STYLAND HOLD<0211> - Announcement
Styland Holdings Limited
MAJOR TRANSACTION
AND
GENERAL MANDATES FOR ISSUE AND REPURCHASE OF SHARES
The Directors announce that Global Eagle, a wholly owned subsidiary of the
Company has conditionally agreed to acquire 40% of the issued share
capital of Cyber World Technology and the Sale Debts at the total
consideration of HK$148 million. The Consideration was based on the net
asset value of Cyber World Technology with reference to the Pro forma
Management Accounts which includes the value of the Beijing Spatial Port
Network being valued at HK$370 million. The principal asset of Cyber World
Technology is its 100% interest in Beijing Spatial Port Network, a wholly
foreign owned enterprise incorporated in the PRC which is engaged in the
field of geographic information system, global positioning system, remote
sensing and provision of internet related services. The Company will
satisfy the Consideration by the issuance of Promissory Notes and
Consideration Shares or cash.
AGREEMENT DATED 13th JANUARY, 2000
Parties:
Purchaser: Global Eagle, a company incorporated in the British Virgin
Islands and a wholly owned subsidiary of the Company
Vendor: Zelma, a company incorporated in the British Virgin Islands
Guarantors: Mr. Liu Wei and Mr. He Xiao Feng
Zelma and its directors, Mr. Liu Wei ("Mr. Liu") and Mr. He Xiao Feng
("Mr. He") are independent third parties not connected with the Company,
directors, chief executives or substantial shareholders of the Company or
any of its subsidiaries or any of their respective associates as defined
in the Listing Rules. Zelma and its directors, Mr. Liu and Mr. He are not
interested in any shares of the Company as at the date of this
announcement.
ACQUISITION
Global Eagle has conditionally agreed to acquire 40 shares in Cyber World
Technology from Zelma, which represents 40% of the issued share capital of
Cyber World Technology and the Sale Debts at the Consideration, being the
aggregate of HK$131,609,368 for the Sale Shares and HK$16,390,632 for the
Sale Debts. Zelma is beneficially interested in 80% of the issued share
capital of Cyber World Technology, the balance of 20% of the issued share
capital of Cyber World Technology was held by an independent third party.
Upon Completion, Zelma shall hold 40% of the issued share capital of Cyber
World Technology as long term investment.
The principal asset of Cyber World Technology is its 100% interest in
Beijing Spatial Port Network, a wholly foreign owned enterprise
incorporated in the PRC which is engaged in the field of geographic
information system, global positioning system, remote sensing and internet
related services (collectively the "4S"). Further details of the 4S are
set out below:
Geographic Information System ("GIS")
GIS is an information system that uses geographical points as a core
reference point that relate virtually all data including, demographic,
economical, social, commercial and financial data into an organized
network that supports data maintenance, inquiry, analysis, graphical
presentation, simulation and solution suggestion. GIS has proven to be a
powerful tool for resource planning, allocation and deployment for cities.
As PRC is facing tremendous pressure in population growth, resource
depletion and pollution, the development of GIS will help to address these
problems. Currently, users in PRC mostly rely on the foreign GIS products
and there are increasing demand for local customized GIS system.
Global Positioning System ("GPS")
With satellites and sensors, GPS is a 24-hours, all weather, wireless
navigation system. GPS is widely used for civilian usage in the PRC. The
directors of Cyber World Technology expect that the demand for GPS will
increase rapidly in the areas of vehicle tracking, investigation, mapping,
navigation, railway management, marine system management and power system
management.
Remote Sensing ("RS")
RS is an integrated survey technology, developed on the foundation of
aerial photographic survey. With the breakthrough in spatial and computer
technologies and the growing demand in geographical and biological
research and practice, RS has become increasingly popular in the PRC.
Particularly, RS is a technology supporting GIS in providing accurate and
instant photographs and models. RS is expected to support a wide range of
industries with its unique instant image formation such as agriculture,
forestry, ore survey and exploitation, irrigation and archaeology.
Internet Related Services ("IRS")
The strong proliferation of internet usage in PRC was fueled by supports
from both the PRC government and foreign business giants in recent years.
With the strong demand to go online by the government, enterprises and
civilians in PRC, the IRS industry in the PRC has been growing rapidly.
Line of related business includes, internet service provider, internet
content provider and internet website design and production.
To capture on the fast growth characteristic of high technology products,
Beijing Spatial Port Network have entered into co-operative contracts with
the City and Environment Management Faculty of Beijing University and the
International Economic Research Centre of Peking University for 4S
research and development, project marketing and management.
Cyber World Technology was incorporated in the British Virgin Islands on
12th May, 1999 and no audited accounts have been prepared. As at the date
hereof, Cyber World Technology has entered into project agreement of
approximately HK$27 million. Based on the Pro forma Management Accounts,
the unaudited net profit attributable to shareholders of Cyber World
Technology for the period from 12th May, 1999 to 30th November, 1999 was
approximately HK$5.04 million and the unaudited net asset value of Cyber
World Technology as at 30th November, 1999 was approximately HK$353.8
million. As the date hereof, Cyber World Technology has entered into
letter of intent with contract value of approximately HK$218 million.
Consideration
The Consideration was determined on an arm's length basis between Zelma
and the Company with reference to the net asset value of Cyber World
Technology and the Sale Debts as shown in the Pro forma Management
Accounts. The net asset value as shown in the Pro forma Management
Accounts was approximately HK$353.8 million which includes Beijing Spatial
Port Network being preliminarily valued at HK$370 million. The Sale Debts
as shown in the Pro forma Management Accounts was approximately HK$16.39
million.
The Consideration of HK$148 million will be subject to post completion
audit adjustments with Beijing Spatial Port Network being valued at HK$370
million. If the net asset value as shown in the Audited Completion
Accounts is less than HK$350 million, the Consideration shall be adjusted
accordingly on a dollar-for-dollar basis. There will be no upward
adjustment to the Consideration and there will be no adjustment to the
consideration of the Sale Debts.
Payment Terms
The Consideration will be satisfied by in the following manners:
(a) Refundable deposit of HK$40,000,000 upon the signing of the
Agreement by issue of Promissory Note of same face amount; and
(b) the issue and allotment of 400,000,000 Shares upon the completion
of the Agreement, credited as fully paid at HK$0.06 each or at the option
of Global Eagle HK$24,000,000, in cash; and
(c) the balance of HK$84,000,000 within 25 business day after the
completion of the Agreement, to be satisfied by issue of Promissory Note.
The Consideration Shares will rank pari passu in all respect with the
existing issued Shares. The issue price of the Consideration Shares
represents 18.9% discount to the closing price of the date of the
Agreement and is equivalent to 9.09% discount to the average closing price
of HK$0.066 for the 10 trading days prior to the date of the Agreement.
The Consideration Shares represent approximately 10.82% of the existing
issued share capital of the Company as at the date hereof and 9.77% of the
issued share capital of the Company, as enlarged by the issue of the
Consideration Shares. Upon Completion, the shareholding of the Principal
Shareholders in the Company will be reduced from 17.21% to 15.53%. The
Audited Completion Accounts shall be finalized within 15 days after
Completion and Global Eagle shall issue a Promissory Note of appropriate
amount if adjustment has to be made upon the finalization of the Audited
Completion Accounts within 10 days after the issuance of the Audited
Completion Accounts. Zelma have no present intention to appoint any
directors into the Company. The Company is considering to appoint
directors into the board of Cyber World Technology upon Completion. The
Company shall finance the cash payment, if any, by internal resources or
fund raising exercise.
Terms of the Promissory Notes
The Promissory Notes issued by Global Eagle will bear interest from and
including the date of issue at 7.5% per annum and payable together with
the principal amount upon maturity of 3 calendar years after the
Completion. The Promissory Notes will be guaranteed by the Company. Global
Eagle shall have the option to serve notice to the holder of the
Promissory Notes 3 business days in advance and repay in part or in full
the Promissory Notes. The Company shall finance the re-payment of the
Promissory Notes by internal resources or fund raising exercise.
Condition and Completion Date:
Pursuant to the Listing Rules, the Acquisition constitutes a major
transaction for the Company. Completion is conditional upon fulfillment of
the following conditions precedent:
1. The Shareholders' approval of the Agreement and issue of
Consideration Shares;
2. The Agreement (including all transactions and actions contemplated
thereunder) have been cleared of all the disclosure and approval
requirements applicable to the Company under the Listing Rules by the
Stock Exchange,
3. A PRC legal opinion in relation to the transactions contemplated
by the Agreement in such form and substance to the satisfaction of Global
Eagle having been obtained;
4. Global Eagle being satisfied with the result of the due diligence
review of the assets, liabilities and operations of Cyber World Technology
and Beijing Spatial Port Network;
5. the Listing Committee of the Stock Exchange granting the listing
of and the permission to deal in the Consideration Shares.
Subject to fulfillment of the conditions precedent, Completion will take
place on the 5th business day after fulfillment of the conditions
precedent or 180 days after the date of the Agreement, whichever is
earlier, or such other date as Global Eagle and Zelma may agree. If the
conditions precedent are not fulfilled or waived by Global Eagle within
180 days after the date of the Agreement, the Agreement will lapse and
Zelma shall return the Promissory Note to Global Eagle.
Reason for the Acquisition
The Company is an investment holding company. The principal activities of
the Group consisted of investment holding, infrastructure development and
operation, property development and investment, general import and export
trading, financing business and securities dealing. The Acquisition
represents a good opportunity for the Group to diversify into high
technology industry and capture the recent rapid growth of the information
technology business.
Application for listing
The Company will apply to the Listing Committee of the Stock Exchange for
the listing of, and permission to deal in the Consideration Shares.
ADJUSTMENT TO THE SUBSCRIPTION PRICE OF THE WARRANTS AND SHARE OPTION
Subject to the completion of the Acquisition and on the basis of the
adjustment formula in the instruments constituting the Warrants and the
Share Option, the subscription price payable upon exercise of the
subscription rights attaching to the Warrants and the Share Option will be
adjusted in accordance with the instrument. Further announcement regarding
the details of the adjustment will be made when appropriate.
GENERAL MANDATES
The Directors will also seek the approval of Shareholders to a general
mandate to issue and repurchase the Company's securities in the SGM.
GENERAL
A circular containing, among other things, further details of Acquisition,
the general mandates for issue and repurchases of Shares, a notice of the
SGM, the business valuation report of Cyber World Technology and the
financial information of Cyber World Technology and the Company will be
despatched to Shareholders as soon as practicable.
TERMS USED IN THIS ANNOUNCEMENT
"Acquisition" acquisition of 40% interest in Cyber World Technology by
Global Eagle
"Agreement" the agreement entered between the Company and Zelma on
13th January, 2000 in relation to the Acquisition
"Audited Completion Accounts" audited accounts of Cyber World Technology
as at Completion
"Beijing Spatial Port Network" Beijing Spatial Port Network Technology
Limited, a wholly foreign owned enterprise
incorporated in PRC on 15th July, 1999
"Company" Styland Holdings Limited, an exempted company incorporated
in Bermuda with limited liabilities, the securities of
which are listed on the Stock Exchange
"Completion" completion of the Acquisition
"Consideration" the aggregate consideration payable by Global Eagle to
Zelma for the acquisition of the Sale Shares and the Sale
Debts
"Consideration Shares" the issue and allotment of 400,000,000 Shares at
HK$0.06 each for the settlement of part of the
Consideration
"Cyber World Technology" Cyber World Technology Limited, a company
incorporated in the British Virgin Islands
on 12th May, 1999
"Directors" directors of the Company
"Global Eagle" Global Eagle Investments Limited, a company incorporated
in the British Virgin Islands and a wholly owned
subsidiary of the Company
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollars
"Mr. Cheung" Mr. Kenneth Cheung Chi-Shing, chairman and substantial
shareholder of the Company
"Listing Rules" rules governing the listing of securities on the Stock
Exchange
"Principal Shareholders" Mr. Cheung and his associates, K.Y.
Limited, K.C. (Investment) Limited and Ms.
Yvonne Han-Yi Yeung who together
beneficially owns 636,029,991 Shares,
representing approximately
17.21% of the existing issued share
capital of the Company.
"Pro forma Management Accounts" unaudited consolidated management accounts
of Cyber World Technology as at 30th
November, 1999 with Beijing Spatial
Network Technology Limited being valued at
HK$370 million
"Promissory Note" promissory notes issued by Global Eagle
"PRC" the People's Republic of China
"RMB" Renminbi, the lawful currency of PRC
"Sale Debts" all outstanding loan due from Cyber World Technology to
Zelma as at Completion.
"Sale Shares" 40 shares of Cyber World Technology representing 40% of
its issued share capital immediately before Completion
"SGM" the special general meeting of the Company to be held on or about
22nd February, 2000
"Share(s)" ordinary share(s) of HK$0.01 each in the share capital of
the Company
"Shareholder(s)" holder(s) of the Shares
"Share Option(s)" option(s) to subscribe for Shares granted on 12th
August, 1997 and 21st April, 1999 under a share
option scheme adopted by the Company on 13th
November, 1991
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Warrant(s)" warrant(s) with subscription rights being transferable in
amounts and multiples of HK$0.20 entitling holders to
subscribe in cash for new Shares at any time on or before
31st December, 2000 (or such earlier date as prescribed by
the instrument constituting such warrants)at the existing
adjusted subscription price of HK$0.45 per Share, subject
to further adjustment
"Zelma" Zelma's Company Limited, a company incorporated in the British
Virgin Islands on 18th September, 1998
By Order of the Board
Styland Holdings Limited
Henry Bing-Kwong Chan
Director
Hong Kong, 13th January, 2000
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