TORONTO, ONTARIO --(Marketwired - Jan. 13, 2014 ) - Hanfeng Evergreen Inc. (TSX:HF) ("Hanfeng" or the "Corporation") announced today that the board of directors of the Corporation has adopted a Shareholder Rights Plan (the "Rights Plan") and an Advance Notice By-law, each effective January 10, 2014 . In light of Xinduo Yu's current share ownership and previously announced intention to nominate a new slate of independent directors, the fundamental objective of the Rights Plan and the Advance Notice By-law is to ensure, to the extent possible, that all shareholders of the Corporation are treated equally and fairly in connection with any initiative to acquire control of the Corporation - whether by way of a dissident proxy solicitation, take-over bid, or otherwise. The Corporation also announced it has changed the record date for the previously announced annual meeting to January 27, 2014 . Hanfeng previously announced on January 7, 2014 , that Xinduo Yu is no longer the President and Chief Executive Officer of the Corporation or the legal representative of the Corporation's wholly-owned subsidiaries, Hanfeng Slow-Release Fertilizer (Heilongjiang) Co., Ltd. and Hanfeng Slow-Release Fertilizer (Jiangsu) Co., Ltd. , and that as part of the Corporation's ongoing value-maximization efforts, the Corporation is taking steps to preserve, and where appropriate monetize, its working capital, while continuing to explore potential partners and customers and strategic alternatives. The Corporation confirms that Xinduo Yu was dismissed by the board of directors of the Corporation from all his offices with the Corporation and its subsidiaries. Any public notices or press releases to the contrary that have been or may be made by Xinduo Yu or persons other than the Corporation are false and should not be relied upon. The Corporation currently does not have an interim Chief Executive Officer. Niral Merchant will continue to serve in his role as Chief Financial Officer of the Corporation and will report directly to the board of directors. As a result of misleading statements published by Xinduo Yu to the effect that he and his current management team intended to continue to lead Hanfeng, despite his dismissal, the Corporation has dismissed and replaced all the other existing directors of the Corporation's subsidiaries, including Hanfeng Slow-Release Fertilizer (Heilongjiang) Co., Ltd. , Hanfeng Slow-Release Fertilizer (Jiangsu) Co., Ltd. , Hanfeng Slow-Release Fertilizer Pte Ltd. (a Singapore subsidiary), and Hanfeng Slow-Release Fertilizer (Canada) Co. Ltd. (a Canadian subsidiary). Summary of Rights Plan The Rights Plan does not prevent a takeover of Hanfeng but ensures that any change of control transaction is conducted in a manner that is fair and in the best interests of the Corporation and all of its shareholders. The objectives of the Rights Plan are: (i) to prevent a creeping takeover of Hanfeng or a transfer of control in which only certain shareholders are paid a premium for their common shares; (ii) to encourage a potential bidder to make a "Permitted Bid", having terms and conditions designed to meet the objectives of the Rights Plan, or to negotiate the terms of an offer with the board of directors of the Corporation; and (iii) to preserve the Corporation's ability to obtain the best value reasonably available for all shareholders by allowing other strategic alternatives to be fully explored by the Board of Directors before any one acquiror has substantial control or a blocking position in the common shares of the Corporation. In summary, the rights issued under the Rights Plan become exercisable only if a person acquires 20% or more of Hanfeng's common shares without complying with the permitted bid provisions of the Rights Plan and where application of the Rights Plan is not waived by the board of directors in accordance with its terms. Any bid that meets certain criteria intended to protect the interests of all shareholders is deemed to be a "Permitted Bid". The Permitted Bid provisions prevent the dilutive effects of the Rights Plan from operating if a take-over bid is made to all holders of common shares of the Corporation (other than the bidder) by way of a take-over bid circular in compliance with applicable securities laws and that remains open for acceptance for a minimum of 75 days and that satisfies certain other conditions. If a take-over bid does not comply with the requirements of the Rights Plan or where the application of the Rights Plan is not waived in accordance with its terms, the rights holders (other than the acquiring person and its affiliates, associates and joint actors) will be entitled to purchase additional common shares of the Corporation at a significant discount to the market price. If a shareholder's beneficial ownership of Hanfeng's common shares as of January 10, 2014 is at or above the 20% threshold, that shareholder's existing ownership would be "grandfathered" under the Rights Plan, but the rights issued would become exercisable if such grandfathered person (and its joint actors) increases its ownership by more than 0.01%. Certain derivative positions are also included in the calculation of beneficial ownership under the Rights Plan. To the knowledge of Hanfeng, as of January 10, 2014 : (i) Xinduo Yu beneficially owns, directly or indirectly, or exercises control or direction over, in the aggregate, 12,296,700 common shares of Hanfeng, representing approximately 20.4% of the issued and outstanding common shares; (ii) an additional 354,974 common shares of Hanfeng are beneficially owned or controlled by Lei Li , Tianhua Yu and Tianyu Yu , who are associates of Xinduo Yu , representing approximately 0.5% of the issued and outstanding common shares of Hanfeng; and (iii) Beidahuang Agriculture Development Limited ("Beidahuang") beneficially owns, or exercises control or direction over, 4,226,408 common shares of Hanfeng, representing approximately 7.0% of the outstanding common shares of Hanfeng. As previously disclosed in the Corporation's Management Information Circular dated February 13, 2013 , the Beidahuang Group of companies (" Beidahuang Group ") has advised that if Hanfeng is not taken private, Beidahuang Group will not purchase fertilizer from the Corporation; may return previous fertilizer purchases; and the then current balance of outstanding accounts receivable may be uncollectible. On December 20, 2013 , the Corporation announced that it has received a notice from Beidahuang Agricultural Company announcing its decision to cease purchasing products from the Company and to terminate all cooperation and business with Hanfeng. The Corporation further understands and previously disclosed that both Xinduo Yu and representatives of Beidahuang Group have indicated that Beidahuang Group may be interested, subsequent to Hanfeng becoming a private company, in acquiring an up to 30% equity interest in Hanfeng. Accordingly, Beidahuang Group may have an agreement, commitment or understanding with Xinduo Yu in these respects with the result that the Corporation has determined that Beidahuang Group may be a joint actor with Xinduo Yu . The Corporation believes that Beidahuang is affiliated or associated with Beidahuang Group . Xinduo Yu is grandfathered under the Rights Plan as of January 10, 2014 . However, if subsequent to January 10, 2014 , Xinduo Yu and/or his joint actors acquire more than 0.01% of the common shares outstanding in addition to those common shares that they already hold, then the rights will become exercisable unless otherwise waived by the Board. The Rights Plan is in effect for a period of six months, unless earlier terminated. The listing of the rights is subject to regulatory approval and acceptance by the Toronto Stock Exchange . Summary of Advance Notice By-law The Advance Notice By-law introduces a requirement that shareholders intending to nominate directors provide advance notice to Hanfeng in certain circumstances. The purpose of the Advance Notice By-law is to provide a fair and transparent procedure for nominating directors. The Advance Notice By-law ensures that Hanfeng and its shareholders will receive adequate prior notice of director nominations, as well as sufficient information on all the nominees, by requiring shareholders to submit a notice of director nominations within a prescribed period in advance of a shareholder meeting for the election of directors. The Board of Directors will be able to evaluate the proposed nominees' qualifications and suitability as directors and respond as appropriate in the best interests of the Corporation. This will facilitate an orderly and efficient meeting process. In particular, the Advance Notice By-law sets forth a procedure requiring advance notice to the Corporation by any shareholder who intends to nominate any person for election as director of the Corporation other than pursuant to (i) a requisition of a meeting made pursuant to the provisions of the Business Corporations Act ( Ontario ) (the "Act"), or (ii) a shareholder proposal made pursuant to the provisions of the Act. Among other things, the Advance Notice Bylaw sets a deadline by which such shareholders must notify the Corporation in writing of an intention to nominate directors prior to any meeting of shareholders at which directors are to be elected and set forth the information that the shareholder must include in the notice for it to be valid. In the case of an annual meeting of shareholders, notice to the Corporation must be made not less than 30 and not more than 65 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Corporation must be made not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made. The Advance Notice By-law is in effect. A complete copy of the Rights Plan and Advance Notice By-law will be filed on SEDAR at www.sedar.com . As a result of delays in approval of the date of the Corporation's previously announced annual meeting scheduled for February 28, 2014 , the record date for that meeting has been changed to be the close of business on January 27, 2014 . This is unrelated to the Advance Notice By-law. Forward-Looking Statements This press release contains forward-looking statements based on current expectations, including but not limited to the Corporation's plans, objectives and expectations and the exploration by the Corporation of strategic alternatives. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about the Corporation's business are more fully discussed in the Corporation's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada . Forward-looking statements are not guarantees of future performance. In light of the significant uncertainties inherent in the forward-looking statements included herein, any such forward-looking statements should not be regarded as representations by the Corporation that its respective objectives or plans will be achieved. Investors are cautioned not to place undue reliance on any forward-looking statements contained herein. Forward-looking statements are provided for the purpose of providing information about the Corporation's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. The Corporation expressly disclaims any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law. About Hanfeng Evergreen Inc. Hanfeng is a leading producer and supplier of value-added fertilizer solutions in emerging markets. It is the largest producer of slow and controlled release fertilizer in two of world's most significant agricultural markets: the People's Republic of China and the Republic of Indonesia . Hanfeng is headquartered in Toronto, Ontario and its shares are traded on the Toronto Stock Exchange under the symbol HF. FOR FURTHER INFORMATION PLEASE CONTACT: Hanfeng Evergreen Inc. Loudon Owen Chairman of the Board of Directors (416) 368-8588 firstname.lastname@example.org Spinnaker Capital Markets Inc. Kevin O'Connor Investor Relations (416) 962-3300 email@example.com Source: Hanfeng Evergreen Inc.
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