CLP.L Regulatory News (CLP)

22 May 2007 11:27

Brainspark PLC22 May 2007 For Immediate Release 22 May 2007 Brainspark Plc ("Brainspark" or "the Company") Incorporation of Company to invest in China First Investment Related Party Transaction Brainspark has incorporated China IPO Group Limited ("China IPO Group"), awholly-owned company, under the 1991 Jersey Company Act. The business model of the China IPO Group, is to make investments in China, bothon 6-12 months returns, in pre-IPO situations, and in 3-5 year return with highgrowth small- to medium- sized technology companies. In order to secure the dealflow the company is entering into first refusal relationships with some of themost important Chinese Science Parks and Incubators. As the name of China IPO Group indicates, the preferred exit from investmentswill be through IPOs with London Stock Market as the favourite choice.. ChinaIPO Group has received an initial start up capital injection of approx £100,000from Brainpark. IPO on the London market will be viewed as the preferred choiceby China IPO Group to raise additional funds, following an initial round offinancing which will begin in June 2007. Directors of China IPO Group will be the Rt. Hon. Earl of Cromer, Non-ExecutiveChairman, Professor Francesco Gardin, Executive Director, Mr. Edward Burman,Executive Director, and as Non-Executive Directors Mr. Dennis Bailey andProfessor Liu Man Hong. Bedell Trust in Jersey will act as company secretary.Allen & Overy in Beijing has been retained as China IPO Group's law firm. Lord Cromer has extensive experience of China where he worked for almost 20years as Managing Director and Director of several companies; he is alsoChairman of JF China Region Fund, Japan High Yield Property Fund and PedderStreet Asia Absolute Return Fund, and is on the boards of the Cambridge AsiaFund, Schroder AsiaPacific Fund, Pacific Basin Shipping and other companies. Heis Chairman of Cromer Associates Limited, a company which advises foreigncompanies investing in China and Chinese companies investing overseas. Francesco Gardin, Edward Burman and Dennis Bailey are Chairman and Directors ofBrainspark Plc. Mr Edward Burman lives in Beijing, where he moved in 2003. Prof. Liu Man Hong is Director of the Venture Capital R&D Centre at RenminUniversity and Honorary Vice-Chairman of the Chinese Venture CapitalAssociation, she holds a Ph.D. in Economics from Columbia University. China IPO Management Ltd is being incorporated as a WFOE (Wholly Foreign OwnedEnterprise) in China, located in Beijing, as a wholly owned subsidiary of ChinaIPO Group acting as local management company. In April 2007 China IPO Group signed an exclusive contract with Xi'anInternational Business Incubator (XIBI) with more than 350 companies beingincubated. XIBI is part of the Xi'an High Tech Zone, which hosts around 8,000companies. Xi'an is one of the main Chinese centres for the Military Aerospaceindustry with 50 universities and research centres. Xi'an has a population of 8million people and is the capital of Shaanxi Province, which has a totalpopulation of approximately 30 million. The contract gives Brainspark first-refusal rights on investment in the 350companies currently incubated in XIBI, for an initial period of 2 yearsrenewable for up to 10 years. Business sectors of the 350 companies range fromalternative energies to advanced sensor technologies and added value servicesfor mobile communications. Under the terms of the agreement, China IPOManagement Limited will open an office within the incubator, provide training toentrepreneurs of the companies on capital markets, investment principles andinternational marketing. In addition the company will identify and monitorinvestment opportunities among the initial 350 incubated companies. China IPO Group is currently engaged in negotiations with further selectedScience Parks in China. China IPO Group made its first pre-IPO investment in China in ET-China HoldingsLtd ("ET-China"), a travel company with its main operations in Guangzhou(Guangdong Province). ET-China is is primarily engaged in serving the leisuremarket in South China through the sale of air tickets, hotel rooms, packagedgroup tours and associated products and services to corporate entities and toindividual travellers. In addition, ET-China, through a joint venture with ChinaSouthern Airlines, provides the e-ticketing service and back office supportservices for China Southern Airlines. South China covers nine provinces with atotal population of 450 million people, and is considered the 16th largesteconomy in the world by GDP. China IPO Group has invested $200,000 (£100,000) as part of a $7,000,000 (£3,500,000) unsecured convertible loan note for pre-IPO funding; the minimuminvestment unit to be entitled to the best terms of the loan note is $500,000 (£250,000). The unit was offered to China IPO Group but the current capitalstructure of the company prevented it from subscribing the minimum investment.Two directors of China IPO Group, as well of Brainspark, Professor FrancescoGardin and Mr Dennis Bailey, agreed to subscribe the remaining $300,000(£150,000) to match the minimum unit. The independent Directors of Brainsparkconfirmed that the investment by Professor Gardin and Mr Bailey is on no morefavourable terms than the investment by China IPO Group. Mr. Luigi Fogliani, an8.89% investor in Brainspark, has agreed to subscribe an additional $100,000(£50,000) under the same terms as China IPO Group. The total investmenttherefore amounts to $600,000 (£300,000). Due to the co-investment by Brainspark Directors as set out above, theinvestment by Brainspark into ET-China is being treated as a Related PartyTransaction under the AIM Rules for Companies. Accordingly, the independentDirectors being Messrs. Edward Burman Alfredo Villa and David Meacher consider,having consulted Beaumont Cornish Limited, the Company's Nominated Adviser,consider that the terms of the investment by Brainspark are fair and reasonableinsofar as the shareholders of Brainspark are concerned. For further information, please contact: Francesco Gardin, Brainspark plc, telephone: 00 39 335 296573 Roland Cornish, Beaumont Cornish Limited, telephone: 020 7628 3396 This information is provided by RNS The company news service from the London Stock Exchange