China Hongxing Sports' ex-CEO makes S$20.5m offer to buy company's subsidiaries

SINGAPORE-LISTED China Hongxing Sports Limited's former chief executive has made a 100 million yuan (S$20.5 million) offer to acquire the company's operating subsidiaries.

The purchase is carried out through Jiayao Investments Limited, owned by Denis Wu Rongzhao, China Hongxing's former CEO and executive director.

China Hongxing said under the proposed deal, it would dispose off all its businesses in China held under Profitstart Group Limited.

In a filing to the Singapore Exchange on Thursday morning, the company said the 100 million yuan package comprises 28 million yuan in cash, which is intended to be made available for distribution to minority shareholders only.

The Wu family comprising Wu Hanjie, Wu Rongguang, and Denis Wu, will renounce their rights to receive any dividend arising from the distribution of the cash consideration. The Wu family holds about 33 per cent of China Hongxing. The renounced dividends will be up to 9.24 million yuan.

There will also be a waiver by Mr Denis Wu and Mr Wu Rongguang of all the monies owed to them by China Hongxing, amounting to some 64.4 million yuan.

As at the date of the agreement, the buyer has paid the cash consideration in Singapore dollars into an escrow account held by a Singapore law firm acting as the escrow agent.

Alfred Cheong, independent director and chairman of the audit committee of China Hongxing said: "There is finally some light at the end of the tunnel for minority shareholders since the voluntary suspension of China Hongxing in 2011. As the efforts to resume the trading of the company's shares were not successful, this proposed disposal potentially offers some closure for minority shareholders, especially since the company faces a possible delisting.

"After the completion of the proposed disposal, the company will become a clean listed shell, which will be available for a reverse takeover in future."