Wang On Group Limited — Capital/Financing Update 2000

Jan 20, 2000

Listed Company Information

WANG ON GROUP<1222>-Announcement & Resumption of Trading WANG ON GROUP LIMITED (Incorporated in Bermuda with limited liability) (the "Company") PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES KINGSWAY SW SECURITIES LIMITED Underwriter and Placing Agent On 18th January, 2000, arrangements were made by Mr. Yau Yuk Tong, Ms. Tang Mui Fun and Middlemore Limited for the private placement of an aggregate of 57,000,000 shares in the Company to independent investors. On 18th January, 2000, Mr. Yau Yuk Tong and Ms. Tang Mui Fun also entered into an agreement with the Company to, subject to certain conditions, subscribe for 27,000,000 and 20,000,000 shares in the Company respectively. It is expected that the Subscription will raise approximately HK$64 million for the Company before expenses. Mr. Yau Yuk Tong and Ms. Tang Mui Fun together with parties acting in concert with them (including Middlemore Limited) hold 40.62 per cent. of the total issued shares of the Company. The Placing will reduce their holding to about 29.24 per cent. of the Company's existing issued share capital. The Subscription will then increase their holding to about 35.31 per cent. of the Company's enlarged issued share capital. Trading in the shares of the Company on the Stock Exchange was suspended from 10 a.m. on 19th January, 2000 at the request of the Company pending the issue of this announcement. Application has been made for resumption of trading as from 10 a.m. on 20th January, 2000. Placing agreement dated 18th January, 2000 Vendors: Mr. Yau Yuk Tong ("Mr. Yau"), Ms. Tang Mui Fun ("Ms. Tang") and Middlemore Limited ("Middlemore"). Middlemore is wholly-owned by Mr. Tang Ching Ho ("Mr. Tang"), the brother of 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. Tang and Middlemore's shareholding interests in the Company are shown further below. Mr. Yau, Ms. Tang, Middlemore and parties acting in concert with them together hold 40.62 per cent. of the total issued share capital of the Company. Number of shares to be placed: 27,000,000, 20,000,000 and 10,000,000 existing ordinary shares of HK$0.01 each ("Shares") in the Company (together the "Placed Shares") by Mr. Yau, Ms. Tang and Middlemore respectively. The aggregate number of the Placed Shares represents about 11.39 per cent. (being as to 5.39 per cent. represented by the Placed Shares being sold by Mr. Yau, as to 4 per cent. represented by the Placed Shares being sold by Ms. Tang and as to 2 per cent. represented by the Placed Shares being sold by Middlemore) of the Company's existing issued share capital of 500,593,914 Shares. The Placed Shares rank pari passu with all other existing issued shares of the Company in all respects and are sold free from any claims, charges, liens, encumbrances or any other third party rights. Placing agent: Kingsway SW Securities Limited (the "Placing Agent"). The Placing Agent is independent of, not connected with and does not act in concert 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 (the "Stock Exchange")). 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: Investors to be procured by the Placing Agent who are independent of, not connected with and do not act in concert 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. Placing price: HK$1.38 per Placed Share. This was arrived at after arm's length negotiations between the Company, Mr. Yau, Ms. Tang, Middlemore and the Placing Agent and represents a discount of about 5.48% to the closing price of HK$1.46 per share quoted on the Stock Exchange on 18th January, 2000, being the day on which agreements for the Placing and the Subscription were entered into, and a discount of approximately 10.91 per cent. over the average closing price of HK$1.549 per share on the Stock Exchange over the last 10 trading days up to and including 18th January, 2000. The placing price of HK$1.38 per Placed Share also represents an approximately 9.72 multiple of the net asset value of HK$0.142 per share calculated on the basis of the audited consolidated net asset value of the Company as at 31st 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 30th June, 1999 of approximately HK$13 million and for the net profit attributable to shareholders for the six months ended 30th September, 1999 of approximately HK$6.76 million) and on the basis of 500,593,914 Shares comprising the existing issued share capital of the Company. The price payable for the Placing Shares will be paid to Mr. Yau, Ms. Tang and Middlemore 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 on or before 24th January, 2000. Subscription agreement dated 18th January, 2000 Subscribers: Mr. Yau and Ms. Tang Number of new shares subscribed for: 27,000,000 and 20,000,000 new Shares (together the "Subscription Shares") by Mr. Yau and Ms. Tang respectively. The aggregate number of the Subscription Shares represents about 9.39 per cent. of the Company's existing issued share capital, and about 8.58 per cent. (being as to 4.93 per cent. represented by the Subscription Shares to be issued to Mr. Yau and as to 3.65 per cent. represented by the Subscription Shares to be issued to Ms. Tang) of its issued share capital as enlarged by the Subscription of 547,593,914 Shares. Subscription price: HK$1.38 per Subscription Share (equal 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 annual general meeting held on 24th September, 1999 which has not previously been utilised. Ranking: The Subscription Shares will upon issue rank pari passu in all respects with the existing Shares 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 date of completion 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 3rd February, 2000. Conditions of the Subscription: Completion of the Subscription is conditional upon the following taking place on or before 1st February, 2000 or such later date as may be agreed between the parties: (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; (c) (if relevant) the obtaining of such approvals as may be required by the Bermuda Monetary Authority; and (d) the Executive Director of the Corporate Finance Division of the Securities and Futures Commission (the "Executive") granting Mr. Yau, Ms. Tang, Middlemore and parties acting in concert with them the waiver from the obligation to make a general offer under the Hong Kong Code on Takeovers and Merger (the "Takeovers Code"). If any of the conditions of the Subscription is not fulfilled by 1st February, 2000 or such later date as may be agreed between the parties to the Subscription Agreement, the liabilities of the parties thereunder will cease and determine. Obligation to make a general offer After completion of the Placing and upon completion of the Subscription, the percentage of voting rights of the Company held by Mr. Yau, Ms. Tang, Middlemore and parties acting in concert with them will increase from below 35 per cent. to more than 35 per cent., thereby triggering the obligation to make a mandatory general offer for all the Shares not held by them under Rule 26.1 of. the Takeovers Code. An application will be made to the Executive for waiver from such obligation to make a general offer under Rule 26 of the Takeovers Code. Changes in shareholding structure: Mr. Yau, Ms. Tang and Middlemore are currently holding 29,500,000 Shares, 44,338,000 Shares and 18,000,000 Shares respectively, representing approximately 5.89 per cent., 8.86 per cent. and 3.59 per cent. respectively of the existing issued share capital of the Company. Mr. Yau and Ms. Tang, together with parties acting in concert with them (which include Mr. Tang, Ms. Yau, Ms. Tang Mui Fong, another sister of Mr. Tang, and Caister Limited, a company beneficially owned by Mr. Tang), have had a beneficial interest in more than 35 per cent. of the issued share capital of the Company throughout the last 12 months preceding the date of this announcement. (For the changes in the shareholding structure of Mr. Yau, Ms. Tang, Middlemoreand parties acting in concert with them and the public 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 (the "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$63 million. The Company intends to apply out of such net proceeds HK$25 million for the expansion of the commercial management business in Chinese wet markets, car parks and shopping centres, HK$15 million for repayment of bank borrowings and the balance for general working capital purposes. The net proceeds from the placing of 10,000,000 Shares by Middlemore of approximately HK$13 million will be retained by Middlemore. On the basis of the price of HK$1.38 for each Subscription Share achieved by the Subscription (as compared to the adjusted net asset value per Share of HK$0.142 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 will bear the pro-rata portion of all costs and expenses of the Placing and the Subscription attributable to the 10,000,000 Placed Shares sold by it out of the total number of 57,000,000 Placed 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. Suspension of Trading: Trading in the shares of the Company on the Stock Exchange was suspended from 10 a.m. on 19th January, 2000 at the request of the Company pending the issue of this announcement. Application has been made for resumption of trading as from 10 a.m. on 20th January, 2000 By Order of the Board of Wang On Group Limited Tang Ching Ho Chairman and Managing Director Hong Kong, 19th January, 2000 The directors of Wang On Group Limited jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in the announcement the omission of which would make any statement in this announcement misleading.