CHUANG'S INT'L<0367> & CHUANG'S CHINA<0298> - Joint Announcement
The Stock Exchange of Hong Kong Limited takes no responsibility for the
contents of this announcement, makes no representation as to its accuracy
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.
Chuang's Consortium International Limited
(Incorporated in Bermuda with limited liability)
CONNECTED TRANSACTION
Chuang's China Investments Limited
(Incorporated in Bermuda with limited liability)
CONNECTED TRANSACTION AND SHARE TRANSACTION
Proposed acquisition of 25 per cent. interest in
a company engaged in e-business for auction services
by Chuang's China Investments Limited
On 10th February, 2000, a wholly-owned subsidiary of
Chuang's China entered into the Agreements to acquire an
aggregate of 25 per cent. interest in a company engaged in
e-business for auction services, from (i) a company
indirectly owned as to 66 per cent. by Mr. Chuang and 34 per
cent. by Mrs. Siu; and (ii) an independent third party respectively.
The aggregate consideration for the Acquisitions is HK$75
million, which will be satisfied in full by way of issue and
allotment of a total of 50,000,000 Consideration Shares at
an issue price of HK$1.50 per Share by Chuang's China to the
Vendors on a pro rata basis. The 50,000,000 Consideration
Shares represent (i) approximately 6.46 per cent. of the
existing issued share capital of Chuang's China; and (ii)
approximately 6.06 per cent. of the issued share capital of
Chuang's China as enlarged by the issue of the Consideration Shares.
The terms of the Agreements were arrived at after arm's
length negotiations between the parties thereto and are on
normal commercial terms. Chuang's China creates and operates
Internet business and as stated in its recent announcement,
Chuang's China's information technology business comprises
technology related development, Internet Pro Limited, and
Internet businesses, initially in the educational and
cultural field, in Hong Kong and the PRC. Chuang's China will
focus on active development of its information technology
business and will identify additional investments in the
information technology industry. In order to reflect the new
direction and future focus of the business of Chuang's China,
the Directors also proposed to change the name of Chuang's
China to "China Cyberworld Limited". Accordingly the
Directors consider that the Acquisitions are in line with
the corporate strategy of Chuang's China.
Further to the investments of Chuang's China since July 1999
in Internet Pro Limited, two educational internet portals
in the PRC and various internet portals relating to culture
and databank in the PRC, the Directors consider that the
Acquisitions will allow Chuang's China to capture an
opportunity to further expand its e-commerce business which
is expected to have high growth potential, particularly in
view of Hong Kong government's long-term dedicated efforts
in establishing Hong Kong as a high-tech hub.
Under the Listing Rules, the Acquisitions constitute a
connected transaction for both Chuang's Consortium and
Chuang's China. Pursuant to Rule 14.25(1) of the Listing
Rules, Chuang's Consortium is only required to make this
announcement and disclose details of the Acquisitions in its
annual report for the financial year ending 31st March, 2000.
For Chuang's China, the Acquisitions are subject to approval
by the Independent Shareholders under the Listing Rules. A
circular, containing amongst other things, details of the
terms of the Agreements, the advice from the independent
board committee and the independent financial adviser of
Chuang's China respectively and a notice of the SGM to
approve the Agreements, will be despatched to the
Shareholders (and for information only, the warrantholders
of Chuang's China) as soon as practicable.
THE AGREEMENTS
The First Agreement
Date : 10th February, 2000
Parties
Vendor : Impressive Profit Investments Limited, a
company indirectly owned as to 66 per cent. by Mr. Chuang
and 34 per cent. by Mrs. Siu
Purchaser : A wholly-owned subsidiary of Chuang's China
Assets to be acquired : 150,000 shares in Treasure
Auctioneer representing 60 per cent. of the Sale Shares
Consideration : The consideration is HK$45 million which
was arrived at after arm's length negotiations between the
parties to the First Agreement and represented a discount
of approximately 14.3 per cent. with reference to the
attributable fair market value (on the basis of price-
to-revenue ratio) of a 25 per cent. equity interest in the
business enterprise of Treasure Auctioneer of HK$87,500,000
as of 31st January, 2000 as valued by an independent valuer,
namely American Appraisal Hongkong Limited. The
consideration will be satisfied in full by way of issue and
allotment of 30,000,000 Consideration Shares at an issue
price of HK$1.50 per Share.
The Second Agreement
Date : 10th February, 2000
Parties
Vendors : Still Water International Limited, a company
incorporated in the British Virgin Islands and is equally
owned by Andrew Wu Ying Cheong, Yu Chai Sum and Wong Siu Tong,
being three independent third parties not connected with
Chuang's China or Chuang's Consortium, the chief executives,
directors, substantial shareholders of Chuang's China or
Chuang's Consortium or any of their respective subsidiaries
or any of their respective Associates.
Purchaser : A wholly-owned subsidiary of Chuang's China
Assets to be acquired : 100,000 shares in Treasure
Auctioneer representing 40 per cent. of the Sale Shares
Consideration : The consideration is HK$30 million which
was arrived at after arm's length negotiations between the
parties to the Second Agreement and represented a discount
of approximately 14.3 per cent. with reference to the
attributable fair market value (on the basis of price-
to-revenue ratio) of a 25 per cent. equity interest in the
business enterprise of Treasure Auctioneer of HK$87,500,000
as of 31st January, 2000 as valued by an independent valuer
namely, American Appraisal Hongkong Limited. The
consideration will be satisfied in full by way of issue and
allotment of 20,000,000 Consideration Shares at an issue
price of HK$1.50 per Share.
Issue of the Consideration Shares under the Agreements
The aggregate consideration of HK$75 million will be
satisfied in full by way of issue and allotment of a total
of 50,000,000 Consideration Shares at an issue price of
HK$1.50 per Share by Chuang's China to the Vendors on a pro
rata basis. The 50,000,000 Consideration Shares represent
(i) approximately 6.46 per cent. of the existing issued share
capital of Chuang's China; and (ii) approximately 6.06 per
cent. of the issued share capital of Chuang's China as
enlarged by the issue of the Consideration Shares.
The issue price of HK$1.50 per Consideration Share represents:-
(i) a premium of approximately 5.63 per cent. to the closing
price of HK$1.42 per Share on 10th February, 2000, being the
date of the Agreements; and
(ii) a premium of approximately 8.70 per cent. to the average
closing price of HK$1.38 per Share for the ten trading days
up to and including 10th February, 2000.
The issue price of HK$1.50 per Share is determined with
reference to the closing market price during the negotiation period.
The issue of the Consideration Shares will be subject to
approval by the Independent Shareholders at the SGM.
The Consideration Shares, upon their issue, will rank pari
passu 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.
Conditions of the Agreements
Completion is conditional upon, inter alia, the following:-
(i) the obtaining of all consents and approvals of any
relevant governmental authorities in Hong Kong, Bermuda and
the British Virgin Islands or elsewhere as may be considered
necessary by the Purchaser for the purposes of the Agreements
and/or the transactions contemplated thereunder;
(ii) the granting of listing of and permission to deal in the
Consideration Shares by the Stock Exchange;
(iii) the obtaining of all necessary shareholders'
approvals of the Agreements and/or the transactions
contemplated thereunder by Chuang's China;
(iv) the Purchaser having conducted a due diligence review
of Treasure Auctioneer and is satisfied with the result of
the review in all material respects; and
(v) the simultaneous completion of the First Agreement and
the Second Agreement.
If by 30th April, 2000, not all (except for those required
to be fulfilled until upon Completion) the conditions of the
Agreements shall have been fulfilled (or waived by the
Purchaser where applicable), the Agreements shall terminate
whereby all rights and obligations of the parties to the
Agreements shall cease to have effect except for any accrued
rights and obligations of the said parties.
Completion of the Agreements
Completion will fall on the third business day on which all
the conditions of the Agreements have been fulfilled (or
waived by the Purchaser where applicable).
Completion of the Agreements will occur simultaneously.
SHAREHOLDING STRUCTURE
(For the existing shareholding structure of Chuang's Consortium and
Chuang's China & shareholding structure of Chuang's Consortium and
Chuang's China immediately after the Acquisitions, please refer to the
press announcement today.)
Covenants of the Vendors
The present intention of the Vendors is to hold the shares
in Treasure Auctioneer as a long term investment.
The Independent Vendor had undertaken that if at any time
after Completion, it intends to sell, transfer or otherwise
dispose of any of its interests in Treasure Auctioneer, it
will first offer in writing to sell such shares to the
Purchaser on no less favourable terms than those upon which
the Independent Vendor intends to sell, transfer or dispose.
Pursuant to the Agreements, the Vendors will on Completion
unconditionally undertake to Chuang's China that, during a
period of twelve months from the date of Completion, each
of them shall not sell, transfer, assign or otherwise dispose
of or grant any options over any of the Consideration Shares
(or any interest or right thereunder) unless with the prior
consent of Chuang's China.
INFORMATION ON TREASURE AUCTIONEER
Treasure Auctioneer is developing a unique bilingual auction
portal (www.treasure-auction.com), which offers a
comprehensive range of specialist auction services for
collectors of treasures including high-end traditional
merchandise of fine ceramics, paintings, jadeite jewellery,
watches and works of art. The portal is expected to be
officially launched on or before 30th April, 2000. Treasure
Auctioneer is targeting the mid-tier and premium market for
the online framework as such market commands high gross
margins and there is limited competition in the online market
for these products today.
The domain name of the auction portal is registered and held
by Treasure-auction.com Limited, a wholly owned subsidiary
of Treasure Auctioneer.
Treasure Auctioneer also owns and operates an auction house
located in Central, Hong Kong. With its in-depth knowledge
and expertise of the management, Treasure Auctioneer has
about 1,500 customers as at 31st December, 1999 and has
secured more than 1,000 pieces of works of art. Since its
inception in July 1999, Treasure Auctioneer had successfully
completed three auction transactions with a total
transaction amount of over HK$11,000,000. The works of art
offered by Treasure Auctioneer are sourced and selected by
a specialist team of Treasure Auctioneer around the world.
Recognising the huge potential brought forth by information
technology, Treasure Auctioneer has the vision, and is well
prepared, to transform into the biggest and most popular
e-business forum for collectors of treasures in Asia. In this
connection, Treasure Auctioneer is prepared to offer
attractive online content, including history, background
and the past transaction records of Chinese fine arts.
Based on the unaudited combined management accounts of
Treasure Auctioneer for the period from its incorporation
in July 1999 up to and including 31st December, 1999, the
unaudited net profits before taxation and after taxation of
Treasure Auctioneer for the period were approximately HK$2.5
million and HK$2.1 million. As at 31st December, 1999, the
unaudited combined net assets of Treasure Auctioneer
amounted to approximately HK$12.1 million.
Mr. Chuang, Mrs. Siu and the three shareholders of the
Independent Vendor are also directors of Treasure Auctioneer.
Upon Completion of the Agreements, Chuang's China will
appoint two directors into the board of Treasure Auctioneer.
It is expected that none of the existing directors of
Treasure Auctioneer will resign on Completion.
REASONS FOR AND BENEFITS OF THE ACQUISITIONS
Chuang's Consortium and its subsidiaries (excluding
Chuang's China) are engaged in property investment and
development in the PRC and South East Asia region, finance
and share dealing, and manufacturing. Chuang's China (a
listed subsidiary of Chuang's Consortium) together with its
subsidiaries are engaged in the information technology
business which includes technology related development and
Internet businesses, as well as property development and
manufacturing in the PRC.
Chuang's China creates and operates Internet business and
as stated in its recent announcement dated 13th January, 2000,
Chuang's China's information technology business comprises
technology related development, Internet Pro Limited, and
Internet businesses, initially in the educational and
cultural field, in Hong Kong and the PRC. Chuang's China will
focus on active development of its information technology
business and will identify additional investments in the
information technology industry. In order to reflect the new
direction and future focus of the business of Chuang's China,
the Directors also proposed to change the name of Chuang's
China to "China Cyberworld Limited". Accordingly the
Directors consider that the Acquisitions are in line with
the corporate strategy of Chuang's China.
Further to the investments of Chuang's China in Internet Pro
Limited, two educational internet portals in the PRC and
various internet portals relating to culture and databank
in the PRC, the Directors consider that the Acquisitions will
allow Chuang's China to capture an opportunity to further
expand its e-commerce business which is expected to have high
growth potential, particularly in view of Hong Kong
government's long-term dedicated efforts in establishing
Hong Kong as a high-tech hub. The Directors further consider
that the issue of Consideration Shares as consideration for
the Acquisitions can serve to preserve the cash resources
of Chuang's China.
The terms of the Agreements were arrived at after arm's
length negotiations between the parties thereto and are on
normal commercial terms. The Directors consider that the
Acquisitions are in the interests of Chuang's China and that
the terms of the Agreements are fair and reasonable so far
as the Shareholders are concerned.
GENERAL
At present, Mr. Chuang, Mrs. Siu and their respective
Associates in aggregate hold approximately 46.22 per cent.
of the issued share capital of Chuang's Consortium. In turn,
Chuang's Consortium holds approximately 66.95 per cent. of
the issued share capital of Chuang's China. Under the Listing
Rules, the Acquisitions constitute a connected transaction
for both Chuang's Consortium and Chuang's China.
The aggregate consideration of HK$75 million under the
Agreements represents less than the higher of HK$10,000,000
or 3 per cent. of the audited consolidated net tangible
assets of Chuang's Consortium (as disclosed in its latest
published audited accounts for the year ended 31st March,
1999). Pursuant to Rule 14.25(1) of the Listing Rules,
Chuang's Consortium is only required to make this
announcement and disclose details of the Acquisitions in its
annual report for the financial year ending 31st March, 2000.
For Chuang's China, the Acquisitions are subject to approval
by the Independent Shareholders under the Listing Rules.
Chuang's Consortium, Mr. Chuang, Mrs. Siu and their
respective Associates in aggregate holding approximately
66.95 per cent. of the issued share capital of Chuang's China
as at the date hereof have confirmed that they shall abstain
from voting at the SGM to approve the Agreements.
An independent board committee of Chuang's China will be
formed for the purpose of advising the Independent
Shareholders on the terms of the Agreements. An independent
financial adviser to the independent board committee of
Chuang's China will be appointed to advise the independent
board committee of Chuang's China on the same.
A circular, containing amongst other things, details of the
terms of the Agreements, the advice from the independent
board committee and the independent financial adviser of
Chuang's China respectively and a notice of the SGM to
approve the Agreements (including the issue of the
Consideration Shares), will be despatched to the
Shareholders (and for information only, the warrantholders
of Chuang's China) as soon as practicable.
In this announcement, the following expressions have the
meanings set out below unless the context requires otherwise:
"Acquisitions" together the First Acquisition
and the Second Acquisition
"Agreements" together the First Agreement and
the Second Agreement
"Associate(s)" meanings as ascribed pursuant to
the Listing Rules
"Chuang's China" Chuang's China Investments
Limited, a company incorporated
in Bermuda, the securities of
which are listed on the Stock Exchange
"Chuang's Consortium" Chuang's Consortium
International Limited, a company
incorporated in Bermuda, the
shares of which are listed on the Stock Exchange
"Completion" Completion of the sale and
purchase of the Sale Shares under the Agreements
"Consideration new Share(s) to be issued and
Share(s)" allotted by Chuang's China to the
Vendors under the Agreements
"Director(s)" the director(s) of Chuang's China
"First Acquisition" the acquisition by the Purchaser
from Impressive Profit
Investments Limited of 150,000
Sale Shares being 60 per cent. of
the Sale Shares pursuant to the First Agreement
"First Agreement" the conditional agreement dated
10th February, 2000 entered into
between, inter alia, the
Purchaser and Impressive Profit
Investments Limited in relation
to the First Acquisition
"Hong Kong" the Hong Kong Special
Administrative Region of the PRC
"Independent shareholders of Chuang's China
Shareholders" (other than Chuang's Consortium,
Mr. Chuang, Mrs. Siu and their
respective Associates) as shall
be entitled to attend and vote at
the SGM to approve the Agreements
and the transactions
contemplated therein (or any
adjournment thereof)
"Independent Vendor" Still Water International
Limited, being one of the two
vendors in respect of the Sale
Shares to be sold under the
Second Agreement
"Listing Rules" the Rules Governing the Listing
of Securities on the Stock Exchange
"Mr. Chuang" Mr. Alan Chuang Shaw Swee, the
Chairman and director of
Chuang's Consortium
"Mrs. Siu" Mrs. Alice Siu Chuang Siu Suen,
the Vice Chairman and director of
Chuang's Consortium
"PRC" the People's Republic of China
"Purchaser" China Cyberworld Limited (which
will be renamed to China
Cyberworld (2000) Limited or
other name as approved by its
shareholders), a wholly-owned
subsidiary of Chuang's China
"Sale Shares" an aggregate of 250,000 Shares in
Treasure Auctioneer,
representing 25 per cent. of the
total issued share capital of
Treasure Auctioneer
"Second Acquisition" the acquisition by the Purchaser
from the Independent Vendor of
100,000 Sale Shares being 40 per
cent. of the Sale Shares pursuant
to the Second Agreement
"Second Agreement" the conditional agreement dated
10th February, 2000 entered into
between, inter alia, the
Purchaser and the Independent
Vendor in relation to the Second Acquisition
"SGM" a special general meeting of
Chuang's China to be convened to
approve, amongst other things,
the Agreements (including the
issue of the Consideration
Shares) and the transactions
contemplated thereunder (or any
adjournment thereof)
"Shareholders" holders of Shares
"Shares" Shares of HK$0.05 each in the
capital of Chuang's China
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Treasure Auctioneer" Treasure Auctioneer
International Limited, a company
incorporated in the British
Virgin Islands on 8th November, 1999
"Vendors" (i) Impressive Profit
Investments Limited, a company
indirectly owned as to 66 per
cent. by Mr. Chuang and 34 per
cent. by Mrs. Siu; and (ii) the
Independent Vendor
"HK$" Hong Kong dollars
By Order of the Board of
Chuang's Consortium International Limited
Ko Sheung Chi
Managing Director
By Order of the Board of
Chuang's China Investments Limited
Ann Li Mee Sum
Managing Director
Hong Kong, 10th February, 2000
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