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Published on Wednesday, 9 May 2007

Sale of Rolling Mills - Alternative Offer Received

Sale of Rolling Mills - Alternative Offer Received

A.C.N. 063 656 333
A.B.N. 64 063 656 333
VIETNAM INDUSTRIAL INVESTMENTS LIMITED

9 May 2007

 

Company Announcements
Australian Stock Exchange Limited
10th Floor
Bond Street
SYDNEY NSW 2000

Dear Sirs

SALE OF ROLLING MILLS – ALTERNATIVE OFFER RECEIVED

On 7 March 2007 the Company announced that it had entered into a sale and purchase agreement (“Sale and Purchase Agreement”) with NatSteel Asia Pte Ltd (“NatSteel”) for the sale of the Company’s 70% interest in Vinausteel Ltd and 100% interest in Structure Steel Engineering Pte Ltd (“Sale Assets”). The terms of the Sale and Purchase Agreement were set out in the explanatory memorandum prepared by the Company for the meeting of the Company’s shareholders to approve the Sale and Purchase Agreement (“Explanatory Memorandum”) sent to shareholders on 10 April 2007. The Explanatory Memorandum also advised shareholders that:

1. the Company had received an alternative offer for the Sale Assets in which Mr Henry Lam, VII’s Managing Director (Vietnam Operations) has an interest; and

2. Messrs Simon Lee, Michael Bowen, Alan Young and Mark Clements (“Independent Directors”) considered that the Sale and Purchase Agreement was fair and reasonable insofar as the shareholders are concerned and that in the absence of a superior proposal, shareholders vote in favour of the Sale and Purchase Agreement.

On 3 May 2007 the Company announced that, based on the Company’s unaudited management accounts as at 31 March 2007, it expected that the amount to be paid under the Sale and Purchase Agreement, net of consultants’ fees, would be approximately US$12.02 million. However the actual amount may be higher or lower depending on a number of factors, including Vinausteel Ltd and SSESTEEL Limited being debt free and a minimum net working capital and tangible fixed asset value, which would be determined following a post completion audit.

The expected amount of US$12.02 million includes approximately US$2.59 million which will be held in escrow pending recovery of certain receivables and finalisation of tax matters and this could further reduce the net purchase consideration.

At approximately mid-day on Friday, 4 May 2007 the Company received an unsolicited communication from Clayton Utz, on behalf of Prudential Vietnam Securities Investment Fund Management Company Limited (“Prudential”). The communication purported to vary an earlier unsolicited proposal made by Prudential to remove a condition precedent that the parties enter into a sale and purchase agreement. On Sunday, 6 May 2007 the Company received an unsolicited offer from Prudential (“Prudential’s Offer”). Prudential and Clayton Utz have subsequently confirmed that Prudential’s Offer is irrevocable, binding and in a form which is capable of immediate acceptance.

The terms of Prudential’s Offer are in the annexure to this announcement.

Given the timing of Prudential’s Offer, on 7 May 2007 the Chairman adjourned the annual general meeting for 14 days to allow the Independent Directors to consider and take advice on Prudential’s Offer.

The Independent Directors are preparing a supplementary explanatory memorandum to be announced to ASX and sent to shareholders and which will set out their recommendation in relation to the Sale and Purchase Agreement. The supplementary explanatory memorandum will be dispatched shortly.

Yours faithfully

SIMON LEE AO
Chairman

 

Terms of Prudential’s Offer

1. Prudential offers to purchase the Sale Assets.

2. Whilst the offer is made by Prudential, the entity to which the Sale Assets will be transferred on completion (“Buyer”) will be jointly held by Prudential and Mr Lam.

3. The cash consideration is US$12.3 million net of all taxes, fees and costs.

4. VII will be granted a call option to acquire an equity interest of up to 20% in the capital of the Buyer. The exercise price for the call option will be based on a total equity valuation for the Buyer of at least US$18 million. The call option will be exercisable for a period of 2 years from completion.

5. VII may require the Buyer to cancel the call option within 30 days of expiry of 12 months from the date of completion for a fixed payment of US$1 million to VII.

6. VII must be able to validly effect the transfer of the Sale Assets.

7. Prudential will at it’s cost arrange the release of VII from any existing liabilities provided in relation to Structure Steel Engineering Pte Ltd and Vinausteel Ltd including (if required) arranging the refinancing of the existing debts of Structure Steel Engineering Pte Ltd and Vinausteel Ltd.

8. The Buyer agrees to pay a deposit of US$1 million upon approval by shareholders of Prudential’s Offer. This deposit is non-refundable provided in all cases that VII complies with its obligations.

9. Prudential’s Offer is subject to:

a. all internal approvals being obtained by VII;

b. the Buyer obtaining all necessary government approvals in connection with the “Proposed Transaction” (this term not being defined) from any relevant authorities in any relevant jurisdiction;

c. VII obtaining all necessary regulatory approvals in connection with the “Proposed Transaction” (this term not being defined) from any relevant authorities in any relevant jurisdiction, including, in Australia, any ASX and FIRB approvals, as the case may be.

If VII does not elect to cancel the call option the cash consideration will be US$11.3 million net of all taxes, fees and costs.
 

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