Pine Capital gets letters of demand from HK firm to terminate deal

PINE Capital's plans to buy a 51 per cent stake in Hong Kong-based asset management firm Silver Tree Hong Kong for HK$2.55 million (S$440,000) in shares may have hit a snag. 

On Friday, the Catalist-listed financial services firm said it received two letters of demand from solicitors acting for Silver Tree's sole shareholder David Sarkis, seeking to terminate the share purchase agreement and compensation of HK$10 million.

The acquisition was to be made in two stages. Pine Capital would acquire the first 9.9 per cent stake in Silver Tree upon the successful completion of due diligence and relevant approvals. The remaining 41.1 per cent would be acquired upon obtaining further approvals, including from Pine Capital shareholders. 

Mr Sarkis, through his solicitors, said in the letters dated July 9 that Pine Capital did not allot and issue the consideration shares for the first stage by the extended long-stop date. He is thus exercising his right to terminate the acquisition. 

He is also demanding compensation of HK$10 million for losses "due to the fall in market value of licenced fund management companies in Hong Kong regulated by the Securities and Futures Commission of Hong Kong permitted to carry out asset management services".

The compensation is also for losses "due to monies owing for the purpose of the funding requirements" of Silver Tree and losing the chance to acquire the consideration shares. 

Pine Capital said it is in consultation with its legal advisers and will make further announcements as appropriate in due course.

However, the firm also reiterated that the consideration for the deal was to be paid in shares, not cash, and that the valuation of Silver Tree is HK$5 million.

It added that consultation with the Singapore Exchange was needed as the proposed acquisition had involved "negative figures".

"As at the date of this announcement, the company and the vendor have yet to finalise the consultation paper required by the Exchange. As such, the company is unable to issue and allot any shares to the vendor," Pine Capital said.