via Khmer NZ
Monday, 02 August 2010 15:01 Jeremy Mullins and Jimmy Ellingham
A LOGGING firm is set to buy a forestry concession in Kratie province in exchange for US$38.6 million worth of company bonds and shares, in an attempt to shore up the business after it lost 99 percent of turnover last year.
In a statement to Hong Kong’s Growth Enterprise Market late last week, China Asean Resources Limited announced the planned acquisition of a 11,500-hectare Kratie concession.
Pending shareholder approval, the firm would buy the concession from two firms, United Sky Investments and Jethero International.
The new concession was to be aquired at a 75 percent discount, according to China Asean Resources. Under the terms of the deal, the two sellers – both based in the British Virgin Islands – would receive an initial 29 percent stake in China Asean Resources, which could grow to 73.77 percent control if the bonds are fully exercised.
According to a statement, China Asean had evaluated possible alternatives to the deal but “none such plans has been fruitful … due to poor business and financial performance”.
Last year, according to previous statements, a crackdown on illegal timber-trading in the Kingdom forced China Asean Resources to halt its legal operations in two Cambodian concessions.
“For the year ended 31 December 2009, [China Asean] suffered a substantial downturn in business, with turnover having been decreased by approximately 99 percent from the previous year,” the statement said.
The company said it hoped that the new concession would prove a good investment.
It intends to plant rubber on the land once the concession has been logged, it said, with an eye to making the most of increased demand for both timber and rubber from China.
Also under the terms of the agreement, China Asean would receive a $3.8 million unsecured, interest-free loan for a term of 70 years.
The firm said the capital would be sufficient to enhance production capacity, including setting up a wood flooring material factory with an annual capacity of 10,000 cubic metres.
Presently, the firm has only one sawn timber factory with annual capacity of 6,000 cubic metres.
The present mill “is far from sufficient to utilise the abundant natural resources owned by the Group at a meaningful pace”, a report said.
China Asean’s share price steadily declined over the last year on the Growth Enterprise Market, a subsidiary of the Hong Kong exchange.
It has dropped from a 52 week high of HK$0.20 last August to bottom out Thursday at HK$0.05 before the deal was announced.
China Asean officials did not return requests for comment yesterday.
Ministry of Agriculture, Forestry, and Fishery officials declined to comment on the issue yesterday.
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