Mongolia Growth Group Ltd. Announces the Sale of Mandal General Daatgal LLC
Ulaanbaatar, MONGOLIA, November 25, 2013 /FSC/ - Mongolia Growth Group Ltd. (YAK - TSX Venture),("MGG" or "the Company") is pleased to announce that UMC Capital LLC ("UMC Capital") has agreed to purchase 100% of Mandal General Daatgal LLC ("Mandal"), subject to the approval of the TSX Venture Exchange, the Financial Regulatory Commission of Mongolia and the satisfaction of certain closing conditions.
Over the course of 2013, the management and board of directors of MGG has determined that, while Mandal has continued to make progress, it is non-core to the Company's much larger property business that has been created over the past two and a half years. This sale will allow the management of MGG to focus its energy, corporate resources and capital on its core commercial real estate business with the goal of creating the most successful institutional property company in the rapidly growing economy of Mongolia.
The benefits of this divestiture will accrue to both MGG and Mandal.
In the case of MGG, it will lead to;
* The release of capital to re-invest in the property business,
* Substantial annual cash savings in the form of reduced audit, compliance, legal and other expenses along with the retention of rental payments from Mandal at market rates,
* Approximately Cdn$85,000 in stock option expense savings in the year 2014,
* More predictable revenues and expenses by focusing MGG exclusively on the property sector,
* Financial statement simplicity as they will relate entirely to the property business, and
* Streamlining the business from the perspective of potential lenders to property assets.
In the case of Mandal, it will lead to;
* More direct incentivization of management through the direct ownership of Mandal. Employees of Mandal will be involved in the management group that will be buying Mandal from MGG, and
* Ability to access more diversified forms of growth capital.
Under the terms of the agreement, MGG has agreed to sell 100% of its shares in Mandal General Daatgal LLC to UMC Capital LLC for gross proceeds of approximately 5.90 billion Mongolian Togrog (approximately Cdn$3.50 million), representing a surplus of approximately 900 million Mongolian Togrog (approximately Cdn$542,000) from MGG's original contribution after accounting for a 1.24 billion Mongolian Togrog (approximately Cdn$746,000) release of statutory capital to MGG. In addition, this sale price represents an expected 2.7 billion Mongolian Togrog (approximately Cdn$1,627,000) premium to second quarter, 2013 net tangible book value.
As part of the sale, UMC Capital will make an immediate payment to MGG of 650 million Mongolian Togrog and additional payments of approximately US$3 million, to be paid in installments over the ensuing 18 month period. In addition, MGG expects to accelerate the vesting of the remaining 300,000 MGG options owned by UMC Capital LLC, subject to TSX Venture approval. The amended options are expected to have a strike price of Cdn$1.75 as compared to the current Cdn$1.64 strike price. Finally, MGG will cancel 307,000 stock options that are currently outstanding to employees of Mandal General Daatgal LLC.
"Disposing of Mandal will allow MGG to lower its cost structure and re-focus the business on property assets that are leveraged to the growth of the Mongolian economy," said Harris Kupperman, Chairman and CEO of MGG.
"We want to thank our friends at Mandal for all of their help in educating us on the Mongolian market. Our early success in the property market would not have been possible without their support. We hope to continue doing business together in the future as MGG intends to keep 100% of its insurance coverage with Mandal on a going forward basis and Mandal has indicated a desire to remain a tenant in the Mandal building-our corporate headquarters."
"I want to thank our friends at MGG for their support in helping us to launch a company with the vision to create the largest, most innovative and most responsible insurance company in Mongolia. Mandal now enjoys a solid reputation as a major risk management institution in Mongolia and our operations shall continue reflecting the best international standards," said Ganzorig Ulziibayar, President of Mandal and Chairman of UMC Capital.
Subject to TSX Venture Exchange approval, MGG expects that this transaction will be closed during the fourth quarter of 2013.
For more information on Mongolia Growth Group Ltd., please see our website: www.MongoliaGrowthGroup.com
Or contact:
Genevieve Walkden
GWalkden@mongoliagrowthgroup.com
Legal Advisories
Additional information about the Company, including the Company's annual information form for the year ended December 31, 2012, is available under MGG's profile on SEDAR at www.sedar.com.
Forward-looking Information
This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words: "expect", "will", "intend" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to the following: the anticipated gain on investment; the benefits and outcomes of the divestiture of Mandal by MGG to each of MGG, UMC Capital and Mandal; the amount and timing of the payments under the share purchase agreement; the cancellation of stock options and acceleration of stock options; intentions surrounding the provider of insurance coverage; and the timing of the closing of the transaction.
The forward-looking information and statements contained herein reflect material factors and expectations and assumptions of MGG including, without limitation: that both MGG and Mandal will conduct its operations in a manner consistent with past operations; the general continuance of current or, where applicable, assumed industry conditions; the ability to obtain regulatory approvals on a timely manner; pricing forecasts and expectations; the reliability of information obtained from third party sources; and the impact of any disposition on the remaining operations of MGG. MGG believes the factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable at this time, but no assurance can be given that these factors, expectations and assumptions will prove to be correct. The forward-looking information and statements included herein are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: unanticipated operating results; increased costs and expenses; the impact of competitors; not being able to obtain regulatory approvals; and certain other risks detailed from time to time in MGG's public disclosure documents including, without limitation, those risks identified in this press release, and in MGG's Annual Information Form for the year ended December 31, 2012, a copy of which is available on MGG's SEDAR profile at www.sedar.com.
MGG cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and MGG does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
To view this press release as a PDF file, click onto the following link:
http://www.usetdas.com/pr/MongoliaGrowthNov252013.pdf
Source: Mongolia Growth Group Ltd. (TSXV - YAK)
Maximum News Dissemination by FSCwire. http://www.fscwire.com
Over the course of 2013, the management and board of directors of MGG has determined that, while Mandal has continued to make progress, it is non-core to the Company's much larger property business that has been created over the past two and a half years. This sale will allow the management of MGG to focus its energy, corporate resources and capital on its core commercial real estate business with the goal of creating the most successful institutional property company in the rapidly growing economy of Mongolia.
The benefits of this divestiture will accrue to both MGG and Mandal.
In the case of MGG, it will lead to;
* The release of capital to re-invest in the property business,
* Substantial annual cash savings in the form of reduced audit, compliance, legal and other expenses along with the retention of rental payments from Mandal at market rates,
* Approximately Cdn$85,000 in stock option expense savings in the year 2014,
* More predictable revenues and expenses by focusing MGG exclusively on the property sector,
* Financial statement simplicity as they will relate entirely to the property business, and
* Streamlining the business from the perspective of potential lenders to property assets.
In the case of Mandal, it will lead to;
* More direct incentivization of management through the direct ownership of Mandal. Employees of Mandal will be involved in the management group that will be buying Mandal from MGG, and
* Ability to access more diversified forms of growth capital.
Under the terms of the agreement, MGG has agreed to sell 100% of its shares in Mandal General Daatgal LLC to UMC Capital LLC for gross proceeds of approximately 5.90 billion Mongolian Togrog (approximately Cdn$3.50 million), representing a surplus of approximately 900 million Mongolian Togrog (approximately Cdn$542,000) from MGG's original contribution after accounting for a 1.24 billion Mongolian Togrog (approximately Cdn$746,000) release of statutory capital to MGG. In addition, this sale price represents an expected 2.7 billion Mongolian Togrog (approximately Cdn$1,627,000) premium to second quarter, 2013 net tangible book value.
As part of the sale, UMC Capital will make an immediate payment to MGG of 650 million Mongolian Togrog and additional payments of approximately US$3 million, to be paid in installments over the ensuing 18 month period. In addition, MGG expects to accelerate the vesting of the remaining 300,000 MGG options owned by UMC Capital LLC, subject to TSX Venture approval. The amended options are expected to have a strike price of Cdn$1.75 as compared to the current Cdn$1.64 strike price. Finally, MGG will cancel 307,000 stock options that are currently outstanding to employees of Mandal General Daatgal LLC.
"Disposing of Mandal will allow MGG to lower its cost structure and re-focus the business on property assets that are leveraged to the growth of the Mongolian economy," said Harris Kupperman, Chairman and CEO of MGG.
"We want to thank our friends at Mandal for all of their help in educating us on the Mongolian market. Our early success in the property market would not have been possible without their support. We hope to continue doing business together in the future as MGG intends to keep 100% of its insurance coverage with Mandal on a going forward basis and Mandal has indicated a desire to remain a tenant in the Mandal building-our corporate headquarters."
"I want to thank our friends at MGG for their support in helping us to launch a company with the vision to create the largest, most innovative and most responsible insurance company in Mongolia. Mandal now enjoys a solid reputation as a major risk management institution in Mongolia and our operations shall continue reflecting the best international standards," said Ganzorig Ulziibayar, President of Mandal and Chairman of UMC Capital.
Subject to TSX Venture Exchange approval, MGG expects that this transaction will be closed during the fourth quarter of 2013.
For more information on Mongolia Growth Group Ltd., please see our website: www.MongoliaGrowthGroup.com
Or contact:
Genevieve Walkden
GWalkden@mongoliagrowthgroup.com
Legal Advisories
Additional information about the Company, including the Company's annual information form for the year ended December 31, 2012, is available under MGG's profile on SEDAR at www.sedar.com.
Forward-looking Information
This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words: "expect", "will", "intend" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to the following: the anticipated gain on investment; the benefits and outcomes of the divestiture of Mandal by MGG to each of MGG, UMC Capital and Mandal; the amount and timing of the payments under the share purchase agreement; the cancellation of stock options and acceleration of stock options; intentions surrounding the provider of insurance coverage; and the timing of the closing of the transaction.
The forward-looking information and statements contained herein reflect material factors and expectations and assumptions of MGG including, without limitation: that both MGG and Mandal will conduct its operations in a manner consistent with past operations; the general continuance of current or, where applicable, assumed industry conditions; the ability to obtain regulatory approvals on a timely manner; pricing forecasts and expectations; the reliability of information obtained from third party sources; and the impact of any disposition on the remaining operations of MGG. MGG believes the factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable at this time, but no assurance can be given that these factors, expectations and assumptions will prove to be correct. The forward-looking information and statements included herein are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: unanticipated operating results; increased costs and expenses; the impact of competitors; not being able to obtain regulatory approvals; and certain other risks detailed from time to time in MGG's public disclosure documents including, without limitation, those risks identified in this press release, and in MGG's Annual Information Form for the year ended December 31, 2012, a copy of which is available on MGG's SEDAR profile at www.sedar.com.
MGG cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and MGG does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
To view this press release as a PDF file, click onto the following link:
http://www.usetdas.com/pr/MongoliaGrowthNov252013.pdf
Source: Mongolia Growth Group Ltd. (TSXV - YAK)
Maximum News Dissemination by FSCwire. http://www.fscwire.com
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