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Honghua Group Limited Enters Into MOU With SBI Offshore To Form Joint Venture For Offshore Drilling

soruce:manager    click:3701    time:2011-05-31

Honghua?Group?Ltd.?(“Honghua”?or?“Group”)?(Stock?Code:?196.HK),?a?leading?global?land?drilling?rig?manufacturer,?is?pleased?to?announce?today?that?the?Group?has?entered?into?a?Memorandum?of?Understanding?(“MOU”)?on?May?30,?2011?with?SBI?Offshore?Limited?(“SBI?Offshore”),?one?of?the?leading?offshore?equipment?manufacturers?in?Singapore?to?form?a?Joint?Venture?(“JV”)?Company?to?offer?contract?manufacturing?services?to?the?global?offshore?&?marine?(“O&M”)?industry.

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Pursuant?to?the?MOU,?Honghua?will?hold?70%?and?SBI?Offshore?will?hold?30%?in?the?equity?of?the?JV?Company,?which?will?amount?to?an?initial?paid-up?capital?of?not?less?than?US$?1?million.?The?JV?Company?will?be?incorporated?in?either?Hong?Kong?or?Singapore.?It?will?focus?on?providing?contract?manufacturing?services?to?O&M?equipment?companies.?

The?JV?Company?is?expected?to?enjoy?first-mover?advantage?as?western?offshore?equipment?companies?are?looking?for?competent?original?equipment?manufacturers?(“OEMs”)?in?Asia?in?order?to?benefit?from?lower?production?costs?and?being?closer?to?the?shipyards?in?Asia,?which?build?approximately?80%?of?mobile?offshore?drilling?and?construction?units?in?the?world.

Mr.?Zhang?Mi,?Chairman?of?Honghua?commented,?“We?are?pleased?to?enter?into?the?MOU?with?SBI?Offshore?in?forming?a?JV?Company.?The?JV?Company?will?allow?Honghua?to?accelerate?its?expansion?into?the?offshore?sector.?Honghua?believes?that?the?JV?Company?will?boost?the?competitiveness?and?capabilities?of?its?offshore?production?base?in?progress?in?Qidong,?Jiangsu?Province,?the?People’s?Republic?of?China.?The?abundant?knowledge?and?resources?of?SBI?Offshore?in?offshore?drilling?equipment?will?certainly?be?favorable?to?the?Group’s?entry?into?the?offshore?equipment?sector.?Looking?forward,?Honghua?will?be?engaged?in?developing?its?offshore?business?and?bring?maximum?returns?for?shareholders.”

Mr.?Jonathan?Hui,?Chairman?and?Chief?Executive?Officer?of?SBI?Offshore,?said,?“The?joint?venture?will?enable?SBI?Offshore?to?substantially?expand?its?contract?manufacturing?capacity?and?capabilities?while?minimizing?capital?expenditures.?Through?the?JV?Company,?we?will?be?able?to?leverage?on?Houghua’s?enormous?production?facilities?and?capabilities?in?land?drilling?rigs?and?rig?components?and?our?vast?knowledge?in?offshore?drilling?equipment?and?expertise?in?the?O&M?sector,?particularly,?project?management,?quality?assurance,?quantity?control?as?well?as?detailed?engineering?that?we?have?built-up?since?our?collaboration?with?Sea?Reef?LLC?in?March?2010.?The?JV?Company?aims?to?become?a?leading?original?design?manufacturer?of?offshore?drilling?and?construction?equipment?and?components?in?the?world.”?

The?MOU?is?not?intended?to?be?legally?binding?between?SBI?Offshore?and?Honghua?in?relation?to?the?formation?of?the?JV?Company.?Both?SBI?Offshore?and?Honghua?intend?to?formalize?their?partnership?in?the?JV?Company?by?entering?into?a?JV?agreement?in?respect?of?the?establishment,?management?and?operation?of?the?JV?Company?within?60?days?from?the?date?of?the?MOU.

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