Central Rand Gold (CRG) today signed an non-binding Memorandum of Understanding with Huili Resources in relation to the potential sale of the company’s subsidiary Central Rand Gold (Netherlands Antilles).
Huili Resources is listed on the Hong Kong Stock Exchange and is an investment holding company. Its subsidiaries are principally engaged in the mining, ore processing and sales of nickel, copper, lead, zinc and gold products in the People’s Republic of China. One of the significant shareholders of Huili Resources is CRRC Investment, a wholly owned subsidiary of China Railway Resources Group Co.
The MOU with Huili Resources is substantively consistent with the terms and conditions of the other MOU’s signed, and also contemplates the potential disposal of 100% of the shares held by Central
Rand Gold in its wholly-owned subsidiary, Central Rand Gold (Netherlands Antilles) to Huili Resources for consideration of no more than USD$150 million.
Pursuant to the agreement it is agreed that both parties will seek to enter into a formal sale agreement of the subsidiary within four months of the date of the agreement. In addition, within this four month period, this MOU also includes a unique provision which entitles Huili Resources to the right of first purchase within 21 days of a third party offer being received for the subsidiary. Importantly, this provision does not prevent the company from completing diligence and advancing final form documentation for a potential transaction with any or all of the MOU parties.
The Huili Resources offer is subject to a number of conditions including:
- mutual completion of due diligence by both Central Rand Gold and Huili Resources;
- Central Rand Gold obtaining all necessary regulatory and exchange approvals for the potential sale of the subsidiary;
- Huili Resources obtaining relevant regulatory approvals;
- the entering into a formal share sale agreement for the sale of the subsidiary; and
- finalisation of all required due diligence and the execution of a formal share sale agreement.
All MOU parties have been given full access to the CRG virtual data room. The company remains fully engaged with all MOU parties during this due diligence process. The company will continue to expedite, where possible, the due diligence process; however this will not be done at the expense of shareholder value. The company continues to target 31 March 2015 to complete the due diligence process, however this period may need to be extended to ensure Huili Resources completes the due diligence process.