YEEBO (INT'L H)<0259> - Announcement & Resumption
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.
YEEBO (INTERNATIONAL HOLDINGS) LIMITED
(Incorporated in Bermuda with limited liability)
DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING POSSIBLE:
FORMATION OF A SINO-FOREIGN JOINT VENTURE
AND
ISSUE OF NEW SHARES
The board of directors (the "Directors") of Yeebo
(International Holdings) Limited (the "Company") announces
that on 23rd March 2000, the Company entered into a
conditional co-operative agreement ("Co-operative
Agreement") with:-
(i) Mr. Fang Hung, Kenneth;
(ii) Centell Telecommunications Corp. ("Centell"); and
(iii) CTC Quntong Information Technology Limited ("Quntong")
for the formation of a joint venture company in Beijing, the
People's Republic of China (the "JV Company").
Under the Co-operative Agreement:-
(i) the Company will invest in US dollars, the equivalent
of RMB100,000,000 (approximately HK$94,300,000) in the JV
Company for a 14% equity interest in the JV Company, within
6 months from the date of the establishment of the JV Company
(subject to any PRC Legal requirements on the time limit for
paying up capital);
(ii) Mr. Fang, through a company wholly owned by him, will
invest in US dollars the equivalent of RMB100,000,000 in the
JV Company for a 14% equity interest in the JV Company;
(iii) the assets and business of both Centell and Quntong
will be injected into the JV Company and the shareholders
of Centell and Quntong will hold between them 72% of the
equity interest in the JV Company;
(iv) the Company has also conditionally agreed (subject
to PRC and independent shareholder approvals) to issue and
allot 190,000,000 new ordinary shares to the JV Company for
a total subscription price of RMB100,000,000.
Mr. Fang is an executive director and substantial
shareholder of the Company, and Centell and Quntong are
independent third parties not connected with the directors,
chief executives or substantial shareholders of the Company,
any of its subsidiaries or any of their associates.
The Co-operative Agreement has been negotiated on an arm's
length basis and on normal commercial terms. The Directors
consider that the terms are fair and reasonable insofar as
the independent shareholders of the Company are concerned
and the proposed investment by the Company in the JV Company
is in the interests of the Company. Details of the commercial
considerations on which the investment by the Company of
RMB100 million was based is set out below under the heading
"General".
A circular containing details of, amongst others, the
formation of the Joint Venture Company, the recommendation
from the independent board committee of the Company, the
advice from the independent financial adviser, a notice of
special general meeting to approve the Co-operative
Agreement will be despatched to the shareholders of the
Company as soon as practicable. Although the Company will
endeavour to ensure that the circular is despatched within
21 days from the date of this announcement, as is required
under the Listing Rules, it may not be possible to do so
within this time period, in which event the Company will
issue a further announcement at that time.
At the request of the Company, trading in its securities was
suspended with effect from 10:00 a.m. on 24th March 2000.
An application will be made to the Stock Exchange for the
resumption of trading of the securities of the Company with
effect from 10:00 a.m. on Wednesday 29th March, 2000.
The investment in the JV Company and the subscription by the
JV Company for shares in the Company may or may not proceed.
Shareholders and investors should exercise caution in
dealing in the shares of the Company.
THE CO-OPERATIVE AGREEMENT
Date 23rd March 2000
Parties:-
(1) (Centell Telecommunications Corp.) ("Centell")
(2) (CTC Quntong Information Technology Limited) ("Quntong")
(3) The Company
(4) Mr. Fang Hung ("Fang")
Summary of terms
Stage 1
1. Quntong and a company owned and controlled by Mr. Fang
("Fang Co.") will first establish a Sino-foreign joint
venture enterprise (the "Quntong Fang Co. JV") into which
Quntong will inject all its assets and business as capital
contribution and Fang Co. will invest the US dollar
equivalent of RMB100,000,000 in cash as its capital
contribution.
Stage 2
2. The shareholders of Centell will establish a new
Sino-foreign joint venture enterprise (i.e. the JV Company)
into which all the assets and business of Centell will be
injected.
3. Quntong and Fang Co. will ensure that Quntong Fang Co.
JV injects all its assets and business into the JV Company.
4. The Company or its subsidiary will then invest in US
Dollars the equivalent of RMB100,000,000 (the "Capital
Investment") into the JV Company. This investment must,
subject to any PRC legal requirements on the time limit for
paying up capital, be made within 6 months of the date of
the establishment of the JV Company.
5. The Company's obligation to make the Capital Investment
is subject to the following conditions:-
(i) the approval by the independent shareholders of the
Company at the SGM of the terms of the Co-operative Agreement
including, subject to all necessary PRC Government approvals,
the approval by the independent shareholders of the
allotment and issue of 190,000,000 new shares in the Company
to the JV Company which represents approximately 29.66% of
the existing issued share capital of the Company and will
represent approximately 23% of the enlarged issued share
capital of the Company after the issue and allotment of the
190,000,000 new shares (In the event that PRC approval for
the allotment of the 190,000,000 new shares is not granted,
Stage 3 of the transaction will not be implemented, whether
or not is the shareholders of the Company have approved the
allotment);
(ii) the Company and its professional advisers having
verified the accuracy of the warranties given by Centell and
Quntong to the Company and Fang under the Co-operative
Agreement (A due diligence exercise will therefore be
conducted before the completion of the Co-operative
Agreement).
6. The Capital Investment will be financed by internal
resources of the Company.
7. Upon completion of the investments into the JV Company
by the shareholders of Centell, Quntong, Fang Co. and the
Company, Fang Co. and the Company will each have a 14% equity
interest in the JV Company and the shareholders of Centell
and Quntong will hold between them the balance of 72% of the
equity interest in the JV Company.
Stage 3
8. The Company has also agreed that for a period of 6 months
after the establishment of the JV Company, the JV Company
will, subject to it having obtained all necessary PRC
governmental approvals, have the right to subscribe for
190,000,000 ordinary shares in the capital of the Company
at a total subscription price of RMB100,000,000.
Except as described above, the Company has no further
commitments under the Co-operative Agreement.
The following charts represent the stages 1, 2 and 3 of the
proposed transaction:
STAGE 1
STAGE 2
STAGE 3
The investment in the JV Company and the subscription for
shares by the JV Company are subject to the fulfilment of
certain conditions as described above. Shareholders and
investors should exercise caution in dealing in the shares
of the Company. The investment by the Company in the JV
Company is conditional upon the subscription by the JV
Company for the 190,000,000 shares in the Company in the
event that PRC approvals for the said subscription are
granted. The allotment and issue by the Company of the
190,000,000 shares to the JV Company will be subject to the
necessary PRC governmental approvals. If PRC approval for
the allotment of the 190,000,000 shares to the JV Company
is not granted, only stages 1 and 2 of the transactoin will
be completed. A further announcement will be made in full
compliance with the Listing Rules as soon as practicable if
and when the investment in the JV Company and the
subscription of shares by the JV Company is to be
implemented.
UNAUDITED Financial Information
Centell
For the 12 months ended 31st December, 1998 the profit before
and after tax were RMB479,000 and RMB443,000 respectively.
For the 12 months ended 31st December, 1999 the profit before
and after tax were RMB6,503,000 and RMB6,015,000
respectively.
The net assets as at 31st December, 1998 and 31st December,
1999 were RMB8,632,000 and RMB14,124,000 respectively.
Quntong
For the 12 months ended 31st December, 1998 the profit before
and after tax were RMB4,180,000.
For the 12 months ended 31st December, 1999 the profit before
and after tax were RMB6,037,000.
The net assets as at 31st December, 1998 and 31st December,
1999 were RMB9,625,000 and RMB19,064,000 respectively.
The above information was derived solely from the unaudited
financial statements of Centell and Quntong. The Company has
not conducted any due diligence on the financial statements
of Centell or Quntong.
PRINCIPAL BUSINESS OF THE GROUP
The Company and its subsidiaries and associated companies
are principally engaged in the business of manufacturing and
trading of liquid crystal displays and printed circuit
boards. The Company's long term objective is to develop a
diversified business focusing on high technology.
REASONS FOR THE FORMATION OF THE JV COMPANY
Both Centell and Quntong are providers of telecommunications
and internet network services in the PRC. They provide
network infrastructure solutions, software engineering for
to telecommunications network management, data
communications, IP technology application and systems
integration. Centell has built telecommunications network
management systems for many local telephone networks in the
PRC accounting for one third of the market share. It is
currently undergoing a corporate reorganisation and upon
completion of such reorganisation, it will be owned as to
30% by a wholly-owned subsidiary of the Ministry of
Information Industry of the PRC, as to approximately 54% by
an employee trust and as to 16% by Quntong. Quntong is a
private company owned by individuals in the PRC who are
independent third parties not connected with the directors,
chief executives or substantial shareholders of the Company,
any of its subsidiaries or any of their associates.
The formation of the JV Company and the proposed co-operation
with Centell and Quntong represents an opportunity for the
Group to participate in the telecommunications and internet
network and infrastructure market in the PRC.
SUSPENSION AND RESUMPTION OF TRADING OF THE SHARES
At the request of the Company, trading in its securities was
suspended with effect from 10:00 a.m. on 24th March 2000.
An application will be made to The Stock Exchange for the
resumption of trading of the securities of the Company with
effect from 10:00 a.m. on Wednesday 29th March, 2000.
GENERAL
Mr. Fang is a connected person of the Company and the value
of the capital commitment of the Company in relation to the
formation of the JV Company exceeds 3% of the consolidated
assets of the Group. Accordingly, the formation of the JV
Company constitutes a connected transaction for the Company
under the Listing Rules and is subject to approval by the
Independent Shareholders. Mr. Fang and his associates hold
approximately 52.9% of the existing issued share capital of
the Company and will abstain from voting at the SGM to approve
the formation of the JV Company.
An independent board committee will be established for the
purpose of considering the terms of the formation of the JV
Company and giving recommendation to the Independent
Shareholders in respect of the formation of the JV Company.
An independent financial adviser will be appointed to advise
the independent board committee of the Company in respect
of the formation of the JV Company.
The terms of the Co-operative Agreement have been negotiated
on an arm's length basis and on normal commercial terms. Both
Centell and Quntong generated profits during 1999 and the
Directors believe that there is significant potential for
growth in profits of companies engaged in the high technology
business. Accordingly, the consideration of RMB100 million
is derived from and based on an historical price earnings
ratio of approximately 60 times of Centell and Quntong. The
Directors consider that the terms are fair and reasonable
insofar as the independent shareholders of the Company are
concerned and the formation of the JV Company is in the
interest of the Company.
A circular containing, among other things, details of the
formation of the JV Company, the recommendation from the
independent board committee of the Company, the advice from
the independent financial adviser, a notice of SGM to approve
the formation of the joint venture company will be despatched
to the shareholders of the Company as soon as practicable.
Although the Company will endeavour to ensure that the
circular is despatched within 21 days from the date of this
announcement as is required under the Listing Rules, it may
not be possible to do so within this time period, in which
event the Company will issue a further announcement at that
time.
Save for the above, there are no negotiations or agreements
in relation to intended acquisitions or realisations which
are discloseable under paragraph 3 of the Listing Agreement
nor are the Directors aware of any matters discloseable under
the general obligation imposed by paragraph 2 of the Listing
Agreement, which is or may be of a price-sensitive nature.
DEFINITIONS
"associate" as defined in the Listing Rules
"Centell" Centell Telecommunications Corp.,
established on 31st March, 1995, the beneficial
shareholders of which are *, as to 80%, *, as to 20%
"Company" Yeebo (International Holdings) Limited
"connected person" as defined in the Listing Rules
"Co-operative the preliminary agreement dated
Agreement" 23rd March, 2000 entered into between
Centell, Quntong, the Company and Mr.
Fang relating to the formation of the JV
Company
"Directors" the board of directors of the Company
"Group" the Company and its subsidiaries or,
where the context so requires, any of
them
"Independent the shareholders of the Company other
Shareholders" than Mr. Fang and his associates
"JV Company" a new joint venture company to be set up
in Beijing, the PRC pursuant to the
Co-operative Agreement, in which the
Company will invest a US dollar sum
equivalent to RMB100,000,000,
representing 14% of the entire
registered capital of the JV Company
"Listing Rules" the Rules Governing the Listing of
Securities on the Stock Exchange
"Mr. Fang" Mr. Fang Hung, Kenneth, an executive
director and substantial shareholder of
the Company
"PRC" the People's Republic of China
"Quntong" CTC Quntong Information Technology
Limited,
established on 10th July, 1997, the
beneficial shareholders of which are
individuals who are independent third
parties not connected with the
directors, chief executives or
substantial shareholders of the
Company, any of its subsidiaries or any
of their associates
"SGM" special general meeting of the Company
to be convened for approving, amongst
other things, the terms of the Co-
operative Agreement
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"substantial as defined in the Listing Rules
shareholder"
"HK$" Hong Kong dollars
"RMB" Renminbi, the legal currency of the PRC
"US dollars" United States dollar, the lawful
currency of the United States of America
(The exchange rate of Renminbi to Hong Kong dollars quoted
in this announcement adopts a rate of HK$1 equivalent to
RMB1.06.)
Made by the order of the board of the Company, the Directors
of which individually and jointly accept responsibility for
the accuracy of this announcement.
By Order of the Board
Kelvin Lam
Company Secretary
Hong Kong, 28th March, 2000
(* For the Chinese name, please refer to the press announcement today.)
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