Proposed Offer by the Phoenician Fund Corporation I for China Pub Company PLC
TORONTO, ONTARIO--(Marketwire - March 20, 2009) - The Phoenician Fund
Corporation I ("Phoenician") and China Pub Company PLC ("China Pub")
announce that they have reached an agreement in principle on the terms
of a proposed offer (the "Proposed Offer") to be made by Phoenician for
the entire issued share capital of China Pub. The Proposed Offer will
be subject to the terms and conditions described herein and it is
intended to constitute Phoenician's qualifying transaction within the
meaning of TSX Venture Exchange ("TSX-V") Policy 2.4.
This Announcement does not constitute an announcement of a firm
intention to make an offer under Rule 2.5 of the UK Takeover Code (the
"Code"). Accordingly there can be no certainty that an offer will
ultimately be made and no certainty to whether any offer will be made
on the terms described herein.
Trading of China Pub's shares on the Channel Islands Stock Exchange
(the "CISX") was suspended on 4 March 2009 pending details of the
Proposed Offer. The Board of China Pub will unanimously recommend
shareholders of China Pub to accept the Proposed Offer.
Phoenician is an Ontario corporation and its shares are listed on
the TSX-V. It is a capital pool company within the meaning of TSX-V
Policy 2.4, that is, a company that has yet to complete a qualifying
transaction. Until it completes a qualifying transaction, Phoenician
cannot commence commercial operations. Phoenician currently has at
least Cdn. $500,000 in cash.
John May, Chairman of China Pub has given an irrevocable
undertaking (known as a "lock up agreement" in Canada) to Phoenician to
accept the Proposed Offer in respect of his 10,000,000 shares in China
Pub (representing 1.5% of the issued share capital of China Pub as at
the date of this Announcement).
Should the Proposed Offer be completed, a request will be made for the China Pub shares to be delisted from the CISX.
TERMS OF THE PROPOSED OFFER
Phoenician and China Pub entered into a letter of intent on 23 February 2009 relating to the Proposed Offer.
The Proposed Offer (subject to the Conditions set out below) will be made as follows:
0.05 common shares of no par value in Phoenician (the "Phoenician Shares") for each ordinary share of 0.02 pence in China Pub (a "China Pub Share").
Any new Phoenician Shares issued pursuant to the Proposed Offer
will be issued credited as fully paid, non assessable and will rank
parri passu in all respects with the existing Phoenician Shares in
issue.
The China Pub Shares will be acquired free from all liens, charges,
encumbrances and other interests and together with all rights now and
hereafter attaching thereto including the right to receive all
dividends and other distributions hereafter declared, made or paid.
Full acceptance of the Proposed Offer will result in Phoenician
issuing an aggregate of 34,981,632 Phoenician Shares. Following the
completion of the Proposed Offer, Phoenician will have 43,016,965
Phoenician Shares and 1,316,033 options issued and outstanding.
Shareholders of China Pub would receive 73.06% per cent of the share
capital of Phoenician on a fully diluted basis.
Fractions of Phoenician Shares will not be allotted to shareholders
of China Pub, and entitlements will be rounded down to the nearest
whole Phoenician Share.
Upon completion of the Proposed Offer, the combined entity (the
"Resulting Issuer") will carry on the themed pub business of China Pub,
as described under "About China Pub" below.
CHINA PUB SHARES
China Pub's issued share capital consists of 647,808,000 China Pub
Shares, each having equal voting rights. China Pub does not hold any
China Pub Shares in treasury and therefore the total number of China
Pub Shares with voting rights is 647,808,000. There are no other
classes of share in issue.
The ISIN number of China Pub Shares is GB00B1VRT431.
As at the date of this Announcement, Phoenician does not (other
than the irrevocable undertaking referred to above) hold an interest in
China Pub Shares or the right to subscribe for such shares.
The China Pub Shares are listed on the CISX. Though listed, they have not traded on the CISX since 31 March 2007.
CONDITIONS OF THE PROPOSED OFFER
The Proposed Offer, when made, will be contingent upon the
following circumstances (the "Conditions") which are set out in full at
Appendix 1 of this Announcement:
1. shareholders of China Pub holding at least 90% (or such lesser
percentage, not being less than 50% of the voting rights then normally
exercisable at a general meeting of China Pub, as Phoenician may
decide) of the issued share capital of China Pub accepting the Proposed
Offer;
2. TSX-V approval of the Proposed Offer; and
3. there being no material adverse change in the business, assets,
liabilities, profits or prospects of the China Pub group of companies
as a whole.
Subject to the requirements of the UK Panel of Takeover and Mergers
(the "Panel"), the Proposed Offer will not proceed unless all of the
Conditions have been fulfilled or (if capable of waiver), waived. Each
Condition will be regarded as a separate Condition and shall not be
limited by reference to other Conditions.
BACKGROUND TO THE PROPOSED OFFER
Following Phoenician's announcement of the Proposed Offer, and
subject to the approval of the TSX-V, Phoenician will lend Cdn$225,000
(being the maximum amount pursuant to TSX-V policies) to China Pub in
order to meet staff costs and creditors. Any excess will be used for
working capital. TSX-V policies require that this lending facility be
secured by means of a charge over the fixed assets of China Pub or any
one or more assets in the subsidiary companies of China Pub. The
facility will be repayable on demand. Without this loan facility, it is
unlikely the Company could meet its current obligations and it would
face insolvency and subsequent liquidation.
The board of directors of Phoenician and China Pub believe that the
Proposed Offer would result in China Pub being in a stronger financial
position than its current weak financial position as referred to above.
In particular, the finances available to Phoenician could be used to
reduce exposure to China Pub's short term obligations although the
Resulting Issuer will need to raise further additional financing
shortly after completion of the Proposed Offer to meet the Resulting
Issuer's ongoing working capital requirements and to assist with China
Pub's expansion (as detailed herein).
Upon completion of the Proposed Offer, the board of directors of
the Resulting Issuer will be comprised of four directors, being the
directors of China Pub and a Canadian resident director to be appointed
at a later time. In addition to other officers to be appointed at a
later time, John May will be appointed as Chief Executive Officer of
the Resulting Issuer.
John J. May - Proposed Executive Chairman and Finance Director
John May is a principal of a boutique Chartered Accountancy
practice, focussing on advising companies on finance raising, mergers
and acquisitions, business strategies and entry onto Plus Markets and
AIM. He is the managing partner of FSA registered City &
Westminster Corporate Finance LLP.
He was previously a Senior Partner at Horwath Clark Whitehill, a UK
Accountancy firm, for 17 years, including 8 years on the Managing
Board. Mr May is the Policy Director and Chairman of the Small Business
Bureau Limited and Deputy Chairman of the Genesis Initiative, which are
lobbying groups to the UK Government on behalf of small businesses. He
is also a Conservative Borough Councillor. Mr May qualified as a
Chartered Accountant in 1974 having previously gained his DIA at the
University of Bath Management School in 1970 and his BA from the
University of London in 1969.
He is currently a non executive director of AIM listed
International Consolidated Minerals Inc, Tomco Energy Plc, Petrolatina
Energy Plc, Red Leopard Holdings Plc and NASDAQ listed Avatar Systems
Inc, London and Pacific Healthcare Inc and White Mountain Titanium
Corp. He is also Chairman of CISX listed Southbank UK Plc. Mr May
resides in London.
Gerard Thompson - Proposed Director
Gerard Thompson is currently a partner in City & Westminster
Corporate Finance LLP, a FSA registered corporate advisory consultancy
assisting companies seeking to go public by making principal-based
investments. He is a senior management executive with financial,
marketing and administrative skills including corporate governance
functions and in particular knowledge of Remuneration and Audit
committee functions (including USA Sarbanes-Oxley provisions). He has
extensive experience as a principal in investment banking, corporate
finance, venture capital, pre-IPO to IPO funding. Mr Thompson has been
involved with a number of AIM listed plc companies. Mr Thompson became
an accredited Mediator in 2005 and subsequently became a partner in
Wilcox-Thompson LLP which provides alternate dispute resolution
services. Mr Thompson resides in London.
Alan Reid - Proposed Director
Alan Reid was previously Chief Operating Officer of Fosters China
Limited, a subsidiary of the globally recognized Fosters Brewing Group.
He was directly responsible for the operations of three joint venture
breweries located in China involving an investment in excess of USD 150
million. During the early nineties, he was also the Commercial Minister
and Senior Trade Commissioner at the Australian Embassy in Beijing. As
a result he has a wide range of political and commercial contacts
throughout Asia. Mr Reid is currently the Managing Director and owner
of Intercedent Limited, an investment and advisory boutique
specialising in advising western companies on setting up and operating
in Greater China. Mr Reid has lived and worked full time in China and
Hong Kong since 1985, is a fluent Mandarin speaker and resides in
Beijing.
ABOUT PHOENICIAN
Phoenician is an Ontario corporation. It is designated by the TSX-V
as a "capital pool company" and is a reporting issuer in British
Columbia, Alberta and Ontario. The Proposed Offer is intended to serve
as the Phoenician's "qualifying transaction" under the policies of the
TSX-V.
In accordance with Rule 2.10 of the Code, Phoenician's share
capital currently consists of 8,035,333 Phoenician Shares outstanding,
each having equal voting rights and there are no other classes of share
in issue.
In addition, options to purchase 626,766 Phoenician Shares at a
price of Cdn $0.16 per share have been granted to Phoenician's
directors and officers, options to purchase 250,000 Phoenician Shares
at a price of Cdn $0.16 per share have been granted to Phoenician's
agent in connection with its initial public offering, options to
purchase 37,500 Phoenician Shares at a price of Cdn $0.16 per share
have been granted to a charitable organization and options to purchase
401,767 Phoenician Shares at a price of Cdn $0.16 per share have been
granted to Phoenician's consultants.
Trading of Phoenician's shares was halted on 23 February 2009
pending details of the Proposed Offer. There can be no assurance that
trading will resume before the TSX-V has reviewed the Proposed Offer
and reinstatement to trading provides no assurance with respect to the
merits of the Proposed Offer or the likelihood of Phoenician completing
the Proposed Offer as its qualifying transaction.
The current directors of Phoenician are: Edwin Lee, Howard Crosby and Nicholas Wilson.
Additional information about Phoenician can be found and is available on SEDAR at www.sedar.com.
ABOUT CHINA PUB
China Pub is incorporated in England and Wales under company number 5506378.
It is an operator of defined pub brands focused on building a
portfolio of outlets across Greater China. It is committed to utilising
its management's experience and market knowledge to extend its pub
brands across Greater China, one of the most thriving economic regions
in the world. The Greater China region, including the Peoples Republic
of China, Hong Kong and Macau, is experiencing rapid economic and
social transformation. Wealth generation and increases in disposable
income, combined with a desire to embrace western lifestyle pursuits,
trends and brands, has created an unprecedented opportunity.
China Pub intends to capitalise on this opportunity to rapidly
expand its cost effective portfolio of pub outlets targeting affluent
locals, expatriates and international visitors. Since its incorporation
in 2005, China Pub's management has been focussed on structuring and
preparing the Company for its Greater China expansion. China Pub has
been actively acquiring a portfolio of well-known brands, investigating
and obtaining key sites in Shanghai, Hong Kong and Macau, and building
its corporate profile through various public relations activities such
as the sponsorship of the Yellow Sea Cup rugby tournament.
China Pub has eight wholly-owned subsidiaries through its
wholly-owned Hong Kong subsidiary China Pub Company HK Limited. They
are:
- China Pub Food & Beverage Management Limited (incorporated in
Shanghai) - operates Malone's American Cafe in Pudong Shanghai, as well
as a small administrative office in Shanghai.
- Bull and Bear Limited (incorporated in Hong Kong) - operates the Bull and Bear pub in Wanchai, Hong Kong.
- Junk Pub Limited (incorporated in Hong Kong) - operates the Junk Pub in Wanchai, Hong Kong.
- Detours Limited (incorporated in Hong Kong) - operates the
trading business of the Duk Ling (sailing junk charters on Victoria
Harbour, Hong Kong).
- Solar Fidelity Limited (incorporated in Hong Kong) - holds the assets of the Duk Ling (the boat and the mooring rights).
- IP Licensing Rights LLC (incorporated in Delaware USA) - holds the IP rights of each of the brands.
- China Pub (Macao) Limited (incorporated in Macau) - originally
set-up to investigate sites and maintain an administrative office in
Macau.
- Kennedy's Irish Limited (incorporated in Hong Kong) - set-up to
develop and then operate the trade of Kennedy's Irish pub in Hong Kong.
Additional information about China Pub can be found and is available at www.cisx.com.
CHINA PUB ASSETS
The primary assets of the Resulting Issuer will be the China Pub assets, comprising of the following:
DUK LING, icon of Hong Kong(c)
The Duk Ling, icon of Hong Kong(c), is an authentic Hong Kong
sailing junk which was restored to original 1950's design having sailed
the deep sea channels in and around Hong Kong for over 25 years
(further information about this asset is available at www.dukling.com.hk).
The Duk Ling is chartered twice every week by the Hong Kong Tourism
Board, as well as by corporate clients and individuals to provide
harbour cruises and hospitality events. The Duk Ling was acquired in
November 2005 by two subsidiaries of China Pub, Detours Limited (the
entity that operates the trade of the Duk Ling) and Solar Fidelity
Limited (the entity which owns the Duk Ling vessel itself together with
its mooring rights).
The Junk Pub
The Junk Pub was established in 2000 and was the first pub brand
that China Pub acquired in November 2005. The Junk Pub has an Asian
nautical theme and is linked to the Duk Ling. It is a popular venue and
has a loyal following from both local and international residents of
Hong Kong.
The Bull and Bear
In 2006, China Pub acquired Hong Kong's famous Bull and Bear pub
brand and opened its first site in Wanchai, Hong Kong. The Bull and
Bear's food and hospitality is representative of a traditional British
pub, serving up meals such as bangers & mash, fish & chips and
steak & ale pie. The Bull and Bear is featured on several tourist
websites, brochures and maps and is a popular venue amongst the rugby
fraternity.
Malone's American Cafe
China Pub signed an agreement in September 2007 with Shanghai
Malone's American Cafe Co. Ltd., to use the brand "Malone's American
Cafe" which was established in 1994. Under the agreement, China Pub can
roll out and operate up to 20 Malone's American Cafe outlets in the
Greater China region for five years
Malone's American Cafe is China Pub's first bar and restaurant in
Shanghai, opened in April 2008. It is operated under license and is
located in the prestigious commercial and residential area of Pudong.
Occupying 9,000 sq. ft. it extends over three levels and features two
bars, a designated dining area, games room, outdoor beer garden and
offers live entertainment six days a week. The food menu offers both
Asian and western menus, including 20 different types of hamburgers
which are popular amongst westerners and local Chinese looking for an
American sports bar experience.
The "China Pub Company Yellow Sea Cup"
One of China Pub's greatest successes in promoting its brands and
establishing its presence in Greater China is by securing the lead
sponsor and naming rights to the Yellow Sea Cup ("YSC") rugby
tournament. Established in 2005, the YSC is the premier rugby
tournament for the Greater China region. The sponsorship agreement
between the YSC and China Pub covers seasons 2008-2017.
FUTURE PLANS
Kennedy's Irish
Kennedy's Irish is an Irish pub concept, developed by China Pub. It
will serve Irish beer, ales and food ranging from Irish stews to
Guinness pies. The interior will feature a traditional Irish bar
setting with various eating nooks and Irish memorabilia. The name
Kennedy is derived from the British Governor of Hong Kong from 1872 to
1877. He was responsible for introducing the Hong Kong dollar and
developing Kennedy Town (a district located in the western area of Hong
Kong Island). The first Kennedy's Irish is due to open within the
coming months in Kowloon, Hong Kong.
The Rugby Pub
A future brand which is expected to be first established in Beijing
is The Rugby Pub. The brand is still in the development stage but it is
planned that it will be tied into, and capitalise on, China Pub's
sponsorship of the YSC rugby tournament. It is envisaged that the pub
will be similar in size to the Bull and Bear and Kennedy's Irish.
Kangaroo Red
Another future brand which China Pub plans to develop is Kangaroo
Red, an Australian pub brand. The pub will focus on Australian
memorabilia, culture, sports and food.
China Pub has also been in negotiations to acquire a Singaporean
group which is an internationally renowned brand with successful
operations in Hong Kong, Taipei and Perth. If completed, the proposed
acquisition will add positive cash flows as well as three existing
operations to China Pub. The target's brand and management, who would
be locked in under the proposed agreement, will significantly enhance
China Pub's operations and recognition.
CHINA PUB MANAGEMENT
The management of China Pub comprises the directors (whose details are set out in this Announcement) and the following persons:
GEOFFREY DART - Chairman of the operating company, China Pub Company HK Limited
PAUL WATT - Director of the operating company, China Pub Company HK Limited
IAN WATT - General Manager
GAVIN SMITH - Financial controller
Complete news release is available here.