Wednesday, September 3, 2008

Final terms for acquisition of the BVI company Rainbow Trend Limited

Amicus Capital Corp. announced that it had agreed to amend the terms of its Qualifying Transaction with the BVI-domiciled Rainbow Trend Limited. The letter of intent concerning this transaction, which includes a proposed share consolidation of Amicus' common shares, was signed in May 2008. On August 14, 2008, Amicus signed share exchange agreement with the Rainbow, according to which it will acquire all of the outstanding shares of the BVI company.

Rainbow (BVI) holds a 55.6% equity interest in Sino-Canadian joint venture Beijing Polo Biotech Co. Ltd. Polo Biology Science Park Co. Ltd. holds the balance of the 44.4% equity interest in Polo JV, which develops and manufactures nutritional health supplements and personal care products in Asia, distributing them through a network of retail outlets, managed by licensed agents.

By the terms of the acquisition transaction, after the consolidation of Amicus' common shares, the Canadian company will acquire the full stock of the BVI-based Rainbow, which makes 50,000 shares currently issued and outstanding. For purposes of the acquisition, Rainbow was valued at US$18mln, and based on this evaluation each common share of Rainbow was valued at $360. In exchange for each issued Rainbow share, Amicus will issue 720 post-consolidated common shares; the total amount of post-consolidated common shares will be 36 mln. Also, Amicus will issue a public offering of 7,000,000 post-consolidated Common Shares at a price of $0.50 per share for gross proceeds of $3.5 million.

After the approvals of the Chinese government are obtained, the parties have agreed to use the net proceeds of the offering to increase Rainbow's ownership of Polo JV up to maximum of 90%.

The Canadian corporation currently has 9,000,000 common shares, and they will be subject to the share consolidation before closing of the offering. The founders of the corporation, which hold 4,000,000 common shares, have also entered into a support agreement with Rainbow, under the terms of which they have agreed to vote their common shares in favour of the acquisition including the share consolidation.

The acquisition is to be completed on or before December 1, 2008, otherwise the terms of the share exchange agreement will be terminated. If the acquisition does not complete by this period due to the fault of Rainbow, the BVI company will have to pay a break fee to Amicus corporation, in the amount of US$540,000.