CTF Services Limited — Share Issue/Capital Change 2000

Apr 3, 2000

Listed Company Information

CENTRAL CHINA<0351> - Announcement & Resumption 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. CENTRAL CHINA ENTERPRISES LIMITED (Incorporated in Hong Kong with limited liability) ISSUE OF NEW SHARES The Company, pursuant to the Agreements, conditionally agreed to issue (a) 120,000,000 New Shares to JTPL; and (b) 180,000,000 New Shares to CSL, both at the issue price of HK$0.20 per New Share for cash. Pursuant to the Agreements, the Company conditionally agreed to grant the Options to be exercised once or more than once within a period of one year commencing from the Completion Date. Each of JTPL and CSL shall have the right to nominate one person to the board of directors of the Company so long as each of JTPL and CSL is interested in not less than 5% of the issued share capital of the Company from time to time. Each of JTPL and CSL, its respective directors, shareholders and beneficial owner(s) are independent of and not connected with 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 Listing Rules). The net proceeds derived from the New Issue are estimated to be about HK$58 million and is intended to be used in diversifying the existing business of the Company into high technology sectors, including, telecommunications and e-commerce in the PRC and/or as additional working capital for the Company. The New Issue and the granting of the Options are conditional on approval by the shareholders of the Company and approval of listing of the New Shares by the Stock Exchange respectively. The trading of the Shares has been suspended at the request of the Company since 28 March, 2000 and resumption of trading has been applied for with effect from 10:00 a.m. on 3 April, 2000. AGREEMENTS TO ISSUE NEW SHARES AND WITH RIGHT TO FURTHER SUBSCRIBE FOR NEW SHARES IN THE COMPANY TO JTPL AND CSL DATED 29 MARCH, 2000 A. NEW ISSUE OF 300,000,000 SHARES 1. Parties The Company will issue 120,000,000 and 180,000,000 New Shares (at the cash subscription price of HK$0.20 per share) to JTPL and CSL respectively. The Company is an investment holding company. Its subsidiaries companies are engaged in the provision of automobile repair and maintenance services and investment in infrastructure projects in the PRC. 2. Independence of JTPL The entire issued share capital of JTPL is owned by CSH via its wholly-owned subsidiary, China Science Industries Limited, which is incorporated in Hong Kong. CSH, being an enterprise legal entity established in the PRC, is an ample high technology group directly under the supervision and control of CAS, which is the most prestigious academic institution and comprehensive research center in natural sciences in the PRC. CAS has direct access to a vast pool of quality high-tech projects including information technology, communication, medical health and bio-technology. CSH principally engages in the research, development, production and marketing of electronic data devices, computer hardware and software, medical instrument and bio-medicine. JTPL, its directors, its shareholders and its beneficial owner(s) are independent of and not connected with 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 Listing Rules). As at the date hereof, so far as the directors of the Company are aware, JTPL does not own any shares in the Company. 3. Independence of CSL The entire issued share capital of CSL is beneficially owned by WTGL. WTGL is incorporated in the British Virgin Islands and is principally engaged in the business of satellite communications and distant medical education through internet and satellite technologies. WTGL also specialises in providing total online solution for medical services providers, including content, community, and e-commerce, in the PRC. CSL, its directors, its shareholders and its beneficial owner(s) are independent of and not connected with 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 Listing Rules). As at the date hereof, so far as the directors of the Company are aware, CSL does not own any shares in the Company. 4. Ranking of New Shares The 300,000,000 New Shares will rank pari passu in all respects with the Company's existing shares in issue (including the right to receive dividend or distributions announced or paid on or after the Completion Date). 5. Issue Price The issue price of each New Share is HK$0.20 and represents a discount of about 74.03% to the closing price of HK$0.77 per share on 27 March, 2000, being the last trading day before the Company applied for suspension of trading of the Shares, and represents a discount of about 66.10% of the average closing price of HK$0.59 per share of the 10 trading-day period expiring on 27 March, 2000. The issue price of HK$0.20 has been determined on an arm's length negotiation basis with reference to the Audited NAV and the Adjusted NAV, which represents a discount of about 24.53% and about 25.93% to the Audited NAV and the Adjusted NAV respectively. 6. Number of New Shares to be issued 120,000,000 shares and 180,000,000 shares of HK$0.20 each to be issued to JTPL and CSL respectively, representing approximately 6.22% and 9.33% respectively of the existing issued share capital of the Company and 5.38% and 8.07% respectively of the issued share capital of the Company as enlarged by the New Issue. 7. Right to appoint directors of the Company Each of JTPL and CSL shall have the right to nominate one person to the board of directors of the Company so long as each of JTPL and CSL is interested in not less than 5% of the issued share capital of the Company from time to time. B. GRANT OF OPTIONS 1. Parties The Company will grant to JTPL and CSL the right to subscribe for 140,000,000 and 260,000,000 New Shares respectively in cash at the subscription price of HK$0.22 per share. 2. Terms of the Options The Options may be exercised, in whole or in part, by JTPL or CSL, as the case may be, more than once at any time during the period commencing from the Completion and expiring on the first anniversary of the Completion. The Options shall be personal to JTPL and CSL, as the case may be, and shall not be assignable and JTPL and CSL, as the case may be, shall not in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to the Options. Any breach of the foregoing shall entitle the Company to cancel the Options. The New Shares to be allotted upon the exercise of an option will be subject to the Company's articles of association for the time being in force and will rank pari passu in all respect with the fully paid Shares in issue on the date of exercise of the Option. The respective Option of each of JTPL and CSL shall lapse automatically, amongst other things, immediately after either JTPL or CSL, as the case may be, has exercised their respective Option in full. 3. Issue Price The issue price of each New Share under the Options is HK$0.22 and represents a premium of 10% of the subscription price for the New Issue and represents a discount of about 71.43% to the closing price of HK$0.77 per share on 27 March, 2000, being the last trading day before the Company applied for suspension of trading of the Shares, and represents a discount of about 62.71% of the average closing price of HK$0.59 per share of the 10 trading-day period expiring on 27 March, 2000. The issue price has been determined on an arm's length negotiation basis with reference to the Audited NAV and the Adjusted NAV, which represents a discount of about 17.00% and about 18.52% to the Audited NAV and the Adjusted NAV respectively. 4. Number of New Shares to be issued upon full exercise of the Options 140,000,000 and 260,000,000 New Shares of HK$0.20 each to be issued to JTPL and CSL respectively upon full exercise of the subscription rights under the Option, represent approximately 7.26% and 13.48% respectively of the existing issued share capital of the Company; represent approximately 6.28% and 11.66% respectively of the existing issued share capital of the Company as enlarged by the New Issue; and represent approximately 5.32% and 9.89% of the issued share capital of the Company as enlarged by the New Issue and the Options. C. CONDITIONS The New Issue and the grant of the Options are conditional upon: (a) the passing of all necessary resolutions by the shareholders of the Company (excluding those shareholders prohibited by the Listing Rules from voting on the relevant resolution) at an extraordinary general meeting convened for such purpose or waiver by the Stock Exchange of such requirement (if such approval or waiver is required under the Listing Rules or by the Stock Exchange) approving this Agreement and the transactions contemplated hereby and to authorise the allotment and issuance of the New Shares to JTPL and CSL and the granting of the Options and the issuance of the New Shares under the Options; (b) the Listing Committee of the Stock Exchange shall have granted or agree to grant approval for (i) listing of and permission to deal in 300,000,000 New Shares , (ii) the grant of the Option by the Company and (iii) listing of and permission to deal in any of the 400,000,000 New Shares to be issued under the Options; and (c) the consents, licences, authorisations, orders, grants, confirmations, permissions, registrations and other approvals necessary or desirable in connection with the Agreements by each of JTPL and CSL or for the implementation of the Agreements. If the Conditions are not fulfilled or waived on or before 15 June, 2000 or such later date as may be agreed between the Parties, the Agreements will lapse unless the Parties otherwise agree. D. COMPLETION Completion of the New Issue and the grant of the Options will take place at 3:00 p.m. on the third busines day after the Conditions are fulfilled or waived. E. APPLICATION FOR LISTING Application will be made by the Company to the Stock Exchange for grant of approval for (a) the listing of and permission to deal in the New Shares; (b) the granting of the Options; and (c) the listing of and permission to deal in the New Shares to be issued pursuant to the exercise of the Options. F. REASONS FOR NEW ISSUE AND THE GRANT OF OPTIONS The directors of the Company consider that it is in the interest of the Company to take appropriate steps to diversify its existing business into other areas with better growth potential. The Company is diversifying into the field of telecommunications and high technology. Currently, the Company through its wholly-owned subsidiary holds a 49% interest in an equity joint venture in the PRC, namely, Henan Zhongzhou Radio & TV Information Network Co. Ltd., which is engaged in the business of cable broadcasting and information transmission services , and the Company has completed its acquisition of a PRC software company, namely Zhengzhou Originsoft Company Limited on 21 March, 2000. The directors of the Company believe that development and distribution of high-tech products will have tremendous growth potential and foresee that by having CSH and WTGL as strategic investors of the Company, the Company will benefit from their solid foundation as well as expertise in the area of research, development, production and marketing of telecommunications and other high-tech products. The directors of the Company further consider the terms of the Agreements to be fair and reasonable and in the best interests of the Company and were negotiated on an arm's length basis. The net proceeds after deduction of commissions and expenses derived from the New Issue are estimated to be about HK$58 million. The board of directors of the Company intends to use the net proceeds principally to diversify the existing business of the Company into the field of telecommunications and high technology projects including e-commerce and medical health and bio-technology related businesses in the PRC and/or as additional working capital for the Company. In view of the said foundations and experience of CSH and WTCL in these areas, the Company would actively explore opportunities to invest together with CSH and WTGL, or, if appropriate, invest in businesses or projects undertaken by CSH, WTGL or their respective affiliates. At present, the Company has not committed itself to nor is the Company involved in any negotiation on any specific project planned for this purpose. In the event that the Options are exercised in full by JTPL and CSL, additional net proceeds after deduction of commissions and expenses derived from the issue of new Shares in full under the Options are estimated to be about HK$86 million. The board of directors of the Company intends to use the additional net proceeds derived therefrom for purposes as mentioned above. The trading of the Shares has been suspended at the request of the Company since 28 March, 2000 and resumption of trading has been applied for with effect from 10:00 a.m. on 3 April, 2000. G. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have the following meanings: "Agreements" the subscription agreement entered into between the Company and JTPL (the "JTPL Agreement") and the subscription agreement entered into between the Company and CSL (the "CSL Agreement"), both dated 29 March, 2000 (as amended from time to time); "Adjusted NAV" HK$0.270 being the Audited NAV as adjusted by the unaudited interim results of the Company for the six months ended 30 June, 1999; "Audited NAV" HK$0.265 being the consolidated net asset value per Share as at 31 December, 1998 as shown in the audited consolidated financial statements of the Company; "CAS" Chinese Academy of Sciences; "Company" Central China Enterprises Limited; "Completion Date" the third business day after the Conditions are fulfilled or waived and on or before 15 June, 2000 or such later date as agreed between the Parties; "Conditions" conditions of the New Issue and the grant of the Options; "CSH" China Sciences Group (Holding) Corporation; "CSL" Chamber Spirit Limited, an investment holding company incorporated in the British Virgin Islands with limited liability; "JTPL" Joint Tech Properties Limited, an investment holding company incorporated in the British Virgin Islands with limited liability; "Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange; "New Shares" new shares of HK$0.20 each of the Company; "New Issue" the issuance and allotment of (a) 120,000,000 New Shares to JTPL; and (b) 180,000,000 New Shares to CSL, both at the issue price of HK$0.20; "Option" a right granted by the Company to each of (a) JTPL to subscribe for 140,000,000 New Shares; and (b) CSL to subscribe for 260,000,000 New Shares; "Parties" the parties to the JTPL Agreement or the CSL Agreement, as the case may be; "PRC" the People's Republic of China; "Shares" shares of HK$0.20 each of the Company; "Stock Exchange" The Stock Exchange of Hong Kong Limited; "WTGL" Worthope Technology Group Co. Ltd., a company incorporated in the British Virgin Islands with limited liability. By order of the Board Lam Kong Yin Patrick Managing Director Hong Kong SAR, 31 March, 2000