Tender Offer and Delisting

 

TIDMCBI 
 
RNS Number : 4458N 
China Biodiesel International Hold 
11 June 2010 
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR 
FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION 
WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH 
JURISDICTION 
 
For immediate release 
 
11 June 2010 
 
 
  China Biodiesel International Holding Co., Ltd. 
 ("China Biodiesel" or the 
                                "Company") 
 
 
                           Delisting and Tender Offer 
 
 
1. Introduction and summary 
 
China Biodiesel (AIM:CBI), one of China's leading renewable energy companies, 
focused on research and development, production, and marketing of biodiesel as a 
substitute for diesel or petrochemical materials, announces that it will today 
be publishing a circular to Shareholders (the "Circular") proposing the 
following: 
 
(a)   the purchase by Evolution Securities of Ordinary Shares in the Company at 
16.5 pence per Ordinary Share by way of a Tender Offer; 
 
(b)   the buyback by the Company as an on-market purchase of the Ordinary Shares 
purchased by Evolution Securities pursuant to the Tender Offer; and 
 
(c)   the cancellation of admission of its Ordinary Shares to trading on AIM. 
 
The Circular will be available on the Company's website shortly at 
www.chinabiodiesel.cn.  Terms defined in the Circular have the same meanings in 
this announcement. 
 
2. Background to and reasons for the Proposals 
 
The share price performance of the Company has recently been disappointing and a 
source of frustration for the Board. The Directors believe that the development 
of the business and its growth potential has not been adequately reflected in 
the value attributed by the public market to the Ordinary Shares. The Directors 
believe that the reasons for this under-valuation are multiple and complex, but 
principally include a lack of liquidity (common to many small cap companies) 
impacted by the structure of the Company's share register and also a lack of 
interest in Chinese small cap companies. After careful consideration, the 
Directors have therefore concluded that it is in the best interests of the 
Company and Shareholders if the Company's admission to trading on AIM is 
cancelled. 
 
Your Board has therefore concluded that the costs and regulatory requirements 
associated with maintaining admission to AIM are a significant burden on the 
Company's financial resources and outweigh the benefits gained from maintaining 
admission. The costs involved with maintaining admission include fees paid to 
the Company's nominated adviser and Registrars, annual fees paid to the London 
Stock Exchange, costs relating to public announcements, fees and expenses of 
Directors and fees and expenses of accountants and lawyers engaged to provide 
services in connection with the Ordinary Shares being traded on AIM. 
 
Therefore, your Board believes that the costs of the Company's current admission 
to AIM outweigh the benefits and that, accordingly, it would be in the best 
interests of the Company and Shareholders as a whole if the Company's admission 
to trading on AIM was cancelled. The Company will submit a notice to cancel its 
admission to trading on AIM shortly after the Extraordinary General Meeting 
(assuming that the relevant Resolution is passed). 
 
The principal effect of the Delisting is that Shareholders will no longer be 
able to buy and sell Ordinary Shares through a public stock market and 
consequently that liquidity in the Ordinary Shares will be very limited. It is 
for this reason that the Tender Offer is being made, further details of which 
are set out in paragraph 4 below. 
 
3. The Delisting 
 
Your Board has concluded that it would be in the best interests of the Company 
to cancel trading in the Ordinary Shares on AIM. Should the Delisting be 
approved, the Company intends to act in a manner befitting a company whose 
shares no longer trade through a public market. Those that remain Shareholders 
after the Delisting will need to be aware of the implications of this. 
 
The principal effects that the Delisting would have on Shareholders are as 
follows: 
 
·      there will no longer be a formal market mechanism enabling the 
Shareholders to trade their Ordinary Shares through the AIM market. The 
Company's Depositary Interest and CREST facility will be cancelled and the 
volume of trading in the Ordinary Shares is likely to be severely reduced; 
 
·      the Company will not be bound to announce material events, nor announce 
interim or final results; and 
 
·      the Company will no longer be required to comply with any of the 
corporate governance requirements for companies traded on AIM. 
 
Upon the successful completion of the Delisting, the Depositary Interest 
facility will no longer be available, and Depositary Interests will be cancelled 
in accordance with the terms of the Deed Poll. It is therefore proposed to 
cancel the Depositary Interest facility for Depositary Interest Holders shortly 
following the Delisting. Following this time, Ordinary Shares will only be 
capable of being held and transferred in certificated form. 
 
Following the Delisting, as the Ordinary Shares will no longer be traded on a 
public market, the Company intends to use reasonable endeavours to facilitate 
introductions and communication among any remaining Shareholders who wish to 
sell their Ordinary Shares and those persons who wish to purchase Ordinary 
Shares. To do this Shareholders or persons wishing to acquire Ordinary Shares 
will be able to leave an indication with the Company that they are prepared to 
buy and sell Ordinary Shares at a specified price. In the event that the Company 
is able to match that order with an opposite sell or buy instruction, the 
Company would contact both parties to effect the order. In carrying out such 
activities, the Company will take no responsibility to match-up Shareholders 
wishing to sell and purchase Ordinary Shares, and no responsibility in respect 
of the time frame in which introductions or communications (if any) are made. 
 
The contact details of the Company are set out on the Company's website, 
www.chinabiodiesel.cn. 
 
Under the AIM Rules for Companies, the Delisting can only be effected by the 
Company after the passing of a resolution approved by at least 75 per cent. of 
the votes cast by Shareholders (present in person or by proxy) in a general 
meeting, and the expiration of a period of 20 Business Days from the date on 
which notice of the Delisting is given. In addition, a period of at least five 
Business Days following approval of the Delisting is required before the 
Delisting may be put into effect. 
 
The first resolution contained in the Notice of EGM seeks Shareholders' approval 
for the Delisting by way of a special resolution. The Company has received 
irrevocable undertakings from certain Directors and senior management holding, 
in aggregate, 34,383,285 Ordinary Shares, representing 75.71 per cent. of the 
Existing Issued Shares, to vote in favour, or procure that their Ordinary Shares 
are voted in favour, of the Delisting. 
 
 
 
 
Those Directors and senior management who have given irrevocable undertakings to 
vote in favour, or procure that their Ordinary Shares are voted in favour, of 
the Delisting are set out below: 
 
+------------------------------------+------------+------------+ 
| Shareholder                        |     Number | Percentage | 
|                                    |         of |         of | 
|                                    |   Ordinary |   Existing | 
|                                    |     Shares |     Issued | 
|                                    |            | Shares (%) | 
|                                    |            |            | 
+------------------------------------+------------+------------+ 
| Huodong Ye                         | 33,772,785 |     74.37% | 
+------------------------------------+------------+------------+ 
| Gloria (Zhengling) He              |    265,000 |      0.58% | 
+------------------------------------+------------+------------+ 
| James (Gaoxiang) Wang              |    345,500 |      0.76% | 
+------------------------------------+------------+------------+ 
 
Assuming that Shareholders approve this resolution, it is proposed that the 
Delisting would take place on 15 July 2010. 
 
Shareholders should note that there is no minimum acceptance level which must be 
reached under the Tender Offer to prevent the Board from continuing with the 
Delisting. 
 
4. Tender Offer 
 
The Board considers that the Tender Offer: 
 
·      provides an opportunity for Tender Offer Shareholders to tender their 
Ordinary Shares prior to the Delisting; 
 
·      allows Tender Offer Shareholders the opportunity to dispose of Ordinary 
Shares efficiently, free of dealing costs and stamp duty (which will be borne by 
the Company); and 
 
·      provides a return of cash now, compared to the alternative of solely 
being exposed to the financial risks of the ongoing operations of the Company. 
 
The Tender Offer Price represents: 
 
 
·      a premium of 50.0 per cent. to the closing price of 11.0 pence per 
Ordinary Share on 10 June 2010, being the last business day prior to the Company 
announcing the Tender Offer; 
 
·      a premium of 49.3 per cent. to the average closing price of 11.1 pence 
per Ordinary Share over the three month period ending 10 June 2010 being the 
last business day prior to the Company announcing the Tender Offer; and 
 
·      a premium of 64.7 per cent. to the average closing price of 10.0 pence 
per Ordinary Share over the six month period ending 10 June 2010 being the last 
business day prior to the Company announcing the Tender Offer. 
 
In light of the limited trading volumes in the Ordinary Shares and the proposed 
Delisting which will reduce trading opportunities further, the Directors believe 
that the Tender Offer provides Shareholders with an opportunity to sell their 
Ordinary Shares which might not otherwise have been available in current market 
conditions. 
 
Details on the Tender Offer 
 
The Tender Offer is to be effected by Evolution Securities offering to purchase 
the Tender Offer Shares as principal and then selling such Tender Offer Shares 
on the London Stock Exchange to the Company for cancellation at the same price 
pursuant to the Repurchase Agreement subject, inter alia, to the Repurchase 
being approved by Shareholders. 
 
The Tender Offer is also conditional upon certain solvency conditions relating 
to the Company, as set out in paragraph 16 of the "Terms and Conditions of the 
Tender Offer" in Part 3 of the Circular. 
 
Ordinary Shares purchased by Evolution Securities pursuant to the Tender Offer 
will be acquired with full title guarantee, free of all liens, charges, 
restrictions, claims, equitable interests and encumbrances and together with all 
rights attaching to them. 
 
The Tender Offer will be open to all Certificated Shareholders on the Company's 
share register and Depositary Interest Holders on the Tender Offer Record Date. 
Certificated Shareholders and Depositary Interest Holders may participate in the 
Tender Offer in respect of all, but not part only, of their registered holdings 
of Ordinary Shares, registered in their name on the Tender Offer Record Date. 
The Ordinary Shares purchased under the Tender Offer will then be cancelled once 
purchased by the Company pursuant to the terms of the Repurchase Agreement. 
 
The Company and Evolution Securities have received irrevocable undertakings from 
the following Directors and senior management that they will not accept or will 
procure the non-acceptance of the Tender Offer in respect of their holding of 
Ordinary Shares: 
 
+------------------------------------+------------+------------+ 
| Shareholder                        |     Number | Percentage | 
|                                    |         of |         of | 
|                                    |   Ordinary |   Existing | 
|                                    |     Shares |     Issued | 
|                                    |            | Shares (%) | 
|                                    |            |            | 
+------------------------------------+------------+------------+ 
| Huodong Ye                         | 33,772,785 |     74.37% | 
+------------------------------------+------------+------------+ 
| Gloria (Zhengling) He              |    265,000 |      0.58% | 
+------------------------------------+------------+------------+ 
| James (Gaoxiang) Wang              |    345,500 |      0.76% | 
+------------------------------------+------------+------------+ 
 
Accordingly, the maximum number of Ordinary Shares which may be purchased in the 
Tender Offer is 
11,028,480 Ordinary Shares, representing 24.29 per cent. of the Existing Issued 
Shares. 
 
Further details of the Tender Offer are set out in Part 3 of the Circular. 
 
5. Repurchase 
 
In contrast to the position for companies registered in England and Wales, under 
BVI law, shareholder approval is not generally required for a company to buy 
back its own shares. A BVI company such as the Company is able to buy back its 
own shares provided its directors are so authorised in its memorandum of 
association or its articles of association, but only from surplus and provided 
the directors determine that immediately following the purchase the company will 
be able to pay its liabilities as they become due in the ordinary course of its 
business and the realisable value of the assets of the Company will not be less 
than the sum of its liabilities other than deferred taxes, as shown in the books 
of the account, and its capital. The Articles require a repurchase of shares to 
be authorised by the members. In this instance, the Directors were granted a 
limited authority from Shareholders at the Annual General Meeting in accordance 
with the Articles to effect market purchases of its own shares, but this is 
insufficient to effect the Tender Offer and, accordingly, your Board has 
resolved to seek Shareholders' authority to effect the buy back of the Ordinary 
Shares purchased by Evolution Securities following the closing of the Tender 
Offer. The Directors have determined that the Company has sufficient surplus 
from which to fund the Repurchase, that following the Repurchase the Company 
will be able to satisfy its liabilities as they fall due in the ordinary course 
of its business and that the realisable value of the assets of the Company will 
not be less than the sum of its total liabilities other than deferred taxed as 
shown in the books of account, and its capital. 
 
The second resolution contained in the Notice of EGM seeks Shareholders' 
approval for the Repurchase by way of an ordinary resolution. The Company and 
Evolution Securities have received irrevocable undertakings from the following 
Directors and senior management that they will vote in favour, or procure that 
their Ordinary Shares are voted in favour, of the Repurchase: 
 
+------------------------------------+------------+------------+ 
| Shareholder                        |     Number | Percentage | 
|                                    |         of |         of | 
|                                    |   Ordinary |   Existing | 
|                                    |     Shares |     Issued | 
|                                    |            | Shares (%) | 
|                                    |            |            | 
+------------------------------------+------------+------------+ 
| Huodong Ye                         | 33,772,785 |     74.37% | 
+------------------------------------+------------+------------+ 
| Gloria (Zhengling) He              |    265,000 |      0.58% | 
+------------------------------------+------------+------------+ 
| James (Gaoxiang) Wang              |    345,500 |      0.76% | 
+------------------------------------+------------+------------+ 
 
Under the terms of the Repurchase Agreement, the Company has agreed to purchase 
from Evolution Securities such number of Ordinary Shares as Evolution Securities 
acquires from Tender Offer Shareholders pursuant to the Tender Offer at a price 
per Ordinary Share equal to the Tender Offer Price. The Repurchase Agreement is 
conditional, inter alia, upon the Tender Offer becoming unconditional in all 
respects (save in respect of any condition relating to the Repurchase Agreement 
becoming unconditional) and not being terminated by 30 July 2010. In the event 
that the conditions to the Repurchase Agreement are not satisfied by 30 July 
2010 (or such date as Evolution Securities shall determine pursuant to the 
Repurchase Agreement), the Repurchase Agreement shall terminate. 
 
Subject to satisfaction of these conditions, completion of the Repurchase 
Agreement shall take place on 14 July 2010. On completion of the Repurchase 
Agreement, the Company will acquire such title in the Ordinary Shares as 
Evolution Securities acquired in those Ordinary Shares purchased from Tender 
Offer Shareholders pursuant to the Tender Offer. 
 
The Company has given certain warranties in favour of Evolution Securities (such 
warranties were given on the date the agreement was entered into and will be 
repeated immediately prior to completion of the Repurchase). In the event that 
these warranties are breached prior to completion Evolution Securities has the 
right to terminate the Repurchase Agreement. 
 
The Company has also entered into an escrow account instruction letter pursuant 
to which the amount payable to the Shareholders participating in the Tender 
Offer and certain costs and expenses which has been deposited into the escrow 
account by the Company and will be released to Evolution Securities in 
satisfaction of the Company's obligation to make payment for the Ordinary Shares 
to be purchased from Evolution Securities under the terms of the Repurchase 
Agreement. 
 
6. Dividend 
 
On 19 April 2010, the Company announced a final dividend of RMB0.0253 per 
Ordinary Share for the year ended 31 December 2009, which was approved by 
Shareholders at the Company's Annual General Meeting on 2 June 2010. 
 
For simplicity, the Company has determined to align the record and payment dates 
for both the Tender Offer and the final dividend for the year ended 31 December 
2009. Accordingly, the record date and payment date for the dividend for the 
year ended 31 December 2009 have been changed from 18 June 2010 and 5 July 2010 
to 23 June 2010 and 14 July 2010, respectively, to align them with those of the 
Tender Offer. Whether or not Shareholders tender their Ordinary Shares under the 
Tender Offer, they will still be eligible for the dividend. 
 
As announced on 2 June 2010, Mr Ye, Executive Chairman of the Company and 
beneficial owner of 33,772,785 shares (or 74.37 per cent. of the Existing Issued 
Share Capital), has opted not to take up his dividend entitlement. 
 
7.  Current Trading of the Company 
 
In order to assist shareholders in assessing the Proposals, the Directors 
believe it is appropriate to provide a trading update for the year to date. 
 
As set out in the preliminary results of the Company for the year ended 31 
December 2009 published on 19 April 2010, the Company experienced a strong 
recovery in trading during the second half of 2009. This recovery has continued 
into 2010 with increased sales volumes and higher year on year margin 
performance. 
 
Management expectations however remain cautious on the outlook of the Company 
due to its reliance on government grants, exposure to raw material price change 
and the overall global economic outlook which, as demonstrated in 2009, has a 
large impact on biodiesel demand. 
 
8. Expected Timetable of Events 
 
+----------------------------------------+------------------+ 
| Tender Offer commences                 |     11 June 2010 | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Tender Offer Record Date and record    |         close of | 
| date for the final dividend for the    |   business on 23 | 
| year ended 31 December 2009            |        June 2010 | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Transfer to escrow account of tendered |  1.00 p.m. on 23 | 
| Depositary Interests settled by        |        June 2010 | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Latest time and date for receipt of    |  1.00 p.m. on 25 | 
| Tender Forms from Certificated Holders |        June 2010 | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Announcement of take-up level under    |     28 June 2010 | 
| the Tender Offer                       |                  | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Latest time and date for receipt of    |   9.00 a.m. on 1 | 
| Forms of Instruction for the           |        July 2010 | 
| Extraordinary General Meeting          |                  | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Latest time and date for receipt of    |   9.00 a.m. on 4 | 
| Forms of Proxy for the Extraordinary   |        July 2010 | 
| General Meeting                        |                  | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Extraordinary General Meeting          |   9.00 a.m. on 6 | 
|                                        |        July 2010 | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Purchase of Tender Offer Shares under  |     14 July 2010 | 
| the Tender Offer and completion of the |                  | 
| Repurchase from Evolution              |                  | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| CREST accounts credited with, and      |     14 July 2010 | 
| despatch of cheques for, Tender Offer  |                  | 
| proceeds and the final dividend for    |                  | 
| the year ended 31 December 2009        |                  | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Cancellation of admission of Ordinary  |  7.00 a.m. on 15 | 
| Shares to trading on AIM               |        July 2010 | 
|                                        |                  | 
+----------------------------------------+------------------+ 
| Cancellation of Depositary Interest    |     23 July 2010 | 
| facility and Despatch of share         |                  | 
| certificates to those holders of       |                  | 
| Depositary Interests on the date of    |                  | 
| the cancellation of the Depositary     |                  | 
| Interest facility                      |                  | 
|                                        |                  | 
+----------------------------------------+------------------+ 
 
All times stated in this expected timetable of events are London times, unless 
otherwise stated. If any of the above times and/or dates change, the revised 
times and/or dates will be notified to Shareholders by announcement through a 
Regulatory Information Service. 
 
A telephone helpline has been established on 0870 707 4040 or, if calling from 
outside the United Kingdom, on [phone] to assist with enquiries from 
Shareholders. 
 
The helpline will be available between 9.00 a.m. and 5.00 p.m., Monday to 
Friday. The helpline is not able to advise on the merits of the Tender Offer nor 
to give financial, legal or tax advice. 
For further information 
Gloria He, CFO: [phone] 
 James Wang, Company Secretary: +86 (592) 
7191109 
Chris Clarke or Bobbie Hilliam 
 Evolution Securities: [phone] 
General 
 
Evolution Securities Limited ("Evolution Securities") is nominated adviser and 
broker to the Company for the purpose of the AIM Rules for Companies. Evolution 
Securities, which is authorised and regulated in the United Kingdom by the 
Financial Services Authority, is acting exclusively for the Company in relation 
to the Proposals. Evolution Securities is not acting for any other person in 
connection with the matters referred to in this announcement and will not be 
responsible to anyone other than the Company for providing the protections 
afforded to clients of Evolution Securities or for giving advice in relation to 
the matters referred to in this announcement. 
 
This announcement has been issued by the Company and is the sole responsibility 
of the Company.  This announcement has not been approved by Evolution Securities 
for the purposes of section 21 of the Financial Services and Markets Act 2000 
(as amended). 
 
This announcement does not constitute or form part of any offer or invitation to 
sell or issue, or any solicitation of any offer to purchase or subscribe for, 
any securities or any offer or invitation to sell or issue, or any solicitation 
of any offer to purchase or subscribe for, such securities by any person in any 
circumstances, and in any jurisdiction, in which such offer or solicitation is 
unlawful.  Accordingly, copies of this announcement are not being and must not 
be mailed or otherwise distributed or sent in or into or from the United States, 
Canada, Australia or Japan or any other jurisdiction if to do so would 
constitute a violation of the relevant laws of, or require registration thereof 
in, such jurisdiction or to, or for the account or benefit of, any United 
States, Canadian, Australian or Japanese person and any person receiving this 
announcement (including, without limitation, custodians, nominees and trustees) 
must not distribute or send it in or into or from the United States, Canada, 
Australia or Japan or any other jurisdiction if to do so would constitute a 
violation of the relevant laws of, or require registration thereof in, such 
jurisdiction. 
This announcement includes statements that are, or may be deemed to be, 
"forward-looking statements".  These forward-looking statements can be 
identified by the use of forward-looking terminology, including the terms 
"believes", "estimates", "plans", "projects", "anticipates", "expects", 
"intends", "may", "will", or "should" or, in each case, their negative or other 
variations or comparable terminology.  These forward-looking statements include 
matters that are not historical facts.  They appear in a number of places 
throughout this announcement and include statements regarding the Directors' 
current intentions, beliefs or expectations concerning, among other things, the 
Company's results of operations, financial condition, liquidity, prospects, 
growth, strategies and the Company's markets.  By their nature, forward-looking 
statements involve risk and uncertainty because they relate to future events and 
circumstances.  Actual results and developments could differ materially from 
those expressed or implied by the forward-looking statements.  Forward-looking 
statements may and often do differ materially from actual results.  Any 
forward-looking statements in this announcement are based on certain factors and 
assumptions, including the Directors' current view with respect to future events 
and are subject to risks relating to future events and other risks, 
uncertainties and assumptions relating to the Company's operations, results of 
operations, growth strategy and liquidity.  Whilst the Directors consider these 
assumptions to be reasonable based upon information currently available, they 
may prove to be incorrect.  Save as required by law or by the AIM Rules for 
Companies, the Company undertakes no obligation to publicly release the results 
of any revisions to any forward-looking statements in this announcement that may 
occur due to any change in the Directors' expectations or to reflect events or 
circumstances after the date of this announcement. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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