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Chinese-led investment in Empire Industries

Transaction Details

Fort Capital Partners is pleased to announce the closing of a $4.5 million strategic investment in Empire Industries Ltd., by Canada Zhoufa Agricultural Holdings Ltd. (“ZAH“), a subsidiary of Zhejiang ZF Investment Co. Ltd. (“ZZG“) of China.

ZAH has purchased securities representing a 28% interest in Empire on a diluted basis.

ZAH has purchased $2.5M of units consisting of one common share and one-half of one warrant. Each whole warrant will entitle the holder to purchase one additional common share at a price of $0.05 per share within one year from closing, and thereafter at an exercise price of $0.10 per share on or before the five years anniversary of the offering. The $2.0M convertible debenture purchase by ZAH bears interest at 7%, has a term of 4 years and is convertible at $0.10 per share any time until maturity.

Concurrently, Empire and ZZG announced intention to enter into a JV to incorporate a new company in China that would be owned 51% by Empire and 49% by ZZG. The joint venture’s business will include the exclusive licensing of Empire’s intellectual property in China, including the design and manufacturing of Empire’s products, and oversight and licensing of manufacturing operations to produce and supply its proprietary entertainment attractions and the licensing of its industrial products to selected manufacturers in the Zhoushan Archipelago New Area, just south of Shanghai. Note: discussions regarding the JV agreement were eventually terminated.

Canadian Resources Capital, a predecessor to Fort Capital, represented ZAH in negotiation and closing of the private placement of securities, and will represent ZAH on the Empire board of directors.