Glorious Sun Enterprises Limited — M&A Activity 2006

Apr 10, 2006

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.

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GLORIOUS SUN ENTERPRISES LIMITED

(Incorporated in Bermuda with limited liability) (Stock Code: 393)

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF GOLDPROMISE AND RELATED SHAREHOLDERS’ LOANS

NON-EXEMPT CONNECTED TRANSACTION

The Directors announce that on 7 April 2006, JeansWest International, a wholly-owned subsidiary of the Company, entered into the Acquisition Agreement with Mr Charles Yeung and Mr Yeung Chun Fan for the acquisition of the entire issued share capital of Goldpromise and related shareholders’ loans for a total consideration of US$10,180,000 (approximately HK$79.4 million). The Goldpromise Group is engaged in the business of selling by retail jeans and other fashion goods through “JeansWest” retail outlets in New Zealand.

Both Mr Charles Yeung and Mr Yeung Chun Fan are directors and substantial shareholders of the Company and therefore are connected persons of the Company. The applicable percentage ratios as defined under Rule 14.07 of the Listing Rules for the Acquisition exceed 2.5%. Accordingly, the Acquisition constitutes a non-exempt connected transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules.

A circular containing details of the Acquisition, a letter from the independent board committee in relation to the Acquisition, a letter from the independent financial adviser in relation to the Acquisition and a notice convening a special general meeting to approve the Acquisition will be despatched to the Shareholders as soon as practicable.

INTRODUCTION

The Directors announce that on 7 April 2006, JeansWest International, a wholly-owned subsidiary of the Company, entered into the Acquisition Agreement with Mr Charles Yeung and Mr Yeung Chun Fan for the acquisition of the entire issued share capital of Goldpromise and related shareholders’ loans for a total consideration of US$10,180,000 (approximately HK$79.4 million). The Goldpromise Group is engaged in the business of selling by retail jeans and other fashion goods through “JeansWest” retail outlets in New Zealand.

THE ACQUISITION AGREEMENT

Date: 7 April 2006

Parties: (1) the Vendors, as sellers of the Sale Interest; and (2) JeansWest International, as purchaser of the Sale Interest.

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Assets involved

The Vendors’ entire interest in Goldpromise is represented by the entire issued share capital of Goldpromise (owned by Mr Charles Yeung as to 50%, being one share, and Mr Yeung Chun Fan as to the other 50%, being the remaining one share) and shareholders’ loans in the total amount of US$4,782,344 (approximately HK$37.3 million) from the Vendors to Goldpromise (as to US$2,391,172 (approximately HK$18.65 million) from Mr Charles Yeung and US$2,391,172 (approximately HK$18.65 million) from Mr Yeung Chun Fan). On completion of the Acquisition, Goldpromise will be wholly owned by the Company and the sale of garment by the Group to JeansWest NZ (as announced on 1 June 2004) will cease to be continuing connected transaction. Please also refer to the paragraph headed “Information relating to Goldpromise” below.

Consideration for the Acquisition

The total consideration for the Acquisition is US$10,180,000 (approximately HK$79.4 million). The consideration will be payable to the Vendors in cash on completion as follows:

(a) US$5,090,000 to Mr Charles Yeung; and

(b) US$5,090,000 to Mr Yeung Chun Fan.

The consideration was determined after arm’s length negotiation between the parties and having regard to (i) the market value of the Goldpromise Group with reference to the historical earnings of JeansWest NZ; (ii) the face value of the shareholders’ loans; (iii) the future prospects of JeansWest NZ; and (iv) an independent business valuation submitted in confidence to the Board in respect of the proposed Acquisition.

The Acquisition will be financed by internal resources of the Group.

Completion

Completion of the Acquisition is conditional upon (a) the Company obtaining independent Shareholders’ approvals required under the Listing Rules on or before 26 May 2006 (or such later date as the parties may agree), and (b) there being no material adverse change to the business, financial condition or results of operations of Goldpromise and its subsidiaries until completion.

Completion is expected to take place on 27 May 2006 (or such other date as the parties may agree) after the last of the above conditions have been satisfied.

INFORMATION RELATING TO GOLDPROMISE

Goldpromise is an investment holding company. Through a wholly-owned subsidiary, Goldpromise is interested in the entire equity interest in JeansWest NZ and two other dormant companies. JeansWest NZ is engaged in the business of selling by retail jeans and other fashion goods through “JeansWest” retail outlets in New Zealand.

Goldpromise became the holding company of Goldpromise Group in May 2005. According to its unaudited management accounts, Goldpromise’s consolidated net profits (since it became the holding company in May 2005) before and after tax for the year ended 31 December 2005 were approximately US$705,004 (approximately HK$5.5 million) and US$470,070 (approximately HK$3.7 million) respectively. Based on the unaudited balance sheet as at 31 December 2005, the total value of Goldpromise’s consolidated net asset (US$570,137) and the shareholders’ loans (US$4,782,344) were US$5,352,481 (approximately HK$41.7 million).

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The net profits (both before and after taxation and extraordinary items) of JeansWest NZ, being the only operational subsidiary of Goldpromise Group at present, for the two financial years immediately preceding the Acquisition as extracted from its audited financial statements are set out below:

Year	ended	31	December	Profit before Taxation (NZ$)	Profit after Taxation (NZ$)
2005				1,888,305	1,270,483
				(approximately HK$8.99 million)	(approximately HK$6.05 million)
2004	(Note)			1,428,948	1,703,286
				(approximately HK$6.8 million)	(approximately HK$8.11 million)

Note: There was an income tax benefit of NZ$274,338 (approximately HK$1.31 million) as a result of tax loss carried forward, for the year ended 31 December 2004.

REASONS FOR, AND BENEFITS OF, THE ACQUISITION

The Group is principally engaged in retailing, export and production of casual wear.

The Goldpromise Group is engaged in the business of selling by retail jeans and other fashion goods through “JeansWest” retail outlets in New Zealand. Messrs. Charles Yeung and Yeung Chun Fan, both being Directors, purchased the now-dormant companies in the Goldpromise Group in 2001 at a cost of US$3,609,200 and JeansWest NZ in 2002 at a cost of US$2,153,660, from the Company when these companies were performing below the management’s expectation.

JeansWest NZ has since been turnaround and the Board believes that acquiring back JeansWest NZ will contribute sustainable and satisfactory earnings towards the Group in the near future. Given the positive development in the New Zealand clothing retail industry, the Board considers that the Acquisition will enable the Company to re-enter the New Zealand market on terms it considers to be appropriate.

The Board (other than the independent non-executive Directors whose views will be set out in the letter from the independent board committee to be included in the circular to be despatched to the Shareholders) is of the view that the terms of the Acquisition are on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

CONNECTION BETWEEN THE PARTIES

Both Mr Charles Yeung and Mr Yeung Chun Fan are directors and substantial shareholders of the Company and therefore are connected persons of the Company.

GENERAL

The applicable percentage ratios as defined under Rule 14.07 of the Listing Rules for the Acquisition exceed 2.5%. Accordingly, the Acquisition constitutes a non-exempt connected transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules.

A circular containing details of the Acquisition, a letter from the independent board committee in relation to the Acquisition, a letter from the independent financial adviser in relation to the Acquisition and a notice convening a special general meeting to approve the Acquisition will be despatched to the Shareholders as soon as practicable.

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DEFINITIONS In this announcement, the following expressions have the following meanings unless the context otherwise requires:

“Acquisition”	the acquisition of the Sale Interest and the transactions
	contemplated by the Acquisition Agreement;
“Acquisition Agreement”	the sale and purchase agreement dated 7 April 2006 entered into
	between the Vendors and JeansWest International in respect of
	the Acquisition;
“Board”	The board of Directors;
“Company”	Glorious Sun Enterprises Limited, a company incorporated in
	Bermuda with limited liability and whose securities are listed on
	the Stock Exchange;
“Directors”	the directors of the Company;
“Goldpromise”	Goldpromise Limited, a company incorporated in the British
	Virgin Islands with limited liability;
“Goldpromise Group”	Goldpromise and its wholly-owned subsidiaries;
“Group”	the Company and its subsidiaries;
“JeansWest International”	Jeanswest International (L) Limited, a wholly-owned subsidiary
	of the Company;
“JeansWest NZ”	Jeanswest Corporation (New Zealand) Limited, a company
	incorporated in New Zealand and a wholly-owned subsidiary of
	Goldpromise;
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited;
“Mr Charles Yeung”	Mr Yeung Chun Kam, alias Charles Yeung, a director and a
	substantial shareholder of the Company;
“NZ$”	New Zealand dollars, the lawful currency of New Zealand
“Sale Interest”	the entire issued share capital of Goldpromise and related
	shareholders’ loans in the total amount of US$4,782,344 from
	the Vendors to Goldpromise;
“Shareholders”	the shareholders of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“US$”	United States dollars, the lawful currency of the United States
	of America;
“Vendors”	Mr Charles Yeung and Mr Yeung Chun Fan, whose connections
	with the Company are set out in the paragraph headed “Connection
	between the parties” above.

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In this announcement, for reference only and unless specified, the translation of New Zealand dollars and United States dollars into Hong Kong dollars is based on the following exchange rates respectively:

NZ$1.00 = HK$4.76 US$1.00 = HK$7.8

By order of the Board Hui Chung Shing, Herman, JP Director

Hong Kong, 7 April 2006

The Directors of the Company as at the date of this announcement are as follows:

Executive Directors:

Mr Charles Yeung, JP, Mr Yeung Chun Fan, Mr Yeung Chun Ho, Mr Pau Sze Kee, Jackson, Mr Hui Chung Shing, Herman, JP, Ms Cheung Wai Yee, Mr Chan Wing Kan, Archie and Mr Teo Heng Kee, Peter.

Independent Non-Executive Directors:

Mr Wong Man Kong, Peter, JP, Mr Lau Hon Chuen, Ambrose, JP and Mr Chung Shui Ming, Timpson, JP

Non-Executive Directors:

Mr Lam Lee G.

Please also refer to the published version of this announcement in The Standard.

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