Suncorp Technologies Limited — M&A Activity 2000

Mar 16, 2000

Listed Company Information

DVB (HOLDINGS)<0500> - Announcement & Resumption of Trading DVB (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability) DISCLOSEABLE TRANSACTION Subscription of additional shareholding interest in HiTV Limited As disclosed in the Circular, in November 1999, HiTV was established and each of DVB, STR and Space has subscribed for 3,600,000 HiTV Shares, representing approximately 33.3% interest in HiTV, at par value, and DVB has thus paid a total consideration of HK$3,600,000. On 14 March 2000, DVB entered into the Agreement to subscribe for an additional 1,200,000 HiTV Shares, representing approximately 10% of the issued share capital of HiTV on a fully diluted basis as enlarged by the issue of such HiTV shares at an aggregate subscription price of HK$120,000,000. The entry into of the Subscription Agreement alone constitutes a discloseable transaction for the Company under the Listing Rules and, even if aggregate with the previous acquisition for HiTV Shares in November 1999 as disclosed in the Circular, still constitutes a discloseable transaction. Further details will be contained in the circular to be despatched to the shareholders of the Company as soon as practicable within 21 days from the date of this announcement. At the request of the Company, trading in the shares of the Company was suspended with effect from 10:00 a.m. on 15th March, 2000. An application has been made to the Stock Exchange for the resumption of trading in shares of the Company with effect from 10:00 a.m. on 16 March, 2000. Agreement dated: 14 March 2000 Subscriber: DVB Issuer: HiTV HiTV is owned approximately as to 33.3% by DVB, as to 33.3% by STR and as to 33.3% by Space. Upon completion of the Subscription, each of STR and Space's interest in HiTV will be diluted to 30%. Each of STR, Space and their respective beneficial owners is independent of and not connected with the directors, chief executive or substantial shareholders of the Company, any of its subsidiaries or any of their respective associates (as defined in the Listing Rules). Shares subscribed for: 1,200,000 new HiTV Shares divided into Tranche A Shares and Tranche B Shares, together representing 10% of HiTV's issued share capital as enlarged by the Subscription. As disclosed in the Circular, DVB has also granted a put option to STR, pursuant to which STR shall be entitled at its option at any time after 1 September 2001 to sell its 3,600,000 shares in HiTV to DVB at a consideration of 22,700,000 shares in the Company. Subject to employees share options of HiTV to subscribe for 1,200,000 HiTV Shares by the management of HiTV as disclosed in the Circular, in which case the present interest of each of DVB, STR and Space will be reduced by approximately 3.33%. Upon completion of the Subscription, DVB will have a 40% interest in HiTV, or a 36.4% interest in HiTV (assuming the full exercise of all the employees share options) or a 63.6% interest in HiTV (assuming the full exercise of all the employees share options and the exercise in full of the put option by STR). Subscription Price: The total subscription price shall be HK$120,000,000 for Tranche A Shares and Tranche B Shares. The price was arrived at based on arm's length negotiation, with reference to the business potential brought about by the established cable network in Eastern China Areas. The Directors believe that the growth in the television viewer's markets in those areas will enable HiTV to secure more subscribers and that, based on DVB's involvements in the business development of HiTV in the last 3 months, HiTV has good business prospect. Conditions: Tranche A Shares The completion of the subscription of Tranche A Shares is conditional upon the following conditions having been fulfilled or waived by 28 March 2000: (a) the warranties given by HiTV under the Agreement, including warranties as to accuracy of corporate information of HiTV and its subsidiaries and no pending or threatened litigation against HiTV, remaining true and accurate and not misleading in any material respects as at the date of the Agreement and as at completion of the subscription of Tranche A Shares as if repeated at such completion; (b) execution by HiTV International of a film distribution agreement to be entered into by DVB and HiTV International; (c) HiTV having complied fully with the obligations specified in the Agreement, which include operating the business in the ordinary course of business and refraining from giving guarantee or security except for normal trade purposes, and otherwise having performed in all material respects all of the covenants, undertakings and agreements required to be performed by it thereunder on or prior to completion of the subscription of Tranche A Shares; (d) DVB having received written consents from STR and Space to the effect that they consent to the allotment and issue of the Tranche A Shares to DVB and agree not to exercise any pre-emption rights which may arise by reason of such allotment and issue; and (e) the board of directors (or the shareholders, as appropriate) of HiTV having passed resolutions to allot and issue the Tranche A Shares to DVB and to approve the registration of DVB in respect of the Tranche A Shares in HiTV's register of members. Save for DVB's interest in HiTV, HiTV International and its beneficial owner is independent of and not connected with the directors, chief executive or substantial shareholders of the Company, any of its subsidiaries or any of its associates (as defined in the Listing Rules). Upon due execution of the film distribution agreement referred to in condition (b) above, DVB shall grant HiTV International a right to distribute on a revenue sharing basis its licensed films in Eastern China Areas in the PRC. The Company will take appropriate steps to ensure agreements entered into by it or its subsidiary will be performed in accordance with all applicable laws. Tranche B Shares The completion of the subscription of Tranche B Shares is conditional upon the following conditions having been fulfilled or waived by 14 June 2000: (a) the warranties given by HiTV under the Agreement, including warranties as to accuracy of corporate information of HiTV and its subsidiaries and no pending or threatened litigation against HiTV, remaining true and accurate and not misleading in any material respects as at the date of the Agreement and as at completion of the subscription of Tranche B Shares as if repeated at such completion; (b) execution by Donghua of the preliminary collaboration agreement in relation to the provision of home entertainment and broadband services over the cable networks of Donghua to be entered into by Donghua and STR Broadcom; (c) HiTV having complied fully with the obligations specified in the Agreement, which include operating the business in the ordinary course of business and refraining from giving guarantee or security except for normal trade purposes, and otherwise having performed in all material respects all of the covenants, undertakings and agreements required to be performed by it thereunder on or prior to completion of the subscription of Tranche B Shares; (d) fulfillment or waiver of conditions for the subscription of Tranche A Shares in accordance with the Agreement; (e) DVB having received written consents from STR and Space that they consent to the allotment and issue of the Tranche B Shares to DVB and agree not to exercise any pre-emption rights which may arise by reason of such allotment and issue; and (f) the board of directors (or the shareholders, as appropriate) of HiTV having passed resolutions to allot and issue the Tranche B Shares to DVB and to approve the registration of DVB in respect of the Tranche B Shares in HiTV's register of members. Save for DVB's interest in HiTV, each of Donghua, STR Broadcom and their respective beneficial owners is independent of and not connected with the directors, chief executive or substantial shareholders of the Company, any of its subsidiaries or any of their respective associates (as defined in the Listing Rules). As there are different conditions to be fulfilled at different time, the Subscription was divided into 2 different tranches. Unless Completion A occurs, Completion B will not be proceeded with. DVB shall be entitled to waive any of the conditions from Completion A and Completion B. Completion of Subscription: Completion A and Completion B will take place on such date as may be agreed between DVB and HiTV within seven business days following the fulfillment (or waiver) of all the respective conditions precedent, which are expected to be before 28 March 2000 (in the case of Tranche A Shares) and 14 June 2000 (in the case of Tranche B Shares). If any of the conditions in respect of Completion A and Completion B has not been fulfilled or waived by DVB before their respective deadlines, the obligations to proceed with Completion A or Completion B (as the case may be) shall be terminated and neither of the parties to the Agreement shall have any claims against the other in respect thereof (save for any antecedent breach of the Agreement). Payment: DVB will pay by banker's draft or by telegraphic transfer the subscription money of HK$80,000,000 for Tranche A Shares on completion of the subscription of Tranche A Shares and the remaining subscription money of HK$40,000,000 for Tranche B Shares on completion of the subscription of Tranche B Shares. The subscription price was determined based on arm's length negotiation between DVB and HiTV with reference to the potential growth in subscribers of HiTV's cable network in the Eastern China Areas. As HiTV was incorporated in November 1999, DVB has not yet received any return from its investment in this new venture. The funding for the subscription of Tranche A Shares and Tranche B Shares will be provided by the internal resources of the Company. Reasons and benefits for the Subscription: HiTV was established in November 1999 and is principally engaged in the establishment of broadband portal and related technical support and platform services upon cable networks in Eastern China Areas, targeting primarily the television viewer's market. As at the date hereof, HiTV has no turnovers and not incurred any material operating expenses and no audited financial information of HiTV is available. The Directors are of the view that the provision of equipment and technology related to image, sound and interactive data transmission used in the PRC is undergoing a period of rapid development and has significant potential for substantial growth. Part of the Company's business strategy is to take advantage of this growth potential by positioning itself for any further business opportunities in the data transmission market and to explore opportunities for further investments in related industries in the PRC. DVB has already nominated 3 out of 9 directors to the board of directors of HiTV, 2 of which are also directors of the Company. The Company does not intend to appoint additional directors to the board of directors of HiTV after the completion of the Subscription. Currently the Company does not have any plan to increase its interest in HiTV. Based on the above factors, the Directors believe that the entry into of the Agreement to increase its interest in HiTV will enhance the Company's growth prospects as well as further strengthening the Company's position in the image, sound and interactive data transmission sector in the PRC. Existing business of the Company: The Company is principally engaged in the sale of computer monitors and related products and has since December 1998 diversified into the electronic and digital data transmission (the "EDT") business. The Company has been exploring opportunities for business collaborations and development of the EDT business in the Asia Region. Business collaborations in relation to EDT business may take the form of supply arrangements, manufacturing/sub-assembly arrangements, technical service arrangements and/or equity or joint venture participation. A circular containing further information relating to the Subscription will be despatched to the shareholders of the Company for information only as soon as practicable. Suspension of trading At the request of the Company, trading in the shares of the Company was suspended with effect from 10:00 a.m. on 15th March, 2000. An application has been made to the Stock Exchange for the resumption of trading in shares of the Company with effect from 10:00 a.m. on 16 March, 2000. Terms used in this announcement: "Agreement" means the agreement dated 14 March 2000 entered into between DVB and HiTV in relation to the Subscription; "Circular" means the discloseable transaction circular issued by the Company on 8 December 1999; "Company" means DVB Holdings Limited, a company incorporated in Bermuda with limited liability whose shares are listed on the Stock Exchange; "Completion A" means completion of subscription of the Tranche A Shares; "Completion B" means completion of subscription of the Tranche B Shares; "Donghua" means Shanghai Donghua Broadcast & TV Networks Ltd., a state-owned enterprise established in the PRC; "DVB" means DVB (Group) Limited, a company incorporated in the British Virgin Islands on 25 November 1998 with limited liability and a wholly-owned subsidiary of the Company; "Eastern China Areas" means Shanghai, Shandong, Zhejiang, Jiangsu, Fujian, Anhui and Jiangxi in the People's Republic of China; "HiTV" means HiTV Limited, a company incorporated in the Cayman Islands with limited liability; "HiTV International" means HiTV International Limited, a company incorporated on 11 February 2000 in Hong Kong with limited liability which is a wholly owned subsidiary of HiTV; "HiTV Shares" means shares of HK$1.00 each in the share capital of HiTV; "Listing Rules" means Rules Governing the Listing of Securities on the Stock Exchange; "New Shares" means 1,200,000 shares of a nominal value of HK1.00 each in the ordinary share capital of HiTV, comprising of Tranche A Shares and Tranche B Shares, to be subscribed by DVB pursuant to the Agreement; "SBT" means Shanghai Broadcasting and Television Technology Systems Limited, a PRC state-owned enterprise which is an associate company of STR; "Space" means Space Pilot International Limited, a company incorporated in the British Virgin Islands with limited liability; "Stock Exchange" means The Stock Exchange of Hong Kong Limited; "STR" means STR International (H.K.) Company Limited, a company incorporated in the British Virgin Islands with limited liability; "STR Broadcom" means STR Broadcom (Suzhou) Limited, a sino-foreign cooperative joint venture enterprise established by HiTV's wholly owned subsidiary and SBT, the after tax profit (after statutory contributions) of which will be distributed as to 70% to HiTV's wholly owned subsidiary and as to 30% to SBT; "Subscription" means the subscription of the New Shares by DVB pursuant to the Agreement; "Tranche A Shares" means 800,000 HiTV Shares to be subscribed by DVB pursuant to the Agreement; and "Tranche B Shares" means 400,000 HiTV Shares to be subscribed by DVB pursuant to the Agreement. By Order of the Board DVB (Holdings) Limited Wu Zheng, Bruno Executive Director Hong Kong, 15 March 2000