DYNAMIC HOLD<0029> - 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.
DYNAMIC HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
DISCLOSEABLE TRANSACTION
The directors (the "Directors") of Dynamic Holdings Limited (the
"Company") are pleased to announce that, on 19th November, 1999,
Dynamic (B.V.I.) Limited, a wholly-owned subsidiary of the
Company, has increased its equity interests in Shenzhen Zhen Wah
Harbour Enterprises Ltd. ("Zhen Wah") from 49% to 80% (the
"Subscription"). The total amount of the Subscription is RMB32,550,000
(equivalent to about HK$30,506,000).
Zhen Wah has concluded an agreement dated 18th November, 1999
(the "Agreement") with the Shenzhen Municipality Planning and
Land Bureau (the "Land Bureau") pursuant to which Zhen Wah is entitled to
redevelop and acquire the land use rights in respect of a piece of land
(the "Property") at Tung Kok Tau in the Shekou District of the
municipality of Shenzhen, the Shenzhen Special Economic Zone, the People's
Republic of China ("PRC"). The Property is currently used by Zhen Wah as
a cargo handling port and it is proposed that the Property will be
redeveloped into a multi-purpose commercial and residential complex (the
"Redevelopment") including a marina, villas, low-rise, high-rise, a hotel,
a passenger ferry terminal as well as commercial and retail development.
Zhen Wah is required under the Agreement to pay the aggregate sum
of RMB210,031,760 (equivalent to about HK$196,843,000) to the Land Bureau.
Dynamic (B.V.I.) Limited is required to finance or arrange the financing
of the Redevelopment under the constitution of Zhen Wah. Further details
are set out below in this announcement.
The Directors believe that the Subscription is in the interest of the
Company and its subsidiaries (the "Group") as Zhen Wah will change from
being an associated company to a subsidiary of the Group. The Subscription
will enable the Group to control and manage the Redevelopment and to
secure a higher share in the financial returns that may be generated by
the Redevelopment.
The Subscription and the obligation to fund or arranging funding
for the Redevelopment together constitute a discloseable transaction for
the Company under the Listing Rules. A circular containing details of the
transaction will be despatched to shareholders as soon as practicable
within 21 days in compliance with the requirements of the Listing Rules.
Background and Reasons for the Subscription
Background
Zhen Wah is an equity joint venture in the PRC which, immediately
before the Subscription, was owned as to 51% by Shenzhen Marine
Company and 49% by Dynamic (B.V.I.) Limited, a wholly-owned subsidiary of
the Company.
The principal business of Zhen Wah is to operate a port with
berthing and storage facilities in the Property.
The Property is strategically located in the Nantou Peninsula in
the southwest of the Shenzhen Special Economic Zone. It is close
to the Shekou Port and just across the Shenzhen Bay from the Hong
Kong Special Administrative Region ("Hong Kong").
The Directors believe that, having regard to the strategic location of the
Property, there is enormous potential for the Property to be redeveloped
by changing its existing use as a cargo handling port to a multi-purpose
commercial and residential complex.
With this objective in mind, Zhen Wah has been negotiating with
the Land Bureau in relation to the Redevelopment.
Conclusion of the Agreement
On 18th November, 1999, the Agreement was concluded between Zhen
Wah and the Land Bureau pursuant to which Zhen Wah is entitled
to redevelop and acquire the land use rights in respect of the
Property. The total consideration payable to the Land Bureau,
in addition to recurring land use fees in an amount to be
determined from time to time, amounted to RMB210,031,760
(equivalent to about HK$196,843,000).
Increase of equity interests in Zhen Wah
In order to finance the consideration payable to the Land Bureau,
Dynamic (B.V.I.) Limited has increased its equity interests in
Zhen Wah from 49% to 80% by injecting the sum of RMB32,550,000
(equivalent to about HK$30,506,000). The Subscription was
completed on 19th November, 1999. The current registered
capital of Zhen Wah is RMB53,550,000 (equivalent to about
HK$50,187,000), contributed as to RMB42,840,000 (equivalent to
about HK$40,150,000) by Dynamic (B.V.I.) Limited and the
remaining RMB10,710,000 (equivalent to about HK$10,037,000) by
Shenzhen Marine Company .
The Directors believe that the Subscription is in the interest
of the Group as Zhen Wah will change from being an associated
company to a subsidiary of the Group. The Subscription will enable
the Group to control and manage the Redevelopment and to secure
a higher share in the financial returns that may be generated by
the Redevelopment.
Financial information on Zhen Wah
The audited net profit after tax of Zhen Wah for the financial
years ended 31st December, 1997 and 1998 amounted to about
RMB4,205,000 and RMB1,602,000 respectively (equivalent to about
HK$3,941,000 and HK$1,501,000 respectively). The unaudited
management accounts of Zhen Wah for the six months ended 30th June,
1999 recorded a net profit after tax of about RMB1,339,000
(equivalent to about HK$1,255,000) for the said six months'
period. The latest audited net tangible asset value of Zhen Wah
as at 31st December, 1998 amounted to about RMB27,935,000
(equivalent to about HK$26,181,000).
Business of the Group
The Group's principal activities are the holding of investment
properties for rental income and property development.
The Property and the Redevelopment
Strategic location of the Property
The Property is strategically located on the seafront of Shekou
District within the Shenzhen Special Economic Zone. With the
recent completion of Hai Bin Road, the Property is readily accessible
within 20 minutes to Futin and Lo Wu; and after the completion of
Shenzhen-Hongkong Western Corridor in 2004 linking Tung Kok Tau and Yuen
Long, the Property will be within half an hour's reach from Hong Kong.
With the prime location of the Property, the Directors believe that the
Redevelopment has all the potentials to become a major revenue
contributor to the Group in the medium and longer term.
Area of the Property and the Redevelopment
The Property (including land proposed to be reclaimed) has a site
area of approximately 171,786 square metres. The land use rights
in respect of the Property are for a period of 70 years commencing
from 18th November, 1999 to 17th November, 2069. The Group
currently contemplates that the Redevelopment, when completed,
will have a gross floor area of not less than 310,000 square metres.
Details of the Redevelopment will be subject to planning approval
from relevant authorities being obtained. The Agreement
provides that once relevant plans have been approved,
construction work must commence within one year from such
approval, and that the work must be completed on or before 31st
December, 2007.
Consideration payable to the Land Bureau
The consideration payable to the Land Bureau for the Property
(excluding recurring land use fees in an amount to be determined)
in the aggregate sum of RMB210,031,760 (equivalent to about
HK$196,843,000) was negotiated on an arm's length basis. An
aggregate sum of RMB54,230,000 (equivalent to about
HK$50,825,000) has already been paid. The balance of the
consideration in the sum of RMB155,801,760 (equivalent to about
HK$146,018,000) will be payable by 2 instalments in May and
November 2000 in the respective sums of RMB20,000,000 (equivalent
to about HK$18,744,000) and RMB135,801,760 (equivalent to about
HK$127,274,000).
Pursuant to the constitution of Zhen Wah, Dynamic (B.V.I.)
Limited is responsible for financing or arranging the financing
of the payment of the balance of such consideration. The
Directors will consider the best method of such financing which
may include, where appropriate, the issuance of further shares
and/or borrowings from financial institutions or third parties.
General
The Subscription and the obligation to fund or arrange the funding
of the Redevelopment together constitute a discloseable
transaction of the Company under the Listing Rules. A circular
containing details of the transaction will be despatched to
shareholders as soon as possible within 21 days as required under
the Listing Rules.
By Order of the Board
Pang Kit Man, John
Chief Executive Officer
Hong Kong, 20th November, 1999
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