Adamas Finance Asia Limited, a London quoted pan-Asian diversified investment vehicle, is pleased to announce the disposal of the Group’s interest in Global Pharm Holdings Group Inc. (“Global Pharm”) (the “Transaction”).
The Transaction is in line with the Company’s objective of maximising shareholder returns through a managed disposal programme of its legacy portfolio where commercially viable and reinvesting the proceeds in pan-Asian income producing assets with capital gain potential.
Terms of the Transaction
On 15 September 2017 (the “Signing Date”), the Company entered into a sale and purchase agreement with Fortune Insight Limited (“Fortune”) (the “SPA”) for the sale of its 75% interest in Blazer Delight Limited (“Blazer Delight”), through which ADAM holds its interest in Global Pharm (the “Global Pharm Interest”) for US$15.6 million in cash, which is payable by Fortune within 120 days of the Signing Date.
The Group’s interest in Global Pharm was transferred to Fortune on the Signing Date. In the event that Fortune does not meet its payment obligations under the SPA, Fortune will transfer the Global Pharm Interest back to ADAM for nil consideration.
Global Pharm Interest
In February 2014 as part of a reverse takeover, the Group acquired a 75% interest in Blazer Delight, which was a special purpose vehicle holding a convertible bond issued by Global Pharm. At that time, the Global Pharm Interest was independently valued at US$22.4 million (net to ADAM). The Company has received payments of approximately US$6.0 million since the acquisition of the interest which is now being sold for US$15.6 million.
In the Company’s audited accounts for the year ended 31 December 2016, the carrying value of the Global Pharm Interest was valued at US$17.3 million. As the negotiated sale price for the Global Pharm Interest is below the Company’s current carrying value, completion of the Transaction will result in an accounting loss of US$1.7 million which will be recognised in the results for the six months ended 30 June 2017.
Related party transaction
Fortune is managed by affiliates of Adamas Asset Management (HK) Limited (“AAM”). The Company’s largest shareholder, Elypsis Solutions Limited, is also managed by affiliates of AAM and therefore the Transaction is classified as a related party transaction under the AIM Rules for Companies.
The Directors, having consulted with WH Ireland Limited, the Company’s nominated adviser, consider that the terms of the Transaction are fair and reasonable insofar as shareholders are concerned.
Suresh Withana of Harmony Capital, the recently appointed Investment Manager to ADAM, stated:
“We are pleased to have achieved the sale of the Global Pharm Interest, which is in line with our objective of exiting the Company’s legacy assets where commercially viable and reinvesting the proceeds in pan-Asian income producing assets with capital growth potential. Although the sale is at a loss, the long-term beneficial impact to the Company from the sale of this investment, should be significant.”
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