Activeworlds Corp. announced that it has completed its acquisition of Wuhan Kingold Jewelry Co., Ltd. a leading designer and manufacturer of 24K gold jewelry in China.
Located in Wuhan, Hubei Province, Kingold produces a wide range of 24K gold jewelry and household ornaments and is ChinaвЂ™s leading manufacturer of 24K gold jewelry sold by weight. In the nine months ending September 30, 2009 Kingold had revenues of US$192,036,951 and net income of US$5,755,918 versus revenue of US$57,184,660 and net income of US$3,825,753 in the same period in 2008. Buying 24K gold jewelry is a preferred method for ChinaвЂ™s rapidly expanding middle class to store wealth; as such, the market for 24K gold jewelry in China is expanding rapidly.
The transaction was structured as an acquisition of the corporate parent of Wuhan Vogue-Show Jewelry Co., Ltd. (вЂњVogue ShowвЂќ), a PeopleвЂ™s Republic of China (вЂњPRCвЂќ) corporation which has entered into a series of captive agreements with Kingold pursuant to which it will receive 95.83% of the profits of Kingold. Known as a variable interest agreement or вЂњVIEвЂќ, this is a common structure used to acquire PRC corporations within certain industries designated by the PRC.
Vogue Show, a wholly owned foreign enterprise (вЂњWOFEвЂќ), is owned by Dragon Lead Group Limited, a British Virgin Islands corporation. At the closing, Activeworlds acquired 100% of Dragon Lead Group Limited. The Company is now in the process of changing its corporate name to вЂњKingold Jewelry, IncвЂќ.
Baytree Capital Associates, LLC served as a consultant on both the Kingold acquisition and the private placement.