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 China’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 China’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. (“Vogue Show”), a People’s Republic of China (“PRC”) 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 “VIE”, this is a common structure used to acquire PRC corporations within certain industries designated by the PRC.
Vogue Show, a wholly owned foreign enterprise (“WOFE”), 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 “Kingold Jewelry, Inc”.
Baytree Capital Associates, LLC served as a consultant on both the Kingold acquisition and the private placement.
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