Sun Hung Kai & Co. Limited
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this
announcement, makes no representation as to its accuracy or completeness and expressly
disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the
whole or any part of the contents of this announcement.
(Incorporated in Hong Kong with limited liability)
DISCLOSEABLE TRANSACTION
A wholly-owned subsidiary of Sun Hung Kai & Co. Limited ("Company") has entered into an
agreement ("Agreement") to:
(a) sell 49% interest in Lippo Capital Limited ("Lippo Capital") for a total consideration of
HK$624 million. Lippo Capital is beneficially interested in approximately 49.86% of Lippo
Limited, a company whose securities are listed on the Stock Exchange; and
(b) purchase approximately 7.18% interest in Lippo Limited directly for a total consideration of
HK$62,900,000.
Agreement Date:
10 May 2000
Parties to the agreement
Upstand Assets Limited ("Upstand"), a wholly-owned subsidiary of the Company, as vendor of
the 345,788,100 shares of HK$1.00 each in Lippo Capital ("Sale Shares", representing 49% of
the issued share capital of Lippo Capital) and purchaser of the 31,450,000 shares of HK$0.10
each in Lippo Limited ("Lippo Shares", representing approximately 7.18% of the issued share
capital of Lippo Limited).
Lippo Cayman Limited ("LCL", a company incorporated in the Cayman Islands) as purchaser of
the Sale Shares.
LCL, J & S Company Limited ("J&S", a company incorporated in the Cook Islands) and Lippo
International Consortium Limited ("LICL", a company incorporated in the British Virgin Islands)
together being vendors of the Lippo Shares. J&S and LICL are wholly owned subsidiaries of
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Sun Hung Kai & Co. Limited
LCL.
None of LCL, J&S or LICL is connected with the directors, chief executive or substantial
shareholders of the Company or any of its subsidiaries or any of their respective associates as
defined in the Listing Rules.
The transaction
Pursuant to the terms of the Agreement, Upstand has agreed to sell the Sale Shares, representing
49% of the entire issued share capital of Lippo Capital, for a total consideration of HK$624
million. The remaining 51% of Lippo Capital is owned by LCL.
Lippo Capital is presently beneficially interested in 218,500,000 shares of HK$0.10 each in
Lippo Limited, representing approximately 49.86% of the existing issued share capital of Lippo
Limited, the securities of which are listed on the Stock Exchange. The principal activities of
Lippo Limited, its subsidiaries and associated companies are investment holding, property
investment and development, estate management, food businesses, fund management, securities
broking, securities trading and treasury investments and the provision of banking, financial,
insurance, mortgage finance and other related services.
In addition, pursuant to the terms of the Agreement, Upstand has also agreed to purchase from
LCL, J&S and LICL (together, the "Lippo Shares Vendors") the Lippo Shares, representing
approximately 7.18% of the entire issued share capital of Lippo Limited, for a total consideration
of HK$62,900,000, in the following proportions:
Lippo Shares Vendors No. of Lippo Shares
LCL
LICL
J&S
334,488
21,115,512
10,000,000
31,450,000
Approximate %
Consideration
Interest
in Lippo (HK$)
Shares
0.08%
668,976
4.82%
42,231,024
2.28%
20,000,000
7.18%
62,900,000
Shareholding in Lippo Limited after completion
Interests in Lippo Limited
Immediately prior to the signing of the Agreement, the Company, through its indirect subsidiary,
is interested in 6,000,000 shares in Lippo Limited, representing approximately 1.36% of the
issued share capital of Lippo Limited. After completion of the Agreement (which took place
immediately after signing), the Company, through its subsidiaries, is interested in 37,450,000
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Sun Hung Kai & Co. Limited
shares in Lippo Limited, representing approximately 8.54% of the issued share capital of Lippo
Limited.
Deemed interests in Lippo Limited
In additon to the holding stated above, a wholly owned subsidiary of Tian An China Investments
Company Limited, an associated company of the Company, is interested in 6,350,000 shares in
Lippo Limited, representing approximately 1.45% of the issued share capital of Lippo Limited.
The Company is deemed, for the purposes of the Securities (Disclosure of Interests) Ordinance
only, to be interested in these additional shares in Lippo Limited.
Financial information about Lippo Capital and Lippo Limited
The audited consolidated net profits of Lippo Capital before and after taxation and minority
interests for the year ended 31 December 1997 were approximately HK$971.5 million and
HK$304.3 million respectively. The audited consolidated net losses of Lippo Capital before and
after taxation and minority interests for the year ended 31 December 1998 were approximately
HK$2,542.2 million and HK$898.3 million respectively. The audited consolidated net assets of
Lippo Capital as at 31 December 1997 and 31 December 1998 were approximately HK$2,999.2
million and HK$1,537.6 million respectively.
The audited consolidated net profits of Lippo Limited before and after taxation and minority
interests for the year ended 31 December 1997 were approximately HK$1,062 million and
HK$692.9 million respectively. The audited consolidated net losses of Lippo Limited before and
after taxation and minority interests for the year ended 31 December 1998 were approximately
HK$2,111.8 million and HK$949.1 million respectively. The audited consolidated net assets of
Lippo Limited as at 31 December 1997 and 31 December 1998 were approximately HK$4,627.3
million and HK$3,083.2 million respectively.
Consideration
Of the HK$624 million for the sale and purchase of the Sale Shares, HK$62,900,000 was set off
by Upstand and the Lippo Shares Vendors for the consideration payable by Upstand for the
Lippo Shares. HK$100,000,000, equal to approximately 16.03% of the consideration for the Sale
Shares, was paid in cash upon completion. The remaining HK$461,100,000, equal to
approximately 73.89% of the consideration for the Sale Shares, was paid by LCL from a loan
("Loan") drawn under a loan facility agreement ("Loan Agreement") for the same amount and
entered into on 10 May 2000 between LCL as borrower and Ranbridge Finance Limited as
lender ("Ranbridge", being a wholly-owned subsidiary of the Company which is in the business
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Sun Hung Kai & Co. Limited
of providing term loans). Pursuant to the Loan Agreement, LCL entered into a share mortgage
whereby the Sale Shares have been charged to Ranbridge. In the event that LCL defaults under
its obligations to make payments under the Loan Agreement, Ranbridge may foreclose on the
Sale Shares. The Loan shall be repaid by the end of 9 months from the date of the Loan
Agreement, and interest is payable on the Loan at the rate of 3% above the prime lending rate
quoted by The Hongkong and Shanghai Banking Corporation Limited. Such interest rate was
determined after arm's length negotiation having regard to the short term nature of the Loan.
Basis of consideration
The total sale price of the Sale Shares and the method of payment were determined through arm's
length negotiation, and the total sale price represents a premium of approximately 24.8% over
the book cost of HK$500 million of the Sale Shares acquired by Upstand in late 1998.
Immediately prior to the signing of the Agreement, Upstand held 49% interests in Lippo Capital
which held 218,500,000 shares of HK$0.10 each in, representing approximately 49.86% of the
issued share capital of, Lippo Limited. This means Upstand was indirectly and proportionally
interested in 107,065,000 shares (being 49% of Lippo Capital's 218,500,000 shares) in Lippo
Limited. As the total sale price is HK$624 million, the sale of the Sale Shares values each Lippo
Share at approximately HK$5.82.
The total purchase price of the Lippo Shares was also determined through arm's length
negotiation. The total purchase price translates to HK$2.00 per Lippo Share, which represents a
premium of approximately 33.33% to the closing price of a Lippo Share on the Stock Exchange
of HK$1.50 on 10 May 2000.
Completion
Completion of the sale of the Sale Shares and the purchase of the Lippo Shares took place
immediately following the signing of the Agreement.
Reasons for the sale and purchase
The principal activities of the Company and its subsidiaries ("Group") are securities, forex,
bullion, commodities and futures broking, provision of online financial services and online
financial information distribution, corporate finance, share margin financing, term loan business,
property investment and insurance consultancy and a strategic long term investment in Tian An
China Investments Company Limited with major real estate interests in the PRC.
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Sun Hung Kai & Co. Limited
Although the investment in Lippo Limited was always intended as a strategic long term
investment, the Company has decided that in the current economic circumstances, it is in the best
interests of shareholders to take the present opportunity to dispose of the interests and to
concentrate its efforts in the development of its core business. The sale which values Lippo
Shares at approximately HK$5.82 per Lippo Share also enables the Company to retain a
significant stake in Lippo Limited through the acquired Lippo Shares at a significantly reduced
cost of HK$2.00 per Lippo Share. This enables the Company to continue to participate in the
future growth of Lippo Limited. The retained stake also provides the Company with a platform
to enhance its position in Lippo Limited if appropriate.
Proceeds of sale
As mentioned in the section headed "Consideration" above, of the HK$624 million for the sale
and purchase of the Sale Shares, HK$62,900,000 was set off by Upstand and the Lippo Shares
Vendors for the consideration payable by Upstand for the Lippo Shares. HK$100,000,000, equal
to approximately 16.03% of the consideration for the Sale Shares, was paid in cash upon
completion. The remaining HK$461,100,000, equal to approximately 73.89% of the
consideration for the Sale Shares, was paid by LCL from the Loan raised under the Loan
Agreement with Ranbridge. At present, the Company intends to use the sale proceeds for the
Group's working capital purposes.
General
Pursuant to the Listing Rules, the sale of the Sale Shares is a "Discloseable Transaction" for the
Company. A circular containing further information on the Agreement will be despatched to the
shareholders of the Company as soon as possible.
By Order of the Board
Hester Wong Lam Chun
Company Secretary
Hong Kong, 12 May 2000
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