KING PACIFIC<0072> - Announcement & Resumption of Trading
The Stock Exchange of Hong Kong Limited and the Securities and
Futures Commission take no responsibility for the contents of
this announcement, make no representation as to its accuracy
or completeness and expressly disclaim any liability
whatsoever for any loss howsoever arising from or in reliance
upon the whole or any part of the contents of this announcement.
KING PACIFIC INTERNATIONAL HOLDINGS LIMITED
(Incorporated with limited liability in Bermuda)
INTELLIGENT TRICO INVESTMENT HOLDINGS LIMITED
(Incorporated with limited liability in Hong Kong)
UNCONDITIONAL VOLUNTARY CASH OFFER BY
ICEA CAPITAL LIMITED ON BEHALF OF
INTELLIGENT TRICO INVESTMENT HOLDINGS LIMITED
FOR ALL THE ISSUED SHARES OF
KING PACIFIC INTERNATIONAL HOLDINGS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED OR HELD BY INTELLIGENT
TRICO INVESTMENT HOLDINGS LIMITED
AND PARTIES ACTING IN CONCERT WITH IT)
The Offeror and parties acting in concert with it are, together,
beneficially interested in approximately 55.8 per cent. of the
issued share capital of King Pacific. The Offeror will make
an unconditional voluntary cash offer for all the issued shares
in King Pacific not already owned by the Offeror or parties
acting in concert with it.
The Offer comprises HK$0.93 in cash for each King Pacific Share
that is the subject of the Offer.
As soon as practicable, and in any event within 21 days of the
date of this announcement (or such later date as may be permitted
under the Takeovers Code), a composite document including an
Offer document of the Offeror setting out the terms of the Offer,
together with the acceptance and transfer forms, and the
response document of King Pacific will be despatched to King
Pacific Shareholders.
THE OFFER
Offer
An unconditional voluntary cash offer for all the King Pacific
Shares other than those King Pacific Shares owned or held by
the Offeror or parties acting in concert with it.
Offeror
Intelligent Trico Investment Holdings Limited, incorporated
in Hong Kong, is a company owned as to 50 per cent. by each
of Mr. Cheng and Mr. Zeng. The Offeror is a general investment
vehicle and has no business other than holding investments in
securities. The parties acting in concert with the Offeror
include Mr. Cheng, Mr. Zeng, Mr. Cheung, Mr. Lang, Mr. Lai,
Mr. Zhang and persons or entities acting in concert with any
of them within the meaning of the Takeovers Code.
Offer price
For each King Pacific Share HK$0.93 in cash
Comparisons of value
During the period of six months ended on 17th May, 1999 (being
the latest practicable date prior to the finalisation of this
announcement for the purpose of ascertaining certain
information for inclusion in this announcement), the Offeror
and parties acting in concert with it acquired and disposed
of King Pacific Shares as follows:
Number of Number of Number of Highest Lowest
King Pacific King Pacific King Pacific purchase/ purchase/
Shares held Shares shares sold selling selling
on 17/5/99 acquired price price
(HK$) (HK$)
Intelligent Trico Investment
Holdings Limited Nil Nil Nil - -
Mr. Cheng
13,576,200 Nil 300,000 0.66 0.66
Changjiang Power
113,852,536 Nil 14,342,000 1.11 0.80
ITE 53,280,000 52,082,000 Nil 1.09 0.87
China Fortune
207,692,308 207,692,308 Nil 0.65 0.65
Mr. Cheung
80,536,000 Nil Nil - -
468,937,044 259,774,308 14,642,000
The Offer Price represents a premium of approximately 0.2 per
cent. over the average closing price of approximately HK$0.928
per King Pacific Share during the ten consecutive trading days
ended on 17th May, 1999 (being the last trading day on which
King Pacific Shares were traded on the Stock Exchange before
this announcement) and a discount of approximately 2.1 per cent.
to the closing price of King Pacific Shares of HK$0.95 on 17th
May, 1999.
Based on the latest published audited consolidated financial
statements of King Pacific for its financial year ended 31st
March, 1998, the consolidated net asset value of King Pacific
was approximately HK$545.6 million, representing
approximately HK$0.86 per King Pacific Share as at that date.
The Offer Price represents a premium of approximately HK$0.07
(approximately 8.1 per cent.) to such net asset value per King
Pacific Share.
Highest and lowest prices
During the six months ended on 17th May, 1999, the highest
closing price of King Pacific Shares was HK$1.11 (on 9th
December, 1998) and the lowest closing price was HK$0.66 (on
24th November, 26th November, 1st December and 2nd December,
1998).
Terms of the Offer
Under the Offer, the King Pacific Shares will be acquired free
from all third party rights, liens, claims, equities, charges
and encumbrances and together with all rights attaching thereto,
including the right to receive all dividends and distributions
declared, paid or made on the King Pacific Shares after the
date of the Offer.
Stamp duty
Sellers' ad valorem stamp duty arising in connection with
acceptance of the Offer will be payable by each King Pacific
Shareholder at the rate of HK$1.25 for every HK$1,000 or part
thereof of the consideration arising in connection with the
acceptance of the Offer and will be deducted from the cash amount
due to such person under the Offer.
Valuation of the Offer
On the basis of the Offer Price and the issued share capital
of King Pacific of 839,755,650 King Pacific Shares at the date
of this announcement, the Offer values the whole of the issued
share capital of King Pacific at approximately HK$781.0
million.
At the Offer Price, the amount payable by the Offeror on full
acceptance of the Offer (excluding certain beneficial owners
of King Pacific Shares who have undertaken to the Offeror not
to accept the Offer as further described below) amounts to
approximately HK$119.3 million. ICEA Capital Limited is
satisfied that sufficient financial resources are available
to the Offeror to satisfy full acceptance of the Offer.
Offer document and response document
An independent committee of the board of directors of King
Pacific will be established to consider the terms of the Offer
and that an independent financial advisor (the "Independent
Financial Advisor") will be appointed to advise such committee
regarding the Offer.
A composite document which includes the Offer document of the
Offeror containing, inter alia, details of the Offer and other
matters referred to in this announcement, together with forms
of acceptance and transfer, and the response document of King
Pacific containing, inter alia, the recommendation of the
independent board committee of King Pacific and the advice of
the Independent Financial Advisor regarding the Offer will be
despatched to King Pacific Shareholders as soon as practicable
and in any event within 21 days of the date of this announcement
(or such later date as may be permitted under the Takeovers
Code).
King Pacific Shareholders should exercise caution when buying
or selling King Pacific Shares prior to receipt of this
document.
Outstanding share options
King Pacific has no outstanding convertible securities,
options (including employee share options) or warrants (as
these terms are defined in the Takeovers Code).
NON-ACCEPTING SHAREHOLDERS
Certain beneficial owners of King Pacific Shares who, together,
hold approximately 28.9 per cent. of the total issued share
capital of King Pacific have executed irrevocable undertakings
in favour of the Offeror not to accept the Offer. The name of
such parties and their respective shareholding interests in
King Pacific Shares are listed below:
Name of party
Number of King Percentage of
Pacific Shares total issued
beneficially share capital
interested of King Pacific
Mr. Cheung Yiu Wing 121,826,599 14.5%
Mr. Cheung Wing Keung, Samuel 10,714,000 1.3%
Mr. Chan Chun Ming 23,000,000 2.7%
Ms. Zhang Anita Lining 20,000,000 2.4%
Mr. Chen Yueh Kuei 20,900,000 2.5%
Mr. Sit Yik Leung 15,000,000 1.8%
Mr. Cheung Sui Lam 6,106,000 0.7%
Fullview Industries Limited(1) 25,000,000 3.0%
----------- -----
242,546,599 28.9%
=========== =====
(1) Fullview Industries Limited is a private company which is
owned as to 50 per cent. by each of Mr. Yang Xiao Min and Mr.
Fu Ren.
All the above parties are not connected with each other (except
that Mr. Cheung Wing Keung, Samuel is the son of Mr. Cheung
Yiu Wing) and are also not connected with the Offeror or any
of the parties acting in concert with it.
INFORMATION ON THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT
The Offeror and parties acting in concert with it are, together,
beneficially interested in approximately 55.8 per cent. of the
issued share capital of King Pacific. The Offeror is owned as
to 50 per cent. by each of Mr. Cheng and Mr. Zeng.
Mr. Cheng, personally and through Changjiang Power which is
wholly-owned by him, is interested in 127,428,736 King Pacific
Shares, representing approximately 15.2 per cent. of the total
issued share capital of King Pacific. Mr. Cheng first became
an executive director of King Pacific in March 1994. Mr. Cheng
actively participates in the day-to-day management of King
Pacific.
Mr. Zeng and Mr. Zhang each holds a 50 per cent. shareholding
in ITE, and Mr. Zeng is the Chairman, while Mr. Zhang and Mr.
Cheng are directors, of ITE. Neither Mr. Zeng nor Mr. Zhang
is currently a director of King Pacific. ITE is the holder of
53,280,000 King Pacific Shares, representing approximately 6.3
per cent. of the total issued share capital of King Pacific.
Mr. Cheung is the holder of 80,536,000 King Pacific Shares,
representing approximately 9.6 per cent. of the total issued
share capital of King Pacific. Mr. Cheung is currently an
executive director of King Pacific.
Mr. Lai and Mr. Lang each holds a shareholding of 10 per cent.
and 90 per cent. respectively in China Fortune. China Fortune
is the holder of 207,692,308 King Pacific Shares, representing
approximately 24.7 per cent. of the total issued share capital
of King Pacific. Neither Mr. Lai nor Mr. Lang is currently a
director of King Pacific.
On 20th May, 1999, the Offeror and parties acting in concert
with it entered into a concert party agreement. Pursuant to
such agreement, the parties agreed to cooperate and consult
one another in relation to the exercise of any voting rights
as shareholders of King Pacific with a view to such voting rights
being exercised on a consensus basis, to support and implement
the proposed changes to the board of directors of King Pacific
referred to below, and to cooperate and consult one another
in relation to any matter to be decided by the directors of
King Pacific with a view to a consensus view being reached in
respect of such matter. In the event that consensus is not
reached whether in respect of the exercise of voting rights
as shareholders of King Pacific or any matter to be decided
by the directors of King Pacific during the period from the
date of the concert party agreement up to the date on which
the Offer closes for acceptance, the Offeror and parties acting
in concert with it agreed to exercise such voting rights or
to decide such matter in accordance with Mr. Cheng's directions
(but no party shall be obliged to do any matter or thing which
involves or may involve acting in breach of or inconsistent
with a director's fiduciary duty to King Pacific and its
shareholders).
The Offeror wishes to clarify that, contrary to a press report
on 19th May, 1999, neither the Offeror nor ITE has, directly
or indirectly, any shareholding interest in any company or
entity of the Public Security Bureau of the People's Republic
of China ("Public Security Bureau")
and neither of them is, directly or indirectly, owned or
controlled by or has any business relationship (except as
stated below) with the Public Security Bureau. ITE and the First
Research Institute of the Public Security Bureau
(the "First Research Institute") have
previously supplied security systems and equipment for use
during the World Bank Conference and the change of sovereignty
in, and President Bill Clinton's visit to, Hong Kong and may
continue to have further business dealings of similar nature
with the Public Security Bureau. None of the Offeror, Mr. Cheng
and Mr. Zeng is acting or has been authorised to act on behalf
of the Public Security Bureau in making the Offer.
INFORMATION ON KING PACIFIC
King Pacific obtained a listing on the Stock Exchange on 21st
October, 1991.
King Pacific is principally engaged in building construction
and maintenance, property investment and development,
restaurant operations and other investment activities.
For its last financial year ended 31st March, 1998, the audited
consolidated accounts of King Pacific recorded audited profits
before and after taxation and minority interests of
approximately HK$12.2 million and approximately HK$10.8
million, respectively. The unaudited losses before and after
taxation and minority interests for the six months ended 30th
September, 1998, as disclosed by King Pacific's interim report,
were approximately HK$43.6 million and approximately HK$42.5
million, respectively. As referred to above, the audited
consolidated net asset value of King Pacific as at 31st March,
1998 was approximately HK$545.6 million.
(For the shareholding structure of King Pacific as at 17th May, 1999,
please refer to the press announcement today.)
REASONS FOR THE OFFER
Mr. Cheng considers that the current market conditions provide
an appropriate opportunity for him to increase his shareholding
in King Pacific. Mr. Zeng, through ITE which has been
established since early 1990s, has been engaged in the
development and sale of security, communication and networking
systems. Mr. Cheng believes that Mr. Zeng's experience and
proven strength in this area will help King Pacific in the
development of new business opportunities.
Intentions Regarding the Future of King Pacific
King Pacific is currently principally engaged in building
construction and maintenance, property investment and
development, restaurant operations and other investment
activities. It is the intention of the Offeror and parties
acting in concert with it that following the completion of the
Offer, King Pacific will, in addition to continuing the
development of its existing businesses, utilise Mr. Zeng's
experience to help it diversify and develop new business
opportunities in the areas of development and sale of security,
communication and networking systems. Detailed plans in
connection with such business development have yet to be
formulated. It is expected that Mr. Zeng will play a key role
in overseeing such new business developments. At this stage,
King Pacific is not engaged in any negotiation, nor has it
entered into any agreement, in relation to the acquisition of
any asset or business.
China Fortune, being the largest shareholder of King Pacific,
has agreed to cooperate with and consult the Offeror and parties
acting in concert with it in relation to the exercise of any
voting rights as shareholder of King Pacific pursuant to the
concert party agreement signed on 20th May, 1999. Please refer
to the section "Information on the Offeror and parties acting
in concert with it" for details.
The Offeror and parties acting in concert with it have
undertaken to the Stock Exchange that they will not inject any
assets into King Pacific within the next six months. The Stock
Exchange will closely monitor all acquisitions or disposals
of assets by King Pacific and has the power to aggregate a series
of transactions and any such transactions may result in King
Pacific being treated as if it were a new listing applicant.
PROPOSED CHANGES TO THE BOARD OF DIRECTORS OF King Pacific
It is the intention of the Offeror and parties acting in concert
with it that following the completion of the Offer, certain
changes will be made to the board of directors of King Pacific.
Mr. Zeng will be appointed as deputy chairman and executive
director. Ms. Cheung Lik Ping will be appointed as executive
director. Mr. Cheung King Lap is expected to resign as executive
director. Mr. Cheung Yiu Wing will remain in office as chairman
and executive director. Mr. Cheung and Mr. Cheng will both
remain in office as deputy chairmen and executive directors
and in the case of Mr. Cheng, managing director. Mr. Cheung
Wing Keung Samuel, Mr. Xiong Ping Bo Paul and Mr. Ching Kwok
Leung will remain as executive directors. Mr. Chuang Shih Ping,
Mr. Lee Sheung Wah James, Mr. Steven Kwan and Mr. Kwong Wai
Tim, William are expected to remain in office as independent
non-executive directors.
Brief background information on the two new directors proposed
to be appointed are set out below:
Mr. Zeng, aged 60, graduated from Chengdu University in 1961
with a degree in telecommunication engineering. He specialises
in wireless telecommunication. In the early 1990s, Mr. Zeng
established ITE in Hong Kong for the provision of services and
sale of security, communication and networking systems as well
as other high technology products. He was in charge of setting
up the security systems used on various major occasions in Hong
Kong, and is currently participating in the senior management
of Beijing Trico Industrial Corporation, a company engaged in
the provision of services and sale of security, communication
and networking systems. Mr. Zeng may consider resigning from
his current position at Beijing Trico Industrial Corporation
and participating on a full-time basis in the management of
King Pacific upon the completion of the Offer and his
appointment as executive director and deputy chairman of King
Pacific.
Ms. Cheung Lik Ping, aged 28, graduated from University of
Pennsylvania, U.S.A. with a degree in business. She is
currently working for a major investment bank as a financial
analyst. Ms. Cheung Lik Ping is the daughter of Mr. Cheung.
Ms. Cheung Lik Ping may consider resigning from her current
employment and participating on a full-time basis in the
management of King Pacific upon the completion of the Offer
and her appointment as executive director of King Pacific.
CONTINUATION OF LISTING OF King Pacific
It is the intention of the Offeror that the listing of King
Pacific Shares on the Stock Exchange should be maintained and
appropriate steps will be taken by the Offeror following the
closing of the Offer to ensure that not less than 25 per cent.
of King Pacific's issued share capital will be held by the public.
The directors of the Offeror have undertaken to the Stock
Exchange that if less than 25 per cent. of King Pacific's issued
share capital is held by the public after the completion of
the Offer, they will within one month thereafter take
appropriate steps to ensure that the minimum public
shareholding is maintained.
The Stock Exchange has stated that, in the event that less than
25 per cent. of King Pacific's issued share capital is held
by the public following the completion of the Offer and the
Offeror does not otherwise acquire the remaining King Pacific
Shares, it will closely monitor trading in King Pacific Shares.
If the Stock Exchange believes that a false market exists or
may exist in King Pacific Shares, and that there are
insufficient King Pacific Shares held by the public to maintain
an orderly market, then it will give consideration to
exercising its discretion to suspend dealings in King Pacific
Shares.
If King Pacific remains a listed company, the Stock Exchange
will closely monitor all acquisitions or disposals of assets
by King Pacific. The Stock Exchange has the discretion to
require King Pacific to issue a circular to its shareholders
irrespective of the size of the proposed transaction,
particularly when such proposed transaction represents a
departure from the principal activities of King Pacific. The
Stock Exchange has the power to aggregate a series of
transactions and any such transactions may result in King
Pacific being treated as if it were a new listing applicant.
Resumption of Trading in King Pacific Shares
Dealings in the King Pacific Shares on the Stock Exchange were
suspended with effect from 10:00 a.m. on 18th May, 1999. King
Pacific has applied to the Stock Exchange for the resumption
of trading in its shares with effect from 10:00 a.m. on 21st
May, 1999.
DEFINITIONS
"Changjiang Power" Changjiang Power Development (HK) Co.
Limited, a company wholly owned by Mr. Cheng
"China Fortune" China Fortune Limited, a company owned as
to 90 per cent. by Mr. Lang and 10 per cent. by Mr. Lai
"ITE" Intelligent Trico Enterprises Company Limited,
a company owned as to 50 per cent. by
each of Mr. Zeng and Mr. Zhang
"King Pacific" King Pacific International Holdings Limited,
a company incorporated in Bermuda whose shares are listed on
the Stock Exchange
"King Pacific Shareholders" registered holders for the
time being of King Pacific Shares
"King Pacific Shares" ordinary shares of nominal value
HK$0.10 each in the issued share capital of King Pacific
"Mr. Cheng" Cheng Chao Ming
"Mr. Cheung" Cheung Kung Tai
"Mr. Lai" Lai Man Yuk
"Mr. Lang" Lang Jing
"Mr. Zeng" Zeng Xiang Zhi
"Mr. Zhang" Zhang Ke Jian
"Offer" the unconditional voluntary cash offer by the
Offeror of HK$0.93 per King Pacific Share for all the issued
King Pacific Shares not already owned by the Offeror or parties
acting in concert with the Offeror
"Offeror" Intelligent Trico Investment Holdings Limited,
a company owned as to 50 per cent. by
each of Mr. Cheng and Mr. Zeng
"Offer Price" HK$0.93 per King Pacific Share
"SFC" Securities and Futures Commission
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Takeovers Code" The Hong Kong Code on Takeovers and Mergers
By Order of the Board
King Pacific International Holdings Limited
Xiong Ping Bo Paul
Director
By Order of the Board
Intelligent Trico Investment Holdings Limited
Cheng Chao Ming
Director
Hong Kong, 20th May, 1999
The information in this announcement relating to the Offeror
has been supplied by the directors of the Offeror. The directors
of the Offeror jointly and severally accept full responsibility
for the accuracy of the information contained in this
announcement (except for information concerning King Pacific)
and confirm, having made all reasonable enquiries, that to the
best of their knowledge, opinions expressed in this
announcement (other than those expressed by King Pacific) have
been arrived at after due and careful consideration and there
are no other facts not contained in this announcement the
omission of which would make any statement in this announcement
misleading.
The information in this announcement relating to King Pacific
has been supplied by the directors of King Pacific. The
directors of King Pacific jointly and severally accept full
responsibility for the accuracy of the information contained
in this announcement (except for information concerning the
Offeror) and confirm, having made all reasonable enquiries,
that to the best of their knowledge, opinions expressed in this
announcement (other than those expressed to be held by the
Offeror,) have been arrived at after due and careful
consideration and there are no other facts not contained in
this announcement the omission of which would make any
statement in this announcement misleading.
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