When someone shares with you something of value, you have an obligation to share it with others.
Saturday, 20 December 2008
Chinese Firm Eyes Listing Through Zhongguo Jilong Acquisition
Shareholders of Zhongguo Jilong, which has been under judicial management since July last year, may soon find themselves holding shares of Chinese firm Changjiang Fertilizer Holdings (CJFH) instead.
Chinese Firm Eyes Listing Through Zhongguo Jilong Acquisition
By LYNETTE KHOO 20 December 2008
Shareholders of Zhongguo Jilong, which has been under judicial management since July last year, may soon find themselves holding shares of Chinese firm Changjiang Fertilizer Holdings (CJFH) instead.
A proposed scheme of arrangement involving CJFH acquiring Zhongguo will give them exposure to the growth prospects of China’s agricultural sector.
A market darling in 2004-2005 for its stellar earnings and the ‘sexy’ food business theme, Zhongguo shares have been suspended since February last year following a winding up petition from creditor Rabobank against the company for not repaying its debt within a stipulated time. The amount in dispute is believed to be in the region of $10 million.
The judicial managers of Zhongguo announced last week that Zhongguo has entered into an investment agreement under which its shareholders will transfer their shares to CJFH in exchange for CJFH shares.
Under the agreement, Zhongguo creditors will also fully release and discharge Zhongguo’s debts in return for CJFH shares. The judicial managers and their solicitors will also receive CJFH shares as professional fees. The total consideration of CJFH shares to be issued or transferred is $4 million.
Zhongguo was previously given a Feb 12 deadline to complete any reverse takeover, failing which it would be delisted. The proposed scheme is therefore subject to the Singapore Exchange’s approval to extend the deadline. Zhongguo said it has applied to SGX for an extension.
Among other things, the arrangement requires the approval of at least 75 per cent in value of Zhongguo creditors and also at least 75 per cent in value of shareholders present and voting at a meeting to be convened. It also requires the sanction of the court.
Three shareholders with a combined 64.25 per cent stake and a creditor that holds 97.5 per cent of Zhongguo’s total debts have given irrevocable undertakings to vote in favour of the resolution.
In compliance with the mainboard’s requirement on shareholding spread, CJFH will issue additional new shares and those owned by its majority shareholder at a price to be determined.
CJFH, a Singapore-incorporated firm, intends to apply for a mainboard listing. It will acquire Miluo Jincheng Shiye Co (including its fertiliser business) through acquiring its holding company Tangjia Electric (Shenzhen) Co Ltd. This will be done through a restructuring exercise to be completed immediately before or after receiving ‘eligibility to list’ from SGX, said Zhongguo’s judicial managers.
CJFH’s value will be determined based on the price-to- earnings ratio of seven times the proforma CJFH Group’s consolidated profit after tax for FY2008. It has assured that its actual consolidated profit after tax is no less than 90 per cent of that sum used to determine its value, and that the total value of shares issued to be no less than $3.2 million. Otherwise, its majority shareholder, whose identity is not mentioned, will top up the shortfall value by issuing more shares.
CJFH intends to wind up Zhongguo after the latter’s delisting, the judicial managers said.
1 comment:
Chinese Firm Eyes Listing Through Zhongguo Jilong Acquisition
By LYNETTE KHOO
20 December 2008
Shareholders of Zhongguo Jilong, which has been under judicial management since July last year, may soon find themselves holding shares of Chinese firm Changjiang Fertilizer Holdings (CJFH) instead.
A proposed scheme of arrangement involving CJFH acquiring Zhongguo will give them exposure to the growth prospects of China’s agricultural sector.
A market darling in 2004-2005 for its stellar earnings and the ‘sexy’ food business theme, Zhongguo shares have been suspended since February last year following a winding up petition from creditor Rabobank against the company for not repaying its debt within a stipulated time. The amount in dispute is believed to be in the region of $10 million.
The judicial managers of Zhongguo announced last week that Zhongguo has entered into an investment agreement under which its shareholders will transfer their shares to CJFH in exchange for CJFH shares.
Under the agreement, Zhongguo creditors will also fully release and discharge Zhongguo’s debts in return for CJFH shares. The judicial managers and their solicitors will also receive CJFH shares as professional fees. The total consideration of CJFH shares to be issued or transferred is $4 million.
Zhongguo was previously given a Feb 12 deadline to complete any reverse takeover, failing which it would be delisted. The proposed scheme is therefore subject to the Singapore Exchange’s approval to extend the deadline. Zhongguo said it has applied to SGX for an extension.
Among other things, the arrangement requires the approval of at least 75 per cent in value of Zhongguo creditors and also at least 75 per cent in value of shareholders present and voting at a meeting to be convened. It also requires the sanction of the court.
Three shareholders with a combined 64.25 per cent stake and a creditor that holds 97.5 per cent of Zhongguo’s total debts have given irrevocable undertakings to vote in favour of the resolution.
In compliance with the mainboard’s requirement on shareholding spread, CJFH will issue additional new shares and those owned by its majority shareholder at a price to be determined.
CJFH, a Singapore-incorporated firm, intends to apply for a mainboard listing. It will acquire Miluo Jincheng Shiye Co (including its fertiliser business) through acquiring its holding company Tangjia Electric (Shenzhen) Co Ltd. This will be done through a restructuring exercise to be completed immediately before or after receiving ‘eligibility to list’ from SGX, said Zhongguo’s judicial managers.
CJFH’s value will be determined based on the price-to- earnings ratio of seven times the proforma CJFH Group’s consolidated profit after tax for FY2008. It has assured that its actual consolidated profit after tax is no less than 90 per cent of that sum used to determine its value, and that the total value of shares issued to be no less than $3.2 million. Otherwise, its majority shareholder, whose identity is not mentioned, will top up the shortfall value by issuing more shares.
CJFH intends to wind up Zhongguo after the latter’s delisting, the judicial managers said.
Post a Comment