KING PACIFIC<0072> - Announcement
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.
KING PACIFIC INTERNATIONAL HOLDINGS LIMITED
(Incorporated under the laws of Bermuda with limited liability)
PROPOSED ISSUE OF UP TO US$10,000,000 3%
CONVERTIBLE DEBENTURES DUE 2002
ARRANGERS
Deloitte & Touche Corporate Finance Ltd.
Capcol Finance (Asia) Ltd.
The directors (the "Directors") of King Pacific International
Holdings Limited (the "Company") are pleased to announce that on
29th September, 1999, the Company entered into a conditional
subscription agreement (the "Subscription Agreement") with
Mountwood LLC (the "Subscriber"). Pursuant to the Subscription
Agreement, the Company has agreed to issue and the Subscriber has
agreed to subscribe for up to US$10,000,000 (approximately
HK$77,800,000) 3% convertible debentures (the "Debentures") due
2002. The Debentures, when issued, will carry the right to convert
(the "Conversion Right") into shares ("Shares") of HK$0.10 each
in the share capital of the Company at the Conversion Price (as
defined below).
The Debentures bear interest at 3% per annum payable semi-annually
in arrears on 30th June and 31st December in each year with the first
interest payment date falling on 31st December 1999. The
Debentures will be issued in two tranches of principal amounts of
US$5,000,000 (approximately HK$38,900,000) (the "Tranche 1
Debentures") and up to US$5,000,000 (approximately HK$38,900,000)
(the "Tranche 2 Debentures") respectively. The subscription and
issue of the Tranche 1 Debentures is conditional upon, among other
things, the granting and listing of and permission to deal in Shares
to be issued upon the exercise of the Conversion Right in respect
of the Tranche 1 Debentures and the Warrants (as defined below).
The subscription and issue of the Tranche 2 Debentures is
conditional upon, among other things, completion of the
subscription and issue of the Tranche 1 Debentures.
The net proceeds from the issue of the Tranche 1 Debentures and the
Tranche 2 Debentures are estimated to amount to approximately
HK$36,200,000 and approximately HK$36,200,000 respectively and are
intended to be applied as working capital of the Company and its
subsidiaries (the "Group").
THE SUBSCRIPTION AGREEMENT DATED 29th SEPTEMBER 1999
Issuer:
King Pacific International Holdings Limited
Subscriber:
Mountwood LLC, a private limited company incorporated in the Cayman
Islands and an accredited investor (as defined in Rule 501(a) of
the Regulations under the United States Securities Act). The
beneficial owners of the Subscriber, its directors and managers and
their respective associates (as defined in the Rules (the "Listing
Rules") Governing the Listing of Securities on the Stock Exchange
(the "Stock Exchange")) are independent third parties not
connected with the directors, chief executive, substantial
shareholders of the Company or its subsidiaries or any of their
respective associates (as defined in the Listing Rules).
Principal amount of Debentures:
The principal amount of the Tranche 1 Debentures is US$5,000,000.
The principal amount of the Tranche 2 Debentures is up to
US$5,000,000.
Deloitte & Touche Corporate Finance Ltd. and Capcol Finance (Asia)
Ltd. are the arrangers for the Placing. The role of Deloitte &
Touche Corporate Finance Ltd. and Capcol Finance (Asia) Ltd. are
to introduce the Subscriber to the Company and to liaise with the
Subscriber on behalf of the Company. Deloitte & Touche Corporate
Finance Ltd. and Capcol Finance (Asia) Ltd. did not provide any
advisory or due diligence services.
Subscription of the Tranche 1 Debentures:
The subscription of the Tranche 1 Debentures is conditional upon,
among other conditions:
(a) the Listing Committee of the Stock Exchange having granted
listing of and permission to deal in the Shares to be issued upon
the exercise of the Conversion Rights attaching to the Tranche 1
Debentures and the Warrants (as referred to below);
(b) none of the warranties made by the Company under the
Subscription Agreement having been breached in any material respect
(or, if capable of being remedied, has not been remedied), or is
misleading or untrue in any material respect; and
(c) the delivery by the Company to the Subscriber of a legal
opinion addressed to the Subscriber from the Company's Hong Kong
and Bermuda lawyers, in an agreed form, covering such matters
including the legality, validity and enforceability of the
Subscription Agreement under the laws of Hong Kong.
Completion of the subscription of Tranche 1 Debentures is expected
to be on the third business day following the satisfaction (or
waiver) of the conditions (the "Tranche 1 Completion Date"). If
the Tranche 1 conditions are not fulfilled (or waived by the
Subscriber) within 60 days from the date of the Subscription
Agreement, the obligations of the parties in respect of the Tranche
1 Debentures will lapse.
Subscription of the Tranche 2 Debentures:
The subscription of the Tranche 2 Debentures is conditional upon:
(a) (if not already obtained) the Listing Committee of the Stock
Exchange having granted the listing of and permission to deal in
the Shares to be issued upon exercise of the Conversion Rights
attaching to the Tranche 2 Debentures and the Warrants (as referred
to below); and
(b) the Company having committed no default or breach of the
Subscription Agreement in respect of the Debentures that are in
issue.
If the Tranche 2 conditions are not fulfilled (or waived by the
Subscriber) on the business day immediately prior to the relevant
completion date, the obligations of the Subscriber to subscribe for
the Tranche 2 Debentures or such remaining part thereof will lapse.
Subject to the Tranche 2 conditions being fulfilled (or waived by
the Subscribers), the Company may, at any time during the period
(the "Availability Period") commencing from the date falling 90
days after the Tranche 1 Completion Date and ending on the date
falling 15 months after the Tranche 1 Completion Date by serving
a call notice (the "Call Notice"), require the Subscriber to
subscribe for all or part of the Tranche 2 Debentures provided that,
among other matters:
(a) the average closing bid price per Share quoted on the Stock
Exchange for the trading days in the 30 calendar days prior to the
date of the relevant Call Notice will be equal to or greater than
HK$0.70 subject to adjustment;
(b) the aggregate trading volume of the Shares traded on the Stock
Exchange in terms of Hong Kong dollar value for the 30 calendar days
prior to the date of the relevant Call Notice will be equal to or
greater than HK$35,000,000; and
(c) the Company may not issue more than 3 Call Notices during the
Availability Period.
Completion of the Tranche 2 Debentures will take place on the 3rd
business day following the date of the relevant Call Notice.
OTHER PRINCIPAL TERMS OF THE DEBENTURES
Nature:
Unsecured general obligations
Conversion Period:
The Tranche 1 Debentures and the Tranche 2 Debentures may, subject
to the terms of the Subscription Agreement, be converted into Shares
from the date of the issue of the relevant Debentures up to 4:00
p.m. (Hong Kong time) the third anniversary of the Tranche 1
Completion Date (the "Maturity Date").
Conversion Price:
The conversion price (the "Conversion Price") for the Debentures
is the lesser of:
(a) 125% of the closing bid price per Share quoted on the Stock
Exchange on the trading day immediately before the completion date
for the issue of the relevant Debenture; or
(b) 93% of the average of the three lowest closing bid prices per
Share quoted on the Stock Exchange over the 30-calendar day period
immediately prior to the date of the relevant conversion notice.
The principal amount of the Debentures to be converted will be
translated into Hong Kong dollars at the United States dollar to
the Hong Kong dollar exchange rate for telex transfer transactions
quoted or applied by The Hongkong and Shanghai Banking Corporation
Limited at or around 11:00 a.m. (Hong Kong time) on the date of
conversion for the purpose of determining the number of Shares (the
"Conversion Shares") to be issued on each conversion. For
reference purpose, based on the closing bid price per Share of
HK$0.86 quoted on the Stock Exchange as at 29th September, 1999,
approximately 45,232,558 Shares and 45,232,558 Shares would be
issued upon conversion of the Tranche 1 Debentures and the Tranche
2 Debentures respectively, representing approximately 5.4% and
5.4% of the existing issued share capital of the Company
respectively and approximately 5.1% and approximately 4.9%
respectively of its enlarged issued share capital.
Fraction of Shares upon conversion:
Fractions of Shares will not be issued on conversion but (except
in cases where any such cash payment would amount to less than HK$100)
an equivalent cash payment in Hong Kong dollars will be made in the
Debenture holder in respect of such fraction.
Limitation to conversion:
No Shares will be issued below the par value of HK$0.10 per Share.
In the event that the Conversion Price falls below the par value,
the Company is required to redeem the principal amount of the
Debentures purported to be converted at face value together with
interest accrued on the tenth business day after the service of a
conversion notice.
Interest:
3% per annum payable semi-annually in arrears on 30th June and 31st
December in each year, the first interest payment date will fall
on 31st December, 1999.
Maturity:
On the Maturity Date, any outstanding Debentures will be
mandatorily converted into Shares provided that the maximum
outstanding principal amount of the Debentures that can be
mandatorily converted will be up to the amount such that the Shares
to be converted therefrom together with the Conversion Shares that
are held by the Debenture holder will not trigger the mandatory
general offer obligation for the Debenture holder and parties
acting in concert with it under the Hong Kong Code on Takeovers and
Mergers. Any outstanding Debentures that cannot be so mandatorily
converted into Shares will be redeemed by the Company at a
redemption amount equal to 120% of such outstanding Debentures
together with accrued interest.
Redemption
In the event that the closing bid price of the Shares falls to a
level of HK$0.53 per Share or less and remain at such level for a
period of ten consecutive trading days, the Company may, by notice,
redeem the Debentures (or such part thereof). If the redemption
notice is served during the period from day 1 to day 120 after the
issue of the relevant Debenture, or from day 121 to day 240 after
such issue date or from day 241 to day 360 after such issue date
or from day 361 to day 480 after such issue date or from day 481
and thereafter, the redemption amount will be 110%, 115%, 120%, 125%
and 130% respectively of the principal amount of the Debentures to
be so redeemed.
Upon the occurrence of an event of default as provided below, the
Debenture holders holding a majority in value of the outstanding
Debentures may require the Company to redeem the whole (but not part)
of the outstanding principal amount of the Debentures at a
redemption amount equal to 120% of such outstanding principal
amount together with accrued interest:
(a) a default is made in the payment of the principal or premium
(if any) or in the payment of interest, in respect of any of the
Debentures when and as the same ought to be paid in accordance with
the Subscription Agreements and such default continues for a period
of 5 days; or
(b) a default is made by the Company in the performance of any
covenant, condition or provision contained in the Subscription
Agreement to be performed by the Company.
Status:
The Conversion Shares will, when allotted and issued, rank pari
passu with all other Shares in issue on the date of conversion in
all respects.
Listing:
The Debentures will not be listed on the Stock Exchange or any of
the stock exchange. An application will be made to the Stock
Exchange for the listing of, and permission to deal in, the
Conversion Shares.
Transferability:
The Debentures may only be assigned or transferred in whole or in
part (a) (in whole multiples of US$50,000) of its outstanding
principal amount to (a) an associate of the Subscriber on terms that
if such transferee ceases to be an associate of the Subscriber, it
will have to transfer the Debenture to another associate of the
Subscriber; (b) one or more funds with which the Subscriber is
affiliated or has management agreements and (c) such other
transferee as may be consented to in advance by the Company (such
consent not to be unreasonably withheld) and (if so required),
subject, in each case, to the prior approval of the Stock Exchange.
The Company and its directors will provide an undertaking to the
Stock Exchange that they will notify the Stock Exchange of any
assignment or transfer of the Debentures immediately.
Lock-up period
The Company will not issue any Shares or other securities
convertible into Shares within 60 days from the Tranche 1 Completion
Date or within 60 days prior to and within 60 days following the
date of any Call Notice and (other than options granted under the
Company's employee share option scheme and Shares issued pursuant
thereto) as long as any of the Debentures remains outstanding, the
Company may not issue Shares or securities convertible into Shares
in any 30-day period that exceed 35% of the aggregate trading volume
of the Shares over the 30 days preceding such issue unless the
Subscriber is given the first right of refusal in respect of such issue.
Warrants
Each Debenture holder will be entitled to be issued, by way of bonus,
on the relevant completion date for the issue of the relevant
Debentures, warrants ("Warrants") carrying rights to subscribe an
amount equivalent to 15% of the principal amount of the relevant
Debenture for Shares. The exercise price for the Warrants is 125%
of the closing bid price per Share quoted on the Stock Exchange on
the Tranche 1 Completion Date (subject to adjustment) and the
Warrants expire on the 4th anniversary of the Tranche 1 Completion Date.
The Warrants will not be listed on the Stock Exchange and any other
stock Exchange. Any issue of the Warrants will have to comply with
Chapter 15 of the Listing Rules. Shares issued following the
exercise of the Warrants will rank pari passu with the Shares in
issue at the date of the exercise. An application will be made
for the listing of the Shares that will be issued upon the exercise
of the Warrants.
Assuming that the exercise price of the Warrants is HK$1.08 being
125% of the closing bid price per Share on 29th September, 1999,
a maximum of 10,805,556 Shares will be issued representing
approximately 1.3% of the Company's existing issued share capital
and assuming that the exercise price is HK$0.10 per Shares being
the par value of the Share, a maximum of 116,700,000 Shares will
be issued representing approximately 13.9% of the Company's
existing issued share capital.
PROCEEDS OF THE ISSUE OF THE DEBENTURES
The Group is principally engaged in building construction and
maintenance, property investment and development, restaurant
operations and other investment activities. The net proceeds of
the issue of the Tranche 1 Debentures and the Tranche 2 Debentures
are estimated to be approximately HK$36,200,000 and approximately
HK$36,200,000 respectively. The net proceeds from the issue of the
Debentures are intended to be applied as general working capital
of the Group.
REASON FOR THE ISSUE OF DEBENTURES
The terms and conditions of the Subscription Agreement were
negotiated by the Company and the Subscriber on an arm's length
basis. The Directors consider that the terms of the Subscription
Agreement are fair and reasonable so far as the Company's
shareholders are concerned.
The Directors believe that the transactions contemplated under the
Subscription Agreement would allow greater flexibility for the
Group to plan its budget and will provide the Group with an
alternative source of funds to meet its working capital
requirements within the 18-month period following the completion
of the issue of the Debentures insofar as the conditions attached
thereto are satisfied or waived. Furthermore, the issue of the
Debentures does not have immediate dilution effect on the
shareholding of the existing shareholders.
GENERAL MANDATE
The 20% mandate granted to the Directors by shareholders of the
Company at its special general meeting held on 13th May, 1999 is
sufficient to cover the issue of Shares pursuant to the exercise
of the Conversion Rights attaching to the Debentures and the
subscription rights attaching to the Warrants.
By order of the board
King Pacific International Holdings Limited
Cheng Chao Ming
Managing Director
Hong Kong, 29th September, 1999
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