CHINA MER HOLD<0144> - Announcement
This announcement is for information purposes only and does not
constitute an invitation to subscribe for or purchase any securities
and neither this announcement nor anything herein forms the basis
for any contractual commitment whatsoever. Neither this announcement
nor any copy thereof may be taken into or distributed in the United
States or to any U.S. persons.
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.
CHINA MERCHANTS HOLDINGS (INTERNATIONAL) COMPANY LIMITED
(incorporated in Hong Kong with limited liability)
PROPOSED GUARANTEED CONVERTIBLE BOND ISSUE
summary
China Merchants Holdings (International) Company Limited is
currently considering an issue of guaranteed convertible bonds due
2004 by a wholly-owned subsidiary of the Company, CMHI Caymans Inc.,
in the international capital markets. Details of the proposed size
and indicative terms of the bonds are set out below.
The Company is also considering the issue of additional bonds to
China Merchants Holdings (Hong Kong) Company Limited, the
controlling shareholder of the Company. The issue of such bonds will
constitute a connected transaction of the Company and will be
subject to approval by independent shareholders of the Company.
It is intended that the net proceeds of the issue of the bonds will
be used in part to finance the acquisitions of a 32.5% equity
interest in Shekou Container Terminal Limited and a 20% equity
interest in Asia Airfreight Terminal Company Limited. Details of the
acquisitions were announced by the Company in a press announcement
issued on 7 April 1999.
This announcement also sets out certain information included in the
preliminary offering circular in respect of the proposed issue of
the bonds which have not been previously announced by the Company
for the general information of public investors.
Proposed guaranteed Convertible Bond Issue
China Merchants Holdings (International) Company Limited (the
"Company") announces that it is currently considering an issue (the
"Issue") of approximately US$100 million in aggregate principal
amount of guaranteed convertible bonds due 2004 (the "Firm Bonds")
by a wholly-owned subsidiary of the Company, CMHI Caymans Inc. (the
"Issuer"), a company incorporated in the Cayman Islands, in the
international capital markets. The Firm Bonds will be guaranteed
irrevocably and unconditionally as to the principal amount and
interest by the Company. It is currently contemplated that the Firm
Bonds will be issued for a term of five years in the international
capital markets to institutional and professional investors. In
addition, it is contemplated that an option may be granted by the
Issuer to the lead manager of the Issue to issue further bonds on
the same terms as the Firm Bonds of up to US$15 million,
representing 15% of the size of the Issue (the "Optional Bonds"
which, together with the Firm Bonds, be hereinafter referred to as
the "Bonds").
The detailed pricing and other terms and conditions of the Bonds,
including the principal amount, interest rate and any applicable
premium on conversion, as well as the exact timing of the issue of
the Bonds, have not yet been determined. The proposed Issue may or
may not proceed and a further announcement will be made if and when
the exact terms and size of the Bonds have been finalised, which
will be after the completion of the marketing of the Bonds.
The Bonds will be convertible into new shares of HK$0.10 each of the
Company (the "Shares"). The issue of new Shares upon conversion of
the Bonds will be made pursuant to and covered by the general
mandate given to the directors of the Company by the shareholders at
the Company's Annual General Meeting held on 28 May 1998. An
application has been made to list the Bonds on the Luxembourg Stock
Exchange. Application will be made to The Stock Exchange of Hong
Kong Limited (the "Hong Kong Stock Exchange") for the granting of
the listing of, and permission to deal in, the new Shares to be
issued upon exercise of the conversion rights attached to the Bonds.
No application will be made for the listing of, or permission to
deal in, the Bonds on the Hong Kong Stock Exchange. The Bonds will
not be registered under the U.S. Securities Act of 1933 or with any
securities regulatory authority in the United States and may not be
offered or sold within the United States absent of registration or
an applicable exemption from the registration requirements thereof.
In addition to the Bonds, the Company is currently considering the
issue of further bonds (the "Parent Bonds") on the same term as the
Bonds by the Issuer to China Merchants Holdings (Hong Kong) Company
Limited ("CM Holdings"). No decision has been made as to whether the
Parent Bonds are to be issued and the proposed size of such Parent
Bonds is yet to be determined. The Company is aware that the issue
of the Parent Bonds to CM Holdings, the controlling shareholder of
the Company, will constitute a connected transaction of the Company
under the Rules Governing the Listing of Securities on the Hong Kong
Stock Exchange (the "Listing Rules"). Should the Company proceed
with the issue of the Parent Bonds, it will issue a press
announcement and prepare and despatch a circular to shareholders
containing, inter alia, further details relating to the Parent Bonds
and a notice to convene an extraordinary general meeting to consider
and, if thought fit, to approve the issue of the Parent Bonds.
intended use of proceeds
It is intended that the net proceeds of the issue of the Bonds will
be used by the Company in part to fund the acquisitions of a 32.5%
equity interest in Shekou Container Terminal Limited and a 20%
equity interest in Asia Airfreight Terminal Company Limited and the
remainder will be used for general corporate purposes. Details of
the acquisitions are set out in the press announcement issued by the
Company on 7 April 1999. Pending application as described herein,
the Company expects to temporarily place the proceeds on short-term
deposits with banks.
offering circular
The Issue is intended to be offered to independent professional
investors only and a preliminary offering circular (the "Circular")
in respect of the proposed issue of the Bonds has been prepared for
distribution to such investors. The Directors and the substantial
shareholder of the Company will confirm that apart from the Parent
Bonds which may be issued to CM Holdings, neither they nor their
respective associates (as defined in the Listing Rules) will
subscribe for or purchase the Bonds in connection with their
offering or distribution by the managers of the Issue and that they
will disclose to the Company and the Hong Kong Stock Exchange any
dealings by them or their respective associates in the Bonds
following their initial offering and distribution.
Since the Circular will disclose information which has not been
previously furnished to public investors, extracts from the Circular
for the general information of the Company's shareholders and public
investors are set forth below.
1. Selected Financial Information
The following table presents selected unaudited interim financial
data of the Company together with its subsidiaries (the "Group") as
at 30 June 1998.
(Unaudited)
as at 30 June
1998
Notes (HK$'000)
Assets and Liabilities
Tangible fixed assets 2,675,808
Intangible assets 1 4,135,986
Interests in associated companies 2 1,549,078
Investments in joint ventures 393,837
Net current assets 3 799,534
9,554,243
Financed by:
Share capital 185,035
Reserves 7,808,124
Shareholders'funds 7,993,159
Minority interests 4 1,254,891
Long-term loans 306,193
9,554,243
Notes:
(1) Intangible assets comprised toll road operating rights,
naming rights of land and building and pre-operating expenses less
amortisation.
(2) The acquisition of two new associated companies was completed
during the period.
(3) Current assets amounted to HK$1,881 million and current
liabilities amounted to HK$1,082 million.
(4) Included in minority interests are loans from minority
shareholders which amounted to HK$519 million.
2. Financial Breakdown
The following table shows a breakdown of the Group's principal
businesses in terms of turnover and profitability for the periods
indicated:
For the year ended 31 December For the six months ended 30 June
1995 1996 1997 1997 1998
(audited) (unaudited)
(HK$'000)(%) (HK$'000)(%) (HK$'000) (%)(HK$'000)(%)(HK$'000)(%)
Turnover
Transportation
Infrastructure - - - - 213,180 15 - - 256,430 36
Shipping Business 317,486 36 288,969 36 290,539 20 134,313 33 145,538 20
Industrial Products 573,440 64 513,409 64 606,340 42 274,527 67 295,738
41
Others - - - - 335,244 23 - - 17,165 3
Total 890,926 100 802,378 100 1,445,303 100 408,840 100 714,871 100
Operating Profit
Transportation
Infrastructure - - - - 130,144 47 - - 167,373 77
Shipping Business 66,842 66 82,500 84 91,475 33 23,110 52 46,958 22
Industrial Products 39,662 39 28,284 29 26,851 10 14,904 33 16,178 7
Others (4,708)(5) (12,081)(13) 27,540 10 6,758 15 (13,917) (6)
Total 101,796 100 98,703 100 276,010 100 44,772 100 216,592 100
Exceptional item - 54,861 - - -
Profit from ordinary
activities 101,796 153,564 276,010 44,772 216,592
Share of results of
associated companies(1)21,310 36,507 46,155 12,294 166,732
Profit from ordinary
activities before
taxation 123,106 190,071 322,165 57,066 383,324
Taxation 7,583 7,719 13,527 3,196 25,230
Profit after tax 115,523 182,352 308,638 53,870 358,094
Note:
(1) In 1995 and 1996, contributions to share of results of
associated companies came from the paint product manufacturing
operations and China Southern Glass Holdings Co., Ltd. ("Southern
Glass").
In 1997 and the first half of 1997, contributions to share of
results of associated companies came from China International Marine
Containers (Group) Co., Ltd. ("CIMC"), the paint product
manufacturing operations and Southern Glass.
In the first half of 1998, contributions to share of results
of associated companies came from CIMC, Modern Terminals Limited
("MTL"), China Nanshan Development (Group) Incorporation, the paint
product manufacturing operations and Southern Glass.
3. Liquidity and Capital Resources
The Group's total borrowings increased from HK$444.6 million at the
end of 1997 to HK$1.2 billion at the end of 1998 primarily due to
the long-term loans entered into by the Group to finance the
acquisition of two new Aframax tankers in the second half of 1998. A
significant portion of the Group's obligations in respect of its
borrowings are related to its shipping operations and are secured
over the Group's vessels. As at 31 December 1998, HK$576.1 million
of borrowings was secured. Of its total indebtedness as at 31
December 1998, approximately HK$366.4 million was payable within one
year, HK$277.3 million payable after one but within two years,
HK$384.9 million payable after two but within five years and
HK$189.4 million payable after five but within twelve years. As at
31 December 1998, the Company had undrawn credit facilities of
HK$365.1 million, out of total available credit facilities of HK$1.6
billion.
The Company services its debt primarily through cash generated by
the Group's operations. As at 31 December 1998, the Group had cash
on hand of approximately HK$1.3 billion of which approximately
HK$324.0 million was held by subsidiaries engaged in PRC joint
ventures. Such amount is owing by such subsidiaries to the Group's
various joint venture partners in the PRC pursuant to the terms of
the relevant joint ventures, reflecting capital commitments made by
the Group in such joint ventures. These amounts will generally not
be available to the Group for other purposes. Approximately HK$121.5
million has been committed to the Group's various pending
investments including its investment on Yangquan Road in Shanxi, the
People's Republic of China ("PRC"). Approximately HK$854.5 million
remains uncommitted.
Cash on hand increased by approximately 73.0% as at 31 December 1998
compared to 31 December 1997 as a result principally of a share
placement by the Company in November 1998, the proceeds of which
have not yet been utilised. Due to the late year end increase in
cash on hand from such share placement and as a result of increased
interest expenses for the long-term loans to finance the acquisition
of the two Aframax tankers in 1998, there was an increase in net
interest expenses. Taking into consideration its cash and cash
equivalents and unutilised bank facilities, the Company believes
that it has and will continue to have access to adequate sources of
funding for its investment needs and will have adequate cash to fund
its obligations under the guarantee relating to the Bonds and to
satisfy its other commitments in the near term.
Total short-term debts as at 31 December 1998 was approximately
HK$366.4 million, made up of HK$75.0 million short-term secured
debt, HK$143.3 million short-term unsecured debt and HK$148.1
million unsecured bank overdrafts. Total long-term debt as at 31
December 1998 was approximately HK$851.7 million made up of HK$501.1
million secured debt and HK$350.6 million unsecured debt.
The table below sets out the total capital expenditure commitments
of the Company entered into for the year ended 31 December 1998:
For the year ended
31 December 1998
(HK$'000,000)
Acquisitions of Fixed Assets 587
Capital Investments 3,640
Total Capital Expenditure 4,227
4. Recent Financial Information
As at 31 December 1998, the Company's tangible fixed assets exceeded
those as at 30 June 1998 by approximately HK$0.4 billion, due
primarily to the acquisition of two new Afrumax tankers by the
Company's subsidiary in the second half of 1998. Investments in
joint ventures increased substantially, to approximately HK$0.8
billion, principally as a result of the Group's acquisition of
interests in two joint ventures in the PRC engaged in the
construction, operation and management of toll roads and bridges,
one of which acquisitions has a fixed rate of return on investment.
Associated companies' investments increased by in excess of HK$1.2
billion largely as a result of accretive growth in the Company's
investment in MTL, accounted for under the equity method of
accounting.
Total current assets as at 31 December 1998 was approximately HK$2.0
billion. Listed investments decreased compared to 1997, as the
Company opted to decrease its focus on these investments in light of
regional economic conditions. Debtors, prepayments and deposits
increased from 30 June 1998, attributable largely to amounts accrued
as at 31 December 1998 but as yet unpaid on that date in connection
with joint ventures making annual distributions of profit. Compared
to 31 December 1997, debtors, prepayments and deposits decreased,
due primarily to a reclassification in the naming rights for the
West tower at Shun Tak Centre (reclassified to intangible assets
upon the actual renaming in 1998) and to the transfer of the Group's
investment in a joint venture in the PRC to investments in joint
ventures.
5. Recent Developments
The Group entered into a joint venture agreement in August 1998 to
establish a Sino-foreign joint venture to operate and manage a
highway in Yangquan, Shanxi, PRC. The Group holds a 54.2% interest
in the joint venture and the remaining interest is held by the PRC
joint venture partner. The PRC joint venture partner will contribute
its portion of the investment amount by transferring the land-use
rights and the operating rights to the Yangquan Road to the joint
venture and the Group will contribute its portion of the investment
amount in cash and the Group's total investment is expected to
amount to approximately HK$121.5 million which will be made after
all necessary approvals have been received. Application has been
made to the relevant PRC regulatory authorities for the approvals of
the joint venture.
The Yangquan Road comprises three sections, the Nanwaihuan Section,
Pingding Section and the Saiyu Section. The Yangquan Road forms part
of the transportation network linking Yangquan with National Highway
307 in Shanxi, PRC. The operation and management of the Yangquan
Road will be undertaken by the Group.
Under the terms of the joint venture contract, the Group is entitled
to receive 100% of the distributable profits for the first ten years
of the joint venture, 70% of the distributable profits from the
eleventh to the twentieth year and 50% of the distributable profits
from the twenty-first to the thirtieth year.
The Company will make a further announcement in relation to the
terms, the structure and the use of proceeds of the Bonds as soon as
they have been finalised.
By Order of the Board
Zhao Hu Xiang
Managing Director
Hong Kong, 10 April, 1999
|
