Giga Capital Corporation
NEX BOARD : GIG.H

November 28, 2011 13:53 ET

Giga Capital Corporation Announces Proposed Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2011) - Giga Capital Corporation (the "Corporation") (TSX VENTURE:GIG.H), a capital pool company, announces that it has entered into a letter of intent ("Letter of Intent") dated November 28, 2011 with Chang Li Holdings Ltd. with respect to the proposed acquisition of all of the issued and outstanding shares of Tongli Enterprises Development (HK) Company Ltd. ("Tongli").

About Tongli:

Tongli carries on the business of the market development and sales of neodymium iron boron (NdFeB) rare earth permanent magnetic materials and devices. These materials are essential components for computers, mobile phones, most audio and video equipment, generators and medical equipment.

Tongli is incorporated under the laws of Hong Kong and has an office in, and its business is located in Hong Kong. It is a wholly-owned subsidiary of Chang Li, incorporated under the laws of the British Virgin Islands with an office in Hong Kong.

Chang Li is owned 50% by Robert Ting Cheong Siu of Hong Kong and 50% by Yue-Sheng Fu of Hong Kong.

The unaudited management prepared financial statements of Tongli indicate that Tongli had revenue of $3,852,089, profit of $516,042, total assets of $2,508,231, total liabilities of $1,454,245 and shareholder's equity of $1,053,986 for the year ended December 31, 2010 and revenue of $8,096,475, profit of $1,144,648, total assets of $5,687,126, total liabilities of $3,371,482 and shareholder's equity of $2,315,644 for the period ended September 30, 2011.

Terms of the Proposed Transaction:

The Letter of Intent provides that the currently issued and outstanding 7,660,000 Common Shares of the Corporation will be consolidated on a 5 for 1 basis (the "Consolidation"). The Consolidation was approved by the shareholders of the Corporation at a shareholders' meeting held on September 15, 2011.

The Letter of Intent contemplates that the Corporation will, subject to acceptance by the TSX Venture Exchange (the "Exchange") and meeting other regulatory requirements, issue a combined total of 25,000,000 post-consolidation Common Shares ("Post Consolidation Shares") and convertible preferred shares ("Convertible Shares") of the Corporation at a deemed price of Cdn.$0.20 in exchange for all of the issued and outstanding shares of Tongli (the "Acquisition") for a total value of $5,000,000. This value is subject to obtaining a final valuation. If the final valuation is higher or lower than $5,000,000 the number of Post Consolidation Shares and Convertible Shares will be recalculated by dividing the final valuation by $0.20. The number of Post Consolidation Shares and Convertible Shares will be determined on the basis that upon completion of the Acquisition and the Financing, as hereinafter defined, the public float will, after the issuance of the Post Consolidation Shares pursuant to the Acquisition, be 20% of the Post Consolidation Shares of the Corporation and the remainder will be Convertible Shares. Each Convertible Share shall be convertible into a Post Consolidation Share of the Corporation, for no additional consideration, at any time as long as the public float is not less than 20% of the total issued Post Consolidation Shares of the Corporation.

Subject to Exchange acceptance, it is intended that the Acquisition will constitute the Qualifying Transaction of the Corporation in accordance with Policy 2.4 of the Exchange.

The Letter of Intent contemplates that the Corporation will raise a minimum of Cdn.$250,000 and a maximum of Cdn.$2,000,000 by the issuance of Post Consolidation Shares at a price of $0.20 per share (the "Financing"). The Corporation has not yet determined whether the Financing will be brokered. If the Corporation enters into an engagement agreement with an agent, the details will be announced in a subsequent news release. The proceeds of the Financing of the minimum offering will be added to working capital and the proceeds of the maximum offering will be used for working capital, product development and product marketing.

The Corporation has retained Wolverton Securities Ltd. to act as sponsor of the proposed Qualifying Transaction.

The transaction contemplated in the Letter of Intent is subject to, among other things, the following conditions:

  1. completion of due diligence by the Corporation and Chang Li;
  2. all prior agreements or letters of intent to which the Corporation is a party shall be terminated to the satisfaction of Chang Li;
  3. the Consolidation shall be effected prior to the closing of the Acquisition;
  4. completion of the Financing;
  5. additional stock options will be granted to directors, officers, employees and consultants of the Corporation and its subsidiaries;
  6. upon closing of the Acquisition, a new board of directors of the Corporation will be elected or appointed;
  7. entering into of a formal agreement; and
  8. meeting all regulatory requirements, including approval of the Exchange, and meeting all conditions of the formal agreement.

The proposed Qualifying Transaction will be at arm's length, and accordingly, will not require approval by the majority of the minority shareholders of the Corporation; however, detailed information on the Qualifying Transaction, Tongli and the Resulting Issuer (as defined in the Exchange policies) will be included in a Filing Statement to be filed on SEDAR.

Proposed Management:

It is proposed that upon completion of the Qualifying Transaction the board of directors will consist of five members, three of whom are currently members of the board, namely: Michael Poon, Frank Boyd and Stephen Law and two of whom are to be appointed, namely: Robert Siu and Alan Chan. The following is a description of the proposed directors and officers of the Resulting Issuer:

President, Chief Executive Officer and Director

Robert Ting Cheong Siu is a director and Chief Executive Officer of Tongli and owns 50% of the issued shares of Tongli. It is proposed that Mr. Siu will be appointed President, Chief Executive Officer and director of the Corporation. Mr. Siu holds a Bachelor's Degree in Life Sciences from Queen's University, Canada and a Master's Degree in Business Administration from the Asian Institute of Management. After serving in the financial arm of the Bank of Philippines Islands and Ayala Finance in Hong Kong in the early 1980s focusing on syndication loans, Mr. Siu joined GSL Investments Group (Canada) in 1988 as the Managing Director of GSL (Asia) Group based in Hong Kong with branch offices in Singapore, Malaysia, Taiwan, Beijing and Shanghai. Over the past 20 years, Mr. Siu's experience has been the areas of investments in Sino-foreign joint venture projects in property, hotel, natural resources, manufacturing and communications, as well as corporate restructuring, corporate finance and fund raising in Canada, the Unites States and Hong Kong. In July 2006 Mr. Siu was appointed Vice-Chairman and Executive Director of A-Max Holdings Limited, a publicly listed company in Hong Kong, whose main business is investments in casino and related operations in Macau. In June 2007, Mr. Siu was appointed Chief Executive Officer of GSL Mining Investment Company Limited, which operates four gold and copper mines in Lanzhou, Gansu and sand and gravel mine in Kunming, Yunnan.

Chief Financial Officer and Director

Michael Poon is currently a director and Chief Financial Officer of the Corporation. He has been a Chartered Accountant in public practice as a sole practitioner since 1992. He has also been employed as Secretary-Treasury and Chief Financial Officer of Ginger Beef Corporation, a TXV listed company, since 2002. In addition, Mr. Poon has been a director of Ginger Beef Corporation since 2002. Mr. Poon received a Bachelor of Business Management degree from Ryerson Polytechnical Institute and received the Chartered Accountant designation in 1983.

Secretary and Director

Alan P. Chan is the proposed Secretary and a proposed director of the Corporation. Mr. Chan is a non-practicing professional engineer and an entrepreneur. He graduated from University of Saskatchewan with a Bachelor of Science Degree in 1973. Since graduation, he worked in a number of industries and held various senior technical and management positions. In 1994, he founded China Pacific Industrial Corp. to pursue joint venture projects in China, and subsequently established two joint ventures in China. Since the late 1990s, Mr. Chan has been involved in the establishment of a number of public companies and assisted them in completing a number of financings, mergers and acquisitions. Currently, he is a director, Chief Financial Officer and Secretary of Grand Power Logistics Group Inc., listed on the TSX Venture Exchange. He is also a director of Ginger Beef Corporation and Hunt Mining Corporation, both listed on the TSX Venture Exchange.

Director

Frank Boyd is currently the President, Chief Executive Officer and a director of the Corporation. Since 2009, he has been the Vice Chairman of the Board and Partner of APEX Limited Partnership. Mr. Boyd started Apex Land Corporation ("APEX") in May, 1991 and served as President and Chief Executive Officer for 18 years. APEX has developed communities and constructed multi-family units and single family homes. Prior to founding APEX in 1991, Mr. Boyd worked in the development industry as a development manager and Vice President of land development for two large land development companies. From 1997 to 2000, Mr. Boyd was the President of the Urban Development Institute of Canada. Mr. Boyd is a non-practicing professional engineer, with a B.Sc. in Civil Engineering from Queen's University of Belfast and is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

Director

Stephen Law is currently a director of the Corporation. He is a civil engineer and has been President of GSL Group of Companies, a real estate development company, since 1989. Mr. Law received his BSc Eng., with honors, from Hong Kong University in 1974. Mr. Law has been a member of the Institution of Civil Engineers, UK and a member of Chartered Engineers UK. He is a member of the Hong Kong Institution of Engineers, the Ontario Society of Professional Engineers and the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

Other Insider

Yue-Sheng Fu is the Executive Director of Tongli and owns 50% of the issued shares of Tongli. He was the Vice General Manager of the electrical appliance plant of Taiyuan Iron and Steel (Group) Co., Ltd. and the General Manager of Taiyuan Tianlihe Co., Ltd. in the early 1980's. Over the past two decades, Mr. Fu has gained experience in investment, business operations and management in the NdFeB rare earth permanent magnet industry.

Trading in the shares of the Corporation will be halted until such time as the Qualifying Transaction is completed and the Financing is closed.

Upon completion of the Qualifying Transaction, the Corporation will be classified as an industrial issuer on the Exchange.

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

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the 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.

Wolverton Securities Ltd., subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the 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.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

NEITHER THE 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.

Statements in this press release contain forward-looking information within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "contemplates", "intends", "plan", "expect", "project", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to: completion of the Acquisition; receipt of all necessary shareholder, regulatory and third party approvals, if applicable; and the composition of the board of directors and management of the Resulting Issuer. Readers are cautioned that assumptions used in the preparation of forward-looking information may prove to be incorrect. Although the Corporation believes that the expectations reflected in the forward-looking information is reasonable, there can be no assurance that such expectations will prove to be correct. The Corporation cannot guarantee future results, level of activity, or performance of achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of the Corporation) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to: foreign operations; general economic conditions in China, Canada and globally; the risks associated with the selling and marketing of semiconductor parts; and exchange rate changes. Industry related risks could include, but are not limited to: operations with foreign entities; delays or changes in plans; competition for, among other things, capital, acquisitions, skilled personnel and supplies; governmental regulation of the technology industry; technical problems; the uncertainty of estimates and projections of costs and expenses; unanticipated operating events or performance which can reduce productivity; the need to obtain required approvals from regulatory authorities; stock market volatility; liabilities inherent in technology operations; access to capital; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. The Corporation undertakes no obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in its expectations except as otherwise required by Exchange Requirements and applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

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 press release.

Contact Information

  • Giga Capital Corporation
    Frank Boyd
    President and Chief Executive Officer
    (403) 716-2230