DONG-JUN (HOLD)<0412>-Announcement & Resumption of Trading
Dong-Jun (holdings) Limited
MAJOR TRANSACTION
Acquisition of an investment property in Shanghai, the People's Republic
of China
On 25th January, 2000, a wholly-owned subsidiary of the Company entered
into the Agreement to acquire from an independent third party a 100 per
cent. interest in an investment property in Shanghai, the PRC for a
consideration of HK$88 million.
The terms of the Agreement were arrived at after arm's length negotiations
between the parties thereto and are based on normal commercial terms. The
Directors consider that the Acquisition will provide recurrent rental
cashflow income to the Group and enhance the diversity of the Group's
property portfolio.
The consideration will be satisfied as to HK$34 million in cash and as to
HK$54 million (at the discretion of the Company as an alternative to
paying in cash pursuant to the Agreement) by way of issue and allotment of
a total of 450,000,000 Consideration Shares at an issue price of HK$0.12
per Share by the Company to the Vendor. The Consideration Shares represent
(i) approximately 11.7 per cent. of the existing issued share capital of
the Company; (ii) approximately 10.5 per cent. of the issued share capital
of the Company as enlarged by the Consideration Issue; and (iii)
approximately 8.9 per cent. of the issued share capital of the Company as
enlarged by both the Consideration Issue and the placing of 760 million
Shares as announced on 5th January, 2000.
Under the Listing Rules, the Acquisition constitutes a major transaction
for the Company. A circular, containing amongst other things, details of
the terms of the Agreement, the valuation report on the Property and a
notice of the SGM to approve the Agreement and the Consideration Issue,
will be despatched to the Shareholders (and for information only, the
warrantholders of the Company) as soon as practicable.
THE AGREEMENT
Date 25th January, 2000
Parties
Vendor : Shanghai Wahfull Real Estate Development Limited,
an independent third party not connected with the Company, the chief
executives, directors, substantial shareholders of the Company or any of
its subsidiaries or any of their respective associates (as defined under
the Listing Rules). The Vendor is privately-owned by Hong Kong investors.
The Vendor is engaged in property development and property investment in
the PRC and was incorporated in the PRC. The holding company and fellow
group companies of the Vendor has representative offices situated in Hong
Kong, Shanghai and HuBei Province, the PRC and are engaged in property
development, property investment, property agency and other investments.
Purchaser : Easycom Limited, a wholly-owned subsidiary of
the Company
Assets to be acquired
The Property
Consideration and payment terms
The consideration payable by the Purchaser to the Vendor under the
Agreement is HK$88 million, of which:-
(i) HK$2 million in cash was paid as deposit upon signing of the
Agreement;
(ii) HK$2 million in cash to be paid on 29th February, 2000; and
(iii) HK$30 million in cash to be paid, plus HK$54 million worth
of Consideration Shares (at the discretion of the Company as an
alternative to paying in cash) to be issued, both upon the date of
Completion, which is expected to be on or before 31st March, 2000.
Basis for determining the consideration
The consideration of HK$88 million was arrived at after arm's length
negotiations between the parties to the Agreement with reference to, and
represented a discount of approximately 16 per cent. to, the attributable
open market value of the Property of HK$105,000,000 as valued by DTZ
Debenham Tie Leung (formerly known as C. Y. Leung & Company Limited), an
independent professional valuer.
The Consideration Issue
As aforesaid, HK$54 million out of the total consideration of HK$88
million will be settled at the discretion of the Company under the
Agreement by way of issue and allotment of a total of 450,000,000
Consideration Shares at HK$0.12 per Share upon completion of the
Agreement. The issue price of HK$0.12 per Consideration Share represents:-
(i) a discount of approximately 6.98 per cent. to the closing
price of HK$0.129 per Share on 25th January, 2000, being the date of the
Agreement;
(ii) a discount of approximately 4.76 per cent. to the average
closing price of HK$0.126 per Share for the ten trading days up to and
including 25th January, 2000; and
(iii) a premium of 275 per cent. over the latest proforma
consolidated net tangible asset per Share of HK$0.032.
The Directors are of the view that the issue price of HK$0.12 per
Consideration Share is fair and reasonable given (i) the bulk size of the
Consideration Shares to be issued and (ii) the level of the premium it
represents over the aforesaid proforma net tangible asset per Share.
The Consideration Shares represent (i) approximately 11.7 per cent. of the
existing issued share capital of the Company; (ii) approximately 10.5 per
cent. of its issued share capital as enlarged by the Consideration Issue;
and (iii) approximately 8.9 per cent. of the issued share capital of the
Company as enlarged by both the Consideration Issue and the placing of 760
million Shares as announced on 5th January, 2000. The Consideration Shares
will be issued subject to approval by the Shareholders at the SGM. The
Consideration Shares, upon their issue, will rank equally in all respects
with the existing issued Shares. Application will be made to the Stock
Exchange for the listing of, and permission to deal in, the Consideration
Shares.
(For the Existing key shareholding structure of the Group and Key
shareholding structure of the Group immediately after the Acquisition
(including the Consideration Issue) and the placing of 760 million Shares
as announced on 5th January, 2000, please refer to the press announcement
today.)
To the best knowledge of the Directors, the Vendor has no present
intention to appoint any directors into the board of the Company nor to
inject any assets into the Company upon Completion. To the best knowledge
of the Directors, the Vendor intends to hold the Consideration Shares as a
strategic investment.
Conditions
Completion is conditional upon,
(i) the lawyers representing the Purchaser having proved that
(a) the Vendor is in possession of a proper legal title to the
Property,
(b) the Vendor has the legal right to assign and transfer the
Property freely to third parties, and
(c) the Property is free from any charge and encumbrances;
(ii) the tenancy agreement in respect of the Property having been
fully and duly performed by the tenant thereto prior to delivery of the
Property from the Vendor to the Purchaser;
(iii) the Vendor having provided the Purchaser with a copy of a
notification of change of owner as issued by the Vendor to the tenant in
respect of the assignment of the Property;
(iv) the Shareholders' consent to, and all other relevant
approvals on, the Consideration Issue having being obtained (in case that
the Company decides to satisfy part consideration of HK$54,000,000 as
such) provided that such consent or approvals are required by the bye-laws
of the Company, the Listing Rules, and/or the relevant laws of Hong Kong
or other jurisdictions; and
(v) the granting of and permission to deal in the Consideration
Shares by the Listing Committee of the Stock Exchange.
If by 31st March, 2000, all the conditions of the Agreement shall not have
been fulfilled (or waived by the Company where applicable), the deposits
previously paid by the Purchaser upon signing the Agreement and on 29th
February, 2000 (amounting to HK$4 million) shall be refunded by the Vendor
to the Purchaser without interest.
Completion
Completion will fall on the business day on which all the conditions of
the Agreement have been fulfilled, but in any event by not later than 31st
March, 2000.
INFORMATION ON THE PROPERTY
The Property comprises two portions, namely (i) the commercial podium on
the first to third level of, and (ii) 50 carparking spaces on the first
level, the first basement, and the second basement of, Harvest Building.
Harvest Building is situated at No. 585 (formerly known as No. 525)
Longhua West Road, Xuhui District, Shanghai, the PRC. Completed in 1995,
Harvest Building comprises two office buildings of 16 and 20 storeys
respectively on a 3-storey commercial podium and a 2-level basement.
The commercial podium portion of the Property has a total gross floor area
of approximately 8,107.31 sq.m.. The Property is currently leased for a
term of five years from 1st April, 1997 at a total monthly rent of
US$120,500 exclusive of management fees and utilities charges, with an
option to renew for a further term expiring in February 2003 at tenant's
discretion. The land use rights of the Property have been granted for a
term of 50 years commencing from 1992.
REASONS FOR AND BENEFITS OF THE ACQUISITION
At present, the Group is engaged in property development and investment in
the PRC, the provision of property agency and management services and the
operation of supermarkets, department stores, restaurants and
entertainment businesses to enhance its own property portfolio.
As mentioned in the announcements of the Company dated 18th January, 2000
and 21st January, 2000 respectively, the Group intends to explore and
engage in new property projects should suitable opportunities arise. The
Directors consider that the Acquisition, representing an acquisition of a
quality investment property in the PRC, will not only provide recurrent
rental cashflow income to the Group but will also enhance the diversity of
the Group's property portfolio.
The terms of the Agreement were arrived at after arm's length negotiations
between the parties thereto and are based on normal commercial terms. The
Directors consider that the Acquisition is in the interests of the Company
and that the terms of the Agreement are fair and reasonable as far as the
Shareholders are concerned. The Directors further consider that the issue
of Consideration Shares as part consideration for the Acquisition can
serve to avoid cash outflow from the Company.
GENERAL
Under the Listing Rules, the Acquisition constitutes a major transaction
for the Company. A circular, containing amongst other things, details of
the terms of the Agreement, the valuation report on the Property and a
notice of the SGM to approve the Agreement and the Consideration Issue,
will be despatched to the Shareholders (and for information only, the
warrantholders of the Company) as soon as practicable.
Trading in the securities of the Company on the Stock Exchange was
suspended from 10:00 a.m. on 26th January, 2000 at the request of the
Company pending publication of this announcement. The Company has applied
to the Stock Exchange for the resumption of trading of the securities of
the Company on the Stock Exchange starting from 10:00 a.m. on 27th
January, 2000.
In this announcement, the following expressions have the meanings set out
below unless the context requires otherwise:
"Acquisition" the Acquisition by the Purchaser from the Vendor of
the Property pursuant to the Agreement
"Agreement" the conditional agreement dated 25th January, 2000
entered into between the Purchaser and the Vendor in relation to the
Acquisition
"Company" Dong-Jun (Holdings) Limited, a company incorporated in
Bermuda, the securities of which are listed and dealt in on the Stock
Exchange
"Completion" Completion of the Agreement
"Consideration Issue" the issue and allotment of the Consideration
Shares by the Company to the Vendor at an issue price of HK$0.12 per
Consideration Share pursuant to the terms of the Agreement
"Consideration Share(s)" the 450,000,000 new Share(s) to be issued
and allotted by the Company to the Vendor under the Consideration Issue
"Director(s)" the director(s) of the Company
"Hong Kong" the Hong Kong Special Administrative Region of the PRC
"Group" the Company and its subsidiaries
"Listing Rules" the Rules Governing the Listing of Securities on
the Stock Exchange
"PRC" the People's Republic of China
"Property" level 1 to 3 and 50 carparking spaces of Harvest
Building situated at No.585 (formerly known as No. 525) Longhua West Road,
Xuhui District, Shanghai, the PRC
"Purchaser" Easycom Limited, a wholly-owned subsidiary of the
Company
"SGM" a special general meeting of the Company to be convened to
approve, amongst other things, the Agreement and the Consideration Issue
(and the transactions contemplated thereunder if applicable) (or any
adjournment thereof)
"Shares" Shares of HK$0.01 each in the capital of the Company
"Shareholders" holders of Shares
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"HK$" Hong Kong dollars
"sq.m." square metre(s)
By Order of the Board
Wong Chun Hung, Vincent
Chairman
Hong Kong, 26th January, 2000
* The Chinese name is for identification purpose only.
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