UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): November 11,
2009
WUHAN
GENERAL GROUP (CHINA), INC.
(Exact
Name of Registrant as Specified in Charter)
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Nevada
(State
or Other Jurisdiction
of
Incorporation)
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001-34125
(Commission
File
Number)
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84-1092589
(IRS
Employer
Identification
No.)
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Canglongdao
Science Park of Wuhan East Lake Hi-Tech Development Zone
Wuhan,
Hubei 430200
People’s
Republic of China
(Address
of Principal Executive Offices, including Zip Code)
Registrant’s
telephone number, including area code: (86) 27-5970-0069
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry
into a Material Definitive Agreement.
On
November 11, 2009, Wuhan General Group (China), Inc. (the “Company”), through
its wholly owned subsidiaries Wuhan Blower Co., Ltd. (“Wuhan Blower”), Wuhan
Generating Equipment Co., Ltd. (“Wuhan Generating”) and Wuhan Xingelin Machinery
Equipment Manufacturing Co., Ltd. (“Wuhan Xingelin,” together with Wuhan Blower
and Wuhan Generating, the “Borrowers”), entered into a Loan Agreement with
Standard Chartered Bank (China) Limited, Guangzhou Branch (the
“Lender”). The Loan Agreement provides for a loan facility totaling
RMB 303,100,000 (approximately $44.4 million) in senior secured debt financing
consisting of a term loan facility for up to RMB 211,600,000 (approximately
$31.0 million) (the “Tranche A Loan”) and a term loan facility for up to RMB
91,500,000 (approximately $13.4 million) (the “Tranche B Loan,” together with
the Tranche A Loan, the “Loans”). The Tranche A Loan will be used
primarily to repay the existing bank debts of Wuhan Blower and Wuhan Generating
and to purchase equipment for Wuhan Generating. The Tranche B Loan
will be used primarily to facilitate the capital expenditure investments of
Wuhan Xingelin.
The
obligations under the Loan Agreement are guaranteed by the Company, Universe
Faith Group Limited, a wholly owned subsidiary of the Company, and Mr. Xu Jie
personally, the President and Chief Executive Officer of the
Company. Each of the guarantors also is a party to the Loan
Agreement.
Both the
Tranche A Loan and the Tranche B Loan will mature on the third anniversary of
the date of the first drawdown under the Tranche A Loan, subject to an extension
of one year and a half at the Lender’s sole discretion. Commencing
fifteen months after the first drawdown under the Tranche A Loan, the Borrowers
will be required to pay eight successive quarterly installments on the Tranche A
Loan. With respect to the Tranche B Loan, the Borrowers will be
required to make eight installment payments commencing fifteen months after the
first drawdown under the Tranche A Loan.
The
Tranche A Loan will bear interest at a fixed rate to be determined at the time
of the drawdown. The interest rate of the Tranche B Loan will be
either a fixed rate or floating rate plus margin, to be determined at the time
of the first drawdown. The Borrowers also must pay to the Lender, who
also serves as the facility agent, an annual commitment fee of 3%, which is to
be paid monthly while the Loans are available.
Subject
to certain conditions, the Borrowers may voluntarily prepay the Loans with a
prepayment fee. The Borrowers are subject to a mandatory prepayment
of the Loans if the Borrowers obtain any new debt financing, dispose of certain
assets, distribute dividends or change control, among other
circumstances.
The Loan
Agreement contains covenants, which include, among others: limitation on the
incurrence of additional indebtedness; limitation on guarantees, liens,
investments, sale of assets, mergers, change of control and capital
expenditures; and maintenance of specified financial ratios. So long
as any amount is outstanding under the Loans, (1) the Borrowers must maintain a
Loan to Value Ratio of 75% through June 2010 and 65% thereafter and (2) Wuhan
Blower must maintain (i) a ratio of total debt to EBITDA of less than certain
amounts that range from 3.0 to 3.5 during 2009 and 2010 and 2.5 in 2011 and (ii)
total revenues must exceed certain amounts that range between RMB 600,000,000
(approximately $87.9 million) to RMB 750,000,000 (approximately $109.9 million)
from 2009 through 2011.
The
Tranche B Loan is subject to additional conditions, including the completion of
syndication of at least RMB 80,000,000 (approximately $11.7 million) under the
Tranche A Loan and the Borrowers maintaining a ratio of total debt to
consolidated EBITDA of less than 2.9 and total annual evenues of at least RMB
600,000,000 (approximately $87.9 million).
As a
condition to the Loans, the Borrowers granted to the Lender a security interest
in substantially all of their assets, including, among other things, mortgages
over land use rights and ownership of buildings, factories and equipment, pledge
of shares, existing and future account receivables that exceed certain amounts
and registered trademarks. In addition, each of the Borrowers agreed
to provide financial and other information within certain time frames, including
audited financial statements within 90 calendar days after the end of each
fiscal year and unaudited financial statements within 15 calendar days after the
end of each fiscal quarter. Each of the Borrowers and guarantors also
agreed, among other things, that there will be no material changes in the senior
officers or board of directors without the prior written consent of the Lender;
all related party transactions will be at arm’s-length; and, subject to certain
conditions, an additional capital contribution of RMB 74,086,590 (approximately
$10.9 million) will be made by December 31, 2009 to Wuhan Blower or Wuhan Blower
will provide written evidence that it will reduce its registered capital amount
to its current paid in amount with the appropriate government
officials.
The
Borrowers must meet certain conditions prior to the funding of the Loans by the
Lender. These include, among other things, confirmation that, after
repaying the existing debt of all Borrowers with funds from Tranche A, there
will be no other debt or corporate guarantees remaining other than those
identified in the Loan Agreement. To the extent that the Borrowers
fail to meet all the required conditions precedent to drawdown under the Loan
Agreement, the Lender is not obligated to fund the Loans.
The
failure to satisfy the covenants under the Loan Agreement or the occurrence of
other specified events that constitute an event of default could result in the
acceleration of the repayment obligations of the Borrowers. The
events of default include, among others: the failure to make payments under the
Loan Agreement; insolvency or bankruptcy proceedings involving any of the
Borrowers; cross defaults to other indebtedness by the Borrowers; material
litigation or a change in control of the Borrowers; and subject to certain
limitations, the failure to perform or observe covenants or other obligations
under the Loan Agreement or related documents by the Borrowers or
guarantors.
The
Borrowers are subject to a penalty interest rate of 1% on all amounts due and
unpaid if the Borrowers fail to pay any sum payable when due. In
addition, the Borrowers are subject to a penalty interest rate of the People’s
Bank of China rate, plus a mark up of 50% to 100%, on all amounts used for
purposes that do not comply with the stated purposes under the Loan
Agreement.
The Loan Agreement is governed by the
laws of the People’s Republic of China (the “PRC”). All financial
covenants under the Loan Agreement are based on generally accepted accounting
principles in the PRC. All amounts in the Loan Agreement are
denominated in RMB, which is the currency used in the PRC. The dollar
translations used in this Current Report are based on the exchange rate of RMB
6.83 for each 1.00 U.S. Dollar, on November 12, 2009.
In
connection with the Loan Agreement, the Borrowers entered into an agreement (the
“Agreement”) with Standard Chartered Corporate Advisory Co. (Beijing), Ltd. (the
“Advisor”) for certain advisory and management services. Under the
Agreement, the Borrowers agreed to pay to the Advisor a management fee of 1% of
the net gross revenues of the Borrowers in connection with the Tranche B
Loan. This management fee remains valid and payable until one year
after the maturity date of the Loans. In addition, the Borrowers have
agreed to pay to the Advisor an advisory fee of 8% of the Loans.
The
foregoing description of the Loan Agreement is qualified in its entirety by
reference to the Loan Agreement, which is attached hereto as Exhibit 10.1 and is
incorporated herein by reference. The Company issued a press release
announcing the Loan Agreement on November 16, 2009, and a copy of this press
release is attached hereto as Exhibit 99.1.
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The
information provided in Item 1.01 is incorporated by reference in this Item
2.03.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
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Exhibit 10.1
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Loan
Agreement, dated November 11, 2009, by and among Wuhan Blower Co., Ltd.,
Wuhan Generating Equipment Co., Ltd. and Wuhan Xingelin Machinery
Equipment Manufacturing Co., Ltd. as borrowers, Standard Chartered Bank
(China) Limited, Guangzhou Branch as lender, facility agent and security
agent, and Wuhan General Group (China), Inc., Universe Faith Group Limited
and Mr. Xu Jie as guarantors (translation).
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Exhibit 99.1
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Press
Release on Loan Agreement issued by the Company on November 16,
2009. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Date: November
15, 2009
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By:
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/s/
Haiming Liu
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Name:
Haiming Liu
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Title: Chief
Financial Officer
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EXHIBIT
INDEX
Form
8-K
November
16, 2009
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Filed
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Exhibit
No.
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Description
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Herewith
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By
Reference
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10.1
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Loan
Agreement, dated November 11, 2009, by and among Wuhan Blower Co., Ltd.,
Wuhan Generating Equipment Co., Ltd. and Wuhan Xingelin Machinery
Equipment Manufacturing Co., Ltd. as borrowers, Standard Chartered Bank
(China) Limited, Guangzhou Branch as lender, facility agent and security
agent, and Wuhan General Group (China), Inc., Universe Faith Group Limited
and Mr. Xu Jie as guarantors (translation).
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X
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99.1
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Press
Release on Loan Agreement issued by the Company on November 16,
2009. |
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X
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