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  • Written by EQS Asia Business News

(EQS-News / 21/09/2015 / 16:39 UTC+8)

Contact:Shiu Ka Yue/ Lorna Wong/ Christine ChanDate:21 September 2015
Tel:2801 6239 (9029 1865/9086 8623/ 6173 9039)Pages:5
 

Independent Financial Adviser Recommends Global Bio-chem's Independent Shareholders To Approve The Resolutions To Be Proposed At The Extraordinary General Meeting

Recommendations of Independent Financial Adviser

Global Bio-chem Technology Group Company Limited ("Global Bio-chem" or "the Company" (stock code: 00809)) together with its subsidiaries (the "Group") has despatched a circular (the "Circular") to its shareholders today (21 September 2015), pursuant to which New Spring Capital Limited ("New Spring Capital"), the independent financial adviser to the independent board committee and the independent shareholders of the Company, has recommended Global Bio-chem's shareholders to approve the conditional subscription agreement ("Subscription Agreement") dated 30 August 2015 entered into between the Company and Modern Agricultural Industry Investment Limited (the "Subscriber") in relation to the issuance by the Company of the subscription shares and the convertible bonds ("Subscription") to the Subscriber, the transactions contemplated thereunder, the grant of the specific mandate, the whitewash waiver and the authorised share capital increase (collectively, the "EGM Matters").

Global Bio-chem's independent board committee, after taking into account the advice from New Spring Capital, recommended the Company's independent shareholders to vote, at the extraordinary general meeting to be held on 8 October 2015, in favour of the EGM Matters.

In the letter of advice from New Spring Capital to the independent board committee and the independent shareholders of Global Bio-chem, New Spring Capital noted that the Subscriber will subscribe for the subscription shares and the convertible bonds with an aim to gain access to the agricultural production industry through expanding its business into the agricultural processing industry in Jilin Province and thus becoming one of the leading industry players. In addition, New Spring Capital also considered that as the subscription shares and the convertible bonds to be subscribed by the Subscriber, and the conversion shares to be issued upon exercise of the conversion rights under the convertible bonds are subject to lock-up arrangements, such arrangements indicated the commitment of the Subscriber to the long term investment in Global Bio-chem.

Taking into account, among others, (i) the Subscription will provide the Group with funds for general working capital, the Group's business development and relocation expenses; (ii) the Subscription will benefit the Company's long-term development and broaden the Company's equity base, offer a good opportunity to raise additional funds to strengthen the financial position, and enhance its business operations and will further enable it to make investments in new acquisitions or business ventures when suitable opportunities arise in the future; and (iii) the terms of the Subscription Agreement are fair and reasonable and in the interests of the Company and the independent shareholders of the Company, New Spring Capital has considered that the EGM Matters are fair and reasonable and in the interests of the Company and the independent shareholders of the Company.Change in members or composition of the Board

Subject to the completion of the Subscription, all existing executive directors of Global Bio-chem will resign as directors of the Company with effective from the Subscription Completion Date. Simultaneously, the Subscriber intends to nominate six new directors to the Board of the Company in place of the above resigning directors and such appointment will also take effect from the Subscription Completion Date. The proposed new directors are currently senior management staff of the Subscriber's parent company - Jilin Province Communication Investment Group Co., Ltd. ("Jiaotou"). They are Mr. Qiu Zhuang, the secretary of the Party Committee and the chairman of Jiaotou; Mr. Li Shuguang, the deputy secretary of the Party Committee and the secretary of discipline inspection commission of Jiaotou; Ms. Wang Qiu, the deputy general manager and the chief financial officer of Jiaotou; Mr. Wang Jian, the assistant to the general manager, head of Asset Operation Department and employee supervisor of Jiaotou; Ms. Liu Fang, the head of the Finance Department of Jiaotou, and Mr. Xing Lizhu, the secretary of the board of directors and director of the General Office of Jiaotou.

The Subscription

On 30 August 2015, Global Bio-chem announced that the Company has entered into the Subscription Agreement with the Subscriber, regarding the issue of subscription shares and convertible bonds of the Company to the Subscriber for a total consideration, which will be settled in Hong Kong dollar, equivalent to RMB1,500,000,000. Under the Subscription Agreement, the Subscriber has conditionally agreed to subscribe an aggregate of 3,135,509,196 new ordinary shares, which upon completion of subscription, will represent approximately 49 per cent of the issued shares of Global Bio-chem as enlarged by the allotment and issue of the subscription shares. The subscription monies for the aforementioned subscription shares amount to HK$721,167,115.

In addition, the Subscriber has conditionally agreed to subscribe for the convertible bonds to be issued by Global Bio-chem. The convertible bonds consideration represents the Hong Kong dollar cash amount equal to the balance of the total consideration after subtracting the subscription monies. Upon completion of the subscription of subscription shares and assuming the convertible bonds are fully converted into shares of the Group and the subscription rights attaching to the outstanding options granted by the Company to subscribe for shares under the share option scheme adopted by the Company were not exercised at all, the Subscriber would be interested in approximately 70.66 per cent of the Company's enlarged issued share capital.

The subscription price is HK$0.23 per subscription share and the initial conversion price for the convertible bonds is HK$0.23 per conversion share. As the Group recorded a negative unaudited net asset value attributable to the equity owners as at 30 June 2015, the subscription price and initial conversion price represent a premium over unaudited net asset value attributable to the equity owners per share as at 30 June 2015.

The net proceeds from the Subscription, after the deduction of the professional and other related expenses, are estimated to be approximately HK$1,790,000,000, of which approximately 7 per cent, 27 per cent and 66 per cent are intended for business development, expenses in relation to the relocation of the Group's production facilities in Lu Yuan District, Changchun to the new production facilities in Xinglongshan, Changchun and general working capital purpose of the Group, respectively.

The completion of the Subscription is conditional on, among others, the reorganisation documents having been duly entered into by the parties thereto and the reorganisation having been completed in accordance with the terms of the reorganisation documents. It is intended that the Group and certain of its principal banks will enter into certain agreement(s) and/or undertaking(s) in relation to the restructuring of certain bank borrowings of the Group. It is intended that the terms of the reorganisation documents will include the lowering of applicable rates of interests payable, rescheduling of interest payment periods and conditional and continuous use of the bank borrowings of the Group.

Mr. Liu Xiaoming, Chairman of Global Bio-chem, said: "In light of the volatile market and uncertain global market conditions, equity financing by way of Subscription is a more practicable and direct means of raising additional capital. It is less costly and imposes minimal financial burden on the Group. We believe that bringing in a new controlling shareholder to the Company who has a strong background will provide support to the Group and potentially lower its financing costs."

The Board of the Company is of the view that, upon the completion of Subscription, Global Bio-chem can leverage on the investment experience of the Subscriber's parent group and its extensive business and governmental network in the PRC to facilitate the Group's business development, further raise the profile of the Group in the Jilin Province, and potentially benefit from the strong support and resources of the Subscriber's parent group such as its network in the business, financial and governmental sectors in the PRC.

About the Subscriber The Subscriber is an indirect wholly-owned subsidiary of Jilin Province Modern Agricultural Industry Investment Fund (LLP), which is an agricultural fund established in the PRC and whose sole general partner is Jilin Province Modern Agricultural Industry Fund Limited. Jilin Province Modern Agricultural Industry Fund Limited is wholly owned by Jilin Changjitu Investment Co., Ltd., a limited company established in the PRC which is owned by Jiaotou and Jilin Municipal Railways Investment and Development Co., Ltd. as to 91.11 per cent and 8.89 per cent respectively. Jiaotou is one of the key state-owned enterprises in Jilin Province in the PRC which is principally engaged in investment and development of transportation infrastructure, agriculture, culture and logistics projects with total assets of approximately RMB28 billion as of 31 December 2014. Jiaotou is 71.43 per cent owned by Stated-owned Assets Supervision & Administration Commission of the People's Government of Jilin Province and 28.57 per cent owned by Jilin Province Investment Group Co., Ltd.  which is wholly owned by Jilin Province Development and Reform Commission. Jilin Municipal Railways Investment and Development Co., Ltd. is wholly owned by State-owned Assets Supervision & Administration Commission of Jilin Municipal Government.

About Global Bio-chem Global Bio-chem has been listed on the Main Board of the Stock Exchange of Hong Kong Limited since 2001. The Group is principally engaged in the manufacture and sale, research and development of corn-based biochemical products in the People's Republic of China ("PRC"). Its products are sold in the PRC and worldwide. Headquartered in Hong Kong and with its production facilities based in various provinces in the PRC, Global Bio-chem is the largest vertically integrated corn-based biochemical product manufacturer in Asia and is one of the leading lysine players in the fermentation industry worldwide. Global Bio-chem is also the parent company of Global Sweeteners Holdings Limited, one of the largest corn sweeteners producers in the PRC, which is also listed on the Main Board of The Stock Exchange of Hong Kong Limited.

- End -

Issued by: Global Bio-chem Technology Group Company Limited Through: CorporateLink Limited

End of Press Release+++++Document: http://n.equitystory.com/c/fncls.ssp?u=HWXSEPMMKSDocument title: GLOBAL BIO-CHEM: Independent Financial Adviser Recommends Global Bio-Chem's Independent Shareholders to Approve the Resolutions to Be Proposed at the Extraordinary General Meeting
Key word(s): Miscellaneous 21/09/2015 Dissemination of a Press Release, transmitted by EQS TodayIR - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.Media archive at www.todayir.com
396085  21/09/2015 

Authors: EQS Asia Business News

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