DEZHONG ENT INV<0310> - 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.
DEZHONG ENTERPRISES INVESTMENTS LIMITED
(Incorporated in Hong Kong with limited liability)
PROPOSED RIGHTS ISSUE,
INCREASE IN AUTHORISED SHARE CAPITAL,
ADOPTION OF SHARE OPTION SCHEME
AND GENERAL MANDATES
Summary:
The Company proposes to raise approximately $45
million before expenses by issuing 45,000,000 Rights Shares at a
price of $1.00 per Rights Share.
The Company will provisionally allot 3 Rights Shares, in nil-paid
form, for every 2 Shares held by Qualifying Shareholders on the
Record Date. The Rights Issue is not available to Overseas
Shareholders.
The Rights Issue is subject to the conditions set out under the
section headed `Conditions of the Rights Issue' below. The Rights
Issue is fully underwritten by the Underwriter.
The Directors believe that the Rights Issue will enlarge the capital
base of the Company and will allow Shareholders to participate in the
growth of the Company. The estimated net proceeds of the Rights Issue
is about $42.5 million and will be used as general working capital of
the Company and for possible future investments in the high growth
industries in the PRC, Hong Kong, Macau and Taiwan when suitable
opportunities arise.
The Company also proposes to seek the approval of the Shareholders
at the EGM for the Increase in Authorised Share Capital, the adoption
of the Share Option Scheme and the renewal of general mandates to
repurchase and issue Shares.
The Company is expecting to send a circular containing, among other
things, further details of the Rights Issue, the Increase in
Authorised Share Capital, the adoption of the Share Option Scheme,
the renewal of general mandates to repurchase and issue Shares and a
notice convening the EGM, to Shareholders on or about 18th February
2000 and subject to the approval of the Rights Issue by Shareholders
at the EGM, to send the prospectus, provisional allotment letter and
form of application for excess Rights Shares to all Qualifying
Shareholders on or about 13th March 2000.
WARNING OF THE RISKS OF DEALING IN SHARES AND RIGHTS SHARES
Existing Shares will be dealt with on an ex-rights basis from 2nd
March 2000. Rights Shares will be dealt with in their nil-paid form
from 15th March 2000 to 23rd March 2000 (both dates inclusive). If
the Underwriter terminates the Underwriting Agreement (see
`Termination of the Underwriting Agreement' below) or the conditions
of the Rights Issue (see `Conditions of the Rights Issue' below) are
not fulfilled, the Rights Issue will not proceed.
PROPOSED RIGHTS ISSUE
Issue Statistics
Basis of the Rights Issue: 3 Rights Shares for every 2
Shares held on the Record Date
Number of existing Shares in 30,000,000 Shares (as at 28th
issue: January 2000)
Number of Rights Shares 45,000,000 Rights Shares
(Based on the number of
existing Shares in issue):
Outstanding share options Nil
granted:
Qualifying Shareholders
The Company will send provisional allotment letters and forms of
application for excess Rights Shares to Qualifying Shareholders only.
Qualifying Shareholder must:
1. be registered as a member of the Company on the Record Date;
2. have an address in Hong Kong which appears on the register of
members of the Company on the Record Date.
In order to be registered as members of the Company on the Record
Date, Shareholders must lodge any transfers of Shares (together with
the relevant share certificates) with the Company's share registrars
by 4:00 p.m. on 3rd March 2000.
The share registrars of the Company is:
Secretaries Limited of 5th Floor, Wing On Centre, 111 Connaught Road
Central, Hong Kong.
The register of members of the Company will be closed from 6th March
2000 to 13th March 2000, both dates inclusive. No transfers of Shares
will be registered during this period.
Basis of the Rights Issue
The Company will provisionally allot 3 Rights Shares, in nil-paid
form, for every 2 Shares held by Qualifying Shareholders on the
Record Date payable in full on acceptance. Based on 30,000,000 Shares
in issue as at the date hereof, 45,000,000 Rights Shares will be
issued under the Rights Issue.
Subscription Price
$1.00 per Rights Share, payable in full upon acceptance.
The Subscription Price represents:
1. a discount of about 50% to the closing price of $2 per Share as
quoted on the Stock Exchange on 28th January 2000;
2. a discount of about 35.9% to the average closing price of $1.56 per
Share for the 10 trading days up to and including 28th January 2000;
and
3. a discount of about 28.5% to the theoretical ex-rights price per
Share of $1.4 based on the closing price as quoted on the Stock
Exchange on 28th January 2000.
The Subscription Price was agreed after arm's length negotiation
between the Company and the Underwriter.
Expected timetable
2000
Despatch of circular with notice of the EGM Friday, 18th February
Last day of dealings in Shares on a cum-rights basis
Wednesday, 1st March
Commencement of dealings in Shares on an ex-rights basis
Thursday, 2nd March
Latest time for lodging transfer of Shares
in order to qualify for the Rights Shares
4:00 p.m. on Friday, 3rd March
Register of members closes from Monday, 6th March to Monday, 13th March
Latest time for lodging proxy forms for the EGM
9:30 a.m. on Saturday, 11th March
Record Date for the Rights Issue Monday, 13th March
Expected date of the EGM 9:30 a.m. on Monday, 13th March
Despatch of Rights Issue prospectus,
provisional allotment letters and
forms for application of excess Rights Shares Monday, 13th March
Register of members re-opens Tuesday, 14th March
First day of dealings in nil-paid Rights Shares Wednesday, 15th March
Latest time for splitting nil-paid Rights Shares
4:00 p.m. on Monday, 20th March
Last day of dealings in nil-paid Rights Shares Thursday, 23rd March
Latest time for payment and acceptance of
Rights Shares 4:00 p.m. on Tuesday, 28th March
Latest time for the Rights Issue to become unconditional
4:00 p.m. on Thursday, 30th March
Announcement of results of the Rights Issue Friday, 31st March
Despatch of refund cheques in respect of
unsuccessful or partially unsuccessful applications
for excess Rights Shares Monday, 3rd April
Despatch of certificates for Rights Shares Monday, 3rd April
Dealing of fully paid Rights Shares commences Thursday, 6th April
Warning of the Risks of Dealing in the Shares and Rights Shares
Existing Shares will be dealt with on an ex-rights basis from 2nd
March 2000. Rights Shares will be dealt with in their nil-paid form
from 15th March 2000 to 23rd March 2000 (both dates inclusive). If
the Underwriter terminates the Underwriting Agreement (see
`Termination of the Underwriting Agreement' below) or the conditions
of the Rights Issue (see `Conditions of the Rights Issue' below) are
not fulfilled, the Rights Issue will not proceed.
Any dealing in Shares or Rights Shares in their nil-paid form
between 15th March 2000 to 23rd March 2000 is accordingly at the
investors' own risk.
If in any doubt, investors should consider obtaining professional
advice on this.
Status of the Rights Shares
The Rights Shares (when fully paid) will rank pari passu in all
respects with the Shares in issue on the date of issue of the Rights
Shares. Holders of the Rights Shares (when fully paid) will be
entitled to receive all future dividends and distributions which are
declared, made or paid after the date of allotment and issue of the
Rights Shares.
Share Certificates
Subject to the fulfilment of the conditions of the Rights Issue,
share certificates for all fully-paid Rights Shares are expected to
be posted by 3rd April 2000 to those Shareholders at their own risk
who accepted or applied and paid for the Rights Shares.
Rights of Overseas Shareholders
Documents to be issued in connection with the Rights Issue will not
be registered under the applicable securities legislation of any
jurisdictions other than Hong Kong. Accordingly, no provisional
allotment of Rights Shares will be made to the Overseas Shareholders.
The Company will send a Rights Issue prospectus to Overseas
Shareholders for their information only. The Company will not send
provisional allotment letters or forms of application for excess
Rights Shares to Overseas Shareholders. If a premium (net of
expenses) can be obtained, the Company will sell each Overseas
Shareholder's provisional allotment of Rights Shares once dealings in
the nil-paid Rights Shares start. The proceeds of each sale, less
expenses, which amount to $100 or more will be paid by cheque to the
relevant Overseas Shareholder in Hong Kong dollars as soon as
practicable. The Company will retain individual amount of less than
$100 for its own benefit.
Fractional Entitlements
Any fractional entitlements to the Rights Shares will not be
allotted to the Shareholders but will be aggregated and sold and
retained for the benefit of the Company.
Application for excess Rights Shares
Qualifying Shareholders may apply (using forms for application of
excess Rights Shares) for any unsold entitlement for the Overseas
Shareholders and any Rights Shares provisionally allotted but not
accepted.
The Company will allocate excess Rights Shares at their sole
discretion, on a fair and equitable basis.
Application for listing
The Company will apply to the Listing Committee of the Stock
Exchange for the listing of, and permission to deal in, the Rights
Shares in both their nil-paid and fully-paid forms.
Dealing in the Rights Shares (in both their nil-paid and fully-paid
forms) will be subject to the payment of stamp duty in Hong Kong.
UNDERWRITING ARRANGEMENTS
Undertaking
Neverhalt, a company which is controlled by Mr. Pang Chun Sing,
Joseph, the chairman of the Company, is beneficially interested in
3,300,000 issued Shares (representing 11% of the existing issued
share capital of the Company) and has irrevocably undertaken to the
Company and the Underwriter that it will take up its provisional
allotment of, and subscribe for, 4,950,000 Rights Shares.
Underwriting Agreement dated 28th January 2000
Underwriter: Chung Nam Securities Limited,
a dealer registered under the
Securities Ordinance (Chapter
333) of the Laws of Hong
Kong, which is principally
engaged in dealings in
securities and is an
independent third party and
not connected with the
directors, chief executive,
substantial shareholders of
the Company or its
subsidiaries or any of their
respective associates (as
defined in the Listing Rules)
Number of Shares 40,050,000 Rights Shares
underwritten: (Note)
Commission: 2.5% of the total issue price
of the Rights Shares
underwritten by the
Underwriter.
Note: Excluding the 4,950,000 Rights Shares to be provisionally
allotted to Neverhalt under the Rights Issue.
Termination of the Underwriting Agreement
It should be noted that the Underwriting Agreement contains
provisions granting the Underwriter the right, exercisable by notice
in writing given by the Underwriter to the Company at any time prior
to 4:00 p.m. on the second business day immediately after the last
day for acceptance of the Rights Issue, to terminate the Underwriting
Agreement if in the reasonable opinion of the Underwriter:
1. the success of the Rights Issue or the taking up of the Rights
Shares by the Shareholders would be materially and adversely affected by:
(i) the introduction of any new law or regulation or any change in
existing law or regulation (or the judicial interpretation thereof)
or other occurrence of any nature whatsoever which may materially and
adversely affect the business or the financial position or prospects
of the Group as a whole; or
(ii) the occurrence of any local, national or international event or
change (whether or not forming part of a series of events or changes
occurring or continuing before, and/or after the date hereof) of a
political, military, financial, economic, currency (including a
change in the system under which the value of the Hong Kong currency
is linked to the currency of the United States of America) or other
nature (whether or not sui generis with any of the foregoing), or in
the nature of any local, national or international outbreak or
escalation of hostilities or armed conflict, or affecting local
securities market or the occurrence of any combination of
circumstances which may materially and adversely affect the business
or the financial position or prospects of the Group as a whole; or
2. there has been a change in market conditions or combination of
circumstances in Hong Kong occurs which affect the success of the
Rights Issue (such success being the taking up of the Rights Shares
by the Shareholders) or otherwise in the reasonable opinion of the
Underwriter makes it inexpedient or inadvisable or inappropriate for
the Company or the Underwriter to proceed with the Rights Issue; or
3. there has been a change in the circumstances of any member of the
Group which may materially and adversely affect the prospect of the
Company; or
4. the Company commits any breach of or omits to observe any of the
obligations or undertakings expressed to be assumed by it under the
Underwriting Agreement; or
5. the Underwriter receives notification or becomes aware of the fact
that any of the representations or warranties contained in the
Underwriting Agreement was, when given, untrue or inaccurate or would
in any respect be untrue or inaccurate if repeated as provided in the
Underwriting Agreement and the Underwriter will determine that any
such nature representation or warranty represents or is likely to
represent a material adverse change in the financial or trading
position or prospects of the Group taken as a whole or is likely to
have a material prejudicial effect on the Rights Issue.
If the obligations of the Underwriter are so terminated, the Rights
Issue will not proceed.
Conditions of the Rights Issue
The Rights Issue is conditional upon, amongst other things, the
following conditions being fulfilled on or before 4:00 p.m. on the
business day following the last day for acceptance of the Rights
Issue:
1. the approval of the Increase in Authorised Share Capital by
Shareholders at the EGM;
2. the approval of the Rights Issue by the Shareholders at the EGM;
3. the Listing Committee of the Stock Exchange granting, the listing
of, and permission to deal in, the Rights Shares in nil-paid and
fully paid forms;
4. the delivery to the Stock Exchange and registration with the
Registrar of Companies in Hong Kong one copy of the prospectus, the
provisional allotment letter and form of application for excess
Rights Shares in compliance with the Listing Rules and Hong Kong
Companies Ordinance; and
5. the delivery to the Underwriter of the irrevocable undertaking by
Neverhalt in relation to the Rights Issue referred to in the section
headed `Underwriting Arrangements' above.
Reasons for the Rights Issue and Use of Proceeds
The principal activities of the Group are the holding of equity and
equity-related investments in companies engaged in the industrial
sector in the PRC, Hong Kong, Macau and Taiwan and the provision of
management services to these companies.
The Directors believe that the Rights Issue will enlarge the capital
base of the Company and will allow Shareholders to participate in the
growth of the Company.
The estimated net proceeds of the Rights Issue is about $42.5
million and will be used as general working capital of the Group and
for possible future investments in the high growth industries in the
PRC, Hong Kong, Macau and Taiwan when suitable opportunities arise.
PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL, ADOPTION OF SHARE
OPTION SCHEME AND RENEWAL OF GENERAL MANDATES
In order to facilitate the Rights Issue and to accommodate future
expansion and growth of the Company, the Directors propose to
increase its authorised share capital from $50,000,000 to
$300,000,000 by the creation of an additional 250,000,000 new Shares.
The Directors have no present intention to issue any part of the
unissued share capital of the Company except for the purpose of
issuing the Rights Shares under the Rights Issue and any Shares which
may fall to be issued upon exercise of the options granted under the
Share Option Scheme.
The Directors consider that it is in the interests of the Company
that employees and executive directors of the Group should be given
the opportunity to obtain equity holdings in the Company, thus
enabling them to participate in the Company's prosperity and
consequently providing them with an incentive to contribute further
to the success of the Company. The Directors therefor propose to seek
the approval of the Shareholders at the EGM for the adoption of the
Share Option Scheme. Under the Share Option Scheme, the maximum
number of Shares in respect of which options may be granted (together
with options exercised and options then outstanding) under the Share
Option Scheme (when aggregated with Shares subject to any other share
option scheme) shall not exceed such number of Shares as such
represent 10% of the nominal value of the issued share capital of the
Company from time to time, excluding for this purpose any Shares
issued pursuant to the Share Option Scheme.
In connection with the enlarged share capital as a result of the
Rights Issue, the Directors will also seek the approval of
Shareholders at the EGM for general mandates to repurchase Shares and
to issue further Shares not exceeding 10% and 20% respectively of the
share capital of the Company as adjusted by the Rights Issue.
GENERAL
A circular containing, among other things, further details of the
Rights Issue, the Increase in Authorised Share Capital, the adoption
of the Share Option Scheme, the renewal of the general mandates to
repurchase and issue Shares and the notice convening the EGM will be
despatched to Shareholders as soon as practicable.
TERMS USED IN THIS ANNOUNCEMENT
`Company' Dezhong Enterprises
Investments Limited, a
company incorporated in Hong
Kong with limited liability,
the Shares of which are
listed on the Stock Exchange
`Directors' directors of the Company
`EGM' the extraordinary general
meeting of the Company to be
held on or about 13th March 2000
`Group' the Company and its subsidiaries
`Hong Kong' the Hong Kong Special
Administrative Region of the PRC
`Increase in Authorised Share the proposal relating to the
Capital' increase of the authorised
share capital of the Company
from $50,000,000 to
$300,000,000 by the creation
of an additional 250,000,000
new Shares
`Listing Rules' Rules Governing the Listing
of Securities on the Stock Exchange
`Macau' the Macau Special
Administrative Region of the PRC
`Neverhalt' Neverhalt Limited, a company
incorporated in the British
Virgin Islands and controlled
by Mr. Pang Chun Sing,
Joseph, the chairman of the Company
`Overseas Shareholders' Shareholders whose names
appear on the register of
members of the Company as at
the close of the business on
the Record Date and whose
addresses as shown on such
register are outside Hong Kong
`PRC' the People's Republic of
China and for the purpose of
this announcement, excluding
Hong Kong and Macau
`Qualifying Shareholders' Shareholders other than the
Overseas Shareholders
`Record Date' 13th March 2000, the record
date by reference to which
entitlements to the Rights
Issue will be determined
`Rights Issue' the proposed issue by way of
rights of 45,000,000 Rights
Shares at a price of $1.00
per Rights Share on the basis
of 3 Rights Shares for every
2 Shares then held on the
Record Date
`Rights Shares' 45,000,000 Shares to be
issued in respect of the
Rights Issue
`Share(s)' ordinary share(s) of $1.00
each in the share capital of
the Company
`Share Option Scheme' the new employee share option
scheme proposed to be adopted
at the EGM
`Shareholder(s)' holder(s) of the Shares
`Stock Exchange' The Stock Exchange of Hong
Kong Limited
`Subscription Price' subscription price of $1.00
per Rights Share
`Underwriter' Chung Nam Securities Limited
`Underwriting Agreement' the underwriting agreement in
relation to the Rights Issue
dated 28th January 2000
between the Company and the
Underwriter
`$' Hong Kong dollars
By Order of the Board Dezhong
Enterprises Investments Limited
Pang Chun Sing, Joseph
Chairman
Hong Kong, 28th January 2000
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