Sinopec Engineering Group Co Ltd. — M&A Activity 2014

Nov 17, 2014

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.

UNIVERSE INTERNATIONAL HOLDINGS LIMITED 寰宇國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

DISCLOSEABLE TRANSACTION: ACQUISITION OF 22.13% INTEREST IN THE TARGET

THE ACQUISITION

Reference is made to the announcement of the Company dated 17 October 2014 in which the Company announced that the Purchaser (a wholly-owned subsidiary of the Company) and various parties had entered into the MOU to form the basis of negotiation of the proposed acquisition of equity interest in the Target.

The Board is pleased to announce that after trading hours on 17 November 2014, the Purchaser and the Vendors entered into the SP Agreement pursuant to which the Purchaser has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell, the Sale Shares (representing 22.13% of the issued share capital of the Target) at the Consideration of HK$5,060,000.

The Target is the holding company of a group of companies which are principally engaged in the trading of watches, wholesales and retail of watches in Hong Kong and PRC. Further details about the Target and its subsidiaries are set out in the paragraph headed “Information about the Target Group” below.

The Target Group has well-established business in trading, wholesales and retail of watch products. The Board believes that the Acquisition will enable the Company to diversify its current business and tap into further business opportunities for watch products in Hong Kong and PRC. The Company will also seek cooperation with the Target Group and access the existing customer base of the Target Group to promote the Company’s current business to create synergetic advertising effect for the Company as well as the Target Group with a view of maximising the return of the shareholders of the Company.

• for identification purposes only

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IMPLICATIONS UNDER THE LISTING RULES

As certain of the relevant percentage ratios (as defined under the Listing Rules) in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction for the Company under the Listing Rules and is subject to the notification and announcement requirements of Chapter 14 of the Listing Rules.

Reference is made to the announcement of the Company dated 17 October 2014 in which the Company announced that the Purchaser (a wholly-owned subsidiary of the Company) and various parties had entered into the MOU to form the basis of negotiation of the proposed acquisition of equity interest in the Target.

The Board is pleased to announce that after trading hours on 17 November 2014, the Purchaser and the Vendors entered into the SP Agreement pursuant to which the Purchaser has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell, the Sale Shares (representing 22.13% of the issued share capital of the Target) at the Consideration of HK$5,060,000, upon and subject to the terms and conditions of the SP Agreement.

THE SP AGREEMENT

Major terms of the SP Agreement are set out below.

Date:

17 November 2014

Parties:

• (1) the Purchaser, Fragrant River Entertainment Culture (Holdings) Limited, a company incorporated in BVI and a wholly-owned subsidiary of the Company as at the date of this announcement; and

• (2) the Vendors:

• (i) Kwok Shun Tim;

• (ii) C8 Club Limited, a company incorporated in Hong Kong;

• (iii) Wong Tat Tung; and

• (iv) Ng Tang.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendors and (where applicable) its ultimate beneficial owners are Independent Third Parties.

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Assets to be acquired

The Purchaser has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell the Sale Shares, which represent 22.13% of the issued share capital of the Target. Upon Completion, the Purchaser will become the second largest shareholder of Target.

Consideration

The Consideration for the acquisition of the Sale Shares is HK$5,060,000. The Company has already paid to the Vendors a sum of HK$5,000,000 (being the Earnest Money) pursuant to the MOU and the remaining balance of the Consideration shall be paid upon Completion.

The Consideration has been and, as the case may be, will be funded by the Group’s internal resources.

Basis of Consideration

The Consideration was determined after arm’s length negotiations between the Vendors and the Purchaser on normal commercial terms with reference to 90.39% of the adjusted net asset value of the Target Group as described in the paragraph headed “Information about the Target Group” below.

Loan Assignments and Capitalisation

As at the date of this announcement, World Time, a wholly-owned subsidiary of the Target, is indebted to various shareholders of the Target certain loans of approximately HK$12,983,000.

It is a term of the SP Agreement that such loans shall be assigned to the Target at nil consideration as soon as practicable after the signing of the SP Agreement and in any event before the Completion (“ Assignment of Loan ”).

Upon completion of the Assignment of Loan, it is expected that World Time will be indebted to the Target an aggregate sum of approximately of HK$15,580,000 (“ Shareholder’s Loan ”), representing the entire sum that World Time owes to the Target.

It is also a term of the SP Agreement that World Time shall capitalise the Shareholder’s Loan in consideration for the allotment and issue, credited as fully paid, 93,506,934 ordinary shares of World Time and such shares shall represent not less than 61.56% of the enlarged issued share capital of World Time (“ Capitalisation ”). After the completion of the Capitalisation, the Target shall own not less than 90.39% of the enlarged issued share capital of World Time.

Conditions precedent

Completion is subject to the fulfilment or (if applicable) waiver of the following Conditions:

• (1) (if applicable) all necessary consents and approvals in relation to the transactions contemplated under the SP Agreement having been obtained by the Vendors and such consents and approvals should be valid up to the Completion Date;

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• (2) (if applicable) all necessary consents and approvals in relation to the transactions contemplated under the SP Agreement having been obtained by the Purchaser and such consents and approvals should be valid up to the Completion Date;

• (3) the Purchaser being reasonably satisfied with the results of the due diligence exercise (whether legal, accounting, financial, operational or other aspects that the Purchaser may consider necessary) on each of the Target’s business assets, liability, activities, operations, prospects and other status which the Purchaser, its agents or professional advisers think reasonably necessary and appropriate to conduct;

• (4) the completion of the Capitalisation having taken place;

• (5) the Purchaser being satisfied, from the date of the SP Agreement and at any time before the Completion, that the warranties as given by each of the Vendors in the SP Agreement remain true, accurate and not misleading and that no events have occurred that would result in any breach of any of the warranties or other provisions of the SP Agreement given by the Vendors; and

• (6) there being no material adverse change.

The Purchaser may waive the Conditions (3), (5) and (6) at any time before the Long Stop Date by notice in writing to the Vendors. None of the other Conditions are capable of being waived by any party.

If any of the Conditions shall not have been fulfilled or (if applicable) waived at or before 5:00 p.m. on the Long Stop Date, all rights and obligations of the parties hereto under the SP Agreement shall cease and terminate, save and except (i) Vendors shall refund the Earnest Money received by them to the Purchaser within five Business Days after the Long Stop Date without interests and (ii) the provision regarding certain provisions relating to confidentiality, costs and expenses and certain miscellaneous matters which provisions shall remain in full force and effect, and no party hereto shall have any claim against the other save for claim (if any) in respect of any antecedent breach thereof.

Completion

Subject to the fulfilment or waiver (as the case may be) of all the Conditions set out above, Completion shall take place on the Completion Date (i.e. the fifth Business Day after all the Conditions shall have fulfilled or waived).

Immediately after Completion, the Group will own 22.13% equity interest in the Target through the Purchaser and the Purchaser will become the second largest shareholder of Target. The Company will equity account the financial results of the Target Group.

INFORMATION ABOUT THE TARGET GROUP

The Target is a company incorporated in BVI with limited liability and is the holding company of a group of companies which are principally engaged in the trading of watches, wholesales and retail of watches in Hong Kong and PRC.

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As at the date of this announcement, the Target owns 75% of the issued share capital of World Time, who owns 100% of the various companies as operating companies of the Target Group.

As disclosed in the sub-paragraph headed “The SP Agreement – Loan Assignments and Capitalisation” above, the existing shareholders of the Target, the Target and World Time will undertake the Assignment of Loan and the Capitalisation. Following completion of the Assignment of Loan and the Capitalisation, the Target’s shareholding interest in World Time will be increased to not less than 90.39%.

As at 30 September 2014, the total assets and net assets value of the Target Group are approximately HK$29,327,000 and HK$12,324,000 respectively. Following the completion of the Assignment of Loan and the Capitalisation as described above, the net assets value of the Target Group will be adjusted to HK$25,307,000.

Set out below is certain unaudited consolidated financial information of the Target for the year ended 31 December 2012 and 31 December 2013 respectively:

	For the	For the
	year ended	year ended
	31 December	31 December
	2012	2013
	HK$’000	HK$’000
Turnover	76,103	60,100
Loss before taxation	(2,165)	(3,646)
Loss after taxation	(2,165)	(3,646)

To the best of the Directors’ knowledge, information and belief, the remaining shareholders of each of the Target and Word Time and their respective ultimate beneficial owners are Independent Third Parties.

INFORMATION ABOUT THE GROUP

The Group is principally engaged in distribution of films in various videogram formats, film exhibition, licensing and sub-licensing of film rights, leasing of investment properties, securities investment and money lending.

REASONS FOR AND BENEFITS OF THE ACQUISITION UNDER THE SP AGREEMENT

The Target Group has well-established business in trading, wholesales and retail of watch products. The Board believes that the Acquisition will enable the Company to diversify its current business and tap into further business opportunities for watch products in Hong Kong and PRC. The Company will also seek cooperation with the Target Group and access the existing customer base of the Target Group to promote the Company’s current business to create synergetic advertising effect for the Company as well as the Target Group with a view of maximising the return of the shareholders of the Company.

The Directors (including the independent non-executive Directors) are of the view that the terms of the SP Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and its shareholders as a whole.

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IMPLICATIONS UNDER THE LISTING RULES

As certain of the relevant percentage ratios (as defined under the Listing Rules) in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction for the Company under the Listing Rules and is subject to the notification and announcement requirements of Chapter 14 of the Listing Rules.

DEFINITIONS

Unless otherwise specified, the following terms have the following meanings in this announcement:

“Acquisition”	the acquisition of the Sale Shares pursuant to the terms and conditions of
	the SP Agreement
“Assignment of Loan”	has the same meaning as defined in the sub-paragraph headed “The SP
	Agreement – Loan Assignments and Capitalisation”
“Board”	the board of Directors
“BVI”	the British Virgin Islands
“Capitalisation”	has the same meaning as defined in the sub-paragraph headed “The SP
	Agreement – Loan Assignments and Capitalisation”
“Company”	Universe International Holdings Limited, a company incorporated in the
	Bermuda, the issued shares of which are listed on The Stock Exchange of
	Hong Kong Limited (stock code: 1046)
“Completion”	the completion of the sale and purchase of the Sale Shares
“Completion Date”	the fifth Business Day after all the Conditions (other than those Conditions
	which can be fulfilled only at Completion) shall have fulfilled or waived
	on which the Completion shall take place (or such other date as the
	Purchaser and the Vendors may agree in writing).
“Condition(s)”	the conditions precedent to which Completion is subject to as set out in the
	sub-paragraph headed “The SP Agreement – Conditions precedent”
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Director(s)”	the director(s) of the Company
“Earnest Money”	the earnest money in the sum of HK$5,000,000 which was paid to the
	Vendors in accordance with the MOU

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“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Third Parties”	third parties independent of the Company and connected persons of the
	Company and “Independent Third Party” shall be construed accordingly
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Long Stop Date”	30 January 2015 (or such later date as the Purchaser and the Vendors may
	agree in writing)
“MOU”	the memorandum of understanding dated 17 October 2014 entered into
	among the Vendors, Victor Meg Limited and the Purchaser in relation
	to the potential acquisition of all or part of the issued share capital of
	the Target, details of which were disclosed in the announcement of the
	Company dated 17 October 2014
“PRC”	the People’s Republic of China, which, for the purpose of this
	announcement, excludes Hong Kong, the Macau Special Administrative
	Region of the PRC and Taiwan
“Purchaser”	Fragrant River Entertainment Culture (Holdings) Limited, a company
	incorporated in BVI with limited liability and a wholly-owned subsidiary
	of the Company
“Sale Shares”	664 issued shares of the Target, representing 22.13% of the issued share
	capital of the Target as at Completion
“Shareholder’s Loan”	has the same meaning as defined in the sub-paragraph headed “The SP
	Agreement – Loan Assignments and Capitalisation” under the section of
	“The SP Agreement” above
“SP Agreement”	the agreement dated 17 November 2014 entered into between the
	Purchaser and the Vendors in relation to the Acquisition
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target”	Winston Asia Limited, a company incorporated in BVI with limited
	liability
“Target Group”	the Target and its subsidiaries

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“Vendors”

the vendors as listed out in the paragraph headed “The SP Agreement – Parties”

“World Time”

World Time International Limited, a company incorporated in Hong Kong with limited liability and a subsidiary of the Target

On behalf of the Board Universe International Holdings Limited Lam Shiu Ming, Daneil Chairman and Executive Director

Hong Kong, 17 November 2014

As at the date of this announcement, the Board comprise of Mr. Lam Shiu Ming, Daneil, Mr. Hung Cho Sing, Mr. Yeung Kim Piu and Mr. Lam Kit Sun as executive Directors and Mr. Lam Wing Tai, Mr. Choi Wing Koon and Mr. Lam Chi Keung as independent non-executive Directors.

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