Greenheart Group Limited — M&A Activity 2000

Mar 9, 2000

Listed Company Information

TOYO HOLDINGS<0094> - Announcement & Resumption 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 press notice appears for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe the Shares. TOYO HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) DISCLOSEABLE TRANSACTION - ASSET ACQUISITION Financial adviser to Toyo Holdings Limited The board of directors of Toyo wishes to announce that Toyo entered into a conditional agreement with Charter King Investments Limited (to be renamed as eMarket Holdings Ltd.) for the acquisition of the Sale Share (representing a 100% shareholding interest in Asia eMarket) on 7th March, 2000. Asia eMarket, an investment holding company, will hold as its sole investment a 50% shareholding interest in Bizipoint at completion of the Agreement. The total consideration payable by Toyo under the Agreement comprises the issue of the Consideration Shares and the payment of HK$141 million, amounting to an aggregate consideration of HK$220 million based on the Issue Price. The proposed acquisition of the Sale Share constitutes a discloseable transaction for Toyo under the Listing Rules. Toyo will despatch a circular containing further details of the proposed acquisition to the Shareholders as soon as practicable. At the request of Toyo, trading in the Shares was suspended with effect from 10:00 a.m. on 7th March, 2000. An application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 10:00 a.m. on 9th March, 2000. THE AGREEMENT DATED 7TH MARCH, 2000 Parties Purchaser : Toyo Vendor : Charter King Investments Limited (to be renamed as eMarket Holdings Ltd.), an independent third party not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules). The Asset Acquisition The Company has conditionally agreed to purchase from eMarket the Sale Share (representing a 100% shareholding interest in Asia eMarket) on 7th March, 2000, Asia eMarket, an investment holding company, will hold as its sole investment a 50% shareholding interest in Bizipoint at completion of the Agreement. Details of the business structure of Asia eMarket are set out under the section headed "Information on eMarket and Asia eMarket Group". The consideration The total consideration payable by Toyo under the Agreement comprises the issue of the Consideration Shares and the payment of HK$141 million, amounting to an aggregate consideration of HK$220 million based on the Issue Price. The total consideration of HK$220 million was agreed after arm's length negotiations between eMarket and the Company and based on an independent valuation on Bizipoint. The cash consideration of HK$141 million will be financed by internal resources of the Company. The Consideration Shares The Issue Price represents a premium of approximately 6.95% over the closing price of HK$0.187 as at the last trading day before the date of this announcement, and a premium of approximately 4.71% over the ten-day average closing price of HK$0.191 up to and including the last trading day before the date of this announcement. The Consideration Shares represent approximately 12.54% of the existing issued share capital of 3,148,676,822 Shares as at the date hereof and approximately 11.15% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares. The Consideration Shares will be issued pursuant to the general mandate granted to the Directors at the annual general meeting held on 23rd June, 1999. Conditions Completion of the Agreement is conditional upon the following Conditions being fulfilled or waived, if applicable, by the Company: (a) the Stock Exchange granting approval for the listing of, and permission to deal in, the Consideration Shares; (b) the Bermuda Monetary Authority granting approval for the issue of the Consideration Shares (if required); (c) the passing of all necessary resolutions of the shareholders of Toyo or Grande to the extent required under Bermuda law or the Listing Rules to approve the issue of the Consideration Shares to eMarket or its nominee; (d) the warranties contained in the Agreement remaining true and accurate and not misleading in any material respect as at the date of this Agreement and as at completion of the Agreement as if repeated at completion of the Agreement; (e) the Company being reasonably satisfied with its due diligence review of the legal, financial and business affairs of the Asia eMarket Group; (f) eMarket having complied fully with its obligations as specified in the Agreement and otherwise having performed in all material respects all of the covenants, undertakings and agreements required to be performed by it; (g) the obtaining of a valuation report from Sallmanns or such other professional valuer as the Company may accept confirming that the valuation of Bizipoint is not less than HK$440 million; (h) the obtaining of a PRC legal opinion in the form as the Company may require at its absolute discretion from King & Wood or a reputable PRC law firm as the Company may accept opining that: (i) the PRC JV has been duly established and has all requisite licenses and approvals to carry out the business currently carried on by the PRC JV; and (ii) the Exclusivity Agreement is legally binding and enforceable; (i) the execution, and application for recordal and/or registration of all if any agreements or other documents required to provide the PRC JV with all legal rights to use the domain names of "cecc.org.cn" and "china-cecc.org"; (j) the obtaining of all necessary approvals from governmental departments or authorities of the PRC and Hong Kong in respect of the transaction contemplated hereunder; (k) the execution by Bizipoint and all its shareholders of the Shareholders Agreement; and (l) completion of the Group Reorganization. In the event that any of the above Conditions shall not have been fulfilled or waived, if applicable, prior to 21st April, 2000, the Agreement shall cease to be of any effect save in respect of claims arising out of any antecedent breach of the Agreement. Other terms If the valuation report referred to in the Condition (g) confirms that the valuation of Bizipoint is less than HK$440 million, the Company may choose to waive this Condition and to proceed to the completion of the Agreement in which event the Consideration will be reduced by 50% of the amount by which the valuation is less than HK$440 million. The Company can choose whether to reduce the number of Consideration Shares valued at HK$0.20 per Share or the cash portion of the consideration. eMarket undertakes with the Company that it shall not dispose of or create any securities over any of the Consideration Shares until the expiry of a period of 3 months commencing from the Completion Date and any such disposal or creation of securities will be carried out in accordance with all relevant laws and regulations. Upon completion of the Agreement, the Company, Bizipoint and all its shareholders shall enter into a Shareholders Agreement relating to the management and administration of Bizipoint and its subsidiary in the form as may reasonably be agreed by eMarket and the Company, the principal terms of which are: 1. pro rata representation on board of Bizipoint for its shareholders and quorum for directors meetings to include a nominee of the Company; 2. no change to existing scope of business without approval of the board of Bizipoint; 3. usual pre-emptive rights - including up stream change of control for shareholders other than the Company; and 4. restrict management shareholders from investing in companies or businesses in direct competition with business of Bizipoint. Completion and payment terms Completion shall take place at 4:00 p.m. on the Completion Date at the offices of the Company's Solicitors. At Completion, the Company shall: (a) allot and issue to eMarket and/or its nominees the Consideration Shares; and (b) pay a sum of HK$71 million to eMarket and/or its nominees, of which HK$20 million will be paid to Bizipoint at the direction of eMarket as a contribution to Bizipoint. After the Completion, the Company shall: (a) as soon as practicable after the allotment and issue of the Consideration Shares, deliver to eMarket the certificate(s) for the Consideration Shares; and (b) within 90 days after Completion, pay a sum of HK$70 million, representing the balance of the cash portion of the consideration, to eMarket. INFORMATION ON EMARKET AND ASIA EMARKET GROUP eMarket is a consortium of internet and technology investors who are the founding shareholders of Bizipoint. Upon completion of the Group Reorganization, eMarket will hold in aggregate 70% of the shareholding interest of Bizipoint, of which 20% will be held directly by eMarket and 50% will be held by Asia eMarket. The consortium of internet and technology investors includes: Mr. Samuel Fang, who has over 30 years experience in the electronics industry and over 10 years of active venture capital investment activities in hi-tech business in the United States and Asia. Mr. Fang was the principal shareholder and chief executive officer of General Electronics, a company listed on the Stock Exchange before it was privatized in December, 1995. Mr. Fang has currently invested in a number of hi-tech and internet projects. Mr. Chin Man, representing Angel Ventures, a technology and internet investment firm. Mr. Man is an entrepreneur in the internet industry in Asia, and was a founder of one of the Hong Kong's first commercial internet service providers and currently holds the position as chief executive officer of Quamnet.com, a financial services portal. Mr. Man together with Angel Ventures has invested in a number of projects including software application and solution, network infrastructure, e-commerce, vertical network, internet broadcast, etc.. Ms. Linda Lau, currently the chief executive officer of Hownew.com, an internet media and broadband company. Mr. Morris Tsoi, a former director and shareholder of Lamex Holdings Limited, a listed company in the furniture business. Mr. Tsoi is currently involved as a venture capitalist in the field of vertical business-to-business commerce. Upon completion of the Group Reorganization, Asia eMarket, 100% beneficially owned by eMarket, will hold a 50% interest in the issued share capital of Bizipoint. (for the shareholding structure of Bizipoint upon completion of the Agreement, please refer to the press announcement today.) The other investors who will hold 15% of the shareholding interest of Bizipoint upon completion of the Agreement are independent of and not connected with the directors, chief executives or substantial shareholders of the Company and eMarket or any of their subsidiaries or any of their respective associates. Bizipoint is principally engaged in the operation of Bizipoint.com, a vertical business-to-business trade and business application portal in the computer and electronics industry. Bizipoint commenced its business in October, 1999, and conducted the official launch of its portal on 14th February, 2000. The directors of Bizipoint intend to develop Bizipoint.com to include the following contents and applications: - news, information and statistics; - company directory; - product catalogue; - auction; - trade fair and exhibitions; - featured products or enterprises; - bulletin postings; - excess stock; - trade chat. It is intended that future revenues of Bizipoint.com will be generated through three major revenue streams: on-line advertising, e-commerce commissions, and technical servicing. In addition to the operation of Bizipoint.com, Bizipoint also holds a 90% equity shareholding in the PRC JV. The remaining 10% equity shareholding of the PRC JV is beneficially owned by the PRC Investor, an independent third party not connected with the directors, chief executives or substantial shareholders of the Company and eMarket, or any of their subsidiaries or any of their respective associates. The PRC JV is principally engaged in the development and production of computer software and hardware technology and products, sale of self-manufactured products, and the provision of related information consulting technical training. The PRC JV serves as an alliance with Bizipoint in the PRC to provide peripheral technical support services, research and developments, and various technical training to facilitate the operations of Bizipoint. REASONS AND BENEFITS OF THE ASSET ACQUISITION The Group is principally engaged in the design, manufacture and sale of popular priced consumer audio and video products, components and other consumer products. The Directors believe that the internet business, especially the field of business-to- business e-commerce, has significant commercial potentials in the future. The Directors are of the opinion that the acquisition of a 50% interest in Asia eMarket will provide an opportunity for the Group to diversify into the business-to- business e-commerce industry. The Directors also believe that the acquisition will enable the Company to form a strategic alliance with Bizipoint, which shall bring positive contribution to their raw materials and accessories sourcing in relation to the principal businesses of the Group. The Directors have confirmed that there is no competing business between the Group and the Asia eMarket Group. GENERAL The acquisition constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing further details of the acquisition 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. SUSPENSION OF TRADING At the request of Toyo, trading in the Shares was suspended with effect from 10:00 a.m. on 7th March, 2000. An application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 10:00 a.m. on 9th March, 2000. DEFINITIONS "Agreement" a conditional sale and purchase agreement in relation to the acquisition of the Sale Share entered into between eMarket and the Company on 7th March, 2000 "Asia eMarket" Advanced Move Investments Limited (to be renamed as Asia eMarket Limited), a company incorporated in the British Virgin Islands with limited liabilities which is wholly owned by eMarket as at the date hereof "Asia eMarket Group" Asia eMarket, its subsidiary and associated companies "Bizipoint" Bizipoint.com Limited, a company incorporated in the British Virgin Islands with limited liabilities, 50% shareholding interest of which will be acquired by Asia eMarket on or before Completion "Company" or "Toyo" Toyo Holdings Limited, an exempted company incorporated in Bermuda with limited liabilities, the securities of which are traded on the Stock Exchange "Completion Date" being the third business day after all of the Conditions have been fulfilled or waived, if applicable (or such later date as the Company or eMarket may agree in writing) "Conditions" the conditions specified in this announcement under the section headed "Conditions" "Consideration Shares" 395,000,000 Shares at an issue price of HK$0.20 per Share totalling HK$79,000,000 to be issued to eMarket as part of the consideration for the acquisition of the Sale Share "Directors" director(s), including the independent non- executive directors, of Toyo "eMarket" Charter King Investments Limited (to be renamed as eMarket Holdings Limited), a company incorporated in the British Virgin Islands with limited liabilities "Exclusivity Contract" the contract dated 28th October, 1999 between * (also known as China Electronic Chamber of Commerce) and Bizipoint as varied or amended by a supplemental contract dated 9th November, 1999 between * and Bizipoint "Grande" The Grande Holdings Limited, an exempted company incorporated in Bermuda with limited liabilities, the securities of which are listed on the Stock Exchange and a controlling shareholder of Toyo holding approximately 56.39% shareholding interest of Toyo as at the date hereof "Group" Toyo and its subsidiaries "Group Reorganization" the reorganization of the shareholding structure in Bizipoint, upon completion of which Asia eMarket will hold a 50% shareholding interest in Bizipoint "Hong Kong" the Hong Kong Special Administrative Region of the PRC "Issue Price" the issue price of HK$0.20 per Consideration Share "Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange "PRC" the People's Republic of China but excluding, for the purposes of the Agreement, Hong Kong, Macau and Taiwan "PRC Investor" * a limited liability company incorporated in the PRC "PRC JV" * a sino-foreign equity joint venture limited liability company established in the PRC, the equity shareholding of which is held as to 90% by Bizipoint and 10% by "PRC JV Contract" The joint venture contract dated 10th November, 1999 between * and Bizipoint relating to the establishment of the PRC JV "Sale Share" 1 share of US$1.0 each in the capital of Asia eMarket to be acquired by Toyo pursuant to the Agreement, representing the entire issued share capital of Asia eMarket "Sallmanns" Sallmanns (Far East) Limited, an independent valuer whose principal place of business is situated at 15/F, Trinity House, 165-171 Wanchai Road, Wanchai, Hong Kong "Share(s)" share(s) of HK$0.01 each in the capital of Toyo "Shareholder(s)" holders of Share(s) "Shareholders Agreement" the shareholders agreement referred to in the above section headed "Other terms" between Asia eMarket, Bizipoint and all the shareholders of Bizipoint "Stock Exchange" The Stock Exchange of Hong Kong Limited By order of the Board Toyo Holdings Limited Christopher W. Ho Executive Chairman Hong Kong, 8th March, 2000 (* for the chinese name, please refer to the press announcement today.)