KUALA LUMPUR (Nov 15): HARVEST COURT INDUSTRIES BHD []'s unit will enter into a related party transaction with 1Green Enviro Sdn Bhd for a RM70 million contract to build a pulp and paper plant in Jempol, Negeri Sembilan.

Harvest Court said on Tuesday the contract would involve the design, procurement, manufacture, CONSTRUCTION [] and commissioning of the proposed pulp and paper plant to process oil palm EFP.

It said the letter of intent (LOI) was not a binding agreement and the contract amount is subject to the maximum of RM70 million for 12 months for package one and 24 months for package two.

'1GE confirmed that the total project value is estimated to be RM200.0 million which consists of three packages for a total targeted production capacity of up to 70,000 tonnes.

'The LOI is only for the package one and two of which Package one amounting to RM50.0 million which involves providing production facilities for 15,000 tonnes capacity and package two amounting to RM20.0 million which involves upgrading the production facilities to 25,000 tonnes capacity,' it said.

Harvest Court said the total size of the plant is around''150,000 sq ft on 10-acre site.

It added package three is not within the scope of the letter of intent and it will be a separate production line of 45,000 tonnes capacities, which would start when packages one and two are completed.

'The gross and net profit margin for the said packages is estimated at 15.7% and 11.8%, respectively from the contract amount respectively,' it said.