CHANGSHU, China, June 13, 2012 /PRNewswire-Asia-FirstCall/ -- Sutor Technology Group Limited (the "Company" or "Sutor") (Nasdaq: SUTR), a leading China-based non-state owned manufacturer and distributor of high-end fine finished steel products and welded steel pipes used by a variety of downstream applications, today announced that its Board of Directors has approved a plan to form a joint venture among its indirect wholly owned subsidiary, Jiangsu Cold-Rolled Technology Co., Ltd. ("Cold-Rolled"), China Railway Materials Wuhan Company Limited ("CRM Wuhan"), a subsidiary of China Railway Materials Company Ltd., and Changshu Binjiang Urban Construction Investment & Management Company ("Changshu Binjiang").
Initially the joint venture will primarily be engaged in providing raw materials procurement, logistic and other related services to third parties. The equity interests in the joint venture for Cold-Rolled, CRM Wuhan and Changshu Binjiang are 39%, 51% and 10%, respectively. CRM Wuhan is a state-owned enterprise (SOE) supervised by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). It is reported that China Railway Materials Company, the parent of CRM Wuhan, is one of the Fortune 500 companies. Changshu Binjiang is affiliated with Changshu municipal government. The registered capital for the joint venture is Renminbi (RMB) 100 million (approximately US$16 million), among which, RMB 39 million (approximately US$6.24 million) will be contributed by Cold-Rolled.
Ms. Lifang Chen, Chairwoman and CEO of Sutor, commented, "We are very pleased that CRM Wuhan selected us as its partner for the joint venture. It reaffirms our position as one of the leading fine finished steel manufacturers in China. We believe this joint venture will elevate our position in the industry. We also intend to take advantage of CRM Wuhan's extensive business network and vast resources to secure our raw materials procurement on more favorable terms, reduce our financial expenses and strengthen our balance sheet."
"We believe the joint venture will improve our vertically integrated business model by extending our value chain into the upstream raw materials purchases. In the long term, we also believe it will open doors for other strategic growth opportunities," concluded Ms. Chen.