Brockman Mining Limited — M&A Activity 2001

Aug 2, 2001

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.

WONG'S INTERNATIONAL (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

RECOMMENDED VOLUNTARY CONDITIONAL CASH OFFER FOR

WONG'S CIRCUITS (HOLDINGS) LIMITED

(Incorporated in the Republic of Singapore)

BY

THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED

FOR AND ON BEHALF OF

GRINKGO HOLDINGS LIMITED

(Incorporated in the British Virgin Islands with limited liability)

An indirect wholly-owned subsidiary of Wong's International (Holdings) Limited

POSSIBLE DISCLOSEABLE TRANSACTION

˙ The directors of WIH announce that the Offeror intends to make a recommended voluntary conditional cash offer to acquire all of the WCH Shares, other than those held at the date hereof by, or by nominees for, the Offeror or its subsidiaries, at an offer price of US$1.46 per Offer Share.

˙ WCH is a company incorporated in the Republic of Singapore and listed on SGX-ST.

˙ As at the date of this announcement, WIH, a party acting in concert with the Offeror, is the registered owner of 124,000,000 WCH Shares representing approximately 74.25 per cent. of the issued and paid up share capital of WCH. WNH, an indirect wholly-owned subsidiary of WIH, is the beneficial owner of the 124,000,000 WCH Shares registered in WIH's name. WIH (as registered owner) and WNH (as beneficial owner) have given an irrevocable undertaking to accept the Offer in respect of such 124,000,000 WCH Shares.

˙ ANZ has been appointed as the independent financial adviser to the Independent Directors and is of the opinion that the Offer is fair and reasonable and is in the interests of the WCH Shareholders and will advise the Independent Directors to recommend that WCH Shareholders should accept the Offer when it is made, in the absence of a higher competing offer.

˙ Having considered the advice of ANZ, the Independent Directors are of the view that the Offer is fair and reasonable and is in the interests of the minority shareholders of WCH and concur with ANZ's recommendations.

˙ Subject to the Offer becoming unconditional on or before the close of the Offer, the Offeror intends to exercise its right to compulsorily acquire all the WCH Shares of the dissenting WCH Shareholders pursuant to Section 215(1) of the Singapore Companies Act.

˙ HSBC confirms that sufficient financial resources are available to the Offeror to satisfy in full all acceptances of the Offer by WCH shareholders , other than WIH.

˙ HSBC is acting as the financial adviser to the Offeror in relation to the Offer.

˙ If the Offer becomes unconditional, the Offer and the Compulsory Acquisition together will constitute a discloseable transaction under the Listing Rules.

˙ The Offer may or may not become unconditional. Shareholders of WIH and investors should exercise caution when dealing in securities of WIH.

INTRODUCTION

The directors of WIH announce that the Offeror intends to make a recommended voluntary conditional cash offer to acquire all of the WCH Shares, other than those held at the date hereof by, or by nominees for, the Offeror or its subsidiaries. Further information on the Offeror is set out in the relevant section below. The Offer is made in accordance with the Code, and Section 213 of the Singapore Companies Act.

As at the date of this announcement, the Offeror and its subsidiaries do not own or control, nor have they agreed to acquire any WCH Shares (whether by themselves or through nominees).

WIH, a party acting in concert with the Offeror, is the registered owner of 124,000,000 WCH Shares representing approximately 74.25 per cent. of the issued and paid-up share capital of WCH. WNH, an indirect wholly-owned subsidiary of WIH, is the beneficial owner of the 124,000,000 WCH Shares registered in WIH's name.

The contents of this announcement is based on information in a similar announcement issued in Singapore by the Offeror and WCH today.

THE OFFER

Terms of the Offer

The Offer will be made by the Offeror on the following basis:-

For each Offer Share: US$1.46 in cash

The Offer Shares are to be acquired by the Offeror free from all charges, liens, pledges and other encumbrances and together with all rights attaching thereto as at the date of this announcement and thereafter, including the right to all dividends, rights and other distributions (if any) declared, made or paid thereon hereafter.

Conditions of the Offer

The Offer shall be conditional upon the Offeror having received, by the close of the Offer, acceptances in respect of such number of Offer Shares which are not less than 90 per cent. in nominal value of the WCH Shares, other than those already held at the date hereof by, or by nominees for, the Offeror or its subsidiaries.

The Offer will, therefore, not become or be capable of being declared unconditional until the Offeror has received valid acceptances in respect of such number of Offer Shares which are not less than 90 per cent. in nominal value of the WCH Shares, other than those already held at the date hereof by, or by nominees for, the Offeror or its subsidiaries.

Acceptances

The Offer will remain open for acceptance by WCH Shareholders for a period of at least 21 days from the despatch of the Offer Document or such later date(s) as may be announced from time to time by or on behalf of the Offeror.

RECOMMENDATION

ANZ has been appointed as the independent financial adviser to the Independent Directors in relation to the Offer. Having considered the terms of the Offer, as set out in this announcement, ANZ is of the opinion that the Offer is fair and reasonable and is in the interests of WCH Shareholders.

Accordingly, ANZ will advise the Independent Directors to recommend that WCH Shareholders should accept the Offer when it is made, in the absence of a higher competing offer.

Having considered the advice of ANZ, the Independent Directors are of the view that the Offer is fair and reasonable and is in the interests of the minority shareholders of WCH, and concur with ANZ's recommendations.

INFORMATION ON THE OFFEROR

The Offeror was incorporated in the British Virgin Islands on 6th June, 2001. As at the date of this announcement, it has an authorised share capital comprising 50,000 ordinary shares of US$1.00 each and an issued and paid-up capital of 1 ordinary share of US$1.00. The entire issued share capital of the Offeror is held by Catel. The directors of the Offeror are Messrs Johnny Wong Chung Ah, Michael Wong Chung Yin, Benedict Wong Chung Mat, Gabriel Chan Tsze Wah and Paulus Chan Wing Kwong. The principal activity of the Offeror is that of investment holding and it has not carried on any business since its incorporation.

INFORMATION ON WNH

WNH was incorporated in Hong Kong on 27th April, 1979 and has, as at the date of this announcement, an authorised share capital comprising 480,000,000 ordinary shares of HK$0.50 each and an issued and paid-up capital of 1,000 ordinary shares of HK$0.50 each. The entire issued share capital of WNH is owned by Catel. The directors of WNH are Messrs Johnny Wong Chung Ah, Michael Wong Chung Yin, Benedict Wong Chung Mat, Gabriel Chan Tsze Wah and Paulus Chan Wing Kwong. The principal activity of WNH is that of investment holding.

INFORMATION ON CATEL

Catel was incorporated in the British Virgin Islands on 16th June, 1989 and has, as at the date of this announcement, an authorised share capital comprising 1,000,000 ordinary shares of HK$ 0.10 each and an issued and paid-up capital of 1,100 ordinary shares of HK$ 0.10. Catel is a wholly-owned subsidiary of WIH. The directors of Catel are Messrs Johnny Wong Chung Ah, Michael Wong Chung Yin, Benedict Wong Chung Mat and Gabriel Chan Tsze Wah. The principal activity of Catel is that of investment holding and its investments include its shareholding interests in the Offeror and WNH.

INFORMATION ON WIH

The Company is a company incorporated in Bermuda on 6th June, 1990 and listed on the HKSE with a current market capitalisation of approximately HK$1,367 million, based on the closing market price of HK$2.925 on 31st July, 2001. It is the holding company of the Group. The business of the Group was founded in 1962 by the late Mr Wong Wha San. The principal activities of the Group are the manufacture and sale of electronic products for original equipment manufacturer customers, including micro-computers, telecommunication equipment and other electronic products. The directors of WIH are Messrs Johnny Wong Chung Ah, Michael Wong Chung Yin, Benedict Wong Chung Mat, Gabriel Chan Tsze Wah, Paulus Chang Wing Kwong, Dr. the Hon. Eric Li Ka Cheung and Dr. Yu Sun Say.

INFORMATION ON WCH

WCH was incorporated in Singapore on 22nd November, 1995 under the Singapore Companies Act as a public limited company. WCH has been listed on the main board of the SGX-ST since 12th December, 1996.

The principal activity of WCH was investment holding while its subsidiaries were primarily engaged in the design, development, manufacture and sale of PCBs. In August 2000, WCH disposed of its PCB business and all of its subsidiary and associated companies engaged in such business. Accordingly, WCH does not currently have any active business operation.

In an announcement dated 31st May, 2001, WCH stated that it had an aggregate cash balance (inclusive of interest accrued up to 29th May, 2001) of approximately US$264 million.

WARRANTY AND INDEMNITY UNDERTAKING BY WCH

In the circular to shareholders of WCH in relation to the Disposal dated 28th July, 2000, it was stated that under the terms of the PCB Business Disposal Agreement, WCH will be liable for any breach of the warranties given in connection with the Disposal.

Notwithstanding the contingent liabilities of WCH, if any, in relation to such warranties pursuant to the PCB Business Disposal Agreement, the directors of WIH are of the view that it is in the best interests of WIH to increase its shareholding in WCH from 74.25 per. cent. to 100 per cent. by way of the Offer and the Compulsory Acquisition.

SUMMARY FINANCIAL INFORMATION ON WCH

The table below sets out certain summarised financial information in respect of WCH for the last two financial years ended 31st December, 1999 and 2000, respectively, based on the audited consolidated financial statements for the periods:-

	Year ended 31st December
	2000	1999
	HK$000	HK$000
Profit before tax and minority interest	1,076,868	151,597
Profit after tax but before minority interest	1,057,458	135,337

1) An exchange rate of SG$ 1 to HK$ 4.327 applied in calculating the figures above.

2) Gain on disposal and foreign exchange translation difference in respect of disposed subsidiary companies in relation to the Disposal has been eliminated in respect of the results for the year ended 31st December, 2000 in order to be consistent with HK GAAP

COMPULSORY ACQUISITION AND DELISTING

Under Section 215(1) of the Singapore Companies Act, if an offeror has acquired 90 per cent. or more of the shares of a Singapore incorporated company (other than those already held by, or by nominees for the offeror or its subsidiaries at the date of the offer), the offeror would have the right to compulsorily acquire all the shares of the dissenting shareholders of the Singapore incorporated company who have not accepted the offer.

Subject to the Offer becoming unconditional on or by the close of the Offer, the Offeror intends to exercise its right to compulsorily acquire all the WCH Shares of the dissenting WCH Shareholders pursuant to Section 215(1) of the Singapore Companies Act.

If the Offeror is able to proceed with the Compulsory Acquisition and upon completion of the Compulsory Acquisition, WCH would become a wholly-owned subsidiary of the Offeror. In this event, the Offeror intends to seek a delisting of WCH from the SGX-ST if WCH is still listed at the relevant time.

IRREVOCABLE UNDERTAKING

The Offeror has received an irrevocable undertaking from WIH (as registered owner) and from WNH (as the beneficial owner) to accept the Offer in respect of the 124,000,000 WCH Shares, representing 74.25 per cent. of the issued share capital of WCH.

Save as aforesaid, neither the Offeror nor any other party deemed to be acting in concert with it has received any irrevocable undertaking from any party to accept or reject the Offer.

PARTIES ACTING IN CONCERT

As at the date of this announcement, Messrs Johnny Wong Chung Ah, Benedict Wong Chung Mat, Gabriel Chan Tsze Wah and Paulus Chan Wing Kwong are the executive directors of both WIH and WCH and they each have direct and deemed interests in 40,693,487 shares, 30,458,487 shares 2,337,500 shares and 1,800,000 shares of WIH respectively. Mr Michael Wong Chung Yin (a director of WIH) has deemed and direct interests in 32,429,460 shares of WIH whilst Mr Michael George Everitt (a director of WCH) has a direct and deemed interest in 14,933,436 shares of WIH. Messrs Johnny Wong Chung Ah, Michael Wong Chung Yin and Benedict Wong Chung Mat are brothers and Mr Michael George Everitt is their brother-in-law.

As at the date of this announcement, WSW has a direct interest in 131,085,865 shares of WIH. The shareholders of WSW comprise family members and discretionary trusts established for the benefit of the family members of the late Mr Wong Wha San. Collectively, these parties own the entire issued and paid-up share capital of WSW.

In aggregate, WSW, together with the other family members of the late Mr Wong Wha San, and their family trusts, collectively control 271,602,500 shares of WIH, representing approximately 58.13 per cent. of WIH.

As at the date of this announcement, WIH, a party acting in concert with the Offeror is the registered owner of 124,000,000 WCH Shares. WNH, an indirect wholly-owned subsidiary of WIH, is the beneficial owner of these 124,000,000 WCH Shares registered in WIH's name.

The directors of the Offeror namely Messrs Johnny Wong Chung Ah, Michael Wong Chung Yin and Benedict Wong Chung Mat are deemed to have an interest in WIH's shareholding of 124,000,000 WCH Shares through their direct and deemed interests in WIH.

As at the date of this announcement, the Offeror and parties acting in concert with it have interests in an aggregate of 124,000,000 WCH Shares, representing approximately 74.25 per cent. of the issued and paid-up share capital of WCH.

CONSIDERATION

The cash consideration payable by the Group under the Offer and the Compulsory Acquisition will be approximately HK$490 million. The Group intends to finance the Offer and the Compulsory Acquisition through a combination of internal resources and bank borrowings.

HSBC, as financial adviser to the Offeror, confirms that sufficient financial resources are available to the Offeror to satisfy in full all acceptances of the Offer by WCH Shareholders, other than WIH.

REASONS FOR THE OFFER

On 30th June, 2000 WCH announced that it had entered into an agreement with Pacific Circuits Limited, a company beneficially owned by independent third parties, in relation to the Disposal. The Disposal was approved by WCH Shareholders on 15th August, 2000 and completed on 17th August, 2000. WCH is at present predominantly a cash company following the completion of the Disposal.

Under Clause 1009 of the Listing Manual, the SGX-ST will normally suspend the listing of a company if it becomes a cash company until it has a business that is able to satisfy the SGX-ST's requirements for a new listing. The SGX-ST may cancel the listing if the company is unable to meet the requirements of a new listing within a period of 12 months of it becoming a cash company i.e. by 17th August, 2001.

In the announcement of 16th August, 2000, WCH said that its board was continuing to explore whether the sale proceeds could be used for other investments or distributed wholly or partly to the shareholders or whether WCH could be sold or liquidated after the sale of the PCB Business. Pending the determination of WCH's future plans, WCH applied for and obtained from SGX-ST a waiver from the application of Clause 1009 of the Listing Manual (i.e. suspension of trading of the Shares on the SGX-ST) for a period of 3 months after completion of the Disposal. Subsequent applications were made for extension of the waiver and granted by the SGX-ST as WCH was not able to conclude negotiations with third parties as to the future plans. However the SGX-ST's approval for the final extension of the waiver period for suspension expired on 17th March, 2001 with the last day for the trading of the WCH Shares being 16th March, 2001. Trading of the WCH Shares on the SGX-ST has been suspended with effect from 19th March, 2001.

In an announcement dated 31st May, 2001, WCH informed WCH Shareholders of its board's views on the available options namely:-

a) declaration of dividend;

b) capital reduction;

c) voluntary liquidation; and

d) reverse takeover

WCH announced that none of the 3 options (a) to (c) above would be the best option to realise and maximise value for WCH Shareholders within a reasonable timeframe. Declaration of dividends and capital reduction were unsuitable due to a lack of sufficient franking tax credits and tax exempt profit. The liquidators whom the directors of WCH approached had indicated that the liquidation process would involve an assessment on the contingent liabilities (if any) of WCH (for example the warranties and indemnities given by WCH under the PCB Business Disposal Agreement, some of which are not limited in terms of time and/or quantum). This would affect the timing and quantity of the distribution following the liquidation.

At the time of the announcement on 31st May, 2001, the directors of WCH were still in negotiations with third parties on option (d) above. The board of WCH had also received an approach from a third party who was interested in acquiring WIH's stake in WCH and as this could offer an option to WCH minority shareholders, WCH had directed the interested party to WIH. Despite ongoing discussions with interested parties since 31st May, 2001, no satisfactory conclusion has been reached with interested parties as at the date of this announcement.

In the said announcement on 31st May, 2001, WCH again stated that it has up to 17th August, 2001 to inject a new business which meets the requirements for a new listing before it is delisted from the SGX-ST. IF WCH fails to meet these requirements by 17th August, 2001, the SGX-ST is empowered under Clause 1009 to proceed with the delisting of WCH Shares.

In view of the impending expiry of the 12 month period under Clause 1009 i.e. 17th August, 2001 (unless extended by the SGX-ST) and the lack of any further developments since the last announcement by WCH on 31st May, 2001, the Offer is being made by the Offeror as a means of providing minority shareholders of WCH with a resolution to the current impasses posed by the suspension of the WCH Shares which restricts the ability of WCH Shareholders to realise their investment in WCH. In addition, the Offer, if becoming unconditional, will allow the Offeror to access to the proceeds of the Disposal in form as reasonably practicable to the benefit of WIH and its shareholders.

The Offer Price at US$1.46 represents:-

i) a discount of approximately 5.19 per cent. to the audited net asset value per WCH Share as at 31st December, 2000 of S$2.67 or equivalent US$1.54 (converted using an exchange rate of S$1.73 = US$1.00 on 29th December, 2000 as quoted by Bloomberg);

ii) a premium of approximately 7.35 per cent. to the closing price of US$1.36 on 16th March, 2001, the last dealing day prior to this announcement;

iii) a premium of approximately 5.80 per cent. to US$1.38 on 16th March, 2001 which is the highest price during the course of the last 3 months at which the WCH Shares had traded prior to the last dealing day of 16th March, 2001; and

iv) a premium of approximately 3.55 per cent. to US$1.41 on 31st October, 2000 which is the highest price during the course of the last 12 months at which the WCH Shares had traded prior to the last dealing day of 16th March, 2001.

GENERAL

HSBC is acting as the financial adviser to the Offeror in relation to the Offer.

If the Offer becomes unconditional, the Offer and the Compulsory Acquistion together will constitute a discloseable transaction under the Listing Rules.

A circular setting out further details on the Offer will be dispatched to shareholders of WIH as soon as practicable.

The Offer may or may not become unconditional. Shareholders of WIH and investors should exercise caution when dealing in securities of WIH.

INTERPRETATION

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:-

“ANZ”	ANZ Singapore Limited
“Catel”	Catel (B.V.I.) Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of the WIH
“Code”	the Singapore Code on Take-overs and Mergers
“Compulsory Acquisition”	the compulsory acquisition by the Offeror of all the WCH Shares of the dissenting WCH Shareholders pursuant to Section 215(1) of the Singapore Companies Act
“Concert parties”	has the meaning ascribed to it in the Code
“Conditions”	the conditions which must be satisfied or waived before completion of the Offer as set out under the heading “Conditions of the Offer”
“Disposal”	the disposal by WCH of its PCB business pursuant to the PCB Business Disposal Agreement
“Group”	the WIH group of companies
“HK GAAP”	Hong Kong Generally Accepted Accounting Principles
“HKSE”	The Stock Exchange of Hong Kong Limited
“Hong Kong”	The Hong Kong Special Administrative Region of the People's Republic of China
“HSBC”	The Hongkong and Shanghai Banking Corporation Limited
“Independent Directors”	the independent directors of WCH, namely Messrs Lim Ho Seng and David Lim Teck Leong
“Listing Manual”	the listing manual of SGX-ST
“Listing Rules”	the Rules Governing the Listing of Securities on HKSE
“Offer”	the recommended voluntary conditional cash offer by the Offeror for WCH Shares as set out under the heading “The Offer”
“Offer Document”	the formal offer document to be despatched to the WCH Shareholders
“Offer Price”	for each WCH Share, US$1.46 in cash
“Offer Shares”	the WCH Shares subject to the Offer, other than those held at the date hereof by, or by nominees for, the Offeror or its subsidiaries
“Offer”	the recommended voluntary conditional cash offer by the Offeror for WCH Shares as set out under the heading “The Offer”
“Offeror”	Grinkgo Holdings Limited, a company incorporated in the British Virgin Islands and an indirect wholly owned subsidiary of WIH
“PCB”	printed circuit board
“PCB Business Disposal Agreement”	the business transfer agreement dated 29th June, 2000 and entered into between, inter alia, WCH and Pacific Circuits Limited
“SGX-ST”	Singapore Exchange Securities Trading Limited
“SIC”	The Securities Industry Council of Singapore
“Singapore Companies Act”	the Companies Act, Chapter 50 of Singapore
“WCH Shareholders”	the holders of WCH Shares
“WCH Shares”	issued and paid-up ordinary shares of S$0.50 each in the capital of WCH
“WCH”	Wong's Circuits (Holdings) Limited, a company incorporated in the Republic of Singapore and listed on SGX-ST
“WIH”	Wong's International (Holdings) Limited, a company incorporated in Bermuda with limited liability and whose shares are listed on HKSE
“WNH”	Wong's Industrial (Holdings) Limited, a company incorporated in Hong Kong and an indirect wholly owned subsidiary of WIH
“WSW”	W.S. Wong & Sons Company Limited
“HK$”	the lawful currency of Hong Kong
“S$”	the lawful currency of the Republic of Singapore
“US$”	the lawful currency of the United States of America

By Order of the Board of
Wong's International (Holdings) Limited
Wong Chung Ah, JohnnyChairmanHong Kong, 1st August, 2001