Adamas Finance Asia Limited Disposal of Interest in Global Pharm & GM Notice (5305R)

TIDMADAM

RNS Number : 5305R

Adamas Finance Asia Limited

15 June 2018

ADAMAS FINANCE ASIA LIMITED

(the "Company" or "ADAM")

Disposal of Interest in Global Pharm & Notice of General Meeting

Adamas Finance Asia Limited, the London quoted pan-Asian diversified investment vehicle, announces that, further to the announcement on 27 April 2018, the Company has agreed revised terms for the disposal of its interest in Global Pharm Holdings Inc. ("Global Pharm") to Fortune Insight Limited ("Fortune") (the "Disposal").

The Disposal is in line with the Company's objective of a managed disposal programme of its legacy portfolio where commercially viable and reinvesting the proceeds in pan-Asian income producing assets with capital gain potential.

   1.    Background 

The Company acquired its interest in Global Pharm, which comprised a convertible bond with a principal value of US$22.35 million (the "GP Interest") in a reverse takeover in February 2014.

In December 2014, the Company and Global Pharm agreed the redemption of the bond for aggregate consideration of US$25 million with an initial payment of US$2.4 million on 31 December 2014, a further US$9 million on 31 March 2015 and a final payment of US$13.6 million on 30 April 2015.

Global Pharm did not comply with the agreed redemption schedule and made payments of approximately US$6.01 million in part-redemption of the bond.

Because of the continuing failure of Global Pharm to make payments, in mid-2017 the Company instructed a leading law firm in Hong Kong to advise on the actions available to enforce payment. The work by the lawyers included the commissioning of an investigative agency. In an announcement on 4 August 2017, the Company noted that, considering the report from the law firm, the amount of ultimate recovery from the GP Interest was in doubt.

On 15 September 2017, ADAM announced the disposal of the GP Interest to Fortune for cash consideration of US$15.6 million. The GP Interest was transferred to Fortune at that time with the cash consideration due within 120 days.

Payment was delayed and on 27 April 2018 the Company announced that it had been notified by Fortune that, as a result of a change in the identity of the principal investor in a fundraising being undertaken by Fortune, it was no longer in a position to complete the acquisition of the GP Interest on the agreed terms.

   2.    Revised Terms 

The revised terms, contained in a deed of amendment to the original sale and purchase agreement, involve a cash payment to be made by Fortune to the Company of US$3 million. In addition, the Company intends to issue 17,746,479 new ordinary shares of no par value each ("Ordinary Shares") to Fortune at a subscription price of US$0.71 thereby raising US$12.6 million (the "Subscription Monies"), meaning a total cash receipt for the Company of US$15.6 million.

The issue of the Ordinary Shares is subject to shareholders approving resolutions to increase the Company's share capital available for issue which are be put to shareholders at a general meeting to be held at 10.00 a.m. BST/ 5.00 p.m. HKT time on 11 July 2018 (the "General Meeting").

Although the terms of the Disposal have changed, the Company will receive the same amount of cash as under the previous deal terms.

The GP Interest was valued at US$15.6 million in the half yearly report for the six months ended 30 June 2017. The Company will therefore incur an additional balance sheet write-down of approximately US$12.6 million in the results for the year ended 31 December 2017.

Due the resulting size of Fortune's shareholding upon completion of the Disposal, the Company, Fortune, WH Ireland Limited and FinnCap Limited will enter into a concurrent six-month lock in and six-month orderly marketing arrangement, which are each subject to customary exceptions and limitations.

   3.    Share Capital Authority 

The current authority given to Directors pursuant to the resolutions passed at the Company's last annual general meeting to issue and allot Ordinary Shares is insufficient to allow the Company to complete the proposed share issue to Fortune and accordingly resolutions will therefore be proposed at the General Meeting to increase the share capital of the Company to allow it to complete the Disposal.

   4.    Related Party Transaction 

Due to Fortune being managed by affiliates of Adamas Asset Management (HK) Limited, which also manages the Company's largest shareholder, Elypsis Solutions Limited, the Disposal is classified as a related party transaction under the AIM Rules.

The Directors, having consulted with WH Ireland Limited, the Company's nominated adviser, consider that the terms of the Disposal are fair and reasonable insofar as Shareholders are concerned.

   5.     Circular 

A circular convening the General Meeting will be posted to shareholders today and will be available on the Company's website.

John Croft, Chairman of the Company, stated:

"This marks a significant milestone for ADAM as we refocus our investment strategy, exiting legacy investments such as Global Pharm.

"We can now focus on returning the Company to growth as we continue to pursue our new investment strategy under the guidance of investment manager, Harmony Capital."

Enquiries:

 
Adamas Finance Asia Limited 
John Croft                   [phone] 
WH Ireland Limited - Nominated Adviser 
Tim Feather 
 James Sinclair-Ford        [phone] 
finnCap Limited - Broker 
William Marle 
 Grant Bergman              [phone] 
Buchanan - Financial PR 
 Charles Ryland 
 Henry Wilson               [phone] 
 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

About Adamas Finance Asia

ADAM is a London quoted investment company focusing on delivering long-term income and capital growth to shareholders through a diverse portfolio of pan-Asian investments. It aims to provide uncorrelated returns through a combination of capital growth and dividend income from a broad spectrum of national geographies and asset classes.

The Company's investment manager, Harmony Capital, which has a dedicated team with real Asian expertise, is focused on the strategy of creating income and capital growth. Harmony Capital is sourcing predominately private opportunities and has created a strong pipeline of income generating assets include potential investments in fintech, healthcare, property, mining, pharmaceuticals and telecoms across Asia.

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June 15, 2018 03:36 ET (07:36 GMT)