China Sunsine board 'confident' it will get industrial site despite open tender rule

THE board of Mainboard-listed China Sunsine Chemical Holdings is confident that it will own a 534,000-square metre site in China's Shandong province, despite the requirement for an open tender.

It told the bourse operator on Saturday night that the local government of Shanxian county has agreed to grant the industrial land to its Shandong Sunsine, despite a Chinese Ministry rule requiring any acquisition or disposal of land to go through an open tender process.

Detailed plans for the 2.5 billion yuan (S$503.7 million) investment have not been finalised and the Shanxian authorities have not mandated a timeline for the investment to be made, the board added.

The Singapore Exchange had queried China Sunsine over an investment deal disclosed on March 12.

The regulator asked China Sunsine, among other questions, how the company planned to spend its investment amount and how it would fund the full investment amount, given that China Sunsine's cash and cash equivalents stood at one billion yuan as at Dec 31, 2018.

The company replied that it expected 1.5 billion yuan to go towards property, plant and equipment, with the rest to be used as working capital. "However, the final investment amount can only be determined after the respective budgets for the specific projects have been drawn up," the board added.

"The investment will be carried out in phases over a long-term horizon," it reiterated, noting that - although the lease tenure for industrial land plots is usually 50 years from when the land use rights are granted - individual certificates would be issued based on the starting date of the separate projects that the China Sunsine unit carries out on each parcel of the land.

"As such, we do not expect this investment to have any material impact on the consolidated net tangible assets per share or earnings per share of the group in the current and subsequent financial years."

China Sunsine had previously said that it planned to fund the acquisition through internal resources and would be "building another comprehensive production base to expand its production capabilities".