/NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES/
RICHMOND, BC, April 17 /CNW/ - Genius World Investments Limited (TSXV: GNW.P) (the "Corporation") is pleased to announce that it has entered into a Letter of Intent ("LOI") effective March 24, 2009 with Nanjing Huade Storage Equipment Manufacturing Co., Ltd. ("Huade"), to purchase all of the issued securities of Huade (the "Acquisition").
The Acquisition, if completed, will constitute the Corporation's Qualifying Transaction ("QT") under TSX Venture Exchange Inc. (the "Exchange") Policy 2.4. Huade and all of its shareholders are at arm's length to the Corporation, as such, the Corporation anticipates that the Acquisition will not be subject to approval of the shareholders of the Corporation.
Huade
The following is a summary of Huade's existing business.
Huade was incorporated on January 16, 1998 under the laws of the People's Republic of China ("PRC") and is headquartered in Nanjing, Jiangsu Province in PRC. Huade is controlled by Hang Lok Decoration Engineering & Trading Company ("Hang Lok"), a company based in Hong Kong and a 75% shareholder of Huade, and Nanjing Huade Shelf Co., Ltd. ("Huade Shelf"), a company based in PRC and a 25% shareholder of Huade.
Huade manufactures and sells multifunctional racking systems. Since incorporation, Huade's business has grown steadily. Huade implemented the automated welding system in 2000 which helped to ramp up production capacity and improved quality. Huade received ISO9001: 2000 certification for its quality management in 2002 and obtained ISO 14004: 2004 certification for its environment management system in 2006. Due to consistent reliable quality and customer satisfaction, Huade's export business has grown considerably with approximately 70% of its revenue generated from exports in 2008. Huade has been one of the leading pioneers in the racking industry in China. Currently Huade has over 20 independent distributors and agents throughout China and 7 independent agents in Europe, America and Japan.
Nanjing Huade Logistics Equipment Manufacture Co., Ltd. ("Huade Logistics") was incorporated on July 24, 2007. Shareholders include Huade, Hang Lok, a strategic distributor in France, and other individuals. Huade Logistics will be focusing on the research and development of advanced automated storage and retrieval systems (AS/RS).
Phase one construction of a 23,000 square metre plant has been completed in Jiangning Science Park in Nanjing, China. Phase two construction that includes a 13,676 square metre plant and a 5,811 square metre office building will commence soon. With the new facilities, Huade and Huade Logistics will have an aggregate production capacity of 5,000 tons per month, a 100% increase from existing capacity of 2,500 tons per month.
Selected Financial Statement Information
The following table presents selected financial information stated in Chinese RMB on the financial condition and results of operations for Huade. Such information is derived from the unaudited financial statements of Huade for the years ended December 31, 2008 and December 31, 2007. The unaudited financial statements were prepared in accordance with PRC generally accepted accounting principles.
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December 31, 2008 December 31, 2007
Balance Sheets Unaudited Unaudited
(RMB) (RMB)
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Current Assets Yuan 61,727,423 Yuan 51,316,253
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Property and Equipment 10,114,086 10,298,445
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Total Assets 75,344,230 65,117,418
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Current Liabilities 30,397,926 18,634,329
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Total Shareholders' Equity 44,946,304 46,483,089
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Total Liabilities and
Shareholders' Equity 75,344,230 65,117,418
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Year Ended Year Ended
December 31, 2008 December 31, 2007
Statements of Operations Unaudited Unaudited
(RMB) (RMB)
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Total Revenues Yuan 211,969,435 Yuan 171,389,701
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Cost of Goods Sold 185,609,456 141,053,074
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Operating Expenses 8,281,629 6,962,063
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Operating Income 17,977,981 23,298,328
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Net Income 12,290,638 16,386,042
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Exchange rates:
- 2008 average exchange rate (CAD:RMB): 7.0845
- 2007 average exchange rate (CAD:RMB): 6.5122
- December 31, 2008 spot rate (CAD:RMB): 5.5710
- December 31, 2007 spot rate (CAD:RMB): 7.3910
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Proposed Acquisition
Under the terms of the LOI, through restructuring and arrangements, Huade will become a wholly-owned foreign enterprise (a "WOFE"). The parties have subsequently agreed that Huade Logistics will also become a WOFE and will be owned by the same holding company ("Holdco"). The Corporation will issue 56,733,333 purchase securities, consisting common shares and special warrants, to acquire 100% of the issued and outstanding shares of Holdco, and thereby indirectly acquire all of the issued and outstanding shares of Huade and Huade Logistics. It is anticipated that each special warrant will be converted into one common share of the Corporation once the Exchange's minimum distribution requirements are met. It is also estimated that the deemed price per purchase security will be approximately CAD$0.29, the projected net asset value per post-QT fully diluted common share of the resulting issuer at June 30, 2009.
The purchase consideration represents 92.5% of the issued and outstanding shares of the resulting issuer (on a diluted basis) after closing of the Acquisition and prior to the proposed private placement. The existing shareholders of the Corporation will hold 7.5% of the resulting issuer at closing of the QT (prior to the private placement). It has been agreed that, after any necessary restructuring or arrangements, the audited aggregate net tangible asset value of Huade and Huade Logistics shall not be lower than RMB98.5 million (approximately C$17.9 million, subject to potential foreign exchange adjustment) as at June 30, 2009. In the event the audited aggregate net tangible asset value of Huade and Huade Logistics, after any necessary restructuring or arrangements, is lower than RMB98.5 million as at June 30, 2009, the percentage shareholdings of the Corporation's existing shareholders in the resulting issuer shall be increased correspondingly to the percentage decrease of Huade and Huade Logistics' aggregate net tangible asset value.
Upon the completion of the Acquisition, Huade and Huade Logistics will become indirect subsidiaries of the Corporation, and the Corporation will carry on its business through Huade and Huade Logistics.
Proposed Private Placement
It is expected that the Corporation will, concurrently with closing of the Acquisition, complete a brokered private placement of common shares or units (comprised of a common share and a common share purchase warrant) to raise approximately CAD $900,000, at a price (the "Private Placement Price") not lower than the per share net tangible asset value on fully diluted basis upon the completion of the QT but prior to the concurrent financing. The Corporation may also grant the agents an option exercisable in whole or in part to offer for sale up to an additional number of common shares or units at the Private Placement Price (the entire offering of common shares or units of the resulting issuer, the "Private Placement"). Huade, with the Corporation's assistance, will retain a sponsor and lead agent for the Private Placement and customary compensation will be paid for such agency services, which may include broker's warrants.
The proceeds of the Private Placement will be used for general working capital purposes.
Directors, Officers and other Insiders
On completion of the Acquisition, the directors and officers of the resulting issuer are anticipated to be:
Yong Xin Cao, Chairman, Director, Chief Executive Officer
Mr. Cao, a resident of Nanjing, China, is a successful entrepreneur with extensive and successful experiences in storage and logistics equipment manufacturing, marketing, financing, and operations through investment and joint ventures. Mr. Cao is one of the founders of Huade and, along with Qinghong Pan, also of Nanjing, China, currently beneficially owns 25% of Huade's shares. Mr. Cao has been the chairman of the board and general manager of Huade from its inception in 1998 to present. He is in charge of the strategic development, sales and marketing, and administration of Huade. Mr. Cao is also one of the founders and chairman and general manager of Huade Logistics, which mainly focuses on research and development, manufacturing and sales of logistic equipment. Mr. Cao is also the founder of Huade Shelf. Huade Shelf was incorporated in 1993 and was one of the pioneers in China for manufacturing and exporting storage racking systems. Between 1993 and 1998, Mr. Cao was the general manager of Huade Shelf, in charge of strategic development, daily operations, manufacturing, sales and marketing. Mr. Cao will become a significant shareholder of the Corporation upon closing of the Acquisition.
Koon Leung Mok, Director
Mr. Mok, a resident of Hong Kong, has substantial operational experience in construction, decoration, storage and logistic equipment manufacturing. Mr. Mok is one of the founders of Huade and currently beneficially owns 75% of Huade. From 1998 to present, Mr. Mok has been director and deputy general manager of Huade, responsible for administration. He is also one of the founders of Huade Logistics and has been director and deputy general manager of Huade Logistics, responsible for infrastructure construction and management. Mr. Mok is the founder and owner of Hang Lok, which has provided numerous infrastructure construction services to many businesses in mainland China and Hong Kong. Mr. Mok will become a significant shareholder of the Corporation upon closing of the Acquisition.
Francois Pollet, Director
Mr. Pollet is the founder of Meta-Invest Group specialized in steel-works and CEO of Metalog S.A.S., one of the leading European companies in logistics, industrial and administrative storage equipment for the past twenty years. He has extensive racking industry experiences, especially in the areas of engineering and manufacturing. Mr. Pollet's career in the storage equipment industry covers various responsibilities. He has been involved in the conception and realization of some of the largest and most notable contracts in the logistics industry in Europe. After a short period in the French Navy, Mr. Pollet was Technical Director of Polypal, one of the largest racking and storage system manufacturers in the world, from 1987 to 1992. He was responsible for strategic research, planning, procurement, and installation. For a three year span during this period, Mr. Pollet was also in charge of a manufacturing unit owned by Polypal that was specialized in customized racking and storage systems. Mr. Pollet subsequently served as Managing Director for Planned Storage Systems in France for from 1992 to 1997. From 1997 until 2004, Mr. Pollet served as Managing Director for Esmena, a leading storage system manufacturer based in Spain. Mr. Pollet was instrumental in the successful development of Esmena's commercial presence in France. Mr. Pollet holds Bachelor degrees in Economics and Engineering from the University of Lille.
Ann Chien, Director
Ms. Chien has extensive business administration and sales and marketing experience. From June 2008 to present, she has been the General Manager of Classic Fine Foods (Taiwan) Ltd., a specialty fine food distributor with headquarters in the United Kingdom. Between November 2007 and June 2008, Ms. Chien was the Marketing Director of Fidelity Investments Securities (Taiwan) Limited, responsible for marketing and brand management. Between April 2007 and November 2007, she was branch manager of Oxford University Press in charge of distribution in Taiwan. From November 2004 to February 2007, Ms. Chien was with Unilever Taiwan Ltd. with her last position as the Managing Director in charge of Foodsolutions branch. From February 2000 to November 2004, Ms. Chien was with SSL Healthcare Taiwan Ltd., with her last position as General Manager responsible for sales, marketing, finance and administration. From June 1998 to February 2000, Ms. Chien was the Assistant Vice President of the Marketing department of Citibank in Taiwan. Ms. Chien received her Diploma from George Brown College in Toronto, Canada in 1988.
Sam Wang, Director, Chief Financial Officer
Mr. Wang is a Certified General Accountant with extensive financial management experiences with public companies listed on Toronto Stock Exchange and TSX Venture Exchange. Mr. Wang is the founder and chief executive officer of Canadian Regal International Finance Inc., a company specialized in assisting private companies in the public listing process. Between December 2006 and September 2007, Mr. Wang was the Senior Accounting Manager and Business Development Manager of Hanwei Energy Services Corp., a company listed on the Toronto Stock Exchange. Between January 2006 and December 2006, Mr. Wang was the Accounting Manager of Y&O Ventures Corp, the predecessor of Hanwei Energy Services Corp. Mr. Wang obtained a BA from Shenzhen University in China in 1992 and a MBA from York University, Ontario in 2000.
Stephen So, Director
Mr. So is a CA, FCPA, CMA, ACMA and FAIA. Mr. So obtained a B.Comm in Accounting from the University of British Columbia in 1979. Mr. So has been Finance Director of Jetion Holdings Limited, a solar cells and modules manufacturer listed on London Stock Exchange - Alternate Investment Market (JHL) since June 2007. Mr. So has been Director of CCIF Certified Public Accountants since October 2004 and Director of T.M. Ho, So & Leung Certified Public Accountants Ltd., an accounting firm, since August 1997. From January to June, 2007, Mr. So was the CFO of CY Oriental Holdings Limited, an apparel manufacturer listed on the Exchange (CYO). Mr. So has acted as an independent non-executive director of Skyworth Digital Holdings Limited (Hong Kong Stock Exchange: 751) since March 2000, Pine Technology Holdings Limited (Hong Kong Stock Exchange Growth Enterprise Market: 8013) since September 2002 and Hang Ten Group Holdings Limited (Hong Kong Stock Exchange: 448) since October 2002.
General
Completion of the Acquisition is subject to a number of conditions, including but not limited to, a definitive agreement entered into with the shareholders of Holdco, completion of the Private Placement and approval of the Exchange. The Acquisition will not close until conditional approval is obtained from the Exchange. There can be no assurance that the Acquisition will be completed as proposed or at all. Under Exchange rules, trading in the Common Shares of the Corporation has been halted, and will remain halted pending completion of the Qualifying Transaction. In accordance with the policies of the Exchange, the Corporation will be retaining a sponsor in connection with the Acquisition.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
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ON BEHALF OF THE BOARD OF DIRECTORS OF
GENIUS WORLD INVESTMENTS LIMITED
Sam Wang
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Sam Wang
CEO & President
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
/Not for dissemination in the United States or through U.S. newswires/
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For further information: Sam Wang, Chief Executive Officer and President of Genius World Investments Limited, at (604) 773-1339
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