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CSC Holdings Limited M&A Activity 2000
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Download source fileThe 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.
| SUMMARY On 5th October 2000, CCT Multimedia entered into the Agreement with Lucky Club, Super Control, CCT Telecom, Mr. Siu and Mr. Tse pursuant to which CCT Multimedia agreed to acquire from the Vendors the entire issued share capital of Wellfit Multi Media, and CCT Telecom, Mr. Siu and Mr. Tse made certain representations and warranties to CCT Multimedia in relation to Wellfit Group. The consideration for the Acquisition is HK$134,400,000 and will be satisfied by the issue of 134,400,000 new CCT Multimedia Shares at HK$1.00 each. Completion of the Acquisition is conditional upon certain conditions being fulfilled as set out below. Each of the Vendors undertakes to CCT Multimedia not to dispose of (nor enter into any agreement to dispose of): (i) any of its interests in (in the case of Lucky Club) 10,800,000 CCT Multimedia Shares and (in the case of Super Control) 3,600,000 CCT Multimedia Shares, allotted and issued to it or its nominee(s) as part of the Consideration Shares, during the period from Completion Date until 20th November 2000; (ii) any of its interests in (in the case of Lucky Club) 90,000,000 CCT Multimedia Shares and (in the case of Super Control) 30,000,000 CCT Multimedia Shares, allotted and issued to it or its nominee(s) as part of the Consideration Shares, during the first six-month period after Completion; and (iii) its interests in more than (in the case of Lucky Club) 45,000,000 CCT Multimedia Shares and (in the case of Super Control) 15,000,000 CCT Multimedia Shares, allotted and issued to it or its nominee(s) as part of the Consideration Shares during the second six-month period after Completion. CCT Telecom is the ultimate holding company of CCT Multimedia and is indirectly interested in 25% of the issued share capital of Wellfit Multi Media. The Acquisition constitutes a major and connected transaction for CCT Multimedia under the Listing Rules and will require approval by independent shareholders at the special general meeting of CCT Multimedia. CCT Telecom and its associates will abstain from voting on the Acquisition at the special general meeting of CCT Multimedia. The Acquisition also constitutes a connected transaction for CCT Telecom under the Listing Rules but falls within the de minimus provision under Rule 14.25(1)(a) of the Listing Rules. CCT Telecom will include details of the Agreement in its next published annual report. Trading in the CCT Multimedia Shares was suspended at the request of CCT Multimedia on 4th, 5th and 9th October 2000. Application has been made to the Stock Exchange for the resumption of trading in the CCT Multimedia Shares with effect from 10:00 a.m. on 10th October 2000. |
Date of the Agreement:
5th October 2000
Parties:
Vendors: Lucky Club and Super Control
Purchaser: CCT Multimedia
Warrantors: CCT Telecom, Mr. Siu and Mr. Tse
Mr. Siu and Mr. Tse will each act as an executive director of CCT Multimedia following Completion. Shareholders of Lucky Club other than Mr. Siu and Mr. Tse, not having involved in the daily operations of Lucky Club, will not be appointed as directors of CCT Multimedia following Completion and therefore have not been made parties to the Agreement.
Terms of the Agreement:
CCT Multimedia agreed to acquire 75 Wellfit Shares from Lucky Club and 25 Wellfit Shares from Super Control on the terms and subject to the conditions set out in the Agreement. The Sales Shares represent the entire issued share capital of Wellfit Multi Media. The Vendors will sell the Sales Shares to CCT Multimedia free from all liens, charges, encumbrances, equities and adverse interests on the Completion Date.
Shareholding Structure of Wellfit Group
Each of the Vendors undertakes to CCT Multimedia not to dispose of (nor enter into any agreement to dispose of): (i) any of its interests in (in the case of Lucky Club) 10,800,000 CCT Multimedia Shares and (in the case of Super Control) 3,600,000 CCT Multimedia Shares, allotted and issued to it or its nominee(s) as part of the Consideration Shares, during the period from Completion Date until 20th November 2000; (ii) any of its interests in (in the case of Lucky Club) 90,000,000 CCT Multimedia Shares and (in the case of Super Control) 30,000,000 CCT Multimedia Shares, allotted and issued to it or its nominee(s) as part of the Consideration Shares, during the first six-month period after Completion; and (iii) its interests in more than (in the case of Lucky Club) 45,000,000 CCT Multimedia Shares and (in the case of Super Control) 15,000,000 CCT Multimedia Shares, allotted and issued to it or its nominee(s) as part of the Consideration Shares during the second six-month period after Completion. Such restrictions on disposal of the Consideration Shares do not apply to warrants or options over CCT Multimedia Shares, or any CCT Multimedia Shares acquired by way of a rights issue, public offer, or any CCT Multimedia Shares issued upon the exercise of any warrants or options.
As at the date of this announcement, the Board of CCT Multimedia comprises eight executive directors, namely, Mr. Mak Shiu Tong, Ms Cheng Yuk Ching, Mr. Tsoi Tong Hoo, Tony, Mr. Wilson Leung, Mr. Shouson Chen, Mr. Lo Kin Cheung, Mr. Lam Chung Ming, Paul, Ms Lam Hau Yee Resand, and two independent non-executive directors, namely, Mr. Lam Kin Kau Mark and Mr. Fung Hoi Wing Henry. It is expected that following Completion, Mr. Siu and Mr. Tse will be nominated by Lucky Club to join the board of directors of CCT Multimedia, as executive directors. Particulars of the proposed new directors are as follows:
Mr. SIU CHIU SHUN PATRICK
Mr. Siu Chiu Shun Patrick is aged 39, and graduated from the Baptist College (now the Baptist University) in 1984. Mr. Siu has over 15 years of experience in all aspects of content production in various media, including in particular, television programmes, variety shows and concerts. During 1993 to 1997, Mr. Siu worked as an executive producer at Television Broadcast Limited. In 1997, Mr. Siu joined Wellfit Productions Limited, one of the wholly-owned subsidiaries of Wellfit Multi Media, and has since then been the managing director of both Wellfit Productions Limited as well as other members of the Wellfit Group.
Mr. TSE CHI KAI TYLYPSE
Mr. Tse Chi Kai Tilypse is aged 34, and graduated from the Hong Kong University in 1989. Mr. Tse has over 10 years experience in the multimedia industry, focusing on business strategic planning and project management. Mr. Tse has been a director of Wellfit Media Workshop Limited, one of the wholly-owned subsidiaries of Wellfit Multi Media since its establishment in 1997. He is also a director of Wellfit Multi Media.
Consideration and payment terms:
The consideration for the Acquisition of the Sale Shares is HK$134,400,000 and will be satisfied by the issue of 134,400,000 new CCT Multimedia Shares, representing approximately 9.50% and 8.68% of CCT Multimedia's existing and enlarged issued share capital, respectively, to the Vendors (100,800,000 and 33,600,000 new CCT Multimedia Shares to Lucky Club and Super Control, respectively, or as each of them may direct, representing 7.13% and 2.37% of CCT Multimedia's existing issued share capital, respectively, and representing 6.51% and 2.17% of CCT Multimedia's enlarged issued share capital, respectively) at HK$1.00 each, representing a premium of approximately 108% to the closing price of HK$0.48 per CCT Multimedia Share as quoted on the Stock Exchange on 3rd October 2000, the last day of trading before the date of signing the Agreement, and a discount of approximately 1.4% to the average closing price of HK$1.014 per CCT Multimedia Share as quoted on the Stock Exchange for the last 10 trading days up to and including 3rd October 2000. Such consideration was determined after arms' length negotiation between the relevant parties and is in fact a multiple of 10.7 times of the unaudited net profit of the Wellfit Group for the year ended 30th June 2000 which was HK$12,579,063.
An application will be made by CCT Multimedia to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.
Conditions of the Agreement:
Completion of the Acquisition is conditional upon the following conditions being fulfilled:
(a) the Listing Committee of the Stock Exchange granting listing of, and permission to deal in, the Consideration Shares;
(b) the passing of all shareholders resolutions at the special general meeting of CCT Multimedia by the shareholders to approve the Agreement and the mandate to issue the Consideration Shares; and
(c) the entering into by each of Mr. Siu and Mr. Tse of a director's service contract with CCT Multimedia.
In the event that the above conditions are not fulfilled or waived by CCT Multimedia on or before 30th November 2000 or such later date as the parties may otherwise agree, the Agreement will lapse.
Completion:
Completion of the Acquisition shall take place on such date and at such time as may be agreed between the parties to the Agreement within three business days of the fulfilment of all the conditions referred to above.
Connection between the parties:
CCT Telecom is the ultimate holding company of CCT Multimedia. As at the date of this announcement, CCT Telecom indirectly holds approximately 64.88% of the issued share capital of CCT Multimedia. CCT Telecom is indirectly interested in 25% of the issued share capital of Wellfit Multi Media through Super Control. Upon Completion, the issued share capital of CCT Multimedia will be enlarged. CCT Telecom will receive 33,600,000 new CCT Multimedia Shares via Super Control or in the manner as it may direct. CCT Telecom will have a diluted shareholding of approximately 61.42% of the enlarged issued share capital of CCT Multimedia. The Acquisition constitutes a major and connected transaction for CCT Multimedia and a connected transaction for CCT Telecom under the Listing Rules.
Information on Wellfit Group:
Wellfit Multi Media was established in the British Virgin Islands on 30th November 1999 and is principally engaged in the content production of various multi-media services. Wellfit Group is primarily involved in the production of:
． videos (including music television, karaoke);
． concerts and variety shows;
． corporate functions;
． promotional events;
． non-drama television programmes; and
． internet content.
In particular, Wellfit Group has served more than 100 companies and organisations in Hong Kong in organising their corporate functions and was also the official production team of the Reunification Gala of 1997 and the Times Square New Year's Eve Countdown in 1999 and 2000.
The directors of Wellfit Multi Media believe that Wellfit Group has a market share of over 60% in local music television and karaoke production. Wellfit Group will also further expand its business into the production, promotion and sale of television (drama and non-drama) programmes to cater for the increasing needs of the global Chinese- speaking communities. Wellfit Group aims to be the leading “one-stop” production house in the Chinese-language multi-media production market.
Based on the unaudited consolidated balance sheet of Wellfit Group as at 30th June 2000, the consolidated net asset value of Wellfit Group amounted to HK$28,679,105.
For information purposes only, and based on the audited consolidated accounts and unaudited consolidated accounts of Wellfit Group for the financial years ended 30th June 1999 and 30th June 2000, respectively, the net profit before tax was HK$1,521,795 and HK$13,184,302, respectively, and the net profit after tax was HK$1,117,700 and HK$12,579,063, respectively, for the two financial years ended 30th June 2000.
Information on CCT Telecom Group:
The principal activities of CCT Telecom Group include the manufacturing and distribution of telecommunications products, provision of and investment in telecommunications services in Hong Kong and the PRC and production of multi-media content.
Information on CCT Multimedia Group:
CCT Multimedia Group is principally engaged in content development and production for multi-media businesses. It is also engaged in two other business activities: (i) the sourcing and sale of a wide range of child care, health care and hygiene products; and (ii) the Internet and related businesses.
Reasons for the transaction:
The directors of CCT Telecom and the directors of CCT Multimedia believe that both companies will benefit from the Acquisition for the following reasons:
(a) Benefits to CCT Telecom:
Completion of the Agreement will allow CCT Telecom to consolidate all of its multi-media businesses using CCT Multimedia as a separately-listed vehicle. The disposal of its indirect interest in Wellfit Multi Media will enable CCT Telecom to streamline its corporate structure and focus on its core telecommunications businesses.
(b) Benefits to CCT Multimedia:
Completion of the Agreement will allow CCT Multimedia to enhance its existing multi-media production business through the acquisition of a well-established content production operator. The Acquisition allows CCT Multimedia Group to develop its multi-media production businesses through Wellfit Group. Wellfit Multi Media has an experienced management team which is considered by the directors of CCT Multimedia to be a valuable asset in its future expansion plans.
The directors of CCT Telecom and CCT Multimedia (including their respective independent non-executive directors) considered that the terms of the Agreement and the consideration received or payable thereunder (as the case may be) to be fair and in the interests of the respective companies and their respective shareholders as a whole.
Information for shareholders of CCT Multimedia:
As the Acquisition constitutes a major and connected transaction for CCT Multimedia under the Listing Rules, it will require approval by independent shareholders of CCT Multimedia at the special general meeting of CCT Multimedia. CCT Telecom and its associates will abstain from voting on the Acquisition at the special general meeting of CCT Multimedia. The Acquisition also constitutes a connected transaction for CCT Telecom under the Listing Rules but falls within the de minimus provision under Rule 14.25(1)(a) of the Listing Rules. CCT Telecom will include details of the Agreement in its next published annual report.
CCT Multimedia will establish an independent board committee to advise its independent shareholders in respect of the Acquisition. CCT Multimedia will also retain an independent financial adviser to advise its independent board committee on the Acquisition.
A circular of CCT Multimedia containing details of the Acquisition, a letter from its independent board committee, a letter of advice from the independent financial adviser to the independent board committee and a notice to the shareholders of CCT Multimedia convening a special general meeting, will be despatched as soon as practicable.
Suspension and Resumption of Trading in the CCT Multimedia Shares:
Trading in the CCT Multimedia Shares was suspended at the request of CCT Multimedia on 4th, 5th and 9th October 2000. Application has been made to the Stock Exchange for the resumption of trading in the CCT Multimedia Shares with effect from 10:00 a.m. on 10th October 2000.
Term used in this announcement:
“Acquisition” the acquisition by CCT Multimedia of the Sales Shares from the Vendors pursuant to the terms and the conditions of the Agreement
“Agreement” the sale and purchase agreement dated 5th October 2000 entered into amongst Lucky Club, Super Control, CCT Multimedia and the Warrantors
“associate(s)” has the meaning ascribed to it under the Listing Rules
“CCT Multimedia” CCT Multimedia Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the main board of the Stock Exchange
“CCT Multimedia Group” CCT Multimedia and its subsidiaries
“CCT Multimedia Share(s)” shares of HK$0.10 each in the issued share capital of CCT Multimedia
“CCT Telecom” CCT Telecom Holdings Limited, a company incorporated in the Cayman Islands, the shares of which are listed on the main board of the Stock Exchange
“CCT Telecom Group” CCT Telecom and its subsidiaries
“Completion” completion of the Acquisition pursuant to the terms and conditions of the Agreement
“Completion Date” the date on which Completion occurs
“Consideration Shares” 134,400,000 new CCT Multimedia Shares
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the People's Republic of China
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Lucky Club” Lucky Club Management Limited, a company incorporated in the British Virgin Islands. Shareholders of Lucky Club include Mr. Siu and Mr. Tse and other third parties. Lucky Club and its shareholders are independent of the directors, chief executive and substantial shareholder of either CCT Multimedia or CCT Telecom and their respective subsidiaries and associates as defined in the Listing Rules, save as disclosed in this announcement
“Mr. Siu” Siu Chiu Shun Patrick, who is indirectly and beneficially interested in approximately 23.6% of the issued share capital of Lucky Club
“Mr. Tse” Tse Chi Kai Tilypse, who is legally and beneficially interested in approximately 5.26% of the issued share capital of Lucky Club
“PRC” The People's Republic of China
“Sale Shares” 100 Wellfit Shares, representing the entire issued share capital of Wellfit Multi Media
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Super Control” Super Control Investments Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of CCT Telecom
“Vendors” Lucky Club and Super Control
“Warrantors” CCT Telecom, Mr. Siu and Mr. Tse
“Wellfit Group” Wellfit Multi Media and its subsidiaries
“Wellfit Multi Media” Wellfit Multi Media Group Limited, a company incorporated in the British Virgin Islands, legally and beneficially owned as to 75% and 25% by Lucky Club and Super Control respectively
“Wellfit Shares” shares of US$1.00 each in the issued share capital of Wellfit Multi Media
“%” per cent.
| By order of the board of directors of CCT Telecom Holdings Limited Mak Shiu Tong Chairman | By order of the board of directors of CCT Multimedia Holdings Limited Tsoi Tong Hoo Tony Director |
Hong Kong, 9th October 2000
Please also refer to the published version of this announcement in the Hong Kong iMail.