CTF Services Limited — M&A Activity 1999

Dec 24, 1999

Listed Company Information

NEW WORLD INFRA<0301> & PACIFIC PORTS<0659> - Joint Announcement 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. NEW WORLD INFRASTRUCTURE LIMITED (Incorporated in the Cayman Islands with limited liability) POSSIBLE MAJOR TRANSACTION PACIFIC PORTS COMPANY LIMITED (Incorporated in Bermuda with limited liability) MAJOR AND CONNECTED TRANSACTION ACQUISITION OF PORT INVESTMENTS BY PACIFIC PORTS FROM NEW WORLD INFRASTRUCTURE - The respective directors of NWI and PPC announce that the Sale and Purchase Agreement in respect of the Acquisition was entered into on 23rd December, 1999. Pursuant to the Sale and Purchase Agreement, subject to satisfaction or waiver of the Conditions, PPC shall acquire all ports and port-related investments owned by NWI. The estimated consideration amounts to approximately HK$4,682 million and is to be satisfied by the issuance of 1,240,506,000 Consideration Shares and 3,227,051,252 Cumulative Convertible Redeemable Preference Shares by PPC to Lotsgain or its nominee. The minimum consideration payable is HK$4,452.5 million and the maximum consideration payable is HK$4,911.5 million. - HSBC Investment Bank Asia is acting as the financial adviser to PPC and Tai Fook is acting as the financial adviser to NWI on the Acquisition. - The Acquisition constitutes a possible major transaction for NWI and a major and connected transaction for PPC under the Listing Rules. - Upon the issuance of the Consideration Shares, the votes attaching to the shareholding interest of NWI in PPC will be increased from approximately 37.15% to 75.0%. Under the Takeovers Code, NWI or Lotsgain or their respective concert parties would be obliged to make an unconditional general offer to acquire all the Shares other than those already owned by NWI and parties acting in concert with it. - An application will be made by NWI, Lotsgain and their respective concert parties to the Executive for the Whitewash Waiver, which will be subject to the approval of the independent shareholders of PPC on a vote taken by way of a poll. The Executive may or may not grant the Whitewash Waiver. Completion of the Acquisition is conditional upon, inter alia, the granting of the Whitewash Waiver by the Executive. Under the Sale and Purchase Agreement, the Whitewash Waiver condition can be waived by NWI. NWI has not yet decided on the action it would take should the Whitewash Waiver not be granted. THE SALE AND PURCHASE AGREEMENT Date 23rd December, 1999 Parties Vendor:Lotsgain Purchaser:PPC Warrantor:NWI The Acquisition The entire issued share capital of the Sale Companies will be acquired by PPC from Lotsgain, a wholly-owned subsidiary of NWI (together with all outstanding shareholders' loans owing from the Sale Group Companies to Lotsgain, which as at 30th November, 1999 had an adjusted value of approximately HK$1.83 billion). The Sale Companies are wholly-owned subsidiaries of NWI through which NWI holds its attributable interests of approximately 33.34% of SLOT, approximately 55.67% of ATL, approximately 36.33% of ACT, approximately 24.5% of SLOTT, 40% of UATYL and 100% of NSATL. While NSATL is a subsidiary of NWI, each of SLOT, ATL, ACT, SLOTT and UATYL is not. Each of the Sale Companies has no other business other than holding such interests in SLOT, ATL, ACT, SLOTT, UATYL and NSATL mentioned above and certain inter-company loans between themselves. Following Completion, besides PPC's existing business, PPC will effectively own approximately 33.34% of SLOT, approximately 55.67% of ATL, approximately 36.33% of ACT, approximately 24.5% of SLOTT, 40% of UATYL and 100% of NSATL. The Acquisition Assets represent all interests of NWI in ports and port-related investments. Consideration The estimated consideration payable by PPC pursuant to the Acquisition amounts to approximately HK$4,682 million and has been determined on the basis of arm's length negotiations with reference to the preliminary valuation of the Acquisition Assets. The minimum consideration payable is HK$4,452.5 million and the maximum consideration payable is HK$4,911.5 million. The final valuation on the Acquisition Assets to be prepared by an independent valuer is understood to be determined on a portfolio basis based on, inter alia, earnings potential of the Acquisition Assets and will be contained in the shareholders' circular to be dispatched to shareholders of PPC in this connection. The estimated consideration is to be satisfied by the issue to Lotsgain or its nominee by PPC of 1,240,506,000 Consideration Shares at an issue price of HK$1.048 per Share and of 3,227,051,252 Cumulative Convertible Redeemable Preference Shares at an issue price of HK$1.048 per Cumulative Convertible Redeemable Preference Share. The actual consideration will be arrived at based on the summation of 14 times the audited pro forma combined profit after taxation of the Acquisition Assets for the 12 months ending 31st December, 1999 (as adjusted on the same basis as the preliminary valuation) and the relevant dividends received from SLOT and ATL. Adjustment to the consideration, if any, will be made by way of changing the number of Cumulative Convertible Redeemable Preference Shares to be issued to Lotsgain or its nominee. At Completion, if the audited pro forma accounts are not available, 3,008,062,702 Cumulative Convertible Redeemable Preference Shares will be issued with reference to the minimum consideration at HK$4,452.5 million, and additional Cumulative Convertible Redeemable Preference Shares, if any, will be issued when the audited pro forma accounts are available, which is expected around Completion. In the event that the maximum consideration of HK$4,911.5 million is payable, the total number of Cumulative Convertible Redeemable Preference Shares to be issued by PPC to Lotsgain or its nominee will be increased to 3,446,039,801. A further announcement will be made by PPC when the actual consideration is determined. If any additional shareholders' loans are made by the Vendor and/or NWI to the Sale Group Companies between 1st December, 1999 and Completion, PPC will acquire such loans for cash at their face value. A further announcement will be made by PPC if any material shareholders' loans are made. Depending on the size of the actual consideration, the Acquisition may constitute a discloseable or a major transaction for NWI under the Listing Rules. An announcement will be made by NWI when the actual consideration is determined. Taking into consideration the above reasons and factors, the directors of NWI and the executive directors of PPC believe the consideration range of HK$4,452.5 million to HK$4,911.5 million payable pursuant to the Acquisition to be fair and reasonable. The directors of NWI and the executive directors of PPC also consider the terms of the Sale and Purchase Agreement (including the issue price of the Consideration Shares and the Cumulative Convertible Redeemable Preference Shares) to be fair and reasonable and in the interests of NWI and PPC and their respective shareholders. Consideration Shares The Consideration Shares, when issued, will rank pari passu in all respects with the Shares then in issue including the right to receive any dividend declared, made or paid, on and after Completion. The Consideration Shares represent about 151.4% of the existing issued share capital of PPC, about 60.2% of the issued ordinary share capital of PPC as enlarged by the issuance of the 1,240,506,000 Consideration Shares but before conversion of the Cumulative Convertible Redeemable Preference Shares and about 23.5 of the issued ordinary share capital of PPC as enlarged by the issuance of the Consideration Shares and conversion in full of the 3,227,051,252 Cumulative Convertible Redeemable Preference Shares on the basis that the estimated consideration represents the actual consideration. Following the Acquisition, NWI will be interested in 75% of the enlarged issued ordinary share capital of PPC before conversion of any Cumulative Convertible Redeemable Preference Shares. If the 3,227,051,252 Cumulative Convertible Redeemable Preference Shares (based on the estimated consideration of HK$4,682 million) were converted into Shares immediately after Completion, they would represent about 156.7% of the enlarged issued share capital of PPC as enlarged by the issuance of the Consideration Shares and about 61.0% of the enlarged issued share capital of PPC as enlarged by the issuance of the Consideration Shares and conversion in full of such Cumulative Convertible Redeemable Preference Shares on the basis that the estimated consideration represents the actual consideration. The issue price of HK$1.048 per Consideration Share represents (i) a premium of about 11.5% to the average closing price of HK$0.94 per Share as quoted on the Stock Exchange from 10th December, 1999 to 23rd December, 1999, the last ten trading days prior to this announcement; and (ii) a discount of about 7.3% to the audited consolidated net tangible asset value of PPC as at 31st December, 1998 of approximately HK$1.13 per Share; and (iii) a discount of about 5.6% to the unaudited consolidated net tangible asset value of PPC as at 30th June, 1999 of approximately HK$1.11 per Share. In negotiating the issue price of the Consideration Shares, which the executive directors of PPC and the directors of NWI believe to be reasonable, the executive directors of PPC have taken into account the following factors: - the Shares have been trading at a price range of HK$0.44 to HK$1.30 per Share during the period from 1st January, 1999 to 23rd December, 1999; - the average closing prices for the periods of 30, 60, 90 and 120 trading days up to 23rd December, 1999 (inclusive) are approximately HK$0.96, HK$0.93, HK$0.93 and HK$0.96 per Share respectively, which represent a discount of about 8.40%, 11.26%, 11.26% and 8.40% respectively to the issue price of HK$1.048 per Consideration Share; - the audited consolidated net tangible asset value of PPC as at 31st December, 1998 of approximately HK$1.13 per Share; and - the unaudited consolidated net tangible asset value of PPC as at 30th June, 1999 of approximately HK$1.11 per Share. Cumulative Convertible Redeemable Preference Shares Total number to be issued 3,227,051,252 on the basis that the estimated consideration of HK$4,682 million represents the actual consideration Par value HK$0.10 for each Cumulative Convertible Redeemable Preference Share Aggregate nominal amount about HK$322.7 million on the basis that the estimated consideration of HK$4,682 million represents the actual consideration Issue price HK$1.048 Aggregate issue price HK$3,381.95 million on the basis that the estimated consideration of HK$4,682 million represents the actual consideration Dividend rate 4% of the subscription amount paid, payable semi-annually on 31st July and 31st January of each year, except that the first dividend payable for the Cumulative Convertible Redeemable Preference Shares shall be paid on 31st July, 2000 and calculated in respect of the period from the date of their issue up to and including that date. Dividend right Fixed at the dividend rate set out above. The cumulative and preference dividend payable on the Cumulative Convertible Redeemable Preference Shares shall be carried forward if unpaid when due and paid in priority to any dividend payable to the holders of the Shares. Return of capital On a return of capital on liquidation or otherwise, the assets of PPC available for distribution among its shareholders shall be applied in paying the subscription amount paid on each Cumulative Convertible Redeemable Preference Share in priority to any payment to the holders of the Shares. Voting rights The Cumulative Convertible Redeemable Preference Shares confer no voting rights to their holders in any general meeting, except in a class meeting for holders of Cumulative Convertible Redeemable Preference Shares, in which case each share will entitle the holder to one vote in such class meeting. Term Within a period of 5 years from the date of Completion, the Cumulative Convertible Redeemable Preference Shares may be converted into Shares on the terms set out below. Redemption Unless previously converted, the Cumulative Convertible Redeemable Preference Shares will be redeemable, at the sole discretion of PPC and by three months' notice, on the fifth anniversary after Completion in Hong Kong dollars at their subscription amount together with any unpaid dividend, or, at the sole discretion of PPC and by three months' notice, on the fifth anniversary after Completion be compulsorily converted into Shares. Conversion right Subject to the following terms, exercisable by the holders of the Cumulative Convertible Redeemable Preference Shares at any time during a period of 5 years after Completion, by 5 business days' notice, to convert the Cumulative Convertible Redeemable Preference Shares into Shares (in multiples of 10 million in number), where one Cumulative Convertible Redeemable Preference Share will be convertible into one Share, subject to adjustment in circumstances such as consolidation and sub-division of Shares. Transferability The Cumulative Convertible Redeemable Preference Shares are transferable by instrument in writing in integral multiples of 10 million in number. Transferability is not subject to any approval mechanism by the Stock Exchange. The directors of PPC and NWI will undertake to disclose to the Stock Exchange and PPC all their dealings in the Cumulative Convertible Redeemable Preference Shares (in the case of NWI for as long as it remains as a substantial shareholder of PPC). PPC will also undertake to disclose to the Stock Exchange all dealings in the Cumulative Convertible Redeemable Preference Shares by its connected persons. All directors and substantial shareholders of PPC will be subject to disclosure requirements under the Securities (Disclosure of Interests) Ordinance. Listing The Cumulative Convertible Redeemable Preference Shares will not be listed. Shareholding structure of PPC (For the charts show the shareholding structure of PPC before and after the Acquisition but before conversion of any Cumulative Convertible Redeemable Preference Shares,please refer to the press announcement today.) The following table shows the shareholding structure of PPC before the Acquisition, after the Acquisition but before any conversion of the Cumulative Convertible Redeemable Preference Shares and after the Acquisition and conversion in full of the Cumulative Convertible Redeemable Preference Shares. After the After the conversion in Convertible Acquisition Acquisition full of the Redeemable but before and Cumulative Preference conversion of Shares the Cumulative Before the Convertible Minimum Acquisition Redeemable consideration Preference Shares Estimated Maximum consideration consideration NWI 304,470,000 1,544,976,000 4,553,038,702 37.15% 75.00% 89.84% 4,772,027,252 4,991,015,801 90.26% 90.65% The Asian 180,000,000 180,000,000 180,000,000 Infrastructure 21.97% 8.74% 3.55% Fund 180,000,000 180,000,000 3.40% 3.27% Other 334,992,000 334,992,000 334,992,000 shareholders 40.88% 16.26% 6.61% 334,992,000 334,992,000 6.34% 6.08% Total issued 819,462,000 2,059,968,000 5,068,030,702 share capital 100.00% 100.00% 100.00% of PPC 5,287,019,252 5,506,007,801 100.00% 100.00% Undertakings NWI has undertaken to PPC that its right of conversion from the Cumulative Convertible Redeemable Preference Shares may only be exercised to an extent where the number of Shares held by NWI and its associates (as defined in the Listing Rules) and concert parties following the conversion shall not exceed 75% of the resultant then issued ordinary share capital of PPC except when the compulsory conversion right is exercised by PPC upon redemption as mentioned above. It is the intention of the directors of PPC to maintain the listing of the Shares on the Stock Exchange after Completion. Accordingly, the directors of PPC and PPC will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists for the Shares. Conditions of the Acquisition Completion of the Acquisition is conditional on, among others: - the passing of all necessary resolutions by the independent shareholders of PPC approving: (i) the transactions contemplated by the Sale and Purchase Agreement; (ii) increasing the authorised share capital of PPC, creating the Cumulative Convertible Redeemable Preference Shares and authorising the allotment and issue of the Consideration Shares and the Cumulative Convertible Redeemable Preference Shares to Lotsgain or its nominee upon Completion (and the allotment and issue of the Shares upon conversion of the Cumulative Convertible Redeemable Preference Shares); (iii) the granting of the Whitewash Waiver to NWI and Lotsgain and their respective concert parties in respect of their obligations to extend a general offer to the shareholders of PPC as a result of the issue of the Consideration Shares and/or the conversion of the Cumulative Convertible Redeemable Preference Shares in accordance with Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code; and (iv) amendments to Bye-laws of PPC; - the granting by the Listing Committee of the Stock Exchange of a listing of, and permission to deal in, the Consideration Shares to be issued by PPC upon Completion and the Shares to be issued upon conversion of the Cumulative Convertible Redeemable Preference Shares; - the granting by the Executive of the Whitewash Waiver in relation to the obligation of NWI or Lotsgain or their respective concert parties to make a mandatory general offer of Shares as a result of the issue of the Consideration Shares and/or the conversion of the Cumulative Convertible Redeemable Preference Shares in accordance with Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code; - the warranties given to PPC remaining true and accurate and not misleading as given at the date of the Sale and Purchase Agreement and at Completion; - if so required, the consents, licences, authorisations, orders, grants, confirmations, permissions, registrations and other approvals necessary or desirable in connection with the proposed acquisition of the Acquisition Assets by PPC or for the implementation of the Sale and Purchase Agreement required by the parties thereto having been obtained from appropriate governments, governmental, supranational or trade agencies, courts, other regulatory bodies, banks, financial institutions or other third parties on terms satisfactory to PPC and such consents, licences, authorisations, orders, grants, confirmations, permissions, registrations and other approvals remaining in full force and effect; and - all consents and approvals having been duly obtained from the Bermuda Monetary Authority in relation to the creation and issue of the Cumulative Convertible Redeemable Preference Shares and (if applicable) the Consideration Shares and any matters or actions contemplated under the Sale and Purchase Agreement. Under the Sale and Purchase Agreement, there are provisions allowing the waiver of certain of the Conditions, including the Condition relating to the obtaining of the Whitewash Waiver. Completion shall take place on the third business day (Saturdays excepted) after the day on which the Sale and Purchase Agreement becomes unconditional (or such other date as may be mutually agreed in writing between NWI and PPC). If the Conditions are not satisfied or waived on or before 30th June, 2000 (or such other date as PPC and NWI may agree), the Sale and Purchase Agreement will lapse. The directors of NWI and the executive directors of PPC expect the Sale and Purchase Agreement to be completed on or before 29th February, 2000. INFORMATION ON THE ACQUISITION ASSETS The Acquisition Assets comprise effective interests of approximately 33.34% in SLOT, approximately 55.67% in ATL, approximately 36.33% in ACT, approximately 24.5% in SLOTT, 40% in UATYL and 100% in NSATL. SLOT operates Container Terminal 3 in Kwai Chung, Hong Kong, providing container terminal services to shipping companies, including loading and unloading containers between vessels and the terminal. Other ancillary terminal services such as cargo consolidation, equipment repair and maintenance services are also offered. Container Terminal 3 is the most efficient container terminal in Hong Kong in terms of annual throughput per berth and overall average crane productivity. ATL operates a container freight station and a cargo distribution centre at Container Terminal 3 in Kwai Chung, Hong Kong. ATL's Asia Terminals Centre is one of the world's largest multi-storey drive-in container freight storage buildings. Its multi-lane vehicle ramp enables all cargo handling activities to be accommodated in one facility, and storage bays on all levels are accessible by container vehicles. Pursuant to land grants issued by the Hong Kong Government in December 1998, ACT, Hongkong International Terminals Limited (`HIT') and Modern Terminals Limited (`MTL') obtained the right to develop and operate Container Terminal 9 in Tsing Yi, Hong Kong. It is anticipated that the construction of Container Terminal 9 will commence in 2000 and the first berth will be completed in 2002. According to an agreement entered into between ACT and MTL in December 1998, ACT will swap its interest in two berths of Container Terminal 9 for MTL's two berths in Container Terminal 8 West after completion of Container Terminal 9 (expected to be in late 2004 and upon its partitioning between ACT, HIT and MTL). After Completion, PPC's share of the cost of development of Container Terminal 9 will be financed by a combination of internal resources and debt or equity fund raising. The executive directors of PPC consider that, after Completion, PPC will have sufficient internal resources in the near future to fulfil its financial obligation for the development of Container Terminal 9. Therefore, PPC has no definite plan for any fund raising exercise in the immediate future. SLOTT operates four container berths at the Dongtuti South Terminal in Tianjin Xingang, the PRC. Container terminal services provided to shipping lines include loading and unloading of containers, container freight station operations, storage, warehousing and other terminal-related services. UATYL is one of the leading providers of container freight station, warehousing and distribution services for South China. The facility, which is located in Yantian, the PRC, is used by UATYL and is a licensed import bonded and customs-approved export warehouse for import/export cargoes. Instant Profits Development Limited (`IPD'), a wholly-owned subsidiary of NWI and the intermediate holding company owning all of the registered capital of NSATL, entered into a conditional agreement for the grant of land use rights in relation to a site in Tianjin Port Free Trade Zone with a total site area of 134,650 square metres at a consideration of approximately US$7.8 million. IPD has transferred the relevant right to apply for a land use right certificate to NSATL as its initial subscription to the registered capital of NSATL. NSATL is in the process of applying for a land use right certificate. The site is planned for the development of a cargo logistic and distribution facility. FINANCIAL INFORMATION The unaudited pro forma combined net profit before and after taxation and minority interests attributable to the Acquisition Assets in respect of the two financial years immediately preceding the Acquisition is as follows:- Year ended 30th June, 1999 1998 HK$'000 HK$'000 Profit before 370,651 331,437 taxation Taxation (65,643) (40,256) Profit before 305,008 291,181 minority interests Minority interests - (16,502) Net profit 305,008 274,679 attributable to shareholders The results of the Acquisition Assets for the two years ended 30th June, 1999 were made up almost entirely of share in profits of SLOT and ATL. The Acquisition Assets' unaudited share in profits before and after taxation of SLOT and ATL are as follows:- Year ended 30th June, 1999 1998 HK$'million HK$'million SLOT - profit 229.0 211.8 before tax - profit after tax 186.9 179.7 ATL - profit before 141.9 119.8 tax - profit after tax 118.4 111.8 The pro forma financial information contained in this section has been reported on in accordance with the Takeovers Code and such report has been lodged with the Executive. The effect of the Acquisition on the profit and loss account and balance sheet of PPC, the pro forma assets and liabilities table of the Acquisition Assets as at 30th June, 1999, and more detailed financial information on the Acquisition Assets will be disclosed in the shareholders' circular to be issued by PPC in this connection. INFORMATION ON THE PPC GROUP In May 1998, NWI acquired an approximately 37.15% equity interest in PPC whereby NWI became the largest shareholder of PPC. The PPC Group is principally engaged in port and cargo handling in the PRC. The PPC Group is also engaged in the investment and management of trucking and warehousing facilities to provide logistic and delivery networks for shipping lines and shippers. INFORMATION ON THE NWI GROUP The NWI Group is principally engaged in the development, ownership, operation and/or management of (i) toll roads, expressways, bridges and tunnels; (ii) power stations; (iii) container terminals; (iv) cargo handling and storage facilities; and (v) water treatment plants, in the PRC including Hong Kong and Macau. NWI is owned as to approximately 58.7% by a wholly-owned subsidiary of New World Development Company Limited, a company listed on the Stock Exchange. REASONS FOR THE TRANSACTION As outlined in its 1998 annual report, NWI intends over the coming years to consolidate its business operations in order to maximise recurring income from existing projects while expanding its business on a selective basis in those areas where attractive returns can be obtained. As part of this policy, when NWI acquired an approximately 37.15% interest in PPC in May 1998, it was envisaged that its then existing port projects within the PRC would be injected into PPC at a time when both NWI and PPC considered it appropriate (as stated in NWI's offer document dated 27th May, 1998). The directors of NWI and the executive directors of PPC consider that it is now appropriate for such a business reorganisation given the increasing trade flows through both Hong Kong and the PRC. In order to achieve a clear delineation of businesses between the NWI Group and the PPC Group, the NWI Group proposes to transfer all of its port investments into the PPC Group under the Acquisition. The directors of NWI and the executive directors of PPC believe that the Acquisition will be beneficial to PPC's business and will result in an enhanced rating for PPC based on its performance as a focused ports operator. The earnings base and business of PPC will also be substantially expanded after the Acquisition. FUTURE INTENTIONS Following the Acquisition, the existing business of the NWI Group, including the development, ownership, operation and/or management of tolls roads, expressways, bridges and tunnels; power stations and water treatment plants in the PRC including Hong Kong and Macau, will continue to be operated by the NWI Group, whilst its container terminals and cargo handling and storage business will be operated by the PPC Group, which will become the flagship of the NWI Group's port businesses in the future. Pursuant to the terms of the Sale and Purchase Agreement, NWI has given a non-competition undertaking to PPC such that all future port and port-related investments of the NWI Group will be undertaken by the PPC Group. The board of directors of PPC consists of 8 directors (including 2 non-executive directors). The directors of NWI expect that the composition of the board of directors of PPC and its name will change to reflect changes in shareholdings following Completion and further announcements will be made by PPC as and when necessary. The directors of NWI have no plans to inject any of the other operations of the NWI Group into the PPC Group. Any future acquisitions or disposals of assets by the PPC Group and any future transactions between the NWI Group and the PPC Group will be subject to the Listing Rules. TAKEOVERS CODE IMPLICATIONS FOR NWI Upon the issuance of the Consideration Shares, the votes attaching to the shareholding of NWI in PPC will be increased from approximately 37.15% to 75.0%. Under the Takeovers Code, NWI would be obliged to make an unconditional general offer to acquire all the Shares other than those already owned by NWI and parties acting in concert with it. An application will be made by NWI to the Executive for the Whitewash Waiver, which will be subject to the approval of the independent shareholders of PPC on a vote taken by way of a poll. The Executive may or may not grant the Whitewash Waiver. Completion of the Acquisition is conditional upon, inter alia, the granting of the Whitewash Waiver by the Executive. Under the Sale and Purchase Agreement, the Whitewash Waiver condition can be waived by NWI. NWI has not yet decided on the action it would take should the Whitewash Waiver not be granted. MAINTAINING THE LISTING OF PPC It is the intention of the directors of PPC to maintain the listing of the Shares on the Stock Exchange after Completion. Accordingly, the directors of PPC and PPC will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists for the Shares. The Stock Exchange has stated that it will closely monitor trading in the Shares if less than 25% of the Shares are held by the public. The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by PPC. The Stock Exchange has the discretion to require PPC to issue a circular to its shareholders irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of PPC. The Stock Exchange also has the power to aggregate a series of transactions and any such transaction may result in PPC being treated as if it were a new listing applicant. 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, it will consider exercising its discretion to suspend trading in the Shares. DEALINGS AND HOLDINGS IN THE SHARES During the six month period immediately preceding the date of this announcement, there were no dealings in the Shares by NWI, its directors and parties acting in concert with any of them. At present, none of the respective directors of NWI and New World Development Company Limited and parties acting in concert with any of them holds any Shares. Mr. Douglas Chan, Managing Director of NWI and Chairman of PPC, has share options in PPC. GENERAL The Acquisition constitutes a possible major transaction for NWI under the Listing Rules. A document containing details of the Acquisition will be sent to shareholders of NWI as soon as practicable. As New World Development Company Limited, the major shareholder of NWI holding approximately 58.7% of NWI has already indicated that it will issue a written approval for the Acquisition, a shareholders' meeting of NWI is not required to be convened in connection with the Acquisition. The Acquisition constitutes a major and connected transaction for PPC under the Listing Rules. An independent committee of the board of directors of PPC has been established to consider, inter alia, the Acquisition and the Whitewash Waiver. An independent financial adviser will be appointed to advise the independent committee of the board of directors of PPC regarding the Acquisition and the Whitewash Waiver. A composite document containing details of, among others, the Acquisition, the Whitewash Waiver and notice of a special general meeting of PPC will be sent to Shareholders as soon as practicable. In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:- `Acquisition' the acquisition of all port and port-related investments of NWI by PPC `Acquisition Assets' NWI's attributable interests in SLOT, ATL, ACT, SLOTT, UATYL and NSATL `ACT' Asia Container Terminals Limited, a company incorporated in Hong Kong with limited liability `associates' has the meaning ascribed to it in the Listing Rules `ATL' Asia Terminals Limited, a company incorporated in Hong Kong with limited liability `Completion' completion of the Acquisition `concert parties' has the meaning ascribed to it in the Takeovers Code `Conditions' the conditions which must be satisfied or waived before Completion as set out under the heading `Conditions of the Acquisition' `Consideration Shares' 1,240,506,000 new Shares to be issued at HK$1.048 per Share as part of the consideration for the Acquisition `Cumulative Convertible cumulative convertible Redeemable Preference redeemable preference shares Shares' in the capital of PPC (the terms of which are set out under the heading `Cumulative Convertible Redeemable Preference Shares') to be issued at HK$1.048 per share as part of the consideration for the Acquisition `Executive' the Executive Director of the Corporate Finance Division of the SFC `Hong Kong' the Hong Kong Special Administrative Region of the PRC `HSBC Investment Bank Asia' HSBC Investment Bank Asia Limited `Listing Rules' the Rules Governing the Listing of Securities on the Stock Exchange `Lotsgain' Lotsgain Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of NWI `New World Infrastructure' or New World Infrastructure `NWI' Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange `NSATL' N.S.A. (Tianjin) Int'l Cargo Distribution Co., Ltd., a company established in Tianjin Municipality of the PRC with limited liability `NWI Group' NWI and its subsidiaries `Pacific Ports' or `PPC' Pacific Ports Company Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange `PPC Group' PPC and its subsidiaries `PRC' or `China' the People's Republic of China `Sale and Purchase Agreement' the conditional sale and purchase agreement among PPC, NWI and Lotsgain dated 23rd December, 1999 relating to the Acquisition `Sale Companies' Noble Park Investments Limited, Hetro Limited, Stockfield Limited, Moving Investments Limited and Future Power Limited `Sale Group Companies' the Sale Companies and their subsidiaries `SFC' the Securities and Futures Commission of Hong Kong `Share(s)' the share(s) of HK$0.10 each in the share capital of PPC `Shareholder(s)' the holder(s) of the Share(s) `SLOT' Sea-Land Orient Terminals Limited, a company incorporated in Hong Kong with limited liability `SLOTT' Sea-Land Orient (Tianjin) Container Terminals Co., Limited, a company established in the PRC with limited liability `Stock Exchange' The Stock Exchange of Hong Kong Limited `Tai Fook' Tai Fook Capital Limited `Takeovers Code' the Hong Kong Code on Takeovers and Mergers `UATYL' United Asia Terminals (Yantian) Limited, a company incorporated in Hong Kong with limited liability `Whitewash Waiver' a waiver from a general offer obligation under the Takeovers Code pursuant to Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code By Order of the Board of NEW WORLD INFRASTRUCTURE LIMITED Douglas Chan Wing-tak Managing Director By Order of the Board of PACIFIC PORTS COMPANY LIMITED Alan Wong Wing-lun Company Secretary Hong Kong, 23rd December, 1999 The directors of NWI jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to the PPC Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, their opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts (other than that relating to the PPC Group) not contained in this announcement, the omission of which would make any of their statements in this announcement misleading. The directors of PPC jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to the NWI Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, their opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts (other than that relating to the NWI Group) not contained in this announcement, the omission of which would make any of their statements in this announcement misleading.