ITC CORPORATION<0372>-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.
ITC Corporation Limited
(Incorporated in Bermuda with limited liability)
ANNOUNCEMENT
SUBSCRIPTION AND PLACING OF NEW SHARES
AND
CONVERTIBLE NOTES
(Connected transactions)
On 27th August, 1999, ITC Corporation Limited (the `Company')
entered into a share subscription agreement (the `Share Subscription
Agreement') for the subscription of 26,000,000 ordinary shares of
HK$0.10 each in the ordinary capital of the Company (`Share') by
Galaxyway Investments Limited (`Galaxyway'), the single largest
shareholder of the Company, and a placing and underwriting agreement
(the `Share Placing Agreement') for the placement of 58,000,000 new
Shares to independent investors (the `Share Placees'), both at a
price (the `Placing Price') of HK$1.00 per Share (the `Share Issue').
The net proceeds of the Share Issue are estimated to be approximately
HK$81 million.
On the same day, the Company also entered into a convertible notes
subscription agreement (the `Convertible Notes Subscription
Agreement') for the subscription of convertible notes of the Company
(the `Convertible Notes') amounting to HK$50,000,000 by Galaxyway and
a placing and underwriting agreement (the `Convertible Notes Placing
Agreement') for the placement (the `Convertible Notes Placement') of
Convertible Notes amounting to HK$50,000,000 to independent investors
(the `Convertible Notes Placees') with an over-allotment option of an
amount up to HK$20,000,000 (the `Convertible Notes Issue'). The net
proceeds of the Convertible Notes Issue are estimated to be
approximately HK$98 million (assuming the over-allotment option has
not been exercised).
The aggregate net proceeds of the Share Issue and the Convertible
Notes Issue are estimated to be approximately HK$179 million
(assuming the over-allotment option has not been exercised), which
will be used mainly for reduction of borrowings and as additional
working capital of the Company and its subsidiaries (the `Group'), or
if the Company receives the notice from Hanny Holdings Limited
(`Hanny') to exercise the put option (the `Put Option') on shares in
Tung Fong Hung (Holdings) Limited (`Tung Fong Hung') as held by Hanny
before completion of the Share Issue and the Convertible Notes Issue,
for partial satisfaction of the acquisition price of the Tung Fung
Hung's shares under the Put Option.
Upon completion of the Share Issue, the interest of Galaxyway in the
issued ordinary share capital of the Company will be slightly reduced
from approximately 31.1 per cent to 31.0 per cent. Upon completion of
the Share Issue and full conversion of the Convertible Notes to be
issued under the Convertible Notes Issue, the interest of Galaxyway
in the issued ordinary share capital of the Company will be increased
from approximately 31.1 per cent. to 33.9 per cent.
Completion of the Share Issue and the Convertible Notes Issue is
subject to the fulfilment of certain conditions which include, inter
alia, the approval of shareholders of the Company (other than
Galaxyway and its associates (as defined in the Rules (the `Listing
Rules') Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited (the `Stock Exchange')) at a special general
meeting and the approval of listing of, and permission to deal in,
the new Shares falling to be issued under the Share Issue and the
Convertible Notes Issue by the Listing Committee of the Stock
Exchange.
THE SHARE SUBSCRIPTION AGREEMENT AND THE SHARE PLACING AGREEMENT
1. Date
27th August, 1999
2. Parties
Issuer: The Company
Subscriber: Galaxyway, the single largest
shareholder of the Company
which holds 130,660,457
Shares, representing
approximately 31.1 per cent.
of the existing issued
ordinary share capital of the
Company.
Underwriters: BNP Prime Peregrine
Securities Limited (`BNP
Prime Peregrine') and Tai
Fook Securities Company
Limited (`Tai Fook', together
the `Share Placing
Underwriters')
3. Number of Shares to be subscribed or placed
84,000,000 Shares, representing approximately 20.0 per cent. of the
existing issued ordinary share capital of the Company and
approximately 16.6 per cent. of the enlarged issued ordinary share
capital of the Company, of which 26,000,000 Shares will be subscribed
by Galaxyway and 58,000,000 Shares will be placed to the Share
Placees through the Share Placing Underwriters.
4. Placing price
HK$1.00 per Share, representing a discount of approximately 3.66 per
cent. to the 10-day average closing price of the Shares as quoted on
the Stock Exchange of HK$1.038 for the period from 11th August, 1999
to 27th August, 1999 and a discount of approximately 8.26 per cent.
to the closing price of HK$1.09 per Share on 27th August, 1999. The
Placing Price was arrived at after arm's length negotiation.
5. Placees
The Share Placees are independent professional investors and will be
more than six.
6. Independence of the Share Placees and the Share Placing Underwriters
The Share Placees, BNP Prime Peregrine and Tai Fook are third
parties independent of, and not connected with, any of the directors,
chief executive or substantial shareholders of the Company and any of
its subsidiaries or any of their respective associates (as defined in
the Listing Rules).
7. Ranking of the new Shares
The 84,000,000 new Shares, when issued, will rank pari passu in all
respects with the issued Shares existing at the date of allotment.
8. Force majeure
The Share Placing Underwriters and Galaxyway are entitled, on the
occurrence of certain events (including a change in national or
international law or regulation, financial, political or economic
conditions as would likely to prejudice materially the business and
financial position of the Group, material breach of any of the
undertakings, representations and warranties set out in the Share
Subscription Agreement and the Share Placing Agreement, and material
adverse change in the financial position of the Company), to
terminate the Share Subscription Agreement and the Share Placing
Agreement (as appropriate) by giving notice to the Company prior to
10:30 a.m. on the date of completion of the Share Issue.
9. Conditions and completion of the Share Issue
The Share Subscription Agreement and the Share Placing Agreement are
inter-conditional. Completion of the Share Issue will take place on
the second business day after the fulfilment of the following
conditions or such other date as may be agreed between the Company,
Galaxyway and the Share Placing Underwriters, but in any event shall
take place not later than 31st October, 1999:
(a) approval of the Share Issue by shareholders of the Company (other
than Galaxyway and its associates (as defined in the Listing Rules))
in a special general meeting; and
(b) the Listing Committee of the Stock Exchange granting listing of, and
permission to deal in, the new Shares to be issued and allotted under
the Share Issue.
Completion of the Share Issue is expected to take place on or around
8th October, 1999.
10. Use of proceeds
The net proceeds of the Share Issue are estimated to be
approximately HK$81 million. It is intended that such net proceeds
will be used as to approximately HK$60 million for reduction of
borrowings and the balance will be used as additional working capital
of the Group, or if the Company receives the notice from Hanny to
exercise the Put Option before the completion of the Share Issue and
the Convertible Notes Issue, for the partial satisfaction of the
acquisition price of the Tung Fong Hung's shares under the Put Option.
THE CONVERTIBLE NOTES SUBSCRIPTION AGREEMENT AND THE CONVERTIBLE
NOTES PLACING AGREEMENT
1. Date
27th August, 1999
2. Parties
Issuer: The Company
Subscriber: Galaxyway
Underwriter: Tai Fook
3. Amount of Convertible Notes to be issued
HK$100,000,000, of which HK$50,000,000 will be subscribed by
Galaxyway and HK$50,000,000 will be placed to the Convertible Notes
Placees through Tai Fook, with an option up to an additional amount
of HK$20,000,000 exercisable by Tai Fook within one month from the
date of completion of the Convertible Notes Issue.
4. Principal terms of the Convertible Notes
Issuer: The Company
Principal amount: HK$100,000,000 in aggregate,
subject to adjustments, with
an option up to an additional
amount of
HK$20,000,000.
Conversion price: HK$1.10 per Share, subject to
adjustments
Interest: Prime rate per annum as
quoted by The Hongkong and
Shanghai Banking Corporation
Limited, payable
semi-annually in
arrears
Conversion period: The Convertible Notes may be
converted in whole or in part
(in an amount or integral
multiple of HK$100,000) at
any time following the date
of issue until maturity.
Maturity: The Company shall repay the
outstanding principal amount
of each of the Convertible
Notes, together with interest
accrued from the last
interest payment date up to
and including the date of
repayment, on third
anniversary of the date of
issue of the Convertible Notes.
Transfer: The Convertible Notes may not
be assigned or transferred
without the prior written
consent of the Company and
the Stock Exchange except to
wholly-owned subsidiaries of
the holders of the
Convertible Notes.
Listing: No application will be made
for the listing of the
Convertible Notes. An
application will be made for
the listing of Shares to be
issued on exercise of the
conversion rights attaching
to the Convertible
Notes.
Upon full conversion of the Convertible Notes, a total of 90,909,090
Shares will be issued, which represent approximately 21.6 per cent.
of the existing issued ordinary share capital of the Company,
approximately 18.0 per cent. of the issued ordinary share capital
immediately following completion of the Share Issue and approximately
15.3 per cent. of the issued ordinary share capital of the Company as
enlarged by such conversion, assuming no other issue of Shares being
made before full conversion of the Convertible Notes. Upon completion
of the Share Issue and full conversion of the Convertible Notes,
Galaxyway will be interested in approximately 33.9 per cent. of the
issued ordinary share capital of the Company, assuming no other issue
of Shares being made before full conversion of the Convertible Notes.
Galaxyway has no present intention to dispose of the Convertible
Notes.
5. Placees
The Convertible Notes Placees are independent professional investors
and will be more than six.
6. Independence of the Convertible Notes Placees and the underwriter
The Convertible Notes Placees and Tai Fook are third parties
independent of, and not connected with, any of the directors, chief
executive or substantial shareholders of the Company and any of its
subsidiaries or any of their respective associates (as defined in the
Listing Rules).
7. Conditions and completion of the Convertible Notes Issue
The Convertible Notes Subscription Agreement and the Convertible
Notes Placing Agreement are inter-conditional. Completion of the
Convertible Notes Issue will take place on the second business day
after the fulfilment of the following conditions or such other date
as may be agreed between the Company, Galaxyway and Tai Fook, but in
any event shall take place not later than 31st October, 1999:
(a) approval of the Convertible Notes Issue by shareholders of the
Company (other than Galaxyway and its associates (as defined in the
Listing Rules)) in a special general meeting;
(b) the Listing Committee of the Stock Exchange granting listing of, and
permission to deal in, the new Shares falling to be issued under the
Convertible Notes; and
(c) the Bermuda Monetary Authority granting approval to the issue of the
Convertible Notes and the Shares to be issued pursuant to the
exercise of the conversion rights attaching to the Convertible
Notes.
Completion of the Convertible Notes Issue is expected to take place
on or around 8th October, 1999.
8. Use of proceeds
The net proceeds of the Convertible Notes Issue are estimated to be
approximately HK$98 million (assuming the over-allotment option has
not been exercised). It is intended that such net proceeds will be
used as to approximately HK$80 million for reduction of borrowings
and the balance will be used as additional working capital of the
Group, or if the Company receives the notice from Hanny to exercise
the Put Option before the completion of the Share Issue and the
Convertible Notes Issue, for the partial satisfaction of the
acquisition price of the Tung Fong Hung's shares under the Put
Option.
CHANGES TO THE SHAREHOLDING IN THE COMPANY AS A RESULT OF THE SHARE
ISSUE AND THE CONVERTIBLE NOTES ISSUE
The shareholding of Galaxyway in the Company immediately before
completion of the Share Issue, after completion of the Share Issue
but before conversion of the Convertible Notes, upon full conversion
of the Convertible Notes (assuming no exercise of the over-allotment
option) and upon full conversion of the Convertible Notes (assuming
full exercise of the over-allotment option) are as follows:
Immediatel Immediatel Upon fully Upon fully Upon fully
before after conversion conversion conversion
completion completion of the of the of the
of the of the Convertible Convertible Convertible
Share Share Notes Notes Notes
Issue Issue but (assuming (assuming by
before no full Galaxyway
conversion exercise exercise only
of the of the of the
Convertible over- over-allot
Notes allotment ment
option) option)
Galaxyway 130,660,457 156,660,457 202,115,002 202,115,002 202,115,002
Shares Shares Shares Shares Shares
(about (about (about (about (about
31.1 per 31.0 per 33.9 per 32.9 per 36.7 per
cent.) cent.) cent.) cent.) cent.)
After completion of the Share Issue and the Convertible Notes Issue
and on the assumption that only Galaxyway will exercise its
Convertible Notes amounting to HK$50,000,000 in full and no other
issue of Shares will be made before such conversion, the interest of
Galaxyway in the issued ordinary share capital of the Company will be
increased from approximately 31.1 per cent. to approximately 36.7 per
cent. Should such event arise, Galaxyway will comply with the
requirements under the Hong Kong Code on Takeovers and Mergers.
Reasons for and benefits of the share issue and the convertible
notes issue
The Share Issue and the Convertible Notes Issue will raise funds for
the Company for the usage mentioned under the paragraphs headed `Use
of Proceeds' above. The directors of the Company consider that the
Share Issue will broaden the shareholder base of the Company, and
that the Convertible Notes Issue will diversify the Company's
investor base and will not cause any immediate dilution to the
shareholding of the existing shareholders of the Company.
CONNECTED TRANSACTIONS
The subscription of 26,000,000 Shares and HK$50,000,000 Convertible
Notes by Galaxyway under the Share Issue and the Convertible Notes
Issue respectively will constitute connected transactions for the
Company under the Listing Rules. A special general meeting of the
Company will be convened to approve, inter alia, the Share Issue and
the Convertible Notes Issue, Galaxyway, the single largest
shareholder of the Company, and its associates (as defined in the
Listing Rules) will abstain from voting at the special general
meeting of the Company with regard to the resolutions proposed to
approve the Share Issue and the Convertible Notes Issue.
The terms of the Share Subscription Agreement, the Share Placing
Agreement, the Convertible Notes Subscription Agreement and the
Convertible Notes Placing Agreement have been arrived at after arm's
length negotiations and are on normal commercial terms. The directors
(including the independent directors) of the Company consider the
terms of the above-mentioned agreements to be fair and reasonable and
in the interests of the Company and its shareholders taken as a
whole.
An independent board committee of the Company will be appointed to
advise the independent shareholders of the Company in respect of the
Share Issue and the Convertible Notes Issue. An independent financial
adviser will be appointed to advise the independent board committee
on whether or not the terms of the Share Subscription Agreement and
the Convertible Notes Subscription Agreement are fair and reasonable
and are in the interests of the Company and of the independent
shareholders taken as a whole.
Suspension and resumption of trading
At the request of the Company, trading in the securities of the
Company on the Stock Exchange had been suspended with effect from
10:00 a.m. on 30th August, 1999. Application has been made to the
Stock Exchange for resumption of trading in the securities of the
Company with effect from 10:00 a.m. on 31st August, 1999.
GENERAL
The directors of the Company wish to inform shareholders of the
Company that further to the subscription of new shares in Star East
Information Technology Corp. (`Star East Information') by an
independent third party as announced on 23rd August, 1999, Star East
Information, a 62 per cent. beneficially owned associated company of
the Company, has recently been approached by certain independent
parties who have expressed interests in investing in Star East
Information. Negotiations with such parties are only at a preliminary
stage. Further announcement will be made when there is significant
progress in such negotiations.
An application will be made to the Listing Committee of the Stock
Exchange for the listing of, and permission to deal in, the new
Shares to be issued under the Share Issue and upon conversion of the
Convertible Notes.
The circular containing, inter alia, details of the Share
Subscription Agreement, the Share Placing Agreement, the Convertible
Notes Subscription Agreement and the Convertible Notes Placing
Agreement, the advice from the independent financial adviser of the
Company, the advice from the independent board committee of the
Company and notice convening the special general meeting of the
Company will be despatched to the shareholders of the Company as soon
as practicable.
Shareholders are advised to exercise caution in dealing in the
shares of the Company.
By Order of the Board
Sylvia Leung
Company Secretary
Hong Kong, 30th August, 1999
The directors of the Company jointly and severally accept full
responsibility for the accuracy of the information contained in this
announcement and confirm, having made all reasonable enquiries, that
to best of their knowledge and belief, 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 contained herein
misleading.
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