UNDERWRITING
PUBLIC OFFER UNDERWRITERS
CNI Securities Group Limited
10th Floor, Sun’s Group Centre
200 Gloucester Road
Wanchai, Hong Kong
TC Capital Asia Limited
Suites 1903–1904, 19th Floor
Tower 6, The Gateway
Harbour City
9 Canton Road
Tsim Sha Tsui
Kowloon, Hong Kong
UNDERWRITING ARRANGEMENTS AND EXPENSES
The Public Offer
Public Offer Underwriting Agreement
Our Company, Controlling Shareholders (including the Vendor), executive Directors and
the Public Offer Underwriters have entered into the Public Offer Underwriting Agreement. As
described in the Public Offer Underwriting Agreement, we are offering the Public Offer
Shares for subscription on the terms and conditions of this prospectus and the Application
Forms at the Offer Price. Subject to the Listing Committee granting the listing of, and
permission to deal in, our Shares in issue and to be issued, and to certain other conditions
described in the Public Offer Underwriting Agreement (including the Joint Lead Managers
(on behalf of themselves and the Public Offer Underwriters) and us (on behalf of ourselves
and the Vendor) agreeing to the Offer Price), the Public Offer Underwriters have agreed
severally to subscribe, or procure subscribers to subscribe, for the Public Offer Shares which
are being offered but not taken up under the Public Offer on the terms and subject to the
conditions of the Public Offer Underwriting Agreement.
The Public Offer Underwriting Agreement is conditional upon and subject to, amongst
other things, the Placing Underwriting Agreement having been signed and becoming
unconditional.
Grounds for termination
If at any time prior to 8:00 a.m. on the Listing Date:
(a) there comes to the notice of the Joint Lead Managers (on behalf of themselves and
the Public Offer Underwriters):
(i)
any new law or regulation in Hong Kong, the BVI and the Cayman Islands
comes into force, or there is any change in existing law or regulation in Hong
Kong, the BVI and the Cayman Islands, or any change in the interpretation or
application thereof by any court or other competent authority in Hong Kong,
the BVI and the Cayman Islands; or
(ii) there is any material adverse change (including any event or series of events
concerning or relating to or otherwise having an effect on) in Hong Kong
financial, political, military, industrial, fiscal, legal, regulatory, economic or
market conditions, stock or financial market conditions; or
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(iii) there is any material adverse change in the conditions of the Hong Kong
securities markets including, for the avoidance of doubt, any significant
adverse change in the index level or value of turnover of such markets; or
(iv) without prejudice to sub-paragraph (ii), (iii) and (v) above, there is imposed
any moratorium, suspension on trading in securities generally on the Stock
Exchange due to exceptional financial circumstance, or minimum prices
having been established for securities traded in general thereon; or
(v) without prejudice to sub-paragraph (ii), (iii) and (iv) above, a general banking
moratorium is declared by Hong Kong authorities; or
(vi) there is a material adverse change or development involving a prospective
material adverse change in taxation or exchange controls in Hong Kong, the
BVI, or the Cayman Islands; or
(vii) there is any material investigation or litigation or claim being threatened or
instituted against any executive Director or member of our Group or the
Vendor; or
(viii) there is any event or series of event of force majeure (including, but without
limitation, any act of God, war, riot, public disorder, civil commotion, fire,
flood, explosion, epidemic, terrorism, strike, lockout, or outbreak of other
diseases); or
(ix) any statement contained in this prospectus and any announcement or circular
published by our Company in relation to the Share Offer was, when any of such
documents was issued, or has become, untrue, incorrect or misleading in any
material respect; or
(x) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, constitute a
material omission therefrom in the context of the Share Offer or the Listing; or
(xi) a contravention by any member of our Group or the Vendor of the Companies
Ordinance, the SFO, or any of the Listing Rules; or
(xii) a prohibition on our Company and the Vendor from allotting or selling the
Shares pursuant to the terms of the Share Offer under applicable laws; or
(xiii) a petition is presented or an order is made for the winding up or liquidation of
any member of our Group or the Vendor, or any member of our Group or the
Vendor makes any composition or arrangement with its creditors or enters into
a scheme of arrangement or any resolution is passed for the winding-up of any
member of our Group or the Vendor or a provisional liquidator, receiver or
manager is appointed over all or part of the assets or undertaking of any
member of our Group or the Vendor or anything analogous thereto occurs in
respect of any material member of our Group or the Vendor,
which in the sole and reasonable opinion of the Joint Lead Managers (for
themselves and the Public Offer Underwriters) has or will have a material adverse
effect on the business or financial conditions or prospects of our Group taken as a
whole or to the success of the Share Offer or the distribution of the Offer Shares, or
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UNDERWRITING
(b) any of the Joint Lead Managers, any of the Joint Bookrunners, the Sponsor or any of
the Underwriters becomes aware, or has reasonable cause to believe that:
(i)
there has occurred any breach which is material and adverse in the context of
the Share Offer or the Listing, of any of the obligations and provisions (save
for those from the Joint Lead Managers, the Joint Bookrunners, the Sponsor
and/or any of the Underwriters) contained in the Public Offer Underwriting
Agreement; or
(ii) there has occurred any material adverse change in the business or in the
financial or trading positions or prospects of any member of our Group taken as
a whole which is material and adverse in the context of the Share Offer and the
Listing,
then and in any such case, any of the Joint Lead Managers (for itself and on behalf of the
Public Offer Underwriters) shall have the sole right upon giving notice in writing to our
Company at any time prior to 8:00 a.m. on the Listing Date to terminate their obligations
under the Public Offer Underwriting Agreement.
UNDERTAKINGS GIVEN TO THE STOCK EXCHANGE PURSUANT TO THE
LISTING RULES
Undertaking by our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock Exchange
that no further Shares or securities convertible into our equity securities (whether or not of a
class already listed) may be issued by us or form the subject of any agreement to such an issue
by us within six months from the Listing Date (whether or not such issue of Shares or our
securities will be completed within six months from the commencement of dealing), except in
any of the circumstances provided for under Rule 10.08 of the Listing Rules or pursuant to the
Share Offer.
Undertaking by our Controlling Shareholders
Pursuant to Rule 10.07(1) of the Listing Rules, our Controlling Shareholders have,
jointly and severally, undertaken to the Stock Exchange and our Company that, save as
permitted under the Listing Rules:
(a) in the period commencing on the date by reference to which disclosure of their
shareholding is made in this prospectus and ending on the date which is six months
from the Listing Date (the “First Six-month Period”), they shall not dispose of, or
enter into any agreement to dispose of, or otherwise create any options, rights,
interests, or encumbrances in respect of, any of our Shares in respect of which they
are shown in this prospectus to be the beneficial owner; and
(b) in the period of six months commencing on the date which the First Six-month
Period expires (the “Second Six-month Period”), they shall not dispose of, nor
enter into any agreement to dispose of, or otherwise created any options, rights,
interests or encumbrances in respect of, any of the Shares, if immediately following
such disposal or upon the exercise or enforcement of such options, rights, interests
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UNDERWRITING
or encumbrances, they would then cease to be a controlling shareholder (as defined
in the Listing Rules) of our Company.
Our Controlling Shareholders have, jointly and severally, undertaken to the Stock
Exchange and our Company that within the First Six-month Period and the Second Six-month
Period, they will:
(i)
when they pledge or charge any Shares beneficially owned by them in favour of an
authorised institution (as defined in the Banking Ordinance (Chapter 155 of the
Laws of Hong Kong)) pursuant to Note 2 to Rule 10.07(2) of the Listing Rules,
immediately inform our Company in writing of such pledge or charge together with
the number of Shares so pledged or charged; and
(ii) when they receive indications, either verbal or written, from the pledgee or chargee
of any Shares that any of the pledged or charged Shares will be disposed of,
immediately inform our Company in writing of such indications.
We will also inform the Stock Exchange as soon as we have been informed of any of the
matters referred to above (if any) by our Controlling Shareholders and disclose such matters in
accordance with the publication requirements under Rule 2.07C of the Listing Rules as soon
as possible after being so informed by our Controlling Shareholders.
UNDERTAKINGS PURSUANT TO THE PUBLIC OFFER UNDERWRITING
AGREEMENT
Undertaking by our Company
We have undertaken to the Sponsor, the Joint Lead Managers, the Joint Bookrunners and
the other Public Offer Underwriters pursuant to the Public Offer Underwriting Agreement
that, except pursuant to the Share Offer or grant of options or issue of our Shares upon
exercise of such options pursuant to the Share Option Scheme, we will not without the prior
written consent of the Joint Lead Managers and the Joint Bookrunners (for themselves and on
behalf of the other Public Offer Underwriters) and unless in compliance with the requirements
of the Listing Rules, at any time during the First Six-month Period, offer, allot, issue or sell, or
agree to allot, issue or sell, grant or agree to grant any option, right, warrant or other rights to
subscribe for any Shares or other securities of our Company over, or otherwise dispose of (or
enter into any transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by our Company or any of its subsidiaries), either directly or
indirectly, conditionally or unconditionally, any Shares or any securities convertible into or
exchangeable for such Shares or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of subscription or ownership
of Shares or such securities, whether any of the foregoing transactions is to be settled by
delivery of Shares or such securities, in cash or otherwise or announce any intention to effect
any such transaction, and we further agree that, during the Second Six-month Period, we will
not carry out any of the above transactions the completion of which would result in any of our
Controlling Shareholders ceasing to be a controlling shareholder (as defined in the Listing
Rules) of our Company.
Undertaking by our Controlling Shareholders and executive Directors
Each of our Controlling Shareholders has respectively undertaken to the Sponsor, the
Joint Bookrunners, the other Public Offer Underwriters and our Company that:
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UNDERWRITING
(a) during the First Six-month Period, he/she/it shall not, and shall procure that the
relevant registered holder(s) and his/her/its close associates and companies
controlled by him/her/it and any nominee or trustee holding in trust for
himself/herself/itself shall not, without the prior written consent of the Joint Lead
Managers and the Joint Bookrunners or otherwise in compliance with the
requirements of the Listing Rules:
(i)
offer, pledge, charge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant or agree to grant any
option, right or warrant to purchase or subscribe for, lend or otherwise transfer
or dispose of, either directly or indirectly, any of the Shares or any securities
convertible into or exercisable or exchangeable for, or that represent the right
to receive any such Shares or such securities; or
(ii) enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of such Shares,
whether any of the foregoing transactions is to be settled by delivery of Shares
or such other securities, in cash or otherwise; or
(iii) agree (conditionally or unconditionally) to enter into or effect any transaction
with the same economic effect as any of the transactions referred to in
paragraphs (i) or (ii) above; or
(iv) announce any intention to enter into or effect any of the transactions referred to
in paragraphs (i), (ii) or (iii) above except in the event of any of our Controlling
Shareholders using securities of our Company beneficially owned by him/it as
security (including a charge or pledge) in favour of any authorised institution
(as defined in the Banking Ordinance of the laws of Hong Kong) for a bona fide
commercial loan or such other circumstances as permitted under the Listing
Rules;
(b) he/she/it shall not, and shall procure that the relevant registered holder(s) and
his/her/its close associates or companies controlled by him/her/it and any nominee
or trustee holding in trust for himself/herself/itself shall not, without the prior
written consent of the Stock Exchange during the Second Six-month Period
commencing on the expiry of the First Six-month Period set out in paragraph (i)
above, dispose of, nor enter into any agreement to dispose of or otherwise create any
options, rights, interests or encumbrances in respect of, any Shares held by
him/her/it or any of his/her/its close associates or companies controlled by
him/her/it or any nominee or trustee holding in trust for himself/herself/itself if,
immediately following such disposal or upon the exercise or enforcement of such
options, rights, interests or encumbrances, he/she/it would cease to be controlling
shareholder (as defined in the Listing Rules) of our Company or the aggregate
interest of all members of our Controlling Shareholders would be less than 30% of
our Company’s issued share capital except in the event of any of our Controlling
Shareholders using securities of our Company beneficially owned by him/her/it as
security (including a charge or pledge) in favour of any authorised institution (as
defined in the Banking Ordinance of the laws of Hong Kong) for a bona fide
commercial loan or such other circumstances as permitted under the Listing Rules;
and
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UNDERWRITING
(c) in the event of a disposal of any Shares or securities of our Company or any interest
therein within the Second Six-month Period, he/she/it shall take all reasonable steps
to ensure that such a disposal shall not create a disorderly or false market for any
Shares or other securities of our Company.
Each of our Controlling Shareholders undertakes to the Sponsor, the Joint Bookrunners,
the other Public Offer Underwriters and our Company that within the First Six-month Period
and the Second Six-month Period, he or she or it shall:
(a) if and when he or she or it pledges or charges, directly or indirectly, any Shares or
other securities of our Company beneficially owned by him or she or it (or any
beneficial interest therein), immediately inform our Company, the Joint Lead
Managers and the Joint Bookrunners in writing of such pledge or charge together
with the number of such Shares or other securities so pledged or charged; and
(b) if and when he or she or it receives indications, either verbal or written, from any
pledgee or chargee that any Shares or other securities in our Company (or any
beneficial interest therein) pledged or charged by him or her or it will be disposed
of, immediately inform our Company, the Joint Lead Managers and the Joint
Bookrunners in writing of such indications.
Placing
Placing Underwriting Agreement
In connection with the Placing, our Controlling Shareholders (including the Vendor),
executive Directors and our Company expect to enter into the Placing Underwriting
Agreement with the Joint Lead Managers and the Placing Underwriters, on the terms and
conditions that are substantially similar to the Public Offer Underwriting Agreement as
described above and on the additional terms described below.
Under the Placing Underwriting Agreement, subject to the conditions set forth therein,
the Placing Underwriters are expected to severally, but not jointly, agree to procure
subscribers to subscribe for, or failing which they shall subscribe for, 514,800,000 Placing
Shares (comprising 228,800,000 new Shares and 286,000,000 Sale Shares) initially being
offered pursuant to the Placing. It is expected that the Placing Underwriting Agreement may
be terminated on similar grounds as the Public Offer Underwriting Agreement. Potential
investors shall be reminded that in the event that the Placing Underwriting Agreement is not
entered into, the Share Offer will not proceed. The Placing Underwriting Agreement is
conditional on and subject to the Public Offer Underwriting Agreement having been executed,
becoming unconditional and not having been terminated. It is expected that pursuant to the
Placing Underwriting Agreement, our Company and our Controlling Shareholders will make
similar undertakings as those given pursuant to the Public Offer Underwriting Agreement as
described in the paragraph headed “Undertakings pursuant to the Public Offer Underwriting
Agreement” above.
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UNDERWRITING
EXPENSES
Total commission, fee and expenses
In connection with the Share Offer, the Joint Lead Managers and the other Underwriters
will receive an underwriting commission of 2.0% of the aggregate Offer Price of all the Offer
Shares, out of which they will pay any sub-underwriting commissions and selling
concessions. The underwriting commission was determined between our Company and the
Underwriters after arm’s length negotiations with reference to current market conditions.
In connection with the Listing, the Sponsor will receive a sponsorship and
documentation fee.
Assuming the Offer Price of HK$0.25 per Share (being the mid-point of the indicative
Offer Price range stated in this prospectus), the total expenses in connection with the Listing
and the Share Offer are estimated to be approximately HK$21.6 million (including
underwriting commission, brokerage, the Stock Exchange trading fee, the SFC transaction
levy, the sponsorship and documentation fee, the listing fee, the legal and other professional
fees, printing cost and other expenses relating to the Share Offer) of which approximately
HK$10.8 million and HK$10.8 million shall be borne by our Company and the Vendor,
respectively.
Our Company has agreed to indemnify the Joint Lead Managers and the other
Underwriters for certain losses which they may suffer, including losses incurred arising from
their performance of their obligations under the Underwriting Agreements, and any breach by
our Company of the Underwriting Agreements.
INDEPENDENCE OF THE SPONSOR
The Sponsor satisfies the independence criteria applicable to sponsors set forth in Rule
3A.07 of the Listing Rules.
Sponsor’s, Joint Lead Managers’ and Underwriters’ interest in our Company
The Sponsor has been appointed as the compliance adviser of our Company with effect
from the Listing Date until despatch of the audited consolidated financial results for the first
full financial year after the Listing Date, and our Company will pay to the Sponsor an agreed
fee for its provision of services with the scope required under the Listing Rules.
Save for their interests and obligations under the Underwriting Agreements and the
advisory and documentation fee payable to the Sponsor in respect of the Share Offer, none of
the Sponsor, the Joint Lead Managers and the Underwriters is interested beneficially or
non-beneficially in any shares in any member of our Group or has any right (whether legally
enforceable or not) or option to subscribe for or to nominate persons to subscribe for any
shares in any member of our Group.
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