GBA Holdings Limited — M&A Activity 2000

Mar 28, 2000

Listed Company Information

S. MEGGA INT'L<0261> - Announcement & Resumption of Trading 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. S. MEGGA International Holdings Limited (Incorporated in Bermuda with limited liability) VERY SUBSTANTIAL ACQUISITION The Board wishes to announce that on 24th March, 2000 the Company has entered into the Sale and Purchase Agreement with the Vendors in relation to the Sale and Purchase of a 40% equity interest in APE, an internet content provider. The aggregate consideration of HK$50,000,000 for the Sale and Purchase will be satisfied by the Company by the issuance and allotment of 125 million S. Megga Shares @ HK$0.4 per share at Completion. Completion is conditional upon a number of conditions, including the approval of shareholders of the Company, as set out below under the section headed "Conditions of the Sale and Purchase Agreement" and the Sale and Purchase may or may not proceed. Shareholders should exercise extreme caution when dealing in shares of the Company. After Completion, there will be no significant change in the Company's existing business, i.e. the manufacturing and sale of DECT and 900 MHz telecommunications products and the Company will continue such business after Completion. The terms of the Sale and Purchase Agreement were determined after arm's length negotiation and were on normal commercial terms. The Sale and Purchase Agreement constitutes a very substantial acquisition and share transaction of the Company under the Listing Rules. At the request of the Company, trading of the Shares was suspended at 10:00 a.m. on Tuesday, 21st March, 2000. Application has been made to the Stock Exchange for resumption of trading of the Shares from 10:00 a.m. on Tuesday, 28th March, 2000. THE SALE AND PURCHASE AGREEMENT Date : 24th March, 2000 Parties: Company : S. Megga International Holdings Limited Vendors : Asia Paging Company Limited as to 10,200 APE Shares Well Master Group Limited as to 800 APE Shares Wong Kin Chuen, Raymond as to 3,800 APE Shares Ng Wai Keung as to 3,400 APE Shares Lin Wing Hung as to 1,200 APE Shares Lo Po Hong as to 600 APE Shares Assets to be acquired: The Sale Shares, being 20,000 APE Shares, representing 40 per cent. of the issued share capital of APE. Consideration The consideration for the Sale Shares is HK$50,000,000 and shall be satisfied by the Company by issuance and allotment of S. Megga Shares at Completion. The price of each of the S. Megga Share to be issued and allotted to APE is HK$0.40 which represents a premium of approximately 225 per cent. to the closing price of HK$0.123 per Share as quoted on the Stock Exchange at 4:00 p.m. on Monday, 20th March, 2000 (being the last time the Shares were traded immediately before the suspension of trading of the Shares on 21st March, 2000). The amount of the consideration was arrived at after arm's length negotiation and is considered by the Directors of the Company to be fair and reasonable. The consideration of the Sale Shares is at a discount to the valuation of APE, which is on a revenue projection basis, and at the date of this announcement is approximately HK$150,000,000. The valuation was provided by the management of APE based upon an independent valuation prepared by an independent valuer which had been received by the management of APE they had received and is subject to satisfactory due diligence as set out under the section "Conditions of Sale and Purchase Agreement". The S. Megga Shares when issued and allotted represent approximately 10.7 per cent. of the current issued share capital of the Company and 9.66 per cent of the then enlarged issued share capital of the Company. However, it is the intention of the Company to complete the Modified Debt Restructuring, as announced on 14th February 2000, at the same time as the Sale and Purchase. Although the Sale and Purchase is not subject to the approval of SCB and other lenders (the "Lenders"), the Company had notified the Lenders in respect of the Sale and Purchase. Based upon the modified terms of the debt restructuring as previously announced, the shareholding structure of the Company upon completion of the Modified Debt Restructuring and the Sale and Purchase can be summarised as follows: Shareholding After New Issue to Lenders and Vendors Existing New Percent- Shares Shares Total age (million) (million) (million) Directors' interest (a) 204.0 204.0 4.3% SCB 1,550.0 1,550.0 32.6% Other Lenders 1,915.0 1,915.0 40.2% Vendors: (b) Asia Paging Company 63.8 63.8 1.3% Well Master Group 5.0 5.0 0.1% Wong Kin Chuen, Raymond 23.8 23.8 0.5% Ng Wai Keung 21.3 21.3 0.4% Lin Wing Hung 7.5 7.5 0.2% Lo Po Hong 3.8 3.8 0.1% Public 965.0 965.0 20.3% --------------------------------------------- 1,169.0 3,590.0 4,759.0 100% (a) Directors' interests include the interests held in Kit Iu Limited. (b) Vendors' interest total 2.6% of the then enlarged share capital of the Company. The single largest shareholder of the Company at the date of this announcement is Kit Iu Limited, which holds 12.07 per cent. of the current issued share capital of the Company. Kit Iu Limited is ultimately owned by the trustee of a discretionary trust whose beneficiaries include Mr. Leung Ho Man Paul and Mr. Leung Howard. The Modified Debt Restructuring Proposal is conditional and is subject to contract with the Financial Creditors. The terms of the Modified Debt Restructuring Proposal are still subject to negotiation until a contract is signed with the Financial Creditors. Accordingly, Shareholders should note that the issue of this announcement does not in any way imply that the Modified Proposal, as announced on 14th February 2000, will necessarily be accepted by the Financial Creditors and may or may not proceed. Shareholders should exercise extreme caution when dealing in the Shares of the Company. The Modified Proposal will be subject to the approval of the Shareholders in a special general meeting of the Company. A futher announcement in respect of the Modified Proposal will be made by the Company shortly. Conditions of the Sale and Purchase Agreement: Completion of the Sale and Purchase Agreement is conditional upon, among other things: 1. due diligence to be carried out by the Company and its professional advisers in relation to the legal and financial conditions of APE and its subsidiaries, being satisfactory to the Company; 2. a valuation of APE to be provided by an independent valuer acceptable to the Company showing that the valuation of APE will not be less than HK$150,000,000; 3. the necessary resolutions of the shareholders of the Company having been passed at the special general meeting to approve the Sale and Purchase, the Sale and Purchase Agreement, the issuance and allotment of the S. Megga Shares and related matters for implementation of the same in accordance with the Bye-laws of the Company, the Listing Rules and/or requirements of other regulatory authorities; 4. the necessary resolutions of the board of the parties to the Sale and Purchase Agreement (excluding the Company and such party who is an individual) having been passed to approve the Sale and Purchase Agreement and the transactions contemplated in the Sale and Purchase Agreement; 5. the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment), and not having revoked, listing of, and permission to deal in the S. Megga Shares, prior to Completion (or such other date as may be agreed between the Company and APE); 6. if required, the permission of the Bermuda Monetary Authority being obtained for the allotment and issue of the S. Megga Shares; and 7. any other necessary waivers, consents and approval from the Stock Exchange and any other relevant regulatory authorities and relevant parties which are required for the Sale and Purchase having been obtained. COMPLETION Completion will take place on the third business day after all conditions of the Sale and Purchase Agreement have been fulfilled or waived. In the event that the above conditions of the Sale and Purchase Agreement are not fulfilled or waived by 30th June, 2000, the Sale and Purchase Agreement will lapse. After Completion, the Vendors will not be entitled to representation to the Board of Directors of the Company and there will not be any change in control and the Board by virtue of the Sale and Purchase. REASON FOR THE SALE AND PURCHASE The Board considers that the Sale and Purchase will be in the interests of the Company and the shareholders as a whole since the strategic investment in APE allows the Company to develop and enhance its business by diversifying into areas of business with high growth and earnings potential to the ultimate commercial benefit of the Company and the shareholders as a whole. After the Completion, there will not be any no significant change to in the Company's existing business, i.e. the manufacturing and sale of DECT and 900 MHz telecommunications products. At present, the Company has no intention to acquire additional shares in APE. INFORMATION ON APE APE is a private investment holding company incorporated in the British Virgin Islands with limited liability focusing on the business of being an internet content provider in sports entertainment programmes and interactive information as well as the sale of sports related merchandise. APE commenced its business on 28th January, 2000 and acquired the total issued share capital of Simplex on 20th March, 2000. APE through its wholly-owned subsidiary, namely Simplex, operates one website. Since incorporartion, APE has not prepared its profit and loss records. The business of APE is managed by its directors. After Completion, the existing directors of APE, i.e. Mr. Chong Yue Hun, Mr. Wong Kin Chuen, Raymond and Mr. Ng Wai Keung, Garrick, together with two to three new directors to be appointed by the Company will manage APE. There will not be a change in control of APE. Simplex has registered the domain name "i4internet. com". The Vendors include (a) Asia Paging Company Limited, owning as to 51 per cent. of the shareholding; (b) Well Master Group Limited, owning as to 4 per cent. of the shareholding; (c) Wong Kin Chuen, Raymond, owning as to 19 per cent. of the shareholding; (d) Ng Wai Keung, owning as to 17 per cent. of the shareholding; (e) Lin Wing Hung, owning as to 6 per cent. of the shareholding; and (f) Lo Po Hong, owing as to 3 per cent. of the shareholding. The Vendors are independent of, and not acting in concert with the directors, chief executives and substantial shareholders of the Company and any of its subsidiaries or any of their respective associates (as defined in the Listing Rules). The valuation of APE as at the date of this announcement is HK$150,000,000 which was provided by the management of APE based upon an independent valuation they had received and is subject to satisfactory due diligence as set out under the section "Conditions of Sale and Purchase Agreement". Neither the Vendors nor APE has any interest in the Company. The beneficial owners of Asia Paging Company Limited are To Shu Tong, Ng Cheong Lam (Holdings) Ltd. , Cheung Pui Pui, Mary, Wong Yat Chee, Tse Ping Shan, Ng Wai Ling and Chui Shuk Tim. The beneficial owner of Well Master Group Limited is Chong Yuen Wai. The current intention of the Vendors regarding the holding of the S. Megga shares is not known. The Vendors have no current intention to acquire additional Shares in the Company. According to the unaudited management account as at 31st December, 1999 of Simplex, the net asset deficit of Simplex amounted to HK$304,660.00. NO INVITATION FOR SECURITIES This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe the Securities. APPLICATION FOR LISTING An application will be made to the Stock Exchange for the listing of and permission to deal in the S. Megga Shares. The Sale and Purchase Agreement constitutes a very substantial acquisition of the Company under the Listing Rules. SPECIAL GENERAL MEETING AND CIRCULAR The SGM of the Company will be convened as soon as practicable at which an ordinary resolution to approve the Sale and Purchase Agreement will be proposed. No shareholders will be required to abstain from voting at the SGM. A circular containing, among other things, details of the Sale and Purchase Agreement, an independent business valuation of APE, and a notice of the SGM to be convened will be dispatched to shareholders of the Company as soon as practicable. GENERAL At the request of the Company, trading of the Shares was suspended at 10:00 a.m. on Tuesday, 21st March, 2000. Application has been made to the Stock Exchange for resumption of trading of the Shares from 10:00 a.m. on Tuesday, 28th March, 2000. DEFINITIONS "APE" Act Power Enterprises Limited, a company incorporated under the laws of the British Virgin Islands with limited liability "APE Shares" share(s) of US$1.00 each in the share capital of APE "Board" the board of Directors "business day" a day (other than Saturday) on which banks are generally open for business in Hong Kong "Company" S. Megga International Holdings Limited "Completion" completion of the sale and purchase of the Sale Shares "Directors" directors of the Company "Hong Kong" Hong Kong Special Administrative Region of the PRC "Listing Rule" Rules Governing the Listing of Securities on the Stock Exchange "S. Megga Shares" means 125,000,000 Shares "Sale and Purchase" the sale and purchase of the Sale Shares pursuant to the Sale and Purchase Agreement "Sale and Purchase the sale and purchase agreement dated 24th Agreement" March, 2000 made between the Company and the Vendors in respect of the Sale Purchase "Sale Shares" 20,000 APE Shares in the share capital of the Vendors "Securities" the securities of the Company "SGM" special general meeting "Share(s)" means the share(s) of HK$0.10 each (or if the Company undergoes a capital reduction, the par value of each of the shares of the Company at the relevant time,) in the share capital of the Company "Simplex" Simplex Technology Limited, a company incorporated under the laws of Hong Kong with limited liability "Stock Exchange" The Stock Exchange of Hong Kong Limited "Vendors" the existing shareholders of APE, being Asia Paging Company Limited, Well Master Group Limited, Wong Kin Chuen, Ng Wai Keung, Garrick, Lin Wing Hung and Lo Po Hong By Order of the Board of S. Megga International Holdings Limited Leung Ho Man, Paul Chairman and Managing Director Hong Kong, 27th March, 2000