Central Development Holdings Limited — M&A Activity 1999

Jun 29, 1999

Listed Company Information

PARAMOUNT<0282>,SEAPOWER RES I<0269> & SEAPOWER INT'L<0240>-J. Announcement & Resumption of PARAMOUNT & SEAPOWER INT'L NEXT MEDIA INTERNATIONAL HOLDINGS LIMITED PARAMOUNT PUBLISHING GROUP LIMITED Proposed Very Substantial Acquisitions Considered as Application for New Listing and Connected Transactions SEAPOWER RESOURCES INTERNATIONAL LIMITED SEAPOWER INTERNATIONAL HOLDINGS LIMITED Proposed Very Substantial Acquisitions and Connected Transactions JOINT ANNOUNCEMENT Proposed Acquisition of Interests in the Web Site "nextmedia.com" and EasyFinder Proposed Disposal of Convertible Notes Proposed Assignment of Interest Receivable to Next and Proposed Placing of 630,000,000 new Shares at HK$0.20 each Financial Adviser to Next Media International Holdings Limited Yu Ming Investment Management Limited Paramount Publishing Group Limited ("Paramount"), Seapower International Holdings Limited ("SIH"), Seapower Resources International Limited ("SRI") and Next Media International Holdings Limited ("Next") entered into a heads of agreement (the "Agreement") on 25th June, 1999. Pursuant to the Agreement, the parties shall use reasonable endeavours to agree and execute formal agreements (the "Formal Agreements") on or before 26th July, 1999 (or such later date as may be agreed between the parties) in respect of (i) the sale and purchase between Paramount and Next of all the intellectual property and other rights, title and interests in and to the internet domain name "nextmedia.com" and web site currently operated by Next at such domain name together with the benefit of licences to use content for the purposes of such web site and other associated assets as determined by Next and the entire interests of Next in the publishing rights, business and masthead of EasyFinder, in consideration of the issue of new shares of HK$0.20 each in the capital of Paramount issued at par (together the "Acquisitions"). The issue price of HK$0.20 per share represents a discount of approximately 75 per cent. to the closing price of HK$0.80 per share on 22nd June, 1999; (ii) the sale and purchase between Next and SRI of HK$105 million convertible notes issued by Paramount due 27th February, 2001 in an aggregate principal amount of HK$140 million (the "Notes") together with all interest accruing thereon from the date of the Agreement (the "Notes Disposal"); (iii) the assignment to Next of all interest accrued under the Notes as at the date of the Agreement and interest that will continue to accrue under the Retained Notes (as defined below) and all interest accrued and accruing under inter company loans made by SIH, SRI and/ or their subsidiaries ("the Seapower Group") to Paramount for a consideration amounting to 30 per cent. of the face value of the approximately HK$27 million accrued interest as at the date of the Agreement; (iv) the placing of new shares in Paramount by Yu Ming Investment Management Limited ("Yu Ming") on behalf of Paramount. All the above transactions (the "Transactions") are inter-conditional. Paramount has appointed Yu Ming as the placing manager for the placing of 630,000,000 new shares at a placing price of HK$0.20 per share. The Agreement also provides that Next will give preference to Paramount in contracting for printing services for the "Next Magazine", "Sudden Weekly" and "Eat and Travel", weekly magazines published by Next, subject to completion of the Transactions. The consideration for such printing services will be negotiated on an arms length basis and on normal commercial terms which are comparable to those offered by Paramount to any independent third party. The Agreement is not legally binding in respect of the Transactions. The Agreement is only legally binding on the parties to use their reasonable endeavours to enter into the Formal Agreements. If the Formal Agreements are not entered into on or before 26th July, 1999 or such later date as the parties may agree, the Agreement will lapse and the Transactions will not be effected. Details of the Formal Agreements will be announced in the event that these agreements are entered into. Upon completion of the Transactions (before conversion of the Sold Notes (as defined below) by Next and placement of new shares in Paramount by Yu Ming to third parties), Next will be interested in 84.3 per cent. of the enlarged issued share capital of Paramount and will become the controlling shareholder of Paramount. Pursuant to Rules 14.06 and 14.23(1)(b) of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), the Acquisitions will constitute very substantial acquisitions and connected transactions for Paramount and SIH. Paramount will be treated as a new applicant for listing under the Listing Rules. The new listing application would be subject to approval of the Listing Committee of the Stock Exchange, and the Acquisitions would be subject to approval of the independent shareholders of Paramount (other than SIH and its associates and concert parties) (the "Paramount Independent Shareholders") and the shareholders of SIH (the "SIH Shareholders"). Such approvals may or may not be granted. To meet the new listing requirements. Paramount also has to satisfy, amongst other things, profit requirements as set out in Chapter 8 of the Listing Rules. A listing document of Paramount containing, inter alia, details of the Acquisitions, will be despatched to the shareholders of Paramount as and when appropriate. Investors should note that the Transactions are subject to satisfaction of a number of conditions. The Transactions may or may not proceed. In the meantime, investors are advised to exercise caution in dealing in the shares of Paramount, SIH and SRI. THE AGREEMENT Pursuant to the Agreement, the parties shall use reasonable endeavours to agree and execute the Formal Agreements on or before 26th July, 1999 or such later date as may be agreed between the parties in respect of the Transactions. Date: 25th June, 1999 Parties: Paramount A company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange and whose principal business is the provision of printing, publishing and reprographic services The audited net loss before and after taxation of Paramount for the year ended 31st March, 1997 were approximately HK$74.76 million and HK$75.28 million (which included exceptional items of approximately HK$39.74 million) respectively. The audited net loss before and after taxation of Paramount for the year ended 31st March, 1998 were approximately HK$59.86 million and HK$59.54 million respectively. There was no exceptional item for the year ended 31st March, 1998. The audited consolidated net asset value of Paramount as at 31st March, 1998 was approximately HK$194 million and the unaudited consolidated net asset value of Paramount as at 30th September, 1998 was approximately HK$165 million, after taking into account the interim loss of HK$30.1 million for the six months ended 30th September, 1998. Based on 234,686,728 issued shares in Paramount (the "Shares") as at the date of this announcement, the net asset value per Share as at 31st March, 1998 and 30th September, 1998 were approximately HK$0.83 (the "NAV per Share") and HK$0.70 respectively. As at the date of this announcement, Paramount has 234,686,728 Shares in issue. Other than the Notes and options granted under its share option scheme, Paramount has no other securities convertible into Shares. SIH A company incorporated in Bermuda, the shares of which are listed on the Stock Exchange. SIH is interested in approximately 63 per cent. of the existing issued share capital of Paramount, and its principal business is property and investment holding and the provision of cold storage warehousing, logistics, printing, publishing and reprographics services. SRI A company incorporated in the Cayman Islands, the shares of which are listed on the Stock Exchange. It is currently the sole holder of the Notes and is owned as to approximately 44 per cent. by SIH. Next A company incorporated in the British Virgin Islands. Its principal business activities are newspaper printing, book publication, publishing of the weekly magazines, including "Next Magazine", "EasyFinder", "Sudden Weekly" and "Eat and Travel" and the management and operation of the web site "nextmedia.com". Next and its shareholders and directors are not connected with and are not acting in concert with the directors, chief executives or substantial shareholders of Paramount, SIH or SRI or any of their respective subsidiaries or an associate of any of them. As at the date of this announcement, Next and its associates are not interested in any Shares or other securities issued by Paramount or SIH. Mr. Lai Chee Ying, Jimmy is interested in 81.3 per cent. of Next and is the controlling shareholder of Next. 6.8 per cent. is held by a discretionary trust established for the benefits of Lai Chee Ying, Jimmy's family. The remaining 11.9 per cent. interest of Next is owned by employees of Next. The board of directors of Next are Mr. Lai Chee Ying, Jimmy, Mr. Ho Kwok Fai, Morris, Mr. Yeung Wai Hong and Mr. Kok Hon Kay, Peter. Transactions: 1. Acquisition of the web site "nextmedia.com" by Paramount Next will create a new holding company (the "Dot Company") and transfer to the Dot Company all of its intellectual property and other rights, title and interests in and to the internet domain name "nextmedia.com" and web site currently operated by Next at such domain name together with the benefit of licences to use content for the purposes of such web site and other associated assets (such as computers and other office equipment) as determined by Next (the "Web Business"). Next commenced the Web Business in February, 1996. For a consideration of HK$97,500,000, Next will either dispose of the Dot Company to Paramount or, alternatively, Next may at its option transfer the Web Business (including the associated assets) directly to Paramount or any of its subsidiaries. The consideration was arrived at after arm's length negotiation and with reference to the average price to revenue ratio and the value of each page view of most U.S. internet related stocks. The consideration will be settled by way of the issue of new Shares at the par value of HK$0.20 each which represents a discount of approximately 76 per cent. to the NAV per Share. Next will be issued 487,500,000 new Shares which will represent approximately 207.7 per cent. of the existing issued share capital of Paramount. "nextmedia.com" has an average daily page views of over 500,000. The web site is one of the most visited web pages in Hong Kong for the sale and purchase of secondhand cars and for recruitment, free of charge. Viewers can also access online EasyFinder and Sudden Weekly, free of charge, and a full version of the Next Magazine for a monthly subscription fee. "nextmedia.com" currently has a paid subscriber base of over 8,000. Assuming the structure of Dot Company had been in existence since 1st April, 1997, the unaudited pro forma net loss before and after taxation and extraordinary items of the Dot Company for the year ended 31st March, 1998 would be approximately HK$1.08 million. The unaudited pro forma net profits before and after taxation and extraordinary items of the Dot Company for the year ended 31st March, 1999 would be approximately HK$1.06 million and HK$0.87 million respectively. As the above figures are estimates made by Next, they will be subject to adjustments upon review by the reporting accountants. Although the issue price for the consideration shares represents a discount of approximately 75 per cent. to the closing price of HK$0.80 per Share on 22nd June, 1999 (the "Suspension Day"), the day immediately preceding the date of suspension for the trading in the Shares, the issue price represents a premium of 6.95 per cent. to the average closing price of HK$0.187 per Share (the "First Closing Price") for the 10 trading days ended 15th June, 1999, and a premium of 10.50 per cent. to the average closing price of HK$0.181 per Share (the "Second Closing Price") for the 20 trading days ended 15th June, 1999, the day immediately preceding the trading day when unusual price movements occurred. The directors of Paramount ("Paramount Directors") believe that the surge of the Share price from HK$0.195, the closing price of the Shares on 15th June, 1999, to HK$0.80, the closing price of the Shares on the Suspension Day, is the result of speculation of Next's participation in Paramount. Having considered the premium of the issue price to the First Closing Price and the Second Closing Price, the huge potential of the Web Business in view of the increasing popularity of internet, the interim loss of HK$30.1 million for the six months ended 30th September, 1998, weakening financial position and an anticipated downward revision of value of the factory building, the Paramount Directors consider that the issue price is fair and reasonable despite at a discount to the NAV per Share, and that the acquisition of the Dot Company or the Web Business is in the interests of Paramount and the Paramount Independent Shareholders. 2. Acquisition of EasyFinder by Paramount Next will create a new holding company (the "Magazine Company") and transfer to the Magazine Company its entire interests in the publishing rights, business and masthead of EasyFinder (the "EasyFinder Business"), a weekly magazine circulated in Hong Kong since September 1991. EasyFinder is a trend and fashion oriented magazine targeted at readers between the age of 14 and 25. It has a circulation of over 130,000 copies per week and a readership of over 370,000. EasyFinder has a supplemental book called Easy Express which mainly focuses on classified advertisement for secondhand cars, jobs and careers, and second hand consumer goods and collectibles. Assuming the structure of the Magazine Company had been in existence since 1st April, 1997, and that EasyFinder had been printed by Paramount since then, the unaudited pro forma net profits before and after taxation and extraordinary items of the Magazine Company for the year ended 31st March, 1998 would be approximately HK$42.34 million and HK$33.86 million respectively. The unaudited pro forma net profits before and after taxation and extraordinary items of the Magazine Company for the year ended 31st March, 1999 would be approximately HK$28.49 million and HK$25.01 million respectively. As the above figures are estimates made by Next, they will be subject to adjustments upon review by the reporting accountants. For a consideration of HK$237,600,000, Next will either dispose of the Magazine Company to Paramount or, alternatively, Next may at its option transfer the EasyFinder Business directly to Paramount or any of its subsidiaries. The consideration represents approximately 7.02 and 9.50 times the net profit after taxation and extraordinary items of the Magazine Company for the year ended 31st March, 1998 and 31st March, 1999 respectively. The consideration was arrived at after arm's length negotiation and will be settled by way of the issue of new Shares at the par of HK$0.20 each which represents a discount of approximately 76 per cent. to the NAV per Share. Next will be issued 1,188,000,000 new Shares which will represent approximately 506.2 per cent. of the existing issued share capital of Paramount. As mentioned in paragraph numbered 1 above, the Paramount Directors consider that the issue price is fair and reasonable despite at a discount to the NAV per Share, taking into account the interim loss of HK$30.1 million for the six months ended 30th September, 1998, weakening financial position and an anticipated downward revision of value in respect of the factory building. Having considered the large number of readership of EasyFinder and the recurrent income generated by the EasyFinder Business, the Paramount Directors consider that the consideration is fair and reasonable and that the acquisition of the Magazine Company or the EasyFinder Business is in the interests of Paramount and the Paramount Independent Shareholders. 3. Sale by SRI of HK$105 million principal amount of the Notes to Next and conversion of the remaining HK$35 million principal amount of the Notes into new Shares SRI is interested in the Notes in an aggregate principal amount of HK$140 million. The Notes bear interest at the rate of 2 per cent. above the Hong Kong Interbank Offered Rate ("HIBOR"). The Notes are convertible into new Shares at a conversion price of HK$0.45 per new Share, subject to adjustment. Upon completion of the Notes Disposal, Next intends to procure that Paramount lowers the interest rate of the Notes to HIBOR plus 0.5 per cent. per annum subject to approval by all relevant parties, including, inter alia, the Stock Exchange. SRI will sell the Notes in an aggregate principal amount of HK$105 million (the "Sold Notes") to Next with all interest accruing thereon from the date of the Agreement for HK$12 million payable in cash. In accordance with the terms of the Notes, any transfer of the Note (including the Notes Disposal) is subject to approval of the Stock Exchange, SRI will write off approximately HK$93 million (HK$105 million less HK$12 million), before taking into account the effect of interest from the date of the Agreement to the date of the completion of the Notes Disposal, of its investment in the Notes upon completion of the Notes Disposal. The Sold Notes are convertible into 233,333,333 new Shares (the "Conversion Shares") if converted in full at the current conversion price. The Conversion Shares represent approximately 99.4 per cent. of the existing issued share capital of Paramount. The consideration paid for the Sold Notes was arrived at after arm's length negotiation and represents a discount of approximately 88.6 per cent. to the principal value of the Sold Notes. SRI will convert in full the remaining Notes in an aggregate principal amount of HK$35 million (the "Retained Notes") held by SRI into 77,777,777 new Shares (the "Retained Shares") at the current conversion price on or before completion of the Transactions. The Retained Shares represent approximately 33.1 per cent. of the existing issued share capital of Paramount and approximately 24.9 per cent. of the issued share capital of Paramount as enlarged by the issue of the Retained Shares. The Notes Disposal forms part of the Transactions. The directors of SRI believe that Next's businesses will bring synergy to the business of Paramount and the potential increase in value in the Retained Shares under the new management of Paramount outweighs the loss in the disposal of the Sold Notes and therefore consider that the Notes Disposal is in the interest of SRI. Next and its associates are not connected with SRI, or the directors, chief executive or substantial shareholders of SRI, or any of their respective subsidiaries or an associate of any of them. 4. Seapower Group assigning interest receivable from Paramount to Next Seapower Group has been providing financial support to Paramount. As at the date of the Agreement, Paramount owed interest to Seapower Group, accrued under all of the Notes and on inter company loans made by Seapower Group, in an aggregate amount of approximately HK$27 million (the "Accrued Interest"), of which approximately HK$17 million interest was accrued under the Notes and approximately HK$10 million interest was accrued on the inter company loans. The principal amount of the inter company loans is not dealt with in this transaction. Interest will continue to accrue under the inter company loans and under the Retained Notes. Seapower Group will cause all rights, title and interest in and to the Accrued Interest, together with interest accruing under the inter company loans and the Retained Notes from the date of the Agreement until completion of the Formal Agreements or in the case of the Retained Notes until conversion (if earlier), to be assigned to Next at a price equal to 30 per cent. of the face value of the Accrued Interest. Based on the Accrued Interest of approximately HK$27 million as at the date of the Agreement, the Seapower Group will write off approximately HK$18.9 million of its interest in the Accrued Interest. Upon completion of the Transactions, Next intends to waive an amount equal to approximately 70 per cent. of its remaining rights to the Accrued Interest. Next and its associates are not connected with SIH, SRI, or the respective directors, chief executives or substantial shareholders of SIH and SRI, or any of their respective subsidiaries or an associate of any of them. 5. Issue and placement of new Shares Pursuant to the Agreement, Paramount will appoint Yu Ming to place such number of new Shares as shall be agreed to professional and/ or individual investors to raise funds for working capital and for expansion of the Web Business and at the same time to satisfy the minimum level of Shares held by the public as required by the Listing Rules, subject to approval of the Paramount Independent Shareholders. Subsequent to the date of the Agreement, Paramount has appointed Yu Ming as the placing manager for the placing of 630,000,000 at a placing price of HK$0.20 per share. Approximately HK$126 million (before expenses) will be raised in the placement. The placement and the transactions contemplated under the Formal Agreements to be entered into are inter-conditional. Yu Ming is not connected with Paramount, or the directors, chief executive or substantial shareholders of Paramount or any of its subsidiaries or an associate of any of them. It is the intention of Next and parties acting in concert with it that the listing of the Shares on the Stock Exchange be maintained after completion of the Transactions. Accordingly, the directors and proposed directors of Paramount and the directors of Next will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that a sufficient public float exists for the Shares as required under the Listing Rules. The Stock Exchange has stated that, in the event that less than 25 per cent. of the issued Shares are in public hands following completion of the Transactions, it will closely monitor the trading in the Shares. If the Stock Exchange believes that a false market exists or may exist in the trading of the Shares or that 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 has also stated that if Paramount remains a listed company, any further acquisitions or disposals of assets by Paramount and its subsidiaries will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require Paramount to issue a circular to its shareholders irrespective of the size of the proposed transactions, particularly when such proposed transaction represents a departure from the principal activities of Paramount. The Stock Exchange also has the power to aggregate a series of transactions and any such transaction may result in Paramount being treated as a new applicant for listing and subject to the requirements for new applicants as set out in the Listing Rules. Conditions: Completion of the Formal Agreements will be conditional upon the following events occurring within 3 months from the date of signing of the Formal Agreements: 1. confirmation being received from the Stock Exchange that the listing of the Shares on the Stock Exchange will not be withdrawn as a result of the entering into or completion of the Formal Agreements; 2. the Executive Director of the Corporate Finance Division of the Securities and Futures Commission (the "SFC") or his delegates granting a waiver (the "Whitewash Waiver") of the obligation of Next to extend a general offer under the Hong Kong Code on Takeovers and Mergers (the "Code") subject to approval by the Paramount Independent Shareholders and such approval being obtained in accordance with the Code; 3. approval by Paramount Independent Shareholders for the sale and purchase of the Magazine Company or the EasyFinder Business and the Dot Company or the Web Business and the undertaking of printing business for Next; 4. approval by the shareholders of Paramount of the increase in the authorized and issued share capital of Paramount and the issue of new Shares to Next and the issue of new Shares pursuant to the placement of new Shares or otherwise as may be required; 5. approval of the SIH Shareholders and shareholders of SRI, if any is required, for the transactions contemplated in the Agreement; 6. approval by the Stock Exchange of the listing of new Shares to be issued as contemplated in the Agreement; 7. approval by the Stock Exchange in respect of the Notes Disposal; 8. Next being satisfied with the financial and legal due diligence exercises to be conducted on Paramount; 9. Paramount being satisfied with the financial and legal due diligence exercises to be conducted on the rights, obligations, interests and assets comprised in the Web Business and the EasyFinder Business; 10. such other approvals or consents required by any applicable law or regulation or required pursuant to any third party obligation being obtained; and 11. such other conditions that may be subsequently agreed by the parties prior to the entering into of the Formal Agreements. Intention to allocate printing contract to Paramount The Agreement also provides that Next will give preference to Paramount in contracting for printing services for "Next Magazine", "Sudden Weekly" and "Eat and Travel" weekly magazines published by Next, subject to completion of the Transactions. The consideration for such printing services will be negotiated on an arms length basis and on normal commercial terms which are comparable to those offered by Paramount to any independent third party. As the printing jobs for Next will constitute connected transactions between Next and Paramount following completion of the Transactions, Paramount will make an application to the Stock Exchange for a waiver from compliance of the requirements set out in paragraphs 14.25 and 14.26 of the Listing Rules, subject to, inter alia, approval of the Paramount Independent Shareholders. A further announcement will be made on the details of such transaction as and when appropriate. The Whitewash Waiver and the General Offer On completion of the Transactions (assuming full conversion of the Retained Notes by SRI and the Sold Notes by Next at HK$0.45 per Share and completion of placement of new Shares by Yu Ming), Next will hold an aggregate of approximately 67 per cent. of the enlarged issued share capital of Paramount. Under the Code, upon completion of the Transactions, Next and parties acting in concert with it would be obligated to make a general offer to purchase all the Shares other than those held by Next and parties acting in concert with it. An application will be made by Next to the Executive for the Whitewash Waiver which may or may not be granted by the SFC. If the Whitewash Waiver is not granted by the SFC, and if Next decides to proceed with the Transactions by waiving the Whitewash Waiver condition and making a general offer, the Seapower Group will not accept the general offer. VERY SUBSTANTIAL ACQUISITION and connected transactions for paramount and sih Upon completion of the Transactions (assuming full conversion of the Retained Notes by SRI at HK$0.45 per Share) but before conversion of the Sold Notes by Next and placement of new Shares, SIH's interest in Paramount will be diluted from approximately 63 per cent. to approximately 7.4 per cent. and Paramount will cease to be consolidated in the accounts of SIH. Pursuant to Rules 14.06 and 14.23(1)(b) of the Listing Rules, the Acquisitions will constitute very substantial acquisitions and connected transactions for Paramount and Paramount will be treated as a new applicant for listing under the Listing Rules. The new listing application would be subject to approval of the Listing Committee of the Stock Exchange, and the Acquisitions are subject to approval of the Paramount Independent Shareholders. Such approvals may or may not be granted. To meet the new listing requirements, Paramount also has to satisfy, amongst other things, profit requirements as set out in Chapter 8 of the Listing Rules. A listing document of Paramount containing, inter alia, details of the Acquisitions, will be despatched to the shareholders of Paramount as and when appropriate. By virtue of the fact that SIH has an approximate 63 per cent. equity interest in Paramount and that Next will be the controlling shareholder of Paramount upon completion of the Acquisitions, the Acquisitions will also constitute very substantial acquisitions and connected transactions for SIH but SIH will not be treated as a new applicant for listing under the Listing Rules. Approval by the SIH Shareholders of the Acquisitions is required. Financial impact of the Transactions on SIH will be disclosed in a further announcement to be issued upon executing the Formal Agreements. CHANGES IN THE BOARD OF DIRECTORS The board of directors of Paramount (the "Paramount Board") will accept and SIH shall cause the appointment of two directors to be nominated by Next to the Paramount Board upon execution of the Formal Agreements. The Paramount Board will also accept and SIH shall cause the appointment of directors to be nominated by Next to the Paramount Board on completion of the Formal Agreements, subject to the requirements of the Code, so that all those incoming directors will represent a majority of the Paramount Board. As at the date of this announcement, there are 6 directors on the Paramount Board. If completion of the Formal Agreements shall fail to take place in accordance with the terms of the Agreement, Next shall cause the two directors which it has so nominated immediately to resign. Details of the appointment of directors to the Paramount Board will be announced in the event that such appointments are made. SHAREHOLDING For the before and after completion of the transactions, please refer to the press announcement today. REASONS FOR AND BENEFITS OF THE TRANSACTIONS The Paramount Board is of the opinion that the acquisition of the Magazine Company or the EasyFinder Business will improve the recurrent income of Paramount and the acquisition of the Dot Company or the Web Business will enable Paramount to diversify its business to, and to benefit from, the increasingly popular internet portal and e-commerce business. The provision of printing services to "Next Magazine", "Sudden Weekly" and "Eat and Travel" will significantly improve the printing capacity utilization of Paramount. The waiving of the Accrued Interest by Next will also lower the financial burden on Paramount. Having considered the above benefits, the Paramount Board considers that the terms of the Transactions are fair and reasonable and the entering into of the Formal Agreements is in the interests of Paramount and the Paramount Independent Shareholders. The board of directors of SIH is of the opinion that the Acquisitions would release reliance of Paramount on financial support from SIH and concur with the Paramount Board's view that the Transactions will revitalize Paramount and that the value of investment of the shareholders of Paramount (including SIH) will be enhanced. SIH intends to hold its 5.2 per cent. equity interests in the enlarged issued share capital of Paramount after completion of the Transactions (assuming full conversion of the Retained Notes by SRI and the Sold Notes by Next at HK$0.45 per Share and completion of placement of new Shares) for investment purposes. Given the difficult economic environment, the board of directors of SRI is of the opinion that the Notes Disposal offers SRI an opportunity to recoup some of its investment in Paramount while enjoying any potential gain in the Retained Shares under the new management of Paramount. SRI intends to hold the Retained Shares for investment purposes. INTENTION OF NEXT ON PARAMOUNT Next intends to maintain Paramount's printing and publishing business and has no intention of injecting assets to Paramount other than those contemplated in the Agreement. No discussion has been made between the parties in relation to the existing employment or divestment of Paramount's assets upon completion of the Transactions. The Transactions will introduce the Web Business and the EasyFinder Business to Paramount and Next believes that both Next and Paramount will benefit from the synergy of both businesses and is confident of the future of Paramount. Other than the Web Business and the EasyFinder Business, Next is mainly engaged in the publishing of "Next Magazine", "Sudden Weekly" and "Eat and Travel" weekly magazines and newspaper printing. Next will satisfy the Stock Exchange that, upon completion of the Transactions, it will not engage in a business which is or is likely to compete with Paramount's business. Details of the future plan of Next on Paramount will be disclosed in the circular of Paramount in respect of its very substantial acquisitions. At present, the publication of "Next Magazine, "Sudden Weekly" and "Eat and Travel" are the remaining businesses of Next that are likely to compete with the EasyFinder Business. RESUMPTION OF TRADING IN THE SHARES Trading in the Shares on the Stock Exchange was suspended at the request of Paramount at 10:00a.m. on 23rd June, 1999. Trading in the shares in SIH on the Stock Exchange was suspended at the request of SIH at 10:00 a.m. on 28th June, 1999. Application has been made to the Stock Exchange for the resumption of trading in the Shares and the shares of SIH with effect from 10:00 a.m. on 29th June, 1999. The directors of Paramount, SIH, SRI and Next wish to make clear that, under the Agreement, the parties will use reasonable endeavours to agree and enter into the Formal Agreements to effect the Transactions on or before 26th July, 1999 or such later date as the parties may agree. However, there is no certainty that the Formal Agreements will be entered into and even if the Formal Agreements are entered into, completion of the Formal Agreements is expected to be subject to a number of conditions as set out in this announcement. If the Formal Agreements are not entered into on or before 26th July, 1999 or such later date as the parties may agree, the Agreement will lapse and the Transactions will not be effected. Details of the Formal Agreements will be announced in the event that these agreements are entered into. In the meantime, investors are advised to exercise caution in dealing in the shares of Paramount, SIH and SRI. Investors will be kept informed of any developments in relation to the Formal Agreements and the Transactions by further announcement. By order of the board of By order of the board of Paramount Publishing Next Media International Group Limited Holdings Limited Vincent Cheung Wing Hung Yeung Wai Hong Director Chairman By order of the board of By order of the board of Seapower International Holdings Seapower Resources Limited International Limited Shirley Choi Siu Lui Shirley Choi Siu Lui Vice-Chairman Director Hong Kong, 28th June, 1999. The directors of Paramount Publishing Group Limited accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Next, SIH and SRI and confirm, having made all reasonable inquiries, that to the best of their knowledge, the opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts relating to Paramount not contained in this announcement, the omission of which would make any statement in this announcement misleading. The directors of Next Media International Holdings Limited accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Paramount, SIH and SRI and confirm, having made all reasonable inquiries, that to the best of their knowledge, the opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts relating to Next not contained in this announcement, the omission of which would make any statement in this announcement misleading. The directors of Seapower International Holdings Limited accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Paramount, Next and SRI and confirm, having made all reasonable inquiries, that to the best of their knowledge, the opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts relating to SIH not contained in this announcement, the omission of which would make any statement in this announcement misleading. The directors of Seapower Resources International Limited accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Paramount, Next and SIH and confirm, having made all reasonable inquiries, that to the best of their knowledge, the opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts relating to SRI not contained in this announcement, the omission of which would make any statement in this announcement misleading.