International law firm Simmons & Simmons has advised Chinese state owned enterprise, Chinatex Corporation (Chinatex), on the subscription of 34% shares in Fountain Set (Holdings) Limited for HK$511 million and the application to the Securities and Futures Commission for a whitewash waiver. Fountain Set (Holdings) Limited is engaged in the textile and garment business and is listed on the Hong Kong Stock Exchange.
Chinatex, an existing client of Simmons & Simmons, is a state-owned enterprise and is one of the 500 largest enterprises in China and its biggest cotton trader. It has two core businesses – a textiles business and a grains and oils business. Chinatex’s textile business covers the trading and manufacturing of cotton, wool, yarns & fabrics, home furnishing textiles and garments. Chinatex has its own cotton plantation, cotton ginning and spinning mills, knit-wear and woven garment manufacturing bases located across China and internationally.
The Simmons & Simmons teams in the Beijing and Hong Kong offices were led by corporate partners Davis Wang and Tom Deegan, assisted by associates, Pamela Leong and Liz Hsu, in the Hong Kong office.
Commenting on the transaction, Tom Deegan said: “We are delighted to have assisted Chinatex’s international expansion with this strategic acquisition and guide the company through Hong Kong’s complex regulatory takeover regime to successful completion. The takeover presented a number of technical challenges that we were able to overcome through negotiations and consultation with the regulatory authorities.”
The deal involves Chinatex becoming the single largest shareholder in Fountain Set (Holdings) Limited by way of subscription of new shares. To overcome the regulatory requirement to undertake a mandatory general offer in Hong Kong, Chinatex has applied for a whitewash waiver from the Securities and Futures Commission in Hong Kong.
