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Adamas Finance Asia Receives USD 6.8m in Final Settlement Due from Exercise of Put Option
Friday 16 June 2017

16 June 2017 - Hong Kong-based investment company Adamas Finance Asia Ltd.'s (LSE: ADAM) Lead Winner Ltd subsidiary has received a payment of HKD 52,353,176 (approximately USD 6.8m) in final settlement of the amount due from the exercise of a put option, the company said

The company announced in February that it had received a payment of USD 700,000 in part settlement of the RMB 50m (approximately USD 7.2m) due from the exercise of the put option.

In January, Adamas Finance Asia said it had agreed terms for the sale of its indirect 15% interest in the Tian Tong Shan Villa Project, a resort development in Fujian Province, China for a total consideration of up to RMB 113.58m (USD 16.4m), the company said.
 
Through its wholly owned subsidiary, Lead Winner Ltd. ADAM holds a 30% interest in S/T Group Holdings Ltd. which in turn holds a 50% interest in Changtai Jinhongbang Real Estate Development Co. Ltd. and its resort development project, the TTS Project.

ADAM's effective 15% interest was valued at USD 48.4m in the consolidated balance sheet at 30 June 2016.
 
Under the terms of an agreement between the shareholders of S/T, LWL has the option to require Wang Chun Fang, the majority indirect holder of CJRE, to purchase shares representing 10% of S/T from LWL for a consideration of RMB 50 m (approximately USD 7.2m).

LWL has exercised the Put Option and full payment in cash is due within 30 days.
 
In addition, LWL has entered into a memorandum of understanding with Wang Chun Fang to sell its remaining 20% holding in S/T.

However, it is anticipated that the sale and purchase agreement relating to the proposed disposal, when executed, will be entered into with R/F Properties Co. Ltd. , a Guangzhou-based real estate developer listed on the Hong Kong Stock Exchange which, it is envisaged, will purchase the entire share capital of S/T.
 
Under the terms of the MOU, the agreed consideration for LWL's 20% holding in S/T, which represents 10% of CJRE, is RMB 63.58m (approximately USD 9.2m).
 
Payment of RMB 51.58m (approximately USD 7.4m) of the total amount due from the proposed disposal is expected within ten days of receipt of the RMB 515.8m (approximately USD 74.2m) from R/F by Wang Chun Fang, which is expected to be received one month following satisfactory completion of Rand F's due diligence. 

The remaining sum due to LWL of RMB 12m (approximately USD 1.8m) will be received in cash through phased payments of 10% of each payment received from Wang Chun Fang.

Exercise of the put option and completion of the proposed disposal is expected to result in a loss on disposal of approximately USD 32m which the directors expect will be recognised in the financial year ended 31 December 2016.
 
The company is selling its holding in the TTS project in line with its investing policy, which involves disposing of the legacy portfolio acquired in a reverse takeover in February 2014 in order to invest the funds realised in income-generating financing opportunities.

The objective is for the financing portfolio to generate cash to enable the company to pay regular dividends to shareholders.
 
ADAM will reinvest the funds received from the exercise of the Put Option and, assuming completion, the proceeds of the sale to R/F in accordance with its investing policy under the advice of its Hong Kong-based investment manager, Adamas Asset Management Ltd.
Details
Date Published: 16/06/2017
Target: Tian Tong Shan Villa Project/15%
Country: China
Deal Size: 16.4m (USD)
Sector: Hotels/Restaurants/Casinos/Catering
Type: Divestment
Financing: Cash
Status: Closed
Vendor: Adamas,  Finance Asia
Buyer: Lead Winner Ltd
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