Keymed Biosciences Inc. — Proxy Solicitation & Information Statement 2004

Oct 15, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Suga International Holdings Limited, you should at once pass this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any shares in Suga International Holdings Limited.

==> picture [122 x 42] intentionally omitted <==

SUGA INTERNATIONAL HOLDINGS LIMITED 信佳國際集團有限公司[] (Incorporated in Bermuda with limited liability) (Stock code: 912)*

DISCLOSEABLE TRANSACTION

Financial Advisor to the Company

• For identification purposes only

15 October, 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Consideration Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on Precise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Effect of the Acquisition on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

DEFINITIONS

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

“Acquisition”	the acquisition by the Purchaser of the entire issued
	share capital of Precise presently owned by the
	Vendors
“Agreement”	the agreement dated 27 September, 2004 entered into
	between the Vendors and the Purchaser relating to the
	Acquisition
“Board”	the board of Directors
“Company”	Suga International Holdings Limited, an exempted
	company incorporated in Bermuda with limited
	liability and the Shares of which are listed on the Stock
	Exchange
“Completion”	completion of the Agreement
“Consideration”	the aggregate consideration of the Acquisition in the
	amount of HK$8,500,000
“Consideration Shares”	2,000,000 new Shares to be issued and alloted by the
	Company at Completion under the Agreement
	pursuant to the general mandate to allot, issue and
	deal with shares of the Company granted to the
	Directors by Shareholders’ resolution passed at the
	Company’s annual general meeting held on 19 August,
	2004
“Director(s)”	the director(s) of the Company
“Group”	the Company and its subsidiaries (within the meaning
	as defined in the Companies Ordinance (Chapter 32
	of the Laws of Hong Kong))
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	8 October, 2004, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange of Hong Kong Limited
“Long Stop Date”	30 November, 2004 or such later date as may be agreed
	between the parties in writing from time to time

– 1 –

DEFINITIONS

“Precise”	Precise Computer Tooling Company Limited, a
	company incorporated in Hong Kong on 13 January,
	1981, the entire issued share capital of which is
	collectively owned by the Vendors as at the date of
	the Agreement
“Purchaser”	Suga International Limited, a company incorporated
	in the British Virgin Islands and a wholly-owned
	subsidiary of the Company
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.10 each in the Company
“Shareholder(s)”	holder(s) of Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendors”	Mr. CHEUNG Koon Ping and Mr. CHEUNG Fong Yan,
	who owned 60% and 40% of the issued share capital
	of Precise respectively as at the date of the Agreement
“%”	per cent.

– 2 –

LETTER FROM THE BOARD

==> picture [122 x 41] intentionally omitted <==

SUGA INTERNATIONAL HOLDINGS LIMITED 信佳國際集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock code: 912)

Executive Directors: Mr. Ng Chi Ho, Chairman Mr. Ma Fung On, Vice Chairman Mr. Wong Wai Lik, Lamson Mr. Fung Chi Leung, Mark

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-Executive Director: Mr. Kyle Arnold Shaw, Jr.

Independent Non-executive Directors: Professor Wong Sook Leung, Joshua Mr. Murase Hiroshi Mr. Leung Yu Ming, Steven

Head Office and Principal Place of Business: Units 1904-7, 19th Floor Chevalier Commercial Centre 8 Wang Hoi Road Kowloon Bay Kowloon Hong Kong 15 October, 2004

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

INTRODUCTION

The Company announced on 27 September, 2004 that the Purchaser, a wholly-owned subsidiary of the Company, has entered into the Agreement with the Vendors to acquire from the Vendors the entire issued share capital of Precise, a company incorporated in Hong Kong, of which the Vendors collectively hold the entire issued share capital. The Consideration is HK$8,500,000, which will be satisfied by (i) HK$2,800,000 to be satisfied by the issue of the Consideration Shares (i.e. 2,000,000 new Shares) at an issue price of HK$1.40 per Share to the Vendors at Completion; (ii) HK$2,700,000 to be paid in cash at Completion and (iii) HK$3,000,000 to be paid in cash by 6 equal bi-monthly installments commencing on the Completion Date.

The Acquisition constitutes a discloseable transaction of the Company under 14.06 of the Listing Rules. The completion of the Agreement is conditional upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares. The purpose of this circular is to provide you further information in respect of the Agreement and the Acquisition and other information as required under the Listing Rules.

• For identification purposes only

– 3 –

LETTER FROM THE BOARD

THE AGREEMENT

• Date : 27 September, 2004 Vendors : CHEUNG Koon Ping and CHEUNG Fong Yan who collectively hold the entire issued share capital of Precise as of the date of the Agreement. To the best of their knowledge, information and belief and having made all reasonable enquiry, the Directors confirm that the Vendors are not connected persons of the Group and are independent of the connected persons of the Group within the meaning of the Listing Rules

• Purchaser : Suga International Limited, a wholly owned subsidiary of the Company

• Assets to be acquired : 5,000 ordinary shares of HK$100.00 each in the share capital of Precise, representing the entire issued share capital of Precise presently owned by the Vendors

• Consideration : HK$8,500,000, to be satisfied in the following manner: (i) HK$2,800,000 to be satisfied by the issue of the Consideration Shares by the Company to the Vendors at Completion;

• (ii) HK$2,700,000 to be paid in cash at Completion; and (iii) HK$3,000,000 to be paid in cash by 6 equal bi-monthly installments commencing on the Completion Date.

• Conditions : Completion is conditional on the followings having taken place on or before the Long Stop Date: (a) the listing committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares;

• (b) if required, the approval of the Agreement and the transactions contemplated thereunder, including but not limited to the issue and allotment of the Consideration Shares, by the Shareholders (where required by the Stock Exchange, the independent Shareholders); and

• (c) if required, the approval of the Bermuda Monetary Authority in respect of the issue and allotment of the Consideration Shares by the Company.

• Completion : Subject to the fulfilment of the conditions precedent, 31 October, 2004 or such other date as the Purchaser may designate by giving not less than three business days’ notice in writing to the Vendors

• (a) the listing committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares;

• (b) if required, the approval of the Agreement and the transactions contemplated thereunder, including but not limited to the issue and allotment of the Consideration Shares, by the Shareholders (where required by the Stock Exchange, the independent Shareholders); and

The Consideration and the terms and conditions of the Agreement were determined as a result of arm’s length negotiations between the Purchaser and the Vendors with reference to 2.18 times price to earnings ratio based on the audited after tax profits of Precise of approximately HK$3,905,000 for the year ended 31 March, 2004. The consideration in cash payment will be financed by the Group’s internal resources.

– 4 –

LETTER FROM THE BOARD

CONSIDERATION SHARES

The Consideration Shares, when issued, will rank pari passu in all respects with the existing issued Shares of the Company. The issue of the Consideration Shares will not result in a change of control of the Company.

The Consideration Shares represent approximately 0.885% of the existing issued share capital of the Company and approximately 0.877% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares.

Based on the respective closing price of HK$1.200 and HK$1.180 per Share as quoted by the Stock Exchange on 27 September, 2004, being the date of the Agreement, and the Latest Practicable Date, the total market value of the Consideration Shares are HK$2,400,000 and HK$2,360,000 respectively.

The issue price of HK$1.40 per Consideration Share represents:

• (i) a premium of approximately 16.67% over the closing price of HK$1.200 per Share as quoted by the Stock Exchange on 27 September, 2004; and

• (ii) a premium of approximately 16.28% over the average closing price of HK$1.204 per Share as quoted by the Stock Exchange for the 10 trading days ending on and including 27 September, 2004; and

• (iii) a premium of approximately 18.64% over the closing price of HK$1.180 per Share as quoted by the Stock Exchange on the Latest Practicable Date.

INFORMATION ON PRECISE

Precise is a company incorporated in Hong Kong in January 1981, specialized in the production of moulds and plastic components. The Vendors currently hold the entire issued share capital of Precise. Precise has been a supplier of the Group since 1998. So far as the Directors are aware, the Group is the largest customer of Precise, accounting for approximately 26% of its total turnover for the year ended 31 March, 2004. Precise will become a wholly owned subsidiary of the Company after Completion. For the two financial years ended 31 March, 2004, the audited net profits before tax of Precise were approximately HK$2,230,000 and HK$3,993,000 respectively and the audited net profits after tax of Precise were approximately HK$1,967,000 and HK$3,905,000 respectively. The audited total asset value and net asset value of Precise as at 31 March, 2004 were approximately HK$25,319,000 and HK$9,030,000 respectively.

INFORMATION ON THE GROUP

The Group is an electronic manufacturing services provider and is principally engaged in the research and development, manufacture and sale of electronic appliances, including networking devices, pet training devices, corded telephones and printed circuit boards for installation in various electronic appliances.

REASONS FOR THE ACQUISITION

The Group is principally engaged in the manufacture of electronics products with plastic parts being one of the major components. The Directors, including the independent non-executive Directors, consider that the Acquisition would have the following benefits to the Group:

– 5 –

LETTER FROM THE BOARD

1. Complete vertical integration

The Acquisition will improve the overall profitability and operational efficiency by gaining a stronger control over the quality and purchase costs of the products.

2. Enhance performance and asset base

So far as the Directors are aware, approximately 74% of Precise’s sales come from other customers while net profit is more or less in line with this. The Acquisition will enhance the Group’s earning base and enlarge asset base. In addition, business activities and customer base of the Group will also be diversified.

3. Improve profitability by pooling resources

The resources of Precise and the Group could be pooled together, especially for those general and administrative, thus reducing costs and serving economies of scale.

4. Enhance equity

As Consideration involves issue of Company’s Shares, the Acquisition will enlarge the equity base and market liquidity.

EFFECT OF THE ACQUISITION ON THE COMPANY

The Acquisition is expected to increase the Group’s earnings and asset base. For the year ended 31 March, 2004, Precise achieved an audited net profit after tax of HK$3,905,000. Upon the Completion, the financial results of Precise will be consolidated into the Group’s accounts and are expected to make additional financial contributions to the Group. As a result of the issue of the Consideration Shares, the Company’s shareholders’ equity is expected to increase by HK$2,800,000. It is expected that the Group will settle the cash portion of the Consideration by utilizing its cash holdings.

GENERAL MANDATE

The Consideration Shares will be issued and alloted by the Company at Completion under the Agreement pursuant to the general mandate to allot, issue and deal with shares of the Company granted to the Directors by Shareholders’ resolution passed at the Company’s annual general meeting held on 19 August, 2004.

GENERAL

The Directors consider that the Agreement is entered into upon normal commercial terms following arm’s length negotiations between the parties to the Agreement and that the terms of the Agreement are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

Application has been made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares.

Your attention is also drawn to the general information set out in the Appendix to this circular.

By Order of the Board Suga International Holdings Limited Ng Chi Ho Chairman

– 6 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENTS

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular with regard to the Company and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts with regard to the Company, the omission of which would make any statement in this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at 31 March, 2004 (being the end of the latest audited financial year of the Company) and the Latest Practicable Date were summarised as follows:–

Authorised: 2,000,000,000 Shares of HK$0.1 each HK$200,000,000 Issued and fully paid, or credited as fully paid: 225,940,000 Shares of HK$0.1 each HK$22,594,000

All Shares in issue rank pari passu in all respects as regards rights to dividends, voting and return of capital.

3. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executive’s interests in the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and the Company’s chief executive in the Shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

(i) Interests in Shares

			Number of Shares	Number of Shares	Number of Shares
				Trust/	Persons
	Personal	Corporate	Family	similar	acting in	Other	Total
Name of Director	interest	interest	interest	interest	concert	interest	interests
Mr. Ng Chi Ho	2,000,000	28,100,000	–	100,000,000	–	–	130,100,000
		(Note 1)		(Note 2)
Mr. Ma Fung On	730,000	9,000,000	–	–	–	–	9,730,000
		(Note 3)
Mr. Fung Chi Leung,
Mark	–	3,000,000	–	–	–	–	3,000,000
		(Note 4)
Mr. Wong Wai Lik,
Lamson	500,000	–	–	–	–	–	500,000
Prof. Wong Sook Leung,
Joshua	34,000	–	–	–	–	–	34,000

– 7 –

APPENDIX

GENERAL INFORMATION

Notes:

1. 28,100,000 Shares are held by Billion Linkage Limited, the entire issued share capital of which is held by Mr. Ng Chi Ho and his spouse in equal shares.

2. 100,000,000 Shares are held by Superior View Inc., the entire issued share capital of which is ultimately held by Fidelitycorp Limited as the trustee of the C.H. Family Trust, the beneficiaries of which are the family members of Mr. Ng Chi Ho.

3. 9,000,000 Shares are held by Global Class Enterprises Limited, the entire issued share capital of which is held by Mr. Ma Fung On.

4. 3,000,000 Shares are held by Able Asset Developments Limited, the entire issued share capital of which is held by Mr. Fung Chi Leung, Mark.

Save as disclosed herein, as at the Latest Practicable Date, none of the above Directors has any interest or short positions in the Shares or underlying shares of the Company which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered in the register required to be kept under section 352 of the SFO.

(ii) Interests in Share options of the Company

Details of the Share options granted to the Directors and chief executive under the share option scheme adopted by the Company on 17 September, 2002 and remain outstanding are summarised as follows:

	Number of
	share options	Exercise		Exercisable	Exercisable
Name of Director	outstanding	price	Grant date	from	until
		(HK$)
Mr. Ng Chi Ho	2,000,000	1.23	7 May, 2004	7 May, 2004	6 May, 2009
Mr. Ma Fung On	1,070,000	1.23	5 May, 2003	5 May, 2003	4 May, 2008
	1,000,000	1.23	7 May, 2004	7 May, 2004	6 May, 2009
Mr. Fung Chi Leung, Mark	1,800,000	1.23	5 May, 2003	5 May, 2003	4 May, 2008
Mr. Wong Wai Lik, Lamson	1,300,000	1.23	5 May, 2003	5 May, 2003	4 May, 2008
	1,000,000	1.23	7 May, 2004	7 May, 2004	6 May, 2009
Mr. Kyle Arnold Shaw, Jr.	500,000	1.23	7 May, 2004	7 May, 2004	6 May, 2009
Professor Wong Sook Leung, Joshua	500,000	1.23	7 May, 2004	7 May, 2004	6 May, 2009
Mr. Murase Hiroshi	500,000	1.23	7 May, 2004	7 May, 2004	6 May, 2009

(iii) Interests in associated company

As at the Latest Practicable Date, each of Mr. Ng Chi Ho, Mr. Ma Fung On and Mr. Fung Chi Leung, Mark indirectly held the following non-voting deferred shares of HK$1 each in Suga Electronics Limited, a wholly-owned subsidiary of the Company:

	Number of non-voting
Name of shareholder	deferred shares
Essential Mix Enterprises Limited_(Note)_	3,200,000
Broadway Business Limited_(Note)_	800,000

– 8 –

APPENDIX

GENERAL INFORMATION

Note: The entire issued share capital of each of Essential Mix Enterprises Limited and Broadway Business Limited are held as to 92% by Mr. Ng Chi Ho, 6% by Mr. Ma Fung On and 2% by Mr. Fung Chi Leung, Mark. These non-voting deferred shares have no voting rights, are not entitled to dividends, and are not entitled to any distributions upon winding up unless a sum of HK$10,000,000,000 per ordinary share has been distributed to the holders of the ordinary shares.

(b) Interests of Shareholders discloseable pursuant to the SFO

Save as disclosed below, the Directors are not aware of any other person (other than a Director or chief executive of the Company or his/her respective associate(s)) who, as at the Latest Practicable Date, had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

		Percentage of the
	Number of	Company’s issued
	Shares	Share
Superior View Inc.(Note 1)	100,000,000	44.26%
Billion Linkage Limited_(Note 2)_	28,100,000	12.44%
Shaw, Kwei & Partners (Asia) Ltd.	11,500,000	5.09%

Notes:

1. The entire issued share capital of Superior View Inc. is ultimately held by Fidelitycorp Limited as the trustee of the C.H. Family Trust, the beneficiaries of which are the family members of Mr. Ng Chi Ho.

2. The entire issued share capital of Billion Linkage Limited is held by Mr. Ng Chi Ho and his spouse in equal shares and, as such, Mr. Ng Chi Ho is deemed to be interested in all the shares held by Billion Linkage Limited under the SFO.

Save as disclosed herein, as at the Latest Practicable Date, none of the above substantial shareholders has any interest or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

(c) Substantial shareholding in other members of the Group

The Directors are not aware of any other person (other than a Director or chief executive of the Company, or his/her respective associate(s)) who, as at the Latest Practicable Date, was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and so far as the Directors were aware, no litigation or claims of material importance were pending or threatened by or against the Company or any of its subsidiaries.

– 9 –

APPENDIX

GENERAL INFORMATION

5. DIRECTORS’ SERVICE CONTRACTS

Each of Mr. Ng Chi Ho, Mr. Wong Wai Lik, Lamson and Mr. Fung Chi Leung, Mark, all being executive Directors, has entered into a service contract with the Company for an initial fixed term of three years commencing from 1 September, 2002 and will continue thereafter until terminated by not less than three months’ notice in writing served by either party on the other. Mr. Ma Fung On, an executive Director, has entered into a service contract with the Company for a term of three years commencing from 1 April, 2004.

The non-executive Director, Mr. Kyle Arnold Shaw, Jr., was appointed for specific terms and to hold office until 31 October, 2004.

Professor Wong Sook Leung, Joshua, Mr. Murase Hiroshi and Mr. Leung Yu Ming, Steven, were appointed for specific terms and to hold office until 31 March, 2005 and 26 September, 2005 respectively.

Save as disclosed above, there is no existing or proposed service contract between any of the Directors or proposed Directors and the Company or any of its subsidiaries, other than contracts expiring or determinable by the employer within one year without payment of compensation (other than by statutory compensation).

6. COMPETING BUSINESS

None of the Directors and their respective associates have any interests in a business which compete or may compete with business of the Group as of the Latest Practicable Date.

7. GENERAL

• (a) The company secretary and the qualified accountant of the Company is Ms. Chan Kwan Hei, Anthea, FCCA, CPA.

• (b) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and the head office and the principal place of business of the Company is at Units 1904-7, 19th Floor, Chevalier Commercial Centre, 8 Wang Hoi Road, Kowloon Bay, Kowloon, Hong Kong.

• (c) The principal share registrar of the Company is Butterfield Fund Services (Bermuda) Limited at Rosebank Centre, 11 Bermudiana Road, Pembroke HM 08, Bermuda and its branch share registrar in Hong Kong is Computershare Hong Kong Investor Services Limited of 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text.

As at the date of this circular, the board of directors of Suga International Holdings Limited comprises (i) Mr. Ng Chi Ho, Mr. Ma Fung On, Mr. Wong Wai Lik Lamson and Mr. Fung Chi Leung Mark as executive directors; (ii) Mr. Kyle Arnold Shaw, Jr. as non-executive director; and (iii) Professor Wong Sook Leung Joshua, Mr. Murase Hiroshi and Mr. Leung Yu Ming Steven as independent non-executive directors.

– 10 –