The Board of Directors of PETONE (“Board”) wishes to announce that its indirect wholly-owned subsidiary, POOSB, had on 9 February 2017 entered into a support services agreement (“Support Services Agreement”) with DJHM (hereinafter collectively referred to as “Parties”) for the engagement of POOSB to provide supply base and marine support services (“Support Services”), to the oil storage terminal engineering procurement and construction works of DJHM located at Tanjung Bin, Johor Darul Takzim for the project known as the Asia Petroleum Hub Terminal Facilities (“Project”).
On 28 February 2017, DJHM had issued a letter to POOSB on even date to further advise that the Support Services Agreement is for the duration of 24 months and is scheduled to commence in the second half of year 2017.
2. BACKGROUND INFORMATION ON DJHM
DJHM (Company Number: 8015702-Z) is a company incorporated in People’s Republic of China and having its business address at 5, Longwan Road, Jinzhou District, Dalian 116100, People's Republic of China. It is principally involved in the manufacturing of large chemical, petrochemical, petroleum refining and fertilizer process equipment, and environmental protection equipment.
3. SALIENT TERMS OF THE SUPPORT SERVICES AGREEMENT
The salient terms of the Support Services Agreement are as follows:
(i) subject to the DJHM being appointed as the Contractor for the Project, DJHM shall appoint POOSB as its Service Provider for the Project;
(ii) POOSB agrees to provide the Support Services to DJHM, which involves provision of supply base with 5 acres of land adjacent to the Port of Tanjung Pelepas in Johor, warehouse and logistic support, agency services and custom clearance, as well as marine support services, which includes amongst others, launch services, tugs, barges and towage, pilotage, floating cranes, accommodation and victualing;
(iii) DJHM agrees to pay POOSB a fee for the Support Services at a rate of cost (“Cost”) plus 5% and as agreed between the Parties from time to time. As at this juncture, POOSB and DJHM are still in the midst of finalising the details of the Cost. A subsequent announcement will be made accordingly upon finalisation of the Cost;
(iv) the Support Services Agreement shall forthwith terminate in the event of:
(a) POOSB ceasing for any reason to be or remain liable to perform its obligations under the terms of the Support Services Agreement;
(b) a court of competent jurisdiction makes an order or a resolution is passed for the winding up or administration (whether out of court or otherwise) of POOSB (otherwise than in the course of a bona fide reorganisation or restructuring previously approved in writing by DJHM) or a receiver, manager, administrator, administrative receiver or other similar officer is appointed in respect of any assets of POOSB; or
(c) either party may terminate the Support Services Agreement forthwith on six (6) calendar months’ notice; or
(d) by mutual agreement between the Parties.
4. FINANCIAL EFFECTS
The Support Services Agreement does not have any effect on the share capital, substantial shareholders’ shareholdings, net assets and gearing of PETONE. The Support Services Agreement is expected to contribute positively to the consolidated earnings per share of PETONE for the financial year ending 30 June 2018.
5. APPROVALS REQUIRED
The Support Services Agreement is not subject to the approval of shareholders of PETONE or any regulatory authorities. The Support Services Agreement is not conditional upon any other corporate exercise undertaken or to be undertaken by PETONE.
6. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the directors of PETONE and/or major shareholders of PETONE and/or persons connected to them have any interest, direct or indirect, in the Support Services Agreement.
7. DIRECTORS’ STATEMENT
The Board is of the opinion that the Support Services Agreement is in the best interest of PETONE and its subsidiaries.
This announcement is dated 1 March 2017.