AWT HOLDINGS<0401> - Announcement & Resumption
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.
AWT Holdings Company Limited
(Incorporated in Bermuda with limited liability)
(1) Proposed Subscription, Placing of New Shares and Granting of
Option
(2) Rescue Proposal
(3) Update on The Group's Financial Position
A rescue proposal of the Group has been submitted to the
Creditor Banks, the Convertible Debt Holders and the Major Unsecured
Creditors on 24 May, 1999. The Board has resolved to offer about
1,333.34 million Shares at the Subscription Price of HK$0.015 each to
raise HK$20 million. Mr. Chan has conditionally agreed to subscribe
for about 666.67 million Shares and will seek strategic investors to
subscribe for the Placing Shares of about 666.67 million Shares at
the Subscription Price. Currently, the Company has not received any
indication from Mr. Chan that he requires any remuneration for
assisting the Company to place the Placing Shares. The Board also
resolves to grant the Option to Mr. Chan to subscribe for another
666.67 million new Shares at the Subscription Price within twelve
months from the date of completion of the rescue proposal. The Option
offered to Mr. Chan is part of his agreement to subscribe for the
Subscription Shares proposed to be issued by the Company. Mr. Chan
has confirmed to the Company that he is not acting in concert with
any of the other Directors, any member of the Creditor Banks, the
Major Unsecured Creditors, the Convertible Debt Holders and Excelbond
Limited, the existing single largest substantial shareholder of the
Company.
The Proposed Subscription by Mr. Chan and the granting of the Option
to Mr. Chan will constitute connected transactions and will be
subject to, amongst other things, independent shareholders' approval.
At the date of this announcement, no placees, whether independent or
connected, or placing agent have been identified by Mr. Chan.
Currently, Mr. Chan has not agreed to underwrite the placing and as
Mr. Chan has not confirmed any investment in the Placing Shares, he
considers that it is too early for him to confirm whether any
potential investors taking up the Placing Shares is acting in concert
with him. If any of the placees of the Placing Shares are connected
persons as defined under the Listing Rules, the Proposed Placing will
also constitute a connected transaction and be subject to independent
shareholders' approval. The Company will engage an independent
financial adviser to advise the independent board committee on the
subscription, the Option and, if applicable, the placing. Further
announcement will be issued once the investors have been identified.
As the Creditor Banks, the Convertible Debt Holders and the Major
Unsecured Creditors may or may not proceed with the rescue proposal
and the Proposed Subscription and the Proposed Placing may or may not
be finalised, shareholders and potential investors are advised to
exercise caution when dealing in the Shares.
The Board also reports that since the Company's announcement dated
15 April, 1999 which provided an update on the Group's financial
position, the Group's maximum exposure in respect of claims made
against its members (including letters of demand, writs of summons
and legal letters received from solicitors representing various
creditors) has increased to about HK$233.6 million as at the date of
this announcement, representing an increase of about HK$38.5 million
worth of claims since 15 April, 1999.
(1)
PROPOSED SUBSCRIPTION, PROPOSED PLACING and granting of option
Subscription Shares : approximately
666.67 million new
Shares
- subscription price : HK$0.015
Placing Shares : approximately
666.67 million new
Shares
- subscription price : HK$0.015
Options to be
granted to Mr.
Chan
- no. of Shares : approximately
issued under the 666.67 million new
Option Shares
- consideration for : nil
the Option
- exercise price : HK$0.015 per Share
- exercise period : a period of 12
months from the
date of completion of the
rescue proposal
Substantial Current Assuming Assuming Assuming
and public position all Event A Event B
Shareholders relevant happening happening
parties and all and Mr.
accept the parties Chan
rescue involved in exercises
proposal, the rescue the Option
Mr. Chan proposal
subscribes convert all
the the
Subscription convertible
Shares and instruments
full proposed to
subscription be issued
of the under the
Placing rescue
Shares proposal
(`Event A') (`Event B')
Excelbond
Limited
(Note 1)
- number of 338.49 338.49 338.49 338.49
million
Shares
- % of 27.48 7.09 3.87 3.60
total
issued
share
capital
Mr. Chan
- number of - 666.67 666.67 1,333.34
million
Shares
- % of - 13.96 7.62 14.17
total
issued
share
capital
Placees
- number of - 666.67 666.67 666.67
million
Shares
- % of - 13.96 7.62 7.08
total
issued
share
capital
Creditor
Banks
- number of - (Note 3) (Note 4) 1,879.73
million 516.09 1,879.73
Shares
- % of - 10.81 21.50 19.97
total
issued
share
capital
Convertible
Bond
Holders
- number of - (Note 3) 1,338.64 1,338.64
million 1,338.64
Shares
- % of - 28.04 15.31 14.22
total
issued
share
capital
Convertible
Note
Holders
- number of - - (Note 5) 2,607.33
million 2,607.33
Shares
- % of - - 29.82 27.70
total
issued
share
capital
Major
Unsecured
Creditors
- number of - (Note 3) 354.05 354.05
million 354.05
Shares
- % of - 7.42 4.05 3.76
total
issued
share
capital
Existing
public
Shareholders
(Note 2)
- number of 893.33 893.33 893.33 893.33
million
Shares
- % of 72.52 18.72 10.21 9.50
total
issued
share
capital
Total 1,231.82 4,773.94 8,744.91 9,411.58
number of
Shares (in
million)
The above figures and percentages are for reference only. The actual
numbers of shares to be issued to relevant parties involved in the
rescue proposal and their respective shareholding may or may not
coincide with the above.
The Company intends that the listing of the Shares on the Stock
Exchange should be maintained and will take necessary steps following
the completion of the rescue proposal to ensure that not less than
25% of the shares will be held by the public.
Note 1: According to information currently available to the Company,
Excelbond Limited, is a wholly-owned subsidiary of China Strategic
Holdings Limited, a company listed on the Stock Exchange and Mr. Chan
confirms that he is not acting in concert with the controlling
shareholder of China Strategic Holdings Limited.
Note 2: Include Shares currently held by Directors of about 12
million Shares, representing about 0.97% of the existing issued share
capital of the Company.
Note 3: Further details are provided in point (iii) under the
section headed `Rescue Proposal'.
Note 4: Further details are provided in point (iv) under the section
headed `Rescue Proposal'.
Note 5: Further details are provided in point (v) under the section
headed `Rescue Proposal'.
Mr. Chan has confirmed to the Company that he is not acting in
concert with any of the other Directors, any member of the Creditor
Banks, the Major Unsecured Creditors, the Convertible Debt Holders
and Excelbond Limited, the existing single largest substantial
shareholder of the Company. Currently, placees for the Placing Shares
are being procured by Mr. Chan. However, at the date of this
announcement, no placees, whether independent or connected, or
placing agent have been identified by Mr. Chan. Currently, Mr. Chan
has not agreed to underwrite the placing and as Mr. Chan has not
confirmed any investment in the Placing Shares, he considers that it
is too early for him to confirm whether any potential investors
taking up the Placing Shares is acting in concert with him.
The Subscription Shares, the Placing Shares and the Shares to be
issued under the Option will rank equally in all respects with the
existing Shares in issue, including the rights to receive all
dividends and distribution which may be declared, made or paid after
the date of subscription agreements which will be entered into
between the Company, Mr. Chan and the placees and the date Mr. Chan
exercises the Option to subscribe for Shares. Mr. Chan and placees of
the Placing Shares will subscribe the Subscription Shares and the
Placing Shares respectively at the Subscription Price. It is expected
that completion of the Proposed Subscription, granting of the Option
to Mr. Chan and Proposed Placing will occur simultaneously with the
completion of the rescue proposal.
Subscription Price
The Subscription Price for the Proposed Subscription and the
Proposed Placing of HK$0.015 per Share represents: (i) a discount of
about 72.7 to the closing price of HK$0.055 per Share as quoted on
the Stock Exchange on 21 May, 1999, being the last trading day prior
to the suspension of trading in the Shares; (ii) a discount of about
71.7% to the average closing price of HK$0.053 per Share as quoted on
the Stock Exchange on the last 10 trading days ended 21 May, 1999;
and (iii) a discount of about 63.4% to the average closing price of
HK$0.041 per Share as quoted on the Stock Exchange on the last 30
trading days ended 21 May, 1999. The Subscription Price was
determined based on arm's length negotiation between the Company and
Mr. Chan. The Subscription Price is less than the proposed price of
HK$0.022 per Share, as stated in the section headed `Rescue Proposal'
below, for issue of the settlement Shares because Mr. Chan and
placees under the Placing will inject cash to rescue the Company and
therefore, more favourable terms are given to them. The Proposed
Subscription by Mr. Chan and the granting of the Option to Mr. Chan
will constitute connected transactions and will be subject to,
amongst other things, independent shareholders' approval.
Use of proceeds
The net proceeds of about HK$20 million from the Proposed
Subscription and the Proposed Placing is intended to be used partly
for cash payment to Creditor Banks under the rescue proposal and
partly for working capital.
Conditions of the Proposed Subscription, the Proposed Placing and
Shares to be issued under the Option
Currently, it is expected that completion of the Proposed
Subscription, the Proposed Placing and the subscription of Shares
under the Option by Mr. Chan will be conditional upon:
(i)
the Creditor Banks, the Convertible Debt Holders and the Major
Unsecured Creditors agree to the debt restructuring plan under the
rescue proposal;
(ii)
the Stock Exchange, the Executive and/or the Bermuda Monetary
Authorities grant(s) the necessary consents or waivers contemplated
under the rescue proposal;
(iii)
Shareholders approve various transactions (including issue of the
Subscription Shares, Placing Shares and Shares to be issued under the
Option) contemplated under the rescue proposal and the Proposed
Placing if, none of the placees is a connected person;
(iv)
Independent Shareholders of the Company approve the Proposed
Subscription, the Option and the Proposed Placing if any of the
placees is a connected person;
(v)
the Listing Committee of the Stock Exchange grants approval for the
listing of, and permission to deal in, the Subscription Shares, the
Shares to be issued upon exercising the subscription rights under the
Option and the Placing Shares and the Shares to be issued under
transactions contemplated under the rescue proposal;
(vi)
International Bank of Asia, one of the Creditor Banks, withdraws its
winding-up petition which is scheduled to be heard in the Court on 17
June, 1999; and
(vii)
the Executive confirms that no general offer obligations will arise
or if there is such an obligation, a waiver of such obligations for
any party involves in taking up Shares under the rescue proposal.
The Proposed Subscription, the granting of the Option to Mr. Chan,
Proposed Placing, the proposed settlements of debts with the Creditor
Banks, the Convertible Debt Holders and the Major Unsecured Creditors
under the rescue proposal (as stated below) are all
inter-conditional.
(2)
RESCUE PROPOSAL
The rescue proposal submitted to the Creditor Banks, the Convertible
Debt Holders and Major Unsecured Creditors on 24 May, 1999 plans to
restructure the Group's debts owing to the Creditor Banks of about
HK$136.7 million, the Major Unsecured Creditors of about HK$7.8
million and the Convertible Debt Holders of about HK$68.6 million.
The transactions contemplated under the rescue proposal involve: (i)
making cash payments to the Creditor Banks for a portion of the debts
owed; (ii) waiving certain amount of indebtedness by the Creditor
Banks; (iii) issuing about 516.09 million, 1,338.64 million and
354.05 million new Shares at a price not lower than HK$0.022 each to
settle part of the debts due to the Creditor Banks, the Convertible
Bond Holders and the Major Unsecured Creditors respectively; (iv)
issuing a three years term new secured convertible bonds to the
Creditor Banks which if converted in full, will result in the issue
of additional 1,363.64 million new Shares to the Creditor Banks; and
(v) issuing a three years term convertible preference shares with an
initial conversion price of HK$0.015 to settle part of the debts due
to the Convertible Note Holders which if converted in full, will
result in the issue of about 2,607.33 million new Shares. During the
meeting, the Company requested all parties involved to provide their
comments on the rescue proposal on or about 29 May, 1999 and further
announcements will be made to inform the public on material
developments of the rescue proposal including terms of the new
convertible bonds and convertible preference shares.
It is expected that a substantial number of Shares, in addition to
the Subscription Shares, Placing Shares and Shares to be issued under
the Option, will be issued to the Creditor Banks, the Major Unsecured
Creditors and the Convertible Debts Holders under the rescue proposal
to settle part of the debts due to them. The existing authorised
share capital of the Company is sufficient for the purpose of the
rescue proposal.
It is expected that if all relevant parties involved in the rescue
proposal accept such proposal in its present form, the Company will
be able to cover its net deficit of about HK$161.0 million as stated
in the section headed `Unaudited Financial Information' below.
It should be emphasised that the Creditor Banks, the Convertible
Debt Holders and the Major Unsecured Creditors may or may not accept
the rescue proposal in its present form and that the discussions on
the rescue proposal are still at a preliminary stage and no legally
binding agreement has been entered into by the parties involved.
Shareholders and potential investors are advised to exercise extreme
caution when dealing in the Shares. Further announcements will be
made as and when there are material developments of the rescue
proposal.
(3)
UPDATE ON THE GROUP'S FINANCIAL POSITION
a.
Unaudited Financial Information
As at 30 April, 1999, based on the unaudited statement of assets and
liabilities presented to the Creditor Banks, the Convertible Debt
Holders and the Major Unsecured Creditors, the Group had (i)
interests in property (based on independent valuations as at 31
March, 1999 and the Director's estimation in the case of a property
situated in Australia of about HK$31.2 million) of about HK$100.1
million; (ii) net current liabilities, other than current liabilities
due to holders of the Convertible Bonds, of about HK$192.5 million
(of which about HK$136.7 million and HK$7.8 million are due to the
Creditor Banks and the Major Unsecured Creditors, respectively); and
(iii) debts due to the Convertible Debt Holders of about HK$68.6
million. According to the accounting records of the Group as at 30
April, 1999, it had a cash and bank balance of about HK$5.1 million,
of which about HK$3.4 million and about HK$0.7 million were pledged
to one of the Creditor Banks and various airlines, respectively. The
net deficit of the Group is about HK$161.0 million.
Based on the unaudited management accounts for the eleven months
ended 28 February, 1999, the Group's turnover was about HK$215.7
million and recorded an operating loss of about HK$61.2 million
before exceptional loss. The Group recorded exceptional loss of about
HK$7.2 million. The exceptional loss primarily relates to a loss of
HK$4 million arising from disposal of a 40% interest in a
wholly-owned subsidiary as announced in the Company's interim report
on 6 March, 1999 and the remaining balance relates to provision for
bad and doubtful debts. The Group suffered a loss of about HK$68.3
million before taxation and interest to minority shareholders. The
loss attributable to shareholders for the eleven months ended 28
February, 1999 was about HK$61.4 million.
b.
Litigation, Maximum Exposure of Claims and Contingent Liability
In the announcement issued by the Company dated 15 April, 1999, the
Company informed the Shareholders that the maximum exposure in
respect of claims made against the Group (including letters of
demand, writs of summons and legal letters received from solicitors
representing various creditors) was about HK$195.1 million. As at the
date of this announcement, the maximum exposure in respect of claims
made against the Group was about HK$233.6 million, representing an
increase of about HK$38.5 million worth of claims since 15 April,
1999. This increase is mainly attributable to: (i) Convertible Bond
amounting to about HK$14.7 million which became due in May, 1999;
(ii) Convertible Note amounting to about HK$15.9 million which became
due in May, 1999; (iii) further accrued interest on the Convertible
Bonds and the Convertible Notes amounting to about HK$0.9 million;
(iv) further accrued interest on banking facilities of about HK$1.3
million; (v) salaries owed to its ex-employees of about HK$3.1
million; (vi) further accrued interest on payables to other unsecured
creditors amounting to about HK$1.6 million; (vii) rent, management
fee and rates outstanding due to early termination of tenancy
agreements amounting to about HK$0.7 million; and (viii) claims
received from other unsecured creditors amounting to about HK$0.3
million. The Group also has a contingent liability of about HK$1.9
million in respect of an alleged tax claim from the Hong Kong Inland
Revenue Department.
(4)
Other Information
The Company also refers to the announcement dated 16 November, 1998
in respect of the disposal agreement dated 9 November, 1998 entered
into among Sunford Finance (HK) Limited, as vendor, Hinton Holdings
Inc., as purchaser, and Mr. Yeung Wing Keung, Wilson, as the director
and controlling shareholder of the said purchaser. As advised by its
Managing Director, Mr. Leung Tze Hang, David, Sunford Finance (HK)
Limited has advised that such disposal agreement of about 119.8
million Shares, representing about 9.8% of the existing issued share
capital of the Company, has been recinded. As at the date of this
announcement, the Company is not able to verify the beneficial owner
of the said 119.8 million Shares.
The Board also refers to the announcement of 30 December, 1998 that
the audit of the annual accounts for the year ended 31 March, 1998
has not yet been completed pending the payment of the remaining
balance of the initial deposit. The Company expects that the audit
should be finalised by end of June, 1999.
(5)
EXISTING BUSINESS
The core business of the Group is the provision of freight
forwarding business and property investment. During the year ended 31
March, 1999, the Group continued to engage in the property agency
services.
(6)
GENERAL
At the request of the Company, trading in the Shares was suspended
from 10:00 a.m. on 24 May, 1999 pending a meeting with the Creditor
Banks, the Convertible Debt Holders and the Major Unsecured Creditors
to present the rescue proposal and the release of this announcement.
During the meeting, the Company requested all the parties involved to
provide their initial comments on the rescue proposal on or about 29
May, 1999. Application has been made to the Stock Exchange for the
resumption of trading of the Shares with effect from 10:00 a.m. on 27
May, 1999.
Terms used in this announcement
`Board' the board of directors of the
Company
`Company' AWT Holdings Company Limited
`Convertible Bonds' the two convertible bonds
issued by the Company on 3
December, 1996 and currently
held by Mr. Tam Ying Yu and
Jade House Corporation, both
are third parties independent
of the Company
`Convertible Debt Holder(s)' holders of the Convertible
Bonds and the Convertible
Notes
`Convertible Notes' the two convertible notes
issued by the Company to
Napier Enterprises Limited
and Jade House Corporation on
1 April, 1998 and the
convertible note issued by
the Company to Expert Way
Limited on 30 October, 1998,
all are third parties
independent of the Company
`Court' the High Court of the Hong
Kong Special Administrative
Region
`Creditor Bank(s)' the eight banks granted
facilities or loans to the
Company, including secured
creditors and unsecured
creditor
`Director(s)' the director(s) of the
Company
`Executive' the Executive Director of the
Corporate Finance Division of
the Securities and Futures
Commission or any delegate of
the Executive Director
`Listing Rules' the Rules Governing the
Listing of Securities on the
Stock Exchange
`Major Unsecured Creditors' two unsecured creditors both
are third parties independent
of the Company. In aggregate
the Company owes them about
HK$7.8 million
`Mr. Chan' Mr. Chan Sing Fai, chairman
of the Company
`Option' the option to be granted by
the Company to Mr. Chan to
subscribe for 666.67 million
Shares at the Subscription
Price within twelve months
from the completion of the
rescue proposal
`Placing Shares' approximately 666.67 million
new Shares to be issued under
the Proposed Placing
`Proposed Placing' the placing of the Placing
Shares to placees at the
Subscription Price
`Proposed Subscription' the subscription of the
Subscription Shares by Mr.
Chan at the Subscription
Price
`Shares' the ordinary shares of
HK$0.01 each in the capital
of the Company
`Shareholder(s)' holder(s) of the Shares
`Stock Exchange' the Stock Exchange of Hong
Kong Limited
`Subscription Price' HK$0.015 per Share
`Subscription Shares' approximately 666.67 million
new Shares to be issued under
the Proposed
Subscription
For and on behalf of the Board
AWT Holdings Company Limited
Leung Tze Hang David
Managing Director
Hong Kong SAR, 26 May, 1999
The Directors jointly and severally accept full responsibility for
the accuracy of the information contained in this announcement and
confirm having made all reasonable enquiries, that to the best of
their knowledge, opinions expressed in this announcement 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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