Ableauctions.com (AAC) Enters into Development Agreement to Explore Second Phase of Gruv Development

October 9, 2008 1:40 PM EDT

Ableauctions.com Inc. (AMEX: AAC) announced today that, in response to the decision by eBay (Nasdaq: EBAY) to wind down the operations of its Live Auctions platform effective December 31, 2008 and because of the continued weakness in the U.S. economy, both of which have negatively impacted the Company's liquidation and live auction broadcast services business, the Company intends to continue expanding its investment and property development business because management believes that these segments of its business will provide good long-term value to its shareholders.

To this end, the Company has entered into a development agreement to acquire a 50% interest in Surrey Central City Holdings Ltd., a private company controlled by Abdul Ladha, the Company's chief executive officer and a director. Surrey owns four properties adjacent to the Company's current development project located in Surrey, British Columbia. By purchasing this interest, the Company can explore the potential of developing the four properties, through Surrey, by improving them with a residential complex consisting of 76 to 138 condominiums and potentially generating revenue of approximately $16 million CAD to $30 million CAD before expenses and income splitting (Phase II).

Under the terms of the development agreement, the Company will acquire a 50% interest in the shares of Surrey from Surrey's sole shareholder. Surrey owns four properties (collectively referred to as the "Property"). The purchase price for the 50% interest is $1,347,440 USD. The Company will pay one-half of the purchase price in cash and the remainder with a promissory note due in one year bearing interest at the prime rate as announced by the Royal Bank of Canada plus 2% per annum. The promissory note also includes a provision allowing the seller to convert the principal amount owed, and any accrued interest, into shares of the Company's common stock. The purchase of the interest in Surrey and the corresponding conversion of the promissory note to stock are subject to shareholder and regulatory approval. The Company will have the right, for a period of one year, to sell back its interest in Surrey for the original purchase price, less one-half of the expenses incurred by Surrey in its efforts to develop the Property, in the event financing or approval of a preliminary development plan cannot be obtained.[SM]

Related Categories

Corporate News

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?