Following the first rounds of meetings..the deal points were mutually agreed in principle and set out ..pending the next step...6 more major shareholders to agree!??
Dear Mr X and Mr Y,
Strictly Confidential, without Prejudice. [lesson for students- it is important to use the word 'without prejudice' in a draft so that the contents cannot be used against you in the court.]
I refer to my appointment in relation to the facilitation of the proposed share transactions between Mr X's ('vendor') and Mr Y or his nominee (' purchaser').
I am pleased to be the defacto liaison between the interested parties in this matter.( hereinafter referred as 'both parties' or 'parties')
On behalf, I am glad that after two consecutive at arm's length meetings, both parties have gained a prelimary non-binding understanding and agreed in-principle on general broad terms and conditions of abovecaptioned matter, subject to resolution of all deal points and fit and proper legal and compliance advisory of such professional representatives both parties shall appoint for the documentation, execution and signature of actual Sale and Purchase Agreement (SPA) to be entered into.
For avoidance of doubts, I set out below for both parties' perusal a summary of salient discussion points with equal commercial and legal privileges, being conditions precedent to the contemplated transaction.[lesson for students - remember that when chairing the meeting, you must take note of 3 important points 1) issues raised by negotiating parties 2) solutions or terms rectifications if any 3) terms which are agreed in principle and mutually by parties. 4) sum up the meeting by repeating the above noted, spell the agenda for the next meeting and of course thank your clients for their precious time]
AA. Vendor
- The vendor considers and shall affirm his intention to divest in two tranches, up to 100 million shares @SGD0.40 per share of said listco to the prospective purchaser on the basis of the understandings of itemized information reiterated below:-
i)Both parties to enter into a SPA which bears a call/put deed for the transaction between parties before the listco's forthcoming EGM
ii)Vendor shall exercise his '1st' Put Option's rights for the 1st tranche of sale shares following the fulfillment and discharge of his undertaking to vote in favour of disposal of the vessels at EGM.
iii)Vendor shall be entitled to further exercise his '2nd' put rights pursuant to the option deed for the finalisation & completion of the full share transaction intended in the SPA upon obtaining a successful asset injection resolution at listco's EGM.
iiii)Vendor shall irrevocably undertake to buyback certain assets in the listco within [ ] working days following the exercise of his '1st' put rights under the '1st' option of the call/put option deed, subject to independent directors' and shareholders' approval.
BB. Purchaser.
- Prospective Purchaser considers and shall affirm his intention to purchase up to 100 million shares @ SGD0.40 per share of said listco from vendor on the basis of the understandings of itemized information reiterated below:-
i) The listco shall have an approximate cash reserves or NAV or the same of at least S$48 million arising from its current on going assets divestment exercise undertaken by the existing board of directors, subject to shareholders' resolution in EGM and independent directors' clearance and scrutiny.
ii) Irrevocable undertakings from vendor to vote in favour of potential assets injection - [] The Estimated Cash Reserves is understood to be realisable from or subsequent to sale of the following assets of the listco as represented by vendor :-
Gentlemen, it is my pleasure to followup and put together both parties for the meeting of minds and final resolutions. Please remain positive and I trust that we shall work to hammer and shape the deal to accomodate circumstances and all parties' objectives and expectations in the best interest of all.
Save as aforementioned, this communication is not a contract, and no party intends that these prelimary understandings represent a contractually binding agreement. These understandings are subject to or conditional on further negotiations and signature of contract. [ lesson for students - because these deals involve not only millions of dollars, parties are primarily and especially concerned with the finalisation of deal points prior to seeking independent legal advisory and also the boards' resolution. Therefore, it is important to make them 'feel' comfortable by explicitly expressing the 'non- obligatory and non-binding understanding at the early stage until the legal guys move in to set the deal points in the mould. In doing so, they will feel that they have adequate time and resources to think it over again and again and again before committing to a very substantial transaction which they are answerable to whole lot of asking people which includes not only the shareholders and board but the regulatory bodies too..if any thing goes wrong...
Kind Regards,
Cheng Kuan
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