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LJ International Inc. (JADE) Inks Agreement to Raise $41M for Preferred Share in Enzo Subsidiary

|Includes: LJ International, Inc. (JADE)

LJ International Inc., a company engaged in the designing, branding, marketing and distribution of a full range of jewelry in China, North America and Europe, today announced it has entered into a definitive agreement for a private placement of shares of its indirect wholly owned subsidiary Enzo Jewelry Inc., with a pool of investors led by the private equity firms FountainVest Partners and Spring Capital Asia.

Per the agreement, the Investors will make an initial investment of US$41.38 million, which includes an investment of US$31.40 million in newly issued ENZO shares and an acquisition of existing shares of ENZO from LJI in the amount of US$9.98 million.

Combined, the Investors will hold approximately 28.27 percent of ENZO’s total issued share capital. The Investors will also receive certain rights to make a further investment of approximately US$25.88 million to acquire up to 10.35 percent of ENZO.

“The transaction we announce today is a major vote of confidence in the future growth of ENZO. In addition to unlocking additional ENZO value, the placement puts us in a stronger position to continue our expansion, tapping into the growth potential of the retail jewelry industry in China. Furthermore, we believe ENZO will benefit from the contributions of experienced private equity investors in China,” Yu Chuan Yih, chairman and CEO of LJI, stated in the press release.

The company said it has allocated the net proceeds from the investment toward capital expenditures for new store openings, marketing expenses and general working capital.

The agreement is expected to allow the parties to enhance shareholder value by spinning off the ENZO retail jewelry division through an initial public offering of ENZO on an international stock exchange in the future.

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