JUSCO STORES<0984> - Announcement
JUSCO STORES (HONG KONG) CO., LIMITED
(Incorporated in Hong Kong with limited liability)
Connected Transactions
Further to the press announcement made by Jusco Stores (Hong Kong) Co.,
Limited ("Company") on 12th April, 1999, the directors of the Company
announce further details of the current and possible future connected
transactions ("Connected Transactions") with Aeon Credit Service (Asia)
Company Limited ("Aeon") relating to payment of commissions by the Company
to Aeon for credit purchase facilities provided by Aeon to the Company's
customers.
Pursuant to the Listing Rules, the Company's independent shareholders will
be asked to approve the Connected Transactions at the annual general
meeting to be held on 16th June, 1999 ("Annual General Meeting").
Due to stronger than expected sales during the months of January and
February 1999, the commission payments exceeded the Prescribed Threshold
(as defined below) for the year ended 28th February, 1999 resulting in a
breach of the Listing Rules. The directors decided to obtain the required
independent shareholders' approval at the Annual General Meeting rather
than incurring the additional costs of convening a separate extraordinary
general meeting when they first became aware that the Prescribed Threshold
had been exceeded. The Stock Exchange has reserved its right to take such
action against the Company and/or the directors as it may consider
appropriate in respect of this breach.
The Connected Transactions
Parties: The Company, a listed company in Hong Kong engaged in the
operation of general merchandise stores.
Aeon, a listed company in Hong Kong principally engaged in the provision
of consumer credit finance services which include the issuance of credit
cards, the provision of vehicle financing, hire purchase facilities and
personal loans.
1. Principal terms of current Connected Transactions
As disclosed in the Company's press announcements on 30th October, 1998
and 12th April, 1999, the Company has agreed to pay a commission to Aeon
at rates agreed between the Company and Aeon from time to time for:
(i) each credit purchase made at the Company's stores using Aeon Card,
Aeon Jusco Card and Aeon Jusco Mastercard; and
(ii) each purchase of selected home appliances and furniture agreed
between the Company and Aeon from time to time made at the Company's
stores using interest-free hire purchase facilities provided by Aeon.
These are the Connected Transactions in respect of which the Company has
currently agreed to pay commissions to Aeon. The Company and Aeon may also
agree that commissions shall be paid by the Company to Aeon in respect of
such other credit cards, hire purchase facilities and other credit
purchase facilities as may be provided by Aeon to the Company's customers
at such rates and on such terms as may be agreed from time to time. The
current commission rates agreed to be paid by the Company for the various
credit purchase facilities currently provided by Aeon are:
Type of credit purchase facilities Commission rate
(i) Aeon Card 1.3%
(ii) Aeon Jusco Card 0.8%
(iii) Aeon Jusco Mastercard 0.8%
(iv) Interest-free hire purchase facilities*
-6 months 3%
-9 months 2.5%
-12 months 5%
-18 months 7.6%
-24 months 10%
* Currently only available for selected home appliances and furniture
agreed between the Company and Aeon from time to time.
The Company has been making commission payments to Aeon since the listing
of the Company and the aggregate commissions paid have been disclosed in
the Company's annual reports.
Except in relation to the Aeon Jusco Card and Aeon Jusco Mastercard, there
is no formal agreement between the Company and Aeon in respect of these
Connected Transactions. The directors, including the independent
non-executive directors, have confirmed that these Connected Transactions
(including the commission rates) are on normal commercial terms and are
fair and reasonable as far as the shareholders of the Company are
concerned.
2. Total commissions paid by the Company for the year ended 28th
February, 1999
For the financial year ended 28th February, 1999, the total commissions
paid by the Company to Aeon of HK$10,204,614 exceeded the Prescribed
Threshold (as defined below) by HK$204,614. This is the first year in
which the commissions paid have exceeded the Prescribed Threshold.
3. Approval of independent shareholders
Pursuant to the Listing Rules, the Company is required to obtain approval
from independent shareholders for the Connected Transactions if the
aggregate amount of the commissions paid by the Company in any financial
year exceeds the higher of HK$10 million and 3% of the book value of the
net tangible assets of the Company disclosed in the latest published
audited consolidated accounts of the Company in any financial year
("Prescribed Threshold").
In anticipation of continuing growth in the use of credit purchase
facilities provided by Aeon to customers of the Company, the directors
anticipate that the Prescribed Threshold is likely to continue to be
exceeded in the future, particularly as the Company and Aeon may also
agree from time to time for Aeon to provide other credit purchase
facilities to customers of the Company under which commissions will be
payable by the Company. The directors consider that it would be
impracticable to obtain approval from independent shareholders for the
Connected Transactions on a continuous basis. Accordingly, the directors
have decided to seek approval from the independent shareholders at the
Annual General Meeting to authorise the Company to continue to enter into
the Connected Transactions on such terms as may be agreed between the
Company and Aeon from time to time subject to the annual aggregate amount
of commission payments not exceeding 1% of the audited consolidated
turnover of the Company in the relevant financial year ("Higher Prescribed
Threshold"). In the financial year ended 28th February, 1999, the Higher
Prescribed Threshold will be approximately HK$27,656,580.00.
Pursuant to the Listing Rules, the Company has appointed the independent
non-executive director, Ms. Peggy Pei Lam, to advise the independent
shareholders on the terms and conditions of the Connected Transactions.
The Company has also appointed Tai Fook Capital Limited as independent
financial adviser ("Independent Financial Adviser") to advise the
independent non-executive director on the terms and conditions of the
Connected Transactions.
The advice of the Independent Financial Adviser together with the
independent non-executive director's recommendation will be included in an
explanatory circular to be sent to shareholders shortly.
4. Application for waiver from certain disclosure requirements under
the Listing Rules
The Stock Exchange has indicated that a waiver from the on-going
disclosure requirements under Chapter 14 of the Listing Rules with respect
to such Connected Transactions as may be agreed between the Company and
Aeon from time to time will be granted after the Annual General Meeting
subject to the following conditions:
(i) that the Higher Prescribed Threshold is approved by the
independent shareholders at the Annual General Meeting (the Higher
Prescribed Threshold will be subject to the independent shareholders'
review and approval every three years after its initial approval);
(ii) that the Connected Transactions are:
(a) entered into in the ordinary course of business of the Company;
(b) entered into on normal commercial terms; and
(c) fair and reasonable so far as the shareholders of the Company are
concerned;
(iii) that the aggregate amount of commission payments shall not exceed
the Higher Prescribed Threshold in any financial year;
(iv) that details of the Connected Transactions will be disclosed in
the next and successive annual reports of the Company in compliance with
Rules 14.25(1)(A) to (D) of the Listing Rules;
(v) the independent non-executive directors of the Company will review
annually the Connected Transactions and confirm in the directors' report
attached to the Company's annual report that the Connected Transactions
are conducted in the manner as stated in (i) above;
(vi) that the Company shall engage its auditors to review the Connected
Transactions annually and to provide the board of directors with a letter
(with a copy to the Stock Exchange) stating that the Connected
Transactions:
(a) have been approved by the Board;
(b) do not exceed the Higher Prescribed Threshold; and
(c) have been entered into on normal commercial terms or have been
entered into in accordance with the terms of the respective agreements
governing the Connected Transactions including the commission rates or,
where there is no formal written agreement, on terms which are no less
favourable than terms available from any independent third parties; and
(vii) the Company shall provide the Stock Exchange with an undertaking
that, for so long as the Company's shares are listed on the Stock
Exchange, it will provide the Company's auditors with full access to its
relevant records for the purpose of the auditors' review of the Connected
Transactions.
5. Circumstances where further approval required
If the aggregate amount of commission payments exceeds the Higher
Prescribed Threshold in any financial year, the Company will again seek
independent shareholders' approval.
Information for the shareholders of the Company
Jusco Co. Ltd is a substantial shareholder of the Company (holding, as at
the date hereof, approximately 70.96% of the Company's issued share
capital) and of Aeon (holding, as at the date hereof, approximately 66.2%
of Aeon's issued share capital). Aeon is also a shareholder of the Company
(holding, as at the date hereof, approximately 0.68% of the Company's
issued share capital). Jusco Co. Ltd and Aeon and their respective
associates (as defined under the Listing Rules) will abstain from voting
on the resolution to be proposed at the Annual General Meeting relating to
the Connected Transactions.
A shareholders' circular containing further information about the
Connected Transactions and including the opinion of the Independent
Financial Adviser and the recommendation of the independent non-executive
director will be sent to the shareholders shortly. Shareholders will also
be sent a notice of the Annual General Meeting.
The directors decided to obtain the required independent shareholders'
approval for the Connected Transactions at the Annual General Meeting
rather than incurring the additional costs of convening a separate
extraordinary general meeting when they first became aware that the
Prescribed Threshold had been exceeded as required by the Listing Rules.
The Stock Exchange has reserved its right to take such action against the
Company and/or the directors as it may consider appropriate in respect of
this breach.
By Order of the Board
Sozaburo Yamazaki
Managing Director
Hong Kong, 12th May, 1999
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