TIDMARCH

RNS Number : 7896U

ARC Capital Holdings Limited

30 December 2011

ARC Capital Holdings Limited

30 December 2011

ARC Capital Holdings Limited

Sale of Orient Home Retail

ARC Capital Holdings Limited ("ARCH") (AIM: ARCH) is pleased to announce that on 29 December 2011, it completed the sale of its equity interest in Orient Home Decoration & Building Materials ("Orient Home Retail" or the "Company") to a domestic Chinese strategic investor ("DCSI") for a nominal consideration. The DCSI has acquired ARCH's interest in Orient Home Retail and has assumed all of its related obligations and liabilities, including the unfunded commitment of ARCH Household Ltd. (a single purpose limited liability company established to hold ARCH's equity interest in the Company) to fund Orient Home Retail's working capital needs. ARCH may recover part of the value of its original investment in Orient Home Retail through an upside sharing arrangement with the DCSI, in addition to recovering its previous RMB100 million bridge loan issued to the Company in July 2011, once the DCSI fulfills the Company's working capital needs. In August 2008, ARCH invested a total of US$83.9 million to acquire 65% of the Company's home improvement retailing business with an additional RMB100 million bridge loan issued to the Company in July 2011. In September 2011, ARCH's Valuation Committee had written down ARCH's equity and debt investments in the Company to nil.

As part of the transaction, ARCH is providing the DCSI with a one-year, RMB100 million bridge loan. This loan is to be used by the DCSI to meet Orient Home Retail's urgent short term working capital needs during the transition of ownership. The DCSI will repay this loan once it has successfully renewed Orient Home Retail's bank loans and has injected additional capital into the Company.

ARCH believes the sale of Orient Home Retail to the DCSI is the best possible outcome because:

-- The DCSI has assumed all obligations of ARCH Household Ltd. to provide Orient Home Retail with the capital necessary to stabilise and expand its business and reduce its debt, thereby relieving ARCH of any further commitment to the Company.

-- The DCSI will support the renewal of Orient Home Retail's bank loans by providing a guarantee and has already done so.

-- The DCSI has other businesses that have synergies with the Orient Home Retail operation which could assist in the turnaround of the Company and the eventual partial recovery of ARCH's original investment through the upside sharing arrangement with the DCSI.

For more information, please contact:

 
 MANAGER:                        NOMINATED ADVISER: 
  Allan Liu, Managing Partner     Philip Secrett 
  ARC Capital Partners Limited    Grant Thornton Corporate 
  T: (852) 2918 0088              Finance 
  F: (852) 2918 0881              T: (44) 20 7383 5100 
  aliu@pagasia.com                Philip.J.Secrett@uk.gt.com 
------------------------------  ---------------------------- 
 BROKER:                         MEDIA RELATIONS: 
  Hiroshi Funaki                  Stephanie Barry 
  LCF Edmond de Rothschild        T: (852) 3719 3375 
  Securities                      sbarry@pagasia.com 
  T: (44) 20 7845 5960 
  F: (44) 20 7845 5961            INVESTOR RELATIONS: 
  funds@lcfr.co.uk                Chong Min Yi 
                                  T: (852) 3719 3319 
  Numis Securities Limited        cyi@pagasia.com 
  David Benda / Hugh Jonathan 
  T: (44) 20 7260 1000 
  F: (44) 20 7260 1001 
  d.benda@numiscorp.com 
------------------------------  ----------------------------

About ARC Capital Holdings Limited

ARC Capital Holdings Limited ("ARCH") (AIM: ARCH) is a closed-end investment company with net assets of US$407.4 million as at 30 November 2011. ARCH was admitted to trading on the AIM Market of the London Stock Exchange in June 2006. ARCH makes and holds investments in the retail, consumer goods and consumer services sectors, principally in China. Target investments include regional hypermarkets and supermarkets, dominant consumer brands, specialty retail chains, retail property assets and retail and consumer service providers.

For more information about ARC Capital Holdings Limited, please visit: www.arch-fund.com

This information is provided by RNS

The company news service from the London Stock Exchange

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