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China Keli Electric Company Ltd.

TSX-V: ZKL

China-Keli - case study

Capital Pool Company: HSF Capital Corporation (“HSF”)

Target Company: Creative Grace Limited (“CGL”) and its wholly-owned subsidiary Zhuhai Keli Electric Co., Ltd. of Zhuhai, China

Resulting Issuer: China Keli Electric Company Ltd. (“China Keli”)

Listing Date: May 5, 2010

Pre-Public Financing: C$500,000, a private placement of 4,544,989 shares at C$0.11 per share

Public Financing: C$5.25 million, a brokered private placement of 17,508,673 shares at C$0.30 per share

Company Description: Operating in the high-voltage electrical equipment manufacturing industry in China, China Keli manufactures and installs electrical components and equipment, including preassembled mini-substations, electrical controllers, pressurized/vacuumed switchgears and circuit breakers.

Transaction: HSF completed its Qualifying Transaction by acquiring all of the issued and outstanding common shares in the capital of CGL, by issuing 14,454,545 common shares in the capital of HSF and 47,545,455 special warrants (which may be converted into a share for no additional consideration) of HSF to the shareholders of CGL. HSF was subsequently renamed China Keli.

Market Capitalization: C$27.0 million at closing

Role of Evans & Evans: Evans & Evans, Inc. acted as the Lead Advisor to CGL over the period July 2009 to May 2010, providing services including:

  • Performing due diligence and valuation analysis on CGL
  • Preparing packaging documents including business plans and corporate presentations
  • Advising on potential deal structures and negotiating terms of the transaction
  • Assembling and managing the financing syndicate
  • Managing the closing of the transaction including liaising with lawyers, accountants, agents and sponsors