Cathay Pacific Airways Limited — M&A Activity 2000

Jan 3, 2000

Listed Company Information

IDT INT'L<0167> - Announcement 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. IDT International Limited (Incorporated in Bermuda with limited liability) PROPOSED SPIN-OFF AND SEPARATE LISTING OF I-COMM TECHNOLOGY LIMITED ON THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED SUMMARY Further to the announcement dated 12th November, 1999, the Directors announce that the Singapore Exchange has granted an approval-in-principle for the separate listing of I-Comm Shares on the Singapore Exchange. The Public Offering is dependent to a large extent on market conditions and there is no certainty that the Public Offering will be completed successfully. The Spin-off, the waiver of assured entitlements to the Shareholders and the Management Services Agreement are subject to, inter alia, the approval of the Shareholders at the Special General Meeting, a notice of which was sent to Shareholders on 24th December, 1999. A circular containing information of the proposed Spin-off, the Public Offering, the waiver of assured entitlements and the Management Services Agreement was despatched to Shareholders on 30th December, 1999. It is expected that the Public Offering will occur by the first quarter of 2000. Further announcement on the Public Offering will be made if and when appropriate. INTRODUCTION On 12th November, 1999, the Directors announced that they were considering a possible spin-off and separate listing on the Singapore Exchange of the Group's wholly-owned telecommunication products business. It was also announced that on the same date, I-Comm had made a confidential submission to the Singapore Exchange in connection with the Public Offering. On 22nd December, 1999, the Singapore Exchange had granted approval in-principle for the listing of I-Comm. The Directors consider that IDT and the Shareholders should benefit from the Public Offering. However, it should be noted that the Public Offering is dependent to a large extent on market conditions at the time of the launch of the Public Offering and there is no certainty that the Public Offering will be completed successfully or at all. The Company will remain its listing status on the Stock Exchange. Upon completion of the Public Offering and the listing of I-Comm on the Singapore Exchange, IDT will continue to hold approximately 75 per cent. of the enlarged total issued share capital of I-Comm. The Spin-off will constitute a material dilution of a major subsidiary pursuant to Practice Note 13 of the Listing Rules and is accordingly, subject to the approval of Shareholders. In addition, as the Shareholders are not being offered assured entitlements to subscribe for I-Comm Shares, the waiver of such assured entitlements is subject to the approval of minority Shareholders, being those Shareholders other than Mr. Raymond Chan and his Associates. Mr. Raymond Chan, the Chairman of the Group, together with his Associates are interested in approximately 52 per cent. shareholding in the Company. PUBLIC OFFERING OF I-Comm SHARES Number of I-Comm Shares It is contemplated that I-Comm, ICT Enterprises and the Underwriter will enter into an underwriting agreement pursuant to which the Underwriter will agree, subject to the terms and conditions thereof, to underwrite the issue by I-Comm of up to 38,718,000 new I-Comm Shares and the sale by ICT Enterprises of up to 38,718,000 I-Comm Shares that will be held by ICT Enterprises after the Internal Reorganisation, at an offer price to be agreed by the parties to the underwriting agreement. The number of new I-Comm Shares and existing I-Comm Shares that will be held by ICT Enterprises to be offered each represent approximately 12.5 per cent. of the issued share capital of I-Comm, as enlarged by the Public Offering. Offer Price It should be noted that the Public Offering has not yet been priced. The Offer Price contained in this announcement, being an anticipated offer price range, has been used to calculate the possible financial impact of the Public Offering on IDT only. The Offer Price is a wide range of prices with a lower limit of S$0.6847 per I-Comm Share, equivalent to approximately HK$3.18 per I-Comm Share, and an upper limit of S$0.8851 per I-Comm Share, equivalent to approximately HK$4.11 per I-Comm Share. It is anticipated, but there can be no guarantee, that the actual pricing of the Public Offering will be within this range. Based on the Offer Price of HK$3.18 to HK$4.11 per I-Comm Share, pro forma I-Comm earnings of approximately HK$70 million for the year ended 31st March, 1999 and 271,020,000 I-Comm Shares in issue after the Internal Reorganisation, the Public Offering will be priced at I-Comm's historic earnings multiple of I-Comm earnings of between 12.2 times and 15.8 times. Use of proceeds The estimated gross proceeds of the issue of the 38,718,000 new I-Comm Shares, before expenses, would be between approximately S$26.5 million and S$34.3 million, equivalent to between approximately HK$123.0 million and HK$159.2 million, and will be used to finance the continued growth of the businesses of the I-Comm Group. In particular, the I-Comm Group intends to use such proceeds, after expenses, of approximately S$24.9 million to S$32.6 million, equivalent to approximately HK$115.5 million to HK$151.3 million, as to: * approximately S$13.4 million, equivalent to approximately HK$62.2 million, for the expansion of the I-Comm Group's production facilities, which will include the purchase of additional machineries to increase the production capacity by 2000. This is to support the increase of additional assembly lines; * approximately S$2.5 million, equivalent to approximately HK$11.6 million, for the establishment of a remote engineering centre to support the I-Comm Group's on-going product and technology developments; and * approximately S$9.0 million to S$16.7 million, equivalent to approximately HK$41.7 million to HK$77.5 million, to increase the I-Comm Group's available working capital to fund the growth of its businesses. The estimated gross proceeds of the sale of the 38,718,000 I-Comm Shares by ICT Enterprises, before expenses, would be between approximately S$26.5 million and S$34.3 million, equivalent to between approximately HK$123.0 million and HK$159.2 million, and will be used to support the development of the IDT Group. The IDT Group intends to use such proceeds, after expenses, of approximately S$24.9 million to S$32.6 million, equivalent to approximately HK$115.5 million to HK$151.3 million, as to: * approximately HK$40.0 million to reduce bank debts; * approximately HK$31.0 million for marketing expansion plans in Europe, the U.S., Latin America and Asia Pacific for the business of the IDT Group; * approximately HK$15.5 million for further investments in the electronic learning aids business; * approximately HK$23.25 million for increasing the IDT Group's research and development capabilities in Hong Kong; and * approximately HK$5.75 million to HK$41.55 million to increase available working capital. Apart from the approval of the Shareholders, whether the Public Offering occurs is subject to a number of conditions, including market conditions, final approval of the listing application by the Singapore Exchange and the willingness of the Underwriter to proceed with the Public Offering in certain circumstances. No underwriting agreement has yet been entered into. It is currently expected that the Public Offering will occur by the first quarter of calendar year 2000, following which I-Comm Shares will commence trading on the Singapore Exchange. However, there can be no assurance that the Public Offering will take place in such time frame or at the indicative pricing range above, or that it will take place at all. Following the Public Offering, the IDT Group will continue to hold approximately 232,302,000 I-Comm Shares and 77,436,000 I-Comm Shares will be held by the public. ICT Enterprises, which will own 232,302,000 I-Comm Shares, representing approximately 75 per cent. of the enlarged issued share capital of I-Comm after the Public Offering, has given an undertaking not to dispose of, or transfer, any part of its interest in I-Comm for a period of six months from the listing date of I-Comm. ICT Enterprises has also undertaken that for the next six months thereafter, it will not reduce its shareholding to below 51 per cent. of the issued and paid up share capital of I-Comm. The I-Comm Shares will rank pari passu with each other in all respects including the right to any distribution of profits by way of dividend. Following completion of the Internal Reorganisation, the IDT Group will consist of the following principal operations: * the IDT Singapore Group which designs and manufactures a range of liquid crystal display-based consumer electronics products, including electronic measuring and timing devices, health care and other products; and * OSI Enterprises Limited, a wholly-owned subsidiary of the Company, holding the electronic personal information and games products division of the Group which designs and manufactures a range of electronic stationery products including electronic organisers, databanks, personal digital assistants, translators, etc. and hand-held electronic games products including electronic learning aids. BUSINESS OF THE I-Comm GROUP The I-Comm Group designs, develops, manufactures and distributes consumer telecommunication products. Currently, the I-Comm Group's main consumer telecommunication business lines are: (i) the ODM of mainly cordless and corded telephones, Caller-ID products and pagers; and (ii) the ODM of radio frequency transceivers and family radio products. The I-Comm Group's products are low frequency 46/49 Megahertz cordless telephones, high-frequency 900 Megahertz and digital spread spectrum cordless telephones, corded telephone, pagers, Caller-ID adjunct boxes, radio frequency transceivers and family radio products. The I-Comm Group operates a management and design centre in Hong Kong and currently bases its manufacturing facilities in Xixian, Shenzhen, PRC. The I-Comm Group has its own customer base separate from the IDT Group, and supplies most of its products to its external customers. INTERNAL REORGANISATION OF THE GROUP Conditional upon the approval by the Shareholders on the Spin-off, the Internal Reorganisation will be carried out to rationalise the structure of the Group. The simplified group structure of the Group and its telecommunication products business before the Internal Reorganisation is as follows: The simplified group structure immediately after the Internal Reorganisation and Public Offering is shown below: RELATIONSHIP BETWEEN THE IDT GROUP AND THE I-Comm GROUP FOLLOWING THE LISTING OF I-Comm and connected transactions After the Public Offering, I-Comm will continue to be managed by the IDT Group and there will continue to be a number of recurring transactions between the two groups. Recurrent transactions between the I-Comm Group and the IDT Group will be regulated by two agreements between I-Comm and IDT Limited and between I-Comm and IDT Singapore Group respectively. The following is a brief description of each of these connected transactions. Existing management services agreement Pursuant to the existing management services agreement dated 1st September, 1997 between IDT Communication and IDT Limited, IDT Limited provides certain sales and marketing, personnel and administrative, corporate, financial and accounting services as well as data processing services to IDT Communication. IDT Limited provides management services to IDT Communication to achieve cost effectiveness in performing common functions and facilities which have already been established within the Group, thus avoiding unnecessary duplication of effort and costs. Pursuant to the existing management services agreement, the Group pays the remuneration of all the directors of IDT Communication which is charged back to IDT Communication as management fees. Their remuneration is based on IDT Communication's turnover as a percentage of the Group's turnover. IDT Communication also shares in the payment of the remuneration of staff of the Group who have provided management services to IDT Communication. Their remuneration in this respect is based on the head count of these staff, who are based in Hong Kong serving IDT Communication, as a percentage of the total head count of the Group in Hong Kong. The fees payable by IDT Communication for the above management services, including remuneration of directors and staff of IDT Communication, in respect of the year ended 31st March, 1999 was approximately HK$21 million. This represents approximately 3.17 per cent. of the Group's net tangible asset as at 31st March, 1999 and approximately 1.17 per cent. of the Group's turnover for the year ended 31st March, 1999. Three common directors of IDT Communication who are also Directors of IDT are Mr. Raymond Chan, Mr. Barry John Buttifant and Mrs. Chan Pau Shiu Yeng, Shirley. The Management Services Agreement In connection with the Public Offering, the Management Services Agreement will be entered into between IDT Limited and I-Comm prior to the Public Offering, pursuant to which management services will be provided to all members of the I-Comm Group with the exception that there will not be any further sales, finance and accounting services. The Management Services Agreement will also include the provision of the office space and staff quarters in Hong Kong, and factory and dormitory space in the PRC used by the I-Comm Group which is previously not included in the existing management services agreement. The Management Services Agreement will accordingly supersede the existing management services agreement dated 1st September, 1997. There will be no change in the allocation basis between the Management Services Agreement and the existing management services agreement dated 1st September, 1997. The principal terms of the Management Services Agreement will be as follows: i. IDT Limited or its related corporations as the manager will provide to I-Comm and/or its subsidiaries certain management services in respect of: * corporate - secretarial and legal documentation services; * marketing - the use of IDT Limited's overseas liaison offices, including the use of its staff and premises; * electronic data processing - information technology support and maintenance services; and * personnel and administrative functions. The fees payable by I-Comm to IDT Limited in respect of the I-Comm Group executive directors' remuneration will be based on the I-Comm Group's turnover as a percentage of the Group's turnover. The fees payable in respect of the other services above will be based on the head count serving I-Comm in Hong Kong only, as a percentage of the total Hong Kong head count of the Group. The fees payable by I-Comm to IDT Limited in respect of other common expenses, for example water and electricity, will be calculated on a cost recovery basis and charged on a turnover allocation basis. Common premises-related expenses, for example in areas relating to electronic data processing and personnel and administrative functions, will be charged on a head count basis; ii. IDT Limited or its related corporations will also provide certain premises for the I-Comm Group's business operations, including staff quarters. The fees payable by I-Comm to IDT Limited in respect of direct premises-related expenses attributable to the I-Comm Group, will be calculated on a cost recovery basis and will be charged on an area allocation basis; iii. The Management Services Agreement will be for an initial fixed period from 1st April, 1999 to 31st March, 2001 and shall continue automatically thereafter, subject to termination by either party giving to the other three months' notice in writing; iv. The Management Services Agreement may also be terminated if I-Comm ceases to be able to continue the appointment of IDT Limited, or if either party goes into liquidation, becomes bankrupt or insolvent, has a receiver appointed or is unable to meet its debts as they fall due; v. A fee shall be paid by I-Comm to IDT Limited, quarterly in advance, for the provision of the management services as mentioned above, subject to annual adjustment as agreed by the parties starting from the financial year commencing 1st April, 1999. The Management Services Agreement aims to regularise the existing operational relationship between the IDT Group and the I-Comm Group. Under the Listing Rules, the Management Services Agreement will constitute a connected transaction in relation to the Company, which requires independent Shareholders' approval. To this end, Anglo Chinese has been appointed as the independent financial adviser to provide its opinion as to the fairness and reasonableness of the Management Services Agreement so far as the independent Shareholders are concerned. The Directors are of the view that the transactions contemplated by the Management Services Agreement will not have any adverse effect on the current financial and trading position of the Group. The Directors expect that the aggregate consideration receivable by IDT Limited under the Management Services Agreement in any financial year will not exceed 10 per cent. of the consolidated turnover of the I-Comm Group for such financial year. Hence, the independent Shareholders' approval will be sought in the Special General Meeting subject to the 10 per cent. limit in this respect. A separate independent Shareholders' approval will be sought if the aggregate consideration exceeds the Cap or if the Management Services Agreement remains in force after three years from the date the Management Services Agreement becomes effective. The Cap is subject to be reviewed by the independent Shareholders after three years from the date of the Management Services Agreement. The Directors, including the independent non-executive Directors, are of the opinion that the Management Services Agreement is fair and reasonable so far as the independent Shareholders are concerned having regard to the circumstances in which it is being entered into. As the Management Services Agreement will be subject to independent Shareholders' approval at the Special General Meeting and the transactions contemplated by the Management Services Agreement will be effected on a continuous basis, the Company will apply to the Stock Exchange for a waiver from the disclosure requirements of the details of such transactions contemplated by the Management Services Agreement by way of a press announcement. Mr. Raymond Chan and his Associates will not vote on the resolution to approve the Management Services Agreement at the Special General Meeting. Purchase of components and moulds from, and payment of processing fees for SMT and bonding services to, the IDT Singapore Group. In the year ended 31st March, 1999, the purchase of components and of moulds from, and processing fees paid to, the IDT Singapore Group by I-Comm Group amounted to approximately HK$19.4 million, HK$1.5 million and HK$5.1 million respectively, totaling HK$26 million, and represents approximately 1.45 per cent. of the Group's turnover as at 31st March, 1999. This also represents approximately 8.01 per cent. and approximately 3.93 per cent. of the Group's profit before tax and net asset value respectively. The I- Comm Group purchases plastic casings for its telecommunication products from the IDT Singapore Group. In addition to plastic casings, the I-Comm Group also purchases from the IDT Singapore Group the moulds produced specifically for the manufacture of such plastic casings. The IDT Singapore Group also provides SMT and bonding services to I-Comm Group. The estimated amount of the above purchases and processing fee payable by I-Comm Group to IDT Singapore Group for the year ending 31st March, 2000 is HK$38 million, representing approximately 3.3 per cent. of the turnover of IDT Group and approximately 5.9 per cent. of I-Comm Group's turnover for the year ended 31st March, 1999. The I-Comm Group, on occasion, uses the IDT Singapore Group for such supplies and services because the quotations provided for such supplies and services are price competitive compared to third party quotations for similar volumes and quantities and the IDT Singapore Group has sufficient capacity to fulfil the volumes ordered by the I-Comm Group. The purchases of such plastic casings, moulds, SMT and bonding services are based on normal commercial terms and on an arm's-length basis. A supply agreement will be entered into prior to the Public Offering between I-Comm and IDT Singapore to formalise the aforesaid arrangements. The principal terms of the agreement will be as follows:- i. the IDT Singapore Group will sell such quantities of the products as may be ordered by the relevant I-Comm Group member, subject to availability; ii. payment for the products will be made within 45 days from the date of the relevant invoices; and iii. the agreement may be terminated by either party giving to the other party not less than three months' notice in writing. Sale of products to the IDT Group The I-Comm Group, on occasion, sells telecommunication products, including transceivers, on an arm's-length basis to certain companies within the IDT Group. In the financial year ended 31st March, 1999, such sales amounted to approximately HK$1.6 million, representing approximately 0.09 per cent. of the Group's turnover for the year ended 31st March, 1999 and approximately 0.24 per cent. of the Group's net tangible assets as at 31st March, 1999. The estimated amount of the above sale of products by I-Comm Group to IDT Group for the year ending 31st March, 2000 is HK$2 million, representing approximately 0.17 per cent. and approximately 0.31 per cent. of the turnover of IDT Group and I-Comm Group respectively for the year ended 31st March, 1999. The IDT Group has overseas marketing offices in the US, France, Germany, Italy, United Kingdom, Spain, Switzerland and Japan, where some of the I-Comm Group's products are also marketed. The customers of the IDT Group may place orders for I-Comm Group's products through these overseas marketing offices. In such instances, I-Comm Group then sells the I-Comm Group's products to the IDT Group at the normal market price, and on normal commercial terms, for on-sale by IDT Group to its customers. All the transactions in relation to the sale and supply of products and components and moulds and payment of processing fees among members of the IDT Group and the I-Comm Group are on normal commercial terms and in the ordinary and usual course of business, being terms similar to those charged to (or by) other independent third parties. No connected persons of the Company have any direct substantial shareholding in the I-Comm Group or members of the IDT Singapore Group concerned. Accordingly, under the Listing Rules, such transactions fall within the exemption under rule 14.24(4) of the Listing Rules and are not subject to Shareholders' approval, or any disclosure as connected transactions. The Directors, including the independent non-executive Directors, consider that the terms of the above transactions are fair and reasonable so far as the Shareholders are concerned. Executive Directors of I-Comm Currently, all the executive directors of I-Comm are Directors of the Company. To ensure the independence of I-Comm, the Company intends to appoint the current general manager of the I-Comm Group as a non-common executive director of I-Comm within twelve months after the Public Offering. REASONS FOR AND BENEFITS OF THE LISTING OF I-Comm The Public Offering will enable I-Comm Group and the IDT Group to raise proceeds for the expansion of their respective operations, in a highly cost-effective manner. Based on the indicative Offer Price, the Company would not be able to raise an equivalent amount of equity capital from the issue of new Shares without incurring significantly higher dilution of the interests of Shareholders. The Public Offering will not cause a dilution of earnings per Share as the return on the funds raised by the Company through the Public Offering and the return earned by I-Comm from the proceeds of the Public Offering are expected to more than compensate the Company for the reduction in its holding in I-Comm. It is also expected that the Public Offering will on completion give rise to an exceptional profit for the Group of between HK$174 million and HK$236 million. In addition, the Directors consider the listing of I-Comm in Singapore as a long term strategy which will be beneficial to the IDT Group and the I-Comm Group for the following reasons: (i) the listing will stimulate greater management focus on the telecommunication business and promote a greater public awareness of its products and services in Singapore and the Asian region, which is expected to be particularly beneficial in the areas of additional resource capability for research and development and accessing the markets of the Asian region; (ii) being listed separately as an independent business entity will enable the telecommunication business to develop its own capability to raise funds independently for its expansion, thereby releasing the capital of the Company for expansion in other operations; (iii) a separate listing will allow investors to invest directly in the telecommunication business and assess the value of the telecommunication business separately from other business that the Company currently operates; and (iv) the Company will continue to hold approximately 75 per cent. interest in the enlarged issued capital of I-Comm as a long term investment and therefore will be able to benefit from any future growth of I-Comm's business, facilitated by, and arising from, the separate listing of I-Comm. Overall, the Directors consider that the Spin-off will bring considerable benefits to both the Company and the Shareholders. Based on the financial data which will be published by I-Comm in the prospectus with respect of the Public Offering, at the minimum Offer Price, the I-Comm Shares are to be priced at a historic earnings multiple of approximately 12.2 times. This compares with a historic earnings multiple of 7.3 times for the Shares of IDT. The Public Offering, therefore, enables IDT to raise permanent equity capital at a more favourable price than it could if it were to issue its own Shares at the current market price. The Public Offering will result in an increase in the Company's net asset value per Share of at least HK$0.089 based on the pro forma net assets at 31st March, 1999. Furthermore, based on the Offer Price, the Public Offering will result in I-Comm having a market capitalisation of between HK$984.1 million and HK$1,271.8 million, as compared with the market capitalisation of the Company of HK$1,790 million based on HK$0.91 per Share as at the Latest Practicable Date. ASSURED ENTITLEMENTS Under the Listing Rules, a listed issuer which is spinning-off a subsidiary by obtaining a listing for such subsidiary, whether in Hong Kong or overseas, is required to offer its shareholders a proportion of any shares issued or sold under assured entitlements, unless minority shareholders agree in general meeting to waive such entitlement. The Directors do not consider that the Company's largely Hong Kong minority Shareholders would respond in any numbers to assured entitlements because the shares of I-Comm would only be listed in Singapore and it would thus be an investment which would be difficult for them to follow and trade. In any event, they can participate in the future of I-Comm Group indirectly by investing in IDT on relatively advantageous terms. For these reasons, the Directors do not consider that the effort and expense of preparing a prospectus of I-Comm for registration in Hong Kong is worthwhile. Without registering a prospectus in Hong Kong, it would not be lawful for the Company to offer the Shareholders assured entitlements in the Public Offering. Under the Listing Rules, only minority Shareholders are permitted to vote on the resolution to waive assured entitlements, set out as resolution numbered 2 in the notice of the Special General Meeting. As Mr. Raymond Chan and his Associates hold approximately 52 per cent. of the issued share capital of IDT as at the Latest Practicable Date, they will not vote on this resolution. Anglo Chinese has been appointed as the independent financial adviser to recommend the minority Shareholders in relation to the waiver of the assured entitlements. FINANCIAL EFFECTS on THE GROUP The following pro forma net assets of the I-Comm Group and the Group are based on the pro forma net assets of the I-Comm Group and the Group as at 31st March, 1999 and adjusted as follows: Pro forma Consolidated Balance Sheets (a) Pro forma net assets of the I-Comm Group: As at 31st March, 1999 Minimum Maximum Offer Price Offer Price HK$ million HK$ million Net current assets - Before the Public Offering 69 69 - Estimated net proceeds from the Public Offering 116 151 185 220 Fixed assets 44 44 Other assets 9 9 Advances from the IDT Group (20) (20) Deferred taxation (2) (2) Minority interests (6) (6) Pro forma net assets 210 245 Capitalisation of advances from the IDT Group (Note 1) 20 20 Adjusted net assets 230 265 (b) Pro forma net assets of the Group: As at 31st March, 1999 Minimum Maximum Offer Price Offer Price HK$ million HK$ million Audited net tangible assets of the Group as at 31st March, 1999 before the Public Offering 661 661 Equivalent to HK$ per Share (Note 2) 0.336 0.336 Add: Estimated net proceeds from issue of 38,718,000 new I-Comm Shares 116 151 Add: Estimated net proceeds from sale of 38,718,000 existing I-Comm Shares 116 151 Less: Minority interest of the public investors in I-Comm (Note 3) (58) (66) Pro forma net tangible assets of the Group after the Public Offering 835 897 Pro forma net asset value per Share (Note 2) (HK$) 0.425 0.456 Notes: (1) The advances from the IDT Group will be capitalised in accordance with the Internal Reorganisation, details of which are set out on pages 9 to 12 of the circular dated 30th December, 1999. (2) Based on 1,966,991,372 Shares in issue as at the Latest Practicable Date. (3) Based on 25% of the adjusted net asset value of the I-Comm Group as at 31st March, 1999 as calculated under (a) above. CONDITIONS OF THE SPIN-OFF The Spin-off will be conditional, inter alia, upon the following: 1. the Shareholders approving the Spin-off at the Special General Meeting; and 2. the minority Shareholders approving the non- provision of assured entitlements under the Public Offering to Shareholders at the Special General Meeting. SPECIAL GENERAL MEETING The Special General Meeting will be held at the Garden Room, 2nd Floor, Hotel Nikko Hongkong, 72 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong on 10th January, 2000 at 10:00 a.m.. A notice convening the Special General Meeting and a form of proxy in connection therewith were despatched to Shareholders on 24th December, 1999. DESPATCH OF CIRCULAR The Directors wish to announce that a circular dated 30th December, 1999 containing, inter alia, information on the Spin-off, the waiver of assured entitlements to the Shareholders and the Management Services Agreement was despatched to Shareholders on 30th December, 1999. The notice convening the Special General Meeting refers to a circular to Shareholders dated 24th December, 1999. However, the circular was not ready for despatch to Shareholders on 24th December, 1999 and the circular was now dated and issued on 30th December, 1999 instead of 24th December, 1999. Shareholders should take note that the Company has not issued any circular dated 24th December, 1999 and the date of the circular as referred to in the ordinary resolutions set out in the notice convening the Special General Meeting shall be amended to read 30th December, 1999 instead of 24th December, 1999. Further announcement on the Public Offering will be made if and when appropriate. Definitions In this announcement, unless the context requires otherwise, the following expressions have the following meanings: "Anglo Chinese" Anglo Chinese Corporate Finance, Limited, an investment adviser and securities dealer registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong) "Associates" has the same meaning ascribed to such expression by the Listing Rules "Caller-ID" caller identification, a feature which displays the caller's phone number "Cap" the aggregate consideration payable by I-Comm Group to IDT Limited under the Management Services Agreement shall not exceed 10 per cent. of the consolidated turnover of the I-Comm Group in such financial year "Director(s)" the director(s) of IDT "Group" IDT and its subsidiaries including the I-Comm Group and the IDT Singapore Group "HK$" and "HK cents" Hong Kong dollars and cents respectively, the lawful currency of Hong Kong "Hong Kong" the Hong Kong Special Administrative Region of the PRC "I-Comm" I-Comm Technology Limited, a company incorporated in Bermuda, the shares of which are proposed to be listed on the Singapore Exchange "I-Comm Group" I-Comm and IDT Holdings (BVI) Limited, IDT Communication, Auto System Technology Limited, Integrated Display Technology Telecommunications (Shenzhen) Co., Ltd., Super Win Electronics Limited, Tekcom Industries Limited, and Tekcom Telecommunication (Shenzhen) Co., Ltd., which will become wholly-owned subsidiaries of I-Comm after the Internal Reorganisation "I-Comm Share(s)" existing share(s) of US$0.01 each in the share capital of I-Comm which shall be consolidated into share(s) of US$0.05 each as part of the Internal Reorganisation "ICT Enterprises" Integrated Communication Technology Enterprises Ltd., a wholly-owned subsidiary of IDT currently holding a 100 per cent. interest in I-Comm, and the vendor of the 38,718,000 I-Comm Shares "IDT" or "the Company" IDT International Limited, a company incorporated in Bermuda, the Shares of which are listed on the Stock Exchange "IDT Communication" IDT Communication Technology Limited, a wholly-owned subsidiary of the Company, which will become a wholly-owned subsidiary of I-Comm after the Internal Reorganisation "IDT Group" IDT and its subsidiaries, excluding the I-Comm Group "IDT Limited" Integrated Display Technology Limited, a wholly-owned subsidiary of IDT "IDT Singapore Group" IDT Singapore and its subsidiaries "IDT Singapore" IDT Holdings (Singapore) Limited, a company incorporated in the Republic of Singapore, the shares of which are listed on the Singapore Exchange, and is currently 65 per cent. owned by IDT "Internal Reorganisation" a restructuring exercise to rationalise the structure of the Group in relation to the Spin-off (as more particularly described on p.9 of the circular despatched to Shareholders on 30th December, 1999), which is expected to be completed after the Special General Meeting but before the Public Offering "Latest Practicable Date" 20th December, 1999, being the latest practicable date prior to the printing of this announcement for ascertaining certain information contained herein "LCD" liquid crystal display "Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange "Management Services Agreement" a management services agreement to be entered into between IDT Limited and I-Comm after the Internal Reorganisation but before the Public Offering "ODM" original design manufacture "Offer Price" an anticipated price range of S$0.6847 to S$0.8851 per I-Comm Share, equivalent to approximately HK$3.18 to HK$4.11 per I-Comm Share "PRC" the People's Republic of China which for the purpose of this announcement, excludes Hong Kong "Public Offering" the proposed invitation in the Republic of Singapore of up to 38,718,000 new I-Comm Shares offered at the Offer Price and a sale of up to 38,718,000 I-Comm Shares that will be held by ICT Enterprises after the Internal Reorganisation at the Offer Price, within twelve months from the date of the approval of the initial public offer by the Shareholders "S$" Singapore dollars, the lawful currency of the Republic of Singapore "Share(s)" share(s) of HK$0.10 each in the capital of IDT "Shareholder(s)" holder(s) of the Share(s) "Singapore Exchange" Singapore Exchange Securities Trading Limited "SMT" surface mount technology "Special General Meeting" special general meeting of IDT to be held at the Garden Room, 2nd Floor, Hotel Nikko Hongkong, 72 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong on 10th January, 2000 at 10:00 a.m., notice of which was sent to Shareholders on 24th December, 1999 "Spin-off" the proposed separate listing of I-Comm on the Singapore Exchange and the Public Offering "Stock Exchange" The Stock Exchange of Hong Kong Limited "Underwriter" BNP Prime Peregrine (Singapore) Limited, a wholly-owned subsidiary of Banque Nationale de Paris "U.S." United States of America Unless otherwise stated, translations of Singapore dollars into Hong Kong dollars have been calculated using an exchange rate of HK$4.64 : S$1. By order of the board of Directors IDT International Limited Raymond Chan Chairman Hong Kong, 30th December, 1999