OCEAN GRAND<1220> - Announcement & Resumption of Trading
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.
OCEAN GRAND HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
Major Transaction
and
General Mandates for Issue and Repurchase of Shares
The Directors announce that Xingye Products, a 93.75% owned
subsidiary of the Company has conditionally agreed to acquire from
the Vendor 1.6 million Linefan Shares (which will represent 40% of
the existing equity interest in Linefan) at the total consideration
of HK$148 million.
The principal assets of Linefan are its 70% equity interest in
Beijing Hangfan, its 72.2% equity interest in Wellpay and its 84.44%
beneficial interest in the business of `search263.net'.
Beijing Hangfan and Wellpay (namely, the Linefan Subsidiaries) are
engaged:-
-
as internet contents providers in the PRC dealing with internet
related consultancy, internet website design and production; and
-
in the provision of internet solutions services,
information-technology products and services and the sale of
telecommunication products.
As Beijing Hangfan (held as to 70% by Linefan and as to 20% by
Wellpay (which is in turn held as to 72.2% by Linefan)) is the owner
of the entire business of `search263.net', Linefan is beneficially
interested as to 84.44% of the business of `search263.net'. The
business of `search263.net' is principally the search engine for
263.net (otherwise and better known as `Capital-Online' which is
currently one of the top 5 most popular PRC web sites according to
the CNNIC Survey).
The Consideration (which will be satisfied partly in cash and partly
by way of the Company's issuance of the Consideration Shares) was
reached after arm's length negotiations with reference to Sallmanns'
Independent Valuation Report in which Sallmanns indicated the value
of the business of `search263.net' to be approximately USD150
million.
AGREEMENTS DATED 15th FEBRUARY, 2000 and 17th FEBRUARY, 2000
Parties:
Purchaser: Xingye Products, a
sino-foreign equity joint
venture established under the
laws of the PRC and a 93.75%
owned subsidiary of the
Company, with balance of its
6.25% equity interest being
held by Xingye
Industry.
Vendor: Hong Ying Bin, a PRC national
The Vendor is an independent third party not connected with the
Company, 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 and is not interested in
any shares of the Company as at the date of this announcement.
ACQUISITION
By way of the Agreements, the Purchaser has conditionally agreed to
acquire from the Vendor 1.6 million Linefan Shares (which will
represent 40% of the existing equity interest in Linefan) at the
total consideration of HK$148 million.
The Vendor is beneficially interested in 1.6 million Linefan Shares
(representing 40% of the equity interest in Linefan), with the
balance 2.4 million Linefan Shares (representing 60% of the equity
interest in Linefan) being held by independent third parties not
connected with the Company, 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. The
Vendor is also beneficially interested in a share option which will
enable the Vendor to subscribe for up to 3,360,000 new Linefan Shares
(representing 45.65% of the enlarged equity capital of Linefan upon
full exercise of the said share option) within the period commencing
from 1 January 2000 and expiring on 31 December 2000. The exercise
price of the said share option shall be USD1.5 (equivalent to
HK$11.63) per Linefan Share if the said share option is exercised
from 1 January 2000 to 30 June 2000 and USD2.00 (equivalent to
HK$15.50) per Linefan Share if the said share option is exercised
from 1 July 2000 to 31 December 2000. The said share option shall not
form part of the Acquisition.
The Company has not, to date, concluded any intention in respect of
the acquisition of the balance of the 60% equity interest in Linefan
nor has it concluded any intention in respect of the acquisition the
above share option. In the event that the Company shall acquire any
or all of the said Linefan Shares and/or the said option, the Company
shall make further announcement in this regard.
The principal assets of Linefan are its respective 70% and 72.2%
equity interest in Beijing Hangfan and Wellpay and its 84.44%
beneficial interest in the business of `search263.net'. The business
in respect of `Search263.net' is held entirely by Beijing Hangfan.
As Beijing Hangfan (held as to 70% by Linefan and as to 20% by
Wellpay (which is in turn held as to 72.2% by Linefan)) is the owner
of the entire business of `search263.net', Linefan is beneficially
interested as to 84.44% of the business of `search263.net'. For
better reference, the balance 10% equity interest in Beijing Hangfan
is held by Beijing Jingxun and the balance 27.8% equity interest in
Wellpay is held by its management team. Both of Beijing Jingxun and
Wellpay's management team 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.
(For the further details of the business engagements of the Linefan Group
and the business of `search263.net',please refer to the press announcement
today.)
Linefan
Linefan is an investment holding company which holds the Linefan
Subsidiaries.
Beijing Hangfan
Beijing Hangfan is:-
-
engaged as an internet contents provider in the PRC dealing with
internet related consultancy, internet website design and production;
-
also engaged in the provision of internet solutions services,
information-technology products and services and the sale of
telecommunication products; and
-
#the owner of the business of `search263.net' and the operator of
`search263.net' (the search engine for 263.net, otherwise and better
known as `Capital-Online').
Wellpay
Wellpay is:-
-
engaged as an internet contents provider in the PRC dealing with
internet related consultancy, internet website design and production;
-
also engaged in the provision of internet solutions services and
information-technology products and services;
-
entitled to, inter alia, the conduct the business of
buying/selling/trading of department store products, medical
equipment, constructions/building/decoration related materials, arts
and crafts, and electronics equipment and machinery; and
-
#the owner of the business of `wellpay.com' and the operator of
`wellpay.com', a PRC internet contents provider (which upon
Completion is expected to be expanded to include more contents
focusing `life-style' related information).
#
the business of `search263.net' and the business of `wellpay.com'
have much interactions in relation to the provision of contents in
the internet and the continuance of such interactions are expected to
be ensured notwithstanding Completion. While `search263.net' is a
portal, `wellpay.com' has specific sites.
The business of `search263.net'
The business of `search263.net':-
-
is principally the search engine for 263.net (otherwise and better
known as `Capital-Online', which is currently one of the top 5 most
popular PRC web sites according to the CNNIC Survey); and
-
is a significant internet contents provider in the PRC (with
currently over 200,000 page viewers per day and with over 170,000
registered members).
Leveraging on the core strengths in contents provision and internet
solutions services, the Linefan Group has established strong
associations to engage in the operation of internet contents
provision in the PRC. The contents provided by the Linefan Group can
be accessed at `search263.net' and at `wellpay.com'.
Consideration
The Consideration was determined on an arm's length basis between
the Purchaser and the Vendor with reference to Sallmanns' Independent
Valuation Report in which Sallmanns indicated the value of the
business of `search263.net' as at 1 January 2000 (the search engine
for 263.net, otherwise and better known as `Capital-Online') to be
approximately USD150 million (equivalent to HK$1,162,500,000).
Notwithstanding that the Linefan Group does have other assets and
business (aside from its 84.44% interest in the business of
`search263.net') and, in particular, that Wellpay owns the business
of `wellpay.com', these other assets (`Linefan Group's other Assets')
have not been valued in any valuation report and in particular not
valued by Sallmanns in Sallmanns' Independent Valuation Report.
As the Consideration (which is in the aggregate amount of HK$148
million):-
-
is referenced only on the Sallmanns' Independent Valuation Report
(which only valued the business of `search263.net' and in which
Sallmann indicated the business of `search263.net' to be
approximately USD150 million (equivalent to HK$1,162.5 million));
-
is referenced on the exclusion of any value of the Linefan Group's
other assets (ie. in light that the Company is of the view that the
most valuable asset of the Linefan Group is its business in
`search263.net' and the value of its other assets is relatively
insignificant in comparison to the value of its business in
`search263.net'); and
-
is, in essence, referenced on Linefan's value being USD126.66
million (equivalent to HK$981.615 million) (in light that Linefan's
is beneficially interested in 84.44% of the business of
`search263.net'),
attention is drawn to the following:-
-
the Acquisition will, in essence, involve the acquisition of 40%
equity interest in Linefan (which according to the above reference
basis, is equivalent to the value of approximately USD50.66 million
(equivalent to HK$392.615 million)) at HK$148 million (namely,
approximately USD19.2 million) thereby representing a discount of
62.1%.
-
the management accounts of Linefan Group as at 31 December 1999
indicates that the net assets value of the Linefan Group is
approximately RMB 5 million (equivalent to HK$4.50 million). As
Linefan has only been established for less than 12 months since April
1999, there is no audited profit and loss figure available.
Payment Terms
The Consideration will be satisfied by in the following manner:
(a)
the issue and allotment of 325 million Shares (namely, the
Consideration Shares) upon Completion, credited as fully paid at the
agreed deemed price of HK$0.351 each (representing the cash
equivalent of approximately HK$114 million, which is the sole
responsibility of the Company); and
(b)
the balance of HK$34 million upon Completion, to be satisfied in
cash, of which HK$9.25 million is the sole responsibility of Xingye
Industry (i.e. in proportional to its equity interest of 6.25% in the
Purchaser) and HK$24.75 million is the sole responsibility of the
Company.
The Consideration Shares will rank pari passu in all respect with
the existing issued Shares. The issue price of the Consideration
Shares represents approximately 51.3% discount to the closing price
of the Shares at HK$0.72 as at 15 February, 2000 and is equivalent to
approximately 5.02% premium to the average closing price of the
Shares at HK$0.3342 for the 20 trading days prior to 15 February,
2000. The Consideration Shares represent approximately 9.93% of the
existing issued share capital of the Company and 9.03% of the issued
share capital of the Company, as enlarged by the issue of the
Consideration Shares. As the shareholding of the Principal
Shareholders in the Company, as at 15 February, 2000, is 41.08%,
assuming that the Principal Shareholders' aggregate holding of Shares
in the Company shall remain unchanged from 15 February, 2000 till
Completion and assuming due Completion, the shareholding of the
Principal Shareholders in the Company will be reduced to 37.37%.
The Company intends to appoint director(s) into Linefan and is
considering to appoint director(s) into the board of the Linefan
Subsidiaries upon Completion. As the Company values the expertise of
the Linefan Group's existing management in the Linefan Group's
business, it has ensured that no existing members in their board of
directors and senior management will leave the Linefan Group
notwithstanding Completion. The Group shall finance the Purchaser's
cash portion of the Consideration by internal resources.
Condition and Completion Date:
Pursuant to the Listing Rules, the Acquisition constitutes a major
transaction for the Company. Completion is conditional upon
fulfillment of, inter alia, the following conditions precedent:
1.
the Shareholders' approval of the Agreements and issue of
Consideration Shares;
2.
the Agreements (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 Agreements in such form and substance to the satisfaction of the
Purchaser having been obtained;
4.
the Purchaser being satisfied with the result of the due diligence
review of the assets, liabilities and operations of the Linefan Group
(which include in particular that of the businesses of
`search263.net' and `wellpay.com');
5.
the Listing Committee of the Stock Exchange granting the listing of
and the permission to deal in the Consideration Shares; and
6.
a PRC legal opinion which expressly opine that Linefan is the
registered owner of respectively 70% and 72.2% equity interest in
Beijing Hangfan and Wellpay respectively and the beneficial owner of
84.44% interest in the business of `search263.net' in such form and
substance to the satisfaction of the Purchaser having been obtained.
The Company has sought preliminary PRC legal advice in relation to
the Acquisition and understands that (i) Xingye Products is able to
hold the Sale Shares without going through special approval procedure
from the relevant PRC regulatory authority, which is different from
an acquisition in other industries and (ii) upon Completion, the
Linefan Group will be able to continue to carry on its existing
business.
Completion will take place on the 3rd business day after all the
above conditions precedent have been fulfilled/waived by the
Purchaser. If the above conditions precedent are not fulfilled/waived
by the Purchaser within 3 calendar months, namely, by 14 May, 2000
after the date of the Agreements, the Agreements will lapse.
On Completion, there will be no changes to the Company's board of
directors as a result of Completion of the Acquisition.
Reason for the Acquisition
The Company is an investment holding company. The Group is
principally engaged in manufacturing and trading of aluminum
extrusion products and trading of aluminum ingots in Hong Kong, the
PRC and other overseas markets through foreign trade corporations in
the PRC. Notwithstanding that the Group shall maintain and expand its
aforesaid `construction/building materials related' core business in
full force, the Group values the Acquisition as an excellent and
well-timed opportunity to diversify the Group's business to include
high technology businesses in order to capture the recent exponential
growth of the information technology business worldwide and
especially in the PRC, leveraging on the Group's stable cash flow
generated by its aforesaid `construction/building materials related'
core business.
In light of the Group's well-established business network especially
in the PRC, the Group targets to, upon Completion, take full
advantage of the business synergy between the Group, the Linefan
Group and the business of `search263.net' to enhance the lining up of
international and PRC providers of information for co-operation in
the Linefan Group's development and global distribution of contents
via web site.
Adopting a long-term view, the Directors believe that the Group can,
in future, conduct the Group's core business via the internet (ie. by
way of e-commerce) on top of the traditional sales methods.
The Directors believe that a stake in the Linefan Group will
definitely prove to be a real asset to the Group in that:
-
the Linefan Group has capabilities to enhance the value of contents
through digitization, classification, repackaging and database
integration;
-
the Linefan Group has technical capability to integrate the raw
contents sourced into a scalable and flexible data structure that
allows themselves to meet the contents requirements of a broad range
of customers;
-
the Linefan Group has extensive experience and knowhow in contents
management and internet solutions; and
-
the business of `search263.net' (which is owned as to 84.44% by
Linefan) is the search engine for 263.net (otherwise and better known
as `Capital-Online', which is currently one of the top 5 most popular
PRC web sites according to the CNNIC Survey.)
Based on the calculations as demonstrated in the sections headed
`Consideration' as set out above in this announcement, the Directors
believe that the Acquisition at the Consideration is for a value
which is fair and reasonable to the Company and its shareholders as a
whole.
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.
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 (`New Mandates'). At the SGM, the Shareholders will approve
specifically the issue and allotment of the Consideration Shares and
the New Mandates. At present, the Company has not reached any
decision to issue new Shares (aside from the Consideration Shares)
upon the approval of the New Mandates.
The existing mandate of the Company to issue and repurchase the
Company's securities was approved in a special general meeting on 25
November 1999, which will be revoked if the New Mandates are approved
at 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 Linefan
and the financial information of Linefan and the Company will be
despatched to Shareholders as soon as practicable.
RESUMPTION OF TRADING IN SHRAES
Trading in the Company's shares was suspended as from 10:00 a.m. on
16 February, 2000 at the Company's request and an application has
been made by the Company to the Stock Exchange for the resumption of
trading in the shares as from 10:00 a.m. on 21 February, 2000
(Monday).
TERMS USED IN THIS ANNOUNCEMENT
'Acquisition' acquisition of the Sale
Shares by the Purchaser from
the Vendor
`Agreements' the agreement entered into
between the Vendor and the
Purchaser on 15 February,
2000 in relation to the
Acquisition and as
supplemented by two
supplemental agreements
entered into between the
Vendor and the Purchaser
dated 15 February, 2000 and
17 February 2000
`Beijing Hangfan' (*Linefan Info Technology
Company) a PRC private
limited company
`Beijing Jingxun' (*Beijing Jingxun Public
Info.Tech.Limited), a PRC
internet services provider.
`CNNIC Survey' the second half yearly survey
for the period ended 31
December, 1999, conducted by
CNNIC (representing the
latest survey conducted by
the CNNIC to date)
`CNNIC' China Internet Network
Information Center
`Company' Ocean Grand 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 the Purchaser to
the Vendor for the
acquisition of the Sale
Shares
`Consideration Shares' the issue and allotment of
325 million Shares at the
agreed deemed price of
HK$0.351 each for the
settlement of part of the
Consideration, which
Consideration Shares
represent approximately 9.93%
of the existing issued share
capital of the Company as at
the date hereof and 9.03% of
the issued share capital of
the Company, as enlarged by
the issue of the
Consideration Shares
`Directors' directors of the Company
`Group' the Company and its
subsidiaries
`HK$' Hong Kong dollars
`Linefan' t(*Beijing Linefan Technology
Company) a PRC private
limited company
`Linefan Group' Linefan and the Linefan
Subsidiaries
`Linefan Shares' shares in Linefan
`Linefan Subsidiaries' Beijing Hangfan and Wellpay
`Listing Rules' rules governing the listing
of securities on the Stock
Exchange
`Purchaser' (*Nanhai Xingye Shaped
Bronze & Aluminum Products
Co., Ltd.), a sino-foreign
equity joint venture
established under the laws of
the PRC and which is 93.75%
owned by the Company
'Principal Shareholders' Mr. Yip Kim Po and his
associates Holylake Resources
Limited and Grecian Resources
Limited who together
beneficially own
approximately 41.08% of the
issued share capital of the
Company as at 15
February,2000.
`PRC' the People's Republic of
China
`RMB' Renminbi, the lawful currency
of PRC
`Sale Shares' 1.6 million shares of Linefan
representing 40% of its
equity interest immediately
before Completion
`Sallmanns' Sallmanns (Far East) Limited,
a firm of chartered
surveyors, property
consultants, plant and
machinery valuers, financial
and tangible asset valuers,
which is independent from the
Group
`Sallmanns Independent the preliminary valuation
Valuation Report' report produced by Sallmanns
to the Company dated 15
February, 2000 in valuation
of the business of
`search263.net' (the search
engine for 263.net, otherwise
and better known as
`Capital-Online') as at 1
January 2000 for the purpose
of producing a financial
valuation model for market
value indication purpose and
on discounted cashflow basis,
after due consideration of
information provided by the
Company (including the
business plan and future
profit forecast of the
business of `search263.net',
market forecast of internet
users in the PRC and
e-commerce activities and
current statistics in the PRC
internet industry), in which
Sallmanns indicated the value
of the business of
`search263.net' to be
approximately USD150 million
(equivalent to HK$1,162.50
million)
`SGM' the special general meeting
of the Company which is
scheduled to be held on or
about 29 March, 2000
(Wednesday)
`Share(s)' ordinary share(s) of HK$0.10
each in the share capital of
the Company
`Shareholder(s)' holder(s) of the Shares
`Stock Exchange' The Stock Exchange of Hong
Kong Limited
`USD' United States Dollar, the
lawful currency of the United
States
`Vendor' Mr. Hong Ying Bin, a PRC
national and an independent
third party not connected
with the Company, directors,
chief executives or
substantial shareholders of
the Company or any of its
subsidiaries or any of their
respective associated as
defined in the Listing Rules
`Wellpay' (*Beijing Wellpay Software
Technology Limited) a PRC
private limited company
'Xingye Industry' (*Nanhai Xingye Shaped
Products Industry Limited),
holding 6.25% equity interest
in Xingye Products and is
owned respectively as to 75%
and 25% by Mr. Yip Lai Po
(who is a current executive
director of the Company) and
Mr. Yip Xin Po (who is the
brother of Mr. Yip Lai
Po)
'Xingye Products' the Purchaser
* for identification purposes only
Note: the percentage figures as set out in this announcement are in
approximation only
By Order of the Board
Ocean Grand Holdings Limited
Yip Kim Po
Chairman
Hong Kong, 18 February, 2000
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