Founder Holdings Limited — M&A Activity 2000

Apr 7, 2000

Listed Company Information

MULTI-ASIA INTL<0234> - 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. This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Shares. MULTI-ASIA INTERNATIONAL HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) DISCLOSEABLE AND SHARE TRANSACTION The Board announces that the Agreement was entered into on 6th April, 2000 between the Vendor and the Purchaser in relation to the acquisition of a 60% shareholding interest in Pacific Cyber, being a producer of wireless headset for mobile phones, and the entire benefit in the Vendor's Loan. Pursuant to the Agreement, the Vendor and the Purchaser have agreed that, subject to the fulfillment of the Conditions, the Purchaser will acquire the Vendor's Shares and the entire benefit in the Vendor's Loan from the Vendor at a total consideration of HK$36,008,000. The total consideration for the Acquisition will be settled as to HK$10,800,000 in cash and as to the remaining HK$25,208,000 by the allotment and issue to the Vendor of the Consideration Shares at an issue price of HK$2.30 per Consideration Share. The Acquisition constitutes a discloseable and share transaction for the Company under the Listing Rules. 1. THE AGREEMENT Date of the Agreement 6th April, 2000 Parties Vendor: Cyber-Profit International Limited, together with its beneficial owner(s), is independent of, and not connected with, the Company and the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules) Purchaser: Hunter Profits Limited, a wholly owned subsidiary of the Company Assets to be acquired (i) The Vendor's Shares, being 30,000 Pacific Cyber Shares representing 60% of the total issued share capital of Pacific Cyber as at the date of the Agreement; and (ii) the entire benefit in the Vendor's Loan, the amount of which will be confirmed at Completion. As at 6th April, 2000, about HK$3.2 million was due from Pacific Cyber to the Vendor. This amount is unsecured, non-interest bearing and is repayable upon demand. Any material change to this amount due to the Vendor will need the prior written approval from the Purchaser. Should there be no change in the amount due by Pacific Cyber to the Vendor during the period starting from 6th April, 2000 and up to the date of Completion, the Vendor's Loan will amount to about HK$1.9 million (being 60% of the amount due by Pacific Cyber to the Vendor as at 6th April, 2000). Consideration HK$36,008,000 in aggregate, as to an amount equal to the Vendor's Loan will be the consideration for the Vendor's Loan, and as to the remaining balance will be the consideration for the Vendor's Shares. The consideration for the Acquisition will be satisfied as to HK$10,800,000 in cash, and as to the remaining HK$25,208,000 by the allotment and issue to the Vendor of the Consideration Shares at an issue price of HK$2.30 per Consideration Share upon Completion. The cash consideration of HK$10,800,000 will be financed by internal resources of the Company. A deposit of HK$2,000,000 of the total consideration for the Acquisition has been paid by the Purchaser upon the signing of the Agreement, while the balance thereof shall be satisfied by the Purchaser upon Completion. The issue price of HK$2.30 per Consideration Share represents: (i) a discount of about 13.21% to the closing price of HK$2.65 per Share as quoted on the Stock Exchange on 6th April, 2000, being the date of the Agreement; (ii) a discount of about 9.27% to the average of the closing prices as quoted on the Stock Exchange for the five trading days up to and including 6th April, 2000 of HK$2.535 per Share; and (iii) a discount of about 3.01% to the average of the closing prices as quoted on the Stock Exchange for the ten trading days up to and including 6th April, 2000 of HK$2.3715 per Share. The Consideration Shares represent (i) about 2.70% of the existing issued share capital of the Company as at the date of the Agreement, and (ii) about 2.63% of the Company's issued share capital as enlarged by the issue of the Consideration Shares. The Consideration Shares will be allotted and issued under the general and unconditional mandate granted by the Shareholders to the Directors at the special general meeting of the Company held on 3rd April, 2000. The Consideration Shares will rank pari passu in all respect with all Shares in issue upon Completion. At present, the Vendor does not hold any Shares in the Company. Upon Completion, the Vendor will be interested in about 2.63% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares. Upon Completion, the Vendor will not appoint any representative into the Board. The Vendor has undertaken not to dispose of any of the Consideration Shares within 45 days from the date of Completion. In addition, the Vendor has undertaken not to dispose of more than 50% of the Consideration Shares after 45 days from the date of Completion until the expiry of 90 days from the date of Completion. The terms of the Acquisition including the consideration therefor were arrived at after arm's length negotiations between the parties to the Agreement. No valuation of Pacific Cyber has been or will be made. Having taken account of the existing business and the future business plan and the market potential of the development of wireless headset for mobile phones, the Directors are of the opinion that the terms of the Agreement including the consideration for the Acquisition are fair and reasonable. Conditions The Agreement is conditional upon the following Conditions being satisfied on or prior to the date of Completion: (i) the passing by the Board of an ordinary resolution approving the Agreement and the implementation thereof and the allotment and issue of the Consideration Shares; (ii) the Listing Committee of the Stock Exchange granting listing of and permission to deal in all the Consideration Shares to be allotted and issued by the Company upon Completion; (iii) all intellectual property rights (including those in the process of application) of the technical and function features specification of the product of Pacific Cyber being transferred from all relevant parties to Powerhouse Profits Limited, a wholly owned subsidiary of Pacific Cyber; (iv) proper application being made for registration of the patent of the product of Pacific Cyber as mentioned in (iii) above in the PRC, Hong Kong, Taiwan, the United States of America and the United Kingdom; (v) production of the product of Pacific Cyber in accordance with the following time schedule: Time Production schedule within 45 days from completion of moulding trial incorporating the date of the all the functions listed in Agreement the Agreement within 3 months from ready for commencement of the date of the commercial production Agreement ; and (vi) all necessary consents, if required, being granted by the necessary third parties. If the Conditions shall not have been fulfilled prior to a date within four and half months from the date of the Agreement or such other date as all parties to the Agreement shall agree, the Agreement shall be terminated and of no effect. The Board has passed a resolution approving the Agreement on 6th April, 2000. Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares. Undertaking Pursuant to the Agreement, the Vendor and the Purchaser undertake to advance to Pacific Cyber and/or its wholly owned subsidiaries the sum of HK$2,000,000 and HK$3,000,000 respectively as a loan to Pacific Cyber and/or its wholly owned subsidiaries within 5 days from the date of the Agreement. Interest shall be charged on the said respective loans at the rate of 3% above the best lending rate of The Hongkong and Shanghai Banking Corporation Limited from time to time. If the Agreement shall be terminated for whatever reason, the Vendor shall procure Pacific Cyber and/or its wholly owned subsidiaries (as the case may be) forthwith repay to the Purchaser the said loan of HK$3,000,000 together with interests thereon. Completion The Completion is expected to take place within four and half months from the date of the Agreement or such other date as all parties to the Agreement shall agree, subject to the fulfillment of the Conditions. 2. INFORMATION ON PACIFIC CYBER Pacific Cyber is an investment holding company and its subsidiaries are principally engaged in the development of wireless headsets for mobile phones. At present, Pacific Cyber is wholly owned by the Vendor. Upon Completion, Pacific Cyber will be owned as to 60% by the Purchaser and as to 40% by the Vendor. As the Purchaser is a wholly owned subsidiary of the Company, Pacific Cyber will become a 60% owned indirect subsidiary of the Company. Pacific Cyber aims to provide superior products in terms of quality of voice transmission, reliability, security as well as applicability. The products under development of Pacific Cyber have the strengths, amongst other things, of (i) mechanical design on the size adjustable ear-fit wearing; (ii) enlarged signal receiving through antenna enhancement; (iii) automatic channel select algorithm; (iv) security identity code system preventing interference from others as well as providing protection of own privacy; (v) mixed mode data control enhancing performance and functionality of devices; (vi) automatic power management saving battery life and lengthening standby time of devices up to 20 days of operations; (vii) self-owned proprietary designed chip sets including model GCT001 and GCT002; (viii) radiation generated at a rate of less than 0.05W at frequency of less than 500MHz so as to reduce electromagnetic interference; and (ix) use of proven frequency bands with no harm to human like the frequency ranges of AM/FM/SW radio and of TV board casting. These features together with the software explored by Pacific Cyber are in the process of patent registration. Pacific Cyber was incorporated on 23rd March 2000 and therefore no audited accounts of Pacific Cyber have yet been prepared. No valuation in respect of Pacific Cyber has been and will be made. As at 6th April, 2000, the unaudited consolidated net asset value of Pacific Cyber was HK$390,000. The main source of income of Pacific Cyber will be the sale proceeds of its products. It is intended that Pacific Cyber will extend the product development of wireless headsets to cover car usage, desktop usage and even intercom and conferencing application in the future. In addition, more value-added features will be included in the products, like recording, radio receiving, voice recognition and so on. Besides, Pacific Cyber intends to line up some mobile phone suppliers to cooperate together. However, no concrete plan has been confirmed yet. At present, there are 4 directors in the board of Pacific Cyber, including Mr. Ho and Mr. Lee. Both Mr. Ho and Mr. Lee have extensive experience in operation management and electronic engineering and they are responsible for the product development of Pacific Cyber. Pursuant to the Agreement, the Vendor will procure Mr. Ho and Mr. Lee to enter into service agreements in a term of two years with Pacific Cyber. The Directors confirm that Mr. Ho and Mr. Lee will remain their offices upon Completion and continue to provide their services to Pacific Cyber. While the other two directors will resign from the board of Pacific Cyber, the Company will nominate three additional directors into the board of Pacific Cyber upon Completion. 3. REASONS FOR AND BENEFITS OF THE ACQUISITION The Company is an investment holding company and its subsidiaries are principally engaged in the property investment, property information websites development, photograph developing and processing and manufacturing business. It is the Group's strategy and direction to invest in suitable prudent technology related businesses. The Directors believe that the Acquisition represents a good opportunity for the Company to participate in the fast growing information technology industry. Following the popularity of the use of mobile phones, it is expected that there will be a great market potential for wireless headsets. In addition, with the proposed introduction of the new legislation in countries/cities like Singapore, China and Hong Kong in forbidding use of mobile phones when driving, the market of wireless headset will grow continuously. At present, there is no existing producer of wireless headset using the radio frequency transmission technology in the market. The Directors consider that Pacific Cyber will be able to capture the market share once upon the completion of the product development. The Directors therefore consider that the Acquisition is in the interest of the Company and the Shareholders as a whole. 4. GENERAL The Acquisition constitutes a discloseable and share transaction for the Company under the Listing Rules. This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Shares. A circular containing, among other things, further details of the Agreement will be issued to the Shareholders as soon as practicable. 5. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context otherwise requires. "Acquisition" the acquisition by the Purchaser of the Vendor's Shares and the entire benefit in the Vendor's Loan pursuant to the Agreement "Agreement" the conditional sale and purchase agreement dated 6th April, 2000 entered into between the Vendor and the Purchaser in relation to the Acquisition "Board" the board of Directors "Company" Multi-Asia International Holdings Limited, a company incorporated in Bermuda with limited liability and which Shares are listed on the Stock Exchange "Completion" completion of the Acquisition "Conditions" the conditions of the Agreement "Consideration Shares" the 10,960,000 new Shares to be allotted and issued to the Vendor to settle part of the consideration for the Acquisition in the amount of HK$25,208,000 "Directors" the directors of the Company "Group" the Company and its subsidiaries "Hong Kong" Hong Kong Special Administrative Region of the PRC "Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange "Mr. Ho" Mr. Ho Wai Man Raymond "Mr. Lee" Mr. Lee Kwok Kee "Pacific Cyber Share(s)" the ordinary share(s) of US$1.00 each in the share capital of Pacific Cyber "Pacific Cyber" Pacific Cyber Holdings Limited, a company incorporated in the British Virgin Islands. As at the date of the Agreement, the entire issued share capital of Pacific Cyber is owned by the Vendor "PRC" the People's Republic of China, for the purpose of this announcement, excludes Hong Kong, Macau, and Taiwan "Purchaser" Hunter Profits Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of the Company "Share(s)" ordinary share(s) of HK$0.01 each in the share capital of the Company "Shareholder(s)" holder(s) of Share(s) "Stock Exchange" The Stock Exchange of Hong Kong Limited "Vendor" Cyber-Profit International Limited, a company incorporated in the British Virgin Islands, which is independent of, and not connected with, the Company and the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules) "Vendor's Loan" 60% of the amount of loans or advances outstanding and owed to the Vendor by Pacific Cyber as at the date of Completion "Vendor's Shares" 30,000 Pacific Cyber Shares in issue, representing 60% of the issued share capital of Pacific Cyber as at the date of the Agreement "HK$" Hong Kong dollar(s), the lawful currency of Hong Kong "US$" United States dollar(s), the lawful currency of United States of America "%" per cent. For and on behalf of the Board MULTI-ASIA INTERNATIONAL HOLDINGS LIMITED Chang Kin Man Executive Director & Company Secretary Hong Kong, 6th April, 2000