Computer And Technologies Holdings Limited — Capital/Financing Update 2000

Jan 27, 2000

Listed Company Information

CHINA AEROSPACE<0031>-Announcement & Resumption of Trading The Stock Exchange of Hong Kong Limited (`Stock Exchange') 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. CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED (Incorporated in Hong Kong with limited liability) Placing of existing shares and subscription for new shares Burhill Company Limited (the `Vendor') has appointed ING Barings as the placing agent to place on a fully underwritten basis an aggregate of 204,017,400 existing shares (the `Placing Shares') of HK$1.00 each (`Shares') in China Aerospace International Holdings Limited (`the Company') at a price of HK$1.80 per Share to independent investors (the `Placing'). In addition, the Vendor also granted ING Barings an over-allocation option to require the Vendor to place on a fully underwritten basis an additional 21,373,200 existing Shares at the same price (the `Over-allocation Option') on or before 4th February, 2000. The Vendor has also agreed to subscribe (the `Subscription') for 357,017,400 new Shares at a price per share equal to the Placing price per share after adjusting for any expenses properly incurred in connection with the Placing. Net proceeds from the Subscription amounting to approximately HK$632 million will be used primarily to finance the capital expenditures for the development of broadband multimedia data transmission and digital video broadcasting services and the working capital requirements of the Company, its subsidiaries and affiliated companies (the `Group'). Approximately HK$440 million will be allocated for the development of broadband media data transmission and digital video broadcasting services while approximately HK$192 million will be for the working capital of the Group. The Vendor and its associates (the `Controlling Shareholders'), all of which are wholly owned subsidiaries of China Aerospace Science & Technology Corp (`CAST') together with parties acting in concert with them, currently hold approximately 42.86% of the Company's existing issued share capital. Upon completion of the Placing and assuming that the Over-allocation Option will not be exercised, the Controlling Shareholders and parties acting in concert with them will hold approximately 31.43% of the Company's existing issued share capital. The Controlling Shareholders' interests in the Company immediately after the Placing will be reduced to approximately 30.23% should the Over-allocation Option be exercised in full. After completion of the Subscription, total shareholding of the Controlling Shareholders and parties acting in concert with them will increase to approximately 42.86% of the Company's issued share capital as enlarged by the Subscription or 41.86% if the Over-allocation Option is exercised in full. The Placing and Subscription Agreement is conditional. Please refer to the paragraph `Condition of the Placing and Subscription Agreement' below for more details. Trading in the shares of the Company was suspended at 2:30p.m. on 25th January, 2000 upon request by the Company. Lifting of the suspension as from 10:00a.m. on 27th January, 2000 has been applied for by the Company. PLACING and subscription AGREEMENT DATED - 26th JANUARY, 2000 Vendor: Burhill Company Limited, a beneficial and registered owner of the placing Shares. The Vendor, its associates and parties acting in concert with them have not dealt in the shares within the past 12 months prior to the date of this announcement. Burhill Company Limited, together with five other companies, all of which being wholly-owned subsidiaries of CAST, are currently the beneficial and registered owners of 42.86% interest in the Company. CAST specialises in the research and development of space technology and related products in the People's Republic of China. CAST is a state-owned enterprise established as a result of a reorganisation of China Aerospace Corporation in 1999. Number of shares to be placed: 204,017,400 Shares, representing about 11.43% of the existing issued share capital of the Company of 1,785,402,502 Shares. In addition, the Vendor also granted ING Barings an over-allocation option to require the Vendor to place an additional 21,373,200 existing shares, representing 1.20% of the existing issued share capital of the Company, on or before 4th February, 2000. Assuming that the Over-allocation Option will be exercised in full, total number of Shares to be placed, amounting to 225,390,600 Shares, will represent about 12.62% of the Company's existing issued share capital. Placement to: Widely placed by ING Barings to professional and institutional investors. Placing price: HK$1.80 per Share, representing a discount of approximately 12.20% to the last traded price of HK$2.05 per Share as quoted on the Stock Exchange before the suspension of trading in the Shares at 2:30 p.m. on 25th January, 2000, a discount of approximately 15.29% to the closing price of HK$2.125 per Share as quoted on Stock Exchange on 24th January, 2000, which is the last full trading day before the suspension of trading on 25th January, 2000, and a premium of about 25.87% to the average closing price of HK$1.43 per Share as quoted on the Stock Exchange for the 10 full trading days up to and including 24th January, 2000. Rights: The Placing Shares are fully paid and carry full entitlement to all dividends declared after the Completion Date (as defined below). The placees will obtain title to the Placing Shares free and clear of any lien, claim or encumbrance. Placing agent and underwriter: ING Barings Asia Limited, as agent for ING Bank N.V. (`ING Barings'). Independence of placees and placing agent: The placees and their ultimate beneficial owners and ING Barings are independent of, not connected with and not acting in concert with the Controlling Shareholders, the directors, chief executive and substantial shareholders of the Company and any of its subsidiaries or any of their respective associates (as defined in the Rules Governing the listing of securities on the Stock Exchange of Hong Kong Limited). Condition of the Placing and Subscription Agreement: If there is any material breach of the representations, warranties or undertakings by the Controlling Shareholders relating to (amongst other things) the ownership of the Placing Shares and by the Company and the Controlling Shareholders in relation to the business and financial condition of the Company contained in the Placing Agreement or the occurrence of certain events (including a change in national or international law or regulation, financial, political or economic conditions as would likely be materially adverse to the success of the Placing, material breach of any of the representations and warranties set out in the Placing Agreement, and material adverse change in the financial position of the Company), on or before the closing of the Placing (as set out in the Placing Agreement) which, in the opinion of ING Barings, has or is likely to have a material adverse effect on the financial position of the Group as a whole or which is or would be materially adverse to the success of the Placing, ING Barings may, at any time prior to 11:00 a.m. on the day of completion of the Placing, by written notice to the Vendor and the Company terminate the Placing Agreement. The Placing is otherwise unconditional. Completion of the placing: Expected on 28th January, 2000 (`Completion Date'). SUBSCRIPTION Subscriber: Burhill Company Limited Number of new shares subscribed for: 357,017,400 new Shares, representing about 20.00% of the existing issued share capital of the Company and about 16.66% of the issued share capital of the Company as enlarged by the Subscription. Subscription price: The Vendor will subscribe for 357,017,400 new shares (the `New Shares') at a price per share equal to the Placing Price per share. The net subscription proceeds amounted to approximately HK$632 million in aggregate, after adjusting for the all expenses properly incurred by the Vendor in connection with the proposed Placing. Such expenses, including placing commission, Stock Exchange transaction levy, stamp duty and other expenses amounting to approximately HK$10 million, will be borne by the Company. Mandate to issue new Shares: The new Shares will be issued under the general mandate granted to the directors of the Company at the annual general meeting held on 30th June, 1999. Ranking of the new Shares: The new Shares, when fully paid, will rank equally with the existing Shares on the date of issue. Conditions of the Subscription: The Subscription is conditional upon the following:- 1. the completion of the Placing; 2. the Listing Committee of the Stock Exchange (the `Listing Committee') granting listing of and permission to deal in the new Shares; and 3. the Executive Director of the Corporate Finance Division of the Securities and Futures Commission or any delegate of the Executive Director (the `Executive') granting the Vendor the waiver from the obligation to make a general offer under the Hong Kong Code on Takeovers and Mergers (the `Takeovers Code') The Subscription is expected to be completed within 14 days from the signing of the Placing Agreement (i.e. on or before 8th February, 2000). The Company will apply to the Listing Committee for the listing of and permission to deal in the new Shares. Obligation to make a general offer: Immediately after completion of the Placing, the Controlling Shareholders' and parties acting in concerts' voting rights in the Company will be reduced from approximately 42.86% to approximately 31.43%. The Controlling Shareholders' and parties acting in concerts' voting rights in the Company immediately after the Placing will be reduced to approximately 30.23% should the Over-allocation Option be exercised in full. The Controlling Shareholders' and parties acting in concerts' voting rights will be increased to approximately 42.86% after completion of the Subscription or approximately 41.86% if the Over-allocation Option is exercised in full. With the percentage of voting rights in the Company held by the Controlling Shareholders and parties acting in concerts' increasing from below 35% to more than 35%, an obligation to make a mandatory general offer by the Controlling Shareholders and parties acting in concerts' for all the Shares not held by the Controlling Shareholders and parties acting in concerts' will be triggered under Rule 26.1 of the Takeovers Code unless otherwise waived by the Executive. An application will be made to the Executive for waiver from such obligation to make a general offer under Rule 26 of the Takeovers Code. Principal business of the Company: The principal businesses of the Group comprise manufacturing of high-tech industrial products such as printed circuit board and liquid crystal display as well as TV and home video appliance. Through its 54.64% subsidiary, CASIL Telecommunications (listed in Hong Kong in August, 1997), the Group also engages in telecommunication equipment manufacturing and global positioning systems operations. Other businesses of the Group include trading, property, and financial services. The future strategy of the Company is to focus on the development of information technologies and satellite applications as the two new core business sectors. One of the key projects under the information technologies sector is the Company's 49% owned joint venture which was formed with the Broadcasting and TV Bureau in the Jiangsu Province in September, 1998. The joint venture is planned to develop broadband multimedia data transmission and digital video broadcasting services over the provincial broadband cable TV backbone network. With a population of around 72 million in the Jiangsu Province and an established Cable TV subscriber base of approximately 7.3 million under the cable-TV network, the directors of the Company believe that this joint venture is well-positioned to take advantage of the fast-growing information technologies industry in the People's Republic of China. Use of proceeds: Net proceeds from the Subscription amounting to about HK$632 million will be used primarily to invest in projects that are related to the development of broadband multimedia data transmission and digital video broadcasting services and the working capital requirements of the Group. Approximately HK$440 million will be allocated for the development of broadband media data transmission and digital video broadcasting services while approximately HK$192 million will be for the working capital of the Group. Suspension and resumption of trading: Trading in the shares of the Company was suspended at 2:30p.m. on 25th January, 2000 upon request by the Company. Lifting of the suspension as from 10:00a.m. on 27th January, 2000 has been applied for by the Company. By Order of the Board China Aerospace International Holdings Limited WANG Yanguang Director Hong Kong, 26th January, 2000 The directors of the Company jointly and severally accept full responsibility for the accuracy of information contained in this announcement and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived as after due and careful consideration and that there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.