TIDMQIH
RNS Number : 6120A
Qihang Equipment Company Limited
23 December 2014
23 December 2014
Qihang Equipment Company Limited
("Qihang" or the "Company")
Disposal of Operating Business
Adoption of Investing Policy
Directorate Change
Change of Name
Qihang announces that it is today posting a circular to
shareholders ("Circular") containing a notice of a general meeting
of the Company ("General Meeting") to be held at 9.00am on 9
January 2015, at the offices of Peterhouse Corporate Finance
Limited ("Peterhouse"), New Liverpool House, 15-17 Eldon Street,
London, EC2M 7LD. The Circular contains proposals (the "Proposals")
for, inter alia:
-- the disposal of the Company's trading subsidiary ("Disposal") ;
-- the adoption of an Investing Policy under AIM Rule 15; and
-- the change of name to Eastbridge Investments Limited
Background
Since the July 2011 completion of the acquisition of Qihang's
current operating business, Jiangsu Qihang CNC Machinery Tools Co.,
Ltd ("JSQH"), JSQH has struggled to meet the expectations of the
Board. The Directors believe that this has mainly been due to
difficulties arising from the economic downturn as well as
difficulties in JSQH's particular market.
On 30 September 2014 the Company announced that it would be
unable to publish its interim accounts to 30 June 2014 in line with
the AIM Rules and as a result, its ordinary shares of 2.5 pence
each ("Ordinary Shares") were suspended from trading on AIM on the
same day.
The Company has now secured financing which will allow it to
settle certain outstanding creditors and thus, in due course,
publish its interim results to 30 June 2014. The publication of the
interim results should allow the Directors to apply for the
resumption of trading in the Ordinary Shares on AIM. Further
information on the financing is set out below.
As is reflected in the Company's consolidated accounts, JSQH's
business has materially underperformed since its acquisition and
its balance sheet has remained weak throughout the period. Whilst
the employees of JSQH continue to develop, manufacture and sell
good quality products in China, there can be no certainty that JSQH
will return to its former levels of turnover or profitability in
the foreseeable future. Moreover, the debt sitting on JSQH's
balance sheet continues to constrain Qihang from exploiting
opportunities available to it.
The Directors therefore believe that JSQH has negligible value,
due to the level of its debts and its recent operating performance
and, as a result, have decided to dispose of this business. In
addition the Board is proposing certain other changes to the
Company, outlined in the Circular, the net effect of which will be
to return the Company to being an investing company on AIM.
Terms of the Disposal and Placing
The terms of the Disposal are that the two controlling
shareholders of Qihang, Proudstyle Limited ("Proudstyle") and Bo
Sheng Investment Development Limited ("Bo Sheng"), will acquire the
entire share capital of the Company's subsidiary Win Yu
International investments Company Limited, which in turn owns JSQH,
and assume all of the operational debt of JSQH. In consideration
for the acquisition, Proudstyle and Bo Sheng are transferring their
Ordinary Shares back to the Company, where they will be held in
treasury pending re-issue.
As part of the process, the Company has today issued 2,000,000
new Ordinary Shares ("Placing Shares") at a price of 2.5 pence
each, raising a total of GBP50,000. Additionally, conditional upon
the passing of the resolutions to be proposed at the General
Meeting ("Resolutions"), the Company has raised a further GBP50,000
through the issue of convertible loan notes. The proceeds of these
two issues will be applied to paying creditors. Application will be
made for the Placing Shares to be admitted to trading on AIM upon
the lifting of the current suspension from trading.
The Disposal is a related party transaction under the AIM Rules
as the Bo Sheng and Proud Style are significant shareholders of the
Company, holding an aggregate of 85.5 per cent of the Ordinary
Shares. The Directors consider, having consulted with Northland
Capital Partners Limited, the Company's Nominated Adviser, that the
terms of the Disposal are fair and reasonable insofar as the
Company's shareholders are concerned.
Board of Directors
Subject to the Resolutions being passed, it is proposed that
immediately following the General Meeting that Qiang Hao and
Roberto Lima will resign as directors of the Company with no
compensation for loss of office, and will waive all claims against
the Company under their appointment letters. Upon their
resignation, Mr Gregory Collier will be appointed as Executive
Director ("the Proposed Director"). The Company intends to appoint
a further executive director to the Board following the General
Meeting, at which point Mark Chapman will resign from the Board
with no compensation for loss of office, and will waive all claims
against the Company under his appointment letter.
Gregory Collier, aged 54, brings 31 years of financial and
commercial experience, having been involved in running businesses
in contract cleaning, leisure, restaurant, property, and toy
distribution. In 1980, Mr. Collier founded 'Office Kleen General
Maintenance', a building maintenance and services company which was
subsequently acquired by Initial Services (now part of Rentokil
Group). In 1986 he founded one of the first paintball leisure
centres in the UK and subsequently was a partner in a number of
entertainment and fitness ventures, including a Mayfair club and
restaurant and a fitness centre in London.
Further disclosures in respect of Gregory Collier under
paragraph (g) of Schedule Two of the AIM Rules are set out
below.
Current Past
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Quick Marketing Limited Welney Plc
Imperial Music & Media Europastry UK Limited
Plc The Bread Store Limited
MCM Facilities Management Winterway Investments
Limited Corplus Limited
Etaireia Investments RQP Limited
Plc Ego Cars
Powabyke EV Limited Metro Vans Limited
Park Electric Limited
Metro Cars Limited
Rick Properties Limited
Shidu Investments Limited
Pub Holdings (UK) Limited
Gregory Collier was a director and shareholder of The Bread
Store Limited, a company incorporated in England and Wales with
company number 06239188. He resigned as a director on 30 June 2008
and ceased to be a shareholder on the same day. At the time of his
resignation, and the transfer of his shareholding, The Bread Store
Limited was a dormant company and had not traded. Subsequent to Mr
Collier ceasing to have any interest or control over the affairs of
The Bread Store Limited a notice of the appointment of a liquidator
was lodged in respect of this company at Companies House on 1 May
2009.
Mr Collier was also a director of The Strand Health &
Fitness Centre Limited at the time it was placed into
administration with an estimated shortfall to creditors of
GBP122,500. The company was dissolved on 13 August 1996.
Investing Policy
On completion of the Proposals, the Company will have disposed
of all of its trading businesses and therefore under Rule 15 of the
AIM Rules it will be re-classified as an Investing Company and will
be required to adopt an Investing Policy, which must be approved by
shareholders.
It is proposed that the Company's Investing Policy be one
focused on the property and real estate sector, with the objective
being to provide shareholders with strong investment returns and a
balanced exposure to lower risk income generating assets and
opportunities that will provide a higher capital return. The
Company will look to invest in residential schemes as well as
commercial, retail and industrial property within the UK. The
Director and the Proposed Director will look to purchase assets
significantly undervalued by the current market.
The Company's investment criteria will be as follows:
-- property investments which provide a stable, predictable and low risk income stream, with opportunities to enhance value through active management;
-- development or redevelopment opportunities where they can be
pre-let to businesses with strong rental covenants, or in order to
protect, enhance or extract additional value from existing
investments;
-- distressed property investments where opportunities arise as markets recover;
-- investment whereby an injection of new finances or specialist
management, the Company can enhance the prospects and therefore the
future value of the investment;
-- investments where the Company is able to benefit from the
Director's existing network of contacts; and
-- the potential to deliver significant returns for the Company.
Investments outside the above criteria will only be made where
risk adjusted returns to shareholders are satisfactory and the
Company has the reserves necessary to extract an above-market
return from the investments.
Moreover, the criteria set out above are not intended to be
exhaustive and the Director and the Proposed Director may make an
investment which does not fulfil all of the investment criteria if
they believe it is in the best interests of shareholders as a
whole.
The Proposed Director believes that his experience will assist
the Company in the identification, evaluation and funding of
appropriate investment opportunities. When necessary, other
external professionals will be engaged to assist in the due
diligence on prospective targets and their management teams. The
Company will also consider appointing additional directors with
relevant experience if required.
Where the Company builds a portfolio of investments it is
possible that there may be cross holdings between such assets and,
as investments are made and new investment opportunities arise,
further funding of the Company may also be required. The Company
does not currently intend to fund any investments with debt or
other borrowings but may do so in future, if appropriate. The board
may also offer new Ordinary Shares by way of consideration as well
as cash, thereby helping to preserve the Company's cash or working
capital and as a reserve against unforeseen contingencies
including, for example, delays in collecting accounts receivable,
unexpected changes in the economic environment and operational
problems.
The Director and Proposed Director recognise that the Investing
Policy outlined above carries a certain degree of risk, but they
believe that the successful implementation of the strategy may
result in strong capital growth for shareholders.
Change of Name
To reflect the Disposal and the new Investing Policy, the
Company proposes to change its name to Eastbridge Investments
Plc.
Full details of the Proposals are set out in the Circular, a
copy of which is being sent to shareholders today and is available
at http://www.qihangequipment.com/
For further additional information please contact:
Qihang Equipment Company Limited Tel: +44 (0)1483
Mark Chapman, Chairman 892130
Nominated Adviser and Joint Broker Tel: +44 (0)20
Northland Capital Partners Limited 7382 1100
William Vandyk / Matthew Johnson
Joint Broker Tel: +44 (0)20
Peterhouse Corporate Finance Limited 7469 0934
Fungai Ndoro/Lucy Williams
This information is provided by RNS
The company news service from the London Stock Exchange
END
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