Esprit Holdings Limited — M&A Activity 1999

Oct 11, 1999

Listed Company Information

GRANDE HOLDINGS<0186> - 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. THE GRANDE HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability and redomiciled and continuing into and existing under the laws of Bermuda) CONNECTED TRANSACTION PURCHASE OF AN INTEREST IN A SUBSIDIARY The board of directors (the "Directors") of The Grande Holdings Limited (the "Company") announce that an agreement (the "Agreement") for the purchase of a 21% interest (the "Purchase") in Capetronic Consumer Electronics Holdings Berhad ("CCE"), in which the Company owned a 38.6% interest, was entered into on 15th July, 1999 between Iskandar Holdings Sdn. Bhd. ("IHSD"), which is an independent third party (other than being a substantial shareholder of CCE), and Capetronic Consumer Electronics Holdings Limited ("CCEH"), which is a wholly owned subsidiary of the Company. The consideration of RM29,552,597 (approximately equivalent to HK$60,100,000) was arrived at after arm's length negotiations and the Directors are of the view that the consideration is fair and reasonable. The transaction was completed on 8th September, 1999. As IHSD was a substantial shareholder of CCE, a non-wholly owned subsidiary of the Company, the transaction constituted a connected party transaction under the Rules Governing the Listing of Securities (the "Listing Rules") on the Hong Kong Stock Exchange Limited (the "Hong Kong Stock Exchange"). Accordingly, the Purchase should have been announced earlier. The Hong Kong Stock Exchange has indicated that they reserve the right to take further action against the Company. Large Scale Limited, Barrican Investments Corporation and associate of Mr. Christopher W. Ho, with shareholding over 50% interest in the Company, have given a certificate of approval of the Agreement. AGREEMENT DATED 15TH JULY, 1999 Parties Vendor: IHSD, an independent third party (other than being a substantial shareholder of CCE) Purchaser: CCEH, a wholly owned subsidiary of the Company CCE Interests Purchased Pursuant to the Agreement, IHSD agreed to sell and CCEH agreed to purchase a total of 11,654,543 ordinary shares of RM1 par value each in CCE (the "Shares"), representing 21% of the issued share capital of CCE. The Shares represented all of the shareholding of IHSD in CCE. CCE, which is incorporated and listed in Malaysia, and its subsidiaries engaged in the manufacture and sale of audio systems, CD players and record players. For the years ended 1997 and 1998, the audited net profits of CCE were approximately RM20,700,000 (approximately equivalent to HK$42,000,000) and RM20,987,000 (approximately equivalent to HK$43,000,000) respectively. The audited net asset value of CCE as of 31st December, 1997 and 1998 were approximately RM112,068,000 (approximately equivalent to HK$228,000,000) and RM121,212,000 (approximately equivalent to HK$248,000,000) respectively. The net asset value as of 30th June, 1999 was approximately RM130,284,000 (approximately equivalent to HK$265,000,000). Consideration The consideration was concluded after arm's length negotiation and upon normal commercial term. The consideration of RM29,552,597 (approximately equivalent to HK$60,100,000) in cash was paid at completion of the Agreement on 8th September, 1999 and reflected a discount of 41.2% and 27.4% to the closing market price of the Shares as at 15th July, 1999 of RM4.32 per Share and the 3-month weighted average market price of the Share from 15th April to 15th July, 1999 of RM3.50, respectively. The closing market price of the Shares was RM3.52 per Share on 5th October, 1999. All the market prices per Share quoted above are already adjusted for bonus issue, which subsequently occurred in August 1999. Connected Transaction As IHSD was a substantial shareholder of CCE, a non-wholly owned subsidiary of the Company, the transaction constituted a connected party transaction under the Listing Rules on the Hong Kong Stock Exchange. The consideration for the Agreement represented over 3% of the audited consolidated net assets of the Company and its subsidiaries at 31st December, 1998. Accordingly, the transaction would have required shareholders approval and disclosure by the Company by way of a press notice as stipulated under Rule 14.26(2) of the Listing Rules. However, Large Scale Limited, Barrican Investments Corporation and associate of Mr. Christopher W. Ho, with shareholding over 50% interest in the Company, have given a certificate of approval of the Agreement. The Hong Kong Sock Exchange has indicated that they reserve the right to take further action against the Company. By Order of the Board THE GRANDE HOLDINGS LIMITED Christopher W. Ho President and Group Chief Executive Officer Hong Kong, 8th October, 1999