ZIBO CITY, China, Oct. 14, 2011 /PRNewswire/ -- China Chemical
Corp. (OTCBB: CHCC) ("China Chemical" or the "Company"), a
manufacturer of organic chemicals, today announced that it has
entered into a definitive merger agreement under which it will be
merged with a subsidiary of New Source Holding Co., Ltd. ("NSH"),
an entity created by certain stockholders of CHCC (the
"Contributing Stockholders"). All outstanding shares of CHCC common
stock not owned by CHCC, the Contributing Stockholders or certain
other stockholders whose shares are subject to litigation in
China between Zibo Jiazhou
Chemical Co., Ltd., a related party of the Company, against PAMCO
Management, Ltd. ("PAMCO") and its Chairman (the "PAMCO
Litigation"), will be converted into the right to receive
$1.50 in cash per share. The
Contributing Stockholders currently own approximately 79.15% of the
outstanding shares of CHCC common stock. The cash consideration
represents a 2,500% premium to the Company's closing share price on
October 11, 2011, the last trading
day prior to the date the merger agreement was entered into and a
greater than 1,666% premium to the Company's closing share price on
October 13, 2011, the last trading
day prior to today's announcement of the execution of a definitive
merger agreement.
The transaction was unanimously approved by the board of
directors of CHCC. Rockwell Global Capital, LLC acted as financial
advisor and McKenna Long &
Aldridge LLP acted as legal counsel to the CHCC board of
directors.
The transaction is subject to customary closing conditions,
including the condition that a majority of the outstanding shares
of CHCC common stock vote in favor of the adoption of the merger
agreement. The Contributing Stockholders have agreed to vote the
shares of CHCC common stock that they own in favor of the merger
agreement. The transaction is not subject to any financing
contingency.
The transaction is expected to close during the fourth quarter
of 2011, subject to the review and clearance of required filings by
the Securities Exchange Commission ("SEC"). The preliminary
proxy statement was filed with the SEC on October 14, 2011.
The PAMCO Litigation
The Company previously engaged PAMCO as financial advisor, in
connection with the Company's share exchange and related
transactions in September 2010.
The Company delivered cash and shares of its common stock to
PAMCO as consideration for certain specified services, although the
Company did not receive some of those services. After the
Company's unsuccessful attempts to resolve this issue with PAMCO
and Po Sun Liu, PAMCO's Chairman, the Company initiated the PAMCO
Litigation in Shandong Province,
PRC on September 22, 2011.
Through the PAMCO Litigation, the Company seeks the return of
$1.8 million cash paid to PAMCO, and
either (i) the return to the Company for cancellation of 6 million
shares of its common stock (the "Litigation Shares") received by
PAMCO or (ii) payment in the amount of $9
million for such shares. The Company will not make
payment with respect to any of these shares until and unless it is
determined upon the conclusion of this litigation that the shares
in question are properly held by the parties who presently hold
them. The Litigation Shares and the shares owned by the
Contributing Stockholders account for over 99% of the shares of the
Company currently outstanding. The stockholders are,
therefore, urged to be certain of the source of their shares and
prospective buyers of shares should confirm that the shares
they are considering purchasing are not Litigation Shares.
Since becoming a public company, other than the shares issued
prior to the Company's share exchange in 2010, since the
share exchange, the Company has not conducted any offering of
shares of its common stock and has not issued or sold any shares of
its common stock. Consequently, shares available for purchase
or trading by the public have entered the market principally as a
result of re-sales by PAMCO or its affiliates of Litigation Shares
and may be shares for which the Company seeks cancellation.
Additional Information and Where to Find It
This press release is neither a solicitation of a proxy nor an
offer to purchase or a solicitation of an offer to sell shares of
CHCC common stock, and is not a substitute for any proxy statement
or other filing that may be made with the SEC in connection with
the transaction. In connection with the transaction, CHCC intends
to file a proxy statement and other relevant materials with the
SEC, and CHCC and certain other persons, including NSH, intend to
file a Schedule 13E-3 transaction statement with the SEC. CHCC
stockholders are strongly advised to read such materials when they
become available because they will contain important information
about the transaction. Once filed, these documents will be
available at no charge on the SEC's website at www.sec.gov.
CHCC and its directors, executive officers and other members of
its management and employees may be deemed to be participants in
the solicitation of proxies from its stockholders in connection
with the transaction. Information regarding the interests of
participants in the solicitation, which may be different than those
of CHCC's stockholders generally, will be included in the proxy
statement relating to the transaction when it becomes
available.
About China Chemical Corp.
China Chemical Corp. is a Zibo City, China-based manufacturer of organic chemical
compounds used in high-performance plastics, PVC, elastic fibers,
paints, tires, insulation, flooring, adhesives, medicines, food
processing, ink, and paper. The Company's primary products are
Phthalic Anhydride (PA) and Maleic Anhydride (MAH), which have a
wide variety of applications in the construction, automotive,
aviation, marine, and consumer goods industries. China Chemical
currently has the capacity to produce 60,000 tons of MAH and 50,000
tons of PA annually. The Company began site development in
October 2010 for a
50,000-ton-capacity 1,4 butanediol (BDO) co-generation plant.
For more information about China Chemical Corp., please visit
the Company's website at http://www.chinachemicalcorp.com.
Forward-Looking Statements
Certain statements contained herein constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations, estimates and
projections about the Company's industry, management's beliefs and
certain assumptions made by management. Readers are cautioned that
any such forward-looking statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Because such statements
involve risks and uncertainties, the actual results and performance
of the Company may differ materially from the results expressed or
implied by such forward-looking statements. These risks and
uncertainties include, among other things, product demand, market
competition, and risks inherent in our operations. Given these
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. Unless otherwise required by law,
the Company also disclaims any obligation to update its view of any
such risks or uncertainties or to announce publicly the result of
any revisions to the forward-looking statements made here. For
additional information, readers should carefully review reports or
documents the Company files periodically with the Securities and
Exchange Commission.
Contact:
Investor Relations:
Mr. Yan Kai
1, Electric Power Road, Zhou Cun District
Zibo, People's Republic of
China
T: 86-533-6168699
SOURCE China Chemical Corp.