Yunkang Group Limited — Share Issue/Capital Change 2000

Mar 1, 2000

Listed Company Information

LEGEND HOLD<0992> - 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. LEGEND HOLDINGS LIMITED (Incorporated in Hong Kong with limited liability) PLACING OF EXISTING SHARES AND SUBSCRIPTION FOR NEW SHARES SUMMARY Legend Group Holdings Co., a controlling shareholder of Legend Holdings Limited has agreed on 29th February, 2000 to place the Placing Shares at the Placing Price and to subscribe for the Subscription Shares at the Subscription Price. The Placing Shares amount to approximately 4.72% of the existing issued share capital of the Company and approximately 4.59% of the enlarged issued share capital of the Company following the completion of the Subscription. The Placing Shares will be sold to independent professional, institutional and/or individual investors through Goldman Sachs (Asia) L.L.C. for itself and its affiliates as the placing agent and underwriter. The intended use of the net proceeds of the Subscription of approximately HK$1,651 million is described below. The Vendor beneficially owns 1,093,136,286 Shares representing approximately 60.72% of the existing issued share capital of the Company. The percentage of shareholding of the Vendor in the Company after completion of the Placing but before completion of the Subscription is approximately 56% and after completion of both the Placing and the Subscription is approximately 57.19%. AGREEMENT TO PLACE THE PLACING SHARES AND AGREEMENT TO SUBSCRIBE FOR THE SUBSCRIPTION SHARES BOTH DATED 29TH FEBRUARY, 2000 VENDOR Legend Group Holdings Co., the controlling shareholder of the Company and a company incorporated in the People's Republic of China which presently beneficially holds 1,093,136,286 Shares, representing approximately 60.72% of the existing issued share capital of the Company. NUMBER OF SHARES TO BE PLACED: 85,000,000 Shares including the over-allotment option of 15,000,000 Shares representing approximately 4.72% of the existing issued share capital of the Company and approximately 4.59% of the enlarged share capital of the Company after the Subscription will be placed pursuant to the Placing. Pursuant to the placing agreement the placing agent has exercised the over-allotment option of an aggregate of 15,000,000 additional Shares to cover the over-allotments in the Placing. SHARES PLACED TO: Independent professional, institutional and/or individual investors (the number of which is more than 6). PLACING PRICE: The Placing Price, being HK$33.75 per Placing Share. The Placing Price was agreed to after arm's length negotiations and represents a discount of approximately 6.25% to the last traded price of HK$36 per Share quoted on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") at the close of business on 29th February, 2000 and a discount of approximately 1.03% to the average closing price of the Shares as quoted on the Stock Exchange for the last five trading days leading up to and including 29th February, 2000. The directors of the Company are of the view that this price is fair and reasonable for the Company. PLACING AGENT AND UNDERWRITER: Goldman Sachs (Asia) LLC for itself and its affiliates, which fully underwrites the Placing. INDEPENDENCE OF PLACEES AND THE PLACING AGENT: The placees and the placing agent are independent of and not connected with the Vendor or any of its associates or the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates (as defined in the Rules Governing the Listing of Securities on the Stock Exchange) or any of them. CONDITIONS AND COMPLETION OF THE PLACING: The Placing is conditional upon, inter alia, no force majeure events occurring on or before completion of the Placing. Completion of the Placing is expected to take place on 3rd March, 2000 or such other date as the parties may agree. MAINTENANCE OF SHAREHOLDING BY THE VENDOR: Under the placing agreement, the Vendor has agreed that neither it, nor any of the companies controlled by it nor the Company will sell or allot any Shares or securities convertible into Shares, without the prior consent of Goldman Sachs (Asia) LLC, until the date being the three months after the date of the placing agreement. NUMBER OF SUBSCRIPTION SHARES SUBSCRIBED FOR: 50,000,000 Subscription Shares representing approximately 2.78% of the Company's existing issued share capital and approximately 2.70% of the Company's issued share capital as enlarged by the Subscription. SUBSCRIBER FOR THE SUBSCRIPTION SHARES: The subscriber for the Subscription Shares is the Vendor and/or Right Lane Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Vendor. As far as the Directors are aware, there is no other substantial shareholder of the Company. SUBSCRIPTION PRICE the Subscription Price, HK$33.75 per Subscription Share which is the same as the Placing Price or, HK$8.4375 per Subscription Share if the Share Subdivision Resolution is passed. MANDATE TO ISSUE SUBSCRIPTION SHARES: The Subscription Shares will be issued pursuant to the general mandate granted to the directors of the Company by resolution of its shareholders passed on 13th July, 1999. RANKING: The Subscription Shares will, when issued and allotted, rank pari passu in all respects inter se and with all other shares in the share capital of the Company then in issue. CONDITIONS OF THE SUBSCRIPTION: Completion of the Subscription is conditional upon:- (a) listing of and permission to deal in all the Subscription Shares being granted by the Listing Committee of the Stock Exchange (and such permission and listing not subsequently being revoked prior to the delivery of definitive share certificate(s) representing the Subscription Shares); and (b) completion of the Placing. If the conditions for the Subscription set out above are not fulfilled or waived in writing by the Vendor on or before 13th March, 2000 (or such later date as the Vendor and the Company may agree), the subscription agreement will cease and terminate. Application will be made to the Stock Exchange for listing of the Subscription Shares on the Stock Exchange. COMPLETION OF THE SUBSCRIPTION: The Subscription will take place on the date falling two business day(s) after the date upon which the last of the conditions for the Subscription referred to above is satisfied provided that such date shall not be later than the date falling 14 days after 29th February, 2000, being 13th March, 2000, or such later date as the Company and the Vendor may agree. CHANGES TO THE SHAREHOLDING IN THE COMPANY AS A RESULT OF THE PLACING AND THE SUBSCRIPTION: The Vendor beneficially owns 1,093,136,286 Shares, representing approximately 60.72% of the existing issued share capital of the Company. The percentage of shareholding of the Vendor in the Company immediately before completion of the Placing, after completion of the Placing but before completion of the Subscription, and after completion of both the Placing and the Subscription are as follows:- After completion of the Placing but After completion Immediately before before completion of both the Placing completion of the of the Subscription and the Placing Subscription Approximately 60.72% Approximately 56% Approximately 57.19% USE OF PROCEEDS: The net proceeds of the Subscription will amount to approximately HK$1,651 million and is intended to be used by the Company as follows: HK$700 million to HK$800 million for investment and acquisition in Internet content providers or acquisition of the rights to use their content; HK$300 million to HK$400 million for development of Internet access devices and Internet technology and services; HK$300 million to HK$400 million for research and development and marketing of e-commerce solutions and the remaining balance for general working capital of the Company. No specific project has yet been identified by the Company for the use of proceeds at this moment. REASONS FOR THE SUBSCRIPTION: The purpose of the Subscription is to raise funds for the purposes described in the section "Use of Proceeds" above. EXPENSES: The Company bears the expenses incurred by the Vendor and/or Right Lane Limited in connection with the Placing in respect of 50,000,000 Shares and the Subscription after deducting interest received by the Vendor and/or Right Lane Limited on the net proceeds of the Placing from completion of the Placing to completion of the Subscription. Any interest income on the net proceeds of the Placing will accrue to the Company. Expenses of the Placing in respect of 35,000,000 Placing Shares incurred by the Vendor will be borne by the Vendor solely. DEFINITIONS "Company" Legend Holdings Limited "Placing" the placing of the Placing Shares at the Placing Price under the placing agreement dated 29th February, 2000 "Placing Price" HK$33.75 per Placing Share "Placing Share(s)" 85,000,000 Shares (including an over-allotment option of an additional 15,000,000 Shares which has been exercised in full by the placing agent) "Share(s)" existing shares of HK$0.10 each in the share capital of the Company "Share Subdivision the ordinary resolution of the Resolution" Company in relation to subdivision of Shares to be proposed at the extraordinary general meeting of the Company to be held on 7th March 2000 "Subscription" the subscription of the Subscription Shares at the Subscription Price under the subscription agreement dated 29th February, 2000 "Subscription Price" HK$33.75 per Subscription Share or, HK$8.4375 per Subscription Share if the Shares Subdivision Resolution is passed "Subscription Share(s)" 50,000,000 new Shares or, 200,000,000 new shares of HK$0.025 each in the Company if the Share Subdivision Resolution is passed "Vendor" Legend Group Holdings Co., a controlling shareholder of the Company By Order of the Board Legend Holdings Limited Liu Chuanzhi Chairman Hong Kong, 29th February, 2000