28th Mar 2007 07:04
Asian Citrus Holdings Ltd28 March 2007 For release at 7.00 a.m. 28 March 2007 This announcement is not for release, publication or distribution, directly orindirectly, in or into the United States, Canada, South Africa, Australia, Japanor any jurisdiction in which the same would be unlawful. This announcement isnot an offer of securities in the United States, Canada, South Africa,Australia, Japan or any jurisdiction in which the same would be unlawful. Asian Citrus Holdings Limited ("Asian Citrus" or "the Company") Proposed Placing to raise up to £30m Asian Citrus, the single largest orange plantation owner and operator in China,announces: • Proposed placing of New Ordinary Shares to raise up to £18 million net of expenses • In addition, certain Selling Shareholders intend to dispose of Ordinary Shares to raise up to £10 million • In aggregate, the Placing will raise up to £30 million • The proceeds from the New Ordinary Shares to be used to: • develop the proposed new plantation in Hunan province, estimated to cost approximately £35 million • enter the juicing business • invest in the existing business Mr. Tony Tong, Chairman commented: "The Directors believe the Company is poised for a phase of significantdevelopment and growth. This belief is underpinned by the increasing consumptionof oranges in the PRC and the growing demand for high quality oranges. Theproceeds from the Placing will enable the Group to take advantage of theopportunities to build on its market-leading position and further improve itsgrowth prospects." ENQUIRIES: JPMorgan Cazenove +44 (0) 207 588 2828(NOMAD & broker to Asian Citrus)Michael Wentworth-StanleyAlex Yule-SmithJames Mitford Weber Shandwick Financial +44 (0) 207 067 0700(PR for Asian Citrus)Terry GarrettHelen ThomasJohn Moriarty About Asian Citrus The Group is the single largest orange plantation owner and, as far as theDirectors are aware, the single largest orange producer in the PRC. Asian Citruscurrently owns and operates two orange plantations: the Hepu Plantation in HepuCounty in the Guangxi Zhuang Autonomous Region, occupying approximately 30.9 sq. km, and the Xinfeng Plantation in Xinfeng County in Jiangxi province, occupyingapproximately 37.1 sq. km. The Hepu Plantation produced approximately 111,201tonnes of oranges in the financial year ended 30 June 2006. The Directors expectthe development of the Xinfeng Plantation to be completed in June 2007 and theplantation's first commercial harvest to take place in November 2007. Proposed placing of ordinary shares of HK$0.10 each ("Ordinary Shares") to raiseup to £30m The Company is proposing to raise up to £18 million net of expenses by way of anon pre-emptive placing to institutional and other qualified investors of newOrdinary Shares ("New Ordinary Shares"). In addition, certain shareholders ofthe Company, Huge Market Investments Limited, Market Ahead Investments Limited,Metage Funds Limited, Metage Special Emerging Markets Funds Limited and Mr PangYi (together, the "Selling Shareholders"), intend to dispose of Ordinary Sharesto raise up to £10 million(1). In aggregate, the placing of the New OrdinaryShares and the sale of Ordinary Shares by the Selling Shareholders will raise upto £30 million (the "Placing" and "Placing Shares"). The issue of the New Ordinary Shares was approved by shareholders at an SGM heldon 15 March 2007. JPMorgan Cazenove is acting as sole bookrunner to the Placing. The Directors and the Selling Shareholders have agreed not to dispose, save incertain limited circumstances, of any interest in Ordinary Shares for a periodof six months following the Placing without the prior written consent ofJPMorgan Cazenove. In addition, the Company has undertaken not to issue anyOrdinary Shares, save as required pursuant to the exercise of options issuedunder its employee shares option plan, within the six-month period following thePlacing, without the prior consent of JPMorgan Cazenove. The Company, the Selling Shareholders and JPMorgan Cazenove have entered intothe placing agreement, pursuant to which JPMorgan Cazenove has agreed, subjectto certain conditions, to use its reasonable endeavours to procure subscribersor purchasers (as the case may be) for the Placing Shares and, having procuredsuch subscribers or purchasers and following the announcement of the Placingprice, to underwrite their obligation to pay for the Placing Shares. The Placingprice will be fixed following a bookbuilding period commencing immediately andexpected to end on Thursday 29 March 2007(2). The Directors have agreed in principle to seek an additional listing of theCompany on the Main Board of the Hong Kong Stock Exchange and the Board isworking with Cazenove Asia to assess the Group's eligibility for such a listing. The Placing will take place in accordance with the terms and conditions set outin the investment circular dated 28 March 2007 (the "Investment Circular") thatwill be circulated to all potential placees. -------------------------------------------------------------------------------(1) Or such other amount as may be agreed by the Company, the SellingShareholders and JPMorgan Cazenove (2) JPMorgan Cazenove reserves the right to close the bookbuilding and announceallocations at any earlier or later time with the consent of the Company------------------------------------------------------------------------------- Strategy The Group's primary focus is selling quality oranges at an affordable price andstrengthening its position as a leading orange producer in the PRC. The Company's strategy comprises: - increasing volume through higher production levels and sourcing from third parties; - building a national brand in the PRC; - increasing profitability by growing sales to supermarkets; and - expanding vertically by developing juicing and nursery businesses. Rationale and use of proceeds The Directors believe that the Company is poised for a phase of significantdevelopment and growth. This belief is underlined by the increasing levels oforange consumption in the PRC from a relatively low historical base, the growingdemand for high quality oranges, the potential to improve the Company's averagesale prices by increasing sales to supermarkets and the Company's strongcompetitive position against both overseas importers to the PRC and localproducers. The Directors believe that there are opportunities for the Company to build onits leading position and to further improve its growth prospects, namely: - its proposed new plantation in Hunan province; - its proposed entry into the juicing business; and - investing in the existing business. The Directors anticipate that the net proceeds of the Placing will be usedprincipally to finance, in part, the development of the Hunan Plantation, withthe majority of the remaining net proceeds allocated for investment in theGroup's proposed juicing business. Hunan Plantation To secure further supplies of oranges to meet the expected increase in demand,the Company has identified Hunan province as a suitable site for the developmentof a third orange plantation. On 12 March 2007, the Company signed a memorandumof understanding with the Hunan Government regarding plans for a plantation andhas reached agreement in principle on the terms of a proposed investmentagreement which would grant the Company, amongst other things, the right tonegotiate agreements directly with the local landowners for the lease ofapproximately 35 sq. km of land. Provided the Company is able to conclude a definitive investment agreement withthe Hunan Government and lease agreements with the local landowners, theDirectors expect the site to be fully developed, with approximately 2.4 millionorange trees by 2010. If the development of the Hunan Plantation proceeds onschedule, the Directors expect that the plantation's first commercial harvestwill be in approximately 2012. The Directors currently estimate the developmentof the Hunan Plantation is likely to cost approximately £35 million. The Placing is not conditional on the signing of the investment agreement withthe Hunan Government or the signing of the requisite lease agreements. If thedevelopment of the Hunan Plantation or a similar investment opportunity is notfound by the Board, Asian Citrus will consider methods of returning the fundsraised by the Company in the Placing to shareholders. Juicing The Company sees an opportunity to expand vertically and, in particular, toinvest in developing certain value-added products such as orange juice. As aresult of the increasing prosperity and disposable income in the PRC, theDirectors believe that demand for orange juice is growing and they have beenconsidering entering the juicing business to capitalise on this expectedincrease in demand. The strategy for these juicing operations is currently being finalised. TheGroup has already held certain discussions with potential strategic partnersabout juicing co-operation arrangements. Additional growth opportunities The Company's policy is also to invest actively in internal growth throughexpanding its existing operations: building the Asian Citrus brand; establishingsales offices to target the national supermarkets; and securing sources ofadditional oranges to fulfil any demand for the Group's oranges over and abovethe Group's own production. Finally, the Board is investigating other investment opportunities, including anumber of small potential acquisitions with a view to enhancing the Group'ssourcing and distribution of oranges. Conversion As part of the secondary sale, Metage Funds Limited and Metage Special EmergingMarkets Funds Limited have indicated that they intend to give notice to theCompany of their decision to convert, under the terms of convertible bonds due2008 issued by the Company (the "Metage Notes"), HK$38.5 million and HK$17.5million in principal amount respectively, into 3.4 million Ordinary Shares (the"Conversion Shares") part of which are for sale in the Placing (such notice totake effect on or prior to the announcement of the Placing price). The Company has signed a letter dated 28 March 2007 (the "Conversion NoticePeriod Waiver") agreeing that the requirement to give five days' notice toeffect conversion of the Metage Notes in accordance with their terms be waived.The Directors (with the exception of Peregrine Moncreiffe who, for the purposesof the Conversion Notice Period Waiver, is a related party under the AIM Rules)consider, having consulted with JPMorgan Cazenove, that the terms of theConversion Notice Period Waiver are fair and reasonable insofar as shareholdersare concerned. Application for listing and admission to trading The New Ordinary Shares and the Conversion Shares will, when issued, be creditedas fully paid and will rank pari passu in all respects with the existingOrdinary Shares, including the right to receive all dividends and otherdistributions declared, paid or made after the date of admission. The Company has applied to the London Stock Exchange for the New Ordinary Sharesand Conversion Shares to be admitted to trading on AIM ("Admission"). It isexpected that Admission will become effective and that dealings will commence on3 April 2007. The Placing will be conditional upon Admission becoming effective and thePlacing Agreement becoming unconditional in all respects, and not having beenterminated in accordance with its terms, prior to 8.00 a.m. on 3 April 2007 (orsuch later date and/or time as may be agreed between the Company and JPMorganCazenove, being not later than 8.00 a.m. on 30 April 2007). APPENDIX This announcement is for information only and does not constitute an offer orinvitation to underwrite, subscribe for or otherwise acquire or dispose of anysecurities or investment advice in any jurisdiction. This announcement shouldnot be relied upon in connection with any decision to acquire Placing Shares orother securities in the capital of the Company. Past performance is no guide tofuture performance. Persons needing advice should consult an independentfinancial adviser. This announcement is only addressed to and directed at persons in member statesof the European Economic Area ("EEA") who are "qualified investors" ("QualifiedInvestors") within the meaning of Article 2(1)(e) of the EU Prospectus Directive(Directive 2003/71/EC) (the "Prospectus Directive"). Any person in the EEA whoacquires any securities in the Placing or to whom any offer of securities ismade will be deemed to have acknowledged and agreed that they are such aQualified Investor. The Company and JPMorgan Cazenove and their respective affiliates, will relyupon the truth and accuracy of the foregoing representations, warranties,acknowledgements and agreements. Certain statements in this announcement are forward-looking statements. Suchstatements speak only as at the date of this announcement, are based on currentexpectations and beliefs and, by their nature, are subject to a number of knownand unknown risks and uncertainties that could cause actual results andperformance to differ materially from any expected future results or performanceexpressed or implied by the forward-looking statement. The information containedin this announcement is subject to change without notice and neither the Companynor JPMorgan Cazenove assume any responsibility or obligation to update publiclyor review any of the forward-looking statements contained herein. This announcement has been issued by and is the sole responsibility of theCompany. JPMorgan Cazenove and its respective affiliates and agents shall haveno liability for any information contained in it relating to the Company. JPMorgan Cazenove, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting exclusively for the Company and theSelling Shareholders and no one else in connection with the Placing andAdmission and will not be responsible to any other person as its client or beresponsible to any other person for providing the protections afforded toclients of JPMorgan Cazenove or for providing advice in relation to the Placingor in relation to the contents of this announcement or for any othertransaction, arrangement or matters referred to in this announcement. If a Placee indicates to JPMorgan Cazenove that it wishes to participate in thePlacing by making an oral offer to acquire Placing Shares it will be deemed tohave read and understood this Appendix and the Investment Circular in theirentirety and to be making such offer on the terms and conditions, and to beproviding the representations, warranties, agreements and acknowledgements,contained in this Appendix and the Investment Circular. In particular each suchPlacee represents, warrants and acknowledges that it is a Relevant Person (asdefined below) and undertakes that it will acquire, hold, manage and dispose ofany Placing Shares that are allocated to it for the purposes of its businessonly. Further, each such Placee represents, warrants and agrees that (a) if itis a financial intermediary, as that term is used in Article 3(2) of theProspectus Directive, that the Placing Shares subscribed for and/or purchased byit in the Placing will not be acquired on a non-discretionary basis on behalfof, nor will they be acquired with a view to their offer or resale to, personsin circumstances which may give rise to an offer of securities to the publicother than an offer or resale in a member state of the EEA which has implementedthe Prospectus Directive to Qualified Investors, or in circumstances in whichthe prior consent of JPMorgan Cazenove has been given to each such proposedoffer or resale; and (b) it is outside the United States and is subscribing forthe Placing Shares for its own account or is purchasing the Placing Shares foran account with respect to which it exercises sole investment discretion andthat it (and any such account) is outside the United States, within the meaningof Regulation S under the US Securities Act of 1933, as amended (the "SecuritiesAct"); or if it is not outside the United States, it is, or is purchasing thePlacing Shares for an account with respect to which it exercises sole investmentdiscretion and that it (and any such account) is a qualified institutional buyer('QIB') as such term is defined in Rule 144A under the Securities Act. This announcement (including this Appendix) and the Investment Circular do notconstitute an offer to sell or issue or the invitation or solicitation of anoffer to buy or subscribe for Placing Shares in any jurisdiction including,without limitation, the United Kingdom, the United States, Canada, South Africa,Australia or Japan. This announcement and the information contained herein isnot for release, publication or distribution, directly or indirectly, to personsin the United States, Canada, South Africa, Australia or Japan or anyjurisdiction in which the same is unlawful. In particular, the Placing Shares referred to in this Announcement and theInvestment Circular have not been and will not be registered under theSecurities Act and may not be offered, sold or transferred within the UnitedStates except pursuant to an exemption from, or as part of a transaction notsubject to, the registration requirements of the Securities Act. Any offering tobe made in the United States will be made to a limited number of QIBs or to anon-US person (under Regulation S) in a transaction exempt from registrationunder the Securities Act. The Placing Shares are being offered and sold outsidethe United States in accordance with Regulation S under the Securities Act. ThePlacing Shares have not been approved or disapproved by the US Securities andExchange Commission, any state securities commission in the United States orother regulatory authority in the United States, nor have any of the foregoingauthorities passed upon or endorsed the merits of the Placing or the accuracy oradequacy of this announcement. Any representation to the contrary is a criminaloffence in the United States. The distribution of this announcement and the placing of Placing Shares incertain other jurisdictions may be restricted by law. No action has been takenby JPMorgan Cazenove or the Company that would permit an offer of the PlacingShares or possession or distribution of this announcement or any other offeringor publicity material relating to the Placing Shares in any jurisdiction whereaction for that purpose is required. Persons into whose possession thisannouncement comes are required by JPMorgan Cazenove and the Company to informthemselves about and to observe any such restrictions. IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY Members of the public are not eligible to take part in the placing. Thisannouncement, this appendix and the terms and conditions set out herein are forinformation purposes only and are directed only at persons whose ordinaryactivities involve them in acquiring, holding, managing and disposing ofinvestments (as principal or agent) for the purposes of their business and whohave professional experience in matters relating to investments and are personswho: (a) fall within Article 19(5) of the Financial Services and Markets Act2000 (financial promotion) Order 2005, as amended ("The Order") or are personsfalling within Article 49(2)(a) to (d) ("High Net Worth Companies,Unincorporated Associations, etc") of the Order, and (b) are qualified investorswithin the meaning of Section 86(7) of the Financial Services and Markets Act2000, as amended ("FSMA"); and (c) have been invited to participate in theplacing by JPMorgan Cazenove (all such persons together being referred to as"Relevant Persons"). This announcement and this Appendix and the terms and conditions set out hereinmust not be acted on or relied on by persons who are not Relevant Persons.Persons distributing the announcement and this Appendix must satisfy themselvesthat it is lawful to do so. Any investment or investment activity to which thisAppendix and the terms and conditions set out herein relates is available onlyto Relevant Persons and will be engaged in only with Relevant Persons. Thisannouncement and this Appendix do not themselves constitute an offer for sale orsubscription of any securities in the Company. The placing shares have not beenand will not be registered under the Securities Act or under the laws of anystate of the United States, and may not be offered, sold or transferred directlyor indirectly, within the United States except pursuant to an exemption from, orin a transaction not subject to, the registration requirements of the SecuritiesAct and the Securities Laws of any applicable state in the United States, theOffering is being made only to a limited number so "Qualified InstitutionalBuyers" in reliance on Rule 144A under the Securities Act. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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