I saw this on the wire today. I'm not sure that any bad comes from this; actually, it's nice that the placement didn't result in any further dilution (at least for seven years). And, suprise upon surprise, the stock was up today. More to come?
Khris
Tuesday September 3 3:10 PM EDT
China Resources closes share exchange transaction
HONG KONG--(BUSINESS WIRE)--Sept. 3, 1996--
Agreement highlights long-term confidence of significant Series
A Preferred holder in China Resources
China Resources Development Inc , a U.S. Corporation with rubber and
other agricultural/raw material operations in the People's Republic of
China (PRC), announced today that it has concluded a transaction with
Everbright Finance & Investment Co. Limited (Everbright) whereby
Everbright receives 32 million CHRB shares (the Exchange Stock) with
certain substantial restrictions, reviewed below, in exchange for its
6.4 million shares of CHRB's Series A Preferred Stock.
The restrictions on the exchange will cause the additional shares to be
excluded from earnings per share calculations under U.S. GAAP for the
next seven years. Subsequent to the exchange, there are no shares of
Series A Preferred Stock outstanding.
Under the terms of the exchange agreement, China Resources exchanged
each outstanding share of Series A Preferred Stock for five shares of
Exchange Stock. The Exchange Stock is CHRB's common stock, $0.001 par
value, with the following restrictions:
-- The Exchange Stock may not be sold publicly, nor will CHRB file any
registration statement which includes the Exchange Stock until after
July 22, 2000. Furthermore, these restrictions apply to the Exchange
Stock even if it is subsequently transferred by Everbright.
--The Exchange Stock may not participate in dividends until after July
22, 2003, and it may not receive distributions in the event of a
liquidation of CHRB.
Commenting on the share exchange, Li Shunxing, President of China
Resources Development, Inc., said, "Everbright understands and supports
China Resources' long-term business plan to further develop our
agricultural and industrial operations and holdings in China and abroad.
The exchange will serve to improve our future cash flow and ability to
finance our expansion while also simplifying our capital structure.
Importantly, the restrictions on the Exchange Stock are intended to
mitigate the dilutive impact of the exchange and underscore Everbright's
confidence in our long-term prospects."
In making the decision to approve the exchange, The Board of Directors
relied upon a fairness opinion rendered by an independent valuation
firm.
China Resources Development, Inc., with offices in Hong Kong and the
Hainan Province in the PRC, markets and distributes dry, natural rubber
and liquid latex, and procures production materials and supplies for
major customers. The Hainan Province supplies over 60% of the PRC's
natural rubber production. CHRB through a subsidiary, owns a 56%
interest in Hainan Agricultural Resources Co. Ltd. (HARC).
CONTACT: China Resources Development, Inc., Hong Kong
Financial Controller
Edward Wong, 011/852/28107205
or
Jaffoni & Collins Inc., New York
Joseph N. Jaffoni/Robert L. Rinderman, 212/505-3015
jci ir@aol.com |
