ITC CORPORATION<0372> - 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.
ITC CORPORATION LIMITED
(Incorporated in Bermuda with limited liability)
Discloseable transaction: acquisition of a shareholding
interest in Tung Fong Hung (Holdings) Limited
The board of directors of ITC Corporation Limited refers to a
put option granted by ITC to Hanny Holdings Limited, a company which
is about 26.3% owned by ITC, in relation to 60 million shares in
Tung Fong Hung (Holdings) Limited, representing about 10.5% of its
issued share capital for a total consideration of about HK$195
million. Under the put option as subsequently extended, Hanny has
the right to put the 60 million shares in Tung Fong Hung to ITC at
its original acquisition cost and other incidental costs and
expenses together with the carrying cost of Hanny by 30th September,
1999.
The board of directors announces that it has been informed by
Hanny that at the special general meeting of Hanny held on 28th
September, 1999, the shareholders of Hanny had approved the exercise
of the put option before it expires on 30th September, 1999.
Currently, ITC beneficially holds about 10.5% of the issued share
capital of Tung Fong Hung and following the exercise of the put
option, its shareholding interest in Tung Fong Hung will be
increased to about 21%.
The acquisition constitutes a discloseable transaction under the
Listing Rules. ITC will apply to the Stock Exchange for a waiver
pursuant to Rule 14.12(2) of the Listing Rules on the requirement to
send to its shareholders and other securities holders a circular
containing information on the acquisition.
Exercise of a put option pursuant to a deed of put option dated
20th November, 1998 (which replaced an original deed dated 5th
December, 1997 and two supplemental option deeds dated 17th April,
1998 and 29th September, 1998) and a supplemental deed dated 2nd
July, 1999
Parties
Vendor: Hanny, an
approximately 26.3%
owned associated
company of ITC,
through a wholly
owned
subsidiary
Purchaser: ITC, through a
wholly owned
subsidiary
Assets
60,000,000 shares in Tung Fong Hung, representing about 10.5% of
its issued share capital.
Information on Tung Fong Hung
Tung Fong Hung and its subsidiaries are principally engaged in the
retailing and wholesale of Chinese medicines, health food and dried
seafood, securities investment and trading, manufacturing and
trading of western pharmaceutical products, money lending, sales and
trading of petroleum products in Hong Kong and the People's Republic
of China.
Information on ITC
The current principal business of the ITC group is the holding of
significant interests in a number of listed and unlisted companies.
Financial results of Tung Fong Hung
The following is a summary of the audited results of Tung Fong Hung
for the eight months ended 31st March, 1998 and the year ended 31st
March, 1999:
Eight months ended Year ended 31st
31st March, March,
1998 1999
HK$'000 HK$'000
Turnover 580,792 612,939
Loss before 766,203 273,301
taxation
Taxation 7,532 (5,101)
Minority interests (803) (599)
Loss attributable 772,932 267,601
to shareholders
The audited consolidated net asset value of Tung Fong Hung was
about HK$410 million as at 31st March, 1999 and the unaudited pro
forma adjusted net asset value of the Tung Fong Hung group as at
31st March, 1999, taking into account the net proceeds from the
rights issue of Tung Fong Hung as announced on 16th June, 1999 and
the placement of 93.5 million new shares in Tung Fong Hung as
announced on 19th August, 1999, was about HK$483 million.
Consideration
The total consideration of about HK$195 million represents about
HK$3.25 per share in Tung Fong Hung. The acquisition price per share
in Tung Fong Hung represents a premium of about 491% and 278% over
the closing price of HK$0.55 per share in Tung Fong Hung on 28th
September, 1999 and the pro forma adjusted net asset value of Tung
Fong Hung per share as at 31st March, 1999, after taking into
account the net proceeds from the rights issue of and the placement
of new shares in Tung Fong Hung, of about HK$0.86 per share
respectively.
The total consideration was agreed upon entering into the put
option deed dated 5th December, 1997 and was determined with
reference to the acquisition cost of the shares in Tung Fong Hung by
Hanny.
Effects on ITC
Payment of the total consideration will be financed by internal
resources of about HK$55 million and the proceeds from the issues of
new ordinary shares in, and convertible notes of, ITC of about
HK$140 million as announced by ITC on 30th August, 1999. The board
of directors of ITC does not expect that the exercise of the put
option will have any material adverse impact on the financial
prospects of the ITC group.
After the acquisition, Tung Fong Hung will become an associated
company of the ITC group and ITC intends to hold the shares in Tung
Fong Hung as strategic investment.
Payment terms
The total consideration will be settled by cash upon completion of
the acquisition.
Shareholding structure
For the shareholding structure of ITC before and after the exercise of
the put option, please refere to the press announcement today.
General
The acquisition constitutes a discloseable transaction under the
Listing Rules. Details of the put option arrangement had been set
out in a circular of ITC issued on 24th December, 1997. ITC will
apply to the Stock Exchange for a waiver pursuant to Rule 14.12(2)
of the Listing Rules on the requirement to send to its shareholders
and other securities holders a circular containing information on
the acquisition.
By Order of the Board
Wong Lai Kin, Elsa
Company Secretary
Hong Kong, 28th September, 1999
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