Wang On Group Limited — Capital/Financing Update 2000

Mar 15, 2000

Listed Company Information

WANG ON GROUP<1222> - Announcement WANG ON GROUP LIMITED (the "Company") PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES KINGSWAY SW SECURITIES LIMITED Underwriter and Placing Agent On 14 March, 2000, arrangements were made by Mr. Yau Yuk Tong, Ms. Tang Mui Fong, Ms. Tang Mui Fun, Middlemore Limited and Caister Limited for the private placement of an aggregate of 100,000,000 shares in the Company to independent investors ("Placing"). On 14 March, 2000, Mr. Yau Yuk Tong, Ms. Tang Mui Fong and Ms. Tang Mui Fun entered into an agreement with the Company to, subject to the satisfaction of certain conditions, subscribe for 29,000,000 shares, 47,000,000 shares and 14,000,000 shares in the Company, respectively ("Subscription"). It is expected that the Subscription will raise approximately HK$64.8 million for the Company before expenses. Mr. Yau Yuk Tong, Ms. Tang Mui Fong and Ms. Tang Mui Fun, together with parties acting in concert with them (including Middlemore Limited and Caister Limited), hold approximately 28.41% of the total issued shares of the Company. Following the completion of the Placing, their shareholding in the Company will reduce to approximately 11.53% of the Company's existing issued share capital. The Subscription will increase their shareholding in the Company to approximately 23.2% of the Company's enlarged issued share capital. Placing agreement dated 14 March, 2000 The Company, Middlemore Limited, Caister Limited and Kingsway SW Securities Limited commenced discussions regarding the Placing at around 1:00 p.m. on 14 March, 2000. Vendors: Mr. Yau Yuk Tong ("Mr. Yau"), Ms. Tang Mui Fong ("Ms. Fong Tang"), Ms. Tang Mui Fun ("Ms. Tang"), Middlemore Limited ("Middlemore") and Caister Limited ("Caister"). Middlemore and Caister are wholly-owned by Mr. Tang Ching Ho ("Mr. Tang"), the brother of Ms. Fong Tang and Ms. Tang and the chairman of the Company. Mr. Yau is a brother of Ms. Yau Yuk Yin ("Ms. Yau"), the wife of Mr. Tang and the deputy chairman of the Company. Mr. Yau, Ms. Fong Tang, Ms. Tang, Middlemore and Caister's shareholding interests in the Company are shown further below. Mr. Yau, Ms. Fong Tang, Ms. Tang, Middlemore, Caister and parties acting in concert with them together hold approximately 28.41% of the total existing issued share capital of the Company. Number of shares to be placed: 29,000,000, 47,000,000, 14,000,000, 3,000,000 and 7,000,000 existing ordinary shares of HK$0.01 each ("Shares") in the Company (together the "Placing Shares") by Mr. Yau, Ms. Fong Tang, Ms. Tang, Middlemore and Caister, respectively. The aggregate number of the Placing Shares represents about 16.87% (as to 4.89% being sold by Mr. Yau, as to 7.93% being sold by Ms. Fong Tang, as to 2.36% being sold by Ms. Tang, as to 0.51% being sold by Middlemore and as to 1.18% being sold by Caister) of the Company's existing issued share capital of 592,593,914 Shares. The Placing Shares rank pari passu in all respects with all other existing issued shares of the Company and are sold free from any claims, charges, liens, encumbrances or any other third party rights. Placing agent: Kingsway SW Securities Limited ("Placing Agent"). The Placing Agent is independent of and not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Stock Exchange") ("Listing Rules")). Subject to completion of the Placing, a commission of 1.5% of the total aggregate consideration for all of the Placing Shares will be payable to the Placing Agent. Placees: Placees (which are more than six placees) to be procured by the Placing Agent will be independent of and not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined under the Listing Rules). Placing price: HK$0.72 per Placing Share ("Placing Price"). The Placing Price has been arrived at after arm's length negotiations between the Company, Mr. Yau, Ms. Fong Tang, Ms. Tang, Middlemore, Caister and the Placing Agent and represents a discount of about 19.1% to the closing price of HK$0.89 per Share quoted on the Stock Exchange on 14 March, 2000, being the day on which agreements for the Placing and the Subscription were entered into, and a discount of approximately 17.81% over the average closing price of HK$0.876 per Share on the Stock Exchange over the last 10 trading days up to and including 14 March, 2000. The Placing Price also represents an approximately 2.32 multiple of the net asset value of HK$0.31 per share calculated on the basis of the audited consolidated net asset value of the Company at 31 March, 1999 of approximately HK$51.23 million (adjusted for the net proceeds received by the Company under the placing and subscription of 75,000,000 Shares announced on 30 June, 1999 of approximately HK$13 million, the net proceeds received by the Company under the placing and subscription of 47,000,000 Shares announced on 19 January, 2000 of approximately HK$63 million, the net proceeds received by the Company under the placing and subscription of 45,000,000 Shares announced on 9 February, 2000 of approximately HK$51 million, a loss of approximately HK$2,000,000 resulting from the disposal of 280 car parking spaces by a wholly owned subsidiary of the Company as announced on 5 January 2000 and for the net profit attributable to shareholders for the six months ended 30 September, 1999 of approximately HK$6.76 million) and on the basis of 592,593,914 Shares comprising the existing issued share capital of the Company. In respect of the placings and subscriptions which took place in June 1999, January and February 2000, the net proceeds have been used by the Group, as to approximately HK$30 million for the repayment of bank borrowings, as to approximately HK$27 million for the expansion of the Group's commercial management business and the remainder for the Group's general working capital purposes (part of which has been placed in bank deposits). The Placing Price payable for the Placing Shares will be paid to Mr. Yau, Ms. Fong Tang, Ms. Tang, Middlemore and Caister upon completion of the Placing, and the price payable for subscription for the Subscription Shares will be paid to the Company upon completion of the Subscription. Conditions of the Placing: The Placing is unconditional and fully underwritten by the Placing Agent. Completion of Placing: Expected to take place on or before 20 March, 2000. Subscription agreement dated 14 March, 2000 Subscribers: Mr. Yau, Ms. Fong Tang and Ms. Tang Number of new shares subscribed for: 29,000,000 new Shares, 47,000,000 new Shares, 14,000,000 new Shares (together the "Subscription Shares") by Mr. Yau, Ms. Fong Tang and Ms. Tang, respectively. The aggregate number of the Subscription Shares represents approximately 15.19% of the Company's existing issued share capital, and approximately 13.18% of the Company's issued share capital as enlarged by the Subscription, being 682,593,914 Shares (as to 4.24% represented by the Subscription Shares to be issued to Mr. Yau, as to 6.89% represented by the Subscription Shares to be issued to Ms. Fong Tang and as to 2.05% represented by the Subscription Shares to be issued to Ms. Tang). Subscription price: HK$0.72 per Subscription Share (equivalent to the Placing Price). Mandate to issue new Shares: The Subscription Shares will be issued and allotted under the general mandate granted to the directors of the Company at the special general meeting held on 9 March, 2000 which has not previously been used. Ranking: The Subscription Shares, when issued, will rank pari passu in all respects with the existing shares of the Company in issue including the right to receive all dividends and distributions declared, paid or made with reference to a record date on or after the completion date of the Subscription. Completion of the Subscription: Expected to be the second business day after the day on which the last of the conditions referred to under "Conditions of the Subscription" below has been satisfied, which shall not be later than 28 March, 2000. Conditions of the Subscription: Completion of the Subscription is conditional upon the following taking place on or before 28 March, 2000 or such later date as may be agreed between the parties (which if later than 14 days from the date of the Placing Agreement, will be subject to applicable connected transaction requirements set out in the Listing Rules): (a) the completion of the Placing; (b) the Listing Committee of the Stock Exchange granting listing of, and permission to deal in, the Subscription Shares; and (c) (if relevant) the obtaining of such approvals as may be required by the Bermuda Monetary Authority. If any of the conditions of the Subscription is not fulfilled by 28 March, 2000 or such later date as may be agreed between the parties to the Subscription Agreement(which if later than 14 days from the date of the Placing Agreement, will be subject to applicable connected transaction requirements set out in the Listing Rules), the liabilities of the parties thereunder will cease and determine. Changes in shareholding structure: Mr. Yau, Ms. Fong Tang, Ms. Tang, Middlemore and Caister are currently holding 29,500,000 Shares, 47,000,000 Shares, 26,338,000 Shares, 3,000,000 Shares and 43,314,000 Shares, respectively, representing approximately 4.98%, 7.93%, 4.44%, 0.51% and 7.31%, respectively of the existing issued share capital of the Company. (for the changes in the shareholding structure of the Company before and after the Placing and the Subscription, please refer to the press announcement today.) Reasons for the Placing and the Subscription and the intended use of proceeds: The Company and its subsidiaries ("Group") are principally engaged in commercial management business in Chinese wet markets, car parks and shopping centres, contracting works and property investment in Hong Kong. The Placing and the Subscription will enlarge the shareholder base and the capital base of the Company and will strengthen the financial position of the Group. The net proceeds receivable by the Company under the Subscription are estimated to be approximately HK$62 million. The Company intends to apply (i) approximately HK$20 million of the net proceeds for possible acquisition of, or investment into, new businesses if and when the Group identified any suitable new businesses for acquisition and investment, (ii) HK$5 million for the expansion of the commercial management business of the Group in Chinese wet markets, car parks and shopping centres, (iii) HK$6 million for repayment of bank borrowings and (iv) the balance for general working capital purposes. The net proceeds from the placing of 10,000,000 Shares by Middlemore and Caister of approximately HK$7 million will be retained by Middlemore and Caister. On the basis of the price of HK$0.72 for each Subscription Share achieved by the Subscription (as compared to the adjusted net asset value per Share of HK$0.31 referred to above) and the total net proceeds expected to be received by the Company, the Directors consider the terms and conditions of the Subscription to be fair and reasonable and believe that the Placing and the Subscription are in the best interest of the Company and its shareholders. Middlemore and Caister will bear the pro-rata portion of all costs and expenses of the Placing and the Subscription attributable to the 10,000,000 Placing Shares sold by it out of the total number of 100,000,000 Placing Shares, while the Company will bear the balance of all such costs and expenses. No new director will be appointed to the board of the Company and no substantial shareholder is expected to be introduced to the Company as a result of the Placing. The Company does not have any outstanding warrants to subscribe for Shares and therefore no adjustment to any warrant exercise price for Shares will be required. Application for listing: Application will be made to the Listing Committee of the Stock Exchange for the grant of the listing of, and permission to deal in, the Subscription Shares. By Order of the Board of Wang On Group Limited Tang Ching Ho Chairman and Managing Director Hong Kong, 14 March, 2000