TSX-V:CHO
TORONTO, Nov. 8, 2013 /CNW/ - China Health Labs & Diagnostics Ltd.
("China Health" or the "Company") (TSXV:CHO) announced today that the
Company and Century Delight Investment Limited ("Century Delight") have
entered into an agreement (the "Agreement") pursuant to which Century
Delight will become the sole shareholder of the Company following the
Company taking action to redeem for cancellation all of the outstanding
common shares of the Company not already owned by Century Delight for
cash consideration of $0.62 per share (the "Transaction"). The
Transaction is proposed to be effected by way of a share consolidation
and redemption under the Companies Act (Cayman Islands). Century Delight is a company indirectly owned and
controlled by Mr. Shiping (Wilson) Yao, the Company's President and
Chief Executive Officer and a member of the Company's board of
directors. Century Delight owns, or has control or direction over,
47,009,266 common shares representing approximately 72% of the
Company's 65,606,686 common shares outstanding.
The consideration offered under the Transaction represents a premium of
approximately 44% to the last trading price of CAN$0.43 of the shares
on the TSX Venture Exchange as of October 23, 2013 (the day before the
first announcement of the Transaction) or a premium of approximately
26.3% over the 30-day volume weighted average price of the shares or
approximately 55.4% over the 60-day volume weighted average of the
shares on the TSX Venture Exchange as of October 23, 2013.
The Transaction will be effected by way of a 47 million to one share
consolidation of all of the issued and outstanding shares. Following
the consolidation, the Company will compulsorily redeem for
cancellation all of the shares held by shareholders whose aggregate
holding is less than one whole post-consolidation share. As a result,
upon completion of the Transaction, only Century Delight will remain as
the sole shareholder of the Company. Shareholders holding fractional
shares that in aggregate are less than one whole share (other than any
dissenting shareholders) following the consolidation, will be entitled
to receive a cash payment of CAN$0.62 for each pre-consolidation share
on the compulsory redemption of such fractional post-consolidations
shares. The Company also expects to pay approximately $67,000 in cash
for the buy-out, surrender and cancellation of outstanding share
purchase options.
In order to complete the Transaction, the Company is required to
complete certain pre-consolidation transactions, including amending the
Company's Articles of Association. At the shareholders' meeting to be
held in Vancouver, British Columbia on Wednesday, December 18, 2013 at
10:00 a.m. (local time), shareholders entitled to vote at the meeting
will be asked to approve two special resolutions: (1) authorizing
amendments to the Company's Articles of Association (the "Articles") to
include a provision permitting the issuance of fractional shares and to
revise the share redemption provisions and certain other provisions of
the Articles that are necessary to provide the Company a right to
compel the redemption of its share capital; and (2) authorizing
amendments to the Articles to revise the share rights provisions of the
Articles to vary the rights attached to the Company's share capital.
These two resolutions must each be passed by (a) at least two-thirds of
the votes cast by shareholders present in person or represented by
proxy at the meeting, and (b) a majority of the votes cast by all
shareholders other than Century Delight, its associates and affiliates,
and all persons acting jointly or in concert with them, present in
person or represented by proxy at the meeting (the "Minority
Shareholders"). Shareholders will also be asked to approve an ordinary
resolution authorizing a consolidation of the authorized share capital
of the company on the basis of one post-consolidation share for every
47 million shares held immediately prior to the consolidation, which
must be passed by (a) a majority of votes cast by shareholders present
in person or represented by proxy at the meeting, and (b) a majority of
the votes cast by the minority shareholders present in person or
represented by proxy at the meeting.
Shareholders of record as of November 6, 2013, the record date for the
meeting, are entitled to receive notice of and to attend, and to vote
at, the meeting or any adjournment or postponement of the Meeting.
As previously announced, a special committee of independent directors
(the "Special Committee"), comprised of Paul Haber (Chair), Hong Chang,
Kim Oishi and Yumin Zhuang, was established to consider and make
recommendations regarding the Transaction. The Special Committee
engaged Evans & Evans, Inc. as its independent valuator and financial
advisor and to prepare a valuation report and fairness opinion with
respect to the Transaction. Based on the valuation work and subject to
the conditions, assumptions and qualifications set forth in valuation
and fairness opinion, in the opinion of Evans & Evans, as of November
7, 2013, the consideration payable under the Transaction is fair, from
a financial point of view, to the Minority Shareholders.
Having undertaken a thorough review of, and carefully considered, the
Transaction, including consulting with its legal and financial
advisors, the Special Committee has unanimously determined that the
Transaction is in the best interests of the Company. Accordingly, the
Special Committee unanimously recommended that the Company's board of
directors approve the Agreement and recommend that Shareholders vote
for the Transaction.
The Company's board of directors, following the recommendation of the
Special Committee, unanimously resolved (with the abstention of the
interested directors) to authorize the Company to enter into the
Agreement, submit the pre-consolidation and consolidation matters to a
vote of the shareholders, and recommend to shareholders that they vote
in favour of the pre-consolidation and consolidation matters to effect
the Transaction. A copy of the valuation and fairness opinion, the
factors considered by the Special Committee in arriving at its
recommendation, and other relevant background information will be
included in the management information circular that will be sent to
shareholders in connection with the meeting and will be filed on SEDAR
at www.sedar.com.
If the Transaction is completed, the common shares of the Company will
be delisted from the TSX Venture Exchange and the Company will also
apply to the applicable Canadian securities regulatory authorities to
cease to be a reporting issuer in each province in which it is a
reporting issuer.
The Company's board of directors cautions shareholders and others
considering trading in shares of the Company that the completion of the
Transaction remains subject to a number of conditions including, but
not limited to, receipt of all regulatory and shareholder approvals and
the availability of financing for the share redemption. There is no
assurance that such financing will be available to complete the
Transaction. The completion of the Transaction is subject to the
satisfaction of certain other closing conditions customary in a
transaction of this nature. If and when these conditions are
satisfied, it is expected that the completion of the Transaction will
be completed following the meeting in late December 2013.
Trading of the Company's common shares on the TSX Venture Exchange is
expected to be voluntarily halted at least three business days prior to
the shareholders' meeting scheduled for December 18, 2013 pending
approval and completion of the Transaction, such halt is intended to
avoid or minimize settlement and entitlement issues.
About China Health Labs & Diagnostics Ltd.
China Health, operating in China as the Biochem Group, is a leading
diagnostic lab solution provider for the public healthcare industry in
China. The Company develops and sells Biochem Group branded and
third-party medical diagnostic products and services to diagnostic
facilities in China. Customers include large urban hospitals, rural
hospitals, Chinese military and rescue operations, the Beijing
government and third-party distributors.
In 2012, China Health had revenue of approximately $45.8 million, and
intends to expand its business by focusing its efforts on expanding its
sales network in three areas where it provides proprietary solutions,
has limited competition and that are supported by Chinese government
policy and budgets: BK Clinlab total lab solutions for rural hospitals
and clinics, POCT solutions for military and emergency rescue services,
and food safety solutions for large cities in China.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements and information
that are based on the beliefs of management and reflect China Health's
current expectations. When used in this news release, the words
"estimate", "project", "belief", "anticipate", "intend", "expect",
"plan", "predict", "may" or "should" and the negative of these words or
such variations thereon or comparable terminology are intended to
identify forward-looking statements and information. The
forward-looking statements and information in this news release
includes information relating to completion of the going private
transaction and the expansion of the Company's business by focusing on
expanding its sales network to areas where it has proprietary products,
limited competition and strong government support. The forward-looking
information is based on certain assumptions, which could change
materially in the future, including the assumption that the Company's
products and services, operations, market, marketing plans and
strategies, competitive conditions, future developments and proprietary
protections continue as projected. Such statements and information
reflect the current view of China Health with respect to risks and
uncertainties that may cause actual results to differ materially from
those contemplated in those forward-looking statements and
information. By their nature, forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause our
actual results, performance or achievements, or other future events, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the risk that the necessary
regulatory and shareholder approvals are not obtained, the financing
for the share redemption is not available, the conditions to completing
the transaction may not be met, the transaction may be terminated or
re-negotiated on different terms, the Company may not be able to expand
its business as expected through its sales network in any of the areas
in which it has proprietary products, limited competition and strong
government support. These and other risks are further described under
"Risk Factors" in the Company's management's discussion and analysis
dated April 30, 2013, which is available on SEDAR and may be accessed
at www.sedar.com. When relying on China Health's forward-looking
statements and information to make decisions, investors and others
should carefully consider the foregoing factors and other uncertainties
and potential events. China Health has assumed a certain progression,
which may not be realized. It has also assumed that the material
factors referred to above will not cause such forward-looking
statements and information to differ materially from actual results or
events. However, the list of these factors is not exhaustive and is
subject to change and there can be no assurance that such assumptions
will reflect the actual outcome of such items or factors.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE
REPRESENTS THE EXPECTATIONS OF CHINA HEALTH AS OF THE DATE OF THIS NEWS
RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS
SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND
SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE CHINA
HEALTH MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION
AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE
LAWS.
SOURCE CHINA HEALTH LABS & DIAGNOSTICS
