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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Canton Prop | LSE:CPIL | London | Ordinary Share | VGG182601028 | ORD NPV (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 20.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:9028P Canton Property Investment Limited 12 March 2008 CANTON PROPERTY INVESTMENT LIMITED ("Canton Properties" or the "Company") ACQUISITION OF $350M CANTON FINANCE CENTRE PROJECT AND ASSOCIATED FUNDRAISING Acquisition of Canton Finance Centre Project Further to the announcement dated 13 November 2007, Canton Properties' Board of Directors is pleased to announce that on 11 March 2008, the Company and Nordsley Enterprises Limited ("Nordsley"), a wholly owned subsidiary of the Company, signed a formal sale and purchase agreement (the "Acquisition Agreement") with Mr Keng Wong ("Mr Wong"), Chairman of CPIL, and Ms. Zhuansong Ye ("Ms. Ye") (collectively, the "Vendors") to acquire the holding interest of Fortune Foundation Commercial Estate Investment Group Limited ("Fortune Foundation") and Rail Commercial International Holdings Limited ("Rail Commercial"), the British Virgin Islands holding companies that indirectly hold 100 per cent. of the Pearl River New City B1-1 Project (the "Canton Finance Centre Project" or the "Project") (the "Acquisition") for an aggregate consideration of RMB 2,499,488,500 (approximately US$352.0 million), to be satisfied partly in cash and partly by the issuance of new ordinary shares of the Company (the " Consideration Shares"). The Acquisition is subject to completion of due diligence and subject to funding; therefore there is no certainty that the transaction will complete. Other than their indirect interest in the Canton Finance Centre Project, Fortune Foundation and Rail Commercial do not have any other business or investment. The Canton Finance Centre Project The Project is located at the entrance to the planned Pearl River New City, Guangzhou, China. The Project is currently under construction and is anticipated to be developed into a mixed-use commercial development called Canton Finance Centre comprising retail shops, offices, a hotel and serviced apartments. It is expected that the retail portion, office portion, serviced apartments and hotel portion of the Project will be completed in stages during the course of 2010 and 2011. The total costs of construction incurred to 31 December 2007 are approximately RMB 24 million (US$3.4 million) and as of that date, the cost of construction required to complete the Canton Finance Centre Project is estimated to be approximately RMB 2,946 million (US$414.9 million). Upon completion of the Acquisition, the ongoing costs of construction will be borne by Canton Properties. Any construction costs incurred in relation to the Project prior to the completion of the Acquisition Agreement are borne by the Vendors. The existing site area and the planned total gross floor area of the Project are approximately 22,067.192 sq m and 243,894 sq m respectively. Knight Frank Petty Limited ("Knight Frank") has carried out an independent valuation of the Project in its existing state and on a completion basis (assuming that the Project was completed as at the date of valuation). Their valuation states the market value of the Project in its existing state and the market value on a completion basis as at 31 December 2007 are RMB 3,029 million (approximately US$426.6 million) and RMB 8,730 million (approximately US$1,229 million), respectively. Reasons for the Acquisition The Acquisition is in line with the Group's objective of creating and maintaining a diversified portfolio of commercial properties and projects in Guangzhou. The Canton Finance Centre Project also complements the Group's existing developments, namely Comic City and the Mall of Canton, both of which are mixed commercial/retail developments in Guangzhou, and capitalises upon the Company's expertise and experience in developing those assets. The independent valuation report by Knight Frank values the Canton Finance Centre Project in its present form at RMB 3,029 million (US$427 million) which is 21.2 per cent. above the purchase price of RMB 2,499,488,500 (US$352.0 million). The Acquisition therefore offers an immediate discount to market value. The Acquisition is a related party transaction under the AIM Rules for Companies as Mr Wong, the Chairman of Canton Properties, is the ultimate beneficial owner of a 50% interest in the Canton Finance Centre Project and the ultimate beneficial owner of a 42.49% interest in the Company. The Project is a high quality mixed commercial, retail and residential development located in a prime position, namely, the entrance to Pearl River New City. Tianhe, the district in which Pearl River New City is located, is currently planned to be the new central business district of Guangzhou. The Acquisition therefore further demonstrates Canton Properties' ability to access prime real estate opportunities in Guangzhou. Fundraising The Company is proposing to effect an equity placing (the "Placing") to complete the Acquisition and to provide working capital to commence the first stage of construction of the Canton Finance Centre Project. The Placing will be undertaken by Libertas Capital who will conduct the equity fundraising in the UK, Hong Kong, Singapore, the UAE and continental Europe. The Placing is conditional on the passing of ordinary resolutions (the "Resolutions ") at an extraordinary general meeting of the Company ("EGM") approving the grant of a specific mandate to the Directors to allot the placing shares and the Consideration Shares mentioned below. Subject to shareholder approval at the EGM the Company will grant an over-allotment option to Libertas Capital at the Placing price which may be exercised during a thirty day period from completion of the Placing or such other later date as may be agreed between the parties within the applicable legal and regulatory requirements to cover over-allotments in the Placing and with a view to supporting the market price of the shares of the Company at a level higher than that which might otherwise prevail in the open market. The Company is proposing to issue a maximum of 408.9 million new ordinary shares in addition to its existing allotment authorities. Any new ordinary shares issued will be used to satisfy the share consideration required under the Acquisition Agreement, will be placed for cash to satisfy the cash consideration under the Acquisition Agreement and, as required, will be applied towards other general corporate purposes. The Directors have recognised that additional equity capital is necessary to pursue the Company's objectives and to enable full advantages to be taken of the opportunities afforded by the Acquisition. The Placing will also enhance the Company's financial strength and is expected to broaden the Company's institutional shareholder base. The net proceeds of the Placing will provide investment and working capital for the Company in addition to enabling it to complete the Acquisition. Principal Terms of the Acquisition Agreement The Acquisition Agreement provides for the conditional purchase from the Vendors of the entire issued share capital of Rail Commercial and Fortune Foundation for an aggregate consideration of RMB 2,499,488,500 (approximately US$352,040,634) which, after deducting the deposit mentioned in the later part of this paragraph, will be satisfied partly in cash by the payment of up to RMB 1,617,494,693 (approximately US$227.7) by Nordsley acting as the buyer to the Vendors and partly by the issue and allotment by the Company to the Vendors of the Consideration Shares at the Placing price. A refundable deposit of approximately US$42.9 million (approximately RMB 319.6 million, calculated as at the date of payment) has been paid and the deposit will be offset against the purchase price. The Consideration Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of the Company, including the right to receive dividends and other distributions declared, made or paid from the date of admission of the Consideration Shares to trading on AIM (the "Admission Date"). The Consideration Shares are not being made available in whole or in part to the public. On completion of the Acquisition, the Consideration Shares issued to the Vendors will be subject to lock-in restrictions. The Vendors have agreed to enter into lock-in agreements with Libertas Capital and the Company pursuant to which the Vendors will undertake not to sell, transfer or otherwise dispose of any of the Consideration Shares held by them or their associates (having the same meaning as related party under the AIM Rules for Companies), other than in certain limited circumstances, for a period of 12 months following the Admission Date. Completion of the Acquisition is conditional upon, among other things: (i) the Resolutions having been passed at the EGM; (ii) completion of the Placing and the receipt of the funds by the Company; (iii) the conditions of Rules 12 and 13 of the AIM Rules relating to substantial transactions and related party transactions respectively having been met by the Company; (iv) the due diligence on Fortune Foundation and Rail Commercial and all their subsidiaries (the "Target Group") and the Canton Finance Centre Project Property having been completed to the satisfaction of the Company, at its sole discretion; (v) there having been no material adverse change to the value or condition of the Target Group, or the Canton Finance Centre Project before or as at completion; and (vi) the lock-in agreements described above having been executed by the Vendors with Libertas Capital and the Company. The Acquisition Agreement contains certain warranties and indemnities given by the Vendors. The Vendors shall not be liable for any breach of those warranties if, among other things, such breach arises as a result of legislation which comes into effect after Completion and which is retrospective in effect. Financial Effects of the Acquisition The aggregate consideration of RMB 2,499,488,500 (approximately US$352.0 million), after deducting the deposit, will be partially settled by the payment of up to approximately RMB 1,617,494,693 (approximately US$227.7 million) in cash (which will be from funds raised from the Placing) and the balance will be settled by issue of Consideration Shares. On the above basis, the total assets of the Company will increase and the "Capital and reserve" will increase as a result of the issue of the New Ordinary Shares. There will be no material impact on the total liabilities of the Company. Shareholders circular A circular providing details of the Acquisition, the fund-raising and the resolutions proposed to be adopted at the EGM together with a notice convening the EGM will be despatched to Shareholders as soon as possible and made available on the Company's website in accordance with Rule 26 of the AIM Rules for Companies. Recommendation Mr. Keng Wong and Ms. Mui Kwan Chan have not participated in Board discussions in relation to this matter and will abstain from voting at the EGM. The Board considers, having consulted with Libertas Capital Corporate Finance Limited, the Company's nominated adviser, that the terms of the Acquisition are fair and reasonable insofar as the shareholders are concerned. For further information, please contact: Dennis Yau, Canton Property Investment Limited Tel: +852 2219 9669 (Chief Financial Officer) Jakob Kinde, Stephen Pickup, Libertas Capital Tel: +44 20 7569 9650 Corporate Finance Limited Allan Piper, Jiang Lei, First City Financial Tel: +852 2854 2666 Ltd Tel: +44 20 7242 2666 This information is provided by RNS The company news service from the London Stock Exchange END ACQJTMLTMMMBMBP
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