KING PACIFIC<0072>-Announcement & Resumption of Trading
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 in Bermuda with limited liability)
POSSIBLE MAJOR TRANSACTION INVOLVING ISSUE OF NEW SHARES
(ACQUISITION OF AN INTEREST IN DIGITAL MULTIMEDIA BROADCASTING
PROJECT)
AND
CONDITIONAL SUBSCRIPTION OF NEW SHARES BY A WHOLLY-OWNED
SUBSIDIARY OF CELESTIAL ASIA SECURITIES HOLDINGS LIMITED
SUMMARY
The board of Directors announces that the Company and the Vendor
entered into the Acquisition Agreement on 3rd January, 2000,
pursuant to which the Vendor has agreed to sell and the Company
has agreed to acquire the Plexus Multimedia Shares, which
represent about 12.865% of the total existing issued share
capital of Plexus Multimedia, at the Acquisition Consideration.
The Acquisition Consideration shall be satisfied by
the Company as to HK$280 million by issuing the Consideration
Shares to the Vendor and as to HK$20 million in cash. The
Consideration Shares represent about 47.83% of the existing
issued share capital of the Company and about 24.53% of the
share capital of the Company as enlarged by the issue of the
Consideration Shares and the Subscription Shares. The
Acquisition pursuant to the Acquisition Agreement, if proceeds,
is expected to constitute a major transaction for the Company
under the Listing Rules.
The Directors have regarded the business plan of Plexus
Multimedia as the major basis on arriving at the Acquisition
Consideration and have made references to the preliminary
estimation of the fair market value of Plexus Multimedia as
at 30th December, 1999 made by the Independent Professional
Valuers. The Independent Professional Valuers made the
preliminary estimation of the fair market value of Plexus
Multimedia based on a number of critical assumptions as
disclosed in the paragraph headed ``Assumptions of the
professional valuation of Plexus Multimedia'' of the section
headed ``The Acquisition Agreement''.
Warning: Investors and shareholders of the Company should note
that should any of the assumptions not be met as expected, the
value of the business enterprise of Plexus Multimedia could
be seriously affected.
The principal activities of Plexus Multimedia are digital
multimedia broadcasting and related business undertakings
including, without limitation, digital multimedia hardware,
software and applications, and wireless service provider
business. It is the intention of Plexus Multimedia to offer
its services in Singapore, Australia, China, India and selected
European countries, and subsequently in other Asian
cities/countries including Hong Kong.
The Acquisition is in line with the Company's intention to
diversify and develop new business opportunity, especially
in the high technology sector. The Directors therefore
consider that the Acquisition is in the benefit of the Group
and the shareholders of the Company.
The board of Directors also announces that the Company and the
Subscriber entered into the Subscription Agreement on 3rd
January, 2000, pursuant to which the Subscriber has agreed to
subscribe for and the Company has agreed to allot and issue
the Subscription Shares at the Subscription Price. The
Subscription Price will be solely used by the Company to finance
the Acquisition and the development of the business of Plexus
Multimedia, and in particular, the DMB Project.
The Subscription Shares represent about 47.15% of the existing
issued share capital of the Company and about 24.18% of the
share capital of the Company as enlarged by the issue of the
Subscription Shares and the Consideration Shares.
The Subscription Agreement and the Acquisition Agreement are
conditional upon the fulfillment of the Subscription
Conditions and the Acquisition Conditions respectively by 29th
February, 2000. Both the Subscription Agreement and the
Acquisition Agreement are conditional, among other things, on
the approval by the Company's shareholders at the Special
General Meeting. A circular containing, among other things,
further information on the Acquisition and the Subscription
and a notice convening the Special General Meeting will be sent
to the Company's shareholders as soon as possible.
Investors and shareholders of the Company should note that
should less than 25% of the Shares be held by public upon
Acquisition Completion and Subscription Completion, trading
in Shares will be suspended immediately until appropriate steps
are taken by the Company so that at least 25% of the Shares
are held by public.
Trading in Shares on the Stock Exchange was suspended at the
request of the Company from 2:30 p.m. on 30th December, 1999.
The Company has applied to the Stock Exchange for resumption
of trading in the Shares with effect from 10:00 a.m. on 10th
January, 2000.
THE ACQUISITION AGREEMENT
The parties
The Acquisition Agreement was entered into between,
among the others, the Company and the Vendor on 3rd January, 2000.
The Vendor and its beneficiary are independent third parties
not connected with the directors, chief executive or
substantial shareholders of the Company or any of its
subsidiaries or their respective associates.
Assets to be acquired
The Plexus Multimedia Shares, being 35,626 existing
shares of SG$1.00 each of Plexus Multimedia, representing about
12.865% of the total issued share capital of Plexus Multimedia.
Based on the existing business and development plans of Plexus
Multimedia and on the basis that such plans are implemented
as scheduled, the Independent Professional Valuers have made
a preliminary estimation of the fair market value of a 100%
equity interest of the business enterprise of Plexus Multimedia
as at 30th December, 1999 (``Preliminary Estimation of Plexus
Multimedia'') which is in the range of US$200 million to US$300
million (equivalent to about HK$1,554.6 million to HK$2,331.9
million). The Preliminary Estimation of Plexus Multimedia has
not been finalised yet and a final valuation will be made by
the Independent Professional Valuers before Acquisition
Completion.
Assumptions of the professional valuation of Plexus Multimedia
In arriving at the Preliminary Estimation of Plexus Multimedia,
the Independent Professional Valuers have made the following
key assumptions.
. The business plan and the projections of Plexus Multimedia
have been prepared on a reasonable basis, reflecting estimates
which have been arrived at after due and careful consideration
by the directors and management of Plexus Multimedia. The
Independent Professional Valuers have reviewed the business
plan and the projections of Plexus Multimedia. However, given
the nature of Plexus Multimedia's development to date and the
lack of comparable companies, the Independent Professional
Valuers are not in a position to comment on the business plan
or the projections.
. The technology to be utilised by Plexus Multimedia in
implementing its business plan will be viable and successfully
deployed.
. Plexus Multimedia will successfully obtain the digital
audio broadcast operating licences in the regions which have
been specified in the business plan in accordance with its
projected timetable and to the specifications described in the
business plan.
. The availability of finance will not be a constraint on the
forecast growth of Plexus Multimedia's operation.
. Plexus Multimedia will retain and have competent management,
key personnel, and technical staff to support Plexus
Multimedia's ongoing operation.
. Plexus Multimedia is a start-up company with no revenue or
operating history and, as of the date of the Preliminary
Estimation of Plexus Multimedia, has not had any customers or
advertisers. The risks associated with the business are one
typically associated with a start-up business, mainly related
to the successful establishment and implementation of the
business plan of Plexus Multimedia. Uncertainty results from
Plexus Multimedia of not having historical financials, or truly
comparable benchmark companies that offer the same bundle of
services that the Company intends to offer.
. The valuation is based on the hypothesis that Plexus
Multimedia will commence operation in accordance with its
projected timetable as prescribed in its business plan.
Warning: Investors and shareholders of the Company should note
that should any of the assumptions not be met as expected, the
value of the business enterprise of Plexus Multimedia could
be seriously affected.
Acquisition Consideration
HK$300 million, to be satisfied as to HK$20 million
in cash (which shall be financed by the funds to be raised from
the Subscription as described below) and as to the balance of
HK$280 million by the issue and allotment of the Consideration
Shares (credited as fully paid) to the Vendor (or to any party
as the Vendor may direct) at Acquisition Completion.
The issue of the Consideration Shares to settle part of the
Acquisition Consideration in the amount of HK$280 million is
of the effect that each Consideration Share will be issued and
credited as fully paid at about HK$0.69 (``Price per
Consideration Share''). Comparisons have been made between the
Price per Consideration Share and the market prices per Share
as quoted on the Stock Exchange and the adjusted audited
consolidated net asset value of the Company as at 31st March,
1999 (``Adjusted Audited Consolidated Net Asset Value'') after
taking into account the unaudited consolidated results of the
Company for the six months ended 30th September, 1999 as
follows:
HK$ Price per
Consideration
Share at a
(discount)
/premium
Last traded price per Share quoted on the Stock Exchange
immediately before suspension of trading of the Shares on 30th
December, 1999 0.93 (25.8%)
Average of the closing prices per Share quoted on the Stock
Exchange for the ten trading days up to and including 30th
December, 1999 0.62 11.3%
Average of the closing prices per Share quoted on the Stock
Exchange for the thirty trading days up to and including 30th
December, 1999 0.61 13.1%
Adjusted Audited Consolidated
Net Asset Value 0.51 35.3%
The terms of the Acquisition are determined after arm's length
negotiations between the Company and the Vendor. The Company's
board of Directors has reviewed the key assumptions of the
Preliminary Estimation of Plexus Multimedia and understand
that the final valuation may deviate substantially from the
Preliminary Estimation of Plexus Multimedia. However, in
negotiations with the Vendor about the Acquisition, the board
of Directors has only made reference to the Preliminary
Estimation of Plexus Multimedia and has not wholly relied on
it and the Directors have regarded the business plan of Plexus
Multimedia as the major basis on arriving at the Acquisition
Consideration. After discussions between the Company and the
Vendor, the Acquisition Consideration has been agreed and no
adjustment to the Acquisition Consideration will be made after
the valuation of Plexus Multimedia is finalized. Having taken
into account the business and prospects of Plexus Multimedia
and the recent prices of the Shares as quoted on the Stock
Exchange, and making reference to the Preliminary Estimation
of Plexus Multimedia, the Directors consider that the terms
of the Acquisition including the Acquisition Consideration and
the issue of the Consideration Shares are fair and reasonable
and are in the interest of the Company.
Consideration Shares
405,800,000 new Shares, representing about 47.83% of the
existing issued share capital of the Company (which is
848,365,181 Shares) and about 24.53% of the enlarged share
capital of the Company (which will be 1,654,165,181 Shares)
immediately following the issue of the Consideration Shares
and the Subscription Shares.
The Consideration Shares will rank pari passu with all the
existing Shares in issue, with the Subscription Shares and with
each other in all respects, including the right to any dividends
or distributions which may be made or declared on or after the
date of allotment and issue of the Consideration Shares.
The Acquisition Agreement does not contain any provision that
restricts the Vendor's ability to transfer and dispose of the
Consideration Shares in future. In addition, the Consideration
Shares are not subject to any lock-up period. The Vendor
undertakes not to dispose the Consideration Shares to connected
persons of the Company as defined in the Listing Rules.
Acquisition Conditions
The Acquisition is conditional upon, among other things, the
following:
(1) the Subscription Agreement becoming unconditional (save
the condition relating to the Acquisition Agreement) and not
being terminated pursuant to the terms thereof;
(2) the obtaining of all the necessary consent or approval,
if required, for the issue and allotment of the Consideration
Shares;
(3) listing of and permission to deal in the Consideration
Shares being granted by the Listing Committee of the Stock
Exchange (and such permission and listing not subsequently
being revoked prior to the delivery of definitive share
certificate(s) representing the Consideration Shares);
(4) the Vendor being satisfied with the results of its due
diligence exercise on the Group and the Company being satisfied
with the results of its due diligence exercise on Plexus
Multimedia;
(5) the approval by shareholders of the Company of the
Acquisition and the issue of the Consideration Shares at the
Special General Meeting; and
(6) the Shares remaining listed on the Stock Exchange and
there is no suspension of trading in the Shares for more than
3 business days (as defined in the Listing Rules).
If the Acquisition Conditions are not fulfilled by 29th
February, 2000, the Acquisition Agreement shall terminate.
Trading in Shares on the Stock Exchange has been suspended since
2:30 p.m. on 30th December, 1999 for the purpose to clear this
announcement. The Company and the Vendor have verbally agreed
and confirmed that suspension of trading in the Shares for more
than 3 business days during the period from 30th December, 1999
to 7th January, 2000 (please refer to the section headed
``Suspension and resumption of trading'' below) will not affect
fulfilment of condition (6) above.
Acquisition Completion
Acquisition Completion shall take place on the second Business
Day from fulfilment of the Acquisition Conditions, when the
Company shall effect payment of cash of HK$20 million to the
Vendor and allot and issue to the Vendor the Consideration
Shares, and the Vendor shall effect transfer of the Plexus
Multimedia Shares to the Company.
Under the Acquisition Agreement, there is no provision that
the Vendor has the right to appoint Directors to the Company's
board of Directors nor does the Company have the right to appoint
directors to the board of directors of Plexus Multimedia. At
present, the Vendor does not have any intention to appoint any
Director to the Company's board of Directors. The Company also
does not have any present intention to appoint any director
to the board of directors of Plexus Multimedia. It is the
Company's intention to hold the Plexus Multimedia Shares which
represent a minority interest in Plexus Multimedia as one of
the Group's investing activities and at present, the Company
does not intend to participate in the operation and business
of Plexus Multimedia.
SHAREHOLDING STRUCTURE AND MANAGEMENT OF PLEXUS MULTIMEDIA
FOLLOWING ACQUISITION COMPLETION
Following Acquisition Completion, the Vendor will retain an
interest of about 64.635% in Plexus Multimedia and the Company
will hold about 12.865% shareholding interest in Plexus
Multimedia. The remaining 22.5% interest in Plexus Multimedia
is currently held by the existing management of Plexus
Multimedia (other than the Vendor and its beneficiary) who are
parties not connected with the directors, chief executive or
substantial shareholders of the Company or any of its
subsidiaries or their respective associates. There are four
members of the management team of Plexus Multimedia who are
not related to each other, save for two of them are both
shareholders to a company which is interested in the share
capital of Plexus Multimedia. (For the shareholding chart of Plexus
Multimedia immediately before and after Acquisition Completion,
please refer to the press announcement today.)
As stated in the paragraph headed ``Acquisition Completion''
under the section headed ``The Acquisition Agreement'' above,
the Company does not have any present intention to appoint any
director to the board of directors of Plexus Multimedia. At
present, Plexus Multimedia has ten staff including the four
members of the management team. The operation and business of
Plexus Multimedia is now run by its management team. Following
Acquisition Completion, the operation and business of Plexus
Multimedia will continue to be run by its existing management.
PLEXUS MULTIMEDIA AND DMB PROJECT
Information on Plexus Multimedia
Plexus Multimedia is a company incorporated in
Singapore in 1996. Since its incorporation up to 30th April,
1999, Plexus Multimedia was dormant. As from 1st May, 1999,
the principal activities of Plexus Multimedia have been digital
multimedia broadcasting (``DMB'') and related business
undertakings including, without limitation, digital
multimedia hardware, software and applications, and wireless
service provider business. Plexus Multimedia has not been in
its full operation yet. It will offer a broadband wireless
service using the DMB protocol in Singapore. It is also the
intention of Plexus Multimedia to rollout similar broadband
wireless services elsewhere, initially in Australia, China,
India and selected European countries, and subsequently in Hong
Kong, Malaysia, the Philippines, South Korea and other Asian
countries.
Preliminary Estimation of Plexus Multimedia has been made by
the Independent Professional Valuers based on the assumptions
as set out in paragraph headed ``Assumption of the professional
valuation of Plexus Multimedia'' under the section headed ``The
Acquisition Agreement''. Plexus Multimedia is involved in the
development and application of advanced technology. Valuation
of Plexus Multimedia is made based on the business plan of Plexus
Multimedia. However, in general high investment risk is
attached to any business in relation to the exploration of
advanced technology and should any of the assumptions made by
the Independent Professional Valuers in arriving the
Preliminary Estimation of Plexus Multimedia not be met as
expected, the value of the business enterprise of Plexus
Multimedia could be seriously affected.
Business plan of Plexus Multimedia
Initially, Plexus Multimedia will deliver a selection
of Internet and non-Internet sourced content to portable
handheld, in-car and fixed location receivers at speeds of
between 500 and 1200 kilobits per second. Non-Internet content
will consist of multimedia broadcast channels while Internet
content will contain mainly text-based content. Vertical
(single purpose) applications are being considered on a case
by case basis (e.g. using the DMB technology to deliver a
customised menu of financial services (including provision of
information on stock prices and financial news) or using the
multimedia advertising potential both to handheld and mass
transit platforms). It is the intention of Plexus Multimedia
to deliver in the third quarter of 2000 a wireless email solution
service to its subscribers on the back of hardware developments
including a wireless uplink creating two-way broadband
wireless access. Further cost to launch the wireless email
solution service is estimated to be about SG$2 million
(equivalent to about HK$9.3 million) which is intended to be
financed by one or more of the following sources of funding:
(i) internal resources of Plexus Multimedia, (ii) bank
borrowings, (iii) shareholders' loans which are intended to
be provided by the shareholders of Plexus Multimedia on pro
rata basis, and/or (iv) equity financing. However, final
decision with regard to the method of financing the launch of
the wireless email solution service has not been made by Plexus
Multimedia yet.
Plexus Multimedia has successfully developed a handheld
receiver, trademark registration of which in Singapore is now
in progress and it is expected that the trademark will be granted
around August 2000. Besides, Plexus Multimedia has been granted
a trial digital broadcast licence by the Singapore Broadcast
Authority and it is the third company in Singapore to receive
a digital broadcasting licence after the Radio Corporation of
Singapore (a customer of Plexus Multimedia) and Singapore Armed
Forces Radio. With the trial digital broadcast licence, Plexus
Multimedia has the privilege to provide the DMB service in
Singapore on a trial basis and upon satisfaction of the trial
broadcast, Plexus Multimedia will apply for a formal licence
with the Singapore Broadcast Authority. Plexus Multimedia will
complete the installation of its DMB multiplexer and
transmitters by mid-January 2000 and has installed and
maintains the DMB broadcast and scheduling software used by
the Radio Corporation of Singapore.
DMB
DMB is a technology that sends digital packets of
information over broadband radio. A standard broadcasting
protocol called EUREKA 147 has been agreed to throughout most
of Europe, Canada and Asia as the standard migration path from
conventional analogue radio to digital radio. The strength of
the DMB protocol is that it can deliver any form of digital
data (audio programs, video, data services or multimedia
content) with a theoretical throughput capacity of up to 2.3
megabits per second. DMB can deliver interference-free compact
disc-quality sound, and will be a direct competitor to existing
radio broadcasting as well as Internet radio. In addition, with
its potential as a wideband standard for datacasting and its
ability to deliver content to fixed as well as portable and
mobile receivers, DMB is also competing with digital television
broadcast and cellular and other digital wireless transmission
systems. The infrastructure cost of DMB is very low however,
especially compared with cellular, microwave or satellite
technologies. DMB benefits from the inherent economy of the
point-to-multipoint nature of the medium, and because of the
ability to position repeater stations without multipath
issues.
DMB will transform the radio broadcast market. But more
importantly, DMB has the potential to revolutionise mobile data
delivery, just as the Internet has revolutionised data delivery
into homes and offices. As a wireless digital delivery medium,
DMB has two broad applications --- audio delivery and data
delivery. To date, industry players have focused on the immense
market for audio content delivery over the DMB spectrum (there
are approximately 1.6 billion radio receivers in the world
today). While the DMB market will undoubtedly grow with the
development of lower cost receivers, the directors of Plexus
Multimedia believe that the true revolution will commence with
the development of applications that drive its data delivery
capabilities.
Financial information on Plexus Multimedia
Based on the unaudited management accounts of Plexus
Multimedia as at 31st December, 1999, the net asset value of
Plexus Multimedia was about SG$2.1 million (equivalent to about
HK$9.8 million).
According to the unaudited management accounts of Plexus
Multimedia for the eight-month period from its commencement
of business on 1st May, 1999 to 31st December, 1999, its net
loss before/after taxation and extraordinary items during that
period was about SG$434,000 (equivalent to about HK$2.0
million). During that eight-month period, Plexus Multimedia
generated revenue of about SG$51,000 (equivalent to about
HK$238,000) by (i) selling hardware products such as
digital car receiver as a distributor, and (ii) designing,
installing and maintaining programming software to parties who
are not connected with the directors, chief executive or
substantial shareholders of Plexus Multimedia or their
respective associates. A substantial portion of sales was made
to Radio Corporation of Singapore during that eight-month
period.
Plexus Multimedia expects to generate revenues mainly from four
areas:
(a) registration and monthly subscription fees charged to
subscribers of the DMB services;
(b) advertising fees originated from revenue splitting
arrangements with multimedia content providers and sponsors
for banners appearing on the handheld devices;
(c) handheld receiver sold to subscribers of the DMB
services; and
(d) consultancy fees or shared profits in relation to the
provision of consultancy services to the vertical application
providers.
INTEREST OF THE VENDOR IN THE COMPANY
At present, the Vendor does not own any beneficial interest
in the share capital of the Company. Upon Acquisition
Completion, the Vendor will hold about 24.53% of the share
capital of the Company as enlarged by the issue of the
Subscription Shares and the Consideration Shares.
REASONS FOR THE ACQUISITION
The principal activity of the Company is investment holding.
The principal activities of the Company's subsidiaries are
building construction and maintenance, property investment and
development, restaurant operations and other investing
activities.
It was stated in the Company's annual report for 1998/1999 that
the Group intends to continue the development of its existing
businesses and to diversify and develop new business
opportunity, especially in the high technology sector, with
a view to driving the Group's development in line with global
market trends and enabling the Company's shareholders to enjoy
more favourable returns in a long run.
As mentioned above, Plexus Multimedia started its business
activities since May 1999 and it recorded a net loss
before/after taxation and extraordinary items during the
eight-month period ended 31st December, 1999 of about
SG$434,000 (equivalent to about HK$2.0 million). Having taken
into account the business and development plans of Plexus
Multimedia and in particular, the DMB Project and its business
potential, the Directors are of the opinion that the
Acquisition is a good opportunity for the Group to diversify
its business and enables it to participate in projects which
involve the application and development of advanced
technologies. The Directors therefore consider that the
Acquisition is in the benefit of the Group and the shareholders
of the Company and is in line with the Company's intention as
stated in its annual report for 1998/1999.
Due to the nature of the business of Plexus Multimedia and the
fact that it is still at the early stage of its development,
high investment risk is attached to the business of Plexus
Multimedia and its business plan may or may not be carried out
as scheduled.
THE SUBSCRIPTION AGREEMENT
The parties
The Subscription Agreement was entered into between, among the
others, the Company and the Subscriber (being a wholly-owned
subsidiary of CASH) on 3rd January, 2000.
The Subscriber is an independent third party not connected with
the directors, chief executive or substantial shareholders of
the Company or any of its subsidiaries or their respective
associates.
Subscription Shares
400,000,000 new Shares, representing about 47.15% of the
existing issued share capital of the Company (which is
848,365,181 Shares) and about 24.18% of the enlarged share
capital of the Company (which will be 1,654,165,181 Shares)
immediately following issue of the Subscription Shares and the
Consideration Shares.
The Subscription Shares will rank pari passu with all the
existing Shares in issue, with the Consideration Shares and
with each other in all respects, including the right to any
dividends or distributions which may be made or declared on
or after the date of allotment and issue of the Subscription
Shares.
The Subscription Agreement does not contain any provision that
restricts the Subscriber's ability to transfer and dispose of
the Subscription Shares in future. In addition, the
Subscription Shares are not subject to any lock-up period. The
Subscriber undertakes not to dispose the Subscription Shares
to connected persons of the Company as defined under the Listing
Rules.
Price
HK$100 million to be payable in full at Subscription Completion.
The Subscription Price is translated into HK$0.25 per
Subscription Share. Comparisons have been made between the
price per Subscription Share and the recent prices per Share
as quoted on the Stock Exchange and the Adjusted Audited
Consolidated Net Asset Value as follows:
HK$ Price per
Subscription
Share at a
discount
Last traded price per Share quoted on the Stock Exchange
immediately before suspension of trading of the Shares on 30th
December, 1999 0.93 73.1%
Average of the closing prices per Share quoted on the Stock
Exchange for the ten trading days up to and including 30th
December, 1999 0.62 59.7%
Average of the closing prices per Share quoted on the Stock
Exchange for the thirty trading days up to and including 30th
December, 1999 0.61 59.0%
Adjusted Audited Consolidated
Net Asset Value 0.51 51.0%
The terms of the Subscription are determined after arm's length
negotiations between the Company and the Subscriber. Having
taken into account the following:
(i) the reasons and proposed benefits of the Acquisition as
stated in the section headed ``Reasons for the Acquisition'';
(ii) if the Acquisition proceeds, the need of funds by the
Company to finance the Acquisition and the development of the
business of Plexus Multimedia, and in particular, the DMB
Project;
(iii) the low level of liquidity of the Shares (ranging from
the lowest of about 0.1 million Shares traded on 13th August,
1999 to the highest of about 19.1 million Shares traded on 28th
December, 1999 during the six-month period ended on 30th
December, 1999) limiting the Company's ability to raise
substantial amount of funds from the stock market at a price
comparable to the prices of the Shares as quoted on the Stock
Exchange;
(iv) no increase in the gearing ratio and the interest burden
of the Company upon Subscription Completion; and
(v) no fund requirements from the existing shareholders of
the Company,
the Directors consider that terms of the Subscription including
the Subscription Price are fair and reasonable to and in the
interest of the Company.
The Directors aware that upon Subscription Completion and
Acquisition Completion, the interests of the existing
shareholders in the Company will be diluted by about 49%.
However, based on the reasons as mentioned above, in particular
points numbered (iii) to (v), the Directors therefore are of
the opinion that the Subscription is the best available means
of fund raising by the Company at present.
Subscription Conditions
The Subscription is conditional upon, among other things, the
following:
(1) the Acquisition Agreement becoming unconditional (save
the condition relating to the Subscription Agreement) and not
being terminated pursuant to the terms thereof;
(2) the obtaining of all the necessary consent or approval,
if required, for the issue and allotment of the Subscription
Shares;
(3) listing of and permission to deal in the Subscription
Shares being granted by the Listing Committee of the Stock
Exchange (and such permission and listing not subsequently
being revoked prior to the delivery of definitive share
certificate(s) representing the Subscription Shares);
(4) the approval of shareholders of the Company of the
Subscription at the Special General Meeting; and
(5) the Shares remaining listed on the Stock Exchange and
there is no suspension of trading in the Shares for more than
3 business days (as defined in the Listing Rules).
If the Subscription Conditions are not fulfilled on or prior
to 29th February, 2000, the Subscription Agreement shall
terminate.
Trading in Shares on the Stock Exchange has been suspended since
2:30 p.m. on 30th December, 1999 for the purpose to clear this
announcement. The Company and the Subscriber have agreed and
confirmed that suspension of trading in the Shares for more
than 3 business days during the period from 30th December, 1999
to 7th January, 2000 (please refer to the section headed
``Suspension and resumption of trading'' below) will not affect
the fulfilment of condition (5) above.
Subscription Completion
Subscription Completion shall take place on the same date as
the Acquisition Completion, when the Subscriber shall effect
payment of the Subscription Price to the Company and the Company
shall allot and issue the Subscription Shares to the
Subscriber.
Under the Subscription Agreement, there is no provision that
the Subscriber has the right to appoint Directors to the
Company's board of Directors. At present, the Subscriber does
not have any intention to appoint any Director to the Company's
board of Directors.
THE SUBSCRIBER AND CASH
The Subscriber is a wholly-owned subsidiary of CASH. The shares
of CASH are listed on the Stock Exchange. At present, CASH and
its subsidiaries do not have any interest in the share capital
of the Company. Upon Subscription Completion, CASH will,
through the Subscriber, hold about 24.18% of the share capital
of the Company as enlarged by the issue of the Subscription
Shares and the Consideration Shares. At present, CASH intends
to hold the Subscription Shares for long term investment
purpose. However, should opportunity arise, CASH may consider
to dispose of part or all of the Subscription Shares to party
or parties who is or are not connected with the directors, chief
executive or substantial shareholders of the Company or any
of its subsidiaries or their respective associates.
REASON FOR THE SUBSCRIPTION AND USE OF PROCEEDS
The Subscription is effected to raise net proceeds of about
HK$98 million which are to be applied as to HK$20 million to
fund the Acquisition Consideration and as to the balance to
finance the development of the business of Plexus Multimedia,
and in particular, the DMB Project.
After reviewing the business plan of Plexus Multimedia, the
Directors are aware that Plexus Multimedia will need funds in
order to fully implement its plan in the coming future. It is
the intention of Plexus Multimedia to obtain the funds as
required from either one or more of the following sources of
funding: (i) bank borrowings, (ii) shareholders' loans which
are intended to be provided by the shareholders of Plexus
Multimedia on pro rata basis, and/or (iii) equity financing.
Final decision with regard to the method of financing has not
been made by Plexus Multimedia yet. In the negotiations between
the Company and the Vendor with regard to the Acquisition, the
Company was requested to prove that funds are available to it
to finance the implementation of the business plan of Plexus
Multimedia. Having taken into account (i) Plexus Multimedia's
business plan and its need of funds to implement the plan in
the coming future; (ii) the understanding between the Vendor
and the Company to prove that the Company has available funds
to finance the business of Plexus Multimedia (this is not a
term of the Acquisition Agreement); and (iii) that the
sentiment of the equity market has improved substantially over
the past few months immediately before execution of the
Subscription Agreement on 3rd January, 2000, the Subscription
Agreement provides a good opportunity for the Company to raise
funds from the equity market, the Directors believe that the
Company will be in a better position if it has excess interest
free funds in hand preparing for future investment in Plexus
Multimedia rather than having investment opportunity but
without adequate funds in hand which will result in the Company
to be in an interior position to bargain with the financiers
when funds are needed, Therefore, the Directors consider that
it is in the interest of the Company to issue the Subscription
Shares to fund the Acquisition Consideration and to reserve
the balance as working capital for the purpose of financing
the business plan of Plexus Multimedia in future.
SHAREHOLDING STRUCTURE AND MANAGEMENT OF THE COMPANY FOLLOWING
ACQUISITION COMPLETION AND SUBSCRIPTION COMPLETION
Shareholding Structure of the Company
(For the Shareholding charts of the Company immediately before and after
the Acquisition and the Subscription, please refer to the press
announcement today.)
Immediately upon Acquisition Completion and Subscription
Completion, if there is no change in the shareholding of the
existing shareholders of the Company, less than 25% of the
Shares will be held by public. Appropriate steps such as
placement of the then existing and/or new Shares will be taken
by the Company to ensure that sufficient public float exists
for the Shares within one month after the Acquisition
Completion and the Subscription Completion which shall take
place on the same date. However, final decision with this
regard has not been made by the Company and further announcement
will be made by the Company once the decision is made to ensure
that sufficient public float exists for the Shares. Investors
and shareholders of the Company should note that should less
than 25% of the Shares be held by public upon Acquisition
Completion and Subscription Completion, trading in Shares will
be suspended immediately until appropriate steps are taken by
the Company so that at least 25% of the Shares are held by public.
Maintaining the listing of the Company
The Stock Exchange has stated that it will closely monitor
trading in the Shares if, at the Acquisition Completion and
the Subscription Completion, less than 25% of the Shares are
held by the public.
If the Stock Exchange believes that:
--- a false market exists or may exist in the Shares; or
--- there are too few Shares in public hands to maintain an
orderly market,
then it will consider exercising its discretion to suspend
trading in the Shares.
The board of Directors intends the Company to remain listed
on the Stock Exchange. The Directors will jointly and
severally undertake to the Stock Exchange to take appropriate
steps to ensure that subsequent to the Acquisition Completion
and the Subscription Completion, not less than 25% of the issued
share capital of the Company will be owned by the general public.
If the Company remains listed on the Stock Exchange, any
acquisition or disposal of assets by the Group in particular
with the Vendor will be subject to the provisions of the Listing
Rules. Pursuant to the Listing Rules, the Stock Exchange has
the discretion to require the Company to issue a circular to
its shareholders irrespective of the size of the proposed
acquisitions and disposals by the Group, particularly where
such proposed acquisitions and disposals by the Group represent
a departure from the principal activities of the Group. The
Stock Exchange also has the power to aggregate a series of
acquisitions and disposals by the Group, in particular, with
the Vendor, and any such transactions may result in the Company
being treated as if it were a new listing applicant and subject
to the requirements for new listing application as set out in
the Listing Rules.
Management of the Company
It is intended that there will not be any change in the
composition of the Company's board of Directors as a result
of Acquisition Completion and Subscription Completion.
Following Acquisition Completion and Subscription Completion,
the operation and business of the Company will continue to be
run by its existing management.
GENERAL
The Acquisition Agreement is conditional upon the Acquisition
Conditions and if it proceeds, the Acquisition is expected to
constitute a major transaction for the Company under the
Listing Rules. The Acquisition Agreement will require the
approval by the shareholders of the Company at the Special
General Meeting.
The conditional Subscription and the issue of the Subscription
Shares pursuant to the Subscription Agreement will also require
the approval by the Company's shareholders at the Special
General Meeting.
Based on the existing shareholding structure of the Company,
all shareholders of the Company are entitled to attend and vote
at the Special General Meeting in respect of the resolutions
relating to the Acquisition Agreement and the Subscription
Agreement. Mr. Cheng Chao Ming, Changjiang Power Development
(H.K.) Co. Limited, Intelligent Trico Investment Holdings
Limited, Intelligent Trico Enterprises Limited and China
Fortune Limited all of which in aggregate holds 408,496,044
Shares, representing about 48.16% of the existing issued share
capital of the Company, have undertaken to vote in favour of
the resolutions in relation to the approval of the Acquisition
Agreement and the Subscription Agreement and the transactions
contemplated thereunder at the Special General Meeting.
The Company will send a circular containing, among other things,
further information on the Acquisition and the Subscription
and a notice convening the Special General Meeting to its
shareholders as soon as practicable.
SUSPENSION AND RESUMPTION OF TRADING
Trading in Shares on the Stock Exchange was suspended at the
request of the Company from 2:30 p.m. on 30th December, 1999.
The Company has applied to the Stock Exchange for resumption
of trading in the Shares with effect from 10:00 a.m. on 10th
January, 2000.
DEFINITION
Acquisition the acquisition of the Plexus Multimedia Shares
by the Company from the Vendor pursuant to the Acquisition
Agreement
Acquisition Agreement the conditional agreement dated 3rd
January, 2000 entered into between, among the others, the
Company as purchaser and the Vendor pursuant to which the Vendor
has agreed to sell and the Company has agreed to purchase the
Plexus Multimedia Shares at the Acquisition Consideration
Acquisition Completion completion of the Acquisition
Agreement
Acquisition Conditions conditions of the Acquisition
Agreement, among other things, those conditions as described
in the paragraph headed ``Acquisition Conditions'' under the
section headed ``The Acquisition Agreement''
Acquisition Consideration HK$300 million
associate as defined in the Listing Rules
Business Days days (other than a Saturday) on which banks
are generally open for business in Hong Kong
CASH Celestial Asia Securities Holdings Limited, a company
incorporated in Bermuda with limited liability and the shares
of which are listed on the Stock Exchange
Company King Pacific International Holdings Limited, a company
incorporated in Bermuda with limited liability and which Shares
are listed on the Stock Exchange
Consideration Shares 405,800,000 Shares to be issued and
credited as fully paid to the Vendor for settlement of part
of the Acquisition Consideration to the extent of HK$280
million
DMB Project the development of the digital multimedia
broadcasting technology and its application by Plexus
Multimedia
Directors directors of the Company
Group the Company and its subsidiaries
Hong Kong Hong Kong Special Administrative Region of the
People's Republic of China
Independent Professional Valuers American Appraisal
Hongkong Limited, independent professional valuers
Listing Rules Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited
Plexus Multimedia Plexus Multimedia Pte Limited, a company
incorporated in Singapore
Plexus Multimedia Shares 35,626 shares of SG$1.00 each in
the share capital of Plexus Multimedia beneficially held by
the Vendor
Share(s) share(s) of HK$0.10 each in the Company
Special General Meeting a special general meeting of the
Company to be convened and held for the purpose to approve the
transactions contemplated in the Subscription Agreement and
the Acquisition Agreement
Stock Exchange The Stock Exchange of Hong Kong Limited
Subscriber Inner City Profits Limited, a company incorporated
in the British Virgin Islands and a wholly-owned subsidiary
of CASH
Subscription the conditional subscription of the
Subscription Shares by the Subscriber pursuant to the
Subscription Agreement
Subscription Agreement the conditional agreement dated 3rd
January, 2000 entered into between, among the others, the
Company and the Subscriber pursuant to which the Subscriber
has agreed to subscribe for and the Company has agreed to allot
and issue the Subscription Shares at the Subscription Price
Subscription Completion completion of the Subscription
Subscription Conditions conditions of the Subscription
Agreement, among other things, those conditions as described
in the paragraph headed ``Subscription Conditions'' under the
section headed ``The Subscription Agreement''
Subscription Price HK$100 million
Subscription Shares 400,000,000 new Shares, representing
about 47.15% of the existing issued share capital of the Company
and about 24.18% of the enlarged share capital of the Company
immediately upon Subscription Completion and Acquisition
Completion
Vendor Yorkshire Developments Limited, a private company
incorporated in the British Virgin Islands which is wholly
owned by one of the management team members of Plexus Multimedia.
It currently and beneficially holds 214,613 shares of SG$1.00
each of Plexus Multimedia which represent about 77.5% in the
total issued share capital of Plexus Multimedia
HK$ Hong Kong dollars, the lawful currency of Hong Kong
SG$ Singapore dollars, the lawful currency of Singapore
US$ United States dollars, the lawful currency of the
United States
On behalf of the board of
King Pacific International Holdings Limited
Cheng Chao Ming
Deputy Chairman and Managing Director
Hong Kong, 8th January, 2000
Note: In this announcement, the exchange rate of HK$7.773 to
US$1 and the exchange rate of HK$4.666 to SG$1 are used.
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