DC FINANCE<0198> & ITC CORPORATION<0372> - J Announcement & Resumption of Trading
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.
DC FINANCE (HOLDINGS) LIMITED
(Incorporated in Bermuda with limited liability)
ITC CORPORATION LIMITED
(Incorporated in Bermuda with limited liability)
Joint announcement
Issue of new shares by
Star East Information Technology Corp.
The board of directors of ITC Corporation Limited announces that
Star East Information Technology Corp., a 62% beneficially owned
associated company of ITC, entered into a subscription agreement with
Hikari Tsushin, Inc., an independent third party on 19th August,
1999. Under the subscription agreement, Hikari Tsushin has agreed to
subscribe and Star East Information has agreed to issue and allot 20
new shares in Star East Information, representing 10% of the enlarged
issued share capital of Star East Information following further issue
of new shares to the existing shareholders of Star East Information
as described below. The total consideration for the subscription by
Hikari Tsushin is US$9.5 million, equivalent to about HK$74.1 million
at an exchange rate of US$1 to HK$7.8.
Under the subscription agreement, Star East Information has also
agreed to issue and allot to its existing shareholders as follows:
- 24 new shares to Star East (B.V.I.) Limited which holds a 30% direct
shareholding interest in Star East Information for a total
consideration of US$24, equivalent to about HK$187;
- 40 new shares to a wholly-owned subsidiary of ITC which holds a 50%
direct shareholding interest, for a total consideration of about
HK$6.3 million. ITC also holds 12% beneficial interest in Star East
Information through its shareholding interest in Star East BVI;
and,
- 16 new shares to a company owned by a group of entertainers which
holds a 20% direct shareholding interest in Star East Information for
a total consideration of about HK$3.8 million.
Following the completion of a proposed acquisition of Star East BVI
by and a proposed placement of shares of DC Finance (Holdings)
Limited (Star East BVI is currently 40% beneficially owned by ITC) as
announced by DC Finance on 15th July, 1999 and the subscription
agreement, Star East Information will be approximately 48% and 27%
beneficially owned by ITC and DC Finance respectively.
ITC, through its wholly-owned subsidiary, and a company owned by a
group of entertainers have also agreed to grant Hikari Tsushin, for
nominal consideration, options to acquire from them a further 10% in
total of the enlarged issued share capital of Star East Information
following the completion of the subscription agreement.
The subscription agreement and the exercise of the call
option in relation to the sale of shares in Star East Information
held by ITC do not constitute a notifiable transaction of ITC
pursuant to the Listing Rules. ITC is making this joint announcement
under the general obligation imposed on the directors of ITC by
paragraph 2 of the Listing Agreement.
The board of directors of DC Finance has noted the material increase
in price of the shares in DC Finance on 18th August, 1999, the date
preceding the suspension of trading of the shares in DC Finance, and
is making this announcement in order to keep shareholders of DC
Finance and investors informed of the latest development in relation
to the acquisition of Star East BVI. The other purpose of this
announcement is to clarify that DC Finance is not a party to the
subscription agreement and ITC currently does not hold any shares in
DC Finance. However, it should be noted that Star East Information is
30% owned by Star East BVI, a company which is proposed to be
acquired by DC Finance and ITC will hold an approximate 10.3%
shareholding interest in DC Finance after the completion of the sale
of Star East BVI to DC Finance and a placement of shares of DC
Finance.
A SUBSCRIPTION AGREEMENT DATED 19th AUGUST, 1999
Issuer of new shares
Star East Information, a 62% beneficially owned associated company
of ITC.
Subscribers of new shares
Existing shareholders of Star East Information and Hikari Tsushin,
Inc., an independent third party under the Listing Rules.
Number of new shares to be issued and subscription price for new
shares in Star East Information
Subscribers Number of Subscription Subscription Shareholding
new shares price in price in percentage
to be original local immediately
subscribed currency currency after the
subscription
Hikari 20 US$9,500,000 HK$74.1 million 10%
Tsushin (1)
ITC, 40 HK$6,304,329 HK$6.3 million 45%
through a (2)
wholly-owned
subsidiary
A company 16 HK$3,857,000 HK$3.8 million 18%
owned by a (2)
group of
entertainers
Star East 24 US$24(3) HK$187 27%
BVI
Note 1: The subscription price was agreed after arm's length
negotiation between Star East Information and Hikari Tsushin and is
considered to be fair and reasonable by the board of directors of
ITC.
Note 2: These amounts are equal to the amount of shareholders'
advances from a wholly-owned subsidiary of ITC and a company owned by
a group of entertainers as at 31st July, 1999, which will be set off
against the subscription price payable by the respective shareholders
for the issue of the new shares.
Note 3: The subscription price represents the par value of shares in
Star East Information being subscribed. The reason for Star East BVI
to subscribe for 24 shares in Star East Information is to maintain
its level of shareholding interest following the subscription.
Effect on ITC
In view that ITC does not hold sufficient direct interest and board
control in Star East Information, therefore Star East Information is
an associated company of ITC. Upon completion of the subscription
agreement, ITC is expected to record a direct profit of about HK$25
million in the financial year ending 31st March, 2000. If Hikari
Tsushin exercises the option and acquires 7% of the enlarged issued
share capital of Star East Information from ITC, the gain or loss for
ITC upon the exercise of the option will depend on the prevailing
carrying cost of ITC of its investment in Star East Information at
the time the option is exercised.
Rights of new shares
The subscribed new shares in Star East Information will be issued
free of rights of any third party and will rank pari passu with all
other existing shares in Star East Information.
Business activities of Hikari Tsushin
Hikari Tsushin, a listed company in Japan, is a telecommunication
subscription agency and also trades in telecommunications and office
equipment. Hikari Tsushin is expanding its businesses to virtual
network of services, including e-commence applications and it also
participates in satellite communications business. Hikari Tsushin has
also invested in another internet related listed company in Hong Kong.
Business activities of Star East Information
Star East Information intends to launch a global Chinese content
provider for entertainment and life style information. The content
will include official profiles of a number of entertainers, Net radio
and Net TV shows, real time conversations between entertainers and
subscribers and daily superstar feature updates. Star East
Information plans to commence its business and to officially launch
its web site at the end of the third quarter of this year.
Trading record
Star East Information was incorporated on 18th February, 1999 and
has not yet commenced its business. No turnover and trading expenses
have been recorded to date.
As at 31st July, 1999, the net asset value including shareholders'
advances of Star East Information was about HK$10.2 million.
Business activities of ITC
The current principal business of ITC group is the holding of
significant interests in a number of listed and unlisted
companies.
Reasons for the subscription
The subscription will strengthen the capital and shareholder base of
Star East Information. In addition, Hikari Tsushin may provide
technological assistance in the development of Star East
Information's web site.
Use of proceeds
It is planned that the proceeds from the subscription will be used
by Star East Information for the development and launching of a
global Chinese content provider for entertainment and life style
information.
Conditions of the subscription
The subscription agreement is conditional upon, amongst other
things, the following conditions precedent being fulfilled or
waived:
- Hikari Tsushin being satisfied with the results of a legal due
diligence review of Star East Information and its subsidiaries;
and,
- completion of the agreement entered into between Star East Group
Limited and DC Finance dated 13th July, 1999, under which DC Finance
will acquire Star East BVI.
Expected date of completion
The subscription agreement is expected to be completed on or before
2nd September, 1999.
Shareholding structure
Following the subsciption only, about 56% of the shares in Star East
Information will be beneficially owned by ITC. On completion of the
sale and purchase agreement between Star East Group, a 40%
beneficially owned company of ITC and the holding company of Star
East BVI, and DC Finance dated 13th July, 1999, Star East Group will
sell the entire shareholding interest in Star East BVI to DC Finance
subject to, amongst other things, the approval of the shareholders of
DC Finance. Following the subscription, the sale of Star East BVI by
Star East Group and a placement of shares of DC Finance, ITC and DC
Finance will directly own about 45% and 27% of the shares in Star
East Information respectively.
(For the shareholding structure of Star East Information before the new
issue of shares and the completion of the sale of Star East BVI to DC
Finance and a placement of shares of DC Finance & the shareholding
structure of Star East Information after the new issue of shares and the
completion of the sale of Star East BVI to DC Finance and a placement of
shares of DC Finance, please refer to the press announcement today.)
Call option
Upon completion of the subscription agreement, a call option deed
will be entered into between ITC, through its wholly-owned
subsidiary, and Hikari Tsushin.
ITC, through its wholly-owned subsidiary, has agreed to grant Hikari
Tsushin a right to acquire 7% of the enlarged issued share capital of
Star East Information upon completion of the subscription for a total
consideration of US$6.65 million, equivalent to about HK$51.9
million, within thirty days from the official launch of a web site of
Star East Information. Similarly, a company owned by a group of
entertainers also proposed to enter into a similar call option deed
with Hikari Tsushin under which Hikari Tsushin can acquire 3% of the
enlarged issued share capital of Star East Information from it.
Further announcement will be made by ITC when the option in relation
to the sale of shares in Star East Information held by ITC is
exercised or lapsed.
General
The board of directors of DC Finance has been informed on 17th
August, 1999 of the above transaction by a director who is also a
director of Star East Group. The board of directors of DC Finance
reminds investors that the acquisition of Star East BVI by DC Finance
is still subject to a number of conditions including the approval of
independent ordinary shareholders of DC Finance at a special general
meeting to be held on 30th August, 1999. Accordingly, investors and
potential investors are advised to exercise extreme caution in
dealing in the shares of DC Finance.
The subscription agreement and the exercise of the call option in
relation to the sale of shares in Star East Information held by ITC
do not constitute a notifiable transaction of ITC under the Listing
Rules.
Save as disclosed herein, the boards of directors of ITC and DC
Finance confirm in relation to their respective companies that they
are not aware of other reasons for substantial increase in the share
prices of ITC and DC Finance and there are no negotiations or
agreements relating to intended acquisitions or realisations of ITC
or DC Finance which are discloseable under paragraph 3 of the Listing
Agreement, neither are the boards of ITC or DC Finance aware of any
matter discloseable under the general obligation imposed by paragraph
2 of the Listing Agreement in so far as it relates to their
respective companies, which is or may be of a price sensitive
nature.
Equitas Capital Limited, the independent financial adviser to the
independent board committee of DC Finance in relation to the
acquisition of Star East BVI by DC Finance has confirmed to the board
of directors of DC Finance that, after considering the terms of the
above transaction, they continue to hold the view that the terms of
the acquisition of Star East BVI and of the placing of new shares in
DC Finance as set out in the announcement of DC Finance on 15th July,
1999 are fair and reasonable and it is in the interests of the
ordinary shareholders of DC Finance for DC Finance to make the offer
to repurchase its preference shares. The full text of the letter of
advice from Equitas Capital is set out in the circular of DC Finance
dated 14th August, 1999.
Resumption of trading
Following the enquiries from the Stock Exchange of Hong Kong
Limited, trading in the securities of ITC and shares of DC Finance
was suspended at the request of ITC and DC Finance respectively on
the Stock Exchange from 10:00 a.m. on 19th August, 1999 pending the
publication of this announcement. Application has been made by ITC to
request the resumption of trading in the securities of ITC from 10:00
a.m. on 24th August, 1999 and an application has been made by DC
Finance to request the resumption of trading in the shares of DC
Finance from 10:00 a.m. on 24th August, 1999.
By Order of the Board
DC Finance (Holdings) Limited
Leung Man Fai
Company Secretary
By Order of the Board
ITC Corporation Limited
Sylvia Leung
Company Secretary
Hong Kong 23rd August, 1999
The directors of DC Finance collectively and individually accept
full responsibility for the accuracy of the information contained in
this announcement relating to DC Finance and confirm, having made
reasonable enquiries, that to the best of their knowledge and belief,
the opinions expressed by them relating to DC Finance herein are fair
and reasonable and have been arrived at after due and careful
consideration and there are no other facts relating to DC Finance not
contained herein the omission of which would make any statement
relating to DC Finance contained in this announcement misleading.
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