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
mentioned above.

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
        Conveyance Pipelines.
    
4.      Coastal  Agricultural  Areas  Project  - construction of 4 Storage  Tanks  and  Related  Secondary
        Conveyance Pipelines.
    
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.


Management team

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.



Option Agreement

The  Company  has  also  agreed an option agreement with Mirae Asset (Shanghai) Investment  Consulting  Co.
Limited ("Mirae").

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
enhanced."

22 January 2010


The Directors of the Issuer accept responsibility for this announcement.

FOR FURTHER INFORMATION PLEASE CONTACT:

Nigel Weller
Hanseatic & Baltic Properties PLC
Finsgate
5-7 Cranwood Street
London
EC1V 9EE

Tel:  +44 (0) 20 7309 2281
Fax: +44 (0) 20 7566 0023

Nick Michaels
Alfred Henry Corporate Finance Limited
Tel:  +44 (0) 20 7251 3762

Contact Information

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