Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited
take no responsibility for the contents of this announcement, make no representation as to
its accuracy or completeness and expressly disclaim any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the contents of this
announcement.
This announcement appears for information only and does not constitute an invitation or offer
to acquire, purchase or subscribe for securities of Arnhold Holdings Limited.
ARNHOLD HOLDINGS LIMITED
安利控股有限公司*
DELIGHT MAX LIMITED
(Incorporated in British Virgin Islands with limited liability)
(Incorporated in Bermuda with limited liability)
(Stock Code: 102)
(I) POSSIBLE UNCONDITIONAL MANDATORY
GENERAL CASH OFFER BY
ACCESS CAPITAL LIMITED
ON BEHALF OF DELIGHT MAX LIMITED
FOR ALL THE ISSUED SHARES IN
ARNHOLD HOLDINGS LIMITED
(OTHER THAN THOSE ALREADY OWNED BY OR
AGREED TO BE ACQUIRED BY DELIGHT MAX LIMITED AND
PARTIES ACTING IN CONCERT WITH IT);
(II) SPECIAL DEAL AND MAJOR AND
CONNECTED TRANSACTION IN RELATION TO THE DISPOSAL
OF ASSETS BY ARNHOLD HOLDINGS LIMITED;
(III) PROPOSED DISTRIBUTION OF SPECIAL DIVIDEND;
(IV) SPECIAL DEAL AND
CONTINUING CONNECTED TRANSACTION
OF ARNHOLD HOLDINGS LIMITED;
(V) CAPITAL REORGANISATION; AND
(VI) RESUMPTION OF TRADING IN SHARES OF
ARNHOLD HOLDINGS LIMITED
Financial adviser to Delight Max Limited
Financial adviser to Arnhold Holdings Limited
SOMERLEY LIMITED
THE SHARE TRANSFER AGREEMENT
The Board has been informed by the Vendors that the Vendors entered into the Share
Transfer Agreement with the Offeror on 20 December 2010, pursuant to which the Vendors
have conditionally agreed to sell and the Offeror has conditionally agreed to purchase the
* For identification purpose only
1
Green Shares, free from all encumbrances and together with all rights now or hereafter
attaching to them, including all rights to any dividend or other distribution declared,
made or paid on or after the Share Transfer Completion Date, excluding, however, the
Proposed Special Dividend, for a cash consideration of HK$203,678,813 (equivalent to
approximately HK$1.1681 per Green Share). The Green Shares represent approximately
73.76% of the issued share capital of the Company as at the date of this announcement or
approximately 73.27% of the issued share capital of the Company as enlarged by the issue
of the Shares upon full exercise of the Share Options, and the entire interest in the Company
owned by the Vendors as at the date of this announcement. The Share Transfer Agreement
is conditional upon the fulfillment of the Share Transfer Conditions as described in the
paragraph headed “The Share Transfer Conditions” below in this announcement.
The Share Transfer Agreement and the Disposal Agreement are inter-conditional with
each other. Share Transfer Completion is intended to take place simultaneously with
Disposal Completion.
POSSIBLE UNCONDITIONAL MANDATORY GENERAL CASH OFFER
Upon Share Transfer Completion, the Offeror Group will own 174,367,617 Shares,
representing approximately 73.76% of the issued share capital of the Company as at the
date of this announcement or approximately 73.27% of the issued share capital of the
Company as enlarged by the issue of the Option Shares upon full exercise of the Share
Options. Under Rules 13 and 26.1 of the Takeovers Code, the Offeror will be required to
make an unconditional mandatory general cash offer for all the Shares not already owned
or agreed to be acquired by the Offeror Group and to make an appropriate offer for all the
Share Options upon Share Transfer Completion.
The Offer Price will be HK$1.1681 per Offer Share, which is equal to the price per Green
Share payable under the Share Transfer Agreement.
2
OTHER ARRANGEMENTS IN RESPECT OF THE OFFERS
As at the date of this announcement, Mr. Daniel George Green, an executive Director and
a substantial Shareholder, is interested in the Share Options with respect to the Option
Shares and with an exercise price of HK$1.49 per Share Option. Under the Share Transfer
Agreement, Mr. Daniel George Green has agreed to exercise his Share Options prior to
Completions so long as the public float of the Company is maintained and tender such
Option Shares and remaining Share Options (if any) for acceptance under the Offers. Save
for the aforesaid, there are no other arrangements in relation to shares of the Offeror or the
Shares and which might be material to the Offers.
DESPATCH OF COMPOSITE OFFER DOCUMENT
Pursuant to Rule 8.2 of the Takeovers Code, the Offeror is required to despatch an offer
document containing the terms of the Offers, together with the Form of Acceptance, to
the Shareholders within 21 days of the date of this announcement, or such later date as
the Executive may approve. It is the intention of the respective boards of directors of the
Offeror and the Company to combine the offer document and the offeree board circular
into a composite offer and response document. Such composite document (accompanied
by the Form of Acceptance) in connection with the Offers setting out, inter alia, details
of the Offers and incorporating the respective letters of advice from the Independent
Board Committee and the Independent Financial Adviser on the Offers will be issued and
despatched by the Offeror and the Company jointly to the Shareholders in accordance
with the Takeovers Code. Given that the Offers are subject to the completion of the Group
Reorganisation, Capital Reorganisation, Disposal Completion, Share Transfer Completion
and the payment of the Proposed Special Dividend becoming unconditional, it is expected
that the Offers may not take place within 21 days of the date of this announcement. As
such, an application will be made to the Executive in respect of Note 2 to Rule 8.2 of the
Takeovers Code for its consent to extend the date of posting of the composite offer and
response document to the Shareholders within 7 days of Share Transfer Completion or 7
April 2011, whichever is the earlier. The Share Transfer Completion Date is expected to be
on or before 31 March 2011. Further announcement(s) in this respect will be made, as and
when necessary.
3
Further announcement(s) regarding the despatch of the composite offer and response
document will be made in due course. Independent Shareholders are encouraged to read the
composite offer and response document carefully, including the advice of the Independent
Financial Adviser to the Independent Board Committee and the recommendation from the
Independent Board Committee to the Independent Shareholders in respect of the Offers,
before deciding whether or not to accept the Offers.
WARNING: Shareholders and potential investors of the Company should note
that the Offers may or may not be materialised as the Share Transfer Agreement
is conditional upon the satisfaction or (if applicable) waiver of the Share Transfer
Conditions and that the making of the Offers is subject to Share Transfer Completion.
Accordingly, the Shareholders and potential investors of the Company should exercise
caution when dealing in the Shares. If Shareholders and potential investors have any
doubt about their position, they should consult their professional advisers. Further
announcement(s) will be made by the Offeror and the Company regarding the Offers
as and when appropriate.
MAJOR AND CONNECTED TRANSACTION
On 20 December 2010, the Company has entered into the Disposal Agreement, pursuant
to which Green Motherlode has conditionally agreed to purchase and the Company has
conditionally agreed to sell the entire issued share capital of the Disposal Company, free
from all encumbrances and together with all rights now or hereafter attaching to them,
including all rights to any dividend or other distribution declared, made or paid on and after
the Disposal Completion Date. Major terms of the Disposal Agreement are described in the
section headed “The Disposal Agreement” below in this announcement.
The Disposal Consideration of HK$149 million (subject to adjustment) was determined
after arm’s length negotiation between the Company and Green Motherlode with reference
to the consolidated net asset value of the Disposal Group and adjusted for the market value
of the properties held by the Disposal Group. The Disposal Consideration will be satisfied
in cash.
4
Green Motherlode is owned as to 50% by Green Family Holdings Limited, which is in turn
wholly owned by Mr. Michael John Green, who is a Director and a substantial Shareholder,
and as to 50% by Mrs. Judith Leslie Green, the spouse of Mr. Michael John Green, and
Green Motherlode is therefore a connected person of the Company. As the applicable
percentage ratios in respect of the Disposal exceed 25% but below 75%, the Disposal
constitutes a major and connected transaction for the Company pursuant to the Listing
Rules.
The Share Transfer Agreement and the Disposal Agreement are inter-conditional with
each other. Share Transfer Completion is intended to take place simultaneously with
Disposal Completion.
CONTINUING CONNECTED TRANSACTION
Upon completion of the Group Reorganisation and upon Disposal Completion and as an
interim measure to ensure smooth transition of the Remaining Group to a new controlling
shareholder, the Remaining Group and the Disposal Group will enter into the Lease
Agreement pursuant to which the Remaining Group will lease some office space at premises
owned by the Disposal Group upon Disposal Completion.
The entering into of the Lease Agreement will constitute a continuing connected transaction
for the Company as the Disposal Company upon Disposal Completion will be owned as
to 50% by Green Family Holdings Limited which is in turn wholly owned by Mr. Michael
John Green, who is a substantial Shareholder and a Director and also 50% owned by Mrs.
Judith Leslie Green, the spouse of Mr. Michael John Green and thus a connected person
of the Company as at the date of this announcement. In addition, any time on and after
Disposal Completion, Mr. Michael John Green will continue to be a connected person
of the Company by way of his capacity as Director within the preceding twelve months
pursuant to the Listing Rules. As each of the applicable percentage ratios as defined under
the Listing Rules in respect of the Continuing Connected Transaction is less than 0.10%, the
Continuing Connected Transaction will exempt from the reporting, announcement and the
independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.
5
SPECIAL DEAL CONSENTS
The Disposal and the Continuing Connected Transaction constitute special deals on the
part of the Company under Rule 25 of the Takeovers Code and require the consents of the
Executive. Such consents, if granted, will be subject to the Independent Financial Adviser
publicly stating that in its opinion the respective terms of the Special Deals are fair and
reasonable; and the approval of the Special Deals by the SD Independent Shareholders
by way of poll at the SGM. Shareholders including (i) Green Motherlode, its associates
and parties acting in concert with any of them, including Messrs. Green and other family
members of Messrs. Green; (ii) the Offeror Group, if the Offeror and/or associates will
have any shareholding in the Company; and (iii) any Shareholders who are involved in or
interested in the Special Deals or any transactions contemplated therein will abstain from
voting on the proposed resolutions in respect of the Special Deals at the SGM.
The Company will make an application to the Executive for consents under Rule 25 of the
Takeovers Code in relation to the Special Deals.
PROPOSED SPECIAL DIVIDEND
The Board is also pleased to announce that, subject to and upon Disposal Completion
and the Capital Reorganisation becoming effective, it has resolved to recommend to the
Shareholders for approval at the SGM a declaration of a Proposed Special Dividend of not
less than HK$177 million (subject to finalisation).
Being one of the Share Transfer Conditions, the Offeror agreed that the Company will be
entitled to declare and pay the Proposed Special Dividend to each Qualifying Shareholders,
including, for the avoidance of doubt, the Vendors. The Board intends to apply the
estimated net proceeds received from the Disposal (after deducting all relevant expenses)
of approximately HK$143 million and any surplus cash of the Group for the payment of
the Proposed Special Dividend while maintaining sufficient cash resources for the Group to
operate the Remaining Group.
Based on 236,396,000 Shares in issue as at the date of this announcement and assuming the
outstanding 1,600,000 Share Options to be exercised in full by Mr. Daniel George Green on
or before the Record Date, the Qualifying Shareholders will receive the Proposed Special
Dividend in cash of not less than HK$0.7437 per Share (subject to finalisation).
6
The Proposed Special Dividend will be paid in cash out of the Company’s distributable
reserves (including those arising from the Capital Reorganisation) as substantially
contributed by the net proceeds to be received from the Disposal.
SUSPENSION AND RESUMPTION OF TRADING
At the request of the Company, trading in the Shares has been suspended with effect from
9:30 a.m. on Friday, 17 December 2010 pending release of this announcement. Application
has been made by the Company to the Stock Exchange for the resumption of trading in the
Shares with effect from 9:30 a.m. on Wednesday, 29 December 2010.
GENERAL
The Company will establish the Independent Board Committee to advise the Independent
Shareholders and the SD Independent Shareholders in relation to the terms and conditions
of the Offers and the Special Deals respectively. The Independent Board Committee will
appoint the Independent Financial Adviser to advise on these respects. Announcement will
be made upon the appointment of the Independent Financial Adviser in accordance with
Rule 2.1 of the Takeovers Code.
The Circular containing, among other things, (i) further details of the Group Reorganisation,
the Special Deals, the Capital Reorganisation and the Proposed Special Dividend; (ii) the
letter of recommendation from the Independent Board Committee and letter of advice from
the Independent Financial Adviser in respect of Special Deals; and (iii) a notice convening
the SGM is expected to be sent to the Shareholders on or before 18 January 2011.
THE SHARE TRANSFER AGREEMENT
Date
20 December 2010
Parties
(i)
The Vendors (as vendors)
(ii)
The Offeror (as purchaser)
7
The Offeror, its ultimate beneficial owners and the parties acting in concert with any of them
have confirmed that they and their respective associates are third parties independent of and
not connected with or acting or presumed to be acting in concert with the Company, the
Directors, the chief executive and substantial Shareholders or any of their subsidiaries or their
respective associates.
Green Shares
Pursuant to the Share Transfer Agreement, the Offeror has conditionally agreed to purchase
and the Vendors have conditionally agreed to sell the Green Shares, being the Vendors’
entire holding of 174,367,617 Shares, representing approximately 73.76% of the issued share
capital of the Company as at the date of this announcement or approximately 73.27% of the
issued share capital of the Company as enlarged by the issue of the Shares upon exercise of
outstanding Share Options in full, free from all encumbrances and together with all rights
now or hereafter attaching to them, including all rights to any dividend or other distribution
declared, made or paid on or after the Share Transfer Completion Date, excluding, however,
the Proposed Special Dividend.
Share Transfer Consideration
The consideration payable to the Vendors of HK$203,678,813 (equivalent to approximately
HK$1.1681 per Green Share) was negotiated and determined on an arm’s length negotiation
among the Offeror and the Vendors with reference to (i) the past and recent prices and trading
volume of the Shares on the Stock Exchange; and (ii) the value and future prospects of the
Remaining Group. The Share Transfer Consideration will be satisfied by internal resources of
the Offeror on the Share Transfer Completion Date.
The Share Transfer Consideration is payable by the Offeror in cash in the following manner:
1.
an escrow money of HK$10,000,000 has been paid to an escrow agent on the date of the
Share Transfer Agreement (to be released to the Vendors on Share Transfer Completion);
and
2.
the balance of HK$193,678,813 will be paid to the Vendors on the Share Transfer
Completion Date.
8
Share Transfer Conditions
Share Transfer Completion is conditional upon:
(a)
the passing of all necessary resolutions by the Shareholders (other than such
Shareholders who are required to abstain from voting at the SGM pursuant to the
requirements under the Takeovers Code and/or the Listing Rules) at the SGM by way
of a poll to approve (a) the Disposal Agreement and the transactions contemplated
thereunder; (b) the Capital Reorganisation; and (c) the declaration of the Proposed
Special Dividend;
(b)
the Executive granting “special deal” consent under Rule 25 of the Takeovers Code
in respect of the Disposal Agreement and the transactions contemplated thereunder in
accordance with applicable requirements under the Takeovers Code and any conditions
attaching to such consent becoming unconditional;
(c)
all the Disposal Conditions (except the Disposal Condition (f)) having been fulfilled or
waived, as applicable;
(d)
declaration of the Proposed Special Dividend, and payment of the Proposed Special
Dividend becoming unconditional;
(e)
the Shares remaining listed and traded on the Main Board at all times from the date of
the Share Transfer Agreement to and on the Share Transfer Completion Date, save for
(a) suspension due to any act or omission on the part of the Offeror; (b) suspension of
less than 10 consecutive Business Days in the period of 14 days immediately preceding
the Share Transfer Completion Date; and (c) suspension on account of clearance of any
announcements, circulars or any other documents in respect of any of the transactions
contemplated under the Share Transfer Agreement and the Offers;
(f)
no written or verbal indication or evidence of any indication having been received
on or before the Share Transfer Completion Date by any party to the Share Transfer
Agreement or the Company from the Stock Exchange or the SFC that the listing of the
Shares on the Main Board will be withdrawn, cancelled or revoked as a result of or in
connection with the transactions contemplated under the Share Transfer Agreement;
9
(g)
the warranties given or made by Messrs. Green pursuant to the Share Transfer
Agreement having remained true and accurate, and not misleading in all material
respects, at all times from the date of the Share Transfer Agreement up to and including
the Share Transfer Completion Date;
(h)
all other requisite consents, authorisations and approvals required to be obtained by the
Vendors and the Company from any authorities, third parties or otherwise (including but
not limited to banks) (or, as the case may be, the relevant waiver) in connection with the
entering into and performance of the terms of the Share Transfer Agreement having been
obtained by the Vendors and the Company (if applicable);
(i)
all other requisite consents, authorisations and approvals required to be obtained by the
Offeror from any authorities, third parties or otherwise in connection with the entering
into and performance of the terms of the Share Transfer Agreement having been obtained
by the Offeror (if applicable); and
(j)
the release and discharge of the Corporate Guarantees given by the Company in full
(subject only to conditions as provided for in such Corporate Guarantees).
In respect of the Share Transfer Condition (a), the Disposal Agreement and the transactions
contemplated thereunder will be subject to the SD Independent Shareholders’ approval, while
both the Capital Reorganisation and the declaration of the Proposed Special Dividend will be
subject to the Shareholders’ approval.
In respect of the Share Transfer Condition (j), it was stipulated in the Calyon Guarantee
that any release, discharge or settlement of the Calyon Guarantee between Calyon and the
Company shall be conditional upon no security, disposition or payment to Calyon by the
Company or any other person being avoided, reduced or required to be repaid pursuant to
any provisions or enactments relating to bankruptcy, liquidation, winding-up, insolvency or
circumstance analogous to the foregoing events (whether or not having the force of law) and,
in any such event, Calyon shall be entitled to recover the value or amount of any such security
or payment from the Company as if such release, discharge or settlement had not occurred.
10
Save that the Offeror may waive any of the Share Transfer Conditions (except Share Transfer
Conditions (a) to (d) and (h)) by notice in writing to the Vendors and such waiver may be
made subject to such terms and conditions as are determined by the Offeror, no party to the
Share Transfer Agreement may waive any of the Share Transfer Conditions. As at the date of
this announcement, the Offeror is not aware of any consent, authorisation or approval which is
required to be obtained from any authorities, third parties or otherwise in connection with the
entering into and performance of the terms of the Share Transfer Agreement.
Subject to the satisfaction or (if applicable) waiver of the Share Transfer Conditions as set out
above, Share Transfer Completion will take place on the Share Transfer Completion Date.
In the event any of the Share Transfer Conditions has not been fulfilled (or waived (as the case
may be) by the Offeror) prior to 31 March 2011 or such later date as the parties to the Share
Transfer Agreement may agree in writing, the Share Transfer Agreement will terminate and all
rights and obligations of the parties to the Share Transfer Agreement will cease to have effect
immediately upon such termination, and no party to the Share Transfer Agreement will have
any claim against or liability or obligation, except that termination will not affect the then
accrued rights and obligations of the parties to the Share Transfer Agreement.
Share Options
As at the date of this announcement, Mr. Daniel George Green, an executive Director and a
substantial Shareholder, is interested in the Share Options with respect to the Option Shares
with an exercise price of HK$1.49. Assuming the Share Options are exercised in full and
the public float of the Company is maintained, the issued share capital of the Company will
be increased by 1,600,000 Option Shares, which will account for approximately 0.67% of
the enlarged issued share capital of the Company. Under the Share Transfer Agreement, Mr.
Daniel George Green agreed to exercise such Share Options prior to Completions so long as
the public float of the Company is maintained and tender such Option Shares and remaining
Share Options (if any) for acceptance under the Offers.
Save as disclosed herein, there is no other relevant securities of the Company which are
convertible into the Shares.
11
Other major term of the Share Transfer Agreement
Messrs. Green warranted under the Share Transfer Agreement that, as at the Share Transfer
Completion Date, the consolidated net asset value of the Group (on the assumptions that the
Disposal Agreement has been completed and all sums payable thereunder have been settled)
shall not be less than HK$30,000,000 and the cash (free from all encumbrances) of the
Company shall not be less than HK$25,000,000. Pursuant to the Share Transfer Condition
(g), Share Transfer Completion is conditional upon, inter alia, these warranties remaining true
and accurate. At Share Transfer Completion, the Company will produce updated consolidated
management accounts of the Group and bank statement(s) of the Company to demonstrate that
these warranties remain true and accurate.
INFORMATION ON THE OFFEROR
The Offeror is a company incorporated in the BVI on 28 May 2010, with limited liability.
The Offeror has not commenced carrying on any business and is investment holding. As at the
date of the Share Transfer Agreement, the Offeror is owned by Quick Glitter Limited (a BVI
company wholly-owned by Mr. Ho Yau Lung, Lawrence) as to approximately 45.84%, Mr.
Wang John Peter Ben as to approximately 15.94%, Mr. Zhang Jian Hua as to approximately
9.96%, Mr. Ko Chun Fung, Henry as to approximately 8.33%, Mr. Xu Yi as to approximately
7.97%, Ms. Cheng Ho Yan as to approximately 4.00%, Mr. Tsang Cheong Wai, Edmund
as to approximately 1.99%, Mr. Chang Yun Wai as to approximately 1.99%, Mr. Yip Yuk
Kwan as to approximately 1.99% and Mr. Sun Chung Man as to approximately 1.99%. The
persons aforesaid make and hold their investments in their personal capacities. There is no
shareholders agreement entered into among the shareholders of the Offeror.
Save for entering into of the Share Transfer Agreement, the Offeror has not conducted any
business activities and has not acquired any other assets since its incorporation.
The owners and directors of the Offeror currently do not have any experience in the
Remaining Business. The Offeror intends to retain existing management staff of the
Remaining Group to manage the Remaining Business.
12
Mr. Ho Yau Lung, Lawrence is a well-known businessman in Hong Kong and Macau. He
holds executive office and directorship in a well-known US listed company (Melco Crown
Entertainment Limited) and a well-known Hong Kong listed company (Melco International
Development Limited) in the entertainment industry. In additional to other public offices and
duties, he is a Member of The Chinese People’s Political Consultative Conference, Shanghai
Committee and sits on the Board of Directors of the Community Chest. Mr. Ho has received
many accolades for his directorship and entrepreneurship, including the “Best CEO” awards
by Institutional Investor and Finance Asia and the “Directors of the Year Award” by the Hong
Kong Institute of Directors.
Mr. Wang John Peter Ben is a Chartered Accountant and has over 20 years of experience in
the financial and investment banking industry. Mr. Wang has held prominent positions in a
number of well-known financial companies. He currently holds non-executive directorships in
two Hong Kong listed companies (MelcoLot Limited and Oriental Ginza Holdings Limited),
and a US listed company (Melco Crown Entertainment Limited).
Mr. Zhang Jian Hua has substantial experience in business development and management
and had his own business in the civil engineering industry until September 2005. Mr. Zhang
is currently vice chairman and director of a Hong Kong listed company (EVA Precision
Industrial Holdings Limited).
Mr. Ko Chun Fung, Henry comes from a technology background and was an executive director
of a Hong Kong listed company (Star Telecom Group) in the early nineties. He has led various
high profile ventures in the telecom and information technology industries, and is currently
an executive director and chief executive officer of a Hong Kong listed company (MelcoLot
Limited).
Mr. Xu Yi has worked for an international bank and several property investment companies in
the PRC and has over 20 years of experience in commercial property investment, development
and management in the PRC.
Save for the personal relationships between certain shareholders of the Offeror and the
aforesaid listed companies, the Offeror has no relationship with such listed companies.
13
Prior to entering into the Share Transfer Agreement, none of the members of the Offeror
Group owned or had control or direction over any voting rights and/or rights over the Shares.
As at the date of this announcement, there are no voting rights or rights over the Shares:
(a)
which are owned or controlled or directed by the Offeror Group;
(b)
in respect of which save as disclosed in the paragraph headed “Other arrangements
in respect of the Offers” in this announcement, the Offeror Group has received an
irrevocable commitment to accept the Offers; and
(c)
in respect of which the Offeror Group holds convertible securities, warrants or options.
As at the date of this announcement, none of the members of the Offeror Group holds any
shares or any options, warrants, derivatives or securities convertible into Share. None of
members of the Offeror Group has dealt in any shares or any options, warrants, derivatives or
securities convertible into Share during the period commencing on the date falling six months
prior to the date of the announcement of the Company dated 17 November 2010 and up to the
date of this announcement.
There are no outstanding derivatives in respect of securities of the Company that have been
entered into by the Offeror Group. There are no arrangements (whether by way of option,
indemnity or otherwise) in relation to shares of the Offeror or the Company and which might
be material to the Offers, and no agreements or arrangements to which the Offeror is a party
which relate to the circumstances in which it may or may not invoke or seek to invoke a
precondition or a condition to the Offers.
The Offeror Group have not borrowed or lent any relevant securities (as defined in Note 4 to
Rule 22 of the Takeovers Code) in respect of securities in the Company.
INFORMATION ON THE GROUP
The Group is engaged in the distribution of building materials and engineering equipment
in Hong Kong and the PRC. The Group also wholly owns and operates a stone processing
facility in the PRC. As per the interim results of the Group as at 30 June 2010, the Group
currently focuses on higher value opportunities in its chosen segments and especially the retail
of plumbing fixtures and the manufacturing and export of building materials.
14
SHAREHOLDING STRUCTURE OF THE COMPANY
The table below shows the shareholding structure of the Company (i) as at the date of this
announcement; (ii) immediately after Share Transfer Completion assuming Mr. Daniel George
Green exercises his Share Options before the Record Date subject to the public float of the
Company is maintained; and (iii) immediately after Share Transfer Completion assuming
Mr. Daniel George Green exercises his Share Options in full before the Record Date, and on
the assumption that there is no change in shareholding except pursuant to the Share Transfer
Agreement and the Disposal Agreement.
Immediately after
Share Transfer
Completion assuming
Immediately after
Mr. Daniel George Green
Share Transfer
exercises his Share Options
Completion assuming
before the Record Date
Mr. Daniel George Green
subject to the public
exercises his Share Options
As at the date of
float of the Company
in full before the
this announcement
is maintained
Record Date
Approx.
The Vendors
Approx.
No. of Shares
percentage
No. of Shares
percentage
No. of Shares
percentage
174,367,617
73.76%
1,543,584
0.65%
1,600,000
0.67%
(Note 1)
Other Directors (Note 4)
Approx.
(Note 2)
(Note 3)
2,543,487
1.08%
2,543,487
1.07%
2,543,487
1.07%
–
0.00%
174,367,617
73.28%
174,367,617
73.27%
Public
59,484,896
25.16%
59,484,896
25.00%
59,484,896
24.99%
Total
236,396,000
100.00%
237,939,584
100.00%
237,996,000
100.00%
The Offeror Group
Notes:
1.
166,093,617 Shares are held through HSBC International Trustee Limited on behalf of the Michael Green
Family Trust, a discretionary trust, in which Mr. Daniel George Green has a beneficial interest. 1,272,000
Shares are owned by Mr. Michael John Green. 7,002,000 Shares are owned by Mr. Daniel George Green.
15
2.
Pursuant to the Share Transfer Agreement, Mr. Daniel George Green has agreed to exercise his Share
Options before Share Transfer Completion so long as the public float of the Company is maintained.
Assuming there are no other changes in the shareholding of the Company, Mr. Daniel George Green may
exercise the Share Options and own up to 1,543,584 Option Shares before the Record Date while the
public float of the Company is maintained.
3.
Assuming that Mr. Daniel George Green will be able to exercise all his Share Options immediately before
Record Date.
4.
Other Directors include all Directors except for Messrs. Green.
THE OFFERS
Immediately following Share Transfer Completion, the Offeror will own an aggregate of
174,367,617 Shares, representing approximately 73.76% of the issued share capital of the
Company or 73.27% of the issued share capital of the Company as enlarged by the issue
of the Shares upon exercise of outstanding Share Options in full (assuming there will be
no other change in the issued share capital of the Company subsequent to the date of this
announcement and up to Share Transfer Completion). In accordance with Rules 13 and 26.1
of the Takeovers Code, the Offeror will be required to make an unconditional mandatory
general cash offer for the Offer Shares and the Share Options (if any) upon Share Transfer
Completion.
Principal terms of the Share Offer
Upon Share Transfer Completion, Access Capital, on behalf of the Offeror, will make the
Share Offer to acquire the Offer Shares pursuant to Rule 26.1 of the Takeovers Code, on the
following basis:
For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$1.1681 in cash
As at the date of this announcement, there are a total of 236,396,000 Shares in issue. Save for
the 1,600,000 Share Options outstanding, as at the date of this announcement, the Company
has no outstanding securities, options, derivatives or warrants which are convertible or
exchangeable into the Shares and has not entered into any agreement for the issue of such
securities, options, derivatives or warrants of the Company.
16
Total Benefit receivable by the Shareholders under the Share Offer and the Proposed
Special Dividend
As stated in the section headed “Proposed Special Dividend” below in this announcement,
subject to Disposal Completion, the Company will apply the estimated net proceed of
approximately HK$143 million to be received from the Disposal and surplus cash of the
Company for the payment of the Proposed Special Dividend to all existing Shareholders
whose names appear on the register of members of the Company on the Record Date. The
Proposed Special Dividend amounts to not less than HK$177 million (subject to finalisation)
based on the number of Shares outstanding at the date of this announcement and assuming
the outstanding 1,600,000 Share Options to be exercised in full by Mr. Daniel George Green
on or before the Record Date, the Qualifying Shareholders will receive the Proposed Special
Dividend in cash of not less than HK$0.7437 per Share (subject to finalisation).
If Share Transfer Completion proceeds, the Vendors will receive an aggregate of
approximately HK$1.9118 per Share (before taxes and expenses) from the Proposed Special
Dividend (subject to the Shareholders’ approval at the SGM) and the Share Offer (the “Total
Benefit”). Shareholders are entitled to the Proposed Special Dividend whether or not
they accept the Share Offer during the offer period. The existing Shareholders will receive
the Total Benefit of approximately HK$1.9118 per Share (before taxes and expenses, if any)
from the Share Offer and the Proposed Special Dividend if Disposal Completion proceeds and
the Shareholders opt to accept the Share Offer in full.
Comparison of value
The Total Benefit of approximately HK$1.9118 per Offer Share receivable by the
Shareholders under the Proposed Special Dividend and the Share Offer represents:
(a)
a discount of approximately 21.33% to the closing price of HK$2.43 per Share as quoted
on the Stock Exchange on 16 December 2010, being the last trading day immediately
before the date of this announcement;
(b)
a premium of approximately 13.12% over the closing price of HK$1.69 per Share as
quoted on the Stock Exchange on 16 November 2010, being the last full trading day
immediately before the publication of the initial announcement regarding the Share
Transfer dated 17 November 2010 (the “Last Full Trading Day”);
17
(c)
a premium of approximately 23.66% over the average closing price of approximately
HK$1.546 per Share as quoted on the Stock Exchange for the last 10 trading days up to
and including the Last Full Trading Day;
(d)
a premium of approximately 25.20% over the average closing price of approximately
HK$1.527 per Share as quoted on the Stock Exchange for the 30 trading days up to and
including the Last Full Trading Day;
(e)
a premium of approximately 26.95% over the average closing price of approximately
HK$1.506 per Share as quoted on the Stock Exchange for the 90 trading days up to and
including the Last Full Trading Day; and
(f)
a premium of approximately 113.85% over the Company’s unaudited consolidated
net asset per Share of approximately HK$0.894 each based on the Group’s unaudited
consolidated net assets of approximately HK$211.3 million as at 30 June 2010 and
236,396,000 Shares in issue as at the date of this announcement.
The Share Offer price of HK$1.1681 per Offer Share receivable by the Shareholders under the
Share Offer represents:
(a)
a discount of approximately 51.93% to the closing price of HK$2.43 per Share as quoted
on the Stock Exchange on 16 December 2010, being the last trading day immediately
before the date of this announcement;
(b)
a discount of approximately 30.88% to the closing price of HK$1.69 per Share as quoted
on the Stock Exchange on the Last Full Trading Day;
(c)
a discount of approximately 24.44% to the average closing price of approximately
HK$1.546 per Share as quoted on the Stock Exchange for the last 10 trading days up to
and including the Last Full Trading Day;
18
(d)
a discount of approximately 23.50% to the average closing price of approximately
HK$1.527 per Share as quoted on the Stock Exchange for the 30 trading days up to and
including the Last Full Trading Day;
(e)
a discount of approximately 22.44% to the average closing price of approximately
HK$1.506 per Share as quoted on the Stock Exchange for the 90 trading days up to and
including the Last Full Trading Day; and
(f)
a premium of approximately 30.66% over the Company’s unaudited consolidated net
asset per Share of approximately HK$0.894 each based on the Group’s unaudited
consolidated net assets of approximately HK$211.3 million as at 30 June 2010 and
236,396,000 Shares in issue as at the date of this announcement.
Shareholders are entitled to the Proposed Special Dividend whether or not they accept
the Share Offer during the offer period. The Proposed Special Dividend of approximately
HK$0.7437 per Share receivable by the Shareholders under the Proposed Special Dividend
represents:
(a)
a discount of approximately 69.40% to the closing price of HK$2.43 per Share as quoted
on the Stock Exchange on 16 December 2010, being the last trading day immediately
before the date of this announcement;
(b)
a discount of approximately 55.99% to the closing price of HK$1.69 per Share as quoted
on the Stock Exchange on the Last Full Trading Day;
(c)
a discount of approximately 51.90% to the average closing price of approximately
HK$1.546 per Share as quoted on the Stock Exchange for the last 10 trading days up to
and including the Last Full Trading Day;
(d)
a discount of approximately 51.30% to the average closing price of approximately
HK$1.527 per Share as quoted on the Stock Exchange for the 30 trading days up to and
including the Last Full Trading Day;
19
(e)
a discount of approximately 50.62% to the average closing price of approximately
HK$1.506 per Share as quoted on the Stock Exchange for the 90 trading days up to and
including the Last Full Trading Day; and
(f)
a discount of approximately 16.81% to the Company’s unaudited consolidated net asset
per Share of approximately HK$0.894 each based on the Group’s unaudited consolidated
net assets of approximately HK$211.3 million as at 30 June 2010 and 236,396,000
Shares in issue as at the date of this announcement.
Highest and lowest price
The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during
the six-month period preceding 16 November 2010, being the last full trading day of the
Shares on the Stock Exchange prior to the announcement of the Company dated 17 November
2010 relating to, among other things, a possible change in control of the Company, which is
price-sensitive in nature, were HK$1.69 per Share on 16 November 2010 and HK$1.30 per
Share on 24 May 2010, 25 May 2010 and 26 May 2010 respectively.
Option Offer
As at the date of this announcement, there are 1,600,000 Share Options outstanding, which
may confer rights to Mr. Daniel George Green to subscribe for the Option Shares at HK$1.49
per Share Option subject to the public float of the Company is maintained. As those Share
Options with exercise price higher than the Offer Price, the cash payment under the Option
Offer for the cancellation of those Share Options will be a nominal amount of HK$0.001 for
each Share Option.
The Option Offer will be made, together with the Share Offer, upon Share Transfer
Completion. Mr. Daniel George Green is entitled to both the Proposed Special Dividend, if his
Share Options are exercised on or before the Record Date, and the Offer Price of HK$1.1681
per Share if he accepts the Share Offer in full and Share Transfer Completion proceeds.
20
Total consideration of the Offers
On the basis of 236,396,000 Shares in issue as at the date of this announcement and assuming
the outstanding 1,600,000 Share Options to be exercised in full by Mr. Daniel George Green
on or before the Record Date, the Share Offer based on the Offer Price and the Total Benefit
value the equity value of the Company at approximately HK$278.0 million and HK$455.0
million respectively. Assuming that the Share Offer is accepted in full by the Shareholders and
on the basis that there will be 63,628,383 Offer Shares at Share Transfer Completion, the total
amount of cash required to effect the Share Offer will be approximately HK$74.3 million.
On the basis of 236,396,000 Shares in issue as at the date of this announcement and assuming
no Share Options to be exercised by Mr. Daniel George Green on or before the Record Date,
the Share Offer based on the Offer Price and the Total Benefit value the equity value of the
Company at approximately HK$276.1 million and HK$451.9 million respectively. Assuming
that the Share Offer is accepted in full by the Shareholders and on the basis that there will be
62,028,383 Offer Shares at Share Transfer Completion, the total amount of cash required to
effect the Share Offer will be approximately HK$72.5 million.
Financial resources
The Offeror intends to finance both the Share Transfer and the Offers by internal resources.
The payment of interest on, repayment of or security for any liability under the aforesaid
facility will not depend on the Remaining Group. Access Capital is satisfied that sufficient
financial resources are available to the Offeror to satisfy the full acceptances of the Offers.
Effects of accepting the Share Offer
By accepting the Share Offer, the relevant Shareholders will sell their Shares to the Offeror
free from all liens, claims and encumbrances and with all rights attached to them as at the date
of Share Transfer Completion, including the right to receive all dividends and distributions
(save for the Proposed Special Dividend) declared, paid or made, if any, on or after the Share
Transfer Completion Date. The making of the Share Offer to a person with a registered
address in a jurisdiction outside Hong Kong may be affected by the applicable laws of the
relevant jurisdiction. The Shareholders with registered addresses in jurisdictions outside Hong
Kong should inform themselves about and observe any applicable legal requirements in their
own jurisdictions.
21
Settlement
Settlement of the Offer Consideration will be made in cash as soon as possible but in any
event within 10 days of the date on which the relevant documents of title are received by the
Registrar to render each such acceptance complete and valid.
Stamp duty
Assuming that the Share Offer is made upon Share Transfer Completion, (i) the seller’s ad
valorem stamp duty arising in connection with acceptance of the Share Offer amounting to
0.1% of the amount payable or the then aggregate market price of each Offer Share in respect
of the relevant acceptance whichever is higher and such stamp duty payable will be deducted
from the amount payable to the Shareholders who accept the Share Offer; and (ii) the Offeror
will bear its own portion of the buyer’s ad valorem stamp duty amounting to 0.1% of the
amount payable or the then aggregate market price of each Offer Share in respect of relevant
acceptances whichever is higher and will be responsible to account to the Stamp Office of
Hong Kong for all the stamp duty payable for the sale and purchase of the Shares which are
validly tendered for acceptance under the Share Offer.
Other arrangements in respect of the Offers
Under the Share Transfer Agreement, Mr. Daniel George Green has agreed to exercise his
Share Options prior to Completions so long as the public float of the Company is maintained
and tender such Option Shares and remaining Share Options (if any) for acceptance under the
Offers, which constitutes an irrevocable commitment to accept the Offers under the Takeovers
Code. Save for the aforesaid, there are no other arrangements in relation to shares of the
Offeror or the Shares and which might be material to the Offers.
Reasons for the Offers and the Offeror’s intention for the Group
The Offeror is interested in acquiring the Company as it has performed basic review on the
Company and, from such review, is attracted by the Company’s same ownership control since
its listing in 1994, its good reputation and its commercial management. The Offeror is further
attracted by the simplicity of the business model of the Remaining Business following the
Disposal Completion.
The Offeror intends to continue the principal business of the Remaining Business of the
Group.
22
Following the completion of the Offers, the Offeror will conduct a review on the business
operations and financial position of the Remaining Business of the Group for the purpose
of formulating business plans and strategies for the future business development of the
Remaining Business of the Group. Subject to the result of the review and should suitable
investment or business opportunities arise, the Offeror may consider diversifying the business
of the Remaining Group with an objective to broaden its income source. However, no such
investment or business opportunities have been identified as at the date of this announcement.
The Offeror has no intention to re-deploy the employees or the remaining assets of the
Remaining Business of the Group after the Disposal other than in its ordinary course of
business.
Maintaining the listing status of the Company
The Offeror intends the Company to remain listed on the Main Board after closing of the
Offers. The directors of the Offeror and the new Directors (if any) to be appointed to the
Board will jointly and severally undertake to the Stock Exchange to take appropriate steps to
ensure that sufficient public float exists in the Shares.
The Stock Exchange has indicated that if, at the closing of the Offers, less than 25% of the
issued Shares are held by the public or if the Stock Exchange believes that: (i) a false market
exists or may exist in the trading of the Shares; or (ii) there are insufficient Shares in public
hands to maintain an orderly market, then it will consider exercising its discretion to suspend
dealings in the Shares.
The Stock Exchange will also closely monitor all acquisitions or disposals of assets by the
Company. Under the Listing Rules, the Stock Exchange has the power to aggregate a series of
transactions and any such transactions may result in the Company being treated as if it were
a new listing applicant and subject to the requirement for new applicants as set out in the
Listing Rules.
23
Despatch of the composite offer document
Pursuant to Rule 8.2 of the Takeovers Code, the Offeror is required to despatch an offer
document containing the terms of the Offers, together with the Form of Acceptance, to
the Shareholders within 21 days of the date of this announcement, or such later date as
the Executive may approve. It is the intention of the respective boards of directors of the
Offeror and the Company to combine the offer document and the offeree board circular into
a composite offer and response document. Such composite document (accompanied by the
Form of Acceptance) in connection with the Offers setting out, inter alia, details of the Offers
and incorporating the respective letters of advice from the Independent Board Committee and
the Independent Financial Adviser on the Offers will be issued and despatched by the Offeror
and the Company jointly to the Shareholders in accordance with the Takeovers Code. Given
that the Offers are subject to completions of the Group Reorganisation, Disposal Completion,
Share Transfer Completion, the completion of the Capital Reorganisation and the payment
of the Proposed Special Dividend becoming unconditional, it is expected that the Offers
may not take place within 21 days of the date of this announcement. As such, an application
will be made to the Executive in respect of Note 2 to Rule 8.2 of the Takeovers Code for its
consent to extend the date of posting of the composite offer and response document to the
Shareholders within 7 days of Share Transfer Completion or 7 April 2011, whichever is the
earlier. The Share Transfer Completion Date is expected to be on or before 31 March 2011.
Further announcement(s) in this respect will be made, as and when necessary.
Further announcement(s) regarding the despatch of the composite offer and response
document will be made in due course. Independent Shareholders are encouraged to read the
composite offer and response document carefully, including the advice of the Independent
Financial Adviser to the Independent Board Committee and the recommendation from the
Independent Board Committee to the Independent Shareholders and in respect of the Offers,
before deciding whether or not to accept the Offers.
WARNING: Shareholders and potential investors of the Company should note that the
Offers may or may not be materialised as the Share Transfer Agreement is conditional
upon the satisfaction or (if applicable) waiver of the Share Transfer Conditions and
that the making of the Offers is subject to Share Transfer Completion. Accordingly,
Shareholders and potential investors of the Company should exercise caution when
dealing in the Shares. If Shareholders and potential investors have any doubt about their
position, they should consult their professional advisers. Further announcement(s) will
be made by the Offeror and the Company regarding the Offers as and when appropriate.
24
THE GROUP REORGANISATION
As at 20 December 2010, being the date of the Share Transfer Agreement, the Vendors are
interested in an aggregate of 174,367,617 Shares, representing approximately 73.76% of
the entire issued share capital of the Company. Pursuant to the Group Reorganisation, the
Remaining Group will be principally engaged in tiles trading and engineering operations and
the Disposal Group will carry on the Disposal Business which refers to the rest of the existing
business operations of the Group. The Disposal Group will, upon Disposal Completion, be
sold to Green Motherlode. Upon completions of the Group Reorganisation, the Disposal and
the Share Transfer, the Company will continue as a publicly listed company and will continue
to operate the Remaining Business.
Group structure before and after completion of the Group Reorganisation
The chart below illustrates the simplified Group structure as at the date of this announcement
and immediately before completion of the Group Reorganisation (assuming no other changes
since the date of this announcement):
Other Directors
1.08%
The Vendors
73.76%
Public
25.16%
The Company
Disposal Group (note 1) and
Remaining Group (note 2)
Notes:
1.
Bathrooms trading; marble and bathroom products manufacturing and export; and bathroom products retail
and renovation operations.
2.
Tiles trading and engineering operations.
25
The chart below shows the simplified Group structure immediately after completion of the
Group Reorganisation (assuming no other changes in the shareholding of the Company since
the date of this announcement):
Other Directors
The Vendors
1.08%
Public
73.76%
25.16%
The Company
Remaining Group (note 2)
Disposal Group (note 1)
Notes:
1.
Bathrooms trading; marble and bathroom products manufacturing and export; and bathroom products retail
and renovation operations.
2.
Tiles trading and engineering operations.
Reason for the Group Reorganisation
After arm ’ s length negotiations, the Offeror has conditionally agreed to acquire the
controlling stake in the Company from the Vendors provided that the Group will be principally
engaged in tiles trading and engineering operations only. The Board considers that the Group
Reorganisation will facilitate Share Transfer Completion and accordingly the Share Offer to
the Shareholders.
26
THE DISPOSAL AGREEMENT
Date
20 December 2010
Parties
(i)
The Company (as vendor)
(ii)
Green Motherlode (as purchaser)
As at the date of this announcement, Green Motherlode is owned as to 50% by Green Family
Holdings Limited, which is in turn wholly owned by Mr. Michael John Green, who is a
Director and a substantial Shareholder, and as to 50% by Mrs. Judith Leslie Green, the spouse
of Mr. Michael John Green, and Green Motherlode is therefore a connected person of the
Company.
Sale Shares
Pursuant to the Disposal Agreement, Green Motherlode has conditionally agreed to purchase
and the Company has conditionally agreed to sell the Sale Shares, free from all encumbrances
and together with all rights now or hereafter attaching to them, including all rights to any
dividend or other distribution declared, made or paid on and after the Disposal Completion
Date.
Disposal Consideration
The Disposal Consideration of HK$149 million (subject to adjustment) was determined after
arm’s length negotiation between the Company and Green Motherlode with reference to the
net asset value of the Disposal Group and adjusted for the market value of the properties held
by the Disposal Group and assuming the Group Reorganisation has been completed on 30
June 2010. The Disposal Consideration will be satisfied in cash.
27
In the event the net asset value of the Disposal Group as shown in the Completion Accounts is
more than HK$142 million, Green Motherlode shall pay such surplus to the Company in cash
on dollar-for-dollar basis. In the event that the net asset value of the Disposal Group as shown
in the Completion Accounts is less than HK$142 million, no adjustment on the Disposal
Consideration shall be made.
Disposal Conditions
Disposal Completion is conditional upon, among other things:
(a)
the Group Reorganisation having been completed;
(b)
the Capital Reorganisation having been completed;
(c)
the passing of the necessary resolutions by the Shareholders (other than such
Shareholders who are required to abstain from voting by law, the Listing Rules, the
Takeovers Code, the Stock Exchange, the SFC and/or the constitutional documents of
the Company) at the SGM approving (i) the execution, delivery and performance of the
Disposal Agreement (in particular, the sale of Sale Shares); and (ii) the Proposed Special
Dividend, in accordance with the constitutional documents of the Company and the
requirements of the Listing Rules and the Takeovers Code;
(d)
the consent of the Executive in relation to the Disposal Agreement and the transactions
contemplated as a special deal under Rule 25 of the Takeovers Code having been
obtained and not revoked prior to Disposal Completion;
(e)
no indication being given by the Stock Exchange or the SFC prior to Disposal
Completion that the listing of the Shares on the Main Board may be revoked or
withdrawn;
(f)
all the Share Transfer Conditions (except the Share Transfer Condition (c)) having been
fulfilled or waived, as applicable;
(g)
the warranties provided by the Company remaining true and accurate and not misleading
in all material aspects at Disposal Completion as if repeated on the Disposal Completion
Date;
28
(h)
all necessary consents to the sale and purchase of the Sale Shares having been granted
by third parties (including financial institutions which provide loan facilities to the
Disposal Group); and
(i)
the warranties provided by Green Motherlode remaining true and accurate and not
misleading in all material aspects at Disposal Completion as if repeated on the Disposal
Completion Date.
Green Motherlode may waive the Disposal Condition (g) either in whole or in part at any time
by notice in writing to the Company. The Company may waive the Disposal Condition (i)
either in whole or in part at any time by notice in writing to Green Motherlode. The Disposal
Conditions (a), (b), (c), (d), (e), (f) and (h) are incapable of being waived.
In the event that any of the Disposal Conditions has not been fulfilled (or waived by the
parties to the Disposal Agreement) prior to 31 March 2011, then Green Motherlode will not be
bound by the Disposal Agreement, and the Disposal Agreement will cease to be of any effect
and save in respect of claims arising out of any antecedent breach of the Disposal Agreement.
Disposal Completion
Subject to the satisfaction or (if applicable) waiver of the Disposal Conditions as set out
above, Disposal Completion will take place on the Disposal Completion Date.
The Share Transfer Agreement and the Disposal Agreement are inter-conditional with
each other. Share Transfer Completion is intended to take place simultaneously with
Disposal Completion.
Information on Green Motherlode
Green Motherlode, a company incorporated in the BVI and whose entire issued share capital
is owned as to 50% by Green Family Holdings Limited, which is in turn wholly owned by Mr.
Michael John Green, and as to 50% by Mrs. Judith Leslie Green, the spouse of Mr. Michael
John Green. Green Motherlode is an investment holding company.
29
Information on the Disposal Company
The Disposal Company, a company incorporated in the BVI with limited liability, is a
direct wholly-owned subsidiary of the Company as at the date of this announcement. Upon
completion of the Group Reorganisation, the Disposal Company will become the holding
company of the Disposal Group and will be engaged in, through the Disposal Group, a range
of operations including, among others, bathrooms trading; marble and bathroom products
manufacturing and export; and bathroom products retail and renovation operations and
holding of office and storage space. The properties owned by the Disposal Group have an
aggregate market value of approximately HK$81.2 million as at 30 November 2010 based on
the preliminary assessment by Vigers Appraisal and Consulting Ltd., an independent property
valuer. Valuation report of these properties will be included in the Circular.
In addition, the unaudited profit before and after taxation of the Disposal Group for each
of the two years ended 31 December 2009, assuming the Group Reorganisation has been
completed on 1 January 2008, were as follows:
Year ended 31 December
2008
2009
HK$ ’000
HK$ ’000
Profit before taxation
Profit after taxation
20,464
18,399
2,170
319
The unaudited net asset value of the Disposal Group as at 30 June 2010, assuming the Group
Reorganisation had been completed on 30 June 2010, was approximately HK$142.2 million.
Rule 14.60(3)(a) of the Listing Rules requires disclosure of details of the gain or loss
expected to accrue to the Group and the basis for calculating such gain or loss as a result of
the Disposal (the “Required Financial Information”) in this announcement. In connection
with this requirement, an application for waiver has been made by the Company and has
been granted by the Stock Exchange for including such information in this announcement.
Such application was made on the grounds that (i) the Required Financial Information is
unaudited and unpublished figures (which is the only available information as at the date of
this announcement) and, if disclosed in this announcement, will constitute profit forecasts
within the meaning of Rule 10 of the Takeovers Code which would need to be reported on
by an auditor and financial adviser of the Company; and (ii) it would be burdensome for the
Company to withhold this announcement until such reports are available.
The Disposal Group will cease to be subsidiaries of the Company upon Disposal Completion.
30
Reasons for and benefits of the Disposal
The Disposal Consideration is higher than the net asset value of the Disposal Group having
adjusted for the market value of the properties to be held by it as at 30 November 2010
and assuming the Group Reorganisation has been completed on 30 June 2010. The Board
(excluding the independent non-executive Directors who will opine on the Disposal after
having considered the advice of the Independent Financial Adviser) are of the view that the
Disposal would enable the Company to realise its investments in the Disposal Group at a fair
price.
In view of the above and that (i) the net proceeds of the Disposal will be distributed to
the Shareholders by way of the Proposed Special Dividend (subject to and upon Disposal
Completion and Share Transfer Completion and upon the Capital Reorganisation becoming
effective); and (ii) the Disposal will facilitate Share Transfer Completion and accordingly
the Share Offer to the Shareholders, the Directors (excluding the independent nonexecutive Directors who will opine on the Disposal after having considered the advice of the
Independent Financial Adviser) consider the Disposal to be fair and reasonable and in the
interests of the Company and the Shareholders as a whole.
PROPOSED SPECIAL DIVIDEND
The Board is pleased to announce that, subject to and upon Disposal Completion and Share
Transfer Completion and upon the Capital Reorganisation becoming effective, it has resolved
to recommend to the Shareholders for approval at the SGM a declaration of the Proposed
Special Dividend of not less than HK$177 million (subject to finalisation).
Being one of the Share Transfer Conditions, the Offeror agreed that the Company will be
entitled to declare and pay the Proposed Special Dividend to each Qualifying Shareholders,
including, for the avoidance of doubt, the Vendors. The Board intends to apply the
estimated net proceeds received from the Disposal (after deducting all relevant expenses) of
approximately HK$143 million and any surplus cash of the Company for the payment of the
Proposed Special Dividend while maintaining sufficient cash resources for the Remaining
Group to operate the Remaining Business.
Based on 236,396,000 Shares in issue as at the date of this announcement and assuming the
outstanding Share Options to be exercised in full by Mr. Daniel George Green on or before the
Record Date, the Qualifying Shareholders will receive the Proposed Special Dividend in cash
of not less than HK$0.7437 per Share (subject to finalisation).
31
LEASE AGREEMENT
Upon completion of the Group Reorganisation and Disposal Completion and as an interim
measure to ensure smooth transition of the Remaining Group to a new controlling shareholder,
Arnhold Trading Limited, which is a member of the Remaining Group, and Arnhold Properties
(BVI) Limited, which is a member of the Disposal Group, will enter into the Lease Agreement
as a temporary measure for the purpose of operating the Remaining Business. Pursuant to the
Lease Agreement, Arnhold Trading Limited will lease some office space at premises owned
by Arnhold Properties (BVI) Limited upon Disposal Completion. Key terms of the Lease
Agreement and the Continuing Connected Transaction are set out below:
Lessor:
Arnhold Properties (BVI) Limited
Lessee:
Arnhold Trading Limited
Term:
One year from the Disposal Completion Date
Rent:
HK$24,000 per month, which is determined after arm’s length negotiation
and with reference to the prevailing market rent and the size of the office
space to be occupied by the tenant
Deposits:
HK$48,000
LISTING RULES AND TAKEOVERS CODE IMPLICATIONS
Green Motherlode is owned as to 50% by Green Family Holdings Limited, which is in turn
wholly-owned by Mr. Michael John Green, who is a Director and a substantial Shareholder,
and as to 50% by Mrs. Judith Leslie Green, the spouse of Mr. Michael John Green, and Green
Motherlode is therefore a connected person of the Company.
32
As each of the applicable percentage ratios as defined under the Listing Rules in respect of
the Disposal exceed 25% but below 75%, the Disposal constitutes a major and connected
transaction for the Company and subject to reporting, announcement and independent
shareholders’ approval requirements pursuant to the Listing Rules.
As any time on and after Disposal Completion, Mr. Michael John Green will continue to be
a connected person of the Company by way of his capacity as Director within the preceding
12 months pursuant to the Listing Rules, the entering into of the Lease Agreement will
constitute a continuing connected transaction for the Company. As the Continuing Connected
Transaction will be carried out on normal commercial terms and each of the applicable
percentage ratios as defined under the Listing Rules in respect of the Continuing Connected
Transaction are less than 0.10%, the Continuing Connected Transaction will exempt from
reporting, announcement and the independent shareholders’ approval requirements under
Chapter 14A of the Listing Rules.
The Disposal and the Continuing Connected Transaction constitute special deals for the
Company under Rule 25 of the Takeovers Code and require the consents of the Executive.
Such consents, if granted will be subject to (i) the Independent Financial Adviser publicly
stating that in its opinion the respective terms of the Special Deals are fair and reasonable;
and (ii) the approval of the Special Deals by the SD Independent Shareholders by way of poll
at the SGM. Shareholders including (i) Green Motherlode, its associates and parties acting
in concert with any of them, including Messrs. Green and other family members of Messrs.
Green; (ii) the Offeror Group; and (iii) any Shareholders who are involved in or interested in
the Special Deals or any transactions contemplated therein will abstain from voting on the
proposed resolutions in respect of the Special Deals at the SGM.
The Company will make an application to the Executive for consents under Rule 25 of the
Takeovers Code in relation to the Special Deals.
33
GROUP STRUCTURE AFTER DISPOSAL COMPLETION AND SHARE
TRANSFER COMPLETION
The chart below shows in summary the Group structure immediately after Disposal
Completion and Share Transfer Completion (assuming no other changes in the shareholding of
the Company since the date of this announcement):
Green Motherlode
100%
Other Directors
The Offeror
1.08%
73.76%
Public
25.16%
Disposal Group (note 1)
The Company
Remaining Group (note 2)
Notes:
1.
Bathrooms trading; marble and bathroom products manufacturing and export; and bathroom products retail
and renovation operations.
2.
Tiles trading and engineering operations.
CAPITAL REORGANISATION
The Board notes that the Remaining Group will have no immediate requirement for the use of
the net proceeds from the Disposal, and it is of the opinion that the current internal resources
are sufficient to fund the ongoing business operations of the Remaining Group. After careful
consideration, the Board is of the opinion that it would be in the interests of the Shareholders
that such net proceeds together with surplus cash be distributed to the Shareholders.
Accordingly, the Board will put forward to the Shareholders a proposal to transfer the entire
amount of approximately HK$95,775,000 standing to the credit of the share premium account
of the Company as at 30 June 2010 under Bermuda law to the Company’s contributed surplus
account.
34
The credit arising therefrom will be made available and applied as part of the Proposed
Special Dividend for distribution to the Qualifying Shareholders in cash. As the Capital
Reorganisation does not require the sanction of the Bermuda court, the Capital Reorganisation
is only conditional upon the passing by the Shareholders of a special resolution approving the
Capital Reorganisation at the SGM and compliance with the relevant legal requirements under
the Companies Act.
Further details on the tentative timetable for the Capital Reorganisation will be included in the
Circular.
SUSPENSION AND RESUMPTION OF TRADING
At the request of the Company, trading in the Shares has been suspended with effect from 9:30
a.m. on Friday, 17 December 2010 pending release of this announcement. Application has
been made by the Company to the Stock Exchange for the resumption of trading in the Shares
with effect from 9:30 a.m. on Wednesday, 29 December 2010.
GENERAL
The Company will establish the Independent Board Committee to advise the Independent
Shareholders and the SD Independent Shareholders in relation to the terms and conditions
of the Special Deals and the Offers. The Independent Board Committee will appoint the
Independent Financial Adviser to advise on these respects. Announcement will be made upon
the appointment of the Independent Financial Adviser in accordance with Rule 2.1 of the
Takeovers Code.
The Circular containing, among other things, (i) further details of the Group Reorganisation,
the Special Deals, the Capital Reorganisation and the Proposed Special Dividend; (ii) the
letter of recommendation from the Independent Board Committee and letter of advice from
the Independent Financial Adviser in respect of the Special Deals; and (iii) a notice convening
the SGM is expected to be sent to the Shareholders on or before 18 January 2011.
35
DEFINITIONS
In this announcement, the following expressions have the meanings set out below unless the
context requires otherwise:
“Access Capital”
Access Capital Limited, a corporation licensed under the
SFO to carry out Type 1 (dealing in securities), Type 4
(advising on securities) and Type 6 (advising on corporate
finance) and Type 9 (asset management) regulated activities
under the SFO and the financial adviser to the Offeror
“acting in concert”
has the meaning ascribed to it in the Takeovers Code
“applicable
has the meaning ascribed to it in the Listing Rules
percentage ratio(s)”
“associate(s)”
has the meaning ascribed to it in the Takeovers Code or the
Listing Rules, as the context may require from time to time
“Board”
the board of Directors
“Business Day”
a day (excluding Saturdays and Sundays and public holidays
and days on which a tropical cyclone warning No. 8 or above
or a “black” rainstorm warning signal is hoisted in Hong
Kong at any time between 9:00 a.m. and 5:00 p.m.) on which
banks generally are open in Hong Kong for the transaction of
normal banking business
“BVI”
British Virgin Islands
“Calyon”
Calyon, Hong Kong Branch
“Calyon Guarantee”
the corporate guarantee dated 13 December 2004 given by
the Company in favour of Calyon in relation to a multipurposes credit facilities of a limit up to HK$40,000,000
36
“Capital Reorganisation”
the proposed transfer of the credit arising from share
premium account of the Company to the contributed surplus
account of the Company
“Circular”
the circular to be despatched to the Shareholders
containing, among other things, (i) further details of the
Group Reorganisation, the Special Deals, the Capital
Reorganisation and the Proposed Special Dividend; (ii)
the letter of recommendation from the Independent Board
Committee and letter of advice from the Independent
Financial Adviser in respect of the Special Deals; and (iii) a
notice convening the SGM
“Companies Act”
the Companies Act 1981 of Bermuda, as amended from time
to time
“Companies Ordinance”
the Companies Ordinance (Chapter 32 of the Laws of Hong
Kong)
“Company”
Arnhold Holdings Limited, a company incorporated in
Bermuda with limited liability, the securities of which are
currently listed on the Main Board of the Stock Exchange
(stock code: 102)
“Completion Accounts”
the management consolidated balance sheet of the Disposal
Company made up as at the Disposal Completion Date and
prepared by the Company
“Completions”
collectively, Disposal Completion and Share Transfer
Completion
“connected person(s)”
has the meaning ascribed to it in the Listing Rules
“Continuing Connected
Transaction”
the continuing connected transaction to be entered into
between the Remaining Group and the Disposal Group
pursuant to the Lease Agreement
37
“controlling
has the meaning ascribed to it in the Listing Rules
shareholder(s)”
“Corporate Guarantees”
collectively, the Calyon Guarantee and the corporate
guarantee dated 3 June 1997 given by the Company in
favour of The Hongkong and Shanghai Banking Corporation
Limited in relation to a banking facility of a limit up to
HK$52,000,000
“Disposal”
the proposed disposal of the Sale Shares pursuant to the
terms of the Disposal Agreement, which constitutes a major
and connected transaction for the Company under the Listing
Rules and a special deal for the Company under Rule 25 of
the Takeovers Code
“Disposal Agreement”
the conditional agreement dated 20 December 2010,
entered into between the Company (as vendor) and Green
Motherlode (as purchaser) in relation to the Disposal
“Disposal Business”
bathrooms trading; marble and bathroom products
manufacturing and export; and bathroom products retail and
renovation operations
“Disposal Company”
Arnhold (BVI) Limited, a company incorporated in the
BVI with limited liability which is a directly whollyowned subsidiary of the Company as at the date of this
announcement
“Disposal Completion”
completion of the Disposal
“Disposal
date of Disposal Completion, being the third Business Day
after all the Disposal Conditions are fulfilled or waived (as
the case may be) in accordance with the Disposal Agreement
or such later date as the parties to the Disposal Agreement
may agree in writing
Completion Date”
38
“Disposal Conditions”
being the conditions precedent to Disposal Completion
pursuant to the Disposal Agreement
“Disposal Consideration”
the aggregate consideration of HK$149 million payable
by Green Motherlode to the Company for the Sale Shares
pursuant to the Disposal Agreement
“Disposal Group”
the Disposal Company and all companies in which the
Disposal Company has interests
“Director(s)”
the director(s) of the Company from time to time
“Executive”
the Executive Director of the Corporate Finance Division of
the SFC or any delegate of the Executive Director
“Form of Acceptance”
the form of acceptance and transfer of the Offer Shares in
respect of the Share Offer
“Green Motherlode”
Green Motherlode Limited, a company incorporated in the
BVI with limited liability, being the purchaser of the Sale
Shares, is owned as to 50% by Green Family Holdings
Limited, which is in turn wholly owned by Mr. Michael John
Green, who is a Director and a substantial Shareholder, and
as to 50% by Mrs. Judith Leslie Green, the spouse of Mr.
Michael John Green
“Green Share(s)”
174,367,617 Shares, representing approximately 73.76% of
the entire issued share capital of the Company as at the date
of this announcement, owned by the Vendors to be sold to
the Offeror pursuant to the Share Transfer Agreement
“Group”
the Company and its subsidiaries
39
“Group Reorganisation”
the proposed group reorganisation of the Company which
sever the Disposal Business from the Remaining Business
such that, when completed, will result in (i) the Remaining
Group principally engaging in the Remaining Business; and
(ii) the Disposal Group principally engaging in the Disposal
Business
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Independent Board
Committee”
the independent committee of the Board to be formed to
advise and give recommendation to the SD Independent
Shareholders and the Independent Shareholders in respect of
the Special Deals and the Offers respectively
“Independent Financial
Adviser”
the independent financial adviser to be appointed by the
Independent Board Committee to advise the Independent
Board Committee and the SD Independent Shareholders and
the Independent Shareholders in relation to the Special Deals
and the Offers respectively
“Independent
Shareholders other than the Offeror Group and the Vendors
Shareholders”
“Lease Agreement”
the agreement to be entered into between Arnhold Trading
Limited (as lessee) which is a member of the Remaining
Group and Arnhold Properties (BVI) Limited (as lessor)
which is a member of the Disposal Group relating to the
lease of office space
“Listing Rules”
the Rules Governing the Listing of Securities on the Stock
Exchange
“Main Board”
the stock market operated by the Stock Exchange prior to the
establishment of the Growth Enterprise Market of the Stock
Exchange (excluding the option market)
40
“Messrs. Green”
Mr. Michael John Green and Mr. Daniel George Green
“Michael Green Family
Trust”
a trust established by Mr. Michael John Green in which Mr.
Daniel George Green has a beneficial interest
“Offers”
the Share Offer and the Option Offer
“Offer Consideration”
the maximum consideration of approximately HK$74.3
million (equivalent to HK$1.1681 per Offer Share) payable
by the Offeror to holders of Offer Shares for each Offer
Share accepted under the Share Offer
“Offer Price”
the amount of HK$1.1681 per Offer Share payable by the
Offeror to holders of Offer Shares for each Offer Share
accepted under the Share Offer
“Offer Shares”
the existing issued Shares and the Options Shares but
excluding the Green Shares and any other Shares owned by
the Offeror Group on the Share Transfer Completion Date
and/or acquired or agreed to be acquired by the Offeror
Group while the Share Offer remains open for acceptance
“Offeror”
Delight Max Limited, a company incorporated in the BVI
with limited liability, being the purchaser of the Green
Shares
“Offeror Group”
the Offeror and its ultimate beneficial owners, namely Mr.
Ho Yau Lung, Lawrence, Mr. Wang John Peter Ben, Mr.
Zhang Jian Hua, Mr. Ko Chun Fung, Henry, Mr. Xu Yi, Ms.
Cheng Ho Yan, Mr. Tsang Cheong Wai, Edmund, Mr. Chang
Yun Wai, Mr. Yip Yuk Kwan and Mr. Sun Chung Man and
parties acting in concert with any of them
41
“Option Offer”
the possible unconditional mandatory cash offer made
by Access Capital on behalf of the Offeror Group for the
cancellation of the Share Options in accordance with the
Takeovers Code
“Option Shares”
1,600,000 Shares to issued upon the exercise of the
outstanding Share Options held by Mr. Daniel George Green
with an exercise price of HK$1.49 per Share Option
“PRC”
the People ’ s Republic of China but excluding, for the
purpose of this announcement, Hong Kong, the Macau
Special Administrative Region of the PRC and Taiwan
“Proposed Special
Dividend”
proposed cash dividend of not less than HK$177,000,000
“Qualifying
Shareholder(s) whose name(s) appear(s) on the register of
members of the Company at the close of business on the
Record Date
Shareholder(s)”
(subject to finalisation) recommended by the Board and to
be declared by the Shareholders at the SGM, payable to the
Qualifying Shareholders
“Record Date”
the record date for the payment of the Proposed Special
Dividend (which will be a date prior to Share Transfer
Completion) to be determined and announced by the
Company
“Registrar”
Computershare Hong Kong Investor Services Limited, the
Hong Kong branch share registrar and transfer office of the
Company
“Remaining Business”
tiles trading and engineering operations
42
“Remaining Group”
the Company and its subsidiaries immediately after the
Group Reorganisation and Disposal Completion, which
are expected to be principally engaged in the Remaining
Business
“Sale Share(s)”
the entire issued share capital of the Disposal Company
“SD Independent
Shareholders”
Shareholders other than (i) Green Motherlode, its associates
and parties acting in concert with any of them, including
Messrs. Green and other family members of Messrs. Green;
(ii) the Offeror Group, if the Offeror and/or associates
will have any shareholding in the Company; and (iii) any
Shareholders who are involved in or interested in the Special
Deals or any transactions contemplated therein
“SFC”
the Securities and Futures Commission of Hong Kong
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong)
“SGM”
the special general meeting of the Company to be convened
and held for the purpose of considering and, if thought
fit, approving the terms of the Special Deals, the Capital
Reorganisation and the Proposed Special Dividend
“Shareholder(s)”
the registered holder(s) of the Share(s) from time to time
“Share(s)”
ordinary shares of HK$0.10 each in the issued share capital
of the Company
“Share Offer”
the possible unconditional mandatory cash offer made by
Access Capital on behalf of the Offeror Group for the Offer
Shares in accordance with the Takeovers Code
43
“Share Options”
options issued under the share option scheme of the
Company approved and adopted by the Shareholders at a
special general meeting of the Company on 11 July 2002
“Share Transfer”
the proposed transfer of the Green Shares pursuant to the
terms of the Share Transfer Agreement
“Share Transfer
Agreement”
the conditional agreement dated 20 December 2010, entered
into between the Vendors (as vendor) and the Offeror (as
purchaser) in relation to the Share Transfer
“Share Transfer
Completion”
completion of the Share Transfer
“Share Transfer
Completion Date”
the date of Share Transfer Completion, being the third
Business Day after the day on which the last of the Share
Transfer Conditions is fulfilled or waived (as the case may
be) by the Offeror in accordance with the Share Transfer
Agreement or such later date as the parties to the Share
Transfer Agreement may agree in writing
“Share Transfer
Conditions”
the conditions precedent to Share Transfer Completion
pursuant to the Share Transfer Agreement
“Share Transfer
Consideration”
HK$203,678,813 (equivalent to approximately HK$1.1681
per Green Share), being the aggregate consideration payable
by the Offeror to the Vendors for Green Shares pursuant to
the Share Transfer Agreement
“Special Deals”
the Disposal and the Continuing Connected Transaction,
which constitute special deals for the Company under Rule
25 of the Takeovers Code
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
44
“substantial shareholder(s)”
has the meaning ascribed to it in the Listing Rules
“Takeovers Code”
the Code on Takeovers and Mergers
“Vendors”
Messrs. Green and HSBC International Trustee Limited
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“%”
per cent.
By order of the board of directors of
By order of the Board of
Delight Max Limited
Wang John Peter Ben
Arnhold Holdings Limited
Lai Ka Tak, Patrick
Director
Director
Hong Kong, 28 December 2010
The Directors jointly and severally accept full responsibility for the accuracy of the
information contained in this announcement relating to the Group and confirm, having made
all reasonable inquiries, that to the best of their knowledge, opinions expressed by the Group
in this announcement have been arrived at after due and careful consideration and there are
no other facts not contained in this announcement, the omission of which would make any
statement in this announcement misleading.
The directors of the Offeror jointly and severally accept full responsibility for the accuracy
of the information contained in this announcement (other than that relating to the Group)
and confirm, having made all reasonable inquiries, that to the best of their knowledge,
opinions expressed in this announcement (other than those expressed by the Group) have been
arrived at after due and careful consideration and there are no other facts not contained in
this announcement, the omission of which would make any statement in this announcement
misleading.
As at the date of this announcement, the executive Directors are Messrs Michael John Green,
Daniel George Green and Lai Ka Tak, Patrick; the non-executive Directors are Messrs Lim
Ghee Keong and Christopher John David Clarke; the independent non-executive Directors are
Messrs Owen Mark Lewellin Rhys, Thaddeus Thomas Beczak and Simon Murray.
45
As at the date hereof, the directors of the Offeror are Mr. Ho Yau Lung, Lawrence, Mr. Wang
John Peter Ben and Mr. Ko Chun Fung, Henry.
In accordance with Rule 3.8 of the Takeovers Code, the respective associates (including a
person who owns or control 5% or more of any class of relevant securities) of the Company
and the Offeror are hereby reminded to disclose their dealings in any securities of the
Company pursuant to the requirements of the Takeovers Code. In accordance with Rule 3.8 of
the Takeovers Code, reproduced below is the full text of Note 11 to Rule 22 of the Takeovers
Code:
“Stockbrokers, banks and others who deal in relevant securities on behalf of clients have a
general duty to ensure, so far as they are able, that those clients are aware of the disclosure
obligations attaching to associates and other persons under Rule 22 and that those clients are
willing to comply with them. Principal traders and dealers who deal directly with investors
should, in appropriate cases, likewise draw attention to the relevant Rules. However, this does
not apply when the total value of dealings (excluding stamp duty and commission) in any
relevant security undertaken for a client during any 7 day period is less than HK$1 million.
This dispensation does not alter the obligation of principals, associates and other persons
themselves to initiate disclosure of their own dealings, whatever total value is involved.
Intermediaries are expected to co-operate with the Executive in its dealings enquiries.
Therefore, those who deal in relevant securities should appreciate that stockbrokers and
other intermediaries will supply the Executive with relevant information as to those dealings,
including identities of clients, as part of that co-operation. ”
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