Grand Power Logistics Group Inc.

Grand Power Logistics Group Inc.

September 07, 2005 13:55 ET

Grand Power Logistics Announces a Major Acquisition

CALGARY, ALBERTA and HONG KONG, PEOPLES REPUBLIC OF CHINA--(CCNMatthews - Sept. 7, 2005) - Grand Power Logistics Group Inc. (TSX VENTURE:GPW) (the "Corporation") today announced that it and its wholly owned Hong Kong subsidiary, Grand Power Express International Limited of Hong Kong ("Grand Power Hong Kong"), have entered into a letter of intent dated September 7, 2005 with Grand Power Express Forwarders Co. Ltd. of Macau ("Grand Power Macau"). Under the terms of the letter of intent, Grand Power Hong Kong will acquire 100% of the shares of Grand Power Macau for HK$13.75 million (approx. CDN$2.17 million). The payment to the shareholders of Grand Power Macau for the acquisition will comprise of HK$3.75 million in cash and HK$10,000,000 in common shares of the Corporation for 3,162,760 shares at a deemed price of CDN$0.50 per share.

The acquisition of Grand Power Macau is a non-arm's length transaction in which three of the directors of the Corporation, namely Tong (Ricky) Chiu, Wan Kee Chiu and In Wai (Mike) Lam are the only shareholders of Grand Power Macau. Tong (Ricky) Chiu owns 6.82%, Wan Kee Chiu owns 86.36% and In Wai (Mike) Lam owns 6.82% of the issued share of Grand Power Macau. This transaction and the issuance of the Corporation shares will be subject to regulatory approval.

This transaction is a related party transaction under the TSX Venture Policy of 5.9. The Corporation is relying on the exemption from the requirement of this Policy that Corporation obtains a minority shareholders' approval and a formal valuation on the basis that the value of the shares to be issued to the shareholders of Grand Power Macau pursuant to this transaction is less than 25% of the market capitalization of the Corporation.

As announced in the press release of April 21, 2005, the Corporation has established a special committee of independent directors to evaluate the acquisition of Grand Power Macau. This special committee, which comprises of Francis Leong and Gerry A. Peacock, has completed its evaluation and has recommended the Corporation to proceed with the acquisition subject to the terms for the acquisition are within the parameters established by the special committee. In addition, an independent appraisal was carried out. Based on this independent appraisal, the value of Grand Power Macau was assessed at HK$13.75 million.

Grand Power Macau is in the business of airfreight agent in operating inbound, outbound and logistics cargo services in Macau. In addition, Grand Power Macau has a CEPA (Closer Economic Co-operation Agreement) license, allowing it to conduct logistics business in Shanghai, the People's Republic of China.

The audited financial statements of Grand Power Macau for the year ended December 31,2004 states that Grand Power Macau had sales revenues of MOP(Macau Pataca)$38,486,304 (approx. CDN$5,671,800) with a net profit after taxes of MOP$179,815 (approx. CDN$26,500), total assets of MOP$11,445,791 (approx. CDN$1,686,788), total liabilities of MOP$7,902,268 (approx. CDN$1,164,572), current assets (same as total assets) of MOP$11,445,791, current liabilities (same as total liabilities) of MOP$7,902,268 and shareholders' equity (net assets), including retained earnings, of MOP$3,543,523 (approx. CDN$522,216).

"The acquisition of Grand Power Macau is a very positive development for the company. It is a well established company with a solid balance sheet and a well developed client list. It provides Grand Power Hong Kong a ready made launching pad into the huge Chinese Mainland market since it possesses a CEPA license, allowing it to conduct logistics business in Shanghai, the biggest commercial centre in China. Grand Power Macau, being a private company, is marginally profitable at the present time. It is expected that the profit margin will improve substantially once its operations are successfully integrated into Grand Power Hong Kong." says Francis Leong, a director of the Corporation.

About Grand Power Logistics Group Inc.

Grand Power Logistics Group Inc. operates principally through its wholly owned subsidiary, Grand Power Express, which commenced business in Hong Kong in March 2002 as an airfreight forwarding service. Although Grand Power Express is principally an airfreight provider, it also provides sea freight services, customs brokerage, logistics, warehousing and distribution, as well as other value added services for clients. The Grand Power group is uniquely positioned in Asia, with its headquarters in Hong Kong and supporting offices in Macau, Shanghai, Guangzhou, Taipei and Bangkok. The Company has obtained key agent status with eight (8) airlines such as Cathay Pacific and Thai Airways. Grand Power began trading on the TSX Venture Exchange in November 2004.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Grand Power Logistics Group Inc.
    Alan Chan
    (403) 229-2337
    (403) 228-3013 (FAX)
    The Howard Group Inc.
    Peter Weichler
    The Howard Group Inc.
    David Gordon
    (403) 237-8387 (FAX)
    Email: info@howardgroupinc. com