DICKSON CONCEPT<0113> - Announcement & Resumption of Trading
The Stock Exchange of Hong Kong Limited takes no responsibility for
the contents of this announcement, makes no representation as to its
accuracy or completeness and expressly disclaims any liability
whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this announcement.
DICKSON CONCEPTS (INTERNATIONAL) LIMITED
(Incorporated in Bermuda with limited liability)
- and -
BROAD GAIN INVESTMENTS LIMITED
(incorporated in the British Virgin Islands with limited
liability)
MAJOR AND CONNECTED TRANSACTIONS
PROPOSED DISPOSAL OF NON-ASIAN ASSETS AND
CONDITIONAL PAYMENT OF A SPECIAL CASH DIVIDEND
BY DICKSON CONCEPTS (INTERNATIONAL) LIMITED
- and -
POSSIBLE PARTIAL CASH OFFER
BY MERRILL LYNCH (ASIA PACIFIC) LIMITED
ON BEHALF OF BROAD GAIN INVESTMENTS LIMITED,
A WHOLLY-OWNED SUBSIDIARY OF
DICKSON INVESTMENT HOLDING CORPORATION,
FOR 51,000,000 OF THE ISSUED SHARES OF
DICKSON CONCEPTS (INTERNATIONAL) LIMITED NOT CURRENTLY OWNED BY
BROAD GAIN INVESTMENTS LIMITED
AND PERSONS ACTING IN CONCERT WITH IT
SUMMARY
On 7th April, 1999, Dickson Concepts entered into an
Agreement subject to conditions, under which Dickson Concepts has
agreed to sell to Broad Gain its entire interest in Harvey Nichols,
S.T. Dupont, TH Leather Goods and Sandgraw for a total consideration
of at least HKD1,526.4 million but not greater than HKD1,583.4
million. The Directors also propose to declare and pay a Special Cash
Dividend of HKD6.80 per Dickson Concepts Share to Shareholders
conditional on completion of the Disposal.
The entire issued share capital of Broad Gain is held by Dickson
Investment Holding Corporation, as trustee of a trust established for
the benefit of, inter alia, Mr. Poon and members of his family. As at
the Pre-Announcement Date, the aggregate shareholding of Mr. Poon,
his associates and parties acting in concert with any of them is
considered to be about 51.9 per cent. of the issued share capital of
Dickson Concepts. As the identities of some of the concert parties
are being ascertained, there may be changes to the aggregate
shareholding of the aforementioned concert parties. Any such changes
will be disclosed as soon as the relevant information is confirmed.
The Disposal constitutes a major and connected transaction under the
Listing Rules and requires approval by the Independent Shareholders.
A circular containing details of the proposed Disposal and
conditional Special Cash Dividend and a notice convening a special
general meeting of Dickson Concepts will be sent to Shareholders as
soon as practicable.
Subject to the consent of the SFC being obtained, Merrill Lynch will
make a Partial Offer at HKD2.00 per Dickson Concepts Share on behalf
of Broad Gain up to 51,000,000 Dickson Concepts Shares (equivalent to
about 19.0 per cent. of the issued share capital of Dickson Concepts)
not already owned by Mr. Poon, Broad Gain and parties acting in
concert with any of them. The terms of the Partial Offer are set out
in the section headed `Terms of the Partial Offer' below. An offer
document containing details of the Partial Offer, together with the
acceptance and transfer forms, is expected to be sent to Shareholders
as soon as practicable.
The Partial Offer will be conditional on the completion of the
Disposal. If the Disposal is completed but the SFC does not consent
to the Partial Offer (which is a pre-condition to the making of the
Partial Offer), Mr. Poon (through Broad Gain) intends to make market
purchases of up to 51,000,000 Dickson Concepts Shares at up to
HKD2.00 per Dickson Concepts Share for a period of five consecutive
trading days following completion of the Disposal. Insofar as the
Takeovers Code is applicable, any market purchases will be made in
compliance with the Takeovers Code.
Warning: The proposed Disposal, Special Cash Dividend and the
Partial Offer are all conditional. Shareholders and potential
investors should therefore exercise caution in dealing in any
securities of Dickson Concepts.
1 THE CONDITIONAL SALE AND PURCHASE AGREEMENT
Date of the Agreement
7th April, 1999
Parties
Vendor:
Dickson Concepts
Purchaser:
Broad Gain
Connection between the parties
As at the Pre-Announcement Date, the aggregate shareholding of Mr.
Poon, his associates and parties acting in concert with any of them
is considered to be 139,070,194 Dickson Concepts Shares, representing
about 51.9 per cent. (subject to confirmation) in aggregate of the
issued share capital of Dickson Concepts. Broad Gain is a
wholly-owned subsidiary of Dickson Investment Holding Corporation,
which acts as trustee of a trust established for the benefit of,
inter alia, Mr. Poon and members of his family. Mr. Poon is the Group
Executive Chairman and a Director of Dickson Concepts.
The Disposal
Pursuant to the Agreement, Dickson Concepts has conditionally agreed
to sell to Broad Gain at a cash consideration of about HKD1,468.6
million its entire interest in the Non-Asian Assets of Dickson
Concepts which comprise the following:
(i) 27,550,000 shares in Harvey Nichols, representing the 50.1 per cent.
equity interest held by Dickson Concepts in Harvey Nichols for a cash
consideration of about HKD607.2 million;
(ii) 3,457,200 shares in S.T. Dupont, representing the 56.6 per cent.
equity interest held by Dickson Concepts in S.T. Dupont for a cash
consideration of about HKD222.7 million;
(iii) 10 shares in TH Leather Goods, representing the 100.0 per cent.
equity interest held by Dickson Concepts in TH Leather Goods. In
addition, Broad Gain has conditionally agreed to repay at face value
certain loans owing by TH Leather Goods to Dickson Concepts as at the
completion of the Disposal. The total cash consideration for TH
Leather Goods (including the repayment of the loans) is about HKD33.2
million; and
(iv) 30,009 shares in Sandgraw, representing the 100.0 per cent. equity
interest held by Dickson Concepts in Sandgraw. In addition, Broad
Gain has conditionally agreed to repay at face value certain loans
owing by Sandgraw to Dickson Concepts as at the completion of the
Disposal. The total cash consideration for Sandgraw (including the
repayment of the loans) is about HKD605.5 million. The sole operating
asset of Sandgraw is the freehold of the Knightsbridge store of
Harvey Nichols, which is currently under a fixed term lease of 35
years to Harvey Nichols.
Broad Gain will pay additional consideration of between HKD57.8
million and HKD114.8 million to acquire from Dickson Concepts all of
Dickson Concepts' rights and obligations arising in respect of
certain financing arrangements relating to S.T. Dupont in order to
meet S.T. Dupont's long term funding requirements. Such arrangements
are described further in the section headed `Interest in S.T. Dupont'
below.
Consideration
The aggregate consideration payable to Dickson Concepts under the
Agreement is at least HKD1,526.4 million but will not be greater than
HKD1,583.4 million, and has been negotiated on an arm's length basis.
The exact amount of the consideration will depend on the number of
convertible bonds Dickson Concepts is required to subscribe for under
the Issue and the extent of its underwriting obligations. Also see
`Interest in S.T. Dupont' below.
In addition, pursuant to a set-off agreement dated 7th April, 1999
entered into between Dickson Concepts, Broad Gain, Dickson Investment
Holding Corporation and Mr. Poon, Dickson Concepts agreed to set off
part of the cash consideration receivable upon completion of the
Disposal in the amount of about HKD945.6 million against the debt in
the same amount that will become owing by Dickson Concepts in the
form of the Special Cash Dividend to Dickson Investment Holding
Corporation, Mr. Poon and certain entities holding Dickson Concepts
Shares for the benefit of Mr. Poon as shareholders of Dickson
Concepts upon completion of the Disposal.
The Special Cash Dividend
Subject to and conditional upon the completion of the Disposal,
Dickson Concepts will pay a Special Cash Dividend on the following
basis:
For each Dickson Concepts Share held: HKD6.80 in cash
Subject to completion of the Disposal, the Special Cash Dividend
will be paid to Shareholders whose names appear on the register of
members of Dickson Concepts on a date to be announced but which is
expected to fall after the date of the proposed special general
meeting of Dickson Concepts.
Conditions of the Agreement
The Disposal is conditional upon:
(i)
the Independent Shareholders passing, at a special general meeting
of Dickson Concepts, a resolution to approve the Disposal and the
declaration and payment of the Special Cash Dividend; and
(ii)
receipt of a formal decision from the Conseil des Marches
Financiers, the French securities regulatory authority, (and such
decision becoming final) regarding dispensation from the requirement
to make a general offer with respect to the issued share capital of
S.T. Dupont not currently owned by Dickson Concepts.
It is expected that a formal decision from the Conseil des
Marches Financiers regarding dispensation referred to above
will be made on the basis that the Disposal will not result in an
effective change of control of S.T. Dupont, which will continue to be
controlled directly or indirectly by Mr. Poon, his associates and
parties acting in concert with any of them.
If the conditions are not satisfied by 31st May, 1999, the Agreement
will lapse unless Dickson Concepts, Broad Gain and Mr. Poon agree to
allow more time. The conditions of the Disposal may not be waived by
the parties to the Agreement.
Force Majeure
Under the Agreement, if at any time prior to completion of the
Disposal an event of force majeure, including any act of God, war,
public disorder, fire, flood, explosion, terrorism, strike or
lock-out or any change in local, national or international political,
military or industrial matters or conditions occurs which in the
reasonable opinion of Broad Gain has a material adverse effect on the
financial condition or prospects of the Non-Asian Assets, the
Agreement shall terminate. Under such circumstances, the Special Cash
Dividend will not be paid.
Expected completion date
Completion of the Disposal and payment of the Special Cash Dividend
are expected to take place simultaneously about seven days following
the satisfaction of the above conditions, but in any event, not later
than 30th June, 1999.
Approval by Independent Shareholders
The Disposal is a major and connected transaction for Dickson
Concepts under the Listing Rules. Therefore, the Agreement is subject
to approval by the Independent Shareholders by an ordinary resolution
at a special general meeting.
An Independent Board Committee has been appointed by the Board to
advise the Independent Shareholders about the Disposal. In this
regard, an independent financial adviser has been appointed to advise
the Independent Board Committee. Furthermore, Strutt & Parker has
been appointed as an independent valuer to value the Knightsbridge
property which is the sole operating asset owned by Sandgraw.
2
INFORMATION ON THE NON-ASIAN ASSETS
Interest in Harvey Nichols
Dickson Concepts holds a 50.1 per cent. interest in the issued
ordinary share capital of Harvey Nichols, a company whose shares are
listed on the London Stock Exchange. Harvey Nichols is a high-end
fashion retailer in the U.K. and sells brand names through two forms
of retailing: either purchased from manufacturers and sold on Harvey
Nichols' own account; or through concessions, involving goods sold by
third parties operating in the store under concession agreements.
Harvey Nichols has also expanded into food retail, and in-store and
stand alone restaurants.
In its unaudited financial statements for the six-month interim
period ended 26th September, 1998, Harvey Nichols reported an
increase in sales of 1.3 per cent. to GBP61.7 million (HKD816.5
million) and the same profit after tax of GBP4.1 million (HKD54.8
million), compared to the six-month interim period ended 27th
September, 1997. In Harvey Nichols' unaudited financial statements
for the six-month interim period ended 26th September, 1998, it was
stated that sales for the first ten weeks of the second half period
ended 3rd April, 1999 were 2.7 per cent. lower compared to the first
ten weeks of the second half period ended 28th March 1998. In
addition, it was stated that based on current retailing trends, the
operating profit from existing businesses of Harvey Nichols for the
full financial year ended 3rd April, 1999 would probably fall below
the level achieved in the previous financial year ended 28th March,
1998. The profit before and after taxation and minority interests of
Harvey Nichols which were included in the audited financial
statements for the financial year ended 28th March, 1998 were GBP14.1
million (HKD182.7 million) and GBP9.5 million (HKD123.4 million)
respectively. In comparison, the profit before and after taxation and
minority interests of Harvey Nichols which were included in the
audited financial statements for the financial year ended 29th March
1997 were GBP12.1 million (HKD154.3 million) and GBP8.2 million
(HKD104.0 million) respectively.
Harvey Nichols faces the challenge of maintaining its leadership
position in a mature and slowing retail market in the U.K. At the
same time, Harvey Nichols has embarked upon a strategy of new store
openings and implementing this strategy will require significant
capital investment. Earlier this year, Harvey Nichols announced the
proposed opening of a third store in Edinburgh, Scotland. The
development costs for this store are expected to be GBP20.0 million
(HKD248.4 million). A fourth store opening is also planned, implying
an aggregate investment requirement of about GBP40.0 million
(HKD496.8 million) within the next two to three years.
The London Panel on Takeovers and Mergers has confirmed that the
acquisition by Broad Gain of Dickson Concepts' interest in Harvey
Nichols will not give rise to any obligations under the City Code on
Takeovers and Mergers on the part of Broad Gain or any persons acting
in concert with Broad Gain to make a mandatory offer for the issued
share capital of Harvey Nichols not currently owned by Dickson
Concepts on the basis that no effective change of control will have
occurred as a result of the acquisition.
The cash consideration payable by Broad Gain to Dickson Concepts for
its 50.1 per cent. equity interest in Harvey Nichols is HKD607.2
million, equivalent to GBP1.78 (HKD22.04) per Harvey Nichols share.
The cash consideration is based on the closing price of Harvey
Nichols shares as at the Pre-Announcement Date of GBP1.78 (HKD22.04)
per Harvey Nichols share. In comparison, the simple average of the
closing prices of Harvey Nichols shares for the ten trading days up
to and including the Pre-Announcement Date is GBP1.70 (HKD21.10).
When compared to the unaudited net asset value per Harvey Nichols
share as at 26th September, 1998 of GBP0.46 (HKD6.04), the cash
consideration represents a premium of 264.9 per cent.. Dickson
Concepts acquired a 100.0 per cent. interest in Harvey Nichols as a
private company in October 1991 for an aggregate consideration of
about GBP17.0 million (HKD229.4 million). The issued share capital of
Harvey Nichols as at the Pre-Announcement Date was 55,000,000 shares
having a total market capitalisation of GBP97.6 million (HKD1,212.0
million).
Interest in S.T. Dupont
Dickson Concepts holds a 56.6 per cent. interest in the issued share
capital of S.T. Dupont, a company whose shares are listed on the
Paris Bourse. S.T. Dupont is a manufacturer and distributor of luxury
goods, with an established market position in luxury lighters and
writing instruments. S.T. Dupont has also expanded its activities
into the areas of leather goods, accessories, ready-to-wear clothing,
watches, cigars and fragrances.
The performance of S.T. Dupont has been severely affected by the
continuing crisis in Asia and the worsening, in summer 1998, of the
world economic climate, particularly in S.T. Dupont's growth markets
of Russia and Latin America. In its unaudited financial statements
for the six-month interim period ended 30th September, 1998, S.T.
Dupont reported a decrease in sales of 15.2 per cent. to FFR231.5
million (HKD320.7 million) compared to the six-month interim period
ended 30th September, 1997 and net loss after taxation of FFR27.1
million (HKD37.5 million). Further losses are expected for the full
financial year ended 31st March, 1999. The loss before and after
taxation and minority interest of S.T. Dupont which were included in
the audited financial statements for the financial year ended 31st
March, 1998 were FFR91.5 million (HKD115.0 million) and FFR96.3
million (HKD121.0 million) respectively. In comparison, the audited
profit before and after taxation and minority interest of S.T. Dupont
which were included in the audited financial statements for the
financial year ended 31st March, 1997 were FFR54.2 million (HKD74.7
million) and FFR37.9 million (HKD52.3 million) respectively.
The implementation of the restructuring programme necessary to
enable S.T. Dupont to operate successfully and to improve the brand's
performance will require substantial ongoing capital investment and
time. S.T. Dupont is unlikely to contribute to Group profits for the
foreseeable future.
The Disposal is conditional upon receipt of a formal decision from
the Conseil des Marches Financiers regarding dispensation from
the requirement to make a general offer with respect to the issued
share capital of S.T. Dupont not currently owned by Dickson Concepts.
It is expected that a formal decision from the Conseil des
March|$$|Aaes Financiers regarding dispensation referred to above
will be made on the basis that the Disposal will not result in an
effective change of control of S.T. Dupont, which will continue to be
controlled directly or indirectly by Mr. Poon, his associates and
parties acting in concert with any of them.
The cash consideration payable by Broad Gain to Dickson Concepts for
its 56.6 per cent. equity interest in S.T. Dupont is HKD222.7
million, equivalent to FFR50.51 (HKD64.42) per S.T. Dupont share. The
cash consideration is based on the closing price of S.T. Dupont
shares as at the Pre-Announcement Date of FFR50.51 (HKD64.42) per
S.T. Dupont share. In comparison, the simple average of the closing
prices of S.T. Dupont shares for the ten trading days up to and
including the Pre-Announcement Date is FFR51.77 (HKD66.03). When
compared to the unaudited net asset value per S.T. Dupont share as at
30th September, 1998 of FFR41.58 (HKD57.59), the cash consideration
represents a premium of 11.9 per cent.. The issued share capital of
S.T. Dupont as at the Pre-Announcement Date was 6,107,400 shares
having a total market capitalisation of FFR308.5 million (HKD393.4
million). Dickson Concepts acquired a 100.0 per cent. interest in
S.T. Dupont as a private company in October 1987 for an aggregate
consideration of about HKD414.9 million.
S.T. Dupont intends to proceed with a recapitalisation which is to
be undertaken by way of a convertible bond issue in a principal
amount of between FFR80.0 million (HKD102.0 million) and FFR90.0
million (HKD114.8 million). Completion of the Issue is expected to
take place before the end of May 1999. The convertible bonds to be
issued are expected to be listed on the Paris Bourse. Dickson
Concepts has committed to subscribe for its 56.6 per cent. share of
the principal amount of the Issue and will underwrite fully the
balance of the Issue. The minimum amount subscribed by Dickson
Concepts will be FFR45.3 million (HKD57.8 million), being 56.6 per
cent. of the minimum size of the Issue of FFR80.0 million (HKD102.0
million), and the maximum amount will be FFR90.0 million (HKD114.8
million), being the maximum size of the Issue. S.T. Dupont will use
the proceeds of the Issue to finance its restructuring programme and
to reduce part of its other borrowings.
Under the Agreement, Broad Gain has agreed to assume the obligation
of Dickson Concepts to refinance S.T. Dupont and to acquire all
convertible bonds of S.T. Dupont held by Dickson Concepts as at
completion of the Disposal at their principal amount.
Depending on the amount of convertible bonds of S.T. Dupont held by
Dickson Concepts as at the completion of the Disposal, the total
consideration payable by Broad Gain to Dickson Concepts in relation
to S.T. Dupont will be at least HKD280.5 million but not more than
HKD337.5 million.
Interest in TH Leather Goods
TH Leather Goods is a recently incorporated wholly-owned subsidiary
of Dickson Concepts that has yet to commence trading. The primary
business of TH Leather Goods is the design, sourcing and distribution
of `Tommy Hilfiger' leather goods and accessories in the United
States and Canada under licence. The licence agreement was signed in
September 1998.
The total cash consideration of HKD33.2 million payable by Broad
Gain to Dickson Concepts is for its 100.0 per cent. equity interest
in TH Leather Goods as well as the repayment of certain loans owing
by TH Leather Goods to Dickson Concepts as at the completion of the
Disposal, which are expected to amount to about HKD33 million. As at
30th September, 1998, the amount due by TH Leather Goods to Dickson
Concepts was HKD14.7 million and the unaudited net asset value of TH
Leather Goods was HKD0.015 million.
In addition, Broad Gain has agreed to assume all future capital
commitments of Dickson Concepts with respect to TH Leather Goods
estimated in aggregate to amount to about HKD150.0 million over the
next two years.
Interest in Sandgraw
Sandgraw is a wholly-owned subsidiary of Dickson Concepts whose sole
operating asset is a 100.0 per cent. interest in the freehold of the
Harvey Nichols Knightsbridge store. The store is currently leased by
Sandgraw to Harvey Nichols at an annual rental of GBP3.3 million
(HKD40.6 million) under a fixed term of 35 years. The annual rental
represents a rate of return of about 6.7 per cent. compared with the
cash consideration of HKD605.5 million. As a result of the Disposal,
Dickson Concepts will cease to have any interest in this source of
earnings.
The total cash consideration of HKD605.5 million payable by Broad
Gain to Dickson Concepts is for its 100.0 per cent. equity interest
in Sandgraw and the repayment of certain loans owing by Sandgraw to
Dickson Concepts as at the completion of the Disposal. The cash
consideration reflects the open market valuation of the mortgage free
Knightsbridge property as assessed by Strutt & Parker, the
independent property valuer, as at 26th March, 1999 of about GBP48.76
million (HKD605.5 million). As at 30th September, 1998, the amount
due by Sandgraw to Dickson Concepts (including interest) was HKD70.8
million and the unaudited net asset value of Sandgraw was HKD400.1
million. Dickson Concepts acquired the freehold interest in the
Knightsbridge property in October 1991 for an aggregate consideration
of GBP35.0 million (HKD473.7 million).
3
REASONS FOR THE DISPOSAL AND SPECIAL CASH DIVIDEND
The unprecedented economic turmoil, which started in Asia in 1997
and subsequently spread to Eastern Europe and Latin America, has had
a severe, adverse impact on the financial performance of the Group.
As stated at the time of the announcement of the Group's last interim
results in December 1998, the Group expects to report a loss for the
first time in its 19-year history for the financial year ended 31st
March, 1999.
Investors' concerns over the impact of this adverse change in the
Group's operating environment, particularly in Asia, have been
reflected in the poor price performance of Dickson Concepts Shares
recently. Since the beginning of the economic downturn in Hong Kong
in November 1997, the price of Dickson Concepts Shares has fallen by
62.2 per cent. to HKD6.20, the closing price on the Pre-Announcement
Date. This compares to a slight fall of 1.6 per cent. in the Hang
Seng Index from the beginning of November 1997 to the
Pre-Announcement Date. Similarly in the last 12 months the price of
Dickson Concepts Shares has fallen by 53.7 per cent. while the Hang
Seng Index has fallen by 2.3 per cent..
Notwithstanding the difficult market conditions that the Group
currently faces in Asia, the Directors believe that the current price
of Dickson Concepts Shares fails to recognise fully the substantial
value of the Asian Assets of the Group. As at the Pre-Announcement
Date, the total market capitalisation of Dickson Concepts Shares was
HKD1,662.4 million which was HKD431.0 million less than the sum of
the market values of Dickson Concepts' equity interests in Harvey
Nichols, S.T. Dupont and Sandgraw of HKD1,364.6 million, and the net
cash balance of Dickson Concepts of HKD728.8 million for the Asian
and Non-Asian Assets as at the Pre-Announcement Date. Furthermore,
the Directors believe that there is a risk that the price of Dickson
Concepts Shares may continue to under-perform in the future if a
recovery in the Asian economies coincides with an economic downturn
in the U.K. and other European economies, following an extended
period of strong growth. In addition, the Directors are mindful of
the fact that each of Harvey Nichols, S.T. Dupont and TH Leather
Goods have significant capital investment requirements. The Directors
estimate that the combined capital requirement of the Non-Asian
Assets will be over HKD500.0 million over the next two to three
years.
The proceeds from the Disposal reflecting the cash consideration
received by Dickson Concepts for the sale of its Non-Asian Assets
together with part of the Company's surplus cash balance will be used
to pay Shareholders a Special Cash Dividend of HKD6.80 per Dickson
Concepts Share. The Special Cash Dividend represents a premium of 9.7
per cent. to the closing price of Dickson Concepts Shares as at the
Pre-Announcement Date of HKD6.20. The net cash balance of the Asian
Assets alone is about HKD691.2 million as at the Pre-Announcement
Date. The net cash balance of the Asian Assets after the Disposal and
payment of the Special Cash Dividend will be about HKD425.0 million.
The difference comprises the cash consideration received from the
Disposal of HKD1,468.6 million plus HKD88.4 million relating to the
convertible bond less the Special Cash Dividend of HKD1,823.2
million.
In addition, Shareholders will have the option to maintain their
existing level of equity interest in the substantial remaining Asian
Assets which consist primarily of wholesale and retail luxury goods
businesses and related property assets. The Group has the most
comprehensive distribution network in the Asian region with over 185
shops and concession rights throughout Asia, including China, Hong
Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan and
Thailand. The Group's impressive portfolio of Asian licences include
leading international luxury brands such as Brooks Brothers, Bvlgari,
Charles Jourdan, Chopard, Coach, Escada Margaretha Ley, French
Connection, Guy Laroche, Joan and David, Kenneth Cole, Nicole Farhi,
Polo/Ralph Lauren, Polo Jeans Company and Warner Bros. Studio Stores.
In addition, the Company will continue to own the Seibu department
store business in Hong Kong and Shenzhen and the Dickson Watch &
Jewellery business in Hong Kong, Taiwan and Singapore.
The Directors remain committed to developing Dickson Concepts' Asian
businesses and will continue plans for expansion despite the
difficult current trading environment. As a demonstration of this
commitment, the Group recently opened two new flagship stores, each
with prime retail space in excess of 5,000 square feet, for Ralph
Lauren and Brooks Brothers at Prince's Building, Central, Hong Kong.
In addition to illustrating the Group's commitment to Asian
retailing, these stores also pave the way for future profits growth.
The Group will also continue to expand its portfolio of quality,
international luxury brand licences.
Furthermore, given the common ownership that will remain after the
Disposal, the Group will continue to maintain the long established
and close working relationships that exist between the management
teams of Dickson Concepts, Harvey Nichols and S.T. Dupont at all
levels. These alliances yield important synergies and also allow the
Group to stay abreast of the latest trends and developments elsewhere
in the world that may signal future trends in the Group's home
markets.
Mr. Poon considers the Non-Asian Assets to be complementary to his
existing investment portfolio and, consistent with his general
approach to investing, he is prepared to hold them as long term
investments but will evaluate on their merits any opportunities to
realise them on attractive terms to Mr. Poon.
The Company's net cash balance after the Disposal and payment of the
Special Cash Dividend is expected to be about HKD425.0 million. This
will allow the Company to take full advantage of future investment
opportunities of exceptional value for the benefit of all its
Shareholders.
Given the financial strength and the continuing repositioning of the
Group following the Disposal and payment of the Special Cash
Dividend, the Directors are totally confident that the Group will
emerge from the current economic turmoil as an even more dominant
market leader.
4
FINANCIAL EFFECTS OF THE DISPOSAL AND THE SPECIAL CASH DIVIDEND
Earnings
The following table below sets out the unaudited earnings after
taxation and minority interests of the Group for the six months ended
30th September, 1998 and the respective per Dickson Concepts Share
amounts before and after the Disposal.
Earnings after taxation and minority interests
Six months ended
30th September,
1998
Before exceptional HKD million HKD per Dickson
items Concepts Share(1)
Attributable to the (134.7) (0.50)
Group
Attributable to 14.9 0.06
Non-Asian Assets(3)
Attributable to (149.6) (0.56)
Asian Assets(3)
After exceptional
items(2)
Attributable to the (290.8) (1.08)
Group
Attributable to 14.9 0.06
Non-Asian Assets(3)
Attributable to (305.7) (1.14)
Asian Assets before
Disposal(3)
Gain on Disposal 366.9 1.37
Attributable to 61.2 0.23
Asian Assets after
Disposal
(1)
Based on the weighted average number of 268,290,865 Dickson Concepts
Shares in issue during the six-month period ended 30th September,
1998.
(2)
As reported in the Group's unaudited financial statements for the
six months ended 30th September, 1998 exceptional items of HKD(156.1)
million represent provision for planned costs of business
restructuring and for certain assets which the Directors consider
prudent to make in light of the economic crisis in Asia.
(3)
Assuming that the Asian and Non-Asian Assets of the Group had been
separated for the entire six month period ended 30th September,
1998.
As a result of the Disposal, the Group will realise an exceptional
gain on Disposal (before expenses) of HKD366.9 million, which is
equivalent to HKD1.37 per Dickson Concepts Share. Earnings after
taxation, minority interests and exceptional items for the Asian
Assets for the six months ended 30th September, 1998 would have been
HKD61.2 million after the Disposal in comparison to a loss of
HKD305.7 million before the Disposal. The gain on Disposal represents
the difference between the cash consideration from Disposal of equity
interests in the Non-Asian Assets of HKD1,383.1 million and the sum
of the net asset values of the Non-Asian Assets of HKD690.6 million
and goodwill of HKD325.6 million related to the acquisition of these
Non-Asian Assets which was previously written-off against retained
profits.
Earnings before taxation, minority interests and exceptional items
attributable to the Non-Asian Assets which were included in the
audited financial statements of Dickson Concepts for the financial
years ended 31st March, 1997 and 31st March, 1998 were HKD107.6
million and HKD85.1 million, respectively. Audited earnings after
exceptional items attributable to the Non-Asian Assets which were
included in the audited financial statements of Dickson Concepts for
the financial years ended 31st March, 1997 and 31st March, 1998 were
HKD107.6 million and HKD41.8 million, respectively.
Net Assets
The following table below sets out the unaudited net asset values of
the Group as at 30th September, 1998 and the respective per Dickson
Concepts Share amounts before and after the Disposal and payment of
the Special Cash Dividend.
Net assets
As at 30th
September, 1998
HKD million HKD per Dickson
Concepts Share(1)
Attributable to the 2,588.4 9.65
Group
Attributable to 690.6 2.58
Non-Asian Assets(2)
Attributable to 1,897.8 7.07
Asian Assets before
Disposal(2)
Cash consideration 1,383.1 5.16
from Disposal of
equity interests
Payment of Special (1,823.2) (6.80)
Cash Dividend
Attributable to 1,457.7 5.43
Asian Assets after
Disposal and
payment of Special
Cash Dividend
(1)
Based on 268,123,652 Dickson Concepts Shares in issue as at 30th
September, 1998.
(2)
Assuming that the Disposal occurred on 30th September, 1998.
The unaudited net asset value attributable to the Asian Assets as at
30th September, 1998 would have been HKD1,457.7 million after the
Disposal and payment of the Special Cash Dividend compared with
HKD1,897.8 million before the Disposal and payment of the Special
Cash Dividend.
The cash consideration from the Disposal of equity interests in the
Non-Asian Assets is HKD1,383.1 million, equivalent to HKD5.16 per
Dickson Concepts Share. This represents a premium of 100.0 per cent.
to the unaudited net asset value attributable to the Non-Asian Assets
of HKD690.6 million, which is equivalent to HKD2.58 per Dickson
Concepts Share as at 30th September, 1998.
As at the Pre-Announcement Date, the Group would have a net cash
balance of about HKD425.0 million (equivalent to HKD1.59 per Dickson
Concepts Share) after the Disposal and payment of the Special Cash
Dividend.
5
CIRCULAR
A circular giving details of the Disposal and the Special Cash
Dividend, and setting out Strutt & Parker's valuation and the advice
of the Independent Board Committee and the independent financial
adviser will be sent to Shareholders shortly. Shareholders will also
be sent a notice of the special general meeting of Dickson Concepts.
The meeting is expected to take place on or around 18th May, 1999.
6
POSSIBLE PARTIAL CASH OFFER
Warning: The Partial Offer is a
possibility only.
The Partial Offer will only be made if the Executive grants its
consent to the making of the Partial Offer under Rule 28 of the
Takeovers Code. If such consent is not given the Partial Offer will
not be made. Once the Executive has reached a decision as to whether
consent will be granted, Shareholders and public investors will be
informed by press announcement as soon as possible thereafter.
Furthermore, the Partial Offer is subject to the completion of the
Disposal. The Agreement in relation to the Disposal is conditional
(see `Conditions of the Agreement' above). If any of the conditions
of the Agreement is not satisfied, the Partial Offer for the Offer
Shares will lapse.
If consent from the Executive is not given but the Disposal is
completed, Mr. Poon (through Broad Gain) intends to make market
purchases of up to 51,000,000 Dickson Concepts Shares at up to
HKD2.00 per Dickson Concepts Share for a period of five consecutive
trading days following completion of the Disposal. See `POSSIBLE
MARKET PURCHASES' below.
Shareholders and potential investors should therefore exercise
caution in dealing in any securities of Dickson Concepts.
If the Partial Offer is made, it will be on the terms set out below.
Partial Offer
Mr. Poon as sole director of Broad Gain also announces a proposed
voluntary partial cash offer to be made by Merrill Lynch on behalf of
Broad Gain, to acquire the Offer Shares.
The Partial Offer gives Shareholders the potential opportunity to
realise their investment in Dickson Concepts (after receiving payment
of the Special Cash Dividend). If acceptances are received for all
the Offer Shares the percentage of Dickson Concepts Shares `in public
hands' (as such term is defined in Rule 8.24 of the Listing Rules)
will not be less than 25.0 per cent. of the issued share capital of
Dickson Concepts.
As at the Pre-Announcement Date, Broad Gain neither owned nor had
control or direction over any voting rights in Dickson Concepts.
Dickson Investment Holding Corporation and Mr. Poon (each being
persons acting in concert with Broad Gain) together held 139,070,194
Dickson Concepts Shares carrying voting rights in Dickson Concepts,
representing about 51.9 per cent. of the total issued share capital
of Dickson Concepts. The aggregate shareholding of Mr. Poon, his
associates and parties acting in concert with any of them in Dickson
Concepts is about 51.9 per cent. As the identities of some of the
concert parties are being ascertained, there may be changes to the
aggregate shareholding of the concert parties. Any such changes will
be disclosed as soon as the relevant information is confirmed. Broad
Gain is a wholly-owned subsidiary of Dickson Investment Holding
Corporation which acts as trustee of a trust established for the
benefit of, inter alia, Mr. Poon and members of his family. Mr. Poon
is the Group Executive Chairman and a Director of Dickson Concepts.
Condition of the Partial Offer
The Partial Offer will be conditional only upon the completion of
the Disposal.
If such condition is not fulfilled by 31st May, 1999 the Partial
Offer will lapse.
Terms of the Partial Offer
The Partial Offer will be made in compliance with the Takeovers
Code, which is administered by the Executive.
On behalf of Broad Gain, Merrill Lynch will make the Partial Offer
up to 51,000,000 Dickson Concepts Shares (representing about 19.0 per
cent. of the issued share capital of Dickson Concepts) (other than
those Dickson Concepts Shares already owned or held by Broad Gain and
persons acting in concert with it) on the following basis:
For each Offer Share HKD2.00 in cash
To the extent that acceptances are received for in excess of
51,000,000 Dickson Concepts Shares, acceptances in respect of Dickson
Concepts Shares in excess of about 40 per cent. of each Shareholder's
Dickson Concepts Shares, being the guaranteed entitlement, will be
scaled down in proportion to the number of such excess Dickson
Concepts Shares for which acceptances are received. The percentage of
the guaranteed entitlement may vary depending on the aggregate
shareholding of the concert group of Mr. Poon when it is finally
ascertained.
The issued share capital of Dickson Concepts as at the
Pre-Announcement Date was 268,123,652 Dickson Concepts Shares having
a total market capitalisation of HKD1,662.4 million.
Shareholders should note that Offer Shares will be acquired subject
to and after completion of the Disposal and payment of the Special
Cash Dividend. Therefore for the purpose of making comparisons with
the closing price of HKD6.20 per Dickson Concepts Share as quoted on
the Stock Exchange on the Pre-Announcement Date, it is appropriate to
aggregate with the Offer Price the amount of the Special Cash
Dividend. The Offer Price plus the Special Cash Dividend (being
HKD8.80 per Dickson Concepts Share in aggregate) represents a premium
of about 41.9 per cent. to the closing price of HKD6.20 per Dickson
Concepts Share as quoted on the Stock Exchange on the
Pre-Announcement Date. The Offer Price plus the Special Cash Dividend
also represents a premium of 31.0 per cent. to the simple average of
the closing prices of Dickson Concepts Shares of HKD6.72 for the ten
trading days up to and including the Pre-Announcement Date.
The Offer Shares will be acquired free from all liens, charges and
encumbrances and together with all rights attaching thereto,
including the right to receive all dividends and distributions
declared, paid or made on or after the date following completion of
the Disposal (but excluding the right to receive the Special Cash
Dividend).
Maintaining the Listing of Dickson Concepts
It is the intention of Broad Gain and Mr. Poon that the listing of
the Dickson Concepts Shares on the Stock Exchange shall be maintained
to allow Shareholders to enjoy the full benefits of a listing, and to
allow Dickson Concepts to maintain its public profile and ability to
raise capital for future expansion. It is for this reason that the
Partial Offer is only in respect of that number of Dickson Concepts
Shares which would result in the level of shareholding in public
hands remaining at not less than 25.0 per cent., being the minimum
level required by the Listing Rules. Assuming the Partial Offer is
fully accepted Broad Gain and Mr. Poon will hold, directly or
indirectly, about 70.9 per cent. of the issued share capital of
Dickson Concepts.
Other than the Dickson Concepts Shares, Dickson Concepts does not
have any other outstanding equity securities (including equity
related convertible securities, warrants, options or subscription
rights in respect of any equity share capital).
Total Consideration
At the Offer Price of HKD2.00 per Dickson Concepts Share, assuming
full acceptance of the Partial Offer, the total consideration payable
by Broad Gain would amount to about HKD102.0 million.
Merrill Lynch is satisfied that sufficient financial resources are
available to Broad Gain to satisfy full acceptance of the Partial
Offer.
Stamp Duty
Stamp duty at the rate of HKD1.25 for every HKD1,000 or part thereof
of the consideration payable in respect of the relevant acceptances
will be payable by holders of the Dickson Concepts Shares who accept
the Partial Offer. The relevant amount of stamp duty payable will be
deducted from the consideration payable upon acceptance of the
Partial Offer.
Independent Board Committee and Despatch of Composite Document
The Independent Board Committee referred to above will also consider
the terms of the Partial Offer and the independent financial adviser
(also referred to above) will advise such committee in relation to
such terms.
It is anticipated that a composite document containing the terms of
the Partial Offer, financial information with regard to Dickson
Concepts, the recommendation of the Independent Board Committee and
the advice of the independent financial adviser regarding the Partial
Offer, together with the forms of acceptance and transfer will be
despatched to Shareholders within 21 days of the date of this
announcement (or such later date as is agreed by the Executive),
together with the circular and notice of the special general meeting
referred to above.
Any composite document containing the terms of the Partial Offer may
contain new financial information with regard to Dickson Concepts.
Intention of Broad Gain and Mr. Poon
Mr. Poon has no intention to dispose of any of the Dickson Concepts
Shares which he will acquire indirectly through Broad Gain under the
Partial Offer. Furthermore, Broad Gain and Mr. Poon intend that
Dickson Concepts will continue to develop its existing Asian
businesses and to seek opportunities to carry out further business
expansion.
Broad Gain and Mr. Poon do not intend to make any major change to
the existing Directors and management of Dickson Concepts or to
redeploy any material assets of the Group including fixed assets
outside of the business of the Group or to inject material assets
into the Group.
Directors and Management of Dickson Concepts
The Directors and the senior management of Dickson Concepts will
continue in their present positions, continuing the leadership and
governance of Dickson Concepts.
7
POSSIBLE MARKET PURCHASES
If the Disposal is completed but the Executive does not grant its
consent to the making of the Partial Offer on the terms proposed, Mr.
Poon intends (through Broad Gain) to purchase up to 51,000,000
Dickson Concepts Shares at up to HKD2.00 per Dickson Concepts Share
for a period of five consecutive trading days commencing on the day
following completion of the Disposal. This would provide an
alternative means for Shareholders to realise their investment in
Dickson Concepts (after receiving payment of the Special Cash
Dividend). It is not the intention of Mr. Poon to make market
purchases if the Partial Offer is made even if it is not fully
accepted. Insofar as the Takeovers Code is applicable, any market
purchases will be made in compliance with the Takeovers Code.
8
SUSPENSION OF TRADING IN DICKSON CONCEPTS SHARES
At the request of Dickson Concepts, the trading of Dickson Concepts
Shares on the Stock Exchange was suspended at 10:00 a.m. on 7th
April, 1999 pending this announcement. Dickson Concepts has made an
application to the Stock Exchange for the resumption of trading of
the Dickson Concepts Shares on the Stock Exchange from 10:00 a.m. on
9th April, 1999.
Shareholders should be aware that the Disposal and Special Cash
Dividend are subject to certain conditions being fulfilled as
referred to above and may not become unconditional and accordingly
may not proceed. Shareholders and potential investors should
therefore exercise caution in dealing in any securities of Dickson
Concepts.
Terms used in this announcement
`Agreement' the conditional agreement
dated 7th April, 1999 entered
into between Dickson Concepts
as vendor and Broad Gain as
purchaser relating to the
Disposal
`Asian Assets' the assets which Dickson
Concepts will retain upon
completion of the Disposal
`Board' the board of Directors of
Dickson Concepts
`Broad Gain' Broad Gain Investments
Limited, a private company
incorporated with limited
liability under the laws of
the British Virgin Islands
`Dickson Investment Holding Dickson Investment Holding
Corporation' Corporation, a company
incorporated in Nauru which
acts as trustee of a trust
established for the benefit
of, inter alia, Mr. Poon and
members of his family
`Dickson Concepts' or the Dickson Concepts
`Company' (International) Limited, an
exempted company incorporated
with limited liability under
the laws of Bermuda, whose
Shares of par value HKD0.30
each are listed on the Stock
Exchange
`Dickson Concepts Share(s)' share(s) of HKD0.30 each in
the issued share capital of
Dickson Concepts
`Disposal' the proposed sale by Dickson
Concepts to Broad Gain of the
Non-Asian Assets on the terms
of the Agreement
`Directors' directors of Dickson Concepts
`Executive' the Executive Director of the
Corporate Finance Division of
the SFC or any delegate of
the Executive Director
`FFR' French Francs
`GBP' Great Britain Pounds Sterling
`Group' Dickson Concepts and its
subsidiaries
`Harvey Nichols' Harvey Nichols Group plc, a
public company incorporated
under the laws of England and
Wales whose shares are listed
on the London Stock Exchange
`HKD' Hong Kong Dollars
`Independent Board Committee' the independent committee of
the board of directors of
Dickson Concepts appointed to
advise the Independent
Shareholders on the Disposal
`Independent Shareholders' Shareholders other than Broad
Gain and its associates
`Issue' the proposed issue of
convertible bonds in the
principal amount of between
FFR80.0 million (HKD102.0
million) and FFR90.0 million
(HKD114.8 million) by S.T.
Dupont
`Listing Rules' The Rules Governing the
Listing of Securities on the
Stock Exchange
`Merrill Lynch' Merrill Lynch (Asia Pacific)
Limited
`Mr. Poon' Mr. Dickson Poon who is the
Group Executive Chairman and
a Director of Dickson
Concepts and the sole
director of Broad Gain
`Non-Asian Assets' the entire interest of
Dickson Concepts in Harvey
Nichols, S.T. Dupont, TH
Leather Goods and Sandgraw
which Dickson Concepts has
agreed to sell and Broad Gain
has conditionally agreed to
purchase pursuant to the
Agreement
`Offer Price' HKD2.00 per Dickson Concepts
Share
`Offer Shares' 51,000,000 Dickson Concepts
Shares offered to be acquired
under the Partial Offer,
representing about 19.0 per
cent. of the issued share
capital of Dickson Concepts
`Partial Offer' the voluntary conditional
partial cash offer proposed
to be made by Merrill Lynch
on behalf of Broad Gain for
the Offer Shares not already
owned or held by Broad Gain
and persons acting in concert
with it at the Offer Price
`Pre-Announcement Date' 6th April, 1999 except where
the date refers to the
closing price and market
capitalisation of Dickson
Concepts Shares, 1st April,
1999 (being the last day of
trading of the Dickson
Concepts Shares before the
date of this announcement)
`Sandgraw' Sandgraw Limited, a wholly
owned subsidiary of Dickson
Concepts incorporated under
the laws of Jersey
`SFC' the Securities and Futures
Commission
`Shareholder' a holder of Dickson Concepts
Shares
`Special Cash Dividend' the proposed cash dividend of
HKD6.80 per Dickson Concepts
Share payable to Shareholders
conditional upon approval of
the Disposal
`S.T. Dupont' S.T. Dupont, a
soci|$$|Aaet|$$|Aae anonyme
incorporated under the laws
of France whose shares are
listed on the Paris Bourse
`Stock Exchange' The Stock Exchange of Hong
Kong Limited
`Takeovers Code' the Hong Kong Code on
Takeovers and Mergers
`TH Leather Goods' Tommy Hilfiger Handbags and
Small Leather Goods Inc., a
wholly owned subsidiary of
Dickson Concepts incorporated
under the laws of the State
of Delaware,
U.S.A.
Note: Historical financial figures denominated in FFR and GBP have
been converted into HKD at the applicable exchange rates prevailing
at the time. The applicable historical exchange rates are: FFR1.000 =
HKD1.385 as at 30th September, 1998 and FFR1.000 = HKD1.257 as at
31st March, 1998; GBP1.000 = HKD13.230 as at 26th September, 1998 and
GBP1.000 = HKD12.990 as at 28th March, 1998.
The financial figures denominated in FFR and GBP as at the
Pre-Announcement Date have been converted into HKD at the following
rates: FFR1.000 = HKD1.275 and GBP 1.000 = HKD12.418, which were the
prevailing rates as at 1st April, 1999.
By Order of the Board
Dickson Concepts (International) Limited
Edwin Ing
Executive Director and Company Secretary
Broad Gain Investments Limited
Dickson Poon
Director
Hong Kong, 8th April, 1999
The Directors of Dickson Concepts jointly and severally accept full
responsibility for the accuracy of the information (other than that
relating to Broad Gain and the Partial Offer) in this announcement
and confirm, having made all reasonable enquiries, that to the best
of their knowledge, their opinions expressed in this announcement
have been arrived at after due and careful consideration and there
are no other facts (other than that relating to Broad Gain and the
Partial Offer) not contained in this announcement the omission of
which would make any statements in this announcement misleading.
Mr. Poon, the sole director of Broad Gain, accepts full
responsibility for the accuracy of the information relating to Mr.
Poon, Broad Gain and the Partial Offer in this announcement and
confirms, having made all reasonable enquiries, that to the best of
his knowledge, his opinions expressed in this announcement have been
arrived at after due and careful consideration and there are no other
facts relating to Broad Gain or the Partial Offer not contained in
this announcement the omission of which would make any of the
statements in this announcement misleading.
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