UK:Abu Dhabi Basic Industries form JV with leading technical textiles maker

Low & Bonar PLC and Abu Dhabi Basic Industries Corporation (“ADBIC”), announce that they have established a joint venture company that will produce artificial grass yarns and other yarns. The joint venture is being established through a wholly-owned subsidiary of Low & Bonar and the Group will have a 75% economic share and operational control of the venture.
Artificial grass yarn is one of the fastest growing product segments within Low & Bonar’s Technical Textiles business, showing growth rates of over 15% per year. This strong growth is driven by the increased use of artificial turf for sports pitches and the rapid expansion of use for landscaping due to environmental restrictions on water use.
The joint venture company will build a new manufacturing plant in the Abu Dhabi Polymers Park, an industry-specific economic zone being established by ADBIC in Abu Dhabi, and production is expected to start in 2009. The new facility will complement Low and Bonar’s existing manufacturing plants in Scotland, Belgium and China and will provide further capacity to support the anticipated growth in artificial grass yarns. The transaction will also allow the Group to benefit from additional sources of its principal raw materials and from ready access to new markets in the Gulf and Middle East region.
The total initial investment in the joint venture to establish its business and production facilities is estimated at US$25 million. Low & Bonar’s committed contribution in 2008 to the venture will amount to US$6 million, payable in cash. The joint venture will manufacture products which are already part of Low & Bonar’s portfolio and will distribute these products exclusively through the Group’s existing sales and distribution infrastructure.

Paul Forman, Group Chief Executive of Low & Bonar, commented: “This new venture will give us a strong position in one of the largest potential markets for artificial grass and allow us to satisfy the significant growth in global demand. The Middle East is also one of the fastest growing areas for many of our other products such as specialist textiles used in civil engineering, where Low & Bonar already enjoys a world-leading position. The local presence with such a high calibre partner will reinforce our position in these markets and create new business opportunities. It will also enable us to develop closer relationships with some of the world’s largest polymer producers.”
Jim White, Chief Operating Officer, ADBIC, commented: “We are very excited to be able to announce this investment with Low & Bonar which creates the first of several new businesses to be located in our recently announced Polymers Park development. Low & Bonar’s choice to invest with us and in Abu Dhabi is a testament to the attractive offering that ADBIC has developed, and we expect to make further investments such as this in the future.”
The joint venture arrangements are subject to obtaining standard licenses required to conduct business in Abu Dhabi which are expected to be obtained by end of May 2008. The arrangements have customary provisions to resolve a deadlock between the partners. Low & Bonar would only be required to purchase ADBIC’s stake in the event that the Group was in material or persistent breach of the joint venture arrangements or in certain circumstances relating to deadlock between the partners over key commercial issues. Low & Bonar was advised by Jasper Capital.