Hephaestus Holdings Limited — M&A Activity 2016

Jun 17, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

UNION ASIA ENTERPRISE HOLDINGS LTD

萬亞企業控股有限公司

(Formerly known as Pan Asia Mining Limited)

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8173)

DISCLOSABLE TRANSACTION: DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET

THE DISPOSAL

The Board announces that on 17 June 2016 (after trading hours), the Vendor (a direct wholly-owned subsidiary of the Company) and the Purchaser entered into the SPA. Pursuant to the SPA, the Purchaser has agreed to acquire and the Vendor has agreed to sell the Sale Shares at the Consideration of HK$80,000, which shall be satisfied by cash within 10 days after Completion.

As at the date of this announcement, the Target is an indirect wholly-owned subsidiary of the Company and is an investment holding company. The Target Group is principally engaged in trading of bottled mineral water and tea products in the PRC. Upon Completion, the Company will cease to hold any equity interest of the Target Group and the results of the Target Group will no longer be consolidated into the consolidated financial statements of the Group.

GEM LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios for the Disposal exceeds 5% but is less than 25%, the Disposal constitutes a discloseable transaction for the Company and is subject to the disclosure and announcement requirements under Chapter 19 of the GEM Listing Rules.

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INTRODUCTION

The Board announces that on 17 June 2016 (after trading hours), the Vendor (a direct wholly-owned subsidiary of the Company) and the Purchaser entered into the SPA. Pursuant to the SPA, the Purchaser has agreed to acquire and the Vendor has agreed to sell the Sale Shares at the Consideration of HK$80,000, which shall be satisfied by cash within 10 days after Completion.

THE SPA

The principle terms of the SPA are as follows:

Date

17 June 2016 (after trading hours)

Parties

1. The Vendor: Black Sand Enterprises Limited, a direct wholly-owned subsidiary of the Company
2. The Purchaser: Nick Chua Chee Ming

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Purchaser is an Independent Third Party.

Assets to be disposed of

The Purchaser has agreed to acquire and the Vendor has agreed to sell the Sale Shares, representing the entire issued share capital of the Target.

Consideration

The consideration for the sale and purchase of the Sale Shares shall be HK$80,000. The Consideration shall be satisfied by the Purchaser to the Vendor within 10 days after Completion by cash.

Basis of the Consideration

The Consideration was determined after arm’s length negotiations between the Purchaser and the Vendor with reference to the unaudited consolidated net liability value of the Target Group of approximately HK$9,205,000 as at 31 March 2016 and the reasons and benefit for the Disposal as stated under the section headed “Reasons and Benefit for the Disposal” below.

In view of the above, the Board considers that the terms and conditions (including the Consideration) of the SPA are fair and reasonable and on normal commercial terms and in the interest of the Company and the Shareholders as a whole.

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Completion

Completion of the SPA shall take place upon the SPA becoming effective after signing by the Purchaser and the Vendor and obtaining relevant approval from relevant PRC governmental authorities.

INFORMATION ON THE TARGET GROUP

The Target is a company incorporated in the PRC with limited liability and is an indirect wholly-owned subsidiary of the Company. The Target is principally engaged in investment holding and it has a subsidiary, being Aquaterra.

Aquaterra is a company incorporated in the PRC and a wholly-owned subsidiary of the Target. Aquaterra is principally engaged in trading of bottled mineral water and tea products in the PRC and it is the operating arm of the Target Group.

Set out below are the consolidated financial information of the Target Group as prepared in accordance with Hong Kong Accounting Standards for the year ended 31 March 2015 and 2016 respectively:

	Year ended 31 March 2015 (Audited) HK$'000	Year ended 31 March 2016 (Unaudited) HK$'000
Turnover	7,024	519
Net (loss) before taxation	(5,004)	(21,495)
Net (loss) after taxation	(5,004)	(21,495)

According to the unaudited financial information of the Target as at 31 March 2016, the Target Group recorded an unaudited net liabilities of approximately HK$9,205,000.

Upon Completion, the Company will cease to hold any equity interest of the Target Group and the results of the Target Group will no longer be consolidated into the consolidated financial statements of the Group.

For illustrative purpose, based on the unaudited consolidated net liability value of the Target Group as at 31 March 2016 of approximately HK$9,205,000; and (ii) the Consideration of HK$80,000, it is estimated that the Group will record a gain of approximately HK$9,035,000 (before taxation) from the Disposal after deducting the expenses attributable to the Disposal of approximately HK$250,000. Shareholders should note that the actual amount of the gain or loss on the Disposal to be recognized in the consolidated financial statements of the Company depends on the net liability/net asset value of the Target Group as at the date of Completion and therefore may be different from the amount mentioned above.

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REASONS AND BENEFIT FOR THE DISPOSAL

The Group is principally engaged in exploration and exploitation of mineral resources and trading of coals, metals, bunker fuel and beverages.

The Target Group is principally engaged in trading of bottled mineral water and tea products in the PRC.

The business environment for the trading of bottled mineral water and tea products in the PRC engaged by Aquaterra has been competitive in recent years. Aquaterra had recorded negative operating results for the financial years ended 31 March 2015 and 2016. In this connection, the Board intends to realize the investment in the Target Group rather than devoting further resources to the Target Group which is loss making. It is expected that the net proceeds from the Disposal will be used for general working capital of the Group.

Based on the above, the Directors consider that the terms of the Disposal are fair and reasonable, and the Disposal is in the interests of the Company and the Shareholders as a whole.

GEM LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios for the Disposal exceeds 5% but is less than 25%, the Disposal constitutes a discloseable transaction for the Company and is subject to the disclosure and announcement requirements under Chapter 19 of the GEM Listing Rules.

DEFINITIONS

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

"Aquaterra"
Aquaterra China Trading (Shanghai) Co., Limited, a company incorporated in the PRC and a wholly owned subsidiary of the Target

"associate(s)"
has the meaning ascribed thereto under the GEM Listing Rules

"Board"
the board of Directors

"Company"
Union Asia Enterprise Holdings Limited 萬亞企業控股有限公司, formerly known as Pan Asia Mining Limited 寰亞礦業有限公司, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on GEM (stock code: 8173)

"Completion"
completion of the sale and purchase of the Sale Shares in accordance with the SPA

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“connected persons” has the meaning ascribed thereto under the GEM Listing Rules

“Consideration” the consideration of HK$80,000 payable by the Purchaser for the disposal of the Sale Shares under the SPA

“Director(s)” director(s) of the Company

“Disposal” the proposed disposal of the Sale Shares pursuant to the terms and conditions of the SPA

“GEM” the Growth Enterprise Market of the Stock Exchange

“GEM Listing Rules” the Rules Governing the Listing of the Securities on GEM of the Stock Exchange

“Group” the Company and its subsidiaries

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Independent Third Party(ies)” third party (parties) independent of and not connected with the Company and its connected persons

“PRC” the People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, Taiwan and the Macau Special Administrative Region of the People’s Republic of China

“Purchaser” Nick Chua Chee Ming

“Sale Shares” the entire issued share capital of the Target

“Share(s)” ordinary share(s) of HK$0.08 each in the issued share capital of the Company

“Shareholder(s)” holder(s) of the Share(s)

“SPA” the agreement to acquire the Sale Shares entered into between the Purchaser and the Vendor dated 17 June 2016

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Target” Pan Asia Mining (Beijing) Company Limited, a company incorporated in the PRC with limited liability and is an indirect wholly-owned subsidiary of the Company

“Target Group” Target together with Aquaterra

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“Vendor”

Black Sand Enterprises Limited, a company incorporated in Hong Kong with limited liability and is a direct wholly-owned subsidiary of the Company

“%”

per cent

By order of the Board
Union Asia Enterprise Holdings Limited
Yip Man Yi
Chairman

Hong Kong, 17 June 2016

As at the date of this announcement, the Board comprises two executive Directors, Ms. Yip Man Yi and Mr. Shiu Chi Tak, Titus, two non-executive Directors, Mr. Liang Tongwei and Mr. Wong Chi Man, and six independent non-executive Directors, Mr. Chu Hung Lin, Victor, Mr. Tong Wan Sze, Mr. Fung Kwok Leung, Dr. Wan Ho Yuen, Terence, Mr. Li Kwok Chu and Mr. Lau Shu Yan.

This announcement, for which the Directors jointly and individually accept full responsibility, including the particulars given in compliance with the GEM Listing Rules 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, the information in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

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 and on the website of the Company www.unionasiahk.com.