Adamas Finance Asia Limited Proposed Disposal (3102T)

TIDMADAM

RNS Number : 3102T

Adamas Finance Asia Limited

04 January 2017

Adamas Finance Asia Limited

("ADAM", or the "Company")

PROPOSED DISPOSAL OF INTEREST IN TIAN TONG SHAN VILLA PROJECT

Adamas Finance Asia Limited announces it has agreed terms for the sale of its indirect 15% interest in the Tian Tong Shan Villa Project (the "TTS Project"), a resort development in Fujian Province, China for a total consideration of up to RMB 113.58 million (approximately US$16.4 million).

Background

Through its wholly owned subsidiary, Lead Winner Limited ("LWL"), ADAM holds a 30% interest in S&T Group Holdings Limited ("S&T"), which in turn holds a 50% interest in Changtai Jinhongbang Real Estate Development Co. Limited ("CJRE") and its resort development project, the TTS Project. ADAM's effective 15% interest was valued at US$48.4 million in the consolidated balance sheet at 30 June 2016.

Disposal

Under the terms of an agreement between the shareholders of S&T, LWL has the option to require Mr. Wang Chun Fang, the majority indirect holder of CJRE, to purchase shares representing 10% of S&T from LWL for a consideration of RMB 50 million (approximately US$7.2 million) (the "Put Option"). LWL has exercised the Put Option and full payment in cash is due within 30 days.

In addition, LWL has entered into a memorandum of understanding (the "MOU") with Mr. Wang Chun Fang to sell its remaining 20% holding in S&T (the "Proposed Disposal"). However, it is anticipated that the sale and purchase agreement relating to the Proposed Disposal, when executed, will be entered into with R&F Properties Co. Limited ("R&F"), a Guangzhou-based real estate developer listed on the Hong Kong Stock Exchange which, it is envisaged, will purchase the entire share capital of S&T.

Under the terms of the MOU, the agreed consideration for LWL's 20% holding in S&T, which represents 10% of CJRE, is RMB 63.58 million (approximately US$9.2 million).

Payment of RMB 51.58 million (approximately US$7.4 million) of the total amount due from the Proposed Disposal is expected within 10 days of receipt of the RMB 515.8 million (approximately US$74.2 million) from R&F by Mr. Wang Chun Fang, which is expected to be received one month following satisfactory completion of R&F's due diligence. The remaining sum due to LWL of RMB 12 million (approximately US$1.8 million) will be received in cash through phased payments of 10% of each payment received from Mr. Wang Chun Fang. Exercise of the Put Option and completion of the Proposed Disposal is expected to result in a loss on disposal of approximately US$32 million which the Directors expect will be recognised in the financial year ended 31 December 2016.

The Company is selling its holding in the TTS project in line with its investing policy, which involves disposing of the legacy portfolio acquired in a reverse takeover in February 2014 in order to invest the funds realised in income-generating financing opportunities. The objective is for the financing portfolio to generate cash to enable the Company to pay regular dividends to shareholders.

ADAM will reinvest the funds received from the exercise of the Put Option and, assuming completion, the proceeds of the sale to R&F in accordance with its investing policy under the advice of its Hong Kong-based investment manager, Adamas Asset Management (HK) Limited ("Adamas").

ADAM Chairman John Croft said: "The global economy and the Chinese property market in particular remain sluggish and we have therefore elected to exercise the Put Option and to enter into the MOU in order to generate funds to invest in line with our policy. This marks another step in our progress towards the realisation of our legacy asset portfolio for reinvestment in high-yield projects. Although the proceeds represent a substantial discount on book value, we are working closely with the Adamas team in Hong Kong to identify investment opportunities similar to those that are starting to generate attractive returns for the Company."

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

Enquiries:

 
 Adamas Finance Asia Limited 
 John Croft                     [phone] 
 
 WH Ireland Limited - Nominated Adviser 
                                    [phone] 
                                               6600 
 Tim Feather                        [phone] 
  Ed Allsopp                                   3444 
 
 finnCap Limited - Broker 
 William Marle                      [phone] 
  Grant Bergman                                0500 
 
 First City Public Relations 
  (Hong Kong)                        [phone] 
                                    [phone] 
 Allan Piper                                   8968 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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January 04, 2017 04:00 ET (09:00 GMT)