EASYKNIT INT'L<1218>EASY CONCEPTS<0241>-Joint Announcement & 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.
EASYKNIT INTERNATIONAL HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
MAJOR TRANSACTIONS
Deemed disposal of interests in
a major subsidiary and
proposed placement of Shares
EASY CONCEPTS INTERNATIONAL HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
Proposed capital reduction,
and proposed change of name
UNI-TECH INTERNATIONAL GROUP LIMITED
(Incorporated in the British Virgin Islands with limited liability)
TOP CENTURY INVESTMENTS COMPANY LIMITED
(Incorporated in the British Virgin Islands with limited liability)
JOINT ANNOUNCEMENT
Agreement for the subscription of New Shares
and
possible unconditional cash offer by BNP Prime Peregrine on behalf
of
Uni-Tech for all the Shares
not already owned or agreed to be
acquired by Uni-Tech or its Concert Parties
The Company has entered into the Subscription Agreement with the
Subscribers and Easyknit in relation to the subscription of
2,297,377,680 new Shares, representing approximately 354.5 per cent.
of the existing issued share capital of the Company and approximately
78 per cent. of the issued share capital of the Company as enlarged
by the Subscription. The consideration for the Subscription is about
HK$117.2 million, which represents 2,297,377,680 new Shares times
HK$0.051 per Share and will be payable in cash by the Subscribers
upon Completion.
It is proposed that the nominal value of all the issued and unissued
Shares will be reduced from HK$0.10 each to HK$0.01 each simultaneously
with Completion. On the basis of 647,978,320 Shares presently in
issue, a credit of HK$58,318,048.80 will arise as a result of the Capital
Reduction. Such credit will be transferred to a special capital reserve
account of the Company. The Capital Reduction is subject to approval by
the Shareholders at the Special General Meeting.
At present, the Subscribers and their Concert Parties do not own any
interest in the Company. Upon Completion, the Subscribers and their
Concert Parties will be interested in an aggregate of 2,297,377,680
Shares, representing about 78 per cent. of the issued share capital
of the Company as enlarged by the Subscription.
Under Rule 26.1 of the Takeovers Code, upon Completion, Uni-Tech
will make an unconditional cash offer at HK$0.051 per Share for all
issued Shares not already owned or agreed to be acquired by it or its
Concert Parties.
Warning: The Offer is a possibility only.
The making of the Offer is subject to Completion. The Subscription
Agreement is conditional (see `Conditions of the Subscription
Agreement' below).
Shareholders and investors should exercise extreme caution when
buying or selling Shares.
If the Offer is made, it will be on the terms set out in this
announcement.
The Company is an indirect 75 per cent. owned subsidiary of
Easyknit. Following Completion (but before the Placing described
below), Easyknit's interest in the Company will be diluted from
approximately 75 per cent. to 16.5 per cent. of the issued share
capital of the Company as enlarged by the Subscription. The effect of
the Subscription Agreement represents a material dilution in
Easyknit's interest in a major subsidiary and gives rise to a deemed
disposal of a major subsidiary which constitutes a major transaction
for Easyknit under the Listing Rules and the Subscription Agreement
is, therefore, subject to approval of the shareholders of Easyknit at
its general meeting.
On 17th February, 2000, the Placing Agreement was entered into
between Touch Profits Limited, a wholly-owned subsidiary of Easyknit
which holds a 75 per cent. interest in the Company and Fair Eagle
Securities Limited, on a fully underwritten basis, for the placement
of a total of 80,000,000 Shares to the placees at the placing price
of HK$1.20 per Share.
The 80,000,000 Shares comprised in the Placing represent
approximately 12.3 per cent. of the existing issued share capital of
the Company and approximately 2.7 per cent. of the issued share
capital of the Company as enlarged by the Subscription. The Placing
will reduce the aggregate shareholding of Easyknit from approximately
75 per cent. to about 62.7 per cent. of the Company's existing issued
share capital. Following the Placing and the Subscription, Easyknit's
interest in the Company will be further diluted to 13.8 per cent. of
the Company's share capital as enlarged by the Subscription.
Entering into the Placing Agreement constitutes a major
transaction for Easyknit under the Listing Rules. Therefore, the
Placing Agreements is subject to approval of shareholders of Easyknit
in a forthcoming special general meeting of Easyknit. The proceeds
from the Placing are estimated to be approximately HK$96 million,
which will be used as to about HK$40 million for the repayment of
bank borrowings of Easyknit and the balance for working capital for
Easyknit.
Both Easyknit and the Subscribers intend that Easyknit, being the
current controlling shareholder of the Company, maintains an interest
in the Company. Accordingly, Easyknit further agrees with the
Subscribers that out of the 485,965,700 Shares held by Easyknit at
the date of the Subscription Agreement, it shall not dispose of 40
per cent. of such Shares, being 194,386,280 Shares (other than the
80,000,000 Shares comprised in the Placing), representing
approximately 6.6 per cent. of the issued share capital of the
Company as enlarged by the Subscription, during the one-year period
after Completion. As for the remaining 291,579,420 Shares (including
the 80,000,000 Shares comprised in the Placing), representing
approximately 9.9 per cent. of the issued share capital of the
Company as enlarged by the Subscription, Easyknit has undertaken with
the Subscribers that it shall dispose of all of them during the
one-year period after Completion.
Trading in the shares of Easyknit on the Stock Exchange and the
SGX-ST was suspended at the request of Easyknit, due to the
exceptional increase of 30.4 per cent. in the share price to HK$0.36
and trading volume of 5.4 million shares on the Stock Exchange, with
effect from 10:48 a.m. and 11:26 a.m. respectively on 31st January,
2000. Trading in the Shares on the Stock Exchange was suspended at
the request of the Company due to the exceptional increase of 517.6
per cent. in the Share prices to HK$2.10 and the trading volume of
4.2 million Shares on the Stock Exchange, with effect from 10:47 a.m.
on 31st January, 2000.
Applications have been made to the Stock Exchange and the SGX-ST for
the resumption of trading of the shares of Easyknit and an
application has also been made to the Stock Exchange for the
resumption of trading of the Shares, in each case, with effect from
10:00 a.m. on 18th February, 2000.
Completion is conditional upon a number of conditions as set out
below under the section headed `Conditions of the Subscription
Agreement'. The Subscription may or may not proceed. Shareholders of
each of Easyknit and the Company and investors should exercise
extreme caution when dealing in the shares of each of Easyknit and
the Company.
THE SUBSCRIPTION AGREEMENT
Date: 7th February, 2000
Issuer: The Company
Subscribers: Uni-Tech Top Century
Warrantor: Easyknit, in the role of the
warrantor, please refer to
section headed `Warranties,
undertaking and terminations'
below.
The Company is an indirect 75 per cent. owned subsidiary of Easyknit.
Each of the Subscribers is independent of the directors, chief
executive and substantial shareholders of the Company and Easyknit,
any of their subsidiaries or their respective Associates.
Shares to be issued
An aggregate of 2,297,377,680 new Shares, representing approximately
354.5 per cent. of the existing issued share capital of the Company
and approximately 78 per cent. of the issued share capital of the
Company as enlarged by the Subscription.
Of the New Shares, 2,209,017,000 new Shares will be subscribed by
Uni-Tech, representing approximately 75 per cent. of the enlarged
issued share capital of the Company and 88,360,680 new Shares will be
subscribed by Top Century, representing approximately 3 per cent. of
the enlarged issued share capital of the Company.
The New Shares will rank pari passu in all respects with all
existing Shares, including the right to receive all future dividends
and distributions declared, made or paid by the Company on or after
the date of their issue.
Issue price
The New Shares will be issued at HK$0.051 per Share which was
determined after arm's length negotiations. The issue price of
HK$0.051 per Share represents a discount of approximately 97.6 per
cent. to the closing price of HK$2.10 prior to the suspension in
trading on 31st January, 2000, a discount of approximately 85 per
cent. to the closing price of HK$0.34 per Share on 28th January,
2000, a discount of about 89.5 per cent. to the average closing price
of approximately HK$0.484 per Share over the 10 trading days up to
and including 28th January, 2000. Such issue price of HK$0.051 per
Share also represents a discount of approximately 55.5 per cent. to
the net asset value per Share as at 31st March, 1999 of approximately
HK$0.1146.
The terms of the Subscription Agreement were negotiated on an arm's
length basis. In negotiating the issue price for the New Shares, the
directors of the Subscribers and the Company have taken into account,
amongst others, the following factors:
- the Shares have been traded at a price range of HK$0.32 to HK$0.44
per Share during the last full trading day on 28th January, 2000
prior to the suspension of trading in the Shares on 31st January,
2000;
- the aggregate trading volume of 256,000 Shares over the 120 trading
days up to and including 28th January, 2000;
- the Group recorded losses of about HK$179.5 million, HK$77.9
million, HK$26.8 million and HK$12.3 million for the period / year
ended 31st March, 1999, 31st March, 1998, 28th February, 1997 and
29th February, 1996 respectively and continued to record a loss of
HK$10.5 million for the six months ended 30th September, 1999;
- the average closing prices per Share for the 30-, 60-, 90- and 120-
trading day periods up to and including 28th January, 2000 were
approximately HK$0.71, HK$0.855, HK$0.9033 and HK$0.9275
respectively; and
- the net asset value per Share as at 31st March, 1999 of HK$0.1146.
In addition, the Directors believe the subscription price of
HK$0.051 per Share is in the best interests of the Company, having
taken into account the following circumstances affecting the Group at
the time:
(1) The Company is in a difficult financial condition. The Company has
been in negotiation with its creditors for some months and in
particular, the standstill agreement with its major bank creditors
expired on 31st December, 1999. While those standstill arrangement
have orally agreed to continue its standstill arrangement until 30th
June, 2000, the Company, at that time continued to be placed under
pressure by creditors;
(2) The net asset value per share of HK$0.1146 is not reflective of the
underlying financial position of the Company. In particular, the
Directors estimate that approximately 80% of the assets of the
Company comprise relatively illiquid real properties located in Hong
Kong and the PRC. The Company have attempted for more than one year
to dispose of some of the Properties, including by tender, without
success. Such difficulties in realising these assets are not
reflected in the net asset value of the Company;
(3) The Directors believe it would not be possible to raise money in the
equity markets generally at a price in excess of the subscription
price;
(4) Easyknit is not willing or able to make further investment in the
Company.
Conditions of the Subscription Agreement
Completion is conditional upon the following conditions being fulfilled:
(a) the listings of and permissions to deal in the Shares in issue
immediately after the Capital Reduction and the New 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 New
Shares);
(b) the Shares remaining listed and traded on the Stock Exchange prior
to Completion, and no notification being received from the Stock
Exchange or the SFC that the listing of the Shares on the Stock
Exchange will or may be withdrawn or suspended at, upon or as a
result of, Completion or otherwise in connection with the terms of
the Subscription Agreement, or for any reason other than the Capital
Reduction or an inadequate percentage of the issued share capital of
the Company being held in public hands following the close of the
Offer;
(c) an increase in the authorised share capital of the Company which is
sufficient for the issue of the New Shares, and issue and allotment
of the New Shares having been approved by Shareholders to the extent
as permitted to vote under the Takeovers Code and the Listing Rules
in respect thereof at the Special General Meeting by way of ordinary
resolution(s);
(d) the Capital Reduction having been approved by the Shareholders at
the Special General Meeting by way of a special resolution;
(e) the Subscription Agreement and the issue and allotment of the New
Shares having been approved by the shareholders of Easyknit at a
special general meeting by way of ordinary resolution(s);
(f) the Bermuda Monetary Authority having consented to the issue and
confirmed the transferability of the New Shares;
(g) all waivers, consents or approvals of the Stock Exchange, the SFC
and any other authority in Hong Kong, Bermuda or elsewhere, which are
required or appropriate for the entry into and the implementation of
the Subscription Agreement, having been obtained;
(h) all requisite consents for the transactions contemplated under this
Agreement having been obtained from financial institutions which have
entered into financing agreements with the Group or Easyknit or its
subsidiaries; and
(i) the Capital Reduction taking effect simultaneously with Completion.
If any of the conditions has not been fulfilled (or waived by the
Subscribers to the extent of conditions (b) and (h) (in respect of
the relevant consents to be obtained from the financial institutions
which have entered into financing agreements relating to the Group
only) )on or before 8th June, 2000, the Subscription Agreement shall
cease to be of any effect.
Completion
The aggregate consideration for the Subscription of about HK$117.2
million will be payable in cash upon Completion. Completion will take
place on the third business day after all the conditions of the
Subscription Agreement have been fulfilled or waived by Subscribers
(to the extent with in respect of conditions (b) and (h) (in respect
of the relevant consents to the Group only)). It is expected that
Completion will take place in or around May 2000.
Warranties, undertaking and terminations
Easyknit, being the Warrantor, and the Company, on a joint and
several basis, made certain warranties in respect of the Group. In
particular, Easyknit warrants that the aggregate value of the
properties of the Group as at 31st March, 2000 will not be less than
HK$200,000,000 (please see paragraph below) and the Standstill
Agreement will be extended to 30th June, 2000 or a later date. In the
event of any breach of warranties in any material respect on or
before Completion, the Subscribers may rescind the Subscription
Agreement.
Both Easyknit and the Subscribers intend that Easyknit, being the
current controlling shareholder of the Company, maintains an interest
in the Company. Accordingly, Easyknit further agrees with the
Subscribers that out of the 485,965,700 Shares held by Easyknit at
the date of the Subscription Agreement, it shall not dispose of 40
per cent. of such Shares, being 194,386,280 Shares (other than the
80,000,000 Shares comprised in the Placing), representing
approximately 6.6 per cent. of the issued share capital of the
Company as enlarged by the Subscription, during the one-year period
after Completion. As for the remaining 291,579,420 Shares (including
the 80,000,000 Shares comprised in the Placing), representing
approximately 9.9 per cent. of the issued share capital of the
Company as enlarged by the Subscription, Easyknit has undertaken with
the Subscribers that it shall dispose of all of them during the
one-year period after Completion and deposit the sale proceeds, save
for those arising from the Placing, up to a maximum of HK$50 million
or if the sale proceeds of all such Shares are less than HK$50
million, the entire amount with the escrow agent.
Property warranty
In relation to the Group's properties, the Subscribers currently do
not intend to dispose of such properties, except for properties in
Hong Kong currently under negotiations by the Company, at an
approximate valuation of HK$35 million.
As stated above, Easyknit warrants that the aggregate gross proceeds
of the Group's properties (if successfully disposed) and the market
value of those properties that have not been disposed of within three
years from Completion shall not be less than HK$200 million. Despite
such warranty given by Easyknit, under the Subscription Agreement,
the Company is not obligated to dispose of any of the Group
properties within three years from completion. If only part of the
properties were disposed of within the three years from Completion
and the gross proceeds from such disposal together with the aggregate
value of the remaining properties as appraised by an independent
valuer approved by the escrow agent is less than HK$200 million, the
Subscribers shall be entitled to be compensated, out of the sale
proceeds of Shares deposited with the escrow agent described above on
a dollar to dollar basis, the shortfall which is limited to the
amount that has been deposited with the escrow agent.
Use of proceeds
The proceeds from the Subscription are estimated to amount to about
HK$117.2 million. It is intended that the proceeds will be used to
expand the business of the Group to telecommunications and
Internet-related activities. At present, there is no specific project
planned for this purpose, and there is also no plan for the
Subscribers to inject any existing assets of theirs or their Concert
Parties into the Group.
INFORMATION ON THE GROUP AND EASYKNIT
The Group is principally engaged in property investment activities.
The Company is an indirect 75 per cent. owned subsidiary of Easyknit.
Following Completion, Easyknit's interest in the Company will be
diluted from approximately 75 per cent. to 16.5 per cent. of the
issued share capital of the Company as enlarged by the Subscription.
The effect of the Subscription Agreement represents a material
dilution in Easyknit's interest in a major subsidiary and gives rise
to a deemed disposal of a major subsidiary which constitutes a major
transaction for Easyknit under the Listing Rules. The Subscription
Agreement is therefore subject to approval by the shareholders of
Easyknit at its general meeting.
Information on Easyknit
The principal business activities of Easyknit are sourcing and
export of cotton based knitted garments for women, children and
infants and property investments. In December 1997, Easyknit acquired
the Company, which was then known as Shui Hing Company Limited, and
subsequently renamed Easy Concepts International Holdings Limited.
Following the Asian financial crisis, the Group's core businesses of
property holding and retail deteriorated, as was reflected in
substantial increases in losses of HK$77.9 million and HK$179.5
million in the years ended 31st March 1998 and 1999 respectively (as
further described in the section headed `Subscription Agreement').
The directors of Easyknit believe that the injection of capital and
change of manangement through the Subscription enables Easyknit to
concentrate on the principal activities of Easyknit whilst
maintaining an interest and upside potential as a minority
shareholder in the Company.
INFORMATION ON THE SUBSCRIBERS
Uni-Tech
Uni-Tech is an investment holding company incorporated in the
British Virgin Islands with limited liability and is a wholly-owned
subsidiary of 21CN.
Top Century
Top Century is an investment holding company incorporated in the
British Virgin Islands with limited liability. The shareholding
structure of Top Century is as to 65 per cent. beneficially owned by
Mr. Poon Wai-Cheong, the executive vice-president of the Pollon Group
and 35 per cent. beneficially owned by Mr. Fung Ka-Keung, David, the
vice-president and financial controller of the Pollon Group.
21CN
The shareholding structure of 21CN is as to 76.5 per cent.
beneficially owned by Pollon, as to 17.5 per cent. by 21CN China, a
company incorporated in the PRC, which is 94 per cent. owned by
(Guangdong Post and Telecommunications Bureau) and its Associates and
the balance by an independent third party, being (Hua Xin Telecom
Technology Company Limited), a provider of internet related services
in the PRC. Guangdong Post and Telecommunications Bureau is a
supervisory governmental agency of 21CN China, and as to 5 per cent.
by Multiphase, a wholly-owned subsidiary of China Telecom (Hong Kong)
Group Limited, (an intermediate holding company of China Telecom
(Hong Kong) Limited, a company listed on the Stock Exchange). The
remaining 1 per cent. is owned by Top Century.
21CN has been developing a portal under the domain name `21cnhk.com'
(the `HK Web Business') which is scheduled to be launched in Hong
Kong in the first quarter of Year 2000. 21CN China operates an
internet business in China, including a portal under the domain name
`21cn.com' (registered under the name of a nominee of 21CN China, Ms.
Chen Changjuan, a deputy director- general of Guangdong Posts and
Telecommunications Administration) (the `PRC Web Business') which was
ranked number 7 by the CNNIC as the most favorite websites in the PRC
for the year ended 31st December, 1999. On 22nd January, 2000, 21CN
China entered into an agreement with 21CN pursuant to which, 21CN
China has an obligation to deal and cross promote exclusively with
21CN in respect of the PRC Web Business. 21CN also plans to establish
other overseas Web Business, together with the HK Web Business and
the PRC Web Business, under the brandname `21CN'.
Pollon
Pollon is 100 per cent. beneficially owned by Ms. Chen Xiao-Ying.
For details of Ms. Chen Xiao-Ying, please refer to section headed
`Proposed change of board composition'. Pollon is an investment
holding company.
The directors, chief executive and substantial shareholders of the
Company are independent of the Subscribers and have no shareholding
or other financial interests in any member of the Subscribers.
Convertible and Exchangeable Notes
Pursuant to Notes Agreement I (of 4th February, 2000), 21CN has
conditionally agreed to issue the ES Note to Emerald Sky and the NF
Note to New Found. Pursuant to Notes Agreement II of (11th February,
2000), 21CN has conditionally agreed to issue the YH Note to Yi Hua.
The principal amounts of the ES Note, NF Note and YH Note are
HK$18,661,775.62, HK$15,162,692.69 and HK$22,744,039.03 respectively.
Under the terms and conditions of the ES Note, the NF Note and the
YH Note, Emerald Sky, New Found and Yi Hua respectively may at any
time after the issue of the ES Note, the NF Note and the YH Note and
on or before 4th February, 2002:
1. convert the ES Note, the NF Note and the YH Note into 21CN Shares,
which, assuming full conversion, would represent approximately 2.9%,
1.9% and 2.9%, respectively, of the issued share capital of 21CN as
enlarged by the full conversion of the ES Note, the NF Note and the
YH Note; or
2. exchange the ES Note, the NF Note and the YH Note into Shares that
will be owned by 21CN through Uni-Tech upon Completion at an exchange
price of HK$0.28, HK$0.34 and HK$0.34 per Share respectively, which
assuming full exchange, would represent approximately 2.25 per cent.,
1.5 per cent. and 2.25 per cent., respectively, of the issued share
capital of the Company as enlarged by the Subscription.
Completion of the Notes Agreement I and the Notes Agreement II are
subject to, among other things, the following conditions:
1. in respect of the Notes Agreement II only, the completion of the
Notes Agreement I ;
2. to the extent legally feasible, the transfer of the domain name and
the business relating to the website `21cnhk.com' by Pollon to 21CN
without any consideration and the transfer of the domain name and the
business relating to the website `21cn.com' by the 21CN China's
nominee (Ms. Chen Changjuan) to 21CN China;
3. Completion of the Subscription Agreement;
4. Emerald Sky, New Found and Yi Hua, as the case may be, have not
identified any undisclosed shareholder of the Company who
beneficially owns more than 20,000,000 of the Shares or any
securities convertible into or exchangeable for the Shares;
5. Emerald Sky, New Found and Yi Hua, as the case may be, have not
identified any undisclosed shareholder of Easyknit who beneficially
owns more than 10 per cent. of Easyknit's shares or any securities
convertible into or exchangeable for the Shares; and
6. Emerald Sky, New Found and Yi Hua, as the case may be, having
received copy of a certificate signed by Mr. Koon Wing Yee, relating
to his beneficial interests, if any, in the Company.
Completion of Notes Agreement I is expected to take place on the
second business day after satisfaction of all of the conditions
precedent as set out in the Notes Agreement I or at such other time
as 21CN, Emerald Sky and New Found may agree in writing. Completion
of the Notes Agreement II is expected to take place simultaneously
with the completion of the Notes Agreement I or any other time as
21CN and Yi Hua may agree in writing, subject to the fulfilment of
the conditions set out in the Notes Agreement II.
Emerald Sky is a company wholly-owned by Sino Equity, a private
equity investment and advisory firm formed in 1998. Sino Equity is
wholly-owned by Mr. Gong Hong-Yu and his family, an independent third
party. Sino Equity serves as advisor to leading international private
equity investors in Asian infrastructure, telecom, media, and
technology areas and on specific investment transactions. It is also
actively seeking to make direct private equity investment in
opportunities relating to information technology in Greater China
region. Mr. Gong Hong-Yu has considerable experience in the
investment industry.
New Found is owned as to 95 per cent. by The News Corporation
Limited indirectly and as to 5 per cent. by Sino Equity. The News
Corporation Limited is one of the world's largest diversified media
and communications companies and its shares are listed on the
Australian Stock Exchange Limited and other major exchanges around
the world.
Yi Hua is beneficially owned as to 50 per cent. by BNP Prime
Peregrine Limited and 50 per cent. by Mr. Leung Pak To, Francis. BNP
Prime Peregrine Limited is the holding company of BNP Prime Peregrine
and BNP Prime Peregrine Limited. Mr. Leung Pak To, Francis is the
Chairman of BNP Prime Peregrine and vice chairman of BNP Prime
Peregrine Limited.
Each of Emerald Sky, Sino Equity, Mr. Gong Hong-Yu, New Found, The
News Corporation Limited, Yi Hua, BNP Prime Peregrine Limited and Mr.
Leung Pak To, Francis is independent of and not connected with any of
the directors, chief executive or substantial shareholders of the
Company or Easyknit and their respective subsidiaries or any of their
respective Associates.
Each of Emerald Sky, New Found and Yi Hua and parties acting in
concert with any of them has not dealt in any of the Shares within
six months prior to the date of this announcement. Each of Emerald
Sky, New Found and Yi Hua notes that except with the consent of the
Executive, it may not within six months of the closing of the offer
acquire any Shares from any Shareholders at a price higher than the
offer price of HK$0.051 under the Offer. In the event that such
consent is not obtained, each of Emerald Sky, New Found and Yi Hua
would take the requisite action to comply with the Takeover Code.
The following table sets out the shareholding position of the
Company, and the corresponding changes (i) upon completion of the
Placing, (ii) upon Completion and the Placing but before Exchange and
(iii) upon Completion, the Placing and after Exchange in full.
Existing Immediately Immediately
shareholding upon upon
structure Completion Completion
and and
completion after
of the Exchange
Placing in full
but
before
Exchange
Number Approximate Number Approximate Number Approximate
of of of
Shares percentage Shares percentage Shares percentage
Easyknit 485,965,700 75.0 405,965,700 13.8 405,965,700 13.8
Uni-Tech - - 2,209,017,000 75.0 2,032,295,640 69.00
Top - - 88,360,680 3.0 88,360,680 3.00
Century
New - - - - 44,180,340 1.50
Found
Emerald - - - - 66,270,510 2.25
Sky
Yi Hua - - - - 66,270,510 2.25
Public 162,012,620 25.0 242,012,620 8.2 242,012,620 8.2
------------------------------------------------------------
647,978,320 100.0 2,945,356,000 100.0 2,945,356,000 100.0
Easyknit through its wholly-owned subsidiary, Touch Profits Limited,
holds 485,965,700 Shares in the Company.
The placing Agreement
Date of the Placing Agreement
17th February, 2000
Parties
Vendor : Touch Profits Limited
Placing agent : Fair Eagle Securities Limited
Number of Shares to be placed
80,000,000 Shares comprised in the Placing represent approximately
12.3 per cent. of the existing issued share capital of the Company
and approximately 2.7 per cent. of the issued share capital of the
Company as enlarged by the Subscription. The Placing will reduce the
shareholding of Easyknit from approximately 75 per cent. to about
62.7 per cent. of the Company's existing issued share capital.
Entering into the Placing Agreement constitutes a major transaction
for Easyknit under the Listing Rules. Therefore, the Placing
Agreement is subject to approval of shareholders of Easyknit in a
forthcoming special general meeting of Easyknit. A resolution will be
put forward to the shareholders of Easyknit at a forthcoming special
general meeting of Easyknit for the approval of the placing of
80,000,000 Shares. Such special general meeting of Easyknit is
expected to be held at the end of March 2000.
The purpose of the Placing is to increase the percentage of the
issued share capital of the Company held by public shareholders after
the Completion.
Placing price
HK$1.20 per Share, which represents a discount of approximately 42.9
per cent. to the closing price of HK$2.10 per Share prior to the
suspension in trading on 31st January, 2000 and a premium of
approximately 252.9 per cent. over the closing price of HK$0.34 per
Share on 28th January, 2000 (being the last full day of trading of
the Shares prior to suspension). Such price also represents a premium
of approximately 147.9 per cent. over the 10-day average closing
price of HK$0.484 on and immediately preceding 28th January, 2000.
Share to be placed under the Placing
The Shares to be placed under the Placing will be sold free from all
liens, charges, encumbrances, claims options or any third-party
rights and together with all rights attaching thereto as at the date
of the Placing Agreement, including the right to all dividends or
other distributions which may be declared, paid or made after the
date of the Placing Agreement.
Independence of placees and the Placing Agent
The Placing Agent has procured that the placees are independent
institutional, professional and other investors and are third parties
independent of the directors, chief executive or substantial
shareholders of the Company, Easyknit, Uni-Tech and the Placing Agent
respectively, any of their respective subsidiaries or their
respective Associates or Concert Parties.
The Placing Agent is independent of the directors, chief executive
or substantial shareholders of the Company, any of its subsidiaries
or their respective associates (as defined in the Listing Rules).
Conditions and completion of the Placing
Completion of the Placing Agreement shall take place on the second
business day after the shareholders' approval is obtained at a
special general meeting of Easyknit which is expected to be at the
end of March, 2000 or such other date as Touch Profits Limited and
the Placing Agent may agree in writing. If such condition has not
fulfilled on or before 5:00 p.m. on 31st March, 2000 (or such later
time and/or date as the Placing Agent may specify in writing), the
Placing Agreement shall lapse.
Use of proceeds
The aggregate proceeds of the Placing will be approximately HK$96
million. It is intended that such proceeds will be used as to
approximately HK$40 million for the repayment of bank borrowings of
Easyknit and the balance for working capital for Easyknit.
SHAREHOLDING STRUCTURE
(For the diagrams showing the Company's existing structure,
the structure immediately (i) upon completion of the Placing; (ii)
upon Completion and the Placing but before the Conversion and/or
Exchange; (iii) upon Completion, the Placing and after Conversion in
full and (iv) upon Completion, the Placing and after Exchange in
full, please refer the press announcement today.)
FUTURE INTENTIONS OF the SUBSCRIBERS
The directors of the Subscribers, upon Completion, will conduct a
review of the position and operations of the Group with a view to
strengthening operations of the Group. The Subscribers currently do
not intend to dispose of the Properties, except for properties in
Hong Kong currently under negotiations by the Company, at an
approximate valuation of HK$35 million. It is the intention of the
Subscribers that the Group will continue its existing business. There
is also no intention for the Subscribers to inject any existing
assets of the Subscribers or their Concert Parties into the Group. In
addition, the directors of the Subscribers intend that there will be
no material changes to the existing management structure and
employees of the Group by reason only of the Subscription.
The directors of the Subscribers aim to expand the business of the
Group into investment in companies conducting information technology
including telecommunications and Internet-related activities in
particular in the PRC and the Asia-Pacific Region. However, there is
no specific plan or target identified at present.
The directors of the Subscribers also believe that the Company will
benefit from having the Subscribers as a controlling shareholder.
The Stock Exchange will also closely monitor all future acquisitions
or disposals of assets by the Company. The Stock Exchange has the
discretion to require the Company to issue a circular to its
shareholders irrespective of the size of the proposed transaction,
particularly when such proposed transaction represents a departure
from the principal activities of the Company. The Stock Exchange also
has the power to aggregate a series of transactions and any such
transaction may result in the Company being treated as if it were a
new listing applicant.
The future directors of the Company are aware of the possibility of
the Company's public float falling below 25 per cent. immediately
after Completion and will address this issue accordingly including by
means of the placement of shares.
PROPOSED CHANGE OF BOARD COMPOSITION
It is intended that other than Mr. Koon Wing Yee, all the existing
Directors will resign upon the closing of the Offer which is expected
to be in May 2000. It is the intention of the Subscribers that Ms.
Chen Xiao-Ying and Mr. Poon Wai-Cheong will be nominated to join the
board of directors of the Company as executive directors. Five more
new executive or non-executive directors including two new
independent non-executive directors will also be appointed. It is
intended that Ms. Chen Xiao-Ying will be appointed as the Executive
Chairperson. As such, the board of directors of the Company would
comprise eight directors, including six executive and non-executive
directors and two independent non-executive directors.
Particulars of the proposed new executive directors of the Company
are set out below:
Ms. Chen Xiao-Ying has been the Executive Chairman of the board of
the Pollon Group, a private investment group, since its inception in
1989. She has been responsible for developing and managing the Pollon
Group's businesses for the past 11 years, including investing in
power plants, telecommunications and real estate development in the
PRC. Ms. Chen has been a Member of the Chinese National People's
Political Consultative Committee since 1998 and Permanent Honorary
President of Friends of Hong Kong Association Limited since 1999. Ms.
Chen graduated from The University of Tokyo with a degree in
economics.
Mr. Poon Wai-Cheong has been the Executive Vice President of Pollon
Industrial Limited (incorporated in the Cayman Islands) since 1997,
and is in-charge of the group's investment in internet and
telecommunications, power generation and real estates. Mr. Poon has
over 15 years' experience in financial management and corporate
development. Mr. Poon holds a Bachalor of Social Science degree in
Economics and Master of Business Administration degree from the
Chinese University of Hong Kong.
PROPOSED CHANGE OF NAME
It is intended that subject to the approval of the Registrar of
Companies in Bermuda, the name of the Company will be changed to 21CN
CyberNet Corporation Limited on Completion to reflect the
introduction of new management and the intention to diversify the
Company's business to include telecommunications and Internet-related
activities in the future. The proposed change of name is also subject
to the approval of the Shareholders at the Special General Meeting.
THE CAPITAL REDUCTION PROPOSAL
It is proposed that the nominal value of all the issued and unissued
Shares will be reduced from HK$0.10 each to HK$0.01 each.
On the basis of 647,978,320 Shares presently in issue, a credit of
HK$58,318,048.80 will arise as a result of the Capital Reduction.
Such credit will be transferred to a special capital reserve account
of the Company. The special reserve account may be applied at the
discretion of the board of the Company towards the meeting of claims
on or liabilities of the Company or contingencies or for paying off
any loan capital or for equalising dividends or for any purposes to
which the profits of the Company may be properly applied. The
Directors have no intention to use such special capital reserve and
have no concrete plans as to when and how to use such reserve. The
Capital Reduction is subject to approval by the Shareholders at the
Special General Meeting.
TAKEOVERS CODE IMPLICATIONS FOR THE SUBSCRIBERS
During the six-month period immediately preceeding the date of this
announcement, there were no dealings in the Shares by the Subscribers
and their Concert Parties. At present, none of the Subscribers or
their Concert Parties hold any Shares.
Upon issuance of the New Shares, the Subscribers and Concert Parties
will be interested in approximately 78 per cent. of the enlarged
issued share capital of the Company. Under the Takeovers Code, the
Subscribers will be obliged to make an unconditional cash offer to
acquire all the issued Shares other than those already owned or
agreed to be acquired by them and their Concert Parties.
POSSIBLE UNCONDITIONAL CASH OFFER
The Offer
At present, Uni-Tech and its Concert Parties do not own any interest
in the Company. Upon Completion, Uni-Tech and its Concert Parties
will be interested in 2,297,377,680 Shares representing about 78 per
cent. of the issued share capital of the Company as enlarged by the
Subscription. The existing shareholding structure and the
shareholding structure upon Completion are set out in the section
headed `Shareholding structure' above. Under Rule 26 of the Takeovers
Code, upon Completion, Uni-Tech will be obliged to make an
unconditional cash offer for all the issued Shares not already owned
or agreed to be acquired by Uni-Tech or its Concert Parties.
Warning: The Offer is a possibility only.
The making of the Offer is subject to Completion. The Subscription
Agreement is conditional (see `Conditions of the Subscription
Agreement' above).
Shareholders and investors should exercise extreme caution when
buying or selling Shares.
If the Offer is made, it will be on the terms set out below.
BNP Prime Peregrine, on behalf of Uni-Tech, will make an
unconditional cash offer for all the issued Shares other than those
already owned or agreed to be acquired by Uni-Tech or its Concert
Parties on the following basis:
for each Share ..................................... HK$0.051 in cash
The offer price of HK$0.051 per Share is the same as the issue price
per Share under the Subscription Agreement.
There are no outstanding warrants or outstanding share options or
securities convertible into shares issued by the Company as at the
date of this announcement.
Condition
If the Offer is made, it will be unconditional.
Easyknit has undertaken to the Subscribers not to accept the Offer
in respect of any Shares held by it.
Total consideration
At present, there are 647,978,320 Shares in issue and the Company's
share capital will be enlarged to 2,945,356,000 Shares upon
Completion. In the event that the Offer was accepted in full by
Shareholders other than Easyknit and its Associates, the aggregate
amount payable by Uni-Tech would be about HK$12.34 million (assuming
the Placing is completed). Easyknit has undertaken to the Subscribers
not to accept the Offer in respect of all the Shares held by it.
Pursuant to an underwriting agreement between Uni-Tech and BNP
Peregrine Securities Limited dated 10th February, 2000, BNP Prime
Peregrine Securities Limited has agreed to purchase or procure
purchasers for all the Shares that are tendered to the Offer at a
price of HK$0.051 per Share to ensure that Uni-Tech will only hold 75
per cent. of the issued share capital of the Company upon Completion.
The underwriting agreement is conditional on the Offer having been
made. BNP Prime Peregrine Capital is satisfied that sufficient
resources are available to Uni-Tech to satisfy acceptances of the
Offer in full.
Effect of accepting the Offer
By accepting the Offer, Shareholders will sell their Shares and all
rights attached to them, including the right to receive all dividends
and distributions declared, made or paid on or after the date of the
Subscription Agreement.
Stamp duty
Stamp duty at a rate of HK$1.25 for every HK$1,000 or part thereof
of the amount payable in respect of relevant acceptances will be
deducted from the amount payable to shareholders who accept the
Offer.
MAINTAINING THE LISTING OF THE COMPANY
It is the intention of the future directors of the Company to
maintain the listing of the Shares on the Stock Exchange after
Completion. Accordingly, the Directors including future directors
upon Completion and the Company and Uni-Tech will jointly and
severally undertake to the Stock Exchange to take appropriate steps
to ensure that sufficient public float exists for the Shares.
The future directors of the Company are aware of the possibility of
the Company's public float falling below 25 per cent. immediately
after Completion and will address this issue accordingly, including
by means of the placement of shares. 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;
it will consider exercising its discretion to suspend trading in the
Shares.
In this connection, it should be noted that upon Completion, there
may be insufficient public float for the Shares and therefore trading
in the Shares may be suspended until a sufficient level of public
float is attained.
SUSPENSION AND RESUMPTION OF TRADING IN THE SECURITIES
Trading in the shares of Easyknit on the Stock Exchange and SGX-ST
was suspended at the request of Easyknit with effect from 10:48 a.m.
and 11:26 a.m. respectively on 31st January, 2000. Trading in the
Shares on the Stock Exchange was suspended with effect from 10:47
a.m. on 31st January, 2000 at the request of Easyknit and the
Company.
Applications have been made to the Stock Exchange and SGX-ST for
resumption of trading of the shares in Easyknit and an application
has also been made to the Stock Exchange for resumption of trading of
the Shares, in each case, with effect from 10:00 a.m. on 18th
February, 2000.
GENERAL
An independent committee of the board of directors of the Company
will be appointed to consider the Subscription and the Offer. An
independent financial adviser will be appointed to advise the
independent board committee regarding the Subscription and the Offer.
BNP Prime Peregrine has been appointed to advise 21CN and Uni-Tech
in connection with the Subscription and the Offer.
An application will be made to the Stock Exchange for the listing
of, and permission to deal in, the New Shares to be issued under the
Subscription and the Exchange.
A circular containing details of the Subscription and notice of the
Special General Meeting will be despatched to Shareholders of the
Company as soon as practicable. Subject to Completion, a composite
offer document containing details of the Offer, the opinion of the
independent board committee and the recommendation of the independent
financial adviser will be despatched to the Shareholders within seven
days from Completion. Application will be made to the Executive for a
consent to despatch the offer document on a date more than 21 days of
the date of this announcement as the making of the Offer is subject
to Completion and Completion is expected to take place in May 2000.
A circular will be sent to the Shareholders of Easyknit in respect
of the Subscription and the Placing.
In this announcement, the following expressions have the meanings
set out below unless the context requires otherwise.
`21CN' 21CN Corporation, a company
incorporated in the Cayman
Islands with limited liability
`21CN China' 21CN Corporation Limited
`21CN Shares' shares of US$0.001 each in
the capital of 21CN
`Associate(s)' has the meaning ascribed
thereto under the Listing Rules
`BNP Prime Peregrine' BNP Prime Peregrine Capital
Limited, financial adviser to
21CN and Uni-Tech in relation
to the Subscription and the Offer
`Capital Reduction' the reduction of nominal
value of the shares HK$0.10
each in the share capital of
the Company from HK$0.10 to HK$0.01
`CNNIC' China Internet Network
Information Center. a
non-profit making government,
administration and service
agency which is engaged in
domain names registration,
Internet catalogue database
service and administrates
other Internet-related
information services in the PRC
`Company' Easy Concepts International
Holdings Limited, an exempted
company incorporated in
Bermuda with limited
liability, the Shares of
which are listed on the Stock
Exchange and which is an
indirect 75 per cent. owned
subsidiary of Easyknit
`Completion' completion of the
Subscription Agreement
`Concert Parties' persons acting in concert
with the Subscribers within
the meaning of the Takeovers
Code, comprising 21CN China,
Pollon, Multiphase, 21CN, New
Found, Emerald Sky and Yi Hua
and parties acting in concert
with any of them
`Controlling Shareholder' has the meaning ascribed
thereto under the Listing Rules
`Conversion' pursuant to the Notes
Agreements, Emerald Sky, New
Found and Yi Hua may, at
their option, convert the ES
Note, the NF Note and the YH
Note respectively into shares
of 21CN, representing a total
of approximately 8 per cent.
of 21CN's enlarged equity
upon full conversion, on or
before 4th February, 2002
`Directors' the directors of the Company
`Easyknit or `Warrantor' Easyknit International
Holdings Limited, an exempted
company incorporated in
Bermuda with limited
liability, the Shares of
which are listed on the Stock
Exchange and the SGX-ST
`Emerald Sky' Emerald Sky Assets Limited is
a company incorporated in the
British Virgin Islands with
limited liability
`ES Note' zero-coupon convertible and
exchange note in an aggregate
principal amount of
HK$18,661,775.62 to be issued
by 21CN to Emerald Sky
pursuant to the Notes Agreement I
`Exchange' pursuant to the Notes
Agreements, Emerald Sky, New
Found and Yi Hua may, at
their option, exchange the ES
Note, the NF Note and the YH
Note respectively into
Shares, representing
approximately six per cent.
of the share capital of the
Company as enlarged by the
Subscription upon full
exchange, on or before 4th February, 2002
`Executive' the Executive Director of the
Corporate Finance Division of
the SFC or any of his delegates
`Group' the Company and its subsidiaries
`HK$' Hong Kong dollar(s), the
lawful currency in Hong Kong
`Hong Kong' Hong Kong Special
Administrative Region of the PRC
`Listing Rules' Rules Governing the Listing
of Securities on The Stock
Exchange of Hong Kong Limited
`Multiphase' Multiphase Properties
Limited, a company
incorporated in the British
Virgin Islands with limited liability
`New Found' New Found International
Limited is a company
incorporated in the British
Virgin Islands with limited liability
`New Shares' an aggregate of 2,297,377,680 new Shares
`NF Note' zero-coupon convertible and
exchange note in an aggregate
principal amount of
HK$15,162,692.69 to be issued
by 21CN to New Found pursuant
to the Notes Agreement I
`Notes Agreement I' the subscription agreement
for the subscription of the
ES Note and the NF Note dated
4th February, 2000 entered
into between 21CN as issuer,
and Emarald Sky and New Found
as subscribers
`Notes Agreement II' the subscription agreement
for the subscription of the
YH Note dated 11th February,
2000 entered into between
21CN as issuer and Yi Hua as subscriber
`Notes Agreements' the Notes Agreement I and the
Notes Agreement II
`Offer' the unconditional cash offer,
for the Offer Shares to be
made by or on behalf of the
Uni-Tech in accordance with
the Takeovers Code
`Offer Shares' all the existing issued
Shares (other than the New
Shares and any Shares which
are already beneficially
owned or acquired, or agreed
to be acquired, by Uni-Tech
and its Concert Parties),
while the Offer remains open
for acceptance
`Placing' the placing of 80,000,000
Shares pursuant to the
Placing Agreement with a
price of HK$1.20 per Share
`Placing Agent' Fair Eagle Securities Limited
`Placing Agreement' the placing and underwriting
agreement dated 17th
February, 2000 entered into
between Touch Profits Limited
and the Placing Agent in
relation to the placing of
80,000,000 Shares
`Pollon' Pollon Internet Corporation,
a company incorporated in the
British Virgin Islands with
limited liability
`Pollon Group' private investment group of
companies chaired by Ms. Chen Xiao-Ying
`PRC' the People's Republic of China
`Properties' the properties currently
owned by the Group
`SFC' Securities and Futures
Commission of Hong Kong
`SGX-ST' Singapore Exchange Securities
Trading Limited
`Sino Equity' Sino Equity Enterprises
Limited, a company
incorporated in the British
Virgin Islands with limited liability
`Special General Meeting' the special general meeting
of the Company
`Share(s)' shares of HK$0.10 each in the
capital of the Company or,
where the context requires,
shares of HK$0.01 each in the
capital of the Company after
the Capital Reduction
`Shareholder(s)' the holder(s) of the Share(s)
`Standstill Agreement' Easyknit and its subsidiaries
entered into a standstill
agreement on 2nd September,
1999 with two of its bankers
who together hold
approximately 94.94 per cent.
of the total bank loans and
other borrowings of
approximately HK$734,000,000
as at 25th August, 1999
whereby the two bankers
agreed to standstill to 31st
December, 1999 in respect of
amounts owed to them by
Easyknit and subsidiaries
`Stock Exchange' The Stock Exchange of Hong Kong Limited
`Subscribers' Uni-Tech and Top Century
`Subscription Agreement' the conditional agreement
dated 7th February, 2000, as
amended by a supplemental
agreement dated 14th
February, 2000 between
Easyknit, the Subscribers and
the Company relating to the
subscription for
2,297,377,680 new Shares in aggregate
`Subscription' the subscription of the New
Shares by the Subscribers on
the terms of the Subscription Agreement
`Takeovers Code' the Hong Kong Code on
Takeovers and Mergers
`Top Century' Top Century Investments
Company Limited is a company
incorporated in the British
Virgin Islands with limited liability
`Uni-Tech' Uni-Tech International Group
Limited is a company
incorporated in the British
Virgin Islands with limited
liability and is 100 per
cent. owned by 21CN
`YH Note' zero-coupon convertible and
exchange note in an aggregate
principal amount of
HK$22,744,039.03 to be issued
by 21CN to Yi Hua pursuant to
the Notes Agreement II
`Yi Hua' Yi Hua Assets Limited, a
company incorporated in the
British Virgin Islands with
limited liability
By Order of the Board of
Easyknit International Holdings Limited
Koon Wing Yee
President and Chief Executive Officer
By Order of the Board of
Uni-Tech International Group Limited
Chen Xiao-Ying
Chairperson
By Order of the Board of
Easy Concepts International Holdings Limited
Koon Wing Yee
President and Chief Executive Officer
By Order of the Board of
Top Century Investments Company Limited
Poon Wai-Cheong
Chairman
Hong Kong, 17th February, 2000
The Directors and the directors of Easyknit jointly and severally
accept full responsibility for the accuracy of the information
contained in this announcement (other than those relating to the
Subscribers) and confirm, having made all reasonable enquiries, that
to the best of their knowledge, their opinions expressed in this
announcement have been arrived at after due and careful consideration
and there are no other facts (other than those relating to the
Subscribers) not contained in this announcement, the omission of
which would make any of their statements in this announcement
misleading.
The directors of each of the Subscribers jointly and severally
accept full responsibility for the accuracy of the information
contained in this announcement (other than that relating to the Group
and Easyknit) and confirm, having made all reasonable enquiries, that
to the best of their knowledge, their opinions expressed in this
announcement have been arrived at after due and careful consideration
and there are no other facts (other than that relating to the Group
and Easyknit) not contained in this announcement, the omission of
which would make any of their statements in this announcement
misleading.
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