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news.China Shengda Packaging Group has signed a Letter of Intent (LOI) to purchase the land use rights from Shengda Group Jiangsu Shuangdeng Paper Industry, to build a paper manufacturing plant.
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China Shengda Packaging provides paper packaging solutions to a wide variety of industries, including food, beverage, cigarette, household appliance, consumer electronics, pharmaceuticals, chemicals, machinery and other consumer and industrial sectors in China.
The company purchased 166,533 square meter plot of land in Yancheng City, Jiangsu Province, China for $11.4m.
China Shengda Packaging plans to build the new plant in two phases.
Phase I, which is expected to be completed by the end of 2011, will entail the construction of 100,000 to 150,000 tons per annum of paper capacity and is expected to require capital expenditures of $34.2m, including the cost of acquiring the land use rights.
Phase II, which is expected to be completed by the end of 2012, will entail the construction of 100,000 to 150,000 tons per annum of paper capacity and is expected to require $18.2m.
The company plans to fund the purchase of the land use rights and construction of the new plant through the proceeds received from its recently closed equity financing and internal cash generation.