Continental Aerospace Technologies Holding Limited — M&A Activity 2001

Mar 14, 2001

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares in CATIC International Holdings Limited.

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.

CATIC International Holdings Limited

(Incorporated in Bermuda with limited liability)

ACQUISITION INVOLVING ISSUE OF NEW SHARES

The board of directors (the "Directors") of CATIC International Holdings Limited (the "Company") is pleased to announce that Starnet, a wholly owned subsidiary of the Company, has entered into the Acquisition Agreement on 12th March 2001, pursuant to which Imaster has agreed to sell and Starnet has conditionally agreed to acquire 23.5% of the entire issued share capital of Pimpernel at a total consideration of HK$26,000,000.00. The consideration of HK$26,000,000.00 was arrived at after arm's length negotiations between the parties, which will be satisfied by the issue and allotment of the Consideration Shares to Imaster at an issue price of HK$0.13 per Consideration Share. The Consideration Shares represent approximately 7.01% of the existing issued share capital of the Company and approximately 6.55% of the issued share capital of the Company as enlarged by the Consideration Shares.

As the consideration is to be satisfied by the issue and allotment of the Consideration Shares, the Acquisition constitutes a share transaction under the Listing Rules.

Trading in the Shares was suspended at 10:00 a.m. on 13th March 2001 at the request of the Company pending publication of this announcement. Application has been made for the resumption of trading of the Shares at 10:00 a.m. on 14th March 2001.

THE ACQUISITION

Date of the Acquisition Agreement: 12th March 2001

Parties Purchaser: Starnet

Vendor: Imaster

Starnet is a company incorporated in the BVI, which is a wholly owned subsidiary of the Company. Imaster is a company incorporated in the BVI, which is an independent third party unconnected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules).

Imaster has agreed to sell and Starnet has agreed to purchase from Imaster the Sale Shares pursuant to the terms and conditions of the Acquisition Agreement.

Information on Pimpernel

Pimpernel has been engaging in the business of software development since its incorporation on 3rd July 1998 and has undertaken a major investment project pursuant to which the Web-enable Document System, an innovative software system designed to provide value added information technology services, has been developed and is beneficially owned by Pimpernel. These value added services, provided by the Web-enable Document System, are specifically designed for use by institutional customers and end-users and include, but are not limited to, a variety of retrieval and output options, verification of digital certificate and data safe deposit services on the internet. Under the Web-enable Document System, documents can be easily transformed into digital format and these digital data can be easily retrieved from the computer or through the internet within the system. The Web-enable Document System also provides flexible Chinese and English indexing functions to enable efficient and effective search of documents and possesses a security system to protect confidential data and information.

There will be no change in the management of Pimpernel after the Acquisition. Pimpernel will be owned as to 23.5% of which by Starnet, and 76.5% of which by Imaster upon Completion of the Acquisition.

Consideration

The Consideration for the acquisition of 23.5% of the entire issued share capital of Pimpernel was arrived at after arm's length negotiations between the parties, taking into account the potential prospects of the business operation of the Web-enable Document System to be launched by Pimpernel, and its strategic value to the Group. The Warranted Profit, when computed against the Consideration, represents an annual yield of 7.7% which effectively values Pimpernel at an aggregate amount of HK$110,600,000.00.

The Consideration for the Acquisition is HONG KONG DOLLARS TWENTY SIX MILLION ONLY (HK$26,000,000.00) which shall be satisfied by the issue and allotment of the Consideration Shares pursuant to the Acquisition Agreement. The Directors consider that the terms of the Acquisition Agreement are fair and reasonable and are in the interests of the Company and the shareholders.

On the Completion Date and upon satisfaction of all the conditions as stated in the Acquisition Agreement, the Company shall issue and allot half of the Consideration Shares, i.e., 100,000,000 Shares, to Imaster. On 20th September 2001, being six months after the Completion Date and upon delivery by Imaster to Starnet a cheque in the sum of HK$2,000,000, being the Warranted Profit, post dated to 30th June 2002 (the "Cheque") in favour of Starnet or such person as Starnet may appoint, the Company shall issue and allot the other half of the Consideration Shares, i.e., the remaining 100,000,000 Shares, to Imaster in satisfaction of the balance of the Consideration. In situation where Starnet's 23.5% profit share in the audited profit after taxation of Pimpernel is in excess of the Warranted Profit. Imaster will pay the surplus thereof to Starnet. Notwithstanding the aforesaid, the Company shall have absolute discretion to issue and allot the other half of the Consideration Shares to Imaster at any time during the period from the Completion Date to 19th September 2001, and in which case Imaster shall deliver the Cheque to Starnet at the same time.

The Consideration Shares represent approximately 7.01% of the existing issued share capital of the Company and approximately 6.55% of the issued share capital of the Company as enlarged by the Consideration Shares. The Consideration Shares upon issue and allotment will rank pari passu in all respects with the issued shares of the Company, including rights as to dividends and voting. The Directors will issue and allot the Consideration Shares in the share capital of the Company pursuant to a general mandate duly granted in a special general meeting of the Company held on 6th February 2001.

The issue price of the Consideration Shares represents (i) a discount of approximately 26.55% to the closing price for the Shares of the Company as quoted on the Stock Exchange on the date of the Acquisition Agreement; (ii) a discount of approximately 21.36% to the average of the closing prices for the Shares of the Company as quoted on the Stock Exchange for the 10 trading days ended on the date of the Acquisition Agreement; and (iii) a discount of approximately 14.92% to the average of the closing prices for the Shares of the Company as quoted on the Stock Exchange for the 20 trading days ended on the date of the Acquisition Agreement.

Conditions

The Acquisition Agreement is conditional upon, among other things, the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares.

Completion

Subject to the satisfaction of the conditions stated in the Acquisition Agreement, completion of the Acquisition is expected to take place on 20th March 2001 or such later date as mutually agreed by the Vendor and the Purchaser.

Application for Listing

Application will be made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares.

Reasons for the Acquisition

The principal activities of the Group consist of undertaking building facade contracting works. The Directors have always been exploring investment opportunities which would increase the earning base of the Group. Recently the Group has acquired substantial interests in a power plant in China, which has been engaging in the generation and sale of electricity and water steam for heating and hot water purposes to the factories in the regional industrial areas in Hangzhou. In addition to the Group's existing business, the Directors have been endeavouring to explore and to diversify the Group's existing business into other business sectors. To this end and taking into account the potential prospects of the business operation of Pimpernel in the Web-enable Document System and its strategic value to the Group, the Directors consider that the Acquisition represents a valuable investment opportunity to expand and diversify the Group's business in the rapidly developing information technology market, which will broaden and enhance the Group's income base in the long term.

Trading in the Shares was suspended at 10:00 a.m. on 13th March 2001 at the request of the Company pending publication of this announcement. Application has been made for the resumption of trading of the Shares at 10:00 a.m. on 14th March 2001.

Definitions

"Acquisition" The acquisition by Starnet from Imaster of the Sale Shares pursuant to the Acquisition Agreement

"Acquisition Agreement" The agreement dated 12th March 2001 entered into between Starnet as purchaser and Imaster as vendor in relation to the sale and purchase of the Sale Shares

"BVI" The British Virgin Islands

"Completion" The completion of the sale and purchase of the Sale Shares under the Acquisition Agreement

"Completion Date" On or before 20th March 2001 or such later date as mutually agreed by Starnet and Imaster in writing

"Consideration" The total consideration payable by Starnet to Imaster for the Acquisition

"Consideration Shares" 200,000,000 new Shares of par value of HK$0.10 each, to be issued and allotted by the Company to Imaster at HK$0.13 per Share pursuant to the Acquisition Agreement in satisfaction of the Consideration

"Group" The Company and its subsidiaries

"Hong Kong" Hong Kong Special Administrative Region of the People's Republic of China

"Imaster" Imaster Management Limited, a company incorporated in the BVI with limited liability

"Listing Rules" Rules Governing The Listing of Securities on the Stock Exchange

"Pimpernel" Pimpernel Resources Limited, a company incorporated in the BVI with limited liability

"Sale Shares" 235 shares of Pimpernel, which constitutes 23.5% of the entire issued share capital of Pimpernel, to be sold to Starnet by Imaster pursuant to the Acquisition Agreement

"Starnet" Starnet Investment Limited, a company incorporated in the BVI with limited liability

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Web-enable Document System" an innovative software system providing value added services to information technology

"Warranted Profit" Starnet's 23.5% profit share in the audited profit after taxation of Pimpernel for the period from 1st April 2001 to 31st March 2002 at a minimum amount of HK$2 million as warranted by Imaster in the Acquisition Agreement

By Order of the Board

Yang Chunshu

Chairman

Hong Kong, 13th March 2001

Please also refer to the published version of this announcement in the i-Mail.