Unifi, Inc (NYSE: UFI) and Hankook Synthetics Inc today announced that the two companies have signed a letter of intent to form a joint venture to produce textured polyester yarn through Hankook's operations in Asia and the US.

Both companies will work towards a global alliance, with Unifi managing and subsequently acquiring a controlling interest in Hankook's worldwide textured polyester business.

According to Brian Parke, Unifi's president and CEO, Unifi will contribute management, manpower, systems and process expertise to optimize Hankook's polyester texturing and POY production, with the initial focus on Hankook's E-Hwa subsidiary in California. "This joint venture represents a sharing of strengths between two industry leaders," said Parke. "It combines Hankook's intimate and expansive knowledge of Asia with our production efficiency, quality and innovation to the benefit of both companies."

South Korea-based Hankook is one of the largest producers of polyester filament in the world. In addition to its major operations in South Korea, Hankook has operating subsidiaries in the US and China. Together the companies will utilize Unifi's advanced technology and experienced management to develop and produce high-end specialty yarns, thus extending Hankook beyond their strong presence in commodity products.

"This joint effort comes at a key time for the textile industry and for Unifi," said Parke. "As our customers look for better global sourcing solutions, Unifi will be there for them. It embodies our strategic commitment to global growth, innovation and the expansion of high quality services throughout the world."

Hankook will add to Unifi's expanding global presence, placing the company's polyester texturing production on four continents. In addition to the US, Unifi also has facilities in Ireland, the UK, Colombia and Brazil, allowing the company to effectively serve the needs of the world's strongest markets.

"This joint venture provides Hankook with the opportunity to improve process efficiency in texturing, POY and FDY production and secures a strong global distribution channel for its products. It moves Hankook Synthetics one step closer to its vision to be a leading global polyester manufacturer," said No Chul Park, Hankook's executive vice president. "Unifi's advanced technology and experienced management will give Hankook the momentum to restructure its operations to produce higher value-added products for its global customers. Hankook believes that this strategic alliance could be a catalyst in the restructuring of the synthetic fiber industry in Korea."

Unifi is one of the largest producers and processors of textured yarns in the world. Its primary business is the texturing, dyeing, twisting, covering and beaming of multi-filament polyester and nylon yarns. Unifi's textured yarns are found in home furnishings, apparel and industrial fabrics, automotive, upholstery, hosiery and sewing thread.

Hankook is the largest producer of polyester yarn in Korea with a domestic market share of 20 per cent and one of the largest polyester yarn producers in the world. Given state-of-the-art facilities, the application of advanced processing methods, and economies of scale, Hankook represents the highest labor productivity and lowest financial cost among polyester fiber companies in Asia. Its primary business is fully-drawn yarn (FDY), pre-oriented yarn (POY) and draw-textured yarn (DTY).