UDL HOLDINGS<0620>-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.
UDL HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
VERY SUBSTANTIAL ACQUISITION, MAJOR TRANSACTION AND CONNECTED TRANSACTIONS
PROPOSED REORGANISATION FOR UDL INVOLVING
ACQUISITION OF ASSET COMPANIES, SHARE CONSOLIDATION OF 20 SHARES INTO 1
SHARE, CAPITAL REDUCTION, ISSUE OF NEW SHARES AND RIGHTS ISSUE OF
5 RIGHTS SHARES FOR EVERY CONSOLIDATED SHARE HELD AND DISPOSAL OF SCHEME
ASSETS
On 16 October 1999, UDL, the Major Subsidiaries, the Other Participating
Subsidiaries, HF Co, Mr. Leung, Mrs. Leung, SF Co, and the Asset Companies
entered into the Agreement, which sets out the main terms of the
Reorganisation. The Reorganisation aims to restructure and rescue the
Group (excluding KEL and its subsidiaries) through, inter alia, the Rights
Issue and the acquisition of the Asset Companies, which will have a fleet
of vessels with the necessary critical mass to compete in the marine
engineering construction industry.
The Reorganisation involves, amongst other things:-
1. the Capital Reduction
2. the Share Consolidation
3. the Rights Issue, which HF Co has agreed to fully underwrite
4. the issue of a fixed number of New Shares at par value of $0.10
each, simultaneously with the Rights Issue, to the Scheme Creditors in
proportion to their Scheme Debts which will represent 50% of the issued
share capital as enlarged by the issue of the New Shares and the Rights
Issue
5. the acquisition of the Asset Companies with most of the proceeds
of the Rights Issue
6. the discharge of the total amount of all outstanding debts due to
the Scheme Creditors of approximately $1,730,293,000 if the Scheme is
implemented
7. the transfer of certain assets of UDL and Participating
Subsidiaries available for disposal or realisation under the Scheme for no
consideration to a new company to be established under the Scheme which
will be held by a trustee on trust to pay the Scheme Creditors in cash
8. the sale of such assets and, from time to time, the distribution
to the Scheme Creditors of the proceeds of the realisation of such assets
by way of Dividends
9. the waiving of the shortfall between (i) the total amount of the
aggregate cash Dividends and the value of New Shares entitled by Scheme
Creditors under the Scheme and (ii) their respective Scheme Debts.
Completion of the Reorganisation is conditional (see "Conditions Precedent
to the Agreement") on, amongst other things, the Listing Committee of the
Stock Exchange granting approval for the listing of, and permission to
deal in, the Consolidated Shares, the New Shares and the Rights Shares.
According to updated records of the Group's indebtedness for
$1,730,293,000, under the issue of New Shares to be proposed to be issued
to Scheme Creditors, no single Scheme Creditors (together with its
associates, if any) will have a shareholding in UDL for more than 10% of
the issued share capital of the Company. Scheme Creditors are independent
of the directors, chief executive and substantial shareholders of UDL or
its subsidiaries or any of their respective associates (as defined in the
Listing Rules).
As soon as practicable after the court hearing (which is to be determined
after 1 December 1999) approving the distribution of the scheme document
to the Scheme Creditors, a circular with further details of the
Reorganisation, the recommendation of independent board committee, the
letter of advice of the independent financial adviser, and notices of a
special general meeting will be despatched to the UDL Shareholders. UDL
will apply to the Stock Exchange for a waiver from strict compliance with
the requirement of the Listing Rules to despatch the circular within 21
days from the publication of this announcement.
After UDL and its subsidiaries started to have liquidity problems in 1998,
some Secured Creditors have attempted to sell security in 1999 provided by
UDL under mortgage to mitigate their exposure. Specifically, there were
six Secured Creditors who had sold security under mortgage to independent
third parties in the period from January 1999 to August 1999. In addition,
the Asset Finance Creditors had sold the security to Asset Companies owned
by Mr. Leung, Mrs. Leung and SF Co respectively in March 1999 and June
1999. As normal business was not possible due to liquidity problems, such
sales had no material impacts to the Group's financial position other than
reducing running interest for such secured debts.UDL observes that these
transactions may be deemed disposals constituting major and connected (as
the case may be) transactions for UDL which should have been made subject
to the approval of independent UDL Shareholders. Failure to do so
constituted a breach of the Listing Rules. UDL reserves the right to take
any appropriate action against relevant parties to the transactions and
acknowledges that the Stock Exchange also reserves their right to take any
appropriate disciplinary action against the directors of the Company and
the Company with regard to the breach of the Listing Rules.
As at the date of this announcement, no formal approvals have been
obtained from Stock Exchange, UDL Shareholders, creditors and the court in
relation to the Reorganisation. Accordingly, UDL Shareholders should note
that the release of this announcement does not in any way imply that the
Reorganisation and the Scheme will necessarily proceed.
Meanwhile UDL Shareholders and investors should exercise extreme caution
when dealing in the shares of UDL.
Trading in the shares of UDL was suspended at the direction of the Stock
Exchange with effect from 11:44 a.m. on 8 October 1999 pending the release
of this announcement. UDL has applied to the Stock Exchange for the
resumption of trading of the UDL Shares with effect from 10:00 a.m. on 19
October 1999.
THE REORGANISATION
The Agreement was signed with a view for the Group to implement a global
scheme of arrangement with its Scheme Creditors in respect of the
settlement and discharge of their unsecured debts due to the Scheme
Creditors on universal global terms applicable to all of them. This will
require the reorganisation of the indebtedness and commercial structure of
the Group and the capital structure of UDL. The successful implementation
of the global creditors' scheme of arrangement will have the winding up
petition against UDL and its subsidiaries dismissed and resolve the
financial difficulties of UDL and the Group as a whole.
It is proposed that the indebtedness and commercial structure of the Group
and the capital structure of UDL be reorganised in accordance with the
Scheme and the Agreement.
REASONS FOR THE REORGANISATION
The Group, which comprises UDL and over 100 group companies (excluding for
this purpose KEL and its subsidiaries), has four main areas of business,
namely, building services, marine engineering, contracting and structural
steel.
The Group suffered greatly as a result of the Asian financial crisis.
Certain clients of large-scale projects completed by members of the Group
delayed payment. Some even refused payment outright. The situation was
exacerbated by the unexpected calling in of loans from major financial
creditors which triggered off a chain reaction leading to the refusal of
credit management by trade creditors and default in payments by members of
the Group.
On 24 October 1998, a petition for the winding up of UDL was presented by
HSBC.
Subsequent to this, Court hearings were heard on 23 November 1998, 11
January 1999, 25 January 1999, 23 March 1999, 28 April 1999, 5 July 1999
and 24 September 1999 and the relevant announcements were issued. UDL
filed an Originating Summons to the court in January 1999 and hearings for
the winding-up petitions against UDL has been adjourned to 1 December 1999
to allow time for UDL to proceed with the proposed Scheme in accordance
with the timetable submitted to the court.
Petitions were also presented to the court for the winding up of various
subsidiaries of UDL, namely, UDL Argos Engineering & Heavy Industries
Company Limited, UDL Civil Contractors Limited, UDL Ship Management
Limited, UDL Contracting Limited and UDL Employment Services Limited.
There was another petition for the winding up of UDL Kenworth Engineering
Limited, a subsidiary of KEL.
In addition, prior to the presentation of the winding up petition of UDL,
United Overseas Bank obtained a charging order nisi over the shares in
nine of the wholly owned subsidiaries of UDL.
UDL is seeking to have the winding up petitions against itself and its
subsidiaries as listed above dismissed by entering into the Scheme, which
may involve the participation of, inter alia, UDL, all Major Subsidiaries,
and Other Participating Subsidiaries in order to resolve the financial
difficulties of UDL and the Group as a whole. Should the proposed Scheme
become effective and binding on UDL, Participating Subsidiaries and Scheme
Creditors, during the period in which the Scheme is effective, none of the
Scheme Creditors shall be able to take any legal actions against UDL and
the Participating Subsidiaries save as expressly permitted under the terms
of the Scheme for the purpose of enforcing or recovering by way of
execution or otherwise, any Scheme Debts.
Parties to the Agreement
(a) UDL - Subject company of the Rights Issue, purchaser of the shares
of Asset Companies and a party to the Scheme
(b) the Major Subsidiaries - parties to the Scheme (one of the Major
Subsidiaries, Universal Dockyard Limited, is a 98.75% owned subsidiary of
UDL)
(c) the Other Participating Subsidiaries - parties to the Scheme
(d) HF Co - underwriter of the Rights Issue (Being the controlling
shareholder of UDL at present holding 54.4% equity interest in UDL)
(e) Mr. Leung - Seller of the shares of Hong Kong Asset Co and
Singaporean Asset Co (director and shareholder holding 54.4% equity
interest in UDL)
(f) Mrs. Leung - Seller of the shares of Singaporean Asset Co
(director of UDL)
(g) SF Co - Shareholder of Hong Kong Asset Co and seller of the shares
of Hong Kong Asset Co
(h) Hong Kong Asset Co - Being the subject company of the First Share
Transaction; a company owned as to 87.5% by Mr. Leung and 12.5% by SF Co
(i) Singaporean Asset Co - Being the subject company of the Second
Share Transaction; a company wholly-owned by Mr. Leung and Mrs. Leung
HF Co, Mr. Leung and Mrs. Leung, Hong Kong Asset Co and Singaporean Asset
Co are connected persons (as defined in the Listing Rules) of UDL. The
entering into the Agreement with these connected persons and Universal
Dockyard Limited by UDL constitutes a connected transaction for UDL under
the Listing Rules.
Major Terms of the Agreement dated 16 October 1999
Responsibilities of the Parties
Pursuant to the Agreement, the Parties shall take such steps as are
necessary to procure the fulfillment of all Conditions Precedent, and to
obtain all necessary consents required for the implementation of the
Reorganisation as soon as is reasonably practicable.
If any of the Major Subsidiaries and the Other Participating Subsidiaries
wishes to participate in the Scheme, it will have to fulfill either of the
following conditions:-
(a) an approved scheme of arrangement under section 166 of the
Ordinance between a Participating Subsidiary and its Scheme Creditors; or
(b) obtaining unanimous consent from its Scheme Creditors by procuring
each of its Scheme Creditors to enter into a deed of debt settlement with
it and UDL.
Further, depending on the final structure of the Scheme, some of the Major
Subsidiaries and the Other Participating Subsidiaries may not be able to
(a) fulfill either one of the conditions referred to above, and therefore
(b) participate in the Scheme, and other subsidiaries of the Group may be
invited to join the Scheme. However, irrespective of the exact number and
identities of the parties to the Scheme, UDL will after the Capital
Reduction and the Share Consolidation issue, simultaneously with the
Rights Issue, a fixed number of 252,306,195 New Shares (representing 50%
of the issued capital as enlarged by the issue of the New Shares and the
Rights Issue) to the Scheme Creditors in proportion to their Scheme Debts
under the Scheme.
Transfer of Assets to a New Company
Although it is expected that the final structure of the Scheme can only be
determined after the next court hearing to be held on 1 December 1999.
UDL, the Major Subsidiaries and the Other Participating Subsidiaries have
a common understanding that the basic structure of the Scheme pursuant to
the Agreement will be as follows:-
Unencumbered Assets Available For Disposal Or Realisation Under the Scheme
(a) UDL and the Participating Subsidiaries will transfer their assets
available for disposal or realisation under the Scheme valued at
approximately $183,501,000 according to latest updated management accounts
as at 30 April 1999 (excluding for the avoidance of doubt, the secured
assets held by the Secured Creditors of UDL and the Participating
Subsidiaries as security) ("Scheme Assets") for no consideration to a new
company to be established under the Scheme which will be held by a trustee
on trust for the Scheme Creditors to pay the Scheme Creditors in
accordance with the Scheme.
The Scheme Assets comprise mainly miscellaneous plant, machinery,
supporting vessels, stock, interest in associated companies, account
receivables, and land use right and right to quarry in the People's
Republic of China. As the Group will concentrate on its core marine
engineering business with the fleets under the Asset Companies which
already have the necessary critical mass, the disposal of Scheme Assets
when the Scheme becomes effective will not affect the Group's
normal business.
(b) the Scheme Assets will be realised or disposed at prices
comparable to the nominated value for such assets which is based on
updated assessment by the Group without independent valuation and governed
by the Project Manager.
For the avoidance of doubt, the above mentioned nominated values set the
mandates for the Project Manager to ensure satisfactory realisation of the
Scheme Assets and availability of adequate amount of proceeds for
distribution by way of cash Dividends.
(c) The proceeds obtained from the realisation or disposal will be
placed in a special scheme account, and will be distributed among the
Scheme Creditors (independent of the directors, chief executives or
substantial shareholders of UDL or any of its subsidiaries or any
associates of them under the terms of the Scheme).
(d) If such realisation or disposal cannot be completed within three
years from the effective date of the Scheme which is estimated to be on 1
March 2000, such assets shall be disposed of through competitive sale and,
for avoidance of doubt, UDL shall not be excluded from participating in
such bidding while any connected person of UDL will be excluded from
participating in the bidding. This will ensure a fair and speedy
determination of the amount of the shortfall for which UDL
has an obligation to compensate Scheme Creditors.
Total Secured and Unsecured Debts of UDL
Under the Scheme, the Secured Creditors of UDL and the Participating
Subsidiaries will sell the encumbered assets (excluding charge on
engineering contracts' proceeds) of UDL and the Participating Subsidiaries
held by such Secured Creditors who are independent of the directors, chief
executives, substantial shareholders of UDL or any of its subsidiaries or
an associate of them (as defined under the Listing Rules). If the proceeds
from such sale are not sufficient to fully cover the debts of any of the
Secured Creditor, the updated outstanding balance of which is $570,525,000
based on management accounts as of 30 April 1999 and subsequent
adjustments to interest and incidental expenses, the Secured
Creditors are entitled to claim under the Scheme the balance of their
debts as unsecured creditors of UDL under the guarantees granted by UDL in
favour of them or of the Participating Subsidiaries from whom the Secured
Creditors have obtained the security.
For clarity purpose, the updated outstanding amount of unsecured debts as
part of the total indebtedness as mentioned above is approximately
$1,159,768,000 based on management accounts as of 30 April 1999 and
subsequent adjustments to interest and incidental expenses.
After UDL and its subsidiaries started to have liquidity problems in 1998,
some Secured Creditors have attempted to sell security in 1999 provided by
UDL under mortgage to mitigate their exposure. Specifically, there were
six Secured Creditors who had sold security under mortgage to independent
third parties in the period from January 1999 to August 1999. In addition,
the Asset Finance Creditors had sold the security to Asset Companies owned
by Mr. Leung, Mrs. Leung and SF Co respectively in March 1999 and June
1999. As normal business was not possible due to liquidity problems, such
sales had no material impacts to the Group's financial position other than
reducing running interest for such secured debts.UDL observes that these
transactions may be deemed disposals constituting major and connected (as
the case may be) transactions for UDL which should have been made subject
to the approval of independent UDL Shareholders. Failure to do so
constituted a breach of the Listing Rules. UDL reserves the right to take
any appropriate action against relevant parties to the transactions and
acknowledges that the Stock Exchange also reserves their right to take any
appropriate disciplinary action against the directors of the Company and
the Company with regard to the breach of the Listing Rules.
Warranty and Indemnity by UDL
Under the terms of the Agreement, UDL warrants to the other Parties that
conditional on UDL, all Major Subsidiaries and Other Participating
Subsidiaries approving and joining the Scheme, the Disposal Proceeds shall
not be less than $176,000,000.
If the aggregate cash Dividends actually received by a Scheme Creditor in
total falls short of the aggregate cash Dividends that the Scheme Creditor
would have received had the Disposal Proceeds been $176,000,000, UDL will
indemnify the Scheme Creditor against such shortfall. However, the amount
of total compensation for the Shortfall in any relevant financial year
shall not be more than 60% of UDL's audited consolidated net profits after
tax, minority interests and all exceptional and extraordinary items in
that financial year. For the avoidance of doubt, (i) if the Shortfall
exceeds 60% of UDL's audited consolidated net profits after tax, minority
interests and all exceptional and extraordinary items in that financial
year, there will still be partial settlement made by UDL to the Scheme
Creditors; and (ii) if UDL shall incur an audited consolidated net loss
after tax, minority interests and all exceptional and extraordinary items
in a financial year, there shall not be any payment obligation in respect
of the Shortfall in that financial year. However, if UDL make any profit
in subsequent year, UDL's obligation to compensate Scheme Creditors' for
the Shortfall will resume subject to the 60% threshold as stated above.
UDL will pay the Shortfall only from the fourth financial year after the
financial year in which the Scheme becomes effective under section 166 of
the Ordinance, and the following financial years until such Shortfall
shall have been eliminated. Further, UDL may make up for such Shortfall
using any part or all of the funds raised by UDL through any fund raising
activities.
Assets Companies
The encumbered assets of UDL and the Participating Subsidiaries were
mainly vessels held in 3 subsidiaries charged to the Asset Finance
Creditors which are also Scheme Creditors. There were 184 nos. of
encumbered marine craft and vessels with an audited book value as of 31
March 1998 amounting to approximately $328,567,000. Out of these marine
craft and vessels, the Asset Finance Creditors have charged over 122 of
them with a book value as at 31 March 1998 of approximately $179,000,000.
The Asset Finance Creditors have exercised their rights of sale to sell
the vessels held as security to the Asset Companies as
follows:
(a) a fleet of vessels of various types, which was held by OCBC and
HSBC Capital as security for approximately $216,773,000 of their
outstanding debts, has been sold to the Singaporean Asset Co in March
1999, which is, as required by OCBC and HSBC Capital, wholly owned by Mr.
Leung and Mrs. Leung, at its market value based on independent valuation
by Kay Leung Co Ltd, Ritchie & Risset (Far East) Pte Ltd, Integral Marine
Consultants Pte Ltd and Victor Morris Team Pte Ltd as at March 1999 of
$108,686,000
(b) OCBC and HSBC Capital have provided the finance for this purchase
to the Singaporean Asset Co, which is secured by, inter alia, a legal
charge on the purchased assets and by the joint and several guarantee of
Mr. Leung and Mrs. Leung
(c) a fleet of vessels of various types, which was held by GE as
security for approximately $74,754,000 of their outstanding debts, has
been sold to the Hong Kong Asset Co, which is, as required by GE, wholly
owned by Mr. Leung and SF Co, at its market value based on independent
valuation by Paul's Marine Surveyors as at May 1999 of $41,040,000
(d) GE has provided the finance for this purchase to the Hong Kong
Asset Co, which is secured by, inter alia, a legal charge on the purchased
assets and by the joint and several guarantee of Mr. Leung and SF Co
Pursuant to the Agreement, the Vendors will sell their shares in the Asset
Companies to UDL for a consideration equal to the net tangible asset value
of the Asset Companies of approximately $15,000,000 as at the date of the
Agreement. The Asset Companies are newly incorporated (Hong Kong Asset Co:
31 July 1998 and Singapore Asset Co: 29 July 1998) and engaged in marine
engineering business. Audited accounts are not available yet but audit
will be undertaken to determine the net tangible asset value of the Asset
Companies as at the date of the Agreement.
UDL will finance the purchase of these shares out of the proceeds obtained
from the proposed Rights Issue. The First Share Transaction and the Second
Share Transaction will be completed within 7 days of the completion of the
Rights Issue. The legal charge on the purchased assets and the joint and
several guarantee of Mr. Leung, Mrs. Leung and SF Co, will only be
released upon complete repayment of the concerned loans provided by the
Asset Finance Creditors for the purchase of the fleets of vessels by the
Asset Companies. After UDL has acquired the Asset Companies from the
Vendors, UDL is not required to provide any security or guarantee to the
Asset Finance Creditors, Mr. Leung and Mrs. Leung or SF Co. As explained
in the section below headed "Future Plans", the acquisition of the Asset
Companies will give UDL access to a fleet with the necessary critical mass
which it currently does not have and to maintain sufficient operations
after disposal of the Scheme Assets.
Although OCBC and HSBC Capital are foreign creditors, who will only be
bound by the Scheme (if it is sanctioned by the court) to refrain from
taking enforcement proceedings in Hong Kong (but not other jurisdiction),
they have agreed in principle that their claims for the outstanding amount
of their debts after the sale of the vessels will be dealt with in
accordance with the terms of the Scheme for unsecured creditors of UDL.
The amount of loan repaid to OCBC, HSBC Capital and GE by the sale of
charged vessels is $149,726,000 and their claims for the current
outstanding amount of their debts under the Scheme is approximately
$178,797,000 based on management accounts as of 30 April 1999 and
subsequent adjustments to interest and incidental expenses.
Capital Reduction, Share Consolidation and Rights Issue
The Agreement was signed with a view for the Group to implement a global
scheme of arrangement with its unsecured creditors which will require the
reorganisation of the indebtedness and commercial structure of the Group
and the capital structure of UDL. The successful implementation of the
global creditors' scheme of arrangement will have the winding up petition
against UDL and its subsidiaries dismissed and resolve the financial
difficulties of UDL and the Group as a whole.
Pursuant to the Agreement, UDL will restructure its capital under a
shareholders' scheme including the Capital Reduction and the Share
Consolidation to facilitate justifiable commercial consideration for the
Rights Issue and as follows:
(a) for the purpose of setting off the audited accumulated
consolidated losses of the Group to the extent of $563,978,536.71, the
aggregate of the issued share capital and the share premium account of UDL
will be reduced by a total of $563,978,536.71 from $568,183,639.96 to
$4,205,103.25:-
(i) as to $79,896,961.75 by reducing its issued share capital to the
extent of $0.095 on each Existing Share; the par value of the Existing
Shares will be reduced from $0.100 to $0.005 per share as a result
(ii) as to $484,081,574.96 by reducing the share premium account of UDL
to the extent of the same amount
(b) after the Capital Reduction, every 20 Existing Shares with a
reduced par value of $0.005 will be consolidated into 1 New Share with a
par value of $0.100 and board lot of 2,000 remains unchanged
(c) subject to the Capital Reduction and the Share Consolidation
becoming effective after approval of the scheme (estimated by UDL to be on
or around 30 April 2000), UDL will undertake a rights issue on the basis
of 5 Rights Shares for each consolidated share of UDL to raise about $21
million at a price of $0.100 per Rights Share (which on the directors'
view is comparable to the current market price adjusted for the Capital
Reduction, Rights Issue and New Issue) offered to all UDL Shareholders
(excluding the Scheme Creditors to whom New Shares will be issued under
the Scheme). A further announcement on details of the Rights Issue will be
made at an appropriate time in accordance with the progress of the court
hearing for the Scheme.
The directors of UDL consider the price of Rights Issue is fair and
reasonable to the UDL Shareholders.
Further announcement on details of the Capital Reduction, Share
Consolidation and Rights Issues will be issued upon the court's approving
the distribution of the scheme document to the Scheme Creditors.
Underwriting of the Rights Issue, and Guarantee by Mr. Leung
Conditional on the fulfillment of all Conditions Precedent (as stated
below), HF Co which is currently holding 54.4% of the issued share capital
of UDL undertakes to underwrite or procure an underwriter to underwrite
the Rights Issue on terms usually prevailing in the market for
underwriting right issues to be detailed in the coming announcement for
the Rights Issue. HF Co further agrees, in its capacity as a UDL
Shareholder, to accept and subscribe for all Rights Shares to which it
will be entitled as a UDL Shareholder under the Rights Issue. After the
Rights Issue, HF Co will hold 27.26% of the then enlarged issued share
capital of UDL or in case HF Co ends up underwriting the Rights Issue in
full, it will hold 46.2% of the the issued share capital of UDL. HF Co has
secured an appropriate loan facility to back up its obligations under the
coming underwriting agreement in respect of the Rights Issue. The details
of the underwriting agreement will be one of the subject matter in the
coming announcement for the Rights Issue.
Mr. Leung has under the Agreement undertaken to unconditionally and
irrevocably guarantee the due and punctual performance and observance by
HF Co of all its obligations under the Agreement. If and whenever HF Co
defaults for any reason whatsoever in the performance of any such
obligations, Mr. Leung shall forthwith upon demand perform (or procure
performance of) and satisfy (or procure the satisfaction of) such
obligations.
Use of Funds
The net proceeds arising from the Rights Issue of approximately
$20,000,000 will be applied as follows:
(a) $3,000,000 to finance the implementation of the Reorganisation on
legal cost, financial adviser fee and reporting accountant charges
(b) $2,000,000 to finance the arbitration/legal fees for debt
recoveries by the Group
(c) $15,000,000 to finance the First Share Transaction and the Second
Share Transaction.
The Scheme
Assuming all the Major Subsidiaries and the Other Participating
Subsidiaries participate in the Scheme, and taking into account the
estimated shortfall of $445,519,442 between the realisation
value/valuation of the security and the debts due to the Secured
Creditors, the Scheme will discharge the total amount of all outstanding
debts due to the Scheme Creditors of approximately $1,730,293,000. For the
avoidance of doubt, there are no other creditors other than Scheme
Creditors should the proposed Scheme become effective. The Scheme will in
any event entitle the Scheme Creditors to ,as full and final satisfaction
of their claims against UDL and Participating Subsidiaries, the
following:-
(a) Disposal of Scheme Assets
distribution of the total amount of the proceeds of realization of the
Scheme Assets (which, for avoidance of doubt, do not include the secured
assets held by the Secured Creditors of UDL and the Participating
Subsidiaries) by way of cash Dividends in proportion to their Scheme
Debts; and
(b) Issue of New Shares
issue by UDL of a fixed number of 252,306,195 New Shares of $0.100 each in
its capital to be issued at par value of $0.100 each, simultaneously with
the Rights Issue, to the Scheme Creditors in proportion to their Scheme
Debts; the New Shares will represent 50% of the issued share capital of
UDL as enlarged by the issue of the New Shares and the Rights Issue.
The distribution of cash Dividends together with the issue of New Shares
to Scheme Creditors in proportion to their Scheme Debts will jointly
extinguish the full amount of the respective Scheme Debts.
For the avoidance of doubt, the shortfall between the total amount of the
aggregate cash Dividends and the value of New Shares entitled by Scheme
Creditors under the Scheme and their respective Scheme Debts will be
waived.
The preliminary form of the Scheme is subject to such additions or
modifications as may be agreed among the Parties (other than HF Co, Mr.
Leung, Mrs. Leung, SF Co, the Hong Kong Asset Co and the Singaporean Asset
Co) from time to time having regard to the advice of their respective
professional advisers. Once the Scheme is finalized, application will be
made to the court for holding of meetings of creditors of UDL, the Major
subsidiaries and the Other Participating Subsidiaries in accordance with
section 166 of the Ordinance.
Conditions Precedent to the Agreement
Completion of the Reorganisation is conditional upon the following
conditions being fulfilled (or, if agreed in writing by the Parties,
waived) on or before 5:00 p.m. on 31 March 2000 (or such later date(s) as
the Parties may agree):
(a) to the extent required by the Listing Rules and the Code, the
approval of the proposed reorganisation, disposal proposal by UDL,
acquisition of Assets Companies, Share Consolidation, Capital Reduction,
issue of the New Shares and the Rights Shares by UDL Shareholders
(excluding Mr. Leung, Mrs. Leung and associates who will abstain from
voting) at the SGM
(b) the Bermuda Monetary Authority and/or other relevant regulatory
authorities granting, if necessary, approval for the issue of the New
Shares under the Scheme and the Rights Shares under the Rights Issue
(c) the Listing Committee of the Stock Exchange granting approval for
the listing of, and permission to deal in, the Consolidated Shares, the
New Shares and the Rights Shares
(d) no indication being received on or before the earliest date on
which the Conditions Precedent (other than this one) have been fulfilled
from the SFC or the Stock Exchange to the effect that the continued
listing of the Existing Shares on the Stock Exchange will or may be
withdrawn or objected to as a result of or in connection with the
implementation of the Reorganisation
(e) the Scheme becoming effective in accordance with section 166 (3)
of the Ordinance
(f) the obtaining by the Vendors of all necessary consents from the
Asset Finance Creditors to their sale of all the existing shares in the
share capitals of the Asset Companies to UDL for both the First Share
Transaction and the Second Share Transaction.
Subject to the fulfillment of the above conditions, the Company shall
undertake the Capital Reduction, the Share Consolidation and the Rights
Issue in accordance with the Agreement.
EFFECT OF THE RESTRUCTURING PROPOSAL
Shareholding Structure
The indicative shareholding structure after the Rights Issue and the
allotment of the New Shares to the Scheme Creditors will be as follows:-
After Share
Existing Consolidation but
as at 16 before Rights Issue After Rights Issue and
October 1999 and Issue of New Shares Issue of New Shares
Assuming HF Co or Assuming HF Co or
underwriter on its underwriter on its
behalf is not behalf underwrite
required to take the Rights Shares
up the Rights entilted but
Shares entitled not taken up by
by Sino Group Sino Group Ltd and
Ltd and other public other public
shareholders of UDL shareholders of
UDL
No. of No. of No. of No. of
Shareholders Shares Shares Shares Shares
(in (in (in (in
millions) % millions) % millions) % millions) %
HF Co, 458.6 54.5 22.93 54.5 (a)22.93 4.54 22.93 4.54
Mr. Leung (Note 1) (Note 1)
and his (b)
114.65 22.72 114.65 22.72
associates
(Note 2) (Note 2)
95.60 18.94
(note 7) (note 7)
Sino Group 170.0 20.2 8.50 20.2
(c) 8.50 1.68 8.50 * 1.68 *
Ltd
(Note 3) (Note 3)
(d)
42.50 8.42
(Note 4) (Note 4)
Public 212.4 25.3 10.62 25.3 (e)
10.62 * 2.12 * 10.62 * 2.12 *
(Note 5) (Note 5)
(f)
53.10 * 10.52 *
(Note 6) (Note 6)
Scheme Creditors 0 0 0 0
252.30 * 50.00 * 252.30 * 50.00 *
Total 841.0 100.0 42.05 100.0
504.60 100.00 504.60 100.00
* UDL shares held in public hands
Note:
(1) UDL Shares of HF Co, Mr. Leung and his associates after Share
Consolidation
(2) HF Co, Mr. Leung and his associates' subscribed all the shares
they are entitled under the Rights Issue
(3) UDL Shares of Sino Group Ltd after Share Consolidation
(4) Assuming Sino Group Ltd will subscribe all the shares it is
entitled under the Rights Issue
(5) UDL Shares of public shareholders other than Sino Group Ltd after
Share Consolidation
(6) Assuming all public shareholders will subscribe all the shares
they are entitled under the Rights Issue
(7) If HF Co ends up underwriting all the Rights Shares entitled but
not taken up by Sino Group Ltd and other public sharholders of UDL, the
95.60 million UDL Shares representing 18.94% of the enlarged issued share
capital will also not be counted as public float.
Immediately upon completion of the Rights Issue and the issue of New
Shares to the Scheme Creditors, about 62.64% of the enlarged issued
capital of UDL will be held in public hands assuming HF Co will not take
up Rights Shares other than those Rights Shares to which it will be
entitled as the shareholder of UDL under the Rights issue, and such Scheme
Creditors and public UDL Shareholders are not connected persons (a
director, chief executive or substantial shareholder of the Company or any
of its subsidiaries or an associate of any of them as defined under the
Listing Rules) of UDL and each of them together with their associates, if
any, will hold no more than 10% of the issued share capital of UDL.
At present, according to the register maintained by UDL pursuant to
Section 16(1) of the Securities (Disclosure of Interests) Ordinance, Sino
Group Ltd is now holding 170,000,000 shares of $0.100 each of UDL,
representing 20.2% of the existing 841,020,650 issued shares of $0.100
each of UDL.
Profit and Loss
For the year ended 31 March 1997, the audited consolidated profit after
taxation and minority interests of the Group was $72,033,000. However, for
the year ended 31 March 1998, the Group incurred an audited loss
attributable to shareholders of $1,689,392,000, representing a loss per
Share of about $2.209 (1997: $0.104 profit). The directors of UDL believe
that the results of the Group would improve after completion of the
Reorganisation as charges relating to depreciation and interests on
borrowings(1998: $123,099,000 depreciation $108,065,000 interest)
would be reduced significantly as a result of the reduction in the total
amount of fixed assets from $663,832,000 as of 31 March 1998 to
approximately $149,700,000 immediately after the Reorganisation and
elimination of all of its existing debts and liabilities.
Net Asset Value
Based on the audited financial statements of UDL for the financial year
ended 31 March 1998, the consolidated net deficit of the Group was
approximately $784,613,000. The unaudited consolidated net deficit of UDL
for the financial year ended 31 March 1999 is $1,684,111,097 (this
unaudited figure is subject to further change upon the finalisation of the
audit by the auditor). After the Reorganisation, the net asset value of
UDL is estimated to be $20,000,000.00.
Working Capital
In the marine engineering construction business, it is critical for main
contractors to secure the availability of a fleet with a sufficient size
to complete a job, which normally takes 3 years. For this reason, when the
main contractors subcontract jobs to subcontractors with the available
fleet (such as UDL), the main contractors are prepared to finance or
normally pay in advance for the fuel, consumables and the necessary funds
for mobilisation of the fleet and labour of the operation. These costs
will of course be deducted from subsequent billings when the work is done.
A number of major contractors have expressed their acceptance of this
arrangement in order to secure the resources necessary for satisfactory
performance of engineering contracts with a tight programme. Therefore,
UDL anticipates that the Group will have sufficient working capital for
its operations after the completion of the Reorganisation.
FUTURE PLANS
After the Reorganisation, the Group will concentrate on its core marine
engineering business, which had a profitable track record before the Group
diversified into heavy engineering and electrical and mechanical
engineering through the acquisition of UDL Argos Engineering & Heavy
Industries Company Limited and UDL Kenworth Engineering Limited in late
1992.
Marine engineering works usually form part of the main contracts for civil
engineering works. For mega sized civil engineering contracts like
container terminal development and reclamation of land, major contractors
are usually the main contractor who have to manage and sublet different
parts of the main contract works to specialist contractors. Having the
track record and the access to a fleet with the necessary critical mass,
the Group will be qualified for most marine engineering works
sub-contracts.
With a fleet size of about 80 vessels in 1991, 120 vessels in 1992 and 160
vessels in 1993, UDL recorded audited pre-tax profits of about $32
million, $68 million and $114 million respectively. After UDL and its
subsidiaries started to have liquidity problems in 1998, Secured Creditors
have attempted to sell security under mortgage (mainly marine vessels) to
mitigate their exposure. The unencumbered vessels stay with the Group
together with those encumbered vessels not yet by sold the Secured
Creditors could not give the Group the necessary critical mass to run a
full ranged comprehensive specialist marine engineering operations as the
leading market player although together with the qualifications vested
with various subsidiaries, the Group still has a solid basis for
sufficient operation should there is no liquidity problem.
With the acquisition of the Asset Companies, the Group will reinstate its
fleet size with the necessary critical mass to run a full ranged
comprehensive specialist marine engineering operations as the leading
market player. Based on papers and study reports prepared by the local
universities covering future civil engineering projects and marine
construction works, and other relevant information, it is anticipated that
substantial marine engineering work with an aggregate value of about $25
billion will be available in the market in the next five years including
Tsing Yi container port development CT9, North Lantau Development,
Victoria Harbour Anchorage enhancement and major reclamation project for
housing development in Singapore. With the outstanding contracts on hand
under the Asset Companies of approximately $100 million, the Group
anticipates that sufficient business opportunities are available to ensure
more than 70% utilisation of its vessels in the next three years.
As agreed previously with the Government, UDL Contracting Limited and UDL
Agros Engineering & Heavy Industries Company Limited have been suspended
from tendering of public works contracts since late 1998. With the full
implementation of the Scheme, it has been agreed that UDL Contracting
Limited and UDL Argos Engineering & Heavy Industries Company Limited could
apply for uplifting of the suspension so that UDL and the Participating
Subsidiaries will also have the necessary Government approved contractor
qualification for a wide range of civil and structural engineering works.
This will give UDL and the Participating Subsidiaries access to direct
contract works with the Government for further expansion of its business
after recovery. Without the Reorganisation, normal business will be in a
difficult position to resume and the petitions for winding-up of UDL and
it subsidiaries as listed above could not be dismissed as planned.
There will be no change in the board of directors of UDL, management,
principal business, operations and control upon the full implementation of
the Scheme.
MAINTAINING THE LISTING OF UDL
It is the intention of the directors to maintain the listing of the shares
of UDL on the Stock Exchange after completion of the Reorganisation.
Accordingly, the directors will undertake to the Stock Exchange to take
appropriate steps to ensure that sufficient public float exists for UDL's
shares.
The Stock Exchange has stated that it will closely monitor trading in the
shares of UDL if less than 25% of the shares of UDL are held by the
public. The Stock Exchange will also closely monitor all future
acquisitions or disposals of assets by UDL. The Stock Exchange has the
discretion to require UDL to issue a circular to its shareholders
irrespective of the size of the proposed transactions, particularly when
such proposed transaction represents a departure from the principal
activities of UDL. The Stock Exchange also has the power to aggregate
a series of transaction and any such transactions may result in UDL being
treated as if it were a new listing applicant. The Stock Exchange will
consider exercising its discretion to suspend trading in the Shares if the
Stock Exchange believes that:-
(a) a false market exists or may exist in the UDL Shares; or
(b) there are too few UDL Shares in public hands to maintain an
orderly market.
GENERAL
The proposed Reorganisation, disposal of Scheme Assets for UDL (a major
transaction), acquisition of Assets Companies (a very substantial
transaction) by UDL from the Vendors, Share Consolidation of 20 shares in
1 share, Capital Reduction, issue of New Shares and 5 Rights Shares for
every 1 Consolidated Share all constitute connected transactions by the
entering into the Agreement by UDL with connected persons mentioned in the
section titled "Parties to the Agreement" and will require UDL's
independent shareholders' approval, i.e. HF Co, SF Co, Mr. Leung, Mrs.
Leung and their respective associates will abstain from voting.
An independent board committee comprising the independent non-executive
directors, Mr. Wong Sum Yuen and Mr. Pao Ping Wing JP., will be formed to
advise the Independent Shareholders in relation to the Reorganisation. An
independent financial adviser will be appointed to advise the independent
board committee as to whether the terms of the Reorganisation are fair and
reasonable so far as the Independent Shareholders are concerned.
As soon as practicable after the court hearing (which is to be determined
after 1 December 1999) approving the distribution of the scheme document
to the Scheme Creditors, a circular with further details of the
Reorganisation, the recommendation of independent board committee, the
letter of advice of the independent financial adviser, and notices of a
special general meeting will be despatched to the UDL Shareholders. UDL
will apply to the Stock Exchange for a waiver from strict compliance with
the requirement of the Listing Rules to despatch the circular within 21
days from the publication of this announcement.
WARNING
The Reorganisation is subject to a number of Conditions Precedent. As at
the date of this announcement, no formal approvals have been obtained from
Stock Exchange, UDL Shareholders, Scheme Creditors and the court in
relation to the Reorganisation. Accordingly, UDL Shareholders should note
that the release of this announcement does not in any way imply that the
Reorganisation and the Scheme will necessarily proceed.
Meanwhile, shareholders and investors should exercise caution in dealing
with the Company's shares.
The directors of UDL have noted the recent decrease in price of the shares
of UDL. Save as mentioned above, the directors also confirm that there are
no negotiations or agreements relating to the intended acquisitions or
realisations which are disclosable under paragraph 3 of the Listing
Agreement and that they are not aware of any matter discloseable under the
general obligation imposed by paragraph 2 of the Listing Agreement, which
is or may be of a price sensitive nature.
Trading in the shares of UDL was suspended at the direction of the Stock
Exchange with effect from 11:44 a.m. on 8 October 1999 pending the release
of the Announcement. UDL has applied to the Stock Exchange for the
resumption of trading of the UDL shares with effect from 10:00 a.m. on 19
October 1999.
DEFINITIONS
"Agreement" the restructuring agreement dated 16 October 1999,
relating to the Group between UDL, the Major Subsidiaries, the Other
Participating Subsidiaries, HF Co, Mr. Leung, Mrs. Leung, SF Co, and the
Asset Companies
"Asset Companies" the Hong Kong Asset Co and the Singaporean Asset Co
"Asset Finance Creditors" OCBC, HSBC Capital, and/or GE, as the
context may require
"Capital Reduction" the reduction of (a) the issued share capital of
UDL from $84,102,065 divided into 841,020,650 shares of $0.100 each to an
amount of $4,205,103.25 by canceling paid-up capital to the extent of
$0.095 on each Existing Share; and (b) the share premium account of UDL in
the amount of $484,081,574.96; both for the purpose of setting off the
accumulated consolidated losses of the Group (including, for this purpose,
KEL and its subsidiaries) to the extent of the aggregate of the said
amounts
"Code" the Code on Takeovers and Mergers
"Conditions Precedent" the conditions precedent to which the
implementation of the Reorganisation is subject to as listed above in the
section headed "Conditions of the Agreement"
"Consolidated Shares" shares of $0.100 each consolidated from 20 shares
of $0.005 each under the Share Consolidation
"Disposal Proceeds" the total amount which can be realised from
assets available for disposal or realisation under the Scheme, excluding
the encumbered assets held by the secured creditors of UDL and the
Participating Subsidiaries as security
"Dividends" the amounts payable to the Scheme Creditors under
the Scheme, whether in cash or in New Shares, in full and final settlement
of the Scheme Debts not exceeding $176,000,000
"Existing Shares" the existing ordinary shares of $0.100 each in
the capital of the Company prior to Capital Reduction and Share
Consolidation
"First Share Transaction" the sale of all the existing issued shares
in the Hong Kong Asset Co by Mr. Leung and SF Co to UDL pursuant to the
Agreement
"GE" GE Capital Finance Limited, a financial creditor of the Group
"Group" UDL and its subsidiaries (excluding KEL and its subsidiaries)
"HF Co" Harbour Front Limited, a company incorporated in British Virgin
Islands, being the holder of 321,192,993 Existing Shares (representing
38.2%) of total issued UDL Shares, which through a wholly owned subsidiary
holds a further 136,427,917 Existing Shares (representing 16.2%)
of total UDL issued Shares, totalling 54.4% of the total UDL issued
shares. These shares are held by HF Co or its designated nominees as
trustee of a unit trust. All units in the unit trust are beneficially
owned by a discretionary trust set up by Mr. Leung, the beneficiaries of
which include members of the family of Mr. Leung and Mrs. Leung
"HSBC" The Hongkong and Shanghai Banking Corporation Limited
"HSBC Capital" HSBC Capital (Asia) Pte Limited, a financial creditor of
the Group
"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China
"Hong Kong Asset Co" UDL Marine Asset (Hong Kong) Limited, a company
incorporated in Hong Kong and engaged in marine engineering business,
which is beneficially owned by SF Co as to 12.5% and by Mr. Leung as
to 87.5%
"Independent Shareholders" the existing shareholders of UDL other
than HF Co, Mr. Leung, Mrs. Leung and their respective associates
"KEL" KEL Holdings Limited, a 75% owned subsidiary of UDL, an exempted
company incorporated in Bermuda, the securities of which are listed on the
Stock Exchange
"Listing Rules" the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
"Major Subsidiaries" Econo Plant Hire Company Limited, UDL Argos
Engineering & Heavy Industries Company Limited, UDL Civil Contractors
Limited, UDL Contracting Limited, UDL Marine Operation Limited, UDL
Marine Pte Limited, UDL Ship Management Limited, all are wholly-owned
subsidiary of UDL and Universal Dockyard Limited, a 98.75% owned
subsidiary of UDL. These subsidiaries are trading companies for the
Group's contracting, marine engineering and structural steel engineering
business
"Mr. Leung" Mr. Leung Yat Tung, Chairman of UDL
"Mrs. Leung" Mrs. Leung Yu Oi Ling, Deputy Chairman of UDL and wife of
Mr. Leung
"New Shares" 252,306,195 new shares of $0.100 each in the
capital of UDL after the Capital Reduction and the Share Consolidation
which will be issued at par value of $0.100 each by UDL under the Scheme
to the Scheme Creditors in proportion to their Scheme Debts
"OCBC" Oversea-Chinese Banking Corporation Limited, a financial creditor
of the Group
"Ordinance" Companies Ordinance, Chapter 32 of the Laws of Hong Kong
"Other Participating East Coast Towing Limited, Everpoint Company
Subsidiaries" Limited, Exact Profit Limited, Fairking
Transportation Limited, Faith On International
Limited, Full Keen Investment Limited, Graceful
Ease Investment Limited, Keen Yield Investment
Limited, S.K. Luk Construction Company Limited,
UDL Dredging Limited, UDL E & M (BVI) Limited,
UDL Investment Limited, UDL Management Limited,
UDL Steel Fabricators & Shipbuilders Company
Limited and Wellful Time Limited, all are
wholly-owned subsidiaries of UDL. They are
mainly intermediate holding companies or
companies running supporting operations as
distinguished from the Major Subsidiaries which
are trading companies running the Group's
principal activities
"Participating Subsidiaries" those Major Subsidiaries and/or Other
Participating Subsidiaries which will participate in the Scheme whether by
implementing separate creditors' schemes of arrangement to approve the
Scheme under section 166 of the Ordinance or by obtaining unanimous
consent from their creditors, and "Participating Subsidiary" means any one
of them
"Parties" the parties to the Agreement, and "Party" means any one of
them
"Project Manager" a professional to be appointed under the Scheme
who shall be independent of UDL and its subsidiaries, and of the
directors, chief executives, substantial shareholders of UDL or
any of its subsidiaries or an associate of them and be responsible for
overseeing the orderly disposal or realisation of assets under the Scheme
"Reorganisation" the reorganisation of the indebtedness and
commercial structure of the Group and of the capital structure of UDL in
accordance with the Scheme and the Agreement
"Rights Issue" the rights issue to be undertaken by UDL on the
basis of 5 Rights Shares for each Consolidated Share to raise about $21
million at a price of $0.100 per Rights Share offered to all UDL
Shareholders (excluding the Scheme Creditors to whom New Shares will be
issued under the Scheme)
"Rights Shares" the new share(s) of $0.100 each in the capital
of UDL after the Capital Reduction and the Share Consolidation to be
issued by UDL under the Rights Issue
"SF Co" Sincere Fun Limited, a company incorporated in Hong Kong, its
shareholders are two companies incorporated in British Virgin Islands both
of which Mr. Leung is a director. These two companies have given their
authorisation to Mr. Leung to procure SF Co to act in accordance with
Mr. Leung's instruction
"SFC" the Securities and Futures Commission
"SGM" a special general meeting of UDL to be held for the purpose of
considering the Agreement and the Resolutions
"Scheme" the global creditors' scheme of arrangement which may
involve the participation of UDL, the Major Subsidiaries and the Other
Participating Subsidiaries, and their respective creditors in respect of
the settlement and discharge of their entire unsecured debts of
approximately $1,730,293,000 due to such creditors on universal global
terms applicable to all of them, subject to such additions or
modifications as may be agreed among the Parties (other than HF Co,
Mr. Leung, Mrs. Leung, SF Co, and the Asset Companies) provided that this
will involve the issue by UDL of a fixed number of 252,306,195 New
Shares to the Scheme Creditors in proportion to their Scheme Debts and the
transfer of certain assets of UDL and Participating Subsidiaries available
for disposal or realisation under the Scheme to a new company to be
established under the Scheme which will be held by a trustee on
trust to pay the Scheme Creditors in cash
"Scheme Assets" assets held by UDL, the Major Subsidiaries and Other
Participating Subsidiaries available for disposal or realisation under the
Scheme as listed in an appendix to the Agreement
"Scheme Creditors" the creditors of UDL and the Participating
Subsidiaries independent of its directors, chief executives or substantial
shareholders of UDL or any of its subsidiaries and an associate of them
(as defined in the Listing Rules) whose debts would be provable or
admissible under the terms of the Scheme
"Scheme Debts" all unsecured debts of the Scheme Creditors which would be
provable or admissible under the terms of the Scheme, including the
balance of any of the secured debts, if any, of UDL or the relevant
Participating Subsidiary after deducting or setting off the value of the
relevant security totalling approximately $1,730,293,000
"Second Share Transaction" the sale of all existing issued shares in
the Singaporean Asset Co by Mr. Leung and Mrs. Leung to UDL pursuant to
the Agreement
"Secured Creditors" financial creditors with their debts secured by
fixed assets, engineering contract proceeds or the shares of KEL
"Share Consolidation" the consolidation of every 20 issued ordinary
shares of UDL of the reduced par value of $0.005 each into new share of
$0.100 each to be effected after the Capital Reduction pursuant to the
Agreement
"Shortfall" the amount by which the aggregate cash Dividends actually
received by a Scheme Creditors fall short of the aggregate cash Dividends
that the Scheme Creditors would have received had the Disposal Proceeds
been $176,000,000
"Singapore" the Republic of Singapore
"Singaporean Asset Co" UDL Marine Assets (Singapore) Pte Limited, a
company incorporated in Singapore and engaged in marine engineering
business, which is 100% beneficially owned by Mr. Leung and Mrs. Leung
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"UDL" UDL Holdings Limited, a company incorporated in Bermuda, the
shares of which are listed on the Stock Exchange
"UDL Shares" original issued share capital of $84,102,065
divided into 841,020,650 shares of $0.100 each of UDL
"UDL Shareholders" shareholders of UDL
"Vendors" in relation to the First Share Transaction, Mr. Leung and
SF Co; and in relation to the Second Share Transaction, Mr. Leung and Mrs.
Leung
"$" Hong Kong dollars, the lawful currency of Hong Kong
By Order of the Board
UDL Holdings Limited
Leung Yat Tung
Chairman
Hong Kong, 16 October 1999
The directors of UDL 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 the best of their
knowledge, 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 in this announcement misleading.
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