LUOYANG GLASS<1108> - Announcement
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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.
LUOYANG GLASS COMPANY LIMITED
(A joint stock limited company incorporated in the Peoples*
Republic of China with limited liability)
Connected Transaction
in relation to
Acquisition in China Luoyang Float Glass Group Financial Company
of Limited Liability
and
Clarification
Summary
The board of directors ("Directors") of Luoyang Glass Company
Limited (the "Company") wishes to announce that on 22nd July, 1999,
the Company entered into an agreement (the "Agreement") to acquire
from its holding company, China Luoyang Float Glass Group Company
of Limited Liability ("CLFG"), a 40% equity interests in China
Luoyang Float Glass Group Financial Company of Limited Liability
("CLFC"), a non-wholly owned subsidiary of CLFG (the "A
cquisition"). The consideration for the Acquisition will be
satisfied by the Company in cash of RMB40 million (equivalent to
approximately HK$37.4 million, which is calculated based on the
exchange rate of HK$1.00 = RMB1.07 as quoted on South China Morning
Post on 22nd July, 1999) which was arrived at after arm's length
negotiations and based on the existing registered share capital
of CLFC of RMB100 million.
As CLFG, the holding company of CLFC, is also the controlling
shareholder of the Company, the Acquisition therefore constitutes
a connected transaction for the Company under Rule 14.23(1)(b)
of the Rules Governing the Listing of Securities (the "Listing
Rules") on The Stock Exchange of Hong Kong Limited and Rule 7.3.2(3)
of the Shanghai Stock Exchange Listing Rules (the "Shanghai
Listing Rules").
In addition, the Directors have noted certain articles on
newspapers in respect of the Disposal and would like to advise
that the Disposal is at a very preliminary stage and might or might
not materialise.
A. Details of the Agreement
1. Date of the Agreement
22nd July, 1999
2. Parties
Vendor : CLFG
Acquirer : the Company
3. Share : 40% equity interests in CLFC
4. Consideration : RMB40 million (approximately
HK$37.4 million) to be settled in cash by the Company in total within 7
days after the date of the Agreement. The consideration was arrived
at after arm's length negotiations and based on the existing
registered share capital of CLFC of RMB100 million.
5. Completion : CLFG currently holds a 90% equity interests
in CLFC and the remaining 10% is held by Luoyang Guohao Holdings
Limited ("LGHL"), an independent third party not connected to any
of the existing directors, associates (as defined in the Listing
Rules) or substantial shareholders of the Company. Upon the
completion of the Acquisition, CLFG, the Company and LGHL will
hold 50%, 40% and 10% respectively of the equity interests in CLFC.
B. Information about the Company
The Company is one of the largest manufacturers of float sheet
glass in the PRC. It is principally engaged in the production and
marketing of float sheet glass and processed vehicle glass of
various thickness, size and colour.
C. Information about CLFC
CLFC is a limited liability company incorporated in the PRC on
27th October, 1993 with a registered share capital of RMB100
million, of which 90% of the equity interests is owned by CLFC
and the remaining 10% is owned by LGHL.
CLFC is principally engaged in the provision of financial/treasury
services which include deposit taking, lending facilities;
product leasing and financing; transportation insurance; letter
of credit; and market research and consultation to CLFG and its
subsidiaries. For the two years ended 31st December, 1998, CLFC
recorded audited net profits of approximately RMB8.9 million
(approximately HK$8.3 million) and RMB7.8 million (approximately
HK$7.3 million) respectively. As at 31st December, 1998, CLFC has
an audited net assets value of approximately RMB107.8 million
(approximately HK$100.7 million).
The Directors would like to advise that it is not provided in the
Agreement whereby the Company is entitled to appoint any of its
directors to the board of CLFC. The management of CLFC will not
change as a result of the Acquisition.
At this stage, the Directors do not envisage any connected
transactions in the future with CLFC, save for the existing
deposits of the Company with CLFC which are within the ordinary
and usual course of businesses of the Company and CLFC and on normal
commercial terms. Moreover, the Company will not involve in the
daily business operations of CLFC.
D. Reason for the transaction
The Directors consider that it is in the interest of the Company
to acquire a 40% equity interests in CLFC which has a profitable
track record to broaden its income base.
In addition, the Directors consider that the Acquisition will
enable CLFC to closely monitor the financial and cash position
of the Company and its subsidiaries (together the "Group") and
provide depository services to the Group in order to facilitate
effective use of its financial resources, and thus add value to
the Group's operations.
The Directors (including the independent non-executive directors)
considered the Acquisition to be fair and reasonable so far as
the shareholders of the Company are concerned and on normal
commercial terms.
E. Connected Transaction
CLFG is the holding company of both the Company and CLFC. Therefore,
the above Acquisition constitutes a connected transaction for the
Company under Rule 14.23(1)(b) of the Listing Rules and Rule
7.3.2(3) of the Shanghai Listing Rules. The amount of the Company
's investment in CLFC is less than 3% of the book value of the
consolidated net tangible assets of the Group as at 31st December,
1998. The Acquisition falls within the deminimis provisions under
Rule 14.25(1) of the Listing Rules and Rule 7.3.5(1) of the
Shanghai Listing Rules, and the Company is required to disclose
by way of a press announcement the brief details of the transaction,
of which will also be included in the Company's next published
interim report, annual report and accounts.
F. Clarification
In addition, the Directors have noted that there have been articles
on newspapers stating that the Company is proposing to dispose
its interest in Qingdao Taiyang Glass Industry Company Limited, a
sino-foreign equity joint venture in which the Company owns 55% of its
equity interests, to CLFG (the "Disposal"). The Directors would like to
advise that the Disposal is at a very preliminary stage and the Company is
discussing with its financial advisers on the structures and terms
of the Disposal and that the Disposal might or might not
materialise and investors should exercise caution in dealing in
the shares of the Company.
By Order of the Board
Wang Jie
Secretary to the Board of Directors
Hong Kong, 22nd July, 1999
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