 YAU LEE HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) |
ALL FINE INVESTMENT COMPANY LIMITED (Incorporated in the Cook Islands with limited liability) |
JOINT ANNOUNCEMENT
CONDITIONAL MANDATORY CASH OFFER BY ICEA CAPITAL LIMITED
ON BEHALF OF ALL FINE INVESTMENT COMPANY LIMITED
FOR ALL THE ISSUED SHARES IN YAU LEE HOLDINGS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED OR HELD BY
ALL FINE INVESTMENT COMPANY LIMITED OR
PARTIES ACTING IN CONCERT WITH IT)
|
In December 1999, Yau Lee raised approximately HK$63.8 million before expenses by way of a rights issue of 590,328,134 rights shares on the basis of one rights share for every two then existing Yau Lee Shares held on 8th December, 1999 at HK$0.108 per rights share (the "Rights Issue"). ICEA acted as the financial adviser and the underwriter for the Rights Issue. The Rights Issue was approximately 44.8 per cent. subscribed. Pursuant to its underwriting obligations under the underwriting agreement dated 22nd November, 1999, ICEA subscribed for all of the 325,751,306 unsubscribed rights shares, representing approximately 18.4% of the issued share capital of Yau Lee as enlarged by the Rights Issue. On 5th January, 2000, ICEA placed 324,771,306 of such Yau Lee Shares (representing approximately 18.3% of the issued share capital of Yau Lee as enlarged by the Rights Issue) to the Offeror at HK$0.108 per Yau Lee Share (the "Placing").
The Offeror and parties acting in concert with it were beneficially interested in approximately 31.5 per cent. of the entire issued share capital of Yau Lee after the Rights Issue but immediately prior to the Placing. As a result of the Placing, the shareholding of the Offeror and parties acting in concert with it in Yau Lee increased to approximately 49.8 per cent.. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a conditional mandatory cash offer to acquire all the issued shares in Yau Lee other than those already owned or held by the Offeror or parties acting in concert with it. The Offer will be conditional upon the Offeror having received acceptances of the Offer which, together with the Yau Lee Shares already owned or held by the Offeror before or during the Offer period, will result in the Offeror and parties acting in concert with it holding more than 50 per cent. of the voting rights of Yau Lee. If the Offeror does not receive acceptances of the Offer which, together with the Yau Lee Shares already owned or held by the Offeror and parties acting in concert with it before or during the Offer period, will result in the Offeror and parties acting in concert with it holding more than 50 per cent. of the voting rights of Yau Lee, the Offer will not become unconditional and will lapse. The Offer comprises HK$0.108 in cash for each Yau Lee Share that is the subject of the Offer. As soon as practicable, and in any event within 21 days of the date of this announcement (or such later date as may be permitted under the Takeovers Code), a composite document including an offer document of the Offeror setting out the terms of the Offer, together with the forms of acceptance and transfer, and the response document of Yau Lee will be despatched to the Yau Lee Shareholders and the holders of the Share Options. At the request of Yau Lee, dealings in the Yau Lee Shares on the Stock Exchange were suspended with effect from 10:00 a.m. on 5th January, 2000, pending the release of this announcement. Yau Lee will apply to the Stock Exchange for the resumption of trading in its shares with effect from 10:00 a.m. on 6th January, 2000. |
THE PLACING
In December 1999, Yau Lee raised approximately HK$63.8 million by way of a rights issue of 590,328,134 rights shares on the basis of one rights share for every two then existing Yau Lee Shares held at HK$0.108 per rights share. ICEA acted as the financial adviser and the underwriter for the Rights Issue. The Rights Issue was approximately 44.8 per cent. subscribed. Pursuant to its underwriting obligations under the underwriting agreement dated 22nd November, 1999, ICEA subscribed for all of the 325,751,306 unsubscribed rights shares, representing approximately 18.4% of the issued share capital of Yau Lee as enlarged by the Rights Issue. On 5th January, 2000, ICEA placed 324,771,306 of such Yau Lee Shares (representing approximately 18.3% of the issued share capital of Yau Lee as enlarged by the Rights Issue) to the Offeror at HK$0.108 per Yau Lee Share. The Offeror and parties acting in concert with it were beneficially interested in approximately 31.5 per cent. of Yau Lee after the Rights Issue but immediately prior to the Placing. As a result of the Placing, the shareholding of the Offeror and parties acting in concert with it in Yau Lee then increased to approximately 49.8 per cent..
A chronological summary of the shareholding of the Offeror and parties acting in concert with it in Yau Lee is as follows:
Number of Yau Lee Shares
held by the Offer Approximate percentage
and parties acting in interest in Yau Lee
concert with it (per cent.)
After completion of
the Rights Issue but
before the Placing 557,799,094 31.5
After the Placing 882,570,400 49.8
THE OFFER
Offer
A conditional mandatory cash offer will be made by ICEA on behalf of the Offeror to acquire all Yau Lee Shares other than those already owned or held by the Offeror or parties acting in concert with it.
Offeror
The Offeror is a private company incorporated in the Cook Islands with limited liability. The entire issued share capital of the Offeror is owned by All Fine Holdings Company Limited, the entire issued share capital of which is, in turn, owned by Mr. Wong. Mr. Wong is the Chairman and a director of Yau Lee and also a director of both the Offeror and All Fine Holdings Company Limited. Mr. Wong currently holds share options in respect of 12,000,000 Yau Lee Shares (representing approximately 0.7% of the existing issued share capital of Yau Lee exercisable) at HK$0.2219 per Yau Lee Share during the period from 3rd January, 1998 to 4th August, 2001.
Offer price
For each Yau Lee Share ............................................. HK$0.108 in cash
Comparisons of value
During the period of six months ended 5th January, 2000 (being the latest practicable date prior to the finalisation of this announcement for the purpose of ascertaining certain information for inclusion in this announcement), the Offeror acquired and disposed of Yau Lee Shares as follows:
Number of
Yau Lee Shares Number of Number of Highest Lowest
held on Yau Lee Shares Yau Lee Shares purchase purchase
5th January, 2000 acquired disposed price price
(HK$) (HK$)
All Fine Investment
Company Limited 882,570,400 510,714,3371 Nil 0.108 0.108
Note 1: 185,943,031 Yau Lee Shares were acquired pursuant to the Rights Issue which was completed on 3rd January, 2000 and 324,771,306 Yau Lee Shares were acquired pursuant to the Placing which was completed on 5th January, 2000.
Save as disclosed above, the Offeror and parties acting in concert with it did not have any dealings in Yau Lee Shares during the period of six months ended 5th January, 2000.
The Offer Price is equal to the subscription price for the rights shares paid by the Offeror pursuant to the Rights Issue and also the price paid for the Yau Lee Shares by the Offeror pursuant to the Placing. The Offer Price represents a discount of approximately 1.2 per cent. to the average closing price of approximately HK$0.1093 per Yau Lee Share during the ten consecutive trading days up to and including 4th January, 2000 (being the last trading day on which Yau Lee Shares were traded on the Stock Exchange before this announcement) and a discount of approximately 16.3 per cent. to the closing price of Yau Lee Shares of HK$0.129 on 4th January, 2000.
Based on the audited consolidated financial statements of Yau Lee for its financial year ended 31st March, 1999, the consolidated net tangible assets of Yau Lee amounted to approximately HK$513.9 million (after deferred expenditures of approximately HK$5.1 million), representing an audited net tangible asset value of approximately HK$0.435 per Yau Lee Share as at that date. The Offer Price represents a discount of approximately 75.2 per cent. to such net tangible asset value per Yau Lee Share.
Based on the unaudited interim consolidated financial statements of Yau Lee for the six months ended 30th September, 1999, the consolidated net tangible assets of Yau Lee amounted to approximately HK$524.6 million (after deferred expenditures of approximately HK$5.7 million), representing an unaudited net tangible asset value of approximately HK$0.444 per Yau Lee Share as at that date. The Offer Price represents a discount of approximately 75.7 per cent. to such net tangible asset value per Yau Lee Share.
Highest and lowest prices
During the six months ended 5th January, 2000, the highest closing price of Yau Lee Shares was HK$0.150 (on 22nd September, 1999) and the lowest closing price was HK$0.096 (on 13th August, 1999 and 16th August, 1999).
Terms of the Offer
Under the Offer, Yau Lee Shares will be acquired free from all third party rights, liens, claims, equities, charges and encumbrances and together with all rights attaching thereto, including the right to receive all dividends and distributions declared, paid or made on Yau Lee Shares after the date when the Offer becomes unconditional.
Condition to the Offer
The Offer will be conditional upon the Offeror having received acceptances of the Offer which, together with the Yau Lee Shares already owned or held by the Offeror or parties acting in concert with it before or during the Offer period, will result in the Offeror holding more than 50 per cent. of the voting rights of Yau Lee. If the Offeror does not receive acceptances of the Offer which, together with the Yau Lee Shares already owned or held by the Offeror or parties acting in concert with it before or during the Offer period, will result in the Offeror and parties acting in concert with it holding more than 50 per cent. of the voting rights of Yau Lee, the Offer will not become unconditional and will lapse.
Yau Lee Shareholders, holders of the Share Options and other investors who are contemplating dealing in the Yau Lee Shares are advised to exercise extreme caution.
Stamp duty
Sellers' ad valorem stamp duty arising in connection with acceptance of the Offer will be payable by each Yau Lee Shareholder at the rate of HK$1.25 for every HK$1,000 or part thereof of the consideration arising in connection with the acceptance of the Offer and will be deducted from the cash amount due to such person on acceptance of the Offer.
Valuation of the Offer
On the basis of the Offer and the issued share capital of Yau Lee of 1,770,984,402 Yau Lee Shares at the date of this announcement, the Offer values the whole of the issued share capital of Yau Lee at approximately HK$191.3 million.
At the Offer Price, the amount payable by the Offeror on full acceptance of the Offer amounts to approximately HK$95.9 million. ICEA, the financial adviser to the Offeror in relation to the Offer, is satisfied that sufficient financial resources are available to the Offeror to satisfy full acceptance of the Offer.
Offer document and response document
An independent committee of the board of directors of Yau Lee (the "Independent Board Committee") will be established to advise the independent Yau Lee Shareholders and the holders of the Share Options on the terms of the Offer and that an independent financial adviser (the "Independent Financial Adviser") will be appointed to advise such committee regarding the Offer.
A composite document which includes the offer document of the Offeror containing, inter alia, details of the Offer and other matters referred to in this announcement, together with forms of acceptance and transfer, and the response document of Yau Lee containing, inter alia, the recommendation of the Independent Board Committee and the advice of the Independent Financial Adviser regarding the Offer will be despatched to the Yau Lee Shareholders and the holders of the Share Options as soon as practicable and in any event within 21 days of the date of this announcement (or such later date as may be permitted under the Takeovers Code).
Yau Lee Shareholders and holders of the Share Options should exercise caution when buying or selling Yau Lee Shares prior to receipt of the composite document.
Outstanding Share Options
As at 5th January, 2000, there were outstanding Share Options granted under Yau Lee's share option scheme of Yau Lee adopted on 5th August, 1991 to subscribe for an aggregate of 47,064,000 Yau Lee Shares at an exercise price of HK$0.2219 per Yau Lee Share. The Offeror shall offer, subject to the Offer becoming unconditional, to pay all holders of such outstanding Share Options HK$0.01 in cash in respect of every Share Option held by them in consideration of the surrender to the Offeror by the relevant holders of all their rights in respect of such Share Options, following which such Share Options will be cancelled and extinguished. Save for these Share Options, Yau Lee has no outstanding convertible securities, options or warrants.
INFORMATION ON THE OFFEROR
The Offeror and parties acting in concert with it are beneficially interested in approximately 49.8 per cent. of the issued share capital of Yau Lee as at the date of this announcement.
The Offeror is a private company incorporated in the Cook Islands with limited liability. The entire issued share capital of the Offeror is owned by All Fine Holdings Company Limited, the entire issued share capital of which is in turn owned by Mr. Wong. Mr. Wong is the Chairman and a director of Yau Lee and also a director of both the Offeror and All Fine Holdings Company Limited. Mr. Wong also currently holds Share Options in respect of 12,000,000 Yau Lee Shares (representing approximately 0.7% of the existing issued share capital of Yau Lee) exercisable at HK$0.2219 per Yau Lee Shares during the period from 3rd January, 1998 to 4th August, 2001.
The Offeror has no other business activities apart from holding the Yau Lee Shares in which it is beneficially interested.
INFORMATION ON YAU LEE
Yau Lee obtained a listing on the Stock Exchange on 29th August, 1991.
Yau Lee is the holding company of the Group. The Group principally acts as a contractor for construction projects and fitting out works, but also manufactures and supplies building materials.
For the financial year ended 31st March, 1999, the audited consolidated financial statements of Yau Lee recorded losses before and after taxation and minority interests of approximately HK$48.7 million and HK$44.1 million, respectively. The unaudited profits before and after taxation and minority interests for the six months ended 30th September, 1999, as disclosed in Yau Lee's interim report, were approximately HK$14.3 million and HK$11.5 million, respectively. As referred to above, the audited consolidated net tangible assets of Yau Lee as at 31st March, 1999 and the unaudited consolidated net tangible assets of Yau Lee as at 30th September, 1999 were approximately HK$513.9 million and HK$524.6 million, respectively.
REASONS FOR THE OFFER AND INTENTION OF THE OFFEROR
The Offeror and parties acting in concert with it were beneficially interested in approximately 31.5 per cent. of Yau Lee after the Rights Issue but immediately prior to the Placing. As a result of the Placing which was completed on 5th January, 2000, the shareholding of the Offeror and parties acting in concert with it in Yau Lee increased to approximately 49.8 per cent.. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a conditional mandatory cash offer to acquire all the issued shares of Yau Lee other than those already owned or held by the Offeror or parties acting in concert with it.
The Offeror has no intention to make any changes to either the board of directors or the management of Yau Lee following the completion of the Offer. It is also the intention of the Offeror that upon completion of the Offer, the principal activities of Yau Lee will remain unchanged.
The Offeror has not intention at present that there will be any injection of assets into Yau Lee.
CONTINUATION OF LISTING OF YAU LEE
It is the intention of the Offeror that the listing of Yau Lee Shares on the Stock Exchange should be maintained and appropriate steps will be taken by the Offeror following the closing of the Offer to ensure that not less than 25 per cent. of Yau Lee's issued share capital will be held by the public. The directors of the Offeror have undertaken to the Stock Exchange that if less than 25 per cent. of Yau Lee's issued share capital is held by the public after the completion of the Offer, they will take appropriate steps to ensure that the minimum public shareholding is maintained.
The Stock Exchange has stated that it will closely monitor trading in Yau Lee Shares if, at the close of the Offer, less than 25 per cent. of Yau Lee Shares are held by the public. If the Stock Exchange believes that:
then it will consider exercising its discretion to suspend dealings in Yau Lee Shares.
If Yau Lee remains a listed company after the completion of the Offer, the Stock Exchange will closely monitor all acquisitions or disposals of assets by Yau Lee. The Stock Exchange has the discretion to require Yau Lee to issue a circular to its shareholders irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of Yau Lee. The Stock Exchange has the power to aggregate a series of acquisitions and disposals by Yau Lee and any such transactions may result in Yau Lee being treated as if it were a new listing applicant and subject to the requirements for new listing applicants as set out in the Listing Rules.
RESUMPTION OF TRADING IN YAU LEE SHARES
At the request of Yau Lee, dealings in the Yau Lee Shares on the Stock Exchange were suspended with effect from 10:00 a.m. on 5th January, 2000, pending the release of this announcement. Yau Lee will apply to the Stock Exchange for the resumption of trading in its shares with effect from 10:00 a.m. on 6th January, 2000.
DEFINITIONS
| "Group" | Yau Lee and its subsidiaries |
| "HK$" | Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative Region of the People's Republic of China |
| "ICEA" | ICEA Capital Limited, a registered dealer under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong) |
| "Mr. Wong" | Mr. Wong Ip Kuen, the chairman and a director of Yau Lee and the beneficial owner of the entire issued share capital of All Fine Holdings Company Limited, which beneficially owns the entire issued share capital of the Offeror, and a director of each of Yau Lee, the Offeror and All Fine Holdings Company Limited |
| "Offer" | the conditional mandatory cash offer by the Offeror of HK$0.108 in cash per Yau Lee Share for all the issued Yau Lee Shares not already owned or held by the Offeror or parties acting in concert with it |
| "Offer Price" | HK$0.108 per Yau Lee Share |
| "Offeror" | All Fine Investment Company Limited, a private company incorporated in the Cook Islands with limited liability, being a wholly-owned subsidiary of All Fine Holdings Company Limited, which, in turn, is beneficially wholly-owned or held by Mr. Wong |
| "Share Option" | each option granted by Yau Lee pursuant to an offer letter under the share option scheme of Yau Lee adopted on 5th August, 1991 to subscribe for certain Yau Lee Shares at an exercise price of HK$0.2219 per Yau Lee Share (subject to adjustment under the terms of the share option scheme) in accordance with the terms thereof |
| "Stock Exchange" | The Stock Exchange of Hong Kong Limited |
| "Takeovers Code" | the Code on Takeovers and Mergers |
| "Yau Lee" | Yau Lee Holdings Limited, an exempted company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange |
| "Yau Lee Share(s)" | share(s) of HK$0.05 each in the share capital of Yau Lee |
| "Yau Lee Shareholder(s)" | registered holder(s) for the time being of Yau Lee Shares |
| By Order of the Board Yau Lee Holdings Limited Chui Man Lung, Everett Company Secretary |
By Order of the Board All Fine Investment Company Limited Wong Ip Kuen Director |
Hong Kong, 5th January, 2000
The information in this announcement relating to the Offeror has been supplied by the directors of the Offeror. The directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to Yau Lee) 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 this announcement the omission of which would make any statement in this announcement misleading.
The information in this announcement relating to Yau Lee has been supplied by the directors of Yau Lee. The directors of Yau Lee jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to the Offeror) 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 this announcement the omission of which would make any statement in this announcement misleading.
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