Autohome Inc. — Capital/Financing Update 2000

Mar 8, 2000

Listed Company Information

GOLIK HOLDINGS<1118> - Announcement GOLIK HOLDINGS LIMITED CONNECTED TRANSACTION PROPOSED ISSUE OF REDEEMABLE TRANSFERABLE CONVERTIBLE NOTES Financial Adviser to Golik Holdings Limited Dao Heng Securities Limited Co-financial Adviser to Golik Holdings Limited BARITS CAPITAL LIMITED The board of Directors announces that on 6th March, 2000, the Company entered into the Notes Agreement with GIL in relation to the subscription by GIL of the Notes for cash at par. The initial conversion price is HK$0.36 per Conversion Share (subject to adjustment) and full conversion of the Notes will result in the issue of a maximum of 111,111,100 Conversion Shares, representing approximately 19.69% of the existing issued share capital of the Company and approximately 16.45% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares. The Company shall repay to the holder(s) of the Notes all the outstanding unconverted principal amount of the Notes together with all accrued interest thereon on the Maturity Date. The terms of the Notes Agreement have been arrived at after arm's length negotiations between the Company and GIL. The Directors (including the non-executive Directors) consider that the terms of the Notes Agreement are fair and reasonable and are in the interests of the Company. The net proceeds of the Proposed Notes Issue of approximately HK$39.2 million will be used as to approximately HK$16.8 million for repayment of a secured bank debt of the Group and as to approximately HK$22.4 million as the general working capital of the Group. There are no specific plans as to the application of the general working capital at present. As at the date of this announcement, GIL and Mr. Pang Tak Chung in aggregate own approximately 37.65% of the issued share capital of the Company and Messrs. Pang Tak Chung and Robert Keith Davies, the ultimate beneficial owners of GIL, are both executive Directors. In view of GIL's interests in the Company and the interests of Messrs. Pang Tak Chung and Robert Keith Davies in GIL, the Proposed Notes Issue constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of the Independent Shareholders at a special general meeting to be convened by the Company pursuant to the Listing Rules. The Company will despatch to its shareholders a circular containing, among other things, further details of the Notes Agreement and the Proposed Notes Issue, the advice of the independent board committee and the advice of the independent financial adviser to the independent board committee and a notice of a special general meeting of the Company to be convened as soon as practicable. PROPOSED NOTES ISSUE Details of the Notes Agreement Date : 6th March, 2000 Issuer : The Company Subscriber : GIL Face value of each Note : HK$2 million Total number of the Notes : 20 Total amount of subscription : HK$40 million Conditions : Completion of the Notes Agreement is conditional upon the fulfillment of, among other things, the following conditions: 1. if necessary, the Stock Exchange having approved the issue of the Notes either unconditionally or subject to conditions to which neither the Company nor GIL reasonably objects and such conditions (if any) have been satisfied; 2. if necessary, the Bermuda Monetary Authority having granted its permission for the issue of the Notes and the free transferability of the Notes and the issue of the Conversion Shares upon the exercise of the conversion rights under the Notes; 3. the Listing Committee of the Stock Exchange having granted the approval for the listing of and permission to deal in the Conversion Shares which may fall to be issued by the Company upon exercise of the conversion rights under the Notes; and 4. the Independent Shareholders having approved the Notes Agreement, the issue of the Notes and the issue of the Conversion Shares upon exercise of the conversion rights under the Notes. Completion : Completion of the Notes Agreement is expected to take place on the third Business Day after the fulfillment of the conditions precedent set out in the Notes Agreement. The Notes Agreement provides that if the conditions are not fulfilled on or before 30th June, 2000 or such other later date as the Company and GIL may agree, the Notes Agreement will lapse and become null and void. Conversion period : The holder(s) of the Notes will have right to convert each of the Notes in whole, i.e. HK$2 million, at any time commencing from the first day of the seventh month from the date of issue of the Notes but before the Maturity Date by duly giving the Conversion Notice, provided always that the exercise of the conversion rights attaching to the Notes shall not trigger any mandatory general offer obligations under the Codes. Conversion price : HK$0.36 per Conversion Share (subject to adjustment), representing: * approximately 12.20% discount to the closing price of HK$0.4100 per Share as of 3rd March, 2000, being the last trading day immediately prior to the date of the Notes Agreement; * approximately 16.06% discount to the average closing price of HK$0.4289 per Share for the one-month period up to and including 3rd March, 2000; and * approximately 5.36% discount to the average closing price of HK$0.3804 per Share for the three-month period up to and including 3rd March, 2000. Interest : The Notes will bear interests at 6.0% per annum on the face value of the Notes payable semi-annually in arrears. Term : The Notes will be for a term of 5 years from the date of issue of the Notes, unless fully converted or redeemed before the expiry of that period. Repayment : The Company shall repay to the holder(s) of the Notes the outstanding unconverted principal of the Notes together with all accrued interest thereon up to and including the date of repayment, on the Maturity Date. Other rights : If, whilst any part of the Notes is outstanding, an offer is made to the Shareholders to acquire all or any proportion of the Shares, the Company will procure that a similar offer is extended to the holder(s) of the Notes and in respect of any Shares issued on conversion of the Notes during the period of the offer. Voting : No holder of the Notes will be entitled to attend or vote at any meetings of the Company by reason only of its being the holder of the Note(s). Issue of the Conversion Shares : The Conversion Shares will be issued pursuant to a resolution proposed to be passed by the Shareholders at a special general meeting of the Company to be convened. Status : The Conversion Shares issued upon conversion shall rank pari passu with all other Shares outstanding at the date of the Conversion Notice and be entitled to all dividends and other distributions the record date of which falls on a date on or after the date of the Conversion Notice. Listing : The Notes will not be listed on the Stock Exchange or any other stock exchanges. An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares. Transferability : The Notes may only be assigned or transferred to (a) the direct or indirect ultimate beneficial owner(s) of the holder(s) of the Notes, or to its associates (as defined under the Listing Rules) and (b) with the prior written approval of the Company, to any other party provided that the prior consent of the Stock Exchange shall be obtained (if so required). Redemption : If at any time from the first day of the seventh month from the date of issue of the Notes to the Maturity Date, the average closing price of the Shares for a period of 30 consecutive trading days is equal to or more than HK$0.54, being 1.5 times of the conversion price of HK$0.36 per Conversion Share, the Company have the right to redeem all the Notes or any part thereof by giving fifteen Business Days notice to the holder(s) of the Notes. Events of default : The Notes contain an events of default provision which provides that on the occurrence of certain events of default specified in the Notes, the holder(s) of the Notes shall be entitled to demand for immediate repayment of the outstanding unconverted principal amount of the Notes together with any interest accrued thereon. Proceeds of the Proposed Notes Issue The net proceeds of the Proposed Notes Issue of approximately HK$39.2 million will be used as to approximately HK$16.8 million for the repayment of a secured bank debt of the Group and as to approximately HK$22.4 million as the general working capital of the Group. There are no specific plans as to the application of the general working capital at present. Reasons and benefits for the Proposed Notes Issue The terms of the Notes Agreement have been arrived at after arm's length negotiations between the Company and GIL. The Directors (including the non-executive Directors) consider that the terms of the Notes Agreement are fair and reasonable and are in the interests of the Company. Given that the Notes bear a low interest coupon and approximately HK$16.8 million of the proceeds will be used for repayment of a secured bank debt of the Group, the issue of the Notes will not increase the interest burden of the Company to a material extent. The Directors consider that the Proposed Notes Issue represents a good opportunity for the Company to raise additional working capital with no immediate dilution effect on the interests of the existing Shareholders under the prevailing market condition. Shareholding structure before and after conversion of the Notes The following table sets out the shareholding structure of the Company as at the date of this announcement and immediately after full conversion of the Notes: After full conversion Current shareholding of the Notes Number of Shares % Number of Shares % Mr. Pang Tak Chung (Notes 1 & 2) 212,463,700 37.65 323,574,800 47.90 China Metallurgic (Hong Kong) Limited 99,000,000 17.54 99,000,000 14.66 Public 252,913,800 44.81 252,913,800 37.44 Total 564,377,500 100.00 675,488,600 100.00 Notes: 1. assume no transfer of the Notes by GIL to any independent third parties. 2. Including corporate interests in 195,646,700 Shares (34.67%) through GIL and personal interests in 16,817,000 Shares (2.98%) before full conversion of the Notes and corporate interests in 306,757,800 Shares (45.41%) and personal interests in 16,817,000 Shares (2.49%) after full conversion of the Notes, GIL is fully aware of its obligations under the Codes and will fully comply with the Codes upon the exercise of the conversion rights attaching to the Notes. Source of funding of GIL The board of Directors have been notified by GIL that the latter intends to pledge certain number of Shares to a financial institution for obtaining a banking facility of HK$40 million to finance the subscription of the Notes. Details of the terms of the banking facility will be included in the circular to be despatched to the Shareholders. GENERAL As at the date of this announcement, GIL and Mr. Pang Tak Chung in aggregate own approximately 37.65% of the issued share capital of the Company and Messrs. Pang Tak Chung and Robert Keith Davies, the ultimate beneficial owners of GIL, are both executive Directors. In view of GIL's interests in the Company and the interests of Messrs. Pang Tak Chung and Robert Keith Davies in GIL, the Proposed Notes Issue constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of the Independent Shareholders at a special general meeting to be convened by the Company pursuant to the Listing Rules. The Company will despatch to its shareholders a circular containing, among other things, further details of the Notes Agreement and the Proposed Notes Issue, the advice of the independent board committee and the advice of the independent financial adviser to the independent board committee and a notice of a special general meeting of the Company to be convened as soon as practicable. DEFINITIONS 'Business Day' a day (other than Saturday) on which banks are open in Hong Kong for general banking business 'Codes' the Codes on Takeovers and Mergers and Share Repurchases 'Company' Golik Holdings Limited 'Conversion Notice' a notice given by the holder(s) of the Notes to the Company to convert the whole of each of the Notes into Conversion Shares in accordance with the Notes Agreement 'Conversion Share(s)' the new Share(s) issuable upon conversion of the Notes by their holders 'Director(s)' the Director(s) of the Company 'GIL' Golik Investments Ltd. 'Group' the Company and its subsidiaries 'Independent Shareholders' Shareholders other than GIL and its associates (as defined under the Listing Rules) 'Listing Rules' the Rules Governing the Listing of Securities on the Stock Exchange 'Maturity Date' the fifth anniversary from the date of issue of the Notes 'Notes Agreement' the conditional subscription agreement dated 6th March, 2000 entered into between the Company and GIL in relation to the subscription by GIL of the Notes 'Notes' 20 5-year 6.0% redeemable transferable convertible notes at HK$2,000,000 each to be issued to GIL under the Notes Agreement 'Proposed Notes Issue' the issue of the Notes by the Company to GIL under the Notes Agreement 'Share(s)' share(s) of HK$0.10 each in the share capital of the Company 'Shareholder(s)' holder(s) of the Shares 'Stock Exchange' The Stock Exchange of Hong Kong Limited By order of the Board Golik Holdings Limited Ho Wai Yu, Sammy Company Secretary 7th March, 2000