SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported): January 6, 2000
CHINA PEREGRINE FOOD CORPORATION
(Exact name of registrant as specified in its amended charter)
Delaware 0-20549 62-1681831
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
11300 US Highway 1, Suite 202
North Palm Beach, Florida 33408 USA
(Address of principal executive offices)
(561) 625-1411
Registrant's telephone number
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(Former name or former address if changed since last report)
Item 5. Other Events
Agreement in Principle to Acquire Equity Interest
in Mandarin Fine Foods Co.
On January 26, 2000, the Board of Directors of China Peregrine Food
Corporation approved an agreement in principle to acquire a majority
interest in Mandarin Fine Foods Co. of Beijing, China. Mandarin distributes
food and beverage products to most of the four- and five-star hotels in
China, including Hilton, Holiday Inn, Sheraton, Marriott and Regency, with
1999 net sales of US$8.1 million and net profits of US$611,000. This
acquisition is part of our plans to reconfigure our business in China by
emphasizing the distribution of food products rather than the production of
such products. Our current plans call for the eventual utilization of
Mandarin as a springboard to access other markets for high quality food and
beverage products in China, as well to broaden the product array in our
distribution channels.
The agreement in principle calls for a 56.25% interest in Mandarin to
be acquired for the equivalent of US$4.5 million. Half of this amount will
be in our common stock, valued at $1.75 per share, or $2.25 million. The
remainder will be in cash or common stock, depending on the value of the
latter at June 30, 2000. If the deal is consummated as an all-stock
transaction, Mandarin would own a maximum of 16.6% of our issued and
outstanding common stock. This agreement in principle is subject to our
completion of due diligence procedures and the approval and execution of a
definitive acquisition agreement.
Item 5. Other Events
Initiation of Termination Procedure for
Green Food Peregrine Children's Food Company, Limited
On January 6, 2000, China Peregrine Food Corporation commenced
procedures to terminate our involvement in Green Food Peregrine Children's
Food Company, Limited, our 70%-owned milk production joint-venture in
Shanghai, Peoples' Republic of China. The termination procedures are
contractually determined and the basis of our utilization of these
procedures is based upon the following two events:
First, the Green Food Peregrine Joint Venture Contract requires the
Chairman of the joint venture to call an interim meeting of the Board of
Directors if requested by two Board members. "When at least two Board
members apply in written form to discuss a certain matter, the Chairman
shall call an interim meeting of the Board after consulting his
deputies...." (JV Contract, Section 9.6). Since the Chairman is elected from
the directors appointed by China National Green Food Corporation, our
Chinese joint venture partner, China National is contractually obligated to
call and attend board meetings in the person of the Chairman.
On November 5, 1999, two directors of the Green Food Peregrine Board
of Directors submitted a written agenda and request for an interim meeting
to Mr. Charles J. Beech, the Chairman of the Green Food Peregrine Board,
recently appointed by China National. Notwithstanding the submission of the
interim meeting request, Mr. Beech refused or failed to call an interim
meeting of the Green Food Peregrine Board of Directors, as he is required to
do by the Joint Venture Contract and the Articles of Association. The
interim meeting was requested for the purpose of addressing management and
business issues of the Green Food Peregrine joint venture, including (1) the
installation of a new management team, as appointed by us and announced on
or about November 10, 1999 and (2) the potential implementation of a new
business plan for Green Food Peregrine, moving away from production to a
strategic licensing and distribution alliance with Shanghai Best Milk
Products Co., Ltd, known in Chinese as Quan Jia (QJ), the second largest
dairy in the Shanghai metropolitan area. The failure of Mr. Beech to call a
meeting is a breach of the Green Food Peregrine Joint Venture Contract by
China National.
Similarly, China National, as the minority party to the joint venture
has responsibilities to cooperate and assist in the business of Green Food
Peregrine, as set forth in Article VI of the JV Contract (JV Contract,
Section 6.1 "All parties to the Joint Venture shall cooperate sincerely and
safeguard the rights and interests of the Joint Venture" and Section 6.2,
which imposes additional obligations on the minority party, among other
things, to "[a]ssist the Joint Venture in all affairs related to its
business....", to "[a]ssist the Joint Venture to purchase machines,
equipment, material, office necessities, transport vehicles, communication
equipments (sic) and other goods and services necessary to carry out the
purposes of the Joint Venture", to cooperate with the other parties to
"expand and renew the production facilities of the Joint Venture", to
"[a]ssist the Joint Venture to find a number of qualified personnel...." for
management and staff employment, to "[a]ssist the Joint Venture in obtaining
approval for loans...." and to "[a]ssist the Joint Venture to handle its
relations with local government and other Chinese companies...."). These
responsibilities require the cooperation of the minority party in the
business of Green Food Peregrine and the failure to do so is a violation of
Joint Venture Contract, Section 6.1.
In addition to the request for an interim meeting of the Green Food
Peregrine Board of Directors, the directors representing China Peregrine
submitted written resolutions to representatives of China National, which
contained proposed votes designed to implement a new business plan for Green
Food Peregrine and to approve the installation of a new management team to
run the business of Green Food Peregrine. The representatives of China
National, who serve as directors of Green Food Peregrine, have failed and
refused to execute those resolutions.
The failure of China National and its representatives to cooperate in
the business affairs of Green Food Peregrine by their refusal to call an
interim meeting of the Green Food Peregrine Board of Directors and their
refusal to execute corporate resolutions necessary for the continued conduct
of the affairs of the Green Food Peregrine Joint Venture constitutes a
violation of section 6.1 of the Joint Venture Contact.
Second, as of the date of the termination procedure notice, Green Food
Peregrine had accumulated losses in excess of its total registered capital.
Insofar as the parties to the joint venture contract cannot agree on the
implementation of further capital contributions, which are dependent upon
the cooperation of China National in the conduct of the business and
financial operations of Green Food Peregrine, the joint venture may be
terminated.
A violation of the Green Food Peregrine Joint Venture Contract and the
financial condition of the joint venture subjects Green Food Peregrine to
termination. (JV Contract, Section 18.3). The termination procedure
contained in Section 18.3 of the JV Contract is incorporated in the Articles
of Association of Green Food Peregrine in Section 15.03. The procedure
involves the giving of a written notice of violation, followed by a written
notice of termination if "[a]ny party violates this Contract...and fails to
resolve the violation within sixty (60) days after it receives written
notice of the violation" (JV Contract, Section 18.3.1).
Item 5. Other Events
Agreement in Principle for New Business Affiliation
On January 6, 2000, we announced that our Looney Tunes(TM) flavored
premium milk business will now move forward via a licensing agreement with
Shanghai Best Milk Products Co., Ltd, known in Chinese as Quan Jia (QJ), the
second largest dairy in that metropolitan area. Under an agreement in
principle reached by the parties, QJ will introduce our Looney Tunes(TM)
flavored and white milks into the 1600 supermarkets and food stores that QJ
currently serves in Shanghai and the surrounding area. Under our Master
License with Warner Bros., we will supply QJ with flavor ingredient
sourcing, packaging designs for each of our four flavored milks and white
milk, and support for the Looney Tunes(TM) brand with marketing and
advertising programs. We also will provide a modicum of working capital
through an initial loan of US$100,000 to QJ for the stocking of Looney
Tunes(TM) inventory. The parties anticipate additional loans in the
aggregate amount of US$500,000, all of which will be paid back through
incremental additions to monthly royalty payments under the licensing
agreement. This agreement in principle is subject to our completion of due
diligence procedures and the approval and execution of a definitive
agreement.
Item 5. Other Events
Name Change
On January 26, 2000, the Board of Directors of China Peregrine Food
Corporation approved a resolution to change the name of the Company to
"China Premium Food Corporation", effective February 1, 2000. The name
change will occur in order to reflect the reorientation of our business from
milk production to distribution of quality foods, as a means of maximizing
our capital resources and leveraging the impact of our Looney Tunes(TM)
license agreements. We believe that the common stock will retain its present
symbol-CHPF.
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 hereunto duly authorized.
China Peregrine Food Corporation
Date: January 31, 2000 By: /s/ Roy G. Warren
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Roy G. Warren, President and
Chief Executive Officer
