ANNOUNCEMENTS

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CONNECTED TRANSACTION

 

On 6th August, 1999, Guoco Investments (China) Limited ("GIC"), a wholly-owned subsidiary of Guoco Group Limited ("the Company") entered into the following conditional sale of shares agreements:-

  1. A sale of shares agreement ("SOYLEC Agreement") was entered into between GIC and O.Y.L. Industries Berhad ("OYLI") whereby OYLI agreed to acquire 24.5% equity interest held by GIC in Shenzhen O.Y.L. Electrical Co. Ltd. ("SOYLEC", a joint venture company with limited liability incorporated under the laws of the PRC) for a consideration of US$3,077,429.00 (equivalent to approximately HK$23,887,000.00).

  2. A sale of shares agreement ("McQuay Agreement") was entered into between GIC and O.Y.L. Overseas Limited ("OYLO"), a wholly owned subsidiary of OYLI whereby OYLO agreed to acquire equity interests of 20% held by GIC in Shanghai McQuay Air Conditioning Co. Ltd. ("SMQAC", a joint venture company with limited liability incorporated under the laws of the PRC) and 20% and 24.5% interest of GIC in two Hong Kong incorporated companies, namely, McQuay Asia (Hong Kong) Limited ("MAHK") and McQuay Air-conditioning Limited ("MQAC") respectively for a total consideration of US$1,215,000.00 (equivalent to approximately HK$9,431,000.00).

The SOYLEC Agreement and McQuay Agreement are subject to the approval of shareholders of OYLI. The completion of such shall take place within one month of the date of approval by the shareholders of OYLI or such other date as mutually agreed by both parties.

Both OYLI and OYLO are associates (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules")) of Mr. Quek Leng Chan, a director and a deemed substantial shareholder of the Company.

The SOYLEC Agreement and McQuay Agreement constitute connected transactions of the Company. Details of the transactions will be included in the next published annual report and accounts of the Company.

INFORMATION REGARDING THE CONDITIONAL SALE OF SHARES AGREEMENTS

  1. SOYLEC Agreement dated 6th August, 1999

    Parties

    Vendor :

    GIC (a wholly-owned subsidiary of the Company)
    Purchaser :

    OYLI (an associate of Hong Leong Company (Malaysia) Berhad ("HLCM"), a substantial shareholder of the Company)

    Interest to be disposed and acquired

    24.5% equity interest in SOYLEC.

    Consideration

    The total purchase price is US$3,077,429.00 (equivalent to approximately HK$23,887,000.00) which was determined on a willing buyer and a willing seller basis on normal commercial terms with reference to the net asset of SOYLEC. A sum of US$307,742.90 representing 10% of the total purchase price was paid by OYLI to GIC on 6th August, 1999. The balance of the purchase price shall be paid on the date of completion (as described below).

    Information regarding SOYLEC

    SOYLEC is a Sino-foreign equity joint venture enterprise established in Shenzhen on 20th August, 1992 under the laws of the PRC for a term of 50 years and is principally engaged in the manufacturing and sale of air conditioners. Presently, SOYLEC is owned by three parties, GIC, OYLI and an independent third party in the proportion of 24.5%, 51% and 24.5% respectively.

  2. McQuay Agreement dated 6th August, 1999

    Parties

    Vendor :

    GIC (a wholly-owned subsidiary of the Company)
    Purchaser :

    OYLO, a wholly owned subsidiary of OYLI (an associate of HLCM, a substantial shareholder of the Company)

    Interest to be disposed and acquired

    Consideration

    The total purchase price is US$1,215,000.00 (equivalent to approximately HK$9,431,000.00), details of which are as follows:-

    Company

    Consideration (US$)

    SMQAC

    71,000.00

    MAHK

    1,064,000.00

    MQAC

    80,000.00

    Total

    1,215,000.00

    The purchase consideration was determined on a willing buyer and a willing seller basis on normal commercial terms with reference to the net asset of SMQAC, MAHK and MQAC.

    A sum of US$121,500.00 representing 10% of the total purchase price was paid by OYLO to GIC on 6th August, 1999. The balance of the purchase price shall be paid on the date of the completion (as described below).

    Information regarding SMQAC, MAHK and MQAC

    SMQAC is a Sino-foreign equity joint venture enterprise established in Shanghai on 31st October, 1994 under the laws of the PRC for a term of 20 years and its principal activities are sale, marketing and servicing of air-conditioners and contractors for mechanical and electrical services. Presently, SMQAC is owned as to 20%, 51% and 29% by GIC, OYLO and an independent third party respectively.

    MAHK is a limited company incorporated in Hong Kong on 21st July, 1992 and is owned as to 20% and 80% by GIC and OYLO respectively. Its principal business activities are sale, service and installation of heating, ventilation and air-conditioning equipment and contractors for mechanical and electrical services.

    MQAC is a limited company incorporated in Hong Kong on 7th January, 1993 and is owned as to 24.5%, 51% and 24.5% by GIC, OYLO and an independent third party respectively. Its principal activities are the sale of air-conditioners, related raw materials and spare parts.

    Following the completion of the McQuay Agreement, OYLO would hold 71%, 100% and 75.5% interest in SMQAC, MAHK and MQAC respectively.

CONDITION PRECEDENT

Pursuant to the requirement of the Kuala Lumpur Stock Exchange, OYLI needs to obtain shareholders?approval for certain related party transactions. The completion of the SOYLEC Agreement and the McQuay Agreement are subject to the approval of shareholders of OYLI being obtained at a general meeting within 4 months from the date of this agreement ("The Cut-Off Date"). If such approval is not obtained by the Cut-Off Date, unless otherwise mutually agreed in writing between the parties, the SOYLEC Agreement and McQuay Agreement shall lapse and cease to have any effect and neither party hereto shall have any further rights against the other.

COMPLETION

Completion of the SOYLEC Agreement and the McQuay Agreement shall take place within one month from the date of the shareholders?approval of OYLI or such other date as mutually agreed by both parties. The transfer of interests in the PRC joint ventures is also subject to registration and approval by the relevant PRC authorities.

REASONS FOR THE SALE

The disposal of interests in the above companies is in line with the Company's strategic policy to divest its investment in non-core businesses. The Directors of the Company (including the independent non-executive directors) consider the terms of the conditional sale of shares agreements to be fair and reasonable and in the best interest of the Company.

INFORMATION OF THE PURCHASER

OYLI and OYLO are subsidiaries of Hume Industries (Malaysia) Berhad ("Hume Industries"). HLCM, a substantial shareholder of the Company, holds more than 35% interest in Hume Industries. Mr. Quek Leng Chan is a director and a deemed substantial shareholder of the Company and HLCM. According to the provisions of the Listing Rules, OYLI and OYLO are associates of Mr. Quek Leng Chan and thus are regarded as "connected persons" of the Company under the Listing Rules.

CONNECTED TRANSACTION

The above two conditional sale of shares agreements constitute connected transactions of the Company. Since the total consideration is less than 3 per cent. of the latest unaudited consolidated net tangible asset value of the Company as at 31st December, 1998, no independent shareholders?approval is required. Details of the transactions will be included in the next published annual report and accounts of the Company.

By Order of the Board
Doris W.N. Wong
Company Secretary


Hong Kong, 6th August, 1999