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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of report (Date of earliest event reported): August 28, 1997
CHINA CONTINENTAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Utah 33-3276-D 87-0431063
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1801-1806 Hua Qin International Building
340 Queen's Road Central
Hong Kong -
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (852) 2542-2612
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Item 2. Acquisition or Disposition of Assets.
China Continental, Inc. (the "Company") has acquired a seventy-five
percent (75%) interest in Da Yu Edible Oil Limited, a Sino-Singapore joint
venture ("Da Yu") formed in March 1995. Da Yu is a refiner and manufacturer of
various high quality palm oil and related products for industrial use and
personal consumption. Da Yu is located in Zhumadian City, Henan Province, in the
People's Republic of China ("PRC"). The Company believes that over the next five
years the PRC's demand for palm oil and related products will increase rapidly
due to the economic upturn and improved living standards in the PRC.
The acquisition represents the continuing efforts of the Company to
diversify its business in order to enhance the long term growth and
profitability of the Company. The acquisition was consummated through the
exchange by the Company of all the stock of its wholly-owned subsidiary, Gain
Whole Limited, for all of the stock of Megaway Resort Development Limited, a
company which owns a seventy-five percent interest in Da Yu. The principal asset
of Gain Whole Limited is a US$22 million certificate of deposit maturing on
September 13, 1997. The transaction was consummated on August 28, 1997.
The Company believes that Da Yu will fill a vacuum in the existing
market which presently does not have a large scale supplier of palm oil
products. Da Yu produces palm oil products for industrial users as well as for
personal home consumption. The primary industrial users are the food processing
industry such as instant noodle factories. Da Yu manufactures high quality oil
creams and margarine for home use. Its customers include ice cream maker Walls,
biscuit giant Nabisco, Watson's Food, and Kentucky Fried Chicken. All products
produced by the refinery are distributed by the Hainan Province Cereal & Oil
Trading Company, a state owned distribution company.
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Da Yu refines approximately 20,000 tons of palm oil per year and
employs approximately 300 persons. The plant has a refining, laboratory,
testing, and storage facilities with the latest available refining technologies.
Da Yu had annual revenues of approximately US$24 million with a net profit
thereon of approximately US$3.2 million. The Company intends to continue the
present line of business of Da Yu. Management believes that the anticipated
increase in demand for Da Yu's products will enable it to increase production
and at the same time increase net profits. The plant is strategically located at
the major rail road crossing of the PRC linking Beijing and Guandzhou, and is
approximately 200km south of Zhengzhou, the capital of Henan province.
The statements contained herein regarding the anticipated increases in
demand for palm oil and related products and the anticipated increases in
revenues and net profits of Da Yu are forward looking statements that involve
substantial risks and uncertainties. In accordance with the Private Securities
Litigation Reform Act of 1995, the following are important factors that could
cause Da Yu's actual results or the demand for its products to differ materially
from those expressed or implied by such forward looking statements: the
significant political, economic, and social uncertainties in the PRC; the
uncertainty whether the PRC government will continue to pursue its present
economic policies encouraging privately owned enterprises; the possibility of
reduction of the selling price of Da Yu's products; the failure of Da Yu to
obtain raw materials at economically beneficial prices; the lack of experience
of the Company in the business conducted by Da Yu; the failure of the state
owned and operated, Hainan Province Cereal & Oil Trading Company, to continue to
act as the distributor of Da Yu's products; and the appearance of other major
competitors to Da Yu or a large scale supplier of products similar to Da Yu.
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Item 5. Other Events.
The Company has not filed its Form 10-K for the fiscal year ended March
31, 1997 and its Form 10-Q for the quarter ended June 30, 1997. The Company
anticipates filing these Reports during late October or November 1997.
Item 7. Financial Statements and Exhibits.
Any financial statements required by Item 7 of this Form 8-K in
connection with the above acquisition will be filed by amendment to this Form
8-K not later than 60 days after the date this Form was required to have been
filed.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHINA CONTINENTAL, INC.
By: /s/ Eric Ng
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Eric Ng, Chief
Financial Officer
Date: September 22, 1997
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Sale And Purchase Agreement
dated August 28, 1997
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DATED THE 28TH DAY OF AUGUST 1997
SUN'S INTERNATIONAL HOLDINGS LIMITED
AND
MR. HARRY HO
AGREEMENT
for the sale and purchase
of interest in
Megaway Resort Development Limited
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THIS AGREEMENT is made on the 28th August 1997
BETWEEN:
1. Sun's International Holdings Limited of Skelton Building, Main
Street, P.O. Box 3136, Road Town Tortola, British Virgin
Island (the "Purchaser"); and
2. Mr. Harry Ho of 300 Beach Road, #25-07 the Concourse Singapore
0719. (the "Vendor").
WHEREAS:
A. Gain whole Limited is a Company incorporated in the British
Virgin Island on February 8, 1996.
B. Megaway Resort Development Limited is a Company incorporated in the
British Virgin Island on ("the Company") and has 75% interest in Da Yu
Edible Oil Co. Ltd., a Sino Singapore joint venture incorporated in the
People's Republic of China on March 20, 1995.
C. The Vendor has a 100 percent interest in the Company (the "Sale
Interest").
D. The Purchase has 100 percent interest in Gain Whole Limited.
E. The Purchase has agreed to purchase the Sale Interest from the Vendor
on the terms and conditions hereinafter appearing.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. SALE AND PURCHASE OF SALE INTEREST
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The Vendor hereby agrees to sell to the Purchaser and the Purchaser
agrees to purchase from the Vendor the Sale Interest free from all
claims, charges, liens, encumbrances, equities and third party rights
and together with all rights attached thereto and all dividends and
distributions declared, paid or made in respect thereof after the date
in return for 100 percent interest of the Purchaser in Gain Whole
Limited.
2. COMPLETION
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2.1 Completion of the sale and purchase of the Sale Interest shall take
place at the offices of the Vendor in Hong Kong on or before 31rst
August 1997 (the "Completion Date") when the Vendor shall deliver to
the Purchaser all the relevant documents necessary for effecting the
transfer of the Sale Interest to the Purchaser and the Purchaser shall
deliver to the Vendor all relevant documents necessary for effecting
the
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transfer of the interest in Gain Whole Limited to the Vendor.
3. WARRANTIES AND REPRESENTATIONS
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3.1 The Vendor hereby warrants and represents to the Purchaser that each of
the following matters are as at the date hereof and will be for all
times up to and including the Completion Date, true and correct in all
respects:
(a) the Vendor is the beneficial owner of the Sale Interest free
from all liens, charges, pledges, options, contracts, pre-
emption rights, third party rights and equities, and
encumbrances of whatever nature and the same are freely
transferable by the Vendor without the consent, approval,
permission, license or concurrence of any third party; and
(b) the Vendor is fully capable of entering into this Agreement
and to perform all obligations and duties hereunder without
the consent, approval, permission, license or concurrence of
any third party save as mentioned in this Agreement.
3.2 The Purchaser hereby warrants and represents to the Vendor that each of
the following matters are as at the date hereof and will be for all
times up to and including the Completion Date, true and correct in all
respects:
(a) the Purchaser is the beneficial owner of the Gain Whole
Limited free from all liens, charges, pledges, options,
contracts, pre-emption rights, third party rights and
equities, and encumbrances of whatever nature and the same are
freely transferable by the Vendor without the consent,
approval, permission, license or concurrence of any third
party; and
(b) the Purchaser is fully capable of entering into this Agreement
and to perform all obligations and duties hereunder without
the consent, approval, permission, license or concurrence of
any third party save as mentioned in this Agreement.
3.3 Each of the warranties and representations, undertakings and identities
contained in this Agreement will survive the completion of the sale and
purchase of the Sale Interest.
3.4 Prior to the Completion Date, if any of the warranties, representations
or undertakings in this Agreement are found to be materially untrue,
inaccurate or misleading or have not been fully carried out in any
material respect, or in the event of the Vendor becoming unable or
failing to do anything required under this Agreement to be done by it
at or before the Completion Date, the Purchaser may by notice in
writing rescind this Agreement but without prejudice to any claim the
Purchaser may have against the Vendor hereunder.
4. ENTIRE AGREEMENT
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This Agreement constitutes the entire agreement and the understanding
between the parties in connection with the subject-matter of this
Agreement and supersedes all previous proposals, representations,
warranties, agreements or undertakings relating thereto whether oral,
written or otherwise and neither party has relied on any such
proposals, representations, warranties, agreements or undertakings.
5. TIME
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5.1 Time shall be of the essence of this Agreement.
5.2 No time or indulgence given by any party to the other party
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shall be deemed or in any way be construed as a waiver of any
of its rights and remedies hereunder.
6. CONFIDENTIALITY
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Other than such disclosure as may be required by law or any competent
authorities, neither of the parties hereto shall make, and the Vendor
shall procure that the Company will not make any announcement or
release or disclose any information concerning this Agreement or the
transactions herein referred to or disclose the identity of the other
party (save disclosure to their respective professional advisers under
a duty of confidentiality) without the written consent of the other
party.
7. ASSIGNMENT
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This agreement shall be binding on and shall enure for the benefits of
the successors and assigns of the parties hereto but shall not be
assigned by any party without the prior written consent of the other
party.
8. NOTICES AND OTHER COMMUNICATION
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Any notice or other communication to be given under this Agreement
shall be in writing and may be delivered by hand or given by facsimile,
telex or cable. Any such notice or communication shall be sent to the
party to whom it is addressed and must contain sufficient reference
and/or particulars to render it readily identifiable with the subject
matter of this Agreement. If so delivered by hand or given by
facsimile, telex or cable such notice or communication shall be deemed
received on the date of despatch and if so sent by post (or, if sent to
an address outside of Hong Kong, so sent by first class air-mail) shall
be deemed received 2 business days after the date of despatch.
9. COST AND EXPENSES
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Each party shall bear its legal and professional fees, costs and
expenses incurred in the negotiations, preparation and execution of
this Agreement.
10. GOVERNING LAW
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This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong.
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IN WITNESS whereof the parties hereto have executed this Agreement the day and
year first above written.
/s/
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SIGNED by a director,
for and on behalf Sun's International
Holdings Limited in the presence of:
/s/
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/s/
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SIGNED by
Mr. Harry Ho
in the presence of:
/s/
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