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