TORONTO, ONTARIO -- (Marketwire) -- 02/14/13 -- Hanfeng Evergreen Inc. (TSX: HF) ("Hanfeng" or the "Company") today filed its Notice of Annual and Special Meeting of Shareholders to be held on March 15, 2013 and Management Information Circular for the previously announced Arrangement involving Hanfeng Evergreen Inc. and 8310831 Canada Inc., a company controlled by Mr. Xinduo Yu, the CEO of the Company. Hanfeng also reported its financial results for the second quarter and six months of fiscal 2013 ended December 31, 2012. All amounts are in Canadian dollars unless otherwise noted.
Privatization Proposal & Arrangement Agreement
As previously announced, the Company received a written non-binding proposal to take the Company private for $2.20 per share (the "Privatization Proposal") from Mr. Xinduo Yu, the Company's President and Chief Executive Officer ("CEO") and the holder of approximately 20.4% of Hanfeng's outstanding common shares.
A previously formed special committee of independent directors (the "Special Committee") undertook to review and consider the Privatization Proposal.
The Special Committee, having undertaken a thorough review of, and having carefully considered, the Privatization Proposal, including consulting with independent legal and financial advisors, unanimously determined that the Privatization Proposal is in the best interests of the Company and the consideration of $2.25 per share (revised upwards from $2.20 after further negotiation) payable pursuant to the Privatization Proposal is fair to the Company's minority shareholders. Accordingly, the Special Committee unanimously recommended that the Board of Directors approve the Privatization Proposal. The Board of Directors (without the participation of the CEO) unanimously determined that the Privatization Proposal is in the best interests of the Company and the consideration of $2.25 per share payable pursuant to the Privatization Proposal is fair to the Company's minority shareholders, and approved the Company entering into an arrangement agreement in order to effect the Privatization Proposal, subject to shareholder approval and court approval.
On February 13, 2013 the Ontario Superior Court of Justice granted an interim order upon the application of the Company approving the process for seeking shareholder consent of a Plan of Arrangement under the Ontario Business Corporations Act, to effect the arrangement agreement.
Additional disclosure regarding the transaction is provided in the management information circular which has been filed on SEDAR and will be available at www.sedar.com.
Sales decreased by $37.2 million to $8.6 million in the second quarter of Fiscal 2013 ("Q2FY13") from $45.8 million in Q2FY12. The decrease in sales is due primarily to the absence of any sales to Beidahuang from HLJ during Q2FY13 and minimal sales in JS, as well as a shift in seasonal production during Fiscal 2012, where sales were made in the second quarter of Fiscal 2012 ("Q2FY12") as opposed to the first quarter of Fiscal 2012 ("Q1FY12"), due to the HLJ 2011 Maintenance Turnaround. Sales were also negatively impacted during Q2FY13 at Hanampi due to sales returns relating to non-compliant product.
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