Sun Red Capital Corporation
TSX VENTURE : SSQ.P

December 04, 2007 19:31 ET

Sun Red Capital Corporation: Announcement of Agreement in Principle

CALGARY, ALBERTA--(Marketwire - Dec. 4, 2007) - Sun Red Capital Corporation (the "Company") (TSX VENTURE:SSQ.P) announces effective December 3, 2007 it has entered into a letter of intent to acquire all of the issued and outstanding shares of Beautiful Fair Limited. It is anticipated that upon completion of the transaction, the Company will hold 100% of the shares of Beautiful Fair Limited, which in turn will hold a 38% interest of Wide Broad Group Limited in addition to an option to purchase at least a 13% additional interest in Wide Broad Group Limited, subject to final negotiation. Wide Broad Group Limited will hold all of the issued and outstanding shares of Dongguan Chditn Printing Co. Ltd. ("Chditn"), a decorative paper printing company headquartered in the Guangdong Province in the People's Republic of China ("PRC").

This transaction will serve as the Company's qualifying transaction ("QT") pursuant to Policy 2.4 of the TSX Venture Exchange (the "Exchange"). Beautiful Fair Limited, Wide Broad Group Limited and Chditn are at arm's length to the Company, as such, the QT will not be subject to approval of the shareholders of the Company.

Subject to the approval of the Exchange, the Company will provide a CDN$50,000 refundable deposit to Beautiful Fair Limited. Beautiful Fair Limited intends to use the funds to pay for its expenses in connection with the QT.

The Business of Chditn and Potential Transaction

Chditn is a modernized enterprise specialized in research and development, production, and sales of home decoration materials, mainly decorative paper, wood-grain paper and paperboard used in the manufacturing of furniture, flooring and kitchen cabinets.

Chditn is incorporated under the laws of PRC and Beautiful Fair Limited and Wide Broad Group Limited are incorporated under the laws of the British Virgin Islands.

The 38% indirect interest to be acquired by the Company will be paid by the issuance of new shares of the Company equivalent of HKD42,750,000 at a deemed price per share to be agreed upon with Beautiful Fair Limited. Those shares will be subject to escrow pursuant to the policies of the Exchange. The option, if exercised will be paid in cash.

The purchase price is subject to a guarantee of net profit after tax of Chditn to be no less than HKD45,000,000 for the 2007 fiscal year and HKD85,000,000 for the 2008 fiscal year.

After completion of the QT, the Company will be the single largest indirect shareholder of Chditn and if the option is exercised, the Company will have indirect control of at least 51% of the shares of Chditn.

Upon the closing of the QT, the Company will have completed a concurrent financing ("QT Financing") to raise up to CDN$14 million, such financing to consist of common shares issued by the Company at a price to be negotiated. The net proceeds raised through the QT Financing will be used to fund the business of Chditn and for additional working capital of the Company. The remaining shareholders of Wide Broad Group Limited will also fund the business of Chditn on a pro rata basis. The Company shall engage an agent in the near future to complete the QT Financing and also act as sponsor for the QT. A further Press Release will be issued upon the agent being engaged.

Directors and Officers of the Company

The following are the directors and officers of the Company, who are expected to be the directors and officers of the resulting issuer:



---------------------------------------------------------------------------

Name, Jurisdiction of
Residence, Positions with
the Company Principal Occupation
---------------------------------------------------------------------------

Patrick K.C. Wong Patrick K.C. Wong was Chairman and Chief
Hong Kong, China Executive Officer of HiNet Holdings Limited,
President, Chief Executive a company engaged in the fibre optics
Officer and a Director infrastructure business and listed on the Hong
Kong Stock Exchange. Prior to that, working
through his private holding companies, Mr.
Wong was a property developer in Hong Kong. In
connection with some of the largest property
companies in Hong Kong, Mr. Wong was involved
in a number of land assemblies and
developments in Hong Kong throughout the 1980s
and 1990s. His latest property development was
a mixed-use development project in Tai Po
completed in 1997. Mr. Wong also held the
position as Chairman on a number of private
investment companies which he controlled.
---------------------------------------------------------------------------

Greg Hansen Greg Hansen is a self employed consultant
Calgary, Alberta advising companies on mergers, acquisitions
Chief Financial Officer, and corporate structures and is also an
Corporate Secretary and a investor. Mr Hansen has recently been engaged
Director for corporate operations rationalization and
the accessing of options for public listings
or industry divestitures. In 1999 he partnered
with Paul Sribibadh, the former President of
Microsoft Asia, to found the FXA Group of
Companies in Hong Kong. FXA Group of Companies
is a global provider of food traceability
software solutions. Prior to his involvement
with the FXA Group, Mr. Hansen formed and was
a principal of Tivoli Agents Limited, a
company active in the acquisition of licensing
rights for products and services from North
America to Asia. He was also the Chief of
Staff to the Deputy Premier, Minister of
Justice, Solicitor General, Government
Reorganization and Intergovernmental Affairs
of Alberta from January, 1992 until August,
1995. Greg is a board member of Kam Media
Group (TSX.V) and graduated from University of
Alberta (BA).
---------------------------------------------------------------------------

Tenny Lo Tenny Lo holds a Bachelor of Social Science
Calgary, Alberta from the Chinese University of Hong Kong and a
Director Masters Degree in Economics from the
University of New Brunswick. Mr Lo is an
Certified General Accountant, Chartered
Accountant and Certified Financial Planner and
is a partner in the Accounting firm of Lo
Porter Hetu of Calgary. Mr. Lo has been a
sessional lecturer at the Southern Alberta
Institute of Technology as well as President
and Chairman of the Board of Governors of the
Certified General Accountants Association of
Alberta.
---------------------------------------------------------------------------

Peter (Doug) McArthur Peter McArthur is self employed and is an
Calgary, Alberta investor. Mr. McArthur has held a variety of
Director senior positions with Calgary-based energy
companies. From 1993 to 1996 he was a Director
of Foothills Oil and Gas Ltd. He was a
founding Director and Officer at Bowridge
Resource Group Inc., which started in 1993 as
a JCP company on the Canadian Venture
Exchange, and was subsequently listed on the
Toronto Stock Exchange. Since 1996 he has been
a Director of First Canadian Energy Ltd.,
Canoro Resources Ltd. and Broadview Press Ltd.
Currently, Mr. McArthur is President of PDM
Ventures Inc., a private Alberta company.
---------------------------------------------------------------------------


Completion of the proposed QT is subject to a number of conditions, including but not limited to, a definitive agreement is entered into with the shareholders of Beautiful Fair Limited, Exchange acceptance, finalization of the terms of the QT Financing, the engagement of a sponsor and an agent. The QT will not close until the Exchange conditional approval is obtained. There can be no assurance that the QT will be completed as proposed or at all. Under Exchange rules, trading in the Company's stock has been halted, and will remain halted pending submission of documentation satisfactory to 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.

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

  • Sun Red Capital Corporation
    Greg Hansen
    Chief Financial Officer
    (403) 397-0186
    (403) 245-2723 (FAX)
    Email: Greg@sunredcapital.com