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
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Date of Report (Date of earliest event reported): December 29, 1997
CHINA RESOURCES DEVELOPMENT, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada 33-5628-NY 87-0263643
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
23/F. Office Tower, Convention Plaza
1 Harbour Road
Wanchai, Hong Kong
(Address of principal executive offices)
Registrant's telephone number, including area code: 011-852-2810-7205
(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Acquisition
The Registrant's indirect 56%-owned subsidiary, Hainan Zhongwei
Agricultural Resources Company Limited, a PRC company ("HARC"), entered
into a Stock Purchase Agreement, dated as of December 29, 1997, whereby
it purchased 28,000,000 legal person shares, par value RMB1 per share
(the "Shares"), of Hainan Sundiro Motorcycle Company Limited, a PRC
company ("Sundiro"), from Hainan Guilinyang State Farm ("Guilinyang").
(Guilinyang owns a five percent interest in HARC, and Guilinyang is a
part of the Hainan Farming Bureau, which owns a 39% interest in HARC.)
The purchase price for the Shares was Rmb140,000,000 (US$16,867,470),
or Rmb5 (US$0.60) per Share, which price reflected a discount of
approximately 60% to the average closing price for the Shares for the
five days preceding the date of the Stock Purchase Agreement, which was
Rmb12.42 (US$1.50) per share, as reported on the Shenzhen Stock
Exchange of the People's Republic of China. As a result of the
purchase, HARC now owns approximately 5.3% of the total outstanding
share capital of Sundiro. ("Rmb" refers to Renminbi yuan, the lawful
currency of the People's Republic of China. Translations of amounts
from Renminbi to U.S. dollars have been made at the single rate of
exchange as quoted by the People's Bank of China (the "PBOC Rate") on
December 30, 1997, which was US$1.00 = Rmb8.30. The Renminbi is not
freely convertible into foreign currencies, and no representation is
made that the Renminbi amounts referred to herein could have been or
could be converted into U.S. dollars at the PBOC Rate or at all.)
The Stock Purchase Agreement was approved by the Board of Directors of
the Registrant, including a majority of the directors not affiliated
with the Hainan Farming Bureau. Directors Wang Faren and Han Jianzhun
disclosed potential conflicts to the Board, which resulted from their
affiliation with the Hainan Farming Bureau. The Registrant issued a
press release disclosing the
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transaction on January 7, 1998, a copy of which is attached as an
exhibit to this report.
Board of Directors Changes
In addition, on January 12, 1998, the Registrant received letters from
two members of its Board of Directors, Yang Jiangang and Wang Faren,
wherein they resigned from the Board and from their positions as
Chairman and Vice Chairman, respectively. Mr. Yang's letter stated that
the reason for his resignation was the increase in his duties with the
China Everbright Group and his resulting inability to contribute his
time and energy to the affairs of the Registrant. Mr Wang's letter
stated that the reason for his resignation was his appointment as Mayor
of Haikou City, the capital city of Hainan Province, the People's
Republic of China. Mr. Wang considered it inappropriate for him to
serve as a director of an entity not controlled by the Haikou City
government. Neither Mr. Yang nor Mr. Wang expressed any disagreements
with the Registrant on any matter relating to the Registrant's
operations, policies or practices; therefore, these resignations are
not reportable in Item 6 of this Form 8-K.
In accepting the resignations of Messrs. Yang and Wang, the Board of
Directors of the Registrant elected director Han Jianzhun to replace
Mr. Yang as Chairman. The Board also established a committee of three
directors to search for two persons to serve as "independent
directors," as required by the listing requirements of The Nasdaq Stock
Market, and to propose such persons to the Board for appointment to the
two vacancies created by the resignations of Messrs. Yang and Wang.
On February 4, 1998, the Board of Directors of the Registrant
met to consider nominations by the Board's search committee of persons
to serve as directors. The committee nominated Messrs. Wan Ying Lin and
Ching Lung Po to serve the remaining terms of Messrs. Yang (in Class
III) and Wang (in Class II), respectively. The nominees were
unanimously elected, and both were also selected to serve on the Audit
Committee of the Board, along with director and Financial Controller
Wong Wah On. Both new directors are "independent" of the Registrant,
and their biographies follow:
Wan Ying Lin, age 50, is a graduate of the Guangxi Liuzhou Institute of
Medical Specialties, where he specialized in administration and
management. From January of 1986 through December of 1987, Mr. Wan was
the manager of Lam Co Mould Company, responsible for the China
marketing and development division in Hong Kong. Then, from January of
1998 through February of 1993, he worked as the marketing manager of
Wai Tong Trading Company in Hong Kong. In 1993, Mr. Wan began his
current position as manager of Hong Kong Prestressing Concrete
Engineering Company Limited. Since 1996, Mr. Wan has also been a
director of OVM International Holding Corporation ("OVM Holding"), a
Nevada corporation which owns a majority equity interest in Liuzhou OVM
Construction Machinery Company Limited, a PRC registered company.
Ching Lung Po, age 51, is a graduate of the Harbin Military and
Engineering Institute and holds the title of Senior Engineer in the
PRC. Mr. Ching was an engineer in the Heilongjiang Suihua Electronic
Factory from 1969 to 1976, and he headed the Heilongjiang Suihua
Industrial Science & Technology Research Institute from 1975 to 1976.
He became the General Manager of the Heilongjiang Qingan Factory in
1976. In 1988, Mr. Ching started his own business and
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established the Shenzhen Hongda Science and Technology Company Limited,
an electronic products manufacturer in Shenzhen, the PRC. Since October
of 1995, Mr. Ching has been the Chairman of Harbin Asibao Chemical
Fiber Company Limited, a PRC established company. Mr. Ching has also
been the Chairman and President of OVM Holding since September of 1996.
He is also the Vice Chairman and a director of Liuzhou OVM Construction
Machinery Company Limited, a PRC registered company in which OVM
Holding owns a majority equity interest.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following exhibits are filed with this report:
Exhibit No. Exhibit Description
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99.1 Press Release issued by Registrant dated January 7,
1998 (Filed herewith.)
Item 8. Change in Fiscal Year.
Not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CHINA RESOURCES DEVELOPMENT, INC.
February 20, 1998 By: /s/ Li Shunxing
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Name: Li Shunxing
Title: President
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EXHIBITS INDEX
Exhibit No. Exhibit Description Page No.
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<S> <C> <C>
99.1 Press Release issued by Registrant, dated January 7, 1998 (Filed herewith.) 7
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EXHIBIT 99.1
Press Release issued by Registrant,
dated January 7, 1998
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News Announcement
CONTACT:
Edward Wong Robert L. Rinderman, Joseph N. Jaffoni
Financial Controller Jaffoni & Collins Incorporated
011/852/28107205 or [email protected] 212/835-8500 or [email protected]
FOR IMMEDIATE RELEASE
CHINA RESOURCES DEVELOPMENT'S SUBSIDIARY ACQUIRES 5.3% EQUITY
INTEREST IN HAINAN SUNDIRO MOTORCYCLE COMPANY LTD.,
CHINA'S SEVENTH LARGEST MOTORCYCLE MANUFACTURER
- Investment Will Be Accretive To 1998 Operating Results -
- Secures Board Representation -
HONG KONG, (January 7, 1998) -- China Resources Development, Inc. (Nasdaq: CHRB,
www.chrb.com), a leading natural rubber distributor based in the People's
Republic of China (PRC), today announced that it has acquired, through its
56%-owned subsidiary, Hainan Zhongwei Agricultural Resources Company Ltd.
(HARC), for U.S.$16,900,000, 5.3% of the outstanding shares of Hainan Sundiro
Motorcycle Company Ltd. (Sundiro), the seventh largest motorcycle manufacturer
in the PRC and a publicly-traded company on the Shenzhen Stock Exchange. The
Company expects the Sundiro investment to be accretive to 1998 operating results
as a result of dividend income to be received.
Pursuant to the agreement between HARC and Hainan Guilingyang State Farm
(Guilingyang) (a wholly-owned subsidiary of the Hainan Farming Bureau and
27%-owner of Sundiro prior to the sale of shares to HARC), HARC purchased
28,000,000 Sundiro PRC legal persons shares (legal persons shares are the
equivalent of common shares and carry normal voting and dividend rights) at
Rmb5.00, or U.S.$0.60 per share from Guilingyang. The purchase price represents
an approximate 60% discount to Sundiro's recent closing price of Rmb12.64, or
U.S.$1.50 per share. Following the investment, HARC has appointed Messrs. Han
Jianzhun and Li Feilie, President and Vice President of HARC, respectively, to
the Sundiro Board of Directors, increasing its size to nine members.
In the twelve months ended December 31, 1996, Sundiro's revenues rose 95% to
$203 million,
(more)
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China Resources Acquires Interest in Hainan Sundiro Motorcycle, 1/7/98
versus the year-earlier period, and net income tripled to $26 million. For the
first six months of 1997, the company reported revenues of $104 million, 49%
higher than the year- earlier period, and net income of $13 million, a 63% rise
over the first half of 1996 (the above Sundiro financial information was
reported under PRC accounting principles).
Li Shunxing, President of China Resources Development, Inc., said, "Sundiro is a
growing, profitable company, and the Board considers this investment to be an
excellent opportunity for China Resources and its shareholders to participate in
its future success. This accretive investment provides diversification into the
industrial manufacturing market, and we are hopeful that our relationship with
Sundiro may lead to additional procurement business in view of the company's
high volume and consumption of raw materials, supplies and components.
China Resources Development, Inc., with offices in Hong Kong and the Hainan
Province in the PRC, through a subsidiary, owns a 56% interest in Hainan
Zhongwei Agricultural Resources Co. Ltd. (HARC). HARC markets and distributes
dry, natural rubber, liquid latex and other agricultural products, and procures
production materials and supplies for major customers. The Hainan Province
supplies over 60% of the PRC's natural rubber production. Additional corporate
information is available at the Company's web site - www.chrb.com.
Except for the historical information in this press release, it includes
forward-looking statements that involve risks and uncertainties, including, but
not limited to the impact of weather, competitive pressures from within the
natural rubber and motorcycle industries, quarterly fluctuations in results,
dividend income receivable, the management of growth, market dynamics and other
risks detailed from time to time in the Company's Securities and Exchange
Commission filings. Actual results may differ materially from management
expectations.
* Certain figures in this announcement have been converted from Renminbi (the
lawful currency of the PRC) to U.S. dollars (for information purposes), at the
prevailing exchange rate as quoted by the People's Bank of China of
U.S.$1.00=Rmb8.30.
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