Zongshen PEM Power Systems Inc. ("ZPP" or the "Company") (TSX:ZPP)
announces today that it has entered into a definitive agreement
with Zongshen Industrial Group Co. Ltd. ("ZIG") and Hong Kong VAS
International Development Limited ("HKVAS"), an investment entity
controlled indirectly by ZIG, pursuant to which HKVAS has agreed to
acquire all of the issued and outstanding common shares of ZPP (the
"Shares") not owned by HKVAS or ZIG for C$0.60 per Share in
cash.
The purchase price to be paid to ZPP's shareholders represents a
13.2% premium over the closing price of the Shares on the TSX on
October 30, 2012, and an 37.5% premium over the 30 trading-day
volume-weighted average share price. The transaction will be
structured as a plan of arrangement under the Business Corporations
Act (British Columbia) (the "Arrangement"). Pursuant to the terms
of the Arrangement, all outstanding Shares not owned by HKVAS or
ZIG will be transferred to HKVAS in exchange for a cash payment of
C$0.60 per Share. The estimated transaction value for the Shares is
approximately C$22 million, funded by HKVAS.
Holders of options to acquire the Shares ("Options") have agreed
to surrender their Options for cancellation upon completion of the
Arrangement.
Completion of the Arrangement is subject to, among other things,
customary conditions, including approval of at least two-thirds of
the votes cast by ZPP's shareholders in person or by proxy at the
special shareholders' meeting to be held in December, 2012 (the
"Meeting"), and the receipt of court and necessary regulatory
approvals. The Arrangement is also subject to approval by a simple
majority of votes cast in person or by proxy by the disinterested
shareholders of ZPP, excluding certain votes outlined in
Multilateral Instrument 61-101 - Protection of Minority
Securityholders In Special Transactions. HKVAS and ZIG collectively
hold approximately 63.5% of the outstanding Shares.
Recommendation of the Independent Directors of the Board of
Directors of ZPP (the "Board")
An independent committee of the Board, after consulting with its
financial and legal advisors, has unanimously determined that the
Arrangement is fair to ZPP's shareholders and has unanimously
resolved to recommend that ZPP's shareholders vote in favour of the
Arrangement at the Meeting. Details of the terms and conditions of
the Arrangement will be included in an information circular for the
Meeting to be mailed to ZPP's shareholders. The Arrangement is
expected to close shortly after the Meeting.
A copy of the arrangement agreement, the information circular
and related documents will be filed with Canadian securities
regulators and will be available at www.sedar.com.
About Zongshen PEM Power Systems Inc.
Zongshen PEM Power Systems Inc. is a public company trading
under the symbol ZPP on the Toronto Stock Exchange. The Company
manufactures low-cost, high quality, environmentally friendly gas
motorbikes, electric motorcycles, electric bicycles and other
e-vehicles in China for the Chinese domestic and international
markets. One of the largest shareholders of Zongshen PEM Power
System is Zongshen Industrial Group, which is one of China's
largest manufacturers and distributors of engines and power
equipment.
Forward-looking Statements and Information
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws and which are based on the expectations, estimates
and projections of management of the parties as of the date of this
news release unless otherwise stated. The use of any of the words
"expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking statements or information. More particularly and
without limitation, this press release contains forward-looking
statements and information concerning: the anticipated benefits of
the Arrangement to the parties, their respective securityholders
and certain of the countries in which ZPP operates; the timing and
anticipated receipt of required regulatory, court, securityholder
and any other third party approvals for the Arrangement; the
ability of the parties to satisfy the other conditions to, and to
complete, the Arrangement; and the anticipated timing of the
meeting of ZPP's shareholders to consider the Arrangement and the
closing of the Arrangement.
In respect of the forward-looking statements and information
concerning the anticipated benefits and completion of the proposed
Arrangement and the anticipated timing of the Meeting and for
completion of the Arrangement, ZPP, HKVAS and ZIG have provided
such in reliance on certain assumptions that they believe are
reasonable at this time, including assumptions as to the time
required to prepare and mail securityholder meeting materials,
where applicable; the ability of the parties to receive, in a
timely manner and on satisfactory terms, the necessary regulatory,
court, securityholder, stock exchange and any other third party
approvals for the Arrangement; the ability of the parties to
satisfy, in a timely manner, the other conditions to the closing of
the Arrangement; and other expectations and assumptions concerning
the Arrangement. The anticipated dates provided may change for a
number of reasons, including unforeseen delays in preparing
securityholder meeting materials, where applicable, the inability
to secure necessary securityholder, regulatory, court or any other
third party approvals in the time assumed or the need for
additional time to satisfy the other conditions to the completion
of the Arrangement. Accordingly, readers should not place undue
reliance on the forward-looking statements and information
contained in this press release.
Since forward-looking statements and information address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors and
risks. Risks and uncertainties inherent in the nature of the
Arrangement include the failure of HKVAS, ZIG and ZPP to obtain
necessary securityholder, where applicable, regulatory, court and
any other third party approvals, or to otherwise satisfy the
conditions to the completion of the Arrangement, in a timely
manner, or at all. Failure to so obtain such approvals, or the
failure of the parties to otherwise satisfy the conditions to or
compete the Arrangement, may result in the Arrangement not being
completed on the proposed terms, or at all. In addition, if the
Arrangement is not completed, and ZPP continues as an independent
entity, there are risks that the announcement of the Arrangement
and the dedication of substantial resources of ZPP to the
completion of Arrangement could have an impact on ZPP's current
business relationships (including with future and prospective
employees, customers, distributors, suppliers and partners) and
could have a material adverse effect on the current and future
operations, financial condition and prospects of ZPP.
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on other factors that could
affect the operations or financial results of the Company are
included in reports on file with applicable securities regulatory
authorities. The forward-looking statements and information
contained in this press release are made as of the date hereof and
the Company undertakes no obligation to update publicly or revise
any forward-looking statements or information, whether as a result
of new information, future events or otherwise, unless so required
by applicable securities laws.
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the release.
Contacts: Zongshen PEM Power Systems Inc. Mr. Michael Cheung,
Chief Financial Officer 1.604.687.7908 1.604.677.7008
(FAX)mcheung@zongshenpem.com Zongshen Industrial Group Mr Li Yao,
Executive Vice President c/o Joyce Liang +86 23
6637-2815joyceliang@zongshen.cn