Weiye Holdings Limited — M&A Activity 2012

Sep 21, 2012

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.

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CULTURE LANDMARK INVESTMENT LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 674)

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

THE ACQUISITION AGREEMENT

Date

21 September 2012 (after trading hours)

Parties

• (1) The Company as purchaser; and

• (2) Ms. Lau Wang Tai, Wendy and Mr. Tsang Yat Loi as Vendors. The Vendors are the registered and beneficial owners of the entire issued share capital of the Target Company, which is a substantial shareholder of Song Labs, a non-wholly owned subsidiary of the Company. Accordingly, the Vendors are connected persons of the Company by way of being associates of a substantial shareholder of Song Labs and the Acquisition constitutes a connected transaction pursuant to Rule 14A.13(1)(a) of the Listing Rules. In addition, as the applicable percentage ratios for the acquisition of the Sale Shares pursuant to the Acquisition Agreement is more than 5% and less than 25%, the Acquisition Agreement constitutes a discloseable transaction for the Company and is subject to the disclosure requirements under Chapter 14 of the Listing Rules.

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Sale and Purchase of the Sale Shares

Under the Acquisition Agreement, the Company will purchase and the Vendors will sell the Sale Shares for the consideration of HK$55,896,400. The Sale Shares represent the entire issued share capital of the Target Company. Upon Completion, the Target Company will become a wholly-owned subsidiary of the Company.

Consideration

Pursuant to the Acquisition Agreement, the consideration of HK$55,896,400 shall be settled in the following manner:

• (i) a deposit in the sum of HK$15,000,000 is payable in cash by the Company to the Vendors upon signing of the Acquisition Agreement; and

• (ii) the remaining HK$40,896,400 shall be settled by issue of the Promissory Notes to the Vendors on Completion.

The Consideration to be paid by the Company to the Vendors will be financed by internal resources of the Group. The Consideration was arrived at after arm’s length negotiations between the Company and the Vendors on normal commercial terms by reference to the estimated value of Song Labs based on information available to the Company as the indirect shareholder of 60.8% of Song Labs and by reference to information contained in the latest management accounts of the Target Company and the PRC Company supplied by the Vendors.

Conditions Precedent

The sale and purchase of the Sale Shares will be subject to, inter alia , the following conditions precedent (or waived by the Company exception conditions (d) and (e) which could not be waived by the Company):

• (a) the Company having completed and being satisfied in all respects, at its absolute discretion, with the results of the due diligence review (including but not limited to the financial, legal and business reviews) to be conducted by the Company in accordance with the Acquisition Agreement;

• (b) the warranties given by the Vendors in the Acquisition Agreement remaining true and accurate in all respects;

• (c) the corporate structure of the Target Group as described in the Acquisition Agreement remaining accurate;

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• (d) the transactions contemplated under the Acquisition Agreement not having breached any provisions of the Listing Rules and the Stock Exchange not having opposed any transaction contemplated under the Acquisition Agreement;

• (e) the passing by the Independent Shareholders at the SGM by way of poll, the necessary resolutions to approve the Acquisition Agreement and the transactions contemplated thereunder; and

• (f) a valuation report having been obtained in relation to the business and assets of the Target Group prepared by an independent valuer appointed by the Company and the Company having been satisfied at its absolute discretion with the valuation report in all respects.

The Company may waive the conditions precedent set out above at its absolute discretion (except conditions (d) and (e) which could not be waived by the Company) and require the Vendors to complete the Acquisition.

In the event that any of the above conditions precedent has not been satisfied or has not been waived by the Company (except conditions (d) and (e) which could not be waived by the Company) on or before the Long Stop Date or such later date as the Company and the Vendors may agree, the Acquisition Agreement shall cease without prejudice to the rights and the obligations of the parties before the termination and the Vendors shall within 3 Business Days return the deposit in the sum HK$15,000,000 paid by the Company.

Completion

Completion of the Acquisition will take place within 5 Business Days after the fulfillment of the conditions precedent (or waived by the Company to the extent allowed under the Acquisition Agreement) or such other date as may be agreed by the Company and the Vendors in writing. Upon Completion, the Target Company and its subsidiaries will become wholly-owned subsidiaries of the Company and their financial results will be consolidated into the accounts of the Group.

PROMISSORY NOTES

Upon Completion, HK$40,896,400 shall be settled by way of Promissory Notes to be executed by the Company in favour of Vendor A in the sum of HK$20,448,200 and in favour of Vendor B in the sum of HK$20,448,200. The terms of the Promissory Notes have been negotiated on an arm’s length basis and the principal terms of which are as follows:

Issuer The Company Principal amount HK$20,448,200 in favour of Vendor A and HK$20,448,200 in favour of Vendor B

Interest

The Promissory Notes shall not bear any interest

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Date of issue

The date of Completion

Repayment Date The date falling on the last day of the 12th month from the date of issue of the Promissory Notes

Early repayment The Company could, at its discretion, repay the Promissory Notes in whole or in part prior to the Repayment Date.

INFORMATION OF THE TARGET GROUP

The Target Company is incorporated in Hong Kong and is an investment holding company with no business and operation other than holding the entire issued share capital of the PRC Company and 19.2% of the issued share capital of Song Labs. The PRC Company is incorporated in PRC and is principally engaged in investment consulting, organisation of cultural & art exchange activities (excluding acting as intermediaries in performances) and acting as music copyright agents. The PRC Company also holds 20% of the equity capital of Song Labs.

FINANCIAL INFORMATION OF THE TARGET GROUP

The following is the audited financial information of the Target Group for the year ended 31 December 2011 and 31 December 2010, respectively. The audited financial information of the Target Company was prepared in accordance with Hong Kong Financial Reporting Standards, whereas the audited financial information of the PRC Company was prepared in accordance with the PRC Accounting Standards for Business Enterprises.

The Target Company

	For the year ended	For the year ended
	31st December, 2011	31st December, 2010
	HK$	HK$
Revenue	—	—
Loss before taxation	44,325	11,060
Loss after taxation	44,325	11,060
Net liabilities	5,093,430	5,049,105
	The PRC Company

	For the year ended	For the year ended
	31st December, 2011	31st December, 2010
	RMB	RMB
Revenue	11,095	10,476
Loss before taxation	22,489	4,139
Loss after taxation	22,489	4,139
Net asset value	2,733,239	2,755,729

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REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in property investment and property sub-leasing, collection of copyright fees in respect of karaoke music products in PRC, exhibition related business, hotel operation, restaurant operation and entertainment business.

Song Labs is a company incorporated in PRC on 17th August, 2005. It is principally engaged in the provision of intellectual property enforcement services in return for certain percentage of the licence fee collected from karaoke venues.

Song Labs has entered into contracts with various owners of copyrights to audio-visual works for vocal accompaniment whereby Song Labs acquires the exclusive rights to, inter alia, grant licence to karaoke operators in PRC the rights to replicate and play audio-visual works with vocal accompaniment.

The Company entered into the Acquisition Agreement in order to acquire all equity interest in Song Labs as it is confident of the potential of the business of provision of intellectual property enforcement services and collection of copyright fees for content distribution in respect of karaoke music products in PRC conducted by Song Labs. The Directors (excluding the independent nonexecutive Directors who will provide their view after considering the advice from Guangdong Securities) consider that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios for the acquisition of the Sale Shares pursuant to the Acquisition Agreement is more than 5% and less than 25%, the Acquisition Agreement constitutes a discloseable transaction for the Company and is subject to the disclosure requirements under Chapter 14 of the Listing Rules.

In addition, the Vendors are the registered and beneficial owners of the entire issued share capital of the Target Company, which is a substantial shareholder of Song Labs, a non-wholly owned subsidiary of the Company. Accordingly, the Vendors are connected persons of the Company by way of being associates of a substantial shareholder of Song Labs and the Acquisition constitutes a connected transaction pursuant to Rule 14A.13(1)(a) of the Listing Rules. The Acquisition and the transactions contemplated under the Acquisition Agreement are therefore subject to approval by the Independent Shareholders at the SGM by way of poll. Other than the Vendors and the Target Company and their respective associates, which are required to abstain from voting on the relevant resolutions to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder, no other Shareholders are required to abstain from voting in respect of the resolutions relating to the Acquisition Agreement and the transactions contemplated thereunder at the SGM.

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An Independent Board Committee will be formed to advise the Independent Shareholders with respect to the relevant resolutions on the transactions contemplated under the Acquisition Agreement proposed to be passed at the SGM, and Guangdong Securities has been appointed to make recommendations to the Independent Board Committee and the Independent Shareholders regarding the same.

GENERAL

The SGM will be held to consider, and if thought fit, pass the requisite resolution(s) to approve the Acquisition Agreement and other transactions contemplated under the Acquisition Agreement.

A circular containing, among other things, further details of the Acquisition, the letter from the Independent Board Committee to the Independent Shareholders, the letter from Guangdong Securities to the Independent Board Committee and the Independent Shareholders, and the notice convening the SGM, will be dispatched to the Shareholders on or before 16 October 2012.

As completion of the Acquisition is subject to the fulfillment of a number of conditions precedent and may or may not proceed, Shareholders and potential investors should exercise caution when dealing with the Shares.

DEFINITIONS

In this announcement, the following expressions shall have the following meanings, unless the context requires otherwise:

• “Acquisition” the acquisition of the Sale Shares by the Company from the Vendors pursuant to the terms and subject to the conditions of the Acquisition Agreement

• “Acquisition Agreement” the conditional sale and purchase agreement dated 21 September 2012 made between the Company and the Vendors in relation to the Acquisition

• “associate(s)” has the meaning ascribed to it in the Listing Rules “Board” the board of Directors “Business Day(s)” a day (other than a Saturday or a Sunday and a day on which a tropical cyclone warning signal number 8 or above or a black rainstorm warning is hoisted in Hong Kong between 9:00 a.m. to 5:00 p.m.) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

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“Company” Culture Landmark Investment Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the main board of the Stock Exchange, being the purchaser

• “Completion” the completion of the Acquisition in accordance with the terms and conditions of the Acquisition Agreement

• “connected person(s)” has the meaning ascribed to this term under the Listing Rules

• “Consideration” a consideration of HK$55,896,400 which was determined in the manner as described in the sub-paragraph headed “Consideration” of this announcement and shall be payable by the Company to the Vendors for the Acquisition pursuant to the payment terms as set out in the Acquisition Agreement

• “Director(s)” the director(s) of the Company

• “Group” the Company and its subsidiaries

• “Guangdong Securities” or Guangdong Securities Limited, a licensed corporation to carry on “Independent Financial Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Adviser” Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities as defined under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Acquisition Agreement and the transactions contemplated thereunder

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Independent Board the independent board committee of the Company comprising Committee” Mr. Tong Jingguo, Mr. Yang Rusheng and Mr. So Tat Keung, independent non-executive Directors, established to advise the Independent Shareholders in respect of the Acquisition

• “Independent Shareholder(s)” Shareholder(s) other than the Vendors and the Target Company and their respective associates, and any Shareholders who have a material interest in the Acquisition

• “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

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“Long Stop Date”	31 January 2013 or such other date as may be agreed by the
	Company and the Vendors in writing
“PRC”	The People’s Republic of China but for the purpose of this
	Announcement shall exclude Hong Kong, the Macau Special
	Administrative Region and Taiwan
“PRC Company”	北京潤通融和投資顧問有限公司(Beijing Runtong Ronghe
	Investment Consulting Company Limited*), a wholly-foreign owned
	enterprise company established in PRC with limited liability and
	being the wholly-owned subsidiary of the Target Company
“Promissory Notes”	the promissory notes to be executed by the Company in favour of
	Vendor A in the sum of HK$20,448,200 and in favour of Vendor
	B in the sum of HK$20,448,200 on Completion for the purpose of
	settling part of the Consideration under the Acquisition Agreement
“RMB”	Renminbi, the lawful currency of PRC
“Sale Shares”	the two ordinary shares of HK$1.00 each in the issued share capital
	of the Target Company, representing the entire issued share capital
	of the Target Company
“SGM”	a special general meeting of the Company to be convened for the
	purpose of considering and, if thought fit, approving the Acquisition
	and the transactions contemplated thereunder
“Share(s)”	ordinary share(s) of HK$0.05 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Song Labs”	北京天語同聲信息技術有限公司(Song Labs Company Limited*), a
	Sino-foreign joint venture company incorporated in PRC with limited
	liability, which is held as to 20% by the PRC Company, as to 19.2%
	by the Target Company, and as to 43.2% and 17.6% by the Company
	through Win Success Enterprises Limited and Wide Stand Holdings
	Limited, respectively
“substantial shareholder(s)”	has the meaning ascribed to this term under the Listing Rules

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“Target Company”

Media Sound Technology Limited, a company incorporated in Hong Kong with limited liability, which is held as to 50% by Vendor A and as to the remaining 50% by Vendor B

• “Target Group”

the Target Company and the PRC Company

• “Vendor A” Ms. Lau Wang Tai, Wendy （柳宏娣）, a Hong Kong permanent resident

• “Vendor B” Mr. Tsang Yat Loi （曾日來）, a Hong Kong permanent resident

“Vendor B”

“Vendors” collectively, Vendor A and Vendor B

“%” per cent.

• The English translation of the names of companies established in PRC referred to in this announcement is for reference only. The official names of those companies are in Chinese.

By order of the Board

Cheng Yang Chairman

Hong Kong, 21 September 2012

As at the date of this announcement, the executive directors of the Company are Mr. Cheng Yang (the Chairman), Mr. Zheng Yuchun, Mr. Li Weipeng and Ms. Lei Lei; and the independent non-executive directors are Mr. Tong Jingguo, Mr. Yang Rusheng and Mr. So Tat Keung.

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