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Aquarius Enters into Letter of Intent for Qualifying Transaction

^{Published on 2010-08-12 10:35:41 - Market Wire}
 

(TSXV: AQU.P)

TORONTO, Aug. 12 /CNW/ - Aquarius Capital Corp. (the "Corporation" or "Aquarius") (TSXV: AQU.P) has entered into a letter of intent (the "Letter of Intent") dated August 6, 2010, pursuant to which it proposes to acquire all of the issued and outstanding securities of Sino Elite Group Limited (the "Target"), which has the economic benefit in and control over Fujian Pucheng Star of Green Foodstuff Co., Ltd. ("Green Star"). The Corporation is a capital pool company and intends for the acquisition of Green Star through the Target to constitute its Qualifying Transaction (the "Qualifying Transaction") as such term is defined in the policies of the TSX Venture Exchange (the "Exchange").

Terms of Acquisition

The Target is a corporation governed by the laws of Hong Kong, and is the 100% holder of Pucheng Hongli Agriculture Products Technology Development Co., Ltd., a company governed by the laws of the People's Republic of China ("Pucheng"). Green Star is a company governed by the laws of the People's Republic of China. Pucheng has entered into a series of variable equity interest contracts with Green Star pursuant to which all economic benefit in and control over Green Star has been transferred to it.

Pursuant to the terms of the Letter of Intent, Aquarius agrees to consolidate, prior to completion of its proposed Qualifying Transaction, its shares, broker warrants, and options on a 10:1 basis. Currently, the Corporation has 5,019,500 shares, 261,950 broker warrants, and 501,950 options outstanding. Post-consolidation, Aquarius will have 501,950 common shares, 26,195 broker warrants, and 50,195 options outstanding.

Subject to certain terms and conditions, the Corporation intends to acquire all of the 10,000 issued and outstanding common shares of the Target in consideration for a total of 27,722,328 post-consolidation common shares of the Corporation at a deemed price of $1.22 per share for a total purchase price of $33,834,660 representing five (5) times the operating cash flow of Green Star as indicated in its audited December 31, 2009 financial statements. Under the LOI, a consultant will be issued 274.04 shares by the Target which will be exchanged for 760,000 post-consolidation shares of the Corporation upon completion of the Qualifying Transaction.

The Target and Green Star shall use best efforts to complete a brokered private placement financing through Avant Capital Corporation (the "HK Broker"), on a best effort basis, of up to Cdn$2,000,000 by issuing up to 721.15 Target shares (the "Target Financing") with an effective price of not less than Cdn$2,733.33279 per Target share (the actual price per share settled upon shall be referred to as the "Target Financing Price"). Up to 721.15 Target shares will be exchanged for up to 2,000,000 post-consolidation shares of the Corporation upon completion of the Qualifying Transaction. As part of the compensation for conducting the Target Financing, the HK Broker will receive broker warrants (the "Target Broker Warrants") to purchase 10% of the Target shares sold in the Target Financing at the Target Financing Price for a period of 24 months.

Pursuant to the terms of the Letter of Intent, Aquarius also agrees to use its best efforts to complete a private placement financing ("Aquarius Financing") of Cdn$200,000 for 200,000 post-consolidation Aquarius shares at Cdn$1.00 per share.

On closing the Qualifying Transaction (and assuming full subscription of the Target Financing and Aquarius Financing), Aquarius will have 31,195,278 post-consolidation common shares outstanding. Current shareholders of Aquarius will own 1.61% of the post consolidation shares outstanding, current shareholders of the Target will own 91.34%, Aquarius private placement investors will own 0.64%, and the Target's private placement investors will own 6.41%. The Corporation will have 226,195 broker warrants and 50,195 options post-consolidation.

About Green Star

Green Star specializes in the advanced processing of agricultural products, including canned fruits and vegetables. The company has been operation for 16 years, and has focused on maintaining excellence through the application of science and technology in production, business operation and management. Key assets include a well established management team, production facilities, and a close partnership with rural households.

Description of Significant Conditions to Closing

Completion of the Qualifying Transaction will be subject to satisfaction of waiver of terms and conditions, customary or otherwise, including but not limited to completion of the consolidation of Aquarius securities, satisfactory completion of due diligence, execution of a definitive agreement on or before September 30, 2010, and all required approvals and consents, including the approval of the Exchange.

If completed, the proposed transaction is expected to constitute the Corporation's Qualifying Transaction under Policy 2.4 of the Exchange.

Completion of the Qualifying Transaction is subject to a number of conditions including but not limited to, due diligence, Exchange acceptance and if required by Exchange policies, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Additional Press Release

The Corporation plans on issuing additional press releases and updates as the definitive agreement is signed and due diligence is completed. The shares of the Corporation will remain halted until the completion of Qualifying Transaction.

CAUTIONARY STATEMENTS RE FORWARD LOOKING INFORMATION

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Qualifying Transaction and associated transactions, including statements regarding the terms and conditions of the Qualifying Transaction and associated transactions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Qualifying Transaction and associated transactions, that the ultimate terms of the Qualifying Transaction and associated transactions will differ from those that currently are contemplated, and that the Qualifying Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, Green Star, Pucheng, the Target, or their respective financial or operating results or (as applicable), their securities.

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.

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