HK TOY CENTRE<0586> & UNITED PACIFIC<0176> - Joint Announcement & UNITED PACIFIC 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.
OPEN MISSION ASSETS LIMITED
(incorporated in the British Virgin Islands with limited liability)
(the `Purchaser')
United Pacific Industries Limited
(Incorporated in Bermuda with limited liability)
(the `Vendor')
Major transaction for the Vendor
Playwell
HONG KONG TOY CENTRE INTERNATIONAL LIMITED
(incorporated in Bermuda with limited liability)
(`HK Toy')
JOINT ANNOUNCEMENT
Financial adviser to United Pacific Industries Limited
Centurion Corporate Finance Limited
Unconditional cash offer
by Somerley Limited on behalf of the Purchaser
for all the issued shares in HK Toy
(other than those already acquired or agreed to be acquired
by the Purchaser or parties acting in concert with it)
SUMMARY
On 17 January 2000, the Purchaser and the Vendor
entered into the Agreement whereby the Purchaser conditionally agreed
to buy from the Vendor (i) 250,000,000 Sale Shares in the capital of
HK Toy for a consideration of HK$37,500,000 (or HK$0.15 per Sale
Share); and (ii) all of the Shareholder's Loans owed by the HK Toy
Group to the Vendor or its holding company and its subsidiaries on
the Completion Date at a consideration equal to the aggregate of
their face value, being HK$17,000,000. The Sale Shares represent
approximately 68.46% of the issued share capital of HK Toy.
Completion of the Agreement has taken place on 31 January 2000 and
(i) the Purchaser has since become the controlling shareholder of HK
Toy beneficially holding approximately 68.46% of the issued share
capital of HK Toy; and (ii) the Shareholder's Loans have been fully
assigned to the Purchaser.
Upon completion of the Agreement, the Purchaser is required to make
a mandatory cash offer for all the issued Shares in the capital of HK
Toy not already held by the Purchaser or parties acting in concert
with it. The terms of the Offer are set out under the heading
`Unconditional cash offer' below.
An independent financial adviser will be appointed to advise the
independent board committee of HK Toy to consider the Offer. The
Purchaser will send an offer document setting out the terms of the
Offer, and acceptance and transfer forms to the independent
shareholders of HK Toy as soon as possible in accordance with the
Takeovers Code. HK Toy will also send an offeree document to its
shareholders in accordance with the Takeovers Code.
Dealings in the shares of HK Toy and the Vendor on the Stock
Exchange have been suspended at the request of HK Toy and the Vendor
respectively with effect from 2:30 p.m. on 17 January 2000, and
dealings in the shares of HK Toy will continue to remain suspended
pending the proof of the beneficial ownership of the Offer Funding to
the satisfaction of Somerley Limited, the financial adviser to the
Purchaser, as more particularly described below. The Vendor has made
an application for the resumption of dealings in its shares following
publication of this announcement and with effect from 10:00 a.m. on
11 February 2000.
The sale of the Sale Shares and the Shareholder's Loans pursuant to
the Agreement constituted a major transaction for the Vendor under
the Listing Rules and the approval of which by the shareholders of
the Vendor was to be required. U.S. Industries, Inc., Asian Corporate
Finance Fund, L.P., Messrs. HO Che Kong, LEUNG Wai Chuen and Simon N.
HSU who beneficially collectively hold not less than 55.53% of the
issued shares in the capital of the Vendor, have each given an
irrevocable written approval to the Vendor in lieu of holding a
physical shareholders' meeting to approve the Agreement. A waiver
application has also been made to the Stock Exchange to complete the
Agreement on the basis of such approval from the said shareholders in
lieu of a physical shareholders' meeting.
THE AGREEMENT dated 17 January 2000 (the `Agreement')
Parties:
Vendor: United Pacific Industries
Limited, a company
incorporated in Bermuda,
which was the controlling
shareholder of HK Toy
beneficially interested in
265,298,332 shares of HK$0.10
each in the capital of HK Toy
(`Shares'), representing
approximately 72.65% of the
existing issued share capital
of HK Toy. The Vendor's
beneficial interests in the
shareholdings of HK Toy has
since been reduced to
approximately 4.19% as more
particularly described
below.
Purchaser: Open Mission Assets Limited,
a company incorporated in the
British Virgin Islands and
the current controlling
shareholder of HK Toy. The
issued share capital of the
Purchaser is beneficially
owned as to 30% by Cyber
Ocean Limited, as to 65% by
Mr. Chim Kim Lun, Ricky (`Mr.
Ricky Chim'), and as to the
remaining 5% by Mr. Lee Tiong
Hock. Cyber Ocean Limited is
beneficially and wholly owned
by Mr. Kwok Lin (`Mr.
Kwok').
The Purchaser, its
shareholders and Mr. Kwok are
parties independent of and
not connected with the
respective directors,
substantial shareholders or
chief executives of HK Toy
and the Vendor, and their
respective subsidiaries and
associates.
Guarantor to Purchaser: Mr. Kwok (Mr. Kwok acts as
the sole guarantor as he was
principally involved in the
negotiation of the terms of
the Agreement with the
Vendor).
The terms of the Agreement were negotiated on an arms-length
basis.
Sale Shares:
The sale of 250,000,000 Shares (the `Sale Shares'), representing
about 68.46% of HK Toy's entire existing issued share capital, at a
consideration of HK$37,500,000 or HK$0.15 per Share (the `Share
Consideration') by the Vendor to the Purchaser.
Shareholder's Loans:
On 31 January 2000 (`Completion Date'), all of the shareholder's
loans then owed by HK Toy and its subsidiaries (the `HK Toy Group')
to the Vendor or its holding company and its subsidiaries (the
`Shareholder's Loans') were assigned to the Purchaser without any
change to the terms at a consideration equal to the aggregate of
their face value, being HK$17,000,000 (the `Loan Consideration'). The
Shareholder's Loans bear an interest rate of 3% per annum over the
prime rate quoted by Standard Chartered Bank.
Payment terms:
The total consideration, which comprises the Share Consideration and
the Loan Consideration (`Total Consideration'), was paid by the
Purchaser to the Vendor in the following manner:
A.
HK$5,000,000 (the `Deposit') was paid in cash on 17 January 2000
upon signing of the Agreement as deposit and part payment of the
Total Consideration;
B.
HK$37,000,000 (the `Completion Amount') was paid in cash on
completion of the Agreement (`Completion') on 31 January 2000 by a
cashier's order; and
C.
The balance in the sum of HK$12,500,000 (the `Balance') was
satisfied by the issue by the Purchaser in favour of the Vendor of a
promissory note (the `Promissory Note') for the Balance on
Completion. The Promissory Note bears interests at a rate of 9% per
annum calculated from 1 February 2000 up to the date of repayment
thereof, which shall be no later than 31 July 2000. On Completion,
the Purchaser has also provided the Vendor as security for repayment
of the Balance a share charge charging 83.5 million Shares (`Charged
Shares') representing approximately 22.87% of the existing issued
share capital of HK Toy. The number of Charged Shares was determined
on the basis of the Balance with reference to the Share Consideration.
Guarantee:
In consideration of the Vendor entering into the Agreement, Mr. Kwok
has unconditionally guaranteed the performance by the Purchaser of
all of its obligations under the Agreement and the Promissory Note
and undertakes to the Vendor that if the Purchaser fails to comply
with any obligations under the Agreement, Mr. Kwok will perform or
procure performance of such obligations. As at the date of this
announcement, these outstanding obligations are, inter alia:-
(i)
payment of the Balance under the Promissory Note (i.e. HK$12.5
million, details as per paragraph C above);
(ii)
delivery of Share certificates for the 83.5 million Charged Shares; and
(iii)
procure a general offer for the Shares within such time and on such
terms as are required by the Hong Kong Code on Takeovers and Mergers
(`Takeovers Code').
Completion Date:
The Agreement was completed on the Completion Date. Upon Completion,
the Vendor's beneficial interests in the shareholdings of HK Toy has
since been reduced to 15,298,332 Shares (representing about 4.19% of
HK Toy's entire existing issued share capital).
Information on HK Toy:
The HK Toy Group is principally engaged in the manufacturing, export
and retail distribution of a variety of toys under private labels and
its own brand name `PLAYWELL'.
As announced in the 1999 interim report, the consolidated unaudited
losses before and after taxation and minority interests of the HK Toy
Group for the six months ended 30 September 1999 were HK$36,259,000
and HK$37,009,000 respectively. The consolidated audited losses
before and after taxation and minority interests of the HK Toy Group
for the period from 1 January 1998 to 31 March 1999 were
HK$170,019,301 and HK$172,247,300 respectively. For the year ended 31
December 1997, the consolidated audited profits of the HK Toy Group
before and after taxation and minority interests were HK$39,912,513
and HK$40,396,599 respectively. The consolidated audited net assets
value of the HK Toy Group as at 31 March 1999 amounted to
HK$229,973,854 or HK$0.63 per Share. On an unaudited basis and after
taking into account the interim losses, the consolidated net assets
of the HK Toy Group was approximately HK$0.53 per Share as at 30
September 1999.
As there was no trading in the Shares on 17 January 2000 prior to
the suspension of trading, the last nominal traded price of the
Shares quoted on The Stock Exchange of Hong Kong Limited (the `Stock
Exchange') was HK$0.247 per Share prior to the suspension of trading,
representing a discount of approximately 60.8% and 53.4% to the
consolidated audited net assets of the HK Toy Group as at 31 March
1999 and the unaudited consolidated net assets of the HK Toy Group as
at 30 September 1999 respectively. The average closing price of the
Shares for the 10 trading days ended on 14 January 2000 was HK$0.203
per Share, representing a discount of approximately 67.8% and 61.7%
to the consolidated audited net assets of the HK Toy Group as at 31
March 1999 and the unaudited consolidated net assets of the HK Toy
Group as at 30 September 1999 respectively. The average closing price
of the Shares for the 30 trading days ended on 14 January 2000 was
HK$0.192 per Share, representing a discount of approximately 69.5%
and 63.8% to the consolidated audited net assets of the HK Toy Group
as at 31 March 1999 and the unaudited consolidated net assets of the
HK Toy Group as at 30 September 1999 respectively. The financial
impact of the disposal under the Agreement will be disclosed in the
circular to shareholders of the Vendor.
The price of HK$0.15 per Share is at a discount of about 39.3% to
the last nominal traded price of HK$ 0.247 per Share quoted on the
Stock Exchange on 17 January 2000, being the date on which the last
trading of Shares was recorded prior to this announcement (there was
no trading in Shares on 17 January 2000). The price of HK$0.15 per
Share is at a discount of about 26.11% to the average closing price
of HK0.203 per Share for the 10 trading days ended on 14 January
2000. The price of HK$0.15 per Share is at a discount of about 21.88%
to the average closing price of HK$0.192 per Share for the 30 trading
days ended on 14 January 2000.
Information about the Vendor and reasons for the transaction:
The Vendor and its subsidiaries are a diversified industrial group
with major interests in a range of industries serving consumer,
business and industrial needs. After Completion, the Vendor and its
remaining subsidiaries will be principally engaged in the manufacture
and trading of voltage converters, intermediate frequency
transformers and coils and rechargeable battery products.
After due and careful consideration, the board of directors of the
Vendor is of the view that (i) the business of the HK Toy Group,
which is facing difficult trading conditions, is no longer a core
business in so far as the Vendor is concerned; and (ii) the Vendor
will be better able to deploy its resources in its other core
businesses post Completion so that shareholder value in the Vendor
could be maximised.
Whilst there are no specific projects being considered by the
Vendor, the proceeds from the Sale Shares and the Shareholder's Loans
will be used for general working capital purpose. The Vendor will
also consider disposing its remaining interest in HK Toy, amounting
to some 4.19% of the total Shares in issue, should market conditions
be attractive.
The transaction contemplated under the Agreement constituted a major
transaction for the Vendor under the Rules Governing the Listing of
Securities on the Stock Exchange (the `Listing Rules'), and the
approval of which by the shareholders of the Vendor was to be
required. U.S. Industries, Inc., Asian Corporate Finance Fund, L.P.,
Messrs. HO Che Kong, LEUNG Wai Chuen and Simon N. HSU who
beneficially collectively hold not less than 55.53% of the issued
shares in the capital of the Vendor, have each given an irrevocable
written approval to the Vendor in lieu of holding a physical
shareholders' meeting to approve the Agreement. A waiver application
has also been made to the Stock Exchange to complete the Agreement on
the basis of such approval from the said shareholders in lieu of a
physical shareholders' meeting.
Unconditional cash offer:
Upon Completion of the Agreement, the Purchaser has acquired voting
rights of approximately 68.46% of the issued share capital of HK Toy,
and under the Takeovers Code, the Purchaser must then make an
unconditional cash offer for all the issued Shares not already owned
by the Purchaser or parties acting in concert with it (the `Offer').
The Offer is made on the terms set out below.
Unconditional cash offer for Shares:
Somerley Limited on behalf of the Purchaser is making the Offer on
the following basis:
For each Share ................... HK$0.15 in cash
The Offer price of HK$0.15 per Share is the same as the price paid
by the Purchaser to the Vendor for each Sale Share under the
Agreement.
There are no options or securities outstanding which are convertible
into Shares.
Total consideration:
At present, HK Toy has 365,157,330 issued Shares. At a price of
HK$0.15 per Share, the Offer values the issued share capital of HK
Toy at about HK$54.8 million.
Based on the 365,157,330 Shares in issue and the 250,000,000 Sale
Shares already acquired by the Purchaser, there are 115,157,330
Shares which are not presently held by the Purchaser or parties
acting in concert with it and are subject to the Offer (the `Offered
Shares'). At the Offer price of HK$0.15 per Share, the Offered Shares
are valued at about approximately HK$17,273,600 (the `Offer
Funding').
The Purchaser has deposited cleared funds in the amount equal to the
Offer Funding with its solicitors specifically designated for the
payment of the Offered Shares under the Offer. The Offer Funding has
been provided by Madam Ly Kim Chou, the mother of Mr. Ricky Chim. The
Executive Director (the `Executive') of the Securities & Futures
Commission (the `SFC') has enquired into the beneficial ownership of
the Offer Funding. Subject to receipt of proof of the beneficial
ownership of the Offer Funding to the satisfaction of Somerley
Limited, the financial adviser to the Purchaser, as required by the
Takeovers Code, a further announcement will be issued by HK Toy and
the Purchaser in accordance with the Takeovers Code, whereby dealings
in the Shares will be resumed.
Terms of the Offer:
A document setting out the terms of the Offer, together with the
acceptance and transfer forms, will be sent to the shareholders of HK
Toy as soon as possible in accordance with the Takeovers Code.
An independent board committee of HK Toy will be set up to consider
the Offer and advise the independent shareholders of HK Toy on the
Offer. An independent financial adviser will be appointed to advise
the said committee.
Effect of accepting the Offer:
By accepting the Offer, shareholders of HK Toy will sell their
Shares and all rights attached to them, including the right to
receive all dividends and distributions made or paid after 17 January
2000.
Stamp duty:
Stamp duty at a rate of HK$1.25 for every HK$1,000 of the price or
part thereof will be deducted from the amount paid to shareholders
who accepted the Offer.
Information about the Purchaser:
The Purchaser is a private company incorporated in the British
Virgin Islands on 22 December, 1999. It has not engaged in any
activity save for the transactions contemplated under the Agreement
and matters relating to the Offer.
None of the Purchaser and parties acting in concert with it owns any
Shares or has dealt in any of the Shares in the past 6 months.
Particulars of the beneficial owners of the Purchaser are set out in
the paragraph headed `Resignation and appointment of directors to the
board of HK Toy' below.
Intentions of the Purchaser regarding HK Toy:
The Purchaser intends that, following Completion, the HK Toy Group
will continue with the existing businesses. The Purchaser does not
intend to make any immediate material changes to the businesses of
the HK Toy Group, including any acquisition or disposal of material
assets by HK Toy. The Purchaser intends to carry out a full
operational review of the HK Toy Group after Completion, with a view
to implementing measures to improve the efficiency of the businesses
of the HK Toy Group, including measures to rationalise the existing
employee structure of the HK Toy Group, if necessary. The Purchaser
will explore suitable business opportunities and new investments for
the HK Toy Group in order to improve its profitability. However, no
such investments or businesses have been identified at this stage.
Any further investments or businesses that might be conducted by HK
Toy will be subject to regulatory and shareholders' approval where so
required by applicable laws and regulations and will be in full
compliance with the relevant Listing Rules.
Maintaining the listing of HK Toy:
The Stock Exchange has stated that it will closely monitor trading
in Shares if, at the close of the Offer, 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
-that 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 Purchaser intends that HK Toy will remain listed on the Stock
Exchange. The Purchaser and its directors and the new directors to be
appointed to the board of HK Toy will jointly and severally undertake
to the Stock Exchange to take appropriate steps to ensure that
sufficient public float exists in the Shares.
If HK Toy remains a listed company, the Stock Exchange has the
discretion to require HK Toy to issue a circular to its shareholders
irrespective of the size of the proposed acquisitions or disposals of
assets by HK Toy, particularly when such proposed transaction
represents a departure from the principle activities of HK Toy. The
Stock Exchange also has the power to aggregate a series of
transactions and any such transactions may result in HK Toy being
treated as if it were a new listing applicant.
Resignation and appointment of directors to the board of HK Toy:
Resignation
It is intended that all the existing executive directors of HK Toy
will resign on the first closing date of the Offer as permitted under
Rule 7.1 of the Takeovers Code.
Appointment
The Purchaser intends to nominate the following persons as executive
directors to the board of HK Toy after the despatch of the offer
document to the shareholders of HK Toy:
Mr. KWOK Lin, aged 59, is the Chairman of SEC Development Company
Limited and the Managing Director of Times Properties Limited. Mr.
Kwok founded SEC Development Company Limited in 1984 which is
principally engaged in the investment in industries, trade, equipment
and the development of technical expertise. In 1985, Mr. Kwok was
extensively involved in managing and promoting investment projects in
power generation plants in the PRC. In 1987, he set up a joint
venture factory in the PRC to manufacture copper clad laminates. In
1988, Times Properties Limited was set up and is principally engaged
in property development and investment and has developed the
properties known as `Times Tower', `CATIC Plaza' and `No. 133 Wanchai
Road' in Hong Kong.
Mr. LEE Tiong Hock, aged 60, has over 27 years of experience in
commercial and investment banking. From 1977 to 1987, he served as
Senior Manager of Marketing Department of an international bank in
Hong Kong and, concurrently, as General Manager of its two
deposit-taking subsidiaries. Since 1989, he has been engaged in
corporate finance advisory business (under the firm Mega Capital
Limited, which ceased business in 1997) and private financial
consultancy business in Hong Kong.
Mr. CHIM Kim Lun, Ricky, aged 31, has over 6 years' commercial and
industrial experiences and in investments. He was previously
directors of three listed companies in Hong Kong, namely, Lucky Man
Properties Limited (now known as Star East Holdings Limited); Chintex
Oil & Gas Co. Limited (now known as Grand Field Group Holdings
Limited); and Mandarin Resources Corporation Limited and was
directors of certain subsidiaries of the aforesaid listed companies
engaging in property investments in Hong Kong and the PRC, assembly
and trading of electrical appliances and electrical engineering
contracting services, and investments in listed securities.
Currently, he does not hold any directorship in listed companies in
Hong Kong. He graduated from the University of British Columbia in
Canada with a bachelor degree in Arts.
Mr. Karajan KWOK, aged 25, is the son of Mr. Kwok Lin. He graduated
from the University of New South Wales of Australia and holds a
Bachelor of Commerce degree. He is a member of the Australian Society
of Certified Practising Accountants and has over three years'
experience in the auditing field.
General:
Pursuant to Rule 8.2 of the Takeovers Code, an offer document should
normally be posted by or on behalf of an offeror within 21 days of
the date of the announcement of the terms of an offer and the
Executive's consent is required if the offer document may not be
posted within such time period. In light of the ongoing confirmation
of the beneficial ownership of the Offer Funding to the satisfaction
of Somerley Limited as more particularly described above, the
confirmation of which should result in the confirmation of financial
resources available to the Purchaser to satisfy full acceptance of
the Offer, the offer document may not be despatched within the
aforesaid 21-day time period. Should this be the case, the Purchaser
will submit a waiver application to the Executive in respect of the
non compliance with Rule 8.2 of the Takeovers Code.
The aforesaid notwithstanding, a circular containing details of the
Agreement will be despatched to the shareholders of the Vendor for
information only as soon as practicable. The Purchaser will send an
offer document setting out the terms of the Offer, and acceptance and
transfer forms to the shareholders of HK Toy as soon as possible in
accordance with the Takeovers Code. HK Toy will also send an offeree
document to its shareholders in accordance with the Takeovers Code.
An independent financial adviser will be appointed to advise the
independent board committee of HK Toy to consider the Offer.
Dealings in the shares of HK Toy and the Vendor on the Stock
Exchange have been suspended at the request of HK Toy and the Vendor
respectively with effect from 2:30 p.m. on 17 January 2000, and
dealings in the Shares will continue to remain suspended pending the
proof of the beneficial ownership of the Offer Funding to the
satisfaction of Somerley Limited as more particularly described
above. The Vendor has made an application for the resumption of
dealings in its shares following publication of this announcement and
with effect from 10:00 a.m. on 11 February 2000.
By order of the board of
OPEN MISSION ASSETS LIMITED
KWOK Lin
Director
By order of the board of
UNITED PACIFIC INDUSTRIES LIMITED
HO Che Kong
Chairman
By order of the board of
HONG KONG TOY CENTRE INTERNATIONALLIMITED
George Y. L. CHAN
Director
Hong Kong SAR, 10 February 2000
The directors of the Purchaser jointly and severally accept full
responsibility for the accuracy of information contained in this
announcement other than those relating to the Vendor and HK Toy and
confirms, having made all reasonable inquiries, that to the best of
their knowledge, opinions expressed in this announcement other than
those relating to the Vendor and HK Toy 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.
The directors of the Vendor jointly and severally accept full
responsibility for the accuracy of information contained in this
announcement other than those relating to the Purchaser and HK Toy
and confirms, having made all reasonable inquiries, that to the best
of their knowledge, opinions expressed in this announcement other
than those relating to the Purchaser and HK Toy 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.
The directors of HK Toy (except Mr. CHU Kim Ho, who is not
contactable) jointly and severally accept full responsibility for the
accuracy of information contained in this announcement other than
those relating to the Purchaser and the Vendor and confirms, having
made all reasonable inquiries, that to the best of their knowledge,
opinions expressed in this announcement other than those relating to
the Purchaser and the Vendor 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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