PEARL ORIENTAL<0988> - Announcement & Resumption of Trading
PEARL ORIENTAL HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
SHARE TRANSACTION
The directors (the "Directors") of Pearl Oriental Holdings Limited (the
"Company") announce that the following agreements have been entered into
on 14 April 1999:
(i) a joint-venture agreement (the "JV Agreement") by China
Sanjiu(999) Import & Export Corporation ("China Sanjiu") and PT&T China
Limited ("PT&T"), pursuant to which the parties agreed to establish an
equity joint venture to be named Pearl Sanjiu Information Technology
Limited ("Pearl Sanjiu") in which China Sanjiu will have a 40% equity
interest and PT&T will have a 60% equity interest.
(ii) a conditional share-asset transfer agreement ("Transfer
Agreement") by China Sanjiu, the Company and PT&T, pursuant to which PT&T
agreed to acquire part of the existing assets ( the "SI Assets") under the
operation of Sanjiu Information Advan Centre ("Sanjiu Information")
including but not limited to office equipment, receivables and software
properties, etc with a value of RMB7,350,000 (the "Assets") from China
Sanjiu at a price of RMB7,350,000 (the "Consideration"), equivalent to
HK$6,869,159 at the agreed exchange rate of HK$1 to RMB1.07, to be
satisfied by the issue of 28,037,383 new shares of HK$0.10 each in
the capital of the Company at an issue price of HK$0.245 per share. The
Assets acquired will be injected into Pearl Sanjiu in the form of
shareholder's loan (the "Shareholder's Loan") of RMB7,350,000.
A. JV AGREEMENT
1. Date of JV Agreement
14 April 1999.
2. Parties
(i) China Sanjiu is a wholly-owned subsidiary of Sanjiu Enterprise
Group ("Sanjiu Enterprise") in the PRC. Both China Sanjiu and
Sanjiu Enterprise are independent third parties not connected with the
Company, any of its subsidiaries, the directors, chief executives and
substantial shareholders of the Company or any of its subsidiaries or any
of their respective associates (as defined under the Rules (the "Listing
Rules") Governing the Listing of Securities on the Stock Exchange); and
(ii) PT&T, an indirect wholly-owned subsidiary of the Company.
3. Nature
To establish Pearl Sanjiu, an equity joint venture in Shenzhen under the
Sino-Foreign Equity Joint Venture Law of the PRC for a term of 50 years.
4. Business of Pearl Sanjiu
Building on the SI Assets to be injected into Pearl Sanjiu, to engage in
the development, marketing, sale and maintenance of hospital management
information software systems and to expand into computer system
integration consultancy and technical support services as well as the
provision of internet information services.
5. Assets to be injected
The SI Assets with a valuation of RMB10,950,000 will be transferred to
Pearl Sanjiu. Part of the SI Assets with a value of RMB1,600,000 will be
injected into Pearl Sanjiu as 40% of the registered capital contribution
by China Sanjiu. Another part of the SI Assets with a value of
RMB2,000,000 will be settled out of the 60% cash registered capital
contribution by PT&T. The remaining part of the SI Assets with a value of
RMB7,350,000 is the subject Assets to be acquired by PT&T under the
Transfer Agreement for injection into Pearl Sanjiu in the form of
Shareholder's Loan.
6. Registered capital and contribution
China Sanjiu PT&T Total
(Rmb'Mn)
Registered capital (Rmb'Mn) 1.60 (40%) 2.40(60%) 4.00
Type of contribution part of the SI Assets cash
*Shareholder's Loan (Rmb'Mn)
(as defined below) - 7.35 7.35
Type of contribution - the Assets
Total investment in Pearl Sanjiu: 11.35
* The Shareholder's Loan is an unsecured loan. Pearl Sanjiu
undertakes not to distribute any distributable profits to shareholders
until the aforesaid Shareholder's Loan of RMB7,350,000 is fully repaid.
7. Management of Pearl Sanjiu
The experienced professional and technical experts and strong marketing
team of Sanjiu Information will be retained by Pearl Sanjiu to carry out
the day to day operation and management. The board of directors of Pearl
Sanjiu which will comprise of 7 members, 3 of them to be appointed by
China Sanjiu and the other 4 to be appointed by PT&T, will carry out
overall policies and objective making functions.
8. Others
The formation of Pearl Sanjiu is subject to the approval of the Shenzhen
Foreign Investment Board.
B. TRANSFER AGREEMENT
1. Date of Transfer Agreement
14 April 1999.
2. Parties
(i) China Sanjiu as vendor;
(ii) PT&T as purchaser; and
(iii) the Company.
3. Nature
To acquire the Assets of Sanjiu Information from China Sanjiu and inject
the same into Pearl Sanjiu in the form of Shareholder's Loan.
4. Consideration
RMB7,350,000 (HK$6,869,159) is to be satisfied by the issue of 28,037,383
new shares (the "Consideration Shares") of HK$0.10 each in the capital of
the Company at an issue price of HK$0.245 per share (the "Issue Price"),
representing a premium of approximately 47.6% to the closing price of
HK$0.166 prior to the suspension of trading in the Company's shares on the
Stock Exchange on 14 April 1999 and a premium of approximately 66.3% and
56.1% respectively to the 10-day average closing price of HK$0.150 and
5-day average closing price of HK$0.157 up to and including 14 April 1999.
The Consideration was determined based on arm's length negotiation by
reference to the valuation of the SI Assets. The Issue Price represents a
discount of approximately 4.18% to the net asset value of HK$0.2557 per
share calculated based on the net asset value as at 31 December 1997 after
adjustment to the published interim results and share placement in 1998.
The Consideration Shares represent approximately 0.27% and 0.22%
respectively of the existing and the enlarged issued share capital of the
Company at completion and will be issued pursuant to the general mandate
granted to the Directors at its annual general meeting held on 23 June
1998. The Consideration Shares will rank pari passu in all respects with
the shares of the Company in issue on the date of completion. Application
will be made to the Stock Exchange for the listing of, and permission to
deal in, the Consideration Shares.
5. Conditions
(i) the Listing Committee of the Stock Exchange granting approval
for the listing of, and permission to deal in the Consideration Shares;
(ii) prior to the completion of the Transfer Agreement, listing of
the Company's shares has not been withdrawn and the shares can be dealt on
the Stock Exchange;
(iii) establishment of Pearl Sanjiu according to the JV Agreement;
(iv) prior to the formation of Pearl Sanjiu, PT&T completing to
its own satisfaction a due diligence investigation into the affairs of
Sanjiu Information;
(v) issue of a valuation report by a recognised valuation firm in
the PRC within a period of three months certifying the total value of the
SI Assets being not less than RMB10,950,000; and
(vi) issue of an endorsement notice on the valuation report
mentioned in item (v) by the relevant authorities for the administration
of state assets.
6. Completion
Completion will take place within three months subject to the fulfillment
of the conditions precedent after the issue of the Business Licence of
Pearl Sanjiu.
7. Sanjiu Information
Sanjiu Information is a business department operated under China Sanjiu
principally engaging in the development, marketing, sale and maintenance
of hospital management information software systems in the PRC. Sanjiu
Information has successfully developed the software systems since its
establishment in 1994. At present, Sanjiu Information has supplied the
systems and is providing ancillary services to 21 hospitals in the PRC.
The profits before tax attributable to the Sanjiu Information business as
certified by an independent accountant in the PRC for the years ended 31
December 1997 and 31 December 1998 were RMB952,610 (HK$890,290) and
RMB1,368,030 (HK$1,278,533) respectively.
C. REASONS FOR THE AGREEMENTS
The transactions herein represent a further step to enhance the Company's
diversification in the information technology business. Based on the 1998
profits of RMB1,368,030 (HK$1,278,533), the total investment value of
RMB11,350,000 (HK$10,607,477) in Pearl Sanjiu represents a price earning
ratio of 8.3 times. Given the expertise and the value of the software
assets to be injected into Pearl Sanjiu, the Directors consider such ratio
is fair and reasonable. Pearl Sanjiu expects to see tremendous growth
potential in the market of 13,000 hospitals of county grade or above in
the PRC which would eventually computerise their management information
systems.
D. GENERAL INFORMATION
The Company is an investment holding company and its subsidiaries are
principally engaged in property investment, development and trading,
project management, hotel investment, management and consultancy as well
as financial services.
The Transfer Agreement constitutes a share transaction for the Company
under the Listing Rules.
E. Suspension of Trading and Resumption
Trading in the Company's shares on the Stock Exchange was suspended with
effect from 2:30 p.m. on 14 April 1999 at the request of the Company
pending the issue of this announcement. Application has been made to the
Stock Exchange for the resumption of trading in shares with effect from
10:00 a.m. on 15 April 1999.
By Order of the Board
Pearl Oriental Holdings Limited
Wong Kwan
Chairman and Chief Executive
Hong Kong, 14 April 1999.
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