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)
DEBT RESTRUCTURING
The Board of the Company wishes to inform its shareholders,
warrantholders and the public that after negotiation with all its
Bank Creditors, a debt restructure agreement has been entered into
on 9 May 2000 amongst the Company, all of its subsidiaries (other
than Golden Dragon), HSBC as the Agent, and the Bank Creditors to
restructure the indebtedness of the Group which will involve,
amongst other things, the following:
* a standstill arrangement with the Bank Creditors until 31
January 2002;
* the HSBC New Loan to finance 70% of the remaining construction
costs of the development project at 6--16 Russell Street, Causeway
Bay, Hong Kong;
* the Sin Hua New Loan to finance 70% of the remaining construction
costs of the extension of Soundwill Plaza, 38 Russell Street,
Causeway Bay, Hong Kong of 8 additional floors and the Penthouse;
and
* the issue of Warrants to each of the Bank Creditors;
The Agreement is subject to, amongst other things, satisfaction of
various matters as set out below.
BACKGROUND
The board of directors (the "Board") of Soundwill Holdings Limited
(the "Company") refers to the Company's previous announcement dated
21 October 1998 in relation to the negotiation with the bank
creditors (the "Bank Creditors") for a formal standstill and a
possible debt restructuring of the Company and its subsidiaries (the
"Group").
As previously announced by the Company, whilst the Board of the
Company believes its business of property development, management
and investment is still viable, the Group has insufficient funds
to service interest and principal repayment as they fall due. Based
on the unaudited consolidated profit and loss account and balance
sheet of the Group for the six months period ended on and as at 30
June 1999, the Group had an unaudited consolidated total assets of
approximately HK$3,865 million and total liabilities of
approximately HK$2,478 million. Of the total liabilities, there
were total net bank borrowings of approximately HK$1,941 million,
and total shareholders' loans of approximately HK$51 million and
HK$200 million convertible bonds held by Madam Foo Kam Chu, Grace,
an approximate 51.12% controlling shareholder of the Company. The
Group had incurred a loss of approximately HK$112 million
attributable to its shareholders during the six months period.
THE AGREEMENT DATED 9 MAY 2000
The debt restructure agreement (the "Agreement") will involve,
amongst other things, the following:
* a standstill arrangement until 31 January 2002 (pursuant to
which the Bank Creditors agreed not to, amongst other things, take
any steps to seek repayment of or take any action or legal
proceedings in respect of any of the bank indebtedness) unless The
Hongkong and Shanghai Banking Corporation Limited ("HSBC") as the
agent and the security agent (the "Agent") (acting on the
instructions of a two third majority in number and value of the Bank
Creditors determined by the bank indebtedness owing to the Bank
Creditors at the relevant time) give at least 7 banking days notice
in writing to the Company;
* new funding of up to HK$70,000,000 will be provided by HSBC (the
"HSBC New Loan") to finance 70% of the remaining construction costs
of the development project at 6--16 Russell Street, Causeway Bay,
Hong Kong;
* new funding of up to HK$52,500,000 will be provided by Sin Hua
Bank Limited, Hong Kong Branch ("Sin Hua New Loan") to finance 70%
of the remaining construction costs of the extension of Soundwill
Plaza, 38 Russell Street, Causeway Bay, Hong Kong of 8 additional
floors and the Penthouse; and
* the issue of unlisted warrants ("Warrants") to each of the Bank
Creditors within 3 months after the Completion Date in consideration
of which each Bank Creditors shall release the Group from all default
interest which has accrued but remains unpaid as at the Completion
Date;
The Agreement is subject to satisfaction of various conditions
including, inter alia:
(a) the Company and its subsidiaries (other than Golden Dragon
Land Development Limited (in liquidation) ("Golden Dragon"))
executing and delivering the scheme security, including the
mortgage of the two development projects financed by the HSBC New
Loan and the Sin Hua New Loan, to the Agent;
(b) Madam Foo Kam Chu, Grace and the related companies executing
a subordination agreement in form and substance satisfactory to the
Agent; and
(c) the Company by its directors resolving to issue the Warrants.
Completion of the Agreement will occur on the banking day on which
the Agent receives notice in writing to the Company that all the
conditions set out in the Agreement have been satisfied or waived
(the "Completion Date"). If such conditions cannot be satisfied
or waived in accordance with the terms of the Agreement on or before
9 June 2000 or such other date as is agreed between the Company and
the Agent, the Agreement shall be of no further effect. Investors
are advised to exercise caution in dealing in the securities of the
Company.
REASONS FOR THE AGREEMENT
As a result of the Asian financial turmoil and the adverse change
in the property market in Hong Kong, the Group had insufficient funds
to service interest and principal repayments as they fell due.
Accordingly, it is necessary for the Group to implement the
Agreement in order for it to restructure the repayment schedule of
its indebtedness in order to allow the Group to strengthen its
capital base and to continue its operations. The implementation
of the Agreement will facilitate the Group to complete the
development projects at 6-16 Russell Street, Causeway Bay, Hong Kong
and the extension of 8 additional floors and the Penthouse at
Soundwill Plaza, 38 Russell Street, Causeway Bay, Hong Kong.
GENERAL
Shareholders and warrantholders of the Company will be notified the
terms of the Warrants when they are finalised. Golden Dragon is
not a major subsidiary of the Group and its net assets as at 31
December 1998 accounted for less than 1.3% of the consolidated net
assets of the Group. The liquidation of Golden Dragon has no
material impact on the financial position and operation of the Group
By Order of the Board
Yip Kwai Cheung
Executive Director
10 May 2000, Hong Kong
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