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Joy Spreader Group Inc. — Capital/Financing Update 2011
Mar 29, 2011
51106_rns_2011-03-28_f3fdc478-6221-499f-8baa-2e50c2bb071f.pdf
Capital/Financing Update
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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.
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AGTech Holdings Limited 亞博科技控股有限公司 [*] (incorporated in Bermuda with limited liability)
(Stock Code: 8279)
POSSIBLE VERY SUBSTANTIAL ACQUISITION AND RESUMPTION OF TRADING
THE POSSIBLE ACQUISITION
The Board wishes to announce that it has on 23 March 2011 resolved for Century Decai, an indirect wholly-owned subsidiary of the Company, to participate in a bid for the Sale Interest, which represents a 65% equity interest in GOT being sold by CEC under a tender process organised at the Beijing Equity Exchange. Century Decai is currently an existing shareholder of GOT holding a 35% interest in GOT. Century Decai has submitted its bid according to the procedures laid down by the Beijing Equity Exchange on 28 March 2011. Due to the restrictions of the terms and conditions, the bid, once submitted, could not be withdrawn. If there are bidders for the Sale Interest other than Century Decai, Century Decai shall, as an existing shareholder of GOT, have the pre-emptive right to acquire the Sale Interest at the highest bid price submitted by the other bidders. The Board has also resolved on 23 March 2011 for Century Decai to exercise such pre-emptive right.
The Share Transfer Agreement will be entered into between Century Decai and CEC if the bid of Century Decai is successful or Century Decai exercises its pre-emptive right. After completion of the Share Transfer Agreement (which will only be signed if Century Decai’s bid is successful or Century Decai exercises the pre-emptive right), the Company will hold the entire equity interest in GOT and GOT will become a wholly-owned subsidiary of the Company.
The Possible Acquisition (whether through the bid submitted by Century Decai and accepted by the Beijing Equity Exchange or by way of Century Decai exercising its pre-emptive right) will constitute a very substantial acquisition of the Company under the GEM Listing Rules. The Share Transfer Agreement and the transactions contemplated thereunder are therefore subject to the approval of the Shareholders at the special general meeting of the Company.
A circular containing, among other things, details of the bid for the Sale Interest, an accountants’ report on GOT, the financial information on the Group and other information as required under the GEM Listing Rules will be despatched to the Shareholders on or before 19 April 2011.
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SUSPENSION AND RESUMPTION OF TRADING
At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:00 a.m. on 24 March 2011 pending the publication of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 a.m. on 29 March 2011.
BACKGROUND
Reference is made to the announcement of the Company dated 5 March 2010 and the circular of the Company dated 26 April 2010 relating to the acquisition by FAIRMAX ENTERPRISES LIMITED, an indirect wholly-owned subsidiary of the Company, of the entire issued share capital in Exequs, which in turn indirectly holds a 35% equity interest in GOT. The First Acquisition constituted a major transaction of the Company for the purposes of the GEM Listing Rules and was completed on 28 April 2010.
The Board wishes to announce that it has on 23 March 2011 resolved for Century Decai, an indirect wholly-owned subsidiary of the Company, to participate in a bid for the Sale Interest, which represents a 65% equity interest in GOT being sold by CEC under a tender process organised at the Beijing Equity Exchange. Century Decai has submitted its bid in accordance with the procedures laid down by the Beijing Equity Exchange on 28 March 2011. Due to the restrictions of the terms and conditions, the bid, once submitted, could not be withdrawn.
PRINCIPAL TERMS OF THE BID FOR THE SALE INTEREST
Date of submission of the bid
28 March 2011
Parties
Purchaser/bidder: Century Decai, an indirect wholly-owned subsidiary of the Company
Vendor: CEC
To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, CEC is one of the largest state-owned information technology enterprises established under the laws of the PRC with the approval of the State Council of the PRC. It is a nationwide electronics and information technology conglomerate directly administered by the PRC government. It actively focuses on communications, consumer electronics, semi-conductor and software sectors in the PRC. Save for being co-investors in GOT, CEC is otherwise a third party independent of the Company and its connected persons (as defined in the GEM Listing Rules). The Group has not entered into any previous transactions with CEC or its associates (as defined in the GEM Listing Rules) which would otherwise require aggregation pursuant to Rule 19.22 of the GEM Listing Rules.
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Procedures for the bidding
The Sale Interest is being offered for sale by way of tender convened at the Beijing Equity Exchange pursuant to 中華人民共和國合同法 (Contracts Law of the PRC), 企業國有產權轉讓 管理暫行辦法 (Temporary Management Policy of National Assets Transfer) and other national assets transfer related laws, regulations and policies in the PRC. Based on the information published by the Beijing Equity Exchange, the tender is open from 1 March 2011 to 28 March 2011 and the floor price for the Sale Interest is RMB108,023,500 (equivalent to approximately HK$127.47 million).
Century Decai has submitted the bid at the floor price. The bid price is determined by the Company taking into account the net asset value, financial performance and growth potential of the business of GOT. In the event that there is no bidder for the Sale Interest other than Century Decai, it is expected that the Beijing Equity Exchange will inform Century Decai the result of the tender on the Business Day next following the close of the tender on 28 March 2011, and Century Decai will be required to pay the Deposit in cash, cheque or bank note within three Business Days thereafter (i.e. on or before 1 April 2011). The Share Transfer Agreement shall then be entered into between CEC and Century Decai within five Business Days after the payment of the Deposit (i.e. on or before 11 April 2011). The balance of the consideration for the Sale Interest shall be settled in cash within ten Business Days after the effective date of the Share Transfer Agreement (which is expected to be around end of May/early June 2011).
Pursuant to 中華人民共和國公司法 (PRC Company Law*), existing shareholders of a company shall have the pre-emptive right to purchase the equity interests of the other shareholders if the other shareholders wish to sell their interests. Accordingly, Century Decai, being an existing shareholder of GOT, has the pre-emptive right to acquire the Sale Interest from CEC during the bidding process conducted at the Beijing Equity Exchange. In the event that there are bidders for the Sale Interest other than Century Decai, all the bidders (including Century Decai) will be required to pay the Deposit on or before 1 April 2011. The Beijing Equity Exchange shall within two Business Days of the receipt of the Deposit (i.e. on or before 6 April 2011) serve a notice to the bidders other than Century Decai and request them to submit their final bid prices within two Business Days of the date of the notice (i.e. on or before 8 April 2011). The Beijing Equity Exchange shall then notify Century Decai the highest final bid price submitted by the other bidders within five Business Days after their bids are submitted (i.e. on or before 15 April 2011), and Century Decai shall have the right to exercise its pre-emptive right to purchase the Sale Interest at the same price as the highest final bid price submitted by the other bidders by serving a written confirmation to the Beijing Equity Exchange within 30 calendar days (i.e. on or before 15 May 2011). The Share Transfer Agreement shall then be entered into between CEC and Century Decai within five Business Days of the written confirmation from Century Decai that it chooses to exercise its pre-emptive right (i.e. on or before 20 May 2011). The balance of the consideration for the Sale Interest shall be settled in cash within ten Business Days after the effective date of the Share Transfer Agreement (which is expected to be around end of May/early June 2011). If Century Decai does not serve the written confirmation within the prescribed time frame, it shall be deemed to have forfeited its pre-emptive right for the Sale Interest. The Board has also resolved for Century Decai to exercise such pre-emptive right.
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The Deposit may be forfeited in whole or in part, at the discretion of CEC, if the bidder defaults in payment of the balance of the bid price, fails to obtain all necessary consents and approvals from the relevant authorities (including the relevant rules of any stock exchange and the purchaser’s shareholders in the general meeting, if applicable) in respect of the Share Transfer Agreement and the transactions contemplated thereunder, or fails to proceed with the prescribed procedures and timeframe to complete the acquisition of the Sale Interest.
Further announcement will be made by the Company regarding the results of the bid and if Century Decai chooses to exercise the pre-emptive right throughout the process of the tender.
Conditions of the Share Transfer Agreement
The Share Transfer Agreement, which shall be in a form prescribed by the Beijing Equity Exchange, shall become effective subject to and conditional upon the fulfillment of the following conditions:
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(i) CEC having obtained all necessary consents and approvals from the relevant authorities in respect of the Share Transfer Agreement and the transactions contemplated thereunder;
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(ii) CEC having completed the tender process convened at the Beijing Equity Exchange in accordance with the relevant laws, regulations and policies in the PRC; and
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(iii) the purchaser of the Sale Interest having obtained all necessary consents and approvals from the relevant authorities (including the relevant rules of any stock exchange and the purchaser’s shareholders in the general meeting, if applicable) in respect of the Share Transfer Agreement and the transactions contemplated thereunder.
The terms of the transactions contemplated under the Share Transfer Agreement, except the final consideration, have been finalised as the procedures for the bid and the principal terms of the Share Transfer Agreement are stipulated by the Beijing Equity Exchange. The Company does not expect there will be any material change in the principal terms of the Share Transfer Agreement. The Share Transfer Agreement and the transactions contemplated thereunder are subject to the approval of the Shareholders at the special general meeting of the Company if Century Decai’s bid is successful or Century Decai exercises its pre-emptive right.
The 產權交易憑證 (asset transfer certificate) will be issued by the Beijing Equity Exchange after the fulfillment of all the above conditions. CEC shall procure GOT to proceed with completing the necessary registration procedures for the change in shareholders with the relevant authorities in the PRC. Completion of the Possible Acquisition will take place when a new business licence is issued to GOT reflecting the new shareholding structure.
INFORMATION ON GOT
GOT was established in the PRC with limited liability in 1994 and is one of the largest terminal and system providers for sports lottery in the PRC. Initially, it was approved by the State Council and authorised by, among others, the Ministry of Finance, State Administration of Taxation and the former Ministry of Electric Industry and was set up for the implementation of commercial terminal projects in the PRC. The scope of services provided by GOT was research and development, manufacturing and sales of commercial terminals in the PRC at that time.
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In 1998, GOT became one of the vendors approved by China Sports Lottery Administration Centre for the research, development and production of sports lottery terminals and systems. In 2004, it established a manufacturing base in Beijing with annual production capability of over 200,000 units. After over 10 years of industry experience, GOT has built up superior research and development abilities in sports lottery terminals and systems and developed an extensive sales network in over 20 provinces and cities in the PRC. In addition, GOT has enhanced its aftersales services by setting up provincial service centres in several provinces and cities across the PRC to handle product repair and maintenance and provide technical support services. Through its efficient call centre system, under normal circumstances, GOT is able to respond to customers’ enquiries within 1 hour after receiving their calls and provide on-site maintenance services within 2 hours (for customers in urban areas) to 6 hours (for customers in rural areas) upon customers’ requests. GOT is recognised as a reputable brand in the PRC sports lottery field and was appraised by General Administration of Sport of China as the “Outstanding Company Contributing to Sports Lottery” in 2005.
As at the date of this announcement, GOT is owned as to 35% by Century Decai and 65% by CEC. After completion of the Share Transfer Agreement (which will only be signed if Century Decai’s bid is successful or Century Decai exercises its pre-emptive right), the Company will hold the entire equity interest in GOT and GOT will become a wholly-owned subsidiary of the Company and the assets, liabilities and results of GOT will be consolidated into the financial statements of the Company.
Based on the audited accounts of GOT prepared using generally accepted accounting principles in the PRC for the year ended 31 December 2009, GOT recorded net profit before tax of approximately RMB15.11 million (equivalent to approximately HK$17.83 million) and net profit after tax of approximately RMB12.86 million (equivalent to approximately HK$15.17 million). Based on the audited accounts of GOT prepared using generally accepted accounting principles in the PRC for the year ended 31 December 2010, net profit before tax of GOT was approximately RMB11.48 million (equivalent to approximately HK$13.55 million) and net profit after tax of GOT was approximately RMB10.52 million (equivalent to approximately HK$12.41 million). The audited net asset value of GOT as at 31 December 2010 was approximately RMB98.16 million (equivalent to approximately HK$115.83 million).
REASONS FOR THE POSSIBLE ACQUISITION
The Company is an investment holding company. The Group is a leading sports lottery and sports leisure service provider in the PRC and is principally engaged in (i) lottery management and gaming technologies business; (ii) online and phone lottery sales business; and (iii) sports and media business.
As disclosed in the final results announcement of the Company for the year ended 31 December 2010, the PRC government has constantly embarked on a number of initiatives to support sports lottery development, thereby enabling continued healthy growth in the PRC sports lottery market. The Directors consider that there are strong prospects for the sports lottery sector in the PRC. Considering that GOT is an established key industry player with cutting-edge technologies, has built up superior research and development capabilities in sports lottery terminals and systems, developed an extensive sales network in over 20 provinces and cities in the PRC and recorded a profitable track record, the Directors consider it desirous to increase its interest in GOT and to participate in the bid. If Century Decai’s bid is successful or Century Decai exercises its preemptive right and the Possible Acquisition is completed, GOT will become a wholly-owned
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subsidiary of the Company and is expected to contribute positively to the future earnings of the Group. In view of the above, the Directors consider that the Possible Acquisition is in the interests of the Company and its Shareholders as a whole.
The Group intends to finance the consideration for the Sale Interest by a combination of bank borrowings and internal resources of the Group.
GENERAL
The Possible Acquisition (whether through the bid submitted by Century Decai and accepted by the Beijing Equity Exchange or by way of Century Decai exercising its pre-emptive right) will constitute a very substantial acquisition of the Company under the GEM Listing Rules. The Share Transfer Agreement and the transactions contemplated thereunder are therefore subject to the approval of the Shareholders at the special general meeting of the Company.
A circular containing, among other things, details of the bid for the Sale Interest, an accountants’ report on GOT, the financial information on the Group and other information as required under the GEM Listing Rules will be despatched to the Shareholders on or before 19 April 2011.
SUSPENSION AND RESUMPTION OF TRADING
At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:00 a.m. on 24 March 2011 pending the publication of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 a.m. on 29 March 2011.
DEFINITIONS
In this announcement, the following terms have the following meanings:
| “Beijing Equity Exchange” | 北京產權交易所(China Beijing Equity Exchange) |
|---|---|
| “Board” | the board of Directors |
| “Business Day” | a day (other than a Saturday or a Sunday) on which banks are |
| open for general business in the PRC | |
| “CEC” | China Electronics Corporation, a state-owned enterprise |
| established under the laws of the PRC | |
| “Century Decai” | 北京世紀德彩科技有限公司(Beijing Century Decai Technology |
| Co., Ltd.*), a company incorporated in the PRC with limited | |
| liability which is an indirect wholly-owned subsidiary of the | |
| Company and holds a 35% equity interest in GOT as at the date | |
| hereof | |
| “Company” | AGTech Holdings Limited, a company incorporated in Bermuda |
| with limited liability, the issued Shares of which are listed on | |
| GEM (stock code: 8279) |
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| “Deposit” | the deposit in the amount of RMB32,407,050 (equivalent to |
|---|---|
| approximately HK$38.24 million) required to be paid by bidders | |
| for the Sale Interest in accordance with the requirement of the | |
| Beijing Equity Exchange | |
| “Director(s)” | director(s) of the Company |
| “Exequs” | Exequs Co. Ltd., a company incorporated in the British Virgin |
| Islands with limited liability which is an indirect wholly-owned | |
| subsidiary of the Company and the sole shareholder of Century | |
| Decai | |
| “First Acquisition” | the acquisition by FAIRMAX ENTERPRISES LIMITED, an |
| indirect wholly-owned subsidiary of the Company, of the entire | |
| issued share capital in Exequs, which in turn indirectly holds a | |
| 35% equity interest in GOT as announced by the Company on 5 | |
| March 2010 and completed on 28 April 2010 | |
| “GEM” | The Growth Enterprise Market of the Stock Exchange |
| “GEM Listing Rules” | the Rules Governing the Listing of Securities on GEM |
| “GOT” | 北京長城高騰信息產品有限公司(Beijing Greatwall GOT |
| Information Products Co., Ltd.*), a company incorporated in the | |
| PRC with limited liability which is owned as to 35% indirectly by | |
| the Company and as to 65% by CEC as at the date hereof | |
| “Group” | the Company and its subsidiaries |
| “Hong Kong” | the Hong Kong Special Administrative Region of the PRC |
| “Possible Acquisition” | the possible acquisition of the Sale Interest by Century Decai |
| through the tender process convened at the Beijing Equity | |
| Exchange as described in this announcement | |
| “PRC” | the People’s Republic of China which, for the purpose of |
| this announcement, excludes Hong Kong, the Macau Special | |
| Administrative Region and Taiwan | |
| “Sale Interest” | a 65% interest in the registered and paid-up capital of GOT |
| “Share(s)” | ordinary share(s) of HK$0.002 each in the share capital of the |
| Company | |
| “Shareholder(s)” | holder(s) of the Share(s) |
| “Share Transfer Agreement” | the conditional sale and purchase agreement to be signed between |
| CEC and Century Decai in relation to the Possible Acquisition | |
| if and after Century Decai’s bid is successful or Century Decai | |
| exercises its pre-emptive right for the Sale Interest |
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“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent
For illustration purposes, figures in RMB in this announcement have been translated into HK$ at the exchange rate of RMB1 = HK$1.18. Such conversion shall not be construed as a representation that amounts in RMB were or may have been converted into HK$ using such exchange rate or any other exchange rate or at all.
By order of the Board AGTech Holdings Limited Sun Ho Chairman & CEO
Hong Kong, 29 March 2011
As at the date of this announcement, the Board comprises Mr. Sun Ho, Mr. Robert Geoffrey Ryan, Mr. Bai Jinmin and Mr. Liang Yu as executive Directors; Ms. Yang Yang as non-executive Director; and Mr. Wang Ronghua, Mr. Hua Fengmao and Mr. Kwok Wing Leung Andy as independent nonexecutive Directors.
This announcement, for which the Directors collectively and individually accept full responsibility, includes 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 contained 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 “Latest Company Announcements” page of the GEM website (www.hkgem.com) for at least 7 days from its date of posting and will be published on the website of the Company at http://www.agtech.com.
- For identification purpose only
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