GoFintech Quantum Innovation Limited — M&A Activity 2002

Apr 19, 2002

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.

Announcement

Voluntary Conditional Cash Offer by

Yu Ming Investment Management Limited

on behalf of

Ontime Capital Investment Limited

to acquire all the shares in the entire issued share capital of

Pacific Challenge Holdings Limited

An Undertaking by Ontime Capital Investment Limited

to cause Pacific Challenge Holdings Limited to pay 90 per cent. of all legally distributable cash to shareholders of

Pacific Challenge Holdings Limited after completion of the Offer

Financial Adviser to Ontime Capital Investment Limited

	YU MING INVESTMENT MANAGEMENT LIMITED

The Offeror announces that it made a voluntary conditional cash offer on 28th March, 2002 to acquire all the Shares in the entire issued share capital of the Company at an offer price of HK$0.01 for each Share. The Offer Price represents (i) a discount of approximately 97.5 per cent. to the closing price of HK$0.40 per Share as quoted on the Stock Exchange on 28th March, 2002, being the last trading day in respect of the Shares on the Stock Exchange prior to the making of the Offer; and (ii) a discount of approximately 97.6 per cent. to the average closing price of HK$0.418 per Share as quoted on the Stock Exchange for the period of 10 trading days ended 28th March, 2002.

The Offeror undertakes to the Shareholders that after it takes Board Control, it will cause the Company to pay to Shareholders 90 per cent. of all legally distributable cash balance of the Group as soon as practicable. Accepting Shareholders will also be entitled to the Cash Distribution, but not the Offeror. On the assumption that the cash balance of the Group of HK$203.4 million as at 16th April, 2002 (based on the Company’s management record) is fully distributable, the Cash Distribution amounts to approximately HK$0.64 per Share.

Therefore, Accepting Shareholders are expected to receive approximately HK$0.65 per Share (being HK$0.01 Offer Price plus a Cash Distribution of approximately HK$0.64 per Share), on the assumption that the cash balance as at 16th April, 2002 does not have material changes. The actual amount may be more or less depending on, inter alia, the amount of cash remaining in the Group as at the time closer to the declaration of the Cash Distribution, and a review of the accounts of the Group by auditors or an independent firm of certified public accountants.

Should the Cash Distribution not be declared within one year after the Offer becomes unconditional, Accepting Shareholders have the right within one month thereafter to buy back the Shares tendered under the Offer at HK$0.01 per Share.

The Offeror undertakes to acquire all outstanding rights to subscribe for Shares at a price of HK$0.01 per right that entitles its holder to subscribe for 1 Share, on the condition that the Offer becomes unconditional. Based on the information as disclosed in the Company’s 2001 annual report, there was no outstanding right to subscribe for Shares as at 31st March, 2001.

The Offer will be subject to and conditional upon the Offeror having received acceptances in respect of Shares which, together with Shares acquired or agreed to be acquired before or during the Offer, will result in the Offeror and persons acting in concert with it holding more than 50 per cent. of the voting rights of the Company. Pursuant to Section 26A of the SFC Ordinance, the Offer is also subject to the approval by the SFC as certain subsidiaries of the Company seem to be registered persons, and changes in a substantial shareholder of the Company will require the approval of the SFC.

As at the date of this announcement, the Offeror and/or parties acting in concert with it has no interest or options in or rights to acquire any Shares and has never dealt in any Shares. The Offeror is independent from, not connected with and not acting in concert with any of the substantial shareholders, chief executive or directors of the Company and any of its subsidiaries or their respective associates.

Barring unforeseen circumstance, the Offeror expects to despatch a formal Offer document setting out the terms and other details of the Offer, together with acceptance and transfer forms, within 21 days from the date of this announcement.

INTRODUCTION

The Offeror announces that it made a voluntary conditional cash offer (the “Offer”) on 28th March, 2002 to acquire all the shares of HK$0.10 each (the “Shares”) in the entire issued share capital of Pacific Challenge Holdings Limited (the “Company”) at an offer price of HK$0.01 for each Share (the “Offer Price”).

THE OFFER

The Offer is made in compliance with the Hong Kong Code on Takeovers and Mergers (the “Code”) and on the following basis:

For each Share HK$0.01 in cash

The Offeror undertakes to acquire all outstanding rights to subscribe for Shares at a price of HK$0.01 per right that entitles its holder to subscribe for 1 Share, on the condition that the Offer becomes unconditional. Based on the information as disclosed in the Company’s 2001 annual report, there was no outstanding right to subscribe for Shares as at 31st March, 2001.

The Offer Price

The Offer Price of HK$0.01 per Share represents (i) a discount of approximately 97.5 per cent. to the closing price of HK$0.40 per Share as quoted on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 28th March, 2002, being the last trading day in respect of the Shares on the Stock Exchange prior to making of the Offer; and (ii) a discount of approximately 97.6 per cent. to the average closing price of HK$0.418 per Share as quoted on the Stock Exchange for the period of 10 trading days ended 28th March, 2002. The Offer Price also represents a discount of approximately 98.8 per cent. to the audited net asset value per Share of approximately HK$0.84 as at 30th September, 2001, the date for the latest audited financial statements of the Company. The Offer Price is arrived at with reference to the market price of the Shares and after having taken into account the uncertainties arising from the current legal disputes between a substantial shareholder and the Company.

Conditions of the Offer

The Offer will be subject to and conditional upon the Offeror having received acceptances in respect of Shares which, together with Shares acquired or agreed to be acquired before or during the Offer, will result in the Offeror and persons acting in concert with it holding more than 50 per cent. of the voting rights of the Company.

It appears that certain subsidiaries of the Company are registered persons under the Securities and Futures Commission Ordinance Chapter 24 of the Laws of Hong Kong (“SFC Ordinance”). Changes in substantial shareholding in a registered person is restricted under Section 26A of the SFC Ordinance, therefore, the Offer is also subject to the approval by the Securities and Futures Commission (“SFC”) that the Offeror can become a substantial shareholder of the Company.

The Offeror and its Interest in the Shares

The Offeror is a private company incorporated in Hong Kong with limited liability. It is wholly-owned equally by Mr. Tony Fung Wing Cheung and Mr. Peter Fung Yiu Fai. It has no activities other than the making of the Offer.

As at the date of this announcement, the Offeror and/or parties acting in concert with it has no interest or options in or rights to acquire any Shares and has not dealt in any Shares. The Offeror is also independent from, not connected with and not acting in concert with any of the substantial shareholders, chief executive or directors of the Company and any of its subsidiaries or their respective associates.

As at the date of this announcement, neither the Offeror nor any person acting in concert with it has received any irrevocable commitment from any shareholders of the Company (“Shareholders”) to accept the Offer.

Total Consideration

As at the date of this announcement, the total number of Shares in issue was approximately 286,480,000. In the event that holders of all the Share accept the Offer, the total consideration of the Offer will be approximately HK$2,864,800 based on the Offer Price of HK$0.01 per Share. Yu Ming Investment Management Limited (“Yu Ming”) has been engaged by the Offeror as its financial adviser in respect of the Offer and to make the Offer on behalf of the Offeror. Yu Ming confirms that it is satisfied that there are sufficient financial resources available to the Offeror for meeting full acceptance of the Offer.

The Offeror is a single purpose company with minimal capitalization. In order to back up its Cash Distribution undertaking, the Offeror undertakes not to pledge or sell any of the Shares acquired under the Offer prior to the Cash Distribution.

Terms of the Offer

Save for the Cash Distribution, it is a term of the Offer that all Shares to be acquired therewith will have all rights attached thereto as at the date on which the Offer is made or subsequently becoming attached thereto and be free from all rights of pre-emption, options, liens, claims, equities, charges, encumbrances and third party rights.

Payment

Payment in cash in respect of acceptance of the Offer will be made by the Offeror as soon as possible but in any event within ten days of the later of the date on which the Offer becomes or is declared unconditional and the date of receipt of a duly completed acceptance.

Stamp Duty

Sellers' ad valorem stamp duty for the Shares registered on the Hong Kong branch register arising in connection with acceptance of the Offer will be payable by each Shareholder at the rate of HK$1 for every HK$1,000 or part thereof of the consideration payable by the Offeror for such Shareholder's Shares and will be deducted from the cash amount due to such Shareholder under the Offer.

OFFEROR'S INTENTION IN RELATION TO The Company

Directors and Management

The Offeror will request the board (the “Board”) of directors (“Directors”) of the Company to appoint such persons nominated by the Offeror to become Directors, and will request all existing Directors of the Company to resign immediately thereafter. Further details on the persons to be nominated will be set out in the formal Offer document to be despatched to Shareholders.

If the Directors refuse to resign voluntarily upon the request of the Offeror after the Offer becomes unconditional, the Offeror will forthwith proceed to make a requisition to convene a Shareholders’ special general meeting under Bye-law 35 of the Company to take control of the Board, by way of appointment of new directors, and/or removal of all present directors of the Board, to form an absolute majority of the Board (the “Board Control”).

Bye-law 35 provides that the Board shall on the requisition of Shareholders holding not less than one-tenth of the paid-up share capital of the Company proceed to convene a special general meeting of the Company and the provisions of Section 74 of the Bermuda’s Companies Act shall apply.

Section 74 of the Bermuda’s Companies Act provides that if the Directors do not within 21 days from the date of requisition proceed duly to convene the special general meeting, the requisitionists may themselves convene the special general meeting, but any meeting so convened shall not be held after three months from the date of the requisition.

Meanwhile, the Offeror has no concrete plan of any substantial change to the existing management and staff structure of the Company. However, the Offeror intends to cause the Company to conduct a review of the human resources of the Company and its subsidiaries (the “Group”) so that inefficient staff will be dismissed if doing so is in the interests of the Company.

Cash Distribution

The Offeror undertakes to the Shareholders that it will cause the Company to pay to Shareholders 90 per cent. of all legally distributable cash balance (“Cash Distribution”) of the Company as soon as practicable, subject to the following conditions :

1. the Offer having become unconditional;

2. the Offeror having taken Board Control; and

3. the amount of legally distributable cash determined by the auditors of the Company or an independent firm of certified public accountants amounts to not less than HK$0.02 per Share.

Within one month after the satisfaction of the above conditions, and the expiry of the terms of the Group’s cash deposits with banks (or financial institutions) equivalent to the amount of Cash Distribution, whichever is the later, the Offeror will cause the Board to declare the Cash Distribution. The preliminary timetable is set out below :

Events Timeline

Offeror takes Board Control Day 1

The Company appoints auditors or independent accounts to

determine the amount of Cash Distribution Day 2 to 7

Declare Cash Distribution Day 30

Register of Shareholders closes to determine entitlement of

Cash Distribution Day 46

Register of Shareholders opens Day 52

Despatch of cheques for the Cash Distribution Day 60

The above timetable is only for reference and may change in order to comply with the Bye-laws of the Company, other relevant laws, rules and/or regulations.

The Offeror will not be entitled to any Cash Distribution in respect of Shares acquired from the Offer. The Offeror undertakes to direct the Company to pay such entitlement in respect of Shares acquired from the Offer to the Shareholders who accepted the Offer (“Accepting Shareholders”).

Based on the management record of the Company, the cash balance of the Group amounted to HK$203.4 million as at 16th April, 2002. Based on 286,480,000 Shares in issue, and on the assumption that the cash balance is fully distributable, the Cash Distribution is estimated to amount to approximately HK$0.64 per Share, subject to actual review of the accounts of the Group after the completion of the Offer.

Therefore, Accepting Shareholders are expected to receive approximately HK$0.65 per Share (being HK$0.01 Offer Price plus a Cash Distribution of approximately HK$0.64 per Share), on the assumption that the cash balance as at 16th April, 2002 will not have material changes. The actual amount may be more or less depending on, inter alia, the amount of cash remaining in the Group as at the date closer to the declaration of the Cash Distribution, and a review of the accounts of the Company by auditors or an independent firm of certified public accountants.

To maximize the amount of Cash Distribution, after the Board Control and before the Cash Distribution, the Offeror undertakes to cause the Company (i) not to make any capital commitment, (ii) to suspend all payments committed by the Company after 28th March, 2002, (iii) not to pay any directors’ fee, (iv) not to hire any new employees or consultants, and (v) generally to cause the Company to take all necessary actions to maximize the amount of the Cash Distribution.

Should the Cash Distribution not be declared within one year after the Offer becomes unconditional, Accepting Shareholders have the right within one month to buy back the Shares tendered under the Offer at HK$0.01 per Share. Details of the rights will be set out in the Offer document to be despatched within 21 days from the date of this announcement.

Details of the Cash Distribution including the actual amount and the actual timetable will be announced within one month after the Board Control.

Business of the Group

It is the intention of the Offeror that the Group will continue its existing principal businesses of corporate finance services, manufacturing and trading. However, the Offeror intends to cause the Company to conduct a review of the operation of the Group so that inefficient business operations will be disposed of or discontinued if doing so is in the interests of the Company.

Future Investments

The Offeror has no intention to inject any of its assets into the Company. In the event that the Offeror is to cause the Company to acquire or invest in any significant new business or projects or to dispose of any material assets, announcements will be made by the Company in full compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

MAINTAINING THE LISTING STATUS OF the Company

It is the intention of the Offeror that the listing of the Shares on the Stock Exchange should be maintained. The Offeror has undertaken and any new directors to be appointed to the board of the Company will undertake to the Stock Exchange to take appropriate steps as soon as possible following the close of the Offer to ensure that not less than 25 per cent. of Shares will be held by the public.

The Stock Exchange has stated that, if less than 25 per cent. of the issued Shares are in public hands following completion of the Offer, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares or that there are insufficient Shares in public hands to maintain an orderly market, then it will consider exercising its discretion to suspend dealings in the Shares.

The Stock Exchange has also stated that it will closely monitor all future acquisitions or disposals of assets by the Company. If the Shares remain listed on the Stock Exchange, any acquisition or disposal of assets by the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has discretion to require the Company to issue a circular to Shareholders where an acquisition or disposal by the Company is proposed, irrespective of the size of the proposed acquisitions and disposals of assets by the Company, particularly where such proposed acquisitions and disposals of assets by the Company represent a departure from the principal activities of the Company. The Stock Exchange has the power to aggregate a series of acquisitions and disposals of assets by the Company and any such acquisitions and disposals of assets may result in the Company being treated as if it were a new listing applicant and subject to the requirements for new listing application as set out in the Listing Rules.

GENERAL

Pursuant to the Code, the Company is required to (i) form an independent board committee to consider the Offer and report to the Shareholders on the Offer; and (ii) appoint an independent financial adviser to advise the independent board committee regarding the Offer.

The Offeror will use all reasonable endeavours to cause the Offer document containing, inter alia, the terms of the Offer to be despatched to Shareholders within 21 days from the date of this announcement. Pursuant to the Code, the Company is required to despatch the offeree documents containing, inter alia, the advice from the independent board committee and the independent financial adviser to Shareholders within 14 days after the posting of the Offer document.

By Order of the Board
Ontime Capital Investment Limited
Peter Fung Yiu Fai
DirectorHong Kong, 18th April, 2002

The directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge, their opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any of their statements in this announcement misleading.

Please also refer to the published version of this announcement in the Hong Kong iMail.