Alpha Returns Group plc : Investment
Alpha Returns Group PLC
("ARGP", "Alpha Returns" or the "Company")
24 April 2015
Investment in Jesoft International Limited ("Jesoft International")
Alpha Returns, the AIM traded investing company focusing on investments in high-growth Asian economies, is pleased to announce that on 24 April 2015 its wholly owned subsidiary ARGP Investments Ltd. ("ARGPI") entered into a conditional sale and purchase agreement ("SPA") for the acquisition of 50 per cent. of the issued share capital of Jesoft International, a BVI registered special purpose vehicle incorporated in December 2014 which has been formed to acquire, via a VIE (variable interest entity) structure, beneficial ownership of Jesoft Computer Technology Co. Ltd. ("Jesoft PRC"). Jesoft PRC is a profitable PRC incorporated entity which was founded in 2005 and operates out of Guangzhou in the PRC, providing all-round corporate IT solutions to various industries within China including retailers, direct sales, online commerce, logistics and automotives. It is preparing to establish branch offices within the PRC in Changsha and Shanghai.
During its year ended 31 December 2014, Jesoft PRC made audited pre-tax profits of RMB 1.08 million (£116,000) on turnover of RMB 2.66 million (£286,000) and at 31 December 2014 had net assets of RMB 1.75 million (£188,000).
Consideration for the 50 per cent. investment holding in Jesoft International is to be satisfied by the issue of new ordinary shares in ARGP in two tranches. 17,394,054 new ARGP ordinary shares have been issued as directed by Wupoxi Group Limited (the "Vendor") to Mr. Zhang Weixian, the ultimate beneficial owner of the Vendor, at an agreed price of 1.7 pence per share (the "Tranche 1 Shares"), equivalent to RMB 2.75 million, with a further RMB 2.75 million due on Completion through the issue of further new ordinary shares in Alpha Returns at the same price of 1.7 pence per share, the exact number of which will depend on the RMB/GBP exchange rate ruling at or around Completion. At yesterday's closing share price of 3.15 pence the Tranche 1 Shares are valued at £548,000 and assuming constant currencies, a total 34,788,108 new ARGP ordinary shares will fall to be issued under the SPA (approximately 5.40 per cent. Alpha Returns' existing issued ordinary share capital), valuing the total consideration payable at yesterday's closing share price at approximately £1,096,000. The Completion date is expressed to be 30 days after satisfaction of a number of conditions precedent, and is currently expected to occur during 3Q2015 and in any event no later than 31 December 2015. Should the Vendor fail to complete, it shall make a cash payment to ARGPI equal to the number of consideration shares issued valued at 1.7p per share, plus interest at 20 per cent. per annum.
On Completion, Jesoft International will be owned as to 20 per cent. each by the two existing beneficial owners of Jesoft PRC, 10 per cent. by the Vendor and 50 per cent by ARGPI. Under the terms of a shareholders' agreement ("SHA") to be entered into at Completion, ARGPI will be entitled to appoint 2 of a total of 5 directors to each Jesoft International group company board (including intermediate holding companies in Hong Kong and PRC to give effect to the VIE holding structure). Jesoft PRC will continue in operation under its own independent operational management. Jesoft International itself will act only as a holding company and the business to be carried on by Jesoft International and its subsidiaries, including Jesoft PRC, is confined to the provision of information technology services in the Asia-Pacific region. Jesoft International currently has a paid up share capital of US$550 and, save for establishing a wholly-owned subsidiary in Hong Kong as part of the intended VIE holding structure, has not yet traded. It is a condition of the SPA that the Vendor subscribes an additional HK$5.625 million share capital in Jesoft International prior to vending down to ARGPI.
The SPA is expressed to be subject to a number of conditions precedent, including:
implementation of the VIE structure and completion of satisfactory due diligence by ARGPI, including a PRC legal opinion on the validity of the VIE structure;
the subscription by the Vendor for new shares in Jesoft International for HK$5.625 million (approximately £483,000);
no material adverse change to the financial position of JeSoft PRC; and
no breach of warranty.
Application will be made for the 17,394,054 new ordinary shares, which rank pari passu with the Company's existing issued ordinary shares, to be admitted to trading on AIM. Admission is expected to become effective and dealings to commence on or around 30 April 2015. The enlarged issued share capital of Alpha Returns with voting rights attached consists of 661,594,511 ordinary shares of 0.01p each with one vote per ordinary share. There are no shares held in Treasury. The total number of voting rights in Alpha Returns is therefore 661,594,511, which figure may be used by shareholders (and others with notification obligations) as the denominator for the calculations by which they will determine whether they are required to notify their interest, or a change to their interest, in Alpha Returns under the Financial Conduct Authority's Disclosure and Transparency Rules.
Commenting on the investment, Christopher Neo, executive director of Alpha Returns, said:
"We are pleased to present Jesoft as our latest investment in the Asia Pacific region. We are confident of the growth prospects of Jesoft PRC and note that it complements our existing investment in Singapore based Telistar Solutions Pte. Ltd.. Since 2013, we have been investing in the Asia Pacific region. We believe that the Asia Pacific region still presents attractive opportunities and we will continue to seek investments that match our investment criteria."
For further information:
Alpha Returns Group plc
Christopher Neo, Executive Director 020 3286 6388
ZAI Corporate Finance Limited (Nomad) 020 7060 2220
Peter Trevelyan Clark / Ivy Wang
Peterhouse Corporate Finance (Broker) 020 7220 9797
Duncan Vasey/Lucy Williams
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Alpha Returns Group plc via Globenewswire