TKC Metals Corporation

06/22/2022 | Press release | Distributed by Public on 06/22/2022 00:54

Acquisition or Disposition of Shares of Another Corporation

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATION CODE
AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported) Jun 20, 20222. SEC Identification Number A1996-106203. BIR Tax Identification No. 005-038-1624. Exact name of issuer as specified in its charter TKC METALS CORPORATION5. Province, country or other jurisdiction of incorporation Metro Manila, Philippines6. Industry Classification Code(SEC Use Only) 7. Address of principal office Unit B1-A/C, 2nd Floor, Building B, Karrivin Plaza, 2316 Chino Roces Avenue Extension, Makati CityPostal Code16348. Issuer's telephone number, including area code (02) 8864-07369. Former name or former address, if changed since last report N/A10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common Shares 940,000,000
11. Indicate the item numbers reported herein Item 2

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

TKC Metals CorporationT

PSE Disclosure Form 4-2 - Acquisition/Disposition of Shares of Another Corporation
References: SRC Rule 17 (SEC Form 17-C) and
Section 4.4 of the Revised Disclosure Rules

Subject of the Disclosure

Sale of the Corporation's China Operations (ZZ Stronghold) through the sale of its Hong Kong subsidiary, Billions Steel International Ltd. (BSIL), to Divine Token Limited (DTL).

Background/Description of the Disclosure

At a meeting of the Corporation's Board of Directors held today, the proposal to sell BSIL to DTL, at the proposed price of One Billion Seven Hundred Forty-One Million Eight Hundred Twenty-Five Thousand Nine Hundred Twenty-Six Pesos (Php1,741,825,926.00), was unanimously approved.

BSIL is a subsidiary of the Corporation registered in Hong Kong (SAR), People's Republic of China (PROC) which oversees its "China Operations" through Zhangzhou Stronghold Steel Works Co. Ltd. (ZZ Stronghold), a company registered in the PROC. ZZ Stronghold is a manufacturer of steel pipes for general construction, water transmission, and structural uses.

BSIL will be acquired by DTL, a corporation organized under the laws of the British Virgin Island.

Date of Approval by
Board of Directors 		Jun 20, 2022
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction

The Corporation's China Operations has been incurring continuing operating losses through the past years due to adverse business and economic environment which caused low production and sales volume. The depressed prices of steel products in the China market and coupled with the changes in the PROC tax policies were significant contributory factors. This has resulted in ZZ Stronghold incurring capital deficiency of Php1,097.3 Million and Php1,151.1 Million as at December 31, 2020 and 2019, respectively.

The sale of the China operations will ease the financial burden of the Corporation, as the parent company, will no longer be required to continue to fund the financial reverses being incurred by the China Operations.

Details of the acquisition or disposition
Date Jun 20, 2022
Manner

TKC's disposition of BSIL will be formalized through the execution of a Deed of Assignment of all of its rights and interests in BSIL in favor of DTL.

Description of the company to be acquired or sold

BSIL is a holding company registered, and with its principal office, in Hong Kong.

BSIL owns ZZ Stronghold, a steel manufacturing company located in ZhangZhou, China.

The terms and conditions of the transaction
Number of shares to be acquired or disposed -
Percentage to the total outstanding shares of the company subject of the transaction 100
Price per share Total consideration shall be Php 1,741,825,926.00
Nature and amount of consideration given or received

The total consideration for the sale of the shares is Php1,741,825,926.00 which will be paid in cash.

Principle followed in determining the amount of consideration

The Corporation does not intend to recognize any losses from this transaction. Ergo, the selling price is equivalent, more or less due to foreign exchange fluctuations, to the Corporation's aggregate cost of its equity investments. The Corporation's advances to the China Operations will likewise be assumed by the buyer.

Terms of payment

a. One Million US Dollars ($1,000,000.00), or approximately Php53.46 Million, shall be payable immediately upon execution of the Deed of Assignment.
b. Eight Million US Dollars ($8,000,000.00), or approximately Php427.68 Million, shall be paid within thirty (30) days after the signing of the Deed of Assignment.
c. The balance of the total consideration of approximately Php1,260 Million (about $23.58 Million) will be paid within one hundred twenty (120) days from the signing of the Deed of Assignment.

Conditions precedent to closing of the transaction, if any

The transaction will be deemed closed upon receipt by the Corporation of the full consideration for the sale.

Any other salient terms

None

Identity of the person(s) from whom the shares were acquired or to whom they were sold
Name Nature of any material relationship with the Issuer, their directors/ officers, or any of their affiliates
Divine Token Limited No material relationship with the Issuer
Effect(s) on the business, financial condition and operations of the Issuer, if any

The impact of the disposition of the Corporation's China Operations is that the Corporation, as parent company, no longer need to consolidate the losses of the China Operations.

With the persistent low prices of steel products in China, the China operations is expected to continue to incur losses. Thus, the Corporation will no longer have any need to subsidize the operations of the subsidiary.

Other Relevant Information

Under SEC Memorandum Circular No. 12, Series of 2020, listed companies proposing to sell all or substantially all of their corporate property and assets are required to have the proposed sale approved by their shareholders owning at least two-thirds (2/3) of their outstanding capital stock. Under the regulations, the sale of property and assets amounting to at least fifty-one percent (51%) of total assets shall constitute "all or substantially all" of the corporation's assets.

The sale will not breach such threshold.

Filed on behalf by:
Name Efren Realeza Jr.
Designation Chief Finance Officer