KUALA LUMPUR (July 13): Kim Teck Cheong Consolidated Bhd (KTC) has entered into a memorandum of understanding (MOU) with a wholly-owned subsidiary of Yayasan Sarawak to jointly undertake a bakery manufacturing business in Kuching.

In a bourse filing on Monday, KTC said the proposed collaboration with Sanjung Etika Sdn Bhd involves the establishment and operation of a bakery manufacturing facility to produce, package and distribute Gardenia bakery products for consumers in Sarawak.

KTC will hold an 80% stake in the joint venture company and Sanjung Etika the remaining 20%.

Sabah-based KTC, through its subsidiary Gardenia Bakeries (East Malaysia) Sdn Bhd, holds exclusive licensing and trademark rights to manufacture and distribute Gardenia products in Sabah, Sarawak and Indonesia.

The group said the initial working capital contribution for the joint venture will be up to RM6 million, to be contributed by both parties according to their respective equity participation.

KTC will be responsible for the day-to-day operations and management of the joint venture company, while overall supervision will be undertaken by its board of directors.

The parties will negotiate and enter into a definitive joint venture agreement setting out the detailed commercial terms of the proposed collaboration.

KTC said the MOU will remain in force for 24 months from the date of execution unless terminated earlier in accordance with its terms, KTC said.

Shares of KTC ended unchanged at 13.5 sen on Monday, giving the group a market capitalisation of RM92.1 million.