ROY CERAMICS SE: CONCLUSION OF DEAL WITH WHITE HORSE ABOUT THE SALE OF TWO CHINESE SUBSIDIARIES PAVES WAY FOR RELOCATION OF PRODUCTION FACILITIES
Frankfurt, 17 November 2015 – Roy Ceramics SE (“ROY”) has successfully concluded all legal formalities regarding the sale of the Group’s subsidiaries Kingbridge Investment Limited and Hillmond International Holdings Limited to White Horse Holdings Limited (“the Buyer”). In relation to the company’s strategy to relocate its production to the USA, ROY’s principal subsidiary Lion Legend Holdings Limited (“LLH”) has acquired Siu Fung Concept Limited, which in turn owns 100 per cent of ROY USA Inc., based in California.
At the end of August the agreement between LLH and White Horse regarding the sale of all issued share capital of the two subsidiaries of LLH at a purchase price of about USD 80,000,000 was signed. With effect of September 30, 2015 all legal formalities of the deal have been concluded. In accordance with the terms of the Share Purchase Agreement, White Horse has issued a promissory note in the amount of USD 80,000,000 to Lion Legend Holdings Limited. Accordingly, the purchase price of USD 80,000,000 has to be paid until June 30, 2016. Furthermore, from October 1, 2015 an annual interest of 6 per cent accrues on any unpaid balance.
Relocation of the production to USA
The sale of the two subsidiaries (excluding moveable plant and machinery and all intellectual property, such as manufacturing processes, patents and trademarks under the ROY name) in China lays the foundation for the relocation of the production from China to the USA. LLH has acquired 100 per cent of the share capital of Siu Fung Concept Limited, a private company incorporated in the British Virgin Islands, which was previously owned by Mr. Surasak Lelalertsuphakun, the Deputy Chairman of the Administrative Board of ROY Ceramics SE. Siu Fung Concept Limited has an authorised share capital of USD 60,000,000 and owns 100 per cent of ROY USA Inc., based in California. ROY USA Inc. will manage the Group’s new state-of-the-art ceramics factory in the USA. The factory will be relocated in Houston, Texas, because of energy, transportation, raw materials, climate, labour cost, and tax advantages. LLH will set up a new subsidiary in Houston for the production.
In order to sustain the production during the transition period whilst the new factory in the USA is built, arrangements with a reputable ceramics factory in Thailand have been made to have access to OEM ceramics products manufactured according to ROY’s production and design know-how. Non-ceramics accessories will continue to be produced by ROY’s existing suppliers in Italy and China.
Adjustment of the outlook for the full-year 2015
The relocation strategy will likely adversely affect the business in China in the third and fourth quarter of 2015. As a consequence ROY Ceramics will need to adjust downwards the full-year outlook for operating profits given in the half-year report. Further details will be provided in the interim report for the third quarter 2015, which will be published by November 30.
About ROY Ceramics SE
ROY Ceramics is one of the 10 leading players in the Chinese sanitary ware market. The Group develops, designs, produces and markets high-end quality ceramics sanitary ware bathroom amenities and accessories. Roy Ceramics leverages on German technology and offers product quality unrivalled amongst domestic manufacturers in the PRC. The ROY brand is targeted in particular to luxury hotels, high quality houses, official and commercial buildings, property developers, retail outlets, architects and design houses. ROY Ceramics sells its products via a well-selected distribution network of self-owned flagship showrooms, franchised outlets and distributors.