UDL HOLDINGS<0620> - 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.
UDL Holdings Limited
(incorporated in Bermuda with limited liability)
2000 SPECIAL GENERAL MEETING
Further to the announcement dated 16 October 1999 in respect
of the proposed reorganisation of the Group, the board of
directors of the Company and together with its subsidiaries
(excluding KEL and its subsidiaries) would like to advise
that a circular will be despatched to Shareholders on 1 March
2000 detailing the terms of the proposed reorganisation, for
the Independent Shareholders, to consider, and if thought
fit, approve the Reorganisation Proposal in the SGM
scheduled to be held on 24 March 2000 to comply with the
requirement of the Companies Act 1981 of Bermuda and the
Company's Bye-laws. The resolutions to be proposed at the
forthcoming SGM are set out in the notice below. The Company
would further advise that the financial implications of the
Reorganisation Proposal would be as represented by the pro
forma statement below. The Company originally intended to
postpone the announcement of the unaudited interim results
of the Group for the six months ended 30 September 1999 (the
"Unaudited Interim Results") on or before 29 February 2000.
Depending on the actual progress of the implementation of
the proposed reorganisation, the announcement of the
Unaudited Interim Results is now scheduled after Completion
and on or before 31 May 2000. This constitutes a breach of
paragraph 11(1) of the Listing Agreement. The Stock Exchange
has indicated that it will reserve its right to take
appropriate action against the Company and its directors in
respect of such breach. The announcement of the Annual
Results was expected to be made by end of July, 2000. The
Company acknowledges breaches of paragraphs 8(1) and 8(2)
of the Listing Agreement.
Further to the announcement dated 16 October 1999 in respect
of the proposed reorganisation of the Group, the board of
directors of the Company and together with its subsidiaries
would like to advise that a circular will be despatched to
Shareholders on 1 March 2000 detailing the terms of the
Reorganisation Proposal.
The Reorganisation Proposal 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 252,306,195 New Shares at par value of
HK$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 New Issue 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
HK$1,730,293,000 if the Scheme is fully implemented;
7. the transfer of the Unencumbered Assets and the net
proceeds obtained from the recovery of the Accounts
Receivables for no consideration to Newco which will be held
by the Scheme Administrator on trust to pay the Scheme
Creditors in cash;
8. the sale of the assets as mentioned in item 7 above and,
from time to time, the distribution to the Scheme Creditors
of the proceeds of the realisation of such assets by way of
Dividends; and
9. the full and final settlement of the Scheme Debts by the
amount payable to the non-preferential Scheme Creditors
under the Scheme in respect of their non-preferential Scheme
Debts, whether in cash or in New Shares, together with
payments to be made pursuant to the Scheme in respect of the
Preferential Claims. Any deemed shortfall between the said
amount payable to the non-preferential Scheme Creditors and
their respective non-preferential Scheme Debts to be waived.
HF Co, Mr. Leung, Mrs. Leung and the Asset Companies are
connected persons (as defined in the Listing Rules) of the
Company. The entering into the Restructuring Agreement with
these connected persons by the Company constitutes a
connected transaction for the Company under the Listing
Rules. Therefore, it is subject to independent shareholders'
approval.
The Independent Board Committee has been formed in order to
give advice to the Independent Shareholders in relation to
the Reorganisation Proposal.
The purpose of this circular is to give you further
information relating to the Reorganisation Proposal, to set
out the recommendation of the Independent Board Committee
and the advice of Somerley to the Independent Board Committee
in respect of the Reorganisation Proposal, and to give you
notice of the SGM at which the necessary resolutions will
be proposed to approve and implement the Reorganisation
Proposal.
HF Co and Mr. Leung and their respective associates, who
together owned approximately 458.6 million Existing Shares,
representing approximately 54.5% of the issued share capital
of the Company as at the Latest Practicable Date, and other
Shareholders who are connected persons or involved, or
interested, in the transactions under the Proposal, will
abstain from voting at the SGM in respect of special
resolution No. 1 and ordinary resolution No. 2 which are
relating to the Reorganisation Proposal. For the avoidance
of doubt, HF Co, Mr. Leung and his associates and other
Shareholders who are connected persons or involved, or
interested, in the transactions under the Proposal, may vote
at the SGM in respect of ordinary resolution Nos. 3, 4 and
5 or such other general matters so arising.
Shareholders are reminded that even if all the resolutions
are approved by the Independent Shareholders at the SGM, the
Reorganisation Proposal is still subject to a number of
conditions including, inter alia, voting results of the
Court Meetings and the court sanction of the Scheme.
The Company and its subsidiaries including KEL and its
subsidiaries had an audited net deficit of HK$784.61 million
as at 31 March 1998. Based on the audited consolidated
balance sheet of the Company and its subsidiaries including
KEL and its subsidiaries as at 31 March, 1998 and less the
unaudited consolidated loss attributable to Shareholders
for the year ended 31 March, 1999 of approximately HK$904.25
million plus movement of exchange fluctuation reserve of
approximately HK$4.75 million in respect of the same period,
the Company and its subsidiaries including KEL and its
subsidiaries have an unaudited net deficit of approximately
HK$1,684.11 million as at 31 March 1999.
Set out below is a statement of the pro forma adjusted net
asset value of the restructured Group after Completion. It
is based on the assumption that all Major Subsidiaries and
Other Subsidiaries participate in the Scheme and is based
on the audited consolidated net deficit of the Company and
its subsidiaries including KEL and it subsidiaries as at 31
March 1998 and adjusted as described below. After Completion,
the net asset value of the Group is estimated to be
HK$20,000,000. Notwithstanding the announcement of the
"Unaudited final results of the Group for the year ended 31
March 1999" as mentioned above, the audit for the year ended
31 March 1999 is delayed due to the limited manpower of the
Company and concentrated efforts to implement the Scheme.
Furthermore, the Unaudited Interim Results of the Group for
the six months ended 30 September 1999 will not be available
until after Completion and on or before 31 May 2000. This
statement is therefore given in good faith and it represents
directors' best estimate on the basis of the most recently
available materials as at the Latest Practicable Date.
However it does not constitute warranties.
HK$'000
Audited consolidated net deficit of the Company
and its subsidiaries including KEL and
its subsidiaries as at 31 March 1998
of approximately HK$784,613,000 (Note 1)
less unaudited loss attributable to
shareholders for the 12 months ended
31 March 1999 of approximately HK$904,251,000
(Note 5) plus movement of exchange
fluctuation reserve of approximately
HK$4,753,000 (1,684,111 )
Add: Proceeds of Rights Issue net of related
expenses (Note 2) 20,000
The estimated amount of the total debts
(including payments for preferential
claims and contingent liabilities)
to be discharged under the Scheme
net of waived inter-company debts
amongst the Company and the
Participating Subsidiaries (Note 3) 1,501,513
Adjustments to net off the effect of
KEL's net deficit based on the
audited consolidated balance sheet of KEL
as at 31 March 1999 582,176
Other adjustments (Note 4) (187,846 )
Less:The estimated value of assets transferred
and/or realised under the Scheme for
settlement of the Scheme Debts (Note 6) (183,501 )
The aggregate par value of New Shares
issued to the Scheme Creditors (Note 7) (25,231 )
The estimated expenses to be incurred in
connection with the implementation of
the Reorganisation Proposal (3,000 )
Pro forma adjusted net asset value of the
restructured Group after Completion of
the Reorganisation Proposal 20,000
Pro forma adjusted net asset value per Share
after Completion (based on 42,051,632
Consolidated Shares, 252,306,195 New Shares
to be issued under the Scheme and 210,255,163
Rights Shares to be issued under the Rights Issue) 3.96 cents
Notes:
(1) Refer to the 1998 Annual Report.
(2) The net proceeds of the 210,255,163 new shares at par
value of HK$0.10 each, after deducting related expenses
about HK$1 million to be borne by the Company, are estimated
to amount to HK$20 million.
(3) The Scheme will discharge the total amount of all
outstanding non-preferential scheme debts due to the
non-preferential Scheme Creditors of approximately
HK$1,730.3 million together with the outstanding debt due
to Preferential Claims of approximately HK$12.5 million
which include inter-company debts to be waived by Scheme
Participating Subsidiaries of approximately HK$241.3
million if the Scheme is fully implemented with the Company
and all Major Subsidiaries and other subsidiaries joining
the Scheme.
(4) This represents the net effect on disposal of certain
subsidiaries not joining the Scheme and operating results
of the Group up to Completion.
(5) Refer to previous announcement dated 29 September 1999
of unaudited final results for the year ended 31 March 1999.
(6) According to the management information closing on 30
April 1999, the value of assets available for disposal or
realisation for the Company and the Participating
Subsidiaries is approximately HK$183.5 million.
(7) UDL Holdings Ltd will issue 252,306,195 new shares at
par value of HK$0.10 each under the Scheme to the Scheme
Creditors in proportion to their Scheme Debts.
In the event that not all Major Subsidiaries and Other
Subsidiaries participate in the Scheme, the pro-forma
adjusted net asset value per share of the restructured Group
will be approximately the same as calculated above since
whatever the number of Subsidiaries joining the Scheme is
and irrespective of which Subsidiary joins the Scheme, the
only substantial tangible asset holdings companies of the
restructured Group upon Completion are the Company and Asset
Companies, the other companies either having transferred all
their assets to Newco under the terms of the Scheme or, in
the event of their not joining the Scheme, being inevitably
under liquidation. For simplicity purposes, the details of
adjustments for other possible scenarios are therefore not
shown here.
The board of directors (the "Board") of the Company, and
together with its subsidiaries, (excluding KEL and its
subsidiaries) would like to advise that further to the
announcement dated 24 December 1999, due to the limited
manpower and financial resources of the Company and
concentration of efforts to implement the scheme of
arrangement (the "Scheme") as announced on 16 October 1999
to oppose the petitions for winding-up of the Company and
certain subsidiaries, the audit work in respect of the
Group's 1999 Audited Accounts has not yet commenced. Court
Meetings of the respective creditors of the Company and
certain of its subsidiaries for the approval of the Scheme
are now scheduled to be held on 14 March 2000.
Because of the limited manpower of the Company and the
concentration of efforts to implement the Scheme, the
Company is unable to comply with paragraph 11(1) of the
Listing Agreement entered into between the Company and the
Stock Exchange which requires the announcement of the
Unaudited Interim Results to be made on or before 31 December
1999. The Company originally intended to postpone the
announcement of the Unaudited Interim Results until on or
before 29 February 2000. Depending on the actual progress
of the implementation of the proposed reorganisation, the
announcement of the Unaudited Interim Results is now
scheduled after Completion and on or before 31 May 2000.
The audit work in respect of the Group's 1999 Audited
Accounts will also commence after completion and will take
approximately three months to complete by the end of July
2000.
This constitutes a breach of paragraph, 8 & 11(1) of the
Listing Agreement. The Stock Exchange has indicated that it
will reserve its right to take appropriate action against
the Company and its directors in respect of such breach.
The Company acknowledges breach of requirements under
paragraph 8(1) and 8(2) of the Listing Rules which require
the Company to despatch the 1999 Annual Report which
comprises the audited results of the Group for the year ended
31 March 1999 within five months of the financial year end
of the Company and to hold annual general meeting within six
months of the financial year end of the Company respectively.
The Company also understands that this breach may lead to
potential disciplinary action by the Stock Exchange.
In an announcement dated 24 December 1999, the Board stated
that because of the limited manpower of the Company and the
concentration of efforts to implement the Scheme, the
Company was unable to comply with paragraph 11(1) of the
Listing Agreement entered into between the Company and the
Stock Exchange which requires the announcement of the
unaudited interim results of the Group for the six months
ended 30 September 1999 (the "Unaudited Interim Results")
to be made on or before 31 December 1999. The Stock Exchange
has indicated that it will reserve its right to take
appropriate action against the Company and its directors in
respect of such breach.
The directors confirm that they have not dealt in any shares
of the Company since 17 July 1999 and have given their
undertakings to the Stock Exchange that they will not deal
in the shares of the Company until the release of the Group's
1999 Audited Accounts and the Unaudited Interim Results.
We have noted the recent increase in the price of the shares
of the Company and wish to state that we are not aware of
any reasons for such increase.
We also confirm that there are no negotiations or agreements
relating to the intended acquisition or realisations which
are discloseable under paragraph 3 of the Listing Agreement,
neither is the Board 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.
Made by the order of the Board of UDL Holdings Limited, the
directors of which individually and jointly accept
responsibility for the accuracy of this statement.
Definitions
"Accounts all accounts receivable(s) of
Receivable(s)" the Company and the
Participating Subsidiaries
other than (a) those receivables
which are inter-company debts as
between the Company and
Participating Subsidiaries or
any of them or between
Participating Subsidiaries or
any of them in respect of which
no dividends will be claimed
under the Scheme and (b) those
receivables charged to certain
financial creditors as security,
and including all claims or
counterclaims (after setting off
the claims of the opposing
parties) claimed by the Company
or the Participating
Subsidiaries in any arbitration
proceedings which have commenced
and are continuing as at the
Effective Date and the excess of
the proceeds and cost awards over
the Secured Debts payable to the
financial creditors which is to
be remitted and transferred to
the Scheme Account
"Asset Companies" the Hong Kong Asset Co and the
Singaporean Asset Co
"Capital Reduction" the reduction of (a) the issued
share capital of the Company from
HK$84,102,065 divided into
841,020,650 shares of HK$0.10
each to an amount of
HK$4,205,103.25 by reducing
paid-up capital to the extent of
HK$0.095 on each Existing Share;
and (b) the share premium account
of the Company in the amount of
HK$484,081,574.96; both for the
purpose of setting off the
accumulated losses of the
Company to the extent of the
aggregate of the above amount
"Completion" completion of the Restructuring
Agreement, which is, amongst
other things, subject to the
approval of the Scheme by the
Court
"Court" the high Court of Hong Kong
"Court Meeting(s)" the 25 (or such lesser number as
the Court may direct) meetings of
Creditors of the Major
Subsidiaries, the Other
Subsidiaries and the Company all
convened at the direction of the
Court for the purpose of
considering and, if thought fit,
approving the relevant Schemes
of Arrangement
"Creditors" the creditors of the Company or
any Subsidiary including, where
the Company or any Subsidiary has
Secured and/or Preferential
Creditors, such Secured and/or
Preferential Creditors, being in
each case Creditors whose claims
arose out of or had their origin
in any matter occurring before
the Effective Date and whether
present, future or contingent,
whether sounding in equity,
contract, tort or under statute
and whether liquidated or yet to
be ascertained
"Dividends" the amount payable to the non-
preferential Scheme Creditors
under the Scheme in respect of
their non-preferential Scheme
Debts, whether in cash or in New
Shares, which, together with
payments to be made pursuant to
the Scheme in respect of
Preferential Claims, shall be in
full and final settlement of the
Scheme Debts
"Effective Date" the date upon which the Scheme,
if approved, becomes effective
under Section 166 of the
Ordinance, which is expected to
be on 10 April 2000
"Existing Share(s)" the existing ordinary share(s)
of HK$0.10 each in the capital of
the Company prior to Capital
Reduction and Share
Consolidation
"Group" the Company and its subsidiaries
(excluding KEL and its
subsidiaries)
"HF Co" Harbour Front Limited, a company
incorporated in the British
Virgin Islands, being the holder
of 321,192,993 Existing Shares
(representing 38.2% of the total
issued shares of the Company)
which through a wholly-owned
subsidiary, Multi-Wishes
Limited, holds a further
136,427,917 Existing Shares
(representing 16.2% of total
issued shares of the Company)
totalling 54.4% of the total
issued shares of the Company.
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
"Hong Kong Asset Co" UDL Marine Assets (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 Board an independent committee of the
Committee" Board comprising Mr. Wong Sum
Yuen and Mr. Pao Ping Wing JP, who
are independent non-executive
Directors
"Independent Shareholder(s) who are not
Shareholder(s)" involved or interested in the
transactions under the
Reorganisation Proposal
"KEL" KEL Holdings Limited, a 75% owned
subsidiary of the Company, an
exempted company incorporated in
Bermuda, the securities of which
are listed on the Stock Exchange
"Latest Practicable 28 February 2000, being the
Date" latest practicable date prior to
the printing of this circular for
ascertaining information
contained herein
"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
the Company and Universal
Dockyard Limited, a 98.75% owned
subsidiary of the Company. 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
the Company
"Mrs. Leung" Mrs. Leung Yu Oi Ling Irene,
deputy chairman of the Company
and wife of Mr. Leung
"Other Subsidiaries" East Coast Towing Limited,
Everpoint Company 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, UDL Employment
Services Limited and Wellful
Time Limited, all are wholly-
owned subsidiaries of the
Company. 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 each of those Major Subsidiaries
Subsidiaries" and Other Subsidiaries which
shall have become subject to an
effective Scheme of Arrangement
and "Participating Subsidiary"
means any one of them
"Preferential Claim(s)" all claims of Creditors against
the Company or any Subsidiary
which would, if the Company or,
as the case may be, the relevant
Subsidiary had commenced to be
wound up on the Effective Date,
have been payable out of the
assets of the Company or the
relevant Subsidiary pursuant to
the Ordinance in priority to the
claims of the general unsecured
creditors of the Company or the
relevant Subsidiary
"Preferential Creditors" Creditors to the extent to which
they have Preferential Claims
against the Company or the
Subsidiaries or any of them
"Reorganisation the proposal to make
Proposal" for the arrangements
restructuring of the
indebtedness of the Group in
accordance with the Scheme and
the Restructuring Agreement
"Restructuring the agreement dated 16 October
Agreement" 1999 and entered into between the
Company, the Major Subsidiaries,
the Other Subsidiaries, HF Co,
Mr. Leung, Mrs. Leung, SF Co, and
the Asset Companies for the
purpose of reorganising the
Group and facilitating the
implementation of the Scheme
"Rights Issue" the rights issue to be undertaken
by the Company on the basis of 5
Rights Shares for each
consolidated share consolidated
under the Share Consolidation to
raise about HK$21 million at a
price of HK$0.10 per Rights Share
offered to all the Shareholders
(excluding the Scheme Creditors
to whom New Shares will be issued
under the Scheme)
"Scheme" such one or more of the Schemes
of Arrangement (in their present
form or with or subject to any
modification thereof or addition
thereto or conditions approved
or imposed by the Court) as
become effective on the
Effective Date
"Scheme Administrator" Matthew O'Driscoll, partner of
Ernst & Young, certified public
accountants, or, failing him,
such other person as the
President of the Hong Kong
Society of Accountants shall
nominate pursuant to the Scheme
"Scheme Assets" the Unencumbered Assets and the
Accounts Receivables
"Scheme Creditor(s)" Creditors (including Foreign
Creditors) with Scheme Debts
(excluding HF Co to the extent of
the amount due to it by the
Company under the Interim
Finance Agreement)
"Scheme Debt(s)" (1) all claims of Proving
Creditors against the Company
and Participating Subsidiaries
and (2) the balances, if any, of
Secured Debts remaining
unsatisfied (if applicable)
after realization or valuation
of the underlying security and
falling to be treated thereunder
as an unsecured claim, which in
both cases (1) and (2) would be
provable under Section 263 of the
Ordinance if an order for the
winding up of the Company and the
Participating Subsidiaries were
made on the Effective Date
"Scheme of Arrangement" each of the Schemes of
Arrangement comprised within
this circular and proposed to be
made respectively between each
of the Company and the
Subsidiaries on the one hand and
their respective Creditors on
the other hand
"Secured Creditors" Creditors of the Company or of
any of the Subsidiaries whose
debts are secured upon any
property or assets of the Company
(in the case of Creditors of the
Company and whether or not such
debts are also secured on any
property or assets of any other
person) or, (in the case of
Creditors of Subsidiaries) whose
debts are secured upon any
property or assets of the
relevant debtor Subsidiary (and
whether or not they are also
secured on any property or assets
of any other person); but so that
if the Company or any of the
Subsidiaries has provided
security to any Secured Creditor
in support of the indebtedness of
any other person but without
having incurred direct liability
as a debtor to the relevant
Secured Creditor in respect of
the security so provided ("a
security providing company"),
the relevant Secured Creditor
shall be treated for the purposes
of the Scheme of Arrangement
(including voting and where
relevant dividend) as if it were
a creditor of the security
providing company for the full
amount of the indebtedness for
which the security so provided
stands as security
"SGM" a special general meeting of the
Company to be held mainly for the
purpose of considering the
Reorganisation Resolutions
"Share Consolidation" the consolidation of every 20
issued ordinary shares of the
Company of the reduced par value
of HK$0.005 each into one new
share of HK$0.10 each to be
effected after the Capital
Reduction pursuant to the
Restructuring Agreement
"Shares" ordinary share(s) of HK$0.10
each in the share capital of the
Company
"Shareholder(s)" shareholder(s) of the Company
"Singaporean Asset Co" UDL Marine Assets (Singapore)
Pte Limited, a company
incorporated in Singapore and
engaged in marine engineering
business, which is 100%
beneficially owned by Mr. Leung
and Mrs. Leung
"Somerley" Somerley Limited, an investment
adviser and exempt dealer
registered under the Securities
Ordinance (Chapter 333 of the
Laws of Hong Kong) and the
independent financial adviser to
the Independent Board Committee
"Stock Exchange" The Stock Exchange of Hong Kong
Limited
"UDL" or "Company" UDL Holdings Limited, a company
incorporated in Bermuda, the
shares of which are listed on the
Stock Exchange
"HK$" and "cents" Hong Kong dollars and cents
respectively, the lawful
currency of Hong Kong
By Order of the Board
UDL Holdings Limited
Leung Yat Tung
Chairman
Hong Kong, 29 February 2000
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