TORONTO, June 21, 2019 (GLOBE NEWSWIRE) -- SARMENT HOLDING LIMITED (the “Company” or “SAIS Group”) (TSXV: SAIS), today announced that, further to its news release dated May 29, 2019, the Company has entered into a non-binding, exclusive letter of intent dated June 21st, 2019 (the “LOI”) with strategic buyers comprised of certain insiders and controlling shareholders of the Company (the “Buyers”), pursuant to which the Company would sell its traditional luxury distribution business to the Buyers (the “Proposed Transaction”).
Under the terms of the LOI, it is intended that the Company would continue to restructure its group structure to create a stand-alone wine and spirits distribution division under a newly incorporated holding company Sarment Wine & Spirits Holding Pte. Ltd. (“Target”) and that the Proposed Transaction would be carried out by way of a sale of 100% of the outstanding shares of Target by the Company to the Buyers. Final legal terms for the Proposed Transaction are still in the process of being determined and finalized. It is expected that the Target’s business on completion of the Proposed Transaction would comprise of the distribution of premium wine and spirits, with offices in Singapore, Hong Kong, Shanghai, Beijing and Tokyo. The Buyers are a consortium of shareholders of the Company, comprising of controlling shareholder El Greco International Investments S.r.l. (28.9% shareholding in SAIS) and insider shareholders Claude Dauphin Estate (14.4% shareholding in SAIS) and Mark Joseph Irwin (14.7% shareholding in SAIS).
Following completion of the Proposed Transaction, it is expected that the Company would continue to operate from Singapore and would focus its resources on “KADDRA”, its Customer Experience Management (“CEM”) platform, and digital media and services. KADDRA’s technology helps businesses combine their full suite of products and services into a single ecosystem seamlessly integrated with their own branded consumer interface.
Under the terms of the LOI, the intended consideration for the Proposed Transaction consists of payment of US$1 by the Buyers to the Company and assumption by the Buyers of the Company’s obligation to pay all outstanding shareholders loans of the Company, and accrued interest thereon, of approximately US$20.45 million as at the date of the LOI. Detailed information in respect of these loans is set out in the Company’s final 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.
The principal terms and conditions of the LOI include, among others, an exclusivity period of 60 days, that no liability or binding obligation is intended to be created between the parties pursuant to the LOI and that the Proposed Transaction is conditional on, among others, the Buyers having conducted and are satisfied with the results of the financial, legal, and regulatory due diligence of the Company and the parties signing a legally binding share purchase agreement.
The board of directors of the Company (the “Board”) has established a special committee of the Board comprised of Ken Robertson, being the independent director of the Board (the “Special Committee”), to consider the Proposed Transaction on behalf of the Company. On behalf of the Special Committee, the Company has retained MNP LLP (“MNP”), an independent accounting and financial advisory firm in Canada, to prepare a preliminary fairness opinion with respect to the fairness of the Proposed Transaction on the terms set forth in the LOI (the “Preliminary Fairness Opinion”). The Special Committee will obtain a final formal valuation and fairness opinion with respect to the finalized terms of the Proposed Transaction once determined (the “Valuation and Fairness Opinion”).
MNP has provided the Preliminary Fairness Opinion dated June 14, 2019, with an effective date as of April 30, 2019 (the “Opinion Date”), to the Special Committee, which concluded to the Special Committee that, based upon and subject to MNP’s scope of review and the analysis, qualifications and assumptions contained in the Preliminary Fairness Opinion, as at the Opinion Date, the Proposed Transaction on terms set forth in the LOI is fair, from a financial point of view, to the shareholders of the Company. The conclusion contained in the Preliminary Fairness Opinion should not be construed as a recommendation for shareholders of the Company to vote in favour of, or against, the Proposed Transaction. MNP reserves the right, but will be under no obligation, to review all calculations contained in the Preliminary Fairness Opinion and, if MNP considers it necessary, to revise its conclusion in light of any information existing at the Opinion Date which becomes known to MNP after the date of the Preliminary Fairness Opinion.
The Proposed Transaction would be 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 controlling shareholders and insiders of the Company. Accordingly, the Proposed Transaction would be subject to the applicable requirements set forth in MI 61-101, including the requirement for the Company to obtain minority shareholder approval.
As part of the Proposed Transaction, it is expected that completion of certain ancillary restructuring transactions, whereby Mark Joseph Irwin would acquire a significant portion of El Greco International Investments S.r.l.’s and Claude Dauphin Estate’s shareholding in SAIS, would result in the creation of Mark Joseph Irwin as a new “control person” of the Company and it will be necessary for the Company to also obtain disinterested shareholder approval for the creation of a new control person in accordance with the rules and policies of the TSX Venture Exchange.
The LOI is non-binding and there is no assurance that the Proposed Transaction will be completed as proposed or at all, and completion of the Transaction remains subject to Board approval. In the event a definitive agreement with respect to the Proposed Transaction (the “Definitive Agreement”) is executed, the closing of the Proposed Transaction will be subject to a number of conditions, including, but not limited to, receipt of a favourable Valuation and Fairness Opinion and a positive recommendation by the Special Committee, along with customary regulatory, third party and shareholder approvals, including the final approval of the TSX Venture Exchange. Full details of the Proposed Transaction will be included in the Definitive Agreement and in the management information circular expected to be filed with the regulatory authorities and mailed to the securityholders of the Company in accordance with applicable securities laws. A copy of the Valuation and Fairness Opinion, and a description of the various factors considered by the Special Committee in respect of the Definitive Agreement, will be included in the management information circular. All securityholders of the Company are urged to read the Definitive Agreement and the management information circular once they become available as they will contain additional important information about the terms of the Proposed Transaction and the Definitive Agreement.
About SAIS Group
Singapore-based SAIS Group is a leader in Customer Experience Management technology, business intelligence and services solutions. Across its business units, the group connects businesses with their customers through end-to-end intelligent solutions. Together with a roundup of world-leading industry and tech experts SAIS offering is crafted to create ground-breaking digital business-customer relationships. Since its establishment in 2012, SAIS Group has expanded throughout Asia and is now looking towards global expansion.
To learn more about SAIS, visit our website: www.sais-group.com
Cautionary Statement
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 luxury 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 proposed business of the Company following completion of the Proposed Transaction, the proposed business of the Target following completion of the Proposed Transaction, the definitive terms and the outcome of the Proposed Transaction, the expected entry into a Definitive Agreement, the expected completion of the Proposed Transaction on the terms of the Definitive Agreement and the expected approval of, among others, the shareholders of the Company and the TSX Venture Exchange. These forward-looking statements represent SAIS Group’s 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 Group’s 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 Group 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.
Contact
Deborah Krish
SAIS Corporate Office
deborah.krish@sais-group.com