WANG ON GROUP<1222> - Announcement
WANG ON GROUP LIMITED
Discloseable Transaction
Acquisition of a 51% Shareholding in Majorluck Limited
Wang On's wholly-owned subsidiary, WOCML, has agreed on 17th December,
1999 to acquire 51% issued shareholdings in Majorluck, an associated
company in which Wang On is currently interested in 49% issued
shareholdings, at a consideration of HK$19,450,000. Upon completion of the
acquisition, Majorluck will become a wholly-owned subsidiary of Wang On.
The acquisition constitutes a discloseable transaction under the Listing
Rules. Wang On will send to its shareholders a circular for their
information as soon as possible.
The Agreement for the acquisition dated 17th December, 1999
Parties
Seller : An independent third party not connected with any
of the directors, chief executive or substantial shareholders of Wang On
or its subsidiaries save for his 51% shareholdings in Majorluck prior to
completion of the acquisition.
Purchaser : WOCML, a wholly-owned subsidiary of Wang On
which currently holds 49% of the issued share capital of Majorluck.
The principal businesses of Wang On and its subsidiaries
are (a) the commercial management of wet markets, shopping centres and car
parks; (b) building-related contracting; and (c) property investment.
Shares agreed to be acquired
5,100 issued shares of HK$1.00 each in the share capital of Majorluck,
representing 51% of its issued and paid-up share capital.
The audited net tangible asset value of Majorluck as at 31st March, 1999
was approximately HK$0.2 million.
The audited net profit before and after taxation and extraordinary items
of Majorluck for the financial years ended 31st March, 1998 was
approximately HK$7.8 million and HK$6.7 million respectively, and which
for the financial years ended 31st March, 1999 was approximately HK$6.8
million and HK$5.9 million respectively.
Pending completion of the acquisition, the issued share capital of
Majorluck is currently owned as to 51% by the Seller and as to 49% by
WOCML. Majorluck will therefore become a wholly-owned subsidiary of Wang
On upon completion of the acquisition and thereafter the results of
Majorluck will be consolidated into the books of Wang On.
Majorluck is principally engaged in the operation and sub-licensing of wet
markets which are currently situated in Tseung Kwan O, Ma On Shan, Tin
Shui Wai and Fanling.
Consideration
HK$19,450,000 in cash, subject to adjustment by an amount representing 51%
of the aggregate amount of dividends which may be declared by Majorluck in
the period between 17th December, 1999 and the date on which the further
deposit (as mentioned below) is payable, being 30th December, 1999 or such
later date as the WOCML and the Seller may agree.
The terms of the Agreement were agreed at after arm's length negotiations
and are considered by the directors of Wang On to be fair and reasonable
and in the best interests of Wang On having regard to the earning
potential of Majorluck.
Payment terms
WOCML paid HK$5 million as refundable deposit (the "Deposit") and part
payment of the consideration upon signing of the Agreement.
A further amount of HK$14,450,000 representing the balance of the
consideration is payable by WOCML on completion (which is expected to take
place on 30th December, 1999) or, if the Agreement is not yet completed by
then, as a refundable further deposit (the "Further Deposit").
Upon payment of the Further Deposit, inter alia:-
i) the Seller and his nominees will resign as directors of
Majorluck and persons nominated by WOCML will be appointed as additional
directors of Majorluck;
(ii) all dividends declared and paid by Majorluck in the period
between the date of the payment of the Further Deposit and completion and
payable to the Seller will be assigned by the Seller to WOCML (the
"Interim Period"); and
(iii) the Seller will appoint persons nominated from WOCML as his
proxy to attend and vote at all shareholders' meetings during the Interim
Period
Should completion fail to take place on or before 31st March, 2000 in
accordance with the Agreement, the aforementioned will be reinstated and
the Deposit and the Further Deposit will be refunded to WOCML, so that
i) the Seller and his nominees who resign as directors of
Majorluck as aforementioned will be re-appointed as directors and those
persons nominated from WOCML as additional directors as aforementioned
will resign as directors;
(ii) the dividends, if any, assigned by the Seller to the Purchaser
as aforementioned will be returned to the Seller;
(iii) the persons nominated from WOCML and appointed as proxy of
the Seller as aforementioned will cease to be such proxy; and
(iv) all advances which WOCML or any subsidiaries of Wang On have
drawn from Majorluck, if any, must be repaid to Majorluck.
Conditions to completion (the "Conditions")
Completion of the acquisition is conditional upon, inter alia, the
following :
i) WOCML having received written evidence confirming the
acquisition is approved by or on which there is no objection expressed
from Hong Kong Housing Authority; and
(ii) WOCML having received confirmation that the major shareholder
of a 25% owned associated company of Majorluck, Harvest Ocean Investment
Limited, to whom the Seller has given an undertaking to maintain at least
25% shareholdings in Majorluck, has no objection to the transaction.
Completion date
Completion is subject to satisfaction of the Conditions and may not be
later than 31st March, 2000 unless agreed between the Seller and WOCML.
Funding
Wang On Group will fund the payment of the consideration out of its
internal resources. The directors consider that the Group will have
adequate working capital after the acquisition.
Reasons for the acquisition
The directors of Wang On consider that the acquisition will enable Wang On
Group to acquire management control of Majorluck as after the acquisition,
Majorluck will become a wholly-owned subsidiary of Wang On. The
acquisition will also enable Wang On Group to expand its wet market
business which is the Group's long term strategy and is in the best
interest of the Group.
Shareholders' information
The acquisition constitutes a discloseable transaction for Wang On under
the Listing Rules. A circular containing further details of the
acquisition will be despatched to the shareholders of Wang On as soon as
possible.
Terms used in this announcement
"Agreement" the sale and purchase agreement dated 17th December, 1999 in
relation to the acquisition of 51% issued shareholdings in Majorluck by
WOCML
"Listing Rules" Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
"Majorluck" Majorluck Limited, incorporated in Hong Kong and
currently a 49% owned associated company of Wang On
"HK$" Hong Kong dollar
"Wang On" Wang On Group Limited, incorporated in Bermuda with limited
liability, the shares of which are listed on The Stock Exchange of Hong
Kong Limited
"Wang On Group" Wang On and its subsidiaries
"WOCML" Wang On Commercial Management Limited, a wholly-owned subsidiary
of Wang On incorporated in the British Virgin Islands
By Order of the Board
Wang On Group Limited
Chan Chun Hong, Thomas
Director and Secretary
Hong Kong, 18th December, 1999
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