Aptech has had a 50:50 JV in China since 1999. It has been the endeavour of the present Board of Directors and the Management team to unlock the value of its China JV. Many significant investors have also asked about this from time to time.
The Board has now received an offer from Aptech’s China JV Partner, which outlines a draft framework agreement (the “Framework Agreement”) whereby the China JV Partner and Aptech will have full alignment of equity interest in a holding company (the “Holding Company”) incorporated outside of the People’s Republic of China (the “PRC”) that may seek a listing on an internationally recognized stock exchange for which work is progressing in right earnest. Upon completion of the transactions as contemplated in the Framework Agreement, Aptech will receive 22% of the outstanding shares in the Holding Company as of the transaction completion date and, in exchange, the Holding Company will receive the 50% equity interest in the China JV that Aptech presently owns.
The Board deliberated on the same and believes that Aptech and its shareholders will benefit from the following through the transactions as contemplated by the Framework Agreement:
(i) with the combined assets of both the China JV and the China JV Partner, the Holding Company will have larger and more streamlined business operations and stronger cash flows comparing to those of the China JV on a standalone basis;
(ii) the 22% outstanding shares of the Holding Company as of the transaction completion date will represent a better equity value than the 50% equity interest in the China JV that Aptech presently owns; and
(iii) while the China JV is restricted by various PRC regulations and is not suitable for listing on an internationally recognized stock exchange, the Holding Company, which is incorporated outside of the PRC, will be a suitable candidate for a listing on an internationally recognized stock exchange, for which work is progressing in right earnest.
The Board believes that accepting the offer is in the best interest of Aptech and that of Aptech’s shareholders, and has agreed to proceed with the offer.
The transactions described above are subject to all necessary permissions and approvals in relevant jurisdictions. Until such permissions or approvals are obtained or received and the transactions are completed, Aptech will continue to hold the 50% equity interest in the China JV.
The Board has also constituted a committee empowering them to proceed with the transactions contemplated by the Framework Agreement, including appointing such advisors / consultants as may be necessary or required.
