SAN DIEGO, Dec. 3 /PRNewswire-Asia-FirstCall/ -- InterAmerican Acquisition Group Inc. (OTC Bulletin Board: IAQG; IAQGW; IAQGU) and its wholly-owned subsidiary, CNC Development Ltd. ("China New Cities Development", "CNC" or "the Company") announced that Sing Kung Limited signed a master agreement with the government of Wengyuan County for a 5-year project having a total value of RMB 3 billion (estimated to be $450 million when complete).
The agreement features a series of BT infrastructure projects to be developed over the next five years, including early stage urban road networks for the Wengchen and Guandu Economic and Technology Zone. Sing Kung and its consortium partners have started the planning process and should begin construction of the Wengyuan Project in mid-2009. This new project is expected to contribute an estimated $50 million in revenue in 2009. The addition of the Wengyuan project brings Sing Kung’s total project backlog to more than $800 million as of the end of November 2008 after taking into account completed progress on projects previously awarded.
Wengyuan lies in the northern part of Guangdong Province, and is only a 1.5 hour drive from Guangzhou. Convenient access to the area is provided by the Jing-Zhu National Highway and the No. 106 National Highway. In response to the recent massive manufacturing and export-oriented industry exodus from the Pearl River Delta Region, Wengyuan has been selected by the Guangdong Provincial Government to be developed into a new manufacturing base over the next 5-10 years. The Wengyuan development project encompasses an area of 40 square kilometers. Sing Kung’s management expects to see a significant boost to the local economy once the infrastructure projects are executed in the next few years.
"We are pleased to win this latest contract in Guangdong Province, further demonstrating the attraction of the Build-Transfer ("BT") model to facilitate China’s rapid urbanization," stated Dr. Jianjun Shi, CEO of Sing Kung Limited. "We should also continue to benefit from the Chinese government’s recently announced $586 billion infrastructure build-out plan aimed at boosting domestic demand, which should strengthen our project pipeline and bolster municipal fiscal capacity."
Stock Purchase Agreement with Sing Kung Limited Amended
InterAmerican Acquisition Group Inc. ("IAG") also announced that it executed an amendment to the stock purchase agreement for Sing Kung that effectively reduces the initial consideration paid by 55%. This milestone is consistent with the agreement in principal previously announced and will allow IAG and CNC to update their S4 registration statement during December.
The new agreement doubles the IAG public shareholder stake and limits dilution by:
1) Reducing the CNC shares issued to Sing Kung common shareholders
2) Eliminating 2009 Incentive Share Issuance (based on 2008 performance)
3) Lowering the exchange ratio for Sing Kung convertible preferred stock
4) Rescinding some IAG founders’ interests
Revised Closing Capital Structure/Improved Valuation
The revised transaction remains an all-stock purchase of Sing Kung common shares. The revised post-transaction stock outstanding at closing will be as follows, assuming full participation in the exchange offer:
Common Shares Percent
Current Sing Kung common stockholders 20,919,487 68%
Current Sing Kung preferred stockholders 2,685,774 9%
InterAmerican public stockholders 5,750,000 19%
InterAmerican founders 1,305,850 4%
Total 30,661,111 100%
The above figures assume that none of IAG’s 6,750,000 warrants having a $5.00 strike price are exercised. Assuming a $7.85 closing value for the common stock, those warrants would add 2,450,637 shares to the capital structure under the treasury method.
Assuming the combined business meets its earnings targets, the modified deal pricing would result in EPS of $1.15 for 2008 and $1.69 for 2009, inclusive of warrants calculated using the treasury method. After adjusting for IAG’s cash (all of which will remain in the combined company at closing), the current-year and forward (2009) P/E ratios will be 5.7X and 3.9X respectively under the revised structure, assuming that IAG shares are valued at the amount of cash per share in trust ($7.85).
After-tax Profit Targets Maintained
In addition to the reductions in stock outstanding at closing, Sing Kung’s management has agreed to maintain its after-tax profit targets related to its earn-out shares from 2009 through 2012 and to forego any incentive share distribution opportunity in 2009 (based on 2008 earnings).
About IAG and CNC Development Ltd.
IAG was formed for the purpose of acquiring, through a merger, stock exchange, asset acquisition or other similar business combination, an unidentified operating business. It formed a subsidiary, CNC Development Ltd. for the sole purpose of effecting a redomestication merger and acquiring Sing Kung. IAG is located in San Diego, California with offices at 2918 Fifth Ave., Suite 209. Additional information about IAG and CNC Development Ltd. is available on the IAG website: http://iaaginc.com or in IAG’s public filings available from the SEC website: ( http://www.sec.gov )
About Sing Kung Limited
Sing Kung Limited (BVI), through its PRC operating subsidiary, forms and leads consortiums to deliver comprehensive city planning and infrastructure build-outs to selected municipalities throughout China. The company’s "Build-Transfer" business model allows local governments to overcome financial and project management constraints and to quickly unlock economic development potential and property value. Sing Kung employs unique capabilities and exceptional strategic relationships to deliver turnkey solutions to progressive cities that are expanding or redeveloping urban cores to meet explosive growth. In addition to supporting its clients with municipal development strategies, detailed planning and fully-financed project implementation, the company also offers municipal government leaders support in obtaining long-term replacement financing and later-phase commercialization and project marketing. For more information, please refer to http://www.cncdev.com .
Forward-looking Statements
Additional information regarding IAG, Sing Kung and China New Cities Development is contained in the Form S-4 registration statement that IAG and China New Cities Development jointly filed with the Securities and Exchange Commission on November 7, 2008. A copy of the filing in its entirety is available at http://www.sec.gov .
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities of the issuers, nor shall there be any sale of such securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about IAG, Sing Kung and their combined business after completion of the proposed acquisition. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of IAG’s and Sing Kung’s management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Sing Kung is engaged; cessation or changes in government incentive programs: fluctuations in customer project schedules and requirements; intensity of competition from other providers of urban and infrastructure planning and construction; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks detailed in the filings with the Securities and Exchange Commission, and the registration statement on Form S-4 of IAG and its BVI subsidiary, CNC Development Ltd. (SEC File No. 333-152977 and 333-152977-01, respectively). The information set forth herein should be read in light of such risks. Neither IAG nor Sing Kung assumes any obligation to update the information contained in this press release.
In connection with the pending transaction, IAG and China New Cities Development filed with the SEC a registration statement on Form S-4 containing a proxy statement/prospectus for the stockholders of IAG. The stockholders of IAG are urged to read the proxy statement/prospectus, when it is available, as well as all other relevant documents filed or to be filed with the SEC, because they will contain important information about Sing Kung, China New Cities Development, IAG and the proposed transaction. The final proxy statement/prospectus will be mailed to stockholders of IAG after the registration statement on Form S-4 is declared effective by the SEC. IAG stockholders will be able to obtain the registration statement (and proxy materials contained therein) and any other relevant filed documents for free at the SEC’s website ( http://www.sec.gov ). When effective, these documents can also be obtained without charge from IAG by directing a request to Ana Ponce, c/o InterAmerican Group, 2918 Fifth Ave., Suite 209, San Diego, CA 92103.
China New Cities Development, IAG and their respective directors and officers may be deemed to be participants in the solicitation of approvals from IAG stockholders in respect of the proposed transaction. Information regarding IAG’s participants will be available in the proxy statement /prospectus. Additional information regarding the interests of such participants will be included in the registration statement containing the proxy statement/prospectus.
For more information, please contact:
Company Contact:
Mr. William C. Morro, CEO
InterAmerican Group, Inc.
Phone: 312-957-4172
Email: wmorro@interamerican-group.com
Web: http://www.cncdev.com
Investor Relations Contact:
Mr. Crocker Coulson, President
CCG Investor Relations
Phone: +1-646-213-1915 (NY Office)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
