India Hospitality Corp

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the
contents of this document or as to the action you should take, you should consult an independent professional adviser
authorised under the FSMA who specializes in advising on the acquisition of shares and other securities.
This document is an admission document prepared in accordance with the AIM Rules and does not comprise a prospectus
for the purposes of the Prospectus Rules and has not been approved by or filed with the Financial Services Authority. This
document has been issued in connection with the application for trading of the Shares and Warrants on AIM.
Application has been made for all of the Shares and Warrants issued and to be issued to be admitted to trading on AIM.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be
attached than to larger or more established companies. AIM securities are not admitted to the Official List of the UK
Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make
the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial
adviser. The London Stock Exchange has not itself examined or approved the contents of this document.
The whole of this document should be read. An investment in the Company involves a significant degree of risk, may
result in the loss of the entire investment and may not be suitable for all recipients of this document. Investors should
carefully consider the Risk Factors beginning on page 17 of the Offering Circular incorporated in this document.
The Units (each of which comprises one Share and two Warrants) are being offered and sold outside the United States in
reliance on Regulation S and within the United States only to qualified institutional buyers in reliance on Rule 144A under
the Securities Act. For a description on offers, sales and transfers of the Shares and Warrants and the distribution of this
document, see ‘‘Transfer Restrictions’’ in the Offering Circular incorporated in this document.
The Company and the Directors, whose names appear on page 2 of this document, accept responsibility for the
information contained in this document including individual and collective responsibility for compliance with the AIM
Rules. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to
ensure that such is the case), the information contained in this document is in accordance with the facts, and does not
omit anything likely to affect the import of such information.
INDIA HOSPITALITY CORP.
(Incorporated in the Cayman Islands under the Companies Law (Revised))
Offering of 16,666,667 Units (each Unit comprising one Share and two Warrants)
in the capital of the Company at US$ 6.00 per Unit
and
Admission to trading on AIM
Nominated Adviser and Broker
DEUTSCHE BANK AG LONDON
SHARE CAPITAL FOLLOWING THE OFFERING AND ADMISSION
US$
Authorised
Number
100,000.00
100,000.00
100,000,000
100,000,000
Issued and fully paid
US$
Number
Shares
Undesignated Shares
21,333.33
0.00
21,333,334
0
Deutsche Bank AG London, which is authorised and regulated in the United Kingdom by the Financial Services Authority,
is acting exclusively for the Company as nominated adviser and broker in connection with the matters described herein
and for no one else in connection with the Offering and Admission. Deutsche Bank Securities Inc. is acting for the
Company as underwriter in connection with the matters described herein and for no one else in connection with the
Offering and Admission. Neither Deutsche Bank AG London nor Deutsche Bank Securities Inc. will be responsible to
anyone other than the Company for providing the protections afforded to their respective customers or for advising any
other person on the contents of this document or the Offering and Admission. No representation or warranty, express or
implied, is made by Deutsche Bank AG London or Deutsche Bank Securities Inc. as to the contents of this document
(without limiting the statutory rights of any person to whom this document is issued).
Copies of this document will be available during normal business hours on any day (except Saturdays, Sundays, bank and
public holidays) free of charge to the public at the registered office of the Company and at the offices of Deutsche Bank AG,
London Branch, 1 Great Winchester Street, London EC2N 2DB for a period of one month from the date of Admission.
DISCLAIMER
This document does not constitute, or form part of, any offer or invitation to sell or issue, or
any solicitation of any offer to purchase or subscribe for, any shares in the Company in any
circumstances in which such offer or solicitation is unlawful nor shall it, or any part of it, or the fact
of its distribution, form the basis of, or be relied on in connection with or act as any inducement to
enter into, any contract therefor.
Recipients of this document who are considering acquiring Shares and Warrants following
publication of the admission document are reminded that any such acquisition must be made only
on the basis of the information contained in the admission document. No reliance may be placed,
for any purpose whatsoever, on the information or opinions contained in this document or on its
completeness and no representation or warranty, express or implied, is given by or on behalf of
the Company, the Nomad, Deutsche Bank or their respective directors, employees, agents or
advisers as to the accuracy or completeness of the information or opinions contained in this
document and no responsibility or liability is accepted by any of them for any such information or
opinions.
Deutsche Bank London and Deutsche Bank are acting only for the Company in connection
with the matters described in this document and are not acting for or advising any other person, or
treating any other person as their respective client, in relation thereto and will not be responsible
for providing the regulatory protection afforded to clients of Deutsche Bank London or Deutsche
Bank or advice to any other person in relation to the matters contained herein. Such persons
should seek their own independent legal, investment and tax advice as they see fit.
This document is exempt from the general restriction (in section 21 of FSMA) on the
communication of invitations or inducements to engage in investment activity pursuant to the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the ‘‘Financial
Promotion Order’’) on the grounds that it is directed only at: (a) persons having professional
experience in matters relating to investments (being ‘‘Investment Professionals’’ within the
meaning of Article 19(5) of the Financial Promotion Order); or (b) persons who fall within
Article 49(2) (a)-(d) of the Financial Promotion Order; or (c) persons who fall within Article 12 of the
Financial Promotion Order on the grounds that it is made to or directed at any other person to
whom it may otherwise be lawfully made to or directed at (all such persons together being
referred to as ‘‘Relevant Persons’’). Reliance on this document for the purpose of engaging in any
investment activity may expose you to a significant risk of losing all of the property invested. This
document is directed only at Relevant Persons and must not be acted on or relied on by persons
who are not Relevant Persons. Any investment or investment activity to which the final form of this
document relates is available only to Relevant Persons and will be engaged in only with Relevant
Persons. Accordingly, this document is exempt from the general restriction on the communication
of invitations to enter into investment activity and has not been approved by an authorised person
as required by section 21 of the FSMA. Any person in the United Kingdom or elsewhere in receipt
of this document who is not a Relevant Person should not act or rely on this document or its
contents and should return this document immediately to the Nomad, Deutsche Bank or the
Company.
The distribution of this document and the offering and sale of Shares and Warrants in
jurisdictions other than the UK may be restricted by law and therefore persons into whose
possession this document comes should inform themselves about, and observe, such restrictions.
Any failure to comply with the restrictions may constitute a violation of the securities laws of any
such jurisdiction. This document does not constitute an offer to sell or issue to, or the solicitation
of an offer to buy or subscribe for, Shares and/or Warrants in any jurisdiction in which such offer or
solicitation is unlawful.
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IMPORTANT NOTICE
Deutsche Bank London has been appointed as nominated adviser and broker to the Company
in accordance with the AIM Rules. In accordance with the AIM Rules, Deutsche Bank London has
confirmed to the London Stock Exchange that it has satisfied itself that the Directors have received
advice and guidance as to the nature of their responsibilities and obligations to ensure compliance
by the Company with the AIM Rules and that, in its opinion and to the best of its knowledge and
belief, having made due and careful enquiry, all relevant requirements of the AIM Rules have been
complied with. No liability whatsoever is accepted by Deutsche Bank London for the accuracy of
any information or opinions contained in this document or for the omission of any material
information, for which it is not responsible.
The contents of this document have been prepared by and are the sole responsibility of the
Company. The Company, Deutsche Bank London and Deutsche Bank have only communicated or
caused to be communicated any invitation or inducement to engage in investment activity (within
the meaning of Section 21 of FSMA) in connection with the issue or sale of the Shares and
Warrants in circumstances in which Section 21(1) of FSMA does not apply, or pursuant to an
exemption therefrom.
The distribution of this document in jurisdictions other than the UK may be restricted by law
and therefore persons into whose possession this document comes should inform themselves
about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities laws of any such jurisdiction. This document does not constitute an offer
to sell or issue to, or the solicitation of an offer to buy or subscribe for, Shares and/or Warrants in
any jurisdiction in which such offer or solicitation is unlawful.
The statements contained in this document are made as at the date of this document, unless
some other time is specified in relation to them, and delivery of this document shall not give rise to
any implication that there has been no change in the facts set out in this document since such date.
Nothing contained in this document shall be deemed to be a forecast, projection or estimate of the
future financial performance of the Company except where expressly otherwise stated.
This document has been prepared solely for the benefit of the limited number of prospective
investors to whom it has been addressed and delivered and may not, in any circumstances, be
used for any other purpose or be viewed as a document for the benefit of the public.
Neither the Company, Deutsche Bank London nor Deutsche Bank nor any of their respective
representatives are making any representation to you regarding the legality of an investment in
the Units, Shares and/or Warrants. In making an investment decision, you must rely on your own
examination of the Company’s business and the terms of the Offering and of the Units, Shares
and/or Warrants, including the merits and risks involved. You should contact the Company,
Deutsche Bank London or Deutsche Bank with any questions about the Offering and Admission or
if you require additional information to verify the information contained in this document. You
should not consider any information in this document to be investment, legal, business or tax
advice. You should consult your own appropriately qualified counsel, business adviser,
accountant, tax adviser and other advisers for legal, financial, business, tax and related advice
regarding an investment in the Units, Shares and/or Warrants.
The Company is making the Offering subject to the terms described in this document and the
placing agreement relating to the Units. The Company reserves the right to reject any commitment
to subscribe for the Units in whole or in part and to allot to any prospective investor less than the
full amount of the Units sought by such investor. Deutsche Bank and certain of its related entities
may acquire, for its own account, a portion of the Units.
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Laws in certain jurisdictions may restrict the distribution of this document and the offer and
sale of the Units, Shares and/or Warrants. Persons into whose possession this document or any of
the Units, Shares and /or Warrants may be delivered must inform themselves about and observe
those restrictions. You should read the sections entitled ‘‘Information for Investors’’, ‘‘Plan of
Distribution’’ and ‘‘Transfer Restrictions’’ in the Offering Circular incorporated in this document for
further information on some of those restrictions. Each prospective offeree or purchaser of the
Units must comply with all applicable laws and regulations in force in any jurisdiction in which it
purchases, offers or sells the Units, Shares and/or Warrants or possesses or distributes this
document, and must obtain any consent, approval or permission required under any regulations
in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or
sales, and neither the Company, Deutsche Bank London nor Deutsche Bank shall have any
responsibility therefor.
This document is based on information provided by the Company and by other sources that
the Company considers reliable. The Company has summarised certain documents and other
information in a manner that the Company believes to be accurate in all material respects, and as
far as the Company is aware, no facts have been omitted which may render the reproduced
information inaccurate or misleading, but the Company refers you to the actual documents for a
more complete understanding of what is discussed in this document, and these summaries are
qualified in their entirety by such reference.
In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive, each of the Company, Deutsche Bank London and Deutsche Bank has
represented and agreed that with effect from and including the date on which the Prospectus
Directive is implemented in that Member State it has not made and will not make an offer of shares
to the public in that Member State, except that it may, with effect from and including such date,
make an offer of shares to the public in that Member State:
(a) at any time to legal entities which are authorised or regulated to operate in the financial
markets or, if not so authorised or regulated, whose corporate purpose is solely to invest
in securities;
(b) at any time to any legal entity which does not meet two or more of the following three
criteria: (1) an average of at least 250 employees during the last financial year; (2) a total
balance sheet of more than e43,000,000 and (3) an annual net turnover of more than
e50,000,000, as shown in its last annual or consolidated accounts; or
(c) at any time in any other circumstances which do not require the publication by the issuer
of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of the above, the expression an ‘‘offer of shares to the public’’ in relation to
any shares in any Member State means the communication to one hundred or more persons in
any form and by any means of sufficient information on the terms of the offer and the shares to be
offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same
may be varied in that Member State by any measure implementing the Prospectus Directive in that
Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes
any relevant implementing measure in that Member State.
No person has been authorised to give any information or make any representation other than
those contained in this document and, if given or made, such information or representations must
not be relied on as having been authorised by the Company, Deutsche Bank London or Deutsche
Bank. The information contained in this document is stated as of the date hereof and, except as
required by the AIM Rules, is subject to change without notice. Neither the delivery of this
document nor any subscription or acquisition made under it shall, in any circumstances, create
iii
any implication that there has been no change in the affairs of the Company since the date of this
document or that the information in it is correct as of any subsequent date.
INFORMATION FOR INVESTORS
The securities offered pursuant hereto have not been registered under the Securities Act, or
the securities laws of any state of the United States, and may not be offered or sold except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act.
The Units, Shares and Warrants are being offered and sold outside the United States in
reliance on Regulation S and within the United States to qualified institutional buyers (subject to
certain limited exceptions) in reliance on Rule 144A under the Securities Act. For a description of
restrictions on offers, sales and transfers of the Shares and Warrants and the distribution of this
document, see ‘‘Transfer Restrictions’’ in the Offering Circular incorporated in this document.
Neither the Company, Deutsche Bank London nor Deutsche Bank are making an offer to sell
the Units in any jurisdiction where the offer or sale is not permitted. By purchasing the Units, you
will be deemed to have made the acknowledgements, representations, warranties and
agreements set forth under ‘‘Transfer Restrictions’’. The Shares and Warrants are subject to
restrictions on transferability and resale and may not be transferred or resold in the United States
or to U.S. persons except as permitted under applicable U.S. federal and state securities laws and
as permitted as set forth under ‘‘Transfer Restrictions’’. Hedging transactions involving the Units,
Shares or Warrants may not be conducted unless in compliance with the Securities Act. You
should understand that you may be required to bear the financial risks of your investment for an
indefinite period of time. See ‘‘Transfer Restrictions’’.
This document is being provided on a confidential basis (1) to ‘‘qualified institutional buyers’’
(subject to certain limited exceptions) for informational use solely in connection with their
consideration of the purchase of the Units, Shares and Warrants and (2) in offshore transactions
complying with Rule 903 or Rule 904 of Regulation S under the Securities Act. Its use for any other
purpose is not authorised.
The Units, Shares and Warrants have not been recommended, approved or disapproved by
the SEC, any state securities commission in the United States or any other U.S. state or federal
regulatory authority. These authorities have not confirmed the accuracy or determined the
adequacy of this document. Any representation to the contrary is a criminal offence in the United
States.
This document has not been, and is not required to be, filed with any governmental or other
authority in the Cayman Islands. No governmental or other authority in the Cayman Islands has
approved this document or the Offering of the Units hereunder, nor passed upon or endorsed the
merits of the Offering or the accuracy or adequacy of this document. Any representation to the
contrary is unlawful.
TO ENSURE COMPLIANCE WITH U.S. INTERNAL REVENUE SERVICE CIRCULAR 230,
INVESTORS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES
CONTAINED OR REFERRED TO IN THIS ADMISSION DOCUMENT IS NOT INTENDED OR WRITTEN
TO BE USED, AND CANNOT BE USED, BY INVESTORS FOR THE PURPOSE OF AVOIDING
PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE U.S. INTERNAL REVENUE CODE;
(B) SUCH DISCUSSION IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE
TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE INVESTORS
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SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISER.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements. Such forward-looking statements
include statements regarding, among other matters, (a) the Company’s expectations about
possible business combinations, (b) the Company’s growth strategies, (c) the Company’s future
financing plans and (d) the Company’s anticipated needs for working capital. Forward-looking
statements, which involve assumptions and describe the Company’s future plans, strategies and
expectations, are generally identifiable by use of the words ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’
‘‘anticipate’’, ‘‘approximate,’’ ‘‘estimate,’’ ‘‘believe,’’ ‘‘intend,’’ ‘‘plan,’’ or ‘‘project’’ or the negative
of these words or other variations on these words or comparable terminology. This information
may involve known and unknown risks, uncertainties and other factors that may cause the
Company’s actual results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking statements.
These statements may be found in this document. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various factors, including,
without limitation, the risks outlined under the section entitled ‘‘Risk Factors’’ in the Offering
Circular incorporated in this document and matters described in this document generally. In light
of these risks and uncertainties, the events anticipated in the forward-looking statements may or
may not occur.
Forward-looking statements are based on the Company’s current expectations and
assumptions regarding our business, the economy and other future conditions. Because forwardlooking statements relate to the future, by their nature, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict. The Company’s actual results may
differ materially from those contemplated by the forward-looking statements. The Company
cautions you therefore that you should not rely on any of these forward-looking statements as
statements of historical fact or as guarantees or assurances of future performance. Important
factors that could cause actual results to differ materially from those in the forward-looking
statements include the factors discussed under the headings ‘‘Cautionary Note Regarding
Forward-Looking Statements’’ and ‘‘Risk Factors’’ in the Offering Circular incorporated in this
document and regional, national or global political, economic, business, competitive, market and
regulatory conditions.
INDUSTRY AND MARKET DATA
Industry and market data used throughout this document were obtained from the Company’s
own research, studies conducted by third parties, industry and general publications published by
third parties, including the Indian Hotel Industry Survey for 2004-2005 prepared in cooperation
with HVS International; the 2004 Lodging Industry Profile prepared by the American Hotel &
Lodging Association; the Government of India, Economic Survey 2004-2005; the RBI Annual
Report, 2004-2005; the Ministry of Tourism, Government of India; the United States Census; the
World Factbook; Forbes; The Times (London); Khanadwala Securities Limited ‘‘Hotel IndustryIndia’’; the National Post (Canada); Standard & Poor’s; and, in some cases, management estimates
based on their industry and other knowledge. None of the Company, Deutsche Bank or Deutsche
Bank London have independently verified market and industry data from third party sources, and
none of the Company, Deutsche Bank or Deutsche Bank London make any representations as to
the accuracy of such information. While the Company believes that the assumptions regarding its
markets are reasonable, they have not been verified by any independent sources, and neither
v
Deutsche Bank nor Deutsche Bank London makes any representations as to the accuracy of such
assumptions.
SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES
The Company is an exempted company incorporated in the Cayman Islands. Certain of its
Directors and officers are not residents of the United States or the United Kingdom. As a result, it
may be difficult for investors to effect service of process on those persons in the United States or
the United Kingdom or to enforce in the United States judgments obtained in U.S. or U.K. courts
against the Company or those persons based on the civil liability provisions of the U.S. or U.K.
securities laws. However, the Company will irrevocably agree (i) that it may be served with process
with respect to actions based on offers and sales of securities made in the United States and other
violations of U.S. securities laws as well as in the United Kingdom and other violations of U.K.
securities laws by having an agent appointed for that purpose and (ii) that service of process upon
such agent and written notice of said service of process to the Company mailed or delivered to the
Company at its registered office shall be deemed in every respect effective service of process upon
the Company with respect to such actions. Although there is no statutory enforcement in the
Cayman Islands of judgments obtained in the United States or the United Kingdom (or other
jurisdictions generally), the courts of the Cayman Islands will recognise and enforce a foreign
judgment of a court of competent jurisdiction, based upon the principle that a judgment of a
competent foreign court imposes upon the judgment debtor an obligation to pay the sum for
which judgment has been given, provided such judgment is final, for a liquidated sum not in
respect of taxes or other charges of a like nature or in respect of a fine or other penalty, and was not
obtained in a manner, and is not of a kind, the enforcement of which is contrary to the public policy
of the Cayman Islands.
vi
CONTENTS
Page
OFFERING STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
EXPECTED TIMETABLE OF PRINCIPAL EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
DIRECTORS, SECRETARY AND ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
LOCATION OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
PART I—INFORMATION ON THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
PART II—MANAGEMENT AND PROPOSED BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
PART III—FINANCIAL INFORMATION ON THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . .
23
PART IV—PRO FORMA STATEMENT OF NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
PART V—ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
OFFERING STATISTICS
Price of a Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US$6.00
Total number of Units subject to the Offering . . . . . . . . . . . . . . . . . . . . . . . . .
16,666,667
Number of Shares comprised in Units subject to the Offering . . . . . . . . . . . .
16,666,667
Number of Warrants comprised in Units subject to the Offering . . . . . . . . . . .
33,333,334
Percentage of Enlarged Share Capital attributable to the Offering . . . . . . . . .
78.1%
Directors’ interests in the Enlarged Share Capital immediately following
Admission(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
189,102 Shares
0 Warrants
Estimated gross proceeds of the Offering and the Private Placing . . . . . . . . .
$103,000,000
Estimated net proceeds of the Offering and the Private Placing which will be
deposited in the Trust Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$96,750,000
(1) Jason N. Ader, the Company’s Chairman of the Board of Directors and Chief Executive Officer, does not directly own
any of Hayground Cove’s 3,655,727 Existing Shares, 500,000 Units purchased by it in the Private Placing (comprised of
500,000 Shares and 1,000,000 Warrants) and 4,166,667 Units purchased by it in this Offering (comprised of 4,166,667
Shares and 8,333,334 Warrants). However, Mr. Ader is the sole member of Hayground Cove, the managing member of
the general partner for each of the funds and accounts it manages and, in this capacity, he may be deemed the
beneficial owner of the Shares held by Hayground Cove and the funds and accounts it manages for purposes of
applicable securities laws. Mr. Ader is also an investor in certain of the funds managed by Hayground Cove Associates
LP. This amount excludes 35,088 Shares expected to be transferred by Hayground Cove to Mr. Talwar upon his
appointment to the Board of Directors of the Company. Mr. Talwar’s appointment will only occur if and when he
receives final approval by the requisite Indian governmental agencies of his resignation on June 6, 2006 from his
positions as Additional Director General, Ministry of Tourism and the Chairman and Managing Director of India
Tourism Development Corporation. There can be no assurance that he will receive such approvals or that he will
become a member of our Board.
The Shares issued as part of the Units pursuant to the Offering and the Private Placing will
rank in full for all dividends or other distributions hereafter declared, made or paid on the Shares
and will otherwise rank pari passu in all respects with the Existing Shares.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Admission and commencement of dealings in Shares and Warrants . . . . .
August 1, 2006
Issuance of Share and Warrant certificates to Placees . . . . . . . . . . . . . . . .
August 4, 2006
(All references in this document to times are to London times unless otherwise stated)
For further details of the Offering, see the section of the Offering Circular attached hereto
entitled ‘‘Offering Circular Summary’’ incorporated in this document.
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DIRECTORS, SECRETARY AND ADVISERS
Directors
Jason Nathaniel Ader (Chairman of the Board of
Directors and Chief Executive Officer)
Andrew Jacques Sasson (Director and Chief Operating
Officer)
Christa Martine Short (Director)
Pawan Munjal (Director)
Anthony Juliano (Director)
Manvinder Pal Singh Puri (Director)
Rajeev Talwar (Prospective Director)
Company Secretary
Ogier Secretaries (Cayman) Limited
Queensgate House
113 South Church Street
P.O. Box 1234 G.T.
Grand Cayman
Cayman Islands
Registered Office
Ogier Fiduciary Services (Cayman) Limited
Queensgate House
113 South Church Street
P.O. Box 1234 G.T.
Grand Cayman
Cayman Islands
Nominated Adviser and Broker to
the Company
Deutsche Bank AG, London Branch
1 Great Winchester Street
London
EC2N 2DB
Placing Agent and Underwriter
Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Solicitors to the Company
UK Counsel
Travers Smith
10 Snow Hill
London EC1A 2AL
US Counsel
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Cayman Counsel
Ogier
Queensgate House
South Church Street
P.O. Box 1234 G.T.
Grand Cayman
Cayman Islands
2
Reporting Accountants and
Auditors to the Company
Solicitors to the Nominated
Adviser Broker, Placing Agent
and Underwriter
Ernst & Young LLP
1 More London Place
London SE1 2AF
UK Counsel
Bingham McCutchen LLP
41 Lothbury
London EC2R 7HF
US Counsel
Bingham McCutchen LLP
399 Park Avenue
New York, NY 10022
Cayman Counsel
Walkers
48 Gracechurch Street
London EC3V OEJ
Registrars
Capita IRG (Offshore) Limited
Victoria Chambers
Liberation Square
1/3 The Esplanade
St. Helier, Jersey
3
LOCATION OF INFORMATION
Much of the information required to be included in this document is located in the Offering
Circular, which is annexed to and incorporated in this document. The following table sets out
where such information can be located, although investors should read this entire document,
including the entire Offering Circular, in order to understand the Company and the risks attached
to an investment in Shares and Warrants.
Topic
Section of Offering Circular
Page reference
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
‘‘Offering Circular Summary’’
1
Investment Highlights . . . . . . . . . . . . . . . . . . . .
‘‘Offering Circular Summary’’
1
Summary Financial Information on the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .
‘‘Summary Financial Data’’
16
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . .
‘‘Risk Factors’’
17
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
‘‘Dilution’’
47
Proposed Business . . . . . . . . . . . . . . . . . . . . . .
‘‘Proposed Business’’
51
Board of Directors and Management . . . . . . . . .
‘‘Management’’
67
Shareholders prior to the Offering . . . . . . . . . . .
‘‘Principal Shareholders’’
74
Rights attaching to Shares and Warrants . . . . . .
‘‘Description of Securities’’
79
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
‘‘Taxation’’
85
4
DEFINITIONS
The following definitions apply throughout this document, unless the context requires
otherwise:
$ or US$
U.S. dollar
‘‘Admission’’
the admission of the Shares and Warrants in issue and
to be issued pursuant to the Offering and the Private
Placing to trading on AIM becoming effective in
accordance with Rule 6 of the AIM Rules
‘‘AIM’’
Alternative Investment Market, a market operated by
the London Stock Exchange
‘‘AIM Rules’’
the rules for the operation of AIM, and governing AIM
companies and their nominated advisers related
thereto, issued by the London Stock Exchange in
relation to AIM-traded securities from time to time
‘‘Articles’’
the Memorandum and Articles of Association of the
Company as amended from time to time
‘‘Banyan Tree Capital’’
Banyan Tree Capital Limited
‘‘Board’’ or ‘‘Directors’’
the directors of the Company whose names are set out
on page 2 of this document
‘‘business combinations’’
acquisitions, through one or more stock purchases,
asset acquisitions, or other business combinations, of
businesses or assets in the Indian hospitality, leisure,
tourism, travel and related industries
‘‘Combined Code’’
the code of best practice including the principles of
good governance published in July 2003 by the
Financial Reporting Council
‘‘Companies Act’’
the Companies Act 1985 (as amended)
‘‘Company’’
India Hospitality Corp.
‘‘CREST’’
the relevant system (as defined in the Uncertificated
Securities Regulations 2001) in respect of which
CRESTCo is the operator (as defined in the
Uncertificated Securities Regulations 2001)
‘‘CRESTCo’’
CRESTCo Limited, the operator of CREST
‘‘Deutsche Bank’’ or ‘‘Placing Agent’’
Deutsche Bank Securities Inc., in its capacity as
underwriter to the Offering
‘‘Deutsche Bank London’’ or ‘‘Nomad’’
Deutsche Bank AG London, as nominated adviser and
broker to the Company
‘‘Enlarged Share Capital’’
the issued ordinary share capital of the Company
immediately following Admission, comprising the
Existing Shares and Shares underlying the Units
issued pursuant to the Offering and the Private Placing
5
‘‘Existing Shareholders’’
the holders of Existing Shares prior to the date of this
document
‘‘Existing Shares’’
the 4,166,667 Shares in issue immediately prior to the
Offering and the Private Placing (after giving effect to
the repurchase of 2,083,333 Shares to be acquired by
the Company)
‘‘FSA’’
the Financial Services Authority of the United
Kingdom
‘‘FSMA’’
the Financial Services and Markets Act 2000
‘‘Hayground Cove’’
Hayground Cove Asset Management LLC and funds
and accounts managed by it which will hold Shares as
the context requires
‘‘IHC Mauritius’’
IHC Mauritius Corp.
‘‘Insiders’’
all officers, directors, advisers, beneficial owners and
shareholders of the Company immediately prior to the
Offering
‘‘Investment Management Trust
Agreement’’
the agreement between the Company and the Trustee
to be dated July 31, 2006 governing the operation of
the Trust Account
‘‘London Stock Exchange’’
London Stock Exchange plc
‘‘New Shareholders’’
investors in the Offering, other than Hayground Cove
with respect to the 4,166,667 Units that it will acquire in
the Offering, and including any person who acquires
Shares in the open market following Admission
‘‘Offering Circular’’
the offering circular, created for the purpose of the
Offering, which forms the annex to this document
‘‘Official List’’
the Official List of the UK Listing Authority
‘‘Offering’’ or ‘‘Placing’’
the conditional placing of the Units by Deutsche Bank
at the Offering Price pursuant to the terms of the
Placing Agreement entered into between Deutsche
Bank, Deutsche Bank London, Hayground Cove, the
Directors and the Company, further details of which
are contained in paragraph 7.1 of Part V of this
document
‘‘Offering Price’’ or ‘‘Placing Price’’
$6.00 per Unit
‘‘Placing Agent Option’’
the Placing Agent’s option to purchase, for $100, as
additional compensation, up to a total of 833,333 Units
at $7.50 per Unit, with the Warrants issued as part of
such Units being exercisable at an exercise price of
$6.25 per warrant
6
‘‘Placing Agent’s deferred commission’’
$1,500,000 of the commission payable to the Placing
Agent pursuant to the Placing Agreement which shall
be paid into the Trust Account and only released to the
Placing Agent on the consummation of the Company’s
first approved business combination
‘‘Placing Agent Warrants’’
the Warrants to subscribe for new Shares to be issued
by the Company on the exercise of the Placing Agent
Option
‘‘Private Placing’’
the purchase of 500,000 Units by Hayground Cove for
$6.00 per Unit contemporaneously with the Offering
‘‘Prospectus Rules’’
the prospectus rules of the FSA made under Part VI of
FSMA
‘‘Qualified Business Combination’’
a business combination which, either by itself or when
combined with all of the Company’s previous business
combinations, has an aggregate Transaction Value of
at least 50% of the initial amount held in the Trust
Account (excluding the amount held in the Trust
Account representing the Placing Agent’s deferred
commission)
‘‘SEC’’
U.S. Securities and Exchange Commission
‘‘Securities’’
Shares and/or Warrants
‘‘Securities Act’’
U.S. Securities Act of 1933, as amended
‘‘Shares’’
ordinary shares of the Company with par value $0.001
‘‘shareholders’’
holders of Shares from time to time
‘‘subsidiary’’
as defined in sections 736 and 736A of the Companies
Act
‘‘this document’’
the entire contents of this document, including the
Offering Circular
‘‘Transaction Value’’
in respect of any business combination, the sum of
(A) cash and fair market value of the property, if any,
used as consideration in connection with such
business combination, (B) net debt assumed and/or
incurred in connection with such business
combination, (C) working capital required to operate
the acquired business or assets, (D) the value of capital
stock used as consideration in connection with such
business combination as determined by an
unaffiliated independent investment banking firm, and
(E) transaction costs incurred to complete the
transaction
‘‘Trust Account’’
the trust account into which part of the proceeds of the
Offering and the Private Placing are deposited with the
Trustee as more fully described in the section headed
‘‘Use of Proceeds’’ at page 45 of the Offering Circular
7
‘‘Trustee’’
Continental Stock Transfer & Trust Company
‘‘UK’’ or ‘‘United Kingdom’’
the United Kingdom of Great Britain and Northern
Ireland
‘‘UK Listing Authority’’
the FSA acting in its capacity as the competent
authority for the purposes of Part VI of the FSMA and
in the exercise of its functions in respect of admission
to the Official List
‘‘Unit’’
a unit of the Company comprising of one Share and
two Warrants
‘‘U.S.’’
United States of America
‘‘Warrants’’
instruments convertible into new Shares and forming
part of the Units, which are more fully described in the
section entitled ‘‘Description of Securities’’ beginning
on page 79 of the Offering Circular
8
PART I
INFORMATION ON THE COMPANY
Proposed Business
The Company intends to use the net proceeds of the Offering and the Private Placing to
acquire, through one or more stock purchases, asset acquisitions or other business combinations,
businesses or assets in India focused on the hospitality, leisure, tourism, travel and related
industries, including but not limited to hotels, resorts, timeshares, serviced apartments and
restaurants. The Company believes that these markets in India, and particularly the hospitality
industry, are high-growth, under-served and fragmented, and that they offer profit margins,
returns on capital and cash flows that are among the most attractive in the world. The Company
intends to place emphasis on acquiring businesses in fast-growing Indian cities and top tourist
destinations in India. The Company believes that the predominantly local hospitality businesses
serving these segments have generally not pursued aggressive growth strategies, but instead
have followed an own-and-manage model as opposed to the lease or franchise model employed
by hospitality industry leaders. The Company believes opportunities exist to negotiate purchases
directly with these companies and their individual owners. In addition, the Company believes it
will be able to use its management’s expertise in operations and financing to manage the
businesses or assets which the Company may acquire, and to deliver superior risk-adjusted
returns for shareholders. For further information on the Company’s proposed business, see
‘‘Proposed Business’’ in the Offering Circular and in Part II of this document.
Current Trading and Prospects
The Company has not carried on any trading business prior to the date of this document.
Admission, Settlement and Dealings
Application has been made to the London Stock Exchange for all of the Shares and Warrants
issued and to be issued in the Offering and the Private Placing to be admitted to trading on AIM. It
is expected that Admission will become effective and that dealings will commence in the Shares
and Warrants on August 1, 2006. Although the Company will place the Shares and Warrants in the
form of the Units, this is a mechanism used only in the Offering and Private Placing and the Units
will not be traded on AIM.
Please note that due to U.S. securities laws, the Shares and Warrants will trade only in
certificated form for an indefinite period of time. The Company has obtained a derogation from the
London Stock Exchange from Rule 36 of the AIM Rules which requires that securities traded on
AIM are capable of electronic settlement. Settlement in CREST or other electronic settlement is
therefore not currently available.
Once the Shares and Warrants are eligible to be settled in a form other than certificated form,
the Company intends to permit the Shares and Warrants to be settled through CREST or another
applicable settlement system. CREST is a paperless settlement system enabling securities to be
evidenced other than by certificate and transferred other than by written instruction.
On May 26, 2006, the London Stock Exchange announced that it intends to offer an alternative
electronic settlement system for securities of companies that are listed on AIM, but which are
subject to transfer restrictions under Regulation S. This new system would enable certifications of
non-U.S. status to be made electronically prior to the settlement of each trade in a manner which is
not currently possible under the CREST system. It is expected that this system will be introduced,
after a consultation period, during the second half of 2006. If an electronic settlement system
which would enable electronic settlement of securities that are subject to Regulation S transfer
9
restrictions is introduced in accordance with those restrictions, the Company intends, subject to
applicable law, to seek admission of the Shares and Warrants (other than the Placing Agent
Warrants) to that settlement system (or any other such system which will enable electronic
settlement) and to enable electronic settlement to take place. However, there is no certainty as to
when this may occur or if it will occur at all or, if approved, that trading of Shares and Warrants
would be capable of electronic settlement under this system. See ‘‘Transfer Restrictions’’ in the
Offering Circular incorporated in this document. Since the electronic system is not expected to be
introduced prior to Admission and the Shares and Warrants are not admitted to the settlement
system on or prior to Admission, each investor in the Offering will initially receive physical
certificates representing the Shares and Warrants instead of settling in electronic form, which may
reduce the liquidity of the Shares and Warrants and could ultimately reduce their market prices.
Combined Code & Takeover Code
The Company will not be subject to the City Code on Takeovers and Mergers, nor subject to
the jurisdiction of the Panel on Takeovers and Mergers in the United Kingdom. However, as soon
as reasonably practicable following a business combination, the Directors will give due
consideration as to whether to seek the requisite approval of holders of Shares to an amendment
of the Memorandum of Association and/or Articles incorporating terms similar to those set out in
Rule 9 of the City Code.
The Company will also not be subject to the Combined Code applicable to companies listed on
the London Stock Exchange. The Company does, however, intend to comply with the Corporate
Governance Guidelines for AIM Companies as published by the Quoted Companies Alliance
(‘‘QCA’’) (as far as possible) by the time of any business combination.
Summary of QCA Corporate Governance Guidelines
The Corporate Governance Guidelines were devised by the QCA, in consultation with a
number of significant institutional small company investors, as an alternative corporate
governance code applicable to AIM companies. An alternative code was proposed because the
QCA considered the Combined Code to be inappropriate to many AIM companies.
The Corporate Governance Guidelines state that ‘‘the purpose of good corporate governance
is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for
the benefit of all shareholders over the longer term’’. The guidelines set out a code of best practice
for AIM companies. Those guidelines require, among other things, that:
• certain matters be specifically reserved for the board’s decision;
• the board should be supplied in a timely manner with information (including regular
management financial information) in a form and of a quality appropriate to enable it to
discharge its duties;
• the board should, at least annually, conduct a review of the effectiveness of the group’s
system of internal controls and should report to shareholders that they have done so;
• the roles of chairman and chief executive should not be exercised by the same individual or
there should be a clear explanation of how other board procedures provide protection
against the risks of concentration of power within the company;
• a company should have at least two independent non-executive directors and the board
should not be dominated by one person or group of people;
• all directors should be submitted for re-election at regular intervals subject to continued
satisfactory performance;
10
• the board should establish audit, remuneration and nomination committees; and
• there should be a dialogue with shareholders based on a mutual understanding of
objectives.
Effect of Cayman Domicile
The Company is an exempted company incorporated in the Cayman Islands under the
Companies Law (Revised). There are a number of differences between the corporate structure of
the Company and that of a public limited company incorporated in England under the Companies
Act.
The Directors consider that it is appropriate to retain the majority of the usual features of a
Cayman Islands exempted company. Set out below is a description of the principal relevant
differences between companies incorporated in England and the Cayman Islands.
• Pre-emptive rights: Shareholders do not have pre-emption rights under the Companies Law
(Revised) over further issues of shares of the Company.
• Takeovers: The Company will not be subject to the City Code on Takeovers and Mergers (the
‘‘Code’’) and the Companies Law (Revised) does not contain provisions which would force a
person acquiring a majority of shares in a company also to acquire the shares of the
minority.
• Disclosure of interests in shares: Under the Companies Law (Revised), shareholders are not
obliged to disclose their interests in the Company in the same way as shareholders of a
company governed by the Companies Act are required to do. However, the Company’s
Articles and the terms of issue of the Warrants provide that (to the extent permitted by
applicable law) (i) if the aggregate amount of Shares or Warrants in which a person is
interested (A) exceeds three per cent by nominal value of the entire issued Shares or
Warrants of the Company respectively, or (B) changes from an aggregate amount which
exceeded three per cent by nominal value of the then issued Shares or Warrants of the
Company so as to increase or decrease through any single percentage then (in either case)
such person shall notify the Company (within the period and including the particulars
required by the Company), or (ii) on written request by the Company, a registered holder of
Shares or Warrants of the Company is obliged to notify the Company (within the period and
including the particulars required by the Company) of any person interested in such Shares
or Warrants; unless otherwise directed by the Board, for so long as a person is in default of
his obligations under (i) or (ii) he shall not be entitled to vote at any meeting of the Company
nor receive dividends in respect of his Shares, and shall not be entitled to exercise his
Warrants; and for the purposes of (i) and (ii) above, ‘‘interest’’ (and aggregate terms) shall be
construed in accordance with provisions which incorporate language substantially
equivalent to section 208 of the Companies Act.
• Issue of preference shares: The Directors are empowered, without shareholder approval, to
issue preference shares with dividend, liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of Shares. In addition,
the preference shares could be utilized as a method of discouraging, delaying or preventing
a change of control.
11
PART II
MANAGEMENT
Directors and Executive Officers
The Company’s current Directors and executive officers are as follows:
Name
Age
Position
Jason N. Ader . . . . . . . . . . . . . . . . . . . . . .
38
Chief Executive Officer and Chairman of
the Board of Directors
Andrew Sasson . . . . . . . . . . . . . . . . . . . . .
36
Chief Operating Officer and Director
Raj Nandiwada . . . . . . . . . . . . . . . . . . . . .
41
Vice President, New Business Development
Christa Short . . . . . . . . . . . . . . . . . . . . . . .
33
Director
Pawan Munjal . . . . . . . . . . . . . . . . . . . . . .
51
Director
Anthony Juliano . . . . . . . . . . . . . . . . . . . .
39
Director
Manvinder Puri . . . . . . . . . . . . . . . . . . . . .
51
Director
Rajeev Talwar(1) . . . . . . . . . . . . . . . . . . . . .
51
Prospective Director
(1) Mr. Talwar is not currently a member of the Board of Directors of the Company. His appointment will only occur if and
when he receives final approval by the requisite Indian governmental agencies of his resignation on June 6, 2006 from
his positions as Additional Director General, Ministry of Tourism and the Chairman and Managing Director of India
Tourism Development Corporation. There can be no assurance that he will receive such approvals or that he will
become a member of our Board.
Jason N. Ader is the Company’s Chief Executive Officer and Chairman of the Board of
Directors. Mr. Ader founded and serves as the President and Chief Executive Officer of Hayground
Cove Asset Management LLC, a New York-based investment management firm with
approximately $1.46 billion of assets across funds and accounts under management as of May 31,
2006. Mr. Ader has a strong asset management record and, prior to founding Hayground Cove,
served as a Senior Managing Director at Bear Stearns & Co., Inc. from 1995 to 2003, where he
performed equity and high yield research for more than 50 companies in the gaming, lodging and
leisure industries. From 1993 to 1995, Mr. Ader served as a Senior Analyst at Smith Barney
covering the gaming industry. From 1990 to 1993, Mr. Ader served as a buyside analyst at Baron
Capital, where he covered the casino industry. Mr. Ader has a B.S. degree in Economics from New
York University and a M.B.A. in Finance from New York University, Stern School of Business.
Andrew Sasson is the Company’s Chief Operating Officer and a member of the Company’s
Board of Directors. In February 2006, Mr. Sasson acquired the land to develop Spa Lofts, a modern
loft condominium project in Las Vegas. Mr. Sasson was a partner in Panorama Towers, a high-rise
condominium in Las Vegas, from January 2004 to November 2005, pioneering the Las Vegas
high-rise market. Mr. Sasson is currently developing a $500 million non-gaming boutique hotel as
part of MGM Mirage’s $7 billion ‘‘Project City Center.’’ The hotel will serve as the gateway into the
66 acre development and is being planned by a world renowned design team. Mr. Sasson also
owns and operates the Light Group, a $100 million Las Vegas hospitality company known for its
innovative and profitable venues including FIX Restaurant and Bar at the Bellagio Hotel and Resort
and Stack Restaurant at the Mirage Resort and Casino, among others. Mr. Sasson has been a
prominent participant in the hospitality industry for the past 16 years.
12
Raj Nandiwada is the Company’s Vice President, New Business Development. Mr. Nandiwada
has served as a consultant to Hayground Cove since March 2006. Mr. Nandiwada founded and
served as the Chief Executive Officer of Global Infozone Inc. from June 2004 to March 2006. From
March 1998 to June 2004, Mr. Nandiwada served as Quantitative Analyst/Portfolio Engineer at
Jacobs Levy Equity Management, where he developed quantitative models, performed equity
research and traded equities. Mr. Nandiwada has a B.S. degree in Engineering from the Regional
Engineering College in Nagpur, India, a Master’s Degree in Systems Science from Louisiana State
University and a M.B.A. in Finance from New York University, Stern School of Business.
Christa Short is a member of the Company’s Board of Directors. Ms. Short has served as a
Managing Director-Research Analyst at Hayground Cove since September 2003. From
August 2001 to August 2003, Ms. Short was an equity research analyst covering gaming, lodging
and leisure industries at Bear Stearns & Co., Inc., and she served as Vice President-Equity
Research from January 2003 to August 2003. Ms. Short has a B.B.A. degree in Finance from the
University of Michigan and a M.B.A. in Finance and Strategy from Kellogg Graduate School of
Management at Northwestern University.
Pawan Munjal is a member of the Company’s Board of Directors. Mr. Munjal is the Managing
Director and Chief Executive Officer of Hero Honda Motors Limited, a joint venture between Hero
Cycles Ltd. and Honda Motor Co. of Japan, positions which he has held since April 2002.
Mr. Munjal has also served as a director of Hero Honda Motors Limited. Over the years, he has
played a significant role in its development and growth. Under his leadership, Hero Honda Motors
Ltd. has emerged as the world’s No. 1 two-wheeler company from 2000 to 2005. As the chief
executive of one of the principal Hero Group Companies, Mr. Munjal is a constituent of the ‘‘Core
Team’’, which looks at growth and strategic planning for the entire group of associated companies.
Mr. Munjal is currently a member of the Executive Council of the Society for Indian Automobile
Manufacturers (SIAM) and the Chairman of the Society for Indian Automobile Manufacturers
Committee on two and three Wheelers. A known figure in industry forums, including the World
Economic Forum, Mr. Munjal has been the chairman of several committees of the Confederation
of Indian Industry, or CII, including Technology and Innovation from 2004 to 2005, Environment
from 2003 to 2004, and Sports from 2000 to 2002. He was also chairman of the Northern Region of
the CII from 1996 to 1997. Mr. Munjal has a B.E. degree in Mechanical Engineering from the
University of Kurukshetra.
Anthony Juliano is a member of the Company’s Board of Directors. Mr. Juliano has served as
Executive Director, Dubai Investment Group, Global Real Estate and Hospitality since March 2006.
At Dubai Investment Group, he oversees a $2 billion U.S. real estate portfolio, including a
$700 million hospitality portfolio. From July 1999 to March 2006, Mr. Juliano held various senior
positions with GE Real Estate, including positions with the private equity investment platform and
large loan/mezzanine financing groups. Mr. Juliano was a real estate attorney with Thacher
Proffitt & Wood from 1993 to 1999 where his practice concentrated on real estate finance and
capital markets. He has a B.A. degree in English from the State University of New York at Albany
and a J.D. degree from New York Law School.
Manvinder Puri is a member of the Company’s Board of Directors. Mr. Puri has served as Vice
President of the Americas division of GHM Hotels since January 2004. He also served as General
Manager of The Setai, South Beach, a GHM Hotel, in Miami, Florida from January 2004 to
January 2006. From January 2003 to December 2003, Mr. Puri was the Group General Manager of
the Hong Kong and Shanghai Hotels, Limited, and he was the Senior Vice President of Operations
at Raffles International, a Singapore-based hotel chain, from March 2001 to December 2002. For
over 30 years, Mr. Puri has been associated with the finest hotels around the world, including the
Peninsula Hotels in Hong Kong, Raffles Hotel in Singapore, The Fullerton Hotel in Singapore,
Rosewood Hotels and Resorts, British Airways Hotels, The Ritz Carlton in Hawaii, Halekulani in
13
Honolulu, the Fairmont Hotel in Chicago, and La Mansion in San Antonio. Mr. Puri studied Food &
Beverage Management and Financial Management at Cornell University, as well as Business
Management at Punjab University in his native India.
Rajeev Talwar has been offered a position on the Company’s Board of Directors. He has
resigned from his position in government on June 6, 2006; however his resignation is pending
approval. Mr. Talwar’s appointment will only occur if and when he receives final approval by the
requisite Indian governmental agencies of his resignation. There can be no assurance that he will
receive such approvals or that he will become a member of our Board. Mr. Talwar was Additional
Director General (Ministry of Tourism) Government of India (since February 2005), CEO National
Council for Hotel Management and Catering Technology (since February 2005), and Chairman and
Managing Director India Tourism Development Corporation (since March 2005), which manages
government owned hotels, travel agencies and duty free shops. Prior to joining the Ministry of
Tourism, Mr. Talwar was assigned to the Delhi Government where he managed many portfolios
and was Managing Director and Chief Executive Officer of Delhi Tourism from August 2001 to
December 2003 where he was responsible for the implementation of the entire tourism policy of
Delhi, Secretary, Information and Public Relations from June 1999 to January 2005, and Chairman
and Managing Director Delhi Transportation Corporation from July to December 2004. Mr. Talwar
has been in the Indian Administrative Service (IAS) since his induction in 1978. During his 28 year
career he has had a cross sectoral experience at a senior management level, and policy making
level, as well as widespread field experience. He has been involved on an all-India basis in a variety
of sectors of the economy, including: civil aviation, tourism, labour, shipping, roads, inland
waterways, coal and food processing. As a result of his position, Mr. Talwar has had exposure to
managements of a large number of public and private sector enterprises along with statutory
bodies in the transport, tourism and infrastructure sectors. Mr. Talwar holds a B.A. (Honors in
History) and a M.A. (History) from St. Stephen’s College, Delhi.
Investment Committee
The Company will form an investment committee to advise and consult with the Company’s
management team with respect to the Company’s investment policies, financing and leveraging
strategies and investment guidelines. The initial members of the investment committee will be
Jason N. Ader, the Company’s Chief Executive Officer and Chairman of the Board of Directors, who
will serve as the initial chairman of the committee, Christa Short, a Director, and Samir Jain.
Mr. Jain is currently a Vice President at Hayground Cove. Prior to joining Hayground Cove, Mr. Jain
was Vice President, Research Analyst covering gaming, lodging and leisure industries at
Jefferies & Company. Mr. Jain does not serve as an officer or Director of the Company. The
Company believes its investment committee will provide the Company with a competitive
advantage in analyzing and valuing acquisition candidates through their experience, financial
industry contacts and investment ideas.
Compensation for Officers and Directors
No executive officer or Director has received any cash compensation for services rendered to
the Company in such capacity. Messrs. Sasson, Munjal, Juliano and Puri have each purchased
35,088 Shares, Mr. Nandiwada has purchased 106,250 Shares and Ms. Short has purchased 48,750
Shares, all at a purchase price of $0.001 per share. If Mr. Talwar joins the Board, he will also
purchase 35,088 Shares at a purchase price of $0.001 per share. These shares are part of the
4,166,667 Existing Shares held by the Existing Shareholders immediately prior to this Offering and
will not be transferable until one year after the later of (A) the date upon which a Qualified
Business Combination is consummated or (B) if there is a business combination, but not a
Qualified Business Combination, the disbursement of the remaining funds in the Trust Account.
14
Upon the consummation of a business combination, the Company may enter into
employment agreements with executive officers of the acquired business, which agreements
would detail compensation and other incentives for the Company’s executive officers, including
stock options and restricted stock under the Company’s Employee Incentive Plan. The terms of
such agreements will be disclosed to ordinary shareholders when the Company proposes a
relevant business combination for approval. However, such individuals and entities will be
reimbursed for any out-of-pocket expenses incurred in connection with activities on the
Company’s behalf such as identifying potential acquisition candidates and performing due
diligence on suitable business combinations.
There is no limit on the amount of these out-of-pocket expenses and there will be no review of
the reasonableness of the expenses by anyone other than the Company’s Board of Directors,
which includes persons who may seek reimbursement, or a court of competent jurisdiction if such
reimbursement is challenged. Because of the foregoing, the Company will generally not have the
benefit of independent directors examining the propriety of expenses incurred on the Company’s
behalf and subject to reimbursement.
In addition, Mr. Ader and Ms. Short are employees of, and Mr. Nandiwada is a consultant to,
Hayground Cove, which will receive consideration under a services agreement with the Company.
Please see ‘‘Certain Relationships and Related Party Transactions’’ in the Offering Circular
incorporated in this document.
Conflicts of Interest
Potential investors should be aware of the following potential conflicts of interest:
• None of the Company’s officers and Directors or management team are required to commit
their full time to the Company’s affairs and, accordingly, they may have conflicts of interest
in allocating their time among various business activities.
• In the course of their other business activities, the Company’s officers and Directors or
management team may become aware of investment and business opportunities which
may be appropriate for presentation to the Company as well as the other entities with which
they are affiliated. The Company’s management may have conflicts of interest in
determining to which entity a particular business opportunity should be presented.
However, the Company will serve as Hayground Cove’s only vehicle for direct, private
investments in the Indian hospitality sector.
• The Company’s officers and Directors and management team may in the future become
affiliated with entities, including other blank check companies, engaged in business
activities similar to those intended to be conducted by the Company.
• Since Hayground Cove and the Company’s officers and Directors own some of the
Company’s Shares that will be transferable only if a business combination is successfully
completed and may own Warrants which will expire worthless if a business combination is
not consummated, certain members of the Company’s Board of Directors, who are also
members of the board of directors of Hayground Cove, may have a conflict of interest in
determining whether a particular acquisition candidate is appropriate to consummate a
business combination. Additionally, certain members of the Company’s executive
management may enter into consulting or employment agreements with the Company as
part of a business combination, pursuant to which they may be entitled to compensation for
their services. The personal and financial interests of the Company’s Directors and officers
may influence their motivation in identifying and selecting an acquisition candidate, timely
completing a business combination and securing the release of their stock.
15
• Other than with respect to any business combination, the Company has not adopted a
policy that expressly prohibits the Company’s Directors, officers, security holders or
affiliates from having a direct or indirect pecuniary interest in any investment to be acquired
or disposed of by the Company or in any transaction to which the Company is a party or
have an interest. Nor does the Company have a policy that expressly prohibits any such
persons from engaging for their own account in business activities of the types conducted
by the Company. Accordingly, such parties may have an interest in certain transactions in
which the Company is involved, and may also compete with the Company.
• Anthony Juliano, a member of the Company’s Board of Directors, has served as the
Executive Director, Dubai Investment Group, Global Real Estate and Hospitality since
April 2006. Dubai Investment Group may seek investments, acquisitions and other ventures
in India, including businesses in the industries in which the Company is seeking acquisition
candidates. Such investments, acquisitions and ventures may be in competition with the
Company or in conjunction with the Company.
Under Cayman Islands law, directors owe duties to companies of which they are a director,
including:
• performing their duties as a director with due skill, care and diligence; and
• owing fiduciary duties to the company of which they are a director to:
• act bona fide in what they consider to be the best interests of the company;
• exercise the powers that are vested in them for the purpose for which they were
conferred and not for a collateral purpose;
• act in such a way as not to fetter the future exercise of their powers, for example by
agreeing to exercise his or her power in accordance with the instructions of a third
party; and
• avoiding conflicts of interest.
Conflicts of interest are able to be waived by the Company as the beneficiary of the duty.
However, in order to minimize potential conflicts of interest which may arise from multiple
corporate affiliations, each of the Company’s officers and Directors has agreed, until the earliest of
a Qualified Business Combination, the Company’s liquidation or such time as he or she ceases to
be an officer or Director, to present to the Company for the Company’s consideration, prior to
presentation to any other entity, any business opportunity which may reasonably be required to
be presented to the Company under Cayman Islands law, subject to certain pre-existing fiduciary
obligations he or she might have (other than in respect of fiduciary obligations to entities owned
solely by the relevant officer or Director). As each of the Company’s officers and Directors is
currently involved in other business enterprises, each has certain pre-existing fiduciary
obligations to other entities that may cause him or her to have conflicts of interest in determining
to which entity he or she presents a specific business opportunity. To the extent that one of the
Company’s officers or Directors identifies a business opportunity that may be suitable for an entity
that he or she has a pre-existing fiduciary obligation to, he or she may honor his pre-existing
fiduciary obligation to this entity (other than in respect of fiduciary obligations to entities owned
solely by the relevant officer or Director). Accordingly, consistent with the Company’s code of
ethics, he or she may not present opportunities to the Company that otherwise may be attractive
to such entity unless such entity has declined to accept such opportunities. However, the Company
will serve as Hayground Cove’s only vehicle for direct, private investments in the Indian hospitality
sector.
16
In connection with the vote required for either consummating any business combination or
extending the period within which the Company is allowed to complete a Qualified Business
Combination, Hayground Cove will vote the 4,166,667 Shares being purchased by it in this
Offering and any Shares that may be purchased by it in the after market in favor of any such
proposed business combination or extension for completing a Qualified Business Combination. In
connection with the vote required for either consummating any business combination or
extending the period within which the Company is allowed to complete a Qualified Business
Combination, the Company’s Existing Shareholders, including certain of the Company’s officers
and Directors, will vote the Shares purchased by them before this Offering and being purchased in
the Private Placing in accordance with the votes constituting the majority of the votes cast by the
New Shareholders and Hayground Cove with respect to the 4,166,667 Shares being purchased by
it in this Offering. In addition, the Company’s Existing Shareholders have agreed to waive their
right to participate in any liquidation distribution upon our failure to consummate any business
combination (including a Qualified Business Combination), but only with respect to those Shares
purchased by them prior to this Offering and being purchased by Hayground Cove in the Private
Placing.
Limitation of Director and Officer Liability
Pursuant to the Company’s memorandum and articles of association, to the extent permitted
by law, every Director and officer and the personal representatives of the same shall be
indemnified by the Company against all actions, proceedings, costs, charges, expenses, losses,
damages or liabilities incurred or sustained by him or her in or about the conduct of the
Company’s business or affairs or in the execution or discharge of his or her duties, powers,
authorities or discretions and, unless arising as a result of his or her own dishonesty, fraud, gross
negligence or willful default, including without prejudice to the generality of the foregoing, any
costs, expenses, losses or liabilities incurred by him in defending (whether successfully or
otherwise) any civil proceedings or (where successfully defended) any criminal proceedings
concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.
No such Director or officer will be liable for: (a) the acts, receipts, neglects, defaults or omissions of
any other such Director or officer agent; (b) any loss on account of defect of title to any of our
property; (c) account of the insufficiency of any security in or upon which any of our money shall
be invested; (d) any loss incurred through any bank, broker or other similar person; (e) any loss
occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or
oversight on his or her part; or (f) any loss, damage or misfortune whatsoever which may happen
in or arise from the execution or discharge of the duties, powers authorities, or discretions of his or
her office or in relation thereto, unless caused as a result of his or her own dishonesty, fraud, gross
negligence or willful default.
Indemnification of Directors and Officers
To the extent permitted by law, the Company’s memorandum and articles of association
provide certain rights of indemnification in favor of the Company’s Directors and officers against
legal liability and expenses if such persons did not, in connection with the matter giving rise to a
particular claim, engage in gross negligence or willful default.
The Company has entered into separate indemnification agreements with each of its Directors
and officers that will, in some cases, be broader than the specific indemnification provisions
contained in the Company’s memorandum and articles of association or Cayman Islands law. The
indemnification agreements require the Company, among other things, to indemnify the officers
and Directors against certain liabilities that may arise by reason of their status or service as
Directors or officers. The Company will also be required to advance certain amounts to or on
17
behalf of its officers and Directors in the event of claims or actions against them, except that the
Company shall not advance any amount to such officers or Directors in respect of any criminal
matter unless and until such matter is finally resolved without a conviction being recorded against
or fine being imposed on such officers or Directors. However, the Company’s officers and
Directors waive their rights to advancing any legal claims against the funds held in the Trust
Account (other than rights attaching to Shares purchased in the Offering or in the after market).
The Company believes that these indemnification arrangements are necessary to attract and
retain qualified individuals to serve as Directors and officers.
In addition, the Company has obtained Directors’ and officers’ liability insurance to provide
our Directors and officers with insurance coverage for losses arising from claims based on
breaches of duty, negligence, errors and other wrongful acts.
Equity Incentive Plan
The Company expects to create an equity incentive plan pursuant to which options and shares
may be awarded to its employees, Directors, consultants and advisers upon approval by its Board
of Directors. The Company may not award options or shares under the equity incentive plan prior
to the consummation of a Qualified Business Combination or, in the event a business combination
or business combinations occur, but do not meet the threshold of a Qualified Business
Combination, the later of one year from the Admission Date and the distribution of the amounts
held in the Trust Account.
Retirement of Directors, Shareholders Qualifications, Borrowing Powers
The Company’s memorandum and articles of association do not stipulate a retirement age for
its Directors but do require its Directors to retire and offer themselves for re-election at least once
every three years at the Company’s annual general meeting in that year. Each year, one third of the
Company’s Board of Directors will so retire and offer themselves for re-election by ordinary
shareholders at the Company’s annual general meeting for that year. There is no shareholding
qualification for the Directors. The Directors are empowered to exercise all of the Company’s
borrowing powers.
Management of IHC Mauritius
The Company is a holding company. IHC Mauritius, the Company’s wholly owned operating
subsidiary incorporated in Mauritius, will initially have the same officers and board of directors as
the Company, except that the board of directors of IHC Mauritius will have an additional two
resident directors as required under Mauritius law. The meetings of the board of directors of IHC
Mauritius shall be chaired in Mauritius. Investment decisions shall be subject to the common
ratification by the boards of directors of each of the Company and IHC Mauritius. IHC Mauritius
shall be required to open a bank account with a Mauritian bank through which all banking
transactions shall be channelled. As per the requirements of the licensing conditions for a
Category 1 Global Business, the administration activities of IHC Mauritius shall be carried out by a
management company incorporated in Mauritius. The management company shall also be vested
with the duty of carrying out the corporate secretarial activities as set out in the Mauritius
Companies Act 2001, including all relevant laws and regulations applicable to companies holding
a Category 1 Global Business License in Mauritius.
18
PROPOSED BUSINESS
General
The Company is a blank check company incorporated under the laws of the Cayman Islands as
an exempted company on May 12, 2006 to serve as a vehicle for acquisitions, through one or more
stock purchases, asset acquisitions or other business combinations, of businesses or assets in
India focused on the hospitality, leisure, tourism, travel and related industries, including but not
limited to hotels, resorts, timeshares, serviced apartments and restaurants. To date, the
Company’s efforts have been limited to organizational and financing activities. The Company
currently has no business operations and no financial history.
While the Company is in the process of preliminarily identifying and reviewing prospective
acquisition candidates, the Company has not engaged in substantive negotiations in connection
with any potential acquisition nor does it have any agreements to acquire any business or asset. In
evaluating a prospective acquisition candidate, the Company’s management team will conduct
such business, legal and accounting due diligence on the acquisition candidate as the Company
believes appropriate given the circumstances.
The Company has been established in the Cayman Islands as an exempted company. It is not
subject to any income, withholding or capital gains taxes in the Cayman Islands. The Company
expects to conduct business, including the making of acquisitions, through IHC Mauritius, a wholly
owned operating subsidiary incorporated in Mauritius as an offshore corporation. IHC Mauritius is
expected to receive several tax benefits, including a tax credit in Mauritius for tax paid in other
countries, a reduction of the corporate tax by a deemed foreign tax credit of 80%, no withholding
tax on outward payments from Mauritius, no capital gains tax or estate duty and no registration
duty, levy or VAT on global business transactions. On the basis of existing tax legislation, the
Company believes the formation of the Company as a Cayman Islands exempted company and
the use of a Mauritian subsidiary to consummate acquisitions will provide investment flexibility
and enhance shareholder returns.
Our Proposed Business
The Company intends to use the net proceeds of the Offering and the Private Placing to
acquire an Indian business, businesses or assets focused on the hospitality, leisure, tourism, travel
and related industries, including but not limited to hotels, resorts, timeshares, serviced
apartments and restaurants. While the Company’s potential acquisitions could come from any of
these sectors, the Company intends to focus primarily on the hospitality industry. The Company
believes that these markets in India, and particularly the hospitality industry, are high-growth,
underserved and fragmented, and that they offer profit margins, returns on capital and cash flows
that are among the most attractive in the world. The Company intends to place emphasis on
acquiring businesses in fast-growing Indian cities and top tourist destinations in India. The
Company believes that the predominantly local hospitality businesses serving these segments
have generally not pursued aggressive growth strategies, but instead have followed an
own-and-manage model as opposed to the lease or franchise model employed by hospitality
industry leaders. The Company believes opportunities exist to negotiate purchases directly with
these companies and their individual owners. In addition, the Company believes that it will be able
to use its management’s expertise in operations and financing to manage the businesses or assets
which the Company may acquire, and to deliver superior risk-adjusted returns for shareholders.
Upon the consummation of a business combination, the Company expects to hire new
individuals resident in India to join its management team. In addition, after one or more business
combinations have been completed, members of the Company’s existing management team may
19
decide to no longer serve as Directors or officers of the Company, in which case the Company
intends to retain such individuals in an advisory capacity.
Strategy
India is the largest democracy and is one of the fastest growing economies in the world.
India’s Gross Domestic Product, or GDP, has been growing at 7% to 8%, adjusted for inflation, over
the last two years and this growth level is expected to continue into the foreseeable future. The
Indian financial markets have improved as economic and corporate governance reforms have
become the focal point of governmental and regulatory authorities. The Company believes India is
positioned to become one of the world’s most influential economic centers and is gaining a
significant role in the world economy.
There has been increasing foreign institutional investment interest in India over the last
several years. However, to date, there has been a relatively small amount of foreign direct
investment, or FDI, in India’s trade, hotels and restaurants industries. For example, according to
Reserve Bank of India, or RBI, these industries only received approximately US$22.0 million of FDI
in the hospitality sector in India in 2004-05, which represented only approximately 1% of the total
inflows to India despite the fact that the trade, hotels and restaurants industries are some of the
fastest growing in the Indian economy. Furthermore, the Indian government is now allowing 100%
FDI in the hotels, tourism and restaurants sectors without the bureaucratic approvals that had
been required in the past. The Company believes that this initiative, coupled with a series of recent
reforms relating to the regulation of corporations, will allow the consummation of business
combinations more quickly with less bureaucratic delay. As a result, the Company believes that
macro economic trends, coupled with favorable regulatory developments, will create attractive
opportunities in the Company’s targeted sectors, which it hopes to capture for the benefit of
shareholders.
The Company believes that the Indian hospitality industry is largely driven by the domestic
Indian market, particularly domestic tourism. Domestic tourism grew at approximately a 13.7%
compounded annual growth rate, or CAGR, from 2000 to 2004 according to the Ministry of
Tourism, Government of India. From 2004–2005, the number of domestic hotel guests (including
business and leisure guests) comprised 71.7% of the total hotel guests in India according to the
Indian Hotel Industry Survey for 2004-2005 prepared in cooperation with HVS International. The
Company believes that the strength of the domestic market will continue to be a key driver of the
Indian tourism industry in the future. The Indian middle class, which was estimated to be
approximately 300 million people in 2005, is expected to grow to 500 million people by 2010. The
increasing purchasing power of the middle class has largely been a direct result of India’s recent
growth. The Company believes that low inflation, an improving credit market and an increasing
percentage of India’s population achieving higher levels of education and technical skills have also
fuelled India’s economic growth. In addition, the Company believes that the boom in information
technology services and outsourcing-related industries in India has led to increasing disposable
per capita income. Although the Company anticipates that India is positioned to experience
growth in foreign tourism as well, the Company believes that the Indian hospitality sector can
sustain its domestic strength even if foreign tourism does not grow as strongly as they anticipate.
Moreover, strong growth in India’s domestic airline passenger market is expected on account of
the increasing purchasing power of the middle class and increasing supply from low cost carriers.
Four budget airlines entered the Indian market in 2005 and at least four more are expected to begin
operations in 2006. Accordingly, the Company intends to approach acquisition candidates that
serve domestic travellers and the demands of the growing Indian middle class.
Currently, the Company believes there is a significant demand/supply imbalance in the
hospitality, leisure, tourism, travel and related industries in India. For example, according to the
20
Indian Hotel Industry Survey for 2004-2005 prepared in cooperation with HVS International, India
had a total of approximately 105,070 available hotel rooms relative to its population of
approximately 1.1 billion. In contrast, the American Hotel & Lodging Association estimated that
the United States had 4,411,908 guest rooms available in 2004, relative to its population of
approximately 299 million. To combat the shortage of hotel rooms and in anticipation of the
Commonwealth Games being held in India in 2010, the Government of India has recently directed
several initiatives that the Company believes will further the growth of the Indian hospitality
industry. These initiatives include, among others:
• increased budget allocation towards infrastructure and tourism;
• the allowance of duty free imports for certain hotels and stand-alone restaurants;
• the removal of expenditure tax on rooms with daily tariffs above Rs. 3000 (approximately
US $67);
• the removal of air travel tax on both domestic and foreign travel;
• the improvement of air, rail and road transportation;
• the upgrade of metropolitan airports;
• infrastructure development with expanded and improved highways;
• a reduction in customs duty and abolition of countervailing duty for hotel projects;
• promotion of Special Economic Zones;
• development of 15 tourist destinations and circuits following an integrated area
development approach; and
• extensive development of new convention centers.
Furthermore, the Company believes that the non-luxury/non-deluxe hospitality segment in
India provides a strong opportunity to exploit the sector and create superior shareholder returns.
The Company believes that the non-luxury segment encompasses a significant percentage of total
revenue of the entire hospitality sector and is fragmented compared to hotel sectors in the United
States and Western Europe. The Company expects that this fragmentation will help provide the
Company with acquisition candidates and negotiation power. The needs of the Indian middle
class, which the Company believes is the fastest growing segment of the total Indian population,
are expected to be met by this segment of the industry, which the Company believes is largely
underserved by the major industry players. As a result, the Company believes that the Indian
hospitality industry will provide the Company with opportunities to find undervalued businesses
and assets and create superior shareholder returns.
Experienced Management Team and Strong Local Network
The Company’s executive officers and Directors, and Hayground Cove’s ‘‘on the ground’’
network in India, have extensive experience in the hospitality, leisure, tourism, travel and related
industries as executive officers, principals or Directors in various enterprises throughout the
world. Jason N. Ader, the Company’s Chief Executive Officer and the Chairman of the Board of
Directors, is the Chief Executive Officer of Hayground Cove Asset Management LLC, a New
York-based investment management firm with approximately $1.46 billion of assets across funds
and managed accounts under management as of May 31, 2006. The funds of Hayground Cove in
operation since January 1, 2004 had returns of approximately 2.54x the returns on the S&P Hedge
Fund Index from January 1, 2004 through May 31, 2006. Mr. Ader has a strong asset management
record and, prior to founding Hayground Cove, was a Senior Managing Director at Bear Stearns &
21
Co., Inc., where he performed equity and high yield research for more than 50 companies in the
gaming, lodging and leisure industries. Mr. Ader was rated as one of the top ranked analysts by
Institutional Investor Magazine for nine consecutive years from 1994 to 2002. Members of the
Company’s management team have, on average, approximately 13 years of experience in the
hospitality, leisure, tourism, travel and related industries. The Company’s management team has a
successful track record of completing large-scale acquisitions and minority investments in
businesses competing in the hospitality, leisure, tourism, travel and related industries. The
Company’s management team’s experience and familiarity with the hospitality, leisure, tourism,
travel and related industries is an important asset that will assist us in implementing the
Company’s business strategies and pursuing its growth opportunities. The Company will serve as
Hayground Cove’s only vehicle for direct, private investments in the Indian hospitality sector.
The Company has partnered with Banyan Tree Capital to serve as its exclusive financial
adviser in India in connection with the Company’s future acquisitions using the proceeds from this
Offering. Banyan Tree Capital is a global financial services advisory company. Banyan Tree Capital
will provide advisory services, including (i) discussing acquisition opportunities with each of the
Company and IHC Mauritius, the Company’s Board of Directors, the Board of Directors of IHC
Mauritius and each of their management teams, (ii) assisting in the identification, solicitation and
evaluation of prospective acquisition opportunities, and (iii) assisting in structuring and
negotiating acquisition opportunities. As part of the consideration for Banyan Tree Capital’s
advisory services, the Company will pay Banyan Tree Capital a retainer fee of $20,000 per month.
Upon meeting certain requisite conditions, 213,334 Shares will be transferred to Banyan Tree
Capital from out of the 3,655,727 Existing Shares held by Hayground Cove immediately prior to
this Offering. For more information, see ‘‘Certain Relationships and Related Party Transactions’’ in
the Offering Circular incorporated in this document.
The Company’s management team possesses broad industry knowledge and core
competencies that the Company believes will enable it to identify attractive potential targets. In
addition, Banyan Tree Capital and Hayground Cove’s network of professionals in India has a wide
range of contacts that the Company expects will help it to identify prospective acquisition
candidates.
Members of the Company’s management team are employees of Hayground Cove. See
‘‘Certain Relationships and Related Party Transactions’’ in the Offering Circular incorporated in this
document.
22
PART III
FINANCIAL INFORMATION ON THE COMPANY
Ernst & Young LLP
1 More London Place
London SE1 2AF
The Directors
India Hospitality Corp.
Ocier Fiduciary Services (Cayman) Limited
Queensgate House
113 South Church Street
P.O. Box 1234 G.T.
Grand Cayman, Cayman Islands
Phone: 020 7951 2000
Fax:
020 7951 1345
CDE & LDE Box 241
www.ey.com/uk
26JUL200614290831
26 July, 2006
Dear Sirs,
Accountants’ Report—Short Form
India Hospitality Corp.
We report on the financial information set out in paragraphs 1 to 5 and the notes to the
financial information below. This financial information has been prepared for inclusion in the AIM
admission document dated 26 July, 2006 of India Hospitality Corp. on the basis of the accounting
policies set out in note 1 to the financial information. This report is required by paragraph (a) of
Schedule Two of the AIM Rules and is given for the purpose of complying with that paragraph and
for no other purpose.
Responsibilities
The Directors of India Hospitality Corp. are responsible for preparing the financial information
on the basis of preparation set out in note 1 to the financial information and in accordance with
International Financial Reporting Standards.
It is our responsibility to form an opinion as to whether the financial information gives a true
and fair view, for the purposes of the AIM admission document, and to report our opinion to you.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an
assessment of significant estimates and judgments made by those responsible for the preparation
of the financial information and whether the accounting policies are appropriate to the entity’s
circumstances, consistently applied and adequately disclosed.
The UK firm Ernst & Young LLP is a limited liability partnership
registered in England and Wales with registered number
OC300001 and is a member practice of Ernst & Young Global.
A list of members’ names is available for inspection at the above
address which is the firm’s principal place of business and its
registered office.
23
We planned and performed our work so as to obtain all the information and explanations
which we considered necessary in order to provide us with sufficient evidence to give reasonable
assurance that the financial information is free from material misstatement whether caused by
fraud or other irregularity or error.
Our work has not been carried out in accordance with auditing standards generally accepted
in the United States of America and accordingly should not be relied upon as if it had been carried
out in accordance with those standards.
Opinion
In our opinion, the financial information gives, for the purposes of the AIM admission
document dated 26 July, 2006, a true and fair view of the state of affairs of India Hospitality Corp.
as at the date stated and its income statement, cash flows and changes in equity for the period
then ended in accordance with the basis of preparation set out in note 1 and in accordance with
International Financial Reporting Standards as described in note 1.
Declaration
We are responsible for this report as part of the AIM admission document and declare that we
have taken all reasonable care to ensure that the information contained in this report is, to the best
of our knowledge, in accordance with the facts and contains no omission likely to affect its import.
This declaration is included in the AIM admission document in compliance with Schedule Two of
the AIM Rules.
Yours faithfully,
Ernst & Young LLP
24
1. INCOME STATEMENT
Note
Legal expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,000)
4
Loss for the period attributable to equity holders . . . . . . . . . . . . . . . .
25
(6,000)
—
(6,000)
Note
Loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic and diluted loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . .
For the period from
incorporation to
31 May 2006 ($)
5
For the period from
incorporation to
31 May 2006
$ per share
(0)
2. STATEMENT OF CHANGES IN EQUITY
Share
capital ($)
Retained
earnings ($)
Total
equity ($)
As at incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
(6,000)
—
(6,000)
Total income and expense for the period . . . . . . . . . . . . . . . .
Issue of share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
6,250
(6,000)
—
(6,000)
6,250
As at 31 May 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
(6,000)
26
250
3. BALANCE SHEET
Note
31 May 2006 ($)
ASSETS
Current assets
Cash at bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
EQUITY & LIABILITIES
Equity
Called up share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
Loans due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
(6,000)
250
7
6,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,000
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
27
4. CASH FLOW STATEMENT
For the period from
incorporation to
31 May 2006 ($)
Operating activities
Loss before changes in working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,000)
Cash flows from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,000)
Financing activities
Issue of share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
6,000
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,250
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash at incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
—
Cash at 31 May 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
28
5. NOTES TO THE FINANCIAL INFORMATION
1 COMPANY INFORMATION AND BASIS OF PREPARATION
Company information
The Company was incorporated in the Cayman Islands on 12 May 2006. As of 31 May 2006, the
Company had no subsidiaries.
Basis of preparation
The special purpose financial statements (‘‘financial statements’’) have been prepared in
accordance with International Financial Reporting Standards and are presented in US Dollars.
The financial statements have been prepared by the director solely for the purpose of
supporting the information to be included in the Company’s admission document prepared in
connection with the intended offering of units (comprising shares and warrants) in the Company
and the admission of the units of the Company to trading on the Alternative Investment Market of
the London Stock Exchange (‘‘AIM’’) hereinafter referred to as the Offering.
Responsibility for preparation of the accounts
The director has accepted responsibility for preparation of the financial statements for each
financial period which give a true and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. In preparing those financial statements, the director
accepts responsibility for:
• Selecting suitable accounting policies and then applying them consistently;
• Making judgments and estimates that are reasonable and prudent; and
• Preparing the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business.
The director accepts responsibility for keeping proper accounting records which disclose with
reasonable accuracy at any time the financial position of the Company and to enable them to
ensure that the financial statements comply with the laws of the Cayman Islands. He also accepts
responsibility for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
2 ACCOUNTING POLICIES
Non interest-bearing loans
Non interest bearing loans are recognised at the fair value of the consideration received less
directly attributable transaction costs.
29
5. NOTES TO THE FINANCIAL INFORMATION (Continued)
2 ACCOUNTING POLICIES (Continued)
IFRSs and IFRIC Interpretations not yet effective
The Company has not applied the following IFRSs and IFRIC Interpretations that have been
issued but are not yet effective:
IFRS 7
Financial Instruments: Disclosures
IAS 1
Amendment—Presentation of Financial Statements: Capital
Disclosures
IFRIC 7
Applying the Restatement approach under IAS 29 Financial
Reporting in Hyperinflationary Economies
IFRIC 8
Scope of IFRS 2
3 ADMINISTRATIVE EXPENSES
The fee for the audit of these financial statements and other professional costs in connection
with the Offering will be charged in the income statement for the period from incorporation to 31
December 2006. The director received no management compensation in any form from the
Company in the period.
4 INCOME TAX
The Company is incorporated as an exempted company under Cayman Islands law and is not
subject to any taxes in the Cayman Islands.
No income tax is chargeable to the income statement or the statement of changes in equity in
the current period.
5 LOSS PER SHARE
Loss per share figures are calculated in accordance with IAS33, Earnings per Share.
Basic loss per share amounts are calculated by dividing net loss for the period attributable to
ordinary equity holders of the Company by the weighted average number of ordinary shares
outstanding during the period. Save for the issue of ordinary shares upon incorporation, the
Company has not entered into any transactions related to ordinary shares during the period and
consequently the diluted and undiluted earnings per share are identical. The following reflects the
income and share data used in the total operations basic and diluted earnings per share
computations:
Net loss attributable to equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . .
$(6,000)
Weighted average number of ordinary shares for basic earnings per share . . . . . . .
328,948
Weighted average number of ordinary shares for diluted earnings per share . . . . . .
328,948
30
5. NOTES TO THE FINANCIAL INFORMATION (Continued)
6 SHARE CAPITAL
Authorised
31 May 2006
200,000,000 ordinary shares of $0.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allotted, called up and fully paid
$200,000
31 May 2006
6,250,000 ordinary shares of $0.001 each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$6,250
The Company was incorporated and registered in the Cayman Islands on 12 May 2006. On
incorporation, one ordinary share of $0.001 was issued to the initial subscriber at a price of $0.001.
On 30 May 2006, 6,250,000 ordinary shares were issued at a price of $0.001
On 30 May 2006, one ordinary share was repurchased from the initial subscriber by the
Company at $0.001
7 NON-INTEREST BEARING LOANS DUE TO RELATED PARTY
$6,000 unsecured loan from Hayground Cove Asset Management LLC (‘‘Hayground’’)
The loan is unsecured and bears no interest. The loan is repayable upon consummation of the
Offering, unless the Company, in its sole discretion, repays the loan amount prior to that time. The
fair value of the loan is not materially different to the book value.
8 RELATED PARTIES
The Company’s Chairman and Chief Executive Officer, Mr Jason Ader, is also Chief Executive
Officer of Hayground. Mr. Ader is the sole member of Hayground and the managing member of
the general partner for each of the funds and accounts it manages. Hayground and the funds and
accounts it manages owns 5,599,560 shares in the Company. During the period, the Company
entered into the following transactions with Hayground:
The Company received a loan from Hayground as described in note 7.
The Company appointed additional directors subsequent to the balance sheet date who also
own shares in the Company as outlined in Note 10.
As described in note 9, Hayground has contracted contingently to provide services to the
Company.
31
5. NOTES TO THE FINANCIAL INFORMATION (Continued)
9 FUTURE COMMITMENTS
In readiness for the Offering and contingent upon its consummation and therefore
commencing from the date when the Company is admitted to AIM, the Company entered into the
following agreements on 30 May 2006:
Services Agreement
Under this agreement, Hayground has agreed to provide certain related administrative
services to the Company for a monthly fee capped at $10,000. It will:
• Provide administrative services as may be required from time to time, including the
administration of the Company’s day-to-day activities, accounting and controller-related
services; and
• Make available to the Company the services of certain of Hayground’s directors and other
employees.
Strategic Advisory agreement
Under this agreement, Banyan Tree Capital Limited has been appointed exclusive strategic
advisor which will provide advisory services to the Company and its Mauritius subsidiary with
regard to the acquisition of assets for a monthly fee capped at $20,000. Upon satisfying certain
circumstances, Banyan Tree Capital Limited will also be entitled in the future to be granted shares
in the Company.
Additionally, the Company has committed to repurchase prior to the Offering 2,083,333 ordinary
shares at their nominal value of $0.001 per share. Included in the ordinary shares to be
repurchased will be 1,943,833 ordinary shares held by Hayground and the funds and accounts that
it manages, and 26,250 ordinary shares held by Christa Short, thereby reducing their
shareholdings set out in notes 8 and 10, respectively.
10 POST BALANCE SHEET EVENTS
In addition to the Offering, since the balance sheet date the Company has formed a wholly
owned operating subsidiary incorporated in Mauritius. The Company expects to conduct
business, including the making of acquisitions, through its Mauritius subsidiary.
Since the balance date, the Company appointed additional directors. These directors and their
shareholdings in the Company are as follows:
Director
Andrew Sasson .
Christa Short . . .
Anthony Juliano
Pawan Munjal . .
Manvinder Puri .
Number of shares in the Company
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35,088
75,000
35,088
35,088
35,088
PART IV
PRO FORMA STATEMENT OF NET ASSETS
Set out below is the unaudited pro forma statement of net assets of the Company as adjusted
to reflect the Offering and the Private Placing. This statement has been prepared for illustrative
purposes only and may not give a true picture of the financial position of the Company. It has been
prepared to illustrate the effect on the Company’s net assets of the application of the proceeds
from the Offering and Private Placing as if the Offering and Private Placing had taken place on
May 31, 2006.
Actual
Balance Sheet Data:
Working capital(2) . . .
Total assets(2) . . . . . .
Total liabilities . . . . .
Shareholders’ equity
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May 31, 2006
As Adjusted(1)
$250
6,250
6,000
250
$1,498,167
98,248,167
1,500,000
96,748,167
(1) The ‘‘as adjusted’’ information gives effect to the sale of the Units in this Offering, the sale of the Units in the Private
Placing, the repayment of the $6,000 loan from Hayground Cove, the repurchase of 2,083,333 Shares by the Company
from Existing Shareholders prior to this Offering at $0.001 per share, and the application of the related proceeds and
the payment of the estimated fees and expenses from such sales.
(2) The ‘‘as adjusted’’ total assets include $95,250,000 to be held in the Trust Account, $1,500,000 in respect of the Placing
Agent’s deferred commission payable upon consummation of the initial business combination and $1,500,000 of net
proceeds of the Offering to be used for working capital purposes. The ‘‘as adjusted’’ total assets to be held in the Trust
Account will be available as described in the Offering Circular. If no business combination is consummated, the Trust
Account (including the amount held in the Trust Account representing the Placing Agent’s deferred commission and
the proceeds of the Private Placing) will be distributed solely to the New Shareholders and Hayground Cove to the
extent it participated in this Offering (i.e., in respect of the 4,166,667 units being purchased by it in this Offering).
33
PART V
ADDITIONAL INFORMATION
1.
Incorporation and status of the Company
1.1
The Company was incorporated as an exempted company in the Cayman Islands under the
Companies Law (Revised) on 12 May 2006. The registered number of the Company is
OG-167 402.
1.2
The registered office of the Company is at Ogier Fiduciary Services (Cayman) Limited,
Queensgate House, South Church Street, P.O. Box 1234 G.T., Grand Cayman, Cayman
Islands, telephone number +1 345 945 6264.
1.3
The liability of the members of the Company is limited.
1.4
The Company has one subsidiary undertaking, IHC Mauritius, which will be the Company’s
wholly owned operating subsidiary formed under the laws of Mauritius.
1.5
The Company has not carried on any trading business since its incorporation to the date of
this document.
2.
Share capital of the Company
2.1
At the date of this document the authorised share capital of the Company is $200,000
divided into 100,000,000 Shares of $0.001 each, of which 6,250,000 shares have been
issued, credited as fully paid, and 100,000,000 undesignated shares of $0.001 each, none of
which have been issued. Prior to Admission, the Company will repurchase 2,083,333 of the
6,250,000 issued and outstanding shares for $0.001 per share. After giving effect to the
repurchase and immediately prior to the Offering, the Existing Shareholders will hold
4,166,667 Shares.
2.2
The authorised and issued share capital of the Company, and the issued Warrants,
immediately prior to Admission is as set out below:
Shares . . . . . . . . . . . . . . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . . .
Undesignated Shares . . . . . . . . . . . .
2.3
Authorised
Number
Aggregate
par value ($)
Issued
Number
100,000.00
0.00
100,000.00
100,000,000
N/A
100,000,000
4,166.67
0.00
0.00
4,166,667
0.00
0.00
The authorised and issued share capital of the Company, and the issued Warrants,
following Admission (assuming that all the Units are subscribed for pursuant to the
Offering and the Private Placing but without giving effect to the Placing Agent Option)
are expected to be as set out below:
Shares . . . . . . . . . . . . . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . .
Undesignated Shares . . . . . . . . . . .
2.4
Aggregate
par value ($)
Aggregate
Par value ($)
Authorised
Number
Aggregate
Par value ($)
Issued
Number
100,000.00
0.00
100,000.00
100,000,000
N/A
100,000,000
21,333.33
0.00
0.00
21,333,334
34,333,334
0.00
Pursuant to article 5.1 of the Articles, the Directors of the Company are generally and
unconditionally authorised to allot all unissued shares of the Company to such persons, at
such times, for such consideration and upon such terms and conditions as the Directors
may determine.
34
2.5
Save as disclosed in this document, no commission, discounts, brokerages or other specific
terms have been granted by the Company in connection with the issue or sale of any of its
share or loan capital.
2.6
The Shares and Warrants are in registered form, contain restrictive legends detailing
certain transfer restrictions and are not capable of being held in uncertificated form until
permitted under U.S. securities laws. The Shares and Warrants are subject to stringent
requirements with respect to transfer and, in the case of Warrants, exercise. See ‘‘Transfer
Restrictions’’ in the Offering Circular incorporated in this document.
3.
Summary of the memorandum and articles of association of the Company
3.1
Memorandum of Association
The objects for which the Company was established are unrestricted and the Company has
full power and authority to carry out any object not prohibited by any law as provided by
Section 7(4) of the Companies Law (Revised) of the Cayman Islands, subject to the
following:
3.2
(a)
the Company may not carry on the business of a bank or trust company without being
licensed in that behalf under the Banks and Trust Companies Law (Revised) or carry
on insurance business from within the Cayman Islands or the business of an
insurance manager, agent, sub-agent or broker without being licensed under the
Insurance Law (Revised) or carry on the business of company management without
being licensed under the Companies Management Law (Revised); and
(b)
the Company may not trade in the Cayman Islands with any person, firm or
corporation except in furtherance of the business of the Company carried on outside
the Cayman Islands.
Articles of Association
The rights attaching to the Shares are provided for in the Articles of Association of the
Company which provides, amongst other things, as follows:
(a)
Votes of shareholders
Subject to any special terms as to voting or to which any shares may have been
issued on a show of hands, every shareholder who, being an individual, is present in
person or, being a corporation, is present by a duly authorised representative, has
one vote, and on a poll every shareholder has one vote for every share of which he is
the holder.
(b)
Alteration of share capital
The Company in general meeting may from time to time by ordinary resolution:
(i)
increase its share capital by such sum to be divided into shares of such amount
as the resolution prescribes;
(ii)
consolidate and divide all or any of its share capital into shares of a larger
amount than its existing shares;
(iii)
convert all or any of its paid-up shares into stock and reconvert that stock into
paid-up shares of any denomination;
35
(iv)
subject to applicable laws, sub-divide its shares, or any of them, into shares of
smaller amount and the resolution may determine that, as between the shares
resulting from the sub-division, one or more of the shares may, as compared
with the others, have such preferred, deferred or other special rights, or be
subject to such restrictions as the Company has power to attach to unissued or
new shares; and
(v)
cancel any shares which, at the date of the passing of the resolution, have not
been taken or agreed to be taken by any person and diminish the amount of its
share capital by the amount of the shares so cancelled.
Subject to applicable laws, and to any rights for the time being conferred on the
holders of any class of shares, the Company may by special resolution reduce its
share capital, any capital redemption reserve or any share premium account in any
way.
Subject to applicable laws and to any rights for the time being conferred on the
holders of any class of shares, the Company may purchase all or any of its shares of
any class, including any redeemable shares.
(c)
Variation of rights
If at any time the share capital of the Company is divided into shares of different
classes, any of the rights for the time being attached to any class of shares may be
varied or abrogated (whether or not the Company is being wound up) in such manner
(if any) as may be provided by those rights or, if no such provision is made, either:
(d)
(i)
with the consent in writing of the holders of two-thirds of the issued shares of
that class; or
(ii)
with the authority of a special resolution passed at a separate general meeting
of the holders of those shares.
Transfers of shares
An instrument of transfer of any share may be in any usual form or in any other form
which the Directors may approve and shall be signed by or on behalf of the transferor
and (except in the case of a fully paid share) by or on behalf of the transferee. An
instrument of transfer need not be under seal.
The transferor shall be deemed to remain the holder of the share until the name of the
transferee is entered in the register of members in respect of it.
Except as set out above, the Articles of Association contain no restrictions on the free
transferability of fully paid shares provided that:
(i)
(ii)
in the case of certificated shares, the transfers are:
(a)
accompanied by the certificate for the shares to be transferred and such
other evidence (if any) as the Directors may reasonably require to prove
the title of the intending transferor or his right to transfer the shares;
(b)
duly stamped;
(c)
in favour of not more than four transferees;
(d)
in respect of only one class of share; and
generally, that the provisions in the Articles of Association relating to transfers
have been complied with.
36
(e)
Dividends
Subject to applicable laws, the Company may, by ordinary resolution, declare
dividends to be paid to the shareholders according to their respective rights and
interests in the profits of the Company. No dividend shall exceed the amount
recommended by the Directors.
Interim dividends may be paid if profits are available for distribution and if it appears
to the Directors to be justified by the financial position of the Company.
All dividends unclaimed for a period of twelve years after having been declared or
become due for payment shall be forfeited and cease to remain owing by the
Company.
(f)
Notification of Interests
The Company’s Articles (and the terms of issue of the Warrants) provide that (to the
extent permitted by applicable law) (i) if the aggregate amount of Shares or Warrants
in which a person is interested (A) exceeds three per cent. by nominal value of the
entire issued Shares or Warrants of the Company respectively, or (B) changes from an
aggregate amount which exceeded three per cent. by nominal value of the then
issued Shares or Warrants of the Company so as to increase or decrease through any
single percentage then (in either case) such person shall notify the Company (within
the period and including the particulars required by the Company), or (ii) on written
request by the Company, a registered holder of Shares or Warrants of the Company is
obliged to notify the Company (within the period and including the particulars
required by the Company) of any person interested in such Shares or Warrants;
unless otherwise directed by the Board, for so long as a person is in default of his
obligations under (i) or (ii) he shall not be entitled to vote at any meeting of the
Company nor receive dividends in respect of his Shares, and shall not be entitled to
exercise his Warrants; and for the purposes of (i) and (ii) above, ‘‘interest’’ (and
aggregate terms) shall be construed in accordance with provisions which incorporate
language substantially equivalent to section 208 of the UK Companies Act 1985 (as
amended).
(g)
Borrowing
The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge all or any part of the undertaking, property and assets (present
and future) and uncalled capital of the Company and, subject to the statutes, to create
and issue debenture and other loan stock and debentures and other securities,
whether outright or as collateral security for any debt, liability or obligation of the
Company or of any third party.
(h)
Directors
The number of Directors (other than alternate Directors) shall not, unless otherwise
determined by an ordinary resolution of the Company, be less than two nor more
than ten.
There is no shareholding qualification in order to be appointed as a Director.
There is no age limit on Directors.
At every general meeting, one-third of the Directors shall retire from office and may
seek to be reappointed.
37
The Directors may from time to time appoint one or more of their number to hold any
executive office (including that of chief executive or managing director) for such term
(subject to applicable laws) and on such terms as the Directors may decide. The
Directors may revoke or terminate any such appointment without prejudice to any
claim for damages for breach of contract between the Director and the Company.
Provided that a Director has disclosed any material interest, a Director may vote at
any meeting of Directors or of a committee of Directors on any resolution concerning
a matter in which he has, directly or indirectly, an interest or duty. The Director shall
be counted in the quorum present at a meeting when any such resolution is under
consideration and if he votes his vote shall be counted.
(i)
General Meetings
An annual general meeting and an extraordinary general meeting convened for the
passing of a special resolution (or an ordinary resolution of which special notice is
required) shall be convened by not less than 21 clear days’ notice in writing. All other
extraordinary general meetings shall be convened by not less than 14 clear days’
notice in writing.
Notice must be given:
(i)
in accordance with the provisions of the Articles of Association regarding
notices;
(ii)
to all shareholders (other than any who, under the provisions of the Articles or
of any restrictions imposed on any shares, are not entitled to receive such
notice from the Company);
(iii)
to each Director; and
(iv)
to the auditors.
No business shall be transacted at any general meeting unless a quorum is present
when the meeting proceeds to business. A quorum is present when there are present
at least two persons entitled to vote at the meeting each of which is a shareholder or a
proxy for a shareholder or a representative of a company which is a shareholder. If
within fifteen minutes from the time fixed for holding a general meeting (or such
longer interval, not exceeding thirty minutes, as the chairman may decide) a quorum
is not present, the meeting may be dissolved (in the case of a meeting convened on
the requisition of shareholders) or adjourned.
At a general meeting, a resolution put to the vote will be decided on a show of hands
unless, before or on the declaration of the show of hands, a poll is demanded by:
(i)
the chairman;
(ii)
at least five shareholders present in person or by proxy and entitled to vote;
(iii)
a shareholder or shareholders present in person or by proxy representing in
aggregate not less than one-tenth of the total voting rights of all the
shareholders having the right to vote at the meeting;
(iv)
a shareholder or shareholders present in person or by proxy holding shares
conferring the right to vote at the meeting on which an aggregate sum has been
paid up equal to not less than one-tenth of the total sum paid up on all the
shares conferring that right.
38
Unless a poll is demanded (and the demand is not withdrawn) a declaration by the
chairman of the meeting that a resolution has been carried, or carried unanimously,
or has been carried by a particular majority, or lost, or not carried by a particular
majority and an entry to that effect in the minutes of the meeting shall be conclusive
evidence of that fact, without proof of the number or proportion of the votes recorded
in favour of or against the resolution
The appointment of a proxy shall be in any usual or common form, or such other form
as may be approved by the Directors and, in the case of an instrument in writing, shall
be signed by the appointer or by his agent duly authorised in writing, or if the
appointer is a corporation shall be either under its common seal or under the hand of
an officer or agent so authorised. The Directors may require evidence of the authority
of any such officer or agent.
The appointment of a proxy shall (subject to any contrary direction contained in the
appointment) be deemed to confer authority to demand or join in demanding a poll
and to vote on any resolution or amendment of a resolution put to the meeting for
which it is given, as the proxy thinks fit, but shall not confer any further right to speak
at the meeting, except with the permission of the Chairman
The above disclosure is in addition to the disclosure of the contents of the Articles of
Association found elsewhere in this document and in the Offering Circular. In particular,
your attention is drawn to the requirement in certain circumstances for the Company to
make distributions or be wound up.
4.
Information on the Directors
4.1
The names, business addresses and respective functions of the Directors are as follows:
Name
Business address
Function
Jason N. Ader . . . .
c/o Hayground Cove Asset Management LLC
1370 6th Avenue
20th Floor
New York
NY 10019, USA
Chairman of the
Board of
Directors and
Chief Executive
Officer
Andrew Sasson . . .
c/o The Light Group
4230 South Decatur Boulevard
Suite A
Las Vegas
NV 89103, USA
Chief Operating
Officer and
Director
Christa Short . . . .
c/o Hayground Cove Asset Management LLC
1370 6th Avenue
20th Floor
New York
NY 10019, USA
Director
Pawan Munjal . . . .
c/o Hero Honda Motors Limited
34 Basant Lok
Vasant Vihar
New Delhi 110057
India
Director
39
Name
Business address
Function
Anthony Juliano . .
Dubai Investment Group
One Rockefeller Plaza—30th floor
New York
NY 10020, USA
Director
Manvinder Puri . . .
701 Brickell Avenue
Miami
FL 33131, USA
Director
Rajeev Talwar(1) . . .
C-II / 27 Satya Marg,
Chanakyapuri
New Delhi 110021
India
Prospective
Director
(1) Conditional upon final approval by the requisite Indian governmental agencies of Mr Talwar’s resignation on June 6,
2006 from his position as Additional Director General, Ministry of Tourism and the Chairman & Managing Director of
India Tourism Development Corporation.
4.2
In addition to any directorship of the Company, the Directors hold or have held the
following directorships or have been partners in the following partnerships within the five
years prior to the date of this document:
Director
Current
directorships
Past
Current
directorships partnerships
Past
partnerships
Jason N. Ader . . . . None
None
None
None
Andrew Sasson . . . Light Las Vegas LLC
Bella Lounge LLC
Mist Lounge LLC
Fix Management LLC
Dancing Monkey LLC
Cranberry Restaurants LLC
Northern Management LLC
None
None
Jet Lounge
Jet East
Light
Light Nightclub
Caramel Bar and Lounge
Mist Bar and Lounge
Fix Bar and Restaurant
Stack Restaurant
Jet Nightclub
Sasson-Hallier Properties
Christa Short . . . . . None
None
None
None
Pawan Munjal . . . . Hero Honda Motors
Limited
Hero Honda Finlease Ltd.
Hero Investment (P)
Limited
None
None
None
Anthony Juliano . . . None
None
None
None
Manvinder Puri . . . . None
None
None
None
4.3
Save as set out in paragraph 4.2 above and in ‘‘Management’’, none of the Directors
has any business interests or activities that are significant with respect to the Company.
4.4
As at the date of this document, none of the Directors:
(i)
have any unspent convictions in relation to indictable offences;
(ii)
have been made bankrupt or have made an individual voluntary arrangement
with creditors or suffered the appointment of a receiver over any of their assets;
40
(iii)
have been a director of any company which, whilst they were such a director or
within 12 months after their ceasing to be such a director, was put into
receivership, compulsory liquidation, creditors’ voluntary liquidation,
administration, company voluntary arrangement or any composition or
arrangement with the company’s creditors generally or with any class of creditors
of any company or had an administrator or an administrative or other receiver
appointed;
(iv)
have been a partner in any partnership which, whilst they were a partner, or
within 12 months after their ceasing to be a partner, was put into compulsory
liquidation or had an administrator or an administrative or other receiver
appointed or entered into any partnership voluntary arrangement;
(v)
have had an administrative or other receiver appointed in respect of any asset
belonging either to them or to a partnership of which they were a partner at the
time of such appointment or within the 12 months preceding such appointment;
or
(vi)
have received any public criticisms by statutory or regulatory authorities
(including recognised professional bodies) or have ever been disqualified by a
court from acting as a director of a company or from acting in the management
or conduct of the affairs of any company.
5.
Directors’ and other interests
5.1
The interests (all of which are or will be beneficial unless otherwise stated) of each
Director and their related parties (as such term is defined in the AIM Rules) in the share
capital of the Company at the date of this document (after giving effect to the
Company’s repurchase of 2,083,333 Shares from the Existing Shareholders at $0.001
per share prior to the date of Admission) and as they will be immediately following
Admission are as follows:
Number of
Shares
currently
held
Director
Jason N. Ader(1)
Andrew Sasson .
Christa Short . . .
Pawan Munjal . .
Anthony Juliano
Manvinder Puri .
Rajeev Talwar(2) .
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*
35,088
48,750
35,088
35,088
35,088
35,088
Percentage of
issued Share
Capital
currently
held
*
0.8%
1.2%
0.8%
0.8%
0.8%
0.8%
Number of
Shares to
be held
immediately
following
Admission
*
35,088
48,750
35,088
35,088
35,088
35,088
Percentage of
Enlarged
Share Capital
to be held
immediately
following
Admission
*
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
(1) Jason N. Ader, the Company’s Chairman of the Board of Directors and Chief Executive Officer, does not directly own
any of Hayground Cove’s 3,655,727 Existing Shares, 500,000 Units being purchased by it in the Private Placing
(comprised of 500,000 Shares and 1,000,000 Warrants) and 4,166,667 Units being purchased by it in this Offering
(comprised of 4,166,667 Shares and 8,333,334 Warrants). However, Mr. Ader is the sole member of Hayground Cove,
the managing member of the general partner for each of the funds and accounts it manages and, in this capacity, he
may be deemed the beneficial owner of the ordinary shares held by Hayground Cove and the funds and accounts it
manages for purposes of applicable securities laws. Mr. Ader is also an investor in certain of the funds managed by
Hayground Cove Associates LP.
(2) Mr. Talwar’s 35,088 Shares have not been and will not be transferred by Hayground Cove to Mr. Talwar until his
appointment to the Board of Directors of the Company. His appointment will only occur if and when he receives final
approval by the requisite Indian governmental agencies of his resignation on June 6, 2006 from his positions as
41
Additional Director General, Ministry of Tourism and the Chairman and Managing Director of India Tourism
Development Corporation. There can be no assurance that he will receive such approvals or that he will be a Director of
the Company.
5.2
Save as disclosed in paragraph 5.1 above, no Director, nor his or her related parties, has at
the date of this document, or will have immediately following Admission, any interest,
whether beneficial or non-beneficial, in the share or loan capital of the Company or any of
its subsidiaries or any related financial product referenced to the Shares or Warrants.
5.3
In addition to the interests of Directors disclosed in paragraph 5.1 above, the Company is
aware of the following existing shareholders of the Company who are at the date of this
document (after giving effect to the Company’s repurchase of 2,083,333 Shares from the
Existing Shareholders at $0.001 per share prior to the date of Admission) , or are expected
to be immediately following Admission, interested, directly or indirectly, in three per cent or
more of the issued share capital of the Company:
Director
Number of
Shares
currently
held
Hayground Cove . . . . . . . . . . . . . . .
3,655,727
Percentage of
issued Share
Capital
currently
held
87.7%
Number of
Shares to
be held
immediately
following
Admission
8,322,395
Percentage of
Enlarged
Share Capital
to be held
immediately
following
Admission
39.0%
5.4
The shareholders listed in 5.3 above do not have different voting rights to other
shareholders.
5.5
Save as disclosed in this document, the Company is not aware of any person or entity who,
directly or indirectly, jointly or severally, will or could exercise control over the Company
immediately following Admission and there are no arrangements the operation of which
could result in a change of control of the Company.
5.6
Save in respect of the agreements between the Company and Hayground Cove (of which
Jason Ader is also President and Chief Executive Officer) described in paragraph 7.6 below,
no Director has or has had any interest in any transaction which is or was unusual in its
nature or conditions or significant to the business of the Company and was effected during
the current or immediately preceding financial year or was effected during any earlier
financial year which remains outstanding and unperformed in any respect.
5.7
There are no loans or guarantees granted or provided by the Company to or for the benefit
of any of the Directors which are now outstanding.
6.
Directors’ remuneration and service agreements
6.1
No Director has received any cash compensation from the Company for services rendered.
No compensation of any kind will be paid by the Company to any of the Directors prior to
completion of a business combination as described in ‘‘Investing Strategy’’, although they
will be reimbursed for out-of-pocket expenses from funds held outside the Trust Account
incurred in connection with activities on the Company’s behalf such as identifying potential
target businesses and performing due diligence on suitable business combinations. There
is no limit on the amount of these out-of-pocket expenses, and there will be no review of the
reasonableness thereof except by the Board of Directors of the Company, which may
include persons who may seek reimbursement, or a court of competent jurisdiction if such
reimbursement is challenged.
6.2
No Director has a service agreement with the Company. Upon the consummation of a
business combination, the Company may enter into employment agreements with some or
all of its executive officers, which agreements will detail compensation and other incentives
for those executive officers.
42
7.
Material Contracts
Save as set out elsewhere in this document, the following are the only contracts (being
contracts otherwise than in the ordinary course of business) which have been entered into
by the Company within the two years immediately preceding the date of this document and
which are or may be material or have been entered into by the Company at any time and
contain any provision under which the Company and its subsidiaries has any obligation or
entitlement which is material to the Company and its subsidiaries at the date of this
document.
7.1
Placing Agreement
A placing and underwriting agreement dated July 26, 2006 entered into between
(1) Deutsche Bank London, (2) Deutsche Bank, (3) Hayground Cove, (4) the Directors and
(5) the Company (the ‘‘Placing Agreement’’), pursuant to which the Company has appointed
Deutsche Bank as Placing Agent and underwriter in connection with the Placing and
Admission. Under the Placing Agreement, Deutsche Bank has agreed, subject to certain
conditions, to purchase the Units at a price per Unit equal to the Placing Price and to
procure subscribers for the Units at the Placing Price from persons in the U.S., the United
Kingdom and Europe and certain other jurisdictions.
The obligations of Deutsche Bank under the Placing Agreement will be conditional upon
inter alia:
(i) Admission becoming effective by not later than 8.00 a.m. London time on August 1, 2006;
and
(ii) no right of termination having arisen in accordance with the terms of the Placing
Agreement.
In consideration of Deutsche Bank’s agreement to provide its services as placing agent and
underwriter pursuant to the Placing Agreement, the Company will pay to Deutsche Bank a
commission of 7 per cent. of the aggregate value of the Units purchased by Deutsche Bank
as well as the Placing Agent Option described in paragraph 7.3 below.
In addition, the Company is liable for the costs, charges and expenses of Deutsche Bank and
Deutsche Bank London and itself in relation to the conduct of the Placing. The Placing
Agreement will contain certain warranties given by the Company and Directors in favour of
Deutsche Bank and Deutsche Bank London. Subject to certain limited exemptions, the
Company and Hayground Cove will agree to indemnify Deutsche Bank and Deutsche Bank
London in respect of losses suffered in connection with the Placing and any breach of the
Placing Agreement. There are no financial limits on the Company’s or on Hayground Cove’s
liability under the Placing Agreement, but the aggregate liability of the Directors for all
claims under the warranties (other than any claim relating to their own fraud or dishonesty)
is limited.
7.2
Nominated Adviser and Broker Agreement
On July 26, 2006, the Company entered into a Nominated Adviser and Broker Agreement
with Deutsche Bank London (the ‘‘Nomad Agreement’’) pursuant to which the Company
has appointed Deutsche Bank London to act as nominated adviser and broker for the
purposes of the AIM Rules. Deutsche Bank London shall be entitled to an annual fee of
US$100,000, payable semi-annually in advance. The Nomad Agreement is conditional on
and continues for a period of twelve months from Admission and thereafter may be
terminated by either party giving the other three months’ notice in writing. The Nomad
43
Agreement contains customary indemnities from the Company in favour of Deutsche Bank
London.
7.3
Placing Agent Option Agreement
A unit purchase option to be dated July 31, 2006 pursuant to which the Company has
agreed to grant to Deutsche Bank for US$100 consideration, as additional compensation for
its services as Placing Agent, an option (exercisable in whole or part) to purchase up to a
total of 833,333 Units equivalent to 5.0% of the total Units subject to the Placing, at a per
Unit price of US$ 7.50 (as adjusted to reflect reorganisations of capital from time to time, if
any). The warrants issued pursuant to this option may be exercised at a price of US$6.25 per
warrant, but will otherwise be issued on identical terms to the Warrants. The warrants
issued pursuant to this option will be issued under a separate warrant deed from the
warrant deed described in paragraph 7.4 below. Such purchase option may be exercised on
a cashless basis and will not be exercisable prior to the later of the completion of a Qualified
Business Combination or, if a business combination that is not a Qualified Business
Combination has occurred, 12 months after the Admission Date or, if extended by a
majority of votes cast at a general meeting of ordinary shareholders at which a quorum is
present, by the extended date. Additionally, the option may be transferred (i) to any officer,
Director or shareholder of the Placing Agent or their family members, (ii) to employees of
the Placing Agent, (iii) pursuant to a charitable donation and (iv) to any initial purchaser
participating in the Offering and their bona fide officers or partners. The exercise price and
number of Shares and Warrants issuable upon exercise of the option may be adjusted in
certain circumstances, including an adjustment in the event of a share dividend, or the
Company’s recapitalization, reorganization, merger or consolidation. The time for exercise
of the option may also be accelerated if the Company redeems the outstanding Warrants.
This option expires four years from July 31, 2006. The Company will apply to AIM for
admission to trading on AIM of the Shares (but not the Warrants) underlying any Units
issued pursuant to this option.
7.4
Warrant Deed
Pursuant to the Warrant Deed to be dated July 31, 2006 between Capita IRG (Offshore)
Limited, as warrant agent, and the Company (the ‘‘Warrant Deed’’), the Warrants will be
issued in registered form under the Warrant Deed. The Warrant Deed sets out the terms of
the Warrants, which are described under the heading ‘‘Description of the Securities’’ in the
Offering Circular incorporated in this document.
7.5
Investment Management Trust Agreement
Pursuant to the Investment Management Trust Agreement, approximately US$ 96,750,000
of the proceeds of the Placing (including US$ 1,500,000 in respect of the placing agent’s
deferred commission) will be delivered to the Trustee to be deposited and held in the Trust
Account for the benefit of the New Shareholders and Hayground Cove with respect to the
4,166,667 Shares being purchased by it in the Offering (subject to a declaration of trust to be
made by the Trustee). Pursuant to the Investment Management Trust Agreement, the
amounts held in the Trust Account may only be invested by the Trustee in any security
issued or guaranteed by the United States or in any open ended-investment company
registered under the U.S. Investment Company Act 1940 that holds itself out as a money
market fund and bears the highest (AAA) credit rating issued by a United States nationally
recognized rating agency.
44
Further, the Company will agree to pay the Trustee’s fees and expenses associated with the
administration of the amounts held in the Trust Account and to indemnify the Trustee for
certain losses.
The Trustee shall only liquidate and/or distribute the Trust Account on receipt of a letter
from the Company specifying the amount of funds contained in the Trust Account that
should be made available to the Company for the purpose of consummating a business
combination, for working capital following the consummation of a business combination,
for a distribution effected pursuant to a total liquidation and/or distribution in the event that
no Qualified Business Combination has occurred by the designated date.
The Investment Management Trust Agreement will provide for:
(i) the Trustee to be indemnified by the Company for all actions taken as Trustee (save in
respect of its negligence or willful misconduct); and
(ii) the Trustee to be paid an initial fee of US$1,000, an annual fee of US$3,000 and a
transaction processing fee of US$250 per disbursement.
The Investment Management Trust Agreement will terminate following the liquidation of
the Trust Account in accordance with its terms or, in the event the Trustee transfers the
management of the Trust Account to a successor trustee.
7.6
Rule 7 Lock-in Deed
Each of the Company’s Existing Shareholders, Hayground Cove, and all substantial
shareholders (as such term is defined in the AIM Rules) entered into a Rule 7 lock-in deed on
July 26, 2006 with the Company and Deutsche Bank London (as the Company’s nominated
adviser for the purposes of the AIM Rules) whereby they covenant that they cannot, and
have agreed to procure that their related parties (as such term is defined in the AIM Rules)
will not dispose of any interest in any Shares or Warrants (whensoever such Shares or
Warrants are acquired) for one year from the date of Admission other than as consented to
in writing by both Deutsche Bank London and the Company or pursuant to a takeover offer,
a court order or a testamentary disposition except that pursuant to a derogation granted to
the Company by the London Stock Exchange from Rule 7 of the AIM Rules, Hayground Cove
is entitled to make certain specified transfers of Shares and Warrants amongst the funds
and accounts which it manages.
7.7
D&O Insurance
The Company will, prior to the consummation of the Offering, obtain Directors’ and officers’
liability insurance to provide its Directors and officers with insurance coverage for losses
arising from claims based on breaches of duty, negligence, errors and other wrongful acts.
7.8
Insider Letters
Hayground Cove and each of the Directors have entered into an agreement to be dated
July 31, 2006 with Deutsche Bank, Deutsche Bank London and the Company pursuant to
which he or she has agreed in consideration of the Company agreeing to enter into the
Placing Agreement that, amongst other things:
•
if the Company solicits the approval of its shareholders for a business combination or
an extension of the time available in which to consummate a Qualified Business
Combination, he or she will vote all Shares owned directly or indirectly by him or her
prior to the Offering in accordance with the majority of votes cast by the New
Shareholders, including Hayground Cove to the extent it participated in the Offering,
45
and he or she will vote all the Shares purchased by him or her in the Offering or in the
after market in favour of such proposed business combination or extension;
•
in the event that the Company consummates (subject to extensions in certain
circumstances) a Qualified Business Combination within 12 months of the Admission
Date, the Company will take all reasonable actions to cause the Trustee (i) to make the
appropriate distributions to each shareholder who has exercised its repurchase
rights, (ii) to cause the remaining amounts to be distributed to the Company in
accordance with the Investment Management Trust Agreement and (iii) to the extent
permitted by law, cause the Company to repurchase that number of those Shares that
were held by Insiders prior to the Offering and Private Placing such that, after the
repurchases, such Shares do not represent more than 25% of the then outstanding
Shares;
•
in the event that the Company fails to complete a Qualified Business Combination
within 12 months (subject to extension in certain circumstances) of Admission but
has consummated a business combination within such period, the Company will
(i) cause the Trustee to liquidate the Trust Account and make appropriate distributions
to each shareholder who has exercised its repurchase rights, (ii) cause the remaining
amounts to be distributed to the Company in accordance with the Investment
Management Trust Agreement and (iii) to the extent permitted by law, cause the
Company to repurchase that number of those Shares that were held by Insiders prior
to the Offering and Private Placing such that, after the repurchases, such Shares do
not represent more than 25% of the then outstanding Shares;
•
in the event that the Company fails to complete a business combination within
12 months (subject to extension in certain circumstances) of Admission, to cause the
Company to liquidate as soon as is practicable;
•
subject to certain customary exceptions and the permission for Hayground Cove to
make certain transfers amongst the funds and accounts it manages (in accordance
with the derogation granted to the Company by the London Stock Exchange to Rule 7
of the AIM Rules), not transfer or sell any (a) Existing Shares or Shares purchased in
the Private Placing held by him or her in the Company until the later of the first
anniversary of (i) the closing of a Qualified Business Combination or (ii) if there is a
business combination, but not a Qualified Business Combination, the disbursement
of the remaining funds in the Trust Account and (b) Shares purchased in the Offering,
until the later of (i) one year after the Admission and (ii) the date upon which a
Qualified Business Combination is consummated, or, if there is a business
combination but not a Qualified Business Combination, the disbursement of the
remaining funds in the Trust Account;
•
subject to certain pre-existing fiduciary obligations, present to the Company for its
consideration, prior to presentation to any other person or entity, any suitable
opportunity to acquire any businesses or assets in the Indian hospitality, leisure,
tourism, travel and related industries until the earlier of the consummation of a
Qualified Business Combination or the liquidation of the Company. In addition, the
Company shall not enter into any business combination involving an entity affiliated
with any of the Insiders unless the business combination is approved in good faith by
a majority of the disinterested members of the Board; and
•
not, nor will any of his affiliates, be entitled to any remuneration for his services
provided to the Company prior to or in connection with the initial business
46
combination unless such remuneration is approved in good faith by the majority of
disinterested members of the Board.
7.9
Services Agreement
On 30 May 2006, the Company and IHC Mauritius entered into a Services Agreement with
Hayground Cove. Under the Services Agreement, Hayground Cove has agreed that,
commencing on the date of Admission through the earlier of the consummation of a
Qualified Business Combination or the Company’s liquidation, it will (i) provide
administrative services as required by the Company from time to time, including the
administration of the Company’s day-to-day activities; (ii) perform accounting and
controller-related services for the Company, an IHC Mauritius, including correspondence
with our auditors; (iii) make available the services of certain employees and consultants of
Hayground Cove, including Jason Ader, Raj Nandiwada, Christa Short and Samir Jain,
together with such other of Hayground Cove’s employee and consultants as may be agreed
between us and Hayground Cove from time to time; and (iv) permit such employees and
consultants whose services Hayground Cove makes available to the Company to access
Hayground Cove’s network of contacts in India for the purposes of furthering the business
of the Company.
In consideration for the services provided by Hayground Cove, the Company has agreed to
pay Hayground Cove the sum of $10,000 per month and to reimburse Hayground Cove
out-of-pocket expenses incurred by Hayground Cove and its employees and consultants in
performing the services under the agreement. The Services Agreement commences on
Admission and continues until the earlier of the consummation by the Company of a
Qualified Business Combination or the Company’s liquidation.
7.10
Advisory Agreement with Banyan Tree Capital
On May 30, 2006, the Company and IHC Mauritius entered into an agreement with Banyan
Tree Capital to serve as their exclusive financial adviser in connection with their future
acquisitions using the proceeds from the Offering. Banyan Tree Capital will provide
advisory services, including (i) discussing acquisition opportunities with the Company and
IHC Mauritius, the Board of Directors of the Company, the Board of Directors of IHC
Mauritius and each of their management teams, (ii) assisting in the identification,
solicitation and evaluation of prospective acquisition opportunities, and (iii) assisting in
structuring and negotiating acquisition opportunities. The term of the agreement is for the
period from May 30, 2006 until the earlier of 18 months after May 30, 2006 and the
consummation of a Qualified Business Transaction; provided, however, that in the event a
Qualified Business Combination is not consummated within 12 months of the effective date
of the agreement, the agreement shall become non-exclusive. The Company has agreed to
indemnify Banyan Tree Capital for liabilities arising out of its role as our adviser (other than
as a result of Banyan Tree Capital’s fraud, willful misconduct or gross negligence). Banyan
Tree Capital has agreed to waive any and all rights and claims against the Trust Account in
respect of the Offering.
As part of the consideration for its advisory services, the Company will pay Banyan Tree
Capital a retainer fee of $20,000 per month. In addition, the Company is required to provide
166,667 Shares to Banyan Tree Capital, which the Company expects to be transferred out of
the 3,655,727 Existing Shares held by Hayground Cove immediately prior to of the Offering,
subject to satisfaction of each of the following conditions:
•
the Company’s completion of a Qualified Business Combination;
47
•
the date that is one year after the completion of a Qualified Business Combination
(the ‘‘Trigger Date’’) has passed; and
•
the Company’s Share price is greater than 1.0x the Sensex hurdle rate on the Trigger
Date or, if the Company’s Share price is below the Sensex hurdle rate on the Trigger
Date, the Share price must have exceeded the Sensex hurdle rate for 20 consecutive
trading days at any time prior to that date. The Sensex hurdle rate is defined as the
Sensex index performance over the duration of time from the closing date of the
Offering to the Trigger Date. For example, if the offering price is at $6.00 per unit and
the Sensex is up 40% on the Trigger Date, then the Share price must be greater than
$8.40 per unit (140% ! $6) in order for the Shares to vest.
Banyan Tree Capital will provide written notice to the Company’s Board of Directors once it
believes that all of the requirements have been met.
Banyan Tree Capital will be transferred additional Shares (out of the 3,655,727 Existing
Shares held by Hayground Cove immediately prior to the Offering) equal in value to
US$700,000, based on the Strike Price (as defined below) at such time following the Trigger
Date, as the Company’s Share price reaches a price that is equal to a 150% threshold above
the offering price (the ‘‘Strike Price’’). Assuming the $6.00 per unit offering price for the
Offering, Banyan Tree Capital would be entitled to receive 46,667 Shares upon the
Company’s Share price reaching $15.00 per share after the Trigger Date. These Shares shall
be transferred within thirty (30) days following the date upon which the foregoing Share
price objective is achieved, shall vest and shall be fully paid and non-assessable upon
issuance. Upon meeting these conditions, the up to 46,667 Shares to which Banyan Tree
Capital is entitled to receive will be transferred to it (out of the 3,655,727 Existing Shares
held by Hayground Cove immediately prior to the Offering).
Hayground Cove has agreed to reserve up to 213,334 of Shares for the Company’s benefit
on behalf of Banyan Tree Capital until such time as all such shares have been transferred to
Banyan Tree Capital or to the extent that there is a final determination by a court of
competent jurisdiction that some or a portion of such shares are not required to be
transferred under the terms of the agreement. The right of Banyan Tree Capital to receive
the Shares will expire 36 months from the closing date of the Offering.
7.11
Unsecured Promissory Note
On May 30, 2006, the Company and IHC Mauritius entered into a promissory note (the
‘‘Note’’) with Hayground Cove in respect of the principal amount of $6,000. The amount due
under the Note is payable on Admission or a default on the part of the Company or IHC
Mauritius of their respective obligations under the Note. The obligations of the Company
and IHC Mauritius are unsecured and no interest is accrued on the amount due under the
Note. The proceeds of the Note are to be used by the Company and IHC Mauritius to pay
expenses relating to the Offering and Admission. The Note is expected to be repaid out of
the proceeds of the Offering and the Private Placing.
8.
Working Capital
In the opinion of the Directors, having made due and careful enquiry, the working capital
available to the Company following Admission will be sufficient for its present
requirements, that is for at least 12 months from the date of Admission.
9.
Taxation
Your attention is drawn to the ‘‘Taxation’’ section of the Offering Circular which starts on
page 85 and is incorporated in this document.
48
10.
Litigation
The Company is not, and has not been during the previous 12 months, involved in any legal
or arbitration proceedings, active, pending or threatened against, or being brought by, the
Company which are having or may have a significant effect on the Company’s financial
position or profitability.
11.
Consents and Responsibility Statement
11.1
The Directors, whose names appear on page 2 of this document, accept responsibility,
individually and collectively, for the information contained in this document, including the
Offering Circular, and for compliance with the AIM Rules. To the best of the knowledge and
belief of the Directors, who have taken all reasonable care to ensure that such is the case,
the information contained in this document is in accordance with the facts and there is no
omission likely to affect the import of such information.
11.2
Deutsche Bank has given and has not withdrawn its consent to the inclusion in this
document of its name and the references to it in the form and context in which it appears.
11.3
Deutsche Bank London has given and has not withdrawn its consent to the inclusion in this
document of its name and the references to it in the form and context in which it appears.
11.4
Ernst & Young LLP has given and has not withdrawn its written consent to the inclusion in
Part III of this document of its report and its name and the references to it in the form and
context in which they appear.
12.
General
12.1
Significant changes
Save as disclosed in this document, including the Offering Circular, there has been no
significant change in the financial or trading position of the Company since 31 May 2006,
the date of the financial information contained in the Accountants’ Report on the Company
in Part III of this document.
12.2
Accounting reference date
The accounting reference date of the Company is 31 December.
12.3
Expenses
The total cost (including fees and commissions) of Admission is expected to be
approximately $6,250,000 (excluding any amounts in respect of VAT) and is payable by the
Company.
12.4
Payments to promoters
No person (other than as disclosed in this document, including the Offering Circular) has
received, directly or indirectly, within the 12 months preceding the date of this document, or
entered into contractual arrangements to receive, directly or indirectly, from the Company
on or after Admission:
(a)
fees totalling £10,000 or more;
(b)
securities where these have a value of £10,000 or more; or
(c)
any other benefit with a value of £10,000 or more at the date of Admission.
49
12.5
Dispatch of certificates
It is expected that definitive certificates in respect of the Shares and Warrants will be posted
to investors no later than August 4, 2006.
12.6
Employees
The Company has no employees.
13.
Availability of this Document
Copies of this document are available free of charge from the Company’s registered office
and at the offices of Deutsche Bank AG, London Branch at 1 Great Winchester Street,
London EC2N 2DB during usual business hours on any weekday (weekends and public
holidays excepted) and will remain available up to and for at least one month after
Admission.
July 26, 2006
50
OFFERING CIRCULAR
CONFIDENTIAL
$100,000,000
India Hospitality Corp.
16,666,667 Units
India Hospitality Corp. is a blank check company recently incorporated as an exempted company under the laws of the Cayman Islands to serve as a
vehicle for acquisitions, through one or more stock purchases, asset acquisitions or other business combinations, of businesses or assets in India
focused on hospitality, leisure, tourism, travel and related industries.
We are offering 16,666,667 units to investors at an offering price of $6.00 per unit. Each unit consists of:
• one ordinary share (par value $0.001); and
• two warrants.
Each warrant entitles the holder to purchase one ordinary share at a price of $5.00. Each warrant will become exercisable on the later of (i) our
completion of a business combination that, either by itself or when combined with all of our previous business combinations, has an aggregate
transaction value (as described below) of at least 50% of the initial amount held in the trust account described below (excluding the amount held in the
trust account representing the placing agent’s deferred commission) (a ‘‘Qualified Business Combination’’), and (ii) if a business combination that is not a
Qualified Business Combination has occurred, one year after the date on which the ordinary shares and warrants are admitted to trading on the
Alternative Investment Market, or AIM, operated by the London Stock Exchange plc (the ‘‘Admission Date’’), unless ordinary shareholders have approved
(by a majority of votes cast at a general meeting of ordinary shareholders at which a quorum is present) an extension of the period of time within which
we will be allowed to consummate a Qualified Business Combination (the ‘‘Extended Date’’), in which case the warrants will not be exercisable before
the Extended Date. In either case, the warrants will expire on the date that is four years after the Admission Date or earlier upon redemption.
Of the 16,666,667 units offered hereby, 4,166,667 units are being offered to Hayground Cove Asset Management LLC, our sponsor, and 12,500,000 units
are being offered to other investors in this offering, all at the initial offering price of $6.00 per unit. We will receive the entire aggregate gross proceeds
from the 4,166,667 units offered to Hayground Cove and the placing agent will not receive any commission on these units. Additionally, our sponsor will
purchase 500,000 units from the company for $3,000,000 (offered at $6.00 per unit) in a private placement to be consummated contemporaneously with
this offering.
Of the net proceeds we expect to receive from this offering and the sponsor private placement, $96,750,000 (approximately $5.81 per unit) will be
deposited into a trust account (of which $1,500,000, or $0.09 per unit, is attributable to the placing agent’s deferred commission described below) at
JPMorgan Chase N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. The placing agent will be entitled to its deferred
commission, but not interest accrued thereon, upon the completion of our initial business combination.
Proceeds (or portions thereof) held in the trust account will be released upon the completion of any approved business combination, and such proceeds
will be used in connection with the approved business combination (and, in the case of the initial business combination, in respect of payment of the
placing agent’s deferred commission) or to fund the exercise of repurchase rights by the new shareholders. The balance of the funds in the trust account
(including any interest, net of taxes payable) will be released to (i) us and new shareholders exercising their repurchase rights upon the consummation
of a Qualified Business Combination, (ii) holders of our ordinary shares if we do not consummate a Qualified Business Combination within 12 months
after the Admission Date (or, if extended by a majority of votes cast at a general meeting of ordinary shareholders at which a quorum is present, by the
Extended Date), or (iii) holders of our ordinary shares (or, to us, to the extent any holders elect to maintain their interest in us), if we consummate a
business combination, but do not consummate a Qualified Business Combination, within 12 months after the Admission Date (or, if extended by a
majority of votes cast at a general meeting of ordinary shareholders at which a quorum is present, by the Extended Date).
We have agreed to sell to the placing agent for $100, as additional compensation, an option to purchase up to a total of 833,333 units at $7.50 per unit,
with the warrants issued as part of such units being exercisable at an exercise price of $6.25 per warrant. The units issuable upon exercise of this
option, and the warrants included therein, are otherwise identical to those offered hereby.
There is presently no public market for our units, ordinary shares or warrants. We have applied to AIM for the admission to trading of our ordinary
shares and warrants that comprise the units offered hereby, and anticipate that our ordinary shares and warrants will be quoted, on AIM under the
symbols ‘‘IHC’’ and ‘‘IHCW’’, respectively, on the Admission Date. The ordinary shares and warrants that comprise the units are immediately separable,
and the units will not independently constitute a transferable security. The ordinary shares and warrants will commence trading separately on the
Admission Date.
Investing in our securities involves risk. You will, for example, experience significant and
immediate dilution of $1.46493 per ordinary share. See ‘‘Risk Factors’’ beginning on page 17 of
this offering circular for a discussion of information that should be considered in connection with
an investment in our securities, including, but not limited to, the fact that investors will not be
entitled to protections normally afforded to investors in blank check offerings (as defined under
Rule 419 of the Securities Act of 1933, as amended, or the Securities Act).
None of the units, ordinary shares or warrants have been or will be registered under the Securities Act. The
units, ordinary shares and warrants may be offered or sold in the United States only to qualified institutional
buyers in reliance on the exemption from registration provided by Rule 144A and in offshore transactions to
non-U.S. persons in reliance on Regulation S. You are hereby notified that sellers of the units, ordinary
shares and warrants may be relying on the exemption from the provisions of Section 5 of the Securities Act
provided by Rule 144A. Hedging transactions involving these securities may not be conducted unless in
compliance with the Securities Act.
Placing Agent’s
Commissions(1)(2)
Offering Price
Per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
6.00
100,000,000
$
$
0.42
5,250,000
Net Proceeds
Before Expenses(2)
$
$
5.58
94,750,000
(1) The placing agent has agreed to defer $1,500,000 of its commission, equal to 2% of the gross proceeds of the 12,500,000 units being offered in this
offering to new shareholders, until the consummation of the initial business combination by us. Upon the consummation of the first such business
combination, such deferred commission will be released to the placing agent out of the proceeds of this offering and the sponsor private placement
held in a trust account at JPMorgan Chase N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. The placing agent will
not be entitled to any interest accrued on the deferred commission.
(2) There is no commission payable to the placing agent on the 4,166,667 units being purchased by Hayground Cove in this offering for an aggregate
price of $25,000,000.
The placing agent is offering units on a firm commitment basis if and when the placing agent executes a placing agreement at the time of pricing of
this offering. Delivery of the ordinary shares and warrants to investors in this offering is expected to be made on or about August 1, 2006.
Deutsche Bank Securities
The date of this offering circular is July 26, 2006.
IMPORTANT NOTICE
This document does not constitute, or form part of, any offer or invitation to sell or issue, or
any solicitation of any offer to purchase or subscribe for, any of our ordinary shares or
warrants in any circumstances in which such offer or solicitation is unlawful, nor shall it, or
any part of it, or the fact of its distribution, form the basis of, or be relied on in connection
with or act as any inducement to enter into, any contract therefor.
Recipients of this document who are considering acquiring ordinary shares and warrants
following publication of the admission document are reminded that any such acquisition must
be made only on the basis of the information contained in the admission document. No
reliance may be placed, for any purpose whatsoever, on the information or opinions contained
in this document or on its completeness and no representation or warranty, express or
implied, is given by or on behalf of us, Deutsche Bank AG London, Deutsche Bank Securities
Inc. or their respective directors, employees, agents or advisors as to the accuracy or
completeness of the information or opinions contained in this document and no responsibility
or liability is accepted by any of them for any such information or opinions.
Deutsche Bank Securities Inc. and Deutsche Bank AG London are acting only for us in
connection with the matters described in this document and are not acting for or advising any
other person, or treating any other person as their respective client, in relation thereto and
will not be responsible for providing the regulatory protection afforded to clients of Deutsche
Bank Securities Inc. or Deutsche Bank AG London or advice to any other person in relation to
the matters contained herein. Such persons should seek their own independent legal,
investment and tax advice as they see fit.
This document is exempt from the general restriction (in section 21 of Financial Services and
Markets Act 2000, or FSMA), on the communication of invitations or inducements to engage
in investment activity pursuant to the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, or the Financial Promotion Order, on the grounds that it is directed
only at: (a) persons having professional experience in matters relating to investments (being
‘‘Investment Professionals’’ within the meaning of Article 19(5) of the Financial Promotion
Order); or (b) persons who fall within Article 49(2) (a)-(d) of the Financial Promotion Order; or
(c) persons who fall within Article 12 of the Financial Promotion Order on the grounds that it
is made to or directed at any other person to whom it may otherwise be lawfully made to or
directed at (all such persons together being referred to as ‘‘Relevant Persons’’). Reliance on
this document for the purpose of engaging in any investment activity may expose you to a
significant risk of losing all of the property invested. This document is directed only at
Relevant Persons and must not be acted on or relied on by persons who are not Relevant
Persons. Any investment or investment activity to which the final form of this document
relates is available only to Relevant Persons and will be engaged in only with Relevant
Persons. Accordingly, this document is exempt from the general restriction on the
communication of invitations to enter into investment activity and has not been approved by
an authorized person as required by section 21 of the FSMA. Any person in the United
Kingdom or elsewhere in receipt of this document who is not a Relevant Person should not
act or rely on this document or its contents and should return this document immediately to
Deutsche Bank AG London, Deutsche Bank Securities Inc. and us.
The distribution of this document and the offering and sale of ordinary shares and warrants in
jurisdictions other than the United Kingdom may be restricted by law and, therefore, persons
into whose possession this document comes should inform themselves about, and observe,
such restrictions. Any failure to comply with the restrictions may constitute a violation of the
securities laws of any such jurisdiction. This document does not constitute an offer to sell or
i
issue to, or the solicitation of an offer to buy or subscribe for, ordinary shares and/or warrants
in any jurisdiction in which such offer or solicitation is unlawful.
THE ORDINARY SHARES AND WARRANTS OFFERED HEREBY ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND, UNTIL THESE ORDINARY SHARES
AND WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS, THESE ORDINARY SHARES AND WARRANTS MAY NOT BE
TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) IN THE
UNITED STATES, TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (B) OUTSIDE OF THE UNITED STATES, IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR 904 UNDER THE SECURITIES ACT, (C) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR ANOTHER EXEMPTION FROM REGISTRATION AS PERMITTED UNDER THE
SECURITIES ACT. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF INDIA HOSPITALITY CORP. AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT IN THE
ORDINARY SHARES AND WARRANTS OFFERED HEREBY FOR AN INDEFINITE PERIOD OF
TIME.
THIS CONFIDENTIAL OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, UNITS, ORDINARY SHARES OR WARRANTS
OFFERED HEREBY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS OFFERING CIRCULAR NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF INDIA
HOSPITALITY CORP. OR ITS SUBSIDIARIES OR THAT THE INFORMATION SET FORTH HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
THE ORDINARY SHARES AND WARRANTS OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE
BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH STATE LAWS.
THE ORDINARY SHARES AND WARRANTS OFFERED HEREBY ARE ALSO SUBJECT TO THE
CONDITIONS OF CATEGORY 3 UNDER REGULATION S AS DESCRIBED IN ‘‘TRANSFER
RESTRICTIONS’’ PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD WHICH SHALL
EXPIRE ONE YEAR FOLLOWING THE LATER OF (1) THE DATE WHEN THE UNITS, ORDINARY
SHARES OR WARRANTS ARE FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS IN
ACCORDANCE WITH REGULATION S AND (2) THE DATE OF THE ADMISSION OF THE
ORDINARY SHARES AND WARRANTS TO TRADING ON AIM.
NOTICE TO RESIDENTS OF NEW HAMPSHIRE
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421 B OF THE NEW HAMPSHIRE UNIFORM
SECURITIES ACT WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY
IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421 B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ii
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
NOTICE TO UK INVESTORS
THIS OFFERING CIRCULAR AND ITS CONTENTS ARE CONFIDENTIAL AND ARE ONLY
DIRECTED AT PERSONS WHO FALL WITHIN THE EXEMPTIONS CONTAINED IN ARTICLES 19
(INVESTMENT PROFESSIONALS) AND 49 (HIGH NET WORTH COMPANIES ETC.) OF THE
FINANCIAL PROMOTION ORDER (SUCH AS PERSONS WHO ARE AUTHORIZED OR EXEMPT
PERSONS WITHIN THE MEANING OF THE FSMA AND CERTAIN OTHER INVESTMENT
PROFESSIONALS, HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS OR
PARTNERSHIPS AND THE TRUSTEES OF HIGH VALUE TRUSTS) AND PERSONS WHO ARE
OTHERWISE PERMITTED BY LAW TO RECEIVE IT. AS SUCH, THIS OFFERING CIRCULAR AND
ITS CONTENTS ARE DIRECTED ONLY AT PERSONS WHO HAVE PROFESSIONAL EXPERIENCE
IN MATTERS RELATING TO INVESTMENTS AND ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THIS OFFERING CIRCULAR RELATES IS ONLY AVAILABLE TO SUCH
PERSONS.
IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN UNION WHICH HAS
IMPLEMENTED THE PROSPECTUS DIRECTIVE, EACH OF DEUTSCHE BANK SECURITIES INC.,
DEUTSCHE BANK AG LONDON AND US HAVE REPRESENTED AND AGREED THAT, WITH
EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS
IMPLEMENTED IN THAT MEMBER STATE, IT HAS NOT MADE AND WILL NOT MAKE AN
OFFER OF ORDINARY SHARES OR WARRANTS TO THE PUBLIC IN THAT MEMBER STATE
PRIOR TO THE PUBLICATION OF A PROSPECTUS IN RELATION TO THAT OFFER WHICH HAS
BEEN APPROVED BY THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE OR,
WHERE APPROPRIATE, APPROVED IN ANOTHER RELEVANT MEMBER STATE AND NOTIFIED
TO THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE, ALL IN
ACCORDANCE WITH THE PROSPECTUS DIRECTIVE, EXCEPT THAT IT MAY, WITH EFFECT
FROM AND INCLUDING SUCH DATE, MAKE AN OFFER OF ORDINARY SHARES OR
WARRANTS TO THE PUBLIC IN THAT MEMBER STATE:
(A) AT ANY TIME TO LEGAL ENTITIES WHICH ARE AUTHORIZED OR REGULATED TO
OPERATE IN THE FINANCIAL MARKETS OR, IF NOT SO AUTHORIZED OR REGULATED,
WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES;
(B) AT ANY TIME TO ANY LEGAL ENTITY WHICH DOES NOT MEET TWO OR MORE
OF THE FOLLOWING THREE CRITERIA: (1) AN AVERAGE OF LESS THAN 250 EMPLOYEES
DURING THE LAST FINANCIAL YEAR; (2) A TOTAL BALANCE SHEET NOT EXCEEDING
e43,000,000 AND (3) AN ANNUAL NET TURNOVER NOT EXCEEDING e50,000,000, AS
SHOWN IN ITS LAST ANNUAL OR CONSOLIDATED ACCOUNTS; OR
(C) AT ANY TIME IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE
PUBLICATION BY THE COMPANY OF A PROSPECTUS PURSUANT TO ARTICLE 3 OR 4 OF
THE PROSPECTUS DIRECTIVE.
FOR THE PURPOSES OF THE ABOVE, THE EXPRESSION ‘‘OFFER OF SHARES TO THE
PUBLIC’’ IN RELATION TO ANY UNITS, ORDINARY SHARES OR WARRANTS IN ANY MEMBER
STATE MEANS THE COMMUNICATION TO ONE HUNDRED OR MORE PERSONS, OTHER
iii
THAN QUALIFIED INVESTORS, IN ANY FORM AND BY ANY MEANS OF SUFFICIENT
INFORMATION ON THE TERMS OF THE OFFER AND THE SECURITIES TO BE OFFERED SO AS
TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE SECURITIES,
AS THE SAME MAY BE VERIFIED IN THAT MEMBER STATE BY ANY MEASURE
IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE.
NOTICE TO RESIDENTS OF FRANCE
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE CERTIFIED BY THE FRENCH
AUTORITE DES MARCHES FINANCIERS, OR AMF, (FORMERLY THE COMMISSION DES
OPERATIONS DE BOURSE, OR COB). THE OFFERING HAS NOT AND WILL NOT BE APPROVED
BY THE AMF AND THE TRANSACTION WILL NOT BE ADVERTISED IN FRANCE. ANY PERSON
WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR UNDERSTANDS THAT NO ACTION
HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW AN OFFERING OF THE ORDINARY
SHARES AND WARRANTS TO THE PUBLIC IN FRANCE. ACCORDINGLY, THE ORDINARY
SHARES AND WARRANTS MAY NOT BE OFFERED, SOLD OR DELIVERED AND NEITHER THIS
OFFERING CIRCULAR NOR ANY OTHER OFFERING MATERIALS RELATING TO THE ORDINARY
SHARES AND WARRANTS MAY BE DISTRIBUTED OR MADE AVAILABLE TO THE PUBLIC IN
FRANCE. THE TRANSFER TO THE PUBLIC, EITHER DIRECTLY OR INDIRECTLY, OF THE
ORDINARY SHARES AND WARRANTS PURCHASED, MUST COMPLY WITH FRENCH PUBLIC
OFFERING REGULATIONS. PURSUANT TO ARTICLES L. 411-1, L. 411-2 AND L. 412-1 OF THE
FRENCH MONETARY AND FINANCIAL CODE (THE ‘‘MF CODE’’), PURCHASERS OF THE
ORDINARY SHARES AND WARRANTS MAY TAKE PART IN THE TRANSACTION ONLY FOR
THEIR OWN ACCOUNT. INDIVIDUAL SALES OF THE ORDINARY SHARES AND WARRANTS IN
FRANCE MAY ONLY BE MADE EITHER TO QUALIFIED INVESTORS IN FRANCE AS DEFINED IN
ARTICLE L. 411-2 OF THE MF CODE OR TO A RESTRICTED CIRCLE OF INVESTORS AS
DEFINED IN ARTICLE L. 411-2 OF THE MF CODE. WHEN SALES OF ORDINARY SHARES AND
WARRANTS ARE MADE TO A RESTRICTED CIRCLE OF INVESTORS AS DEFINED IN ARTICLE
L. 411-2 OF THE MF CODE WHICH IS NOT LESS THAN 100 INDIVIDUALS, EACH OF THESE
INDIVIDUALS MUST PROVIDE CERTIFICATION AS TO THEIR PERSONAL ASSOCIATION, OF A
PROFESSIONAL OR FAMILY NATURE, WITH A MEMBER OF THE MANAGEMENT OF THE
ISSUER. FURTHERMORE, FOLLOWING ARTICLE L. 423-1 OF THE MF CODE WITH REGARDS
TO SOLICITATION AND ARTICLE L. 341-10 OF THE MF CODE WITH REGARDS TO
CANVASSING, NO SOLICITATION OR CANVASSING OF THE PUBLIC WILL BE CONDUCTED IN
CONNECTION WITH THE OFFERING.
NOTICE TO RESIDENTS OF GERMANY
ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR UNDERSTANDS THAT
NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW AN OFFERING OF THE
ORDINARY SHARES AND WARRANTS TO THE PUBLIC IN GERMANY. ACCORDINGLY, THIS
OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE ORDINARY SHARES OR WARRANTS TO THE PUBLIC IN GERMANY.
THEREFORE, THE ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED, SOLD, OR
DELIVERED AND NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER OFFERING
MATERIALS RELATING TO THE ORDINARY SHARES AND WARRANTS MAY BE DISTRIBUTED
OR MADE AVAILABLE TO THE PUBLIC IN GERMANY OR BE USED FOR, OR IN CONNECTION
WITH AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE ORDINARY
SHARES AND WARRANTS TO THE PUBLIC IN GERMANY. INDIVIDUAL SALES OF THE
ORDINARY SHARES AND WARRANTS TO ANY PERSON IN GERMANY MAY ONLY BE MADE
TO (I) CERTAIN PERSONS WHO ON A PROFESSIONAL OR COMMERCIAL BASIS (AS DEFINED
IN §2 PARA. 1 GERMAN SALES PROSPECTUS ACT) PURCHASE OR SELL ORDINARY SHARES
iv
AND WARRANTS FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF THIRD PARTIES, OR
(II) TO A LIMITED GROUP OF PERSONS (AS DEFINED IN §2 PARA. 2 GERMAN SALES
PROSPECTUS ACT), AND ACCORDING TO ANY OTHER GERMAN SECURITIES, PROSPECTUS,
TAX, AND OTHER APPLICABLE LAWS AND REGULATIONS.
NOTICE TO RESIDENTS OF ITALY
THIS OFFERING CIRCULAR HAS NOT BEEN SUBMITTED TO THE CLEARANCE PROCEDURES
OF COMMISSIONE NAZIONALE PER LE SOCIETÀ E LA BORSA, OR CONSOB, AND HAS NOT
BEEN AND WILL NOT BE SUBJECT TO THE FORMAL REVIEW OR CLEARANCE PROCEDURES
OF CONSOB AND ACCORDINGLY MAY NOT BE USED IN CONNECTION WITH ANY OFFERING
OF ORDINARY SHARES OR WARRANTS IN THE REPUBLIC OF ITALY (‘‘ITALY’’) OTHER THAN
TO ‘‘PROFESSIONAL INVESTORS’’ (AS DEFINED BELOW AND IN ACCORDANCE WITH
APPLICABLE ITALIAN SECURITIES LAWS AND REGULATIONS).
ANY OFFER OF ORDINARY SHARES OR WARRANTS IN ITALY IN RELATION TO THE
OFFERING IS BEING MADE ONLY TO PROFESSIONAL INVESTORS (EACH A ‘‘PROFESSIONAL
INVESTOR’’), PURSUANT TO ARTICLE 30, PARAGRAPH 2 AND ARTICLE 100 A) OF
LEGISLATIVE DECREE NO. 58 OF 24 FEBRUARY 1998, AS AMENDED, OR DECREE NO. 58,
AND AS DEFINED IN ARTICLES 25 AND 31, PARAGRAPH 2 OF CONSOB REGULATION NO.
11522 OF 1 JULY 1998, AS AMENDED, OR REGULATION NO. 11522, AND EXCLUDING
INDIVIDUALS AS DEFINED PURSUANT TO THE AFOREMENTIONED ARTICLE 31, PARAGRAPH
2, WHO MEET THE REQUIREMENTS IN ORDER TO EXERCISE ADMINISTRATIVE,
MANAGERIAL OR SUPERVISORY FUNCTIONS AT A REGISTERED SECURITIES DEALING FIRM
(A SOCIETÀ DI INTERMEDIAZIONE MOBILIARE, OR SIM), MANAGEMENT COMPANIES
AUTHORIZED TO MANAGE INDIVIDUAL PORTFOLIOS ON BEHALF OF THIRD PARTIES
(SOCIETÀ DI GESTIONE DEL RISPARMIO, OR SGR) AND FIDUCIARY COMPANIES (SOCIETÀ
FIDUCIARIE) MANAGING PORTFOLIO INVESTMENTS REGULATED BY ARTICLE 60,
PARAGRAPH 4 OF LEGISLATIVE DECREE NO. 415 OF 23 JULY 1996 AND OTHERWISE IN
ACCORDANCE WITH APPLICABLE ITALIAN LAWS AND REGULATIONS PROVIDED THEREIN.
UNDER NO CIRCUMSTANCES SHOULD THIS OFFERING CIRCULAR BE CIRCULATED AMONG,
OR BE DISTRIBUTED IN ITALY TO ANY MEMBER OF THE GENERAL PUBLIC IN ITALY OR TO
INDIVIDUALS OR ENTITIES FALLING OUTSIDE THE CATEGORIES OF PROFESSIONAL
INVESTORS. ANY SUCH OFFER OR ISSUE OR ANY DISTRIBUTION OF THIS OFFERING
CIRCULAR WITHIN ITALY AND/OR THE RENDERING OF ADVICE OF ANY NATURE
WHATSOEVER IN CONNECTION WITH THE OFFERING MUST BE CONDUCTED EITHER BY
BANKS, INVESTMENT FIRMS (AS DEFINED IN DECREE NO. 58) AND FINANCIAL COMPANIES
ENROLLED IN THE SPECIAL REGISTER PROVIDED FOR BY ARTICLE 107 OF LEGISLATIVE
DECREE NO. 385 OF 1 SEPTEMBER 1993, AS AMENDED, TO THE EXTENT DULY AUTHORIZED
TO ENGAGE IN THE PLACEMENT AND/OR UNDERWRITING OF FINANCIAL INSTRUMENTS IN
ITALY IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF DECREE NO. 58.
NOTICE TO RESIDENTS OF JERSEY
CONSENT UNDER THE CONTROL OF BORROWING (JERSEY) ORDER 1958, OR THE COB
ORDER, HAS NOT BEEN OBTAINED FOR THE CIRCULATION OF THIS OFFERING CIRCULAR.
ACCORDINGLY, THE OFFER THAT IS THE SUBJECT OF THIS OFFERING CIRCULAR MAY ONLY
BE MADE IN JERSEY WHERE SUCH OFFER IS NOT AN OFFER TO THE PUBLIC (AS DEFINED
IN THE COB ORDER) OR WHERE (IN THE ABSENCE OF A RELEVANT CONNECTION WITH
JERSEY) THE OFFER IS VALID (AS DEFINED IN THE COB ORDER) IN THE UNITED KINGDOM
AND IS CIRCULATED IN JERSEY ONLY TO PERSONS SIMILAR TO THOSE TO WHOM, AND IN
A MANNER SIMILAR TO THAT IN WHICH, IT IS FOR THE TIME BEING CIRCULATED IN THE
v
UNITED KINGDOM. THE DIRECTORS OF THE COMPANY MAY, BUT ARE NOT OBLIGED TO,
APPLY FOR SUCH CONSENT IN THE FUTURE. INVESTMENT BUSINESS CARRIED OUT IN OR
FROM WITHIN JERSEY, INCLUDING BUT NOT LIMITED TO THE SALE OR ADVICE IN
RELATION TO INVESTMENTS, IS REGULATED UNDER THE FINANCIAL SERVICES (JERSEY)
LAW 1998.
NOTICE TO INDIVIDUAL PURCHASERS IN LUXEMBOURG
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
COMMISSION FOR THE SUPERVISION OF THE FINANCIAL SECTOR, OR CSSF. THE ORDINARY
SHARES AND WARRANTS HAVE NOT BEEN AND WILL NOT BE AUTHORIZED FOR PUBLIC
OFFERING IN LUXEMBOURG AND MAY NOT BE OFFERED OR SOLD IN LUXEMBOURG IN
CIRCUMSTANCES THAT WOULD CONSTITUTE A PUBLIC OFFER UNLESS THE
REQUIREMENTS OF LUXEMBOURG LAW CONCERNING PUBLIC OFFERS HAVE BEEN
COMPLIED WITH. THIS DOCUMENT MAY NOT BE DUPLICATED. IN ADDITION, IT MAY NOT
BE PASSED TO ANOTHER PERSON.
vi
NOTICE TO INSTITUTIONAL INVESTORS IN LUXEMBOURG
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
COMMISSION FOR THE SUPERVISION OF THE CSSF. THE ORDINARY SHARES AND
WARRANTS HAVE NOT BEEN AND WILL NOT BE AUTHORIZED FOR PUBLIC OFFERING IN
LUXEMBOURG AND MAY NOT BE OFFERED OR SOLD IN LUXEMBOURG IN
CIRCUMSTANCES THAT WOULD CONSTITUTE A PUBLIC OFFER UNLESS THE
REQUIREMENTS OF LUXEMBOURG LAW CONCERNING PUBLIC OFFERS HAVE BEEN
COMPLIED WITH.
NOTICE TO RESIDENTS OF NORWAY
THIS OFFERING CIRCULAR HAS NOT BEEN FILED WITH THE NORWEGIAN COMPANY
REGISTRY OR WITH THE OSLO STOCK EXCHANGE IN ACCORDANCE WITH THE NORWEGIAN
SECURITIES TRADING ACT, CHAPTER 5, AND MAY THEREFORE NOT BE DISTRIBUTED TO
MORE THAN FIFTY (50) POTENTIAL INVESTORS IN NORWAY.
NOTICE TO RESIDENTS OF SWITZERLAND
INDIA HOSPITALITY CORP. HAS NOT BEEN AUTHORIZED BY THE SWISS FEDERAL BANKING
COMMISSION AS A FOREIGN INVESTMENT FUND NOR DOES THIS OFFERING CIRCULAR
CONSTITUTE AN ISSUE PROSPECTUS FOR THE OFFERING OF ORDINARY SHARES OR
WARRANTS IN ACCORDANCE WITH APPLICABLE SWISS LEGISLATION. ACCORDINGLY,
ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED TO THE PUBLIC IN OR FROM
SWITZERLAND. THIS OFFERING CIRCULAR MAY ONLY BE USED BY THOSE PERSONS TO
WHOM IT HAS BEEN HANDED OUT IN CONNECTION WITH THE OFFER DESCRIBED THEREIN.
IT MAY NOT BE USED IN CONNECTION WITH ANY OTHER OFFER AND SHALL IN
PARTICULAR NOT BE DISTRIBUTED TO THE PUBLIC IN SWITZERLAND.
NOTICE TO RESIDENTS OF ISRAEL
NEITHER THE OFFERING CONTEMPLATED BY THIS OFFERING CIRCULAR NOR THE
ORDINARY SHARES AND WARRANTS OFFERED THEREUNDER HAVE BEEN OR WILL BE
REGISTERED WITH THE SECURITIES COMMISSION OF THE STATE OF ISRAEL.
ACCORDINGLY, THE ORDINARY SHARES AND WARRANTS OFFERED BY THIS OFFERING
CIRCULAR MAY NOT BE OFFERED OR SOLD TO THE GENERAL PUBLIC. THE ORDINARY
SHARES AND WARRANTS OFFERED BY THIS OFFERING CIRCULAR SHALL ONLY BE
OFFERED TO, AND MAY ONLY BE ACQUIRED BY, THOSE PARTIES THAT ARE ‘‘ACCREDITED
INVESTORS’’ AS DEFINED IN SECTION 15 OF THE SECURITIES LAW, 5728-1968, OF THE
STATE OF ISRAEL AND THE RULES AND REGULATIONS ADOPTED THEREUNDER.
NOTICE TO RESIDENTS OF IRELAND
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH ANY
REGULATORY OR OTHER AUTHORITIES IN IRELAND. ANY PERSON WHO IS IN POSSESSION
OF THIS OFFERING CIRCULAR UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE
TAKEN WHICH WOULD ALLOW AN OFFERING OF THE ORDINARY SHARES AND WARRANTS
TO THE PUBLIC IN IRELAND. ACCORDINGLY, THE ORDINARY SHARES AND WARRANTS MAY
NOT BE OFFERED, SOLD OR DELIVERED AND NEITHER THIS OFFERING CIRCULAR NOR ANY
OTHER OFFERING MATERIALS RELATING TO THE ORDINARY SHARES AND WARRANTS MAY
BE DISTRIBUTED OR MADE AVAILABLE TO THE PUBLIC IN IRELAND. INDIVIDUAL SALES OF
THE ORDINARY SHARES AND WARRANTS TO ANY PERSON IN IRELAND MAY ONLY BE
vii
MADE TO LESS THAN TWENTY (20) PERSONS, WHETHER INSTITUTIONAL OR INDIVIDUALS,
AND WHETHER ON A SOLICITED OR UNSOLICITED BASIS.
NOTICE TO RESIDENTS OF JAPAN
THE ORDINARY SHARES AND WARRANTS OFFERED HEREBY HAVE NOT BEEN, AND WILL
NOT BE, REGISTERED UNDER THE SECURITIES AND EXCHANGE LAW OF JAPAN. NEITHER
THE ORDINARY SHARES OR WARRANTS NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, RESOLD, OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO
OR FOR THE ACCOUNT OF ANY RESIDENT OF JAPAN (WHICH TERM AS USED HEREIN
MEANS ANY PERSON RESIDENT IN JAPAN, INCLUDING ANY CORPORATION OR OTHER
ENTITY ORGANIZED UNDER THE LAWS OF JAPAN), OR TO OTHERS FOR RE-OFFERING OR
SALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO A RESIDENT OF JAPAN EXCEPT
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND
OTHERWISE IN COMPLIANCE WITH, THE SECURITIES AND EXCHANGE LAW AND ANY
OTHER APPLICABLE LAWS, REGULATIONS AND MINISTERIAL GUIDELINES OF JAPAN.
NOTICE TO RESIDENTS OF AUSTRIA
ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR UNDERSTANDS THAT
NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW AN OFFERING OF THE
ORDINARY SHARES AND WARRANTS TO THE PUBLIC IN AUSTRIA. ACCORDINGLY, THE
ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED, SOLD OR DELIVERED AND
NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER OFFERING MATERIALS RELATING TO
THE ORDINARY SHARES AND WARRANTS MAY BE DISTRIBUTED OR MADE AVAILABLE TO
THE PUBLIC IN AUSTRIA. ANY INDIVIDUAL SALES OF THE ORDINARY SHARES AND
WARRANTS TO ANY PERSON IN AUSTRIA WERE MADE ONLY TO A LIMITED CIRCLE OF
INSTITUTIONAL INVESTORS IN ACCORDANCE WITH § 3/1/11 OF THE AUSTRIAN CAPITAL
MARKETS ACT OR IN A PRIVATE PLACEMENT WHERE A MAXIMUM OF 250 INDIVIDUALS
WERE INDIVIDUALLY APPROACHED AND IDENTIFIED BY NAME. THE ORDINARY SHARES
AND WARRANTS MUST NOT BE RESOLD OR SOLD OTHER THAN IN COMPLIANCE WITH
THE CAPITAL MARKETS ACT.
NOTICE TO RESIDENTS OF THE KINGDOM OF DENMARK
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE FILED WITH OR APPROVED
BY THE DANISH SECURITIES COUNCIL, OR FONDSRÅDET, OR ANY OTHER REGULATORY
AUTHORITY IN THE KINGDOM OF DENMARK. THE ORDINARY SHARES AND WARRANTS
HAVE NOT BEEN OFFERED OR SOLD AND MAY NOT BE OFFERED OR SOLD OR DELIVERED
DIRECTLY OR INDIRECTLY IN DENMARK, UNLESS IN COMPLIANCE WITH CHAPTER 12 OF
THE DANISH ACT ON TRADING IN SECURITIES AS AMENDED FROM TIME TO TIME AND
THE DANISH EXECUTIVE ORDER NO. 166 OF 13 MARCH 2003 ON THE FIRST PUBLIC OFFER
OF CERTAIN SECURITIES ISSUED PURSUANT THERETO. THE RECIPIENT OF THIS OFFERING
CIRCULAR MAY NOT FORWARD ANY OFFER TO, OR REPLACE THEMSELVES WITH, ANY
OTHER INVESTOR IN DENMARK WITHOUT COMPLYING WITH THE RELEVANT LAWS.
NOTICE TO RESIDENTS OF SWEDEN
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE APPROVED BY OR
REGISTERED WITH THE SWEDISH FINANCIAL SUPERVISORY AUTHORITY, OR SFSA. THE
OFFERING HAS NOT AND WILL NOT BE APPROVED BY THE SFSA AND THE TRANSACTION
WILL NOT BE ADVERTISED IN SWEDEN. ANY PERSON WHO IS IN POSSESSION OF THIS
OFFERING CIRCULAR UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN
viii
WHICH WOULD ALLOW AN OFFERING OF THE ORDINARY SHARES AND WARRANTS TO THE
PUBLIC IN SWEDEN. ACCORDINGLY, NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER
OFFERING MATERIALS RELATING TO THE ORDINARY SHARES AND WARRANTS MAY BE
DISTRIBUTED OR MADE AVAILABLE TO THE PUBLIC IN SWEDEN.
NOTICE TO RESIDENTS OF BELGIUM
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
BELGIAN BANKING, FINANCE AND INSURANCE COMMISSION, OR BFIC. THE OFFERING HAS
NOT AND WILL NOT BE APPROVED BY THE BFIC AND THE TRANSACTION WILL NOT BE
ADVERTISED IN BELGIUM. ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING
CIRCULAR UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD
ALLOW AN OFFERING OF THE ORDINARY SHARES AND WARRANTS TO THE PUBLIC IN
BELGIUM. ACCORDINGLY, THE ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED,
SOLD OR DELIVERED AND NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER OFFERING
MATERIALS RELATING TO THE ORDINARY SHARES AND WARRANTS MAY BE DISTRIBUTED
OR MADE AVAILABLE TO THE PUBLIC IN BELGIUM. THE ORDINARY SHARES AND
WARRANTS MUST NOT BE OFFERED, DISTRIBUTED OR SOLD IN BELGIUM EXCEPT IN
COMPLIANCE WITH THE REQUIREMENTS FOR A NON-PUBLIC OFFERING LAID DOWN IN
ARTICLES 2 & 3 OF THE ROYAL DECREE OF 7 JULY 1999. INDIVIDUAL SALES OF THE
ORDINARY SHARES AND WARRANTS TO ANY PERSON IN BELGIUM MAY ONLY BE MADE IF
(i) NO UNAUTHORIZED INTERMEDIARY HAS BEEN INVOLVED, (ii) THE OFFER HAS NOT
BEEN ADVERTISED TO MORE THAN FIFTY (50) INDIVIDUALS, AND (iii) A MAXIMUM OF
FIFTY (50) INDIVIDUALS HAS BEEN ACTIVELY SOLICITED. INDIVIDUAL SALES OF THE
ORDINARY SHARES AND WARRANTS TO PROFESSIONAL INVESTORS, AS DEFINED IN
ARTICLE 3 OF THE ROYAL DECREE OF 7 JULY 1999, ARE PERMITTED, AS WELL AS
INDIVIDUAL SALES FOR A CONSIDERATION OF AT LEAST EUR 250,000 PER INVESTOR.
NOTICE TO RESIDENTS OF FINLAND
THIS OFFERING CIRCULAR HAS NOT BEEN PREPARED TO COMPLY WITH THE STANDARDS
AND REQUIREMENTS APPLICABLE UNDER FINNISH LAW, INCLUDING THE SECURITIES
MARKET ACT (26.5.1989/495) AS AMENDED AND IT HAS NOT BEEN APPROVED BY THE
FINNISH FINANCIAL SUPERVISION AUTHORITY. ANY PERSON WHO IS IN POSSESSION OF
THIS OFFERING CIRCULAR UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN
WHICH WOULD ALLOW AN OFFERING OF THE ORDINARY SHARES AND WARRANTS TO THE
PUBLIC IN FINLAND. THE ORDINARY SHARES AND WARRANTS MUST NOT BE, DIRECTLY
OR INDIRECTLY, OFFERED DISTRIBUTED OR SOLD IN FINLAND EXCEPT IN COMPLIANCE
WITH ALL APPLICABLE PROVISIONS OF THE LAWS OF FINLAND, INCLUDING THE FINNISH
SECURITIES MARKET ACT (26.5.1989/495) AND THE REGULATIONS ISSUED THEREUNDER,
AS AMENDED.
NOTICE TO RESIDENTS OF ICELAND
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
ICELANDIC FINANCIAL SUPERVISORY AUTHORITY, OR FME. THE OFFERING HAS NOT AND
WILL NOT BE APPROVED BY THE FME AND THE TRANSACTION WILL NOT BE ADVERTISED
IN ICELAND. ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR
UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW
AN OFFERING OF THE ORDINARY SHARES AND WARRANTS TO THE PUBLIC IN ICELAND.
ACCORDINGLY, THE ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED, SOLD OR
DELIVERED AND NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER OFFERING
ix
MATERIALS RELATING TO THE ORDINARY SHARES AND WARRANTS MAY BE DISTRIBUTED
OR MADE AVAILABLE TO THE PUBLIC IN ICELAND.
NOTICE TO RESIDENTS OF THE NETHERLANDS
OUR ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED, SOLD, TRANSFERRED
OR DELIVERED IN OR FROM THE NETHERLANDS AS PART OF THEIR INITIAL DISTRIBUTION
OR AT ANY TIME THEREAFTER, DIRECTLY OR INDIRECTLY, OTHER THAN TO INDIVIDUALS
OR LEGAL ENTITIES, WHICH INCLUDES, BUT IS NOT LIMITED TO, BANKS, BROKERS,
DEALERS, INSTITUTIONAL INVESTORS AND UNDERTAKINGS WITH A TREASURY
DEPARTMENT, WHO OR WHICH TRADE OR INVEST IN ORDINARY SHARES AND WARRANTS
IN THE CONDUCT OF A BUSINESS OR A PROFESSION.
NOTICE TO RESIDENTS OF SAUDI ARABIA
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
SAUDI ARABIAN MONETARY AGENCY, OR SAMA. THE OFFERING HAS NOT AND WILL NOT
BE APPROVED BY SAMA AND THE TRANSACTION WILL NOT BE ADVERTISED IN SAUDI
ARABIA. ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR
UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW
AN OFFERING OF THE ORDINARY SHARES AND WARRANTS TO THE PUBLIC IN SAUDI
ARABIA. ACCORDINGLY, THE ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED,
SOLD OR DELIVERED AND NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER OFFERING
MATERIALS RELATING TO THE ORDINARY SHARES AND WARRANTS MAY BE DISTRIBUTED
OR MADE AVAILABLE TO THE PUBLIC IN SAUDI ARABIA. THE OFFERING IS MADE WITHOUT
THE APPROVAL, UNDER ARTICLE 228 OF THE REGULATIONS FOR COMPANIES, ROYAL
DECREE NO. M/6 DATED 22/3/1385 H. (20 JULY 1965 G.), AS AMENDED, OF THE MINISTRY OF
COMMERCE.
NOTICE TO RESIDENTS OF SPAIN
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED BY THE
SPANISH SECURITIES EXCHANGE COMMISSION, OR COMISION NACIONAL DEL MERCADO
DE VALORES. THE ORDINARY SHARES AND WARRANTS MUST NOT BE OFFERED,
DISTRIBUTED OR SOLD IN SPAIN EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF
THE FOLLOWING SPANISH REGULATIONS, AS AMENDED FROM TIME TO TIME, THE
SPANISH SECURITIES MARKET ACT OF 28TH JULY, 1988, AND ROYAL DECREE 291/1992, OF
27TH MARCH, 1992, ON ISSUANCE AND PUBLIC SALE OFFERINGS OF SECURITIES.
NOTICE TO RESIDENTS OF KUWAIT
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
MINISTRY OF COMMERCE AND INDUSTRY, OR MOCI. THE OFFERING HAS NOT AND WILL
NOT BE APPROVED BY THE MOCI AND THE TRANSACTION WILL NOT BE ADVERTISED IN
KUWAIT. ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR
UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW
AN OFFERING OF THE ORDINARY SHARES AND WARRANTS IN KUWAIT. THE ORDINARY
SHARES AND WARRANTS MUST NOT BE OFFERED, DISTRIBUTED OR SOLD IN KUWAIT
EXCEPT IN COMPLIANCE WITH THE FOLLOWING KUWAITI REGULATIONS, DECREE LAW NO.
31 OF 1990, WHICH HAS BEEN SUPPLEMENTED BY MINISTERIAL ORDER NOS. 113 OF 1992
AS WELL AS MINISTERIAL ORDER NOS. 16 OF 1995, 53 OF 1996, 100 OF 1999, 286 OF 2000
AND 362 OF 2001.
x
NOTICE TO RESIDENTS OF THE UNITED ARAB EMIRATES
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE
UNITED ARAB EMIRATES, OR UAE, CENTRAL BANK. THE OFFERING HAS NOT AND WILL
NOT BE APPROVED BY THE UAE CENTRAL BANK AND THE TRANSACTION WILL NOT BE
ADVERTISED IN UAE. ANY PERSON WHO IS IN POSSESSION OF THIS OFFERING CIRCULAR
UNDERSTANDS THAT NO ACTION HAS BEEN OR WILL BE TAKEN WHICH WOULD ALLOW
AN OFFERING OF THE ORDINARY SHARES AND WARRANTS TO THE PUBLIC IN UAE.
ACCORDINGLY, THE ORDINARY SHARES AND WARRANTS MAY NOT BE OFFERED, SOLD OR
DELIVERED AND NEITHER THIS OFFERING CIRCULAR NOR ANY OTHER OFFERING
MATERIALS RELATING TO THESE ORDINARY SHARES OR WARRANTS MAY BE DISTRIBUTED
OR MADE AVAILABLE TO THE PUBLIC IN UAE.
NOTICE TO RESIDENTS OF MONACO
THIS OFFERING CIRCULAR HAS NOT BEEN AND WILL NOT BE REGISTERED WITH OR
APPROVED BY THE REGULATORY AUTHORITIES IN MONACO. THIS OFFERING CIRCULAR IS
PERSONAL TO THE RECIPIENT AND HAS BEEN PREPARED SOLELY FOR USE IN
CONNECTION WITH THE OFFERING DESCRIBED HEREIN. DISTRIBUTION OF THIS OFFERING
CIRCULAR TO ANY PERSON OTHER THAN THE RECIPIENT AND THOSE PERSONS, IF ANY,
RETAINED TO ADVISE SUCH RECIPIENT WITH RESPECT TO THE OFFER AND SALE OF THE
ORDINARY SHARES AND WARRANTS IS UNAUTHORIZED, AND ANY DISCLOSURE OF ANY
OF ITS CONTENTS IS PROHIBITED. EACH RECIPIENT, BY ACCEPTING DELIVERY OF THIS
OFFERING CIRCULAR, AGREES TO THE FOREGOING AND AGREES TO MAKE NO COPIES OF
THIS OFFERING CIRCULAR. THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER
TO SELL, OR ANY SOLICITATION OF AN OFFER TO BUY, ANY OF THE ORDINARY SHARES
OR WARRANTS OFFERED HEREBY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER
THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALE MADE HEREUNDER OF THE
ORDINARY SHARES AND WARRANTS DESCRIBED HEREIN SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF. IF THE RECIPIENT DOES NOT PURCHASE ANY
SHARES, OR THIS OFFERING IS TERMINATED, THE RECIPIENT AGREES TO RETURN THIS
OFFERING CIRCULAR AND ALL DOCUMENTS DELIVERED CONCERNING IT TO THE INITIAL
PURCHASERS OR ITS REPRESENTATIVE WHO PROVIDED THE SAME.
NOTICE TO RESIDENTS OF THE CAYMAN ISLANDS
THE REGISTRAR OF COMPANIES OF THE CAYMAN ISLANDS MAY AT ANY TIME AND FROM
TIME TO TIME PROHIBIT THE SALE OF ANY OF OUR ORDINARY SHARES OR WARRANTS OR
ANY INVITATION IN THE CAYMAN ISLANDS TO SUBSCRIBE FOR ANY OF OUR ORDINARY
SHARES OR WARRANTS.
AS PART OF OUR AND THE INITIAL PURCHASERS’ RESPONSIBILITY FOR THE PREVENTION
OF MONEY LAUNDERING, WE AND THE INITIAL PURCHASERS (INCLUDING ITS AFFILIATES,
SUBSIDIARIES OR ASSOCIATES) WILL REQUIRE A DETAILED VERIFICATION OF THE
PURCHASER’S IDENTITY AND THE SOURCE OF PAYMENT. DEPENDING ON THE
CIRCUMSTANCES OF EACH APPLICATION, A DETAILED VERIFICATION MIGHT NOT BE
REQUIRED WHERE:
(A) THE PURCHASER IS A RECOGNIZED FINANCIAL INSTITUTION WHICH IS
REGULATED BY A RECOGNIZED REGULATORY AUTHORITY AND CARRIES ON BUSINESS
xi
IN A COUNTRY LISTED IN SCHEDULE 3 OF THE MONEY LAUNDERING REGULATIONS
2000, OR A SCHEDULE 3 COUNTRY; AND
(B) THE APPLICATION FOR OUR SHARES IS MADE THROUGH A RECOGNIZED
INTERMEDIARY WHICH IS REGULATED BY A RECOGNIZED REGULATORY AUTHORITY
AND CARRIES ON BUSINESS IN A COUNTRY RECOGNIZED IN SCHEDULE 3. IN THIS
SITUATION WE AND/OR THE INITIAL PURCHASERS, AS APPLICABLE, MAY RELY ON A
WRITTEN ASSURANCE FROM THE INTERMEDIARY THAT THE REQUISITE
IDENTIFICATION PROCEDURES ON THE APPLICANT FOR BUSINESS HAVE BEEN
CARRIED OUT.
WE AND THE INITIAL PURCHASERS RESERVE THE RIGHT TO REQUEST SUCH INFORMATION
AS IS NECESSARY TO VERIFY THE IDENTITY OF A PURCHASER. IN THE EVENT OF DELAY
OR FAILURE BY THE APPLICANT TO PRODUCE ANY INFORMATION REQUIRED FOR
VERIFICATION PURPOSES, WE AND/OR THE INITIAL PURCHASERS, AS APPLICABLE, WILL
REFUSE TO ACCEPT THE APPLICATION AND THE SUBSCRIPTION MONIES RELATING
THERETO.
IF ANY PERSON WHO IS RESIDENT IN THE CAYMAN ISLANDS HAS A SUSPICION THAT A
PAYMENT TO US AND/OR THE INITIAL PURCHASERS (BY WAY OF SUBSCRIPTION OR
OTHERWISE) CONTAINS THE PROCEEDS OF CRIMINAL CONDUCT, THAT PERSON IS
REQUIRED TO REPORT SUCH SUSPICION PURSUANT TO THE PROCEEDS OF CRIMINAL
CONDUCT LAW (AS AMENDED).
BY SUBSCRIBING, PURCHASERS CONSENT TO THE DISCLOSURE BY US AND/OR THE
INITIAL PURCHASERS OF ANY INFORMATION ABOUT THEM TO REGULATORS AND OTHERS
UPON REQUEST IN CONNECTION WITH MONEY LAUNDERING AND SIMILAR MATTERS
BOTH IN THE CAYMAN ISLANDS AND IN OTHER JURISDICTIONS.
NOTICE TO RESIDENTS OF THE BRITISH VIRGIN ISLANDS
THIS OFFERING CIRCULAR AND THE ORDINARY SHARES AND WARRANTS OFFERED
HEREBY HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE LAWS AND
REGULATIONS OF THE BRITISH VIRGIN ISLANDS, NOR HAS ANY REGULATORY AUTHORITY
IN THE BRITISH VIRGIN ISLANDS PASSED COMMENT UPON OR APPROVED THE ACCURACY
OR ADEQUACY OF THIS OFFERING CIRCULAR.
NOTICE TO RESIDENTS OF GUERNSEY
THE ORDINARY SHARES AND WARRANTS MAY ONLY BE OFFERED OR SOLD IN OR FROM
WITHIN THE BAILIWICK OF GUERNSEY EITHER (I) BY PERSONS LICENSED TO DO SO UNDER
THE PROTECTION OF INVESTORS (BAILIWICK OF GUERNSEY) LAW, 1987, AS AMENDED, OR
THE POI LAW; OR (II) TO PERSONS LICENSED UNDER THE POI LAW; OR (III) TO PERSONS
LICENSED UNDER THE INSURANCE BUSINESS (BAILIWICK OF GUERNSEY) LAW, 2002, THE
BANKING SUPERVISION (BAILIWICK OF GUERNSEY) LAW, 1994, OR THE REGULATION OF
FIDUCIARIES, ADMINISTRATION BUSINESSES AND COMPANY DIRECTORS, ETC, (BAILIWICK
OF GUERNSEY) LAW, 2000.
CONSENT UNDER THE CONTROL OF BORROWING (BAILIWICK OF GUERNSEY) ORDINANCES
1959-2003 HAS NOT BEEN OBTAINED TO THE CIRCULATION OF THIS OFFERING CIRCULAR
IN THE BAILIWICK OF GUERNSEY. ACCORDINGLY, NO OFFER OF THE ORDINARY SHARES OR
WARRANTS THAT IS A PUBLIC OFFER, AN OFFER TO EXISTING HOLDERS OF ORDINARY
SHARES OR WARRANTS OF THE COMPANY, OR AN OFFER TO EXISTING HOLDERS OF
SECURITIES OF ANY BODY CORPORATE SPECIFIED IN THIS OFFER, MAY BE CIRCULATED IN
xii
THE BAILIWICK OF GUERNSEY. THE DIRECTORS OF THE COMPANY MAY, BUT ARE NOT
OBLIGED TO, APPLY FOR SUCH CONSENT IN THE FUTURE.
FOR OTHER NON-UNITED STATES RESIDENTS
IT IS THE RESPONSIBILITY OF THE PROSPECTIVE INVESTOR TO SATISFY ITSELF AS TO FULL
OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OR JURISDICTION OUTSIDE
THE UNITED STATES IN CONNECTION WITH ANY PURCHASE OF OUR ORDINARY SHARES
AND WARRANTS, INCLUDING, WITHOUT LIMITATION, OBTAINING ANY REQUIRED
GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE
REQUIREMENTS.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR LEGAL, TAX AND ACCOUNTING
ADVISORS TO ENSURE THAT THEY ARE QUALIFIED AND ELIGIBLE TO PARTICIPATE IN THIS
OFFERING AND TO PURCHASE OUR ORDINARY SHARES AND WARRANTS. WE HAVE NOT
UNDERTAKEN ANY ACTIONS TO ENSURE THAT YOU ARE SO QUALIFIED OR ELIGIBLE
UNDER THE LAWS OF YOUR JURISDICTION.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
THE DISTRIBUTION OF THE ORDINARY SHARES AND WARRANTS IN CANADA IS BEING
MADE ONLY ON A PRIVATE PLACEMENT BASIS EXEMPT FROM THE REQUIREMENT THAT
WE PREPARE AND FILE AN OFFERING CIRCULAR WITH THE SECURITIES REGULATORY
AUTHORITIES IN EACH PROVINCE WHERE TRADES OF SHARES ARE MADE. ANY RESALE OF
THE ORDINARY SHARES AND WARRANTS IN CANADA MUST BE MADE UNDER APPLICABLE
SECURITIES LAWS WHICH WILL VARY DEPENDING ON THE RELEVANT JURISDICTION, AND
WHICH MAY REQUIRE RESALES TO BE MADE UNDER AVAILABLE STATUTORY EXEMPTIONS
OR UNDER A DISCRETIONARY EXEMPTION GRANTED BY THE APPLICABLE CANADIAN
SECURITIES REGULATORY AUTHORITY. PURCHASERS ARE ADVISED TO SEEK LEGAL
ADVICE PRIOR TO ANY RESALE OF THE ORDINARY SHARES AND WARRANTS.
Representations of Purchasers
BY PURCHASING ORDINARY SHARES AND WARRANTS IN CANADA AND ACCEPTING A
PURCHASE CONFIRMATION, A PURCHASER IS REPRESENTING TO US AND THE DEALER
FROM WHOM THE PURCHASE CONFIRMATION IS RECEIVED THAT:
• THE PURCHASER IS ENTITLED UNDER APPLICABLE PROVINCIAL SECURITIES LAWS
TO PURCHASE THE ORDINARY SHARES AND WARRANTS WITHOUT THE BENEFIT OF
AN OFFERING CIRCULAR QUALIFIED UNDER THOSE SECURITIES LAWS,
• WHERE REQUIRED BY LAW, THAT THE PURCHASER IS PURCHASING AS PRINCIPAL
AND NOT AS AGENT, AND
• THE PURCHASER HAS REVIEWED THE TEXT ABOVE UNDER RESALE RESTRICTIONS.
Rights of Action—Ontario Purchasers Only
UNDER ONTARIO SECURITIES LEGISLATION, A PURCHASER WHO PURCHASES A SECURITY
OFFERED BY THIS OFFERING CIRCULAR DURING THE PERIOD OF DISTRIBUTION WILL HAVE
A STATUTORY RIGHT OF ACTION FOR DAMAGES, OR WHILE STILL THE OWNER OF THE
ORDINARY SHARES AND WARRANTS, FOR RESCISSION AGAINST US IN THE EVENT THAT
THIS OFFERING CIRCULAR CONTAINS A MISREPRESENTATION. A PURCHASER WILL BE
xiii
DEEMED TO HAVE RELIED ON THE MISREPRESENTATION. THE RIGHT OF ACTION FOR
DAMAGES IS EXERCISABLE NOT LATER THAN THE EARLIER OF 180 DAYS FROM THE DATE
THE PURCHASER FIRST HAD KNOWLEDGE OF THE FACTS GIVING RISE TO THE CAUSE OF
ACTION AND THREE YEARS FROM THE DATE ON WHICH PAYMENT IS MADE FOR THE
ORDINARY SHARES AND WARRANTS. THE RIGHT OF ACTION FOR RESCISSION IS
EXERCISABLE NOT LATER THAN 180 DAYS FROM THE DATE ON WHICH PAYMENT IS MADE
FOR THE ORDINARY SHARES AND WARRANTS. IF A PURCHASER ELECTS TO EXERCISE THE
RIGHT OF ACTION FOR RESCISSION, THE PURCHASER WILL HAVE NO RIGHT OF ACTION
FOR DAMAGES AGAINST US. IN NO CASE WILL THE AMOUNT RECOVERABLE IN ANY
ACTION EXCEED THE PRICE AT WHICH THE ORDINARY SHARES AND WARRANTS WERE
OFFERED TO THE PURCHASER AND IF THE PURCHASER IS SHOWN TO HAVE PURCHASED
THE ORDINARY SHARES AND WARRANTS WITH KNOWLEDGE OF THE
MISREPRESENTATION, WE WILL HAVE NO LIABILITY. IN THE CASE OF AN ACTION FOR
DAMAGES, WE WILL NOT BE LIABLE FOR ALL OR ANY PORTION FO THE DAMAGES THAT
ARE PROVEN NOT TO REPRESENT THE DEPRECIATION IN VALUE OF THE ORDINARY
SHARES AND WARRANTS AS A RESULT OF THE MISREPRESENTATION RELIED UPON.
THESE RIGHTS ARE IN ADDITION TO, AND WITHOUT DEROGATION FROM, ANY OTHER
RIGHTS OR REMEDIES AVAILABLE AT LAW TO AN ONTARIO PURCHASER. THE FOREGOING
IS A SUMMARY OF THE RIGHTS AVAILABLE TO AN ONTARIO PURCHASER. ONTARIO
PURCHASERS SHOULD REFER TO THE COMPLETE TEXT OF THE RELEVANT STATUTORY
PROVISIONS.
Enforcement of Legal Rights
ALL OF OUR DIRECTORS AND OFFICERS, AS WELL AS THE EXPERTS NAMED HEREIN MAY
BE LOCATED OUTSIDE OF CANADA AND, AS A RESULT, IT MAY NOT BE POSSIBLE FOR
CANADIAN PURCHASERS TO EFFECT SERVICE OF PROCESS WITHIN CANADA UPON US OR
THOSE PERSONS. ALL OR A SUBSTANTIAL PORTION OF OUR ASSETS AND THE ASSETS OF
THOSE PERSONS MAY BE LOCATED OUTSIDE OF CANADA, AND, AS A RESULT, IT MAY NOT
BE POSSIBLE TO SATISFY A JUDGMENT AGAINST US OR THOSE PERSONS IN CANADA OR
TO ENFORCE A JUDGMENT OBTAINED IN CANADIAN COURTS AGAINST US OR THOSE
PERSONS OUTSIDE OF CANADA.
Taxation and Eligibility for Investment
CANADIAN PURCHASERS OF THE ORDINARY SHARES AND WARRANTS SHOULD CONSULT
THEIR OWN LEGAL AND TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF
AN INVESTMENT IN THE ORDINARY SHARES AND WARRANTS IN THEIR PARTICULAR
CIRCUMSTANCES AND ABOUT THE ELIGIBILITY OF THE ORDINARY SHARES AND
WARRANTS FOR INVESTMENT BY THE PURCHASER UNDER RELEVANT CANADIAN
LEGISLATION.
xiv
WHAT YOU SHOULD KNOW ABOUT THIS OFFERING CIRCULAR
This offering circular is highly confidential and has been prepared solely for use in
connection with this offering. This offering circular is personal to you and does not constitute
an offer to any other person or to the public generally to subscribe for or otherwise acquire
any of our securities. You are not authorized to distribute this offering circular to any other
person. You are also prohibited from disclosing or reproducing any of the contents of this
offering circular, either in whole or in part, without our prior written consent.
This offering circular is based on information provided by us and by other sources that
we believe to be reliable. Neither we nor the placing agent represent that the information
contained in this offering circular is accurate or complete. To the extent that documents or
other information are summarized in this offering circular, we refer you to such documents
and information for a more complete understanding of what we discuss in this offering
circular, and these summaries are qualified in their entirety by such reference. In making an
investment decision, you must rely on your own examination of us and the terms of this
offering, including the merits and risks involved. In particular, you acknowledge that:
• you have been afforded an opportunity (i) to request from the placing agent and us,
and have received and reviewed, all additional documents and information considered
by you to be necessary to verify the accuracy of or to supplement the information set
forth in this offering circular and (ii) to meet with our representatives and to have them
answer any questions regarding us and the terms and conditions of this offering, and
all such questions have been answered to your satisfaction;
• you have not relied on the placing agent or any person affiliated with the placing agent
in connection with your investigation of the accuracy of any information or your
investment decision; and
• no person has been authorized to give information or make any representation
concerning us or our securities, other than as contained in this offering circular and
information provided by our officers and employees in connection with your
examination of us and the terms of this offering, and, if given or made, such other
information or representation should not be relied upon as having been authorized by
the placing agent.
We are not making any representation to any purchaser of our securities regarding the
legality or appropriateness of an investment in our securities under any laws or regulations.
You should not consider any information contained in this offering circular to be investment,
legal, business or tax advice. You should consult your own attorney, business advisor and tax
advisor for investment, legal, business and tax advice regarding an investment in our
securities.
The distribution of this offering circular and the offering and sale of our securities in
certain jurisdictions may be restricted by law. You are required to inform yourself about and
to observe any such restrictions. This offering circular does not constitute, and may not be
used for or in connection with, an offer or solicitation in any jurisdiction in which such offer
or solicitation is not authorized or to any person to whom it is unlawful to make such offer or
solicitation.
This offer may be withdrawn at any time before the closing of the offering, either in
whole or in part, and is specifically made subject to the terms described in this offering
circular and in the placing agreement between the placing agent and us.
xv
No representation or warranty, express or implied, is made by the placing agent as to the
accuracy or completeness of the information set forth herein, and nothing contained in this
offering circular is, or will be relied upon as, a promise or representation, whether as to the
past or the future. The placing agent assumes no responsibility for the accuracy or
completeness of the information set forth herein.
All inquiries relating to this offering circular and this offering should be directed to the
company.
Neither the United States Securities and Exchange Commission, or SEC, nor any state
securities commission has approved or disapproved of these securities or determined if this
offering circular is truthful or complete. Any representation to the contrary is a criminal
offense.
This offering circular has not been, and is not required to be, filed with any governmental
or other authority in the Cayman Islands. No governmental or other authority in the Cayman
Islands has approved this offering circular or the offering of the units hereunder, nor passed
upon or endorsed the merits of the offering or the accuracy or adequacy of these offering
materials. Any representation to the contrary is unlawful.
xvi
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This offering circular contains forward-looking statements. Such forward-looking
statements include statements regarding, among other matters, (a) our expectations about
possible business combinations, (b) our growth strategies, (c) our future financing plans and
(d) our anticipated needs for working capital. Forward-looking statements, which involve
assumptions and describe our future plans, strategies and expectations, are generally
identifiable by use of the words ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘anticipate,’’
‘‘approximate,’’ ‘‘estimate,’’ ‘‘believe,’’ ‘‘intend,’’ ‘‘plan’’ or ‘‘project,’’ or the negative of these
words or other variations on these words or comparable terminology. This information may
involve known and unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from the future results,
performance or achievements expressed or implied by any forward-looking statements. These
statements may be found in this offering circular. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of various factors,
including, without limitation, the risks outlined under ‘‘Risk Factors’’ and matters described in
this offering circular generally. In light of these risks and uncertainties, the events anticipated
in the forward-looking statements may or may not occur.
Forward-looking statements are based on our current expectations and assumptions
regarding our business, the economy and other future conditions. Because forward-looking
statements relate to the future, by their nature, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Our actual results may differ
materially from those contemplated by the forward-looking statements. We caution you
therefore that you should not rely on any of these forward-looking statements as statements
of historical fact or as guarantees or assurances of future performance. Important factors that
could cause actual results to differ materially from those in the forward-looking statements
include regional, national or global political, economic, business, competitive, market and
regulatory conditions as well as, but not limited to, the following:
• our status as a development stage blank check company;
• the limited period of time within which we must complete a Qualified Business
Combination;
• the risk of our dissolution or liquidation prior to a business combination;
• the adequacy of the net proceeds resulting from the offering to allow the completion of
a business combination;
• the lack of protection normally afforded to investors in blank check companies
registered with the SEC;
• our limited resources to consummate an attractive business combination and the
significant competition for business combination opportunities;
• the potential for significant costs and low returns resulting from an acquisition;
• third-party claims against the proceeds held in the trust account;
• our selection of prospective acquisition candidates;
• the dilutive effect that our issuance of preference or ordinary shares or debt securities
to complete a business combination or under an employee incentive plan after
consummating a Qualified Business Combination will have on the interests of
shareholders;
xvii
• our ability to obtain additional financing if necessary;
• the impact of the incurrence of indebtedness on our operations;
• our dependence on a single asset or property after a business combination;
• the impact of repurchase rights on our ability to consummate desirable business
combinations;
• our dependence on our key personnel;
• conflicts of interest of our officers and directors;
• difficulty in serving process, initiating civil or criminal actions and/or enforcing
judgments against directors who reside out of the United States or the United Kingdom;
• the control by Existing Shareholders of a substantial interest in us;
• the adverse effect the outstanding warrants and options may have on the market price
of our ordinary shares;
• the purchase of warrants in the open market by our sponsor;
• the arbitrariness in determining the offering price for our units;
• the lack of a market for our securities;
• liquidity risks associated with certificated securities and with the securities not being
registered with the SEC;
• the possibility that AIM will temporarily suspend trading of our securities;
• the possibility of a delay in the disbursement of the trust account in connection with
our liquidation;
• the adverse effect that anti-takeover provisions in the constituent documents of the
company may have on management and shareholders;
• adverse tax consequences resulting from a business combination or due to being a
passive foreign investment company;
• the impact of having no ‘‘independent’’ directors;
• the consequences of being deemed an investment company;
• the advantages and disadvantages arising out of incorporating in the Cayman Islands;
• the difficulties associated with consummating a business combination involving an
Indian company;
• the impact of changes in the India-Mauritius tax treaty;
• competitive factors in the hospitality, leisure, tourism, travel and related industries;
• the effect of economic conditions on the hospitality, leisure, tourism, travel and related
industries;
• competition for businesses, properties or assets in the hospitality, leisure, tourism,
travel and related industries;
• operating risks in the hospitality, leisure, tourism, travel and related industries;
• high fixed costs, including property taxes and insurance costs, in the hospitality, leisure,
tourism, travel and related industries;
xviii
• high incidence of indirect taxes in the hospitality, leisure, tourism, travel and related
industries;
• intellectual property risks in the hospitality, leisure, tourism, travel and related
industries;
• seasonal variations in the hospitality, leisure, tourism, travel and related industries;
• governmental and regulatory risks in the hospitality, leisure, tourism, travel and related
industries;
• environmental risks in the hospitality, leisure, tourism, travel and related industries;
• the impact of an adverse change in the Indian government’s economic liberalization and
deregulation policies;
• regional hostilities, terrorist attacks, social unrest or natural disasters in India;
• limitations in Indian law on the ability to raise capital outside of India;
• exchange controls;
• foreign currency fluctuations;
• adverse changes in political relations between the United States and India or between
India and the United Nations;
• the adverse effect that restrictions on the sale of shares of an acquisition candidate
under Indian law may have on our share price;
• difficulties in enforcing shareholders’ rights inside and outside of India following a
business combination on account of India’s legal system;
• the impact of economic sanctions against India; and
• taxes and other levies imposed by the governments in India.
These risks and others described under ‘‘Risk Factors’’ are not exhaustive and are not set
out in any order of priority.
Any forward-looking statement made by us in this offering circular speaks only as of the
date on which we make it, and is expressly qualified in its entirety by the foregoing
cautionary statements. Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement, whether as a result of new
information, future developments or otherwise.
xix
INDUSTRY AND MARKET DATA
Industry and market data used throughout this offering circular were obtained from our
own research, studies conducted by third parties, industry and general publications published
by third parties, including the Indian Hotel Industry Survey for 2004-2005 prepared in
cooperation with HVS International; the 2004 Lodging Industry Profile prepared by the
American Hotel & Lodging Association; the Government of India, Economic Survey 2004-2005;
the RBI Annual Report, 2004-2005; the Ministry of Tourism, Government of India; the United
States Census; the World Factbook; Forbes; The Times (London); Khanadwala Securities
Limited ‘‘Hotel Industry-India’’; the National Post (Canada); Standard & Poor’s; and, in some
cases, management estimates based on their industry and other knowledge. Neither we nor
the placing agent have independently verified market and industry data from third-party
sources, and neither we nor the placing agent make any representations as to the accuracy of
such information. While we believe that our assumptions regarding our markets are
reasonable, they have not been verified by any independent sources, and the placing agent
makes no representations as to the accuracy of such assumptions.
SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES
We are an exempted company incorporated in the Cayman Islands. Certain of our
directors and officers are not residents of the United States or the United Kingdom. As a
result, it may be difficult for investors to effect service of process on those persons in the
United States or the United Kingdom or to enforce in the United States judgments obtained in
U.S. or U.K. courts against us or those persons based on the civil liability provisions of the
U.S. or U.K. securities laws. However, we will irrevocably agree (i) that we may be served with
process with respect to actions based on offers and sales of securities made in the United
States and other violations of U.S. securities laws as well as in the United Kingdom and other
violations of U.K. securities laws by having an agent appointed for that purpose and (ii) that
service of process upon such agent and written notice of said service of process to us mailed
or delivered to us at our registered office shall be deemed in every respect effective service of
process upon us with respect to such actions. Although there is no statutory enforcement in
the Cayman Islands of judgments obtained in the United States or the United Kingdom (or
other jurisdictions generally), the courts of the Cayman Islands will recognize and enforce a
foreign judgment of a court of competent jurisdiction, based upon the principle that a
judgment of a competent foreign court imposes upon the judgment debtor an obligation to
pay the sum for which judgment has been given, provided such judgment is final, for a
liquidated sum not in respect of taxes or other charges of a like nature or in respect of a fine
or other penalty, and was not obtained in a manner, and is not of a kind, the enforcement of
which is contrary to the public policy of the Cayman Islands.
xx
OFFERING CIRCULAR SUMMARY
This summary highlights certain information appearing elsewhere in this offering circular.
For a more complete understanding of this offering, you should read the entire offering
circular carefully, including the risk factors and the financial statements and the related notes
and schedules. Unless otherwise stated in this offering circular: (i) references to ‘‘we,’’ ‘‘us,’’
‘‘company’’ or ‘‘our company’’ refer to India Hospitality Corp. and, where appropriate, shall
include IHC Mauritius Corp., our operating subsidiary formed under the laws of Mauritius;
(ii) references to ‘‘sponsor’’ or ‘‘Hayground Cove’’ refer to Hayground Cove Asset Management
LLC for itself and in respect of the funds and accounts it manages and which will hold
ordinary shares as the context requires; (iii) references to ‘‘Existing Shareholders’’ refer to
Hayground Cove, certain employees of Hayground Cove and certain of our officers and
directors who held ordinary shares prior to this offering and their subsequent assignees or
transferees; (iv) references to ‘‘New Shareholders’’ refer to investors in this offering, other
than Hayground Cove with respect to the 4,166,667 units being purchased by it in this offering
and includes any persons acquiring ordinary shares in the after market following the
admission of the ordinary shares and warrants on AIM; (v) references to ‘‘business
combinations’’ refer to acquisitions, through one or more stock purchases, asset acquisitions,
or other business combinations, of businesses or assets in the Indian hospitality, leisure,
tourism, travel and related industries; (vi) references to ‘‘Transaction Value’’ refer to the sum
of (A) cash and fair market value of the property, if any, used as consideration in connection
with a business combination, (B) net debt assumed and/or incurred in connection with such
business combination, (C) working capital required to operate the acquired business or assets,
(D) the value of capital stock used as consideration in connection with such business
combination as determined by an unaffiliated independent investment banking firm, and
(E) transaction costs incurred to complete the transaction; (vii) references to a ‘‘Qualified
Business Combination’’ refer to a business combination which, either by itself or when
combined with all of our previous business combinations, has an aggregate Transaction Value
of at least 50% of the initial amount held in the trust account (excluding the amount held in
the trust account representing the placing agent’s deferred commission); (viii) references to
‘‘Sponsor Private Placement’’ refer to Hayground Cove’s purchase of 500,000 units from the
company for $3,000,000 (offered at $6.00 per unit), which will occur contemporaneously with
the consummation of this offering; (ix) references to ‘‘Placing Agent Option’’ refers to the
placing agent’s option to purchase, for $100, as additional compensation, up to a total of
833,333 units at $7.50 per unit, with the warrants issued as part of such units being
exercisable at an exercise price of $6.25 per warrant; and (x) references to ‘‘constituent
documents’’ refer to our memorandum and articles of association.
Unless expressly stated to the contrary, the information in this offering circular assumes
that the placing agent will not exercise the Placing Agent Option.
You should rely only on the information contained in the entirety of this offering circular.
We have not authorized anyone to provide you with different information. We are not making
an offer of these securities in any jurisdiction where the offer is not permitted.
As of the date of this offering circular, we had 6,250,000 ordinary shares issued and
outstanding. Prior to the Admission Date, we will repurchase 2,083,333 ordinary shares from
our Existing Shareholders at $0.001 per share. Such repurchase is a condition to the placing
agent’s obligation to consummate this offering and the listing of the shares and warrants
offered hereby. After the repurchase and immediately prior to the consummation of this
offering, our Existing Shareholders will hold 4,166,667 of our ordinary shares. Unless
otherwise indicated, share amounts in this offering circular give effect to the repurchase.
1
General
We are a blank check company incorporated under the laws of the Cayman Islands as an
exempted company on May 12, 2006 to serve as a vehicle for acquisitions, through one or
more stock purchases, asset acquisitions or other business combinations, of businesses or
assets in India focused on the hospitality, leisure, tourism, travel and related industries,
including but not limited to hotels, resorts, timeshares, serviced apartments and restaurants.
To date, our efforts have been limited to organizational and financing activities. We currently
have no business operations and no financial history.
While we are in the process of preliminarily identifying and reviewing prospective
acquisition candidates, we have not engaged in substantive negotiations in connection with
any potential acquisition nor do we have any agreements to acquire any business or asset. In
evaluating a prospective acquisition candidate, our management team will conduct such
business, legal and accounting due diligence on the acquisition candidate as we believe
appropriate given the circumstances.
We have been established in the Cayman Islands as an exempted company. We are not
subject to any income, withholding or capital gains taxes in the Cayman Islands. We expect to
conduct business, including the making of acquisitions, through IHC Mauritius Corp., or IHC
Mauritius, our wholly owned operating subsidiary incorporated in Mauritius as an offshore
corporation. IHC Mauritius expects to receive several tax benefits, including a tax credit in
Mauritius for tax paid in other countries, a reduction of the corporate tax by a deemed foreign
tax credit of 80%, no withholding tax on outward payments from Mauritius, no capital gains
tax or estate duty and no registration duty, levy or VAT on global business transactions. On
the basis of existing tax legislation, we believe our formation as a Cayman Islands exempted
company and the use of a Mauritian subsidiary to consummate acquisitions will provide
investment flexibility and enhance shareholder returns.
Our Proposed Business
We intend to use the net proceeds of this offering and the Sponsor Private Placement to
acquire an Indian business, businesses or assets focused on the hospitality, leisure, tourism,
travel and related industries, including but not limited to hotels, resorts, timeshares, serviced
apartments and restaurants. While our potential acquisitions could come from any of these
sectors, we intend to focus primarily on the hospitality industry. We believe that these markets
in India, and particularly the hospitality industry, are high-growth, underserved and
fragmented, and that they offer profit margins, returns on capital and cash flows that are
among the most attractive in the world. We intend to place emphasis on acquiring businesses
in fast-growing Indian cities and top tourist destinations in India. We believe that the
predominantly local hospitality businesses serving these segments have generally not
pursued aggressive growth strategies, but instead have followed an own-and-manage model
as opposed to the lease or franchise model employed by hospitality industry leaders. We
believe opportunities exist to negotiate purchases directly with these companies and their
individual owners. In addition, we believe we will be able to use our management expertise in
operations and financing to manage the businesses or assets we may acquire, and to deliver
superior risk-adjusted returns for our shareholders.
Upon the consummation of a business combination, we expect to hire new individuals
resident in India to join our management team. In addition, after we have completed one or
more business combinations, members of our existing management team may decide to no
longer serve as directors or officers of the company, in which case we intend to retain such
individuals in an advisory capacity.
2
Our Strategy
India is the largest democracy and is one of the fastest growing economies in the world.
India’s Gross Domestic Product, or GDP, has been growing at 7% to 8%, adjusted for inflation
over the last two years, and this growth level is expected to continue into the foreseeable
future. The Indian financial markets have improved as economic and corporate governance
reforms have become the focal point of governmental and regulatory authorities. We believe
India is positioned to become one of the world’s most influential economic centers and is
gaining a significant role in the world economy.
There has been increasing foreign institutional investment interest in India over the last
several years. However, to date, there has been a relatively small amount of foreign direct
investment, or FDI, in India’s trade, hotels and restaurants industries. For example, according
to the Reserve Bank of India, or RBI, these industries only received approximately
US$22.0 million of FDI in 2004-05, which represented only approximately 1% of the total
inflows to India despite the fact that the trade, hotels and restaurants industries are some of
the fastest growing in the Indian economy. Furthermore, the Indian government is now
allowing 100% FDI in the hotels, tourism and restaurants sectors without the bureaucratic
approvals that had been required in the past. We believe that this initiative, coupled with a
series of recent reforms relating to the regulation of corporations, will allow the
consummation of business combinations more quickly with less bureaucratic delay. As a
result, we believe that macro economic trends, coupled with favorable regulatory
developments, will create attractive opportunities in our targeted sectors, which we hope to
capture for the benefit of our shareholders.
We believe that the Indian hospitality industry is largely driven by the domestic Indian
market, particularly domestic tourism. Domestic tourism, grew at approximately a 13.7%
compounded annual growth rate, or CAGR, from 2000 to 2004 according to the Ministry of
Tourism, Government of India. From 2004-2005, the number of domestic hotel guests
(including business and leisure guests) comprised 71.7% of the total hotel guests in India
according to the Indian Hotel Industry Survey for 2004-2005 prepared in cooperation with HVS
International. We believe that the strength of the domestic market will continue to be a key
driver of the Indian tourism industry in the future. The Indian middle class, which was
estimated at approximately 300 million people in 2005, is expected to grow to 500 million
people by 2010. The increasing purchasing power of the middle class has largely been a direct
result of India’s recent growth. We believe that low inflation, an improving credit market and
an increasing percentage of India’s population achieving higher levels of education and
technical skills have also fueled India’s economic growth. In addition, we believe that the
boom in information technology services and outsourcing-related industries in India has led to
increasing disposable per capita income. Although we anticipate that India is positioned to
experience growth in foreign tourism as well, we believe that the Indian hospitality sector can
sustain its domestic strength even if foreign tourism does not grow as strongly as we
anticipate. Moreover, strong growth in India’s domestic airline passenger market is expected
on account of the increasing purchasing power of the middle class and increasing supply
from low cost carriers. Four budget airlines entered the Indian market in 2005 and at least
four more are expected to begin operations in 2006. Accordingly, we intend to approach
acquisition candidates that serve domestic travelers and the demands of the growing Indian
middle class.
Currently, we believe there is a significant demand/supply imbalance in the hospitality,
leisure, tourism, travel and related industries in India. For example, according to the Indian
Hotel Industry Survey for 2004-2005 prepared in cooperation with HVS International, India had
a total of approximately 105,070 available hotel rooms relative to its population of
3
approximately 1.1 billion. In contrast, the American Hotel & Lodging Association estimated
that the United States had 4,411,908 guest rooms available in 2004, relative to its population
of approximately 299 million. To combat the shortage of hotel rooms and in anticipation of
the Commonwealth Games being held in India in 2010, the Government of India has recently
directed several initiatives that we believe will further the growth of the Indian hospitality
industry. These initiatives include, among others:
• increased budget allocation towards infrastructure and tourism;
• the allowance of duty free imports for certain hotels and stand-alone restaurants;
• the removal of expenditure tax on rooms with daily tariffs above Rs. 3000
(approximately US$67);
• the removal of air travel tax on both domestic and foreign travel;
• the improvement of air, rail and road transportation;
• the upgrade of metropolitan airports;
• infrastructure development with expanded and improved highways;
• a reduction in customs duty and abolition of countervailing duty for hotel projects;
• promotion of Special Economic Zones;
• development of 15 tourist destinations and circuits following an integrated area
development approach; and
• extensive development of new convention centers.
Furthermore, we believe that the non-luxury/non-deluxe hospitality segment in India
provides a strong opportunity to exploit the sector and create superior shareholder returns.
We believe that the non-luxury segment encompasses a significant percentage of total
revenue of the entire hospitality sector and is fragmented compared to hotel sectors in the
United States and Western Europe. We expect that this fragmentation will help provide us
with acquisition candidates and negotiation power. The needs of the Indian middle class,
which we believe is the fastest growing segment of the total Indian population, are expected
to be met by this segment of the industry, which we believe is largely underserved by the
major industry players. As a result, we believe that the Indian hospitality industry will provide
us with opportunities to find undervalued businesses and assets and create superior
shareholder returns.
Experienced Management Team and Strong Local Network
Our executive officers and directors, and our sponsor’s ‘‘on the ground’’ network in India,
have extensive experience in the hospitality, leisure, tourism, travel and related industries as
executive officers, principals or directors in various enterprises throughout the world. Jason
N. Ader, our Chief Executive Officer and the Chairman of our Board of Directors, is the Chief
Executive Officer of our sponsor, Hayground Cove Asset Management LLC, a New York-based
investment management firm with approximately $1.46 billion of assets across funds and
managed accounts under management as of May 31, 2006. The funds of Hayground Cove in
operation since January 1, 2004 had returns of approximately 2.54x the returns on the S&P
Hedge Fund Index from January 1, 2004 through May 31, 2006. Mr. Ader has a strong asset
management record and, prior to founding Hayground Cove, was a Senior Managing Director
at Bear Stearns & Co., Inc., where he performed equity and high yield research for more than
50 companies in the gaming, lodging and leisure industries. Mr. Ader was rated as one of the
4
top ranked analysts by Institutional Investor Magazine for nine consecutive years from 1994 to
2002. Members of our management team have, on average, approximately 13 years of
experience in the hospitality, leisure, tourism, travel and related industries. Our management
team has a successful track record of completing large-scale acquisitions and minority
investments in businesses competing in the hospitality, leisure, tourism, travel and related
industries. Our management team’s experience and familiarity with the hospitality, leisure,
tourism, travel and related industries is an important asset that will assist us in implementing
our business strategies and pursuing our growth opportunities. We will serve as Hayground
Cove’s only vehicle for direct, private investments in the Indian hospitality sector.
We have partnered with Banyan Tree Capital Limited, or Banyan Tree Capital, to serve as
our exclusive financial advisor in India in connection with our future acquisitions using the
proceeds from this offering. Banyan Tree Capital is a global financial services advisory
company. Banyan Tree Capital will provide advisory services, including (i) discussing
acquisition opportunities with each of us and IHC Mauritius, our Board of Directors, the Board
of Directors of IHC Mauritius and each of our management teams, (ii) assisting in the
identification, solicitation and evaluation of prospective acquisition opportunities, and
(iii) assisting in structuring and negotiating acquisition opportunities. As part of the
consideration for Banyan Tree Capital’s advisory services, we will pay Banyan Tree Capital a
retainer fee of $20,000 per month. Upon meeting certain requisite conditions, 213,334 ordinary
shares will be transferred to Banyan Tree Capital from out of the 3,655,727 ordinary shares
held by Hayground Cove immediately prior to this offering. For more information, see
‘‘Certain Relationships and Related Party Transactions.’’
We will form an investment committee to advise and consult with our management team
with respect to our investment policies, financing and leveraging strategies and investment
guidelines. The initial members of the investment committee will be Jason N. Ader, our Chief
Executive Officer and Chairman of the Board of Directors, who will serve as the initial
chairman of the committee, Christa Short and Samir Jain. Ms. Short is currently a member of
the company’s Board of Directors and a managing director at Hayground Cove. Prior to
joining Hayground Cove, Ms. Short was Vice President, Research Analyst covering gaming,
lodging and leisure industries at Bear Stearns & Co., Inc. Mr. Jain is currently a Vice President
at Hayground Cove. Prior to joining Hayground Cove, Mr. Jain was Vice President, Research
Analyst covering gaming, lodging and leisure industries at Jefferies & Company. Mr. Jain
does not serve as an officer or director of the company. We believe our investment committee
will provide us with a competitive advantage in analyzing and valuing acquisition candidates
through their experience, financial industry contacts and investment ideas.
Our management team possesses broad industry knowledge and core competencies that
we believe will enable us to identify attractive potential targets. In addition, Banyan Tree
Capital and Hayground Cove’s network of professionals in India has a wide range of contacts
that we expect will help us to identify prospective acquisition candidates.
Members of our management team are employees of Hayground Cove. See ‘‘Certain
Relationships and Related Party Transactions.’’
Our registered office is located at: Ogier Fiduciary Services (Cayman) Limited, Queensgate
House 113 South Church Street, P.O. Box 1234 G.T., Grand Cayman, Cayman Islands.
5
The Offering
Securities offered . . . . . . . . . . .
16,666,667 units, at $6.00 per unit, each unit consisting of:
•
one ordinary share (par value $0.001); and
•
two warrants
The ordinary shares and warrants will begin trading on
AIM on the Admission Date. The ordinary shares and
warrants that comprise the units are immediately
separable, and the units will not independently constitute a
transferable security.
Offering . . . . . . . . . . . . . . . . . .
Of the 16,666,667 units being offered, 4,166,667 units are
being purchased by our sponsor. The other 12,500,000
units are being offered to investors other than our sponsor.
The units may be offered or sold in the United States only
to qualified institutional buyers in reliance on the
exemption from registration provided by Rule 144A and in
offshore transactions to non-U.S. persons in reliance on
Regulation S. The units may be offered or sold in the
United Kingdom and other EEA states only to qualified
investors as defined in the EC Prospectus Regulation
(No. 809/2004) who are also persons of a kind described in
Article 19 or 49 of the United Kingdom’s Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005.
Ordinary shares:
Number in issue immediately
before this offering . . . . . . . .
Number to be in issue after this
offering . . . . . . . . . . . . . . . . .
4,166,667 ordinary shares.
21,333,334 ordinary shares (including 500,000 ordinary
shares issued to Hayground Cove in the Sponsor Private
Placement contemporaneously with this offering and
excluding 833,333 ordinary shares issuable pursuant to the
Placing Agent Option, if such option is exercised).
Warrants:
Number in issue before this
offering . . . . . . . . . . . . . . . . .
Number to be in issue after this
offering . . . . . . . . . . . . . . . . .
0.
34,333,334 warrants (including 1,000,000 warrants issued to
Hayground Cove in the Sponsor Private Placement
contemporaneously with this offering and excluding
1,666,666 warrants issuable pursuant to the Placing Agent
Option, if such option is exercised).
Exercisability . . . . . . . . . . . . . . .
Each warrant is exercisable for one ordinary share.
Exercise price . . . . . . . . . . . . . .
$5.00.
Exercise period . . . . . . . . . . . . .
The warrants will become exercisable on the later of:
6
•
the completion of a Qualified Business
Combination, and
•
one year after the Admission Date, if a business
combination, but not a Qualified Business
Combination, has occurred before that date (or, if
extended by a majority of votes cast at a general
meeting of ordinary shareholders at which a
quorum is present, the Extended Date).
Expiration . . . . . . . . . . . . . . . . .
The warrants will expire at 5:00 p.m., New York City time,
on the date that is four years after the Admission Date or
earlier upon redemption.
Redemption . . . . . . . . . . . . . . .
We may redeem the then outstanding warrants (including
any warrants issued upon exercise of the Placing Agent
Option) with prior notice to the placing agent and Deutsche
Bank AG London, our nominated advisor (and provided it
remains our nominated advisor):
•
in whole and not in part,
•
at a price of $0.01 per warrant,
•
at any time after the warrants become exercisable,
•
upon a minimum of 30 days’ prior written notice of
redemption, and
•
if, and only if, the last independent bid price for our
ordinary shares on AIM equals or exceeds $8.50 per
share for any 20 trading days within a 30-tradingday period ending three business days before we
send the notice of redemption, and the weekly
trading volume of our ordinary shares has been at
least 500,000 shares for each of the two calendar
weeks ending three business days before we send
the notice of redemption.
We have established these criteria to prevent a redemption
call unless there is at the time of the call a significant
premium to the warrant exercise price as well as a
sufficient degree of liquidity to cushion market reaction, if
any, to any such redemption call.
If the foregoing conditions are satisfied and we call the
warrants for redemption, each warrant holder will then be
entitled to exercise its warrants prior to the date scheduled
for redemption. However, there can be no assurance that
the price of the ordinary shares will equal or exceed $8.50
or the warrant exercise price after the redemption call is
made.
Sponsor Private Placement . . . .
Hayground Cove will purchase 500,000 units from the
company for $3,000,000 (offered at $6.00 per unit) in the
Sponsor Private Placement, the proceeds of which will be
7
paid into the trust account. These units are identical to the
units offered in this offering, except that Hayground Cove
has agreed to certain voting procedures and waived its
liquidation and repurchase rights with respect to the
ordinary shares contained in these units until distribution
of the trust account. The Sponsor Private Placement will
occur contemporaneously with the consummation of this
offering.
Proposed AIM symbol of
ordinary shares . . . . . . . . . . .
‘‘IHC’’
Proposed AIM symbol of
warrants . . . . . . . . . . . . . . . .
‘‘IHCW’’
Proceeds to be held in the trust
account . . . . . . . . . . . . . . . . .
$96,750,000 (approximately $5.81 per unit) of the net
proceeds we expect to receive from this offering, including
the placing agent’s deferred commission of $1,500,000
($0.09 per unit), and the Sponsor Private Placement will be
held in a segregated trust account at JPMorgan Chase
N.A., maintained by Continental Stock Transfer & Trust
Company, acting as trustee pursuant to a trust agreement
to be signed on or prior to the consummation of this
offering. These proceeds (or portions thereof) will only be
released to be used in connection with an approved
business combination (and, in the case of the initial
business combination, in respect of payment of the placing
agent’s deferred commission) or to fund the exercise of
repurchase rights by New Shareholders. However, up to
$500,000 of the interest earned on the trust account (net of
taxes payable on such interest) may be released to us to
for working capital purposes. The funds in the trust
account may otherwise be released as described below and
under ‘‘Distribution if no Qualified Business Combination.’’
Unless and until the completion of an approved business
combination, no proceeds, other than up to $500,000 of the
interest earned on the trust account, held in the trust
account will be available for (i) our use for expenses that
we may incur related to the investigation and selection of
an acquisition candidate, (ii) any required deposits or other
payments and (iii) the negotiation of an agreement to
acquire an acquisition candidate. Until such event occurs,
these expenses may be paid only from:
•
the net proceeds of this offering not held in the
trust account, which will be approximately
$1,500,000 in working capital after the payment of
approximately $1,000,000 in expenses relating to
this offering; and
8
•
the up to $500,000 of interest (net of taxes payable
on such interest) on the trust proceeds that may be
released to us for working capital purposes.
Upon consummation of the initial business combination,
$1,500,000, which constitutes the placing agent’s deferred
commission, will be paid to the placing agent from the
funds held in the trust account.
The warrant exercise price will be paid directly to us and
will not be held in the trust account.
Ordinary shareholders must
approve business
combinations . . . . . . . . . . . . .
Until such time as all of the funds held in the trust account
have been disbursed, we will seek approval of holders of
ordinary shares purchased in the offering before we
consummate any business combination, even if the nature
of the business combination would not ordinarily require
shareholder approval under applicable law or the AIM
Rules. Until we have completed a Qualified Business
Combination, we will only consummate business
combinations which have a Transaction Value of at least
$25.0 million. As part of the request for ordinary
shareholder approval, we may include a request for
reimbursement of any expenses associated with pursuing
and completing such business combination and any
working capital needs of the acquisition subsequent to the
date of the closing of such business combination, as well
as a request for the approval of reasonable salaries and
other compensation to our officers and directors for
ongoing management of the acquired business subsequent
to the date of the closing of such business combination, all
of which funds would be transferred to us from the funds
held in the trust account if approved.
In connection with the vote required for either
consummating any business combination or extending the
period within which we are allowed to complete a Qualified
Business Combination, Hayground Cove will vote the
4,166,667 ordinary shares being purchased by it in this
offering and any ordinary shares that may be purchased by
it in the after market in favor of any such proposed
business combination or extension for completing a
Qualified Business Combination. In connection with the
vote required for either consummating any business
combination or extending the period within which we are
allowed to complete a Qualified Business Combination, our
Existing Shareholders, including certain of our officers and
directors, will vote the ordinary shares purchased by them
before this offering and being purchased by our sponsor in
the Sponsor Private Placement in accordance with the
votes constituting the majority of the votes cast by the
9
New Shareholders and Hayground Cove with respect to the
4,166,667 ordinary shares being purchased by it in this
offering.
We will proceed with a business combination only if it is
approved by a majority of votes cast at a general meeting
of ordinary shareholders at which a quorum is present and
we confirm that we have sufficient cash resources to pay
both (A) the consideration required to close the business
combination and (B) the cash due to New Shareholders
who vote against the business combination and who
exercise their repurchase rights, as described below. We
may choose to condition the consummation of any
business combination on the number or percentage of New
Shareholders electing to exercise their repurchase rights
not exceeding a pre-specified threshold.
Repurchase rights for New
Shareholders voting against a
business combination . . . . . .
Repurchase rights are the rights of each New Shareholder
to have us offer to repurchase a certain number of its
ordinary shares, where such number is equal to the total
number of ordinary shares held by such New Shareholder
multiplied by a fraction, of which (a) the numerator is equal
to the amount of funds in the trust account immediately
before the business combination (excluding accrued net
interest attributable to such funds and the placing agent’s
deferred commission) and (b) the denominator is equal to
the amount of funds placed in the trust account as a result
of this offering and the Sponsor Private Placement
(excluding accrued net interest attributable to such funds
and the placing agent’s deferred commission). This fraction
will never be deemed to exceed 1.0.
The price payable in respect of each ordinary share on the
exercise of repurchase rights in connection with any
business combination will be the per share amount of
$5.72, which reflects the initial per share amount of $5.81
deposited in the trust account less the $0.09 per share due
to the placing agent in respect of the placing agent’s
deferred commission (plus any interest earned on the
proceeds in the trust account in excess of the up to
$500,000 of interest released to us for working capital
purposes, net of taxes payable on such interest, on such
amount per share). New Shareholders will be entitled to
exercise their repurchase rights by accepting our offer to
repurchase in the following circumstances:
•
If any business combination that does not meet the
requirements to be deemed a Qualified Business
Combination is approved and completed, New
Shareholders who vote against such business
combination will be entitled to exercise their
10
repurchase rights or maintain their interest in us;
and
•
If a Qualified Business Combination is approved
and completed, New Shareholders who vote
against the Qualified Business Combination will be
entitled either to exercise their repurchase rights or
to maintain their interest in us.
The payment of repurchase proceeds is subject to
applicable laws, including applicable anti-money laundering
regulations.
An eligible New Shareholder who wishes to exercise its
repurchase rights will be required to notify us of its
acceptance of our repurchase offer at any time after the
mailing to our ordinary shareholders of the voting
materials circulated in respect of the relevant proposed
business combination or Qualified Business Combination
(which will include an offer to repurchase capable of
acceptance by eligible New Shareholders), but not more
than five business days nor less than one business day
prior to the date of the meeting at which the resolution to
approve the proposed business combination (including a
Qualified Business Combination) is to be proposed. Such
acceptance will not be valid unless the New Shareholder
votes against the business combination (including a
Qualified Business Combination) and the business
combination is approved and completed.
Following consummation of a Qualified Business
Combination, New Shareholders who did not vote against
the Qualified Business Combination will no longer have
repurchase rights.
New Shareholders who exercise their repurchase rights will
continue to retain all rights to the warrants that they
received as part of the units purchased in this offering to
the extent that such rights have not been otherwise
transferred or sold by such New Shareholder.
Although Hayground Cove will have repurchase rights in
respect of the 4,166,667 ordinary shares being purchased
by it in this offering, because it will vote these shares in
favor of any proposed business combination, it has
effectively waived its ability to exercise repurchase rights in
respect of these ordinary shares.
In the event that New Shareholders exercise their
repurchase rights, we will repurchase, to the extent
permitted by law, an amount of ordinary shares held by the
Existing Shareholders at a price equal to par value of
$0.001 per share such that, as a result of the exercise of
repurchase rights, at no time will the ordinary shares
11
purchased by the Existing Shareholders prior to this
offering constitute more than 25% of our then outstanding
ordinary shares. In such event, the purchase price that we
will pay to the Existing Shareholders with respect to the
repurchased ordinary shares (i.e., some portion of the
4,166,667 ordinary shares purchased prior to this offering)
will be paid out of our working capital, rather than the trust
account.
Distribution if no Qualified
Business Combination . . . . . .
We will, subject to applicable law, dissolve and promptly
distribute the amount held in the trust account to our New
Shareholders and Hayground Cove (in respect of the
4,166,667 units being purchased by it in this offering) if we
do not consummate a Qualified Business Combination
within 12 months after the Admission Date (or, if extended
by a majority of votes cast at a general meeting of ordinary
shareholders at which a quorum is present, by the
Extended Date); provided, however, that, if we consummate
any business combination within 12 months after the
Admission Date (or, if extended by a majority of votes cast
at a general meeting of ordinary shareholders at which a
quorum is present, by the Extended Date), but do not
consummate a Qualified Business Combination, then we (i)
must offer to repurchase a pro rata portion of the ordinary
shares then owned by the New Shareholders and
Hayground Cove (in respect of the 4,166,667 units being
purchased by it in this offering) using the remaining funds
held in the trust account (which funds will be net of the
proceeds used for prior approved business combinations,
the placing agent’s deferred commission, acquisition
expenses, working capital and repurchase payments to
New Shareholders who have exercised their repurchase
rights), and (ii) must repurchase for $0.001 par value such
number of the ordinary shares purchased by the Existing
Shareholders prior to this offering, if any, required to
ensure that such shares represent no more than 25% of our
then outstanding ordinary shares, in which case we will
have met the requirements to avoid liquidation of the
company and therefore we will not be required to dissolve.
The New Shareholders and Hayground Cove (in respect of
the 4,166,667 units being purchased by it in this offering)
may, however, elect to maintain their interest in us and, in
that instance, the funds that would otherwise be used to
repurchase such shareholders’ ordinary shares will instead
be released to us.
The placing agent has agreed to waive its rights to its
deferred commission held in the trust account in the event
of our failure to consummate a business combination
within 12 months after the Admission Date (or, if extended
12
by a majority of votes cast at a general meeting of ordinary
shareholders at which a quorum is present, by the
Extended Date) and in such event such amounts will be
included within the amounts of the funds held in the trust
account which will be available for distribution to the New
Shareholders and Hayground Cove (in respect of the
4,166,667 units being purchased by it in this offering).
The Existing Shareholders have agreed to waive their
rights to participate in any distribution of the funds held in
the trust account occurring upon our failure to
consummate any business combination (including a
Qualified Business Combination), but only with respect to
the ordinary shares purchased by them prior to this
offering and being purchased by our sponsor in the
Sponsor Private Placement.
The payment of repurchase proceeds or proceeds on
dissolution is subject to applicable laws, including
applicable anti-money laundering regulations
Lock-up of Existing
Shareholders’ securities . . . . .
Under Rule 7 of the AIM Rules, each of our Existing
Shareholders, our sponsor, and all substantial shareholders
(as such term is defined in the AIM Rules) have entered
into agreements with us and our nominated advisor, which
provide that they cannot, and have agreed to procure that
their related parties (as such term is defined in the AIM
rules) will not, except in certain limited circumstances,
dispose of any ordinary shares and warrants acquired by
them for one year from the Admission Date; provided,
however, that we have received a derogation from the
London Stock Exchange in respect of Rule 7 of the AIM
Rules for certain specified transfers amongst the funds and
accounts managed by our sponsor.
The Existing Shareholders have also agreed that the
ordinary shares and warrants held by them generally will
not be transferable until (i) in the case of the ordinary
shares and warrants purchased prior to the offering
(4,166,667 ordinary shares) and being purchased in the
Sponsor Private Placement (500,000 ordinary shares and
1,000,000 warrants), one year after the later of (A) the date
upon which a Qualified Business Combination is
consummated or (B) if there is a business combination, but
not a Qualified Business Combination, the disbursement of
the remaining funds in the trust account, and (ii) in the
case of the ordinary shares and warrants being purchased
in this offering by our sponsor (4,166,667 ordinary shares),
the later of (A) one year after the Admission Date or (B) the
date upon which a Qualified Business Combination is
consummated or, if there is a business combination but not
a Qualified Business Combination, the disbursement of the
13
remaining funds in the trust account; provided, however,
that our sponsor will be permitted to make certain
specified transfers amongst the funds and accounts it
manages in accordance with the derogation granted to us
by the London Stock Exchange in respect of Rule 7 of the
AIM Rules.
Payments to our sponsor,
directors, officers and
advisor . . . . . . . . . . . . . . . . .
We have agreed to the following reimbursements or
payments to our sponsor, directors, officers and financial
advisor and/or their affiliates, as applicable:
•
repayment of a $6,000 interest-free loan from our
sponsor to us to cover certain expenses of this
offering;
•
payment of up to $10,000 per month to our sponsor
for administrative services, accounting and
controller-related services, the services of certain of
its approved employees and access to its network
of contacts in India; and
•
payment of $20,000 per month to Banyan Tree
Capital for services it provides to us as our
exclusive financial advisor in India.
Until the consummation of a business combination, these
payments will be made from (i) the approximately
$1,500,000 of the net proceeds of the offering and the
Sponsor Private Placement that will be used for working
capital purposes, which will not be deposited in the trust
account, and (ii) up to $500,000 of interest (net of taxes
payable on such interest) on the proceeds held in the trust
account that may be released to us for working capital
purposes.
See ‘‘Certain Relationships and Related Party Transactions.’’
14
Risks
In making your decision on whether to invest in our securities, you should take into
account not only the backgrounds of our management team, but also the special risks we face
as a blank check company, as well as the fact that this offering is not being conducted in
compliance with Rule 419 promulgated under the Securities Act, and, therefore, you will not
be entitled to the protections normally afforded to investors in Rule 419 blank check offerings.
You should carefully consider these and the other risks set forth in the section entitled ‘‘Risk
Factors’’ beginning on page 17 of this offering circular.
15
Summary Financial Data
(U.S. dollars)
The following table summarizes the relevant financial data for our business and should be
read with our financial statements, and the related notes and schedules, which are included in
this offering circular. We have not had any significant operations to date, so only balance
sheet data is presented.
May 31, 2006
Actual
As Adjusted(1)
Balance Sheet Data:
Working capital(2) . . .
Total assets(2) . . . . . .
Total liabilities . . . . .
Shareholders’ equity
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$250
6,250
6,000
250
$1,498,167
98,248,167
1,500,000
96,748,167
(1) The ‘‘as adjusted’’ information gives effect to the sale of the units in this offering, the sale of the units in the
Sponsor Private Placement, the repayment of the $6,000 loan from our sponsor, the repurchase of 2,083,333
ordinary shares by the company from Existing Shareholders prior to this offering at $0.001 per share, and the
application of the related proceeds and the payment of the estimated fees and expenses from such sales.
(2) The ‘‘as adjusted’’ total assets include $95,250,000 to be held in the trust account, $1,500,000 in respect of the
placing agent’s deferred commission payable upon consummation of the initial business combination and
$1,500,000 of net proceeds of the offering to be used for working capital purposes. The ‘‘as adjusted’’ total assets
to be held in the trust account will be available as described in this offering circular. If no business combination is
consummated, the trust account (including the amount held in the trust account representing the placing agent’s
deferred commission and the proceeds of the Sponsor Private Placement) will be distributed solely to the New
Shareholders and Hayground Cove to the extent it participated in this offering (i.e., in respect of the 4,166,667
units being purchased by it in this offering).
16
RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully consider
the following risk factors and all other information contained in this offering circular before
making a decision to invest in our units. The risks and uncertainties described below are not
the only ones facing us and are not set out in any order of priority. Additional risks and
uncertainties that we are unaware of, or that we currently deem immaterial, also may become
important factors that affect us. If any of the following risks occur, our business, financial
conditions or results of operations may be materially and adversely affected. In that event, the
trading price of our securities could decline, and you could lose all or part of your investment.
Risks Related to Our Business and This Offering
We are a development stage blank check company incorporated as an exempted company in
the Cayman Islands with no operating history and, accordingly, you will not have any basis
on which to evaluate our ability to achieve our business objective.
We are a development stage blank check company recently incorporated as an exempted
company in the Cayman Islands with no operating results to date. Therefore, our ability to
begin operations is dependent upon our ability to obtain financing through this offering of our
securities. Since we do not have an operating history, you will have no basis upon which to
evaluate our ability to achieve our business objective, which is to serve, through IHC
Mauritius, our wholly-owned operating subsidiary organized under the laws of Mauritius,
through one or more stock purchases, asset acquisitions or other business combinations, of
businesses or assets in India in the hospitality, leisure, tourism, travel and related industries.
While we are in the process of preliminarily identifying and reviewing prospective acquisition
candidates, we have not engaged in substantive negotiations in connection with any potential
acquisition nor do we have any agreements to acquire any acquisition candidate or asset. We
will not generate any revenue (other than interest on cash amounts held by us) until, at the
earliest, upon the consummation of a business combination. We cannot assure you that a
business combination will be consummated.
The per ordinary share distribution of the funds held in the trust account upon a liquidation
will be less than the $6.00 per unit offering price.
If we are unable to complete a business combination or if we have completed one or
more business combinations, but not a Qualified Business Combination, within the time frame
permitted by the terms of this offering, we will be required to liquidate the trust account.
Upon the liquidation of the trust account, holders of the ordinary shares issued in this offering
will receive their pro rata share of the funds held in the trust account (plus any interest earned
on the proceeds in the trust account in excess of the up to $500,000 of interest that has been
released to us for working capital purposes, net of taxes payable on such interest, on such
amount per share). After deducting the placing agent’s commission and $2,500,000 of the
proceeds of this offering not placed in the trust account (used to pay the expenses of this
offering and for working capital purposes in connection with our seeking a business
combination), the per ordinary share amount deposited into the trust account will be less than
the $6.00 per unit price in this offering. If we are unable to complete a business combination
within 12 months after the Admission Date (or, if extended by a majority of votes cast at a
general meeting of ordinary shareholders at which a quorum is present, by the Extended
Date), the per share distribution of the funds held in the trust account is anticipated to be
approximately $5.81 per ordinary share.
Upon consummation of an initial business combination, $1,500,000 of the amount held in
the trust account (which represents the placing agent’s deferred commission) will be paid to
the placing agent. As a result, due to the payment of the placing agent’s deferred commission,
17
the per share distribution of the funds held in the trust account upon liquidation of the trust
account will be reduced by $0.09 per share to $5.72 per ordinary share.
We only have a limited period of time to consummate a business combination and therefore
there is no assurance we will be able to complete one or more business combinations that
utilize all of the funds held in the trust account in the time provided.
We only have 12 months, unless extended upon approval by a majority of votes cast at a
general meeting of ordinary shareholders at which a quorum is present, to complete a
business combination. Even though we have the flexibility to consummate a business
combination with a Transaction Value of as little as $25.0 million, to the extent that we
consummate business combinations other than a Qualified Business Combination, we will
need to consummate more business combinations if we are to consummate business
combinations with an aggregate Transaction Value equal to 50% or more of the initial amount
held in the trust account (excluding the amount held in the trust account representing the
placing agent’s deferred commission). If we complete one or more business combinations but
do not utilize all of the funds held in the trust account, investors will own interests in
businesses and/or assets that will likely be smaller than one that would exist had all the initial
proceeds held in the trust account been applied to acquisitions. In addition, upon a Qualified
Business Combination, all remaining funds will be released from the trust account, and will be
available for our use in accordance with our management’s business judgment and applicable
law. When funds are released from the trust account, ordinary shareholders will no longer
possess the same degree of control with respect to such funds as was present prior to the
time such funds were released from the trust account.
If we are unable to find a suitable acquisition candidate or candidates that would result in a
Qualified Business Combination, the funds being held in the trust account may not be
returned to you for a significant amount of time.
We may not be able to find a suitable acquisition candidate or candidates that would
result in a Qualified Business Combination. In such event, we will not be required to liquidate
until 12 months after the Admission Date (or, if extended by a majority of votes cast at a
general meeting of ordinary shareholders at which a quorum is present, by the Extended
Date). As a result, in the event we fail to find a suitable acquisition candidate, the funds being
held in the trust account may not be returned to you for a significant amount of time.
If the net proceeds of this offering not being placed in the trust account, together with the
up to $500,000 of interest in the trust account which may be released to us for working
capital purposes, are insufficient to allow us to operate for at least the next 12 months, we
may not be able to complete a business combination.
We currently believe that (i) the approximately $1,500,000 of funds for working capital
available to us outside of the trust account on the Admission Date and (ii) up to $500,000 of
interest (net of taxes payable on such interest) on the proceeds held in the trust account that
may be released to us for working capital purposes after the Admission Date, will be sufficient
to allow us to operate for at least the next 12 months. However, we cannot assure you that
our estimates will be accurate. We could use a portion of the funds not being placed in the
trust account to pay due diligence costs in connection with potential business combinations or
to pay fees to consultants and advisors to assist us with our search for acquisition candidates.
We could also use a portion of the funds not being placed in the trust account as a deposit or
down-payment or to fund a ‘‘no-shop’’ provision (a provision in letters of intent requiring
acquisition candidates to negotiate exclusively with one party and to refrain from ‘‘shopping’’
around for transactions with other parties on terms more favorable to such acquisition
candidates) with respect to a particular proposed business combination. If we entered into
such a letter of intent where we paid for the right to receive exclusivity from an acquisition
18
candidate and were subsequently required to forfeit such funds (whether as a result of our
breach or otherwise), we might not have sufficient funds to continue searching for, or conduct
due diligence with respect to, any other potential acquisition candidates.
You will not be entitled to protections normally afforded to investors in blank check
companies.
Because the net proceeds of this offering and the Sponsor Private Placement are intended
to be used to complete business combinations with an acquisition candidate or candidates
that have not been identified, we may be deemed to be a ‘‘blank check’’ company under the
United States securities laws. We are conducting this offering in reliance on exemptions from
the registration requirements of the Securities Act and, in any event, we will have net tangible
assets in excess of $5,000,000 upon the successful consummation of this offering; therefore,
we are exempt from the rules promulgated by the SEC to protect investors in blank check
companies, including Rule 419. Consequently, investors will not be afforded the benefits or
protections of these rules nor will they be afforded certain of the protections traditionally
associated with public offerings of blank check companies that are subject to Rule 419 (e.g.,
that the business combination be valued at no less than 80% of the net assets acquired and
that the shareholder meeting to consider approval of the business combination be preceded
by the circulation of an SEC-reviewed proxy statement, including audited financial
statements). See ‘‘Comparison to Offerings of Blank Check Companies.’’
Because of our limited resources and the significant competition for business combination
opportunities, we may not be able to consummate an attractive business combination.
We expect to encounter competition from other entities having a business objective
similar to ours, including other blank check companies, venture capital, private equity and
leveraged buyout funds, existing companies in the hospitality, leisure, tourism, travel and
related industries and other businesses competing for business combinations in India. Many
of these entities are well established and have extensive experience in identifying and
consummating business combinations. Many of these competitors may possess greater
technical, human and other resources than we do and our financial resources are relatively
limited when contrasted with those of many of these competitors. Our ability to compete in
acquiring certain sizable acquisition candidates will be limited by our available financial
resources. Further, the obligation we have to seek approval of holders of ordinary shares
purchased in the offering of any business combination until we consummate a Qualified
Business Combination or until we release the balance of the funds held in the trust account to
the New Shareholders and Hayground Cove in respect of the 4,166,667 units being purchased
by it in this offering, and our obligation to offer to repurchase a portion of each New
Shareholder’s ordinary shares for cash if such New Shareholder votes against the business
combination and the business combination is approved and completed, may reduce the
resources otherwise available to us for a business combination. Additionally, our outstanding
warrants and the Placing Agent Option and the potential future dilution they represent to
ordinary shareholders, may not be viewed favorably by certain acquisition candidates if we
use shares as consideration. Any of these obligations may place us at a competitive
disadvantage in seeking to successfully consummate a business combination.
Our acquisitions may not yield the returns we expect and may result in significant costs.
Even if we are able to successfully identify and acquire businesses in India, these
acquisitions may not yield the returns we expect and, if financed using our equity capital, may
be dilutive. We also may incur significant costs and divert management attention in
connection with evaluating and negotiating potential acquisitions, including ones that we are
subsequently unable to complete. We may underestimate the costs necessary to bring an
acquired business up to the standards established for its intended market position or the costs
19
to integrate an acquired business with our existing operations after our initial acquisition is
completed. Significant costs of acquisitions, including costs of uncompleted acquisitions,
could materially impact our operating results, as they would generally be expensed in the
time period during which they are incurred.
If third parties bring claims against us, the proceeds held in the trust account could be
reduced and the per share liquidation amount received by New Shareholders will be less
than the estimated $5.81 per ordinary share liquidation amount.
Our placing of funds in the trust account may not protect those funds from third party
claims against us. Although our sponsor has agreed to be liable for ensuring that the
proceeds in the trust account are not reduced by the claims of vendors for services rendered
or products sold to us, claims of prospective acquisition candidates for fees and expenses of
third parties that we agree in writing to pay in the event we do not complete a combination
with such business or claims by a vendor or prospective acquisition candidate that does not
waive rights and claims against the trust account, it may not be able to satisfy those
obligations. Although we will seek to have all vendors and other entities we engage, and all
prospective acquisition candidates with whom we negotiate, execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account for the benefit of our New Shareholders and Hayground Cove in respect of the
4,166,667 units being purchased by it in this offering, there is no guarantee that they will
execute such agreements. Nor is there any guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the trust account.
Accordingly, the proceeds held in the trust account could be subject to claims that could take
priority over those of our shareholders and the per share liquidation amount could be less
than $5.81, plus interest, net of expenses, if any, due to claims of such creditors.
We may not be able to disburse the funds in our trust account immediately following the
expiration of the time in which we are permitted to consummate a business combination
until due corporate steps have been taken in accordance with our articles of association and
the Companies Law (Revised).
We will seek to obtain all necessary approvals to facilitate a prompt winding-up and
distribution of the funds in our trust account. However, the requirement to seek and obtain
such approvals as may be required may delay the disbursement of the funds in our trust
account for some time following the expiration of the time in which we are permitted to
consummate a Qualified Business Combination. In the event we are obligated to seek
shareholder approval for a winding-up and do not obtain such approval, we will nonetheless
continue to pursue shareholder approval for our winding-up.
Investors in this offering are unable to currently ascertain the merits or risks of an acquisition
candidate’s operations or assets.
Investors in this offering currently have no basis to evaluate the possible merits or risks of
the acquisition candidate’s operations or assets. Our financial performance will depend upon
the financial condition of our target investments and our management’s ability to manage
such investments. To the extent we complete a business combination with a financially
unstable company or an entity in its development stage, we may be affected by numerous
risks inherent in the business operations of such an entity. Although our management will
endeavor to evaluate the risks inherent in a particular acquisition candidate’s operations or
assets, we cannot assure you that they will properly ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our securities will ultimately
prove to be more favorable to investors than a direct investment, if such opportunity were
20
available, in an acquisition candidate. For more information on how we will select an
acquisition candidate, see ‘‘Proposed Business—Consummating a Business Combination.’’
We may issue additional ordinary or preference shares to complete a business combination
or under an employee incentive plan after consummation of a Qualified Business
Combination, which would dilute the interest of our shareholders and likely present other
risks.
Our authorized capital is $200,000 comprised of 200,000,000 shares (par value $0.001 per
share). Of this authorized capital, 100,000,000 shares have been designated by our Board of
Directors as ordinary shares. The remaining 100,000,000 authorized but unissued and
undesignated shares may be designated by our Board of Directors as ordinary or preference
shares and issued as such at any time subsequent to the date of this offering circular.
Immediately after this offering, there will be 78,666,666 authorized but unissued ordinary
shares available for issuance (of which 36,833,333 have been reserved for the full exercise of
our outstanding warrants and any shares and/or warrants issuable under the Placing Agent
Option) and 100,000,000 undesignated shares available for issuance. We may issue a
substantial number of additional ordinary or preference shares, or a combination of ordinary
or preference shares, to complete a business combination or under an employee incentive
plan after consummation of a Qualified Business Combination. The issuance of additional
ordinary shares or any number of preference shares:
• may significantly dilute the equity interest of investors in this offering;
• may subordinate the rights of holders of ordinary shares if preference shares are issued
with rights senior to those afforded to our ordinary shares;
• could cause a change in control if a substantial number of ordinary shares are issued,
which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers
and directors; and
• may adversely affect prevailing market prices for our ordinary shares and/or warrants.
We may be unable to obtain additional financing, which could compel us to restructure or
abandon a particular business combination.
Although we believe that the net proceeds of this offering and the Sponsor Private
Placement will be sufficient to allow us to consummate a business combination, we have not
yet identified any prospective acquisition candidate and we cannot ascertain the funding
requirements for any particular transaction. If these net proceeds prove to be insufficient,
either because of the size of the business combination or the depletion of the available net
proceeds outside of the funds held in the trust account in search of an acquisition candidate
or assets, or because we become obligated to repurchase ordinary shares from the New
Shareholders, based on their shareholding, we will be required to seek additional financing.
We cannot assure you that such financing would be available on acceptable terms, if at all.
To the extent that additional financing proves to be unavailable when needed to
consummate a particular business combination, we would be compelled to restructure the
transaction or abandon that particular business combination and seek an alternative
acquisition candidate. In addition, if we consummate a business combination, we may require
additional financing to fund the operations or growth of the business or assets. The failure to
secure additional financing could have a material adverse effect on the continued
development or growth of the acquisition candidate. None of our officers, directors or
shareholders is required to provide any financing to us in connection with or after a business
combination.
21
The incurrence of indebtedness could have adverse results on our operations.
In the event we incur indebtedness to finance acquisitions or otherwise through the
issuance of debt securities, by entering into a credit facility or otherwise, such incurrence
could result in:
• default and foreclosure on our assets, if our operating income and other resources after
a business combination were insufficient to pay our debt obligations;
• acceleration of our obligations to repay the indebtedness, even if we have made all
principal and interest payments when due, if the indebtedness contains covenants that
require the maintenance of financial ratios or reserves, and any such covenant is
breached;
• a demand for immediate payment of all principal and accrued interest, if any, if the
indebtedness is payable on demand; and
• our inability to obtain additional financing, if necessary, if the indebtedness contains
covenants restricting our ability to obtain additional financing while such indebtedness
is outstanding.
It is possible that we will complete only a single business combination with the proceeds of
this offering, which will cause us to be solely dependent on a single business or asset.
Of the net proceeds we expect to receive from this offering (including the 4,166,667 units
offered to Hayground Cove) and the Sponsor Private Placement, approximately $96,750,000
will be held in the trust account (which includes the placing agent’s $1,500,000 deferred
commission) and may be used by us to complete a business combination. Any business
combination must have a Transaction Value of at least $25.0 million at the time of such
acquisition. It is possible that we will have the ability to complete only one business
combination with the proceeds of this offering. In addition, we may have difficulty locating
suitable subsequent business combination candidates for reasons other than cash availability.
Accordingly, the prospects for our success may be solely dependent upon the performance of
a single business, property or asset or subject to numerous economic and competitive
developments with respect to the hospitality, leisure, tourism, travel and related industries.
In this case, we may not be able to diversify our operations or benefit from the possible
spreading of risks or offsetting of losses, unlike other entities which may have the resources
to complete several business combinations in different industries or different areas of a single
industry.
Alternatively, if our business combination entails the simultaneous acquisitions of several
businesses, properties or assets from different sellers, such sellers may need to agree that the
purchase of their businesses, properties or assets is contingent upon simultaneous
consummations of the other acquisitions. If we were to consummate a Qualified Business
Combination with several businesses, properties or assets, we would face additional risks,
including difficulties and expenses incurred in connection with the subsequent integration of
these multiple businesses, properties and/or assets into a single operating business. If we are
unable to adequately address these risks, it could negatively impact our profitability and
results of operations.
22
The ability of our New Shareholders to exercise their repurchase rights may not allow us to
consummate desirable business combinations or optimize our capital structure.
When we seek approval of holders of ordinary shares purchased in the offering of a
business combination, each New Shareholder in this offering will have the right to have us
offer to repurchase a portion of its ordinary shares for cash if such New Shareholder votes
against the business combination and the business combination is approved and completed.
Such holder must both vote against such business combination and then exercise his
repurchase rights by accepting our offer to repurchase to receive a pro rata share of the
amount initially deposited in the trust account (excluding the placing agent’s deferred
commission) plus interest, net of expenses. We will be permitted to proceed with any
business combination if we are able to confirm that we have sufficient funds to pay the
consideration to close the business combination plus all sums due to New Shareholders who
vote against the business combination and duly exercise their repurchase rights. Therefore,
we may not be able to consummate a business combination that requires us to use all of the
funds held in the trust account as part of the purchase price, or we may be required to incur
an amount of leverage that is not optimal for our business combination. This may limit our
ability to consummate the most attractive business combinations available to us.
Our ability to successfully consummate a business combination and to be successful
thereafter will be dependent upon the efforts of our key personnel.
Our ability to successfully consummate a business combination will be dependent upon
the efforts of our key personnel. The future role of our key personnel following a business
combination, however, cannot presently be fully ascertained. Although we expect most of our
management and other key personnel, particularly Jason N. Ader, our Chief Executive Officer
and Chairman of the Board of Directors, to remain associated with us following a business
combination, none of such key personnel have entered into either employment or consulting
agreements with us. Therefore, such key personnel may only remain with the combined
company upon the consummation of a business combination if they are able to negotiate and
agree to mutually acceptable employment or consultancy terms, which terms would be
determined at such time by the respective parties and disclosed to shareholders at such time
as we seek approval for such business combination. Furthermore, we will not be able to grant
new shares or options to key personnel prior to the earlier of the completion of a Qualified
Business Combination or the total release of funds in the trust account, which may affect our
hiring efforts. Additionally, we may also employ other personnel following a business
combination, including the management associated with the acquisition candidate. While we
intend to closely scrutinize any such individuals, we cannot assure you that our assessment of
them will prove to be correct.
The officers and directors of an acquisition candidate may resign upon consummation of a
business combination.
The role of an acquisition candidate’s key personnel upon the consummation of a
business combination cannot be ascertained at this time. Although we contemplate that
certain members of an acquisition candidate’s management team will remain associated with
the acquisition candidate following a business combination, it is possible that members of the
management of an acquisition candidate will not wish to remain in place.
23
Our officers, directors and advisors will allocate some portion (which may be significant) of
their time to other businesses, thereby potentially causing conflicts of interest in their
determination as to how much time to devote to our affairs, which could have a negative
impact on our ability to consummate a business combination.
Our officers, directors and advisors are not required to commit their full time (or any
minimal amount of time) to our affairs, which may create a conflict of interest when they
allocate their time between our operations and their other commitments. For example, certain
of our executive officers and advisors are currently employed by our sponsor and are not
obligated to devote any specific number of hours to our affairs. If our sponsor requires them
to devote more substantial amounts of time to its business and affairs, it could limit their
ability to devote time to our affairs and could have a negative impact on our ability to
consummate a business combination. We cannot assure you that these conflicts will be
resolved in our favor.
Our officers, directors, advisors and their affiliates currently are, and/or may in the future
become affiliated with additional entities that are, engaged in business activities similar to
those intended to be conducted by us and, accordingly, may have conflicts of interest in
determining to which entity a particular business opportunity should be presented.
None of our officers, directors, advisors or their affiliates has been or currently is a
principal of, or affiliated or associated with, a blank check company. However, some of our
officers, directors and advisers currently are, and/or may in the future become affiliated with
additional entities, including other ‘‘blank check’’ companies, that are engaged in business
activities similar to those we intend to conduct. Our officers, directors and advisors may
become aware of business opportunities that may be appropriate for presentation to not only
us but also the other entities with which they are or may be affiliated. Due to any such
affiliations, they may have either fiduciary or contractual obligations to present potential
business opportunities to those such entities before presenting them to us, which could create
additional conflicts of interest. For instance, Anthony Juliano, a member of our Board of
Directors, is the Executive Director, Dubai Investment Group, Global Real Estate and
Hospitality, which also may seek investment, acquisitions or other ventures in India, including
in businesses in the industries in which we are seeking acquisition candidates. Such
investments, acquisitions and ventures may be in competition with us or in conjunction with
us. Accordingly, members of our management may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. We cannot assure you
that any of these conflicts will be resolved in our favor.
Other than with respect to a business combination, our officers, directors, security holders
and affiliates may have a pecuniary interest in certain transactions in which we are involved,
and may also compete with us.
Other than with respect to a business combination, we have not adopted a policy that
expressly prohibits our directors, officers, security holders or affiliates from having a direct or
indirect pecuniary interest in any transaction to which we are a party or have an interest. Nor
do we have a policy that expressly prohibits any such persons from engaging for their own
account in business activities of the types conducted by us. Accordingly, such parties may
have an interest in certain transactions in which we are involved, and may also compete with
us.
24
Some of our directors reside outside the United States and the United Kingdom and a
substantial portion of their assets are located outside the United States and the United
Kingdom which may present difficulties in attempting to serve process, initiate civil or
criminal actions, and/or enforce judgments against them.
Some of our directors are residents of jurisdictions outside the United States and the
United Kingdom, principally India, and a substantial portion of the assets of these directors
are located outside the United States and the United Kingdom. Therefore, you may not be
able to effect service of process within the United States or the United Kingdom upon these
persons or to enforce judgments of United States courts predicated upon the federal
securities laws of the United States or United Kingdom courts predicated upon the securities
laws of the United Kingdom against them. In addition, you may have difficulty bringing an
original action in an Indian court or any other foreign court to enforce liabilities against any
person based on the U.S. federal securities laws or U.K. securities laws.
Our Existing Shareholders control a substantial interest in us and thus may influence certain
actions requiring a shareholder vote.
Immediately after this offering, our Existing Shareholders, including our officers and
directors, will collectively own approximately 41% of our issued and outstanding ordinary
shares (purchased prior to this offering, being purchased in the Sponsor Private Placement
and being purchased in the offering), assuming no exercise by the placing agent of the
Placing Agent Option. Because the repurchase requirement does not extend to the ordinary
shares of the Existing Shareholders being purchased in the Sponsor Private Placement, in this
offering or in the after market, our Existing Shareholders may hold greater than 25% of the
then outstanding ordinary shares of the company (so long as the ordinary shares purchased
by the Existing Shareholders prior to this offering represent no more than 25% of our then
outstanding ordinary shares). Any ordinary shares purchased by the sponsor in the offering or
after market will have the same rights as ordinary shares purchased by the New
Shareholders. However, Hayground Cove has agreed to vote the 4,166,667 ordinary shares
being purchased by it in this offering and any ordinary shares that may be purchased by it in
the after market in favor of any such business combination. Because of the ownership block
held by our Existing Shareholders, including our officers and directors, such holders may be
able to effectively exercise control over all matters requiring approval by our shareholders,
including the election of directors, the adoption of amendments of our constituent documents,
and possible merger, amalgamations, corporate control contests and other significant
corporate transactions. In addition, because Hayground Cove has agreed to vote the 4,166,667
ordinary shares being purchased by it in this offering either in favor of a business
combination or an extension of time to consummate a Qualified Business Combination, such
vote by Hayground Cove may result in the approval of a business combination or extension
even if a majority of the votes cast by the New Shareholders were not voted in favor of such
proposal. The concentration of ownership may have the effect of delaying, deferring or
preventing future acquisitions, financings and other corporate opportunities and attempts to
acquire us, which in turn could have a material adverse effect on the price of our ordinary
shares.
25
Our Existing Shareholders paid an aggregate of $4,166.67 (after giving effect to our
repurchase of 2,083,333 ordinary shares from our Existing Shareholders at $0.001 per share
prior to the Admission Date), or approximately $0.001 per share, for the ordinary shares held
by them immediately prior to this offering and, accordingly, you will experience immediate
and substantial economic dilution from the purchase of our ordinary shares.
The difference between the offering price per share of our ordinary shares, assuming no
value is attributed to the warrants included in the units, and the pro forma net tangible book
value per share of our ordinary shares after this offering, constitutes the dilution to you and
the other investors in this offering. The fact that our Existing Shareholders purchased
4,166,667 ordinary shares at a nominal price will significantly contribute to this dilution.
Assuming the offering is completed, you, the other New Shareholders and Hayground Cove in
respect of the 4,166,667 units being purchased by it in this offering and the units being
purchased in the Sponsor Private Placement will incur an immediate and substantial dilution
of approximately 24.4% or $1.46493 per ordinary share (the difference between the pro forma
net tangible book value per ordinary share of $4.53507, and the initial offering price of $6.00
per unit).
Our outstanding warrants may have an adverse effect on the market price of our ordinary
shares and make it more difficult to consummate a business combination.
In connection with this offering and the Sponsor Private Placement, we will be issuing
warrants to purchase up to 34,333,334 ordinary shares as part of the units. In addition, we
have agreed to sell to the placing agent for $100, as additional compensation, up to a total of
833,333 units at $7.50 per unit, with 1,666,666 warrants issued as part of such units being
exercisable at an exercise price of $6.25 per warrant. The potential for the issuance of a
substantial number of additional shares upon exercise of these warrants could make us a less
attractive acquisition vehicle in the eyes of an acquisition candidate. These warrants, when
exercised, will increase the number of issued and outstanding ordinary shares and may
reduce the value of the ordinary shares issued to complete the business combination.
Therefore, our warrants may make it more difficult to consummate a business combination or
increase the cost of acquiring the acquisition candidate. Additionally, the sale, or even the
possibility of sale, of the ordinary shares underlying the warrants and the Placing Agent
Option could have an adverse effect on the market price for our securities or on our ability to
obtain future financing. If and to the extent these warrants and/or the Placing Agent Option
are exercised, you may experience dilution to your holdings.
Determination of the offering price for our units is more arbitrary than the pricing of
securities for an operating company.
Prior to this offering there has been no market for any of our securities. The offering price
of the units and the terms of the warrants were negotiated between us and the placing agent.
Factors considered in our determination of the prices and terms of the units, including the
ordinary shares and warrants underlying the units, include:
• the history and prospects of companies whose principal business is the acquisition of
other companies;
• prior offerings of those companies;
• our prospects for acquiring a business at attractive values;
• our capital structure;
26
• an assessment of our management and their experience in identifying operating
companies;
• general conditions of the securities markets at the time of the offering; and
• other factors that were deemed relevant by us and the placing agent.
However, although these factors were considered, the determination of our offering price
is more arbitrary than the pricing of securities for an operating company in a particular
industry since we have no historical operations or financial results.
We may not obtain an opinion from an unaffiliated third party as to the Transaction Value of
acquisition candidates or the fairness of the transaction to our shareholders.
We are not required to obtain an opinion from an unaffiliated third party that
(i) acquisition candidates we select have a Transaction Value in excess of $25.0 million, the
threshold value for us to be permitted to consummate a business combination, (ii) acquisition
candidates we select have an aggregate Transaction Value of at least 50% of the initial amount
held in the trust account, the threshold value to constitute a Qualified Business Combination
or (iii) that the price we are paying is fair to shareholders. If no opinion is obtained, our
shareholders will be relying on the judgment or our Board of Directors.
There is currently no market for our securities and a market for our securities may not
develop, which could adversely affect the liquidity and price of our securities.
There is currently no market for our securities. Therefore, shareholders should be aware
that they cannot benefit from information about prior market history when making a decision
to invest. In addition, the price of the securities, after the offering, can vary due to general
economic conditions and forecasts, our general business condition and the release of our
financial reports. Furthermore, an active trading market for our securities may never develop
or, if developed, it may not be maintained. Investors may be unable to sell their securities
unless a market can be established or maintained.
In connection with this offering, an application will be made for our ordinary shares and
warrants (other than any warrants issued pursuant to the exercise of the Placing Agent
Option) to be quoted on AIM. We do not currently have an intention to list our securities on
any other exchange and, therefore, we expect our securities to continue to trade on AIM (even
after a Qualified Business Combination). The ordinary shares and warrants will be regulated
by the AIM Rules. AIM is not a regulated market for the purposes of European Union
regulations, but is regulated only by the London Stock Exchange. An investment in securities
traded on AIM is perceived to carry a higher risk than an investment in securities quoted on
exchanges with more stringent listing requirements, such as the Official List of the United
Kingdom Listing Authority, the Luxembourg Stock Exchange, the New York Stock Exchange or
the NASDAQ National Market. This is because AIM imposes less stringent corporate
governance and ongoing reporting requirements. In addition, except in limited circumstances,
shareholder approval is not required under the AIM Rules for business combinations that are
valued at less than 100% of our gross assets, profits, turnover, gross capital or market value
of all of our shares that are listed on AIM. AIM is also a new and more flexible market, which
requires only semi-annual, rather than quarterly, financial update reports. Investors should be
aware that the value of the ordinary shares and warrants may be influenced by many factors,
some of which may affect quoted companies generally, including the depth and liquidity of
the market, the performance of the company, a large or small volume of trading in the
27
company’s securities, legislative changes and general economic, political or regulatory
conditions, and that the prices may be volatile and subject to extensive fluctuations.
Therefore, the market price of the ordinary shares and warrants may not reflect our
underlying value. The value of an investment in us may increase or decrease; therefore,
investors may realize less than, or lose all of, their investment.
We have not registered the ordinary shares or warrants with the SEC, which will limit your
ability to resell them in the United States or to a U.S. Person.
Neither the ordinary shares nor the warrants have been registered under the Securities
Act or any U.S. state securities laws. As a result, they may only be offered or sold if:
• an applicable exemption from the registration requirements of the Securities Act and
applicable state laws applies to the circumstances of the sale, or
• a registration statement covering the resale of these securities is filed and declared
effective.
In addition, we cannot assure you that we will always retain a listing on AIM. If we fail to
retain such a listing, certain investors may decide to sell their ordinary shares and/or
warrants, which could have an adverse impact on the price of the ordinary shares and/or
warrants.
The ordinary shares and warrants being sold in this offering will be subject to legend and
certification requirements under the Securities Act and may initially be represented by
physical certificates, which will reduce the liquidity of the ordinary shares and warrants and
could ultimately reduce their market prices.
This offering is being made pursuant to exemptions from the registration requirements of
the U.S. Securities Act of 1933, as amended, including Regulation S. As a result, each
purchaser of subsequent transfers of ordinary shares or warrants other than a distributor will
be required to certify that (i) it is not a U.S. Person (and is not acquiring the securities for the
account or benefit of any U.S. Person) or (ii) it is a U.S. Person who purchased securities in a
transaction pursuant to Rule 144A that did not require registration under the Securities Act. In
addition, the ordinary shares and warrants will contain a legend to the effect that any transfer
or sale is pursuant to an exemption from registration under the Securities Act. The transfer
agent may also require legal opinions prior to effecting a transfer during this time period.
CRESTCo, which is the Central Securities Depository for the U.K. market and which operates
the CREST system, does not currently operate an electronic settlement system that monitors
the legend and certification requirements under Regulation S and Rule 144A of the Securities
Act.
On May 26, 2006, the London Stock Exchange announced that it intends to offer an
alternative electronic settlement system for securities of companies that are listed on AIM, but
which are subject to transfer restrictions under Regulation S. This new system would enable
certifications of non-U.S. status to be made electronically prior to the settlement of each trade
in a manner which is not currently possible under the CREST system. It is expected that this
system will be introduced, after a consultation period, during the second half of 2006. If an
electronic settlement system, which would enable electronic settlement of securities that are
subject to Regulation S transfer restrictions, is introduced in accordance with those
restrictions, it is our intention, subject to applicable law, to seek admission of the ordinary
shares and warrants (other than any warrants resulting from the exercise of the Placing Agent
28
Option) to that settlement system (or any other such system which permits electronic
settlement) and to enable electronic settlement to take place. However, we can give no
assurances as to when this may occur or if it will occur at all or, if approved, that trading of
our ordinary shares and warrants would be capable of electronic settlement under this
system. See ‘‘Transfer Restrictions.’’ Since the electronic system is not expected to be
introduced prior to the closing of this offering, each investor in this offering will initially
receive physical certificates representing the ordinary shares and warrants instead of settling
in electronic form, which will reduce the liquidity of the ordinary shares and warrants and
could ultimately reduce their market prices.
Upon announcement of a business combination, it is possible that AIM will temporarily
suspend trading of our securities.
Our initial business combination will require a shareholder vote. Unless we publish an
admission document with respect to our securities, as the AIM rules require, at the same time
we announce the proposed business combination, trading of our securities will be suspended
until such publication. While we will endeavor to avoid such a suspension, we may be
required to announce the business combination before we are able to publish the admission
document.
Provisions in our constituent documents may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our ordinary shares and could
entrench management.
Our constituent documents contain provisions that may discourage unsolicited takeover
proposals that shareholders may consider to be in their best interests. These provisions
include a staggered Board of Directors and the ability of the Board of Directors to designate
the terms of and issue new series of preference shares, which may make more difficult the
removal of management and may discourage transactions that otherwise could involve
payment of a premium over prevailing market prices for our securities.
There may be tax consequences to our business combinations that may adversely affect us.
While we expect to undertake any merger or acquisition so as to minimize taxes both to
the acquired business and/or asset and us, such business combination might not meet the
statutory requirements of a tax-free reorganization, or the parties might not obtain the
intended tax-free treatment upon a transfer of shares or assets. A non-qualifying
reorganization could result in the imposition of substantial taxes.
We may be a passive foreign investment company which could lead to additional taxes for
U.S. holders of our shares or warrants.
A passive foreign investment company, or PFIC, is a non-U.S. corporation that meets
either the income or asset PFIC tests. The income test is met if 75% or more of a corporation’s
gross income is ‘‘passive income’’ (generally dividends, interest, rents, royalties, and gains
from the disposition of passive assets) in any taxable year. The asset test is met if at least
50% of the average value of a corporation’s assets produce, or are held for the production of,
passive income. Because we are a blank check company with no active business operations
prior to a business combination, it is likely that we will be considered a PFIC unless we qualify
for the PFIC start-up exception. The application of such exception and our non-PFIC status
cannot be assured. If we are considered a PFIC, a U.S. holder of our shares or warrants could
29
be subject to substantially increased tax liability, including an interest charge upon the sale or
other disposition of the U.S. holder’s ordinary shares or warrants or upon the receipt of
‘‘excess distributions’’ from us. Certain elections may sometimes be used to reduce the
adverse impact of the PFIC rules. These elections may not be available to U.S. holders. If
these elections are available, they may result in a current U.S. federal tax liability prior to any
distribution or on the disposition of the ordinary shares, and without the assurance of a U.S.
holder receiving an equivalent amount of income or gain from a distribution or disposition.
Certain members of our Board of Directors may not be deemed to be ‘‘independent’’
directors, and therefore actions taken and expenses incurred by our directors on our behalf
will generally not be subject to ‘‘independent’’ review.
Certain of our directors are principals of our sponsor. As a result, these directors may not
be deemed to be ‘‘independent’’. Although we believe that all actions taken by our Board of
Directors on our behalf will be in the best interests of our shareholders, we cannot assure you
that this will be the case. If actions are taken, or expenses are incurred, that are not in the
best interests of our shareholders, it could have a material adverse effect on our business and
operations and the price of our ordinary shares and warrants could decline. See ‘‘Certain
Relationships and Related Party Transactions.
If we are deemed to be an investment company, we may be required to institute
burdensome compliance requirements and out activities may be restricted, which may make
it difficult for us to complete a business combination.
If we are deemed to be an investment company under the Investment Company Act of
1940, as amended, or the Investment Company Act, our activities may be restricted, including:
• restrictions on the nature of our investments; and
• restrictions on the issuance of securities, each of which may make it difficult for us to
complete a business combination
In addition, we may have imposed upon us burdensome requirements, including:
• registration as an investment company;
• adoption of a specific form of corporate structure; and
• reporting, record keeping, voting, proxy and disclosure requirements and other rules
and regulations.
We do not believe that our anticipated principal activities will subject us to the Investment
Company Act. To this end, the proceeds held in the trust account may be invested by the
trustee only in United States ‘‘government securities’’ within the meaning of Section 2(a)(16)
of the Investment Company Act with a maturity of 180 days or less, or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act.
By restricting the investment of the proceeds to these instruments, we intend to meet the
requirements for the exemption provided in Rule 3a-1 promulgated under the Investment
Company Act. If we were deemed to be subject to the Investment Company Act, compliance
with these additional regulatory burdens would require additional expense for which we have
not allotted.
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There are certain advantages and disadvantages arising out of incorporating in the Cayman
Islands.
We are a blank check company recently incorporated as an exempted company in the
Cayman Islands. We chose to incorporate in the Cayman Islands in order to take advantage of
certain benefits, including:
• the political and economic stability of the Cayman Islands;
• the developed legal system, which is based on English common law, and an established
and effective judicial system;
• the Cayman Islands favorable tax system;
• the absence of any exchange controls or currency restrictions; and
• the availability of professional and support services.
However, there are certain potential disadvantages in having incorporated in the Cayman
Islands including:
• the Cayman Islands has a less developed body of securities laws as compared to the
United States or certain other jurisdictions and provides significantly less statutory
protection for investors; and
• Cayman Islands companies may not have standing to sue before the federal courts of
the United States.
Under Cayman Islands law, the requirements and restrictions relating to this offering
contained in our amended and restated memorandum and articles of association may be
amended, which could reduce or eliminate the protection afforded to our shareholders by
such requirements and restrictions.
Our amended and restated memorandum and articles of association set forth certain
requirements and restrictions relating to this offering that shall apply to us until the
consummation of a Qualified Business Combination. Specifically, our amended and restated
articles of association provides among other things, that:
• prior to the consummation of any business combination, including a Qualified Business
Combination, we shall submit any potential business combination to our shareholders
for approval;
• we may only consummate a business combination, including a Qualified Business
Combination, if it is approved by a majority of votes cast at a general meeting of
ordinary shareholders at which a quorum is present and we confirm that we have
sufficient cash resources to pay both (A) the consideration required to close the
business combination and (B) the cash due to New Shareholders who vote against the
business combination and who exercise their repurchase rights. We may choose to
condition the consummation of any business combination on the number or percentage
of New Shareholders electing to exercise their repurchase rights not exceeding a
pre-specified threshold;
• if any business combination that is not a Qualified Business Combination is approved
and completed, New Shareholders who vote against such business combination will be
entitled to exercise their repurchase rights or maintain their interest in us;
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• if a Qualified Business Combination is approved and completed, New Shareholders who
vote against the Qualified Business Combination will be entitled either to exercise their
repurchase rights or to maintain their interest in us;
• if we do not consummate a Qualified Business Combination within 12 months after the
Admission Date (or, if extended by a majority of votes cast at a general meeting of
ordinary shareholders at which a quorum is present, by the Extended Date), we will,
provided we have not consummated any business combination, dissolve and promptly
distribute the amount held in the trust account to our New Shareholders and
Hayground Cove in respect of the 4,166,667 units being purchased in this offering; and
• if we consummate any business combination within 12 months after the Admission
Date (or, if extended by a majority of votes cast at a general meeting of ordinary
shareholders at which a quorum is present, by the Extended Date), but do not
consummate a Qualified Business Combination, then we (i) must offer to repurchase a
pro rata portion of the ordinary shares then owned by the New Shareholders and
Hayground Cove (in respect of the 4,166,667 units being purchased by it in this offering)
using the remaining funds held in the trust account (which funds will be net of the
proceeds used for prior approved business combinations, the placing agent’s deferred
commission, acquisition expenses, working capital and repurchase payments to New
Shareholders who have exercised their repurchase rights) and (ii) must repurchase for
$0.001 par value such number of the ordinary shares purchased by the Existing
Shareholders prior to this offering, if any, required to ensure that such shares represent
no more than 25% of our then outstanding ordinary shares, in which case we will have
met the requirements to avoid liquidation of the company and therefore we will not be
required to dissolve.
India has different corporate disclosure, governance and regulatory requirements than those
in the United States and the United Kingdom which may make it more difficult or complex
to consummate a business combination involving an Indian company.
Companies in India are subject to accounting, auditing, regulatory and financial standards
and requirements that differ, in some cases significantly, from those applicable to companies
in the United States and the United Kingdom, which may make it more difficult or complex to
consummate a business combination with an Indian company. In particular, the assets and
profits appearing on the financial statements of an Indian company may not reflect its
financial position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with United States or United Kingdom
generally accepted accounting principles or International Accounting Standards. Legal
principles relating to corporate affairs and the validity of corporate procedures, directors’
fiduciary duties and liabilities and shareholders’ rights for Indian corporations may differ from
those that may apply in the United States or the United Kingdom, which may make the
consummation of a business combination with an Indian company more difficult.
Because there are numerous companies with a business plan similar to ours seeking to
consummate a business combination, it may be more difficult for us to do so.
Since 2004, based upon publicly available information, approximately 74 similarly
structured blank check companies have completed initial offerings in the United States and on
AIM. Nine of these companies have consummated business combinations while 21 other
companies have announced that they have entered into a definitive agreement for a business
combination, but have not consummated such business combination. Accordingly, we believe
there are 44 blank check companies with an aggregate of approximately $3.8 billion in trust
32
accounts that are seeking to carry out a business plan similar to our business plan. While
some of those companies must complete a business combination in specific industries and/or
specific countries, a number of them may consummate a business combination in any
industry they choose or have very broad definitions of the industry they will target. Therefore,
we may be subject to competition from these and other companies seeking to consummate a
business plan similar to ours. Because of this competition, we may not be able to
consummate our initial business combination within the required time period.
Changes in the India-Mauritius income tax treaty and in governmental laws and regulations
in Mauritius may eliminate the tax benefits that IHC Mauritius, our wholly owned Mauritius
operating subsidiary, expects to receive in connection with the making of acquisitions, which
may impact our investment flexibility and our shareholder returns.
We expect to conduct business, including the making of acquisitions, through IHC
Mauritius, a wholly owned operating subsidiary incorporated in Mauritius as an offshore
corporation. Under current law, IHC Mauritius expects to receive several tax benefits, including
a reduction in Indian taxes under the income tax treaty between India and Mauritius, a tax
credit in Mauritius for tax paid in other countries, a reduction of the corporate tax by a
deemed foreign tax credit of 80%, no withholding tax on outward payments from Mauritius,
no capital gains tax or estate duty and no registration duty, levy or VAT on global business
transactions. We believe our formation as a Cayman Islands exempted company and the use
of a Mauritian subsidiary to consummate acquisitions will provide investment flexibility and
enhance shareholder returns. However, due to treaty changes and changes in governmental
laws and regulations, IHC Mauritius may no longer receive these benefits, which may impact
our investment flexibility and our shareholder returns.
Risks Related to the Hospitality, Leisure, Tourism, Travel and Related Industries
The hospitality, leisure, tourism, travel and related industries are highly competitive on an
international, national, regional and local level. If we are unable to compete effectively, we
would lose market share, which could adversely affect our business and operations.
The hospitality, leisure, tourism, travel and related industries are highly competitive on an
international, national, regional and local level. Competition in these industries is primarily
based on service quality, range of services, brand name recognition, convenience of location,
room rates, guest amenities, perceived values and quality of accommodations. We will
compete with other local, regional and national limited and full service companies in the
hospitality, leisure, tourism, travel and related industries. Our competitors may have a larger
network of locations and greater financial resources than we do. Our properties may be
located in cities and communities in which significant new development in these industries
has occurred in recent years. Our competitors may be able to accept more risk than we can
manage prudently and may be able to have more readily available access to funds needed to
make acquisitions. Additionally, competitors may offer significantly lower rates and prices,
greater convenience, services or amenities or superior facilities. Changes in demographics and
other changes in our markets may also adversely impact the convenience or desirability of
our property locations, thereby adversely impacting our results of operations and financial
condition.
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The performance of the hospitality, leisure, tourism, travel and related industries has
traditionally been closely linked with the general economy, with the result that an economic
slowdown could have a material adverse effect on our business and operations.
In an economic downturn, hospitality, leisure, tourism, travel and related industries that
target business and leisure travelers may be susceptible to a decrease in revenues. In periods
of economic difficulties, business and leisure travelers may seek to reduce travel costs by
limiting travel or otherwise generally reducing the costs of their trips. In periods of weak
demand, profitability is negatively affected by the relatively high fixed costs of operating
hospitality, leisure, tourism, travel and related industries. An economic slowdown could have
a material adverse effect on our business and operations.
Hospitality, leisure, tourism, travel and related businesses are capital intensive; financing the
rising cost of capital improvements and increasing operating expenses could reduce our cash
flow and adversely affect our financial performance.
Our properties will have ongoing needs for renovations and other capital improvements
to remain competitive, including replacement, from time to time, of furniture, fixtures and
equipment. To compete effectively, we will need to make capital expenditures. In addition, we
will need to make capital expenditures to comply with applicable laws and regulations. We
may not be able to fund capital improvements solely from cash provided from our operating
activities and, if so, we may need to rely upon the availability of debt or equity capital.
In addition, renovations and other capital improvements to our properties may be
expensive and may require us to close all or a portion of the operations to customers during
such renovations. These capital improvements may give rise to the following additional risks,
among others:
• construction cost overruns and delays;
• uncertainties as to market demand or a loss of market demand after capital
improvements have begun;
• disruption in service and availability, causing reduced demand, occupancy and rates
and prices;
• a possible shortage of available cash to fund renovations and the related possibility that
financing for these renovations may not be available to us on affordable terms; and
• possible environmental problems.
As a result, capital improvement projects may increase our expenses and reduce our cash
flows and our revenues. If capital expenditures exceed our expectations, this excess would
have an adverse effect on our available cash.
Various operating risks common to the hospitality, leisure, tourism, travel and related
industries, many of which are beyond our control, may adversely effect our operating results.
Our revenues and our operating results will be subject to the various operating risks
common to the hospitality, leisure, tourism, travel and related industries, many of which are
beyond our control. These include:
• adverse effects of international market conditions, which may diminish the desire for
leisure travel or the need for business travel, as well as national, regional and local
economic and market conditions where our businesses will operate and where our
customers will live;
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• increases in operating costs due to inflation, labor costs (including the impact of
unionization), workers’ compensation and health-care related costs, utility costs,
insurance and unanticipated costs for things such as acts of nature and their
consequences and other factors that may not be offset by increased room rates;
• the construction and opening of competing businesses;
• continuing expenditures for modernizing, refurbishing and maintaining existing facilities
prior to the expiration of their anticipated useful lives;
• changes in governmental laws and regulations, fiscal policies and zoning ordinances
and the related costs of compliance;
• changes in interest rates and in the availability, cost and terms of debt financing;
• airline strikes, natural disasters or other factors that may affect travel patterns and
reduce the number of business and commercial travelers and tourists;
• management ability of our business managers;
• desirability of particular locations;
• location and quality of business;
• relative illiquidity of hospitality, leisure, tourism, travel and related business
investments; and
• adverse effects of a downturn in the hospitality, leisure, tourism, travel and related
industries.
We may have high fixed costs, including property taxes and insurance costs, which we may
be unable to adjust in a timely manner in response to a reduction in revenues.
The costs associated with owning and operating hospitality, leisure, tourism, travel and
related businesses can be significant, some of which may not be altered in a timely manner in
response to changes in demand for services, and failure to adjust our expenses may
adversely affect our business and operations. Property taxes, stamp duties, registration
charges and insurance costs may be a significant part of our operating expenses. The
incidence of property taxes, stamp duties and registration charges payable on acquisition or
transfer of immovable properties may increase as property tax rates, stamp duties or
registration charges change and differ from state to state and also on the basis of assessment,
re-assessment or valuation of properties by taxing/municipal authorities. In addition, our real
property tax rates will increase as property tax abatements/exemptions expire.
In the future, our properties may be subject to increases in tax rates, utility costs,
operating expenses, insurance costs, repairs and maintenance and administrative expenses,
which could reduce our cash flow and adversely affect our financial performance. If our
revenues decline and we are unable to reduce our expenses in a timely manner, our results of
operations could be adversely affected.
High incidence of indirect taxes would affect our businesses and may lead to reduction in
revenues.
The hospitality, leisure, tourism, travel and related industries are subject to a large
number of indirect taxes. For instance, any levy of entertainment tax, luxury tax or service tax
is required to be incurred by customers who are recipients of hospitality, leisure, tourism,
35
travel and related services. The rates of such indirect taxes are subject to change and any
increase in their rates may adversely affect our revenues.
Our success may depend on the value of our name, image and brand, and if demand for our
business decreases or the value of our name, image or brand diminishes, our business and
operations would be adversely affected.
Our success may depend, to a large extent, on our ability to shape and stimulate
consumer tastes and demands by providing and maintaining innovative, attractive, and
exciting properties and services, as well as our ability to remain competitive in the areas of
design and quality. There can be no assurance that we will be successful in this regard or that
we will be able to anticipate and react to changing consumer tastes and demands in a timely
manner.
Furthermore, a strong media profile will be an integral part of our ability to shape and
stimulate demand with our target customers. A key aspect of our marketing strategy will be to
focus on attracting media coverage. If we fail to attract that media coverage, we may need to
substantially increase our advertising and marketing costs, which would adversely affect our
results of operations. In addition, other types of marketing tools, such as traditional
advertising and marketing, may not be successful in attracting our target customers. Our
business would be adversely affected if our public image or reputation were to be diminished.
Our brand names and trademarks are integral to our marketing efforts. If the value of our
name, image or brands were diminished, our business and operations would be adversely
affected.
Any failure to protect trademarks after our acquisitions could have a negative impact on the
value of our brand names and adversely affect our business.
Hospitality, leisure, tourism, travel and related businesses often rely on trademark laws to
protect their proprietary rights. The success of our business may depend in part upon our
continued ability to use our trademarks to increase brand awareness and further develop our
brand in the Indian market. Monitoring the unauthorized use of our intellectual property is
difficult. Litigation may be necessary to enforce our intellectual property rights or to
determine the validity and scope of the proprietary rights of others. Litigation of this type
could result in substantial costs and diversion of resources, may result in counterclaims or
other claims against us and could significantly harm our results of operations. In addition, the
laws of India do not protect proprietary rights to the same extent as do the laws of the United
States or the United Kingdom.
From time to time, we will apply to have certain trademarks registered. There is no
guarantee that such trademark registrations will be granted. We cannot assure you that all of
the steps we will take to protect our trademarks in the United States, the United Kingdom,
India and other countries will be adequate to prevent imitation of our trademarks by others.
The unauthorized reproduction of our trademarks could diminish the value of our brand and
its market acceptance, competitive advantages or goodwill, which could adversely affect our
business.
We may have disputes with, or be sued by, third parties for infringement or misappropriation
of their proprietary rights, which could have a negative impact on our business.
Other parties may assert trademark, copyright or other intellectual property rights that will
be important to our business. We cannot assure you that others will not seek to block our use
of certain marks or seek monetary damages or other remedies for the prior use of our brand
36
names or other intellectual property or the sale of our products or services as a violation of
their trademark, copyright or other proprietary rights. Defending any claims, even claims
without merit, could divert our management’s attention, be time-consuming, result in costly
settlements, litigation or restrictions on our business and damage our reputation.
In addition, there may be prior registrations or use of trademarks in the United States, the
United Kingdom, India or other foreign countries for similar or competing marks or other
proprietary rights of which we are not aware. In all such countries it may be possible for any
third-party owner of a national trademark registration or other proprietary right to enjoin or
limit our expansion into those countries or to seek damages for our use of such intellectual
property in such countries. In the event a claim against us was successful and we could not
obtain a license to the relevant intellectual property or redesign or rename our products or
operations to avoid infringement, our business, financial condition or results of operations
could be harmed. Securing registrations does not fully insulate us against intellectual property
claims, as another party may have rights superior to our registration or our registration may
be vulnerable to attack on various grounds.
Seasonal variations in revenue at our hospitality, leisure, tourism, travel and related
businesses can be expected to cause quarterly fluctuations in our revenues.
The hospitality, leisure, tourism, travel and related industries are seasonal in nature. This
seasonality can be expected to cause quarterly fluctuations in our revenues. In the hospitality
industry in India, for example, revenues are generally higher from October to March as
compared to from April to September. Business from tourist and business travelers in India is
generally higher during the second half of the fiscal year. Our quarterly earnings may also be
adversely affected by factors outside our control, including weather conditions and poor
economic factors. As a result, we may have to enter into short-term borrowings in certain
quarters in order to offset these fluctuations in revenues.
Failure of the Indian hospitality, leisure, tourism, travel and related industries to exhibit
continued improvement may impede our ability to execute our business plan.
A substantial part of our business plan is based on our belief that the Indian hospitality,
leisure, tourism, travel and related industries will continue to benefit from the recent
improving economic fundamentals. We cannot be sure as to whether, when, or to what extent
hospitality, leisure, tourism, travel and related industries’ fundamentals will in fact continue to
improve. In the event conditions in these industries do not continue to improve as we expect,
our ability to execute our business plan may be impeded.
Hospitality, leisure, tourism, travel and related industries may be faced with labor disputes or,
upon expiration of any collective bargaining agreement, a strike, which would adversely
affect our operations.
We will rely heavily on our employees providing high-quality, personal service at our
businesses, and any labor dispute or stoppage caused by poor relations with a labor union or
our employees could adversely affect our ability to provide those services, which could reduce
our revenue, tarnish our reputation and hurt our results of operations. Our relationship with
our employees or the union could deteriorate due to disputes relating to, among other things,
wage or benefit levels or management responses to various economic and industry
conditions. Furthermore, if our collective bargaining agreement is terminated, the union could
engage in a strike or picketing against our businesses. Although we will make every effort to
maintain harmonious relations with our employees, managerial staff and trade unions, it is
possible that demands, strikes, picketing or any other kind of lack of cooperation or
37
destruction to our assets by them may lead to business loss, failure to meet targeted business
objectives, loss of valuable assets, loss of goodwill or any other kind of loss, monetary or
otherwise. Further, any change in labor legislation may lead to increase in labor cost and
thereby reduce our revenues.
The hospitality, leisure, tourism, travel and related industries are heavily regulated, including
with respect to food and alcohol sales, employee relations, construction and taxation. Failure
to comply with regulatory requirements may result in an adverse effect on our business.
Our failure to comply with regulatory requirements may result in an adverse effect on our
business. Our properties will be subject to numerous state and central laws, including those
relating to environmental protection and the preparation and sale of food and beverages,
including alcohol. We will also be subject to laws governing our relationship with our
employees in such areas as minimum wage and maximum working hours, overtime, working
conditions, hiring and firing employees and work permits.
Also, our ability to remodel, refurbish or add to our properties may be dependent upon
our obtaining necessary building permits from local authorities, statutory clearances from the
fire departments and airport authorities (in respect of height of the building) and such other
approvals as may be required from relevant authorities to carry out hospitality, leisure,
tourism, travel and related business activities. The failure to obtain any of these permits could
adversely affect our ability to increase revenues and net income through capital
improvements of our properties. Any non-compliance with such laws, rules, regulations, or
bylaws may lead to the seizure or demolition of our properties, result in cessation of provision
of essentials such as water and electricity to the property and/or make us liable to pay fines
and penalties which may adversely affect our revenues and image.
In addition, we will be subject to the numerous rules and regulations relating to direct/
indirect Indian taxation. Compliance with these rules and regulations requires significant
management attention. Any failure to comply with all such rules and regulations could subject
us to fines or audits by the applicable taxation authority.
Uninsured and underinsured losses could adversely affect our financial condition and results
of operations.
We will be responsible for insuring our businesses and properties as well as for obtaining
the appropriate insurance coverage to reasonably protect our interests in the ordinary course
of business. We will ensure that comprehensive insurance be maintained on each of our
properties, including liability, fire and extended coverage. There are certain types of losses,
generally of a catastrophic nature, such as earthquakes and floods or terrorist acts, which may
be uninsurable or not economically insurable, or may be subject to insurance coverage
limitations, such as large deductibles or co-payments. We will use our discretion in
determining amounts, coverage limits, deductibility provisions of insurance and the
appropriateness of self-insuring, with a view to maintaining appropriate insurance coverage
on our investments at a reasonable cost and on suitable terms. Uninsured and underinsured
losses could harm our financial condition and results of operations. We could incur liabilities
resulting from loss or injury to our businesses and properties or to persons at our properties.
Claims, whether or not they have merit, could harm the reputation of a business or property
or cause us to incur expenses to the extent of insurance deductibles or losses in excess of
policy limitations, which could harm our results of operations.
In the event of a catastrophic loss, our insurance coverage may not be sufficient to cover
the full current market value or replacement cost of our lost investment. If we suffer
38
uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the
capital we have invested in a business or property, as well as the anticipated future revenue
from such business or property. In that event, we might nevertheless remain obligated for any
mortgage debt or other financial obligations related to the business or property. In the event
of a significant loss, our deductible may be high and we may be required to pay for all such
repairs and, as a consequence, it could materially adversely affect our financial condition.
Inflation, changes in building codes and ordinances, environmental considerations and other
factors might also keep us from using insurance proceeds to replace or renovate a property
after it has been damaged or destroyed. Under those circumstances, the insurance proceeds
we receive might be inadequate to restore our economic position on the damaged or
destroyed property.
If we were unable to obtain adequate insurance at our businesses or on our properties for
certain risks, it could cause us to be in default under specific covenants on certain of our
indebtedness or other contractual commitments that require us to maintain adequate
insurance at our businesses or on our properties to protect against the risk of loss. If this
were to occur, or if we were unable to obtain adequate insurance and our businesses or
properties experienced damage which would otherwise have been covered by insurance, it
could materially adversely affect our financial condition and the operations of our businesses
or properties.
In addition, insurance coverage for our businesses and properties and for casualty losses
does not customarily cover damages that are characterized as punitive or similar damages. As
a result, any claims or legal proceedings, or settlement of any such claims or legal
proceedings that result in damages that are characterized as punitive or similar damages may
not be covered by our insurance. If these types of damages are substantial, our financial
resources may be adversely affected.
Risks Related to Doing Business in India
A significant change in the Indian government’s economic liberalization and deregulation
policies may make it more difficult to consummate a business combination or cause potential
acquisition candidates or their goods and services to become less attractive.
Since the early 1990s, successive Indian governments have committed themselves to
implementing an economic structural reform program with the objective of liberalizing India’s
exchange and trade policies, reducing the fiscal deficit, controlling inflation, promoting a
sound monetary policy, reforming the financial sector and placing greater reliance on market
mechanisms to direct economic activity. A significant component of the program is the
promotion of foreign investment in key areas of the economy and the further development of
and the relaxation of restrictions in the private sector. While the government’s policies have
resulted in improved economic performance, there can be no assurance that this performance
will be sustained.
There can be no assurance that these economic reforms will persist, and that any newly
elected government will continue the program of economic liberalization of previous
governments. Any changes that may adversely affect Indian laws and policies with respect to
foreign investment and currency exchange may make it more difficult for us to consummate a
business combination or cause potential acquisition candidates or their goods and services to
become less attractive.
39
Regional hostilities, terrorist attacks or social unrest in some parts of India may cause
potential acquisition candidates to become less attractive.
India is a multi-religious, multi-lingual, multi-cultural country. There have been several
incidents of societal violence in the past. Any societal violence may lead to loss of property,
and key personnel, disruption, or freezing or ceasing of business operations, which would
adversely affect our businesses and revenues.
Religious and border disputes persist in India. Moreover, India has from time to time
experienced civil unrest and hostilities with neighboring countries such as Pakistan.
Notwithstanding recently improved relations between the two countries, the longstanding
dispute with Pakistan over the border Indian state of Jammu and Kashmir, remains
unresolved.
India has also experienced terrorist attacks in some parts of the country. Further, terrorist
attacks often target hotels, restaurants, resorts and other hospitality businesses, which
generally service large groups of individuals. If the Indian government is unable to control the
violence and disruption associated with these tensions, the results could destabilize the
economy and, consequently, it could cause potential target businesses to become less
attractive.
The ability to provide security in and around the premises of our businesses and
properties will largely depend upon the assistance from local police and other relevant
government departments. Even if the best possible measures are taken, it would be difficult
on our part to check and restrict any sudden terrorist attack, civil unrest or regional hostility.
India has witnessed in the past wars between its neighboring countries (e.g., Pakistan and
China), at which times a state of emergency has been declared throughout the country. Also,
due to political instability, societal tension, and terrorist activities, several states in India have
at times been under the President’s rule and managed by India’s Army. Such situations may
paralyze day to day business operations and adversely impact revenues within India.
Additionally, since early 2003, there have been military hostilities and civil unrest in
Afghanistan, and political instability and terrorist attacks in other neighboring countries like
Pakistan, Nepal and Sri Lanka as well as in Iraq and other Asian countries. These events could
adversely influence the Indian economy and, as a result, negatively affect us and our ability to
achieve our business objective.
A poor monsoon season or seasons or the occurrence of natural disasters, such as tsunamis,
could negatively impact Indian GDP growth.
India’s economy is heavily dependent on the monsoon season each year, which drives the
performance of the agricultural sector. The agricultural sector is a significant component of
annual Indian GDP and is also a source for the rise in the rural population’s growth in
disposable income. If India experiences a poor monsoon season (or seasons), or if India
experiences another tsunami, such as the one that struck Southeast Asia in December 2004,
GDP growth and rural population disposable income may both be negatively impacted,
slowing the demand for infrastructure development, which could make our target businesses
less attractive.
India has suffered severe earthquakes, super cyclones and other natural disasters
responsible for loss of property. If any such natural disaster strikes at the places where we
operate or have businesses, our properties may become inaccessible, heavily damaged, or
destroyed, and overall demand for such businesses may fall, which may inhibit us from
continuing our operations.
40
Indian law may limit the ability of an acquired business to raise capital outside India and may
limit the ability of others to acquire its business or assets, which could prevent us from
operating our business or entering into a transaction that is in the best interests of our
shareholders.
In certain cases, foreign investment in, or an acquisition of shares in, an Indian company
requires approval from relevant government authorities in India, including the RBI. If we are
required to seek the approval of the Government of India and/or RBI for any of our targeted
business activities and the Government of India and/or RBI does not approve the investment
for any such activities or implements a limit on the foreign equity ownership of our target
business or grants approval subject to certain restrictive terms and conditions, or the
negotiated price for the shares is not in accordance with the applicable guidelines, it may
severely impact our business plans and our ability to carry on business in an effective
manner. In addition, our ability to seek and obtain additional equity investment from
non-Indian investors will be limited.
Based on the Foreign Direct Investment Policy (April 2006) published by the Ministry of
Commerce & Industry of the Government of India, or the Indian FDI Policy, we believe
generally that FDI in sectors and industries in which we propose to invest is allowed up to
100%. However, we cannot be certain that a particular acquisition that we may target or the
particular business activity pertaining to hospitality, leisure, tourism, travel and related
business activities that we may consider undertaking in India will not be subject to FDI
restrictions or restrictions related to the acquisition of existing companies in India by a person
resident outside India or investments into India by a person resident outside India. If any of
our business objectives pertaining to hospitality, leisure or related activities in India require
prior approval from the Government of India or any regulatory authority in India, such
approval if granted may be subject to certain restrictive terms and conditions as may be
specified in such approval or may take a long time, in which event our business objectives
and targeted revenues may be adversely affected or which may consequently confine us to
only a few business activities and not all as targeted by us.
Exchange controls in India may limit our ability to utilize our cash flow effectively following a
business combination.
Following a business combination, we will be subject to India’s rules and regulations on
currency conversion. In India, the Foreign Exchange Management Act, 1999, or FEMA,
regulates the conversion of the Indian rupee into foreign currencies. Comprehensive
amendments are made from time to time in FEMA and regulations made thereunder in
accordance with the changes made in the Indian FDI Policy. Companies into which foreign
equity has been infused, subject to the provisions of FEMA and regulations made thereunder
and in accordance with the Indian FDI Policy, are now permitted to operate in India without
any major or special restrictions, if they are 100% FDI companies covered under the automatic
route, effectively place them on par with wholly owned Indian companies. However, the Indian
foreign exchange market is not yet fully developed and there is no certainty that the Indian
authorities would eliminate or continue to relax foreign currency restrictions. Any future
restrictions on currency exchanges may limit our ability to use our cash flow for the
distribution of dividends to our shareholders or to fund operations.
Foreign currency fluctuations could cause a business combination to be more expensive.
Because our business objective includes the acquisition of one or more businesses with
operations in India, changes in the U.S. dollar-Indian rupee exchange rate may affect our
ability to achieve such an objective. The exchange rate between the Indian rupee and the U.S.
41
dollar has changed substantially in the last two decades and may fluctuate substantially in the
future. If the U.S. dollar declines in value against the Indian rupee, any business combination
will be more expensive and therefore more difficult to complete. Furthermore, we may incur
costs in connection with conversions between U.S. dollars and Indian rupees, which may
make it more difficult to consummate a business combination. Fluctuations in exchange rates
could also adversely affect the value, translated or converted in U.S. dollars, of the net assets,
earnings and any declared dividends of our business upon the consummation of a business
combination.
If political relations between the United States or the United Kingdom and India or between
India and the international community weaken, it could make acquisition candidates less
attractive.
The relationship between the United States or the United Kingdom and India and the rest
of the international community may change over time. Change in political conditions in India
may lead to less liberal or less business friendly investment policies by the government of
India or may prevent us from exercising our rights as shareholders or stake holders in an
acquisition candidate or in directing or appointing the management of an acquisition
candidate. Change in political conditions in India may also lead to the implementation of an
embargo or economic sanctions by the United States or the United Kingdom or other
developed countries against Indian companies or companies doing business in India, which in
turn could compel us to prematurely terminate our business arrangements, or sell our equity
holdings at less than fair market value or prevent the repatriation of the sale proceeds from
any termination or dissolution of our business arrangements or could prevent acquisition
candidates from accessing the United States, the United Kingdom or other international
markets for its products or services, thus affecting its and our profitability.
Acquisitions of shares of Indian businesses listed on recognized stock exchanges in India will
be subject to restrictions under Indian law, which may adversely impact the price to us of the
shares of an acquisition candidate and increase the cost of consummating an acquisition.
If an acquisition candidate is listed on a recognized stock exchange in India, the
acquisition of shares of such corporation may require, in addition to other applicable laws and
approvals required, compliance with the provisions of SEBI (Substantial Acquisition of
Shares & Takeovers) Regulations, 1997, as amended from time to time. The offer price and
other terms and conditions for acquisition of shares would need to be in compliance with
SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997, which may increase
the cost of acquisition and result in substantial time required for completion of a transaction.
The existing shareholders of an acquisition candidate may not approve the acquisition or
there could be another hostile and competitive bid to acquire such corporation, which may
further increase the costs of the acquisition and cause further delay. Even after investing
substantial time and efforts we may not be able to consummate such an acquisition.
The sale of the shares of an acquisition candidate may be subject to restrictions under Indian
law, which may adversely impact the price of the shares of an acquisition candidate or our
ability to repatriate the proceeds from such sale.
Under current Indian regulations and practice, in certain cases, approval of the RBI,
Ministry of Finance and, if an acquisition candidate is publicly traded in India, approval of the
Securities & Exchange Board of India, or SEBI, may be required for the sale of shares of an
acquisition candidate. If any of the approvals are not granted or not granted in a timely
fashion, it will impact our ability to consummate a business combination. Under currency
42
exchange controls presently in effect in India, the manner of formulating the purchase price
for the sale of shares must be in compliance with the applicable regulations and notifications
which, if complied with, would not entail any further approvals. However, situations may arise
where the price negotiated for the acquisition of an acquisition candidate may not be in
compliance with the methodology prescribed in the applicable regulations and notifications,
which may require prior specific approvals from appropriate authorities. We cannot assure
you that any required approval from the RBI, SEBI and/or any other government agency could
be obtained on any particular terms or at all.
Delays in judicial dispute resolution may impact doing business in India and, because the
Indian judiciary will determine the scope and enforcement under Indian law of almost all of
our acquisition candidates’ material agreements, we may be unable to enforce our rights
inside and outside of India following a business combination.
During the course of doing business in India, litigation may arise involving some of our
business arrangements governed by Indian law. The legal system in India is fairly complex
and time consuming, and the process of litigation in India may extend for several years. Such
delay may adversely affect and restrict our ability to further the needs of our consumers and
may cause loss of time, energy and revenue. Even if we seek to enforce our rights through
alternative dispute resolution or the courts of another country, we may still be required to
seek enforcement of an arbitral award or judgment in the Indian judiciary. If recourse to the
Indian judiciary is required, this can substantially impact our ability to consummate a business
combination.
Further, Indian law will govern almost all of our acquisition candidates’ material
agreements, some of which may be with Indian governmental agencies. We cannot assure
you that acquisition candidates will be able to enforce any of their material agreements or
that remedies will be available outside of India. The inability to enforce or obtain a remedy
under any of our future agreements may have a material adverse impact on our future
operations.
Returns on investment in Indian companies may be decreased by withholding and other
taxes.
Our investments in India will incur tax risk unique to investment in India and in
developing economies in general. Income that might otherwise not be subject to withholding
of local income tax under normal international conventions may be subject to withholding of
Indian income tax. Generally speaking, under tax treaties with India and under local Indian
income tax law income is subject to Indian tax if paid from India. In the event any tax is
withheld in India, proof of payment of withholding taxes may be required from the Income tax
authorities of India as part of the remittance procedure. Any withholding taxes paid by us on
income from our investments in India may or may not be creditable on our income tax
returns.
We intend to avail ourselves of income tax benefits under income tax related treaties with
India to seek to minimize any Indian withholding tax or local tax otherwise imposed. However,
the Indian tax authorities may not recognize application of such treaties to achieve a
minimization of Indian tax. We may also elect to create wholly-owned operating subsidiaries
to consummate the business combinations, to conduct operations and potentially to sell our
businesses or assets to attempt to limit the potential tax consequences of such actions, but
those attempts may not be successful.
43
The imposition of economic sanctions could affect our operations in India and adversely
impact our business.
The United States, Japan and certain other nations have announced and imposed
economic sanctions against India in the past. For example, as required under Section 102 of
the U.S. Arms Export Control Act, sanctions were imposed in response to the detonation by
India of nuclear devices. Although most of the current sanctions imposed by the United States
restrict the United States from providing assistance to India and do not directly limit the
activities of U.S. businesses, the precise ramifications of the sanctions are not expected to be
known for some time. Further, although the current sanctions do not directly affect U.S.
businesses, additional sanctions could be imposed which could have a material adverse effect
on U.S. businesses with operations, sales or suppliers in India.
Companies operating in India are subject to a variety of central and state government taxes
and surcharges.
Tax and other levies imposed by the central and state government in India that affect the
tax liability of our India operations include: (i) central and state taxes and other levies;
(ii) income tax; (iii) central sales tax, local sales tax/value added tax; (iv) turnover tax;
(v) service tax; (vi) customs duty; (vii) excise duty; (viii) stamp duty; (ix) entertainment tax;
(x) luxury tax; (xi) securities transaction tax; (xii) wealth tax; (xiii) fringe benefits tax; and
(xiv) other special taxes (including ‘‘cess’’) and surcharges which are introduced on a
temporary or permanent basis from time to time.
The central and state tax scheme in India is extensive and subject to change from time to
time. The statutory corporate income tax in India for domestic companies, which includes a
surcharge and education cess, is currently approximately 34%. The central or state
government may in the future increase the corporate income tax it imposes. Any such future
increases or amendments may affect the overall tax liability of companies operating in India
and may result in significant additional taxes becoming payable. Additional tax exposure
could have a material adverse effect on our India operations’ business, financial condition and
results.
44
USE OF PROCEEDS
We estimate that the proceeds of this offering and the Sponsor Private Placement will be
as set forth in the following table:
Gross proceeds:
Gross proceeds from units offered to the New Shareholders and Hayground
Cove in this offering(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proceeds from Sponsor Private Placement . . . . . . . . . . . . . . . . . . . . . .
$100,000,000
3,000,000
Total gross proceeds(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$103,000,000
(2)
Offering expenses:
Placing agent’s commission(3) . . .
Legal fees and expenses. . . . . . .
Printing and engraving expenses
Accounting fees and expenses . .
AIM application and listing fees .
Miscellaneous expenses(4). . . . . .
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$3,750,000
700,000
75,000
180,000
14,000
31,000
Total offering expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$4,750,000
(5)
Net proceeds:
Net proceeds held in the trust account(3)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)
Net proceeds not held in the trust account
$96,750,000
.........................
1,500,000
Total net proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$98,250,000
Percentage of gross proceeds of this offering held in the trust account . . . . . . .
96.75%
(1) The placing agent will not receive any commission on 4,166,667 units being purchased by Hayground Cove in
this offering at a price per unit of $6.00.
(2) A portion of the offering expenses have been paid from the funds we received from our sponsor in the amount
of $6,000. The loan will be payable without interest upon the consummation of this offering out of the proceeds
of this offering not being placed in the trust account.
(3) The table does not include $1,500,000 of the placing agent’s commission, equal to 2% of the gross proceeds of
the 12,500,000 units being offered to other investors in this offering, which the placing agent has agreed to defer
until and conditioned upon the consummation of the initial business combination. Upon the consummation of the
initial business combination, such deferred commission will be released to the placing agent out of the trust
account. The placing agent will not be entitled to any interest accrued on the deferred commission.
(4) Includes other expenses related to the offering, including related to marketing and the appointment of the
registrar and transfer agent and trustee.
(5) We estimate that the net proceeds from the sale of the units in this offering and the Sponsor Private Placement
will be approximately $98,250,000, after deducting the commission payable to the placing agent (other than the
placing agent’s deferred commission) and the estimated offering expenses payable by us.
(6) Includes $3,000,000 proceeds of 500,000 units being purchased in the Sponsor Private Placement.
(7) Comprised of $1,500,000 in working capital to cover the annual fee of $100,000 payable to Deutsche Bank AG
London as nominated advisor, directors and officers liability insurance premiums, due diligence, legal, accounting
and other expenses of structuring and negotiating business combinations, including the $20,000 monthly fee to
Banyan Tree Capital for advisory services, as well as for general and administrative services and reimbursement
of any out-of-pocket expenses incurred by our sponsor in connection with activities conducted on our behalf,
including the monthly fee of $10,000 that we have agreed to pay our sponsor for administrative services,
accounting and controller-related services, the services of certain of its approved employees and access to its
network of contacts in India. See ‘‘Certain Relationships and Related Party Transactions.’’ We may also withdraw
from the trust account up to $500,000 of interest (net of taxes payable on such interest) on the proceeds held in
the trust account for working capital purposes.
45
We estimate that the net proceeds from the sale of the units in this offering and the
Sponsor Private Placement will be $98,250,000, after deducting the fees payable to the placing
agent at the closing of this offering (excluding the $1,500,000 in deferred commission of the
placing agent) and the estimated offering expenses payable by us of $1,000,000.
Approximately $96,750,000 ($5.81 per unit) of the net proceeds will be placed in the trust
account (including the placing agent’s $1,500,000 deferred commission). Portions of such
proceeds will be released upon the consummation of business combinations (including the
total release of the placing agent’s deferred commission to the placing agent upon the
consummation of the initial business combination) and used to fund such approved business
combination or to fund the exercise of repurchase rights by New Shareholders. The proceeds
held in the trust account may be used as consideration to pay the sellers of acquisition
candidates with which we ultimately complete business combinations, as reimbursement of
any expenses associated with completing such business combinations, for any working capital
needs of the acquisitions and to satisfy the placing agent’s deferred commission following the
initial business combination. The balance of the funds in the trust account will be released to
us upon the consummation of a Qualified Business Combination. We may also withdraw from
the trust account up to $500,000 of interest (net of taxes payable on such interest) on the
proceeds held in the trust account for working capital purposes.
We may not use all of the proceeds in the trust account in connection with a Qualified
Business Combination, either because the consideration for the Qualified Business
Combination is less than the proceeds in the trust account or because we finance a portion of
the consideration with our capital stock or indebtedness. In such event, the proceeds held in
the trust account as well as any other net proceeds not expended will be disbursed to us and
will be used to finance our operations, which may include the operations of target businesses,
to consummate other acquisitions or for working capital, as determined by our management
and Board of Directors at such time.
As of the date of this offering, our sponsor has advanced to us a total of $6,000 which
was used to pay a portion of the expenses of this offering for AIM application and listing fees,
and legal fees and expenses. The loan will be payable without interest upon the
consummation of this offering out of the proceeds of this offering not being placed in the
trust account.
46
DILUTION
The difference between the offering price per share of ordinary shares, assuming no value
is attributed to the warrants included in the units, and the pro forma net tangible book value
per share of our ordinary shares after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share is determined by dividing our net tangible book
value, which is our total tangible assets less total liabilities (including the value of ordinary
shares which is subject to repurchase rights of New Shareholders for cash), by the number of
outstanding ordinary shares.
At May 31, 2006, our net tangible book value was $250, or approximately $0.00004 per
ordinary share. After giving effect to the sale of 17,166,667 ordinary shares included in the
units sold in this offering and the Sponsor Private Placement, the repurchase of 2,083,333
ordinary shares by the company from Existing Shareholders prior to this offering at $0.001
per share and the deduction of placing agent’s commission and estimated expenses of this
offering, our pro forma net tangible book value at May 31, 2006 would have been $96,748,167
or $4.53507 per ordinary share, representing an immediate increase in net tangible book value
of $4.53503 per ordinary share to the Existing Shareholders and an immediate dilution of
$1.46493 ordinary share or approximately 24.4% to New Shareholders and Hayground Cove in
respect of the 4,166,667 units being purchased by it in this offering.
The following table illustrates the dilution to the New Shareholders and Hayground Cove
to the extent it participated in this offering on a per share basis, assuming no value is
attributed to the warrants included in the units:
Offering price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net tangible book value at May 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . .
Pro forma net tangible book value after this offering, the Sponsor Private
Placement and the repurchase of existing ordinary shares . . . . . . . . . . .
Dilution to New Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
.
$6.00
$0.00004
.
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$4.53507
$1.46493
The following table sets forth information on the Existing Shareholders (with respect to
the shares they purchased prior to this offering) and the New Shareholders and Hayground
Cove with respect to the shares being purchased in the Sponsor Private Placement and being
purchased in this offering):
Ordinary Shares Purchased
Number
Percentage
Existing Shareholders:
At May 31, 2006 . . . . . . . . . .
Proposed ordinary share
repurchase . . . . . . . . . . . .
6,250,000
6,250
(2,083,333)
(2,083)
4,166,667
New Shareholders and
Hayground Cove(1) . . . . . . . .
Total Consideration
Amount
Percentage
19.5%
4,167
Average
Price Per
Share
0.004% $0.001
17,166,667
80.5
103,000,000
99.996
21,333,334
100.0%
$103,004,167
100.000%
6.000
(1) Includes an aggregate of 4,166,667 units being purchased by Hayground Cove at the initial offering price of $6.00
per unit in this offering as well as 500,000 units being purchased Hayground Cove at $6.00 per unit in the
Sponsor Private Placement.
47
Our pro forma net tangible book value per share after the offering, the repurchase of
2,083,333 ordinary shares by us from Existing Shareholders prior to this offering at $0.001 per
share, and Sponsor Private Placement is calculated as follows:
Numerator:
Net tangible book value at May 31, 2006 . . . . . . . . .
Repurchase of existing ordinary shares . . . . . . . . . .
Proceeds from this offering and the Sponsor Private
Offering expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
.........
.........
Placement
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250
(2,083)
103,000,000
(6,250,000)
$96,748,167
Denominator:
Ordinary shares issued and outstanding at May 31, 2006 . . . . . . . . . . . . . . . . . .
Repurchase of existing ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary shares included in the units offered and the Sponsor Private
Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250,000
(2,083,333)
17,166,667
21,333,334
48
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are a blank check company incorporated as an exempted company under the laws of
the Cayman Islands on May 12, 2006 to serve as a vehicle for acquisitions, through one or
more stock purchases, asset acquisitions, or other business combinations, of businesses or
assets in India focused on the hospitality, leisure, tourism, travel and related industries. To
date, our efforts have been limited to organizational and financing activities. We currently
have no business operations and no financial history. We intend to utilize cash derived from
the proceeds of this offering and the Sponsor Private Placement, shares in our capital stock,
indebtedness, or a combination thereof, in consummating business combinations. The
issuance of additional preference or ordinary shares of our capital:
• may significantly dilute the equity interest of our shareholders;
• may subordinate the rights of holders of ordinary shares if preference shares are issued
with rights senior to those afforded to the holders of our ordinary shares;
• may cause a change in control if a substantial number of our ordinary shares are
issued, which may affect, among other things, our ability to use our net operating loss
carry forwards, if any, and could also result in the resignation or removal of our present
officers and directors; and
• may adversely affect prevailing market prices for our ordinary shares.
Similarly, if we incur indebtedness, it could result in:
• default and foreclosure on our assets if our operating revenues after a business
combination are insufficient to pay our debt obligations;
• acceleration of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the indebtedness contains covenants that
require the maintenance of certain financial ratios or reserves and any such covenant is
breached;
• a demand for immediate payment of all principal and accrued interest, if any, if the
indebtedness is payable on demand; and
• our inability to obtain additional financing, if necessary, if the indebtedness contains
covenants restricting our ability to obtain additional financing while such indebtedness
is outstanding.
While we are in the process of preliminarily identifying and reviewing prospective
acquisition candidates, we have not engaged in substantive negotiations in connection with
any potential acquisition nor do we have any agreements to acquire any business or asset. In
evaluating a prospective acquisition candidate, our management team will conduct such
business, legal and accounting due diligence on the acquisition candidate as we believe
appropriate given the circumstances.
We intend to use substantially all of the net proceeds of this offering and the Sponsor
Private Placement, including the funds held in the trust account (other than the placing agent’s
deferred commission, which will be paid to the placing agent upon the consummation of an
initial business combination), to consummate business combinations. The remaining proceeds
held in the trust account will be released to us following a Qualified Business Combination
(excluding any amount held in the trust account representing the placing agent’s deferred
discount) and will be used to finance our operations, to consummate other acquisitions, or for
working capital purposes, as determined by our Board of Directors at that time.
49
We believe that, on the Admission Date, the funds available to us outside of the trust
account and the up to $500,000 of interest on the proceeds held in the trust account will be
sufficient to allow us to operate for at least the next 12 months. Over this time period, we will
be using these funds for identifying and evaluating prospective acquisition candidates,
performing business due diligence on prospective acquisition candidates, traveling to and
from the property and asset locations that represent prospective acquisition candidates,
reviewing corporate, title, environmental, and financial documents and material agreements
regarding prospective acquisition candidates, selecting acquisition candidates to acquire and
structuring, negotiating and consummating the business combination. We do not believe we
will need to raise additional funds following this offering in order to meet the expenditures
required for operating our business. However, we may need to raise additional funds through
a private offering of indebtedness or equity financing in order to consummate a business
combination or business combinations that are presented to us.
As of May 31, 2006, our sponsor has advanced an aggregate of $6,000 to us, on a
non-interest bearing basis, for payment of offering expenses on our behalf. The loan will be
payable without interest upon the consummation of this offering out of the proceeds of this
offering not being placed in the trust account.
50
PROPOSED BUSINESS
General
We are a blank check company incorporated under the laws of the Cayman Islands as an
exempted company on May 12, 2006 to serve as a vehicle for acquisitions, through one or
more stock purchases, asset acquisitions or other business combinations, of businesses or
assets in India focused on the hospitality, leisure, tourism, travel and related industries,
including but not limited to hotels, resorts, timeshares, serviced apartments and restaurants.
To date, our efforts have been limited to organizational and financing activities. We currently
have no business operations and no financial history.
While we are in the process of preliminarily identifying and reviewing prospective
acquisition candidates, we have not engaged in substantive negotiations in connection with
any potential acquisition nor do we have any agreements to acquire any business or asset. In
evaluating a prospective acquisition candidate, our management team will conduct such
business, legal and accounting due diligence on the acquisition candidate as we believe
appropriate given the circumstances.
We have been established in the Cayman Islands as an exempted company. We are not
subject to any income, withholding or capital gains taxes in the Cayman Islands. We expect to
conduct business, including the making of acquisitions, through IHC Mauritius, our wholly
owned operating subsidiary incorporated in Mauritius as an offshore corporation. IHC
Mauritius is expected to receive several tax benefits, including a tax credit in Mauritius for tax
paid in other countries, a reduction of the corporate tax by a deemed foreign tax credit of
80%, no withholding tax on outward payments from Mauritius, no capital gains tax or estate
duty and no registration duty, levy or VAT on global business transactions. On the basis of
existing tax legislation, we believe our formation as a Cayman Islands exempted company
and the use of a Mauritian subsidiary to consummate acquisitions will provide investment
flexibility and enhance shareholder returns.
IHC Mauritius has applied for a certificate of Mauritius Tax Residency from the
Commissioner of Income Tax in Mauritius. IHC Mauritius will hold a Category 1 Global
Business License for the purposes of the Financial Services Development Act 2001 and will
therefore be regulated by the Financial Services Commission in Mauritius.
In order to qualify for a certificate of Mauritius Tax Residency, IHC Mauritius will have to
meet the following conditions:
• IHC Mauritius must appoint two Mauritian resident directors;
• All meetings of the board of directors of IHC Mauritius must be held or chaired in
Mauritius;
• The registered office of IHC Mauritius must be situated in Mauritius and all corporate
records and documents of IHC Mauritius must be kept at its registered office;
• IHC Mauritius must open a bank account in a Mauritian bank and all banking
transactions must be channeled through such an account;
• IHC Mauritius must have its accounting records verified by an auditor’s firm in
Mauritius; and
• IHC Mauritius must have a Mauritian company as its secretary as provided for by
Sections 163 and 164 of the Companies Act 2001 or as may be licensed as a
management company pursuant to the Financial Services Development Act 2001.
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As a Mauritian tax resident, IHC Mauritius will be subject to income tax under the Income
Tax Act 1995, or the Income Tax Act, at a rate of 15% per annum. However, IHC Mauritius will
be allowed a credit for foreign tax on its income which is not derived from Mauritius against
the Mauritius tax computed by reference to that same income. If no written evidence is
presented to the Mauritius Commissioner of Income Tax showing the amount of foreign tax
charged on income derived by IHC Mauritius outside of Mauritius, the amount of foreign tax
shall be conclusively presumed to be equal to 80% of the Mauritius tax chargeable with
respect to that income, which would reduce the rate of tax effectively to 3%. If the income has
borne local tax in the target region at a rate greater than 15%, the effective rate of tax may be
reduced further in certain circumstances.
No capital gains tax should be payable in Mauritius in respect of IHC Mauritius’
investments and redemption proceeds paid by the company to ordinary shareholders will
exempt Mauritius from any withholding tax.
IHC Mauritius is not subject to any exchange control restrictions in Mauritius. Any
payments made to or by the company are therefore not restricted by the exchange control
regulations. IHC Mauritius will have to comply with the exchange control regulations of the
countries where the investments are envisaged.
Our Proposed Business
We intend to use the net proceeds of this offering and the Sponsor Private Placement to
acquire an Indian business, businesses or assets focused on the hospitality, leisure, tourism,
travel and related industries, including but not limited to hotels, resorts, timeshares, serviced
apartments and restaurants. While our potential acquisitions could come from any of these
sectors, we intend to focus primarily on the hospitality industry. We believe that these markets
in India, and particularly the hospitality industry, are high-growth, underserved and
fragmented, and that they offer profit margins, returns on capital and cash flows that are
among the most attractive in the world. We intend to place emphasis on acquiring businesses
in fast-growing Indian cities and top tourist destinations in India. We believe that the
predominantly local hospitality businesses serving these segments have generally not
pursued aggressive growth strategies, but instead have followed an own-and-manage model
as opposed to the lease or franchise model employed by hospitality industry leaders. We
believe opportunities exist to negotiate purchases directly with these companies and their
individual owners. In addition, we believe we will be able to use our management expertise in
operations and financing to manage the businesses or assets we may acquire, and to deliver
superior risk-adjusted returns for our shareholders.
Upon the consummation of a business combination, we expect to hire new individuals
resident in India to join our management team. In addition, after we have completed one or
more business combinations, members of our existing management team may no longer
serve as directors or officers of the company, in which case we intend to retain such
individuals in an advisory capacity.
Our Strategy
India is the largest democracy and is one of the fastest growing economies in the world.
India’s GDP has been growing at 7% to 8%, adjusted for inflation over the last two years, and
this growth level is expected to continue into the foreseeable future. The Indian financial
markets have improved as economic and corporate governance reforms have become the
focal point of governmental and regulatory authorities. We believe India is positioned to
52
become one of the world’s most influential economic centers and is gaining a significant role
in the world economy.
There has been increasing foreign institutional investment interest in India over the last
several years. However, to date, there has been a relatively small amount of FDI in India’s
trade, hotels and restaurants industries. For example, according to the RBI, these industries
only received approximately US$22.0 million of FDI in 2004-05, which represented only
approximately 1% of the total inflows to India despite the fact that the trade, hotels and
restaurants industries are some of the fastest growing in the Indian economy. Furthermore,
the Indian government is now allowing 100% FDI in the hotels, tourism and restaurants
sectors without the bureaucratic approvals that had been required in the past. We believe that
this initiative, coupled with a series of recent reforms relating to the regulation of
corporations, will allow the consummation of business combinations more quickly with less
bureaucratic delay. As a result, we believe that macro economic trends, coupled with
favorable regulatory developments, will create attractive opportunities in our targeted sectors,
which we hope to capture for the benefit of our shareholders.
We believe that the Indian hospitality industry is largely driven by the domestic Indian
market, particularly domestic tourism. Domestic tourism, grew at approximately a 13.7%
CAGR from 2000 to 2004 according to the Ministry of Tourism, Government of India. From
2004-2005, the number of domestic hotel guests (including business and leisure guests)
comprised 71.7% of the total hotel guests in India according to the Indian Hotel Industry
Survey for 2004-2005 prepared in cooperation with HVS International. We believe that the
strength of the domestic market will continue to be a key driver of the Indian tourism industry
in the future. The Indian middle class, which was estimated at approximately 300 million
people in 2005, is expected to grow to 500 million people by 2010. The increasing purchasing
power of the middle class has largely been a direct result of India’s recent growth. We believe
that low inflation, an improving credit market and an increasing percentage of India’s
population achieving higher levels of education and technical skills have also fueled India’s
economic growth. In addition, we believe that the boom in information technology services
and outsourcing-related industries in India has led to increasing disposable per capita income.
Although we anticipate that India is positioned to experience growth in foreign tourism as
well, we believe that the Indian hospitality sector can sustain its domestic strength even if
foreign tourism does not grow as strongly as we anticipate. Moreover, strong growth in
India’s domestic airline passenger market is expected on account of the increasing purchasing
power of the middle class and increasing supply from low cost carriers. Four budget airlines
entered the Indian market in 2005 and at least four more are expected to begin operations in
2006. Accordingly, we intend to approach acquisition candidates that serve domestic travelers
and the demands of the growing Indian middle class.
Currently, we believe there is a significant demand/supply imbalance in the hospitality,
leisure, tourism, travel and related industries in India. For example, according to the Indian
Hotel Industry Survey for 2004-2005 prepared in cooperation with HVS International, India had
a total of approximately 105,070 available hotel rooms relative to its population of
approximately 1.1 billion. In contrast, the American Hotel & Lodging Association estimated
that the United States had 4,411,908 guest rooms available in 2004, relative to its population
of approximately 299 million. To combat the shortage of hotel rooms and in anticipation of
the Commonwealth Games being held in India in 2010, the Government of India has recently
directed several initiatives that we believe will further the growth of the Indian hospitality
industry. These initiatives include, among others:
• increased budget allocation towards infrastructure and tourism;
53
• the allowance of duty free imports for certain hotels and stand-alone restaurants;
• the removal of expenditure tax on rooms with daily tariffs above Rs. 3000
(approximately US$67);
• the removal of air travel tax on both domestic and foreign travel;
• the improvement of air, rail and road transportation;
• the upgrade of metropolitan airports;
• infrastructure development with expanded and improved highways;
• a reduction in customs duty and abolition of countervailing duty for hotel projects;
• promotion of Special Economic Zones;
• development of 15 tourist destinations and circuits following an integrated area
development approach; and
• extensive development of new convention centers.
Furthermore, we believe that the non-luxury/non-deluxe hospitality segment in India provides
a strong opportunity to exploit the sector and create superior shareholder returns. We believe
that the non-luxury segment encompasses a significant percentage of total revenue of the entire
hospitality sector and is fragmented compared to hotel sectors in the United States and Western
Europe. We expect that this fragmentation will help provide us with acquisition candidates and
negotiation power. The needs of the Indian middle class, which we believe is the fastest growing
segment of the total Indian population, are expected to be met by this segment of the industry,
which we believe is largely underserved by the major industry players. As a result, we believe
that the Indian hospitality industry will provide us with opportunities to find undervalued
businesses and assets and create superior shareholder returns.
Experienced Management Team and Strong Local Network
Our executive officers and directors, and our sponsor’s ‘‘on the ground’’ network in India,
have extensive experience in the hospitality, leisure, tourism, travel and related industries as
executive officers, principals or directors in various enterprises throughout the world. Jason
N. Ader, our Chief Executive Officer and the Chairman of our Board of Directors, is the Chief
Executive Officer of our sponsor, Hayground Cove Asset Management LLC, a New York-based
investment management firm with approximately $1.46 billion of assets across funds and
managed accounts under management as of May 31, 2006. The funds of Hayground Cove in
operation since January 1, 2004 had returns of approximately 2.54x the returns on the S&P
Hedge Fund Index from January 1, 2004 through May 31, 2006. Mr. Ader has a strong asset
management record and, prior to founding Hayground Cove, was a Senior Managing Director
at Bear Stearns & Co., Inc., where he performed equity and high yield research for more than
50 companies in the gaming, lodging and leisure industries. Mr. Ader was rated as one of the
top ranked analysts by Institutional Investor Magazine for nine consecutive years from 1994 to
2002. Members of our management team have, on average, approximately 13 years of
experience in the hospitality, leisure, tourism, travel and related industries. Our management
team has a successful track record of completing large-scale acquisitions and minority
investments in businesses competing in the hospitality, leisure, tourism, travel and related
industries. Our management team’s experience and familiarity with the hospitality, leisure,
tourism, travel and related industries is an important asset that will assist us in implementing
our business strategies and pursuing our growth opportunities. We will serve as Hayground
Cove’s only vehicle for direct, private investments in the Indian hospitality sector.
54
We have partnered with Banyan Tree Capital to serve as our exclusive financial advisor in
India in connection with our future acquisitions using the proceeds from this offering. Banyan
Tree Capital is a global financial services advisory company. Banyan Tree Capital will provide
advisory services, including (i) discussing acquisition opportunities with us and IHC Mauritius,
our Board of Directors, the Board of Directors of IHC Mauritius and each of our management
teams, (ii) assisting in the identification, solicitation and evaluation of prospective acquisition
opportunities, and (iii) assisting in structuring and negotiating acquisition opportunities. As
part of the consideration for Banyan Tree Capital’s advisory services, we will pay Banyan Tree
Capital a retainer fee of $20,000 per month. Upon meeting certain requisite conditions,
213,334 ordinary shares will be transferred to Banyan Tree Capital from out of the 3,655,727
ordinary shares held by Hayground Cove immediately prior to this offering. For more
information, see ‘‘Certain Relationships and Related Party Transactions.’’
We will form an investment committee to advise and consult with our management team
with respect to our investment policies, financing and leveraging strategies and investment
guidelines. The initial members of the investment committee will be Jason N. Ader, our Chief
Executive Officer and Chairman of the Board of Directors, who will serve as the initial
chairman of the committee, Christa Short and Samir Jain. Ms. Short is currently a member of
the company’s Board of Directors and a managing director at Hayground Cove. Prior to
joining Hayground Cove, Ms. Short was Vice President, Research Analyst covering gaming,
lodging and leisure industries at Bear Stearns & Co., Inc. Mr. Jain is currently a Vice President
at Hayground Cove. Prior to joining Hayground Cove, Mr. Jain was Vice President, Research
Analyst covering gaming, lodging and leisure industries at Jefferies & Company. Mr. Jain
does not serve as an officer or director of the company. We believe our investment committee
will provide us with a competitive advantage in analyzing and valuing acquisition candidates
through their experience, financial industry contacts and investment ideas.
Our management team possesses broad industry knowledge and core competencies that
we believe will enable us to identify attractive potential targets. In addition, Banyan Tree
Capital and Hayground Cove’s network of professionals in India has a wide range of contacts
that we expect will help us to identify prospective acquisition candidates.
Members of our management team are employees of Hayground Cove. See ‘‘Certain
Relationships and Related Party Transactions.’’
Consummating a Business Combination
General
We are not presently engaged in any substantive business. We intend to utilize cash
derived from the net proceeds of this offering and the Sponsor Private Placement, our shares
of capital stock (if issued in connection with a business combination after or concurrent with a
Qualified Business Combination), indebtedness or a combination of these in consummating a
business combination. The net proceeds of this offering and the Sponsor Private Placement
are intended to be applied toward consummating business combinations as described in this
offering circular, and the proceeds are not otherwise being designated for any more specific
purposes. Accordingly, prospective investors in this offering will invest in us without an
opportunity to evaluate the specific merits or risks of any one or more business combinations,
such as time delays, significant expense, loss of voting control and compliance with various
securities laws. We may also seek to consummate a business combination with a company or
business that may be financially unstable or in its early stages of development or growth
which would subject us to the numerous risks inherent in such companies and businesses.
While we are in the process of preliminarily identifying and reviewing prospective
acquisition candidates, we have not engaged in substantive negotiations in connection with
55
any potential acquisition nor do we have any agreements to acquire any business or asset.
None of our officers, directors, promoters or other affiliates is currently engaged in
substantive discussions on our behalf with representatives of potential sellers regarding the
possibility of a potential merger, capital stock exchange, asset acquisition or other similar
business combination with us nor have we, nor any of our agents or affiliates, been
approached by any candidates (or representatives of any candidates) with respect to a
possible substantive acquisition transaction with us.
Subject to the limitations that an acquisition candidate be in the hospitality, leisure,
tourism, travel and related industries and the business combination have a Transaction Value
of at least $25.0 million at the time of such combination, as described below in more detail,
we will have considerable flexibility in identifying and selecting a prospective acquisition
candidate.
Sources of Acquisition Candidates
We have engaged Banyan Tree Capital to serve as our exclusive financial advisor in India
in connection with our future acquisitions using the proceeds from this offering. We expect
that Banyan Tree Capital will be an important source of acquisition candidates. Banyan Tree
Capital will provide advisory services, including (i) discussing acquisition opportunities with us
and IHC Mauritius, our Board of Directors, the Board of Directors of IHC Mauritius and each of
our management teams, (ii) assisting in the identification, solicitation and evaluation of
prospective acquisition opportunities, and (iii) assisting in structuring and negotiating
acquisition opportunities. In addition to Banyan Tree Capital, our ‘‘on the ground’’ network,
our officers and directors and their affiliates may also bring acquisition candidates to our
attention.
Selection of an Acquisition Candidate and Structuring of a Business Combination
In evaluating a prospective acquisition candidate, our management team will conduct
such business, legal and accounting due diligence on such business and assets as we believe
appropriate given the circumstances and will consider, among other factors, the following:
• financial condition and results of operation;
• growth potential;
• experience and skill of management and availability of additional personnel;
• capital requirements;
• competitive position;
• degree of current or potential market acceptance of the products, processes or services;
• proprietary features and degree of intellectual property or other protection of the
products, processes or services;
• regulatory environment of the industry; and
• costs associated with consummating the business combination.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a
particular business combination will be based, to the extent relevant, on the above factors as
well as other considerations deemed relevant by our management in consummating a
business combination consistent with our business objectives. In evaluating a prospective
acquisition candidates, we will conduct an extensive due diligence review, which will
encompass, among other things, meetings with incumbent management and inspection of
56
facilities, as well as a review of the financial, legal and other information which will be made
available to us.
The time and costs required to select and evaluate one or more acquisition candidates
and to structure and complete the business combination or combinations cannot presently be
ascertained with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective acquisition candidate with which a business combination is
not ultimately completed will result in a loss to us and reduce the amount of capital available
to otherwise complete a business combination.
Transaction Value
The Transaction Value of a business combination is relevant in connection with
determining whether (i) we have satisfied the threshold requirement in connection with a
business combination of $25.0 million Transaction Value and (ii) we have completed a
Qualified Business Combination, which requires the completion of a business combination
which, either by itself or when combined with all of our previous business combinations, has
an aggregate Transaction Value of at least 50% of the initial amount deposited in the trust
account (excluding the amount held in the trust account representing the placing agent’s
deferred commission).
The Transaction Value of each business combination will be determined by our Board of
Directors based upon standards generally accepted by the financial community, and means
the sum of (i) cash and fair market value of the property, if any, used as consideration in
connection with a business combination, (ii) net debt assumed and/or incurred in connection
with such business combination, (iii) working capital required to operate the acquired
business or assets, (iv) the value of shares in our capital to be issued as consideration in
connection with such business combination as determined by an unaffiliated independent
investment banking firm, and (v) transaction costs related to the business acquisition. If our
Board of Directors is not able to independently determine the Transaction Value of an
acquisition candidate, we will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the National Association of Securities Dealers, Inc. Since
any opinion, if obtained, would merely state the Transaction Value, we do not anticipate that
copies of such opinion will be distributed to our shareholders, although copies will be
provided to shareholders who request it. We will not be required to obtain an opinion from an
investment banking firm as to the Transaction Value of any business combination if our Board
of Directors is able to independently determine the Transaction Value of an acquisition
candidate.
Funds to be held in the Trust Account
We will hold $96,750,000 of the proceeds of this offering and the Sponsor Private
Placement in a segregated trust account established at Continental Stock Transfer & Trust
Company, as trustee, pursuant to a trust agreement signed on or prior to the consummation
of this offering. These proceeds (or portions thereof) will only be released to be used in
connection with an approved business combination (and, in the case of the initial business
combination, in respect of payment of the placing agent’s deferred commission) or to fund the
exercise of repurchase rights by New Shareholders. The funds in the trust account will be
released as described below under the heading ‘‘Distribution if no Qualified Business
Combination’’.
Unless and until the completion of an approved business combination, no proceeds held
in the trust account will be available for (i) our use for expenses that we may incur related to
the investigation and selection of an acquisition candidate, (ii) any required deposits or other
57
payments and (iii) the negotiation of an agreement to acquire an acquisition candidate, other
than up to $500,000 of interest (net of taxes payable on such interest) on the proceeds held in
the trust account that may be released to us working capital purposes and trust expenses and
taxes payable on income generated by the funds held in the trust account. Until such event
occurs, these expenses may be paid only from:
• the net proceeds of this offering not held in the trust account, which will be
approximately $1,500,000 in working capital after the payment of approximately
$1,000,000 in expenses relating to this offering; and
• the up to $500,000 of interest (net of taxes payable on such interest) on the trust
proceeds that may be released to us for working capital purposes.
The proceeds held in the trust account may be invested by the trustee only in United
States ‘‘government securities’’ within the meaning of Section 2(a)(16) of the Investment
Company Act with a maturity of 180 days or less, or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act. By restricting the
investment of the proceeds to these instruments, we intend to meet the requirements for the
exemption provided in Rule 3a-1 promulgated under the Investment Company Act.
Opportunity for Ordinary Shareholder Approval of Business Combination
Until such time as the funds held in the trust account have been disbursed in their
entirety, we will seek approval of holders of ordinary shares purchased in the offering before
we consummate any business combination, even if the nature of the business combination is
such as would not ordinarily require shareholder approval under applicable law or the AIM
Rules. In connection with seeking approval of holders of ordinary shares purchased in the
offering of any such business combination, we will furnish our ordinary shareholders with
proxy solicitation materials which, among other matters, will include a description of the
operations of acquisition candidates and, if available, audited or unaudited, as appropriate,
historical financial statements of acquisition candidates. Management will exercise their
judgment in ensuring that such proxy materials contain substantially the same information as
would be provided if the business combination were governed by the proxy rules of the U.S.
federal securities laws while complying with the AIM Rules and subject to the relevant
information being available. However, such proxy statement will not be reviewed by the SEC
and, accordingly, investors will not have the benefit of receiving a proxy statement reviewed
by the SEC and the proxy materials may contain financial statements prepared in accordance
with International Accounting Standards rather than U.S. generally accepted accounting
principles. Such proxy materials will also contain a description of the amount to be released
from the funds held in the trust account, including a breakdown of the amount of funds that
constitute (i) consideration and expenses for the transaction, (ii) working capital and
(iii) transaction expenses. In addition, the company may seek approval for funds to pay
management compensation, including the terms of any future compensation for management
of the acquired business.
In addition, we agree that, in connection with seeking shareholder approval of any
business combination, other than the initial business combination, which does not rise to the
level of a Qualified Business Combination, we will provide our ordinary shareholders with
proxy solicitation materials which will, among other things, include a description of the
operations of acquisition candidates and, if available and practicable in the time frame,
audited or unaudited historical financial statements of acquisition candidates.
In connection with the vote required for either consummating any business combination
or extending the period within which we are allowed to complete a Qualified Business
Combination, Hayground Cove will vote the 4,166,667 ordinary shares being purchased by it
58
in this offering and any ordinary shares that may be purchased by it in the after market in
favor of any such proposed business combination extension for completing a Qualified
Business Combination. In connection with the vote required for consummating any business
combination, our Existing Shareholders, including certain of our officers and directors, will
vote the ordinary shares purchased by them before this offering and being purchased in the
Sponsor Private Placement in accordance with the votes constituting the majority of the votes
cast by the New Shareholders and Hayground Cove with respect to the 4,166,667 ordinary
shares being purchased by it in this offering.
We will proceed with a business combination only if it is approved by a majority of votes
cast at a general meeting of ordinary shareholders at which a quorum is present and we
confirm that we have sufficient cash resources to pay both (A) the consideration required to
close the business combination and (B) the cash due to New Shareholders who vote against
the business combination and who exercise their repurchase rights, as described below. We
may choose to condition the consummation of any business combination on the number or
percentage of New Shareholders electing to exercise their repurchase rights not exceeding a
pre-specified threshold.
Repurchase Rights
New Shareholders will be entitled to exercise their repurchase rights by accepting our
offer to repurchase a certain number of their ordinary shares under the following
circumstances:
• If any business combination that does not meet the requirements to be deemed a
Qualified Business Combination is approved and completed, New Shareholders who
vote against such business combination will be entitled to exercise their repurchase
rights or maintain their interest in us; and
• If a Qualified Business Combination is approved and completed, New Shareholders who
vote against the Qualified Business Combination will be entitled either to exercise their
repurchase rights or to maintain their interest in us.
Such repurchase rights entitle a New Shareholder to accept an offer by us to repurchase a
percentage of its ordinary shares, where such number is equal to the total number of ordinary
shares held by the New Shareholder multiplied by a fraction, of which (a) the numerator is
equal to the amount of funds in the trust account immediately before the business
combination (excluding accrued net interest attributable to such funds and the placing agent’s
deferred commission) and (b) the denominator is equal to the amount of funds placed in the
trust account as a result of this offering and the Sponsor Private Placement (excluding
accrued net interest attributable to such funds and the placing agent’s deferred commission).
This fraction will never be deemed to exceed 1.0.
The price payable in respect of each ordinary share on the exercise of repurchase rights
in connection with any business combination will be the per share amount of $5.72, which
reflects the initial per share amount of $5.81 deposited in the trust account less $0.09 per
share due to the placing agent in respect of the placing agent’s deferred commission (plus
any interest earned on the proceeds in the trust account in excess of the up to $500,000 of
interest released to us for working capital purposes, net of taxes payable on such interest, on
such amount per share).
An eligible New Shareholder who wishes to exercise its repurchase rights will be required
to notify us of its acceptance of our repurchase offer at any time after the mailing to our
ordinary shareholders of the voting materials (which will include an offer to repurchase
capable of acceptance by eligible New Shareholders), but not more than five business days
59
nor less than one business day prior to the date of the meeting at which the resolution to
approve the proposed business combination (including a Qualified Business Combination) is
to be proposed. Such acceptance will not be valid unless the New Shareholder votes against
the business combination (including a Qualified Business Combination) and the business
combination is approved and completed.
Any acceptance of an offer to repurchase, once made, may be withdrawn at any time up
to the date of the meeting held to vote on a business combination (including a Qualified
Business Combination). It is anticipated that the funds to be distributed to New Shareholders
who are entitled to have their ordinary shares repurchased and who elect to exercise their
repurchase rights by accepting our offer to repurchase will be distributed promptly after the
completion of any business combination (including a Qualified Business Combination). New
Shareholders who exercise their repurchase rights will continue to retain all rights to the
warrants that they received as part of the units purchased in this offering to the extent that
such rights have not been otherwise transferred or sold by such New Shareholder.
In the event that New Shareholders exercise their repurchase rights, we will repurchase,
to the extent permitted by law, an amount of ordinary shares held by the Existing
Shareholders at par value of $0.001 per share such that, as a result of the exercise of
repurchase rights, at no time will the ordinary shares issued to the Existing Shareholders prior
to this offering constitute more than 25% of our then outstanding ordinary shares. In such
event, the purchase price paid by us with respect to the repurchased ordinary shares of the
Existing Shareholders will be paid out of our working capital, rather than the trust account. No
assurance can be given, however, that such repurchase will be permitted by applicable laws
(including the AIM Rules).
The payment of repurchase proceeds is subject to applicable laws, including applicable
anti-money laundering regulations (if any).
Distribution if No Qualified Business Combination
Except as indicated below, if we do not consummate a Qualified Business Combination
within 12 months after the Admission Date (or, if extended by a majority of votes cast at a
general meeting of ordinary shareholders at which a quorum is present, by the Extended
Date), we will, subject to applicable law, dissolve and promptly distribute the amount held in
the trust account to our New Shareholders and Hayground Cove in respect of the 4,166,667
units being purchased by it in this offering; provided, however, that, if we consummate any
business combination within 12 months after the Admission Date (or, if extended by a
majority of votes cast at a general meeting of ordinary shareholders at which a quorum is
present, by the Extended Date), but do not consummate a Qualified Business Combination,
then we (i) must offer to repurchase a pro rata portion of the ordinary shares then owned by
the New Shareholders and Hayground Cove (in respect of the 4,166,667 units being purchased
by it in this offering) using the remaining funds held in the trust account (which funds will be
net of the proceeds used for prior approved business combinations, the placing agent’s
deferred commission, acquisition expenses, working capital and repurchase payments to New
Shareholders who have exercised their repurchase rights) and (ii) must repurchase for $0.001
par value such number of the ordinary shares purchased by the Existing Shareholders prior to
this offering, if any, required to ensure that such shares represent no more than 25% of our
then outstanding ordinary shares, in which case we will have met the requirements to avoid
liquidation of the company and therefore we will not be required to dissolve.
Our sponsor has agreed to waive its rights to participate in any distribution of the funds
held in the trust account occurring upon our failure to consummate any business combination
(including a Qualified Business Combination), but only with respect to the ordinary shares
60
purchased by it prior to this offering and being purchased by it in the Sponsor Private
Placement.
New Shareholders and Hayground Cove to the extent it participated in this offering may,
however, elect to maintain their interest in us and, in that case, the funds that would
otherwise be used to repurchase such ordinary shareholders’ shares will be released to us.
If we were to expend all of the net proceeds of this offering and the Sponsor Private
Placement, other than the proceeds held in the trust account, and without taking into account
interest, if any, earned on the funds held in the trust account, the initial per ordinary share
repurchase price would be $5.72, or $0.28 less than the per unit offering price of $6.00 which
reflects the initial per share amount of $5.81 deposited in the trust account less the $0.09 per
share due to the placing agent in respect of the placing agent’s deferred commission (plus
any interest earned on the proceeds in the trust account in excess of the up to $500,000 of
interest released to us for working capital purposes, net of taxes payable on such interest, on
such amount per share). The proceeds deposited held in the trust account could, however,
become subject to the claims of our creditors which could be prior to the claims of our New
Shareholders and Hayground Cove to the extent it participated in this offering. Our sponsor
has agreed to be liable for ensuring that the proceeds in the trust account are not reduced by
the claims of vendors for services rendered or products sold to us, claims of prospective
acquisition candidates for fees and expenses of third parties that we agree in writing to pay in
the event we do not complete a combination with such business or claims by a vendor or
prospective acquisition candidate that does not waive rights and claims against the trust
account. However, we cannot assure you that the actual per ordinary share repurchase price
will not be less than anticipated, due to claims of creditors. For more information, see ‘‘Risk
Factors—Risks Related to Our Business and This Offering—If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per share liquidation
amount received by shareholders will be less than the approximately $5.81 per ordinary
liquidation amount.’’
A New Shareholder will be entitled to receive funds held in the trust account (including
the interest earned on his portion of the trust account less an amount of up to $500,000 of
interest that has been released to us for working capital purposes, net of taxes payable on
such interest, and excluding, if a business combination is consummated, the placing agent’s
deferred commission) only in the event of the distribution of the funds held in the trust
account or if that shareholder was to exercise his repurchase rights in connection with any
business combination (including a Qualified Business Combination) which such New
Shareholder voted against and which we consummate. The Existing Shareholders will be
entitled to receive funds from the trust account (including the interest earned on his portion of
the trust account in excess of the up to $500,000 of interest that has been released to us for
working capital purposes, net of taxes payable on such interest, and excluding, if a business
combination is consummated, the placing agent’s deferred commission) only in the event of
our liquidation and to the extent of ordinary shares purchased by them in or subsequent to
this offering. In no other circumstances will a New Shareholder or Hayground Cove to the
extent it participated in this offering have any right or interest of any kind to or in the trust
account.
Competition
In identifying, evaluating and selecting an acquisition candidate, we may encounter
competition from other entities having a business objective similar to ours. Many of these
entities are well established and have extensive experience identifying and consummating
business combinations. Many of these competitors possess greater technical, human and
61
other resources than we do and, unlike us, do not have their funds held in a trust account.
This competitive limitation gives others an advantage in pursuing the acquisition of an
acquisition candidate or assets.
Employees
We do not currently have, and we do not intend to have, any full time employees prior to
the consummation of a business combination. We have three officers, two of whom are also
members of our Board of Directors. These individuals are not obligated to devote any specific
number of hours to our matters and intend to devote only as much time as they deem
necessary to our affairs.
AIM Listing and Financial Information
We have applied for our ordinary shares and warrants to be admitted to trading on AIM.
The ordinary shares and warrants have not been admitted to trading at the date of this
offering circular. As a result of our ordinary shares and warrants being traded on AIM, we will
seek the consent of our shareholders for approval of our investing strategy on an annual basis
until such time (if at all) as we are no longer treated as an ‘‘investing company’’ under the
AIM Rules.
As a result of our ordinary shares and warrants being traded on AIM, we will be required
to furnish AIM with audited annual accounts and semi-annual financial reports. Our financial
statements will be prepared in accordance with International Accounting Standards. We will
also be required to disclose the nature of any significant or related party transactions and any
non-public developments concerning a change in our financial condition, sphere of activity,
the performance of our business or expectations related to such performance, to the extent
that any of the foregoing information when made public would be likely to lead to a
substantial movement in the price of our securities. In addition to the AIM requirements, we
will seek ordinary shareholder approval on any proposed business combination regardless of
the size of the transaction prior to and including consummating a Qualified Business
Combination. In connection with such vote, Hayground Cove will vote the 4,166,667 ordinary
shares being purchased by it in this offering and any ordinary shares that may be purchased
by it in the after market in favor of any such proposed business combination. Our Existing
Shareholders, including certain of our officers and directors, will vote the ordinary shares
purchased by them before this offering and being purchased in the Sponsor Private
Placement in accordance with the votes constituting the majority of the votes cast by the New
Shareholders and Hayground Cove with respect to the 4,166,667 ordinary shares being
purchased by it in this offering.
Legal Proceedings
To the knowledge of management, there is no litigation currently pending or
contemplated against us or any of our officers or directors in their capacities as such.
Registered Office
Our registered office is located at: Ogier Fiduciary Services (Cayman) Limited, Queensgate
House, 113 South Church Street, P.O. Box 1234 G.T., Grand Cayman, Cayman Islands.
62
COMPARISON TO OFFERINGS OF BLANK CHECK COMPANIES
The following table compares and contrasts the terms of our offering and the terms of an
offering of blank check companies under Rule 419 promulgated by the SEC assuming that the
gross proceeds, placing agent’s commission and expenses for the Rule 419 offering are the
same as this offering. None of the terms of a Rule 419 offering will apply to this offering.
Terms of Our Offering
Terms Under a Rule 419 Offering
Escrow of net proceeds
$96,750,000 of the net proceeds
from this offering and the
Sponsor Private Placement will
be deposited into a trust account
at JPMorgan Chase N.A.,
maintained by Continental Stock
Transfer & Trust Company,
acting as trustee. These
proceeds consist of $95,250,000
from the net proceeds payable
to us and $1,500,000 of the
proceeds attributable to the
placing agent’s deferred
commission.
Approximately $85,725,000 of
the offering proceeds would be
required to be deposited into
either an escrow account with
an insured depositary institution
or in a separate bank account
established by a broker-dealer in
which the broker-dealer acts as
trustee for persons having the
beneficial interests in the
account.
Investment of net
proceeds
The proceeds held in the trust
account will only be invested in
United States ‘‘government
securities’’ within the meaning
of Section 2(a)(16) of the
Investment Company Act with a
maturity of 180 days or less, or
in money market funds meeting
certain conditions under
Rule 2a-7 promulgated under
the Investment Company Act.
Proceeds could be invested only
in (i) an obligation that
constitutes a ‘‘deposit’’ under
the Federal Deposit Insurance
Act, (ii) specified securities such
as a money market fund
meeting conditions of the
Investment Company Act or
(iii) in securities that are direct
obligations of, or obligations
guaranteed as to principal or
interest by, the United States.
Limitation on fair value
or net assets of
acquisition
candidates
Each business combination must
have an Transaction Value of at
least $25.0 million at the time of
such business combination. If
we complete a Qualified
Business Combination, the
balance of the funds held in the
trust account will be released to
the company.
We would be restricted from
acquiring an acquisition
candidate unless the fair value
of such business or net assets to
be acquired represent at least
80% of the maximum offering
proceeds.
Trading of securities
issued
The ordinary shares and
warrants will commence trading
separately on the Admission
Date. The ordinary shares and
warrants are not registered in
the United States, and unless
registered or sold under Rule
144 may only be re-sold in the
United States to qualified
institutional buyers pursuant to
No trading of the units or the
underlying ordinary shares and
warrants would be permitted
until the completion of a
business combination. During
this period, the securities would
be held in the escrow or trust
fund.
63
Terms of Our Offering
Terms Under a Rule 419 Offering
Rule 144A or outside the United
States.
Exercise of the
warrants
The warrants cannot be
exercised until the later of the
completion of a Qualified
Business Combination or one
year from the Admission Date, if
a business combination, but not
a Qualified Business
Combination, has occurred
before that date (or, if extended
by a majority of votes cast at a
general meeting of ordinary
shareholders at which a quorum
is present, by the Extended
Date).
The warrants could be exercised
prior to the completion of a
business combination, but
securities received and cash
paid in connection with the
exercise would be deposited in
the escrow or trust fund.
Election to remain an
investor
We will give our ordinary
shareholders the opportunity to
vote on each business
combination until all funds held
in the trust account have been
released. A shareholder
following the procedures
described in this offering circular
is given the right, subject to
certain limitations, to accept an
offer to repurchase its ordinary
shares after giving effect to
partial repurchases and prior
business combinations.
However, a shareholder who
does not follow these
procedures or a shareholder
who does not take any action
would not be entitled to the
return of any funds.
A prospectus containing
information required by the SEC
would be sent to each investor.
Each investor would be given
the opportunity to notify the
company, in writing, within a
period of no less than 20
business days and no more than
45 business days from the
effective date of the posteffective amendment, to decide
whether he or she elects to
remain a shareholder of the
company or require the return of
his investment. If the company
has not received the notification
by the end of the 45th business
day, funds and interest or
dividends, if any, held in the
trust or escrow account would
automatically be returned to the
shareholder. Unless a sufficient
number of investors elect to
remain investors, all of the
deposited funds in the escrow
account must be returned to all
investors and none of the
securities will be issued.
Business combination
deadline
We must consummate a
Qualified Business Combination
within 12 months after the
Admission Date (or, if extended
If a business combination has
not been consummated within
18 months after the effective
date of the initial registration
64
Release of funds
Terms of Our Offering
Terms Under a Rule 419 Offering
by a majority of votes cast at a
general meeting of ordinary
shareholders at which a quorum
is present, by the Extended
Date) or we will dissolve and
distribute the funds held in the
trust account to our New
Shareholders and Hayground
Cove in respect of the 4,166,667
units being purchased by it in
this offering; provided, however,
that if we consummate a
business combination but do not
consummate a Qualified
Business Combination within the
time periods set forth in this
offering circular, then we (i) will
distribute the remaining funds
held in the trust account (net of
the proceeds used for prior
approved business
combinations, acquisition
expenses, working capital and
repurchase payments) to the
New Shareholders and
Hayground Cove to the extent it
participated in this offering and
(ii) repurchase for $0.001 par
value per share such number of
the ordinary shares issued to
Hayground Cove prior to this
offering, if any, required to
ensure that such shares
represent no more than 25% of
our then outstanding ordinary
shares, in which case we will
have met the requirements to
avoid liquidation of the company
and therefore we will not be
required to dissolve.
statement, funds held in the
trust account or escrow account
would be returned to investors.
No proceeds held in the trust
account will be released to us
until the earlier of the
completion of a Qualified
Business Combination or
distribution of the funds held in
the trust account to the New
Shareholders and Hayground
Cove in respect of the 4,166,667
The proceeds held in the escrow
account would not be released
to shareholders until the earlier
of the completion of a business
combination or the failure to
consummate a business
combination within the allotted
time.
65
Terms of Our Offering
units being purchased in this
offering, upon our failure to
consummate a Qualified
Business Combination within the
allotted time. If we consummate
any business combination within
12 months after the Admission
Date (or, if extended by a
majority of votes cast at a
general meeting of ordinary
shareholders at which a quorum
is present, by the Extended
Date) but do not consummate a
Qualified Business Combination
within the same time period
then the New Shareholders and
Hayground Cove (to the extent it
participated in this offering) may
elect to exercise their
repurchase rights. However, the
funds of the New Shareholders
who elect to maintain their
interest in us will be released to
us.
66
Terms Under a Rule 419 Offering
MANAGEMENT
Directors and Executive Officers
Our directors and executive officers are as follows:
Name
Age Position
Jason N. Ader . . . . . . . . . . 38 Chief Executive Officer and Chairman of the Board of
Directors
Andrew Sasson . . . . . . . . . 36 Chief Operating Officer and Director
Raj Nandiwada . . . . . . . . . 41 Vice President, New Business Development
Christa Short . . . . . . . . . . . 33 Director
Pawan Munjal . . . . . . . . . . 51 Director
Anthony Juliano . . . . . . . . 39 Director
Manvinder Puri . . . . . . . . . 51 Director
Rajeev Talwar(1) . . . . . . . . . 51 Prospective Director
(1) Mr. Talwar is not currently a member of the Board of Directors of the company. His appointment will only occur if
and when he receives final approval by the requisite Indian governmental agencies of his resignation on June 6,
2006 from his positions as Additional Director General, Ministry of Tourism and the Chairman and Managing
Director of India Tourism Development Corporation. There can be no assurance that he will receive such
approvals or that he will become a member of our Board.
Jason N. Ader is our Chief Executive Officer and Chairman of the Board of Directors.
Mr. Ader founded and serves as the President and Chief Executive Officer of Hayground Cove
Asset Management LLC, a New York-based investment management firm with approximately
$1.46 billion of assets across funds and accounts under management as of May 31, 2006.
Mr. Ader has a strong asset management record and, prior to founding Hayground Cove,
served as a Senior Managing Director at Bear Stearns & Co., Inc. from 1995 to 2003, where he
performed equity and high yield research for more than 50 companies in the gaming, lodging
and leisure industries. From 1993 to 1995, Mr. Ader served as a Senior Analyst at Smith
Barney covering the gaming industry. From 1990 to 1993, Mr. Ader served as a buyside
analyst at Baron Capital, where he covered the casino industry. Mr. Ader has a B.S. degree in
Economics from New York University and a M.B.A. in Finance from New York University, Stern
School of Business.
Andrew Sasson is our Chief Operating Officer and a member of our Board of Directors. In
February 2006, Mr. Sasson acquired the land to develop Spa Lofts, a modern loft
condominium project in Las Vegas. Mr. Sasson was a partner in Panorama Towers, a high-rise
condominium in Las Vegas, from January 2004 to November 2005, pioneering the Las Vegas
high-rise market. Mr. Sasson is currently developing a $500 million non-gaming boutique
hotel as part of MGM Mirage’s $7 billion ‘‘Project City Center.’’ The hotel will serve as the
gateway into the 66 acre development and is being planned by a world renowned design
team. Mr. Sasson also owns and operates the Light Group, a $100 million Las Vegas
hospitality company known for its innovative and profitable venues including FIX Restaurant
and Bar at the Bellagio Hotel and Resort and Stack Restaurant at the Mirage Resort and
Casino, among others. Mr. Sasson has been a prominent participant in the hospitality industry
for the past 16 years.
Raj Nandiwada is our Vice President, New Business Development. Mr. Nandiwada has
served as a consultant to Hayground Cove since March 2006. Mr. Nandiwada founded and
served as the Chief Executive Officer of Global Infozone Inc. from June 2004 to March 2006.
From March 1998 to June 2004, Mr. Nandiwada served as Quantitative Analyst/Portfolio
Engineer at Jacobs Levy Equity Management, where he developed quantitative models,
67
performed equity research and traded equities. Mr. Nandiwada has a B.S. degree in
Engineering from the Regional Engineering College in Nagpur, India, a Master’s Degree in
Systems Science from Louisiana State University and an M.B.A. in Finance from New York
University, Stern School of Business.
Christa Short is a member of our Board of Directors. Ms. Short has served as a Managing
Director-Research Analyst at Hayground Cove since September 2003. From August 2001 to
August 2003, Ms. Short was an equity research analyst covering gaming, lodging and leisure
industries at Bear Stearns & Co., Inc, and she served as Vice President-Equity Research from
January 2003 to August 2003. Ms. Short has a B.B.A. degree in Finance from the University of
Michigan and a M.B.A. in Finance and Strategy from Kellogg Graduate School of Management
at Northwestern University.
Pawan Munjal is a member of our Board of Directors. Mr. Munjal is the Managing
Director and Chief Executive Officer of Hero Honda Motors Limited a joint venture between
Hero Cycles Ltd. and Honda Motor Co. of Japan, positions which he has held since April 2002.
Mr. Munjal has also served as a director of Hero Honda Motors Limited. Over the years, he
has played a significant role in its development and growth. Under his leadership, Hero
Honda Motors Ltd. has emerged as the world’s No. 1 two-wheeler company from 2000 to
2005. As the Chief Executive of one of the principal Hero Group Companies, Mr. Munjal is a
constituent of the ‘‘Core Team’’, which looks at growth and strategic planning for the entire
group of associated companies. Mr. Munjal is currently a member of the Executive Council of
the Society for Indian Automobile Manufacturers (SIAM) and the Chairman of the Society for
Indian Automobile Manufacturers Committee on Two and Three Wheelers. A known figure in
industry forums, including the World Economic Forum, Mr. Munjal has been the chairman of
several committees of the Confederation of Indian Industry, or CII, including Technology and
Innovation from 2004 to 2005, Environment from 2003 to 2004, and Sports from 2000 to 2002.
He was also chairman of the Northern Region of the CII from 1996 to 1997. Mr. Munjal has a
B.E. degree in Mechanical Engineering from the University of Kurukshetra.
Anthony Juliano is a member of our Board of Directors. Mr. Juliano has served as
Executive Director, Dubai Investment Group, Global Real Estate and Hospitality since
March 2006. At Dubai Investment Group, he oversees a $2 billion U.S. real estate portfolio,
including a $700 million hospitality portfolio. From July 1999 to March 2006, Mr. Juliano held
various senior positions with GE Real Estate, including positions with the private equity
investment platform and large loan/mezzanine financing groups. Mr. Juliano was a real estate
attorney with Thacher Proffitt & Wood from 1993 to 1999 where his practice concentrated on
real estate finance and capital markets. He has a B.A. degree in English from the State
University of New York at Albany and a J.D. degree from New York Law School.
Manvinder Puri is a member of our Board of Directors. Mr. Puri has served as Vice
President of the Americas division of GHM Hotels since January 2004. He also served as
General Manager of The Setai, South Beach, a GHM Hotel, in Miami, Florida from
January 2004 to January 2006. From January 2003 to December 2003, Mr. Puri was the Group
General Manager of the Hong Kong and Shanghai Hotels, Limited, and he was the Senior Vice
President of Operations at Raffles International, a Singapore-based hotel chain, from
March 2001 to December 2002. For over 30 years, Mr. Puri has been associated with the finest
hotels around the world, including the Peninsula Hotels in Hong Kong, Raffles Hotel in
Singapore, The Fullerton Hotel in Singapore, Rosewood Hotels and Resorts, British Airways
Hotels, The Ritz Carlton in Hawaii, Halekulani in Honolulu, the Fairmont Hotel in Chicago, and
La Mansion in San Antonio. Mr. Puri studied Food & Beverage Management and Financial
68
Management at Cornell University, as well as Business Management at Punjab University in
his native India.
Rajeev Talwar has been offered a position on our Board of Directors. He resigned from
his position in government on June 6, 2006; however his resignation is pending approval.
Mr. Talwar’s appointment will only occur if and when he receives final approval by the
requisite Indian governmental agencies of his resignation. There can be no assurance that he
will receive such approvals or that he will become a member of our Board. Mr. Talwar was
Additional Director General (Ministry of Tourism) Government of India (since February 2005),
CEO National Council for Hotel Management and Catering Technology (since February 2005),
and Chairman and Managing Director India Tourism Development Corporation (since
March 2005), which manages government owned hotels, travel agencies and duty free shops.
Prior to joining the Ministry of Tourism, Mr. Talwar was assigned to the Delhi Government,
where he managed many portfolios and was Managing Director and Chief Executive Officer of
Delhi Tourism from August 2001 to December 2003 where he was responsible for the
implementation of the entire tourism policy of Delhi, Secretary, Information and Public
Relations from June 1999 to January 2005, and Chairman and Managing Director Delhi
Transportation Corporation from July to December 2004. Mr. Talwar has been in the Indian
Administrative Service (IAS) since his induction in 1978. During his 28 year career he has had
a cross sectoral experience at a senior management level and policy making level, as well as
widespread field experience. He has been involved on an all-India basis in a variety of sectors
of the economy, including: civil aviation, tourism, labour, shipping, roads, inland waterways,
coal and food processing. As a result of his position, Mr. Talwar has had exposure to the
management of a large number of public and private sector enterprises along with statutory
bodies in the transport, tourism and infrastructure sectors. Mr. Talwar holds a B.A. (Honors in
History) and a M.A. (History) from St. Stephen’s College, Delhi.
Investment Committee
We will form an investment committee to advise and consult with our management team
with respect to our investment policies, financing and leveraging strategies and investment
guidelines. The initial members of the investment committee will be Jason N. Ader, our Chief
Executive Officer and Chairman of the Board of Directors, who will serve as the initial
chairman of the committee, Christa Short, a director, and Samir Jain. Mr. Jain is currently a
Vice President at Hayground Cove. Prior to joining Hayground Cove, Mr. Jain was Vice
President, Research Analyst covering gaming, lodging and leisure industries at Jefferies &
Company. Mr. Jain does not serve as an officer or director of the company. We believe our
investment committee will provide us with a competitive advantage in analyzing and valuing
acquisition candidates through their experience, financial industry contacts and investment
ideas.
Compensation for Officers and Directors
No executive officer or director has received any cash compensation for services rendered
to us in such capacity. Messrs. Sasson, Munjal, Juliano and Puri have each purchased 35,088
ordinary shares, Mr. Nandiwada has purchased 106,250 ordinary shares and Ms. Short has
purchased 48,750 ordinary shares, all at a purchase price of $0.001 per share. If Mr. Talwar
joins the Board, he will also purchase 35,088 ordinary shares at a purchase price of $0.001 per
share. These shares are part of the 4,166,667 ordinary shares held by the Existing
Shareholders immediately prior to this offering and will not be transferable until one year
after the later of (A) the date upon which a Qualified Business Combination is consummated
69
or (B) if there is a business combination, but not a Qualified Business Combination, the
disbursement of the remaining funds in the trust account.
Upon the consummation of a business combination, we may enter into employment
agreements with executive officers of the acquired business, which agreements would detail
compensation and other incentives for our executive officers, including stock options and
restricted stock under our Employee Incentive Plan. The terms of such agreements will be
disclosed to ordinary shareholders when we propose a relevant business combination for
approval. However, such individuals and entities will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such as identifying potential
acquisition candidates and performing due diligence on suitable business combinations.
There is no limit on the amount of these out-of-pocket expenses and there will be no
review of the reasonableness of the expenses by anyone other than our Board of Directors,
which includes persons who may seek reimbursement, or a court of competent jurisdiction if
such reimbursement is challenged. Because of the foregoing, we will generally not have the
benefit of independent directors examining the propriety of expenses incurred on our behalf
and subject to reimbursement.
In addition, Mr. Ader and Ms. Short are employees of, and Mr. Nandiwada is a consultant
to, our sponsor, which will receive consideration under a services agreement with us. Please
see ‘‘Certain Relationships and Related Party Transactions.’’
Conflicts of Interest
Potential investors should be aware of the following potential conflicts of interest:
• None of our officers and directors or management team are required to commit their
full time to our affairs and, accordingly, they may have conflicts of interest in allocating
their time among various business activities.
• In the course of their other business activities, our officers and directors or
management team may become aware of investment and business opportunities which
may be appropriate for presentation to our company as well as the other entities with
which they are affiliated. Our management may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. However, we will
serve as Hayground Cove’s only vehicle for direct, private investments in the Indian
hospitality sector.
• Our officers and directors and management team may in the future become affiliated
with entities, including other blank check companies, engaged in business activities
similar to those intended to be conducted by our company.
• Since our sponsor, officers and directors own some of our ordinary shares that will be
transferable only if a business combination is successfully completed and may own
warrants which will expire worthless if a business combination is not consummated,
certain members of our Board of Directors, who are also members of the Board of
Directors of our sponsor, may have a conflict of interest in determining whether a
particular acquisition candidate is appropriate to consummate a business combination.
Additionally, certain members of our executive management may enter into consulting
or employment agreements with us as part of a business combination, pursuant to
which they may be entitled to compensation for their services. The personal and
financial interests of our directors and officers may influence their motivation in
identifying and selecting an acquisition candidate, timely completing a business
combination and securing the release of their stock.
70
• Other than with respect to any business combination, we have not adopted a policy that
expressly prohibits our directors, officers, security holders or affiliates from having a
direct or indirect pecuniary interest in any investment to be acquired or disposed of by
us or in any transaction to which we are a party or have an interest. Nor do we have a
policy that expressly prohibits any such persons from engaging for their own account in
business activities of the types conducted by us. Accordingly, such parties may have an
interest in certain transactions in which we are involved, and may also compete with
us.
• Anthony Juliano, a member of our Board of Directors, has served as the Executive
Director, Dubai Investment Group, Global Real Estate and Hospitality since April 2006.
Dubai Investment Group may seek investments, acquisitions and other ventures in
India, including businesses in the industries in which we are seeking acquisition
candidates. Such investments, acquisitions and ventures may be in competition with us
or in conjunction with us.
Under Cayman Islands law, directors owe duties to companies of which they are a
director, including:
• performing their duties as a director with due skill, care and diligence; and
• owing fiduciary duties to the company of which they are a director to:
• act bona fide in what they consider to be the best interests of the company;
• exercise the powers that are vested in them for the purpose for which they were
conferred and not for a collateral purpose;
• act in such a way as not to fetter the future exercise of their powers, for example
by agreeing to exercise his or her power in accordance with the instructions of a
third party; and
• avoiding conflicts of interest.
Conflicts of interest are able to be waived by the company as the beneficiary of the duty.
However, in order to minimize potential conflicts of interest which may arise from multiple
corporate affiliations, each of our officers and directors has agreed, until the earliest of a
Qualified Business Combination, our liquidation or such time as he or she ceases to be an
officer or director, to present to our company for our consideration, prior to presentation to
any other entity, any business opportunity which may reasonably be required to be presented
to us under Cayman Islands law, subject to certain pre-existing fiduciary obligations he or she
might have (other than in respect of fiduciary obligations to entities owned solely by the
relevant officer or director). As each of our officers and directors is currently involved in other
business enterprises, each has certain pre-existing fiduciary obligations to other entities that
may cause him or her to have conflicts of interest in determining to which entity he or she
presents a specific business opportunity. To the extent that one of our officers or directors
identifies a business opportunity that may be suitable for an entity that he or she has a
pre-existing fiduciary obligation to, he or she may honor his pre-existing fiduciary obligation
to this entity (other than in respect of fiduciary obligations to entities owned solely by the
relevant officer or director). Accordingly, consistent with our code of ethics, he or she may not
present opportunities to our company that otherwise may be attractive to such entity unless
such entity has declined to accept such opportunities. However, we will serve as Hayground
Cove’s only vehicle for direct, private investments in the Indian hospitality sector.
In connection with the vote required for either consummating any business combination
or extending the period within which we are allowed to complete a Qualified Business
Combination, Hayground Cove will vote the 4,166,667 ordinary shares being purchased by it
in this offering and any ordinary shares that may be purchased by it in the after market in
71
favor of any such proposed business combination or extension for completing a Qualified
Business Combination. In connection with the vote required for either consummating any
business combination or extending the period within which we are allowed to complete a
Qualified Business Combination, our Existing Shareholders, including certain of our officers
and directors, will vote the ordinary shares purchased by them before this offering and being
purchased by our sponsor in the Sponsor Private Placement in accordance with the votes
constituting the majority of the votes cast by the New Shareholders and Hayground Cove with
respect to the 4,166,667 ordinary shares being purchased by it in this offering. In addition, our
Existing Shareholders have agreed to waive their right to participate in any liquidation
distribution upon our failure to consummate any business combination (including a Qualified
Business Combination), but only with respect to those ordinary shares purchased by them
prior to this offering and being purchased in the Sponsor Private Placement.
Limitation of Director and Officer Liability
Pursuant to our memorandum and articles of association, to the extent permitted by law,
every director and officer and the personal representatives of the same shall be indemnified
by us against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities
incurred or sustained by him or her in or about the conduct of our business or affairs or in
the execution or discharge of his or her duties, powers, authorities or discretions and, unless
arising as a result of his or her own dishonesty, fraud, gross negligence or willful default,
including without prejudice to the generality of the foregoing, any costs, expenses, losses or
liabilities incurred by him in defending (whether successfully or otherwise) any civil
proceedings or (where successfully defended) any criminal proceedings concerning us or our
affairs in any court whether in the Cayman Islands or elsewhere. No such director or officer
will be liable for: (a) the acts, receipts, neglects, defaults or omissions of any other such
director or officer agent; (b) any loss on account of defect of title to any of our property;
(c) account of the insufficiency of any security in or upon which any of our money shall be
invested; (d) any loss incurred through any bank, broker or other similar person; (e) any loss
occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or
oversight on his or her part; or (f) any loss, damage or misfortune whatsoever which may
happen in or arise from the execution or discharge of the duties, powers authorities, or
discretions of his or her office or in relation thereto, unless caused as a result of his or her
own dishonesty, fraud, gross negligence or willful default.
Indemnification of Directors and Officers
To the extent permitted by law, our memorandum and articles of association provide
certain rights of indemnification in favor of our directors and officers against legal liability and
expenses if such persons did not, in connection with the matter giving rise to a particular
claim, engage in gross negligence or willful default.
We have entered into separate indemnification agreements with each of our directors and
officers that will, in some cases, be broader than the specific indemnification provisions
contained in our memorandum and articles of association or Cayman Islands law. The
indemnification agreements require us, among other things, to indemnify the officers and
directors against certain liabilities that may arise by reason of their status or service as
directors or officers. We will also be required to advance certain amounts to or on behalf of
our officers and directors in the event of claims or actions against them, except that the
company shall not advance any amount to such officers or directors in respect of any criminal
matter unless and until such matter is finally resolved without a conviction being recorded
against or fine being imposed on such officers or directors. However, our officers and
72
directors waive their rights to advance any legal claims against the funds held in the trust
account (other than rights attaching to ordinary shares purchased in this offering or in the
after market). We believe that these indemnification arrangements are necessary to attract and
retain qualified individuals to serve as directors and officers.
In addition, we have obtained directors’ and officers’ liability insurance to provide our
directors and officers with insurance coverage for losses arising from claims based on
breaches of duty, negligence, errors and other wrongful acts.
Equity Incentive Plan
We expect to create an equity incentive plan pursuant to which options and ordinary
shares may be awarded to our employees, directors, consultants and advisors upon approval
by our Board of Directors. We may not award options or shares under the equity incentive
plan prior to the consummation of a Qualified Business Combination or, in the event a
business combination or business combinations occur, but do not meet the threshold of a
Qualified Business Combination, the later of one year from the Admission Date and the
distribution of the amounts held in the trust account.
Retirement of Directors, Shareholders Qualifications, Borrowing Powers
Our memorandum and articles of association do not stipulate a retirement age for our
directors but do require our directors to retire and offer themselves for re-election at least
once every three years at our annual general meeting in that year. Each year, one third of our
Board of Directors will so retire and offer themselves for re-election by ordinary shareholders
at our annual general meeting for that year. There is no shareholding qualification for our
directors. Our directors are empowered to exercise all of our borrowing powers.
Management of IHC Mauritius
We are a holding company. IHC Mauritius, our wholly owned operating subsidiary
incorporated in Mauritius, will initially have the same officers and board of directors as the
company, except that the board of directors of IHC Mauritius will have an additional two
resident directors as required under Mauritius law. The meetings of the board of directors of
IHC Mauritius shall be chaired in Mauritius. Investment decisions shall be subject to the
common ratification by the boards of directors of each of our company and IHC Mauritius. IHC
Mauritius shall be required to open a bank account with a Mauritian bank through which all
banking transactions shall be channeled. As per the requirements of the licensing conditions
for a Category 1 Global Business, the administration activities of IHC Mauritius shall be carried
out by a management company incorporated in Mauritius. The management company shall
also be vested with the duty of carrying out the corporate secretarial activities as set out in
the Mauritius Companies Act 2001, including all relevant laws and regulations applicable to
companies holding a Category 1 Global Business License in Mauritius.
73
PRINCIPAL SHAREHOLDERS
The table presents information concerning the beneficial ownership of our ordinary shares
as of the Admission Date (after giving effect to our repurchase of 2,083,333 ordinary shares
from our Existing Shareholders at $0.001 per share prior to the Admission Date). The table
also contains information about beneficial ownership, as adjusted to reflect the sale of our
ordinary shares included in the units in this offering circular and the Sponsor Private
Placement (without giving effect to the Placing Agent Option) by:
• each person we know to be the beneficial owner of 5% or more of our outstanding
ordinary shares;
• each of our executive officers;
• each of our directors; and
• all our executive officers and directors as a group.
Unless otherwise indicated, we believe that each stockholder identified in the table
possesses sole voting and investment power over all ordinary shares shown as beneficially
owned by the stockholder.
Ordinary Shares
As Adjusted for the
Offering and the Sponsor
Before the Offering
Private Placement
Number of
Percentage of
Number of
Percentage of
Ordinary
Ordinary
Ordinary
Ordinary
(2)
(2)(3)
Shares
Shares
Shares
Shares(3)
Names and Addresses of Beneficial Owners(1)
Hayground Cove(4)(5) . . .
Jason N. Ader . . . . . . . .
Andrew Sasson(6) . . . . .
Raj Nandiwada(6) . . . . . .
Christa Short(6) . . . . . . .
Pawan Munjal(6) . . . . . .
Anthony Juliano(6) . . . . .
Manvinder Puri(6) . . . . . .
Rajeev Talwar(5)(6) . . . . .
All directors and officers
*
.........
.........
.........
.........
.........
.........
.........
.........
.........
as a group
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3,655,727
*
35,088
106,250
48,750
35,088
35,088
35,088
35,088
3,986,168
87.7%
*
**
2.5
1.2
**
**
**
**
95.7
8,322,395
*
35,088
106,250
48,750
35,088
35,088
35,088
35,088
8,697,835
39.0%
*
**
**
**
**
**
**
**
40.8
Jason N. Ader, the Chairman of our Board of Directors and our Chief Executive Officer, does not directly own any
of Hayground Cove’s 3,655,727 ordinary shares held by it immediately prior to the offering, 500,000 units being
purchased by it in the Sponsor Private Placement (comprised of 500,000 ordinary shares and 1,000,000 warrants)
and 4,166,667 units being purchased by it in this offering (comprised of 4,166,667 ordinary shares and 8,333,334
warrants). However, Mr. Ader is the sole member of Hayground Cove, the managing member of the general
partner for each of the funds and accounts it manages and, in this capacity, he may be deemed the beneficial
owner of the ordinary shares held by Hayground Cove Asset Management LLC and the funds and accounts it
manages for purposes of applicable securities laws. Mr. Ader is also an investor in certain of the funds managed
by Hayground Cove Associates LP.
** Indicates less than 1.0%.
(1) Unless otherwise indicated, the business address of each of the shareholders is our registered office, which is
located at: Ogier Fiduciary Services (Cayman) Limited, Queensgate House, 113 South Church Street, P.O. Box 1234
G.T., Grand Cayman, Cayman Islands.
(2) Unless otherwise indicated, all ownership is direct beneficial ownership.
(3) Excludes the exercise of the warrants offered in this offering and the Sponsor Private Placement, which are not
exercisable until the later of (i) the completion of a Qualified Business Combination and (ii) one year after the
Admission Date, if a business combination, but not a Qualified Business Combination, has occurred before that
date (or, if extended by a majority of votes cast at a general meeting of ordinary shareholders at which a quorum
is present, the Extended Date). Also, assumes no exercise by the placing agent of the Placing Agent Option.
(4) Represents shares for which Hayground Cove Asset Management LLC and the funds and accounts it manages are
direct beneficial owners. The business address of Hayground Cove is 1370 Avenue of Americas, 20th Floor,
New York, New York 10019. Employees of Hayground Cove, other than those who also serve as the company’s
74
officers and/or directors, were transferred a combined 175,500 ordinary shares, including 16,250 ordinary shares
to Samir Jain, who is a member of the investment committee.
(5) Mr. Talwar’s 35,088 ordinary shares have not been and will not be transferred by Hayground Cove to Mr. Talwar
until his appointment to the Board of Directors of the company. His appointment will only occur if and when he
receives final approval by the requisite Indian governmental agencies of his resignation on June 6, 2006 from his
positions as Additional Director General, Ministry of Tourism and the Chairman and Managing Director of India
Tourism Development Corporation. There can be no assurance that he will receive such approvals or that he will
become a member of our Board.
(6) These shares are part of the 4,166,667 ordinary shares held by the Existing Shareholders immediately prior to this
offering for $0.001 per share. Mr. Sasson is also an investor in certain of the funds managed by Hayground Cove
Associates LP.
Immediately after this offering, our sponsor, directors and officers are expected
collectively to own approximately 40.8% of our then outstanding ordinary shares (purchased
before this offering, being purchased in the Sponsor Private Placement and being purchased
in the offering), assuming no exercise by the placing agent of the Placing Agent Option and
excluding the exercise of the warrants offered in this offering and the Private Placement.
Because the repurchase requirement does not extend to the ordinary shares of the Existing
Shareholders being purchased in the Sponsor Private Placement, in this offering or in the
after market, our Existing Shareholders may hold greater than 25% of the then outstanding
ordinary shares of the company (so long as the ordinary shares purchased by the Existing
Shareholders prior to this offering represent no more than 25% of our then outstanding
ordinary shares). Because of the ownership block held by our sponsor, directors and officers,
other than approval of a business combination, such holders may be able to effectively
exercise control over all matters requiring approval by our shareholders, including the election
of directors and approval of significant corporate transactions.
All of the ordinary shares of the Existing Shareholders outstanding prior to the date of
this offering circular and the 4,166,667 purchased by our sponsor in the offering will be not be
transferable until (i) in the case of the shares held immediately prior to the offering (4,166,667
ordinary shares) and being purchased in the Sponsor Private Placement by our sponsor
(500,000 ordinary shares), one year after the later of (A) the date upon which a Qualified
Business Combination is consummated or (B) if there is a business combination, but not a
Qualified Business Combination, the disbursement of the remaining funds in the trust account,
and (ii) in the case of the shares being purchased in this offering by our sponsor (4,166,667
ordinary shares), the later of (A) one year after the Admission Date or (B) the date upon which
a Qualified Business Combination is consummated or, if there is a business combination but
not a Qualified Business Combination, the disbursement of the remaining funds in the trust
account.
The Existing Shareholders will be restricted from transferring any ordinary shares or
warrants held by them pursuant to Rule 7 of the AIM Rules and certain insider letters that will
be executed in connection with the offering. During the ‘‘lock-up’’ period required by Rule 7 of
the AIM Rules, none of the Existing Shareholders will be able to sell or transfer their
securities except (i) our sponsor will be permitted to make certain specified transfers amongst
the funds and accounts it manages pursuant to a derogation from Rule 7 of the AIM Rules
granted to us by the London Stock Exchange, (ii) by way of acceptance of a takeover offer
made for the whole company, or (iii) pursuant to a court order. After the expiration of the
‘‘lock-up’’ period required by Rule 7 of the AIM Rules, the ordinary shares and warrants held
by the Existing Shareholders will continue to be restricted from transfer under the insider
letters, except for the situations set forth in clauses (i), (ii) and (iii) above and to their
respective spouses and children or trusts established for their benefit (in the case of
individuals) and on certain reconstructions and reorganizations of the company. In each
instance, the Existing Shareholders will retain all other rights as our other shareholders,
including, without limitation, the right to vote their ordinary shares and the right to receive
cash dividends, if declared. If dividends are declared and payable in ordinary shares, such
dividends will also be subject to the lock-up arrangements. If we are unable to consummate a
business combination and liquidate, the Existing Shareholders will not receive any portion of
the liquidation proceeds with respect to the 4,166,667 shares held by them immediately prior
to this offering.
75
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Share Issuances to our Officers and Directors
The Existing Shareholders have purchased 4,166,667 ordinary shares for $4,166.67 in
cash, a purchase price of $0.001 per share (after giving effect to our repurchase of 2,083,333
ordinary shares from our Existing Shareholders at $0.001 per share prior to the Admission
Date). The following table sets forth the ownership of our 4,166,667 ordinary shares held by
our Existing Shareholders as of the date hereof (and prior to the consummation of the
Sponsor Private Placement and this offering):
Name
Number of
Shares
Hayground Cove(1)(2) . . . . . . . . . . .
Jason N. Ader . . . . . . . . . . . . . . . .
3,655,727
*
Andrew Sasson . . . . . . . . . . . . . . .
Raj Nandiwada . . . . . . . . . . . . . . .
35,088
106,250
Christa Short . . . . .
Pawan Munjal(3) . .
Anthony Juliano(3) .
Manvinder Puri(3) . .
Rajeev Talwar(2)(3) .
*
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48,750
35,088
35,088
35,088
35,088
Relationship to Us
Sponsor
Chief Executive Officer and Chairman of
the Board of Directors
Chief Operating Officer and Director
Vice President, New Business
Development
Director
Director
Director
Director
Prospective Director
Jason N. Ader does not directly own any of Hayground Cove’s 3,655,727 ordinary shares held by it immediately
prior to this offering. However, Mr. Ader is the sole member of Hayground Cove, the managing member of the
general partner for each of the funds and accounts it manages and, in this capacity, he may be deemed the
beneficial owner of the ordinary shares held by Hayground Cove and the funds and accounts it manages for
purposes of applicable securities laws. Mr. Ader is also an investor in certain of the funds managed by
Hayground Cove Associates LP.
(1) Employees of and consultants to Hayground Cove, other than those who also serve as the company’s officers
and/or directors, were transferred a combined 175,500 ordinary shares, including 16,250 ordinary shares to Samir
Jain, who is a member of the investment committee.
(2) Mr. Talwar’s 35,088 ordinary shares have not been and will not be transferred by Hayground Cove to Mr. Talwar
until his appointment to the Board of Directors of the company. His appointment will only occur if and when he
receives final approval by the requisite Indian governmental agencies of his resignation on June 6, 2006 from his
positions as Additional Director General, Ministry of Tourism and the Chairman and Managing Director of India
Tourism Development Corporation. There can be no assurance that he will receive such approvals or that he will
become a member of our Board.
(3) Each of the rights of Messrs. Munjal, Juliano, Puri and Talwar to the ordinary shares are (or, in the case of
Mr. Talwar, will be) contingent upon their remaining as a director of the company for the period from the
consummation of the offering until the consummation of a Qualified Business Combination. If any such individual
does not remain as a director until the consummation of a Qualified Business Combination, Hayground Cove will
have the option to purchase such director’s 35,088 ordinary shares at $0.001 per share, the price paid for such
shares.
For the shareholdings of our beneficial owners, please see the ‘‘Principal Shareholders’’.
Share Issuances to Hayground Cove in the Sponsor Private Placement and in this offering
An additional 500,000 units were offered to Hayground Cove in the Sponsor Private
Placement at a per unit price of $6.00 contemporaneously with this offering, all the proceeds
of which will be placed in the trust account. On the date of this offering, we and Hayground
Cove will enter into a purchase agreement in connection with the sale of the 4,166,667 units.
76
Loans from our Sponsor
As of May 31, 2006, our sponsor has advanced an aggregate of $6,000 to us, on a
non-interest bearing basis, for payment of offering expenses on our behalf. The loan will be
payable without interest upon the consummation of this offering out of the proceeds of this
offering not being placed in the trust account.
Services Agreement with our Sponsor
Our sponsor has also agreed that, commencing on the Admission Date, through the
earlier of the consummation of a Qualified Business Combination or our liquidation, it will:
• provide administrative services as may be required by us and IHC Mauritius from time
to time, including the administration of the company’s day-to-day activities;
• perform accounting and controller-related services for us and IHC Mauritius, including
correspondence with our auditors;
• make available the services of Mr. Ader, Mr. Nandiwada, Ms. Short and Mr. Jain,
together with such other of our sponsor’s employees as may be agreed between us and
the sponsor from time to time (the ‘‘Approved Employees’’); and
• permit the Approved Employees to access our sponsor’s network of contacts in India for
the purposes of furthering the business of the company.
We and IHC Mauritius have agreed to pay our sponsor $10,000 per month for these
services. In addition, the company has undertaken to reimburse our sponsor, monthly in
arrears, all out-of-pocket expenses incurred by Hayground Cove in performing these services.
We believe that the fees charged by our sponsor for the foregoing services are at least as
favorable as we could have obtained from an unaffiliated person.
Banyan Tree Capital Limited Advisory Services Agreement
We and IHC Mauritius have entered into an agreement with Banyan Tree Capital to serve
as our exclusive financial advisor in connection with our future acquisitions using the
proceeds from this offering. Banyan Tree Capital will provide advisory services, including
(i) discussing acquisition opportunities with us and IHC Mauritius, our Board of Directors, the
Board of Directors of IHC Mauritius and each of our management teams, (ii) assisting in the
identification, solicitation and evaluation of prospective acquisition opportunities, and
(iii) assisting in structuring and negotiating acquisition opportunities. The term of the
agreement is for period from May 30, 2006 until the earlier of 18 months after May 30, 2006
and the consummation of a Qualified Business Transaction; provided, however, that in the
event a Qualified Business Combination is not consummated within 12 months of the effective
date of the agreement, the agreement shall become non-exclusive. We have agreed to
indemnify Banyan Tree Capital for liabilities arising out if its role as our advisor (other than as
a result of Banyan Tree Capital’s fraud, willful misconduct or gross negligence). Banyan Tree
Capital has agreed to waive any and all rights and claims against the trust account in respect
of this offering.
As part of the consideration for its advisory services, we will pay Banyan Tree Capital a
retainer fee of $20,000 per month. In addition, we are required to provide 166,667 ordinary
shares to Banyan Tree Capital, which we expect to be transferred out of the 3,655,727 ordinary
shares held by Hayground Cove immediately prior to this offering, subject to satisfaction of
each of the following conditions:
• our completion of a Qualified Business Combination;
77
• the date that is one year after the completion of a Qualified Business Combination (the
‘‘Trigger Date’’) has passed; and
• our ordinary share price is greater than 1.0x the Sensex hurdle rate on the Trigger Date
or, if our ordinary share price is below the Sensex hurdle rate on the Trigger Date, the
ordinary share price must have exceeded the Sensex hurdle rate for 20 consecutive
trading days at any time prior to that date. The Sensex hurdle rate is defined as the
Sensex index performance over the duration of time from the closing date of this
offering to the Trigger Date. For example, if the offering price is at $6.00 per unit and
the Sensex is up 40% on the Trigger Date, then the share price must be greater than
$8.40 per unit (140% ! $6) in order for the shares to vest.
Banyan Tree Capital will provide written notice to our Board of Directors once it believes
that all of the requirements have been met.
Banyan Tree Capital will be transferred additional ordinary shares (out of the 3,655,727
ordinary shares held by Hayground Cove immediately prior to this offering) equal in value to
US$700,000, based on the Strike Price (as defined below) at such time following the Trigger
Date, as our ordinary share price reaches a price that is equal to a 150% threshold above the
offering price (the ‘‘Strike Price’’). Assuming the $6.00 per unit offering price for this offering,
Banyan Tree Capital would be entitled to receive 46,667 ordinary shares upon our ordinary
share price reaching $15.00 per share after the Trigger Date. These shares shall be transferred
subject to applicable law within thirty (30) days following the date upon which the foregoing
ordinary share price objective is achieved, shall vest and shall be fully paid and
non-assessable upon issuance. Upon meeting these conditions, the up to 46,667 ordinary
shares to which Banyan Tree Capital is entitled to receive will be transferred to it (out of the
3,655,727 ordinary shares held by Hayground Cove immediately prior to this offering).
Hayground Cove has agreed to reserve up to 213,334 of ordinary shares for our benefit on
behalf of Banyan Tree Capital until such time as all such shares have been transferred to
Banyan Tree Capital or to the extent that there is a final determination by a court of
competent jurisdiction that some or a portion of such shares are not required to be
transferred under the terms of the agreement.
The right of Banyan Tree Capital to receive the ordinary shares will expire 36 months
from the closing date of this offering.
Research Services Agreement between Banyan Tree Research Pvt. Ltd. and Hayground Cove
Our sponsor has entered into an agreement with Banyan Tree Research Pvt. Ltd, or
Banyan Research, to provide research and related services to Hayground Cove from time to
time as may be reasonably requested. In consideration for its research services, our sponsor
has agreed to pay Banyan Research a fee of $15,000 per month.
Reimbursement of Our Sponsor, Officer and Directors
We will reimburse our sponsor, officers and directors for any reasonable out-of-pocket
business expenses incurred by them in connection with certain activities on our behalf such
as identifying and investigating possible acquisition candidates. There is no limit on the
amount of such out-of-pocket expenses reimbursable by us from monies available to us
outside of the trust account, which will be reviewed only by our Board of Directors or a court
of competent jurisdiction if such reimbursement is challenged.
78
DESCRIPTION OF SECURITIES
General
Our authorized capital is $200,000 comprised of 200,000,000 shares (par value $0.001 per
share). Of this authorized capital, 100,000,000 unissued shares have been designated by our
Board of Directors as ordinary shares. These designated but unissued ordinary shares are
immediately available for issuance. The remaining 100,000,000 authorized but unissued and
undesignated shares may be designated by the Board of Directors as ordinary or preference
shares and issued as such at any time subsequent to the date of this offering circular.
Ordinary shares and preference shares will only be issued fully-paid.
Units
Each unit consists of one ordinary share and two warrants. Each warrant entitles the
holder to purchase one ordinary share at $5.00. The ordinary shares and warrants will begin
to trade separately on the Admission Date.
Ordinary Shares
Our shareholders are entitled to one vote for each ordinary share held of record on all
matters to be voted on by the shareholders. In connection with the vote required for either
consummating any business combination or extending the period within which we are
allowed to complete a Qualified Business Combination, Hayground Cove will vote the
4,166,667 ordinary shares being purchased by it in this offering and any ordinary shares that
may be purchased by it in the after market in favor of any such proposed business
combination or extension for completing a Qualified Business Combination. In connection
with the vote required for consummating any business combination, our Existing
Shareholders, including certain of our officers and directors, will vote the ordinary shares
purchased by them before this offering and being purchased in the Sponsor Private
Placement in accordance with the votes constituting the majority of the votes cast by the New
Shareholders and Hayground Cove with respect to the 4,166,667 ordinary shares being
purchased by it in this offering. Shareholders who fail to meet certain notification
requirements owed to us upon holding in excess of 3% of our issued and outstanding shares
(or upon certain other increases or decreases of interests thereafter) will forfeit their right to
vote or receive dividends in respect of their shares. See ‘‘Cayman Islands Laws—Shareholder
meetings, voting and written consents.’’
We will proceed with a business combination only if it is approved by a majority of votes
cast at a general meeting of ordinary shareholders at which a quorum is present and we
confirm that we have sufficient cash resources to pay both (A) the consideration required to
close the business combination and (B) the cash due to New Shareholders who vote against
the business combination and who exercise their right to have us offer to repurchase a certain
number of its ordinary shares, where such number is equal to the total number of ordinary
shares held by such New Shareholder multiplied by a fraction, of which (a) the numerator is
equal to the amount of funds in the trust account immediately before the business
combination (excluding accrued net interest attributable to such funds and the placing agent’s
deferred commission) and (b) the denominator is equal to the amount of funds placed in the
trust account as a result of this offering and the Sponsor Private Placement (excluding
accrued net interest attributable to such funds and the placing agent’s deferred commission).
This fraction will never be deemed to exceed 1.0.
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New Shareholders are eligible to exercise their repurchase rights by accepting an offer by
the company to purchase the relevant number of their ordinary shares under the following
circumstances:
• If any business combination that does not meet the requirements to be deemed a
Qualified Business Combination is approved and completed, New Shareholders who
vote against such business combination will be entitled either to exercise their
repurchase rights or maintain their interest in us; and
• If a Qualified Business Combination is approved and completed, New Shareholders who
vote against the Qualified Business Combination will be entitled either to exercise their
repurchase rights or to maintain their interest in us.
Following consummation of a Qualified Business Combination, New Shareholders who
did not vote against the business combination will no longer have repurchase rights.
New Shareholders who exercise their repurchase rights will continue to retain all rights to
the warrants that they received as part of the units purchased in this offering to the extent
that such rights have not been otherwise transferred or sold by such New Shareholder. In
addition, the Existing Shareholders have agreed that, in the event that New Shareholders
exercise their repurchase rights, we will repurchase, to the extent permitted by law, an
amount of ordinary shares held by the Existing Shareholders at par value of $0.001 per share
such that, as a result of the exercise of repurchase rights, at no time will the ordinary shares
issued to the Existing Shareholders prior to this offering constitute more than 25% of our
issued and outstanding ordinary shares. In such event, the purchase price that we will pay to
the Existing Shareholders with respect to the repurchased ordinary shares will be paid out of
our working capital, rather than the trust account.
The ordinary shares are subject to certain requirements with respect to transfer. See
‘‘Transfer Restrictions’’.
We will, subject to applicable law, dissolve and promptly distribute the amount held in the
trust account to our New Shareholders and Hayground Cove in respect of the 4,166,667 units
being purchased by it in this offering if we do not consummate a Qualified Business
Combination within 12 months after the Admission Date (or, if extended by a majority of
votes cast at a general meeting of ordinary shareholders at which a quorum is present, by the
Extended Date); provided, however, that if we consummate any business combination within
12 months after the Admission Date (or, if extended by a majority of votes cast at a general
meeting of ordinary shareholders at which a quorum is present, by the Extended Date), but do
not consummate a Qualified Business Combination, then we (i) must offer to repurchase a pro
rata proportion of the ordinary shares owned by New Shareholders and Hayground Cove to
the extent it participated in this offering using the remaining funds held in the trust account
(which funds will be net of the proceeds used for prior approved business combinations, the
placing agent’s deferred commission, acquisition expenses, working capital and repurchase
payments to New Shareholders who have exercised their repurchase rights) and (ii) must
repurchase for $0.001 par value such number of the ordinary shares purchased by the Existing
Shareholders prior to this offering, if any, required to ensure that such shares represent no
more than 25% of our then outstanding ordinary shares, in which case we will have met the
requirements to avoid liquidation of the company and therefore we will not be required to
dissolve.
Our sponsor has agreed to waive its rights to participate in any distribution of the funds
held in the trust account occurring upon our failure to consummate any business combination
(including a Qualified Business Combination), but only with respect to the ordinary shares
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purchased by it prior to this offering and purchased in the Sponsor Private Placement. New
Shareholders and Hayground Cove to the extent it participated in this offering may, however,
elect to maintain their interest in us and, in that case, the funds that would otherwise be used
to repurchase such shareholders’ shares will be released to us.
Under the laws of the Cayman Islands, shareholders are not obliged to disclose their
interests in the company in the same way as holders of ordinary shares in a company
governed by the United Kingdom Companies Act 1985 are required to do. However, the
articles of association of the company contain provisions similar to those in sections 198-220
of the United Kingdom Companies Act 1985.
Preference Shares
Our constituent documents authorize the issuance of preference shares with such
designation, rights and preferences as may be determined from time to time by our directors.
No preference shares are being issued or registered in this offering. Accordingly, our directors
are empowered, without shareholder approval, to issue preference shares with dividend,
liquidation, conversion, voting or other rights which could adversely affect the voting power
or other rights of the holders of ordinary shares, although the placing agreement prohibits us,
prior to a Qualified Business Combination, from issuing preference shares which participate in
any manner in the proceeds of the trust account, or which votes as a class with the ordinary
shares on a Qualified Business Combination. We may issue some or all of the preference
shares to consummate a Qualified Business Combination. In addition, the preference shares
could be utilized as a method of discouraging, delaying or preventing a change in control of
us.
Warrants
No warrants are currently outstanding. Each warrant (other than those subject to the
Placing Agent Option, which have an exercise price of $6.25) being issued as part of a unit
entitles the registered holder to purchase one ordinary share at a price of $5.00 subject to
adjustment as discussed below, and become exercisable on the later of:
• the completion of a Qualified Business Combination; and
• one year after the Admission Date, if a business combination, but not a Qualified
Business Combination, has occurred before that date (or, if extended by a majority of
votes cast at a general meeting of ordinary shareholders at which a quorum is present,
the Extended Date).
The warrants will expire four years from the Admission Date at 5:00 p.m., New York City
time.
We may call the warrants for redemption (including any warrants issued pursuant to
exercise of the Placing Agent Option), with prior notice to the placing agent and Deutsche
Bank AG London, our nominated advisor (and provided it remains our nominated advisor), in
the following circumstances and on the following conditions:
• in whole and not in part;
• at a price of $0.01 per warrant;
• at any time after the warrants become exercisable;
• upon a minimum of 30 days’ prior written notice of redemption; and
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• if, and only if, the closing independent bid price of our ordinary shares equals or
exceeds $8.50 per share for any twenty (20) trading days within a 30-trading-day period
ending three business days before we send the notice of redemption, and the weekly
trading volume of our ordinary shares has been at least 500,000 shares for each of the
two calendar weeks ending three business days before we send the notice of
redemption.
We have established these criteria to prevent a call unless there is at the time of the call a
significant premium to the warrant exercise price as well as a sufficient degree of liquidity to
cushion market reaction, if any, to any such redemption call.
If the foregoing conditions are satisfied and we call the warrants for redemption, each
warrant holder will then be entitled to exercise its warrant prior to the date scheduled for
redemption by payment of the exercise price in cash. However, there can be no assurance
that the price of the ordinary shares will equal or exceed $8.50 or the warrant exercise price
after the redemption call is made.
The warrants will be issued in registered form under a warrant instrument. You should
review a copy of the warrant instrument, which is available upon request, for a complete
description of the terms and conditions applicable to the warrants. The warrants contain
restrictive legends detailing certain transfer restrictions and due to U.S. securities regulations
are not currently capable of being held in uncertificated form. Additionally, the warrants are
subject to certain additional requirements with respect to transfer and exercise. See ‘‘Transfer
Restrictions’’.
Subject to the requirements described in ‘‘Transfer Restrictions’’ the warrants may be
exercised upon surrender of the warrant certificate on or prior to the expiration date at the
offices of the Capita Registrars, the registrar and transfer agent, with the exercise form on the
reverse side of the warrant certificate completed and executed as indicated, accompanied by
full payment of the exercise price, by certified check payable to us, for the number of
warrants being exercised. The warrant holders do not have the rights or privileges of holders
of ordinary shares or any voting rights until they exercise their warrants and receive ordinary
shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will
be entitled to one vote for each share held of record on all matters to be voted on by the
shareholders.
No warrants will be exercisable by a U.S. warrant holder unless, at the time of exercise,
the exercise of the warrants for ordinary shares by a U.S. warrant holder has been registered
under the U.S. Securities Act or is exempt from registration and the holder has presented an
opinion to the company as to the matters described under ‘‘Transfer Restrictions—Exercise of
Warrants’’. Additionally, the warrants are subject to certain additional restrictions on exercise
and transfer. See ‘‘Transfer Restrictions’’.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the
warrants, a holder would be entitled to receive a fractional interest in an ordinary share, we
will, upon exercise, round up to the nearest whole number the number of ordinary shares to
be issued to the warrant holder.
Dividends
We have not paid any cash dividends on our ordinary shares to date and do not intend to
pay cash dividends prior to the completion of a business combination. The payment of cash
dividends in the future will be contingent upon our revenues and earnings, if any, capital
requirements and general financial condition subsequent to the completion of a business
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combination. The payment of any dividends subsequent to the completion of a business
combination will be within the discretion of the Board of Directors. It is the present intention
of the Board of Directors to retain all earnings, if any, for use in our business operations and,
accordingly, our Board of Directors does not anticipate declaring any dividends in the
foreseeable future.
Our Registrar and Transfer Agent
The registrar and transfer agent for our ordinary shares and for our warrants is Capita
Registrars.
Shares Eligible for Future Sale
The Existing Shareholders have agreed that the ordinary shares and warrants held by
them generally will not be transferable until (i) in the case of the shares held immediately
prior to the offering (4,166,667 ordinary shares) and being purchased in the Sponsor Private
Placement (500,000 ordinary shares), one year after the later of (A) the date upon which a
Qualified Business Combination is consummated or (B) if there is a business combination, but
not a Qualified Business Combination, the disbursement of the remaining funds in the trust
account, and (ii) in the case of the shares being purchased in this offering by our sponsor
(4,166,667 ordinary shares), the later of (A) one year after the Admission Date or (B) the date
upon which a Qualified Business Combination is consummated or, if there is a business
combination but not a Qualified Business Combination, the disbursement of the remaining
funds in the trust account.
In accordance with Rule 7 of the AIM Rules, each of our Existing Shareholders, our
sponsor, and all substantial shareholders (as such term is defined in the AIM Rules) have
entered into agreements with us and our nominated advisor, which provide that they cannot,
and have agreed to procure that their related parties (as such term is defined in the AIM rules)
will not, except in certain limited circumstances, dispose of any ordinary shares and warrants
acquired by them for one year from the Admission Date; provided, however, that we have
received a derogation from the London Stock Exchange in respect of Rule 7 of the AIM Rules
for certain specified transfers amongst the funds and accounts managed by our sponsor.
Settlement and Transfer Restrictions
This offering is being made pursuant to exemptions from the registration requirements of
the Securities Act. As a result, each purchaser of subsequent transfers of ordinary shares or
warrants other than a distributor will be required to certify that (i) it is not a U.S. Person (and
is not acquiring the securities for the account or benefit of any U.S. Person) or (ii) it is a U.S.
Person who purchased securities in a transaction pursuant to Rule 144A that did not require
registration under the Securities Act. In addition, the ordinary shares and warrants will contain
a legend to the effect that any transfer or sale is pursuant to an exemption from registration
under the Securities Act. The transfer agent may also require legal opinions prior to effecting
a transfer during this time period. CRESTCo, which is the Central Securities Depository for the
U.K. market and which operates the CREST system, does not currently operate an electronic
settlement system that monitors the legend and certification requirements of Regulation S and
Rule 144A of the Securities Act.
On May 26, 2006, the London Stock Exchange announced that it intends to offer an
alternative electronic settlement system for securities of companies that are listed on AIM, but
which are subject to transfer restrictions under Regulation S. This new system would enable
certifications of non-U.S. status to be made electronically prior to the settlement of each trade
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in a manner which is not currently possible under the CREST system. It is expected that this
system will be introduced, after a consultation period, during the second half of 2006. If an
electronic settlement system, which would enable electronic settlement of securities that are
subject to Regulation S transfer restrictions, is introduced in accordance with those
restrictions, it is our intention, subject to applicable law, to seek admission of the ordinary
shares and warrants (other than any warrants resulting from the exercise of the Placing Agent
Option) to that settlement system (or any other such system which permits electronic
settlement) and to enable electronic settlement to take place. However, we can give no
assurances as to when this may occur or if it will occur at all or, if approved, that trading of
our ordinary shares and warrants would be capable of electronic settlement under this
system. The SIS system is not expected to have mechanisms in place to monitor the legend
and certification requirements for resales under Rule 144A, and such resales will, we
anticipate, continue to be made through physical settlement. See ‘‘Transfer Restrictions.’’
Since the electronic system is not expected to be introduced prior to the closing of this
offering, each investor in this offering will initially receive physical certificates representing the
ordinary shares and warrants instead of settling in electronic form, which will reduce the
liquidity of the ordinary shares and warrants and could ultimately reduce their market prices.
84
TAXATION
UNITED STATES
TO ENSURE COMPLIANCE WITH UNITED STATES INTERNAL REVENUE SERVICE
CIRCULAR 230, INVESTORS ARE HEREBY NOTIFIED THAT (A) ANY DISCUSSION OF UNITED
STATES FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS OFFERING CIRCULAR
IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANYONE FOR
THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE
UNITED STATES INTERNAL REVENUE CODE, (B) THE DISCUSSION CONTAINED OR
REFERRED TO HEREIN IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE
TRANSACTIONS OR MATTERS ADDRESSED HEREIN, AND (C) PROSPECTIVE INVESTORS
SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISOR.
The following general discussion summarizes the material U.S. federal income tax
consequences of the acquisition, ownership and disposition of ordinary shares and warrants
by a U.S. holder that acquires units from the company in this offering. In addition, the
following discussion addresses certain U.S. federal income tax consequences applicable to
persons other than U.S. holders. For purposes of this discussion, a U.S. holder is:
• an individual who is a citizen or resident of the United States;
• a corporation (or other entity taxed as a corporation for U.S. federal income tax
purposes) created or organized under the laws of the United States, any state thereof or
the District of Columbia;
• an estate whose income is includible in gross income for U.S. federal income tax
purposes regardless of its source; or
• a trust if (i) a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust, or (ii) it has in effect a valid election to be
treated as a U.S. Person.
This discussion is based on current provisions of the Internal Revenue Code of 1986, as
amended, or the Code, current and proposed Treasury regulations promulgated thereunder,
and administrative and judicial decisions as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
This summary does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to each person’s decision to purchase units. This
discussion does not address all aspects of U.S. federal income taxation that may be relevant
to any particular U.S. holder based on such holder’s individual circumstances. In particular,
this discussion considers only U.S. holders that will own ordinary shares and warrants as
capital assets and does not address the potential application of the alternative minimum tax
or the U.S. federal income tax consequences to U.S. holders that are subject to special
treatment, including:
• holders owning directly, indirectly or by attribution at least 10% of the voting power of
our stock;
• broker-dealers;
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• insurance companies;
• taxpayers who have elected mark-to-market accounting;
• tax-exempt organizations;
• regulated investment companies;
• real estate investment trusts;
• financial institutions or ‘‘financial services entities’’;
• taxpayers who hold ordinary shares or warrants as part of a straddle, hedge,
conversion transaction or other integrated transaction;
• certain expatriates or former long-term residents of the United States; and
• taxpayers whose functional currency is not the U.S. dollar.
This discussion does not address any aspect of U.S. federal gift, estate tax laws, or state,
local or non-U.S. tax laws. Additionally, the discussion does not consider the tax treatment of
partnerships or other pass-through entities or persons who hold our ordinary shares or
warrants through such entities.
Prospective investors are advised to consult their tax advisors regarding the specific tax
consequences to them of purchasing, holding or disposing of our ordinary shares and
warrants.
Taxation of ordinary shares and warrants
Allocation of purchase price between ordinary shares and warrants
For U.S. federal income tax purposes, a U.S. holder must allocate the purchase price of a
unit between the ordinary share and the warrants that comprise the unit based on the relative
fair market value of each; the holder’s initial tax basis in an ordinary share and each of the
warrants will be equal to the portions of the purchase price allocated to it. We intend to
allocate US$5.72 to each ordinary share and US$0.14 to each of the warrants comprising part
of a unit. While uncertain, it is possible that the U.S. Internal Revenue Service, or the IRS, will
apply, by analogy, rules pursuant to which our allocation of the purchase price will be binding
on a U.S. holder of a unit that acquired the unit upon original issuance, unless the U.S. holder
explicitly discloses in a statement attached to the U.S. holder’s timely filed U.S. federal
income tax return for the taxable year that includes the acquisition date of the unit that the
U.S. holder’s allocation of the purchase price between the ordinary share and the warrants
that comprise the unit is different than our allocation. Our allocation is not, however, binding
on the IRS.
Each U.S. holder is advised to consult such holder’s own tax advisor with respect to the
risks associated with an allocation of the purchase price between the ordinary share and the
warrants that comprise a unit that is inconsistent with our allocation of the purchase price.
Taxation of dividends paid on ordinary shares
In the event we pay a dividend, subject to the discussion of the PFIC rules below, a U.S.
holder will be required to include in gross income as ordinary income the amount of any
distribution paid on ordinary shares to the extent the distribution is paid out of our current or
86
accumulated earnings and profits as determined for U.S. federal income tax purposes.
Distributions in excess of such earnings and profits will be applied against and will reduce the
U.S. holder’s tax basis in the ordinary shares and, to the extent in excess of such basis, will
be treated as gain from the sale or exchange of ordinary shares.
In the case of a U.S. holder that is a corporation, a dividend from a non-U.S. corporation
will generally be taxable at regular corporate rates of up to 35% and generally will not qualify
for a dividends-received deduction. In the case of certain non-corporate U.S. holders,
dividends from a Cayman Islands company, whose stock is not traded on a U.S. securities
market are generally subject to tax at ordinary income rates of up to 35% as well.
Distributions of current or accumulated earnings and profits paid in a non-U.S. currency
to a U.S. holder will be includible in the income of a U.S. holder in a U.S. dollar amount
calculated by reference to the exchange rate on the day the distribution is received. A U.S.
holder that receives a non-U.S. currency distribution and converts the non-U.S. currency into
U.S. dollars on the date of receipt will realize no foreign currency gain or loss. If the U.S.
holder converts the non-U.S. currency to U.S. dollars on a date subsequent to receipt, such
U.S. holder will have foreign exchange gain or loss, which will generally be U.S. source
ordinary income or loss, based on any appreciation or depreciation in the value of the
non-U.S. currency against the U.S. dollar from the date of receipt to the date of conversion.
U.S. holders will have the option of claiming the amount of any non-U.S. income taxes
withheld from dividend distributions to them either as a deduction from gross income or as a
dollar-for-dollar credit against their U.S. federal income tax liability. Individuals who do not
claim itemized deductions, but instead utilize the standard deduction, may not claim a
deduction for the amount of the non-U.S. income taxes withheld, but such amount may be
claimed as a credit against the individual’s U.S. federal income tax liability. The amount of
foreign income taxes which may be claimed as a credit in any year is subject to complex
limitations and restrictions, which must be determined on an individual basis by each holder
of ordinary shares. These limitations include, among others, rules which limit foreign tax
credits allowable with respect to specific classes of income to the U.S. federal income taxes
otherwise payable with respect to each such class of income. The total amount of allowable
foreign tax credits in any year cannot exceed regular U.S. tax liability for the year attributable
to foreign source taxable income. A U.S. holder will be denied a foreign tax credit with
respect to non-U.S. income tax withheld from dividends received on the ordinary shares to
the extent such U.S. holder has not held the ordinary shares for at least 16 days of the 31-day
period beginning 15 days before the ex-dividend date or to the extent such U.S. holder is
under an obligation to make related payments with respect to substantially similar or related
property. Any days during which a U.S. holder has substantially diminished its risk of loss on
the ordinary shares are not counted toward meeting the 16-day holding period required by
the statute. As noted in the section below, regarding taxation in the Cayman Islands, currently
there is no Cayman Islands withholding tax in respect of distributions from the company to
U.S. holders.
Taxation of the disposition of ordinary shares or warrants
Subject to the discussion of the PFIC rules below, upon the sale, exchange or other
disposition of ordinary shares or warrants, a U.S. holder will recognize capital gain or loss in
an amount equal to the difference between such U.S. holder’s tax basis in its ordinary shares
or warrants, as applicable, and the amount realized on the disposition. The acquisition of
ordinary shares pursuant to the exercise of a warrant is not considered a sale, exchange or
disposition for these purposes. A U.S. holder’s tax basis in its ordinary shares is usually the
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cost of such ordinary shares (that is, in the case of a holder that acquired the unit upon
original issuance, an amount equal to the portion of the purchase price of the unit allocated to
the ordinary shares as described above under ‘‘—Allocation of purchase price between
ordinary shares and warrants’’). See ‘‘—Exercise or lapse of the warrant’’ below for a
discussion regarding a U.S. holder’s tax basis in ordinary shares acquired pursuant to the
exercise of a warrant.
In the event that a U.S. holder converts ordinary shares into a right to receive cash under
the circumstances described above (see ‘‘Description of Securities’’), the transaction will be
treated for U.S. federal income tax purposes as a redemption of the ordinary shares. If the
conversion qualifies as a sale of ordinary shares by a U.S. holder under Section 302 of the
Code, the U.S. holder will recognize gain or loss equal to the difference between such U.S.
holder’s tax basis in its ordinary shares and the amount realized pursuant to the conversion. If
the conversion does not qualify as a sale of ordinary shares under Section 302, a U.S. holder
will be treated as receiving a corporate distribution with the tax consequences described
below. Whether the conversion qualifies for sale treatment will depend largely on the total
number of ordinary shares treated as owned by the U.S. holder (including any ordinary shares
constructively owned by the U.S. holder as a result of, among other things, owning warrants).
The conversion of ordinary shares generally will be treated as a sale or exchange of the
ordinary shares (rather than as a corporate distribution) if the receipt of cash upon the
conversion (1) is ‘‘substantially disproportionate’’ with respect to the U.S. holder, (2) results in
a ‘‘complete termination’’ of the U.S. holder’s interest in the company or (3) is ‘‘not essentially
equivalent to a dividend’’ with respect to the U.S. holder. These tests (the ‘‘Section 302 Tests’’)
are explained more fully below.
In determining whether any of the Section 302 Tests is satisfied, a U.S. holder takes into
account not only ordinary shares actually owned by the U.S. holder, but also ordinary shares
that are constructively owned by it. A U.S. holder may constructively own, in addition to
ordinary shares actually owned directly, ordinary shares owned by certain related individuals
and entities in which the U.S. holder has an interest as well as any ordinary shares the
shareholder has a right to acquire by exercise of an option, which would generally include
ordinary shares which could be acquired pursuant to the exercise of warrants. In order to
meet the substantially disproportionate test, the percentage of outstanding ordinary shares
actually and constructively owned by the U.S. holder immediately following the conversion of
ordinary shares must, among other requirements, be less than 80% of the percentage of the
outstanding ordinary shares actually and constructively owned by the U.S. holder immediately
before the conversion. There will be a complete termination of a U.S. holder’s interest if either
(1) all of the ordinary shares actually and constructively owned by the U.S. holder is
converted or (2) all of the ordinary shares actually owned by the U.S. holder is converted and
the U.S. holder is eligible to waive, and effectively waives in accordance with specific rules,
the attribution of ordinary shares owned by certain family members and the U.S. holder does
not constructively own any other ordinary shares. The conversion of the ordinary shares will
not be essentially equivalent to a dividend if a U.S. holder’s conversion results in a
‘‘meaningful reduction’’ of the U.S. holder’s proportionate interest in the company. Whether
the conversion will result in a meaningful reduction in a U.S. holder’s proportionate interest
will depend on particular facts and circumstances. However, the IRS has indicated in a
published ruling that even a small reduction in the proportionate interest of a small minority
shareholder in a publicly held corporation who exercises no control over corporate affairs
may constitute such a ‘‘meaningful reduction’’. Although a U.S. holder exercising its
conversion right must convert all its ordinary shares, the U.S. holder would still be entitled to
retain warrants and thus may constructively own ordinary shares. Accordingly, a U.S. holder
88
should consult with its tax advisors in order to determine the appropriate tax treatment to it
of a conversion of ordinary shares.
If none of the Section 302 Tests are satisfied, then the conversion will be treated as a
corporate distribution and the tax effects will be as described in ‘‘—Taxation of dividends paid
on ordinary shares’’. After the application of those rules, any remaining tax basis of the U.S.
holder in the converted ordinary shares will be added to the U.S. holder’s basis in its warrants
or possibly to the tax basis in other ordinary shares constructively owned by it.
As described above, under certain circumstances the company has the right to redeem
the warrants. A redemption of the warrants will be treated as a sale or exchange of the
warrants.
For ordinary shares and warrants traded on an established securities market, a U.S.
holder that uses the cash method of accounting calculates the U.S. dollar value of foreign
currency proceeds received on the sale as of the date that the sale settles, while a U.S. holder
that uses the accrual method of accounting is required to calculate the value of the proceeds
of the sale as of the ‘‘trade date,’’ unless such U.S. holder has elected to use the settlement
date to determine its proceeds of sale.
Capital gain from the sale, exchange or other disposition of shares held more than one
year is long-term capital gain, and is eligible for a reduced rate of taxation for individuals.
Long-term capital gains recognized by certain non-corporate holders with respect to tax years
beginning before January 1, 2011 may qualify for a reduced rate of taxation of 15% or lower.
See ‘‘—Exercise or lapse of a warrant or adjustment of exercise price’’ below for a discussion
regarding a U.S. holder’s holding period in ordinary shares acquired pursuant to the exercise
of a warrant. Gain recognized by a U.S. holder on a sale, exchange or other disposition of
ordinary shares or warrants generally will be treated as U.S. source income for U.S. foreign
tax credit purposes. A loss recognized by a U.S. holder on the sale, exchange or other
disposition of ordinary shares or warrants generally will be allocated to U.S. source income
for U.S. foreign tax credit purposes. The deductibility of a capital loss recognized on the sale,
exchange or other disposition of ordinary shares or warrants is subject to limitations. A U.S.
holder that receives foreign currency upon disposition of ordinary shares or warrants and
converts the foreign currency into U.S. dollars subsequent to receipt will have foreign
exchange gain or loss based on any appreciation or depreciation in the value of the foreign
currency against the U.S. dollar, which gain or loss will generally be U.S. source ordinary
income or loss.
Exercise or lapse of a warrant
Subject to the discussion of the PFIC rules below, a U.S. holder generally will not
recognize gain or loss upon the exercise of a warrant. Ordinary shares acquired pursuant to
the exercise of a warrant will have a tax basis equal to the U.S. holder’s tax basis in the
warrant (that is, in the case of a holder that acquired the unit upon original issuance, an
amount equal to the portion of the purchase price of the unit that a U.S. holder allocated to
the warrant as described above under ‘‘—Allocation of purchase price between ordinary
shares and warrants’’, increased by the exercise price paid to exercise the warrant. The
holding period of such share would begin on the date of exercise of the warrant. If a warrant
is allowed to lapse unexercised, a U.S. holder would have a capital loss equal to such holder’s
tax basis in the warrant.
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Tax consequences if we are a passive foreign investment company
We will be a PFIC if 75% or more of our gross income in a taxable year, including the pro
rata share of the gross income of any company in which we are considered to own 25% or
more of the shares by value, is passive income. Alternatively, we will be a PFIC if at least 50%
of our assets in a taxable year, averaged over the year and ordinarily determined based on
fair market value, including the pro rata share of the assets of any company in which we are
considered to own 25% or more of the shares by value, are held for the production of, or
produce, passive income.
Passive income generally includes dividends, interest, rents, royalties, and gains from the
disposition of passive assets. Passive income also includes the excess of gains over losses
from some commodities transactions. Net gains from commodities transactions will not be
included in the definition of passive income if they are active business gains or losses from
the sale of commodities, but only if substantially all of a corporation’s commodities are stock
in trade or inventory, depreciable or real property used in a trade or business, or supplies
used in the ordinary course of the trade or business of a corporation. Net gains from
commodities transactions will also not be included in the definition of passive income if they
arise out of commodity hedging transactions entered into in the ordinary course of a
corporation’s trade or business. Because we are a company with no current active business,
we believe that it is likely that we will meet the PFIC asset or income tests for the current
year. However, the PFIC rules contain an exception to PFIC status for companies in their
‘‘start-up year.’’ A corporation will not be a PFIC for the first taxable year the corporation has
gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies
the IRS that it will not be a PFIC for either of the first two taxable years following the start-up
year; and (3) the corporation is not in fact a PFIC for either of these years. The applicability of
the start-up exception to us is uncertain. After acquisition of a company in a business
combination, we may still meet one of the PFIC tests depending on the timing of the
acquisition and the interest, royalty, commodities and other passive income and assets of the
acquired business which would likely be a predecessor corporation for purposes of the
start-up exception. If the company that we acquire in a business combination is a PFIC, then
we will likely not qualify for the start-up exception and will be a PFIC for the current year.
We note, however, that PFIC status cannot be determined until the close of the year in
question and is determined annually. Consequently, we can provide no assurance that we will
not be a PFIC for either the current year or for any subsequent year.
If we are a PFIC during any year of a U.S. holder’s holding period, that U.S. holder, upon
its receipt of certain excess distributions by us and upon disposition of ordinary shares or
warrants at a gain, would be liable to pay tax at the highest then prevailing income tax rate
on ordinary income plus interest on the tax, as if the distribution or gain had been recognized
ratably over the taxpayer’s holding period for the ordinary shares or warrants. Additionally, if
we are a PFIC during any year of a deceased U.S. holder’s holding period, a U.S. holder who
acquires ordinary shares or warrants from the deceased U.S. holder would not receive the
step-up of the income tax basis to fair market value for such ordinary shares or warrants.
Instead, such U.S. holder would have a tax basis equal to the deceased’s tax basis, if lower.
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If a U.S. holder has made a qualifying electing fund, or QEF, election covering all taxable
years during which the holder held ordinary shares and in which we were a PFIC, distributions
and gains will not be taxed as described above, nor will the denial of a basis step-up at death
described above apply. Instead, a U.S. holder that makes a QEF election is required for each
taxable year to include in income the holder’s pro rata share of the ordinary earnings of the
QEF as ordinary income and a pro rata share of the net long-term capital gain of the QEF as
long-term capital gain, regardless of whether such earnings or gain have in fact been
distributed. Undistributed income is subject to a separate election to defer payment of taxes.
If deferred, the taxes will be subject to an interest charge. The U.S. Treasury Regulations
provide that U.S. holders may not make a QEF election with respect to warrants. As a result, if
a U.S. holder sells warrants, any gain will be subject to the special tax and interest charge
rules treating the gain as an excess distribution, as described above, if the company were a
PFIC at any time during period the U.S. holder held the warrants. If a U.S. holder that
exercises warrants properly makes a QEF election with respect to the newly acquired ordinary
shares, the adverse tax consequences relating to PFIC shares will continue to apply with
respect to the pre-QEF election period, unless the holder makes a purging election. The
purging election creates a deemed sale of the ordinary shares acquired on exercising the
warrants. The gain recognized by the purging election would be subject to the special tax and
interest charge rules, treating the gain as an excess distribution, as described above. As a
result of the purging election, the U.S. holder would have a new tax basis and holding period
in the ordinary shares acquired on the exercise of the warrants for purposes of the PFIC rules.
The application of the PFIC rules to warrants and to ordinary shares acquired upon
exercise of warrants is subject to significant uncertainties. Accordingly, U.S. holders should
consult their tax advisors concerning the PFIC consequences of holding warrants or of holding
ordinary shares acquired through the exercise of such warrants.
In order to comply with the requirements of a QEF election, a U.S. holder must receive
certain information from us. The QEF election is made on a shareholder-by-shareholder basis
and can be revoked only with the consent of the IRS. A U.S. holder makes a QEF election by
attaching a completed IRS Form 8621, including the information provided in the PFIC annual
information statement, to a timely filed U.S. federal income tax return and by filing a copy of
the form with the IRS. We will provide such information as the IRS may require in order to
enable U.S. holders to make the QEF election. However, there is no assurance that we will
have timely knowledge of our status as a PFIC in the future. Even if a U.S. holder in a PFIC
does not make a QEF election, such holder generally must file a completed Form 8621 with
the shareholder’s tax return.
Where a U.S. holder has elected the application of the QEF rules to its PFIC shares, and
the excess distribution rules do not apply to such shares (because of a timely election or a
purge of the PFIC taint), any gain realized on the appreciation of the PFIC shares is taxable as
capital gain (if the shares are a capital asset in the hands of the U.S. holder) and no interest
charge is imposed. U.S. shareholders of a QEF are currently taxed on their pro rata shares of
the QEF’s earnings and profits. Where earnings and profits that were included in income
under this rule are later distributed, the distribution is not a dividend. The basis of a U.S.
holder’s shares in a QEF is increased by amounts that are included in income, and decreased
by amounts distributed but not taxed as dividends, under the above rules.
Although a determination as to a corporation’s PFIC status is made annually, an initial
determination during a U.S. holder’s holding period that a corporation is a PFIC will generally
apply for subsequent years, whether or not it meets the tests for PFIC status in those years. A
U.S. holder who makes the QEF election discussed above for the first year the U.S. holder
holds or is deemed to hold ordinary shares or warrants and for which we are determined to
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be a PFIC, however, is not subject to the PFIC rules or the QEF regime for the years in which
we are not a PFIC.
If our ordinary shares became ‘‘regularly traded’’ on a ‘‘qualified exchange or other
market,’’ as provided in applicable Treasury Regulations, a U.S. holder of our ordinary shares
may elect to mark the ordinary shares to market annually, recognizing as ordinary income or
loss each year an amount equal to the difference between the U.S. holder’s adjusted tax basis
in such ordinary shares and its fair market value. Losses would be allowed only to the extent
of net mark-to-market gain previously included by the U.S. holder under the election in
previous taxable years. As with the QEF election, a U.S. holder who makes a mark-to-market
election would not be subject to the general PFIC regime and the denial of basis step-up at
death described above. However, it is unclear whether our ordinary shares will qualify for the
mark-to-market election and prospective investors should not assume that our ordinary shares
will qualify for the mark-to-market election.
If we are a PFIC and, at any time, have a non-U.S. subsidiary that is classified as a PFIC,
U.S. holders of ordinary shares generally would be deemed to own, and also would be
subject to the PFIC rules with respect to, their indirect ownership interests in that lower-tier
PFIC. A QEF election under the PFIC rules with respect to our ordinary shares would not apply
to a lower-tier PFIC. If we are a PFIC and a U.S. holder of ordinary shares does not make a
QEF election in respect of a lower-tier PFIC, the U.S. holder could incur liability for the
deferred tax and interest charge described above if either (1) we receive a distribution from,
or dispose of all or part of our interest in, the lower-tier PFIC or (2) the U.S. holder disposes of
all or part of its ordinary shares. Upon request, we will endeavor to cause any lower-tier PFIC
to provide to a U.S. holder no later than ninety days after the request the information that
may be required to make a QEF election with respect to the lower-tier PFIC. A mark-to-market
election under the PFIC rules with respect to our ordinary shares would not apply to a
lower-tier PFIC, and a U.S. holder would not be able to make such a mark-to-market election
in respect of its indirect ownership interest in that lower-tier PFIC. Consequently, U.S. holders
of ordinary shares could be subject to the PFIC rules with respect to income of the lower-tier
PFIC the value of which already had been taken into account indirectly via mark-to-market
adjustments. Similarly, if a U.S. holder made a mark-to-market election under the PFIC rules in
respect of our ordinary shares and made a QEF election in respect of a lower-tier PFIC, that
U.S. holder could be subject to current taxation in respect of income from the lower-tier PFIC
the value of which already had been taken into account indirectly via mark-to-market
adjustments. U.S. holders are urged to consult their own tax advisors regarding the issues
raised by lower-tier PFICs.
The rules dealing with PFICs and with the QEF and mark-to-market elections are very
complex and are affected by various factors in addition to those described above, including
our ownership of any non-U.S. subsidiaries. As a result, U.S. holders of ordinary shares or
warrants are strongly encouraged to consult their tax advisors about the PFIC rules in
connection with their purchasing, holding or disposing of ordinary shares or warrants.
Tax consequences for non-U.S. holders of ordinary shares or warrants
Except as described in ‘‘—Information reporting and back-up withholding’’ below, a
non-U.S. holder of ordinary shares or warrants will not be subject to U.S. federal income tax
on the payment of dividends on ordinary shares or on gain from the disposition of ordinary
shares or warrants unless such income is U.S. source income and:
• such item is effectively connected with the conduct by the non-U.S. holder of a trade or
business in the United States and, in the case of a resident of a country which has an
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income tax treaty with the United States, such item is attributable to a permanent
establishment or, in the case of an individual, a fixed place of business, in the United
States; or
• the non-U.S. holder is an individual who holds the ordinary shares or warrants as a
capital asset and is present in the United States for 183 days or more in the taxable
year of the disposition, certain other conditions are met, and such non-U.S. holder does
not qualify for an exemption.
If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal
income tax with respect to such income in the same manner as a U.S. holder unless
otherwise provided in an applicable income tax treaty; a non-U.S. holder that is a corporation
for U.S. federal income tax purposes may also be subject to a branch profits tax with respect
to such income at a rate of 30% (or at a reduced rate under an applicable income tax treaty).
If the second exception applies, the non-U.S. holder generally will be subject to U.S. federal
income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on
the amount by which such non-U.S. holder’s capital gains allocable to U.S. sources exceed
capital losses allocable to U.S. sources during the taxable year of disposition of the ordinary
shares or warrants.
Information reporting and back-up withholding
U.S. holders generally will be subject to information reporting with respect to dividends
paid on ordinary shares, and on the proceeds from the sale, exchange or disposition of
ordinary shares or warrants if the payments are made by or through a U.S. Person or a U.S.
office of a non-U.S. Person (as defined in Regulation S under the Securities Act). In addition,
U.S. holders will be subject to back-up withholding (currently at 28%) on dividends paid on
ordinary shares, and on the proceeds from the sale, exchange or other disposition of ordinary
shares or warrants, unless the U.S. holder provides a duly executed IRS Form W-9 or
otherwise establishes an exemption. Non-U.S. holders generally are not subject to information
reporting or back-up withholding with respect to dividends paid on ordinary shares, or the
proceeds from the sale, exchange or other disposition of ordinary shares or warrants,
provided that such non-U.S. holder certifies to its foreign status on the applicable duly
executed IRS Form W-8 or otherwise establishes an exemption. Back-up withholding is not an
additional tax and the amount of any back-up withholding will be allowable as a credit against
a holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided
that certain required information is timely furnished to the IRS.
UNITED KINGDOM
The following paragraphs are intended as a general guide only for holders of ordinary
shares or warrants who are resident, ordinarily resident and domiciled in the United Kingdom
for tax purposes. The statements only apply to persons who are beneficial owners of ordinary
shares or warrants but are not applicable to all such persons, and in particular, are not
addressed to: (i) persons who do not hold ordinary shares or warrants as capital assets;
(ii) persons who own (directly or indirectly) 10% or more of the company; (iii) special classes
of holders of ordinary shares or warrants, such as dealers in securities or currencies, brokerdealers or investment companies and (iv) depositories, clearing services or holders of
depository interests. The statements do not purport to be comprehensive or to describe all
potential relevant considerations. They are based on current legislation and HM Revenue &
Customs practice. Any owner or prospective purchaser of ordinary shares or warrants should
consult its professional advisors on the possible tax consequences of acquisition, ownership
and disposition under the laws of its particular citizenship, residence and/or domicile.
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Stamp duty and stamp duty reserve tax
No stamp duty or stamp duty reserve tax is payable in the United Kingdom on the issue
of ordinary shares or warrants.
No U.K. stamp duty reserve tax is payable on an agreement to transfer ordinary shares or
warrants assuming that the registers of the ordinary shares or warrants are not kept in the
United Kingdom. No U.K. stamp duty should be payable to register the transfer of ordinary
shares or warrants in a register kept outside the United Kingdom. However, U.K. stamp duty,
together with interest and any applicable penalties, would be payable in the event that it
became necessary to rely upon any transfer of shares or warrants in any U.K. court
proceedings (other than criminal proceedings), but only where such transfer was executed in
the United Kingdom or relates to any matter or thing done or to be done in the United
Kingdom.
Taxation of chargeable gains
A subsequent disposal of ordinary shares or warrants by persons resident or ordinarily
resident in the United Kingdom in a tax year which gives rise to gains may be liable to capital
gains tax (individuals and trustees) or corporation tax (companies). Liability to tax and the rate
of tax will depend on the person’s circumstances and the availability of exemptions or
allowable losses.
Indexation allowance, which increases the acquisition cost of an asset in line with the rise
in the retail price index, is available for corporate holders of ordinary shares or warrants
during the period of ownership.
For individuals and trustees, taper relief may be available to reduce the amount of a
chargeable gain according to how long the asset has been held.
Individuals and certain trusts have an overall annual exemption from capital gains tax for
the first £8,500 of chargeable gains in the current tax year. Settlements have an equivalent
exemption of up to £4,250 in the current tax year.
Generally, losses realized on the disposal of assets may be set against other gains made
during the tax year or carried forward and set against gains in future tax years.
Different tax treatment applies to persons who trade in securities.
Persons who are neither resident nor ordinarily resident in the United Kingdom will not
normally be liable to tax in the United Kingdom in respect of any gain accruing to them on a
disposal of ordinary shares or warrants. The terms of a relevant double taxation treaty may
apply to persons with dual residence.
Taxation of dividends
The company is not required to withhold U.K. tax from dividends paid on ordinary shares.
Any holder of ordinary shares who is resident in the United Kingdom, or who carries on a
trade, profession or vocation in the United Kingdom to which his ordinary shares is
attributable, will generally be subject to U.K. tax on income in respect of any dividends paid
on the ordinary shares.
Dividends paid to a U.K. resident corporate holder of ordinary shares will be assessable
income of such holder.
Individuals ordinarily resident in the United Kingdom should note that sections 739 and
740 of the Income and Corporation Taxes Act 1988, which contain provisions for preventing
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the avoidance of income tax through transactions resulting in the transfer of income to
persons (including companies) abroad, may render them liable to taxation in respect of any
undistributed income and profits of the company.
These comments are intended only as a general guide to the current tax position in the
United Kingdom at the date of this document. The rates and basis of taxation can change and
will be dependent on the personal circumstances of a holder of ordinary shares or warrants.
Neither the company nor its advisors warrant in any way the tax position outlined above
which, in any event, is subject to changes in the relevant legislation and its interpretation and
application.
CAYMAN ISLANDS
There is, at present, no direct taxation on individuals or corporations based upon profits,
income, gains or appreciation in the Cayman Islands. Accordingly, under current law, all
interest, dividends and gains payable to the company will be received free of all Cayman
Islands taxes.
The company was incorporated as an ‘‘exempted company’’ pursuant to the Companies
Law (Revised) of the Cayman Islands, or the Companies Law. The company has applied for
and received an undertaking from the Governor in Cabinet of the Cayman Islands to the effect
that, for a period of 20 years from the date of the undertaking, no law that thereafter is
enacted in the Cayman Islands imposing any tax or duty to be levied on profits, income or on
gains or appreciation, or any tax in the nature of estate duty or inheritance tax, will apply to
any property comprised in or any income arising under the company, or to the shareholders
of the company, in respect of any such property or income. Accordingly, it is not envisaged
that the company will be subject to any taxation in the Cayman Islands. The company,
however, will be subject to certain incidental registry fees and stamp duties on certain
instruments entered into by it.
There are currently no withholding taxes or exchange control regulations in the Cayman
Islands applicable to the company or its shareholders. The Cayman Islands is not party to any
double tax treaties.
There are currently no inheritance, estate duty, gifts or gains taxes in the Cayman Islands
applicable to the ordinary shares or the warrants or to any income or gains that a shareholder
or holder of warrants derives either from holding or pursuant to any transfers or redemptions
of such ordinary shares or warrants.
MAURITIUS
Tax Implications—IHC Mauritius Investing In India
Since IHC Mauritius is a tax resident of Mauritius and has no permanent establishment in
India, for purposes of the Double Taxation Treaty between India and Mauritius (the ‘‘Treaty’’):
• Income distributions to IHC Mauritius by way of dividends from its investments in
securities that are equity shares of Indian companies are not subject to any withholding
tax, as dividends are presently not taxable in the hands of shareholders. However, the
Indian companies declaring/distributing dividends are required to pay a dividend
distribution tax rate of 14.025% on the same;
• Any interest income would be taxable as follows:
• If the loan is provided in foreign exchange, at 20.91% on gross basis; or
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• If the loan is provided in Indian currency, at 41.82% on net income basis;
• Any capital gains arising on the disposal of IHC Mauritius’ investments in India being
equity shares of Indian companies are not liable to tax in India as per article 13(4) of the
Treaty and, accordingly, such gains are not subject to withholding tax;
• Any income chargeable as business income is not liable to tax in India under Article 7
of the Treaty since IHC Mauritius does not have permanent establishment in India; and
• Any other income is taxable only in Mauritius provided it is covered under the residual
category under Article 22 of the Treaty.
Securities Transaction Tax (‘‘STT’’)
STT is payable on purchase or sale of securities being equity shares of Indian companies,
where the transaction of purchase or sale is entered into in a recognized stock exchange in
India. Such tax is levied on both the buyer and the seller at 0.125% of the value of transaction
effective June 1, 2006. Prior to that time, the effective rate of STT was 0.1% of the value of the
transaction.
Stamp Duty
Further, in the event of transfers of securities, there is a stamp duty of 0.01% (where
transfer is delivery based), 0.0025% (where transfer is non delivery based) on the value of the
securities transferred (normally payable to the transferee). The stamp duty is not applicable to
transfers made through the depository system (i.e. shares held and transferred in
dematerialized form).
Tax Implications—Mauritius
IHC Mauritius will be incorporated as a Category 1 Global Business Company for the
purposes of the Mauritian Financial Services Development Act 2001, and will able to take
advantage of a preferential tax regime under Mauritian Income Tax Act. Also, the Finance Act
2000 introduced new tax provisions relating to the taxation of the Category 1 Global business
Companies.
IHC Mauritius will be subject to tax at 15% and may either claim credit for foreign taxes
incurred on its foreign income or otherwise claim a presumed credit equivalent to 80% of the
Mauritius tax payable on its foreign source income. Hence, IHC Mauritius will be subject to tax
at the maximum effective rate of 3%. Under the Mauritius Income Tax Act, gains arising from
the sale of securities are exempt from tax.
Dividends paid by a subsidiary to its parent company are not subject to any tax in
Mauritius. Also, Mauritius does not tax capital gains and, therefore, gains resulting from
disposal by IHC Mauritius of its investments in India will not be subject to tax in Mauritius.
A certificate of Mauritian tax residence has been provided by the Commissioner of
Income Tax in respect of IHC Mauritius. Accordingly, IHC Mauritius qualifies as a resident of
Mauritius for the purposes of the Treaty. On this basis, IHC Mauritius should be entitled to
certain relief from Indian tax.
The company will not be subject to any taxation in Mauritius in respect of dividends or
interest from the subsidiary and in respect of disposals (including redemptions) of the shares
in IHC Mauritius.
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ERISA
The following general discussion summarizes the applicability of the United States
Employee Retirement Income Security Act of 1974, as amended, or ERISA, and section 4975 of
the Code to an investment in our ordinary shares or warrants by employee benefit plans or
other plans subject to ERISA or section 4975 of the Code, or other person which is treated as
if it is holding the assets of any such plan (collectively ‘‘ERISA Plans’’). This summary does
not purport to be a complete discussion of all of the considerations under ERISA or
section 4975 of the Code relating to the acquisition or holding of our ordinary shares or
warrants. Moreover, governmental plans, church plans, non-United States benefit plans and
other similar investors that are not subject to the fiduciary standards of ERISA or the
prohibited transaction rules of ERISA or section 4975 of the Code (collectively, ‘‘Other Plans’’)
may be subject to substantially similar laws (‘‘Similar Laws’’). Accordingly, any person
considering the acquisition or holding of our ordinary shares or warrants with the assets of
any employee benefit plan (whether or not subject to ERISA or section 4975 of the Code)
should consult with legal counsel regarding the applicability of ERISA, section 4975 of the
Code or Similar Laws.
Both ERISA and section 4975 of the Code impose special rules limiting direct and indirect
transactions involving the assets of any ERISA Plan and certain related persons, termed
‘‘parties in interest’’ under ERISA and ‘‘disqualified persons’’ under the Code. Disqualified
persons and parties in interests include any fiduciary for an ERISA Plan, any service provider
to an ERISA Plan, the employer sponsoring an ERISA plan and persons affiliated with any
such fiduciary, service provider, or employer. Engaging in such a ‘‘prohibited transaction’’ can
result in substantial excise tax penalties or personal liability. To avoid any such prohibited
transaction in connection with an investment in our shares or warrants, each purchaser will
be required to represent and warrant in connection with any purchase or transfer or our
shares or warrants that it is not and will not transfer our shares or warrants to an ERISA Plan,
except on a basis which would not give rise to a prohibited transaction. See ‘‘Transfer
Restrictions—ERISA Transfer Restrictions.’’
The United States Department of Labor, or the DOL, has issued a regulation, 29 C.F.R.
2510.3-101, (the ‘‘Plan Assets Regulation’’) defining what constitutes the assets of an
employee benefit plan or other plan subject to the fiduciary standards of ERISA or the
prohibited transaction rules of ERISA or section 4975 of the Code. Under a ‘‘look-through’’ rule
set forth in the Plan Assets Regulation, the underlying assets owned by an entity in which any
such plan owns an equity interest will be treated as if they were ‘‘plan assets’’ of such plans
unless an exception applies. The look-through rule does not apply to an entity (i) that qualifies
as an ‘‘operating company’’ or (ii) in which participation by ‘‘benefit plan investors’’ is not
significant, as determined under the Plan Assets Regulation. Although there are other
exceptions to the look-through rule, we do not expect any of them to likely apply here.
The Plan Assets Regulation defines an ‘‘operating company’’ as including an entity that is
primarily engaged in the production or sale of a product or service (other than the investment
of capital). In the event we are able to complete a business combination, we expect to
thereafter qualify as an ‘‘operating company’’ within the meaning of the Plan Assets
Regulation such that the look-through rule will not apply to our assets or our activities
thereafter. However, we do not expect to qualify as an ‘‘operating company’’ at any time
before we complete a business combination.
Accordingly, our assets and our activities before we complete a business combination
may be subject to the fiduciary standards of ERISA and the prohibited transaction rules of
ERISA or section 4975 of the Code if (i) any of our ordinary shares or warrants is owned by
any ERISA Plan and (ii) ownership of our ordinary shares or warrants by benefit plan
investors is significant (as determined under the Plan Assets Regulation).
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Under the Plan Assets Regulation, the term ‘‘benefit plan investors’’ currently includes all
employee benefit plans, whether or not they are subject to ERISA or section 4975 of the Code,
and all persons which are treated under the Plan Assets Regulation or otherwise as if they
were plan assets of such plans. Participation by benefit plan investors in an entity will be
significant for purposes of the Plan Assets Regulation if such investors in the aggregate own
25% or more of the value of any class of equity interest of the entity, disregarding for
purposes of such calculation any equity interests owned by any person (other than a benefit
plan investor) having discretionary control over the entity’s assets or rendering investment
advice for compensation to the entity, or any affiliate thereof (collectively ‘‘Controlling
Persons’’).
We do not intend to restrict or monitor ownership of our ordinary shares or warrants by
ERISA Plans or other benefit plan investors and, accordingly, there are no assurances that the
look-through rule will not apply to our assets and our activities prior to our completion of a
business combination. Prior to the completion of a business combination, we expect to
conduct the limited scope of our activities in compliance with the fiduciary standards of ERISA
and the prohibited transaction rules of ERISA and section 4975 of the Code. However, the
interpretation and application of the fiduciary standards under ERISA and the prohibited
transaction rules under ERISA or section 4975 of the Code are oftentimes complex and
uncertain and, because of limited information, may be difficult to comply with fully. We also
note that we will not qualify as an investment manager (as defined in ERISA), and any
fiduciary decisions made by us or on our behalf might be treated as a delegation of authority
by any fiduciary that made the decision to acquire our ordinary shares or warrants on behalf
of a Plan, which may or may not be proper under the Plan’s terms.
We note that a substantial portion of the proceeds of the offering will be held in a trust
account at JPMorgan Chase N.A., maintained by Continental Stock Transfer & Trust Company,
and that we will proceed with a business combination only if it is approved by a majority of
votes cast in a general meeting of ordinary shareholders at which a quorum is present and
we confirm that we have sufficient cash resources to pay both (A) the consideration required
to close the business combination and (B) the cash due to New Shareholders who vote
against the business combination and who exercise their right to have us offer to repurchase
a certain number of its ordinary shares, where such number is equal to the total number of
ordinary shares held by such New Shareholder multiplied by a fraction, of which (a) the
numerator is equal to the amount of funds in the trust account immediately before the
business combination (excluding accrued net interest attributable to such funds and the
placing agent’s deferred commission) and (b) the denominator is equal to the amount of
funds placed in the trust account as a result of this offering and the Sponsor Private
Placement (excluding accrued net interest attributable to such funds and the placing agent’s
deferred commission).
If the look-through rule of the Plan Assets Regulation applies so that our underlying
assets and activities are subject to the fiduciary standards of ERISA and the prohibited
transaction rules of ERISA and section 4975 of the Code apply to our assets and activities, we
may be restricted from obtaining financing or other services from, or otherwise engaging in
certain business activities with, persons who provide services to ERISA Plans generally.
The applicability of ERISA and section 4975 of the Code, or any similar laws, to the
acquisition and holding of our ordinary shares or warrants involves many considerations
under such laws, and we urge any person contemplating the acquisition or holding of our
ordinary shares or warrants by or on behalf of any ERISA Plan or Other Plan to consult with
legal counsel regarding the applicability of such laws.
The comments in this document are intended as a summary only and any person who is
in any doubt about his or her tax position or who may be subject to tax in a jurisdiction other
than the United Kingdom or the United States or the Cayman Islands should seek his or her
own professional advice.
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PLAN OF DISTRIBUTION
Subject to the terms and conditions of the placing agreement, the placing agent has
agreed to purchase from us 16,666,667 units at the offering price of $6.00 per unit less the
placing agent’s discount and commissions set forth on the cover page of this offering circular
(other than in respect of 4,166,667 units which are being offered to our sponsor and which the
placing agent has agreed to purchase from us at the initial offering price of $6.00 per unit
without deduction).
Number of
Units
Placing agent
Deutsche Bank Securities Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,666,667
Of the 16,666,667 units offered hereby, 12,500,000 units are being offered to New
Shareholders and 4,166,667 units are being offered to Hayground Cove, all at the initial
offering price of $6.00 per unit. We will receive the entire aggregate gross proceeds from the
units offered to Hayground Cove, and the placing agent will not receive any commission on
these units.
The placing agent will purchase 1,802,666 units in the offering for its own account.
The placing agreement provides that the obligation of the placing agent to purchase all of
the 16,666,667 units being offered is subject to certain conditions precedent.
The placing agent’s commission per share is equal to the offering price per unit less the
amount paid by the placing agent to us per unit. The placing agent’s commission is 7% of the
initial offering price. We have agreed to pay the placing agent the commission set forth below.
The placing agent will not receive any commission on the 4,166,667 units purchased by our
sponsor in this offering.
Offering price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Placing agent’s commission(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds before expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per Unit
Total(1)
$6.00
0.42
$5.58
$100,000,000
5,250,000
$ 94,750,000
(1) The total fees do not include the fair value of the purchase option we have agreed to sell to the placing agent,
which, based upon a Black-Scholes model, on the date of sale would be approximately $1,408,711 using an
expected life of five years, volatility of 37.1% and a risk-free interest rate of 5.04%.
(2) The placing agent has agreed to defer $1,500,000 of its commission, equal to 2% of the gross proceeds of the
12,500,000 units being offered other than to Hayground Cove, until the consummation of an initial business
combination. Upon the consummation of a business combination, such deferred commission will be released to
the placing agent out of the gross proceeds of this offering held in a trust account at JP Morgan Chase N.A.,
maintained by Continental Stock Transfer & Trust Company, acting as trustee. The placing agent will not be
entitled to any interest accrued on the deferred commission.
(3) There is no commission to the placing agent on the 4,166,667 units being purchased by Hayground Cove in this
offering for $25,000,000.
Upon the consummation of a business combination, the placing agent will be entitled to
receive that portion of the proceeds attributable to the placing agent’s deferred commission
held in the trust account. If we are unable to consummate a business combination and the
trustee is forced to liquidate the trust account, the placing agent has agreed that: (i) it will
forfeit any rights to or claims against such proceeds and (ii) the proceeds attributable to the
placing agent’s commission will be distributed on a pro-rata basis among the New
Shareholders and Hayground Cove in respect of the 4,166,667 units being purchased in this
offering along with any interest accrued thereon (net of taxes payable).
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Placing Agent Option
We have agreed to issue to the placing agent for $100, as additional compensation, up to
a total of 833,333 units at $7.50 per unit, with the warrants issued as part of such units being
exercisable at an exercise price of $6.25 per warrant. The option will become exercisable upon
the later of (i) the consummation of a Qualified Business Combination or (ii) if a business
combination that is not a Qualified Business Combination has occurred, one year after the
Admission Date (or, if extended by a majority of votes cast at a general meeting of ordinary
shareholders at which a quorum is present, by the Extended Date). This option expires four
years from the Admission Date. Additionally, the option may be transferred (i) to any family
member of an officer, director or shareholder of the placing agent (ii) to employees of the
placing agent, (iii) pursuant to a charitable donation and (iv) to any initial purchaser
participating in the offering and their bona fide officers or partners. The exercise price and
number of ordinary shares and warrants issuable upon exercise of the option may be
adjusted in certain circumstances, including an adjustment in the event of a share dividend, or
our recapitalization, reorganization, merger or consolidation. The time for exercise of the
option may also be accelerated if we redeem the outstanding warrants. We will apply for
admission to trading on AIM of any ordinary shares (but not warrants) underlying the units
issued pursuant to the exercise of this option.
Other Terms
Although we are not under any contractual obligation to engage the placing agent or
Deutsche Bank AG London, our nominated advisor, to provide any services for us after this
offering (other than Deutsche Bank AG London in its role as our nominated advisor), the
placing agent or Deutsche Bank AG London, our nominated advisor may, among other things,
introduce us to potential acquisition candidates or assist us in raising additional capital, as
needs may arise in the future. If the placing agent or nominated advisor provides any of these
services to us after this offering, we may pay the placing agent or nominated advisor fair and
reasonable fees that would be determined at that time in an arm’s-length negotiation.
Indemnification
We have agreed to indemnify the placing agent against some liabilities, including civil
liabilities under the Securities Act, or to contribute to payments the placing agent may be
required to make in this respect.
United Kingdom Financial Services and Markets Act (‘‘FSMA’’) restrictions for U.K. persons
Each of the company, Deutsche Bank AG London and the placing agent has confirmed
that: (i) it has not offered or sold, and prior to the date six months after the date of sale of the
ordinary shares and warrants will not offer or sell, any ordinary shares and warrants to
persons in the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of the
Prospectus Rules of the Financial Services Authority or FSA; (ii) it has complied and will
comply with all applicable provisions of the FSMA with respect to anything done by it in
relation to the ordinary shares and warrants in, from or otherwise involving the United
Kingdom; and (iii) it has only issued or passed on and will only issue and pass on in the
United Kingdom any document received by it in connection with the sale of the ordinary
shares and warrants to a person who is of a kind described in Articles 19, 47 and 49 of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or is a person to
whom such document may otherwise lawfully be issued or passed on.
Affiliation of Nominated Advisor and Placing Agent
A reference to Deutsche Bank AG London, our nominated advisor, is a reference to
Deutsche Bank AG a corporation domiciled in Frankfurt am Main, Germany, operating in the
United Kingdom under branch registration number BR000005, acting through its London
branch at 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank Securities Inc., our
placing agent, is a wholly owned subsidiary of Deutsche Bank AG.
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CAYMAN ISLANDS LAW
Comparison of Cayman Islands Law to Delaware Law
The Companies Law is modelled on English statute but does not follow many of the
recent English statutory amendments or enactments. In addition, the Companies Law differs
from laws applicable to United States corporations and their shareholders. As a Cayman
Islands exempted company, we are governed by the terms of the Companies Law, the terms
of our memorandum and articles of association and common law as it applies in the Cayman
Islands.
For comparative purposes, the following is a summary of certain of the differences which
we regard as significant between the provisions of the Companies Law applicable to us and
our shareholders and the laws applicable to companies incorporated in the State of Delaware
and their shareholders:
Shareholders’ rights
The rights of shareholders to take action against our directors, actions by minority
shareholders and the fiduciary responsibilities of our directors are, to a large extent, governed
by common law as applied in the Cayman Islands. Such common law is derived, in part, from
comparatively limited judicial precedent in the Cayman Islands as well as from judicial
precedent in common law matters in the courts of England and Wales and elsewhere in the
Commonwealth, although the decisions of such courts are persuasive only and not binding
upon the courts of the Cayman Islands. In particular, the Cayman Islands has a less developed
body of securities laws as compared to the State of Delaware, which has a fully developed
and judicially interpreted body of corporate and securities laws. In addition, our Cayman
Islands legal counsel is not aware of a significant number of reported class or derivative
actions having been brought before the courts of the Cayman Islands, whereas such actions
are ordinarily available in the courts of the State of Delaware. Under Cayman Islands law, we
would be the named plaintiff in actions against the directors and minority shareholders would
not generally be entitled to bring derivative actions. However, there is judicial precedent from
the courts of England and Wales which, though not binding, would be persuasive in an
argument that there are exceptions to the preceding general principle including when:
• a company acts or proposes to act illegally;
• the act complained of required a special resolution to be passed by the shareholders
which was not obtained; and
• those who control the company are perpetrating a fraud on the minority.
Directors’ duties
Under the laws of the State of Delaware, a director of a Delaware corporation has a
fiduciary duty to the corporation and to its shareholders. Such duty has two components, the
duty of care and the duty of loyalty. The duty of care requires that a director act in good faith,
with the care that an ordinary prudent person would exercise under similar circumstances.
Under this duty, a director must inform himself of, and disclose to shareholders, all material
information reasonably available regarding a significant transaction. The duty of loyalty
requires that a director act in a manner he reasonably believes to be in the best interests of
the corporation. He must not use his corporate position for personal gain or advantage. This
duty prohibits self-dealing by a director and mandates that the best interest of the corporation
and its shareholders take precedence over any interest possessed by the director, officer or
controlling shareholder and not shares by the shareholders generally. In general, actions of a
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director are presumed to have been made on an informed basis, in good faith and in the
honest belief that the action taken was in the best interests of the corporation. However, this
presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should
evidence be presented concerning a transaction by a director, a director must prove the
procedural fairness of the transaction, and that the transaction was of fair value to the
corporation.
The duties of a director under Cayman Islands law are divided into duties of skill and care
and fiduciary duties. Such fiduciary duties are owed to the company only and are constituted
by the duty to act in good faith in what they consider to be the best interests of the company,
the duty to exercise the powers vested in them for the purpose for which they were conferred
and not for any collateral purpose, the duty not to fetter his future discretion in the exercise of
any of the powers vested in him and the duty to avoid any conflict between the interests of
the company and his personal interests. The duty of skill and care was generally considered
to require that a director exhibit the skill that he actually possesses in exercising his powers
as a director. However, although not yet decided upon in any reported case before the courts
of the Cayman Islands, recent judicial authority from the courts in England and Wales and
elsewhere in the Commonwealth have established precedent which is very persuasive in the
courts of the Cayman Islands that would apply a more objective and higher standard of skill
and care on directors.
The Companies Law imposes various duties on the officers of a company with respect to
certain matters of management and administration of the company. The Companies Law
imposes fines on persons who fail to satisfy those requirements or on the company itself.
However, in many circumstances, an individual is only liable if he is knowingly guilty of
default or knowingly and wilfully authorizes or permits the default. In comparison, under the
laws of the State of Delaware, the business and affairs of a corporation are managed by or
under the direction of its board of directors. In exercising their powers, directors are charged
with the fiduciary duty of care noted above to protect the interests of the corporation and the
fiduciary duty of loyalty to act in the best interests of its shareholders. In addition, under
Delaware law, a party challenging the propriety of a decision of the directors bears the burden
of rebutting the applicability of the presumption afforded to the directors by the ‘‘business
judgement rule’’. If such presumption is not rebutted, the business judgement rule protects
the directors and their decisions, and their business judgements will not be second guessed. If
the presumption is rebutted, the directors bear the burden of demonstrating the entire
fairness of the relevant transaction. Notwithstanding the foregoing, Delaware courts subject
directors’ conduct to enhanced scrutiny in respect of defensive actions taken in response to a
threat to corporate control an approval of a transaction resulting in a sale of control of the
corporation.
Mergers and similar arrangements
Cayman Islands law does not provide for mergers, as that expression is understood under
the laws of the State of Delaware. However, there are statutory provisions that facilitate the
reconstruction and amalgamation of companies, provided that the arrangement is approved
by a majority in number of each class of shareholders and creditors with whom the
arrangement is to be made and who must, in addition, represent at least three quarters in
value of each such class of shareholders or creditors, as the case may be, that are present
and voting either in person or by proxy at a meeting, or meetings, convened for that purpose.
The convening of the meetings and subsequently the arrangement, must be sanctioned by the
Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to
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the court the view that the transaction ought not to be approved, the court can be expected to
approve the arrangement if it determines that:
• the statutory provisions as to the dual majority vote have been met;
• the shareholders have been fairly represented at the meeting in question;
• the arrangement is such that a businessman would reasonably approve; and
• the arrangement is not one that would more properly be sanctioned under some other
provision of the Companies Law.
When a take-over offer is made and accepted (within four months) by holders of not less
than 90.0% of the shares affected, the offeror may, within a two month period, require the
holders of the remaining shares to transfer such shares on the terms of the offer. An objection
can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless
there is evidence of fraud, bad faith or collusion. If the arrangement and reconstruction is thus
approved, the dissenting shareholder would have no rights comparable to appraisal rights,
which would otherwise ordinarily be available to dissenting shareholders of a Delaware
corporation, providing rights to receive payment in cash for the judicially determined value of
the shares.
Shareholder meetings, voting and written consents
Under the Delaware General Corporation Law, or the DGCL, a shareholder has the right to
put any proposal before the annual meeting of shareholders provided that it complies with
the notice provisions in the corporation’s governing documents. A special meeting may be
called by the board of directors or any other person authorised to do so in the governing
documents, but shareholders may be precluded from calling special meetings. Cayman
Islands law and our articles of association allow our shareholders holding not less than 10%
of the paid up voting share capital to requisition a shareholders’ meeting. As an exempted
company, we are not obliged by law to call an annual shareholders’ meeting.
Under the DGCL, cumulative voting for elections of directors is not permitted unless the
corporation’s certificate of incorporation specifically provides for it. Cumulative voting
potentially facilitates the representation of minority shareholders on a board of directors since
it permits the minority shareholder to cast all the votes to which the shareholder is entitled on
a single director, which increases the shareholder’s voting power with respect to electing such
director. As permitted under Cayman Islands law, our articles of association do not provide for
cumulative voting. As a result, our shareholders are not afforded any less protections or rights
on this issue than shareholders of a Delaware corporation.
Under the DGCL, a corporation may eliminate the right of shareholders to act by written
consent by amendment to its certificate of incorporation. Cayman Islands law and our articles
of association provide that shareholders may approve corporate matters by way of a
unanimous written resolution signed by or on behalf of each shareholder who would have
been entitled to vote on such matter at a general meeting without a meeting being held.
Disclosure of interests in shares and warrants
Our articles of association and the terms of issue of the warrants provide that (to the
extent permitted by applicable law) (i) if the aggregate amount of shares or warrants in which
a person is interested (A) exceeds 3% by nominal value of our entire issued shares or
warrants respectively, or (B) changes from an aggregate amount which exceeded 3% by
nominal value of our then issued shares or warrants so as to increase or decrease through
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any single percentage then (in either case) such person shall notify us (within the period and
including the particulars required by us), or (ii) on written request by us, a registered holder
of shares or warrants is obliged to notify us (within the period and including the particulars
required by us) of any person interested in such shares or warrants; unless otherwise directed
by the Board, for so long as a person is in default of his obligations under clauses (i) or (ii) he
shall not be entitled to vote at any of our meetings nor receive dividends in respect of his
shares, and shall not be entitled to exercise his warrants.
For the purposes of clauses (i) and (ii) above, ‘‘interest’’ includes an interest of any kind
(whether conditional or absolute) whatsoever in shares or warrants; accordingly, there are to
be disregarded any restraints or restrictions to which the exercise of any right attached to the
interest is or may be subject, including: a joint interest; a beneficial interest; a contractual
right to purchase; the right to exercise any right conferred by or the right to control the
exercise of such right in shares or warrants; or the right to call for delivery of, the right to
acquire or the obligation to take an interest in shares or warrants. Further, a person is entitled
to exercise or control the exercise of any right conferred by the holding of shares or warrants
if he has a right (whether subject to conditions or not) the exercise of which would make him
so entitled, or is under an obligation (whether so subject or not) the fulfillment of which
would make him so entitled.
Removal of directors
Under the DGCL, a director of a corporation with a classified board may be removed only
for cause with the approval of a majority of the outstanding shares entitled to vote, unless the
certificate of incorporation provides otherwise. Under our articles of association, directors can
be removed with cause or by a majority of votes cast at a general meeting of ordinary
shareholders at which a quorum is present, or the unanimous written resolution or all
shareholders.
Transactions with interested shareholders
The DGCL contains a business combination statute applicable to Delaware public
corporations whereby, unless the corporation has specifically elected not to be governed by
such statute by amendment to its certificate of incorporation, it is prohibited from engaging in
certain business combinations with an ‘‘interested shareholder’’ for three years following the
date that such person becomes an interested shareholder. An interested shareholder generally
is a person or group who or which owns or owned 15% or more of the target’s outstanding
voting stock within the past three years. This has the effect of limiting the ability of a potential
acquirer to make a two-tiered bid for the target in which all shareholders would not be treated
equally. The statute does not apply if, among other things, prior to the date on which such
shareholder becomes an interested shareholder, the board of directors approves either the
business combination or the transaction which resulted in the person becoming an interested
shareholder. This encourages any potential acquirer of a Delaware public corporation to
negotiate the terms of any acquisition transaction with the target’s board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of
the types of protections afforded by the Delaware business combination statute. However,
although Cayman Islands law does not regulate transactions between a company and its
significant shareholders, it does provide that such transactions must be entered into bona fide
in the best interests of the company and not with the effect of constituting a fraud on the
minority shareholders.
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Dissolution; Winding up
Under the DGCL, once the board of directors approves a proposal to dissolve, dissolution
must also be approved by shareholders holding a majority of the total voting power of the
corporation. Only if the dissolution is initiated by the board of directors may it be entitled to
vote thereon. Delaware law allows a Delaware corporation to include in its certificate of
incorporation a supermajority voting requirement in connection with dissolutions initiated by
the board. Under the Companies Law and our articles of association, our company may be
voluntarily dissolved, liquidated or wound up only if two-thirds of the votes cast at a general
meeting of ordinary shareholders at which a quorum is present vote in favor or by the
unanimous written resolution of all ordinary shareholders. In addition, our company may be
wound up by the Grand Court of the Cayman Islands if the opportunity is unable to pay its
debts or if the court is of the opinion that it is just and equitable that our company is wound
up.
Variation of rights of shares
Under the DGCL, a corporation may vary the rights of a class of shares with the approval
of a majority of the outstanding shares of such class, unless the certificate of incorporation
provides otherwise. Under Cayman Islands law and our articles of association, if our share
capital is divided into more than one class of shares, we may vary the rights attached to any
class only with the vote at a class meeting of holders of two-thirds of the shares of such class
or unanimous written resolution, provided that if such variation has the effect of altering our
articles of association, the variation will also need to be approved in the manner described
under the heading ‘‘Amendment of governing documents’’.
Amendment of governing documents
Under the DGCL, a corporation’s governing documents may be amended with the
approval of a majority of the outstanding shares entitled to vote, unless the certificate of
incorporation provides otherwise. As permitted by Cayman Islands law, our memorandum and
articles of association may only be amended if two-thirds of the votes cast at a general
meeting of ordinary shareholders at which a quorum is present vote in favor or by the
unanimous written resolution of all ordinary shareholders.
Indemnification of directors and executive officers and limitation of liability
Cayman Islands law does not limit the extent to which a company’s articles of association
may provide for indemnification of officers and directors, except to the extent any such
provision may be held by the Cayman Islands court to be contrary to public policy, such as to
provide indemnification against civil fraud or the consequences of committing a crime. Our
memorandum and articles of association permit indemnification of officers and directors for
losses, damages, costs and expenses incurred in their capacities as such unless such losses or
damages arise from dishonesty, fraud, gross negligence or willful default of such directors or
officers. This standard of conduct is generally the same as permitted under the DGCL to a
Delaware corporation.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to our directors, officers or persons controlling us under the foregoing provisions, we have
been informed that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable as a matter of United States
law.
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Rights of non-resident or foreign shareholders
There are no limitations imposed by our memorandum and articles of association on the
rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares.
In addition, there are no provisions in our memorandum and articles of association governing
the ownership threshold above which shareholder ownership must be disclosed.
Inspection of books and records
Holders of our ordinary shares will have no general right under Cayman Islands law to
inspect or obtain copies of our list of shareholders or corporate records except our
memorandum and articles of association. However, we will provide our shareholders with
annual audited consolidated financial statements.
We have been advised that there is uncertainty as to whether the courts of the Cayman
Islands or India would:
• recognize or enforce judgements of United States courts obtained against us or our
directors or officers predicated upon the civil liability provisions of the securities laws of
the United States or any state in the United States; or
entertain original actions brought in the Cayman Islands or India against us or our directors or
officers predicated upon the securities laws of the United States or any state in the United
States.
Mutual Funds Law
We are not a ‘‘mutual fund’’ within the meaning of the Mutual Funds Law (Revised) of the
Cayman Islands and accordingly are not regulated under that law.
Anti-Money Laundering
In order to comply with applicable regulations aimed at the prevention of money
laundering and/or anti-terrorism initiatives, we, or Capita Registrars on our behalf, will require
verification of identity and source of funds from all prospective investors. Depending on the
circumstances of each subscription, it may not be necessary to obtain full documentary
evidence of the identity and source of funds.
We, or Capita Registrars on our behalf, reserve the right to request such information as is
necessary to verify the identity and source of funds of a prospective investor. We, or Capita
Registrars on our behalf, also reserve the right to request such verification evidence in respect
of a transferee of units, shares or warrants. In the event of delay or failure by the prospective
investor or transferee to produce any information required for verification purposes, we, or
Capita Registrars on our behalf, may refuse to accept the application or refuse to register the
relevant transfer and (in the case of a subscription for units) any funds received may be
returned without interest to the account from which the monies were originally debited.
We, or Capita Registrars on our behalf, also reserve the right to refuse to make any
distribution to a shareholder if any of our directors or service providers suspects or is advised
that the payment of a distribution to such shareholder might result in a breach or violation of
any applicable anti-money laundering or other laws or regulations by any person in any
relevant jurisdiction, or such refusal is considered necessary or appropriate to ensure the
compliance by us, our directors or service providers with any such laws or regulations in any
relevant jurisdiction.
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If, as a result of any information or other matter which comes to his attention, any person
resident in the Cayman Islands (including us, our directors and service providers) knows or
suspects that another person is engaged in money laundering, such person is required to
report such information or other matter pursuant to The Proceeds of Criminal Conduct Law
(Revised) of the Cayman Islands and such report shall not be treated as a breach of any
restriction upon the disclosure of information imposed by law or otherwise.
By subscribing, applicants consent to the disclosure by us or Capita Registrars of any
information about them to regulators and others upon request in connection with money
laundering and similar matters both in the Cayman Islands and in other jurisdictions.
Compulsory Acquisition
Shares in our capital may be subject to compulsory acquisition in the circumstances set
out in section 88 of the Companies Law. Section 88 provides that, in certain circumstances
where an offer to acquire shares of a company has been approved by 90 per cent or more (by
value) of those shares, the offeror is entitled to compulsorily acquire the remaining shares.
Section 88 may not apply in all circumstances and is subject to compliance by the offeror with
the procedural requirements of section 88. The Grand Court of the Cayman Islands may, on an
application made by a dissenting shareholder, make orders which interfere with or prevent the
acquisition by the offeror of the shares of a dissenting shareholder.
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TRANSFER RESTRICTIONS
General
The ordinary shares and warrants offered hereby have not been registered under the
Securities Act. The ordinary shares and warrants may not be offered or sold within the United
States or to U.S. Persons, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Hedging transactions involving
the ordinary shares or warrants may not be conducted unless in compliance with the
Securities Act.
Subject to the applicable transfer restrictions described herein, the ordinary shares and
warrants that comprise the units offered hereby are immediately separable, and the units will
not independently constitute a transferable security. For the avoidance of doubt, although
holders may choose to transfer ordinary shares and warrants in the same proportion as those
that constitute units, the units will not be evidenced by certificates.
The ordinary shares and warrants have not been registered under the Securities Act and
are ‘‘restricted securities’’ as defined in Rule 144 promulgated under the Securities Act. A
purchaser of such securities may not offer, sell, pledge or otherwise transfer such securities in
the United States or to, or for the account or benefit of, any U.S. Person, except (a) pursuant
to an effective registration statement under the Securities Act, (b) to a person whom the seller
reasonably believes is a qualified institutional buyer in a transaction meeting the requirements
of Rule 144A under the Securities Act, (c) pursuant to an exemption from the registration
requirements of the Securities Act provided by Rule 144 thereunder (if available), or (d) in
certain transactions specified in Regulation S. The selling restrictions set forth in the
preceding sentence will continue to be applicable to the ordinary shares and warrants
notwithstanding the expiration of the Compliance Period described below under ‘‘Category 3
Offering—Compliance Period.’’ Pursuant to the company’s bylaws, the company will be
required to refuse to register any transfer of its securities not made in accordance with the
provisions of Rule 144A, Rule 144 (if available), Regulation S, or pursuant to registration under
the Securities Act or another exemption from registration under the Securities Act.
Exercise of Warrants
Each purchaser of warrants (regardless of whether such purchaser acquired such warrants
in a transaction pursuant to Rule 144A, Regulation D or Regulation S), upon exercise of each
warrant, must:
(a) provide the company with a written certification that it is neither within the United
States nor a U.S. Person and the warrant is not being exercised on behalf of a U.S.
Person; or
(b) provide the company with a written opinion of counsel to the effect that the Warrant
and the securities delivered upon exercise thereof have been registered under the
Securities Act or are exempt from registration thereunder.
Each purchaser of warrants regardless of whether such purchaser acquired such
warrants in a transaction pursuant to Rule 144A, Regulation D, or Regulation S) upon
exercise of each warrant, must receive certificated securities containing the legend
described in item (c) under ‘‘Category 3 Offering—Compliance Period.’’
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Representations and Warranties of Each Purchaser
Each purchaser of securities will be deemed to have represented and agreed as follows:
(1) the purchaser (A)(i) is a qualified institutional buyer pursuant to Rule 144A (subject to
certain limited exceptions in the case of the initial purchase only), (ii) is aware that
the sale to it is being made in reliance on Rule 144A (or, in the case of the placing
agent only, in reliance on Regulation D) and (iii) is acquiring the securities for its own
account or for the account of a qualified institutional buyer pursuant to Rule 144A or
(B) is not a U.S. Person and is purchasing the securities in an offshore transaction
pursuant to Regulation S;
(2) if the purchaser is in the United Kingdom or is a U.K. person, the purchaser is either
(a) a ‘‘qualified investor’’ within the meaning of section 86(7) of the FSMA or is
otherwise permitted by law to have the offer of the units made to it without requiring
the publication and registration of a prospectus under the FSMA; or (b) a person with
professional experience within the meaning of Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005; or (c) a person falling within
Article 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005;
(3) the purchaser understands that the securities are being offered in a transaction not
involving any public offering within the meaning of the Securities Act, that the
securities have not been and, except as described in this confidential offering circular,
will not be registered under the Securities Act and that if in the future it decides to
offer, resell, pledge or otherwise transfer any such securities, such securities may be
offered, resold, pledged or otherwise transferred only (i) in the United States to a
person whom the seller reasonably believes is a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, (ii) outside the United States in a
transaction complying with the provisions of Rule 903 or Rule 904 under the
Securities Act, (iii) pursuant to an exemption from registration under the Securities
Act provided by Rule 144 (if available), or (iv) pursuant to an effective registration
statement under the Securities Act, in each of cases (i) through (iv) in accordance
with any applicable securities laws of any state of the United States. No
representation can be made as to the availability of the exemption provided by
Rule 144 for resale of the securities;
(4) in addition to the restrictions set forth in clause (3) above, the purchaser understands
and agrees that, if in the future it decides to resell, pledge or otherwise transfer any
securities or any beneficial interests in any securities prior to the date which is one
year after the later of (1) the date when the ordinary shares or warrants are first
offered to persons (other than distributors) pursuant to Regulation S and (2) the date
of the listing of the shares on AIM, it will do so only (i) in compliance with the
restrictions set forth under ‘‘Category 3 Offering—Compliance Period’’ below,
(ii) pursuant to an effective registration statement under the Securities Act, or (iii) in
accordance with the provisions of Rule 144A, Rule 144 (if available) or Regulation S,
and in each of such cases in accordance with any applicable securities law of any
state of the United States;
(5) the purchaser agrees to and each subsequent holder is required to, notify any
purchaser of the ordinary shares or warrants from it of the resale restrictions referred
to in paragraphs (2) and (3) above, if then applicable;
109
(6) the purchaser acknowledges that, prior to any proposed transfer of ordinary shares or
warrants other than pursuant to an effective registration statement, the transferee of
ordinary shares or warrants may be required to provide certifications and other
documentation relating to the non-U.S. Person status of such transferee;
(7) the purchaser acknowledges that the company, Deutsche Bank Securities Inc. and
others will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and warranties and agrees that if any such acknowledgement,
representation or warranty deemed to have been made by virtue of its purchase of
ordinary shares or warrants is no longer accurate, it will promptly notify the company
and Deutsche Bank Securities Inc.;
(8) the purchaser acknowledges that neither the company, Deutsche Bank Securities Inc.,
nor any person representing any of them, has made any representation to it with
respect to the company, or the offering, other than the information contained in this
confidential offering circular, which has been delivered to the purchaser and upon
which the purchaser is relying in making its investment decision with respect to the
securities offered hereby. The purchaser has had access to such financial and other
information concerning us and the securities offered hereby, including an opportunity
to ask questions of and request information from the company and Deutsche Bank
Securities Inc.;
(9) the purchaser is purchasing the securities offered hereby for its own account, or for
one or more investor accounts for which it is acting as fiduciary or agent, in each
case, not with a view to, or for offer or sale in connection with, any distribution
thereof in violation of the Securities Act, subject to any requirement of law that the
disposition of its property or the property of such investor account or accounts be at
all times within its or their control and subject to its or their ability to resell, reoffer or
otherwise transfer such securities pursuant to Rule 144A, Regulation S or Rule 144 (if
available) under the Securities Act;
(10) the purchaser understands that the securities offered hereby, as ‘‘Restricted
Securities’’ under Rule 144 of the Securities Act, will, until the expiration of the
applicable holding period with respect to the securities set forth in Rule 144 of the
Securities Act, and the expiration of the compliance period described under
‘‘Category 3 Offering—Compliance Period’’ and ‘‘Exercise of Warrants’’, bear the
legends described under ‘‘Category 3 Offering—’’Exercise of Warrants’’, unless the
company determines otherwise in compliance with applicable law; and
(11) the purchaser acknowledges that the ordinary shares and warrants, whether
purchased pursuant to Rule 144A of the Securities Act, Regulation D of the Securities
Act or pursuant to Regulation S of the Securities Act, will bear a restrictive legend to
the following effect, unless the company determines otherwise in compliance with
applicable law:
PRIOR TO INVESTING IN THE SECURITIES OR CONDUCTING ANY TRANSACTIONS IN THE
SECURITIES, INVESTORS ARE ADVISED TO CONSULT PROFESSIONAL ADVISORS
REGARDING THE RESTRICTIONS ON TRANSFER SUMMARIZED BELOW AND ANY OTHER
RESTRICTIONS.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE ‘‘SECURITIES ACT’’), AND IS A RESTRICTED SECURITY (AS DEFINED IN
RULE 144 UNDER THE SECURITIES ACT). THIS SECURITY MAY NOT BE OFFERED, SOLD OR
110
OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT
BE CONDUCTED DIRECTLY OR INDIRECTLY, UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS
SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(II) OUTSIDE OF THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH RULE 903 or 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN
(A) ABOVE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER
RESTRICTIONS WHICH REQUIRE THAT IN ADDITION TO ANY CERTIFICATIONS REQUIRED
FROM A TRANSFEROR AS SET FORTH ON THE REVERSE OF THIS CERTIFICATE, PRIOR TO
THE EXPIRATION OF A ONE-YEAR DISTRIBUTION COMPLIANCE PERIOD, THE TRANSFEREE
CERTIFIES AS TO WHETHER OR NOT IT IS A U.S. PERSON WITHIN THE MEANING OF
REGULATION S AND PROVIDES CERTAIN OTHER CERTIFICATIONS AND AGREEMENTS.
PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS TO
BE EFFECTED IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S
UNDER THE SECURITIES ACT OR IS EXEMPT FROM REGISTRATION.
In addition, each purchaser of warrants will be deemed to have represented and agreed
as follows:
(1) the purchaser understands that ordinary shares issuable upon exercise of the
warrants is, subject to certain exceptions, not being offered in the United States or to
U.S. Persons and that warrant holders will be required, as a condition precedent to
the exercise of any warrants, to comply with the requirements set forth under
‘‘Exercise of Warrants’’.
(2) the purchaser understands that warrant holders located in the United States or who
are U.S. Persons may be permitted to exercise their warrants for ordinary shares if
the company reasonably believes that such exercise does not require registration
under the Securities Act in reliance upon such warrant holder (i) certifying that it is a
qualified institutional buyer pursuant to Rule 144A and understands that the ordinary
shares to be issued upon exercise of such warrant has not been registered under the
Securities Act, (ii) supplying an opinion of counsel that the warrants and the ordinary
shares issuable upon exercise are exempt from registration under the Securities Act
and (iii) agreeing that (x) such ordinary shares will be subject to certain restrictions
on transfer as set forth above for the ordinary shares and warrants, (y) a new holding
period for the ordinary shares issued upon exchange of such warrant, for purposes of
111
Rule 144 under the Securities Act, will commence upon issuance of such ordinary
shares and (z) its acquisition of ordinary shares was not solicited by any form of
general solicitation or general advertising and that it has been given access to
information sufficient to permit it to make an informed decision as to whether to
invest in the ordinary shares. The company may, in its sole discretion, permit the
exercise of warrants in certain limited circumstances in accordance with their terms if
the requirements of other exemptions under the Securities Act and other applicable
laws can be satisfied.
Except as described in this offering circular, we are not required to register the securities
under the Securities Act, or the Exchange Act. In addition, it is doubtful that sales may be
made under Rule 144 until two years after the closing when the securities become eligible for
sale under Rule 144(k) if they are not held by affiliates. Moreover, investors should be aware
that the Rule 144 holding period for ordinary shares acquired upon exercise of the warrants
for cash would begin to run from the date of such exercise. Accordingly, we cannot assure
you that a liquid U.S. trading market for the securities will ever develop.
ERISA Transfer Restrictions
The warrants and ordinary shares may not be sold or transferred to, and each purchaser
by its purchase of the warrants or ordinary shares will be deemed to have represented and
covenanted that it is not acquiring the units or the underlying warrants or ordinary shares for
or on behalf of, and will not transfer the warrants or ordinary shares to, any employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (‘‘ERISA’’) subject to Title I of ERISA or any plan as defined in Section 4975 of the
Code or any entity deemed to hold assets of any such plans, except that such purchase will
be permitted:
(i) to the extent such purchase is made by or on behalf of a bank collective investment
fund maintained by the purchaser in which no plan (together with any other plans
maintained by the same employer or employee organization) has an interest in excess
of 10% of the total assets in such collective investment fund, and the other applicable
conditions of Prohibited Transaction Class Exemption 91-38 issued by the United
States Department of Labor are satisfied;
(ii) to the extent such purchase is made by or on behalf of an insurance company pooled
separate account maintained by the purchaser in which no plan (together with any
other plans maintained by the same employer or employee organization) has an
interest in excess of 10% of the total of all assets in such pooled separate account,
and the other applicable conditions of Prohibited Transaction Class Exemption 90-1
issued by the United States Department of Labor are satisfied;
(iii) to the extent such purchase is made on behalf of a plan by (A) an investment advisor
registered under the Investment Advisors Act of 1940, as amended (the ‘‘Investment
Advisors Act’’), that had as of the last day of its most recent fiscal year total assets
under its management and control in excess of $85.0 million and had shareholders’
or partners’ equity in excess of $1,000,000, as shown in its most recent balance sheet
prepared in accordance with generally accepted accounting principles within the two
years immediately preceding the purchase, or (B) a bank as defined in
Section 202(a)(2) of the Investment Advisors Act with equity capital in excess of
$1.0 million as of the last day of its most recent fiscal year, or (C) an insurance
company which is qualified under the laws of more than one state to manage,
acquire or dispose of any assets of a pension or welfare plan, which insurance
112
company has as of the last of its most recent fiscal year, net worth in excess of
$1.0 million and which is subject to supervision and examination by a State authority
having supervision over insurance companies and, in any case, such investment
advisor, bank or insurance company is otherwise a qualified professional asset
manager, as such term is used in Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor, and the assets of such plan when
combined with the assets of other plans established or maintained by the same
employer (or affiliate thereof) or employee organization and managed by such
investment advisor, bank or insurance company, do not represent more than 20% of
the total client assets managed by such investment advisor, bank or insurance
company at the time of the transaction, and the other applicable conditions of such
exemption are otherwise satisfied;
(iv) to the extent such plan is a governmental plan (as defined in Section 3(32) of ERISA)
which is not subject to the provisions of Title I of ERISA or Section 401 of the Code;
(v) to the extent such purchase is made by or on behalf of an insurance company using
the assets of its general account, so long as the reserves and liabilities for the general
account contracts held by or on behalf of any plan, together with any other plans
maintained by the same employer (or its affiliates) or employee organization, do not
exceed 10% of the total reserves and liabilities of the insurance company general
account (exclusive of separate account liabilities), plus surplus as set forth in the
National Association of Insurance Commissioners Annual Statement filed with the
state of domicile of the insurer, in accordance with Prohibited Transaction Class
Exemption 95 60 issued by the United States Department of Labor, and the other
applicable conditions of such exemption and otherwise satisfied;
(vi) to the extent such purchase is made by an in-house asset manager within the
meaning of Part IV(a) of Prohibited Transaction Class Exemption 96 23 issued by the
United States Department of Labor, so long as such manager has made or properly
authorized the decision for such plan to purchase ordinary shares and warrants,
under circumstances such that Prohibited Transaction Class Exemption 96-23 is
applicable to the purchase and holding of such ordinary shares and warrants; or
(vii) to the extent such purchase will not otherwise give rise to a transaction described in
Section 406 or ERISA or Section 4975(c)(1) of the Code for which a statutory or
administrative exemption is unavailable.
Category 3 Offering—Compliance Period
The ordinary shares and warrants offered under Regulation S hereby are subject to the
conditions listed under section 903(b)(3), or Category 3, of Regulation S of the Securities Act.
Under Category 3, Offering Restrictions (as defined under Regulation S) must be in place in
connection with the offering and additional restrictions are imposed on resales of the ordinary
shares and warrants as described below. All ordinary shares and warrants are subject to these
restrictions, regardless of whether the purchaser acquired the ordinary shares or warrants in a
transaction pursuant to Rule 144A or in a transaction pursuant to Regulation S.
Prior to one year after the later of (1) the time when the ordinary shares or warrants are
first offered to persons other than distributors in reliance upon Regulation S or (2) the date of
the listing of the shares on AIM (the ‘‘Compliance Period’’):
(a) every purchaser of ordinary shares or warrants other than a distributor will be
required to certify that it is not a U.S. Person and is not acquiring the securities for
113
the account or benefit of any U.S. Person or is a U.S. Person who purchased
securities in a transaction that did not require registration under the Securities Act;
(b) every purchaser of the ordinary shares or warrants will be required to agree to resell
such ordinary shares or warrants only in accordance with the provisions of
Rule 144A, Rule 144 (if available) or Regulation S, or pursuant to registration under
the Securities Act, and will be required to agree to not engage in hedging
transactions with regard to the securities unless in compliance with the Securities Act;
(c) the ordinary shares and warrants will (i) contain a legend to the effect that transfer is
prohibited except in accordance with the restrictions set forth in (b) above during the
Compliance Period, and (ii) with respect to the warrants (notwithstanding the
expiration of the Compliance Period), and pursuant to Rule 903(b)(5)(i), contain a
legend stating that the warrants and securities to be issued upon their exercise have
not been registered under the Securities Act and that the warrant may not be
exercised by or on behalf of any U.S. Person without an opinion, the contents of
which are described in item (b) of ‘‘Exercise of Warrants’’ below;
(d) each distributor selling securities to a distributor, a dealer (as defined in
Section 2(a)(12) of the Securities Act), or a person receiving a selling concession, fee
or other remuneration will be required to send a confirmation or other notice to the
purchaser stating that the purchaser is subject to the same restrictions on offers and
sales that apply to a distributor; and
(e) pursuant to the company’s bylaws, the company will be required to refuse to register
any transfer of its securities not made in accordance with the provisions of Rule 144A,
Rule 144 (if available) or Regulation S, or pursuant to registration under the Securities
Act.
LEGAL MATTERS
The validity of the securities offered in this offering circular is being passed upon for us
by Ogier, our Cayman Islands counsel as to Cayman Islands law. Proskauer Rose LLP, New
York, New York, has acted as our counsel as to certain matters of U.S. law, and Travers Smith,
London, United Kingdom, has acted as our counsel as to certain matters of English law.
Bingham McCutchen LLP, New York, New York and London, United Kingdom, is acting as
counsel for the placing agent in this offering.
INDEPENDENT AUDITORS
The financial statements of India Hospitality Corp., as of May 31, 2006, and for the period
from May 12, 2006 (inception) through May 31, 2006, appearing in this offering circular have
been audited by Ernst & Young LLP, independent auditor, as set forth in their report thereon
appearing elsewhere herein and are included in reliance upon such report given on the
authority of such firm as experts in auditing and accounting.
114
INDIA HOSPITALITY CORP.
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-2
INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-3
STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-5
CASH FLOW STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-6
NOTES TO THE FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-7
F-1
INDEPENDENT AUDITORS’ REPORT TO THE DIRECTOR OF
INDIA HOSPITALITY CORP. IN RELATION TO THE NON-STATUTORY AUDIT FOR THE
PERIOD FROM INCORPORATION ON 12 MAY 2006 TO 31 MAY 2006
We have audited the accompanying special purpose financial statements (‘‘financial
statements’’) of India Hospitality Corp. (‘‘the company’’) for the period from incorporation to
31 May 2006 which comprise the income statement, statement of changes in equity, balance
sheet, cash flow statement, and the related notes 1 to 10. These financial statements have
been prepared on the basis of the accounting policies set out therein. These financial
statements are the responsibility of the company’s director. Our responsibility is to express an
opinion on these financial statements based on our audit.
This report is made solely to the company’s director. Our work has been undertaken so
that we might state to the company’s director those matters we are required under
International Standards on Auditing (UK and Ireland) to state to them in an auditors’ report
and for no other purpose. To the fullest extent required by the law, we do not accept or
assume responsibility to anyone other than the company and the company’s director, for our
audit work, for this report, or for the opinions we have formed.
We conducted our audit in accordance with International Standards on Auditing (UK and
Ireland). Those Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared solely for the records of India
Hospitality Corp.
In our opinion, the financial statements give a true and fair view of the financial position
of the company as of 31 May 2006 and of the results of its financial performance, changes in
equity and its cash flows for the period then ended in accordance with International Financial
Reporting Standards.
Ernst & Young LLP
London
16 June 2006
F-2
INCOME STATEMENT
Note
Legal expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,000)
4
Loss for the period attributable to equity holders . . . . . . . . . . . . . . . .
Loss per share
Basic and diluted loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . .
F-3
For the period from
incorporation to
31 May 2006 ($)
(6,000)
—
(6,000)
Note
For the period from
incorporation to
31 May 2006
$ per share
5
(0)
STATEMENT OF CHANGES IN EQUITY
Share capital($)
Retained
earnings($)
Total
equity($)
As at incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
(6,000)
—
(6,000)
Total income and expense for the period . . . . . . . . . . . . . .
Issue of share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
6,250
(6,000)
—
(6,000)
6,250
As at 31 May 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
(6,000)
F-4
250
BALANCE SHEET
Note
31 May
2006($)
ASSETS
Current assets
Cash at bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
EQUITY & LIABILITIES
Equity
Called up share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
Loans due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
(6,000)
250
7
6,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,000
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
F-5
CASH FLOW STATEMENT
For the period from
incorporation to
31 May 2006($)
Operating activities
Loss before changes in working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,000)
Cash flows from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,000)
Financing activities
Issue of share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
6,000
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,250
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
Cash at incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Cash at 31 May 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,250
F-6
NOTES TO THE FINANCIAL INFORMATION
1 COMPANY INFORMATION AND BASIS OF PREPARATION
Company information
The Company was incorporated in the Cayman Islands on 12 May 2006. As of
31 May 2006, the company had no subsidiaries.
Basis of preparation
The special purpose financial statements (‘‘financial statements’’) have been prepared in
accordance with International Financial Reporting Standards and are presented in US Dollars.
The financial statements have been prepared by the director solely for the purpose of
supporting the information to be included in the Company’s admission document prepared in
connection with the intended offering of units (comprising shares and warrants) in the
Company and the admission of the units of the Company to trading on the Alternative
Investment market of the London Stock Exchange (‘‘AIM’’) hereinafter referred to as the
Offering.
Responsibility for preparation of the accounts
The director has accepted responsibility for preparation of the financial statements for
each financial period which give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period. In preparing those financial
statements, the director accepts responsibility for:• Selecting suitable accounting policies and then applying them consistently;
• Making judgments and estimates that are reasonable and prudent; and
• Preparing the financial statements on the going concern basis unless it is inappropriate
to presume that the Company will continue in business.
The director accepts responsibility for keeping proper accounting records which disclose
with reasonable accuracy at any time the financial position of the Company and to enable
them to ensure that the financial statements comply with the laws of the Cayman Islands. He
also accepts responsibility for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
2 ACCOUNTING POLICIES
Non interest-bearing loans
Non interest bearing loans are recognised at the fair value of the consideration received
less directly attributable transaction costs.
F-7
NOTES TO THE FINANCIAL INFORMATION (Continued)
2 ACCOUNTING POLICIES (Continued)
IFRSs and IFRIC Interpretations not yet effective
The Company has not applied the following IFRSs and IFRIC Interpretations that have
been issued but are not yet effective:
IFRS 7
Financial Instruments: Disclosures
IAS 1
Amendment—Presentation of Financial Statements: Capital Disclosures
IFRIC 7
Applying the Restatement approach under IAS 29 Financial Reporting in
Hyperinflationary Economies
IFRIC 8
Scope of IFRS 2
3 ADMINISTRATIVE EXPENSES
The fee for the audit of these financial statements and other professional costs in
connection with the Offering will be charged in the income statement for the period from
incorporation to 31 December 2006.
The director received no management compensation in any form from the Company in
the period.
4 INCOME TAX
The Company is incorporated as an exempted company under Cayman Islands law and is
not subject to any taxes in the Cayman Islands.
No income tax is chargeable to the income statement or the statement of changes in
equity in the current period.
5 LOSS PER SHARE
Loss per share figures are calculated in accordance with IAS33, Earnings per Share.
Basic loss per share amounts are calculated by dividing net loss for the period
attributable to ordinary equity holders of the Company by the weighted average number of
ordinary shares outstanding during the period. Save for the issue of ordinary shares upon
incorporation, the Company has not entered into any transactions related to ordinary shares
during the period and consequently the diluted and undiluted earnings per share are identical.
The following reflects the income and share data used in the total operations basic and
diluted earnings per share computations:
Net loss attributable to equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average number of ordinary shares for basic earnings per share . . . . . . .
Weighted average number of ordinary shares for diluted earnings per share . . . . . .
$ (6,000)
328,948
328,948
6 SHARE CAPITAL
Authorised
31 May 2006
200,000,000 ordinary shares of $0.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-8
$200,000
NOTES TO THE FINANCIAL INFORMATION (Continued)
6 SHARE CAPITAL (Continued)
Allotted, called up and fully paid
31 May
2006($)
6,250,000 ordinary shares of $0.001 each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$6,250
The Company was incorporated and registered in the Cayman Islands on 12 May 2006.
On incorporation, one ordinary share of $0.001 was issued to the initial subscriber at a price
of $0.001.
On 30 May 2006, 6,250,000 ordinary shares were issued at a price of $0.001.
On 30 May 2006, one ordinary share was repurchased from the initial subscriber by the
Company at $0.001.
7 NON-INTEREST BEARING LOANS DUE TO RELATED PARTY
$6,000 unsecured loan from Hayground Cove Asset Management LLC (‘‘Hayground’’).
The loan is unsecured and bears no interest. The loan is repayable upon consummation
of the Offering, unless the Company, in its sole discretion, repays the loan amount prior to
that time. The fair value of the loan is not materially different to the book value.
8 RELATED PARTIES
The Company’s Chairman and Chief Executive Officer, Mr Jason Ader, is also Chief
Executive Officer of Hayground (and is also a major shareholder in that company). During the
period, the Company entered into the following transactions with Hayground:
The Company received a loan from Hayground as described in note 7.
As described in note 9, Hayground has contracted contingently to provide services to the
Company.
9 FUTURE COMMITMENTS
In readiness for the Offering and contingent upon its consummation and therefore
commencing from the date when the company is admitted to AIM, the Company entered into
the following agreements on 30 May 2006:
Services Agreement
Under this agreement, Hayground has agreed to provide certain related administrative
services to the Company for a monthly fee capped at $10,000. It will:
• Provide administrative services as may be required from time to time, including the
administration of the Company’s day-to-day activities, accounting and controller-related
services; and
• Make available to the Company the services of certain of Hayground’s directors,
employees and consultants.
F-9
NOTES TO THE FINANCIAL INFORMATION (Continued)
9 FUTURE COMMITMENTS (Continued)
Strategic Advisory agreement
Under this agreement, Banyan Tree Capital Limited has been appointed exclusive strategic
advisor which will provide advisory services to the Company and its Mauritius subsidiary with
regard to the acquisition of assets for a monthly fee capped at $20,000. Upon satisfying
certain circumstances, Banyan Tree Capital Limited will also be entitled in the future to be
granted shares in the Company.
10 POST BALANCE SHEET EVENTS
In addition to the offering, since the balance sheet date the Company has commenced the
process of forming a wholly owned operating subsidiary incorporated in Mauritius. The
Company expects to conduct business, including the making of acquisitions, through its
Mauritius subsidiary.
F-10
No dealer, salesperson or any other person
is authorized to give any information or
make any representations in connection
with this offering other than those
contained in this offering circular and, if
given or made, the information or
representations must not be relied upon as
having been authorized by us. This offering
circular does not constitute an offer to sell
or a solicitation of an offer to buy any
security other than the securities offered by
this offering circular, or an offer to sell or a
solicitation of an offer to buy any securities
by anyone in any jurisdiction in which the
offer or solicitation is not authorized or is
unlawful. The information contained in this
offering circular is accurate only as of the
date of this offering circular, regardless of
the time of delivery of this offering circular
or of any sale of our securities.
India Hospitality Corp.
$100,000,000
16,666,667 Units
TABLE OF CONTENTS
Page
Offering Circular Summary . . . . . .
Risk Factors . . . . . . . . . . . . . . . . .
Use Of Proceeds . . . . . . . . . . . . . .
Dilution . . . . . . . . . . . . . . . . . . . .
Management’s Discussion And
Analysis Of Financial Condition
And Results Of Operations . . . .
Proposed Business . . . . . . . . . . . .
Comparison To Offerings Of Blank
Check Companies . . . . . . . . . . .
Management . . . . . . . . . . . . . . . .
Principal Shareholders . . . . . . . . .
Certain Relationships And Related
Party Transactions . . . . . . . . . . .
Description Of Securities . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . .
ERISA . . . . . . . . . . . . . . . . . . . . . .
Plan Of Distribution . . . . . . . . . . .
Cayman Islands Law . . . . . . . . . . .
Transfer Restrictions . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . .
Independent Auditors . . . . . . . . . .
Index To Financial Statements . . .
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17
45
47
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49
51
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63
67
74
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76
79
85
97
99
101
108
114
114
F-1
Until September 11, 2006 all dealers that
effect transactions in these securities,
whether or not participating in this offering,
may be required to deliver an offering
circular. This is in addition to the dealers’
obligation to deliver an offering circular
when acting as placing agent and with
respect to their unsold allotments or
subscriptions.
Deutsche Bank Securities
Offering Circular
July 26, 2006