CACOLA Furniture International has inked two separate non-legally binding memoranda of understanding (MOUs), each for a possible acquisition of a goldmine in China.
The proposed deals, if either one proceeds to completion, will result in a change of control and constitute a reverse takeover (RTO) transaction, said Cacola.
Under the first MOU, Cacola is looking to wholly acquire Gold Depot Investments - which has an indirect interest in a goldmine located at Jingping county, Guizhou province - from Gold Tycoon for $250 million. Of this, $40 million will be settled in cash and the balance $210 million through the allotment of new and ordinary shares in Cacola at a 10 per cent discount of the weighted average prices of trades done on the date the definitive agreement is signed.
The second MOU is for the acquisition of 100 per cent of Shanxi Han Yin Huanglong Gold, which has an indirect interest in a goldmine located at Yellow Dragon Village, Long Ya Town, Hanyin county, Shanxi province for $130 million.
This proposed purchase will be settled with $20 million in cash and $110 million worth of consideration shares at the issue price of $0.03 per share.
Cacola said the group's furniture orders in China have not "been satisfactory" due to fewer property sales in the market. This is exacerbated by higher operating costs.
"The board is of the view that the balance sheet will be strengthened by the proposed acquisition and that such acquisition will unlock shareholder value," it said.
At end 2009, Cacola had about RMB180m cash and no debt. It was possibly a value stock. It has proved to be a trap as its business fundamentals were crappy and the losses eroded the cash. Just saw the 2Q results statement - cash is now down to RMB38 m. I don't see how it can survive for a long time more.
Announced on 10th April 2014, that the Company had entered into a sale and purchase agreement to acquire the Goyes Group, a prominent meat processing and related business group in Hunan, China, with their FY2014 net profit exceeding RMB120 million. Goyes had since appointed Foo Kon Tan as the reporting accountants and Bakertilly Hong Kong Limited as their internal auditor to strength their internal management processes. The Company has completed various due diligence reviews on the Goyes Group, and pre-clearance submission had been made to SGX. Upon the successful of the RTO, the
Company will transform itself into a group which holds a profitable meat processing and related business. The management is actively engaged with professionals and regulators working towards completing the RTO in 2015.
