HONG KONG, Feb. 21, 2011 /PRNewswire-Asia/ -- Thinsoft (Holdings) Inc ("The Company" or "Thinsoft", stock code: 8096.HK), is pleased to announce it entered into a non-legally binding Memorandum of Understanding (the " MOU") in relation to the possible acquisition of the entire equity and an option to acquire the entire equity of two diesel and kerosene wholesale companies respectively in Zhejiang, the PRC at a consideration of RMB90 million in cash.
The MOU is divided in two parts: (i) the Share Purchase Agreement in which Thinsoft will acquire the entire equity interest in Zhoushan Boke Power Co. Ltd. ("Boke"), and (ii) the Option Agreement, in which the Company will acquire the option of the entire equity interest in Zhejiang Yuye Petroleum Co. Ltd. ("Yuye"), and enter into a series of Structure Agreements to obtain effective management of and operational and economic control over Yuye. Acquisition agreement will be signed within one month after the date of the MOU.
Boke is principally engaged in selling of diesel, kerosene, fuel oil and lubricating oil in Zhejiang Province and Eastern China, while Yuye is principally engaged in wholesale of kerosene, diesel oil, lubricating oil and fuel oil used in marine fisheries system in Zhejiang province and Eastern China, PRC. Yuye has its own oil tanks and storage facilities including terminal for loading and unloading oil products in Zhoushan City, Zhejiang.
According to the Foreign Investment Industrial Guidance Catalogue (2007) which is applicable in the PRC, the approval for the wholesale business of refined oil, which Yuye currently holds, falls under the restricted category for foreign investment. It is difficult for a foreign-invested entity to obtain approval for operation of wholesale of refined oil. Thus Thinsoft will not exercise the Option until such acquisition would not result in the cancellation of such approval under PRC laws. Upon the completion of the said transaction and the acquisition of the option of the entire equity interest in Yuye, Thinsoft will enter into a series of Structure Agreements to obtain effective management of and operational and economic control over Yuye. Yuye will be deemed as a subsidiary of Thinsoft upon the completion of the said transaction from accounting perspective, allowing Thinsoft to indirectly diversify into the wholesale business of refined oil. Among the total consideration, 10% will be paid to the Vendor within 5 business days after execution of the Share Purchase Agreement and the remaining balance to be paid to the Vendor within 5 business days after all conditions precedent to the Completion have been fulfilled.
Commenting on the MOU, Mr. Dennis Yu, Chairman of Thinsoft, said "Zhoushan City is one of the key oil storage base in PRC. The possible acquisition will help the Company to broaden the business network of the fuel oil processing and trading business in the region and Eastern China. We believe this will increase the potential of the Group's future earning ability and in turn benefit the Shareholders."
