Hanseatic & Baltic Properties plc
LSE : HBPO
January 22, 2010 02:00 ET
Statement re Memorandum of Understanding
HANSEATIC & BALTIC PROPERTIES PLC
MEMORANDUM OF UNDERSTANDING AND OPTION AGREEMENT
Hanseatic & Baltic Properties Plc ("Hanseatic & Baltic" or "the Company") is pleased to announce that it
has signed a Memorandum of Understanding ("MoU") to acquire the entire issued share capital United Sino
Limited ("Sino"), a company incorporated in the Cayman Islands from the following companies; P.T.
Citramegah Karya Gemilang (referred to as "CKG"), incorporated in the Republic of Indonesia, Prestigious
Assets Management Limited, Sarris Limited, Olympiad Investments Limited, Trinova Holdings Limited, Mirae
Asset Solutions (HK) Limited and Jersey Hills Holdings Limited, all incorporated in the British Virgin
Islands (together referred to as the "Vendors").
The consideration for the acquisition under the terms of the MoU will be 30 billion Ordinary shares of GBP
0.001 each. Today's mid-market price is 2.25 p
The MoU is legally binding however the completion of the acquisition is conditional upon the fulfilment of
certain conditions which include the completion of due diligence by the Company on Sino, the successful
raising of GBP 10 million of debt or equity, shareholder approval and the fulfilment of requirements under
The City Code on Takeover and Mergers.
If the proposed acquisition goes ahead the Company will have 30,092,368,046 Ordinary shares in issue and
the vendors would own 99.7% of the entire issued share capital of the Company prior to including shares
raised as a result of the intended placing mentioned above.
The Company has previously issued certain convertible instruments which, under certain conditions, may
result in a total of an additional 705,750,000 Ordinary Shares being issued. On a fully diluted basis the
Company would have 30,798,118,046 Ordinary shares in issue and the vendors would own 97.4% of the entire
issued share capital of the Company prior to including shares raised as a result of the intended placing
The above calculations do not include the exercise of options under the option agreement which is detailed
under the section Option Agreement below.
Background information on Sino
It is proposed that Sino incorporates a subsidiary in Libya in which it will own 65% of the entire issued
share capital (referred to as the "Subsidiary"). The Subsidiary will own construction assets and equipment
with a net book value of approximately Libyan Dinars 67.2 million. The Subsidiary's only liability will be
an on-demand promissory note (the "Note") issued to Sino for Libyan Dinars 67.2 million (approximately
USD 54 million). The Note will be Sino's only asset.
Sino will enter into a construction management agreement with CKG to manage all of its construction
projects in Libya and in particular:
1. Ain Zara 2,771 Housing Units Project.
2. Al Awata Housing Units Project.
3. Coastal Agricultural Areas Project - construction of 5 Storage Tanks and Related Secondary
4. Coastal Agricultural Areas Project - construction of 4 Storage Tanks and Related Secondary
5. Fire Fighting Water Pipeline Works at Azzawiya Refinery.
6. Zaiwa Floating Roof Tank Project.
7. Construction of Khaleed Ben Elwaleed Hotel and Office Complex.
8. Sarafa Bank Headquarters Office Building.
9. Sebha Housing Project.
Furthermore, the MoU provides that Sino shall enter into a construction management agreement with the
Subsidiary which terms include that the Subsidiary shall pay to Sino 40% of its profit as management fees.
The Vendors shall procure that all new construction projects (ie all and any construction project other
than those listed above) shall be entered into by the Subsidiary.
The board of Sino will include Mr Naeem Shah and Mr Song Han Wook, both of whom have extensive experience
in the construction industry.
Mr. Naeem Shah has extensive experience both in field operations and management relating to the
construction of housing complexes, oil & gas facilities (both upstream and downstream), LNG plants, power
plants, pipelines, airports, and infrastructure works. He started his career as a field engineer with
Bechtel in 1973 and became Bechtel's Far East Manager of Construction in 1991. He was awarded Bechtel's
"Constructor of the Year" award in 1993. Mr Shah left Bechtel in 1995. He is now the chairman and driving
force of CKG. CKG is an Indonesian company that has successfully completed many construction projects in
Asia and Africa.
Mr Song Han Wook spent the first 23 years of his career at the Hyundai Engineering & Construction Co. where
he acted as project coordinator or development manager on a number of substantial projects including 3
years on the King Fahad Hospital Project in Saudi Arabia and 7 years working on the Nuclear Power Plant
Project in Korea. Since 2001 he has also worked at Keangnam Enterprises Co. and Sechang Construction Co.
where he was responsible for overseas business. Since 2009 he has worked at Prestigious Construction
Management Pte. Ltd. where he acts as the Managing Director responsible for business in Libya.
The Company has also agreed an option agreement with Mirae Asset (Shanghai) Investment Consulting Co.
Mirae shall have an option to acquire 2 billion Ordinary Shares of GBP 0.001 at a subscription price of 1p
per Share. The option period commences on the day immediately following the acquisition of Sino until 19th
January 2011. If the acquisition does not proceed the option period does not commence.
Leo Knifton, Chairman, commented:
"We are delighted to have signed this Memorandum of Understanding and are excited by the prospect of the
Company completing this acquisition and becoming one of PLUS's largest companies. Sino along with the nine
projects comes with assets which include plant and machinery which has an approximate value of USD 54m dollars
along with the value of the nine projects which far outweigh the purchase price. The potential for the
Company after the successful acquisition will be significant and shareholder value will be considerably
22 January 2010
The Directors of the Issuer accept responsibility for this announcement.
FOR FURTHER INFORMATION PLEASE CONTACT:
Hanseatic & Baltic Properties PLC
5-7 Cranwood Street
Tel: +44 (0) 20 7309 2281
Fax: +44 (0) 20 7566 0023
Alfred Henry Corporate Finance Limited
Tel: +44 (0) 20 7251 3762