PEARL ORIENTAL<0988> - Announcement
The Stock Exchange of Hong Kong Limited (the "Stock Exchange") 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.
Pearl Oriental Holdings Limited
(Incorporated in Bermuda with limited liability)
(the "Company")
SHARE TRANSACTION
The directors (the "Directors") of the Company announce that its wholly
owned subsidiary, Cyberbank Corporation Limited (the "Purchaser"), has
entered into a conditional share sale and purchase agreement (the
"Agreement") on 10 September, 1999 for the acquisition (the "Acquisition")
from Mr Peter Qiu Haixiao (the "Vendor") of 60% of the entire issued share
capital in Etex Technology Limited ("Etex").
The consideration for the proposed Acquisition is HK$12,960,000 (the
"Consideration") and will be paid in full by the issue of a total of
60,000,000 new shares of HK$0.10 each in the capital of the Company at an
issue price of HK$0.216 per share (the "Consideration Shares").
Etex has entered into an asset transfer agreement (the "ebid Agreement")
(details referred to in section B) with Glamour Internet Solutions
("Glamour") on 8 September, 1999 whereby Glamour has agreed to transfer
the ebid Assets (as defined in section B) to Etex.
A. the Agreement
1. Date of Agreement
10 September, 1999.
2. Parties
(i) the Vendor who is currently the beneficial owner of 2 shares of
HK$1.00 each in Etex is an independent third party not connected with the
Company, any of its subsidiaries, the directors, chief executives and
substantial shareholders of the Company or any of its subsidiaries or any
of their respective associates (as defined under the Rules (the "Listing
Rules") Governing the Listing of Securities on the Stock Exchange); and
(ii) the Purchaser is an indirect wholly owned subsidiary of the
Company incorporated in the Cayman Islands.
3. Shares to be acquired
A total of 12,960,000 shares of HK$1.00 each, equivalent to 60% of the
entire enlarged issued capital of Etex after the Capitalisation Issue (as
described in paragraph 7).
4. Consideration
The Consideration of the Acquisition of HK$12,960,000 is to be paid in
full by the issue and allotment by the Company of 60,000,000 Consideration
Shares credited as fully paid at an issue price of HK$0.216 per share. The
issue price per Consideration Share represents (i) a premium of
approximately 16.1% to the closing price of HK$0.186 per share as quoted
on the Stock Exchange as at 10 September, 1999; and (ii) a premium of
approximately 16.8% and 13.7% to the 10-day average closing price of
HK$0.185 per share and 5-day average closing price of HK$0.190 per share
up to and including 10 September, 1999 respectively. The issue price was
also determined by reference to the audited net asset value per share of
the Company of HK$0.210 as at 31 December, 1998, representing a premium of
2.9%.
The Consideration Shares represent respectively approximately 0.556% and
0.553% of the existing and the enlarged issued share capital of the
Company after the issue of the Consideration Shares. The Consideration
Shares will be issued pursuant to the general mandate granted to the
Directors at the Company's annual general meeting held on 23 June, 1999.
The Consideration Shares will rank equally in all respects with the
existing shares of the Company in issue at the date of Completion (see
paragraph 5). Application will be made to the Stock Exchange for the
listing of, and permission to deal in, the Consideration Shares.
The Consideration was determined after arm's length negotiations between
the parties with reference to the Net Asset Value Guarantee of
HK$21,600,000 (details referred to in paragraph 8). The Directors have
also taken into account, the business operation of the website with domain
name, http://www.ebid.com.cn (the "ebid Website"); its business
connections and partners; existing membership base; software and hardware
systems together with its professional personnel and expertise. Given the
development potential envisaged based on the existing fundamentals of the
ebid Business (referred to in section B) and the high growth potential of
the Internet auction business and Internet market in the PRC, the
Directors are in the opinion that the Consideration and the terms of the
Acquisition are fair and reasonable and in the interest of the Company and
its shareholders despite the loss making records of the ebid Business.
5. Completion
Completion will take place on the third business day after the date on
which all the Conditions (as stated below) are fulfilled or waived by the
Purchaser ("Completion"). The Conditions must be fulfilled or waived on or
before 45 days from the date of the Agreement (i.e. 25 October, 1999) or
such later date as agreed by both parties.
6. Conditions
Completion is conditional upon the following Conditions being satisfied or
waived by the Purchaser on or prior to Completion:
(a) the due diligence exercise to be carried out by the Purchaser
on the assets, liabilities, business and prospects of the ebid Website
operation, including the completion by Etex of the ebid Agreement, being
satisfactory to the Purchaser and having revealed no fact or matter or
thing which renders any of the warranties untrue, misleading or incorrect
in any respect;
(b) the Vendor producing written evidence to the Purchaser that the
ebid Agreement has been duly completed in accordance with its terms;
(c) the Capitalisation Issue having been completed; and
(d) the granting by the Listing Committee of the Stock Exchange of
a listing of, and permission to deal in, the Consideration Shares to be
issued by the Company on Completion of the Agreement.
7. Capitalisation Issue
The Vendor has agreed to increase the authorised share capital of Etex on
or before the date of Completion from HK$10,000 to HK$30,000,000 by the
creation of an additional 29,990,000 shares of HK$1.00 each, which shall
rank equally with the existing shares of Etex. The Vendor has also agreed
to subscribe for 21,599,998 new shares in Etex at HK$1.00 per share by
capitalisation of the shareholder's loan of HK$12,960,000 due to the
Vendor currently standing to the credit of Etex's account and payment of
HK$8,640,000 in cash. The subscription proceeds are to be used to ensure
Etex having a net asset value of not less than HK$21,600,000 as at the
date of Completion so as to provide sufficient working capital for the
operation and further expansion of its business.
8. Net Asset Value Guarantee
The Vendor has guaranteed and undertaken to the Purchaser that the audited
net asset value of Etex certified by Etex's auditors at the date of
Completion will not be less than HK$21,600,000. If the audited net asset
value of Etex at the date of Completion is less than such value, the
Vendor must pay to Etex in cash an amount equal to the shortfall within 7
days from the date of demand by the Purchaser.
B. INFORMATION ON ETEX
Etex is a company incorporated in Hong Kong. Its sole purpose is to
acquire from Glamour pursuant to the ebid Agreement, all its assets ("ebid
Assets") relating to the ebid Website and other relevant operations (the
"ebid Business") including the domain name, information contents, software
and hardware systems, Internet system maintenance team, membership base,
business connections and partners and goodwill, etc.
Glamour, its directors and shareholders are independent third parties not
connected with the Company, any of its subsidiaries, the directors, chief
executives and substantial shareholders of the Company or any of its
subsidiaries or any of their respective associates (as defined under the
Listing Rules).
The ebid Website was designed and established by Glamour. It has started
its operation and opened for public access since 12 July, 1999. It is the
first Internet portal in the PRC which focuses on the provision of
Internet auction services where shoppers can compete to win limited
merchandise through live-action bidding. Incomes mainly come from
commission charged from the winning bidders and the vendors of the
merchandise, promotion fees as well as sales revenue of auction goods as
vendor. Despite the short operating history, the ebid Website has already
successfully concluded over 300 trades with auction turnover of
RMB300,000. The unaudited operating loss for the seven months ended 31
July 1999 was RMB63,380.95.
Upon Completion, the share capital of Etex will be held as to 12,960,000
shares (60%) by the Purchaser and 8,640,000 shares (40%) by the Vendor.
Etex will become a subsidiary of the Company after the Acquisition. At
present, the Company has no intention to acquire from the Vendor his
balance shareholding.
The Vendor is one of the executive directors of Etex and the sole
beneficial owner of Glamour. Graduated from Shanghai Fudan University
with a degree in international economic law, the Vendor
established Glamour in 1995 and started Internet solutions business in
1997. He is the founder of the ebid Website. Mr Bill Qiu Hairong is
another director of Etex and a key executive of Glamour. With a degree in
Management Information System from Shanghai Cai Jing University and
extensive experience in information and Internet technology, he is
currently responsible for the development and maintenance for the ebid
Website. The Vendor and Mr Bill Qiu will remain as executive directors of
Etex upon Completion to oversee the operation, management and expansion of
the Internet business. Three more directors will be nominated by the
Purchaser to the board of directors of Etex upon Completion to oversee the
policy making and strategic planning functions.
C. REASONS FOR THE ACQUISITION
It is the Group's strategy and direction to increase investment in high
growth technology businesses which are Internet oriented. According a
report of a market research company, Internet auction portals will become
basic service portals of Internet users and will be a key element to the
future success of e-commerce. Given the e-commerce development trend and
the high potential of the PRC Internet market, the Directors believe that
the ebid Business will achieve a high growth in the near future. It is
envisaged that the Acquisition will bring strategic value and
opportunities to the Group's development in Internet and e-commerce
businesses.
D. GENERAL INFORMATION
The Company is an investment holding company and its subsidiaries are
principally engaged in property investment, development and trading,
project management, hotel investment, management and consultancy,
financial services as well as telecommunication, Internet and information
technology businesses.
The proposed Acquisition constitutes a share transaction for the Company
under the Listing Rules.
This announcement appears for information only and does not constitute an
invitation or offer to acquire, purchase or subscribe for shares in the
Company.
By Order of the Board
Pearl Oriental Holdings Limited
Wong Kwan
Chairman and Chief Executive
Hong Kong, 10 September, 1999
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