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Hephaestus Holdings Limited M&A Activity 2008
51310_rns_2008-05-18_0e90ee0d-7ed3-4aff-8293-c0edeee4887a.pdf
M&A Activity
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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 announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.
智庫媒體集團（控股）有限公司
Intelli - Media Group (Holdings) Limited
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8173)
VERY SUBSTANTIAL ACQUISITION: ACQUISITION OF THE ENTIRE EQUITY INTEREST IN FIRST PINE ENTERPRISES LIMITED INVOLVING ISSUE OF PROMISSORY NOTE, CONSIDERATION SHARES, AND CONVERTIBLE BONDS AND RESUMPTION OF TRADING
THE ACQUISITION
The Board refers to the announcement dated 8 April 2008 in which it was announced that the Purchaser, a wholly-owned subsidiary of the Company, entered into a MOU with the Target Company and the Vendor to acquire the entire issued share capital of the Target Company.
The Board is pleased to announce that on 2 May 2008 the Purchaser has entered into the conditional Acquisition Agreement with the Vendor. Under the Acquisition Agreement, the Purchaser has agreed to acquire the entire issued share capital of the Target Company from the Vendor at the Acquisition Price of HK$5,700 million.
The Acquisition Price, of which HK$40 million had been paid to the Vendor on 9 April 2008 as earnest money, is to be satisfied (i) as to HK$200 million by the issue of the Promissory Note; (ii) as to HK$350 million by the issue of the Consideration Shares; and (iii) as to the balance of HK$5,110 million by the issue of the Convertible Bonds by the Company. Particulars of the Acquisition Price, the Promissory Note, the Consideration Shares and the Convertible Bonds are set out in the sections headed "Acquisition Price," "Promissory Note," "Consideration Shares," and "Convertible Bonds" below.
The Acquisition constitutes a very substantial acquisition for the Company under Chapter 19 of the GEM Listing Rules and is therefore subject to the reporting, announcement and shareholders' approval requirements under Chapter 19 of the GEM Listing Rules.
GENERAL
A circular containing, among other information, (i) further details of the Acquisition, the Promissory Note, the Consideration Shares and the Convertible Bonds; and (ii) a notice of the EGM, will be despatched to the Shareholders as soon as practicable.
RESUMPTION OF TRADING
At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 2:30 p.m. on 2 May 2008 pending the release of this announcement. The Company has applied to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 19 May 2008.
INTRODUCTION
The Board refers to the announcement dated 8 April 2008 in which it was announced that the Purchaser, a wholly-owned subsidiary of the Company, entered into a MOU with the Target Company and the Vendor to acquire the entire issued share capital of the Target Company.
The Board announces that on 2 May 2008 the Purchaser, which is a wholly owned subsidiary of the Company, entered into the conditional Acquisition Agreement with the Vendor. Under the Acquisition Agreement, the Purchaser has agreed to acquire the entire issued share capital of the Target Company from the Vendor at the Acquisition Price of HK$5,700 million.
ACQUISITION AGREEMENT
Date
2 May 2008
Parties
(1) the Vendor, as vendor
(2) the Purchaser, as purchaser
(3) the Company, as co-warrantor, giving representations, warranties and undertakings in favor of the Vendor in respect of the due performance of certain obligations of the Purchaser under the Acquisition Agreement
To the best knowledge, information and belief of the Directors after having made all reasonable enquiry, the Vendor and its ultimate beneficial owners are Independent Third Parties.
To the best of knowledge, information and belief of the Directors after having made all reasonable enquiry, the Vendor, its ultimate beneficial owner, and/or its associates hold approximately 14.96 million Shares, representing 0.7% of the total issued share capital of the Company as at the date of this Announcement and the Vendor does not have any relationship with Nice Hill Investments Ltd., its ultimate owners and their respective associates, save as being common Shareholders in the Company.
Subject matter
The Sale Shares representing the entire issued share capital of the Target Company.
Acquisition Price
The Acquisition Price of HK$5,700 million, of which HK$40 million had been directly paid to the Vendor on 9 April 2008 as earnest money (“Earnest Money”), is to be satisfied upon Completion:
(1) as to HK$200 million by the issue of the Promissory Note to the Vendor (or such person(s) as nominated by the Vendor);
(2) as to HK$350 million by the Company allotting and issuing to the Vendor (or such person(s) as nominated by the Vendor) a total of 500,000,000 Consideration Shares. The Consideration Shares shall rank pari passu in all respects with the Shares in issue on the date of allotment and issue including the right to all dividends, distributions and other payments made or to be made for which the record date falls on or after the date of such allotment and issue; and
(3) as to HK$5,110 million by the Company issuing the Convertible Bonds to the Vendor (or such person(s) as nominated by the Vendor).
In the event that Completion does not take place and this is (i) not the result of any willful act or willful omission or willful default of the Vendor; or (ii) is not solely as a result of any act, omission or default of the Vendor; or (iii) is a result of any act or omission or default of the Purchaser or the Company, the Vendor shall be entitled to forfeit the Earnest Money paid by the Purchaser. The Directors consider that the terms of the forfeit (including the amount and the forfeit situations) are fair and reasonable and in the interest of the Company and the Shareholders as a whole.
In the event that Completion does not take place and this is solely a result of any act, omission or default of the Vendor or is a result of any willful act or willful omission or willful default of the part the Vendor, then the Vendor shall forthwith return, without any interest, the Earnest Money to the Purchaser.
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The Earnest Money was funded with the proceeds received by the Company from the issue of the HK$50 million convertible notes on 26 February 2008. On or before 31 March 2008, the entire HK$50 million convertible notes were converted into 1,000,000,000 new Shares. Particulars of the subscription and subsequent conversions are contained in the Company's announcements dated 15 January 2008, 26 February 2008 and 3 April 2008.
In an announcement dated 7 April 2008, the Company had further raised approximately HK$49 million by placing 114,000,000 new Shares during a fund raising exercise which was concluded on 17 April 2008. Proceeds from this placement have been designated for the Group's business expansion, including the proposed Acquisition.
Prior to Completion, the Company has no obligation whatsoever to fund any of the Target Company's working capital requirements. In case of any advance is made to the Target Company prior to Completion, the Company will make appropriate disclosure in accordance with the requirement of the GEM Listing Rules.
Particulars of the Promissory Note, the Consideration Shares, and the Convertible Bonds are set out in the paragraphs headed "Promissory Note," "Consideration Shares," and "Convertible Bonds" below.
Basis of determination of the Acquisition Price
The Acquisition Price was determined after considering the following factors: i) the exciting opportunity presented by the Acquisition for the Company, a foreign investor for Philippines purposes, to enter into a major joint venture set up to explore, drill, mine and trade magnetite sand and other valuable mineral resources in the Philippines as the Republic of Philippines had suspended beach mining and offshore mining pursuant to a temporary suspension order issued by the Department of Environment and Natural Resources and the suspension on acceptance or processing of mining applications covering offshore areas have recently been lifted in 2004; ii) the Company believes Mogan may be the holder of a very significant untapped source of magnetite placer deposits, based on the preliminary information available to the Purchaser on the potential geological resource of the Mining Claims, including, among others, the marine seismic reflection survey jointly executed by the Philippine Bureau of Mines and Geo-Sciences and the Philippine Bureau of Coast and Geodetic Survey under the supervision of experts from the Project Office of the Committee for Coordination of Joint Prospecting for Mineral Resources in Asian Offshore Areas, a United Nations Development Program supported inter-governmental body which was established to help member countries explore their offshore area for mineral deposits; iii) the preliminary assayed results have indicated that the sampling contains a high level of magnetics and iron content; iv) the Philippines' advantageous geographic location to the PRC relative to Brazil and Australia. The distance between Shanghai and the Amazons in Brazil is approximately 16,886 kilometers, or 10,943 miles, or 9,118 nautical miles. It is approximately 7,020 kilometers, or 4,362 miles, or 3,791 nautical miles from Shanghai to Western Australia (location of the Pilbara mines which is reputed to contain
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one of the world's largest magnetite reserves), and approximately 1,841 kilometers, or 1,144 miles, or 994 nautical miles from Shanghai to Manila in the Philippines. Manila is approximately 581 kilometers away from Tacloban, the capital of Leyte Province. The Philippines' relatively shorter distance to China would enable the Chinese steel manufacturing companies to enjoy savings in the form of lower transportation costs when importing magnetite (the principal raw material in the production of steel products). The physical location(s) of the assets under the Acquisition will give the Company a natural advantage to compete more effectively (in terms of pricing) and efficiently (in terms of product delivery) in this global industry once it is in production operation; v) the current state of the worldwide economy has placed a strong emphasis on natural resources; vi) the upward price trend of magnetite sand as the principal raw material in the production of steel globally which has increased substantially in recent years; and vii) the Directors' belief that with optimization, the proposed Acquisition will provide a healthy and steady stream of future income as well as diversify the overall business risks of the Company. The Acquisition Price was reached after arm's length negotiations between the parties to the Acquisition Agreement. The Directors consider that the terms of the Acquisition (including the amount and payment method of the Acquisition Price) are normal commercial terms that are fair and reasonable.
As at the date of this Announcement, the Company has not conducted any independent valuation on Mogan or the Mining Claims. The Company will include a valuation report on the Mogan (including the Mining Claims) in the circular to be dispatched to the Shareholders.
Conditions precedent
Completion of the Acquisition is subject to the fulfillment of the following conditions precedent:
(1) the Purchaser being satisfied with the results of a due diligence review of the Target Group and that the Reorganization has been properly completed in accordance with applicable laws;
(2) the approval by the Shareholders of the Company (with such Shareholders as required under the GEM Listing Rules or the Takeovers Code abstaining from voting on the relevant resolution(s)) of the Acquisition Agreement and the transactions contemplated thereunder (including but without limitation to the issue of the Convertible Bonds and Consideration Shares) and all other consents and acts required under the GEM Listing Rules and the Takeovers Code being obtained and completed or, as the case may be, the relevant waiver from compliance with any of such requirements being obtained from the Stock Exchange or the SFC;
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(3) the Purchaser receiving legal opinions obtained at the Purchaser's expense, in form and substance satisfactory to the Purchaser, to be issued by a firm of lawyers nominated by the Purchaser in such jurisdiction (including the British Virgin Islands and the Philippines) and covering such matters relating to the ownership of the Mining Claims and the business of the Target Group and the Reorganization, having been obtained;
(4) the Purchaser being satisfied with the terms of the Mogan SPA and the Mogan SHA;
(5) the GEM Listing Committee having granted listing of and permission to deal in the Consideration Shares and the Conversion Shares;
(6) all approvals, consents and acts (whether required under laws, codes, regulations, the GEM Listing Rules or otherwise) for the purpose of or in connection with Completion being obtained and completed or, as the case may be, the relevant waiver from compliance with any of such provisions being obtained from the relevant authority (including without limitation the Stock Exchange);
(7) the Board approving and authorizing the transactions contemplated in the Acquisition Agreement, the issue of the Convertible Bonds and the Promissory Note and the allotment and issue of the Consideration Shares and of the Conversion Shares upon the exercise of the conversion rights attached to the Convertible Bonds;
(8) the Purchaser having obtained a technical report issued by the Technical Adviser at the Purchaser's expense that indicates the Mining Area has an inferred geological resource of magnetite sand of not less than 1.5 billion metric tons;
(9) no indication being received from the Stock Exchange that the transactions contemplated under this Acquisition Agreement will be treated or, as the case may be, ruled by the Stock Exchange as a "reverse takeover" under the GEM Listing Rules;
(10) none of the warranties given by the Vendor and the Purchaser respectively in the Acquisition Agreement having been breached in any material respect (or, if capable of being remedied, not having been remedied), or is misleading or untrue in any material respect;
(11) the Purchaser being satisfied that, from the date of the Acquisition Agreement to Completion, there has not been any Material Adverse Change in respect of any member of the Target Group; and
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(12) (i) there being no event, or series of events, beyond the reasonable control of the relevant member of the Target Group (including, without limitation, acts of government or orders of any courts, strikes, calamity, crisis, lock-outs, fire, explosion, flooding, civil commotion, acts of war, outbreak or escalation of hostilities (whether or not war is declared), acts of God, acts of terrorism, declaration of a national or international emergency, riot, public disorder, economic sanctions, outbreaks of diseases or epidemics including Severe Acute Respiratory Syndrome and H5N1 and such related or mutated forms or interruption or delay in transportation); or
(ii) there being no change or development involving a prospective change, or any event or series of events likely to result in any change or development involving a prospective change, in local, national, international, financial, economic, political, military, industrial, fiscal, regulatory, currency or market conditions or matters in the Philippines or Hong Kong; or
(iii) there being no new law or change or development involving a prospective change in existing laws or any change or development involving a prospective change in the interpretation or application thereof by any court or other competent authority in the Philippines or Hong Kong,
which in each case:
(a) is or will or could be expected to have a material adverse effect on the general affairs, management, business, financial, trading or other condition or prospects of any member of the Target Group; or
(b) makes it impracticable for the Acquisition to proceed.
If any of the conditions set out above is not fulfilled or, except for the conditions (2), (5), (6), (7) and (9) which may not be waived, waived by the Purchaser (or in the case of condition (10), in respect of the warranties given by the Purchaser, waived by the Vendor) on or before 12:00 noon on the Long Stop Date, the obligations of the parties shall cease and determine (save and except the provisions on confidentiality which shall continue to have full force and effect) and none of the parties shall have any claim under the Acquisition Agreement against the others of them save in respect of any antecedent breaches.
Completion
Completion of the Acquisition shall take place on the fifth Business Day following the date on which all of the conditions (1) to (8) above shall have been fulfilled (or, where applicable, waived).
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PROMISSORY NOTE
The non-interest bearing Promissory Note in the principal sum of HK$200 million shall be payable in four (4) installments as follows:
| Installment Date | Amount |
|---|---|
| 1. The first Business Day immediately after three (3) months from the Completion Date | HK$50.0 million |
| 2. The first Business Day immediately after six (6) months from the Completion Date | HK$50.0 million |
| 3. The first Business Day immediately after nine (9) months from the Completion Date | HK$50.0 million |
| 4. The first Business Day immediately after twelve (12) months from the Completion Date | HK$50.0 million |
The Purchaser reserves the right to defer all installment payments until the final installment date. The Purchaser shall have the right at any time to prepay the Promissory Note or to request for an extension by not exceeding six (6) months beyond the final installment date for the full repayment of the Promissory Note.
CONSIDERATION SHARES
The issue price of the Consideration Shares is HK$0.70 per Consideration Share, which was determined after arm's length negotiations between the parties with reference to the recent market price of the Shares and the net asset value per Share as at 30 September 2007 of HK$0.012 (based on the unaudited net assets of the Company as at 30 September 2007), represents (i) a premium of approximately 5.833% over the net asset value per Share as at 30 September 2007 of HK$0.012; (ii) a discount of approximately 22.2% to the closing price of HK$0.90 per Share as quoted on the Stock Exchange on the Last Trading Day; (iii) a discount of approximately 14.6% to the average of the closing prices as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day of HK$0.82 per Share; and (iv) a discount of approximately 6.7% to the average of the closing prices as quoted on the Stock Exchange for the last ten trading days up to and including the Last Trading Day of HK$0.75 per Share.
The Consideration Shares represent approximately 24.4% of the existing issued share capital of the Company and approximately 19.6% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares. The Consideration Shares will be issued under a specific mandate proposed to be obtained at the EGM. An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.
In determining the issue price of the Consideration Shares, the Directors had considered (a) the net asset value per Share as at 30 September 2007 of HK$0.012 (based on the unaudited net assets of the Company as at 30 September 2007) and (b) the Vendor's willingness to accept the Consideration Shares instead of immediate cash settlement of the relevant part of the consideration for the Acquisition. The Shares were traded within a range of HK$0.07 to HK$0.90 per Share between 2 May 2008 and 19 September 2007, 150 trading days up to and including the Last Trading Day. The Directors consider that the recent increase in the trading prices of the Shares might be attributable to recent market sentiment and in reaction to the Company's recent announcements on the MOU and fund raising exercises. Notwithstanding the recent surge in the trading prices, the Directors had taken into account the fact that the issue price of the Consideration Shares of HK$0.70 per Consideration Share represents a premium of about 5,833% over the net asset value per Share as at 30 September 2007. In view of the above, the Directors consider that the issue price of the Consideration Shares is fair and reasonable and is in the interest of the Company and the Shareholders as a whole.
CONVERTIBLE BONDS
The principal terms of the Convertible Bonds are as follows:
Principal amount
Approximately US$655,128,205 (approximately HK$5,110 million based on a fixed exchange rate of HK$7.8 to US$1) comprising two tranches: the total principal amount of Tranche A Bonds is US$425,833,333 while the total principal amount of Tranche B Bonds is US$229,294,872.
Form and denomination
The Convertible Bonds will be issued in registered form and in the denomination of US$100,000 each and in integral multiples of US$100,000 thereof.
Maturity Date
The date falling on the 10th anniversary of the Completion Date.
Interest
The Convertible Bonds shall accrue no interest.
Transferability
A Convertible Bond may be transferred to any person in whole multiples of US$100,000 (or such lesser amount as may represent the entire principal amount thereof).
The Company will promptly notify the Stock Exchange of Hong Kong upon becoming aware of any dealings in the Convertible Bonds by any connected person of the Company.
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Conversion
Bondholders have the right to convert their Convertible Bonds into Conversion Shares at any time during the period from the date of issue of such Convertible Bonds up to the Maturity Date, in amounts of not less than a whole multiple of US$100,000, save that if at any time the outstanding principal amount of the Convertible Bond held by a Bondholder is less than US$100,000, or if a Bondholder intends to exercise the conversion rights attached to the entire principal amount of all the Convertible Bonds held by him, the Bondholder may convert the whole (but not part only) of such outstanding principal amount of the Convertible Bonds.
Upon full conversion of the Convertible Bonds into Conversion Shares, a total of 7,300 million Shares will be issued by the Company.
Each Bondholder shall exercise the conversion rights attaching to the Convertible Bonds only if the allotment and issue of the Conversion Shares to such Bondholder pursuant to an exercise of the conversion right will not cause the Company to be in breach of the minimum public float requirement stipulated under Rule 11.23 of the GEM Listing Rules.
No conversion right may be exercised by a Bondholder, to the extent that, following such exercise, a Bondholder and parties acting in concert with it, taken together, will directly or indirectly, control or be interested in 29% or more of the entire issued Shares (or in such lower percentage as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer).
The Conversion Shares will be issued pursuant to a specific mandate to be granted to the Directors by the Shareholders at the EGM.
Conversion Price
The Convertible Bonds shall be converted at the Conversion Price of HK$0.70 (subject to adjustment as mentioned below) per Conversion Share.
The Conversion Price of HK$0.70 per Conversion Share, which was determined after arm's length negotiations between the parties with reference to the recent market price of the Shares and the net asset value per Share as at 30 September 2007 of HK$0.012 (based on the unaudited net assets of the Company as at 30 September 2007), represents (i) a premium of approximately 5.833% over the net asset value per Share as at 30 September 2007 of HK$0.012; (ii) a discount of approximately 22.2% to the closing price of HK$0.90 per Share as quoted on the Stock Exchange on the Last Trading Day; (iii) a discount of approximately 14.6% to the average of the closing prices as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day of HK$0.82 per Share; and (iv) a discount of approximately 6.2% to the average of the closing prices as quoted on the Stock Exchange for the last ten trading days up to and including the Last Trading Day of HK$0.75 per Share.
For the same reason as mentioned above regarding the determination of the issue price of the Consideration Shares, the Directors have considered the net asset value per Share as at 30 September 2007 of HK$0.012 in determining the Conversion Price. The Conversion Price of HK$0.70 per Conversion Share represents a premium of about 5,833% over the net asset value per Share as at 30 September 2007. The Directors consider that the Conversion Price is fair and reasonable and is in the interest of the Company and the Shareholder as a whole.
Redemption and purchase
Upon occurrence of an event of default set out in the conditions of the Convertible Bonds, a Bondholder shall have the right to require the Company to redeem in whole but not in part the entire outstanding principal amount of all of the Convertible Bonds held by such Bondholder by giving the Company a notice in writing. The date of redemption in respect of such outstanding amount shall be the date falling seven Business Days of the date of such notice.
The Company or any of its subsidiaries may at any time and from time to time purchase Convertible Bonds at any price as agreed between the Company or such subsidiary and the relevant Bondholder.
The Company shall redeem any Convertible Bond which remains outstanding on the Maturity Date at its principal amount.
Cancellation
Immediately upon redemption by the Company or purchase by the Company or any of its subsidiaries, the Convertible Bonds so redeemed or purchased shall be cancelled. Any Convertible Bond so cancelled shall not be re-issued or re-sold.
Adjustment to Conversion Price
The Conversion Price is subject to adjustments upon the occurrence of, among other matters, subdivision or consolidation of Shares, capitalization issues, rights issues and grant to Shareholders of options, warrants or other rights to subscribe for or purchase any Shares (depending on the subscription or purchase prices), which adjustments shall be certified by an approved merchant banker or the auditors of the Company.
Voting rights and ranking
Bondholders shall not be entitled to attend or vote at any general meeting of the Company. Upon issue and allotment, Conversion Shares shall rank in all respects pari passu with all Shares in issue as at the date of allotment and issue.
Listing
The Convertible Bonds will not be listed on the Stock Exchange or any other stock exchange. An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.
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Shareholding chart of the Company
The following chart sets out the percentage shareholding in the Company (i) as at the date of this announcement, and (ii) after issue of the Consideration Shares but before the issue of the Conversion Shares; and (iii) after issue of the Consideration Shares and issue of the Conversion Shares (assuming the Convertible Bonds are converted in full and the exercise of WS option), assuming that there is no other change in the issued share capital of the Company:
| As at the date of this announcement (in no. of Shares) | After issue of the Consideration Shares, and assuming the exercise of the WS Option, but before the issue of the Conversion Shares (Notes 4 and 5) (in no. of Shares) | After issue of the Consideration Shares, and assuming the exercise of the WS Option, and issue of Conversion Shares of the Convertible Bonds up to a cap of 29% of the entire issued Shares (Notes 4 and 5) (in no. of Shares) | After issue of the Consideration Shares, and assuming the exercise of the WS Option, and issue of Conversion Shares upon full conversion of the Convertible Bonds (Notes 4 and 5) (in no. of Shares) | |
|---|---|---|---|---|
| Nice Hill Investments Ltd. (note 1, 2) | 337,663,501 (16.5%) | 337,663,501 (13.2%) | 337,663,501 (11.8%) | 337,663,501 (3.4%) |
| So Wing Lok, Jonathan (note 2) | 34,301,900 (1.7%) | 34,301,900 (1.3%) | 34,301,900 (1.2%) | 34,301,900 (0.3%) |
| Vendor (and parties acting in concert with it) | 14,960,000 (0.7%) | 514,960,000 (20.2%) | 831,840,094 (29.0%) | 7,814,960,000 (79.3%) |
| Well Spread Consultants Ltd. (note 4) | 5,000,000 (0.2%) | 5,000,000 (0.2%) | 5,000,000 (0.1%) | |
| Public | 1,659,608,622 (81.1%) | 1,659,608,622 (65.0%) | 1,659,608,622 (57.9%) | 1,659,608,622 (16.8%) |
| Total: | 2,046,534,023 (100%) | 2,551,534,023 (100%) | 2,868,414,117 (100%) | 9,851,534,023 (100%) |
Notes:
- Nice Hill Investments Ltd. is a company incorporated in the British Virgin Islands with limited liability and wholly owned by Mr. Chin Wai Keung, Richard, the chairman and executive director of the Company.
- Mr. Chin Wai Keung, Richard and Mr. So Wing Lok, Jonathan are executive Directors.
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Under the conditions of the Convertible Bonds, no conversion right may be exercised, to the extent that following such exercise, a Bondholder (including the Vendor and its concert parties) and parties acting in concert with it, taken together, will directly or indirectly, control or interested in 29% or more of all the issued Shares. Therefore, a Bondholder (including the Vendor and its concert parties) is able to convert any Convertible Bonds to the extent that the aggregate shareholding of the Vendor (and its concert parties) in the Company will be 29% or less as a result of such conversion. Further, a Bondholder shall exercise the conversion rights attaching to the Convertible Bonds only if the allotment and issue of the Conversion Shares to such Bondholder pursuant to an exercise of the conversion right will not cause the Company to be in breach of the minimum public float requirement stipulated under Rule 11.23 of the GEM Listing Rules.
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Well Spread Consultant Ltd. is the holder of stock options, granted by the Company on 6 March 2007 and expiring on 5 March 2017, that allows it to subscribe for 6,000,000 Shares at a subscription price of HK$0.188 per Share. As at the date of this Announcement, Well Spread Consultant Ltd. has subscribed for 1,000,000 Shares and has the option to further subscribe for another 5,000,000 Shares prior to expiry on 5 March 2017. Other than these stock options and the Convertible Bonds, the Company does not have any other option, warrant or similar right to subscribe or purchase for shares in the capital of the Company.
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For the reason given in Note 3 above:
(a) the column showing the shareholding after issue of the Consideration Shares but before the issue of the Conversion Shares is the maximum extent of shareholding of the Vendor (and it concert parties) immediately after the issue of the Consideration Shares; and
(b) the column showing the shareholding after issue of the Consideration Shares and issue of Conversion Shares upon full conversion of the Convertible Bonds only, are for illustration purposes only.
- Each of Nice Hill Investments Ltd., Mr. Chin Wai Keung, Richard and Mr. So Wing Lok, Jonathan (including their respective concert parties) has confirmed that he or it is not acting in concert with the Vendor and its concert parties.
Dilution effect on Shareholders as a result of conversion of Convertible Bonds
The Conversion Shares (assuming the Convertible Bonds are exercised in full) represent (1) approximately 356.7% of the existing issued share capital of the Company; and (2) approximately 286.7% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares; and (3) approximately 74.1% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares and the Conversion Shares.
In view of the potential dilution effect on existing Shareholders on exercise of conversion rights attaching to the Convertible Bonds, for so long as any of the Convertible Bonds are outstanding, the Company will keep the Shareholders informed of the level of dilution and details of conversion as follows:
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(i) the Company will make a monthly announcement (the "Monthly Announcement") on the website of the Stock Exchange and the Company. Such announcement will be made on or before the fifth business day following the end of each calendar month and will include the following details in a table for form:
(a) whether there is any conversion of the Convertible Bonds during the relevant month. If yes, details of the conversion(s), including the conversion date, number of new Shares issued, conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;
(b) the outstanding principal amount of the Convertible Bonds after the conversion, if any;
(c) the total number of Shares issued pursuant to other transactions, including Shares issued pursuant to exercise of options under any share option scheme(s) of the Company;
(d) the total issued share capital of the Company as at the commencement and the last day of the relevant month; and
in addition to the Monthly Announcement, if the cumulative amount of new Shares issued pursuant to the conversion of the Convertible Bonds, reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Bonds (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will as soon as practicable but in any event no later than the fifth business day thereafter make an announcement on the website of the Stock Exchange and the Company including details as stated in (i) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Bonds (as the case may be), up to the date on which the total amount of Shares issued pursuant to the conversion amounts to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Bonds (as the case may be).
In addition, if the Company forms the view that any issue of Conversion Shares will trigger the disclosure requirements under Rule 17.10 of the GEM Listing Rules, then the Company is obliged to make such disclosure regardless of the issue of any announcement in relation to the Convertible Bonds as mentioned above.
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INFORMATION ON THE GROUP, THE VENDOR AND OTHERS
The Company is an investment holding company and its issued Shares are listed on GEM. The Group is principally engaged in the business of distributing home video entertainment – in both video compact disc and digital video disc formats – across popular genres to East Asian and Southeast Asian markets. In addition to home video distribution, the Company provides entertainment programs under license to other platforms including cable television. The Company's capability to license, co-produce and distribute animated feature films, animations and related merchandising has grown after it acquired Datewell Group in December 2006. It is currently the owner of the film library and rights to 150 episodes of exceptionally popular anime such as Pleasant Goat and Big Big Wolf. The Directors have no present intention to discontinue any of the existing principal business of the Group. Hence, the Directors do not consider the Acquisition constitutes a change of business of the Group. Instead, they are of the view that the Acquisition will lead to a diversification of the Group's business.
To the best knowledge of the Directors, the Vendor is an investment holding company incorporated in the British Virgin Islands.
The Directors expects to appoint person(s) with the relevant experience and expertise in the exploration, drilling, mining and trading of mineral resources in the management of the Group since the existing management of the Group does not have such relevant experience and expertise. The Directors currently do not expect there will be any change in the composition of the Board in connection with the Acquisition. The Company has identified various potential candidates with relevant experience in the mining, engineering or metallurgical industry and are in discussions with them to join the Group and provide technical support to its current management team.
None of the Vendor, the 8 individual Filipinos, the owner(s) of the remaining 60% of Mogan or their representatives will, on Completion, have any legal right to be appointed as the director(s) of the Group, save that the shareholders holding shares representing the remaining 60% of the share capital of Mogan, Holdco B and Holdco C will have the right to appoint up to two of the five directors on the board of directors of Mogan, Holdco B and Holdco C, respectively.
There is no relationship between the Vendor and the 8 Filipinos, who are existing shareholders of Mogan, other than the Mogan SPA between the Target Company and the 8 Filipinos, who are the existing shareholders of Mogan.
INFORMATION ON THE TARGET GROUP
The Target Company is a company incorporated in the British Virgin Islands with limited liability on 13 December 2007. The sole business activity of the Target Group is investment holding. The Target Company is owned as to 100% by the Vendor.
Based on the audited financial accounts from the date of incorporation to 31 March 2008, the Target Company had a turnover of HK$448,882, a profit from operations of HK$102,440 and an after-tax profit of HK$84,756 and had net assets of approximately HK$84,764.
Upon Completion, the Target Company will become a wholly owned subsidiary of the Company and its financial results will be consolidated with those of the Group.
The Target Company has entered into the Mogan SPA on 2 May 2008 to acquire an effective 64% interest in the share capital of Mogan, a corporation organized and existing under the laws of the Philippines on 16 January 2007.
Mogan has been established to principally engage in and carry on the business of operating mines; and of prospecting, exploration and of mining.
As disclosed in the Company’s announcement dated 21 April 2008, Mogan has claimed the following offshore and onshore mining tenements in the Philippines:
(1) an offshore mining tenement (EXPA-000110-VIII (the exploration mining application number allocated by the Philippine Mines and Geo-Science Bureau)) for magnetite placer deposits and other associated minerals in the Leyte Gulf region, covering an area of approximately 15,781.611 hectares along the municipalities of Tanauan, Tolosa, Dulag, Mayorga, MacArthur and Abuyog in Leyte Province;
(2) an offshore mining tenement (EXPA-000115-VIII (the exploration mining application number allocated by the Philippine Mines and Geo-Science Bureau)) for magnetite placer deposits and other associated minerals in the Leyte Gulf region, covering an area of approximately 25,312.2425 hectares along the municipalities of Basey and Marabut in Samar Province, and the municipality of Tacloban City in Leyte Province;
(3) an offshore mining tenement (EXPA-000099-VI (the exploration mining application number allocated by the Philippine Mines and Geo-Science Bureau)) for magnetite placer deposits and other associated minerals, covering an area of approximately 17,205.2259 hectares along the municipalities of Ilog, Suay, Himamaylan, Binalbagan and Hinigaran in Negros Occidental Province; and
(4) an offshore mining tenement (EXPA in progress) for magnetite placer deposits and other associated minerals, covering an area of approximately 15,535.,8295 hectares along the municipalities of Tandag and Claver in Surigao del Sur Province.
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The Mining Claims, once accepted by the Philippine Mines and Geo-Sciences Bureau and the respective EXPA(s) have subsequently been allocated, are essentially legal rights claimed by the holder. It is one of the prerequisites in the application for an exploration permit. The others being the application itself (MGB Form No. 5-1), location and topography maps, the relevant corporate documents (as it relates to the applicant company), formulation and design of the two (2) year exploration work program, two (2) year environmental work program, endorsement certification from the National Commission of Indigenous Peoples, certification from the Environmental Management and Community Relations, proof of financial capability, proof of technical competence, among others.
Under Philippine law, it is illegal to perform any exploration activities without an exploration permit. As such, there are no exploration activities being conducted on the Mining Claims as at the date of this Announcement.
As at the date of this Announcement, Mogan has already submitted an application for an exploration permit in respect of each of the Mining Claims. It is difficult to ascertain as to when the Philippine of Mines and Geo-Sciences Bureau will approve the relevant applications. The Directors, together with shareholders of Mogan, or the Philippine Subsidiary, endeavor to procure the approval of these documents at the earliest possible time.
Once approved, an exploration permit has an expiry date of two (2) years from the date of issuance and can be renewed for like periods of up to six (6) years. Subject to fulfillment of the terms and conditions of the exploration permit, an exploration permit can be converted into a number of different mining licenses for the development and exploitation of the applied mineral resources.
For the avoidance of doubt, it has been agreed that the following onshore mining tenements of Mogan for chromite, nickel laterite, nickeliferrous laterite and other associated mineral deposits will not form part of the assets of Mogan on Completion (the "Exclusion") and hence the Group will not acquire any interest in such mining tenements pursuant to the Acquisition Agreement:
(a) over 5,103.00 hectares of onshore mining tenements for chromite, nickel laterite and other associated mineral deposits situated within the Municipalities of Las Nieves and Esperanza in the Province of Agusan Del Norte and Agusan Del Suron;
(b) over 2,916.00 hectares of onshore mining tenements for chromite, nickel laterite and other associated mineral deposits situated within the Municipalities of Impasug-ong and Malitbog in the Province of Bukidnon; and
(c) over 190.8571 hectares of onshore mining tenement for nickeliferous laterite and other associated mineral deposits situated within the Municipalities of Basilisa and Cagdianao, Dinagat Island in the Province of Dinagat.
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It is contemplated that in light of the Exclusion, if Mogan is not used as the holding entity, the Philippine Subsidiary may be formed as a new entity which will hold the Mining Claims. The Philippines subsidiary's principal activities will be to engage in and carry on the business of operating mines; and of prospecting, exploration and of mining.
Based on the unaudited financial statements of Mogan for the year ended 31 December 2007, Mogan had a net loss of PHP 840,690 (approximately HK$168,138) and net assets of PHP 1,659,310 (approximately HK$331,862). Other than its Mining Claims, Mogan does not have any other substantial or material asset and liability. Further financial information of Mogan shall be provided to the Shareholders in the circular of the Company.
Upon Completion, the Target Company will become a wholly owned subsidiary of the Purchaser while Mogan or the Philippine Subsidiary will become an indirect subsidiary of the Company and their respective financial results will be consolidated with those of the Group.
THE REORGANIZATION
Shareholding structure of Mogan as at the date of this announcement:
*Note: To the best knowledge, information and belief of the Directors after having made all reasonable enquiries, these 8 individuals are Independent Third Parties and do not have any relationship with Nice Hill Investments Ltd, its ultimate beneficial owners and their respective associates.
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Shareholding structure of Mogan or Philippine Subsidiary immediately after completion of the Reorganization:
Shareholding structure of the Target Group immediately after Completion:
*Note: The remaining 60% shareholding in Holdco B and Holdco C will be held by various Independent Third Parties and such Independent Third Parties do not have any relationship with Nice Hill Investments Ltd., its ultimate beneficial owners and their respect associates.
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The Reorganization is being facilitated at the request of the Purchaser, to enable the Purchaser to acquire an effective 64% shareholding interest in Mogan, or in the Philippine Subsidiary, being in either case, the Philippine Corporation that is or will be the legal holder of the Mining Claims. As at the date of this Announcement, each of Holdco A, Holdco B and Holdco C is in the process of being set up. The principal business activities of Holdco A, Holdco B and Holdco C will be solely for the purpose of investment holding.
Pursuant to the 1987 Philippine Constitution, all lands of the public domain, water minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and other natural resources are owned by the state. The exploration, development and utilization of these natural resources are also under the full control and supervision of the state. However, the state has the option of entering into co-production, joint venture or production sharing arrangements with Philippine corporations or associations or Philippine citizens. At least 60% of the capital of a corporation or association must be directly held by Philippine citizens for such corporation or association to be considered a Philippine corporation or association.
REASONS FOR THE ACQUISITION
The Directors consider that the Group will be able to broaden its source of income by diversifying into the business of exploration, drilling, mining, and trading of natural resources, particularly the mineral magnetite in sand form. This is an unique opportunity for the Company to enter into one of the first major joint ventures after the Philippines, under Executive Order No. 270 – National Policy Agenda on Revitalizing Mining in the Philippines, dated January 16, 2004, and signed by President Gloria Macapagal Arroyo, lifted the temporary suspension on acceptance or processing of mining applications covering offshore areas in the country.
Magnetite is one of the four minerals used as the principal raw material in the production of steel. It is also the natural ore with the highest iron content. The potential of the Company's investment through the Acquisition is made that much more attractive given there is currently a strong emphasis being placed on natural resources in the worldwide economy, and the fact that China is now the world's largest producer and consumer of steel. The PRC's rapidly growing economy and their demand for steel products and magnetite as a raw material have already driven the worldwide contracted fine prices of about US$25 per ton in year 2001 to over US$130 per ton to date. In line with this upward pricing trend, according to a research report by a leading international financial institution, the spot prices for iron ore for Vale CIF, Chinese Spot, Indian CIF, and Australian CIF have ranged between US$123 to US$215 per ton in April 2008; while in an South China Morning Post article dated 7 May 2008, it was indicated that the spot iron ore price ranged between US$180 to US$190 per ton.
Currently, the sale and purchase of magnetite or iron ore is still very much a barter trade. Typically, the first large steel manufacturing companies to reach on an agreement with one of the top three leading producers, Vale, BHP Billiton and Rio Tinto, sets the benchmark price for the industry.
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In a news article dated 18 February 2008 by the Herald Tribune, Nippon Steel had announced that it and POSCO have agreed on paying Vale US$78.90 per ton for its Itabira fine ore (a lower quality product) in the year starting 1 April 2008. This represented an increase of 65% and the sixth annual increase in a row. According to a Reuters' news article dated 20 February 2008, Ilva had agreed to a 65% increase for the iron ore from Vale's Southern System mines (Tubarão fines) and a 66% increase for iron ore from Vale's massive Carajás mine in the Amazon. Thyssenkrupp had just earlier agreed to a similar deal. Baosteel, the first steel manufacturing company to finalize its negotiations with Vale in 2007, concluded its discussions on 23 February 2008 by agreeing to a price hike of 65% for iron ore from Vale's Southern System mines (US$118.98 FOB) and 71% iron ore from Vale's Carajás mine (US$125.17 FOB) when compared with 2007.
Iron ore prices are anticipated to continue to be on the rise, particularly if China's steel manufacturing companies allow a freight premium into this year's contract price when it concludes its discussions with BHP Billiton and Rio Tinto. The Australian producers are contending that, when shipping magnetite to China, Australia is geographically a lot closer to China than Brazil. China should therefore pay higher price given the shorter delivery time and savings in freight transportation cost. Based on the market information available to the Directors, it costs approximately US$60 per ton to ship from Brazil to China and approximately US$20 from Australia to China.
The Directors believe that PRC's considerable national demand for this raw material will continue to grow in line with her expanding economy in the near to medium future. The Directors therefore believe that the Acquisition will enable the Group to diversify into the business of exploring, drilling, mining and trading of mineral resources such as magnetite, which the Directors' view as an investment with good prospects over the medium to long term.
The Directors consider that the terms of the Acquisition (including the amount and the payment methods of the Acquisition Price) are fair and reasonable and in the interest of the Company and the Shareholders as a whole.
IMPLICATION UNDER THE GEM LISTING RULES
The Acquisition constitutes a very substantial acquisition for the Company under Chapter 19 of the GEM Listing Rules and is therefore subject to the reporting, announcement and shareholders' approval requirements under Chapter 19 of the GEM Listing Rules.
To the best of knowledge, information and belief of the Directors after having made all reasonable enquiry, the Vendor, its ultimate beneficial owner, and/or its associates hold approximately 14.96 million Shares, representing 0.7% of the total issued share capital of the Company as at the date of this Announcement. The Vendor, its ultimate beneficial owner, and/or its associates will therefore be required to abstain from voting
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on the resolutions, which will be conducted by way of poll, approving the Acquisition Agreement and the transactions contemplated thereunder at the EGM, should he/she/it hold any Shares on the date of the EGM.
SUSPENSION AND RESUMPTION OF TRADING
At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 2:30 p.m. on 2 May 2008 pending the release of this announcement. The Company has applied to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 19 May 2008.
GENERAL
A circular containing, among other information, (i) further details of the Acquisition, the Promissory Note, the Consideration Shares and the Convertible Bonds; and (ii) a notice of the EGM, will be despatched to the Shareholders as soon as practicable.
DEFINITIONS
In this announcement, the following expressions shall, unless the context requires otherwise, have the following meanings:
"Acquisition" the purchase of the Sale Shares by the Purchaser from the Vendor subject to the terms and conditions of the Acquisition Agreement.
"Acquisition Agreement" the conditional agreement entered into on 2 May 2008 between, among other persons, the Vendor and the Purchaser in relation to, among others, the Acquisition.
"Acquisition Price" the consideration for the entire Acquisition, being the aggregate sum of HK$5,700 million, particulars of which are set out in the paragraph headed "Acquisition Price" in this announcement.
"acting in concert" has the meaning ascribed to it in the Takeovers Code.
"associate(s)" has the meaning ascribed to it in the GEM Listing Rules.
"Baosteel" Baosteel Group Corporation Limited, a state owned enterprise that is listed on the Shanghai Stock Exchange and the PRC's largest iron and steel conglomerate.
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“BHP Billiton”
BHP Billiton Limited, a company listed on the Australian Securities Exchange and the London Stock Exchange and the world’s largest mining company.
“Board”
the board of Directors.
“Bondholder(s)”
a person in whose name a Convertible Bond is registered in the register of bondholders, and “holder” in relation to a Convertible Bond has the corresponding meaning.
“Business Day”
a day (other than Saturdays, Sundays and such other days during which a “black” rainstorm warning or a tropical cyclone warning signal number 8 or above is in force in Hong Kong), on which licensed banks in Hong Kong are open for business throughout their normal business hours.
“CIF”
Cost, Insurance, and Freight.
“Company”
Intelli-Media Group (Holdings) Limited, a company incorporated in the Cayman Islands with limited liability and whose Shares are listed on GEM.
“Completion”
completion of the Acquisition in accordance with the Acquisition Agreement.
“Completion Date”
the date on which Completion occurs.
“Connected Person(s)”
has the meaning ascribed to it under the GEM Listing Rules.
“Consideration Shares”
500,000,000 new Shares to be allotted and issued to satisfy the Acquisition Price in part.
“Conversion Price”
HK$0.70 per Conversion Share (subject to adjustment).
“Conversion Shares”
7,300,000,000 new Shares falling to be issued upon exercise by the Bondholder(s) of the conversion rights attached to the Convertible Bonds.
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“Convertible Bonds” up to US$655,128,205 (the U.S. Dollar equivalent of HK$5,110 million) zero coupon convertible bonds, comprising the Tranche A Bonds and the Tranche B Bonds, due on the 10th anniversary of the Completion Date, to be created by an instrument to be executed by the Company by way of a deed poll and for the time being outstanding or, as the context may require, any number of them.
“Director(s)” director(s) of the Company.
“EGM” an extraordinary general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving: (i) the Acquisition Agreement and the transactions contemplated thereunder; (ii) the grant of specific mandates to the Directors for the issue of the Promissory Note and the Consideration Shares; and (iii) the issue of the Convertible Bonds and of the Conversion Shares upon conversion thereof.
“FOB” Freight on Board.
“GEM” the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited.
“GEM Listing Committee” has the meaning ascribed to it in the GEM Listing Rules.
“GEM Listing Rules” the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited.
“Group” collectively, the Company and its subsidiaries from time to time.
“Holdco A” a company to be organized and established under the laws of the British Virgin Islands and acceptable to the Purchaser to own 40% of the outstanding capital stock of Mogan. Holdco A will be an investment holding company and will be owned, after completion of Reorganization but before Completion, by the one or more of the 8 Filipinos, their associates or their respective nominees, all of which are independent third parties.
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“Holdco B”
a corporation to be organized and existing under the laws of the Philippines and acceptable to the Purchaser to own 30% of the outstanding capital stock of Mogan. Holdco B will be an investment holding company and will be owned, after completion of Reorganization but before Completion, by the one or more of the 8 Filipinos, their associates or their respective nominees, all of which are independent third parties.
“Holdco C”
a corporation to be organized and existing under the laws of the Philippines and acceptable to the Purchaser to own 30% of the outstanding capital stock of Mogan. Holdco C will be an investment holding company and will be owned, after completion of Reorganization but before Completion, by the one or more of the 8 Filipinos, their associates or their respective nominees, all of which are independent third parties.
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC.
“Ilva”
Ilva S.p.A.
“Independent Third Party(ies)”
person(s) who (i) is/are not connected person(s) of the Company and (ii) is/are independent of and not connected with the Company, any of the directors, chief executive, management shareholders, and substantial shareholders of the Company or any of its subsidiaries, or any of their respective associates.
“Last Trading Day”
2 May 2008, being the trading day during which trading of the Shares on GEM was suspended pending the issue of this announcement.
“Long Stop Date”
30 September 2008 or such later date as the Purchaser may at its sole and absolute discretion determine.
“Material Adverse Change”
in relation to any person, any change (or effect) which has a material and adverse effect on the financial position, business or operations of such person.
“Maturity Date”
the date falling on the 10th anniversary of the Completion Date.
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“Mining Area”
the areas covered by the offshore mining tenements, namely i) EXPA-000110-VIII which includes an area of approximately 15,781.611 hectares within the Leyte Gulf region along the municipalities of Tanauan, Tolosa, Dulag, Mayorga, MacArthur and Abuyog in Leyte Province; ii) EXPA-000115-VIII which includes an area of approximately 25,312.2425 hectares within the Leyte Gulf region along the municipalities of Basey and Marabut in Samar Province, and the municipality of Tacloban City in Leyte Province; iii) EXPA-000099-VI which includes an area of approximately 17,205.2259 hectares within the Panay Gulf region along the municipalities of Ilog, Suay, Himamaylan, Binalbagan and Hinigaran in Negros Occidental Province; and an area of approximately 15,535.8295 hectares along the municipalities of Tandag and Claver in Surigao del Sur Province, claimed by Mogan as described in “Information on the Target Group” and which are to form part of the assets of the Target Group.
“Mining Claims”
all of the rights, title and interests of Mogan in and to magnetite and other minerals located in the Mining Area.
“Mogan”
Mt. Mogan Resources and Development Corporation, a corporation organized and existing under the laws of the Philippines, and the legal holder of the Mining Claims.
“Mogan SHA”
the relevant shareholders’ agreements to be entered on the date of completion of the Mogan SPA between, among other persons, the Target Company and the other shareholders of Mogan, Holdco B and Holdco C (as the case may be), to regulate their relationship as shareholders of Mogan, Holdco B and Holdco C upon completion of the Target Company’s acquisition of the 64% indirect interest in Mogan under the Mogan SPA.
“Mogan SPA”
the relevant sale and purchase agreement entered into on May 2, 2008 between the Target Company and the existing shareholders of Mogan in connection with the Reorganization and the Target Company’s acquisition of a 64% indirect equity shareholding interest in Mogan, with a long-stop date of 30 September 2008.
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“MOU”
the non-legally binding memorandum of understanding dated 8 April 2008 entered into between the Purchaser, the Target Company and the Vendor setting out the preliminary understanding in relation to the Acquisition.
“Nippon Steel”
Nippon Steel Corporation, Japan’s largest steel company and the world’s second largest steel producer.
“POSCO”
Pohang Iron and Steel Company, South Korea’s largest steel company and the world’s third largest steel producer.
“Philippine Subsidiary”
Mogan (or such other corporation to be organized and existing under the laws of the Philippines and acceptable to the Purchaser to be the legal holder of the Mining Claims).
“PRC”
the People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan.
“Promissory Note”
the HK$200 million promissory note to be issued by the Company to the Vendor to satisfy the Acquisition Price in part.
“Purchaser”
Black Sand Enterprises Limited, a company incorporated in Hong Kong and a wholly owned subsidiary of the Company.
“Reorganization”
the reorganization, as contemplated under the Mogan SPA, of the shareholding of Mogan, which is currently individually held by 8 Filipinos, into a shareholding structure whereby Mogan’s equity share capital will be 40% directly held by Holdco A, and the remaining 60% to be held as to 30% each by Holdco B and Holdco C, or such other structure acceptable to the Purchaser. The proposed shareholding structure of Mogan after the Reorganization is set out in the paragraph headed “The Reorganization” in this announcement.
“Rio Tinto”
Rio Tinto Group plc, a company listed on the Australian Securities Exchange, the London Stock Exchange and the New York Stock Exchange.
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"Sale Shares"
such number of ordinary shares of US$1.00 each as shall represent the entire issued share capital in the Target Company immediately before Completion.
"SFC"
Securities and Futures Commission of Hong Kong.
"Share(s)"
share(s) of HK$0.01 each in the capital of the Company.
"Shareholder(s)"
holder(s) of Share(s).
"Stock Exchange"
The Stock Exchange of Hong Kong Limited
"Substantial Shareholder(s)"
has the meaning ascribed to it in the GEM Listing Rules.
"Takeovers Code"
the Hong Kong Code on Takeovers and Mergers.
"Target Company"
First Pine Enterprises Limited, a company incorporated in the British Virgin Islands and owned as to 100% by the Vendor.
"Target Group"
the Target Company, Holdco A, Holdco B, Holdco C and Mogan or Philippine Subsidiary, if applicable.
"Technical Advisor"
Marine GeoSolutions (Pty.) Ltd (or such other technical advisor appointed by the Purchaser from time to time), an Independent Third Party.
"Tranche A Bonds"
the series of Convertible Bonds so designated, in the denomination of US$100,000 each, in registered form comprising a total principal amount of up to US$425,833,333, to be issued by the Company in accordance with the terms of the Acquisition Agreement.
"Tranche B Bonds"
the series of Convertible Bonds so designated, in the denomination of US$100,000 each, in registered form comprising a total principal amount of up to US$229,294,872, to be issued by the Company in accordance with the terms of the Acquisition Agreement.
"ThyssenKrupp"
ThyssenKrupp AG.
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“Vale”
Companhia Vale do Rio Doce, a public company by the Brazilian Federal Government and the world’s largest exporter of iron ore.
“Vendor”
Kesterion Investment Limited, a company incorporated in the British Virgin Islands with limited liability.
“WS Option”
the outstanding stock options granted by the Company to Well Spread Consultant Ltd. in respect of 5,000,000 Shares. Further details are set out in the section “Shareholding chart of the Company”.
“HK$”
Hong Kong dollar(s), the lawful currency of Hong Kong.
“US$”
United States dollar(s), the lawful currency of the United States of America.
“%”
means per cent.
By order of the Board
Intelli-Media Group (Holdings) Limited
Kwong Wai Ho, Richard
Executive Director
Hong Kong, 19 May 2008
As at the date of this announcement, the Board comprises four executive Directors, Mr. Chin Wai Keung, Richard, Mr. So Wing Lok, Jonathan, Ms. Wong Hoi Yan, Audrey, Mr. Kwong Wai Ho, Richard, and four independent non-executive Directors, Mr. Chow Shiu Ki, Mr. Shum Man Ching, Mr. Lai Kai Jin, Michael, and Mr. Ng Yat Cheung, JP.
This announcement, for which the directors of the Company (the “Directors”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.
This announcement will remain on the page of “Latest Company Announcement” on the GEM website for at least 7 days from the date of its posting.