Scooter maker Vmoto has consolidated ownership of its Chinese manufacturing facility, buying out the remaining minority stake it did not own for $US1.3 million ($A1.5 million) and revealing plans for a $3.5 million capital raising.
The announcement is below:
Vmoto Limited is pleased to announce it has reached agreement whereby it has secured the remaining 33% interest in the Nanjing JV, owner of the Nanjing manufacturing facility, taking the Company's interest to 100% and making it a wholly owned subsidiary. This increases the profit earned by Vmoto from its manufacturing division by 50%.
The agreement between Vmoto Limited and the minority shareholders in the Nanjing JV has been reached for a total consideration of US$1,300,000. Further, the agreement locks key management, including Mr Li Gung, Vmoto's Factory General Manager, into long term employment contracts at the Nanjing Facility of between 3 and 6 years, guaranteeing continuity of experience and skills for the Company's manufacturing operations.
To fund the acquisition and provide ongoing working capital, the Company further advises it has received an overwhelmingly positive response to a capital raising to institutional and sophisticated investors, with firm commitments received to raise $3,500,000 via a placement of up to 21,875,000 fully paid ordinary shares at an issue price of $0.16, a 15% premium to the last sale price.
Vmoto Managing Director, Mr Patrick Davin, commented "This is a company transforming transaction for Vmoto. Raising funds at a premium is a clear endorsement of the support Vmoto has in the market and the added value this transaction brings. This increases the profitability of the manufacturing division by 50% whilst simplifying the operational structure of the Company. The Company remains debt free and strongly positioned to commence mass production within weeks. The Company always had the option to buy out our partners in 3 years time, however the opportunity to do the transaction now was too good to miss for shareholders."
The Placement will be made pursuant to the Company's existing 15% capacity and under s708 of the Corporations Act to sophisticated investors. The funds raised from the Placement will be applied towards the consideration for the acquisition of the 33% of the former Nanjing JV and working capital that was previously expected to have been contributed by the Nanjing JV partner.
