Puxing Energy Limited — M&A Activity 2000

Mar 8, 2000

Listed Company Information

SUNWAY INT'L<0058> - Announcement The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 contents of this announcement. SUNWAY INTERNATIONAL HOLDINGS LIMITED (incorporated in Bermuda with limited liability) PROPOSED SHARE TRANSACTION The Directors are pleased to announce that a wholly-owned subsidiary of the Company has entered into a non-binding letter of intent with a subsidiary of the Academy of Science of China for the acquisition from it of a 10% interest in a joint venture enterprise. The proposed business of the joint venture is the provision of online multi-lingual translation services to internet users through translation software to be made available on the internet. The consideration of the acquisition is HK$13,200,000. The consideration will be satisfied by the allotment and issue of an 4,400,000 new ordinary shares of HK$0.10 each in the capital of the Company at an issue price of HK$3.00 per share. The issue price represents a 48.1% premium to the closing price of the Company's shares on 7 March 2000 and a 55.4% premium to the average closing price of the shares for the last 10 trading days ended 7 March 2000. The acquisition is subject to the execution of a formal agreement and the satisfaction of other conditions. The proposed transaction contemplated under the letter of intent, if it proceeds, will constitute a share transaction of the Company under Chapter 14 of the Listing Rules. The transaction contemplated under the letter of intent may or may not proceed. Shareholders of the Company and investors should exercise caution in dealing in the shares of the Company. LETTER OF INTENT DATED 6 MARCH, 2000 (THE `LETTER OF INTENT') Parties (1) Hitchin, a company incorporated in the British Virgin Islands the entire issued capital of which is held, indirectly, by the Company. (2) Hua Jian, a limited liability company established in the PRC, a subsidiary of (The Academy of Science of China). Hua Jian is an independent third party not connected with the Directors, chief executive and the substantial shareholders of the Company or its subsidiaries or any of their respective Associates. Assets to be acquired Pursuant to the Letter of Intent, Hua Jian has agreed to sell and Hitchin has agreed to purchase the Sale Equity. The Sale Equity, which is owned by Hua Jian after contribution, represents 10% of the proposed registered capital of the Joint Venture. Consideration The Consideration for the Acquisition is HK$13.2 million and will be satisfied by the allotment and issue of 4,400,000 Consideration Shares to Hua Jian. The Consideration Shares will be issued fully paid at the Issue Price per Share. The payment time and method of the Consideration Shares will be agreed by both parties in accordance with the PRC laws and regulations the terms of which will be set out in the Formal Agreement. The Issue Price for each of the Consideration Shares is equivalent to a premium of 48.1 per cent. over the closing price of the shares of the Company of HK$2.025 as quoted on the Stock Exchange on 7 March 2000 and a premium of 55.4 per cent. over the average closing price of the shares of HK$1.93 on the Stock Exchange for the last 10 trading days ended on 7 March 2000. The 4,400,000 Consideration Shares represent about 0.44 per cent. of the existing issued share capital of the Company or about 0.44 per cent. of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. The Consideration Shares will be issued under the general mandate granted to the Directors by the then shareholders of the Company on 6 August 1999 prior to the listing of the Shares of the Company. The Consideration has been arrived at after arm's length negotiations between the parties. Conditions Completion of the Acquisition pursuant to the Letter of Intent will be subject to the satisfaction of the following conditions: (1) all relevant approvals relating to the establishment of the Joint Venture being obtained; (2) all relevant approvals relating to the allotment and issue of the Consideration Shares to Hua Jian being obtained (including but not limited to, where applicable, the approvals by the Stock Exchange, the shareholders of the Company and the relevant PRC authorities); (3) the written consent from Rainbow and Ji Tong relating to the Acquisition being obtained; (4) all relevant approvals relating to the Acquisition being obtained; (5) the execution of the Formal Agreement; (6) a legal opinion to be issued by a PRC lawyer acceptable to Hitchin and Hua Jian relating to the legality and enforceability of the Formal Agreement; and (7) all the necessary documents required to conduct a due diligence on the Joint Venture being provided by Hua Jian to Hitchin. Exclusivity Under the Letter of Intent, Hua Jian has agreed with Hitchin that, within a period of two months from the date of the Letter of Intent, it will not directly or indirectly negotiate with and/or entering into any agreement with any other parties relating to the Letter of Intent. Enforceability The Letter of Intent is non-legally binding, except for the clauses on exclusivity and confidentiality and the sharing of legal expenses relating to the preparation of the Letter of Intent and the Formal Agreement. INFORMATION ON THE JOINT VENTURE The Joint Venture will be a limited liability company to be set up in Beijing City, the PRC. A joint venture contract relating to the Joint Venture has been entered into by Hua Jian, Rainbow and Ji Tong. The registered capital of the Joint Venture is proposed to be RMB40 million the ownership of which are divided as follows before the Acquisition: Rainbow (70%), Hua Jian (20%) and Ji Tong (10%). After the Acquisition, the ownership of the registered capital of the Joint Venture will be divided as follows: Rainbow (70%), Hua Jian (10%), Ji Tong (10%) and Hitchin (10%). The principal business of the Joint Venture is intended to be the provision of online multi-lingual translation services to internet users through translation software to be made available on the internet. Hua Jian owns the technology of the online translation and the applicable software will be equipped with a web-based information bank and a multi-lingual search engine. It is intended that the translation service will be provided through a portal operated by the Joint Venture. Application has been made to the relevant PRC authorities for the formation of the Joint Venture. Rainbow and Ji Tong are independent third parties not connected with the Directors, chief executive and the substantial shareholders of the Company or its subsidiaries or any of their respective Associates. REASONS FOR THE ACQUISITION The Group is principally engaged in the design, development, manufacture and sale of a wide range of electronic and related components and parts (comprising quartz crystals, liquid crystal displays, printed circuit boards and watch movements) and consumer electronic products (comprising electronic calculators, electronic watches and clocks). The Directors believe that the internet business offers immense commercial potential in future. The Directors also believe that the Company will benefit from the Acquisition in that the Acquisition provides an opportunity for the Group to widen its business scope and earning base. The Acquisition will further provide a channel for co-operation among the Company and the other shareholders and business partners of the Joint Venture. GENERAL The transaction contemplated under the Letter of Intent constitutes a share transaction of the Company under Chapter 14 of the Listing Rules. A further announcement will be made once the Formal Agreement is entered into. Shareholders of the Company and investors should note that the Letter of Intent is non-legally binding (except for the clauses on exclusivity and confidentiality and the sharing of legal expenses for the preparation of the Letter of Intent and the Formal Agreement) and is conditional. The transaction contemplated under the Letter of Intent may or may not proceed. Shareholders of the Company and investors should exercise caution in dealing in the shares of the Company. DEFINITIONS `Acquisition' the proposed acquisition from Hua Jian of the Sale Equity on the terms of the Letter of Intent `Associates' has the meaning ascribed in the Listing Rules `Board' the board of Directors of the Company `Rainbow' (Rainbow Display Equipments Joint Stock Company Limited), a joint stock limited company established in the PRC `Company' Sunway International Holdings Limited, a company incorporated in Bermuda `Consideration' HK$13.2 million, being the amount of consideration payable for the Acquisition under the Letter of Intent `Consideration Shares' 4,400,000 new ordinary Shares proposed to be allotted and issued in satisfaction of the Consideration `Directors' the directors of the Company, including the independent non-executive directors `Formal Agreement' the proposed formal agreement to be executed by Hitchin and Hua Jian relating to the Acquisition under the Letter of Intent `Group' the Company and its subsidiaries `HK$' Hong Kong dollars `Hitchin' Hitchin Venture Limited, a wholly owned subsidiary of the Company `Hua Jian' (Hua Jian Electronics Company Limited) `Issue Price' HK$3.00, being the subscription price for which the Consideration Shares will be issued fully paid `Ji Tong' (Ji Tong Communications Company Limited), a limited liability company established in the PRC `Joint Venture' (Golden Bridge Translation Port Company Limited), a company to be established in Beijing, the PRC `Listing Rules' the Rules Governing the Listing of Securities on the Stock Exchange `PRC' the People's Republic of China `RMB' Renminbi, the lawful currency of the PRC `Sale Equity' the 10% interest in the registered capital of the Joint Venture to be contributed by Hua Jian after the establishment of the Joint Venture `Share(s)' Shares of HK$0.10 each in the capital of the Company `Stock Exchange' The Stock Exchange of Hong Kong Limited By Order of the Board Sunway International Holdings Limited Wong Choi Kam Chairman Hong Kong, 7 March 2000