CURRENT REPORT UNDER SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17.2(c) THEREUNDER
1. Date of Report (Date of earliest event reported)
Sep 30, 2022
2. SEC Identification Number
ASO94-03992
3. BIR Tax Identification No.
003-871-592
4. Exact name of issuer as specified in its charter
Global Ferronickel Holdings, Inc.
5. Province, country or other jurisdiction of incorporation
Makati, Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
7/F Corporate Business Center, 151 Paseo de Roxas cor. Arnaiz St. Makati CityPostal Code1228
8. Issuer's telephone number, including area code
(02) 8519 7888
9. Former name or former address, if changed since last report
Not applicable
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common Shares
5,199,872,829
11. Indicate the item numbers reported herein
9
The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.
Global Ferronickel Holdings, Inc.FNI
PSE Disclosure Form 5-1 - Substantial Acquisitions References: SRC Rule 17 (SEC Form 17-C) and Section 4.4 and/or Section 5 of the Revised Disclosure Rules
Subject of the Disclosure
Company acquires 22.22% shareholding in GHGC Holdings Ltd (GHGC) with the signing of a Share Purchase Agreement
Background/Description of the Disclosure
Acquisition of 22.22% shareholding in GHGC Holdings Ltd (GHGC) through its shareholder, Gu Zhifang, for USD 75 million.
GHGC is a British Virgin Islands holding company owning 90% shareholding in Guangdong Century Tsinghan Nickel Industry Co., Ltd.’s (Guangdong Century).
Date of Approval by Board of Directors
May 24, 2021
Date of Approval by Stockholders
Jun 30, 2021
Other Relevant Regulatory Agency, if applicable
N/A
Date of Approval by Relevant Regulatory Agency
N/A
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction
Acquiring 22.22% shareholding in GHGC gives FNI 20% indirect ownership in Guangdong Century and provides experience and capabilities in value-added processing of nickel ore.
To complement the growth potential of the Company’s nickel mining business, it is diversifying its investments towards high-growth firms and industries that can provide operational synergies and improve cost efficiencies. The business diversification initiatives will provide risk reduction and optimal value to stakeholders. This results in vertical integration of the value chain.
Description of the transaction including the timetable for implementation and related regulatory requirements, if any
The Board of Directors approved the acquisition on May 24, 2021 and was ratified by the stockholders on June 30, 2021.
The Seller undertakes to prepare, execute, file, and process all documents for the registration of the 2,222 Shares in favor of FNI before all concerned government agencies and offices no later than 30 days from the execution of the Share Purchase Agreement. Payment term is in installments of USD 10 million annually and offset of FNI’s Receivables from the Seller.
Identities of the parties to the transaction
Name
Nature of Business
Nature of any material relationship with the Issuer, their directors/officers or any of their affiliates
Gu Zhifang
Holding company of a steel (nickel pig iron) plant
Guangdong Century is owned by GHGC Holdings Ltd., a British Virgin Island company owned by FNI Directors Joseph C. Sy and Gu Zhifang
Terms and conditions of the transaction
The nature and amount of consideration (e.g. price per share, the aggregate amount)
Cash with cancellation of FNI receivables.
Basis upon which the amount of consideration or value of the transaction was determined
The amount was pegged after a series of negotiations with the Seller. During the due diligence period, FNI was provided access to the financial records of Guangdong Century, its historical annual income for the past years, as well as its earning potential. FNI has also factored in the intangible benefits of this transaction, namely: enhance synergy between FNI as a nickel ore supplier and Guangdong Century as a value-added processor, provide consistent and reliable trade transactions between parties, and support the diversification projects of the Company.
As an arm’s length transaction, the set price is fair and within the value range in the valuation report of an independent party which considered the relevant financial ratios such as EV/EBITDA, P/E, and P/B of comparable companies.
The number of shares to be acquired
FNI will acquire 2,222 common shares in GHGC Holdings, Inc.
Ratio/percentage to total outstanding capital stock
22
Terms of payment
Payment of the USD 75 million transaction price shall be made by offset of receivables amounting to USD 23,238,492. The remaining balance of USD 51,761,508 shall be paid to the Seller in cash installments of USD10 million annually until fully paid.
Conditions precedent to closing of the transaction, if any
There are no conditions precedent to the closing of the transaction.
Description of the company subject of the transaction
Nature and business
GHGC is a holding company whose sole business is owning 90% shareholding in Guangdong Century. It does not have investment other than its shareholding in Guangdong Century.
Guangdong Century is in the business of processing laterite nickel ore and the sale of nickel pig iron. It is one of the most competitive smelters with RKEF technology.
Acquiring 22.22% shareholding in GHGC gives FNI 20% indirect ownership in Guangdong Century.
Discussion of major projects and investments
As of date, GHGC’s investment is solely in Guangdong Century.
Guangdong Century is a nickel alloy enterprise in China that operates in a 33-hectare area with more than 600 employees.
Guangdong Century plant uses rotary kiln technology. The rotary kiln can feed up to 4 furnaces. Previously, the rotary kiln feeding at two furnaces produced only around 20,000 tons of pure nickel. After technical upgrade, the rotary kiln, now feeding at three furnaces, is estimated to produce about 28,000 tons of pure nickel.
Guangdong Century’s wholly owned subsidiary is Yangjiang Zichen Port and Logistic Limited Company, located near Yangjiang Harbour, Hailing Cove area.
List of subsidiaries and affiliates, with percentage holdings
Name
% Ownership
Guangdong Century Tsinghan Nickel Industry Co., Ltd.
Effect(s)/impact on the business, financial condition and operations of the Issuer
This acquisition will enhance synergies between FNI as a nickel ore supplier and Guangdong Century as a value-added processor, provide consistent and reliable trade transaction between parties, increase profitability and support the diversification projects of the Company.
Other Relevant Information
Attached are the following: GHGC Certificate of Incumbency GHGC 2021 Audited FS GHGC Memorandum and Articles of Association SEC Form 17-C
Filed on behalf by:
Name
Eveart Grace Pomarin-Claro
Designation
Corporate Secretary and Alternate Corporate Information Officer
Global Ferronickel Holdings, Inc.FNI