Hong Kong-listed investment holding company CIMC Enric Holdings Limited has terminated its plans to acquire Sinopacific Offshore and Engineering, majority owned by Sinopacific Shipbuilding Group.
CMIC Enric signed a memorandum of understanding on 15 August, 2015 with Sinopacific and SOEG to acquire 63.31% of equity interests of SOE, and with Evergreen Group to acquire the remaining 36.69% of stake.
The acquisition was conditional upon the satisfaction or waiver of conditions precedent. However, the company’s board considers that certain conditions for the completion of the transaction cannot be fulfilled, including the 36.69% equity interests in the target company as they have been seized by the PRC courts and therefore not free from encumbrances and disputes.
The board also considers that vendors had breached certain material terms of the agreements, including considerable difference in the net asset value of the target company now and a year ago.
“After due and careful consideration and after consulting with our legal advisers, the board decided not to proceed with acquisition I and acquisition II,” the company said, adding that it delivered termination notices on 1 June 2016.
In addition, the company is seeking return of the first installments and prepayment worth RMB 178.6 million (USD 27.1 million) and payment of damages and interests as a result of the breaches to the purchase.
The decision on termination also relates to the announcement dated 21 December 2015 regarding the financial assistance framework agreement CIMC Enric entered into with Sinopacific worth RMB 1.5 billion (USD 227 million).
As a result, Sinopacific is due to repay the loan and interests or release any members of the group from any guarantee under the agreement within one month from the termination.
“In the meantime, the board is considering various alternatives in protecting the rights and values of the group’s interests in the target company, including but not limited to the commencement of restructuring procedures against the company,” CIMC Enric concluded.