Ex-CEO of China Hongxing Sports makes $20.5m offer to buy its operating subsidiaries

SINGAPORE - Mainboard-listed China Hongxing Sports said its former chief executive Denis Wu Rongzhao has made a 100 million yuan (S$20.5 million) offer to acquire all of the company's businesses in China held under Profitstart Group Ltd.

China Hongxing said after completion of the proposed disposal, China Hongxing will become a clean listed shell available for a reverse takeover and minority shareholders who continue to hold shares in the shell will benefit from this.

The 100 million yuan package comprises 28 million yuan (S$5.6 million) in cash, which is intended to be made available for distribution to minority shareholders only, the company said in a pre-market filing on Thursday (Sept 21).

Mr Denis Wu is a part of the Wu family, the controlling shareholder group with a 33-per cent stake in China Hongxing. The company said the Wu family will renounce their rights to receive any dividend arising from the distribution of the cash consideration. The renounced dividends will be up to 9.24 million yuan.

Mr Denis Wu and Mr Wu Rongguang will also waive all the monies owed to them by China Hongxing, amounting to some 64.4 million yuan.

As at the date of the agreement, the buyer has paid the cash consideration in Singapore dollars into an escrow account held by a Singapore law firm acting as the escrow agent.

China Hongxing said after completion of the proposed disposal, China Hongxing will become a "clean listed shell available for a reverse takeover in future."

"Minority shareholders who continue to hold shares in the shell will benefit from a reverse takeover," said the company.

Said Mr Alfred Cheong, China Hongxing independent director and chairman of its audit committee: "There is finally some light at the end of the tunnel for minority shareholders since the voluntary suspension of China Hongxing in 2011. As the efforts to resume the trading of the company's shares were not successful, this proposed disposal potentially offers some closure for minority shareholders, especially since the company faces a possible delisting.

"After the completion of the proposed disposal, the company will become a clean listed shell, which will be available for a reverse takeover in future."