CTF Services Limited — Share Issue/Capital Change 2000

Jan 18, 2000

Listed Company Information

CENTRAL CHINA<0351> - 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 part of the contents of this announcement. CENTRAL CHINA ENTERPRISES LIMITED (incorporated in Hong Kong with limited liability) Placing of 170,000,000 Existing Shares And Subscription for 170,000,000 New Shares SUMMARY Fulham, a substantial shareholder of the Company who is beneficially interested in approximately 22.9% of the issued share capital of the Company, had on 17 January, 2000 agreed to sell 170,000,000 Placing Shares through SW Capital as the placing manager to more than six independent professional investors at the Placing Price of HK$0.41 per Placing Share and to subscribe for 170,000,000 Subscription Shares at the Subscription Price of HK$0.41 per Subscription Share less all costs and expenses incurred under the Placing. The Placing Shares represent approximately 10.6% of the existing issued share capital of the Company as at the date of this announcement. As of the date of this announcement, Fulham has a beneficial holding of 366,150,000 Shares representing approximately 22.9% of the existing issued share capital of the Company, and Fulham will be interested in approximately 12.2% of the then issued share capital of the Company upon the completion of the Placing. The Placing is unconditional. The Subscription Shares represent approximately 10.6% of the existing issued share capital of the Company as at the date of this announcement and approximately 9.6% of the issued share capital of the Company as enlarged by the Subscription. Upon the completion of the Subscription, Fulham will be interested in approximately 20.7% of the issued share capital of the Company as enlarged by the Subscription. The Subscription is conditional upon the fulfillment of certain conditions as described below. The net proceeds of the Subscription is approximately HK$68 million and will be used for the purposes as set out in the section headed ``Use of net proceeds'' below. THE PLACING AGREEMENT DATED 17 JANUARY 2000 Vendor: Fulham, a company incorporated in British Virgin Islands with limited liability. As of the date of this announcement, Fulham has a beneficial holding of 366,150,000 Shares representing approximately 22.9% of the issued share capital of the Company. Placees: The Placing Shares were sold to more than six independent professional investors who are not connected with any of the Directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates (as defined in the Listing Rules) (the ``Independent Placees''). Placing Manager: SW Capital, which is independent of and not connected with any of the Directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates (as defined in the Listing Rules). Number of Placing Shares: 170,000,0000 Placing Shares, representing approximately 10.6% of the Company's existing issued share capital as at the date of this announcement. Immediately following the Placing, Fulham will be interested in approximately 12.2% of the then issued share capital of the Company. Placing Price and Subscription Price: The Placing Price is HK$0.41 per Placing Share, which was agreed after arm's length negotiations and represents a discount of approximately 10.9% to the closing price of HK$0.46 per Share as quoted on the Stock Exchange on 17 January, 2000 (being the date of this announcement), and a discount of approximately 15.1% to the average closing price of the Shares for the last 10 trading days up to and including the date of this announcement. All costs and expenses to be incurred in relation to the Placing in the amount of approximately HK$1.8 million will be borne by the Company under the Subscription. Rights: The Placing Shares were sold free of all liens, charges and encumbrances, claims, options and third party rights together with all rights attaching thereto as at the date of the Placing Agreement. Holders of the Placing Shares will be entitled to receive all dividends and other distributions which may be declared, made or paid by the Company in respect thereof on or after the date of the Placing Agreement. Condition of the Placing: The Placing is unconditional. Completion of the Placing: The completion of the Placing will take place on the second business day immediately following the day on which the Placing Shares were sold to the Independent Placees pursuant to the Placing Agreement, which is expected to be on 19 January, 2000. THE SUBSCRIPTION AGREEMENT DATED 17 JANUARY 2000 Subscriber: Fulham Number of Subscription Shares: 170,000,000 Subscription Shares, representing approximately 10.6% of the Company's existing issued share capital as at the date of this announcement and approximately 9.6% of the issued share capital of the Company as enlarged by the Subscription. Fulham (or its nominees) will be interested in approximately 12.2% of the issued share capital of the Company immediately after the Placing but before the Subscription and 20.7% of the then issued share capital of the Company immediately after the Placing and the Subscription. Subscription Price: The Subscription Price is HK$0.41 per Subscription Share less all costs and expenses incurred under the Placing. Ranking and rights of the Subscription Shares: The Subscription Shares, when fully paid, will rank pari passu in all respects with the Shares then in issue, including the right to receive all dividends and other distributions which may be declared, made or paid by the Company on or after the date of completion of the Subscription Agreement. Mandate to issue Subscription Shares: The Subscription Shares will be issued pursuant to the general mandate granted to the Directors by a resolution of the Company's shareholders passed at the Company's annual general meeting held on 28 June, 1999. Conditions of the Subscription: The Subscription is conditional on: (i) the Placement being completed; (ii) its completion taking place on the date which is the later of (i) the date falling within 14 days after the date on which the Placement is completed in accordance with its terms; and (ii) the date on which the approval is obtained by the Company from the Listing Committee of the Stock Exchange in respect of listing of, and permission to deal in, the New Shares, or such longer period as may be agreed between the Company and Fulham (subject to full compliance of the requirements on connected transactions as set out in the Listing Rules) but in any event not later than 15 February, 2000. If all of the above conditions are not fulfilled, the Subscription Agreement will lapse and cease to be of any effect. Completion of the Subscription: The Subscription will take place on the business day immediately following the day on which all the conditions in respect of the Subscription referred to above are fulfilled. Application for Listing: Application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Subscription Shares. Substantial Shareholders: Fulham is wholly owned by Henan Hongkong Enterprises Limited (``Henan HK'') which also owns directly 1,644,000 shares in the Company and holds the entire interests in Henan Hongkong Finance Limited which in turn owns 5,570,000 Shares. Accordingly, Henan HK beneficially owns 373,364,000 Shares (or approximately 23.4% interest in the Company). The percentage shareholding of Henan HK in the Company will be approximately 12.7% immediately following the completion of the Placing but before the Subsciption and will be approximately 21.1% immediately after the completion of the Placing and the Subscription. Sufficiency of Public Shareholding The Directors confirm that after the completion of both the Placing and the Subscription, not less than 25% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares will be in public hands. Reason for the Placing and the Subscription: The Directors have considered various means of obtaining funding for the Company and are of the view that financing by way of an issue of the Subscription Shares through the Subscription under the present market sentiment is the most appropriate and effective way which also broadens the capital and shareholder bases of the Company for the Company's future growth and development. Use of net proceeds: The net proceeds of the Subscription, after deduction of costs and expenses in relation to the Subscription, is estimated to be approximately HK$68 million and intended to be used as to approximately HK$40 million for the further expansion of the optic fibre cable broadcasting and television network in Henan Province, the PRC, which is owned and operated exclusively by an equity joint venture (the ``Joint Venture'') established in the PRC between a wholly owned subsidiary of the Henan Radio & TV Bureau and the Group in which the Group owns 49% interest. The Joint Venture, which was approved by all relevant PRC authorities of its establishment on 4 August 1998, plans to extend its existing optic fibre cable network from the present total length of approximately 1,900 km to approximately 2,700 km covering other locations within the Henan Province. The total investment for the expansion as aforementioned is estimated at approximately HK$80 million which will be contributed by each of the parties to the Joint Venture in accordance with their respective interests in the Joint Venture. Hence, the contribution from each of the Company and the subsidiary of Henan Radio & TV Bureau will both in the amount of approximately HK$40 million. Henan Radio & TV Bureau is under the supervision of the People's Government of Henan Province. The balance of the net proceeds which is approximately HK$28 million will be placed as bank deposits which will be used as general working capital of the Group. Terms used in this announcement: ``Company'' means Central China Enterprises Limited ``Director(s)'' means director(s) of the Company ``Fulham'' means Fulham Associates Limited, a substantial shareholder of the Company which holds 366,150,000 shares (or approximately 22.9%) in the issued share capital of the Company ``Group'' means the Company and its subsidiaries ``km'' means kilometers ``Listing Rules'' means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ``Placing'' means the placing of 170,000,000 Placing Shares by Fulham at the Placing Price to the Independent Placees pursuant to the terms of the Placing Agreement ``Placing Agreement'' means an agreement entered into between Fulham and SW Capital on 17 January 2000 pursuant to which SW Capital agreed to place, on behalf of Fulham, the Placing Shares to Independent Placees pursuant to the Placing ``Placing Price'' means HK$0.41 per Placing Share ``Placing Shares'' means the 170,000,000 existing Shares agreed to be placed by SW Capital on behalf of Fulham to the Independent Placees pursuant to the Placing ``SW Capital'' means Shenyin Wanguo Capital (H.K.) Limited, an investment adviser and dealer registered under the Securities Ordinance (Chapter 333 of the laws of Hong Kong), being the placing manager for Fulham in relation to the Placing ``Share(s)'' means ordinary share(s) of HK$0.20 each in the capital of the Company ``Stock Exchange'' means The Stock Exchange of Hong Kong Limited ``Subscription'' means the conditional subscription of the Subscription Shares by Fulham at the Subscription Price pursuant to the terms of the Subscription Agreement ``Subscription means a conditional agreement entered into Agreement'' between the Company and Fulham on 17 January 2000 pursuant to which Fulham agreed to subscribe for the Subscription shares pursuant to the Subscription ``Subscription Price'' means HK$0.41 per Subscription Share less all costs and expenses incurred under the Placing ``Subscription Shares'' means the 170,000,000 new Shares conditionally agreed to be subscribed by Fulham pursuant to the Subscription By order of the Board Central China Enterprises Limited Lam Kong Yin, Patrick Director Hong Kong, 17 January, 2000