Cash shell Ninety is acquiring sorbic acid and potassium sorbate producer Honour Field and changing its name to Sorbic International.
Ninety is paying up to £20.1m in shares for Honour Field. The full amount is dependent on the business making profits after tax of £4.38m. In the six months to June 2008 it made pre-tax profits of £2.26m.
The business is based in Shandong Province in China. It produces approximately 3,000 metric tonnes of sorbic acid and 5,000 metric tonnes of potassium sorbate per year. They are used as food preservatives. The company wants to expand its production facilities. This will require investment of £7.3m.
Ninety shares are currently trading at 1.25p. A capital reorganisation means that 60 shares will be consolidated into one new share. The equivalent share price is 75p.
A share placing at 75p a share will raise £240,000 gross.
Albany Capital, which originally spun off the shell, will retain a 38.7% stake in Sorbic and the seller of Honour Field will own 42.7%. These shares are the subject of lock-in and orderly market agreements. That means that the shares will be tightly held.
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