CALGARY, ALBERTA--(Marketwired - April 1, 2014) - AMG Bioenergy Resources Holdings Ltd. (the "Company") (TSX VENTURE:ABG), a Canadian publicly traded company, reports that it has entered into an arm's length project management agreement ("Project Management Agreement") with Mr. Tan Wen Tai of Singapore (the "Stakeholder") dated March 24, 2014 with respect to the development of a resort condominium residences in Hainan island (the "Project") in the People's Republic of China by Hainan Hua Yan Scientific Resources Co. Ltd. (the "Project Company").
The Stakeholder intends to acquire a controlling interest in the Project Company for USD16 million (the "Investment"), and, pursuant to the Project Management Agreement, will rely on the Company as its nominee to not only assist with such acquisition, but to provide various management services related to the Project on behalf of the Stakeholder (the "Management Services"). These include, among other things, accounting and banking services, planning and budgeting services, assisting with obtaining licensing and permits, and quarterly reporting in respect of engineering work. The Company intends to hire a project engineer and a project accountant (the "Hired Employees") to assist with these services, the aggregate annual cost of which is estimated to be USD $66,000 and will be borne by the Company, which will be via shareholders loans if it doesn't otherwise have cash on hand. Management of AMG does not intend to devote more than 30 to 35% of their respective working time to the Management Services.
The term of the Project Management Agreement is 30 months. If by the end of this term the Stakeholder recoups his investment in the Project Company of $16M USD and realizes an average annual return over the term of the Project Management Agreement of 17.5% (via cumulative dividends), the Stakeholder will remunerate the Company for providing the Management Services by transferring to the Company shares in the Project Company representing not less than a 51% ownership interest. After reasonable inquiry including consultation with applicable legal counsel, the Company is not aware of any applicable laws which would impede the transfer of these shares. In the event the Stakeholder does not recoup his investment and realize a 17.5% annual return, then the Company may not receive any remuneration for providing the Management Services.
Aside from the costs associated with the Hired Employees, the Company's working capital requirements to fulfil its obligations under the Project Management Agreement are expected to be nominal. Other than these costs, the Company has no other financial obligations or commitments in respect of the Management Services. The Project Management Agreement provides that all working capital requirements respecting the Project and of the Company, up to USD $2M (which the Company has agreed not to exceed), including those related to the Company's out-of-pocket costs (other than remuneration paid to the Company's own employees, which includes the Hired Employees), will be paid or reimbursed by the Project Company. It will be a condition to advancing the Investment to the Project Company that the Project Company agrees to set aside USD $2M for this purpose, all of which will be managed by the Company as part of the Management Services.
The entering into of the Project Management Agreement is a "Reviewable Transaction" as defined in TSX Venture Exchange Policy 5.3. As a result, the Company will be required to obtain Exchange approval, and it will be required to satisfy numerous other conditions, including, obtaining disinterested shareholder approval. In the event the Company is unable to satisfy these conditions, pursuant to the Management Agreement it is entitled to terminate the agreement without cost or liability. As a result there can be no assurance that the transactions contemplated by the Management Service Agreement will be completed as proposed, or at all.
The Company's shares are anticipated to resume trading on the Exchange on or about April 1, 2014.
About AMG Bioenergy Resources Holdings Ltd.
The Company has been active in research and development of bio-fuel feedstock and biodiesel conversion with the intent of developing a business producing jatropha as a bio-fuel feedstock in the People's Republic of China and other parts of Asia. The Company is also active in the management of its Jatropha and Eucalyptus plantations in the People's Republic of China. This will continue to be the focus of the Company's business notwithstanding the Management Services to be performed by the Company pursuant to the Project Management Agreement.
ON BEHALF OF THE BOARD
Lee Shoong Lim, Managing Director
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.
This news release may contain "forward-looking information" (as defined in applicable Canadian securities legislation). Forward-looking information is based on expectations, estimates and projections, and it addresses future events and conditions. Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, as no assurances can be given as to future results, levels of activity or achievements."