IGC (IGC) to Acquire Chinese Ore Processor, Linxi H&F
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India Globalization Capital, Inc. (AMEX: IGC) has entered a definitive agreement to acquire an iron ore processing company, Linxi H&F Economic and Trade Co., located in Chifeng, China.
At closing, which is subject to customary closing conditions including completion of due diligence and approval of the IGC shareholders, IGC will issue 31.5 million shares of IGC common stock for the purchase of 95% of the equity in PRC Ironman. In addition, the stock purchase agreement provides for a contingent payment by IGC to PRC Ironman's majority shareholder of $1 million payable within 30 days of closing and upon satisfaction of certain post closing covenants. The Agreement further provides for certain contingent payments by IGC to PRC Ironman shareholders, as follows (i) $1.5 million in cash or stock, which is contingent on IGC achieving an earnings growth of at least 30% from the previous year's closing audit (i.e., March 31, 2011); and (ii) $1.5 million in cash or stock, which is contingent on IGC achieving an earnings growth of at least 30% from the previous year's closing audit (i.e., March 31, 2012). The Agreement adds that if either annual target is missed there would still be a payout provided the company achieves an earnings growth of 69% between FYE 2011 and FYE 2013. The acquisition is expected to close in the current fiscal quarter.
At closing, which is subject to customary closing conditions including completion of due diligence and approval of the IGC shareholders, IGC will issue 31.5 million shares of IGC common stock for the purchase of 95% of the equity in PRC Ironman. In addition, the stock purchase agreement provides for a contingent payment by IGC to PRC Ironman's majority shareholder of $1 million payable within 30 days of closing and upon satisfaction of certain post closing covenants. The Agreement further provides for certain contingent payments by IGC to PRC Ironman shareholders, as follows (i) $1.5 million in cash or stock, which is contingent on IGC achieving an earnings growth of at least 30% from the previous year's closing audit (i.e., March 31, 2011); and (ii) $1.5 million in cash or stock, which is contingent on IGC achieving an earnings growth of at least 30% from the previous year's closing audit (i.e., March 31, 2012). The Agreement adds that if either annual target is missed there would still be a payout provided the company achieves an earnings growth of 69% between FYE 2011 and FYE 2013. The acquisition is expected to close in the current fiscal quarter.
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