KUALA LUMPUR (March 20): Tien Wah Press Holdings Bhd has terminated a joint venture agreement (JVA) with Vietnamese company, Dong Nai Food Industrial Corp (Dofico), as the latter’s failure to deliver had caused losses.

The JVA signed in May 2015 was for Tien Wah to dispose of a 50% stake in Toyo (Viet)-Dofico Print Packaging Co Ltd (TVDP) to Dofico for US$1.63 million (or RM7.01 million), in order to secure Dofico’s print packaging volume.

TVDP is principally involved in the manufacturing of aluminium paper, paper core, tipping paper, and box printing under a 28-year investment licence granted by Vietnamese authorities which expires in July 2021.

Dofico, meanwhile, is a conglomerate owned entirely by the People’s Committee of Dong Nai Province, a Vietnamese government agency.

In a filing with the stock exchange today, Tien Wah said all three parties had “mutually agreed” to terminate the JVA.

“Dofico had failed to comply with the agreed minimum printed carton volumes of tobacco packaging as set out in the JVA.

“Hence, the aforesaid challenge had affected the operations of TVDP, which had led to continuous losses for TVDP for the financial year ended Dec 31, 2016,” read the filing.

As at Dec 31, 2016, TVDP has recorded an accumulated net loss of US$253,014 (or RM1.05 million). Net assets stood at US$2.78 million (or RM12.49 million).

Following the termination of the JVA, Dofico will be returning its capital contribution at the initial transfer price, resulting in Tien Wah becoming the sole owner of TVDP.

“The termination and acquisition of capital contribution will result in TVDP being a 100% wholly-owned subsidiary of Tien Wah, and Tien Wah is free to determine the business direction, growth and prospects of TVDP moving forward,” it added.

The JVA termination and acquisition are expected to be completed by the end of the second quarter ending June 30.

The group said it will not pose any material impact on its earnings and net assets per share, gearing, share capital, and substantial shareholdings for the financial year ending Dec 31, 2018.

Shares in Tien Wah edged up one sen or 0.66% to close at RM1.52 today, with a market capitalisation of RM220.01 million.