Shanghai Century Acquisition Corp. (AMEX:SHA)
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Shanghai Century Acquisition Corporation (AMEX:SHA), a special purpose
acquisition corporation, announced today that it has signed an agreement
to terminate the share purchase agreement dated May 28, 2007 with
Sichuan Kelun Pharmaceutical Co., Ltd. (“Kelun”).
At the same time, Shanghai Century announced that it has signed
agreements for the acquisition of 100% of the shares of Asia Leader
Investments Limited (“Asia Leader”)
the owner of 67% of the shares of New Goal International Limited (“New
Goal”) in consideration for $300,000 plus a
commitment to contribute $70,000,000 to the capital of New Goal.
Pursuant to these agreements Shanghai Century will also acquire Asia
Leader’s option to purchase the remaining 33%
of New Goal, which Shanghai Century will exercise at closing for
$31,800,000. This acquisition (the “Acquisition”)
will not require PRC governmental approval since both Asia Leader and
New Goal are Hong Kong companies.
Following the Acquisition, Shanghai Century will be engaged in the
structured and specialized financial leasing business in the People’s
Republic of China in such industries as 3G mobile telecommunication
subscriber financing and network expansion, financial and banking
services infrastructure, automobiles and transportation, alternative
energy, energy saving infrastructure, healthcare and aviation.
Shanghai Century announced that the termination of the proposed Kelun
acquisition was due to the delay of PRC regulatory approval of the Kelun
transaction and both Shanghai Century and Kelun concurred that it was
highly unlikely the Kelun transaction would have received approval prior
to the established deadline for consummation of a business combination
for Shanghai Century.
Anthony Kai Yiu Lo, Chairman and Co-CEO of Shanghai Century, stated, “While
we are obviously disappointed about the Kelun transaction, we are
delighted to enter into an even more exciting opportunity in the fast
growing structured and specialized financial leasing industry in China.
China has registered greater than 20% fixed asset investment growth
every year since 2002 but the leasing volume per GDP was only 0.2% in
2006. The demand for innovative financing structures is expected to grow
rapidly in the future years.” According to
the 2008 White Clarke Global Leasing Report, China’s
lease volume in 2006 was US$5.35 billion, representing an annual growth
rate of 30.2%.
Mr. Lo, who has extensive experience in the financial services industry,
will stay on as chairman of Shanghai Century following the Acquisition.
It is expected that Franklin D. Chu, currently Co-Chief Executive
Officer and a director of Shanghai Century, and Raymond Ch’ien,
currently advisor to Shanghai Century and Chairman of Hang Seng Bank
Limited as well as a member of the board of The Hongkong and Shanghai
Banking Corporation Limited, will also be directors of Shanghai Century
following the Acquisition.
New Goal is a Hong Kong company that was recently established by Kevin
Ma, a pioneer in the China’s leasing industry
since 1994, in order to engage in much larger leasing transactions that
would fully capitalize on his expertise and extensive connections in
China. Mr. Ma founded New Century International Leasing (“NCIL”)
in 1994 and in 1996 co-founded Newcourt Leasing (China) Corporation. He
previously held various positions in the then PRC Ministry of Foreign
Trade and Economic Cooperation.
Mr. Ma, who will become the CEO and a director of Shanghai Century after
the acquisition, will lead an experienced management team with many
years of experience in the leasing and financial services industry in
China and the United States. Mr. Ma’s second
in command will be Vincent Chan, a Wharton graduate and Harvard MBA, who
was formerly CEO of Zymmetry Corporation and a lead consultant for Booz
Allen & Hamilton in the financial services sector. Mr. Chan will also
become a member of the board of directors of Shanghai Century.
Mr. Lo added, “We have full confidence that
Kevin and his team will build upon the reputation and track record of
their accomplishments and propel Shanghai Century to become a true
leader in China’s structured and specialized
financial leasing industry.”
Initially New Goal will utilize, through contractual arrangements the
existing financial leasing license of NCIL to obtain the economic benefit’s
of engaging in financial leasing in the PRC. It is expected that upon
closing New Goal will be a party to leasing arrangements in excess of
US$50 million in the automotive and bank automation industries. In
addition, the acquisition agreements require that New Goal will, as soon
as practical after the closing, apply to establish its own financial
leasing subsidiary in China.
Mr. Ma and the management team will not receive shares of Shanghai
Century as part of the acquisition purchase price but will be eligible
to receive shares of Shanghai Century upon meeting certain future
performance targets. Four million shares and four million warrants will
be issued to the management team if New Goal and its PRC leasing
subsidiary achieve a combined net after tax income of US$20 million in
2008, which earn outs could be increased pro rata up to a maximum of 50%
and decreased pro rata without any minimum. An additional four million
shares of Shanghai Century will be issued to the management team if New
Goal and its PRC leasing subsidiary achieve a combined net after tax
income of US$34 million in 2009, which earn out could be increased pro
rata up to a maximum of 25% with no shares being issued to the
management team unless the US$34 million target is reached. An
additional four million shares of Shanghai Century will be issued to the
management team if New Goal and its PRC leasing subsidiary achieve a
combined net after tax income of US$57.8 million in 2010, which earn out
could be increased pro rata up to a maximum of 25% with no shares being
issued to management unless the US$57.8 million target is reached. In
determining whether these targets are reached, net profits will be
calculated by excluding the effects of certain accounting items
described in the employment agreement with Kevin Ma. All earn out shares
issued to the management team will be subject to a lock up of two years
from the date of issuance.
If New Goal and its PRC financial leasing subsidiary exceed all of their
net after tax profit targets in 2008, 2009 and 2010 to the maximum
extent permitted for the award of earn out shares and warrants,
management will hold approximately 26%, 39% and 48% of the issued and
outstanding ordinary shares of Shanghai Century, assuming none of
Shanghai Century’s warrants and options are
exercised and no other ordinary shares are issued following the
Acquisition.
Kevin Ma stated, “My goal for many years has
been to build up a world class financial leasing and services company in
China. I and my experienced management team have strategic plans to
fully utilize the financial resources of Shanghai Century to help us
achieve this goal. We aim to one day be the GE Capital of China and all
the while enhance shareholder value.”
The proposed acquisition has been unanimously approved by the board of
directors of Shanghai Century and the relevant acquisition parties. It
is subject to the approval by a majority of the shareholders of Shanghai
Century voting in person or by proxy at a meeting to be held for that
purpose as well as certain closing conditions. In addition, Shanghai
Century will not complete the acquisition if its shareholders holding
20% or more of the ordinary shares issued in its initial public offering
both vote against the Acquisition and elect to convert their ordinary
shares into a pro rata share of the funds in Shanghai Century’s
trust account.
Shanghai Century will file with the United States Securities and
Exchange Commission (the “SEC”)
and distribute to its shareholders a proxy statement in connection with
the Acquisition. Shanghai Century’s
shareholders are encouraged to read the proxy statement which will
contain important information about Shanghai Century, New Goal and the
Acquisition, including detailed risk factors.
Shanghai Century is a foreign private issuer. As such, its proxy
statement and other proxy materials with respect to the Acquisition will
not be subject to preliminary review and comment by the SEC. Shanghai
Century’s proxy statement with respect to the
Acquisition will contain risk factor disclosure alerting its
shareholders to the fact that its proxy materials have not been reviewed
by the SEC and may not have all of the material disclosures required to
be included under the SEC’s rules. It is,
however, the intent of Shanghai Century to provide to its shareholders
proxy materials with respect to the Acquisition that meet the form and
content requirements of the Schedule 14A of the Securities Exchange Act
of 1934, as amended.
Additional information and where to find it
Shareholders of Shanghai Century and other interested persons are
advised to read, when available, Shanghai Century’s
proxy statement in connection with Shanghai Century’s
solicitation of proxies for the special meeting because the proxy
statement will contain important information. Such persons can also read
Shanghai Century’s final prospectus, dated
April 24, 2006, for a description of the security holdings of Shanghai
Century’s officers and directors and their
respective interests in the successful consummation of the acquisition.
The proxy statement will be mailed to shareholders as of a record date
to be established for voting on the acquisition. Shareholders will also
be able to obtain a copy of the proxy statement, without charge, by
directing a request to: Shanghai Century Acquisition Corporation, 23rd
Floor, Shun Ho Tower, 24-30 Ice House Street, Central, Hong Kong SAR,
China. The definitive proxy statement, once available, can also be
obtained, without charge, at the SEC’s
internet site (http://www.sec.gov).
Shanghai Century and its officers and directors may be deemed to have
participated in the solicitation of proxies from Shanghai Century's
shareholders in favor of the approval of the acquisition. Information
concerning Shanghai Century's directors and executive officers is set
forth in the publicly filed documents of Shanghai Century. Shareholders
may obtain more detailed information regarding the direct and indirect
interests of Shanghai Century and its directors and executive officers
in the acquisition by reading the preliminary and definitive proxy
statements regarding the acquisition, which will be filed with the SEC.
Forward-looking statements
This press release contains statements of a forward-looking nature.
These statements are made under the “safe
harbor” provisions of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by terminology such as “will,”
“expects,” “anticipates,”
“future,” “intends,”
“plans,” “believes,”
“estimates” and
similar statements. The accuracy of these statements may be impacted by
a number of business risks and uncertainties that could cause actual
results to differ materially from those projected or anticipated,
including risks related to: business conditions in China, changing
interpretations of generally accepted accounting principles; outcomes of
government reviews; inquiries and investigations and related litigation;
continued compliance with government regulations; legislation or
regulatory environments, requirements or changes adversely affecting the
businesses in which New Goal International is engaged; fluctuations in
customer demand; management of rapid growth; intensity of competition
from other competitors; timing, approval and market acceptance of new
services and solutions; general economic conditions; geopolitical events
and regulatory changes, as well as other relevant risks detailed in
Shanghai Century's filings with the Securities and Exchange Commission,
including its report on Form 10-K. The information set forth herein
should be read in light of such risks. Neither Shanghai Century nor New
Goal International assumes any obligation to update the information
contained in this presentation.
About Shanghai Century Acquisition Corporation
Shanghai Century Acquisition Corporation was formed for the purpose of
acquiring, through a share exchange, asset acquisition or other similar
business combination, or control through contractual arrangements, an
operating business having its primary operations in China.
In April 2006 the Company raised US$115 million through an initial
public offering on the American Stock Exchange. The Company's units
began trading on April 25, 2006 and its ordinary shares and warrants
began trading separately on July 26, 2006. Shanghai Century Acquisition
Corporation’s principal offices are in Hong
Kong.