Founder Holdings Limited — M&A Activity 2000

Mar 2, 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. MULTI-ASIA INTERNATIONAL HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) DISCLOSEABLE AND SHARE TRANSACTION SUMMARY The Board announces that the Agreement was entered into on 1 March 2000 among the First Vendor, the Second Vendor and the Purchaser for the Acquisition of a total of 80% shareholding interest in Linkpex and the entire benefits of the Vendors' Loan. As at the date of this Agreement, Linkpex is the beneficial owner of Land Search Online, which is an online property information provider. The total consideration payable by the Purchaser under the Agreement amounts to HK$80,000,000, which will be satisfied by the issue and allotment of 40,000,000 Consideration Shares at an issue price of HK$2.00 per Consideration Share. The Agreement is conditional, among other things, upon the passing of an ordinary resolution by the Shareholders at a special general meeting of the Company to approve the issue and allotment of the Consideration Shares. The Acquisition constitutes a discloseable and share transaction for the Company under the Listing Rules. 1. THE AGREEMENT Date of the Agreement 1 March 2000 Parties Vendors: Best Season Corporation (i.e. the First Vendor) and iStar Limited (i.e. the Second Vendor), both of them together with their respective beneficial owner(s) are independent of, and not connected with, the Company and the directors, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules) Purchaser: Advance Hero Limited, a wholly-owned subsidiary of the Company Save for their common interest in Linkpex, the First Vendor and the Second Vendor do not have any other relationships. Assets to be acquired (i) A total of 80 Linkpex Shares (60 Linkpex Shares and 20 Linkpex Shares will be acquired from the First Vendor and the Second Vendor respectively), representing 80% of the total issued share capital of Linkpex; and (ii) the entire benefits of the Vendors' Loan, the amount of which will be confirmed at Completion. As at 31 January 2000, HK$5,252,589 was due from Linkpex to the First Vendor and HK$3,501,726 was due from Linkpex to the Second Vendor. These amounts are non-interest bearing and are repayable upon demand. Any material change to these amounts due to the First Vendor and the Second Vendor will need the prior written approval from the Company. Based on the assumption that there will be no change in the amounts owed by the Company to the First Vendor and the Second Vendor, the Vendors' Loan will amount to HK$7,003,452 (as to HK$5,252,589 due to the First Vendor and as to HK$1,750,863, being 50% of HK$3,501,726, due to the Second Vendor) as the date of Completion. As at the date of the Agreement, Linkpex is owned as to 60% by the First Vendor and as to 40% by the Second Vendor. Upon Completion, the issued share capital of Linkpex will be owned as to 80% by the Purchaser and as to 20% by the Second Vendor. The principal activity of Linkpex is investment holding. As at the same date, Linkpex is the beneficial owner of Land Search Online, an online real estate information provider, which forms entire investment of Linkpex. Details of Land Search Online are set out in the section headed ``Information on Linkpex and Land Search Online'' below. Consideration HK$80,000,000 in aggregate, as to an amount equal to the Vendors' Loan will be the consideration for the Vendors' Loan, and as to the remaining balance will be consideration for the 80 Linkpex Shares. The consideration for the Acquisition of HK$80,000,000 in aggregate will be satisfied by the issue and allotment of 40,000,000 Consideration Shares (30,000,000 Consideration Shares and 10,000,000 Consideration Shares will be issued and allotted to the First Vendor and the Second Vendor respectively) at an issue price of HK$2.00 per Consideration Share upon Completion. The issue price per Consideration Share represents: (i) a discount of about 3.61% to the closing price of HK$2.075 per Share as quoted on the Stock Exchange on 1 March 2000, being the date of the Agreement; (ii) a discount of about 0.55% to the average of the closing prices as quoted on the Stock Exchange for the five trading days up to and including 1 March 2000 of HK$2.011 per Share; and (iii) a discount of about 0.72% to the average of the closing prices as quoted on the Stock Exchange for the ten trading days up to and including 1 March 2000 of about HK$2.0145 per Share. The Consideration Shares represent (i) about 11.39% of the existing issued share capital of the Company as at the date of the Agreement, and (ii) about 10.22% of the Company's issued share capital as enlarged by the issue of the Consideration Shares. The Consideration Shares will rank pari passu in all respect with all Shares in issue as at the date of the Agreement. However, the First Vendor and the Second Vendor will not be entitled to vote at the special general meeting of the Company convened to pass the resolution approving the issue and allotment of the Consideration Shares. At present, the First Vendor and the Second Vendor do not hold any Shares in the Company. Upon Completion, the First Vendor and the Second Vendor will be interested in about 7.67% and 2.56% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares respectively. The First Vendor and the Second Vendor will not appoint any representative into the Board upon Completion. The First Vendor and the Second Vendor have undertaken not to dispose of any of the Consideration Shares within three months from the date of Completion. In addition, the First Vendor and the Second Vendor have undertaken not to dispose of more than 50% of the Consideration Shares issued and allotted to them respectively after three months from the date of Completion until the expiry of six months from the date of Completion. The terms of the Acquisition including the consideration thereof were arrived at after arm's length negotiations among the parties to the Agreement. Having taken account of the existing business and the future business plan and potential of Land Search Online, 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 issue and allotment of the Consideration Shares; (ii) the passing by the Shareholders of an ordinary resolution in a special general meeting of the Company approving the issue and allotment of the Consideration Shares; (iii) 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; and (iv) all necessary consents being granted by the necessary third parties. If the Conditions are not fulfilled prior to a date within three months from the date of the Agreement or such earlier date as all parties to the Agreement shall agree, the Agreement shall be terminated and of no effect. The Board has passed a resolution according to condition (i) above on 1 March 2000. A circular containing, among other things, a notice convening the special general meeting of the Company to pass the resolution according to condition (ii) above will be despatched to the Shareholders as soon as practicable. Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares. Completion The Completion is expected to take place within three months from the date of the Agreement or such earlier date as all parties to the Agreement will agree subject to the fulfillment of the Conditions. 2. INFORMATION ON Linkpex and LAND SEARCH ONLINE As at the date of the Agreement, the entire issued shares of Land Search Online are beneficially owned by Linkpex. Land Search Online was incorporated in February 1999 and no audited accounts have yet been prepared. Its principal business is the provision of online information of property transactions in Hong Kong at the Land Search Website. As at 31 January 2000, the unaudited net liabilities of Linkpex were about HK$694,000. No valuation in respect of Linkpex or Land Search Online will be made. Land Search Website has been established to provide property transaction information and it can provide up-to-date, accurate and comprehensive online information. The 12 staff (including Mr. Wong) of Land Search Online possess specialist and professional knowledge about the property market in Hong Kong. With the help of an artificial intelligent computer system, all data being entered into the memorial day book of the Land Registry in Hong Kong are automatically and electronically updated into the database of Land Search Website on the next morning. The Land Search Website is therefore able to provide timely and accurate information on the fast moving and changing Hong Kong property market. In addition, information available at Land Search Website includes latest property transaction records, mortgage status, historical legal actions and other statistics of the property markets. Land Search Website therefore offers convenience to its subscribers as they can obtain comprehensive information by visiting one website only. Since its incorporation up to January 2000, Linkpex has recorded a revenue of about HK$600,000 which has been generated from the subscription of service of Land Search Online. At present, Land Search Online has about 150 subscribers, covering real estate agents, property developers, law firms, accounting firms, investment companies, banks and trust organizations and market researchers, and subscription fees are payable on monthly basis. Land Search Online expects to increase its sources of incomes through advertisement. It is intended that Land Search Online will expand its platform in order to extend its service by supplying information on the property market in the PRC, and to enhance its service by extending the information resources to a wider base. In addition, Land Search Online intends to develop several other websites to enhance convenience and efficiency of information retrieval. However, at present, no capital commitment has been made by Linkpex or Land Search Online or the Group. Mr. Wong is the founder and an existing director of both Linkpex and Land Search Online. Land Search Online and Mr. Wong entered into a service agreement on 30 December 1999 in relation to the provision of services by Mr. Wong to Land Search Online for a term of two years. The Company confirms that upon Completion Mr. Wong will continue to be a director of both Linkpex and Land Search Online and provide services according to the abovesaid service agreement. Besides of Mr. Wong, each of Linkpex and Land Search Online has two more directors, being the representatives of the First Vendor. Upon Completion, these directors will resign from the respective boards of Linkpex and Land Search Online. The Company will then nominate new directors to the respective boards of these companies, While Mr. Wong will be responsible for the technical operation of Land Search Website, the Company will be responsible for the management of Linkpex and the marketing of Land Search Website. It is the intention of the Company not to change the operations of Linkpex and Land Search Online. 3. REASONS FOR AND BENEFITS OF THE ACQUISITION The Company is an investment holding company and its subsidiaries are principally engaged in property investment, securities investment and the manufacture of food product. 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 to participate in the fast growing information technology industry. Following the popularity of internet and the recovery of property market in Hong Kong, it that the Group's expected that the subscription of service of the Land Search Website will grow continuously. In addition, the Directors believe that the Group's experience in property industry would add synergy to the development of the Land Search Website. 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. The issue and allotment of the Consideration Shares will be subject to the passing of an ordinary resolution by the Shareholders at a special general meeting of the Company. A circular containing, among other things, further details of the Agreement and a notice convening the special general meeting of the Company will be issued to the Shareholders as soon as practicable. According to the present shareholding structure of the Company, no Shareholders will abstain from voting at such special general meeting. This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Shares. 5. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context otherwise requires. ``Acquisition'' the acquisition by the Company of a total of 80% shareholding interest of Linkpex and the entire benefits in the Vendors' Loan pursuant to the Agreement ``Agreement'' the conditional sale and purchase agreement dated 1 March 2000 entered into among the First Vendor, the Second 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 as set out in the paragraph headed ``Conditions'' under the section headed ``The Agreement'' ``Consideration Shares'' the 40,000,000 new Shares in aggregate to be issued and allotted to the First Vendor and the Second Vendor to settle the consideration for the Acquisition in the amount of HK$80,000,000 ``Directors'' the directors of the Company ``First Vendor'' Best Season Corporation, a company incorporated in the British Virgin Islands with limited liability, which is independent of, and not connected with, the Second Vendor, 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) ``Group'' the Company and its subsidiaries ``Hong Kong'' Hong Kong Special Administrative Region of the PRC ``Land Search Online'' Land Search Online Limited, a company incorporated in Hong Kong with limited liability. As at the date of the Agreement, the entire issued share capital of Land Search Online is beneficially owned by Linkpex ``Land Search Website'' the website, http://www.landsearch.com.hk, owned and operated by Land Search Online ``Linkpex'' Linkpex Holdings Limited, a company incorporated in the British Virgin Islands with limited liability. As at the date of the Agreement, Linkpex is owned as to 60% by the First Vendor and as to 40% by the Second Vendor ``Linkpex Share(s)'' the ordinary share(s) of US$1.00 each in the share capital of Linkpex ``Listing Rules'' Rules Governing the Listing of Securities on the Stock Exchange ``Mr. Wong'' Mr. Wong Chi Lik Alec, being the founder and a director of each of Linkpex and Land Search Online ``PRC'' the People's Republic of China, for the purpose of this announcement, excludes Hong Kong, Macau, and Taiwan ``Purchaser'' Advance Hero Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company ``Second Vendor'' iStar Limited, a company incorporated in the British Virgin Islands with limited liability, which is independent of, and not connected with, the First Vendor, 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) ``Share(s)'' ordinary share(s) of HK$0.01 each in the share capital of the Company ``Shareholder(s)'' holder(s) of Share(s) ``Stock Exchange'' The Stock Exchange of Hong Kong Limited ``Vendors' Loan'' the total amount of loans or advances outstanding and owed to the First Vendor together with 50% of the amount of loans or advances outstanding and owed to the Second Vendor by the Company as at the date of Completion ``HK$'' 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, 1 March 2000