E&E INT'L<0033> - 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.
Elec & Eltek International Holdings Limited
(Incorporated in Bermuda with limited liability)
ANNOUNCEMENT
SUMMARY
Further to the announcement of the Company dated 13th December 1999, the
Board wishes to provide shareholders of the Company with additional
information on the rationale of the proposed disposal of the PCB Business
by its approximately 42% owned associate EEIC, information of which had
been released by EEIC in Singapore on 17th December 1999.
Investors and shareholders of the Company should exercise caution when
dealing in the shares of the Company.
Further to the announcement of Elec & Eltek International Holdings Limited
(the "Company") dated 13th December 1999, the board of directors of the
Company (the "Board") wishes to provide shareholders of the Company with
additional information on the rationale of the proposed disposal (the
"Disposal") of the printed circuit board ("PCB") business ("PCB Business")
by its approximately 42% owned associate Elec & Eltek International
Company Limited ("EEIC") pursuant to a letter of intent dated 12th
December 1999 with an investor (the "Investor"). The following
information was released by EEIC in Singapore on 17th December 1999:-
"The directors of EEIC ("EEIC Directors") are of the view that the PCB
industry is becoming increasingly competitive due to several factors, such
as the continuous expansion of Taiwanese PCB manufacturers' operations
into the People's Republic of China ("PRC"). Currently, the PCB industry
in Asia is also very fragmented, and the consolidation trend among PCB
manufacturers will lead to fewer but larger PCB manufacturers. These
factors will bring keener competition into the PCB industry.
To maintain its competitive edge, EEIC has to take part in the short term
consolidation trend as well as commit to investing in new technology
continuously. For example, EEIC has to invest in new plants equipped with
advanced high-density interconnected technologies, in the PRC or other
cost-competitive countries, to manufacture high-end multi-layer PCBs in
order to sustain the growth in profitability. In addition, EEIC's
existing production facilities would also need to be continually upgraded
in view of the rapidly changing pace in PCB technology, and such
investments would be highly capital-intensive.
Hence, the EEIC Directors view the Disposal as a good opportunity to exit
this increasingly competitive industry.
It is the current intention of the EEIC Directors to retain the listing of
EEIC. The EEIC Directors are currently considering various alternatives
for EEIC after the Disposal. These include the search for a new business
with good prospects for growth and attractive returns, and/or returning
the cash to shareholders, after taking into consideration the tax
implications, if any.
The EEIC Directors wish to emphasize that there is no assurance that the
Disposal will proceed, as it is conditional on, inter alia, agreement on
the definitive documentation, the completion of a due diligence exercise
by the Investor and its advisers, and the approval of shareholders in
general meeting.
In the event that the Disposal proceeds and is completed, EEIC will become
a cash company. Pursuant to Clause 1009 of the Singapore Exchange Limited
("SGX") Listing Manual, the SGX will suspend the listing of EEIC if it
becomes a cash company, until it has a business that is able to satisfy
the SGX's requirements for new listing. The SGX may cancel the listing of
EEIC if it is unable to meet the requirements for a new listing within a
period of 12 months.
The EEIC Directors are aware of EEIC Shareholders' concern over the future
of EEIC and its listing status, and will endeavour to inform EEIC
Shareholders of developments through timely announcements, as
appropriate."
As there can be no assurance that the Disposal will actually proceed,
investors and shareholders of the Company should exercise caution when
dealing in the shares of the Company.
By Order of the Board
Elec & Eltek International Holdings Limited
David So Cheung Sing
Chairman
Hong Kong, 18th December 1999
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