FDB Holdings Limited — Capital/Financing Update 2021

Jan 22, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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Steering Holdings Limited 旭通控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1826)

CONNECTED TRANSACTION RELATING TO THE DISPOSAL OF ENTIRE ISSUED SHARE CAPITAL OF FRUIT DESIGN & BUILD LIMITED

Reference is made to the announcement of the Company dated 5 October 2020 in relation to the entering of the MOU between the Vendor and the Purchaser for the Group to dispose of the entire issued share capital of Target Company.

THE DISPOSAL

On 22 January 2021 (after trading hours), the Vendor and the Purchaser entered into the Agreement, pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares at the Consideration of HK$8,500,000 (subject to adjustment, if any). The Agreement shall supercede the MOU and the MOU has lapsed.

Upon Completion, the Group will no longer hold any interest in the Target Company and the Target Company will cease to be a subsidiary of the Company and the financial results of the Target Company will no longer be consolidated with the results of the Group.

LISTING RULES IMPLICATIONS

The Company had made an application to the Stock Exchange under Rule 14.20 of the Listing Rules for using the alternative size tests (the ‘‘Alternative Size Tests’’) in relation to the calculation of the applicable percentage ratios (as set out under Rule 14.07 of the Listing Rules) in relation to the Disposal by taking the Management Account for 30 September 2020 as the basis of the calculation.

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On 24 December 2020, the Company was informed that the Stock Exchange accepted the Company’s application on using the Alternative Size Tests. Based on the Alternative Size Tests, all the applicable percentage ratios (as set out under Rule 14.07 of the Listing Rules) in respect of the Disposal are less than 5%, and the Disposal shall not constitute a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules.

As the Purchaser is a director of the Target Company, the Purchaser is a connected person of the Company at the subsidiary level. As the Stock Exchange had accepted the Company’s application to use the Alternative Size Tests, and all the applicable percentage ratios for the Disposal are less than 25% and the aggregate consideration for the Disposal is less than HK$10,000,000, the Disposal is therefore subject to the reporting and announcement requirements but is exempt from the circular, independent financial advice and shareholders’ approval requirement.

The Board has approved the Disposal and the Directors (including independent nonexecutive Directors) have also confirmed that the terms and conditions of the Agreement and the Disposal are fair and reasonable, on normal commercial terms, not in the ordinary and usual course of business of the Group but in the interests of the Company and the Shareholders as a whole.

Reference is made to the announcement of the Company dated 5 October 2020 in relation to the entering of the MOU between the Vendor and the Purchaser for the Group to dispose of the entire issued share capital of the Target Company.

THE AGREEMENT

The Board is pleased to announce that on 22 January 2021 (after trading hours), the Vendor (a direct wholly-owned subsidiary of the Company) entered into the Agreement with the Purchaser, pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares at the Consideration (subject to adjustment, if any) on and subject to the terms and conditions contained therein, major terms of which are as follows:

MAJOR TERMS OF THE AGREEMENT

Date

22 January 2021 (after trading hours)

Parties

• (a) FDB & Associates Limited, a direct wholly-owned subsidiary of the Company as the Vendor

• (b) Mr. IP Kong Ling as the Purchaser

• (c) The Target Company

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Asset to be disposed of

Pursuant to the Agreement, the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares at the Consideration (subject to adjustment, if any) on and subject to the terms and conditions contained therein. The Sale Shares represents the entire issued share capital of the Target Company, being an indirect wholly-owned subsidiary of the Company. Upon Completion, the Group will no longer hold any interest in the Target Company and the Target Company will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the financial results of the Group.

Upon the entering of the Agreement, the Agreement shall supercede the MOU and the MOU has lapsed.

Consideration

Under the Agreement, the Consideration shall be HK$8,500,000 payable by the Purchaser to the Vendor in the following manner:

• (a) 10% of the Consideration in the sum of HK$850,000, being the refundable deposit and part payment of the Consideration, shall be paid by the Purchaser to the Vendor upon signing of the Agreement (the ‘‘Deposit’’); and

• (b) subject to the terms and conditions of the Agreement and the ascertainment, determination and adjustments as described below, the balance of the Consideration shall be paid on Completion.

The Consideration shall be paid on the Completion Date by way of cashier order and/or bank transfer or any other method as mutually agreed by the Parties in writing. Upon the Audited Completion Accounts being made up, the Valuer should re-assess the market value of the Target Company as at the Completion Date (‘‘Market Value at Completion’’) and issue the Second Valuation Report addressing to the Vendor and the Purchaser. The final Consideration shall be ascertained and adjusted based on the Audited Completion Accounts at Completion which is based on the Market Value at Completion that:

• (a) if the Agreed Assets Value of the Company as at Completion is less than or equal to HK$6,249,354, no adjustment shall be made to the Consideration; or

• (b) if the Agreed Assets Value of Company as at Completion is more than HK$6,249,354, the Consideration shall be upwardly adjusted by the excess in the Agreed Assets Value.

If the Purchaser is liable to pay any sum to the Vendor after the adjustment, such sum shall be paid by the Purchaser to the Vendor within 14 Business Days from the date of receipt of the Second Valuation Report by the Vendor and the Purchaser.

The Consideration was determined after arm’s length negotiations between the Vendor and the Purchaser, taking into account the market value of the entire issued share capital of the Target Company after the Business Transfer as at 31 August 2020 according to the Valuation Report, and the pro forma unaudited consolidated net asset value of the Target Company after the Business Transfer as at 31 August 2020.

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The stamp duty and other levies, if any, payable on the sale and purchase of the Sale Shares pursuant to the Agreement shall be borne by the Vendor and the Purchaser in equal shares.

Conditions Precedent

Unless otherwise waived in writing (save and except for Condition (c) below), Completion is conditional upon the fulfilment of the following Conditions:

• (a) the Purchaser being satisfied with the results of the due diligence review on the Target Company;

• (b) the Company fulfilling all compliance requirements under the Listing Rules in connection with entering of the Agreement and the transactions contemplated thereunder;

• (c) the Business Transfer Agreement being completed;

• (d) all necessary authorisations of all relevant governmental or regulatory authorities, agencies or bodies, or any other third party, required for the implementation of the transactions contemplated in the Agreement being obtained and maintained;

• (e) all the warranties as set out in the Agreement being true, complete and accurate in all respects and not misleading in any respect; and

• (f) no Material Adverse Change having occurred prior to the Completion Date or are likely to occur before the Completion Date.

It was agreed by the parties that the Business Transfer Agreement shall be completed on or before the Completion and Condition (c) above is not capable of being waived by the parties.

Pursuant to the Agreement, the Vendor undertakes to use its best endeavours to procure the satisfaction of the Conditions as soon as practicable but in any event by the Long Stop Date. If the Conditions have not been fulfilled or waived on or before the Long Stop Date or by such later date as may be agreed between the Purchaser and the Vendor in writing, then the Agreement shall thereupon become null and void ab initio and the Purchaser’s obligations to purchase the Sale Shares shall lapse.

The Purchaser’s undertakings

The Purchaser undertakes to the Vendor that he shall (and such obligation shall survive the Completion):

• (a) at all times after the execution of the Agreement, use his best endeavours to procure the fulfilment and performance of the obligations under the Business Transfer Agreement and provide all assistance as requested by Win Lee in relation to all matters and transactions as contemplated under the Business Transfer Agreement; and

• (b) accede to all reasonable requests made by Win Lee in relation to the Business Transfer Agreement and use his best endeavours to procure the transfer of the Vendor’s contracting business and its related assets and liabilities to Win Lee.

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The Purchaser acknowledges that, Mr. Ng Kin Siu as an executive Director and a director of the Target Company will resign from all his positions in the Target Company, and the Purchaser shall be responsible for procuring sufficient number of technical director or other qualified person to be employed by the Target Company as required under the licences or permits held by the Target Company.

Completion

Subject to all the Conditions having been fulfilled and/or waived (as applicable), the Completion shall take place on the fifth (5th) Business Day following the date on which the last of the Conditions has been fulfilled (or otherwise waived) or such other date as the parties may agree in writing.

Default by the Vendor or the Purchaser

If all the Conditions have not been fulfilled on or before the Long Stop Date as a result of the default of the Vendor and the Agreement is rescinded by the Purchaser pursuant to the terms of the Agreement, then the Vendor shall, within 14 Business Days immediately following the termination of the Agreement by the Purchaser, refund the Deposit so received by the Vendor (without interest) to the Purchaser and, in addition to all other rights and remedies available to him, the Purchaser may rescind the Agreement.

If all the Conditions have not been fulfilled on or before the Long Stop Date as a result of the default of the Purchaser, or if the Purchaser fails to comply with its obligations under the Agreement, including his obligation to pay the balance of the Consideration upon completion, then the Vendor may, in addition to all other rights and remedies available to it, by notice to the Purchaser, rescind the Agreement whereupon the Vendor shall be entitled to forfeit the Deposit absolutely.

INFORMATION ON THE GROUP

The Company is an investment holding company. As at the date of this announcement, the Group is principally engaged in the provision of building consultancy services, contracting business, project management, and provision of financial information and technology services to individuals in the People’s Republic of China.

INFORMATION ON THE VENDOR

The Vendor is an investment holding company incorporated in the British Virgin Islands and a direct wholly-owned subsidiary of the Company. The Vendor directly holds 100% equity interests and shareholding in the Target Company.

INFORMATION ON THE PURCHASER

The Purchaser is a director of the Target Company, and therefore is a connected person of the Company at the subsidiary level pursuant to the Listing Rules. Save for the foregoing, to the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the Purchaser is not in any other way connected with the Company and its connected persons.

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INFORMATION ON THE TARGET COMPANY

The Target Company is an indirect wholly-owned subsidiary of the Company and an immediately wholly-owned subsidiary of the Vendor. As at the date of this announcement, the Target Company is principally engaged in contracting business and provision of building consultancy services. The Target Company has been undergoing the Business Transfer for transferring the contracting business and all assets and liabilities related to contracting business to Win Lee under the Business Transfer Agreement, after which the entire contracting business previously operated by the Target Company will be retained and continued to be operated by the Group. Upon the completion of the Business Transfer under the Business Transfer Agreement, the Target Company will be principally engaged in building consultancy services.

Upon Completion of the Disposal, the Group will no longer hold any interest in the Target Company and the Target Company shall cease to be a subsidiary of the Company and the financial results of the Target Company will not be consolidated with the results of the Group and the Group will no longer operate the business of provision of building consultancy services.

REASONS FOR THE DISPOSAL

As disclosed in the interim report 2020 of the Company, the financing banks of the Group have adopted strengthened credit measures on the Group (the ‘‘Strengthened Credit Measures’’) and tightened the credit control over the Group thereby having a substantial impact on the operation of the contracting and consulting business, which may cast doubt on certain subsidiaries’ ability of certain subsidiaries of the Group which engage in contracting and consultancy business to continue as a going concern. Having considered the Strengthened Credit Measures, the overall performance of the building consultancy business in the past few years is weak and the business environment of the Target Company has been increasingly difficult, the Disposal would provide the Company with an opportunity to streamline its line of business and the structure of the Group and, at the same time, to obtain immediate cash in return for the Group to focus its resources on the contracting business, which is believed to be more profitable, while the Group will continue to explore other more promising business opportunities.

Upon Completion, the Group will no longer hold any interest in the Target Company and the Target Company will cease to be a subsidiary of the Company and the financial results of the Target Company will no longer be consolidated with the results of the Group.

None of the Directors has any material interest in the Disposal or was required to abstain from voting on the Board resolutions in relation to the Disposal.

The terms and conditions of the Agreement have been agreed after arm’s length negotiations between the parties. The Board has approved the Disposal and the Directors (including independent non-executive Directors) have also confirmed that the terms and conditions of the Agreement and the Disposal are fair and reasonable, on normal commercial terms, not in the ordinary and usual course of business of the Group but in the interests of the Company and the Shareholders as a whole.

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USE OF PROCEEDS

It is expected that the proceeds from the Disposal will be applied towards the general working capital of the Group and repayment of bank loans of the construction segment.

FINANCIAL EFFECTS OF THE DISPOSAL

Based on the Consideration (subject to adjustment (if any)) for the disposal of the Target Company and the pro forma net assets of the Target Company as at 31 August 2020 after the Business Transfer to be disposed of by the Company of HK$6.25 million, it is expected that the Group will record a gain of approximately HK$2.25 million due to the disposal of the Target Company. Subject to audit and adjustment, the actual amount of the gain from the disposal of the Target Company to be recognised by the Group will depend on the net asset value of the Target Company as at the Completion Date and therefore may be different from the amount as set out above.

LISTING RULE IMPLICATIONS

The Company had previously made an application to the Stock Exchange under Rule 14.20 of the Listing Rules for using the Alternative Size Tests in relation to the calculation of the applicable percentage ratios (as set out under Rule 14.07 of the Listing Rules) in relation to the Disposal by taking the Management Account for 30 September 2020 as the basis of the calculation.

On 24 December 2020, the Company was informed that the Stock Exchange accepted the Company’s application on using the Alternative Size Tests. Based on the Alternative Size Tests, all the applicable percentage ratios (as set out under Rule 14.07 of the Listing Rules) in respect of the Disposal are less than 5%, and the Disposal shall not constitute a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules.

As the Purchaser is a director of the Target Company, the Purchaser is a connected person of the Company at the subsidiary level under the Listing Rules. As the Stock Exchange had accepted the Company’s application to use the Alternative Size Tests, and all the applicable percentage ratios for the Disposal are less than 25% and the aggregate consideration for the Disposal is less than HK$10,000,000, the Disposal is therefore subject to the reporting and announcement requirements but is exempt from the circular, independent financial advice and shareholders’ approval requirement.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below:

• ‘‘Agreed Assets Value’’ the net asset value of the Target Company as at Completion as ascertained and determined by deducting the amount of the liabilities from the assets

‘‘Agreement’’ the agreement for the sale and purchase of the Sale Shares dated 22 January 2021 and entered into between the Vendor, the Purchaser and the Target Company

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• ‘‘Audited Completion Accounts’’

• the audited accounts of the Target Company for the period from 1 January 2020 up to the Completion Date audited by an auditor agreed upon and jointly appointed by the Vendor and the Purchaser in writing and to be given to the Purchaser, the Vendor and the Valuer within 45 Business Days after Completion for the purpose of determining the adjustment to be made to the Consideration in accordance with the Agreement

• ‘‘Board’’

• the board of Directors

• ‘‘Business Day’’

• a day (other than a Saturday, Sunday or public holiday) on which licensed commercial banks in Hong Kong are open for general banking business for members of the public in Hong Kong

• ‘‘Business Transfer’’

• the transfer of the contracting business and the related assets and liabilities of the Target Company, as a going concern, to Win Lee by the Target Company pursuant to the Business Transfer Agreement

• ‘‘Business Transfer Agreement’’

• a business transfer agreement dated 25 September 2020 entered into between the Target Company and Win Lee, both of which are an indirect wholly-owned subsidiary of the Company, pursuant to which the Target Company shall transfer its contracting business and the related assets and liabilities to Win Lee, as a going concern, on the terms and conditions set out therein

• ‘‘Company’’

• Steering Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange (stock code: 1826)

• ‘‘Completion’’

• completion of the sale and purchase of the Sale Shares in accordance with the Agreement

• ‘‘Completion Accounts’’

• the unaudited consolidated management accounts of the Target Company for the period from 1 January 2020 to the Completion Date

• ‘‘Completion Date’’ the fifth (5th) Business Day following the date on which the last of the Conditions has been fulfilled (or otherwise waived) or such other date as the parties may agree in writing on which the Agreement shall be completed

• ‘‘Condition(s)’’

• the conditions precedent of the Agreement as set out in the section headed ‘‘Conditions Precedent’’ in this announcement

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• ‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules ‘‘Consideration’’ the total consideration of the Disposal, being HK$8,500,000 ‘‘Directors’’ the directors of the Company

• ‘‘Disposal’’ the disposal of the Sale Shares by the Vendor pursuant to the terms and conditions of the Agreement

• ‘‘Group’’ the Company and its subsidiaries from time to time ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Long Stop Date’’ 31 March 2021, or a later date which is agreed by the Vendor and the Purchaser in writing

• ‘‘Management Account for the unaudited management account of the Target Company 30 September 2020’’ for the nine months ending 30 September 2020

• ‘‘Material Adverse Change’’ any change, event, occurrence, state of facts or effect, the consequence of which is to, or could reasonably be expected to materially and adversely affect the financial position, management, business or property, results of operations, legal or financing structure, business prospects or assets or liabilities of the Target Company and ‘‘Material Adverse Change’’ or ‘‘Material Adverse Effect’’ shall be construed accordingly

• ‘‘MOU’’ the non-legally binding memorandum of understanding for the sale and purchase of the Sale Shares dated 30 September 2020 and entered into between the Vendor, the Purchaser and the Target Company

• ‘‘Parties’’ the parties to the Agreement, and ‘‘Party’’ means any one of them

• ‘‘percentage ratios’’ the percentage ratios set out in Rule 14.07 of the Listing Rules

• ‘‘Purchaser’’ Mr. IP Kong Ling, a director of the Target Company

• ‘‘Sale Shares’’ 28,100,000 Shares in the Target Company, representing the entire issued share capital of the Target Company

• ‘‘Second Valuation Report’’ the valuation report in respect of the market value of the Company as at Completion issued by the Valuer

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• ‘‘Share(s)’’ ordinary share(s) of par value of HK$1.00 each in the share capital of the Company

• ‘‘Shareholder(s)’’ holder(s) of the Share(s) ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Target Company’’ Fruit Design & Build Limited, a company incorporated with limited liability under the laws of Hong Kong, and an indirect wholly-owned subsidiary of the Company

• ‘‘Valuation Report’’ the valuation report in respect of the market value of the entire issued share capital of the Target Company after the Business Transfer as at 31 August 2020, prepared by the Valuer

• ‘‘Valuer’’ Valtech Valuation Advisory Limited, an independent valuer commissioned by the Company

• ‘‘Vendor’’ FDB & Associates Limited, a company incorporated in the British Virgin Islands with limited liability and a direct wholly-owned subsidiary of the Company

• ‘‘Win Lee’’ Win Lee Building Engineering Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company

• ‘‘%’’ per cent

Shareholders and potential investors are advised to exercise caution when dealing in the Shares of the Company.

By order of the Board Steering Holdings Limited Ng Kin Siu

Chief executive officer and executive Director

Hong Kong, 22 January 2021

As at the date of this announcement, the executive Directors are Ms. Feng Xuelian and Mr. Ng Kin Siu; the non-executive Director is Mr. Gao Yunhong; and the independent nonexecutive Directors are Mr. Chan Yuk Sang, Mr. Wan Chi Wai Anthony and Mr. Lau Kwok Fai Patrick.

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