CHINA STATE CONSTRUCTION DEVELOPMENT HOLDINGS LIMITED — M&A Activity 2000

Jan 31, 2000

Listed Company Information

UNIVERSAL APPLI<0419> - Announcement UNIVERSAL APPLIANCES LIMITED (Incorporated in Hong Kong with limited liability) Acquisition of non-voting preference shares exchangeable into ordinary shares of DVB (Holdings) Limited from DII Group (BVI) Co. Ltd. Discloseable transaction The directors of UAL are pleased to announce that on 28th January, 2000, Million Way and DII entered into the Sale and Purchase Agreement. Pursuant to the Sale and Purchase Agreement, Million Way will purchase, and DII will sell as beneficial owner, the 15,000,000 DVB Preference Shares at a consideration of US$19,471,233 (approximately HK$150,902,056). The DVB Preference Shares carry the right to exchange into the Exchanged DVB Shares. The principal terms of the DVB Preference Shares are set out under the heading "Principal terms of the DVB Preference Shares" below. The terms of the Sale and Purchase Agreement have been negotiated on an arm's length basis and the directors of UAL believe that the acquisition of the DVB Preference Shares is in the interests of UAL and its shareholders. The entering into of the Sale and Purchase Agreement constitutes a discloseable transaction for UAL and a circular containing further details of the Sale and Purchase Agreement will be sent to shareholders of UAL as soon as possible. SALE AND PURCHASE AGREEMENT DATED 28TH JANUARY, 2000 Parties (i) DII, as the vendor of the 15,000,000 DVB Preference Shares (ii) Million Way, as the purchaser of the 15,000,000 DVB Preference Shares DII is not connected with any of the directors, chief executive or substantial shareholders of DVB or UAL or their subsidiaries or any of their respective associates (within the meaning of the Listing Rules). DII subscribed the DVB Preference Shares from DGL in March 1999 at a consideration of US$15,000,000 (approximately HK$116,250,000). The acquisition Pursuant to the Sale and Purchase Agreement, DII will sell as beneficial owner and Million Way will purchase the 15,000,000 DVB Preference Shares at a consideration of US$19,471,233 (approximately HK$150,902,056). The DVB Preference Shares carry the right to exchange into the Exchanged DVB Shares. Upon signing of the Sale and Purchase Agreement, Million Way paid a cash deposit of US$3,000,000 (approximately HK$23,250,000) to DII. Upon completion of the Sale and Purchase Agreement, Million Way will pay to DII the balance of US$16,471,233 (approximately HK$127,652,056) in cash. It is the intention of the directors of UAL that the consideration for the acquisition of the DVB Preference Shares will be funded by internal resources and borrowings. Condition precedent Completion of the acquisition of the DVB Preference Shares is conditional upon the obtaining of the consent of the Stock Exchange to the transfer of the DVB Preference Shares to Million Way. If the said condition cannot be fulfilled on or before 25th March, 2000 or such later date as DII and Million Way may agree, the Sale and Purchase Agreement will lapse and become null and void and the said deposit will be refunded to Million Way. It is expected that completion of the Sale and Purchase Agreement will take place on or before 27th March, 2000 or such later date as the relevant parties may agree. Principal terms of the DVB Preference Shares Dividend The holder of the DVB Preference Shares will be entitled to receive out of funds lawfully available for such dividend distribution, in priority to the holders of any other class of shares in the capital of DVB, a fixed cumulative cash dividend in Hong Kong dollars at a rate of 5 per cent. per annum on the nominal amount of each DVB Preference Share for each year from the date of issue of the DVB Preference Shares to the date of exchange of the DVB Preference Shares. Such dividends shall accrue from day to day and shall be payable yearly in arrears in each year on the anniversary of the date of issue of the DVB Preference Shares or the date of exchange of the DVB Preference Shares, provided that if the date of exchange falls on a date other than an anniversary of the issue date of the DVB Preference Shares, dividends accrued shall be calculated on a pro rata basis. Voting The holder of the DVB Preference Shares will not be entitled to receive notice of, or to attend or vote at, general meetings of DVB unless a resolution is to be proposed at the general meeting for the winding up of DVB or varying or abrogating the rights or privileges of the holders of the DVB Preference Shares. Exchange by the holder of the DVB Preference Shares The holder of the DVB Preference Shares shall have the right at any time starting from 1st July, 2000 to exchange all (but not part) of its DVB Preference Shares into Exchanged DVB Shares at the Exchange Price. The exchange rate for converting US$ into HK$ for the purpose of calculating the number of Exchanged DVB Shares which may fall to be issued upon exchange has been fixed at US$1 = HK$7.75. The Exchange Price represents a discount of approximately 28.9 per cent. to the closing price of HK$6.75 per DVB Ordinary Share as quoted on the Stock Exchange on 28th January, 2000, being the date of this announcement. Assuming exercise in full of the exchange rights attached to the DVB Preference Shares at the Exchange Price, 24,218,750 DVB Ordinary Shares will be issued representing approximately 9.55 per cent. of the issued ordinary share capital of DVB as at the date of this announcement as enlarged by such exchange. Compulsory Exchange The board of directors of DVB has the right, at its absolute discretion, to require compulsory exchange of the DVB Preference Shares at the Exchange Price at any time after the expiry of 15 calendar months after the date of issue of the DVB Preference Shares provided that the average of closing market prices of the DVB Ordinary Shares for the 20 trading days ending on the trading day immediately preceding the date of giving notice of such compulsory exchange is not less than HK$10. Transferability Pursuant to the terms of the DVB Preference Shares, prior written consent from DVB is required for any proposed transfer of the DVB Preference Shares and any proposed transfer of the DVB Preference Shares to a transferee which is a connected person of DVB under the Listing Rules is subject to the prior written consent of the Stock Exchange. Further, the grant of listing on the Stock Exchange of the Exchanged DVB Shares is subject to any transfer of the DVB Preference Shares being approved by the Stock Exchange. Listing The DVB Preference Shares are not listed on the Stock Exchange or other stock exchanges. Ranking The Exchanged DVB Shares will rank pari passu in all respects with the DVB Ordinary Shares as at the date of exchange, including the right to receive all dividends and other distributions the record date of which falls on a date on or after the date of exchange. INFORMATION ON UAL The UAL Group is principally engaged in the business of manufacturing and distribution of consumer electronic, household electrical and telecommunications products. UAL also holds a controlling interest of approximately 50.97 per cent. in DVB which is engaged in the provision of a digital platform for value-added services through satellite, terrestrial fibre optic networks or other forms of telecommunication and cable networks, video and other digital image and sound transmission, related software and the management of subscriber base business in China. REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE AGREEMENT DII subscribed the DVB Preference Shares from DGL in March 1999. The management of DII has now decided to dispose of the DVB Preference Shares. The directors of UAL consider that the acquisition of the DVB Preference Shares represents an attractive investment opportunity for UAL. Assuming exercising in full of the exchange rights attached to the 15,000,000 DVB Preference Shares, the value of the Exchanged DVB Shares would be approximately HK$163,476,563 based on the closing price of HK$6.75 per DVB Ordinary Share as quoted on the Stock Exchange on 28th January, 2000. On this basis the consideration of US$19,471,233 (approximately HK$150,902,056) for the acquisition of the 15,000,000 DVB Preference Shares represents a discount of approximately 7.7 per cent.. It should be noted, however, that the DVB Preference Shares are not capable of exchange into DVB Ordinary Shares until 1st July, 2000 at the earliest. UAL currently holds approximately 50.97 per cent. interest in DVB. Upon exercising in full of the exchange rights attached to the DVB Preference Shares at the Exchange Price, UAL will hold approximately 55.7 per cent. of the issued ordinary share capital of DVB as at the date of this announcement as enlarged by such exchange. The directors of UAL are optimistic about the prospects of DVB and are of the view that the acquisition of the DVB Preference Shares represents an attractive investment opportunity for UAL and is in the interests of UAL and its shareholders. GENERAL The terms of the Sale and Purchase Agreement have been negotiated on an arm's length basis and the consideration was determined by reference to the market prices of DVB Ordinary Shares. The entering into of the Sale and Purchase Agreement constitutes a discloseable transaction for UAL. A circular containing further details of the Sale and Purchase Agreement will be sent to the shareholders of UAL as soon as practicable. DEFINITIONS "DVB" DVB (Holdings) Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange "DVB Ordinary Share(s)" shares of HK$1.50 each in the ordinary share capital of DVB "DII" The DII Group (BVI) Co., Ltd., a company incorporated in the British Virgin Islands which is a wholly-owned subsidiary of DII Group "DII Group" The DII Group, Inc., a company incorporated in the United States and quoted on NASDAQ "DGL" DVB (Group) Limited, a company incorporated in the British Virgin Islands, the issued ordinary share capital of which is wholly owned by DVB and the issued preference share capital of which is wholly owned by DII as at the date hereof "DVB Preference Share(s)" non-voting cumulative exchangeable preference shares of US$1 each in the capital of DGL issued to the DII, as described in UAL's circular dated 9th April, 1999 "Exchange Price" HK$4.80 per DVB Ordinary Share, subject to adjustments in certain circumstances, including subdivision or consolidation of the share capital of DVB, bonus issue, rights issue and other dilutive events, according to normal adjustment formulae "Exchanged DVB Shares" the 24,218,750 DVB Ordinary Shares to be issued by DVB upon exercise by the holder of the exchange rights attached to the DVB Preference Shares based upon the current Exchange Price "Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange "Million Way" Million Way Enterprises Limited, a company incorporated in the British Virgin Islands which is a direct wholly owned subsidiary of UAL "Stock Exchange" The Stock Exchange of Hong Kong Limited "Sale and Purchase Agreement" the conditional agreement dated 28th January, 2000 entered into between Million Way and DII in relation to the acquisition by Million Way of the 15,000,000 DVB Preference Shares "UAL" Universal Appliances Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange "UAL Group" UAL and its subsidiaries By Order of the Board UNIVERSAL APPLIANCES LIMITED Ko Chun Shun, Johnson Chairman Hong Kong, 28th January, 2000 * An exchange rate of US$1 = HK$7.75 has been used in this announcement.