Unifi Inc and Sinopec Yizheng Chemical Fibre Co Ltd have signed agreements finalising the formation of a joint venture to manufacture, process, and market polyester filament yarn.

The joint venture will be called Yihua Unifi Fibre Industry Company Limited and will focus on the production of higher margin specialty yarns for the Chinese market.
   
Sinopec Yizheng Chemical Fibre said in a legal notice today that it will contribute 50 per cent of the capital of the venture by way of an existing fibre plant.

Unifi is to contribute its half of the venture through $15 million cash funds.

The companies have agreed that the new venture will invest an extra $60m in capital equipment, and that they will extend total investment in the business from $90m to $180m in a year's time.

Unifi has also agreed to license a number of its technologies and trademarks to the venture, to help boost its productivity.

"Through the merging together of the manufacturing strength and reputation
of two global leaders, this joint venture will achieve our mutual goal of
being the leading local supplier of high-end specialty yarns in Asia," said
Brian Parke, chairman and chief executive officer of Unifi. 

Sinopec Yizheng says that it expects a charge of approximately CNY430.7m from writedown of the value of assets it is placing in the venture.