| Connected transactions
The Board wishes to announce that on 22 January 2001, Premier, a wholly-owned subsidiary of the Company, proposed to increase its equity interest in Dyxnet by way of the following: (a) the Rights Shares Subscription, whereby Premier shall subscribe for the entire 5,200,000 Rights Shares under its pro rata assured entitlement and for 22,840,550 additional Rights Shares under excess application pursuant to the Rights Issue in the proportion of one Rights Share for every Dyxnet Share held on the Record Date, at the issue price of HK$0.5610 each; and (b) the Preference Shares Subscription, whereby Premier shall subscribe for 4,789,927 Preference Shares at the issue price of US$0.09368 (or approximately HK$0.7307) each. Subscribers of the Rights Shares and the Preference Shares will respectively receive one bonus Ordinary Warrant for every Rights Share allotted under the Rights Issue and 15 or 5 bonus Preference Warrants (as the case may be) for every 100 Preference Shares subscribed for. In addition, subject to the approval of Independent Shareholders at the Special General Meeting, Premier will further undertake to Dyxnet that it will underwrite up to 3,199,294 additional Rights Shares not taken up by other Qualifying Dyxnet Shareholders. The considerations for the Rights Shares Subscription (excluding the proposed underwriting commitment of Premier under the Rights Issue), the proposed underwriting commitment of Premier under the Rights Issue and the Preference Shares Subscription will be HK$15,730,749, HK$1,794,804 and HK$3,500,000 respectively, totalling HK$21,025,553. Assuming Premier will be allotted all the 28,040,550 Rights Shares to be applied for (without taking into account any Rights Shares which may have to be taken up by Premier as a result of its proposed underwriting commitment under the Rights Issue), immediately upon completion of the Rights Shares Subscription, the interest of Premier in the issued ordinary share capital of Dyxnet will be increased from approximately 7.48% to approximately 23.91%. Diyixian is a wholly-owned subsidiary of Dyxnet. As Diyixian holds approximately 14.67% of the issued share capital of Speedlink which is an approximate 72% indirectly owned subsidiary of the Company, Dyxnet is considered to be a connected person of the Company under the Listing Rules. Accordingly, the Rights Shares Subscription and the Preference Shares Subscription will constitute connected transactions for the Company under the Listing Rules and are subject to the approval of Independent Shareholders at the Special General Meeting. Application for ongoing connected transaction waivers It is proposed that certain subsidiaries of the Company will enter or continue to enter into various connected transactions (as referred to below as the "Transactions" under the section headed "Application for ongoing connected transaction waivers") with Diyixian. As the Transactions are/will be ongoing in nature, the Company has applied to the Stock Exchange for ongoing waivers from the disclosure and/or shareholders' approval requirements in respect of the Transactions on each occasion they arise. The Transactions will be subject to the conditions set out in this announcement. |
CONNECTED TRANSACTIONS
Background
As at the date of this announcement, Premier holds 5,200,000 Dyxnet Shares, representing approximately 7.48% of the issued ordinary share capital of Dyxnet. Premier's cost of investment in such 5,200,000 Dyxnet Shares was HK$13,000,000 or HK$2.50 each. In order to finance its business development and expansion as well as strengthen its capital base in preparation for its possible future listing on a recognised stock exchange, Dyxnet proposed to raise capital through the Rights Issue and the placing of Preference Shares to Qualifying Dyxnet Shareholders and/or independent investors. It should be noted, however, that no concrete timetable and plan for the possible future listing of Dyxnet have been finalised at this stage.
The Rights Shares Subscription
On 5 January 2001, Dyxnet proposed the Rights Issue of 69,520,000 Rights Shares at an issue price of HK$0.5610 each in order to raise approximately HK$39 million. Qualifying Dyxnet Shareholders will be entitled to subscribe for the Rights Shares on the basis of one Rights Share for every Dyxnet Share held on the Record Date. Any Rights Shares not taken up by Qualifying Dyxnet Shareholders under their pro rata assured entitlements will be made available for excess application firstly by other Qualifying Dyxnet Shareholders and then by other independent investors to be procured by Dyxnet. The Rights Shares, when issued, will rank pari passu in all respects with other Dyxnet Shares then in issue.
On 22 January 2001, Premier proposed to subscribe for the entire 5,200,000 Rights Shares under its pro rata assured entitlement and for 22,840,550 additional Rights Shares under excess application pursuant to the Rights Issue. The aggregate consideration for the Rights Shares Subscription of a total of 28,040,550 Rights Shares will be HK$15,730,749, which will be payable (subject to the approval of the Independent Shareholders at the Special General Meeting) by Premier to Dyxnet as follows:
Subject to the approval of the Independent Shareholders at the Special General Meeting, Premier will further undertake to Dyxnet that it will underwrite up to 3,199,294 additional Rights Shares (for a cash consideration of HK$1,794,804) not taken up by other Qualifying Dyxnet Shareholders. Other remaining Rights Shares not taken up by Premier and other Qualifying Dyxnet Shareholders will be underwritten by another existing shareholder of Dyxnet, which is not connected with the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates (as defined in the Listing Rules).
The Qualifying Dyxnet Shareholders and/or the independent investors subscribing for the Rights Shares will receive one bonus Ordinary Warrant for every Rights Share allotted under the Rights Issue. Pursuant to the Rights Shares Subscription (assuming Premier is not required to take up the 3,199,294 additional Rights Shares pursuant to its proposed underwriting commitment under the Rights Issue), Premier will be entitled to receive 28,040,550 Ordinary Warrants. Each Ordinary Warrant will carry subscription rights entitling its holder to subscribe for one Dyxnet Share at an initial subscription price of HK$0.10 per Dyxnet Share (subject to adjustment) within 4 years from the date of issue of the Ordinary Warrant. Premier is required to submit its application for the Rights Shares within five bank business days (excluding Saturday) after obtaining approval of the Independent Shareholders at the Special General Meeting.
The Preference Shares Subscription
On 5 January 2001, Dyxnet also proposed a placing of 85,156,240 Preference Shares to Qualifying Dyxnet Shareholders and/or independent investors at an issue price of US$0.09368 (or approximately HK$0.7307) per Preference Share. Qualifying Dyxnet Shareholders subscribing for the Preference Shares will be entitled to receive 15 bonus Preference Warrants for every 100 Preference Shares subscribed for. Independent investors subscribing for the Preference Shares will be entitled to receive either 15 bonus Preference Warrants or 5 bonus Preference Warrants (as mutually agreed between Dyxnet and such investors) for every 100 Preference Shares subscribed for. The bonus Preference Warrants are given to the subscribers of the Preference Shares in order to increase the attractiveness of the Preference Shares to the Qualifying Dyxnet Shareholders and/or independent investors. It is expected that Dyxnet will raise approximately US$7.98 million (or approximately HK$62.2 million) through the placing of Preference Shares.
In addition to the Rights Shares Subscription, on 22 January 2001, Premier proposed to subscribe for 4,789,927 Preference Shares for a total cash consideration of HK$3,500,000. Pursuant to the Preference Shares Subscription, Premier will be entitled to receive 718,489 Preference Warrants. Premier is required to make the Preference Shares Subscription within five bank business days (excluding Saturday) after obtaining approval of the Independent Shareholders at the Special General Meeting.
The principal terms of the Preference Shares are as follows:
Dividend
In the event that the directors of Dyxnet resolve to declare any dividend to shareholders of Dyxnet out of the retained profits legally available for distribution, holders of the Preference Shares shall be entitled to receive a non-cumulative preferential dividend at a rate of 8% per annum on the Notional Value per Preference Share in priority and preference to any payment of dividend to the holders of Dyxnet Shares.
Conversion price
The Preference Shares (together with any amount of declared but unpaid preferential dividends relating to such Preference Shares) are convertible into Dyxnet Shares at the initial conversion price of US$0.09368 (or approximately HK$0.7307) each, subject to adjustment.
Based on the conversion price of US$0.09368 (or approximately HK$0.7307) per Dyxnet Share, a total of 5,508,416 Dyxnet Shares will be issued to Premier upon full conversion of the 4,789,927 Preference Shares to be subscribed by Premier and of the 718,489 additional Preference Shares falling to be issued upon exercise in full by Premier of the 718,489 Preference Warrants at the initial subscription price of US$0.09368 (or approximately HK$0.7307) each. Together with the existing 5,200,000 Dyxnet Shares held, the 28,040,550 Rights Shares to be subscribed for pursuant to the Rights Shares Subscription (assuming Premier is not required to take up the 3,199,294 additional Rights Shares pursuant to its proposed underwriting commitment under the Rights Issue) and the 28,040,550 additional Dyxnet Shares falling to be issued upon exercise in full by Premier of the 28,040,550 Ordinary Warrants at the initial subscription price of HK$0.10 each, Premier will be interested in a maximum of 66,789,516 Dyxnet Shares, representing approximately 21.45% of the issued ordinary share capital of Dyxnet on a fully diluted basis.
Ranking
As mentioned above, the Preference Shares will rank in priority to the Dyxnet Shares in respect of dividend. The Dyxnet Shares falling to be issued upon exercise of the conversion rights attaching to the Preference Shares will, when issued, rank pari passu in all respects with the Dyxnet Shares then in issue.
Voting rights
Holders of the Preference Shares have the right to vote with the holders of Dyxnet Shares as a single class. Each Preference Share carries the same number of votes as such number of Dyxnet Shares which would be issuable if the conversion rights attaching to the Preference Share were exercised as at the record date for the vote being conducted or, if no such record date is established, at the date such vote is taken or any written consent of the shareholders of Dyxnet is solicited.
Redemption
The Preference Shares are not redeemable by Dyxnet.
Transferability
The Preference Shares are transferable by the holders thereof.
Liquidation
If Dyxnet goes into liquidation, its assets available for distribution among its shareholders shall be applied to repay holders of the Preference Shares in priority to holders of any other class of shares of Dyxnet and such repayment will include:
(i) the amount of all declared but unpaid preferential dividends relating to the Preference Shares; and
(ii) an amount equal to US$0.14052 (or approximately HK$1.096) on each Preference Share, representing 1.5 times the Notional Value.
Thereafter, the remaining assets shall be distributed on a pro rata basis among the holders of Dyxnet Shares and Preference Shares, with the holders of the Preference Shares being treated as if holding such number of Dyxnet Shares which would be issuable if the conversion rights attaching to the Preference Shares were exercised.
The principal differences between the Preference Shares and the Dyxnet Shares are that, unlike the holders of the Dyxnet Shares, the holders of the Preference Shares will be entitled to a non-cumulative preferential dividend at the rate of 8% per annum on the Notional Value of each Preference Share held in the event that Dyxnet declares a dividend. If Dyxnet goes into liquidation, the holders of the Preference Shares will also be entitled to receive 1.5 times the Notional Value of each Preference Share held in addition to any declared but unpaid dividend and will be paid in priority to holders of any other class of shares of Dyxnet out of the assets available for distribution among Dyxnet's shareholders. However, both Preference Shares and Dyxnet Shares will carry voting rights.
Shareholding interest of Premier in Dyxnet
Existing Scenario 1* Scenario 2** Scenario 3***
Number of Dyxnet Shares
held by Premier 5,200,000 33,240,550 66,789,516 73,188,104
Percentage of total
Dyxnet Shares 7.48% 23.91% 21.45% 23.50%
Number of Preference
Shares held by Premier Nil 4,789,927 Nil Nil
Percentage of total
Preference Shares N/A 5.62% N/A N/A
| * Scenario 1: Shareholding interest of Premier in Dyxnet immediately after completion of the Rights Shares Subscription and the Preference
Shares Subscription, assuming that (a) Premier is not required to take up the 3,199,294 additional Rights Shares pursuant to its
proposed underwriting commitment under the Rights Issue; (b) the conversion rights attaching to the Preference Shares as well as
the subscription rights attaching to the Ordinary Warrants and the Preference Warrants are not exercised by any of their respective
holders including Premier; and (c) all the outstanding warrants and management share options of Dyxnet (convertible into a
maximum of 10,252,000 Dyxnet Shares) are not exercised. (Note: As at the date of this announcement, Dyxnet has outstanding
warrants issued to a private investor and employee share options issued to existing management of Dyxnet, which together will be
convertible into a maximum of 10,252,000 Dyxnet Shares when exercised in full.)
**Scenario 2: Shareholding interest of Premier in Dyxnet after completion of the Rights Shares Subscription and the Preference Shares Subscription and on a fully diluted basis, assuming that (a) Premier is not required to take up the 3,199,294 additional Rights Shares pursuant to its proposed underwriting commitment under the Rights Issue; (b) the conversion rights attaching to the Preference Shares as well as the subscription rights attaching to the Ordinary Warrants and the Preference Warrants are fully exercised by their respective holders including Premier; (c) the Preference Shares falling to be issued upon the aforesaid exercise of the subscription rights attaching to the Preference Warrants are also immediately converted into Dyxnet Shares; (d) the Preference Shares are converted into Dyxnet Shares at the initial conversion price of US$0.09368 (or approximately HK$0.7307), the Dyxnet Shares are issued at the initial subscription price of HK$0.10 each upon exercise of the Ordinary Warrants and the Preference Shares are issued at the initial subscription price of US$0.09368 (or approximately HK$0.7307) each upon exercise of the Preference Warrants; (e) there are no outstanding declared but unpaid preferential dividends relating to the Preference Shares immediately prior to their conversion into Dyxnet Shares; and (f) all the outstanding warrants and management share options of Dyxnet (convertible into a maximum of 10,252,000 Dyxnet Shares) are fully exercised. ***Scenario 3: Shareholding interest of Premier in Dyxnet after completion of the Rights Shares Subscription and the Preference Shares Subscription and on a fully diluted basis, assuming that (a) Premier is required to take up the 3,199,294 additional Rights Shares pursuant to its proposed underwriting commitment under the Rights Issue; (b) the conversion rights attaching to the Preference Shares as well as the subscription rights attaching to the Ordinary Warrants and the Preference Warrants are fully exercised by their respective holders including Premier; (c) the Preference Shares falling to be issued upon the aforesaid exercise of the subscription rights attaching to the Preference Warrants are also immediately converted into Dyxnet Shares; (d) the Preference Shares are converted into Dyxnet Shares at the initial conversion price of US$0.09368 (or approximately HK$0.7307), the Dyxnet Shares are issued at the initial subscription price of HK$0.10 each upon exercise of the Ordinary Warrants and the Preference Shares are issued at the initial subscription price of US$0.09368 (or approximately HK$0.7307) each upon exercise of the Preference Warrants; (e) there are no outstanding declared but unpaid preferential dividends relating to the Preference Shares immediately prior to their conversion into Dyxnet Shares; and (f) all the outstanding warrants and management share options of Dyxnet (convertible into a maximum of 10,252,000 Dyxnet Shares) are fully exercised. |
Information on Dyxnet
Dyxnet does not have any operations other than holding the entire issued ordinary shares of Diyixian. Diyixian has commenced operations since August 1999 and is engaged in the provision of a full array of Internet solutions (including, but not limited to, Internet access, virtual private network, server co-location, hosting, content distribution, traffic management and security) to Internet content providers, online traders, multimedia web content users and corporate intranet/extranet users in Greater China.
As Dyxnet was incorporated only on 30 October 2000, no accounts have been prepared by Dyxnet. As at 31 October 2000 (being the date to which the latest management accounts of Diyixian were made up), the unaudited net tangible asset value of Diyixian stood at approximately HK$1.3 million. No audited accounts of Diyixian have been prepared since its incorporation on 2 August 1999.
Reasons for the Rights Shares Subscription and the Preference Shares Subscription
The Group is principally engaged in (a) the provision and maintenance of multi-discipline building services including electrical engineering, water pumping and fire services, air-conditioning, plumbing and drainage, environmental engineering, extra voltage system engineering and telecom wiring; (b) the provision of broadband connectivity and application (through the Company's subsidiaries, Speedlink and KOD); and (c) investment holding.
Assuming Premier will be allotted all the 28,040,550 Rights Shares to be applied for (without taking into account any Rights Shares which may have to be taken up by Premier as a result of its proposed underwriting commitment under the Rights Issue), immediately upon completion of the Rights Shares Subscription, Premier will be interested in an aggregate of 33,240,550 Dyxnet Shares, representing approximately 23.91% of the issued ordinary share capital of Dyxnet as enlarged by the Rights Issue. The Board considers that the Rights Shares Subscription (including Premier's proposed underwriting commitment for 3,199,294 additional Rights Shares under the Rights Issue) will enable Premier to avoid the dilutive effect on its shareholding in Dyxnet due to the Rights Issue and, by increasing Premier's shareholding in Dyxnet (the holding company of Diyixian), it is expected that there will be enhanced strategic alliance between Diyixian and Speedlink or KOD, thus allowing the Group to further strengthen its broadband connectivity and application business.
In addition, following completion of the Preference Shares Subscription, Premier will be entitled to a non-cumulative preferential dividend at the rate of 8% per annum on the Notional Value of each Preference Share held in the event that Dyxnet declares a dividend. If Dyxnet goes into liquidation, Premier will also be entitled to receive 1.5 times the Notional Value of each Preference Share held in addition to any declared but unpaid dividend and will be paid in priority to holders of any other class of shares of Dyxnet out of the assets available for distribution among Dyxnet's shareholders. The Board considers that the Preference Shares will provide an attractive fixed dividend yield of 8% per annum to Premier which will also have additional protection (as compared to holders of any other class of shares of Dyxnet) against investment loss in the event of Dyxnet going into liquidation.
The issue prices of HK$0.5610 per Rights Share and US$0.09368 (or approximately HK$0.7307) per Preference Share represent (a) a discount of approximately 77.56% and approximately 70.77% respectively to the cost of Premier's initial investment in Dyxnet of HK$2.5 per Dyxnet Share; and (b) a discount of approximately 23.90% and approximately 0.88% respectively to the pro forma unaudited adjusted net tangible asset value per Dyxnet Share of approximately HK$0.7372, based on the issued share capital of Dyxnet of 139,040,000 Dyxnet Shares as enlarged by the 69,520,000 Rights Shares pursuant to the Rights Issue and the pro forma unaudited adjusted net tangible asset value of Dyxnet of approximately HK$102.5 million immediately after the completion of the Rights Issue and the placing of Preference Shares. The Board considers that the respective issue prices of the Rights Shares and the Preference Shares are fair and reasonable and the Rights Shares Subscription (including Premier's proposed underwriting commitment for 3,199,294 additional Rights Shares under the Rights Issue) and the Preference Shares Subscription will enable Premier to reduce its average cost of investment in Dyxnet on a per share basis. Besides, should Premier decide to further increase its investment in Dyxnet in the future, it can elect to exercise the conversion rights attaching to the Preference Shares held or the subscription rights attaching to the Ordinary Warrants and the Preference Warrants held.
It should be noted, however, that, pursuant to the terms of the Rights Shares Subscription and the Preference Shares Subscription, Premier will not have any board representation in Dyxnet after the completion of such subscriptions, except that an executive Director, Mr. Kwok, is already a director of Dyxnet.
Source of funding
The considerations for the Rights Shares Subscription (including the proposed underwriting commitment of Premier under the Rights Issue) and the Preference Shares Subscription will be funded by internal resources of the Company.
General
Diyixian is a wholly-owned subsidiary of Dyxnet. As Diyixian holds approximately 14.67% of the issued share capital of Speedlink which is an approximate 72% indirectly owned subsidiary of the Company, Dyxnet is considered to be a connected person of the Company under the Listing Rules. Accordingly, the Rights Shares Subscription and the Preference Shares Subscription will constitute connected transactions for the Company under the Listing Rules and are subject to the approval of Independent Shareholders at the Special General Meeting.
An Independent Board Committee has been appointed to advise the Independent Shareholders as to whether the terms of the Rights Shares Subscription and the Preference Shares Subscription are fair and reasonable. An independent financial adviser will also be appointed to advise the Independent Board Committee in respect of the terms of the Rights Shares Subscription and the Preference Shares Subscription.
Mr. Kwok (an executive Director) together with New World Trading Limited (which is wholly-owned by Mr. Kwok) are beneficially interested in approximately 14.11% of the issued share capital of the Company. As Mr. Kwok is also beneficially interested in approximately 1.86% of the issued ordinary share capital of Dyxnet, and is the director of both Dyxnet and Diyixian, Mr. Kwok, New World Trading Limited and their respective associates (as defined in the Listing Rules) will abstain from voting at the Special General Meeting.
A circular containing details of the Rights Shares Subscription, the Preference Shares Subscription, the recommendation of the Independent Board Committee to the Independent Shareholders and of the independent financial adviser to the Independent Board Committee in respect of the Rights Shares Subscription and the Preference Shares Subscription as well as the notice of the Special General Meeting will be despatched to the Shareholders shortly.
APPLICATION FOR ONGOING CONNECTED TRANSACTION WAIVERS
It is anticipated that, subject to obtaining the approval of the Independent Shareholders at the Special General Meeting, certain subsidiaries of the Company will enter or continue to enter into the following transactions (collectively referred to as "Transactions" hereafter) from time to time in the future:
A. Provision of services by SCEE and Westco to Diyixian in respect of installation and maintenance of electrical, mechanical, ventilation and air-conditioning systems in Diyixian's data centres (Service fees to be charged by SCEE and Westco to Diyixian will not be less than those charged to independent third party customers in respect of the provision of the same or similar services).
B. Payment by Speedlink to Diyixian of rental for server co-location at Diyixian's data centres and for access to the Internet together with related setup charges (Rental and set-up charges payable by Speedlink to Diyixian will be comparable to and not more than the prevailing market rental and set-up charges charged by other independent third party service providers).
C. Payment by KOD to Diyixian of rental for server co-location at Diyixian's data centres and for access to the Internet together with related setup charges (Rental and set-up charges payable by KOD to Diyixian will be comparable to and not more than the prevailing market rental and set-up charges charged by other independent third party service providers).
As Diyixian is a substantial shareholder of the Company's subsidiary, Speedlink, as mentioned above and all of SCEE, Westco, Speedlink and KOD are subsidiaries of the Company, the Transactions will constitute connected transactions for the Company under the Listing Rules which would normally require disclosure by way of press announcement and prior approval of Independent Shareholders each time such Transactions occur. The Board considers that the Transactions will be entered into or continue to be entered into on normal commercial terms in the ordinary and usual course of the businesses of SCEE, Westco, Speedlink and KOD.
Transaction (B) above has been entered into between Speedlink and Diyixian from April to November 2000. However, since April 2000 up to the date of this announcement, the aggregate value of Transaction (B) only amounted to HK$907,091 and it is therefore exempted from any disclosure and/or shareholders' approval requirements under the Listing Rules. None of Transactions (A) and (C) have been entered into so far.
The Board considers that disclosure and/or shareholders' approval of the Transactions each time they arise in full compliance with the Listing Rules will be impracticable because the Transactions will occur on an ongoing basis. The Company has applied to the Stock Exchange for ongoing waivers from the disclosure and/or shareholders' approval requirements in respect of the Transactions on each occasion they arise. The Transactions will be subject to the following conditions:
1. that the Transactions shall be:
(i) entered into by the relevant subsidiaries of the Company involved in the ordinary and usual course of business;
(ii) conducted either (a) on normal commercial terms (which expression will be applied by reference to transactions of a similar nature and to be made by similar entities) or (b) (where there is no available comparison) on terms that are fair and reasonable so far as the Shareholders are concerned; and
(iii) entered into either (a) in accordance with the terms of the agreements governing such Transactions or (b) (where there are no such agreements) on terms no less favourable than those available to or from independent third parties;
2. the aggregate amount of each of the Transactions for each financial year of the Company shall not exceed their respective cap amounts (the "Cap Amounts") as follows:
Transaction reference
(as adopted above) Cap Amount*
A 15% of the Group's annual turnover for
each financial year
B not more than 3% of the Group's audited net
tangible asset value for each financial year
C not more than 3% of the Group's audited net
tangible asset value for each financial year
* The Cap Amounts have been determined by the Board based on the respective anticipated volume of the Transactions in the future.
3. the independent non-executive Directors shall review the Transactions annually and confirm in the Company's next annual report that they were conducted in the manner as stated in paragraphs (1) and (2) above;
4. the Company's auditors shall review the Transactions annually and confirm in the Company's next annual report together with a letter (the "Letter") addressed to the Board (a copy of which shall be provided to the Listing Division of the Stock Exchange) stating whether:
(i) the Transactions have received the approval of the Board;
(ii) Transaction (A) is in accordance with the pricing policies as stated in the Company's financial statements;
(iii) the Transactions have been entered into in accordance with the terms of the agreements governing the Transactions or, if there are no such agreements, on terms no less favourable than those available to or from independent third parties; and
(iv) the Cap Amounts have been exceeded.
Where, for whatever reason, the auditors of the Company decline to accept the engagement or are unable to provide the Letter, the Board shall contact the Listing Division immediately;
5. details of the Transactions in each financial year shall be disclosed as required under Rule 14.25(1)(A) to (D) of the Listing Rules in the annual report of the Company for that financial year; and
6. each of the Company and Diyixian shall provide to the Stock Exchange an undertaking that, for so long as the Shares are listed on the Stock Exchange, it will provide the Company's auditors with full access to its relevant records for the purpose of the auditors' review of the Transactions referred to in paragraph (4) above.
If any terms of the Transactions as mentioned above are altered or if the Company enters into any new agreements with any connected persons (within the meaning of the Listing Rules) in the future, the Company must comply with the provisions of Chapter 14 of the Listing Rules governing connected transactions unless it applies for and obtains a separate waiver from the Stock Exchange.
In respect of Transactions (B) and (C), in the event of any future amendments to the Listing Rules imposing more stringent requirements than as at the date of this announcement on transactions of the kind to which Transactions (B) and (C) belong including, but not limited to, a requirement that such transactions be made conditional on approval by the independent shareholders of the Company, the Company must take immediate steps to ensure compliance with such requirements within a reasonable time.
The aforesaid ongoing waivers, if granted by the Stock Exchange, will be for a period of three financial years up to the financial year ending 31 March 2003 for Transaction (A) and for an indefinite period for Transactions (B) and (C).
Details of the Transactions, together with the recommendation of the Independent Board Committee to the Independent Shareholders and of the independent financial adviser to the Independent Board Committee in respect of the Transactions, will also be included in the circular containing details of the Rights Shares Subscription and the Preference Shares Subscription as mentioned above.
DEFINITIONS
| "Board" | the board of Directors |
| "Company" | Shun Cheong Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange |
| "Conversion Price" | the initial conversion price of US$0.09368 (or approximately HK$0.7307) per Dyxnet Share, subject to adjustment |
| "Director(s)" | the director(s) of the Company |
| "Diyixian" | Diyixian.com Limited, a company incorporated in Hong Kong which is currently wholly-owned by Dyxnet |
| "Dyxnet" | Dyxnet Holdings Limited, a company incorporated in the Cayman Islands on 30 October 2000 |
| "Dyxnet Share(s)" | ordinary share(s) of US$0.001 (or approximately HK$0.0078) each in the capital of Dyxnet |
| "Group" | the Company and its subsidiaries |
| "Hong Kong" | Hong Kong Special Administrative Region of the People's Republic of China |
| "Independent Board Committee" | an independent committee of the Board |
| "Independent Shareholders" | Shareholders other than New World Trading Limited (which is wholly-owned by Mr. Kwok), Mr. Kwok and their respective associates (as defined in the Listing Rules) |
| "KOD" | KOD Hong Kong Limited, an approximate 57.2% indirectly owned subsidiary of another approximate 55% indirectly owned subsidiary the Company |
| "Listing Rules" | Rules Governing the Listing of Securities on the Stock Exchange |
| "Mr. Kwok" | Mr. Kwok Shun On, an executive Director |
| "Notional Value" | the value of US$0.09368 (or approximately HK$0.7307) attributed to each Preference Share |
| "Ordinary Warrant(s)" | warrant(s) of Dyxnet with subscription rights entitling the holder of each of them to subscribe for one new Dyxnet Share at an initial subscription price of HK$0.10 per Dyxnet Share (subject to adjustment) within 4 years from the date of issue |
| "Preference Share(s)" | 8% convertible non-cumulative preference share(s) of US$0.001 (or approximately HK$0.0078) each, each carrying the rights to convert into one new Dyxnet Share at the Conversion Price |
| "Preference Shares Subscription" | the subscription by Premier of 4,789,927 Preference Shares at the issue price of US$0.09368 (or approximately HK$0.7307) each |
| "Preference Warrant(s)" | warrant(s) of Dyxnet with subscription rights entitling the holder of each of them to subscribe for one new Preference Share at an initial subscription price of US$0.09368 (or approximately HK$0.7307) per Preference Share (subject to adjustment) within 4 years from the date of issue |
| "Premier" | Premier.com Limited, an indirectly wholly-owned subsidiary of the Company |
| "Qualifying Dyxnet Shareholders" | shareholders of Dyxnet (including Premier) whose names appeared on the register of members of Dyxnet on the Record Date |
| "Record Date" | 19 December 2000, being the date with reference to which entitlements to the Rights Issue were determined |
| "Rights Issue" | the issue by way of rights of 69,520,000 Rights Shares at HK$0.5610 each to Qualifying Dyxnet Shareholders |
| "Rights Share(s)" | the new Dyxnet Share(s) to be issued pursuant to the Rights Issue |
| "Rights Shares Subscription" | the subscription by Premier of Rights Shares issued by Dyxnet pursuant to the Rights Issue |
| "SCEE" | Shun Cheong Electrical Engineering Company Limited, an indirectly wholly-owned subsidiary of the Company |
| "Share(s)" | ordinary share(s) of HK$0.10 each in the capital of the Company |
| "Shareholders" | holders of the Shares |
| "Special General Meeting" | a special general meeting of Shareholders to be convened to consider and, if thought fit, approve the Rights Shares Subscription, the Preference Shares Subscription and the "Transactions" as defined in the section headed "Application for ongoing connected transaction waivers" in this announcement |
| "Speedlink" | Speedlink Limited, an approximate 72% indirectly owned subsidiary of the Company |
| "Stock Exchange" | The Stock Exchange of Hong Kong Limited |
| "Westco" | Westco Airconditioning Limited, an indirectly wholly-owned subsidiary of the Company |
| "%" | per cent. |
By Order of the Board
Kwok Shun On
Managing Director
Hong Kong, 7 February 2001
For the purpose of this announcement, the exchange rate used is US$1 = HK$7.8 unless otherwise specified.
http://www.irasia.com/listco/hk/shuncheong
Please also refer to the published version of this announcement in the South China Morning Post, Hong Kong Economic Times and Hong Kong Economic Journal.
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