InterAmerican Acquisition Group Inc. to Acquire Emerging Leader in China City Planning & Infrastructure Development

Business Wire,  May 21, 2008  

• E-mail
• Print
• Link

SAN DIEGO & SHANGHAI, China -- InterAmerican Acquisition Group Inc. ("IAG") (OTCBB:IAQG) (OTCBB:IAQGU) (OTCBB:IAQGW), announced today that it has entered into a definitive agreement ("Agreement") to acquire up to 89.6% of the capital stock of Sing Kung, Ltd. ("Sing Kung"), a British Virgin Islands ("BVI") holding company and will also complete an exchange offer to acquire the balance at the closing of the acquisition. Sing Kung, through its wholly-owned China-based subsidiary, Century City Infrastructure Co., Ltd. ("Century City" or the "Company"), plans and implements turnkey urban infrastructure and development projects throughout the People's Republic of China ("PRC") for municipal and provincial governments.

[TABLE OMITTED]

About Century City

Market

Century City management estimates that annual fixed investment in urban infrastructure in the PRC currently exceeds $100 billion annually and that it will rise faster than GDP for several decades. The growing level of expenditure will be required to deal with the projected migration of at least 300 million citizens to urban centers over the next 20 years. Century City's management has defined its market as the 800 largest municipal and provincial governments that are responsible for meeting these significant urban infrastructure needs.

Business Description

Century City and its operating affiliates provide economic strategy guidance and detailed urban planning services to municipalities struggling to deal with growth and demands on city infrastructures. The Company generates the plans for the industrial, commercial, and residential development of key infrastructure projects. In keeping with established practice within the PRC, these projects are collaborative in nature and involve engineering teams from recognized centers of excellence such as Tongji and Tshingua Universities with whom Company management maintains close relations.

For qualifying urban development projects, the Company organizes and manages a consortium for turnkey financing and implementation of the first-phase of development - site development and foundational infrastructure such as roads, pipelines, electric grids, and public lighting. The Company and its consortium enter into a build-transfer ("BT") contract with the local government sponsor, a variation on public-private partnerships ("PPP") in wide use throughout the world. The consortium is responsible for the detailed design and engineering work and the on-time completion of construction to specification. Century City has three BT projects in-progress and has proposals outstanding for several others having completion dates in 2009 and beyond.

The repayment time frames for BT contracts in the PRC are generally long term (up to 15 years). However, payment is typically accelerated through take out financing that it helps arrange for its client municipalities.

William Morro, IAG's CEO commented, "We have been exploring infrastructure-related acquisitions in various emerging markets since our IPO. The acquisition of Sing Kung affords IAG shareholders an exceptional opportunity to participate in this rapidly growing sector with a superior management team that has demonstrated success operating in the world's largest and fastest growing market. The Company has refined a proven PPP investment model to meet the unique requirements of China's political system, regulatory structure, and capital markets."

Management & Strategic Positioning

The Company's CEO, Dr. Jianjun Shi, and the core senior leadership team will remain in place following the closing of the IAG transaction. Dr. Shi holds a PhD in Economics from Tongji University and has many years of experience in major project management. Other continuing team members include the current Chairman, Jiping Gao and the Chief Architecture and Planning Officer Moulong Zhu. Although recently retired as the Chief Economist of the China Development Bank ("CDB"), China's largest infrastructure lender, Mr. Gao maintains a formal relationship with CDB as a consultant and advisor. Professor Zhu, a dean of China's urban planning professional community, recently retired as Head of the Instructional Department at Tongji's prestigious School of Urban Planning and Architecture; continues to be a member of the faculty there. The existing finance group will also remain in place, but the Company is currently recruiting a senior finance executive who has experience with US public reporting requirements and who can interface effectively with the global financial community. Of the seven board members to be elected upon consummation of the acquisition, IAG will select two and Chardan will select one.

Bridge Financing from Chardan Capital

To meet its immediate capital needs, Sing Kung closed on a private equity placement of $14.6 million by Chardan, investors extremely familiar with the infrastructure sector in the PRC. Chardan is experienced in China and has a first-hand perspective on infrastructure development there through its other investments. Chardan's CEO, Dr. Richard Propper, stated, "We have worked diligently with the company over many months and are extremely excited about its future. It will be one of the leaders in the infrastructure development arena, and, due to its unique positioning, should be able to win more than its fair share of municipal contracts. In addition, the Company will be able to scale up rapidly while maintaining high margins, a confirmation of its extraordinary value proposition. We financed the Company so that it would be able to meet its expansion plans into 2009, serve as a bridge to the IAG acquisition, and position the company to capitalize on expected new project opportunities."