Lifebrandz ends Inner Mongolia deal in favour of another

FINANCIALLY beleaguered Lifebrandz Ltd has terminated a proposed reverse takeover of an industrial-grade garnet mining company in Inner Mongolia in favour of another deal.

In an exchange filing on Friday evening, the former nightlife entertainment behemoth said that term sheet has been terminated by mutual agreement by both parties, but did not disclose the reason.

Catalist-listed Lifebrandz had said in late October that it would try to buy Three Crystals Hong Kong Limited for S$70 million in shares. Three Crystals is the sole shareholder of Inner Mongolia Three Crystals Trading Co Ltd, which partly owns a company that explores industrial grade garnet on a 0.95 square kilometre area - a third the size of the City of London - in Inner Mongolia.

In a separate announcement, the group said that it plans to conduct a reverse takeover of Natural Essence Group SPV for S$25 million, to be paid for through the issuance of new shares. The company did not say what Natural Essence Group, which is incorporated in British Virgin Islands, does.

Besides the S$25 million consideration, Lifebrandz will also issue to the joint arrangers of Stirling Coleman Capital and a certain Gan Cheng Siong unlisted warrants amounting to a total issue price of S$2.5 million. Each warrant will carry the right to subscribe for a new ordinary share in Lifebrandz at an exercise price of 0.1 Singapore cent.

Prior to the transaction, however, Natural Essence Group will procure S$2 million through a placement into Lifebrandz, with the funds to be used for working capital requirements and all corporate advisory fees, lawyer, independent account and other fees.

In connection with this, Lifebrandz has on Nov 15 conditionally agreed to issue to Pramana Capital Pty Ltd 167 million new shares for S$501,000, or 0.3 Singapore cent per share - a premium of 20 per cent to the shares' average price of 0.25 Singapore cent on Nov 15.

Auditors for Lifebrandz had in late October flagged concern over its ability to continue as a going concern.

It warned then that if funds from the agreement with Three Crystals were not forthcoming, "the group and the company may be unable to continue in operational existence for the foreseeable future".