CSC Holdings Limited — M&A Activity 2000

Feb 24, 2000

Listed Company Information

CCT TELECOM<0138>& WILTEC HOLDINGS<1169>-Joint Announcement & Resumption of Trading 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 parts of the contents of this announcement. Greatway International Corp. (incorporated in the British Virgin Islands with limited liability) CCT Telecom Holdings Limited (incorporated in the Cayman Islands with limited liability) Wiltec HOldings Limited (incorporated in Bermuda with limited liability) JOINT ANNOUNCEMENT ACQUISITION OF 51.28% INTEREST IN WILTEC BY THREE WHOLLY-OWNED SUBSIDIARIES OF CCT TELECOM AND UNCONDITIONAL MANDATORY CASH OFFER BY SOMERLEY LIMITED ON BEHALF OF THE OFFEROR, AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF CCT TELECOM FOR ALL THE ISSUED SHARES IN WILTEC NOT ALREADY OWNED BY THE OFFEROR OR PARTIES ACTING IN CONCERT WITH IT JOINT FINANCIAL ADVISERS TO CCT TELECOM SOMERLEY LIMITED AMS CORPORATE FINANCE LIMITED * Three wholly-owned subsidiaries of CCT Telecom have acquired a total of 110,000,000 Shares representing approximately 51.28% of the issued share capital in Wiltec from Pulteney for a consideration of HK$1.00 per Shae or an aggregate consideration of HK$110,000,000. * Somerley, on behalf of the Offeror, a wholly-owned subsidiary of CCT Telecom, will make an unconditional mandatory cash offer for all Shares not already owned by the Offeror or parties acting in concert with it at HK$1.00 per Share in cash. * Pulteney has undertaken to CCT Telecom, save for the Sale Shares disposed of under the Acquisition Agreement, not to dispose of (nor enter into any agreement to dispose of) any of its interests in the Shares for a period of 12 months from the closing date of the Offer. * It is the intention of the Offeror that the existing executive directors of Wiltec will continue to serve on the Wiltec Board. It is also the intention of the Offeror that the existing business of Wiltec including sourcing and sale of child care products, health care and hygiene products, toys and child safety products will continue. Wiltec recently launched a web site, www.ebuy.com.hk, which provides internet shopping and auction services. It is the intention of the Offeror to strengthen and develop such existing electronic commerce businesses by adding more contents and building up the customer and subscriber base and expand into other electronic commerce and trading businesses. * At the request of the respective company, trading in the shares of Wiltec and CCT Telecom on the Stock Exchange were suspended with effect from 10:00 a.m. on 17th February, 2000 and 10:00 a.m. on 21st February, 2000 respectively pending the issue of this announcement. Applications will be made by Wiltec and CCT Telecom to the Stock Exchange for the resumption of trading of their respective shares with effect from 10:00 a.m. on 24th February, 2000. * Shareholders and potential investors should exercise caution when dealing in the Shares. THE ACQUISITION AGREEMENT DATED 19TH FEBRUARY, 2000 Parties Vendor: Pulteney, a company in which Mr. Leung Ngai, Mr. Wilson Leung and Mr. Shouson Chen, all directors of Wiltec, have a respective 63.4%, 18.3% and 18.3% beneficial interest. Following completion of the Acquisition, Mr. Leung Ngai disposed of his shares in Pulteney to Mr. Wilson Leung and Mr. Shouson Chen who now each beneficially owns 50% of the shares in Pulteney. Purchaser: CCT Telecom. CCT Telecom has subsequently nominated the Nominees, all beneficially wholly-owned subsidiaries of CCT Telecom, to purchase the Sale Shares from Pulteney. CCT Telecom is listed on the Stock Exchange. Mr. Mak Shiu Tong, Clement, the chairman of CCT Telecom, and his spouse are beneficially interested in 19.14% of CCT Telecom. CCT Telecom and the Nominees are independent of and not connected with the directors, chief executive or substantial shareholders of Wiltec or any of its subsidiaries or any of their respective associates. Shares acquired Offeror 50,000,000 Shares Info-net International Corp. 50,000,000 Shares Clear Access Agents Limited 10,000,000 Shares ------------------ 110,000,000 Shares ================== The Sale Shares, representing approximately 51.28% of Wiltec's existing issued share capital, have been acquired by the Nominees free from all liens, charges, encumbrances, equities and adverse interests and with all rights attached or accruing thereto on the completion date. Each of the Nominees has financed the acquisition of the respective number of Shares by its respective internal resources. As the Sale Shares are represented by 3 share certificates, CCT Telecom has established the three Nominees to hold each block of Shares represented by each certificate. The directors of CCT Telecom and the Nominees have confirmed that they have no agreement (formal or informal), or understanding, or option to dispose of or otherwise transfer any of the said Shares. Aggregate consideration The Sale Shares were acquired for a consideration of HK$1.00 per Share or an aggregate consideration of HK$110,000,000. The purchase price for the Sale Shares was determined on an arm's length and commercial basis. Completion The Acquisition was completed on 21st February, 2000. UNCONDITIONAL MANDATORY CASH OFFER As the Nominees together have acquired 110,000,000 Shares, representing approximately 51.28% of the issued share capital of Wiltec, the Nominees are obliged under the Code to make an unconditional mandatory cash offer for all the issued Shares other than those already owned by the Offeror or parties acting in concert with it. There are no options or warrants of Wiltec outstanding at the date hereof. Terms of the Offer The Offer will be made by Somerley on behalf of the Offeror on the following basis: For each Share ............... HK$1.00 in cash It is the intention of Pulteney to retain its remaining 20,410,000 Shares, representing approximately 9.51% of the issued share capital of Wiltec, as a strategic investment. Pulteney has undertaken to CCT Telecom, save for the Sale Shares disposed of under the Acquisition Agreement, not to dispose of any of its interests in the Shares for a period of 12 months from the closing date of the Offer. Shareholders and other investors who are contemplating dealing in the Shares are advised to exercise extreme caution. The Offer price of HK$1.00 per Share represents a discount of approximately 45.1% to the closing price of HK$1.82 per Share as quoted on the Stock Exchange on 16th February, 2000, being the last trading day prior to suspension of trading of the Shares on the Stock Exchange pending the issue of this announcement, and a discount of approximately 27.5% to the average closing price of HK$1.38 per Share for the ten trading days up to and including 16th February, 2000. The Offer price of HK$1.00 per Share represents a premium of approximately 58.7% over the unaudited proforma adjusted consolidated net asset value of Wiltec of approximately HK$0.63 per Share based on the audited consolidated net asset value of the Wiltec Group of approximately HK$123.4 million as at 31st March, 1999 plus the increase in unaudited retained earnings by approximately HK$12.0 million for the six months ended 30th September, 1999 and 214,516,000 Shares in issue. During the six month period ended on 19th February, 2000, save for the Sale Shares, neither the Nominees, CCT Telecom nor any parties acting in concert with them have dealt in the Shares. Pulteney has disposed of a total of 21,390,000 Shares through the market during the same period. Total consideration At present, there are 214,516,000 Shares in issue. At the Offer price of HK$1.00 per Share and assuming that there will not be any change in the issued share capital of Wiltec, the Offer values the entire issued share capital of Wiltec at HK$214,516,000. The Offer will be financed by internal resources of the Offeror. Somerley is satisfied that the Offeror has sufficient financial resources available to satisfy full acceptance of the Offer. The Offer document An Offer document setting out the terms of the Offer, and the acceptance and transfer forms, will be sent to all independent Shareholders as soon as practicable. Effect of accepting the Offer By accepting the Offer, Shareholders will sell their Shares and all rights attached to them to the Offeror at the Offer price, including their rights to receive all dividends and distributions declared, made or paid on or after the date of the Acquisition Agreement. Stamp duty Stamp duty at a rate of HK$1.25 for every HK$1,000 or part thereof will be deducted from the consideration payable to Shareholders who accept the Offer. General An independent board committee of Wiltec will be established to consider the terms of the Offer and advise the independent Shareholders on the Offer. An independent financial adviser will be appointed to advise the independent board committee of Wiltec. INFORMATION ON WILTEC (For the shareholding structures of Wiltec immediately before and after completion of the Acquisition, please refer to the press announcement today.) The Wiltec Group is principally engaged in the sourcing and sale of a wide range of child care products, health care and hygiene products, toys and child safety products. In addition, the Wiltec Group has developed a web site, www.ebuy.com.hk, which was launched on 20th October, 1999. The web site provides internet shopping and auction services all in one. The consolidated profits before and after tax of Wiltec for the two years ended 31st March, 1998 and 31st March, 1999 and six months ended 30th September, 1999 are as follows: Six months ended Year ended 31st March, 30th September, 1999 1999 1998 HK$'000 HK$'000 HK$'000 (unaudited) (audited) (audited) Profit before tax 19,359 25,540 40,713 Profit after tax 16,038 22,138 34,063 The audited consolidated net asset value of the Wiltec Group was approximately HK$123,448,000 as at 31st March, 1999. INFORMATION ON THE NOMINEES AND CCT TELECOM The Offeror, Info-net International Corp. and Clear Access Agents Limited are private companies incorporated in the British Virgin Islands on 21st, 21st and 18th January, 2000 respectively. Save for the Acquisition, each of the Nominees has not conducted any business since its incorporation. The Nominees are beneficially wholly-owned subsidiaries of CCT Telecom. The principal activities of the CCT Group include the business of manufacturing and sale of telecommunication products and the provision of internet access, internet contents, international direct-dial telephone services and other telecommunications services, trading of telecommunications and network equipment and provision of related consultancy services. The executive directors of CCT Telecom are Mr. Mak Shiu Tong, Ms. Cheng Yuk Ching, Mr. Tsoi Tong Hoo Tony, Mr. Tam Ngai Hung, Mr. Zhang Guo Liang, Mr. Liu Zhen Yuan, and Mr. William Donald Putt and the independent non-executive directors are Mr. Samuel Olenick, Mr. Tam King Ching Kenny and Mr. Lau Ho Man Edward. The directors of each of the Nominees are Mr. Mak Shiu Tong, Ms. Cheng Yuk Ching, Mr. Tsoi Tong Hoo Tony and Mr. Tam Ngai Hung. INTENTION OF THE OFFEROR REGARDING WILTEC Upon completion of the Offer, it is the intention of the Offeror that the existing executive directors of Wiltec will continue to serve on the Wiltec Board. It is also the intention of the Offeror that the existing business of Wiltec including the sourcing and sale of child care products, health care and hygiene products, toys and child safety products will continue. Wiltec recently developed and launched a web site, www.ebuy.com.hk, to provide internet shopping and auction services. It is the intention of the Offeror to strengthen and develop such existing electronic commerce businesses by adding more contents and building up the customer and subscriber base and expand into other electronic commerce and trading businesses. CCT Telecom has no intention to inject any assets into the Wiltec Group. Proposed new directors of Wiltec The Wiltec Board presently comprises four executive directors (namely Mr. Wilson Leung, Mr. Shouson Chen, Mr. Lo Kin Cheung, Mr. Lam Chung Ming, Paul), one non-executive director (Mr. Leung Ngai) and two independent non-executive directors (namely Mr. Heng Kwoo Seng and Mr. Yick Shiu Cheong, James). Mr. Leung Ngai, Mr. Heng Kwoo Seng and Mr. Yick Shiu Cheong, James shall resign as directors of Wiltec as at the closing date of the Offer (which is the earliest time permitted under the Code). The Offeror will nominate four persons to the Wiltec Board to act as executive directors whose appointment shall become effective upon despatch of the Offer document. The Offeror shall appoint two other persons to act as independent non-executive directors as soon as practicable. Save for the aforesaid, the Offeror has no intention to nominate any other persons to the Wiltec Board. Set out below are brief biographies of the persons nominated by the Offeror to the Wiltec Board. Proposed executive directors Mr. Mak Shiu Tong, Clement, aged 45, the chairman of the CCT Group, has over 22 years' experience in the electronic manufacturing industry specializing in telephone and telecommunications products. He possesses a diploma in the field of electronic engineering. Ms. Cheng Yuk Ching, Flora, aged 45, an executive director of CCT Telecom, has over 20 years' experience in the electronics industry. She holds a diploma in business administration. Mr. Tsoi Tong Hoo, Tony, aged 35, an executive director of CCT Telecom. Prior to joining CCT Telecom, Mr. Tsoi was a senior executive with an infrastructure investment company and an investment banking group. Mr. Tsoi has over 13 years' experience in investment banking, investment research and corporate planning. He has been a Chartered Financial Analyst since 1989. Mr. Tam Ngai Hung, aged 46, an executive director of CCT Telecom, has more than 20 years' working experience in financial accounting management and extensive experience in mergers and acquisitions. He is a Fellow of the Association of Chartered Certified Accountants and an associate of both Hong Kong Society of Accountants and The Institute of Chartered Secretaries and Administration. MAINTAINING THE LISTING OF THE SHARES The Offeror intends Wiltec to remain listed on the Stock Exchange. The directors of the Offeror and the new directors who will serve on the Wiltec Board will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that subsequent to the close of the Offer, not less than 25% of the issued share capital of Wiltec will be owned by the general public. The Stock Exchange has stated that it will closely monitor trading in the Shares if, at the close of the Offer, less than 25% of the Shares are held by the public. If the Stock Exchange believes that: -a false market exists or may exist in the Shares; or -there are too few Shares in public hands to maintain an orderly market; then it will consider exercising its discretion to suspend trading in the Shares. If Wiltec remains listed on the Stock Exchange, any acquisition or disposal of assets by Wiltec will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require Wiltec to issue a circular to its Shareholders irrespective of the size of the proposed acquisitions and disposals by Wiltec, particularly where such proposed acquisitions and disposals by Wiltec represent a departure from the principal activities of Wiltec. The Stock Exchange also has the power to aggregate a series of acquisitions and disposals by Wiltec and any such transactions may result in Wiltec being treated as if it were a new listing applicant and subject to the requirements for new listing applicants as set out in the Listing Rules. SUSPENSION AND RESUMPTION OF TRADING IN THE SECURITIES OF WILTEC AND CCT TELECOM At the request of the respective company, trading in the shares of Wiltec and CCT Telecom on the Stock Exchange were suspended with effect from 10:00 a.m. on 17th February, 2000 and 10:00 a.m. on 21st February, 2000 respectively pending the issue of this announcement. Applications will be made by Wiltec and CCT Telecom to the Stock Exchange for the resumption of trading of their respective shares with effect from 10:00 a.m. on 24th February, 2000. TERMS USED IN THIS ANNOUNCEMENT "Acquisition" the acquisition by the Nominees of the Sale Shares from Pulteney pursuant to the Acquisition Agreement "Acquisition Agreement" the sale and purchase agreement dated 19th February, 2000, entered into between Pulteney (as vendor), CCT Telecom (as purchaser) and Mr. Wilson Leung and Mr. Shouson Chen (as warrantors) "associate(s)" has the meaning ascribed to it under the Listing Rules "CCT Group" CCT Telecom and its subsidiaries (excluding members of the Wiltec Group) "CCT Telecom" CCT Telecom Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Stock Exchange "Code" the Hong Kong Code on Takeovers and Mergers "HK$" Hong Kong Dollars, the lawful currency of Hong Kong "Hong Kong" the Hong Kong Special Administrative Region of the PRC "Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange "Nominees" the Offeror, Info-net International Corp. and Clear Access Agents Limited, all beneficial indirect wholly-owned subsidiaries of CCT Telecom "Offer" the unconditional mandatory cash offer to be made by Somerley on behalf of the Offeror for all the Shares not already owned by the Offeror or parties acting in concert with it "Offeror" Greatway International Corp., a company incorporated in the British Virgin Islands with limited liability and a beneficially and wholly-owned subsidiary of CCT Telecom "PRC" the People's Republic of China "Pulteney" Pulteney Group Limited, a company incorporated in the British Virgin Islands with limited liability "Sale Shares" 110,000,000 Shares beneficially owned by Pulteney and sold to the Nominees under the Acquisition Agreement "SFC" the Securities and Futures Commission of Hong Kong "Shareholder(s)" shareholder(s) of Wiltec "Shares" ordinary shares of HK$0.10 each in the issued share capital of Wiltec "Somerley" Somerley Limited, an investment adviser and exempt dealer under the Securities Ordinance, Chapter 333 of the laws of Hong Kong "Stock Exchange" The Stock Exchange of Hong Kong Limited "Wiltec Board" the board of directors of Wiltec "Wiltec Group" Wiltec and its subsidiaries "Wiltec" Wiltec Holdings Limited, a company incorporated in Bermuda with limited liability and the securities of which are listed on the Stock Exchange By Order of the Board of By Order of the Board of Greatway International Corp. CCT Telecom Holdings Limited Clement Mak Shiu Tong Clement Mak Shiu Tong Director Chairman By Order of the Board of Wiltec Holdings Limited Wilson Leung Chairman Hong Kong, 23rd February, 2000 The directors of the Nominees jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Wiltec and CCT Telecom and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement, other than those expressed by Wiltec and CTT Telecom, have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading. The directors of CCT Telecom(save for William Donald Putt who is overseas and not contactable) jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Wiltec and the Nominees and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement, other than those expressed by Wiltec and the Nominees, have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading. The directors of Wiltec jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to the Nominees and CCT Telecom and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement, other than those expressed by CCT Telecom and the Nominees, have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.