SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) September 19, 1996
HENG FAI CHINA INDUSTRIES, INC.
(Exact name of Registrant as specified in charter)
Delaware 0-7619 93-063633
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
650 West Georgia Street, British Columbia, Canada V6B 4N8
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (604) 685-8318
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(Former Address) (Zip Code)
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Item 2. Acquisition or Disposition of Asset
As of September 4, 1996, Heng Fai China Industries, Inc. (the "Registrant"
or the "Company"), entered into an agreement, a copy of which is annexed as an
exhibit to this Report (the "Agreement"), with Monkey King Group (the "Seller")
pursuant to which Worldwide Container Company Ltd. ("Worldwide"), a wholly owned
subsidiary of the Company, acquired from the Seller a 70% interest in Wuhan
Container Co., Ltd. ("Wuhan") in exchange for 727,272 shares of the Company's
restricted common stock (the "Shares"). Based upon negotiations between the
Company's President and the Seller the Shares were valued at a per share price
of $5.50. Pursuant to the terms of the Agreement the Shares will be held in
escrow by an escrow agent in Singapore (the "Escrow Agent"). The Seller has
agreed that the Shares cannot be sold until Worldwide receives cumulative
profits, contributions and/or dividends aggregating a minimum of $4,000,000 from
the operations of Wuhan. Wuhan is a People's Republic of China state company
which was formed to engage in the design, manufacture, lease and repair of
standard and non-standard containers and related steel structure products. Wuhan
commenced trial production of its containers in the Spring of 1996.
The closing of the Agreement was conditioned upon the approval of the Board
of Directors of the Company as well as the Company's satisfactory completion of
a due diligence review of Wuhan. On September 19, 1996 the Company's Board
approved the Agreement, completed its due diligence review of Wuhan and directed
the issuance of the Shares to Hubei Monkey King Investment & Development
Corporation ("HMK"). Pursuant to the Agreement the transaction will be deemed
closed upon delivery of the Shares to the Escrow Agent.
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The assets acquired by the Company through the acquisition of a 70%
interest in Wuhan consisted of assembly lines, plant and manufacturing
production equipment, power generators and related equipment. Wuhan presently
owns its manufacturing plant which is located in the City of Wuhan on the banks
of the Yangtze River and Hanshui River. The facility consists of approximately
480,000 square feet which Wuhan estimates has a capacity to produce 10,000
containers on an annual basis. The Company believes that approximately
$5,000,000 in capital improvements will be required to be made to the plant in
order to reach maximum capacity. The Company intends to utilize Wuhan's assets
in order to engage in the full scale design, manufacture and production of
container and related steel structure products.
Neither the Company nor any of the affiliates possessed any interest in
Wuhan, the Seller and/or HMK prior to the execution and/or closing of the
Agreement.
Item 7. Financial Statements and Exhibits
a) It is currently impracticable for the Registrant to file the required
financial statements for the acquisitions described in Item 2 of this Current
Report on Form 8-K. The Registrant intends to file such financial statements as
soon as they are available by amending this Current Report.
b) It is currently impracticable for the Registrant to file the Pro-Forma
condensed balance sheet and statement of income and explanatory notes, giving
effect to the combined accounts of the Company and Wuhan as required by the
instructions to Form 8-K. The Registrant intends to file such Pro Forma
financial statements as soon as they are available by amending this Current
Report.
c) Attached hereto as Exhibit 2 is a copy of the Stock Purchase Agreement
between the Company and the Monkey King Group.
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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.
September 19, 1996
HENG FAI CHINA INDUSTRIES, INC.
(Registrant)
By: s\Robert H. Trapp
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Robert H. Trapp,
Secretary, Treasurer and Director
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EXHIBIT 2
THIS AGREEMENT MADE as of the 4th day of September, 1996.
BETWEEN:
Worldwide Container Co. Ltd.
Unit B, 13th Floor, Lippo Leighton Tower,
103-109 Leighton Road,
Causeway Bay, Hong Kong
(hereinafter called the "Buyer")
AND
Heng Fai China Industries Inc. ("HFCI")
588-650 West Georgia Street
Vancouver, B.C. Canada
(hereinafter called the "Issuer")
AND
Monkey King Group
344, Yi Ling Road,
Yichang, Hubei,
People's Republic of China
(hereinafter called the "Vendor")
AND
FONG JEYA Partnership
Advocates & Solicitors
7 Temasek Boulevard
#43-03 Suntec City Tower 1
Singapore 038987
(hereinafter called the "Escrow Agent")
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WHEREAS:
A. The Vendor is the beneficial owner of a 100% interest of the total
registered capital of Wuhan Container Co. Ltd. ("WCCL"), a company
incorporated under the Laws of the People's Republic of China.
B. The Buyer is a company incorporated in Hong Kong and is a wholly owned
subsidiary of Heng Fai China Industries Inc. ("HFCI"), a corporation
incorporated in Delaware of the United States of America and its shares are
listed on the National Association of Securities Dealers, Inc. ("NASDAQ").
C. The Vendor is desirous of selling and the Buyer is desirous of purchasing
the 70% interest of WCCL on the terms and conditions hereinafter set out.
D. The completion of this Agreement occurs when the Buyer delivers the HFCI
Treasury Stocks to the Vendor and the Vendor completes all necessary
regulatory procedures to transfer the 70% interest of WCCL to the Buyer.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the business in
operation by WCCL and the mutual covenants and agreement hereinafter contained,
the parties hereto agree as follows:
1. The Vendor shall and do hereby sell the 70% interest of WCCL to the Buyer
at a price of US$4,000,000.
2. The Buyer shall deliver 727,272 shares of HFCI Treasury Stocks at a price
of US$5.5 per share to the Vendor as consideration in lieu of US$4,000,000
cash payment.
3. The Vendor covenants, represents and warrants that it holds the 100%
interest WCCL free and clear of any liens, charges or encumbrances and has
full power and authority to transfer the 70% interest of WCCL to the Buyer.
4. The Vendor covenants, represents and warrants that WCCL will have a total
trade debt of not exceeding US$500,000 upon the signing of this agreement
and the Vendor undertakes to repay all current debts of WCCL within 60 days
following the completion of this agreement to ensure WCCL as a debt free
company after 60 days following the completion of this agreement.
5. Upon execution for this Agreement the Vendor will execute an Irrecoverable
Power of Attorney to transfer the 70% interest of WCCL to the Buyer.
6. The Vendor jointly authorizes the Buyer to deliver the 727,272 shares of
HFCI Treasury Stocks as consideration shares in the name of the Escrow
Agent. Upon the execution for this Agreement the Buyer will deliver in the
Escrow Agent's name the HFCI Shares to the Escrow Agent and the Issuer will
properly register the Escrow Agent's name in the Issuer's shareholders'
register.
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7. The Vendor agrees to register the 70% interest of WCCL in the name of the
Buyer upon effected payment of the HFCI Shares to the Escrow Agent.
8. The Escrow Agent agrees to facilitate the policing of this Agreement so
that all parties to this agreement will undertake the terms and conditions
of this agreement.
9. The Vendor agrees to keep the 727,272 HFCI Shares in the Escrow Agent as
performance shares. The Vendor further agrees only to sell the HFCI Shares
upon meeting the following criteria:
a. A total profit contribution to Worldwide Container Co. Ltd. of 100%
US$4,000,000 in the form of cash dividend payments deposited in the
designated bank accounts operated by Worldwide Container Co. Ltd. in
the United States or in Hong Kong;
b. The profit contribution can be accumulative but must be totaled up to
US$4,000,000 before release of share for sales in the over the counter
markets;
10. The Buyer and the Vendor agree that they have both undertaken their own
diligence and indemnify each other from any liabilities or losses.
11. This Agreement shall ensure to the benefit of and be binding upon the
parties hereto.
12. This Agreement will only become effective upon:
a. the approval by the Board of Directors of the Buyer;
b. the approval by all necessary regulatory authorities governing the
Buyer; and
c. a satisfactory due diligence review to be performed by the Buyer.
WITNESS WHEREOF the Parties hereto have executed this Agreement as if the day
and year first above written.
SIGNED, SEALED AND DELIVERED BY
Heng Fai China Industries Inc.
in the presence of:
[ILLEGIBLE]
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Signature
Address: 588-650 West Georgia Street
Vancouver, B.C. Canada
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SIGNED, SEALED AND DELIVERED BY
Worldwide Container Co. Ltd.
in the presence of:
[ILLEGIBLE] [Corporate Seal]
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Signature
Address: Unit B, 13th Floor
Lippo Leighton Tower
103-109 Leighton Road
Causeway Bay, Hong Kong
SIGNED, SEALED AND DELIVERED BY
FONG JEYA Partnership
Advocates & Solicitors
in the presence of:
[ILLEGIBLE] [Corporate Seal]
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Signature
Address: 7 Temasek Boulevard
#43-03 Suntec City Tower 1
Singapore 038987
SIGNED, SEALED AND DELIVERED BY
Monkey King Group
in the presence of:
[ILLEGIBLE] [Corporate Seal]
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Signature
Address: 344, Yi Ling Road
Yichang, Hubei,
People's Republic of China
