These steps are being taken in an effort to distribute the net proceeds received from the Government of Mongolia as settlement of the international arbitration award in respect of the expropriation of Khan’s properties in Mongolia.
According to Khan Resources Inc.’s press release, “An agreement (the “Khan Bermuda Sale Agreement“) was signed and closed on Aug 17, 2016 with an independent third party for the purchase of Khan’s directly held subsidiary, Khan Resources Bermuda Ltd. (“Khan Bermuda“). Khan Bermuda holds all of the issued and outstanding shares of Khan Resources LLC (“Khan LLC“) and CAUC Holding Company Ltd. (“CAUC Holding“), which in turn holds a 58% interest of Central Asian Uranium Company, LLC (“CAUC”). As part of the distribution of the settlement funds, Khan Bermuda received US$4,965,067 and CAUC Holding received US$35,307,148. Under the terms of the Khan Bermuda Sale Agreement, Khan sold all of the shares of Khan Bermuda (and accordingly, all of Khan’s interest in CAUC Holding and CAUC and Khan LLC) for a cash purchase price of US$38,462,686. The cash proceeds will be converted to Canadian dollars in the near future.
Having consulted with its various professional advisors, the Company has concluded that the sale of Khan Bermuda and its subsidiaries will accelerate and maximize shareholder distributions by simplifying the corporate structure and avoiding the need to wind-up and repatriate cash from these foreign subsidiaries in multiple jurisdictions and reducing or eliminating any risks to Khan associated with such subsidiaries. While the proceeds of the sale are expected to be less than the consolidated assets of Khan Bermuda, the discount is offset by the present-value benefits that Khan shareholders will receive due to a more expeditious distribution of cash and the avoidance of the costs to liquidate the subsidiaries and attendant risks. As such, and for all of the reasons mentioned above, the board of directors of Khan has unanimously determined that the sale is in the best interest of the Company and is fair to its shareholders.”
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