Chinese mill group Lee & Man Paper has entered into an agreement to buy the shares of Cambodian paper company Shunying.
It will pay $98.75 million (£70.73 million) for the land belonging to Shunying and enter into a service agreement to build a factory there.
Due to Cambodian law, foreign investors are not able to own the land, so a complex variable equity arrangement has been set up that will enable Lee & Man’s investment vehicle Able Might to exercise control of the company and receive the economic benefits.
Once the share purchase has been completed, Shunying will be an indirect, wholly-owned subsidiary of Lee & Man Paper.
Lee & Man Paper said in a statement that it plans to “develop its pulp and paper production in Cambodia”.
In February, the Council for the Development of Cambodia agreed to issue a final registration certificate for Shunying Pulp and Paper’s $504 million investment in the country’s first paper mill, that will be located in Kampot province.
