CHINA UNITED<0273> - 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.
China United Holdings Limited
(Incorporated in Bermuda with limited liability)
PLACING OF NEW SHARES
UNDER GENERAL MANDATE
China United Holdings Limited (the "Company") has
conditionally agreed to place, through its placing agent,
Tai Fook Securities Company Limited ("Tai Fook"),
2,550,000,000 new ordinary shares ("Placing Shares") of
HK$0.02 each in the share capital of the Company ("Shares")
to independent investors at a price of HK$0.063 per Share
("Placing").
The Placing is fully underwritten by Tai Fook.
The Placing Shares represent approximately 20% of the
existing issued share capital of the Company of
12,752,707,704 Shares and approximately 16.66% of the
Company's issued share capital as enlarged by the Placing.
The net proceeds from the Placing of approximately HK$150
million will be used as general working capital and to reduce
its debts.
The Placing is conditional upon the Hong Kong Stock Exchange
granting listing of and permission to deal in the Placing
Shares.
The Placing is subject to termination on the occurrence of
an event of force majeure before 10:00 a.m. on the expected
completion date including:-
(i) the occurrence of any event, development or change
(whether or not local, national or international or forming
part of a series of events, developments or changes occurring
or continuing before, on and/or after the date hereof) and
including an event or change in relation to or a development
of an existing state of affairs of a political, military,
industrial, financial, economic, fiscal, regulatory or
other nature, whether or not sui generis with any of the
foregoing, resulting in a material adverse change in, or
which may be result in a material adverse change in,
political, economic, fiscal, financial, regulatory or stock
market conditions and which in the reasonable opinion of Tai
Fook would materially prejudice the success of the Placing;
or
(ii) the imposition of any moratorium, suspension or
material restriction on trading in securities generally on
the Stock Exchange occurring due to exceptional financial
circumstances or otherwise and which in the reasonable
opinion of Tai Fook, would materially prejudice the success
of the Placing; or
(iii) any change in conditions of local, national or
international securities markets occurs which in the
reasonable opinion of Tai Fook would materially prejudice
the success of the Placing; or
(iv) any new law or regulation or change in existing laws or
regulations or any change in the interpretation or
application thereof by any court or other competent
authority in the Hong Kong or any other jurisdiction relevant
to the Company and its Subsidiaries (together, the "Group")
and if in the reasonable opinion of Tai Fook any such new
law or change would materially and adversely affect the
business or financial prospects of the Group and/or
materially prejudice the success of the Placing; or
(v) a change or development occurs involving a prospective
change of taxation or exchange control (or the
implementation of exchange control) in Hong Kong or
elsewhere and if in the reasonable opinion of Tai Fook, any
such change or development would materially prejudice the
success of the Placing; or
(vi) any litigation or claim of material importance of any
third party being instigated against any member of the Group,
which has or may have a material effect on the business or
financial prospects of the Group and which in the reasonable
opinion of Tai Fook would materially prejudice the success
of the Placing.
PLACING AGREEMENT DATED 17TH FEBRUARY, 2000 (THE "PLACING
AGREEMENT")
Placing agent and underwriter:
Tai Fook is the placing agent and underwriter and will
receive a placement commission of 2.5% on the gross proceeds
of the Placing. Tai Fook is independent of, not connected
with and not acting in concert with the directors, chief
executive or substantial shareholder of the Company, and any
of their subsidiaries or any of their respective associates
(as defined in the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the "Listing
Rules" and the "Stock Exchange" respectively)).
Placees:
More than six placees (independent individual and
institutional investors) will be independent of, not
connected with and not acting in concert with the directors,
chief executive or substantial shareholder of the Company,
and any of their subsidiaries or any of their respective
associates (as defined in the Listing Rules).
Placing price:
The placing price is HK$0.063 per Placing Share. This price
was agreed after arm's length negotiations and represents
(i) a discount of approximately 24.1% to the closing price
of HK$0.083 per Share quoted on the Stock Exchange on 17th
February, 2000; and (ii) a discount of approximately 23.45%
to the average closing price of approximately HK$0.0823 per
Share as quoted from the Stock Exchange from 2nd February,
2000 to 17th February, 2000, both dates inclusive, being the
last ten full trading days immediately before the issue of
this announcement.
Rights
The Placing Shares will on issue rank equally with the then
existing Shares.
Number of Shares to be placed
2,550,000,000 new Shares are to be placed, representing
approximately 20% of the existing issued share capital of
the Company of 12,752,707,704 Shares and approximately
16.66% of the issued capital of the Company as enlarged by
the Placing of 2,550,000,000 Shares. The Placing Shares are
fully underwritten by Tai Fook.
General Mandate:
The Placing Shares will be issued pursuant to the general
mandate to allot, issue and deal with Shares granted to the
directors of the Company by resolution of its shareholders
passed at the Company's general meeting held on 16th February,
2000.
Use of Proceeds
The net proceeds from the placement announced on 24th January,
2000 of HK$101 million was used as to approximately HK$10
million was used to repay debt, HK$10 million was provided
to China United Finance Limited, a wholly-owned subsidiary
of the Company and a licensed money-lender for general
working capital purposes, HK$75 million has been deposited
with banks (out of which HK$30 million will be used to repay
debts pending negotiations with bankers) and HK$5 million
was used for payment for a deposit for the acquisition of
TCM as described below.
The net proceeds from the Placing referred to herein of
approximately HK$150 million will be used as follows:-
(i) approximately HK$8 million will be used for completion
(which is subject to the satisfaction of certain conditions
e.g. due diligence) of the Company's investment in DBZ
Limited, details of which were referred to in the Company's
announcement dated 3rd January, 2000. Subject to
satisfaction of certain conditions, completion is expected
to take place within this month;
(ii) approximately HK$47 million (including the deposit of
HK$5 million, the total acquisition price is HK$52 million)
will be used for the possible acquisition of approximately
17% (subject to adjustment) of the issued share capital of
TCM-Online Incorporation ("TCM") a company incorporated in
the British Virgin Islands from two vendors (the "Vendors")
who are independent third parties not connected with the
directors, chief executives and substantial shareholders of
the Company and its subsidiaries or an associate (as defined
in the Rules Governing the Listing on the Stock Echange of
Hong Kong Limited) of any of them. Completion of this
transaction is subject to due diligence on TCM-Online
Incorporation to the satisfaction of the Company and the
Vendors having served notices of exercise of pre-emption
rights under the existing shareholder agreement. If the
Vendors elect to exercise the pre-emption rights, the shares
in TCM to be sold to the Company shall be reduced by the shares
acquired by the Vendors. The consideration was determined
based on arms length negotiations between the Vendors and
the Company with reference to other available business
opportunities in the market. TCM is engaged in the
development of web sites relating to traditional chinese
medicine on the internet. The Company will make an
announcement on completion of this transaction, which is
expected to take place within this month, subject to
satisfaction of certain conditions;
(iii) the balance of approximately HK$95 million shall
be used as to half for repayment of debts of the Company and
the balance for general working capital purposes should
opportunities arise to improve the business mix of the
Company by diversifying from its existing business of
property investments in Hong Kong and the PRC. The Company
is not in negotiations in relation to such opportunities as
at the date hereof.
As at the date hereof the Company's indebtedness is
approximately HK$480 million of which HK$53 million are bank
debts due within one year and the balance are long term debts.
Condition of the Placing
The Placing is conditional upon the Listing Committee of the
Stock Exchange granting listing of, and permission to deal
in, the Placing Shares ("Condition").
Force majeure
The Placing is subject to rescission on the occurrence of
certain events before 10:00 a.m. on the date for completion
of the Placing Agreement, including:-
(i) the occurrence of any event, development or change
(whether or not local, national or international or forming
part of a series of events, developments or changes occurring
or continuing before, on and/or after the date hereof) and
including an event or change in relation to or a development
of an existing state of affairs of a political, military,
industrial, financial, economic, fiscal, regulatory or
other nature, whether or not sui generis with any of the
foregoing, resulting in a material adverse change in, or
which may be result in a material adverse change in,
political, economic, fiscal, financial, regulatory or stock
market conditions and which in the reasonable opinion of Tai
Fook would materially prejudice the success of the Placing;
or
(ii) the imposition of any moratorium, suspension or
material restriction on trading in securities generally on
the Stock Exchange occurring due to exceptional financial
circumstances or otherwise and which in the reasonable
opinion of Tai Fook, would materially prejudice the success
of the Placing; or
(iii) any change in conditions of local, national or
international securities markets occurs which in the
reasonable opinion of Tai Fook would materially prejudice
the success of the Placing; or
(iv) any new law or regulation or change in existing laws or
regulations or any change in the interpretation or
application thereof by any court or other competent
authority in the Hong Kong or any other jurisdiction relevant
to the Company and its subsidiaries (together, the "Group")
and if in the reasonable opinion of Tai Fook any such new
law or change would materially and adversely affect the
business or financial prospects of the Group and/or
materially prejudice the success of the Placing; or
(v) a change or development occurs involving a prospective
change of taxation or exchange control (or the
implementation of exchange control) in Hong Kong or
elsewhere and if in the reasonable opinion of Tai Fook, any
such change or development would materially prejudice the
success of the Placing; or
(vi) any litigation or claim of material importance of any
third party being instigated against any member of the Group,
which has or may have a material effect on the business or
financial prospects of the Group and which in the reasonable
opinion of Tai Fook would materially prejudice the success
of the Placing.
The Directors are not aware of the occurrence of any of such
events as at the date of this announcement.
Completion
The Placing is to be completed two business days after
satisfaction of the condition. The Placing Agreement will
lapse if the Condition is not satisfied by 9th March, 2000
unless the parties agree otherwise.
Application for listing
Application will be made by the Company to the Stock Exchange
for listing of and permission to deal in the Placing Shares.
As at the date hereof and accordingly to the register
maintained by the Company pursuant to the Securities
(Disclosures of Interests) Ordinance, the Company has no
substantial or controlling shareholders.
Reason for the Placing
In view of the current market conditions the directors of
the Company consider that the Placing represents an
opportunity to raise capital for the Company while
broadening the shareholder base and the capital base of the
Company.
The Directors may make, or put proposals to shareholders for,
further significant issues of shares by the Company to
further strengthen the financial position and improve the
business mix of the Company by diversifying from the existing
business of property investment in Hong Kong, and the PRC
should an opportunity arise. The Company has not identified
the area of diversification as at the date hereof. However
no concrete plans or definite agreements has been reached
or made. Investors are advised to exercise caution in dealing
in the Company's securities. At this present time, the
Directors have not entered into any negotiations.
By order of the board of directors of
China United Holdings Limited
Chung Wilson
Managing Director
Hong Kong, 17th February, 2000
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