Apparel company China Xiniya Fashion Ltd. said Dec. 11 that it entered into purchase and divestiture agreements that will result in its core business changing from men's fashion to microlending.
On Dec. 10, the company signed a securities purchase agreement with True Silver Ltd. and Honest Plus Investments Ltd. as well as a share transfer agreement with Qiming Investment Ltd. Those moves fulfill closing conditions of a July 2016 agreement under which Qiming Investment agreed to sell a controlling stake in China Xiniya to Perfect Lead International Ltd. and Honest Plus.
Under the two new agreements, China Xiniya will acquire the entire share capital of True Silver from Honest Plus for about $34.6 million and 772,283,308 newly issued ordinary shares. In addition, China Xiniya will divest its current operations by selling its Hong Kong-based subsidiary Xiniya Holdings Ltd. to Qiming Investment, also for about $34.6 million.
True Silver has a holding of about 80% in Hubei Chutian Microfinance Co. Ltd., which provides small loans in China. True Silver is a subsidiary of Honest Plus, which is indirectly controlled by Hubei Chutian founder Qizhi Wei, while Qiming Investment is owned and controlled by China Xiniya Chairman and CEO Qiming Xu.
In addition to the core business change of China Xiniya, the agreements will also result in the resignation of all current directors and officers of China Xiniya, with the exception of the CFO. New directors and officers will then be appointed.
Closing of the acquisition and divestiture is subject to NYSE approval, and China Xiniya is also seeking to transfer its listing to NYSE American after completion.
Shearman & Sterling LLP is serving as U.S. legal counsel to China Xiniya and Qiming Investment. Honest Plus has Lewis Brisbois Bisgaard & Smith LLP serving as U.S. legal counsel, Conyers Dill & Pearman as Cayman Islands counsel, Appleby as British Virgin Islands counsel and Grandall Law Firm as China counsel.
