Skin Elements Ltd (ASX:SKN) has executed a binding term sheet which includes a $2.4 million investment and a sales and distribution agreement for its skin care product range in the Chinese skin care market.
The agreement with Henan Huatuo Health Management Co (HHHM) represents a milestone in Skin Elements’ strategy to become a leading global provider of natural and organic skin care products.
Skin Elements' executive chairman Peter Malone said the agreement with HHHM was the company’s first large-scale distribution transaction.
“It is the culmination of an extensive period of negotiation, which has included due diligence meetings with HHHM in China.
“Our discussions with distribution partners in major international markets are ongoing and with this term sheet now in place, and our capability to execute on our global growth plans and deliver large-scale product orders established, we see a clear opportunity to move to expedite other potential global distribution opportunities.”
Terms and conditions
HHHM is an advanced technology enterprise specialising in research and development of Chinese medicine health products, physiotherapy services, health management and vocational skills training for Chinese medicine.
Each order will be paid for on order with production undertaken by the company’s contract manufacturing suppliers.
Under the terms of the proposed distribution agreement:
- HHHM will be granted exclusive distribution rights for Skin Elements products for the Peoples Republic of China;
- HHHM will place initial orders of $20 million over a three-year period for products such as Soleo organics sunscreen, Complete Esscience natural skincare and PaypayaActivs therapeutic creams;
- The first shipment of product to be shipped on or prior to June 30, 2019; and
- SKN will provide all necessary documents, assistance and product samples required for HHHM to obtain and necessary China Food & Drug Administration registration on selected SKN products.
HHHM intends to distribute Skin Elements products in China via its Huatuo Health Centres.