JD Logistics, Inc. — M&A Activity 2001

Jan 15, 2001

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy 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.

	MIDAS PRINTING GROUP LIMITED
(Incorporated in the Cayman Islands with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTION

Proposed acquisition by the Company of an interest in
an auction and trading company

On 12th January, 2001, the Company entered into the Sale and Purchase Agreement with the Vendor and Mrs. Siu to acquire 20 per cent. interest in Treasure Auctioneer from the Vendor at a consideration of HK$68 million which will be satisfied as to HK$52 million in cash and as to HK$16 million by way of issue and allotment of the Consideration Shares.

Treasure Auctioneer is engaged in the provision of a comprehensive range of specialist auction services in Hong Kong and in trading business selling mostly jewellery and watches to retailers and consumers.

Pursuant to the terms of the Sale and Purchase Agreement, the Option Agreement will be signed on Completion pursuant to which the Vendor will grant the Option to the Purchaser to acquire up to an additional 15 per cent. interest in Treasure Auctioneer from the Vendor at a consideration of HK$340 per share in Treasure Auctioneer (or an aggregate consideration of HK$51 million assuming full exercise of the Option) which will be satisfied in cash.

The Consideration Shares will represent (i) approximately 11.0 per cent. of the existing issued share capital of the Company; and (ii) approximately 9.9 per cent. of the issued share capital of the Company as enlarged by the issue of the Consideration Shares.

Completion of the Sale and Purchase Agreement is conditional upon the conditions set out below. The terms and conditions of the Sale and Purchase Agreement have been arrived at after arm's length negotiations between the parties thereto and are on normal commercial terms. The Board considers such terms and conditions to be fair and reasonable so far as the Shareholders are concerned and are in the interests of the Company.

The Vendor is indirectly owned as to 66 per cent. by Mr. Chuang and 34 per cent. by Mrs. Siu. Mr. Chuang, Mrs. Siu and their respective Associates in aggregate hold approximately 48.95 per cent. in the issued share capital of Chuang's Consortium International Limited which, in turn, holds approximately 63.86 per cent. of the issued share capital of China Cyberworld Limited. China Cyberworld Limited holds approximately 16.43 per cent. in the issued share capital of the Company and 25 per cent. in the issued share capital of Treasure Auctioneer. Mr. Chuang, Mrs. Siu and their respective Associates also hold in aggregate approximately 5.48 per cent. of the issued share capital of the Company. Under the Listing Rules, the Acquisition constitutes a discloseable and connected transaction for the Company. Accordingly, the Agreements and the transactions contemplated under the Agreements are conditional, among other things, upon the approval of the Independent Shareholders at the EGM. Mr. Chuang, Mrs. Siu and their Associates will abstain from voting in respect of their shareholding interests in the Company at the EGM to approve the Agreements.

A circular containing details of the terms of the Agreements, advice from the independent board committee of the Company and the independent financial adviser respectively and a notice of the EGM to approve the Agreements will be despatched to the Shareholders as soon as practicable.

THE AGREEMENTS

1. The Sale and Purchase Agreement

Date	:	12th January, 2001
Parties
Vendor	:	Impressive Profit
Purchaser	:	the Company
Guarantor	:	Mrs. Siu, who has undertaken to procure the due performance of the obligations of the Vendor under the Sale and Purchase Agreement
Assets to be acquired	:	200,000 shares in Treasure Auctioneer, representing 20 per cent. of its issued share capital

Consideration and payment terms:

The consideration for the acquisition of the Sale Shares was HK$68 million which was arrived at after arm's length negotiations and represented a discount of approximately 6.3 per cent. with reference to the attributable fair market value of 20 per cent. equity interest in the business enterprise of Treasure Auctioneer of HK$72.6 million as of 15th December, 2000 as valued by the Valuer, an independent valuer. The consideration will be satisfied as to HK$52 million in cash and HK$16 million by way of issue and allotment of the Consideration Shares at an issue price of HK$0.40 per Consideration Share.

The issue price of HK$0.40 per Consideration Share represents:--

(i) a premium of approximately 31.15 per cent. to the closing price of HK$0.305 per Share on 12th January, 2001, being the date of the Sale and Purchase Agreement; and

(ii) a premium of approximately 32.45 per cent. to the average closing price of HK$0.302 per Share for the ten trading days up to and including 12th January, 2001.

Based on 363,928,068 Shares in issue as at the date of this announcement, the Consideration Shares represent (i) approximately 11.0 per cent. of the existing issued share capital of the Company; and (ii) approximately 9.9 per cent. of the issued share capital of the Company as enlarged by the issue of the Consideration Shares. The Consideration Shares, upon their issue, will rank pari passu in all respects with the existing issued Shares. Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

Undertakings

Pursuant to the Sale and Purchase Agreement, the Vendor will on Completion undertake unconditionally to the Purchaser that, during a period of six months from the date of Completion, (i) it shall remain as the beneficial owner of all Consideration Shares and shall not sell, transfer, assign or otherwise dispose of or grant any options over any of the Consideration Shares (or any interest or right therein or thereof ) unless with the prior consent of the Company; and (ii) it shall not create any encumbrance, lien, pledge, charge or other security interest in or over any of the Consideration Shares (or any interest or right therein or thereof).

Conditions of the Sale and Purchase Agreement

Completion is conditional upon, inter alia, the following:--

(i) the obtaining of all consents and approvals of any relevant governmental authorities in Hong Kong, the Cayman Islands and the British Virgin Islands or elsewhere as may be considered necessary by the Purchaser for the purposes of the Agreements and/or the transactions contemplated thereunder;

(ii) the granting of listing of and permission to deal in the Consideration Shares by the Stock Exchange;

(iii) all necessary shareholders' approvals of the Agreements and/or the transactions contemplated therein required by the Stock Exchange and under the Listing Rules having been obtained by the Company;

(iv) the valuation by the Valuer of the fair market value of a 35 per cent. equity interest in the business enterprise of Treasure Auctioneer as at 15th December, 2000 is not less than HK$127,000,000;

(v) the receipt by the Company of legal opinion issued by the lawyers practising in the British Virgin Islands, in form and substance satisfactory to the Company, regarding Treasure Auctioneer and its subsidiary; and

(vi) all warranties of the Vendor contained in the Sale and Purchase Agreement remaining true and correct at all times as from the signing of the Sale and Purchase Agreement up to and until Completion.

If any of the conditions of the Sale and Purchase Agreement (except for those required to be fulfilled upon Completion ) have not been fulfilled (or waived by the Company where applicable) on or before 5:00 p.m. on 30 April, 2001, the Sale and Purchase Agreement shall (unless the Vendor and the Company otherwise agree) terminate whereby all rights and obligations of the parties to the Sale and Purchase Agreement shall cease to have effect except for any accrued rights and obligations of the said parties.

As at the date of this announcement, the condition set out in paragraph (iv) above has been fulfilled.

Completion of the Sale and Purchase Agreement

Completion will fall on the third business day after all the conditions of the Sale and Purchase Agreement have been fulfilled (or waived by the Company where applicable) or on such other date as the parties thereto may agree.

2. The Option Agreement

Date	:	To be entered into on and conditional upon Completion
Parties
Grantor	:	Impressive Profit
Grantee	:	the Company
Guarantor	:	Mrs. Siu, who has undertaken to procure the due performance of the obligations of Impressive Profit under the Option Agreement
The Option	:	Impressive Profit granted the Option to the Company for a nominal consideration of HK$1. The Option was granted as part of the terms of the Acquisition and the payment of a nominal consideration, together with other terms of the Acquisition, was considered by the Directors to be on normal commercial terms. Pursuant to the Option, the purchaser has the right to acquire up to 150,000 shares in Treasure Auctioneer (and all shares and other securities in Treasure Auctioneer arising or deriving from the said 150,000 shares) for a consideration of HK$340 per share (or HK$51 million in aggregate assuming full exercise of the Option). The Option Shares represent 15 per cent. of the total issued share capital of Treasure Auctioneer as at the date of the Option Agreement.
Option period	:	The Option is exercisable at any time during the period commencing from the date of Completion and ending on the earlier of (1) the business day immediately prior to the second anniversary date of Completion or (2) the business day immediately prior to the date on which any shares or other securities in Treasure Auctioneer are offered to the public for subscription or purchase.
Assets to be acquired upon exercise of the Option	:	150,000 shares in Treasure Auctioneer (and all shares and other securities in Treasure Auctioneer arising or deriving from the said 150,000 shares), representing 15 per cent. of its issued share capital as at the date of the Option Agreement. Exercise of the Option shall be a minimum of 50,000 shares or multiple(s) thereof. Upon full exercise of the Option, Impressive Profit will not have any shares in Treasure Auctioneer.
Consideration	:	HK$340 per share in Treasure Auctioneer (or HK$51 million in aggregate assuming full exercise of the Option) in cash which was arrived at after arm's length negotiations between the parties thereto and represented a discount of approximately 6.3 per cent. with reference to the attributable fair market value of a 15 per cent. equity interest in the business enterprise of Treasure Auctioneer of HK$54.4 million as of 15th December, 2000 as valued by the Valuer, an independent valuer.

SHAREHOLDING STRUCTURE

Changes in shareholding structure of the Company and Treasure Auctioneer:

Note:

1 Existing shareholding

2 Shareholding upon Completion

3 Shareholding assuming full exercise of the Option

INFORMATION OF TREASURE AUCTIONEER

Treasure Auctioneer is principally engaged in the provision of a comprehensive range of auction services to collectors, museums, galleries and dealers of fine arts, antiques and collectibles in Hong Kong. It is also engaged in the trading business, selling mostly jewellery and watches to retailers and consumers on consignment basis. It owns and operates an auction and trading house located in Central, Hong Kong. Treasure Auctioneer is targeting the mid-tier and premium market and offers products in numerous collecting categories, amongst them ceramics, jadelite, calligraphy, paintings, antique, furniture, jewellery, watches, clocks, works of art and other collectibles. With its in-depth knowledge and expertise of the management, Treasure Auctioneer has more than 2,700 customers as at 31st December, 2000. Since its commencement of operation in July 1999, Treasure Auctioneer had achieved sales of over HK$46,000,000 and has successfully completed 10 physical auction transactions offering more than 5,700 lots of products for sale. The products offered by Treasure Auctioneer are sourced around the world and selected by a specialist team of Treasure Auctioneer.

To complement its auction activities carried out at its specialized auction house, Treasure Auctioneer has also developed its own web-site, which is a unique bilingual, English and Chinese portal (www.treasure-auction.com), in early 2000. This web-site enhances the existing business of Treasure Auctioneer by providing an interactive platform to facilitate a real time link to the physical auction held in a venue, allowing bidders to participate in the physical auction through the use of computers under the on-line auction mode. In addition, it also expands the reach of Treasure Auctioneer's customers by allowing a round the clock, non-stop and continuous bidding for selective items listed on the live auction mode. Since the launch of this additional web channel of conducting auction and trading businesses, Treasure Auctioneer has offered more than 600 lots of products for sale through live auction and has arranged more than 2,400 lots of property for real time bidding through on-line auction at seven physical venue auctions.

In view of the growing popularity and reputation of Treasure Auctioneer among its customers and in the industry, Treasure Auctioneer has plans to broaden its revenue base by the development of trading and additional auction services for a wide categories of valuable properties, such as diamonds and jewellery, and participating in real estate auctions in the form of joint venture partnership. With its expertise and professionalism in the business, Treasure Auctioneer also provides services to international auction houses, responsible for the receipt and delivery of watches and carpets for auction, collection and payment of auction proceeds and arrangement for physical auction held in Hong Kong.

Based on the unaudited consolidated management accounts of Treasure Auctioneer for the period from its incorporation in July 1999 up to and including 30th September, 2000, the unaudited net loss before taxation of Treasure Auctioneer for the period was approximately HK$3.7 million. As at 30th September, 2000, the unaudited consolidated net assets of Treasure Auctioneer amounted to approximately HK$6.3 million.

The board of directors of Treasure Auctioneer consists of eight directors. Mr. Chuang is a director of Treasure Auctioneer. Upon Completion of the Sale and Purchase Agreement, the Company will appoint up to two directors into the board of Treasure Auctioneer. It is expected that none of the existing directors of Treasure Auctioneer will resign on completion of the Sale and Purchase Agreement.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in commercial printing, book printing and packaging printing.

As stated in the Company's annual report for the year ended 31st December, 1999, the Group plans to diversify its existing offline business into online business and will explore new opportunities to invest in other online business. The Directors consider that the Acquisition will allow the Company to capture an opportunity to diversify its business, broaden its revenue base and expand its business into an operative auction and trading business and are expected to have high growth potential. As Treasure Auctioneer maintain business contacts with museums, galleries and dealers who publish high quality catalogues and albums, the Directors are also of the opinion that the Acquisition could provide the Company with an opportunity to expand the client base of its printing business.

The terms of the Agreements were arrived at after arm's length negotiations between the parties thereto and are on normal commercial terms. The Directors consider that the Acquisition is in the interests of the Company and that the terms of the Agreements are fair and reasonable so far as the Independent Shareholders are concerned.

GENERAL

At present, Mr. Chuang, Mrs. Siu and their respective Associates in aggregate hold approximately 48.95 per cent. of the issued share capital of Chuang's Consortium International Limited which, in turn, holds approximately 63.86 per cent. of the issued share capital of China Cyberworld Limited. China Cyberworld Limited is a substantial shareholder of the Company and holds approximately 16.43 per cent. of the issued share capital of the Company and 25 per cent. in the issued share capital of Treasure Auctioneer. Mr. Chuang, Mrs. Siu and their respective Associates also hold in aggregate approximately 5.48 per cent. of the issued share capital of the Company. Under the Listing Rules, the Acquisition constitutes a discloseable and connected transaction for the Company. Accordingly, the Sale and Purchase Agreement and the Option Agreement and the transactions contemplated thereunder, are conditional, among other things, upon the approval of the Independent Shareholders at the EGM. Mr. Chuang, Mrs. Siu and their respective Associates will abstain from voting in respect of their shareholding interests in the Company at the EGM to approve the Agreements and the transactions contemplated thereunder.

An independent board committee will be appointed by the Board for the purpose of considering the Agreements. An independent financial adviser will be appointed as the independent financial adviser to the independent board committee to advise the independent board committee in this regard.

A circular, containing the details of the Sale and Purchase Agreement and the Option Agreement, the recommendation of the independent board committee, the advice of the independent financial adviser and a notice to convene the EGM to approve the Agreements and the transactions contemplated therein (including the issue of the Consideration Shares), will be despatched to the Shareholders as soon as practicable.

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

“Acquisition”	the acquisition by the Purchaser from the Vendor of the Sale Shares representing 20 per cent. interest in the issued share capital of Treasure Auctioneer pursuant to the Sale and Purchase Agreement and the acquisition by the Purchaser from the Vendor of the Option Shares representing 15 per cent. interest in the issued share capital of Treasure Auctioneer upon full exercise of the Option pursuant to the Option Agreement
“Agreements”	the Sale and Purchase Agreement and the Option Agreement
“Associate(s)”	meanings as ascribed pursuant to the Listing Rules
“Board”	board of Directors
“Company”	Midas Printing Group Limited, a limited liability company incorporated in the Cayman Islands, the shares of which are listed on the Stock Exchange
“Completion”	completion of the sale and purchase of the Sale Shares under the Sale and Purchase Agreement
“Consideration Share(s)”	40,000,000 new Share(s) to be issued and allotted by the Company to the Vendor (or its nominee) under the Sale and Purchase Agreement
“Director(s)”	the director(s) of the Company
“EGM”	an extraordinary general meeting of the Company to be convened to approve, amongst other things, the Agreements (including the issue of the Consideration Shares) and the transactions contemplated thereunder (or any adjournment thereof)
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Impressive Profit” or “Vendor”	Impressive Profit Investments Limited, a company incorporated in the British Virgin Islands and indirectly owned as to 66 per cent. by Mr. Chuang and 34 per cent. by Mrs. Siu
“Independent Shareholders”	Shareholders (other than Mr. Chuang, Mrs. Siu and their respective Associates) as shall be entitled to attend and vote at the EGM to approve the Agreements and the transactions contemplated therein (or any adjournment thereof)
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Mr. Chuang”	Mr. Alan Chuang Shaw Swee
“Mrs. Siu”	Mrs. Alice Siu Chuang Siu Suen
“Option”	an option granted by the Vendor to the Purchaser to acquire up to all of the Option Shares in accordance with the terms of the Option Agreement
“Option Agreement”	the option agreement to be entered into on Completion between the Company, the Vendor and Mrs. Siu in relation to the grant of option to acquire the Option Shares
“Option Shares”	150,000 shares in Treasure Auctioneer and all share and other securities in Treasure Auctioneer arising or deriving from the said 150,000, representing 15 per cent. of the total issued share capital of Treasure Auctioneer as at the date of the Option Agreement
“PRC”	the People's Republic of China
“Purchaser”	the Company or its wholly-owned subsidiary
“Sale and Purchase Agreement”	the conditional sale and purchase agreement dated 12th January, 2001 entered into between the Company, the Vendor and Mrs. Siu in relation to the acquisition of the Sale Shares
“Sale Shares”	200,000 shares in Treasure Auctioneer, representing 20 per cent. of the total issued share capital of Treasure Auctioneer
“Shares”	Shares of HK$0.10 each in the capital of the Company
“Shareholders”	holders of Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Treasure Auctioneer”	Treasure Auctioneer International Limited, a company incorporated in the British Virgin Islands
“Valuer”	American Appraisal Hongkong Limited
“HK$”	Hong Kong dollars

By Order of the Board of
Midas Printing Group Limited
Chan Sheung ChiuChairmanHong Kong, 15th January, 2001