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    MAE HOLDINGS LIMITED

    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 however arising from or in reliance upon the whole or any part of the contents of this announcement.

    (Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION: FORMATION OF JOINT VENTURE

    The Directors are pleased to announce that on 19 September 2000 the Company, through the Subscriber (a wholly owned subsidiary of the Company) formed a 50/50 joint venture with the Partner by subscribing for the Subscription Shares in the JVC under the Subscription Agreement. The Subscription Shares represent 50% of the entire issued share capital in the JVC as enlarged by the issue of these Shares.

    The consideration for the Subscription Shares is HK$50,000 and was paid in cash upon completion of the Subscription Agreement. The Subscription Shares were issued at the par value of HK$1 each and the consideration paid equals the aggregate nominal value of the Subscription Shares.

The JVC is intended to carry on securities and futures brokerage business.

    Also on 19 September 2000, the JVC has entered into an Acquisition Agreement with the Partner. The Acquisition Agreement is for the purchase by the JVC from the Partner of the entire issued share capital of PP Securities for a consideration of HK$20,000,000. PP Securities is a securities brokerage firm and a registered dealer

    with the SFC.

    The Subscriber has agreed to lend a total of HK$15,950,000 in three tranches to the JVC to finance in part the acquisition by the JVC from the Partner of the entire issued capital of PP Securities, a proposed acquisition of a trading right on the Futures Exchange for a wholly owned subsidiary of the JVC, from an independent third party and general working capital requirements of the JVC and it subsidiaries. The Subscriber has no capital commitment to the JVC apart from such loan.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    The Partner's total financial commitment in the JVC will be HK$17 million. This commitment will include HK$12 million of the purchase price payable by JVC for his securities company, PP Securities , which will be left outstanding as a debt due from the JVC and will be evidenced by an unsecured loan note to be issued by the JVC. The balance of the Partner's financial commitment, HK$5 million, will be lent by the Partner to the JVC on completion of the Acquisition Agreement.

    The JVC and the Partner are independent third parties not connected with the directors, chief executives or substantial shareholders of the Company or its subsidiaries or their respective associates (as defined under the Listing Rules).

    The Subscription Agreement constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing further details of the Subscription will be despatched by the Company to its shareholders for their information as soon as practicable.

    SUBSCRIPTION AGREEMENT

    Date of the Subscription Agreement:

    19 September 2000

Parties:

    Issuer: Pacific Pearl Holdings Limited (the "JVC"), a company incorporated in Hong

    Kong with limited liability

    Subscriber: MAE Investments Limited, a wholly-owned subsidiary of the Company

    incorporated in the British Virgin Islands

    Guarantor: Yung Ki Cheong, Philip (the "Partner"), director and shareholder of the JVC, for

    the observance and performance by the JVC of its obligations under the

    Subscription Agreement

    The JVC and the Partner are independent third parties not connected with the directors, chief executives or substantial shareholders of the Company or its subsidiaries or their respective associates (as defined under the Listing Rules).

Interest Acquired:

    Pursuant to the Subscription Agreement, the Subscriber has subscribed for and the JVC has issued and allotted the Subscription Shares. The Subscription Shares represent 50% of the entire issued share capital of the JVC as enlarged by the allotment of these Subscription Shares to the Subscriber.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

Completion and Consideration Paid

    The Subscription Agreement is unconditional and completion took place upon signing.

    The consideration for the Subscription Shares is HK$50,000 and was paid by the Subscriber in cash to the JVC upon completion of the Subscription Agreement. The Subscription Shares were issued without premium at the par value of HK$1 each and the consideration paid equals the aggregate nominal value of the Subscription Shares.

Transfer of PP Securities into the JVC

    PP Securities is a securities brokerage firm wholly-owned by the Partner. It is a registered dealer under the Securities Ordinance and an exchange participant of, and has a trading right to trade on the Stock Exchange.

    The consideration of HK$20,000,000 will be left outstanding as a debt due from the JVC and will be evidenced by an unsecured loan note to be issued by the JVC. Pursuant to the Subscription Agreement, the Partner entered into the Acquisition Agreement with the JVC whereby the Partner has agreed to sell and transfer to the JVC his 100% equity interest in PP Securities at the consideration of HK$20,000,000. The amount of the consideration was arrived at after negotiations and takes into account the unaudited net asset value of PP Securities as at 31 August 2000 of about HK$17,688,000 and the earning potential of PP Securities.

    The transfer of PP Securities into the JVC under the Acquisition Agreement is conditional upon the appropriate approvals being granteed by the SFC pursuant to theSecurities Ordinance and by the Stock Exchange pursuant to the Rules of the Stock Exchange to such transfer and to the consequent change of control in PP Securities.

    Upon completion of the Acquisition Agreement, the consideration of HK$20,000,000 for PP Securities will be paid as to HK$8,000,000 by the JVC to the Partner out of the MAE Loan mentioned below and the remaining balance of HK$12,000,000 will not be paid but will constitute interest free unsecured shareholder's loan due from the JVC to the Partner. There will not be any fixed repayment dates for the shareholder's loan of HK$12,000,000 from the Partner. It is intended that the shareholder's loan will only be repaid to the extent that there are surpluss funds for repayment withoutaffecting the cashflow of the JVC or its operating subsidiaries.

Establishment of Futures Brokerage Business

    PP Futures is a newly incorporated wholly-owned subsidiary of the JVC and is intended to be the futures brokerage arm of the JVC.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    Under the Subscription Agreement, the Partner and the JVC have undertaken to the Subscriber that, as soon as practicable following completion of the Subscription Agreement, they will cause PP Futures to enter into a conditional definitive agreement for the acquisition from an independent third party of a trading right in the Futures Exchange on arm's length and normal commercial terms, to seek registration as a commodities dealer under the Commodities Trading Ordinance and to lodge an application with the Futures Exchange to become an exchange participant of the Futures Exchange. It is expected that the conditional agreement will be conditional upon the obtaining of the requisite approvals from the SFC and the Futures Exchange.

Financial Commitments by the Partner

    Under the Subscription Agreement, the Partner has undertaken to the Subscriber and the JVC that the Partner will simultaneously upon completion of the Acquisition Agreement lend to the JVC the sum of HK$5,000,000 by way of interest free and unsecured shareholder's loan which the JVC may apply in funding its general working capital requirements. The shareholder's loan of HK$5,000,000 from the Partner will only be repaid to the extent that there are surplus funds for repayment without affecting the cashflow of the JVC or its operating subsidiaries.

    The aggregate financial commitments assumed by the Partner in favour of the JVC, taking into account of the unpaid balance of HK$12,000,000 for his sale of PP Securities to the JVC, will be HK$17,000,000.

    The financial commitments assumed by the Partner in favour of the JVC exceed the amount assumed by the Subscriber by approximately HK$1,000,000. To eliminate such inequality the Subscriber has agreed with the Partner that repayments from time to time made by the JVC shall first be applied to repay the HK$1,000,000 owed to the Partner. Once such inequality has been eliminated, repayment of shareholders' loan will be made on equal basis.

Financial Commitments by the Subscriber

    Pursuant to the Subscription Agreement, the Subscriber has entered into the Loan Agreement with the JVC whereby the Subscriber has agreed to grant the MAE Loan, being a term loan in the aggregate amount of HK$15,950,000 to the JVC by three tranches. The Subscriber has no capital commitment to the JVC apart from the MAE Loan.

    The first tranche of HK$8,000,000 was disbursed to the JVC upon completion of the Subscription Agreement to part finance the consideration payable by the JVC for the acquisition of PP Securities from the Partner under the Acquisition Agreement.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    The second tranche of HK$4,950,000 will be disbursed to the JVC upon the entering into by PP Futures of the conditional definitive agreement for the acquisition of a trading right in the Futures Exchange to finance the payment of consideration for such acquisition and the remaining balance thereof to fund the JVC's general working capital requirements.

    The third tranche in the sum of HK$3,000,000 will be disbursed to the JVC upon completion of the Acquisition Agreement when PP Securities has become the JVC's subsidiary to finance the JVC's general working capital requirements.

    The MAE Loan, including the first and second tranches, is repayable in full if the Acquisition Agreement does not become unconditional upon the expiry of 6 months from the date of the Subscription Agreement.

    The MAE Loan is guaranteed by the Partner and is interest free unless it is not repaid if and when it becomes due for repayment and in which case interest will accrue as from the due date at an annual rate equal to the Hong Kong dollar prime rate plus 3%.

The MAE Loan will be funded by the Company's internal resources.

Shareholders Agreement

    Upon completion of the Subscription Agreement on 19 September 2000, the Subscriber and the Partner entered into a shareholders agreement in relation to the JVC and its subsidiaries regulating the business, affairs and internal management of the JVC and its subsidiaries.

    Under the shareholders agreement, the Subscriber is entitled to appoint two out of four directors of the JVC and its subsidiaries. The Company has appointed two of its executive directors to the board of the JVC. The chairman of the board shall be elected at the commencement of each board meeting. In the event of an equality of votes cast at a board meeting, the chairman of the meeting shall not be entitled to a second or casting vote.

    Under the shareholders agreement, the Partner is nominated the managing director of the JVC and will be responsible for the day to day management of the JVC and its subsidiaries. He will not have any casting vote at meetings of the directors of the JVC.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    INFORMATION ON THE JVC AND PP SECURITIES

    The JVC was incorporated in Hong Kong by the Partner on 28 July 2000 with the intention to function as the holding company of a group of companies comprising PP Finance, PP Futures and PP Securities whose businesses are to provide financial services in connection with the trading of securities and futures. The JVC has not commenced operations since its incorporation in July 2000 and has no assets other than its paid up capital of HK$100,000 and has no liabilities other than those relating to its incorporation, the Subscription Agreement or the Acquisition Agreement.

    At present, only PP Finance and PP Futures are wholly-owned by the JVC. PP Securities is 100% owned by the Partner and pursuant to the Acquisition Agreement, PP Securities will be sold and transferred to the JVC subject to approval by the SFC and the Stock Exchange.

    PP Finance was incorporated in Hong Kong on 3 March 1997 but does not carry on any active business.

    PP Futures was incorporated in Hong Kong on 7 August 2000 and has not commenced business. Subject to the successful acquisition by PP Futures of a trading right of and becoming an exchange participant of the Futures Exchange and becoming registered as a commodities dealer by then, it is expected that PP Futures will commence business in spring, 2001.

    It is expected that PP Futures will enter into a conditional definitive agreement for the acquisition of a trading right of the Futures Exchange from an independent third party within September 2000 and an application will be made to the SFC for registering PP Futures as a commodities dealer under the Commodities Trading Ordinance promptly after the entering into of such agreement. At the same time an application will be made to the Futures Exchange seeking admission as an exchange participant of the Futures Exchange. It is expected that the conditional agreement will be conditional upon the obtaining of the requisite approvals from the SFC and the Futures Exchange.

    PP Securities was incorporated in Hong Kong on 26 February 1997. It carries on business as dealer in securities and is a registered dealer under the Securities Ordinance and an exchange participant of with a trading right in the Stock Exchange. Its stock brokerage business began in June 1997.

    The audited net assets value of PP Securities as at 31 December 1998 and 31 December 1999 are HK$10,683,772 and HK$12,670,783 respectively. Based on the management accounts of PP Securities made up to 31 August 2000, its unaudited net assets value as at that date was HK$17,687,756.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    For the two years ended 31 December 1999, the audited net profits before and after taxation of PP Securities are as follows:

     Year ended 31 December (HK$)

     1999 1998

Profits (loss) before taxation 2,796,700 (765,804)

    Profits (loss) after taxation 2,657,011 (673,910)

REASONS FOR FORMING THE JOINT VENTURE

    The Company is an investment holding company. The subsidiaries of the Company are principally engaged in the manufacture and sale of torodial transformers, adapters, EI transformers and related accessories, plastic moulds and electrical products.

    The Board are of the view that given the status of Hong Kong as the financial hub of Asia Pacific, the local financial services industry will continue to enjoy stable growth. The Board is aware of the competition in the securities and futures brokerage business and is confident that the JVC will be able to perform with success under competition. The establishment of an equal joint venture with the Partner by subscribing for the Subscription Shares is a good opportunity to diversify the Group's business in the financial services sector. The Board believes that, although they have no prior experience in the operation of a stock or futures brokerage, they have a sufficient understanding of the business through their involvement in the management of the Company as a company listed on the Stock Exchange. The Partner, as the managing director of the JVC, will oversee the day-to-day operation of the securities and futures brokerage business and the Board is content to place reliance upon the Partner in the management of such business subject to supervision by the board of the JVC of which the Subscriber has representation.

    The formation of joint venture with an established market participant will eliminate the entry costs associated with the starting up of a new operation and reduce the lead time in accumulating sustainable client base and transaction volume.

    PP Securities is generating healthy return and upon its integration with the JVC will contribute positively to the earnings of the Company and enhance the Company's income base.

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    GENERAL

    The Subscription Agreement constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing further details of the Subscription will be despatched by the Company to its shareholders for their information as soon as practicable.

    The Board consider that the terms of the Subscription Agreement and ancillary arrangements including the MAE Loan are fair and reasonable and on normal commercial terms and formation of the equal joint venture with the Partner is in the interest of the Company and its shareholders as a whole.

Definitions of capitalised terms used in this announcement:

    "Acquisition the conditional agreement dated 19 September 2000 made between

     Agreement" the JVC as purchaser and the Partner as vendor concerning the sale

    and transfer by the Partner of his 100% equity interest in PP

    Securities to the JVC

"Board" the board of directors of the Company

    "Company" MAE Holdings Limited, a company incorporated in Bermuda with

    limited liability, the shares of which are listed on the Stock

    Exchange

"Directors" the directors of the Company

"Futures Exchange" Hong Kong Futures Exchange Limited

"Group" the Company and its subsidiaries

"HK$" Hong Kong Dollars, the lawful currency of Hong Kong

    "Hong Kong" The Hong Kong Special Administrative Region of the People's

    Republic of China

"JVC" Pacific Pearl Holdings Limited (太平洋明珠控股有限公司), a

    company incorporated in Hong Kong with limited liability

    "Listing Rules" The Rules Governing the Listing of Securities on the Stock

    Exchange

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    "Loan Agreement" The agreement dated 19 September 2000 entered into between the

    Subscriber and the JVC regarding the MAE Loan

    "MAE Loan" the term loan of HK$15,950,000 to be extended by the Company

    to the JVC in three tranches pursuant to the Loan Agreement

"Partner" YUNG Ki Cheong, Philip (翁奇昌), the 50% joint owner of the

    JVC (prior to completion of the Subscription Agreement, he owned

    100% of the JVC)

"PP Finance" Pacific Pearl Finance Limited (太平洋明珠財務有限公司), a

    company incorporated in Hong Kong with limited liability

"PP Futures" Pacific Pearl Futures Limited (太平洋明珠期貨有限公司), a

    company incorporated in Hong Kong with limited liability

"PP Securities" Pacific Pearl Securities Limited (太平洋明珠證券有限公司), a

    company incorporated in Hong Kong with limited liability

"SFC" The Securities and Futures Commission of Hong Kong

"Stock Exchange" The Stock Exchange of Hong Kong Limited

    "Subscriber" MAE Investments Limited, a company incorporated in the British

    Virgin Islands with limited liability and a wholly-owned subsidiary

    of the Company

    "Subscription" the subscription by the Subscriber of the Subscription Shares

    "Subscription The subscription agreement dated 19 September 2000 made

     Agreement" between the JVC, the Subscriberr and the Partner in relationto the

    Subscription

    "Subscription Shares" 50,000 new shares of HK$1 each in the JVC, representing 50% of

    the issued share capital of the JVC as enlarged by the allotment of

    these shares

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    MAE Holdings Discloseable Transaction th19 September, 2000

    MAE HOLDINGS LIMITED

    By Order of the Board

    Lo Wai Shing Felix

    Director

    Hong Kong, 19 September 2000

Please also refer to the published version of this announcement in the Hong Kong iMail & Hong

    Kong Economic Times.

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    MAE Holdings Discloseable Transaction th19 September, 2000

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