Litu Holdings Limited — M&A Activity 2018

Jun 29, 2018

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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BRILLIANT CIRCLE HOLDINGS INTERNATIONAL LIMITED 貴 聯 控 股 國 際 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock Code:1008)

INSIDER INFORMATION: FRAMEWORK AGREEMENT

This announcement is made by the Company pursuant to Rule 13.09(2) of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

INTRODUCTION

The Board is pleased to announce that on 29 June 2018 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, entered into the Framework Agreement with the Vendor in relation to the Proposed Acquisition at the proposed cash consideration of RMB130,000,000 (equivalent to approximately HK$156,000,000).

FRAMEWORK AGREEMENT

Principal terms are summarised as follows:

Date

29 June 2018

Parties

• (i) 上海順灝新材料科技股份有限公司 (Shanghai Shunho New Materials Technology Co., Ltd.*) as the Vendor; and

• (ii) 深圳市科彩印務有限公司 (Shenzhen Kecai Printing Co., Ltd.*) as the Purchaser

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The Vendor is a company listed on the Shenzhen Stock Exchange (Stock code: 002565). To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Vendor and its ultimate beneficial owner(s) are Independent Third Parties.

Assets to be acquired

Pursuant to the Framework Agreement, the Purchaser intends to acquire the Sale Interest, representing the entire equity interest of the Target Company.

Consideration

The proposed consideration for the Proposed Acquisition is RMB130,000,000 (equivalent to approximately HK$156,000,000), payable in cash, subject to negotiation in good faith between the parties to the Framework Agreement. Pursuant to the Framework Agreement, 30% of the consideration shall be paid by the Purchaser to the Vendor within 5 business days after the signing of the Formal Agreement as an initial deposit and the balance shall be paid in accordance with the terms of the Formal Agreement. The consideration was determined after arm’s length negotiations between the Purchaser and the Vendor with reference to the net assets value of the Target Company.

Earnest money

Within 10 business days upon the signing of the Framework Agreement, the Purchaser shall pay to the Vendor an earnest money in the sum of RMB5,000,000 (equivalent to approximately HK$6,000,000) (the ‘‘Earnest Money’’). It is the intention of the parties to the Framework Agreement to apply the Earnest Money towards the consideration of the Proposed Acquisition upon the entering into of the Formal Agreement subject to the terms and conditions therein.

In the event that the Formal Agreement is not entered into by the parties to the Framework Agreement within 30 days after the date of the Framework Agreement, the Purchaser shall be entitled to terminate the Framework Agreement by giving the Vendor or the Target Company a written notice, and the Vendor shall within 10 days of such termination refund the Earnest Money to the Purchaser in full.

Due diligence

Pursuant to the Framework Agreement, the Vendor agrees to authorise the Purchaser to conduct legal and financial due diligence on the Target Company for a period of 30 days from the date of the Framework Agreement.

Exclusivity

The Vendor agrees that it will not, from the date of the Framework Agreement to 31 July 2018 initiate or continue negotiations or discussions with, or enter into any agreement or statement of intent or understanding with, any person or entity other than the Purchaser or its subsidiaries with respect to subject matter of and transactions contemplated under the Framework Agreement.

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Legal binding effect

The Framework Agreement constitutes legally binding commitment on the parties thereto and is valid until 31 July 2018, upon which, if no Formal Agreement is executed and delivered by all parties to the Framework Agreement, shall cease and terminate and the Earnest Money shall be fully refunded in accordance with the terms of the Framework Agreement.

INFORMATION OF THE TARGET COMPANY

Information of the Target Company

The Target Company is a company established under the laws of the PRC with limited liability and is principally engaging in the production and sales of paper packaging, including laser film, vaporized film, rainbow film, laser paper, wrapping paper, research, design and development of optical materials, etc. The annual production capacity is 20,000 tons of paper packaging materials with a total of 4 operational production lines situated in Shenzhen of the PRC.

The audited financial information of the Target Company for the year ended 31 December 2016 and 2017 are set out below:

	For the	For the
	year ended	year ended
	31 December	31 December
	2017	2016
	RMB$(’000)	HK$(’000)
	(audited)	(audited)
Turnover	241,374	278,890
Net profit before taxation	31,051	49,039
Net profit after taxation	23,178	36,653
	As at	As at
	31 December	31 December
	2017	2016
	RMB$(’000)	RMB$(’000)
	(audited)	(audited)
Total asset value	127,590	178,723
Net assets	65,654	109,786

REASON FOR AND BENEFITS OF THE PROPOSED ACQUISITION

The Company is an investment holding company with its subsidiaries principally engaged in (i) the printing of cigarette packages for PRC cigarette manufacturers; (ii) manufacturing of laminated papers; and (iii) the provision of the printing of package and decoration matters, research and development on printing technology, wholesale, import and export of the packaging products.

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The Directors are of the view that the Proposed Acquisition represents a good opportunity for the Group to expand into the printing business in the PRC and an extension of the industry chain of the Group’s printing business as the Target Company has been serving the Group as raw material supplier for many years. The Directors consider that the printing industry in the PRC is expected to maintain a steady growth in the future and the Proposed Acquisition will help expand the Group’s business and broaden its revenue base. In addition, the Company expects to generate cost saving synergies as a result of sharing of resources between the Group and the Target Company after completion of the Proposed Acquisition and to utilise the research and development capacity of Target Company efficiently.

In consideration of the above, the Directors are of the view that the terms of the Framework Agreement are on normal commercial terms and fair and reasonable and the Proposed Acquisition is expected to be in the interests of the Company and Shareholders as a whole.

As at the date of this announcement, the Formal Agreement is yet to be signed. There is no assurance that the Proposed Acquisition will be materialised. If proceed, the Proposed Acquisition may constitute a notifiable transaction for the Company under the Listing Rules and further announcement in relation to the Proposed Acquisition will be made by the Company as and when appropriate in compliance with the Listing Rules.

Shareholders of the Company and other investors should note that the Proposed Acquisition may or may not proceed and are advised to exercise caution when dealing in the shares of the Company.

DEFINITIONS

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

‘‘Board’’	the	board of Directors
‘‘Company’’	Brilliant Circle Holdings International Limited, a company
	incorporated in the Cayman Islands with limited liability
	and	the issued Shares of which are listed on the main board
	of the Stock Exchange
‘‘Director(s)’’	the	director(s) of the Company
‘‘Framework Agreement’’	the	framework agreement entered into between the
	Purchaser and the Vendor dated 29 June 2018 in relation to
	the	Proposed Acquisition
‘‘Formal Agreement’’	the	formal sale and purchase agreement which may or may
	not	be entered into by the Purchaser and the Vendor in
	relation to the Proposed Acquisition
‘‘Group’’	the	Company and its subsidiaries
‘‘Hong Kong’’	the	Hong Kong Special Administrative Region of the PRC

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• ‘‘Independent Third party(ies) who, together with its ultimate beneficial Party(ies)’’ owner(s), is/are persons independent of the Company and its connected persons (as defined in the Listing Rules)

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

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

• ‘‘Proposed Acquisition’’ the proposed acquisition by the Purchaser of the Sale Interest

• ‘‘Purchaser’’ 深圳市科彩印務有限公司 (Shenzhen Kecai Printing Co., Ltd.*), a company established under the laws of the PRC and a wholly owned subsidiary of the Company

• ‘‘Sale Interest’’ the equity interest held by the Vendor in the Target Company, representing the entire equity interest thereof

• ‘‘Shareholder(s)’’ holder(s) of issued share(s) of the Company

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Target Company’’ 深圳市金升彩包 裝 有限公司 (Shenzhen Jin Sheng Cai Packaging Co., Ltd.*), a company established under the laws of the PRC

• ‘‘Vendor’’ 上海順灝新材料科技股份有限公司 (Shanghai Shunho New Materials Technology Co., Ltd.*), a company established under the laws of the PRC and the legal and beneficial owner of the Target Company as at the date of this announcement

• ‘‘%’’ per cent. ‘‘HK$’’ Hong Kong dollars, the lawful currency of the Hong Kong ‘‘RMB’’ Renminbi, the lawful currency of the PRC

• The English translation of Chinese names or words in this announcement, where indicated, are included for information purpose only and should not be regarded as the official English translation of such Chinese names or words.

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Unless otherwise stated, the exchange rate of RMB1.00 to HK$1.20 is used in this announcement for illustration purpose only. No representation is made that any amounts in RMB or HK$ could be converted at such rates or any other rates.

By order of the Board Brilliant Circle Holdings International Limited Cai Xiao Ming, David Chairman

Hong Kong, 29 June 2018

As at the date of this announcement, the Board comprises three executive Directors, namely, Mr. Cai Xiao Ming, David (Chairman), Mr. Qin Song (Vice Chairman and the Chief Executive Officer) and Mr. Peng Guoyi, one non-executive Director, namely, Ms. Li Li, and three independent non-executive Directors, namely, Mr. Lui Tin Nang, Mr. Lam Ying Hung, Andy and Mr. Siu Man Ho, Simon.

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