YUE FUNG INT'L<0965> - Announcement
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.
YUE FUNG INTERNATIONAL GROUP HOLDING LIMITED
(incorporated in Bermuda with limited liability)
DISCLOSEABLE TRANSACTION
Yue Fung International Group Holding Limited (the "Company"
which together with its subsidiaries, the "Group") has
agreed to acquire from each of Mr Fu Chu Kan and Ms Fu Yin
Ling (the "Vendors") 125 shares (the "Sale Shares") of
US$1.00 each in the capital of Richlink International
Holdings Limited (the "Richlink" which together with its
subsidiaries, the "Richlink Group"), being 25 per cent. of
the entire issued share capital of Richlink.
The Company has also agreed to acquire from the Vendors the
shareholders' loan (the "Sale Loan") of HK$2,500,000 owed
by Richlink Group to the Vendors in the sum of HK$1,250,000
each.
The consideration payable by the Company for the acquisition
(the "Acquisition") of the Sale Shares and the Sale Loan is
HK$34,875,000 and will be satisfied partly by the allotment
and issue to the Vendors of 60,000,000 new ordinary shares
(each a "Consideration Share") of HK$0.10 each in the capital
of the Company at an issue price (the "Issue Price") of
HK$0.45 per Consideration Share and partly by the transfer
of certain machinery and moulds from the Group worth
HK$7,875,000 to the Vendors.
The Acquisition is subject to the conditions as detailed
below.
The Acquisition constitutes a discloseable transaction on
the part of the Company under the Rules (the "Listing Rules")
Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited (the "Stock Exchange").
For the year ended 31st May 1999, products purchased by the
Group from the Richlink Group amounted to approximately
HK$7,300,381. The purchases from the Richlink Group for the
year ended 31st May 1999 accounted for approximately 7.3 per
cent. of the total purchases made by the Group for the year
ended 31st May 1999. It is intended that following the
Acquisition, the Group will continue to purchase from the
Richlink Group.
A special general meeting (the "SGM") of the Company will
be convened as soon as possible to consider and if thought
fit, passing the resolutions to approve the allotment and
issue of the Consideration Shares.
A circular containing, among other matters, details of the
Agreement, the notice convening the SGM will be dispatched
to the Shareholders within 21 days after the date of
publication of this announcement.
The Sale and Purchase Agreement dated 28th January 2000 (the
"Agreement")
Parties
(1) The Purchaser: The Company
(2) The Vendors: The Vendors
Each of the Vendors is an independent third party not
connected with the directors, chief executive or substantial
shareholders of the Company or any of its subsidiaries or
any of their respective associates (as defined in the Listing
Rules). Immediately before the entering into of the
Agreement, the Vendors have not had any interests in the
shares (each a "Share") of HK$0.10 each in the capital of
the Company or its subsidiaries.
Assets acquired
Pursuant to the Agreement, the Vendors have agreed to sell
and the Purchaser has agreed to purchase the Sale Shares,
being 25 per cent. of the entire issued share capital of
Richlink and the Sale Loan. The remaining 75 per cent, will
be held by Mr. Fu Chu Kan and Ms. Fu Yin Ling, as to 67.5
per cent and 7.5 per cent respectively. Richlink was
incorporated in the British Virgin Islands on 19th August
1998 and as at the date of this announcement, its entire
issued share capital was beneficially owned as to 80 per cent.
by Mr. Fu Chu Kan and as to the balance of 20 per cent. by
Ms. Fu Yin Ling.
No audited financial statements have been prepared by
Richlink since its incorporation. As at 30th September 1999,
the net asset value of the Richlink Group based on its
unaudited consolidated management accounts was
approximately HK$19,200,000. For the period commencing from
19th August 1998 to 30th September 1999, the Richlink Group
recorded an unaudited consolidated profit of approximately
HK$19,200,000, the 9 months' operating profit.
The consideration payable by the Company on the 25% issued
share capital of Richlink is based on the unaudited annual
profit of Richlink Group of HK$23,250,000 for the year ended
1999, multiplying this with a profit earning ratio of 6,
which is based on companies in the similar industry, thus
estimating the net worth of Richlink Group at
HK$139,500,000.
Richlink Group are principally engaged in the manufacture
and sale of melamine products, rubber key products and other
electronic components.
The Company has also agreed to acquire from the Vendors the
shareholders' loan (the "Sale Loan") of HK$2,500,000 owed
by the Richlink Group to the Vendors in the sum of
HK$1,250,000 each payable on demand. HK$2,500,000, the Sale
Loan, is 25% of the total shareholders' loan of HK$10,000,000
of Richlink Group.
Consideration
The consideration for the Acquisition is HK$34,875,000 and
will be satisfied partly by the allotment and issue to the
Vendors of the 60,000,000 Consideration Shares (each a
"Consideration Share") at the Issue Price and by the transfer
from the Group to the Vendors of machinery, such as plastic
injection machines and moulds at book value worth
HK$7,875,000.
The Issue Price represents a discount of approximately 21.7
per cent. to the average closing price of the Shares of
HK$0.5745 for the last ten trading days up to the date of
the Agreement and a discount of approximately 10 per cent.
to the closing price of the Shares of HK$0.5 as at the date
of the Agreement.
The Consideration Shares represents approximately 17.5 per
cent. of the issued share capital of the Company and
approximately 14.9 per cent. of the issued share capital of
the Company as enlarged by the allotment and issue of the
Consideration Shares. The controlling shareholder's
shareholding will be diluted from 44.5% to 37.8%. The SGM
will be convened and held to approve, among other matters,
the allotment and issue of the Consideration Shares to the
Vendors credited as fully paid at the Issue Price.
The consideration was negotiated on an arm's length basis
and on normal commercial terms between the Vendors and the
Company.
The Directors, including the independent non-executive
directors, consider that the terms of the Agreement are based
on normal commercial terms and are fair and reasonable so
far as the shareholders of the Company and Company are
concerned.
Completion
Completion will take place on the second business day after
all the conditions set out in the section headed "Conditions"
below have been fulfilled, which is expected to be on or
before 31st March 2000 or such later date as the Vendors and
the Company may agree.
Conditions
Completion of the Acquisition is conditional upon
fulfillment of the following conditions:
(1) the Listing Committee of the Stock Exchange granting
listing of and permission to deal in the Consideration Shares;
and
(2) the shareholders of the Company passing at the SGM an
ordinary resolution approving the allotment and issue of the
Consideration Shares to the Vendors, credited as fully paid.
If the conditions are not fulfilled on or before 31st March
2000 or such later date as the Vendors and the Company may
agree, the Agreement shall cease and terminate and none of
the parties shall have any claim against the others.
Continuing Transactions
For the year ended 31st May 1999, based on the Company's
consolidated audited accounts, components of calculators
purchased by the Group from the Richlink Group amounted to
approximately HK$7,300,381. The purchases from the Richlink
Group for the year ended 31st May 1999, based on the Company's
consolidated audited accounts, accounted for approximately
7.3 per cent. of the total purchases made by the Group for
the year ended 31st May 1999. It is intended that, following
the Acquisition, the Group will continue to purchase from
the Richlink Group.
Reasons for the Acquisition
The Directors believe that the Acquisition would enable the
Group to secure a steady supply of the essential components
including rubber key pads and certain electronic parts of
the Group's products such as calculators and databanks,
enable vertical integration of its manufacturing process,
enhance the Group's asset base and improve its earnings which
will ultimately benefit the shareholders.
The Company will continue to diversify and develop the
internet business especially for primary, secondary and
tertiary education and the development of internet content
provider business in the PRC and Hong Kong.
General
After the acquisition, Richlink will become an associated
company of the Company. The Company is principally engaged
in investment holding with its subsidiaries principally
engaged in the design, development, maintenance and sale of
a wide range of electronic calculators, digital timers,
clocks, watches and databanks.
The SGM will be convened as soon as possible to consider and
if thought fit, passing the resolutions to approve the
allotment and issue of the Consideration Shares.
A circular containing, among other matters, details of the
Agreement, the notice convening the SGM, will be dispatched
to the Shareholders within 21 days after the date of
publication of this announcement.
Application will be made to the Stock Exchange for the
listing of and permission to deal in the Consideration
Shares.
This Transaction will not affect the placing of existing and
subscription of new shares previously announced by the
Company on 25th January 2000.
By order of the board
Yue Fung International Group Holding Limited
Lee Wing Kan
Chairman
Hong Kong, 28th January 2000
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