Regent Pacific Group Limited — M&A Activity 2000

Apr 6, 2000

Listed Company Information

REGENT PACIFIC<0575> - 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 or any part of the contents of this announcement. REGENT PACIFIC GROUP LIMITED (Incorporated in the Cayman Islands with limited liability) Discloseable, Major and Connected Transactions Proposed acquisition of Interman Holdings Limited with amended terms and issue of non-voting deferred shares as part consideration and possible purchase by connected persons of minority interest in Regent Europe The Directors announced details of the Acquisition on 15th March, 2000. On 17th March, 2000, the Company repurchased an aggregate of 3,559,000 Shares. The Executive informed the Company that such repurchases, resulting in an increase in the voting rights of the Vendor and parties acting in concert with it, are acquisitions of voting rights, which would constitute a disqualifying transaction under whitewash guidance note pursuant to the Takeovers Code. In order to remove any possibility of a general offer being required to be extended by the Vendor as a result of the issue of the original 226,620,213 Consideration Shares, the Vendor, Mr. James Mellon and the Company, by virtue of the Deed, have agreed that an aggregate of 92,000,000 non-voting convertible Deferred Shares will be issued in place of the same number of Consideration Shares as part of the consideration pursuant to the Agreement. Pursuant to the Deed, Indigo Securities Limited has substituted Holmehead Limited as the Vendor due to a reorganisation of the discretionary trust of which Mr. James Mellon is a beneficiary. Mr. James Mellon will continue to act as the guarantor of the Vendor. As announced on 15th March, 2000, the Directors resolved to pay a dividend of HK$0.12 per Share in cash or, as an alternative, one share in Regent Europe. Certain Directors and director of subsidiaries of the Company have agreed with the Company that if Shareholders do not choose to receive shares in Regent Europe, they will buy such shares from the Company at a price of HK$0.12 per Share up to a maximum amount of US$2.5 million. These arrangements will ensure that Regent Europe will cease to be a subsidiary of the Company and contribute to the financing of the cash dividend of HK$0.12 per Share up to US$2.5 million. The purchase constitutes a discloseable and connected transaction for the Company and will be conditional on Independent Shareholders' approval. Application will be made to postpone the despatch of the circular to Shareholders to on or before 20th April, 2000. AMENDMENTS TO THE AGREEMENT The Directors on 15th March, 2000 announced, among other things, entering into the Agreement involving the Acquisition by the Company of an interest in Interman. The Acquisition involved the issue of the original amount of 226,620,213 Consideration Shares which would result in the Vendor and parties acting in concert with it incurring an obligation to make a general offer for all the Shares other than those controlled by the Vendor and parties acting in concert with it. The Agreement was conditional on, among other things, a whitewash waiver being granted by the Executive. On 17th March, 2000, the Directors announced that an aggregate of 3,559,000 Shares (representing 0.38% of the existing issued Shares) had been repurchased by the Company. The Executive informed the Company that such repurchases, resulting in an increase in the voting rights of the Vendor and parties acting in concert with it, are acquisitions of voting rights, which would constitute disqualifying transactions under the whitewash guidance note pursuant to the Takeovers Code. The Vendor and parties acting in concert wish to ensure that they do not incur an obligation to make a general offer for the Shares upon Completion. Accordingly, on 5th April, 2000, the Deed was entered into pursuant to which the Vendor and the Company have agreed that an aggregate of 92,000,000 non-voting convertible Deferred Shares will be issued in place of the same number of Consideration Shares as part of the consideration pursuant to the Agreement. The issue price of the Deferred Shares is HK$2.80 each and therefore the aggregate consideration of an equivalent of HK$634.5 million is not changed. Therefore, under the Agreement, an aggregate of 134,620,213 Shares and 92,000,000 Deferred Shares will be issued as consideration. The 134,620,213 Shares represent 14.5% of the existing Shares and 12.7% of the enlarged ordinary share capital upon issue of such Shares. The Deferred Shares carry conversion rights into Shares on a 1 for 1 basis. Accordingly, if converted in full, the Deferred Shares will be converted into 92,000,000 Shares, representing approximately 8.7% of the enlarged issued ordinary share capital of the Company upon Completion before conversion. The following is a summary of the changes in shareholdings in the Company based on the existing issued share capital of the Company and upon Completion: Immediately Immediately upon Completion upon Completion Existing (before (after conversion Shareholding conversion of of Deferred structure Deferred Shares) Shares) Number Number Number of Shares % of Shares % of Shares % ('000) ('000) ('000) James Mellon 118,935 12.8 253,555 23.9 345,555 29.9 Peter Everington 49,291 5.3 49,291 4.7 49,291 4.3 Jayne Sutcliffe 38,727 4.2 38,727 3.6 38,727 3.3 Other Directors 1,250 0.1 1,250 0.1 1,250 0.1 ----------------------------------------------- 208,203 22.4 342,823 32.3 434,823 37.6 Public 720,177 77.6 720,177 67.7 720,177 62.4 ----------------------------------------------- Total issued share capital of the Company 928,380 100.0 1,063,000 100.0 1,155,000 100.0 Following Completion (but before conversion of any Deferred Shares), the Vendor and parties acting in concert with it will control in aggregate 32.3% of the voting rights of the Company. Since the Vendor and parties acting in concert with it will not incur an obligation under Rule 26 of the Takeovers Code to make a general offer to acquire the Shares not owned by them, a whitewash-waiver will not be required. THE DEFERRED SHARES Conditions: The Deed is conditional on: * approval by the Stock Exchange for listing of and permission to deal in the Conversion Shares; * approval from Independent Shareholders in general meeting of the Company for the issue and allotment of the Deferred Shares and the Conversion Shares and the increase in authorised share capital of the Company to include the Deferred Shares; Completion: Subject to the satisfaction of the conditions of the Agreement, the issue of the Deferred Shares is expected to take place on Completion. Application for Listing: Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares. No application will be made for the listing of the Deferred Shares. The following is a summary of the terms of the Deferred Shares: Voting: The Deferred Shares will not be entitled to vote at any of the general meetings of the Company. Transferability: The Deferred Shares are transferable with the prior written consent of the Company and prior written notice given to the Stock Exchange. Capital: Each Deferred Share will confer on the holder pari passu rights on a winding up or return of capital. Distributions: The Deferred Shares will rank pari passu with the Shares in respect of all distributions made the Company after their issue. Conversion: Each Deferred Share will carry a conversion right to convert into one Share commencing six months from the date of issue. The conversion price is therefore equivalent to HK$2.80 per Share. The Conversion Shares shall, when issued, rank pari passu in all respects with all other Shares in issue on the date of conversion including the right to any dividends or distributions. THE REPLACEMENT OF VENDOR Pursuant to the Deed, Indigo Securities Limited has substituted Holmehead Limited as the Vendor under the Agreement due to a reorganisation of the discretionary trust effected on 5th April, 2000 of which Mr. James Mellon is a beneficiary. Mr. James Mellon will continue to act as the guarantor of the Vendor. Save for the above, no other terms of the Agreement have been amended. PURCHASE ARRANGEMENTS OF THE SHARES IN REGENT EUROPE On 15th March, 2000, the Directors announced the declaration of the Dividend. The Dividend is to be satisfied in cash or, as an alternative for Shareholders who are interested in the Eastern European business of the Company, by the distribution in specie of the shares in the capital of Regent Europe on the basis of one share of Regent Europe for every Share of the Company. The Directors holding approximately 22.4% of the Company's present share capital have stated they will elect to receive shares in Regent Europe. In addition, the Consideration Shares (including the Deferred Shares) will rank for the Dividend and the Vendor has stated it will elect to receive shares in Regent Europe. Accordingly, at least 37.6% of the shares in Regent Europe will be distributed to the Shareholders and holders of the Deferred Shares. In order to further reduce the possibility that a significant interest in Regent Europe will remain with the Group after the Dividend, and to contribute to the funding for the cash dividend, certain Directors (Ms. Jayne Sutcliffe and Mr. David McMahon) and a director of subsidiaries of the Company (Mr. David Curl) have agreed to purchase shares in Regent Europe at a price of HK$0.12 per share up to a maximum amount of US$2.5 million, representing approximately 162 million shares (equivalent to approximately 15.2% interest) in Regent Europe in the event that some Shareholders choose cash in respect of the Dividend. Consequently, Regent Europe will cease to be a subsidiary of the Company and a maximum holding of 47% interest in Regent Europe will remain with the Group, assuming none of the Shareholders elect for shares in Regent Europe pursuant to the Dividend. The purchases constitute a discloseable and connected transaction under the Listing Rules and would be conditional on approval of Independent Shareholders. A further announcement will be made of the Record Date for the Dividend and the books closing arrangements. The Directors believe that Regent Europe's business will no longer be consistent with the Group's focus. Following the Dividend, Regent Europe will function as an independent financial services group. The Directors believe this step will clarify the structure of the Company and sharpen the focus of its business in terms of both geographical area and markets served. At the same time, the management of Regent Europe will be able to concentrate on its own specialised businesses and be incentivised by reference to the results from those businesses. Regent Europe is a company incorporated in the Cayman Islands and a wholly owned subsidiary of the Company which acts as the holding company for the Company's European interests. These include principally brokerage and investment activities in Russia, corporate finance activities based in London and certain fund management activities. For the year ended 31st March, 1999, activities in Eastern Europe and Russia now held under Regent Europe incurred losses of an aggregate of US$53.9 million. The net assets of Regent Europe was approximately US$20 million according to the management accounts of Regent Europe for January 2000. DESPATCH OF THE SHAREHOLDER CIRCULAR Under the Listing Rules, a circular is required to be despatched to the Shareholders with 21 days of the Announcement providing details of the transactions contemplated. In view of the above possible changes to the Agreement, the Directors will make an application to the Stock Exchange for an extension for the despatch of the circular of the Company from 5th April, 2000 to 20th April, 2000. FLUCTUATIONS IN THE PRICE OF THE SHARES The Directors have noted the decrease in the price of the Shares today and wish to state that save for the above information, they are not aware of the reasons for such fluctuation. The Directors announced on 15th March, 2000 details of the Agreement. Save as mentioned above, neither the Company nor any of its subsidiaries are involved in negotiations or parties to any agreements in relation to intended acquisitions or realisations which are discloseable under paragraph 3 of the Listing Agreement, nor are the Directors aware of any matter discloseable under the general obligation imposed by paragraph 2 of the Listing Agreement, which is or may be of a price-sensitive nature. The Directors wish to remind Shareholders and investors to exercise extreme caution in dealing in the shares of the Company. DEFINITIONS In this announcement, the following expressions have the meanings set out below: "Acquisition" the proposed acquisition by the Company of 100% interest in Interman pursuant to the Agreement "Agreement" the sale and purchase agreement dated 15th March, 2000 between the Company and Holmehead Limited relating to the sale and purchase of Interman, as novated by the Deed dated 5th April, 2000 "Company" Regent Pacific Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange "Completion" completion of the Agreement "Consideration Share(s)" shares to be issued as consideration pursuant to the Agreement "Conversion Shares" Shares issued pursuant to any conversion of the Deferred Shares "Deed" the deed of novation entered into between the Company, Holmhead Limited, Mr. James Mellon and Indigo Securities Limited pursuant to which Indigo Securities Limited has substituted Holmehead Limited as the Vendor and certain amendments were made to the Agreement "Deferred Shares" 92,000,000 non-voting convertible deferred shares of US$0.01 each in the capital of the Company to be issued pursuant to the Agreement (as amended by the Deed) "Directors" Directors of the Company from time to time "Dividend" the proposed payment of the second interim dividend in cash of HK$0.12 per Share or by way of distribution in specie of the Regent Europe shares "Executive" the Executive Director of the Corporate Finance Division of the SFC (or any delegate of the Executive Director) "Group" the Company and its subsidiaries "HK$" Hong Kong dollar(s), the lawful currency in Hong Kong "Independent Shareholders" Shareholders who are not involved in or interested in the Acquisition "Interman" Interman Holdings Limited, a company incorporated in the British Virgin Islands with limited liability "Mr. James Mellon" Mr. James Mellon, the Chairman of the Company "Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange "Record Date" the date by reference to which the entitlements under the Dividend are determined "Regent Europe" Regent Europe Limited (formerly known as Regent Fund Management (Cayman) Limited), a company incorporated in the Cayman Islands and a wholly owned subsidiary of the Company "SFC" Securities and Futures Commission "Share(s)" share(s) of US$0.01 each in the capital of the Company "Shareholder(s)" the holder(s) of the Share(s) "Stock Exchange" The Stock Exchange of Hong Kong Limited "Takeovers Code" The Hong Kong Code on Takeovers and Mergers "US$" United States dollar(s), the lawful currency in the United States of America "Vendor" Indigo Securities Limited, a company incorporated in the British Virgin Islands, which is indirectly wholly owned by a discretionary trust, the sole beneficiary of which is Mr. James Mellon, the Chairman of the Company On behalf of the Board of REGENT PACIFIC GROUP LIMITED Peter Everington Director Hong Kong, 5th April, 2000 The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge, their opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any of their statements in this announcement misleading.