RoboSense Technology Co., Ltd — M&A Activity 2000

Mar 6, 2000

Listed Company Information

LUOYANG GLASS<1108> - 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. LUOYANG GLASS COMPANY LIMITED (a joint stock limited company incorporated in the People's Republic of China with limited liability) CONNECTED TRANSACTIONS In relation to the acquisitions of 40.29% interest in CLFG Mineral Products Co. Ltd. and of 52% interest in Yinan Huasheng Mineral Products Industry Co. Ltd. The directors of the Company hereby announce that on March 3, 2000, the Company entered into two agreements (the "Acquisition Agreements"). One is for the acquisition of 40.29 per cent interest in CLFG Mineral Products Co., a wholly owned subsidiary of CLFG, at a consideration of approximately Rmb12,475,000 (equivalent to approximately HK$11,731,000), which is the unsecured account receivable owed to the Company by the CLFG, based on the existing registered share capital of Rmb30,960,000 of CLFG Mineral Products Co.. CLFG Mineral Products Co. is mainly engaged in the exploration and processing and marketing of silica-sand and other mineral products. The other is for the acquisition of 52 per cent interest in Yinan Mineral Products Co. held by Qingdao Taiyang at a consideration of Rmb14,560,000 (equivalent to approximately HK$13,692,000) which is the unsecured account receivable owed to the Company by Qingdao Taiyang, based on the existing registered share capital of Rmb28,000,000 of Yinan Mineral Products Co.. Yinan Mineral Products Co. is mainly engaged in the exploration and processing and marketing of silica-sand and other mineral products. Terms of the Acquisition Agreements have been arrived at after negotiation between the parties. All directors of the Company including the Independent Board Committee considers that the terms of the Acquisition Agreements are fair and reasonable as far as the shareholders are concerned and are in the interests of the Company. As CLFG is a controlling shareholder of the Company and holds about 57.14 per cent of the issued capital of the Company and Qingdao Taiyang is a wholly owned subsidiary of the CLFG, they are connected persons of the Company as defined under the Rules governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and 7.3.2 (III) of the Rules governing the Listing of Stocks on the Shanghai Stock Exchange. Thus, the agreements to be arrived at and the completion of transactions contemplated thereunder constitute connected transactions of the Company. The total investment amount of the Company in CLFG Mineral Products Co. and Yinan Mineral Products Co. is less than 3 per cent of the consolidated net tangible assets value of the Company and its subsidiaries as at June 30, 1999. Pursuant to 14.25(1) of the Listing Rules and 7.3.5(I) of the Rules governing the Listing of Stocks on the Shanghai Stock Exchange, the entering into the Acquisition Agreements require an announcement in the press and inclusion in the Company's next annual report. 1. The Acquisition Agreements A. Acquisition Agreement 1 Date of the Agreement: March 3, 2000 Parties: (1) CLFG (Vendor) (2) the Company (Purchaser) Interest: 40.29 per cent interest in CLFG Mineral Products Co. Consideration: An amount of Rmb12,475,000 (equivalent to approximately HK$11,731,000) which is the unsecured account receivable owed to the Company by CLFG will be converted into 40.29 per cent interest in CLFG Mineral Products Co.. The consideration has been based on 40.29% of the current registered capital of Rmb30,960,000 of CLFG Mineral Products Co.. Completion: CLFG currently holds 100 per cent interest in CLFG Mineral Products Co.. The acquisition will be completed upon the conversion of the account receivable into the 40.29 per cent. interest in the registered capital of CLFG Mineral Products Co.. Upon the completion of the acquisition, the Company will own 40.29 per cent interest in CLFG Mineral Products Co. and CLFG will continue to hold the remaining 59.71 per cent. interest in CLFG Mineral Products Co.. CLFG Mineral Products Co. will become an associated company of the Company. Within two days after the Acquisition Agreement 1 was entered into, CLFG will transfer its 40.29 per cent. interest to the Company and the Company set off the account receivable of Rmb12,475,000 (equivalent to approximately HK$11,731,000) owed to the Company by CLFG, the Acquisition Agreement 1 will be completed. B. Acquisition Agreement 2 Date of the Agreement: March 3, 2000 Parties: (1) Qingdao Taiyang (Vendor) (2) the Company (Purchaser) Interest: 52 per cent interest in Yinan Mineral Products Co. Consideration: An amount of Rmb14,560,000 (equivalent to approximately HK$13,692,000) which is the unsecured account receivable owed to the Company by Qingdao Taiyang will be converted into the 52% interest in Yinan Mineral Products Co.. The consideration has been based on 52% of the current registered capital of Rmb28,000,000 of Yinan Mineral Products Co.. Completion: Qingdao Taiyang currently holds 52 per cent interest in Yinan Mineral Products Co.. The acquisition will be completed upon the conversion of the account receivable into the 52 per cent interest in the registered capital of Yinan Mineral Products Co.. Upon the completion of the acquisition, the Company will own 52 per cent interest in Yinan Mineral Products Co.. Yinan Mineral Products Co. will become a subsidiary of the Company. Within two days after the Acquisition Agreement 2 was entered into and Qingdao Taiyang will transfer its 52 per cent. interest to the Company and the Company set off the account receivable of Rmb14,560,000 (equivalent to approximately HK$13,692,000) owed to the Company by Qingdao Taiyang, the Acquisition Agreement 2 will be completed. 2. Profile of the Company The Company is one of the largest manufacturers of float sheet glass in the PRC and is principally engaged in the production and marketing of float sheet glass of various thickness, sizes and colors and processed vehicle glass. 3. Profile of CLFG Mineral Products Co. and Yinan Mineral Products Co. A. Registered capital, the latest audited results and the scope of business of CLFG Mineral Products Co. are shown below: Company Registered 1998 Audited 1999 Audited Scope of Business Name Capital Results Results (Loss) (Loss) Rmb '000 Rmb '000 Rmb '000 CLFG Mineral 30,960 (4,363) (2,180) exploration and processing Products Co. and marketing of silica-sand and other mineral products The registered share capital of CLFG Mineral Products Co. was totally paid up. Upon the completion of the acquisition, the Company will have the cost of investment and percentage of interest in CLFG Mineral Products Co. as shown below: Company Name Cost of Investment Percentage of Interest Rmb '000 (%) CLFG Mineral Products Co. 12,475 40.29 CLFG and CLFG Mineral Products Co. entered into an undertaking agreement on March 3, 2000. Accordingly, since the losses incurred by CLFG Mineral Products Co. during the two fiscal years ended December 31, 1999 were caused by the operational problems prior to the purchase, CLFG has undertaken to bear all the said losses which will be set off by the respective earnings of CLFG in CLFG Mineral Products Co. in the future. Therefore, the Company has no need to make provision for the losses of CLFG Mineral Products Co. for the two fiscal years ended December 31, 1999 and the said losses would not have any financial impact on the Company. As at December 31, 1999, CLFG Mineral Products Co. has audited net asset value of approximately Rmb28,832,000 (equivalent to approximately HK$27,114,000). After the completion of the acquisition, the board of directors of CLFG Mineral Products Co. shall continue to consist of 7 directors. The Company will appoint two directors in the CLFG Mineral Products Co. to replace the two directors originally appointed by CLFG Mineral Products Co.. The directors of the Company anticipated that there will still be connected transaction with CLFG Mineral Products Co. in the future because the silica-sand produced by the CLFG Mineral Co. is the raw material for the production of glass of the Company. The connected transaction has involved Rmb34,440,000 since 1997. The amount involved in connected transactions between the Company and CLFG Mineral Products Co. each year will be approximately Rmb11,000,000. In this connection, the Company will apply for a waiver from The Stock Exchange of Hong Kong Limited. B. Registered capital, the latest audited results and the scope of business of Yinan Mineral Products Co. are shown below: Company Registered 1998 Audited 1999 Audited Scope of Business Name Capital Results Results (Loss) (Loss) Rmb '000 Rmb '000 Rmb '000 Yinan Huasheng 28,000 (4,650) 216 exploration and processing Mineral Products and marketing of silica-sand Industry Co. Ltd. and other mineral products Upon the completion of the acquisition, the Company will have the cost of investment and percentage of interest in Yinan Mineral Products Co. as shown below: Company Name Cost of Investment Percentage of Interest Rmb '000 (%) Yinan Mineral Products Industry Co. 14,560 52 The registered share capital of Yinan Mineral Products Co. was totally paid up. Two of the other three business partners of Yinan Mineral Products Co., "*" and "*" transferred their respective 10% and 15% interest in Yinan Mineral Products Co. to Qingdao Taiyang on March 3, 2000. The other business partner, "*" still has 23% interest in Yinan Mineral Products Co.. Accordingly, there will be connected transactions between the Company and Yinan Mineral Products Co. in the future. The amount involved in such connected transactions will be approximately Rmb16,000,000 each year in the future. As such, the Company will apply for a waiver from The Stock Exchange of Hong Kong Limited. Qingdao Taiyang and Yinan Mineral Products Co. entered into an undertaking agreement on March 3, 2000. Accordingly, since the losses incurred by Yinan Mineral Products Co. in the year of 1998 were caused by the operational problems prior to the purchase, Qingdao Taiyang has undertaken to bear all the respective losses which will be set off by the respective earnings of Qingdao Taiyang in Yinan Mineral Products Co. in the future. As at December 31, 1999, Yinan Mineral Products Co. has audited net assets value of approximately Rmb17,637,000 (equivalent to approximately HK$16,586,000). Yinan Mineral Products Co. currently has five directors. After the completion of the acquisition, the Company will appoint three persons to be directors of Yinan Mineral Products Co. to replace the directors appointed by Qingdao Taiyang, and the remaining two directors will be appointed by other two shareholders respectively. 4. Reason for the Transaction The Directors believe that the acquisitions of 40.29% interest in CLFG Mineral Products Co. and 52% interest in Yinan Mineral Products Co.. will enable them to be transformed into a silica- sand base for the Company, which will secure for the Company a stable and steady access to quality raw material of silica-sand, as 70 per cent of the silica-sand required by the Company are from the two companies. Loss of CLFG Mineral Products Co. for 1998 and 1999 was mainly attributable to old facilities and imperfect management. After the participation of the Company, these adverse factors will be improved gradually and the management of the Company is confident on the prospects of the CLFG Mineral Products Co. and Yinan Mineral Products Co. which are both new companies and established in 1997. Although it recorded loss for 1998, it recorded profits for 1999 and has a positive prospect. All directors of the Company including the Independent Board Committee believes that the terms of the acquisitions are fair and reasonable as far as the independent shareholders of the Company are concerned and are in the interest of the Company. 5. Connected Transactions CLFG is a controlling company of the Company and CLFG Mineral Products Co., and Qingdao Taiyang are wholly owned subsidiaries of CLFG. Thus, as defined under the Hong Kong Listing Rules and 7.3.2(III) of the Rules governing the Listing of Stocks on the Shanghai Stock Exchange, the above acquisitions constitute connected transactions of the Company. The total investment amount of the Company in CLFG Mineral Products Co. and Yinan Mineral Products Co. is less than 3 per cent of the consolidated net tangible assets value of the Company and its subsidiaries as at June 30, 1999. Pursuant to 14.25(I) of the Listing Rules and 7.3.5(I) of the Rules governing the Listing of Stocks on the Shanghai Stock Exchange, the acquisitions shall not require the approval by the independent shareholders of the Company. The Company is required to disclose the particulars of the transactions in the newspapers and the details shall be included in the interim report, annual report and accounts for the year of 2000 to be issued by the Company. 6. Terms used in this Announcement "Acquisition Agreement 1" the acquisition of 40.29 per cent interest in CLFG Mineral Products Co. "Acquisition Agreement 2" the acquisition of 52 per cent interest in Yinan Mineral Products Co. "Acquisition Agreements" Acquisition Agreement 1 and Acquisition Agreement 2 "A Share" domestic invested shares of Rmb1.00 each in the registered share capital of the Company. "Associates" as defined under the Rules governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. "CLFG" China Luoyang Float Glass Group Company of Limited Liability, who is the controlling shareholder of the Company and owns about 57.14 per cent of the issued share capital of the Company "CLFG Mineral Products Co." CLFG Mineral Products Co. Ltd., a joint stock limited company established in the PRC, is a wholly owned subsidiary of CLFG "The Company" Luoyang Glass Company Limited, a joint-stock company registered and incorporated in China, whose A Shares and H Shares are listed on Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited respectively "Directors" the directors of the Company "Independent Board Committee" the independent board committee formed by two executive directors of the Company "Independent Shareholders" the shareholders of the Company other than of CLFG and its associates "Hong Kong Listing Rules" the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited "H Share" overseas listed foreign shares of Rmb1.00 each in the registered shares capital of the Company "PRC" the People's Republic of China "Qingdao Taiyang" Qingdao Taiyang Glass Industry Co. Ltd., a wholly owned subsidiary of CLFG "Yinan Mineral Products Co." Yinan Huasheng Mineral Products Industry Co. Ltd. which is a joint stock limited company established in the PRC. Qingdao Taiyang holds 52 per cent of its interest. "HK$" the lawful currency of Hong Kong "Rmb" the lawful currency of China By Order of the Board Wang Jie Secretary to the Board of Directors Luoyang, China. March 3, 2000 Unless otherwise specified, the translation of Reminbi into Hong Kong dollars is based on the exchange rate of Rmb100 and HK$94.04 as quoted on South China Morning Post on March 3, 2000. "*" For the Chinese names, please refer to the press announcement today.