SOUNDWILL HOLD<0878> - 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.
SOUNDWILL HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
SHARE TRANSACTION
On 15th November, 1999, Soundwill Technology Company Limited,
a wholly owned subsidiary of Soundwill Holdings Limited (the
"Company"), entered into an agreement with an independent third
party (the "Vendor") to purchase 7,000,000 shares,
representing 35 % of the issued share capital, of Netwalk
Technology Company Limited ("Netwalk") for HK$13,300,000 (the
"Transaction"). The consideration will be satisfied by the
Company issuing 41,562,500 new shares and 41,562,500 new
convertible preference shares of the Company to the Vendor (the
"New Issues"). Netwalk and its subsidiaries are principally
engaged in internet business in the People's Republic of China
("PRC"). The Transaction is subject to the shareholders'
approval at a special general meeting to be convened to approve
the New Issues (the "SGM").
Transaction
Acquisition of 7,000,000 shares, representing 35% issued share
capital, of Netwalk from an independent third party which is
not a director, chief executive or substantial shareholder of
the Company or their associate.
Consideration
The consideration of HK$13,300,000 is based on the forecast
consolidated profit of HK$8,000,000 of Netwalk and its
subsidiaries and price earnings multiple of 4.75 times. The
consideration will be satisfied by issuing 41,562,500 new
shares (the "New Shares") at HK$0.16 per share, representing
a premium of approximately 8.1% to the closing price of HK$0.148
of the shares of the Company (the "Shares") quoted on the Stock
Exchange on 15th November, 1999 and a premium of approximately
7.0% to the average closing price of HK$0.1495 of the Shares
quoted on the Stock Exchange for the last ten trading days upto
15th November, 1999, and 41,562,500 new convertible preference
shares ("CPS") at HK$0.16 per CPS of the Company. The CPS will
be convertible into Shares on a ratio of one CPS for one Share
(subject to adjustment). The New Shares,which will rank pari
passu with the existing Shares, together with the Shares to
be issued pursuant to the conversion of the CPS represent
approximately 4.47% of the existing issued share capital of
the Company and approximately 4.28% of the issued share capital
as enlarged by the New Issues.
Convertible Preference Shares
The CPS shall be mandatory converted into Shares seven days
from the date of issue of the audited consolidated financial
statements of Netwalk for the year ending 31st December, 2000.
If the audited consolidated profit after tax of Netwalk for
the year ending 31st December, 2000 is less than HK$8,000,000,
the conversion ratio will be adjusted in accordance with the
terms of the CPS. A further announcement will be made if the
conversion ratio is adjusted upon conversion. Details of the
terms will be set out in a circular to be sent to the shareholders.
The CPS are not transferable, carry no interest, have no voting
rights and will not be listed on any stock exchange.
Conditions
Completion of the Transaction is conditional upon, inter alia:
1. The Listing Committee of the Stock Exchange granting
listing of, and permission to deal in, all the New Shares to
be issued to the Vendor and shares to be issued pursuant to
the conversion of the CPS;
2. The approval of the New Issues by the shareholders in the
SGM;
3. Approval from the Bermuda Monetary Authority for the New
Shares and shares to be issued pursuant to the conversion of
the CPS;
4. Due diligence review by the Company on Netwalk and its
subsidiaries; and
5. A legal opinion in the form, including the legality of
the Transaction, as satisfied by the Company.
Information about Netwalk
Netwalk was incorporated in Hong Kong in October 1999 and,
through its wholly owned subsidiaries incorporated in the PRC,
principally engaged in internet businesses in the PRC. Such
businesses include acting as an internet content provider
providing information, such as business, financial , news,
entertainment and sports, through internet and acting as a sole
agent of an internet service provider in the PRC. A subsidiary
of Netwalk has been in operation since May 1998. The proforma
loss of Netwalk and its subsidiaries for the period from 6th
May, 1998 to 31st December, 1998 and for the period from 1st
January, 1999 to 30th September, 1999 is approximately
RMB346,000 and RMB422,000, respectively. At present the other
65% of Netwalk are owned by independent third parties other
than the Vendor. Upon completion of the Transaction, a
representation from the Company will be nominated into the
board of directors, which will comprise three directors, of
Netwalk.
Application for listing
Application will be made to the Stock Exchange for the listing
of, and permission to deal in, the New Shares and the shares
to be issued pursuant to the conversion of the CPS.
General
The Company and its subsidiaries (the "Group") are principally
engaged in property development and investment in Hong Kong.
The directors consider that the Transaction allows the Group
to diversify into other business and its source of revenue from
contribution of Netwalk as an associated company. It is the
intention of the Company to hold the shares in Netwalk as a
long term investment.
A circular setting out the particulars of the Transaction and
notice of the SGM will be sent to the shareholders as soon as
possible.
Save as disclosed above, there is no other negotiations
discloseable under paragraph 3 of the Listing Agreement or
paragraph 2 of the Listing Agreement, which is of a price-
sensitive nature. This announcement appears for information
purposes only and does not constitute an invitation or offer
to acquire, purchase or subscribe the Shares.
By order of the Board
Foo Kam Chu, Grace
Chairman
Hong Kong, 15th November, 1999
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