Chip Eng Seng Construction (CES Construction), the wholly-owned subsidiary of Chip Eng Seng Corporation, has entered into a joint venture (JV) with Inception Materials and Ye Chengzhong for the procurement of construction-related supplies and materials.
Ye is the sole shareholder of Inception Materials.
Under the agreement, a joint venture company (JVCo), Eura Construction Supply, will be set up and incorporated in Singapore.
Its primary business will be to provide procurement services relating to construction-related supplies and materials, as well as related services.
Eura Construction is currently a wholly-owned subsidiary of Chip Eng Seng Corporation.
The joint venture partners will provide a total of $1 million to the JVCo as an initial capital contribution, in accordance to their respective shareholding proportion.
CES Construction will hold 55% of the issued and paid-up share capital in the JVCo while Inception Materials will hold the remaining 45%.
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In addition, the JVCo and the joint venture partners have entered into an agreement (JVA) to regulate the relationship of the partners as shareholders of the JVCo, which includes board composition, financing obligations and dividend policy.
Under the JVA, Ye will be a director of the JVCo and will be employed by the JVCo to manage its day-to-day operations.
Inception Materials and Ye have also pledged not to be involved in any business that may be competitive to the joint venture.
The entry into the JV is in line with Chip Eng Seng Corporation’s plans to augment its construction business segment.
The group says it has been expanding its capabilities in the segment so it can participate in a broader range of competitive construction tender projects which are of larger scale and higher value.
CES Construction’s contribution of $550,000 to the JVCo will be funded by internal resources.
Shares in Chip Eng Seng closed 1 cent lower or 2% down at 48.5 cents on April 21.
