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GLG Life Tech Corp (2)
Symbol GLG
Shares Issued 38,394,223
Close 2020-08-07 C$ 0.195
Market Cap C$ 7,486,873
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GLG Life Tech sells idle Runhao facility in China

2020-08-10 18:19 ET - News Release

Mr. Simon Springett reports

GLG LIFE TECH CORPORATION ANNOUNCES SALE OF IDLE FACILITY AND REDUCTION IN DEBT

GLG Life Tech Corp. has arranged the sale of one of its two idle facilities, along with the substantial reduction of the company's debt.

After extensive negotiations stretching over multiple years, the company has concluded the sale of its idle Runhao facility, located in Qingdao, China. Specifically, the company sold the buildings and land use rights to the buyer, while retaining the assets, liabilities and obligations of the company's subsidiary entity that previously held the buildings and land use rights. The company had not used the facility for several years and its sale will not have any impact on the company's continuing operations.

The deal involved not only the company (as seller) and the buyer, but also the company's primary bank debtholder, China Cinda Assets Management Corp. Anhui Branch (Cinda). Under the terms of the deal, from the sale proceeds of 222 million renminbi (approximately $42.6-million), Cinda received just over 102 million renminbi, and as a result of this payment, Cinda further agreed to waive an additional approximately 90 million renminbi in amounts owed to Cinda.

Thus, the company reduced its overall liability to Cinda from 570 million renminbi (as at March 31, 2020) to 387 million renminbi (as at July 31, 2020), which is a reduction of 193 million renminbi (approximately $37-million) or a 34-per-cent reduction in the company's obligations to Cinda. The carrying amounts of the Runhao buildings and land use rights were $10.4-million.

Pursuant to the sale and the Chinese government's conditions for approval for the deal, the company is required to use the remaining proceeds from the sale to: satisfy the company's tax obligation for Runhao; settle debts owed to certain third parties tied to the construction of Runhao; repay debts to a related party that has been instrumental in facilitating the company's overall restructuring efforts; and pay settlement fees for the transaction. The deal was finalized in late July and the disposition of Runhao will be recorded as effective within the third quarter of 2020.

This substantial reduction in debt significantly improves the company's balance sheet. Further, pursuant to a prior agreement with Cinda announced on Sept. 9, 2019, this debt reduction positions the company for further waivers of amounts owed to Cinda as future payments are made to Cinda. The company continues to work closely with Cinda regarding its obligations and its plans to resolve those obligations through payments, waivers and potentially a partial conversion of debt to equity in the company's main Chinese subsidiary, Runhai Anhui Biotechnology Joint Stock Co.

About GLG Life Tech Corp.

GLG is a global leader in the supply of high-purity zero-calorie natural sweeteners including stevia and monk fruit extracts used in food, beverages and dietary supplements. GLG's vertically integrated operations, which incorporate its "Fairness to Farmers" program and emphasize sustainability throughout, cover each step in the stevia and monk fruit supply chains, including non-GMO (genetically modified organisms) seed and seedling breeding, natural propagation, growth and harvest, proprietary extraction, and refining, marketing and distribution of the finished products. Additionally, to further meet the varied needs of the food and beverage and supplement industries, GLG's Naturals+ product line enables it to supply a host of complementary ingredients reliably sourced through its supplier network in China.

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