This co-operation arrangement will be part of LF USA’s brand optimization initiative, and will allow LF USA to enter the better men’s business with a higher price point. This co-operation arrangement will have the leverage of Trinity’s heritage brand, LF USA’s existing distribution platform, the management team of Heritage and as well as the existing product design capability of BHB.
The three-way co-operation is structured whereby BHB will run the day-to-day operations of Kent & Curwen brand in the United States, LF USA will provide the distribution platform and back-office support, and Trinity will license the Kent & Curwen brand as licensor.
The terms of the co-operation are summarized below:
(1) LF USA and Trinity International will finance the initiative with the subscription of convertible promissory notes of BHB, in a maximum aggregate amount of US$32,000,000 (approximately HK$249,600,000) and US$15,000,000 (approximately HK$117,000,000), respectively. The Notes, with maturity on 31 December 2027, bear interest at 5% per annum, and will be drawn down over 3 years in 2013, 2014 and 2015.
(2) LF USA and Trinity International will have the right to convert the Notes into a total of 75% interest in BHB during a conversion period of approximately 3 years subsequent to the drawdown.
(3) Put/Call Option subject to the conversion of the Note held by LF USA: Heritage will have a Put Option, over 5 years commencing 6 months after the conversion of the Note held by LF USA, to sell its remaining interest in BHB to LF USA. LF USA will have a Call Option, over a period of another 5 years after the expiration of the Put Option, to buy Heritage’s remaining interest in BHB.
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