Vision Values Holdings Ltd. — M&A Activity 1999

Dec 8, 1999

Listed Company Information

WAH YIK HOLD<0862> - 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. Far-Reaching Limited (Incorporated in the British Virgin Islands with limited liability) (the "Offeror") WAH YIK HOLDINGS COMPANY LIMITED (Incorporated in the Cayman Islands with limited liability) (the "Company") JOINT ANNOUNCEMENT Conditional agreement for Jun Jing Developments Limited (the "Vendor") to sell its entire interests in the shares and warrants in the Company to the Offeror and Unconditional cash offer by Somerley Limited on behalf of the Offeror for all the issued shares and outstanding warrants (other than those owned by the Offeror and parties acting in concert with it) of the Company On 7th December, 1999, the Vendor and the Offeror entered into an unconditional agreement for the sale and purchase of 1.5 billion shares and 300 million units of warrants of the Company, representing 75% of the issued share capital and outstanding warrants of the Company respectively, at HK$0.03 per share and HK$0.01 per unit of warrant. Upon completion of the agreement on 7th December, 1999, the Offeror becomes interested in 75% of the issued share capital and outstanding warrants of the Company respectively. The Offeror will make a mandatory cash offer for all the issued shares and outstanding warrants of the Company not already held by the Offeror or parties acting in concert with it. The terms of this offer are set out under the heading "Unconditional cash offer" below. An independent board committee of the Company will be appointed to consider the offer. An independent financial adviser will be appointed to advise the shareholders on the offer. A document setting out the terms of the offer, and acceptance and transfer forms will be sent to independent shareholders and warrantholders of the Company as soon as practicable in accordance with the Hong Kong Code on Takeovers and Mergers (the "Code"). SALE AND PURCHASE AGREEMENT DATED 7TH DECEMBER, 1999 Parties: Vendor: Jun Jing Developments Limited ("Jun Jing") Purchaser: Far-Reaching Limited The Offeror is a company incorporated in the British Virgin Islands and wholly owned by Mr. Yam Tak Cheung ("Mr. Yam"). Mr. Yam is an independent third party not connected with the chief executive, directors or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Rules Governing the Listing of Securities (the "Listing Rules") on the Stock Exchange of Hong Kong Limited (the "Stock Exchange")). Shares and warrants sold: 1.5 billion shares of HK$0.01 each in the capital of the Company (75% of the Company's issued share capital). 300 million units of warrants of the Company (75% of the outstanding warrants of the Company). The warrants carry subscription rights of HK$0.195 each entitling the holders thereof to subscribe in cash for shares at any time from the date of issue until 4:00 p.m. (Hong Kong time) on 30th November, 2000 (both days inclusive) at an initial subscription price of HK$0.195 per share , subject to adjustment. The 1.5 billion shares and 300 million units of warrants of the Company have been acquired by the Offeror free from all claims, charges, liens, encumbrances and equities. On 23rd June, 1999 the Company announced that on 9th June, 1999 Jun Jing had pledged 120 million shares of the Company (the "Charged Shares") (before the 1 into 10 share subdivision effected on 2nd November, 1999) beneficially held by it to a financial institution as security for facilities granted to Jun Jing. Jun Jing has confirmed that the Charged Shares have been released to Jun Jing upon repayment by it in full of its indebtedness due to such financial institution at the same time of the completion of the sale and purchase agreement. Purchase price: HK$0.03 per share HK$0.01 per unit of warrant The above prices have been agreed at after arm's length negotiation between the parties. Payment terms: HK$30 million has been paid on completion which took place on 7th December, 1999 HK$18 million on or before 8th January, 2000 Completion: 7th December, 1999 Information about the Company: The Company and its subsidiaries (the "Group") are principally engaged in the operation of bowling recreation centers in major cities within Fujian Province of the PRC. The audited consolidated profits before tax of the Company for the two financial years ended 31st December, 1998 and 1997 were about HK$54.7 million and HK$52.1 million respectively. The audited consolidated profits attributable to shareholders of the Company for the two financial years ended 31st December, 1998 and 1997 were about HK$44.0 million and HK$43.4 million respectively. The unaudited consolidated profit before and after taxation of the Company for the six months ended 30th June, 1999 were about HK$20.0 million and HK$16.1 million respectively. The audited consolidated net asset value of the Company was about HK$173.1 million as at 31st December, 1998. Information about the Vendor: The Vendor is a company incorporated in the British Virgin Islands and is owned as to 67% and 33% by Mr. Hui Mang Mang and Mr. Tsai Hung Ching respectively, both directors of the Company. After the disposal, neither the Vendor nor Mr. Hui Mang Mang nor Mr. Tsai Hung Ching will have any shares or warrants of the Company. Unconditional cash offer: As the Offeror has acquired voting rights in 75% of the issued share capital of the Company, the Offeror must make a cash offer for all the issued shares and outstanding warrants of the Company not already owned by the Offeror and parties acting in concert with it under the Code. Investors should exercise caution before buying or selling any shares and/or warrants of the Company. The offer will be on the terms set out below. Unconditional cash offer: Somerley Limited on behalf of the Offeror will make a cash offer for all the issued shares and outstanding warrants of the Company, other than those already owned by the Offeror or acquired by it and parties acting in concert with it during the offer period. Price: HK$0.03 per share and HK$0.01 per unit of warrant, which will be the same as the prices paid by the Offeror to the Vendor for shares and warrants of the Company under the sale and purchase agreement. The price of HK$0.03 per share represents a discount of about 85.3% to the closing price of HK$0.204 per share of the Company (under stock code 862) quoted on the Stock Exchange on 7th December, 1999, being the date of the sale and purchase agreement. The price of HK$0.03 also represents a premium of about 245% over the audited net tangible asset of HK$0.0087 per share as at 31st December, 1998. The price of HK$0.01 per unit of warrant represents a discount of about 94.1% to the closing price of HK$0.17 per unit of warrant of the Company quoted on the Stock Exchange on 7th December, 1999, being the date of the sale and purchase agreement. Total consideration: At present the Company has 20 billion issued shares and 400 million units of warrants. At a price of HK$0.03 per share and HK$0.01 per unit of warrant, the offer values the entire issued share capital of the Company at about HK$60 million and all the outstanding warrants of the Company at about HK$4 million. Somerley Limited confirms that there are resources available to the Offeror sufficient to satisfy full acceptance of the offer. Save for the warrants, there are no options or other securities of the Company which are convertible into shares of the Company. The Offeror's existing voting rights: Prior to completion of the sale and purchase agreement, the Offeror and parties acting in concert with it do not hold any shares or warrants of the Company and has not dealt in the Company's shares or warrants in the past 6 months. Terms of the Offer: A document setting out the terms of the offer, and acceptance and transfer forms will be sent to the shareholders and warrantholders of the Company as soon as practicable in accordance with the code. An independent board committee will be set up to consider the offer. An independent financial adviser will be appointed to advise the committee. Effect of accepting the offer: By accepting the offer, shareholders and warrantholders will sell their shares or warrants of the Company, as the case may be, and all rights attached to them, including the right to receive all dividends and distributions made or paid after 7th December, 1999. Stamp duty: Stamp duty at a rate of HK$0.125 for every HK$1,000 of the price or part thereof will be deducted from the amount paid to shareholders and warrantholders of the Company who accept the offer. Information about the Offeror: The Offeror is a private company incorporated in the British Virgin Islands on 8th November, 1999 and has not conducted any business since its incorporation except for entering into the sale and purchase agreement. The entire issued share capital of the Offeror is beneficially owned by Mr. Yam. The sole director of the Offeror is Mr. Yam. None of the Offeror or Mr. Yam has any interests in any businesses which compete, or are likely to compete, directly or indirectly, with the businesses currently carried out by the Company. Mr. Yam, aged 38, holds a bachelor degree of Science from the University of Toronto, majoring in computer. Mr. Yam has over 5 years of experience in the management and operation of a private textile and knitting company of which he is a controlling shareholder. Mr. Yam confirms that the acquisition of the shares and warrants of the Company by the Offeror is solely financed by his own resources and he is not related to any PRC entities in connection with the acquisition of the said securities. Intentions of the Offeror: The Offeror intends that the Group will continue with the existing businesses of operation of bowling recreation centers. The Offeror does not intend to make any material changes to the businesses of the Group. The Offeror intends that the daily operation of the Group will continue to be carried out by its existing management and there will not be any material changes to the employees of the Group by reason only of the offer. The Offeror will explore suitable business opportunities and new investments, although no such investments or businesses have been identified at this stage. Any further investments or businesses that might be conducted by the Company will be subject to regulatory and shareholders' approval where so required by the applicable laws and regulations and will be in full compliance with the relevant Listing Rules. The Offeror will undertake to the Stock Exchange that it will fully comply with the Listing Rules requirements. If Mr. Yam becomes a director of the Company, he will fully comply with the requirements of the Listing Rules as regards directors of listed companies. Directors and management of the Company: The Offeror does not contemplate to make any changes to the board of directors or management of the Company at present. However, the Offeror intends to nominate sufficient number of directors so as to constitute majority of the board of the Company upon the close of the offer. Further announcement will be made by the Company in this regard. Maintaining the listing of the Company: The Offeror intends to maintain the listing status of the Company on the Stock Exchange. The Stock Exchange has stated that it will closely monitor trading in the shares and warrants of the Company. If the Stock Exchange believes that: - a false market exists or may exist in the shares or warrants; or - that there are too few shares or warrants in public hands to maintain an orderly market; then it will consider exercising its discretion to suspend trading in the shares or warrants of the Company. The director of the Offeror and the new directors to be appointed to the board of the Company will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that not less than 25% of the shares and warrants of the Company will be held by the general public upon the close of the offer. If the Company remains a listed company, any acquisition or disposal of assets by the Company will be subject to the provisions of the Listing Rules. The Stock Exchange has the discretion to require the Company to issue a circular to its shareholders, and for information only, warrantholders irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principle activities of the Company. The Stock Exchange also has the power to aggregate a series of transactions and any such transactions may result in the Company being treated as if it were a new listing applicant and subject to the requirements for new listing applicants as set out in the Listing Rules. General An independent board committee of the Company will be appointed to consider the offer. A document setting out the terms of the offer, and acceptance and transfer forms will be sent to independent shareholders and warrantholders of the Company as soon as practicable in accordance with the Code. The following statement is made at the request of the Stock Exchange. The directors of the Company noted the recent increases in the price of the shares of the Company and wish to state that save for the sale and purchase agreement, the directors are not aware of any reasons for such increase and there are no negotiations or agreements relating to intended acquisitions or realisations which are discloseable under paragraph 3 of the Listing Agreement, neither is the board 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. Made by the order of the board of the Company the directors of which individually and jointly accept responsibility for the accuracy of the above statement. By Order of the Board By Order of the Board Far-Reaching Limited Wah Yik Holdings Company Limited Yam Tak Cheung Hui Mang Mang Sole director Chairman Hong Kong, 7th December, 1999 The director of the Offeror accepts full responsibility for the accuracy of the information contained in this announcement except those relating to the Company and confirms, having made all reasonable inquiries, that to the best of his knowledge, the 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 statement in this announcement misleading. The directors of the Company jointly and severally accept full responsibility for the accuracy of the information contained in this announcement except those relation to the Offeror and Mr. Yam and confirm, having made all reasonable inquiries, that to the best of their knowledge, the 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 statement in this announcement misleading.