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Yamada Green Resources sells stake in Chinese associate, proposes S$2.7m share placement

YAMADA Green Resources is set to book a 3.4 million yuan ($687,000) loss from the disposal of a 45 per cent equity interest in a Chinese food manufacturer Fujian Tianwang Foods.

Its wholly-owned subsidiary, Fujian Wangsheng Industrial Co, has entered into a sale and purchase agreement to sell the stake in Tianwang to its 55-per cent owner Jinhai International Holdings for 39.9 million yuan (S$8.17 million), China-based mushroom supplier Yamada said on Tuesday night.

The sale price is the same amount at which Yamada acquired the 45 per cent stake in 2015. Tianwang will no longer be an associated company of Yamada once the disposal is completed.

Incorporated in China’s Fujian province, Tianwang manufactures processed food products including bamboo shoots, and also cultivates vegetables and is involved in forestry management in China.

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The buyer, Jinhai, is an independent third party unrelated to Yamada’s directors and substantial shareholders.

Tianwang’s unaudited net loss for the half year ended Dec 31, 2018, was about 100,000 yuan, said Yamada.

Yamada said that despite the potential book loss, the deal will be in its best interests because the group no longer has any bamboo plantations, which means Tianwang no longer adds value to the group.

The deal will also prevent further losses, by discontinuing unprofitable investment projects, while providing the working capital for Yamada to start on subsequent projects, it noted.

Separately, Yamada said on Tuesday that it plans to issue 8.5 million of new ordinary shares to Japanese food manufacturer Tennensozai for a total of S$2.7 million, or S$0.3135 per share.

Yamada will also grant Tennensozai an option to subscribe to 8.5 million new shares, subject to the completion of the proposed share placement.

Tennensozai is the group’s largest overseas customer and also its preferred partner for expansion into the Japan market in the future, Yamada said.

Proceeds from the proposed share placement will be used for Yamada’s general working capital purposes including business expansion, acquisitions, investments and joint ventures.

The proposed placement is subject to shareholder approval. Its other conditions precedent also include approval-in-principle for the listing and quotation of the subscription shares and option shares on the Singapore Exchange (SGX) mainboard.

If any of the conditions precedent is not satisfied by Dec 31, 2019, either Yamada or Tennensozai will be entitled to terminate the subscription agreement.

When allotted and issued in full, the subscription shares and option shares will represent about 8.77 per cent of the enlarged total number of shares in Yamada.

Yamada Green Resources’ mainboard-listed shares have been suspended from trading since September 2017.

On Tuesday, the group also announced the reconstitution of its board and board committees.