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China Wonder

  • BY: Andrew Hore |
  • POSTED: 04/04/2011 |

China Wonder is selling its original packaging machinery business and becoming a shell with more than 5m in cash.

Jersey-registered China Wonder is selling Jinzhou Wonder Packaging Machine Co for RMB33m (3.14m), with RMB28.05m (2.67m) paid on completion. Up to RMB4.95m (471,000) will be held in escrow to cover any breach of warranties and indemnities for 12 months after the disposal. If the cash in escrow does not cover the damages claimed then China Wonder will have to pay the rest. The maximum liability would be RMB10m (952,000). This does not include any warranties relating to taxation.

China Wonder says that it could not provide the required working capital for the packaging machinery business.

Assuming full payment of the cash in escrow the net proceeds will be 3.11m.

Last year, capital equipment manufacturing business Creative Legend was sold to Friend Birch for RMB30m (2.78m).

That means that China Wonder will have cash of RMB57.5m (5.48m), including cash in escrow. At 19.5p a share, up 2.75p, China Wonder is valued at 3.51m.

Management says that it will look to buy engineering companies with a particular focus on China. If the new investing policy is not agreed by shareholders the company will be wound-up.

Mark Chapman is staying on as chairman. Qiang Hao and Roberto Lima will also stay on the board. 

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