MEPCO signs framework agreement with Al Masirah to buy corn starch

Middle East Paper Co. (MEPCO) signed, on Thursday, a framework agreement with Al Masirah International Industrial Investment Co. to buy natural corn starch for industrial use through purchase orders, the company said in a bourse statement.

The agreement has a 5-year term from the signing date after which it could be renewed.

The value of annual deals is expected to exceed 1% of the company’s total revenue according to the audited financial statements for FY2019, MEPCO said, adding that the agreement will have a positive impact on its financials during the fulfillment period.

The agreement is a related party transaction that will be implemented within the context of the company's regular activities without granting any preferential advantages to the second party.

MEPCO also added that the deal is a related party deal as its chairman, Abdullah Al Muammar, has a direct interest in this agreement through his ownership of a 31% stake in Al Masirah, as well as his membership in the board of directors.

In addition, board member Emad Al Muhaidib has a direct interest in this agreement through his 5% stake in Al Masirah and his membership in the board of directors.

Al Masirah International, which started its production recently, will be among the local suppliers to provide starch material to the company, MEPCO said, noting the deal aims to reduce dependence on imports, ensure supply continuity and raise local content percentage.

The deal is pending approval from the company’s general assembly.