<PAGE> 1
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 22 , 1999
Dransfield China Paper Corporation
----------------------------------
(Registrant's name)
8th Floor, North Wing, Kwai Shun Industrial Centre
51-63 Container Port Road, Kwai Chung
New Territories, Hong Kong, China
--------------------------------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
--- ---
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.]
Yes No X
--- ---
[If "Yes" is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b):82-_________]
<PAGE> 2
The following sets forth a press release issued on July 21, 1999, by
Dransfield China Paper Corporation.
For more information
Strategic Financial Relations Limited
Richard Tsang /Anita Cheung/Joyce Lam
Tel: 011-852-2527-0490 Fax: 011-852-2804-2789
DRANSFIELD CHINA PAPER CORPORATION
ACQUIRES AN ADDITIONAL 28.6% INTEREST IN
ITS PAPER MILL NO. 2
* * *
FOCUSES ON DEVELOPMENT OF ITS PAPER BUSINESS
(Hong Kong, July 21, 1999) - Hong Kong-based Dransfield China Paper
Corporation (NASDAQ: DCPCF) ("Dransfield") today announced that it has
increased its effective interest in Jiang Ying Dransfield Paper Co. Limited
("Jiang Ying Dransfield Paper"), from 46% to 74.6%, by acquiring the entire
interest of a joint venture partner, Jiangsu Huaxi Group Corporation ("Jiangsu
Huaxi") in Jiang Ying Dransfield Paper.
Under the agreement, Jiangsu Huaxi has disposed of its entire interest
in Jiang Ying Dransfield Paper Co. Ltd. to Dransfield, at a total consideration
of 429,515 shares in Dransfield valued at a price of US$2.30 per share.
Dransfield has also committed itself to assisting Jiangsu Huaxi to sell those
shares over three years at that price.
Jiang Ying Dransfield Paper was formerly set up by Dransfield's
subsidiary, Dransfield Broadsino Paper Holdings Ltd. ("DBPH"), and Jiangsu
Huaxi. It previously operated an electricity power plant and a paper mill.
After the acquisition, it only possesses the paper mill in Jiangyin Huaxi,
Jiangsu Province (Dransfield's "Paper Mill No. 2"). The paper mill will house
facilities for waste paper storage, sorting and pulping, deinking, paper making
and converting and warehousing. The electricity power plant will be owned and
operated by Jiangsu Huaxi, which intends to expand the power plant into the
second phase.
Mr. Horace Yao, Chairman & CEO of Dransfield, said, "The acquisition
is in line with our corporate strategy, that is to reduce our involvement in
the power plant and to allow us to place greater emphasis on the development of
the paper plant. We have full confidence in the prospect of our paper business,
as paper products produced under our paper plant will be of top quality and
will gain an excellent reputation in the industry. In addition, the share
placement as a consideration for the acquisition not only alleviates pressure
on our cash position and further capital investment, it also enhances the
liquidity of Dransfield's shares."
Mr. Yao continued, "Although self-sufficient electricity provision
from our power was an advantage in the past, there is now an over abundance of
electricity supply in the province and we can get supply from the national
grid. With our establishment of a strong relationship with
2
<PAGE> 3
our local partner, we can operate the paper plant without a need for us to
participate in the power plant."
Dransfield China Paper Corporation is a Nasdaq-listed, Hong Kong-based
company primarily engaged in the brokering and distribution of a variety of
paper products in China and Hong Kong. Expanding into a major force in the PRC
paper products industry, the Company has recently embarked upon a significant
growth program that includes the construction of four strategically located
pulp and paper mills in the PRC. Upon completion, the Company will be a full
vertically-integrated paper company, engaged in the production and sale of
recycled pulp, the production and sale of jumbo paper rolls, the conversion of
jumbo paper rolls into tissue paper products, and the distribution of tissue
paper products under the Company's own brand name.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DRANSFIELD CHINA PAPER CORPORATION
By: /s/ Thomas J. Kenan
-----------------------------------
Thomas J. Kenan, Director
Date: July 22, 1999
3
<PAGE> 4
AGREEMENT
Party A: Jiangsu Huaxi Group Companies Limited - China
Party B: Dransfield Broadsino Paper Holdings Limited - Hong Kong
According to the board minutes of Jiang Ying Dransfield Paper
Co. Ltd. dated December 8, 1998, Party A and Party B, after having
made a number of discussions on the basis of friendly negotiations
and mutual benefits, arrive at an agreement as follows:
1. Jiang Ying Dransfield Paper Co. Ltd. changes from a joint venture
enterprise (hereinafter, "JV") to a wholly-owned enterprise of Party B. The
portion invested by Party A (for example, the power plant in Huaxi) shall be
withdrawn from the JV. The paper mill of the JV shall be solely established and
operated by Party B. The paper mill becomes a solely-owned enterprise of Party
B.
2. Party A and Party B shall jointly appoint financial specialists
to conduct a complete review of the financial accounts of Jiang Ying Dransfield
Paper Co. Ltd. since its establishment up to the day before it becoming a
solely-owned enterprise of Party B. If Party B finds it necessary, it may
appoint registered accountants to perform an audit of the accounts. Party A
shall be responsible for any unreasonable expenses incurred so as to enable a
smooth running of the solely-owned enterprise to be established.
3. The landuse right of the land existing occupied by Party B (of
approximately 102.74 mu, subject to confirmation by a surveyor) shall be
transferred to Party B according to a board resolution of Jiang Ying Dransfield
Paper Co. Ltd. passed on 8 December, 1998 - i.e. on the basis of RMB80,000 per
mu. Upon the issue of the original Business License to the solely-owned
enterprise, Party A shall transfer to the enterprise the land of 102.74 mu which
is now occupied by Party B as aforesaid but is under the name of Party A. Party
A shall also be responsible for making application for the relevant Landuse
Right Certificate. Party A will be given the shares of Party B's holding company
which are listed in the U.S.A., calculated at US$2.3 (RMB19.136) per share. At
the request of Party A, Party B agrees to refer established securities brokers
to act on behalf of Party A to dispose of its shares over a three-year period
with the target of one-fifth in the first year, two-fifths in the second year,
and two-fifths in the third year. The minimum selling price of the shares shall
be not less than an amount equivalent to RMB19.136 per share. Party B shall
reimburse Party A for any shortfall that may arise.
4. Jiang Ying Dransfield Paper Co. Ltd. changes from a JV to a
solely-owned enterprise. Party B shall appoint a responsible
Exhibit to Form 6-K
Page 1 of 2 Pages
<PAGE> 5
officer to make application for the establishment of the solely-owned
enterprise. Party A shall actively give helping hands on making the application
with the target of obtaining the Business License within one month.
5. Party B assumes all the responsibilities for the debts of the
paper mill of the original JV and those debts owed in the name of the JV but
was actually incurred by the paper mill. Party A is free from any obligations
to all these debts. Party A assumes all the responsibilities for the debts of
the power plant of the original plant. Party B is free from any obligations to
all these debts.
6. This agreement is signed in quadruplicate. Each of the parties
holds two sets.
Representative from Party A: (Signed)
Date: 20 July, 1999
Representative from Party B: (Signed)
Date: 20 July, 1999
Exhibit to Form 6-K
Page 2 of 2 Pages
