The JV company, Shanghai Umeco Composites, will be 51 per cent owned by Umeco Composites, with Leadgo holding the remainder.
Umeco currently manufactures the films supplied to Leadgo for the Chinese market at its facility in Italy (IPM). Umeco expects that the global growth in the wind energy market will allow IPM to back-fill its production capacity once production for the Chinese market moves to the JV.
Umeco estimates that its total investment in the JV will be $4.1m (£2.6m), comprising a cash investment of $2.4m for its equity stake in the company and a $1.7m shareholder loan facility. Leadgo will make a similar investment and provide a similar loan.
At the outset, the JV will have no other assets and IPM will receive a technology royalty from the JV following the commencement of production.
‘The continued growth of the global wind energy market, despite the economic downturn, reflects the ongoing transition to generating power from renewable sources,’ said Clive Snowdon, chief executive officer of Umeco. ‘This joint venture represents another important step in building Umeco’s capability in the worlds largest wind energy market.’
The joint venture agreement is subject to approval from Chinese authorities. It is anticipated that this will be granted within the next two months and that the new facility will be operational by the end of 2011.
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