TORONTO, July 29, 2019 /CNW/ -- SARMENT HOLDING LIMITED (the "Company" or "SAIS") (TSXV: SAIS), today announced that, further to its news release dated June 21, 2019, the Company has entered into a Sale and Purchase Agreement dated July 29, 2019 (the "SPA") with certain strategic buyers comprised of the following insiders and/or control persons of the Company: El Greco International Investments S.r.l. ("El Greco") (who holds a 28.9% shareholding in SAIS), Claude Dauphin Estate (who holds a 14.4% shareholding in SAIS) and Mark Joseph Irwin (a director of SAIS and who holds a 14.7% shareholding in SAIS) (collectively, the "Buyers"), pursuant to which the Company shall sell its traditional wine and spirits distribution business to the Buyers (the "Transaction"), subject to the receipt of shareholder and regulatory approvals, including approval of the TSX Venture Exchange (collectively, the "Approvals").
Shareholder approval will be sought at the annual general and special meeting of the Company, which is set for August 30, 2019 (the "Meeting").
Under the terms of the SPA, the completion of the Transaction is conditional upon, among other things, the Company's restructuring of its corporate group structure (the "Restructuring") to transfer its wine and spirits distribution business, including all shareholder loans payable by the Company (the "ShareholderLoans") and accrued interest thereon, to Sarment Wine & Spirits Holding Pte. Ltd.(the "Target") and the receipt of the Approvals.
Assuming the satisfaction or waiver of each condition precedent under the SPA (including the completion of the Restructuring and receipt of the Approvals), the Transaction will be carried out by way of a sale by the Company of 100% of the issued and outstanding shares of the Target to the Buyers.
The consideration for the Transaction consists of payment of US$1 by the Buyers to the Company and the assumption by the Buyers of the Company's indebtedness under the Shareholder Loans and accrued interest thereon, in the aggregate amount of approximately US$20.5 million.
Detailed information regarding the Shareholder Loans is set out in the Company's final IPO prospectus dated July 26, 2018 (under the heading "Liquidity and Capital Resources – Shareholder Loans") and the Company's most recent financial statements for the quarter ended March 31, 2019 (under the heading "Loans and Borrowings – Loans from Shareholders"), copies of which are available under the Company's profile on SEDAR at www.sedar.com.
Additionally, in connection with the Transaction, subject to the receipt of the Approvals, Mark Joseph Irwin is expected to acquire a significant portion of El Greco's and Claude Dauphin Estate's shareholding in SAIS, which will result in the creation of Mark Joseph Irwin as a new "control person" who will hold 53.50% of the issued and outstanding shares of the Company.
Following the Restructuring and upon completion of the Transaction, the Company expects to continue to operate from Singapore and focus its resources on "KADDRA", its technology business which the Company expects to operate through its wholly-owned subsidiaries, Kaddra Pte. Ltd. and Kaddra IP Holding Pte. Ltd. "KADDRA" refers to the Company's Customer Experience Management platform, and digital media and services, which technology seeks to help businesses combine their full suite of products and services into a single ecosystem seamlessly integrated with their own branded consumer interface. The Target's business on completion of the Transaction is expected to comprise of the distribution of premium wine and spirits, with offices in Singapore, Hong Kong, Shanghai, Beijing and Tokyo.
Special Committee and Board Approval
In order to assess the Transaction, the board of directors of the Company (the "Board") established a special committee of the Board comprised of Ken Robertson, being the independent director of the Board not involved in the Transaction (the "Special Committee"). On behalf of the Special Committee, the Company retained MNP LLP ("MNP"), an independent accounting and financial advisory firm in Canada, to prepare a fairness opinion and formal valuation (the "FairnessOpinion") with respect to the fairness of the Transaction, from a financial point of view. The Special Committee has obtained and reviewed the Fairness Opinion and recommended on July 29, 2019 that the Board approve the Transaction.
The Board approved the Transaction on July 29, 2019. Directors Mark Joseph Irwin and Giulio Fiarolo di Gropello (a director of El Greco) abstained from voting on the Transaction due to their conflicts of interest.
The Transaction is a "related party transaction" within the meaning of Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions ("MI 61-101") as the Buyers comprise of certain control persons and insiders of the Company. Accordingly, in addition to shareholder approval of the Transaction through an ordinary resolution (being a simple majority of shareholders of the Company), the Transaction is subject to the applicable requirements set forth in MI 61-101, including the requirement to obtain minority shareholder approval of the Transaction.
Further, as Mark Joseph Irwin is expected to become a new "control person" of the Company following completion of the Transaction, the rules and policies of the TSX Venture Exchange require the Company to obtain disinterested shareholder approval of the creation of a new control person.
Accordingly, both the Transaction and the creation of a new control person must be approved by a simple majority of shareholders present in person or by proxy at the Meeting other than El Greco, Mark Joseph Irwin, Claude Dauphin Estate and Catherine Dauphin.
Singapore-based SAIS is a leader in Customer Experience Management technology, business intelligence and services solutions. Across its business units, SAIS connects businesses with their customers through end-to-end intelligent solutions. Together with a roundup of world-leading industry and tech experts, SAIS seeks to create ground-breaking digital business-customer relationships. Since its establishment in 2012, SAIS Group (being SAIS, its material subsidiaries and its predecessors) has expanded throughout Asia and is now looking towards global expansion.
Certain statements contained in this press release contain "forward-looking information" ("forward-looking statements") within the meaning of Canadian securities laws. All statements, other than statements of historical fact, included herein, including, without limitation, statements regarding the completion of any potential strategic transaction such as the sale of its wine and spirits distribution business, and the terms and result of any such transaction, are forward-looking statements. Forward-looking statements are typically identified by words such as: believes, expects, anticipates, intends, estimate, postulate and similar expressions or are those which, by their nature, refer to future events. Forward-looking statements include, but are not limited to, statements relating to the expected business of the Company following completion of the Transaction, the expected business of the Target following completion of the Transaction, the expected completion of the Transaction on the terms of the SPA, the expected creation of a new control person of the Company, and the approval of, among others, the shareholders of the Company and the TSX Venture Exchange. These forward-looking statements represent SAIS' expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of SAIS' control, which could cause actual results to differ materially from the results discussed in the forward-looking statements When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Company's final prospectus, dated July 26, 2018, filed with the applicable Canadian securities regulatory authorities. Although the Company believes that such statements are reasonable, there can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future performance, and that actual results may differ materially from those in forward-looking statements. For this reason, readers should not place undue reliance on forward looking statements.
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, SAIS does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.