Migao Corporation enters into arrangement agreement for going private transaction

TORONTO, June 7, 2016 /CNW/ - Migao Corporation (TSX:MGO) ("Migao" or the "Company") is pleased to announce that the Company has signed a definitive arrangement agreement (the "Arrangement Agreement") in connection with the proposed acquisition by 2521416 Ontario Inc. ("Purchaser"), a company wholly-owned indirectly by Mr. Liu Guocai, the Chief Executive Officer, President and principal shareholder of the Company, of all of the common shares of the Company (the "Shares") not owned by Purchaser or its affiliates.  Pursuant to the Arrangement Agreement, the Shares would be acquired for cash consideration of $0.75 per Share through a court-approved plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement").  The purchase price represents a 97.37% premium over the closing price of the Shares on the Toronto Stock Exchange (the "Exchange") on June 6, 2016, and a 93.4% premium over the 20 trading-day volume-weighted average share price.  All of the Company's outstanding options will be cancelled upon completion of the Arrangement, and holders will be entitled to receive a cash amount equal to the amount by which the consideration exceeds the exercise price of such options, if any.  All payments are subject to applicable withholding taxes, if any.

The Company formed a special committee (the "Special Committee") comprised of independent directors to review and assess the proposed transaction. The Special Committee engaged Houlihan Lokey (China) Limited ("Houlihan Lokey") to provide to the Special Committee, on behalf of the Board of Directors of the Company, a formal valuation as required under Multilateral Instrument 61-101 – Protection of Minority Securityholders In Special Transactions ("MI 61-101"). Houlihan Lokey also provided an opinion to the Special Committee, on behalf of the Board of Directors of the Company, to the effect that, as of the date of the opinion and based upon and subject to the assumptions, limitations, restrictions and qualifications therein, the consideration to be received by the shareholders (other than Purchaser and its affiliates) ("Minority Shareholders") under the Arrangement pursuant to the Arrangement Agreement was fair to Minority Shareholders from a financial point of view.  The full text of the valuation and fairness opinion will be contained in the in the Company's information circular.

Based on the unanimous recommendation of the Special Committee, among other things, the Board of Directors of the Company has unanimously (i) determined that the Arrangement is fair to the Minority Shareholders and that the Arrangement is in the best interests of the Company; and (ii) recommended that shareholders vote in favour of the Arrangement. The Company intends to call a special meeting of its shareholders to be held on or about July 27, 2016 (the "Meeting") to seek approval for the Arrangement.

Completion of the Arrangement is subject to, among other things, financing, customary conditions, including approval of at least 66⅔% of the votes cast on a special resolution by shareholders of the Company present in person or represented by proxy at the Meeting, and a simple majority of the votes cast by shareholders present in person or represented by proxy at the Meeting (excluding shareholders whose votes are required to be excluded pursuant to MI 61-101), and the receipt of approval of the Superior Court of Justice of Ontario (Commercial List) and necessary regulatory approvals.  Purchaser and its affiliates collectively hold approximately 34.2% of the outstanding Shares.  Each of the directors and senior officers of the Company has advised the Company that they intend to vote all Shares owned by them in favour of the approval of the Arrangement. 

The Arrangement Agreement includes customary deal protection provisions, including a right to match and non-solicitation provisions in favour of Purchaser. The Arrangement Agreement also provides for a mutual non-completion fee of $500,000 if the Arrangement Agreement is terminated in certain circumstances, including payment of such fee to the Company upon termination if the financing condition is not waived on or after July 22, 2016.  Upon completion of the Arrangement, it is expected that the Company would be delisted from the Exchange and would cease to be a reporting issuer. The proposed Arrangement and related transactions will be more fully described in a management information circular and related proxy materials that will be distributed to shareholders and filed on SEDAR in advance of the Meeting in accordance with applicable corporate and securities laws. In accordance with the Arrangement Agreement, the closing of the transaction must occur by no later than September 6, 2016, subject to extension in accordance with the provisions of the Arrangement Agreement.

Blake, Cassels & Graydon LLP is acting as legal counsel to Purchaser.  Dentons Canada LLP is acting as legal counsel to the Company.   Stikeman Elliott LLP is acting as legal counsel to the Special Committee.

About Migao

Migao Corporation, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various strategic locations across China for the production and sale of specialty potash fertilizer (potassium nitrate and potassium sulphate) to China's agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection. Migao's Sichuan facility is ISO 14001 certified, an international environmental management standard.  Please visit www.migaocorp.com for further information.

Caution Regarding Forward-looking Information

Certain information set forth in this press release, including information and statements which may contain words such as "could", "plans", "intends" "should", "anticipate", "expects", "will", "propose", "opportunity", "future", "continue",  and similar expressions and statements relating to matters that are not historical facts, contain forward-looking statements, including but not limited to statements regarding: the proposed Arrangement and the anticipated timing of closing; mailing of the information circular related to the Meeting and the timing thereof and timing of the Meeting; the benefits of the Arrangement for Migao, its stakeholders, employees and the countries in which it operates; the delisting of the Shares following completion of the Arrangement and Purchaser's plans for Migao following the completion of the Arrangement. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Migao's control. Completion of the Arrangement is subject to a number of conditions, including receipt of approvals required by the People's Republic of China, and other conditions which are typical for transactions of this nature.  Failure to satisfy any of these conditions, the emergence of a superior proposal or the failure to obtain approval of Migao's shareholders may result in the termination of the Arrangement Agreement. The foregoing list is not exhaustive. Additional information on these and other risks that could affect completion of the Arrangement will be set forth in the information circular in respect of the Meeting, which will be available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or achievement of Migao could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Migao will derive therefrom. Migao disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

SOURCE Migao Corporation

For further information on Migao, please contact: Helen Lu, Chief Financial Officer, Migao Corporation, 778-375-3247, [email protected]