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PCB | November 08, 2007

Aspocomp's Chinese and Indian subsidiaries<br>into a new JV with Meadville

Aspocomp has signed an agreement according to which it will contribute its shareholdings in its subsidiaries in China and India as well as certain equipment from its Salo plant to a new holding company.
80 percent of the shares of the holding company will be sold to Meadville Holdings Limited, a Hong Kong listed parent company of the Meadville Group. Aspocomp will remain a minority owner with 20 percent ownership.

The assets to be contributed to the joint venture by Aspocomp are valued at about EUR 77 million. Meadville will pay about EUR 61 million for its 80 percent holding in the joint venture. Aspocomp will use about EUR 40 million of this consideration to repay its loan to Standard Chartered Bank in full and about EUR 8 million to repay the working capital facilities of its Chinese subsidiary. The balance of the consideration will be used to partially repay Aspocomp's interest bearing liabilities in Finland and to improve its liquidity.

The parties have agreed that they may either list the joint venture at the earliest in year 2012, or alternatively the parties may exercise mutual put and call option rights concerning Aspocomp's 20 percent shareholding at the earliest in year 2013. In addition, the parties have agreed on the pricing principles to be used to value the put and call option rights for Aspocomp's 20 percent holding. The pricing will be based on the highest of the following figures: either 5.5 times EBITDA, or net asset value of the joint venture, or the agreed minimum price. The agreed minimum price is the initial value of Aspocomp's 20 percent holding in the joint venture.

As part of the agreement, Meadville will also acquire 10 percent ownership of Aspocomp's subsidiary in Oulu, Finland. Aspocomp's holding in its Thai subsidiary will remain unaffected.

Following the negotiated transaction, Aspocomp's assets would comprise 20 percent shareholding of the new joint venture, 90 percent shareholding of Aspocomp's Oulu subsidiary, about 87 percent shareholding of Aspocomp's Thai subsidiary, about 15 percent shareholding of Imbera Inc and real estates in Salo and Oulu.

Simultaneously with this transaction, Aspocomp has agreed with its Finnish bank creditors on adjustments to the terms of its liabilities. However, the financial position of Aspocomp will remain weak.

The agreement with Meadville is subject to approval of the Extraordinary General Meeting of Aspocomp. The companies expect to finalize the transaction by the end of November 2007.

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