Mandarin Mining Plc (to be renamed Enerstry Group Plc) (the "Company")
Proposed reverse acquisition and re-admission to ISDX Growth Market
The Company is pleased to announce that the Company's ISDX Growth Market Admission Document in connection
with its proposed reverse acquisition has been posted to Shareholders today.
Your directors are pleased to inform you that the Company announced today that it has exercised its right
under an Option Agreement to conditionally acquire shares representing 65.71 per cent of the issued share
capital of Enerstry Co. Limited in consideration of the issue to the Vendors of 60,000,000 new Ordinary
Shares in the Company. The new Ordinary Shares to be issued to the vendors represent 70.59 per cent of the
Enlarged Issued Share Capital of the Company. The acquisition of Enerstry Co. Limited is subject to
approval of Shareholders of the company's new investment strategy in power generation and renewable energy
Further details regarding Enerstry Co Limited are set out below.
The Acquisition will constitute a "reverse takeover" under the ISDX Growth Market Rules for Issuers and is
therefore conditional on the approval of Independent Shareholders at the General Meeting. The issue of the
Consideration Shares to the vendors as consideration for the Acquisition would normally give rise to an
obligation on the Concert Party (further details of which are set out in Part V of the Admission Document)
to make a general offer to Shareholders pursuant to Rule 9 of the City Code. The Panel has agreed, however
to waive this obligation to make a general offer, subject to the passing on a poll by Independent
Shareholders of Resolution no. 1 set out in the Notice of General Meeting at the end of the Admission
Application will be made for the Enlarged Issued Share Capital to be admitted to trading on ISDX Growth
Market, subject to the Resolutions being passed by the Shareholders at the General Meeting. The Directors
expect that Admission will become effective and that trading in the Enlarged Issued Share Capital on ISDX
Growth Market is expected to commence on 25 February 2013.
The transaction is subject to the approval of Shareholders at a General Meeting to be held at Finsgate, 5-7
Cranwood Street, London EC1V 9EE at 10.00 a.m. on 22 February 2013.
The Directors of the Company accept responsibility for this announcement.
FOR FURTHER INFORMATION PLEASE CONTACT:
Fook Meng Chan
Mandarin Mining plc
Tel: 00 65 6236 2985
Alfred Henry Corporate Finance Limited
Tel: +44 (0) 20 7251 3762
Number of Consideration Shares being issued pursuant to the Acquisition 60,000,000
Number of Existing Shares in issue 15,000,000
Number of EIN Subscription Shares to be issued at Completion 10,000,000
Total number of Ordinary Shares in issue at Admission, to include the 85,000,000
Consideration Shares and the EIN Subscription Shares
Total number of Ordinary Shares in issue after conversion of the
Convertible Notes 100,000,000
Publication of the Document 5 February 2013
Latest time and date for receipt of Forms of Proxy 10.00 a.m. 20 February 2013
GM 10.00 a.m. 22 February 2013
Completion of the Acquisition 22 February 2013
Admission and commencement of dealings on ISDX Growth Market 25 February 2013
Despatch of definitive share certificates in respect of the 14 March 2013
Consideration Shares to be held in certificated form by no later than
Details of the Transaction as extracted from the Admission Document are set out below. Unless otherwise
defined herein, defined terms, including terms of a technical nature, used in this announcement have the
meaning given to them in the Company's Admission Document.
Your directors are pleased to inform you that the Company announced today that it has exercised its right
under the Option Agreement to conditionally acquire shares representing 65.71 per cent of the issued share
capital of Enerstry in consideration of the issue to the Vendors of 60,000,000 new Ordinary Shares in the
Company. The new Ordinary Shares to be issued to the Vendors represent 70.59 per cent of the issued share
capital of the Company as enlarged by the issue of the new Ordinary Shares, if the Convertible Notes are
exercised in full, the new Ordinary Shares to be issued to the Vendors would form 60 per cent of the issued
share capital of the Company as further enlarged by the issue of Ordinary Shares on conversion of the
The Acquisition will constitute a "reverse takeover" under the ISDX Rules and is therefore conditional on
the approval of Shareholders at the General Meeting. The issue of the Consideration Shares to the Vendors
as consideration for the Acquisition would normally give rise to an obligation on the Concert Party
(further details of which are set out in Part V of the Document) to make a general offer to Shareholders
pursuant to Rule 9 of the City Code. The Panel has agreed, however to waive this obligation to make a
general offer, subject to the passing on a poll by Independent Shareholders of Resolution no. 1 set out in
the Notice of General Meeting at the end of the Document.
Application will be made for the Enlarged Issued Share Capital to be admitted to trading on ISDX Growth
Market, subject to the Resolutions being passed by the Shareholders at the General Meeting. The Directors
expect that Admission will become effective and trading in the Enlarged Issued Share Capital on ISDX Growth
Market is expected to commence on 25 February 2013.
Mandarin Mining Plc
Mandarin Mining Plc was established in February 2011, with a view to admission to the ISDX Growth Market
(formerly known as the PLUS-quoted Market) as an Investment Vehicle (as defined in the ISDX Rules). The
Company was admitted to the ISDX Growth Market on 31 March 2011. The Directors, having identified the
resources sector as being represented by a diverse range of private companies seeking investment, entered
into discussions with one such company, Enerstry. The Directors consider that Enerstry has the prospects
for growth that are sought by investors in the Company on the basis that its business is able to use the
resources that are capable of being provided by the Company to establish and develop the projects that are
being fostered by Enerstry. The Directors wish to proceed with the Acquisition and propose that the
investing strategy of the Company is to be extended to include power generation and renewable energy
Information on Enerstry
Enerstry was founded in January 2012 in Korea by Hwang, Sie Hyoung and Park, Minkyu, with the support of a
group of investors and professionals who contributed finance and expertise to the operations that Enerstry
was proposing to undertake. The strategic objective of Enerstry has been to establish and manage
facilities to recycle waste products in order to generate electricity and energy that is to be supplied to
users and utility groups for an economic return. The participants in Enerstry comprise a management team
which carries the technical expertise and management experience needed to establish and operate the
projects that Enerstry has targeted.
At the outset the equity participation in Enerstry was shared amongst four investors. Enercom is a
corporate investor that has interests in the renewable energy industry. Samyang is also a corporate
investor with interests in the energy industry. Samyang is controlled by members of the family of Lee
Kwangsung, the wife of Hwang, Sie Hyoung, one of the founders of Enerstry and a Proposed Director. Park,
Minkyu, was one of the founders of Enerstry and is a Proposed Director. In addition Lee, Hyung Suk, who is
Hwang, Sie Hyoung's brother in law, has invested 400,000,000 KRW for preferred stock issued by Enerstry.
Enerstry and its directors do not own any specific intellectual property rights that are used or required
to enable Enerstry to conduct its business. The Directors of Enerstry have a measure of expertise and know-
how in relation to the structure and operation of facilities to recycle waste products for the generation
of electricity and energy and they have developed the knowledge of and access to the organisations for whom
these facilities can be established. To the extent that the systems or the equipment used in these
facilities is the subject of intellectual property rights, Enerstry expects to be able to contract with the
owners of these rights to the extent needed to establish the facilities in accordance with Enerstry's
Business Strategy of the Enlarged Group
Enerstry is engaged in developing projects that involve installing and operating recycling facilities to
transform waste or scrap into renewable energy. Enerstry has the expertise within its management team to
identify prospective sites for the establishment of facilities that are capable of converting biomass and
other waste into energy that can be used by industrial operations and other users of electricity and power.
Enerstry's strategy is for clients to engage it to establish an operating facility, using technology and
equipment that is available to Enerstry; it also wishes to contract for the supply of biomass or other
waste that is to be processed by the facility. The business model of Enerstry envisages that the client
will provide the facility with a long term power off-take contract.
The Directors of Enerstry have been actively promoting the use of renewable energy facilities to industrial
businesses in Korea. The commercial structure can vary according to the scale and requirements of each
project, but the basic format is for Enersry to undertake the role of devising and managing the project.
The equipment and construction services are provided by established contractors, Enerstry is able to
provide access to sources of funding for each project and to provide the operational management where that
is needed. Enerstry aims to provide the economic model for the operation, to take account in particular of
the cost savings and other economic benefits of renewable energy. The economic model will also provide for
the returns that are capable of being earned by Enerstry. These can range between management fees,
earnings from off-take agreements and other sources of revenue derived from the operations and equity
participation in companies that establish and operate facilities.
The Yonsei Milk Project
In the course of its strategy described above, Enerstry has entered into commitments to proceed with a
project to install and operate a plant using wood pellets to create steam for power production for Yonsei
Milk. Yonsei Milk is a substantial producer of milk in Korea, having a production facility in the Seoul
region. Yonsei Milk is a division of Yonsei University, one of Korea's most substantive university
foundations. It is common for educational facilities in Korea, which are non-profit making foundations, to
own and operate commercial activities such as milk production facilities of the scale of Yonsei Milk.
On 17 December 2012 an agreement was entered into between Enerstry and Yonsei Milk that represents a formal
binding commitment to proceed with the Yonsei Milk project. Enerstry is to acquire the equipment to be
installed at the production facility of Yonsei Milk and operated to burn wood pellets for steam powered
electricity generation for Yonsei Milk's production facilities. Enerstry is to fund the acquisition,
installation and operation of the plant and facilities that are to be used. Yonsei Milk is to pay for the
power supplied by the plant at rates set at a level that reflects the savings by comparison with Yonsei
Milk's use of Liquified Natural Gas (LNG) as its existing source of fuel for power generation. The
agreement will continue for an initial term of ten years, provided that the use of wood chip fuel to
provide power to the milk production facility remains viable and economic. The period of the agreement may
be extended at the end of the initial term.
Enerstry has entered into firm commitments to obtain and install at the Yonsei Milk site the plant and
equipment that is to be provided for this purpose and for the stocks of wood pellets that are needed to
fuel the plant. It is expected that the plant is to be operational after about three months from the
commencement of the project. There are no regulatory or governmental consents or approvals required for
the installation and operation of the plant at Yonsei Milk.
EIN Asset is to provide funding to Enerstry for the cost of obtaining, installing and operating the plant
at Yonsei Milk and for working capital. The total amount of KRW 1,000,000,000 (i.e. about USD 1,000,000) is
to be advanced by EIN Asset to Enerstry by way of a medium term unsecured loan, repayable on 30 April 2014
and carrying interest at the rate of 4.5 per cent per annum on the principal amount. EIN Asset has advanced
the sum of KRW500,000,000 to Enestry and is to advance the balance by the end of April 2013.
If all of the principal amount of the loan and interest owing to EIN Asset is not paid by 30 April 2014,
EIN Asset will have the right within 30 days after that date to convert the outstanding amount into new
shares of Enerstry ranking pari passu with the existing ordinary shares of Enerstry. The conversion rate
at which the outstanding amount is to be converted into shares of Enerstry will be fixed at the fair value
of the shares at that date as determined by the board of directors of Enerstry at its sole discretion.
EIN Asset has been instrumental in introducing the Acquisition to the Company and has assisted in the
negotiation of the terms of the Acquisition, as well as agreeing to provide the funding required for the
Yonsei Milk project. As consideration for this assistance, the Company is to pay to EIN Asset a fee of
GBP300,000 which EIN Asset has agreed is to be applied in subscribing for 10,000,000 new Ordinary Shares at
an issue price of 3p per share. Further details of the agreement between the Company and EIN Asset in
relation to this fee and the subscription for Ordinary Shares by EIN Asset are set out in paragraph 9.5 of
Part VI of the Document.
Commercial relationship with Enercom
Enercom, one of the Vendors, has interests in businesses that operate in the energy industry. In the
initial stages of its development Enerstry made use of administrative and other facilities provided by
Enercom, for which Enerstry paid fees to Enercom. Following the Acquisition these arrangements will cease
and Enerstry will rely on its own resources for the facilities that had been provided by Enercom.
Enercom is affiliated with Enerpower Limited, a company that has been established in order to utilise the
expertise of participants of Enercom in the sourcing of waste products. Enerstry is proposing to contract
with Enerpower Limited for the supply of stocks of wood pellets that are to be used in the plant to be
installed at Yonsei Milk. Enerstry intends to use Enerpower Limited to secure the supply of wood pellets
and other waste material for use as fuel for the plant at Yonsei Milk and other similar energy systems.
Your attention is drawn to the Risk Factors set out in Part II of the Document.
Directors and Proposed Directors
Of the present directors of the Company, Chan, Fook Meng will continue in office as a non-executive
director after Admission and Nazim Khan will resign from office as a non executive director with effect
from Completion of the Acquisition. It is proposed that Hwang, Sie Hyoung and Park, Minkyu will become
directors of the Company on Completion of the Acquisition and Admission. Neither Chan, Fook Meng or Nazim
Khan (or any person connected with either of them) have any interest in Enerstry or any of the Vendors or
in EIN Asset and nor are either of them connected with the Proposed Directors or the Concert Party.
Hwang, Sie Hyoung (age 38)
Mr Hwang joined Seoul National University in 1993 and graduated in 2003 with a major in Economics having
also spent three years studying law and three years carrying out military service. On leaving university
he started working as a junior executive at Dongbang Plantech Co, Ltd, a medium sized company operating as
an equipment manufacturer for the steel industry. His role was one of overseas development and included
dealing with the company's European customers. After six years with Dongbang Plantech Co, Ltd he moved, in
2008, to Samyang P&A Co, Ltd, as team leader. Samyang P&A Co, Ltd is a small company run by Mr Hwang and
his family to provide equipment for power plants, predominantly valves. At Samyang Mr Hwang would plan
projects with the company's customers and assess their equipment needs. In early 2012 Mr Hwang left
Samyang to found Enerstry and become its Chief Executive Officer.
Park, Minkyu (age 39)
Mr Park joined Seoul National University in 1993 and graduated in 2001 with a major in Economics having
also spent three years carrying out military service and one year travelling. On leaving university he
joined the Korean Credit Service, a subsidiary of the US company Moody's. In 2004 he became an aide to a
member of the National Assembly, Kim Geun Tae, who was also the minister of health and social welfare for
18 months of Mr Park's employment with him. Mr Park continued his employment with Kim Geun Tae for a
further two and a half years when Mr Kim returned to his former role of senator. In 2007, Mr Park joined
Amin Deloitte LLC, the Korean Deloitte and Touche firm, where he acted as project manager and director
providing consulting services to the energy industry, including state owned utilities companies. In 2009
he joined Company W, a technology startup, as Chief Financial Officer, where he remained until early 2012
when he joined Enerstry as its Chief Financial Officer.
Directors of Enerstry
The Board of directors of Enerstry consists of the two Proposed Directors mentioned above, Hwang, Sie
Hyoung and Park, Minkyu, together with Jung, Jong Guk, who holds office as Chief Technical Officer. Jung,
Jong Guk is also an executive director of Enercom.
The Company is developing appropriate measures to comply with the Combined Code on Corporate Governance
published by the Financial Reporting Council in so far as it is practicable and appropriate having regard
to the size of the Company. In the first instance, because of the size of the Company, the board of
directors as a whole will address risk management issues and Park, Minkyu will be responsible for the
financial and accounting affairs of the Company, together with the members of the Audit Committee. As the
Company grows the board of directors will further develop policies and procedures to reflect the principles
of good governance and the Combined Code.
Board of Directors
The Board meets regularly and is responsible for strategy, performance, approval of major capital projects
and the framework of internal controls. The Board has a formal schedule of matters specifically reserved
to it for decision. To enable the Board to discharge its duties, all Directors receive appropriate and
timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All
Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring
that Board procedures are followed and that applicable rules and regulations are complied with.
Audit Committee and Remuneration Committee
The Audit Committee comprises Chan, Fook Meng and Park, Minkyu and is chaired by Chan, Fook Meng. The
Audit Committee is responsible for ensuring that the financial performance, position and prospects of the
Company are properly monitored and reported on and for meeting the auditors and reviewing their reports
relating to accounts and internal controls.
The Remuneration Committee comprises Chan, Fook Meng and Hwang, Sie Hyoung and is chaired by Chan, Fook
Meng. The Remuneration Committee reviews the performance of executive directors and sets their
remuneration, determines the payment of bonuses to executive directors and considers the future allocation
of share options to Directors and employees so as to demonstrate to the Shareholders that the remuneration
of the executive directors and employees of the Company is set by a board committee whose members have no
personal interest in the outcome of the committee's decision and who will have appropriate regard to the
interests of the Shareholders.
Dissemination of Regulatory News
The Company shall make such announcements as are appropriate in compliance with its duties to ISDX.
Marketability of Ordinary Shares and the ISDX Growth Market
It is intended that an application will be made for the Company's Enlarged Issued Share Capital to be
traded on the ISDX Growth Market.
Any individual wishing to buy or sell securities which are traded on the markets operated by ISDX, must
trade through a stockbroker (being a member of ISDX and regulated by the Financial Services Authority) as
the market's facilities are not available directly to the public.
Details of the Acquisition
On 5 November 2012, the Company entered into the Option Agreement with the Vendors under which the Company
was granted the option to purchase Ordinary Shares of Enerstry, representing 65.71 per cent of the issued
share capital of Enerstry. The Option may be exercised at any time in the period to 31 December 2013. The
Company has determined that it wishes to exercise the Option subject to the passing of the Resolutions and
Admission and notice exercising the Option has been served on the Vendors accordingly.
The Option Agreement provides for the issue at Completion of the Consideration Shares in exchange for the
transfer of issued Ordinary Shares of Enerstry held by the Vendors.
The numbers of shares of Enerstry to be transferred and the Consideration Shares to be issued to the
Vendors is set out below:
Name of Vendor No. of Enerstry's Shares No. of Consideration Shares
held at the date of the
Park, Minkyu 24,000 31,302,000
Enercom Co. Limited 12,000 15,654,000
Lee, Kwang Sung 10,000 13,044,000
The remaining issued ordinary shares of Enerstry, amounting to 24,000 Ordinary Shares, representing 34.29
per cent of the equity shares of Enerstry are held by Samyang. The original shareholders of Enerstry
included Samyang, which is a company that has interests in equipment used in energy systems and which is
owned by members of the family of Lee Kwangsung, the wife of Hwang, Sei Hyoung, who is also a minority
shareholder of Samyang. Samyang has not accepted the offer to exchange its holding of shares of Enerstry
for new shares of the Company on the terms that apply to the Acquisition. The reason for Samyang's
decision was expressed to be the desire that the resulting division of the Consideration Shares should
reflect the proportions allocated to the Vendors without the inclusion of Samyang.
Samyang's position as a minority shareholder of Enerstry is governed by the constitutional documents of
Enerstry and corporate laws of Korea that apply to minority shareholdings of this kind. Samyang has no
specific rights or powers that derive from its minority shareholding that would enable it to restrict or
control the activities and policies of Enerstry, but the directors of Enerstry will be obliged to take
account of Samyang's position as a minority shareholder. As the controlling shareholder of Enerstry, the
Company will be able to appoint all of the members of the Board of Directors of Enerstry. Samyang is not
restricted in its ability to transfer its shares in Enerstry on a pre-emptive basis or otherwise. There
are no express requirements that, on a sale of the Company's shares in Enerstry to a third party, Samyang
could either obstruct the sale or require that its shares in Enerstry are to be sold at the same time.
In addition to the ordinary shares issued by Enerstry to the Vendors and Samyang, Enerstry has issued
80,000 units of preferred stock at KRW 5,000 per unit of stock, representing an aggregate amount of
principal indebtedness of KRW 400,000,000. The preferred stock carries interest at 2 per cent per annum.
All of the preferred stock has been subscribed by Lee, Hyung Suk, who is the brother in law of Hwang, Sie
Hyoung, as a means to fund Enerstry in its early stages of development. In anticipation of the Acquisition
the terms of the preferred stock have been adapted by discontinuing the proposal that the principal amount
of the stock is to be convertible into ordinary shares of Enerstry and by extending the term for redemption
of the preferred stock. By an agreement dated 21 December 2012 Lee, Hyung Suk has agreed to extend the
period for redemption of the principal amount of preferred stock until 31 December 2014. In addition it
has been agreed by Enerstry and Lee, Hyung Suk that the conversion right attaching to the preferred stock
will not be exercised and the principal amount of the preferred stock will not be convertible into ordinary
shares of Enerstry.
The Directors and Proposed Directors are of the opinion having made due and careful enquiry, that following
Admission the Enlarged Group will have sufficient working capital for at least the next 12 months from the
date of Admission.
Admission, Dealings and Settlement
The Directors and Proposed Directors have applied for the Enlarged Issued Share Capital to be admitted to
trading on the ISDX Growth Market following the Acquisition.
Dealings in the Ordinary Shares on ISDX Growth Market are expected to commence on 25 February 2013.
The Directors and Proposed Directors will arrange with CREST for the Enlarged Issued Share Capital to be
admitted to CREST with effect from Admission. Accordingly settlement of transactions in Ordinary Shares
following Admission may, if a shareholder wishes, take place within the CREST system. CREST is a paperless
settlement procedure, which allows title to securities to be evidenced without a certificate and
transferred otherwise than by written instrument.
CREST is a voluntary system and shareholders who wish to receive and retain share certificates will be able
to do so.
Each of the Vendors is to enter into a Lock-in-Deed under which the Vendors will be restricted from any
sale or disposal of the Consideration Shares issued to them for a period of twelve months following
Menora Trading Limited, which is beneficially controlled by Chan, Fook Meng, has also entered into a Lock-
in Deed under which it will be restricted from any sale or disposal of its holding of Ordinary Shares for a
period of twelve months following Completion.
Share Dealing Code
The Company has adopted and will operate a share dealing code for directors in accordance with the ISDX
The Directors consider that it would not be appropriate at this stage to indicate any likely level of
Share Option Scheme
It is the Directors present intention that following the Acquisition and Admission, the Company will
consider when appropriate, the introduction of share options to be granted by the Company to senior
executives and to employees of the Group in order to retain and incentivise them. At this time the
Directors do not expect the total number of Ordinary Shares which are capable of being issued under such
options to exceed ten per cent of the issued ordinary share capital of the Company.
The Ordinary Shares are not "listed on a recognised stock exchange" for the purposes of those sections of
the Income and Corporation Taxes Act 1988 (the Taxes Act), as amended, and various tax regulations which
use this term in relation to securities, provided that the Company remains one which does not have any of
its shares admitted to trading on a recognised stock exchange and included in the official UK list
maintained by the Financial Services Authority as the UK Listing Authority or are officially listed in a
qualifying country outside the UK in accordance with provisions corresponding to those generally applicable
in EEA states. For these purposes the ISDX Growth Market is not a recognised stock exchange.
Further information regarding taxation in relation to the Proposals is set out in paragraph 11 of Part VI
of the Document. If you are in any doubt as to your tax position you should consult your own independent
financial adviser immediately.
The terms of the Acquisition give rise to certain considerations under the Takeover Code. Brief details of
the Panel, the Takeover Code and the protection they afford are given below.
The Takeover Code is issued on behalf of the Panel. The Takeover Code is designed principally to ensure
fair and equal treatment of all shareholders in relation to takeovers.
The Takeover Code is administered by the Panel. The Takeover Code applies to all takeovers and merger
transactions, however effected, where the offeree company is, inter alia a public company with its
registered office in the UK and whose place of central management and control is in the UK. Mandarin
Mining Plc is such a company and its shareholders are entitled to the protections afforded by the Takeover
Under Rule 9 of the Takeover Code ("Rule 9"), when any person, or group of persons acting in concert,
acquires an interest in shares which, when taken together with shares in which he, or persons acting in
concert with him, are interested, carry 30 per cent or more of the voting rights of a company which is
subject to the Takeover Code, that person is normally required to make a general offer in cash to all
shareholders at the highest price paid by him, or any person acting in concert with him, within the 12
months preceding the date of the announcement of the offer.
Rule 9 further provides that, inter alia, where any person, together with persons acting in concert with
him, is interested in shares which in the aggregate carry not less than 30 per cent of the voting rights of
a company but does not hold shares carrying more than 50 per cent of such voting rights and such person, or
any person acting in concert with him, acquires an interest in any other shares which increases the
percentage of shares carrying voting rights of such company in which he is interested, such person, or
persons acting in concert with him, is normally required by the Panel to make a general offer in cash to
all shareholders of the company for the shares not already owned by him, or any other person acting in
concert with him, at not less than the highest price paid by, him or any person acting in concert with him,
within the 12 months preceding the date of the announcement of the offer.
Where any person, who, together with persons acting in concert with him, holds over 50 per cent of the
voting rights of a company, that person (or persons acting in concert with him), will be able, for so long
as they continue to be acting in concert, to acquire additional shares which carry voting rights without
any consequence under Rule 9, save that individual members of the concert parties will not be able to
increase their percentage interests in shares through or between the Rule 9 thresholds without Panel
Under the Takeover Code, a concert party arises when persons who, pursuant to an agreement or understanding
(whether formal or informal), co-operate to obtain or consolidate control of, or to frustrate the
successful outcome of an offer for, a company to which the Takeover Code applies. Under the Takeover Code,
control means an interest or interests in shares carrying in aggregate 30 per cent. or more of the voting
rights of a company, irrespective of whether such interest or interests give de facto control.
Shareholders should be aware that, upon Admission and following the issue of the Consideration Shares and
the new Ordinary Shares to be subscribed by EIN Asset, members of the Concert Party will in aggregate own
60,000,000 Ordinary Shares representing 70.59 per cent of the Enlarged Issued Share Capital of the Company.
The shareholdings of each member of the Concert Party immediately following Admission are set out below:
Name No. of No. of No of Ordinary No. of Ordinary Percentage
Existing Consideration Shares Shares at of Enlarged
Ordinary Shares subscribed by Admission Issued Share
Shares EIN Asset Capital (%)
Park, Minkyu - 31,302,000 - 31,302,000 36.83
Enercom Co. - 15,654,000 - 15,654,000 18.42
Lee, Kwangsung - 13,044,000 - 13,044,000 15.34
Ein Asset - - 10,000,000 10,000,000 11.76
Existing 15,000,000 - - 15,000,000 17.65
TOTAL 15,000,000 60,000,000 10,000,000 85,000,000 100.00
In addition the Company has outstanding GBP150,000 of Convertible Loan Notes 2014 that carry the right of
conversion into up to 15,000,000 Ordinary Shares. Purestar Group Limited ("Purestar") is the holder of all
of the Convertible Loan Notes. Purestar was formerly beneficially controlled by Chan, Fook Meng, one of
the Directors, but he no longer holds any interest in Purestar. Purestar is now beneficially owned by Tan,
Kiam Hock who has acquired ownership of Purestar from Chan, Fook Meng.
Following Completion of the Acquisition, the Concert Party will hold more than 50 per cent of the Company.
For so long as the Concert Party holds more than 50 per cent of the issued share capital of the Company
(and for so long as they continue to be treated as acting in concert), the Concert Party may increase their
aggregate shareholding without incurring an obligation under Rule 9 to make a general offer, although
individual members of the Concert Party will not be able to increase their percentage interest in shares
through 30 per cent or between 30 per cent and 50 per cent of the voting rights of the Company without the
consent of the Panel.
The Panel has deemed the members of the Concert Party to be acting in concert for the purposes of the City
Following an application by the Directors, the Panel has agreed to waive the obligation to make a general
offer that would otherwise arise on the members of the Concert Party as a result of the Acquisition,
subject to Resolution No. 1, (as set out in the notice convening the GM) being passed on a poll by the
Independent Shareholders of the Company. There are no existing shareholders of the Company who are not to
be treated as Independent Shareholders for this purpose and accordingly to be passed Resolution No. 1 will
require a simple majority of the votes cast.
The Members of the Concert Party do not currently have any interests, rights to subscribe or short
positions in the share capital of the Company.
No member of the Concert Party has had any interest in securities of the Company in the 12 months preceding
the date of the Document. The Waiver will be invalid if any member of the Concert Party acquires an
interest in securities of the Company in the period between the date of the Document and the GM.
Accordingly, each member of the Concert Party has undertaken to the Company that he will not acquire an
interest in securities in the Company during such period.
Details of the members of the Concert Party, their relationship and their interests in the Company, are set
out in Part V of the Document.
You will find at the end of the Document a Notice of GM to be held at Finsgate, 5-7 Cranwood Street, London
EC1V 9EE at 10.00 a.m. on 22 February 2013 at which the following resolutions will be proposed:
* ordinary resolution to approve the waiver of the obligations on the Concert Party (or any members
of the Concert Party) to make a general offer to shareholders pursuant to Rule 9 of the Takeover Code in
the event of the issue of the Consideration Shares to the Concert Party on Completion of the Acquisition
subject to and in accordance with the terms of the Option Agreement (subject to approval by Independent
Shareholders voting on a poll);
* an ordinary resolution to adapt the investing strategy and approve the Acquisition;
* ordinary resolutions to approve the appointment of the Proposed Directors; and
* a special resolution to change the name of the Company to 'Enerstry Group Plc'.
Action to be taken by all Shareholders
You will find enclosed with the Document a Form of Proxy for use at the GM. Whether or not you intend to be
present at the meeting you are requested to complete and sign the Form of Proxy in accordance with the
instructions thereon and return it to Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard,
Farnham, Surrey GU9 7LL as soon as possible and in any event so as to arrive no later than 10.00 a.m. on
20 February 2013. Completion and return of the Form of Proxy will not prevent you from attending the GM
and voting in person should you so wish.
The Board, which has been so advised by Alfred Henry in its capacity as Rule 3 Adviser to the Company,
considers the terms of the Proposals to be reasonable and in the best interests of the Company and the
Shareholders. In providing advice to the Directors, Alfred Henry has taken into account the Directors'
Accordingly your Directors unanimously recommend that you vote in favour of the Resolutions proposed at the
GM. Chan, Fook Meng intends that Menora Trading Limited, which holds 4,000,000 Ordinary Shares representing
26.67 per cent of the issued Ordinary Shares as at the date of the Document, is to vote in favour of the
The attention of potential investors is drawn to the fact that the purchase of Ordinary Shares in the
Company involves a variety of risks. Investors should be aware of the risks associated with an investment
in a business in the early stages of development. All potential investors should carefully consider the
entire contents of the Document, including, but not limited to, the risk factors described below before
deciding whether to invest in the Company, particularly in the light of the current economic circumstances
and potential investors are asked to read this document and these risk factors with regard to current
economic circumstances. The risks noted below do not necessarily comprise all those potentially faced by
the Company and are not intended to be presented in any assumed order of priority. Potential investors
should also consider additional risk factors relevant to their particular circumstances.
If any of the events set out in the following risks do happen, the Enlarged Group's business, financial
circumstances, results or future operations could be adversely affected. In such a case, the price of the
Ordinary Shares could fall and investors may lose all or part of their investment. Further risks and
uncertainties, of which the Directors are currently unaware or which the Directors currently consider to be
immaterial, may also have an adverse effect on the Enlarged Group.
Admission to ISDX Growth Market
The Ordinary Shares are not included in the Official List and not admitted to trading on a "Regulated
Market' under EU financial services law (which does not include the ISDX Growth Market).
Notwithstanding that the Company's Enlarged Issued Share Capital is to be readmitted to the ISDX Growth
Market, there is no assurance that an active trading market for the Ordinary Shares will develop or, if
developed, be sustained following admission to the ISDX Growth Market. If an active trading market is not
developed or maintained, the liquidity and trading price of the Ordinary Shares could be adversely
affected. In addition, there is no guarantee that the Company's application to ISDX for the readmission of
its Ordinary Shares to be traded on the ISDX Growth Market following Completion of the Acquisition will be
successful. Acceptance of the Company's application to, and continued admission to trading on the ISDX
Growth Market is entirely at the discretion of ISDX.
Potential investors should be aware that the value of shares can rise or fall and that investment in a
share which is not traded on the Official List or the transfer of which is restricted may be less
realisable and carries a higher risk than investment in a share which has a liquid market. A prospective
investor should consider with care whether an investment in the Company is suitable for him in light of his
personal circumstances and the financial resources available to him. Potential investors should be aware
that investing in the Company carries a risk of losing all the money which they invest.
The strategy for the Company and consequently for the Ordinary Shares is to achieve capital growth and the
Ordinary Shares may not therefore be suitable as a short-term investment. Investors may not therefore
capitalise their investment either at all or within the timeframe they had originally expected.
The market value of the Ordinary Shares following Admission to trading on the ISDX Growth Market (in the
event that this takes place) may not necessarily reflect the underlying net asset value of the Enlarged
Any changes to the regulatory environment, in particular to the ISDX Rules in relation to companies such as
the Company, could affect the ability of the Company to maintain a trading facility on the ISDX Growth
Market. Recent changes in the structure of the ISDX Growth Market and its succession to the PLUS quoted
market (on which the Company's listing commenced) may introduce changes to the regulatory rules applicable
to the market and to the approach adopted by ISDX as regards the qualification of companies for listing on
the ISDX Growth Market. The directors have no reason to consider that the Company will not continue to
qualify for admission to the ISDX Growth Market or that any changes to the regulatory environment will have
an adverse effect on the Company or the trading of its shares.
Liquidity of the Ordinary Shares
The share prices of public companies can be subject to significant fluctuations. In particular, the market
for shares in smaller public companies is less liquid than for larger public companies. Consequently the
share price of the Company may be subject to greater fluctuations and the Ordinary Shares may be difficult
The Company may need to raise further funds in the future, either to fund the expansion of the activities
of the Enlarged Group, for acquisitions and investments or to raise additional working capital to sustain
the operations of the Enlarged Group. Any equity offerings to new investors could result in dilution for
existing shareholders. Furthermore, there can be no guarantee or assurance that additional funds can be
raised when necessary. In these circumstances the Company would need to secure additional funding from
other sources and/or scale back its future plans.
EIN Asset has agreed to provide funding for the Yonsei Milk project on the terms shown in the Convertible
Loan Agreement dated 23 November 2012 between EIN Asset and Enerstry described in paragraph 9.9 of Part VI
of the Document (the "Enerstry Convertible Loan Agreement"). The ability to repay the loans that are to be
advanced by EIN Asset will depend primarily on the revenues and earnings generated by the Yonsei Milk
project. If the revenues do not meet expectations, whether as to time or amount, or if for any other
reason Enerstry does not have the surplus cash resources needed to meet the repayment obligations, the
indebtedness owing to EIN Asset will need to be resolved without risking a default by the Company.
The Enerstry Convertible Loan is subject to EIN Asset's right to convert any amount that remains
outstanding and unpaid on 30 April 2014 into ordinary shares of Enerstry at a conversion rate that applies
a value of the ordinary shares of Enerstry that is to be determined by the directors of Enerstry at that
time. The value at which the outstanding amount of the loan is to be converted may be such that the number
of shares to be issued to EIN Asset causes the Company to cease to have majority control of the shares of
Enerstry and could cause the Company's holding of issued shares of Enerstry to be subject to dilution. If
Enerstry does not have the funds available to repay the outstanding indebtedness owing to EIN Asset, the
directors of Enerstry may be obliged to agree a conversion rate that would be acceptable to EIN Asset in
order to avoid the prospect of defaulting on the repayment of the outstanding indebtedness.
Under the terms of the Convertible Loan Agreement dated 23 November 2012 the balance of the principal
amount that is to be drawn down in April 2013 is subject to Enerstry having complied with the terms of the
Enerstry Convertible Loan Agreement. If Enerstry is subject to any of the events of default provided for
in the Convertible Loan Agreement, the further advance may not be made and the existing indebtedness would
become repayable before the repayment date in April 2014.
It is envisaged that other projects comparable to the Yonsei Milk project will be introduced in the future
and in each case the costs of establishing the energy system before it generates earnings is likely to be
met substantially by means of loans and other forms of project finance. The Company's ability to proceed
with projects of this kind will depend on its ability to raise external finance on terms that enable the
resulting operation of the energy system to be economically viable.
The nature of the energy system projects that the Company proposes to implement, and the expectation that
each project will be the subject of distinct and independent financing arrangements, is likely to lead to
the use of separate companies to handle individual projects, with those who provide the finance taking
equity participation in addition to providing debt funding. In this case the Company may obtain management
fees as its principal source of returns from those projects, with limited participation in the growth
derived from the project and the realisation of capital value.
Risks relating to Enerstry and its Business
The following sets out some of the risks relating to Enerstry's business. If any of the following risks
occur, Enerstry's business, financial condition or results of operations could be seriously affected.
The Yonsei Milk project is subject to the risks that are commonly encountered in the preparation and
conduct of arrangements that involve the integration of energy systems. Enerstry is reliant on Yonsei Milk
to provide the facilities needed to install and operate the plant that is to be installed for this purpose,
to comply with the long term supply of power contemplated by the arrangements and to meet the financial
obligations to sustain the plant and the system. The economic return that is capable of being earned by
Enerstry is determined in some measure by the savings derived from the use of wood pellet fuel by
comparison with LNG - changes to the cost of the supply of energy to Yonsei may adversely affect the
returns that Enerstry is able to earn from this source.
Enerstry relies on its ability to source wood pellet and other sources of waste fuel to be used in the
Yonsei Milk plant and other prospective facilities. If the sources that have been contracted by Enerstry
or from which it is contemplating acquiring stocks of fuel for this purpose become restricted or for any
other reason Enerstry is obliged to obtain supplies from other less economic sources, the returns that
Enerstry is able to earn from the energy systems that it operates may be reduced.
Enerstry expects to use recognised suppliers of equipment and plant of a specialised nature for the energy
systems that it is to install and operate at Yonsei Milk and elsewhere. Enerstry will rely on the
technology developed by these suppliers to meet the specifications required for the energy systems that it
is to install and to meet the performance requirements of the plant that is to be installed. If these
suppliers are not able or fail to meet the specifications or if their equipment does not perform to the
standards required, Enerstry may be obliged to incur expense in remedying the defects or in deploying
equipment that does not meet the budgetary or performance requirements of the systems for which Enerstry is
to be responsible.
The energy systems that Enerstry is to promote rely on the economic and social advantages to be gained from
the use of waste and other biomass fuels to compete with other forms of energy supply. Changes in the
market for fuels or for the supply of energy may adversely affect the competitive position of the energy
systems that Enerstry is promoting and operating.
The regulatory structure in Korea for the installation of energy systems is relatively favourable, the
permits and authorisations required in order to install and operate energy systems such as that
contemplated for Yonsei Milk are not onerous and are not expected to cause any material delay in the
implementation of the project. Should the position change, or if Enerstry extends the jurisdictions in
which it operates to territories that impose more restrictive and time consuming regulatory structures, the
need to establish funding and operational arrangements in advance of the implementation and commencement of
the operations that generate revenue for Enerstry may require Enerstry to adopt a more protracted model for
the energy systems that it is promoting.
Samyang is to remain as a minority shareholder of Enerstry, holding shares that represent about 34 per cent
of the equity shares of Enerstry. The constitution of Enerstry does not contain any specific rights or
powers that are vested in Samyang as the holder of shares of Enerstry to restrict the activities of
Enerstry, to appoint or remove any officers of Enerstry, to obtain information about the activities of
Enerstry (other than the common rights of shareholders) or to require Enerstry to act in accordance with
the directions of Samyang or to refrain from acting in accordance with the resolutions of the directors of
Enerstry or of the Company as the controlling shareholder. The directors of Enerstry are obliged to
observe and take account of the broad obligations and rights of Samyang as a minority shareholder in
accordance with Korean corporate law. There are no restrictions, either within the constitution of
Enerstry or otherwise, on the sale or other disposal of shares in Enerstry by Samyang or by the Company.
The Group may need additional capital as it implements its expansion plan. Whilst expansion is expected to
involve separate corporate structures for individual energy systems which will be subject to distinct
financing arrangements, the Enlarged Group may need additional funds for the proposed expansion of its
operations. Such funds may not be available on acceptable terms or at all, and, without additional funds,
the Group may not be able to effectively execute its growth strategy, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.
Following the Acquisition the Ordinary Shares in the Company held by the members of the Concert Party and
the shares of Enerstry held by Samyang will in some cases be held by members of the extended family of
those who are the executive directors of the Company and of Enerstry. The relationship between these
family groups will need to be taken into account in the governance of the Company, but may also cause the
interests held by the respective members of the family groups to be influenced by personal and familial
Directors' other Interests
Fook Meng Chan, as the non-executive Director is not restricted, other than by his normal duties as a
company director, from acting in the direction, management or conduct of the affairs of any other company
or partnership. Fook Meng Chan has other interests and his continued ability to provide his services to
the Company is dependent on his ability to combine those interests with his activity as a director of the
Company. In the event of any potential conflicts of interest being identified, they will be declared and
dealt with appropriately.
Share Price Impact of Sales of Ordinary Shares by Locked-in Parties
The market price could decline as a result of any sales of Ordinary Shares by those who are subject to Lock
in Agreements following expiry of the lock-in period as detailed in the paragraph headed Lock-in
Arrangements in Part I of the Document and paragraphs 9.10 and 9.11 of Part VI of the Document, or the
perception that these sales could occur.
Economic, Political, Judicial, Administrative, Taxation or other Regulatory Matters
In addition to the impact of the downturn of the world's economies, the Enlarged Group may be adversely
affected by other changes in economic, political, judicial, administrative, taxation or other regulatory or
other unforeseen matters.
The Enlarged Group's operations in the Republic of Korea make it subject to foreign currency fluctuations
and such fluctuations may materially affect the Company's financial position and results. The Company does
not engage in currency hedging to off-set any risk of currency fluctuations. The Enlarged Group's revenues
and operating costs are denominated in KRW and the Company maintains its accounts in sterling. As a
result, any significant fluctuation of the KRW against sterling may materially affect the results of the
Repatriation of Earnings
Currently, there are no restrictions on the repatriation from the Republic of Korea of earnings or capital
to foreign entities that would apply to the Enlarged Group. However, there can be no assurance that any
such restrictions on repatriation of earnings or capital from the Republic of Korea, or any other country
where the Company may invest, will not be imposed in the future.
At present, the distribution of dividends by Korean companies to foreign shareholders is subject to
withholding taxes. It is not envisaged that dividends will be drawn by the Company in the near future but,
should Enerstry make distributions the application of withholding tax may reduce the amount received by the
Current and potential investors are strongly recommended to consult an independent financial adviser
authorised under the Financial Services and Markets Act 2000 who specialises in investments of this nature
before making any decision to invest.
In the Document, where the context permits, the terms set out below shall have the following meanings:
"Acquisition" the proposed acquisition of shares representing 65.71 per cent of the
entire issued share capital of Enerstry pursuant to the terms of the Option
"Admission" admission of the Ordinary Shares, in issue and to be issued pursuant to the
Acquisition, to trading on the ISDX Growth Market
"Admission Document" or this document
"Alfred Henry" Alfred Henry Corporate Finance Limited, the Company's ISDX Growth Market
Corporate Adviser and Rule 3 Adviser to the Company
"City Code" or "Takeover the City Code on Takeovers and Mergers
"Act" Companies Act 2006
"Company" or "Mandarin" Mandarin Mining Plc, a company incorporated in England and Wales with
registered number 07535969
"Completion" Completion of the Acquisition and Admission
"Concert Party" all of the Vendors
"Consideration Shares" 60,000,000 new Ordinary Shares to be issued to the Vendors as consideration
for the Acquisition on and subject to the terms set out in the Option
"Convertible Notes" GBP150,000 convertible unsecured loan notes 2013 of the Company,
convertible at 1p per share into up to 15,000,000 new Ordinary Shares
further details of which are contained in paragraph 9.4 of Part VI of the
"Corporate Governance Code" the UK Corporate Governance Code published in September 2012 by the
Financial Reporting Council as the same may be amended or varied
"CREST" the computer based system and procedures which enable title to securities
to be evidenced and transferred without a written instrument, administered
by Euroclear UK & Ireland Limited
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended
from time to time
"Directors" the directors of the Company at the date of the Document, whose names are
set out on page 4 of the Document
"EIN Asset" EIN Asset Management Limited, a company incorporated in Korea under number
"EIN Subscription Shares" 10,000,000 Ordinary Shares to be subscribed by EIN Asset, applying the fee
of GBP300,000 that is to become payable by the Company to EIN Asset on
Completion under the agreement details of which are summarised in
paragraph 9.5 of Part VI of the Document
"Enercom" Enercom Co. Limited, a company incorporated in Korea under No. 284211-
"Enerstry" Enerstry Co. Limited a company incorporated in Korea under number
"Enlarged Group" the Company and Enerstry after the Acquisition
"Enlarged Issued Share the entire issued ordinary share capital of the Company, as enlarged by the
Capital" issue of the Consideration Shares and the EIN Subscription Shares
"Existing Shareholders" the holder of Ordinary Shares at the date of the Document
"Existing Shares" the 15,000,000 Ordinary Shares in issue at the date of the Document
"Form of Proxy" the Form of Proxy to be used by holders of Existing Shares in connection
with the GM which accompanies the Document
"FSA" Financial Services Authority
"Financial Services and the Financial Services and Markets Act 2000 (as amended)
Markets Act" or "FSMA"
"GM" or "General Meeting" the general meeting of the Company to be convened on 22 February 2013 for
the purpose of passing the Resolutions
"Independent Shareholders" the holders of Existing Shares who are not also members of the Concert
Party and have no personal interest in the Acquisition
"ISDX"(1) ICAP Securities & Derivatives Exchange Limited, a recognised investment
exchange under section 290 of the Financial Services and Markets Act
"ISDX Growth Market"* the market of that name within the ISDX primary traded securities market
segment that is the market for unlisted securities operated by ISDX
"ISDX Rules"* the ISDX Growth Market Rules for Issuers which sets out the admission and
disclosure standards for companies on the ISDX Growth Market
"Korea" the Republic of South Korea
"KRW" South Korean Won - the currency of Korea
"London Stock Exchange" London Stock Exchange plc
"Notice of GM" the notice set out at the end of the Document convening the GM
"Official List" the Official List of the UK Listing Authority
"Option Agreement" the agreement dated 5 November 2012 between the Company (1) and the Vendors
(2) relating to the option granted by the Vendors to the Company to acquire
issued shares of Enerstry and complete the Acquisition, particulars of
which are set out in paragraph 9.7 of Part VI of the Document
"Ordinary Shares" Ordinary Shares of 1p each in the share capital of the Company
"Panel" the Panel on Takeovers and Mergers, the regulatory body that administers
the City Code
"Proposals" the Acquisition, the Waiver, the passing of the Resolutions, the change of
name and Admission
"Prospectus Rules" the Prospectus Rules made by the FSA pursuant to sections 734(A)(1) and 3
of FSMA, as defined in section 417(1) of FSMA
"Proposed Directors" Hwang, Sie Hyoung and Park, Minkyu
"Resolutions" the resolutions set out in the Notice of GM at the end of the Document
"Samyang" Samyang P&A Co Limited, a company incorporated in Korea under No.
"UK Listing Authority" the FSA, acting in its capacity as the competent authority for the purposes
of Part 8 of the Financial Services and Markets Act 2000
"Vendors" Park, Minkyu; Enercom Co Limited and Lee Kwangsung, the vendors of the
issued shares of Enerstry under the Option Agreement
"Waiver" the conditional waiver to be granted by the Panel, subject to the passing
of Resolution No. 1 on a poll of Independent Shareholders at the GM, of the
obligation of the Concert Party (or any member thereof) which would
otherwise arise under Rule 9 of the Takeover Code to make a mandatory cash
offer for the issued Ordinary Shares not already owned by the Concert Party
(or relevant member thereof) on or after Admission as further described in
the Section headed "Takeover Code" in Part 1 and in Part V of the Document
"Yonsei Milk" Yonsei Milk, a division of Yonsei University, a school incorporated in
Korea under number 3128207708
For the purpose of the Document, the exchange rate GBP to KRW is GBP1 to 1,715 KRW
(1)The ISDX Growth Market is the successor of the PLUS-quoted market operated by PLUS Stock Exchange plc.
In this Document where the ISDX Growth Market and the ISDX Rules will be used to refer to the PLUS-
quoted market, historic references are to be made to the Company's admission to PLUS-quoted market to
the PLUS Rules for Issuers or other references to PLUS in relation to periods prior to the introduction
of the title ISDX Growth Market for the securities exchange to which the Ordinary Shares have been
admitted, those references will be substituted by references to the ISDX Growth Market and the ISDX
Growth Market Rules for Issuers in order to avoid confusion.