27th Aug 2008 07:00
27 August 2008
Origo Sino-India PLC
Guarantee to Primary Holdings International
Origo Sino-India Plc ("Origo" or the "Company") (LSE: OSI) is pleased to announce it has entered into a financing arrangement with Primary Holdings International Group Pty Ltd and its associated companies (collectively referred to "PHI"), a group formed to purchase, lease and operate farmland properties in Australia.
PHI's strategy is to build a diversified portfolio of farmland properties in Australia from which it can supply a full range of premium soft commodities for export to the growing markets of China and India. PHI intends to acquire under-utilised farmland with secure water rights where its experienced management team sees the opportunity to improve capacity, yield, and capital value through the application of improved management techniques and targeted capital expenditure.
PHI will lease acquired properties to professional local partners who will be responsible for day-to-day management of the farms and incentivised to improve yields via irrigation, management, new technology and economies of scale. PHI will support lessees by providing group-level functions covering management, finance, logistics, marketing and sales. In addition, PHI also expects to be able to generate further returns via the optimisation of infrastructure and water management across its portfolio. This structure should allow PHI to reduce risks related to climatic conditions and global commodity markets, while generating lease fees linked to improving yields of the land. PHI is initially targeting properties in Queensland and the Northern Territory with secure water resources, efficient logistical infrastructure and access to China and India.
Under the terms of the agreement, Origo will provide PHI with a guarantee of up to AU$11 million for the purpose of funding the acquisition of certain properties in southern Queensland. The guarantee is secured against a mortgage over the targeted properties and will lapse upon PHI having raised equity financing equal to the guaranteed amount, which it expects to do with the assistance of Origo. If called upon, the amount is repayable within 45 days from the disbursement of funds, and carries a coupon of 15 percent per annum. Origo will fund the payment of the amount, if required, from its existing cash resources.
Commenting on today's announcement Chris Rynning, CEO of Origo, said:
"Rising demand from China and India has been one of the key drivers of spiralling global food prices in the last few years. PHI's business model offers investors the opportunity to participate in the supply of "soft-commodities" to these markets through a low-risk sale and lease business model which combines stable, incremental revenues with long-term capital appreciation. We are in active discussion with PHI to form a closer partnership, including a potential equity investment, aimed at extending PHI's business model down-stream in the value-chain by assisting in placing produce in China and India."
ENDS
Further information:
|
Origo Sino-India PLC Chris Rynning |
+86 1390 124 6417 |
|
Nominated Adviser: Smith & Williamson Corporate Finance Limited Azhic Basirov |
+44 (0)20 7131 4000 |
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Broker: Liberum Capital Limited Simon Atkinson |
+44 (0)20 3100 2223 |
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Public Relations : Aura Financial Michael Oke/Andy Mills |
+44 (0)20 7321 0000 |
Notes to editors:
Origo Sino-India PLC ("Origo"):
Origo is an established private equity investor and strategic consultancy business, which provides its shareholders with exposure to growth opportunities and private equity returns in China and India.
Origo's business model is to generate capital gains from private equity investment in growth companies from which it also generates fees for consultancy services related to further fundraisings, M&A and strategic development.
Origo is aligned with two major financial institutions which provide a source of high quality deal flow. In China, Origo works closely with China Equity, a leading private equity firm, whose chief executive is a member of Origo's board. In India, Origo has entered into a memorandum of understanding with SBI Capital Markets, one of the longest established companies in the Indian Capital Markets. A former chairman of the State Bank of India is also a member of the board of Origo.
Through a placement of new Origo ordinary shares in March 2008, funds managed by GLG Partners LP invested approximately £17 million bringing their total stake in Origo to approximately 29.6% of the Company's outstanding share capital.
Origo also signed a memorandum of understanding with GLG Partners LP in March 2008 to explore asset management and advisory opportunities in China, India and other markets.
On its admission to AIM in December 2006 Origo raised GBP12.8 million gross of new money via a placing of 25,673,238 Ordinary Shares at 50 pence per share. Each ordinary share carried a warrant exercisable at 55p.
Origo has a significant portfolio of investments in a range of industrial sectors, including mobile applications and content; natural resources; art and paper products; furniture; food and beverage; online gaming; anti-virus software; and bio energy.
Related Shares:
OPP.L