Aquarius Capital Corp.
TSX VENTURE : AQU.P

November 19, 2010 13:01 ET

Aquarius Files Preliminary Prospectus for Qualifying Transaction With Green Star

TORONTO, ONTARIO--(Marketwire - Nov. 19, 2010) - Further to its preliminary news release on August 12, 2010, Aquarius Capital Corp. (TSX VENTURE:AQU.P) (the "Corporation" or "Aquarius"), is pleased to announce that it has entered into an arm's length share purchase and exchange agreement (the "Agreement") on November 18, 2010 with Sino Elite Group Limited (the "Target") and the Target's shareholders, which has the economic benefit in and control over Fujian Pucheng Star of Green Foodstuff Co., Ltd. ("Green Star"). The Corporation is a capital pool company and intends for the acquisition of Green Star through the Target to constitute its Qualifying Transaction (the "Qualifying Transaction") as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). Aquarius has filed a preliminary non-offering prospectus dated November 18, 2010 with the securities commissions of Ontario, British Columbia and Alberta with respect to the Qualifying Transaction. The proposed Qualifying Transaction does not constitute a non-arm's length qualifying transaction, and will not be subject to shareholder approval.

Qualifying Transaction

The Target is a corporation governed by the laws of Hong Kong, and is the 100% holder of Pucheng Hongli Agriculture Products Technology Development Co., Ltd., a company governed by the laws of the People's Republic of China ("Pucheng"). Green Star is a company governed by the laws of the People's Republic of China. Pucheng has entered into a series of variable equity interest contracts with Green Star and Green Star shareholders pursuant to which all economic benefit in and control over Green Star has been transferred to Pucheng (the "VIE Agreements").

Upon completion of the proposed Qualifying Transaction, both the Target and Pucheng will be wholly owned subsidiaries of Aquarius, and the principal business of Aquarius will be the business of Green Star by operation of the VIE Agreements. The resulting issuer following the completion of the Qualifying Transaction ("Resulting Issuer") is expected to be named "China Green Star Agricultural Corporation" or such other name as may be chosen by the directors of the Resulting Issuer and accepted by the Exchange upon closing of the Qualifying Transaction. 

Pursuant to the terms of the Agreement, Aquarius has agreed to consolidate, prior to completion of the proposed Qualifying Transaction, its common shares on a 10:1 basis (the "Consolidation"). Currently, Aquarius has outstanding 7,019,500 common shares, as well as 261,950 broker warrants, 100,000 finder warrants, and 501,950 options exercisable at $0.10 per share. Post Consolidation, the Corporation will have outstanding 701,950 common shares, 26,195 broker warrants exercisable at $1.00 per share, 10,000 finder warrants exercisable at $1.00 per share and 50,195 options exercisable at $1.00 per share.

Subject to certain terms of the Agreement, Aquarius intends to acquire all 10,274 issued and outstanding common shares of the Target in consideration for a total of 28,493,328 post-Consolidation common shares of Aquarius, with a share exchange ratio of 2,773.3432 post-Consolidation Aquarius shares for each Target share, at a deemed price of CDN$1.22 per post-Consolidation Aquarius share for a total deemed purchase price of $34,761,860 representing five (5) times the operating cash flow of Green Star as indicated in its audited December 31, 2009 financial statements.

A preliminary prospectus dated November 18, 2010 in respect of the proposed Qualifying Transaction has been filed with the securities commissions of Ontario, British Columbia and Alberta and with the Exchange in accordance with Policy 2.4 of the Exchange and is available on SEDAR at www.sedar.com.

Completion of the Qualifying Transaction will be subject to satisfaction or waiver of terms and conditions set out in the Agreement, including but not limited to completion of the Consolidation, satisfactory completion of due diligence, and all required approvals and consents, including the approval of the Exchange and receipt for the final prospectus of Aquarius with respect to the Qualifying Transaction has been issued by the securities commissions of Ontario, British Columbia and Alberta. A shareholder's meeting has been scheduled for December 6, 2010 by Aquarius to approve the proposed consolidation and name change of the Corporation.

Beneficial Owner Information

Immediately below is a list of the full names and jurisdictions of residence of each of the beneficial owners ("Vendors") of Target's shares, including the full name and jurisdiction of incorporation of companies as well as name and jurisdiction of residence of each of the individuals who directly or indirectly hold a controlling interest in or who otherwise control the company that is a Vendor of Target shares:

SHAREHOLDER Residence of
Shareholder
Controlling
Shareholder
of Corporate
Shareholder
Controlling
Shareholder
Residence
       
Bliss Time
Limited
British Virgin
Islands
Lianyun
Guan
China
       
Ally Fast
Limited
British Virgin
Islands
Huiring
Luo
China
       
Maxtion
Investment
Limited
British Virgin
Islands
Yufenf
Zhu
China
       
Ultra Wealthy
Investment
Corporation
British Virgin
Islands
Huaiya
Zeng
China
       
Ace Rank
Limited
British Virgin
Islands
Jia
Lu
China
       
Easy China
Limited
British Virgin
Islands
Meizhen
Guan
China
       
Chun Min China N/A N/A
       
Fanghua
Yang
China N/A N/A
       
Bihui
Huang
China N/A N/A
       
Wentao
Yang
Markham,
Ontario,
Canada
N/A N/A
       
Rong
Catherine
Lu
Markham,
Ontario,
Canada
N/A N/A
       
Weizhi Lin China N/A N/A
       
Bomin Lin China N/A N/A
       
Foundation
Markets
Inc.
Ontario Various   Toronto,
Canada

Industry Overview1

As a result of years of rapid development, there are about 500 key canned food manufacturing enterprises in China that make up to 1,000 product varieties available to the market. While several leading regions have come to the fore, Zhejiang, Fujian, and Shandong have demonstrated distinctive regional advantages. Hundreds of types of canned food, mainly vegetable, fruit, meat and aquatic products are exported from China to the rest of the world. Products with over $100 million annual export value include canned bamboo shoots, tomato paste, mushroom and orange, and those with over $50 million annual export value include canned asparagus, chufa and meat. These products are exported to over 100 countries and regions such as the EU, Japan and the U.S., and some of them have demonstrated remarkable international competitiveness with export volume growing rapidly.

About Green Star

Green Star was incorporated on March 31, 2003 under the laws of the People's Republic of China (PRC). Located in the Pucheng County of the Fujian Province, PRC, Green Star specializes in the advanced processing of agricultural products and has a canned vegetable and fruit product line consisting of tomato paste, canned bamboo shoots, canned oranges, canned peaches and various other types of canned fruits. Green Star has been operation for 16 years, and has focused on maintaining excellence through the application of research and development in production, efficient business operation and management's long term planning. Key assets include a well established management team, production facilities, and a close partnership with rural farming communities.

The following table sets forth selected financial information for Green Star as of and for the years ended December 31, 2009, 2008, and 2007, being the last three completed fiscal years of Green Star, and for the nine months ended September 30, 2010 and 2009: 

    Nine Months Ended September 30   Year Ended December 31
(in Canadian dollars)   2010   2009   2009   2008   2007
Income Statement Data   (unaudited)   (unaudited)   (audited)   (audited)   (audited)
Revenues   $17,884,695   $15,966,016   $24,142,271   $10,001,275   $3,063,022
Income (loss) from continuing operations   $5,762,806   $6,198,391   $8,947,885   $3,590,491   $1,011,729
Net income (loss)   $4,323,387   $4,654,949   $6,688,852   $2,692,419   $746,022
Balance Sheet Data                    
Total Assets   $15,383,337   $5,863,567   $11,357,769   $6,447,555   $2,092,112
Total Liabilities   $2,129,845   $4,006,707   $2,554,960   $3,373,535   $830,252
Shareholders Equity   $13,253,492   $1,856,860   $8,802,809   $3,074,020   $1,261,860

Proposed Management

The following are brief descriptions of the Resulting Issuer's management team and its proposed board of directors nominees that will, collectively, assume management responsibility for Aquarius upon completion of the Qualifying Transaction:

Guan, Lianyun, Director, Chairman of the Board and CEO

Mr. Guan is the founder of Green Star and has over 18 years of experience in the food processing industry. Mr. Guan established Pucheng Zhaixia Vegetable Processing Factory in 1992 and acted as its general manager. Mr. Guan established Green Star in March 2003 and built the production line for canned orange and canned tomato paste in 2004 and 2007, respectively. Mr. Guan has been acting as the sole director and general manager of Green Star since that time.

Luo Huirong, Director, Vice President, Administrative

Ms. Luo has been the Vice President of Green Star since November 2006. Previously, Ms. Luo served as vice general manager of administration in Fuzhou Banghui Hotel, Fuzhou, Fujian, China from October 1995 to October 2006. Ms. Luo graduated from Nanping TV College, Fujian with accounting degree in 1995.

Ye Huoyun, Director

Mr. Ye has been the business director of Fujian Xinhua Beer Company, based in Pucheng, Fujian, PRC, since February 1998. He helped Fujian Xinhua Beer Company to become one of the major beer producers in the region. Previously, Mr. Ye was manager of Fujian Pucheng Beer Factory from June 1985 to December 2000. Mr. Ye has been in food industry over 20 years.

He has extensive knowledge of Chinese domestic food market and sales channels.

Paul Marsiglio, Director

Mr. Marsiglio has been the President of Marsiglio Enterprises Inc., a real estate investment company involved in residential land development, since January 1994. Mr. Marsiglio has a Masters in Business Administration from the Schulich School of Business and is an accredited member of the Appraisal Institute of Canada. Mr. Marsiglio has been a director of Aquarius since May 2008.

Gary Hokkanen, Director

Mr. Hokkanen has been the President of Cavalry Corporate Solutions Ltd., a corporate service company, since April 2010. Previously, Mr. Hokkanen served as CFO of Wireless Age Communications, Inc., formerly an entity operating cellular retail stores and business enterprises, from March 2003 to April 2010. From January 2001 to April 2003 Mr. Hokkanen was CFO of IRMG Inc., a Toronto based financial management consulting firm. From January 2001 to April 2003 Mr. Hokkanen was CFO of IRMG Inc., a Toronto based financial management consulting firm. Mr. Hokkanen currently provides executive level consulting services to development stage entities through a sole proprietorship know as Bronte Business Associates and Mr. Hokkanen currently also serves as CFO and director of Capricorn Business Acquisitions, Inc. and Sagittarius Capital Corp., each a capital pool company. Mr. Hokkanen holds a Bachelor of Arts degree from the University of Toronto and is a CMA (Certified Management Accountant) and a member of the Society of Management Accountants, Ontario.

Bob Jian Guo, Director

Mr. Guo has been the President of Goldenmount Capital International Inc., a Greater-Toronto-Area based financing consulting company, since June 2010. Previously, Mr. Guo was a financial advisor at BMO Nesbitt Burns, Toronto from July 2006 to June 2010. From May 2005 to March 2006, Mr. Guo worked at TD Waterhouse, Toronto as an associate. Mr. Guo holds a MBA from Schulich School of Business, York University and is a Canadian Investment Manager (CIM) designated by CSI Global Education Inc.

Lan Gu, CFO

Ms. Gu has over ten years public and industry management accounting working experience involving audit, management accounting, financial and tax management and planning. Ms. Gu was an auditor with PricewaterhouseCoopers, Toronto, Canada from July 2003 to August 2005. Subsequently, Ms. Gu provided CFO and controllership services in Lanno Torelli LLP, Toronto, Canada from September 2005 to October 2010, and during that time, Ms. Gu served as CFO of Sinoenergy Corp., a NASDAQ listed Chinese company, from May 2008 to October 2008. Ms. Gu holds a Bachelor of Arts degree (Honors) from York University and is a Chartered Accountant (CA) in Canada Ontario and a Certified Public Accountant (CPA) in U.S. Illinois.

Judith Hong Wilkin – Corporate Secretary

Ms. Judith Hong Wilkin has been a lawyer practicing securities law at the at the law firm of Fogler, Rubinoff LLP since 2000, except during January to May 2006 when she was a lawyer at the law firm of Freshfields Bruckhaus Deringer at its Hong Kong office. Ms. Wilkin holds a Master of Law degree from York University, a Bachelor of Law degree from the University of Ottawa, a Bachelor of Arts degree from Lakehead University and a Bachelor of Education (Honours) degree from Southwest China University.

Sponsoring Agent

Global Maxfin Capital Inc. ("Global Maxfin"), subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the Qualifying Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Prospectus

Further information on Aquarius, Green Star, the Qualifying Transaction and the Resulting Issuer can be found in Aquarius's preliminary prospectus dated November 18, 2010 posted at www.sedar.com.

Completion of the Qualifying Transaction is subject to a number of conditions including but not limited to, due diligence and Exchange acceptance. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the non-offering prospectus to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

1 Based on Canned Industry Research Report at Alibaba.com,
http://wenku.baidu.com/view/d8e49b4769eae009581becec.html

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Aquarius Capital Corp
    James Phillipson
    CFO
    905-731-8255