EXHIBIT 99.I.1(a)-2
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IMPORTANT
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IF YOU ARE IN DOUBT as to any aspect of this document or as to the action to be
taken, you should consult a stockbroker or other registered dealer in
securities, bank manager, solicitor, professional accountant or other
professional adviser.
IF YOU HAVE SOLD OR TRANSFERRED all your shares (including shares represented by
ADSs) in Brilliance China Automotive Holdings Limited, you should at once hand
this document to the purchaser or transferee or to the bank or stockbroker or
other agent through whom the sale or transfer was effected for transmission to
the purchaser or transferee.
The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing
Company Limited take no responsibility for the contents of this document, make
no representation as to its accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon the
whole or any part of the contents of this document.
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CONDITIONAL MANDATORY CASH OFFER
BY
(CLSA LOGO)
CLSA LIMITED
ON BEHALF OF THE OFFERORS
TO ACQUIRE ALL ISSUED SHARES, INCLUDING SHARES REPRESENTED BY ADSS,
IN THE SHARE CAPITAL OF
BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED
(incorporated in Bermuda with limited liability)
AND THE EMPLOYEE OPTIONS
(OTHER THAN THOSE ALREADY OWNED OR HELD BY THE OFFERORS
OR PARTIES ACTING IN CONCERT WITH THEM)
FINANCIAL ADVISER TO THE OFFERORS
ON THE CONDITIONAL MANDATORY CASH OFFER
CLSA EQUITY CAPITAL MARKETS LIMITED
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The procedure for acceptance of the Offer is set out in Appendix I to this
document and the accompanying form of acceptance and transfer (in the case of
Ordinary Shareholders) or the form of acceptance and cancellation of Employee
Options (in the case of holders of Employee Options) or the Letter of
Transmittal (in the case of holders of ADSs). Acceptances of the Offer by
Ordinary Shareholders and holders of Employee Options must be received by the
Registrar and the Company Secretary, respectively, not later than 4:00 p.m.
(Hong Kong time) on 6 February, 2003 (or such later time and/or date as the
Offerors may determine and announce) while acceptances of the Offer by holders
of ADSs must be received by the Depositary Agent not later than 6:00 p.m.
(E.S.T.) on 5 February, 2003 (or such later time and/or date as the Offerors may
determine and announce).
9 January, 2003
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EXPECTED TIMETABLE
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For Ordinary Shareholders
and holders of For holders
Employee Options of ADSs
(Hong Kong time) (E.S.T.)
Latest date for the posting of the Offeree Thursday, 23 January, 2003 Thursday, 23 January, 2003
Document (Note 1)
Latest acceptance time 4 p.m. on Thursday, 6 p.m. on Wednesday,
6 February, 2003 5 February, 2003
First closing time and date of the Offer 4 p.m. on Thursday, 6 p.m. on Wednesday,
(Note 2) 6 February, 2003 5 February, 2003
Latest time by which the Offer could be Monday, 10 March, 2003 Monday, 10 March, 2003
declared unconditional (Note 3)
Despatch of cheques to accepting Wednesday, 12 February, Wednesday, 12 February,
Ordinary Shareholders (if any), holders 2003 2003
of ADSs (if any) and accepting holders
of Employee Options (if any) and (if
applicable) return of Share certificates
and other documents to Ordinary
Shareholders, holders of ADSs and
holders of Employee Options (assuming
that the Offer becomes unconditional on
6 February, 2003)(Note 4)
Notes:
1. Under the Takeovers Code, the Company is required to post the Offeree
Document to Shareholders and holders of Employee Options within 14 days of
posting of this document (unless the Executive consents to a later date).
2. Under the Takeovers Code, where the Offeree Document is posted after the
date on which this document is posted, the Offer must remain open for
acceptance for at least 28 days following the date on which this document
is posted. The Offerors reserve the right to extend the Offer until such
date as it may determine in accordance with the Takeovers Code (or as
permitted by the Executive in accordance with the Takeovers Code). The
Offerors will issue a press announcement in relation to any extension of
the Offer, which announcement will state either the next closing date or
that the Offer will remain open until further notice. In the latter case,
at least 14 days' notice in writing will be given before the Offer is
closed to those Ordinary Shareholders, holders of ADSs and holders of
Employee Options who have not accepted the Offer.
3. In the event that the Offer has not been declared or has not become
unconditional on or before 10 March, 2003, being 60 days after posting of
this document, the Offer will lapse unless the Executive consents to a
later date. As stated in note 2 above, the Offerors reserve the right to
extend the Offer until such date as it may determine in accordance with the
Takeovers Code (or as permitted by the Executive in accordance with the
Takeovers Code), but there is no certainty that the Offer will be extended
beyond the first closing date stated above.
4. Remittances in respect of the consideration payable for the Shares and
Employee Options tendered under the Offer will be despatched as soon as
possible but in any event within 10 days of the later of the date of
receipt by the Registrar, the Company Secretary or the Depositary Agent (as
the case may be) of all the relevant documents to render the acceptance
under the Offer complete and valid, and the date when the Offer becomes or
is declared unconditional. Please note that the date is different from that
set out in the Announcement.
UNLESS OTHERWISE EXPRESSLY STATED, ALL TIME REFERENCES CONTAINED IN THIS
DOCUMENT ARE TO HONG KONG TIME.
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NOTICE TO ORDINARY SHAREHOLDERS AND HOLDERS OF ADSS IN THE US
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NOTICE TO ORDINARY SHAREHOLDERS AND HOLDERS OF ADSS IN THE US
The Offer is open to US Shareholders, including US holders of ADSs. The
Offer is being made for the securities of the Company, a company incorporated
outside the US. The Offer will be made in accordance with the requirements of
the Takeovers Code in Hong Kong and will be subject to disclosure and other
procedural requirements that are different from those under US law.
It may be difficult for US investors to enforce their rights and any claim
that they may have arising under US federal securities laws, since the Offerors
are located outside of the US, and all of the officers and directors of Huachen
and all of the Management Directors are residents of a country other than the
US. US investors may not be able to effect service of process upon a non-US
company or its officers or directors, or other non-US persons, for violations of
US securities laws. It may be difficult for a US investor to enforce a judgment
obtained from a US court against the Offerors.
The Offer in the US is being made pursuant to an exemption from certain US
tender offer rules provided by Rule 14d-1(c) under the Exchange Act.
Holders of Ordinary Shares and ADSs in the US should be aware that the
Offerors may purchase securities in the Company otherwise than under the Offer,
such as in the open market or through privately negotiated purchases. Save as
provided in the Call Option Agreements, the Offerors do not presently intend to
make any such purchases. If made, any purchases (other than pursuant to the Call
Option Agreements (which cannot occur until six months after the Offer ends or
closes)) will be disclosed by the publication of an announcement in accordance
with the requirements of the Takeovers Code.
Notwithstanding anything to the contrary herein, the Offer in the US is
being made directly by the Offerors and not by CLSA. References to the Offer
being made by CLSA contained herein should be read accordingly.
US holders of the Ordinary Shares and ADSs should be aware that tendering
the securities described herein may have tax consequences in the US. Such
consequences for investors who are residents in, or citizens of, the US may not
be described fully herein. See "US Federal Income Tax Consequences" in Appendix
I to this document. The Offerors strongly advise investors to consult their own
tax and financial advisers before making any decisions about the Offer.
This document, the form of acceptance and transfer and the Letter of
Transmittal, together with exhibits, are being filed on Form CB with the SEC
pursuant to Rule 14d-1(c) under the Exchange Act. Copies of the Form CB and any
amendments thereto, including exhibits, will be available without charge at the
SEC website at xxx.xxx.xxx.
Any questions or requests for assistance in completing the forms included
in the Letter of Transmittal or requests for additional copies of this document
with respect to Ordinary Shares represented by ADSs may be directed to the
Information Agent at: 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, XX,
telephone number (0-000) 000 0000 (for banks and brokerage firms) or (1-800) 207
3159 (for all others).
This document, the accompanying form of acceptance and transfer or the
accompanying Letter of Transmittal (as the case may be) contain important
information about the Offer. The Offerors urge holders of Ordinary Shares and
ADSs in the US to read them in their entirety before any decision is made with
regards to the Offer. The Offerors make no representation as to the adequacy or
fairness of the Offer Price.
This document has not been reviewed by any federal or state securities
commission or regulatory authority in the US, nor has any such commission or
authority passed upon the accuracy or adequacy of this document. Any
representation to the contrary is unlawful and may be a criminal offence.
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CONTENTS
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Page
DEFINITIONS 1
LETTER FROM CLSA ECM 6
APPENDIX I - DETAILED TERMS AND CONDITIONS OF THE OFFER 19
APPENDIX II - GENERAL INFORMATION 37
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DEFINITIONS
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In this document, the form of acceptance and transfer, the form of
acceptance and cancellation of Employee Options and the Letter of Transmittal,
unless the context requires otherwise, the following expressions have the
following meanings:
"acting in concert" Has the meaning defined in the Takeovers Code;
"ADR" An American depositary receipt evidencing an ADS;
"ADS" An American depositary share representing 100 Ordinary Shares;
"ADS Latest 6 p.m. on 5 February, 2003 (or such later time and/or date as the Offerors may
Acceptance Time" determine and announce);
"Announcement" The announcement of the Offer on the Announcement Date;
"Announcement Date" 19 December, 2002;
"Business Day" A day on which the Stock Exchange is open for the transaction of business;
"Call Option The call option agreements entered into between Huachen and each of
Agreements" the Management Directors relating to the grant by Huachen to each of
the Management Directors of a call option in respect of a specified number of
Ordinary Shares, totalling 346,305,630 Ordinary Shares in aggregate;
"CCASS" The Central Clearing and Settlement System established and operated by Hong Kong
Clearing;
"CLSA" CLSA Limited, a registered securities dealer registered under the Securities
Ordinance (Chapter 333 of the Laws of Hong Kong);
"CLSA ECM" CLSA Equity Capital Markets Limited, a registered investment adviser registered
under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong);
"Companies Act" The Companies Act 1981 of Bermuda (as amended);
"Company" Brilliance China Automotive Holdings Limited, a company incorporated in Bermuda
with limited liability whose Ordinary Shares and ADSs are listed on the Stock
Exchange and the New York Stock Exchange, respectively;
"Condition" The condition to which the Offer is subject, details of which are set out in
the paragraph headed "Condition of the Offer" in "Letter from CLSA ECM";
"Depositary Agent" The Bank of New York, the tender agent for the Offer with respect to the Ordinary
Shares represented by ADSs;
"Directors" The directors of the Company;
"Employee Options" Share options granted by the Company to certain employees of the Group pursuant
to the share option scheme adopted by the Company on 18 September, 1999;
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DEFINITIONS
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"E.S.T." Eastern Standard Time in the US;
"Exchange Act" The Securities Exchange Act of 1934, as amended, of the US;
"Executive" The Executive Director of the Corporate Finance Division of the SFC or any
delegate of the Executive Director;
"First Closing Date" 6 February, 2003, being the 28th day after the date of posting of this document;
"Form of Acceptance" In the case of Ordinary Shareholders, the form of acceptance and transfer or, in
the case of holders of Employee Options, the form of acceptance and cancellation
of Employee Options or, in the case of holders of ADSs, the Letter of Transmittal
accompanying this document, the provisions of which form part of the terms of
the Offer;
"Foundation" (CHINESE CHARACTERS) (Chinese Financial Education Development Foundation), which
was, prior to execution of the Principal Agreement, the controlling shareholder
of the Company, holding 39.446% of the issued share capital of the Company;
"Group" The Company and its subsidiaries;
"holders of ADSs" or Registered holders of ADSs or registered holders of Ordinary Shares represented
"holders of Ordinary by ADSs;
Shares represented by
ADSs"
"Hong Kong" The Hong Kong Special Administrative Region of the PRC;
"Hong Kong Clearing" Hong Kong Securities Clearing Company Limited;
"Huachen" (CHINESE CHARACTERS) (Huachen Automotive Group Holdings Company Limited*, a
company incorporated in the PRC with limited liability;
"Independent Shareholders other than the Offerors and their respective associates and parties
Shareholders" acting in concert with any of them;
"Information Agent" X.X. Xxxx & Co., Inc.;
"Latest Acceptance Time" 4 p.m. on 6 February, 2003;
"Latest Practicable Date" 6 January, 2003, being the latest practicable date prior to the printing of this
document for ascertaining certain information contained herein;
"Letter of Transmittal" The letter of transmittal for holders of ADSs in the form accompanying this
document;
"Listing Rules" The Rules Governing the Listing of Securities on the Stock Exchange;
"Management Directors" Xx. Xx, Xx. Xxxx, Xx. Xx and Mr. Xx, all of whom are executive Directors;
* For identification purposes only
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DEFINITIONS
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"Mr. He" Mr. Xx Xxx (also known as Ho To) of Suites 2303-06, Great Eagle Centre, 00
Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx, an executive Director;
"Xx. Xxxx" Xx. Xxxx Xxxx of Suites 2303-06, Great Eagle Centre, 00 Xxxxxxx Xxxx, Xxxxxxx,
Xxxx Xxxx, an executive Director;
"Mr. Su" Xx. Xx Xxxxx (also known as So Keung) of Suites 2303-06, Great Eagle Centre, 00
Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx, an executive Director;
"Xx. Xx" Xx. Xx Xxxx Xx (also known as Xx Xxx On) of Suites 2303-06, Great Eagle Centre,
00 Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx, an executive Director;
"New York Stock The New York Stock Exchange, Inc.;
Exchange"
"Offer" The conditional mandatory cash offer made by CLSA, on behalf of the Offerors,
to acquire all issued Shares (including Ordinary Shares represented by ADSs) in
the share capital of the Company and the Employee Options (other than those
already owned or held by the Offerors or parties acting in concert with them);
"Offer Document" This document setting out the details of the Offer, and the accompanying form of
acceptance and transfer (for Ordinary Shareholders), the form of acceptance and
cancellation of Employee Options (for holders of Employee Options) and the
Letter of Transmittal (for holders of ADSs), to be sent to Shareholders and
holders of the Employee Options;
"Offer Price" HK$0.10 per Ordinary Share;
"Offeree Document" The response document in respect of the Offer to be issued by the Company to
Shareholders and holders of Employee Options in accordance with the Takeovers Code;
"Offerors" Huachen together with the Management Directors;
"Ordinary Shareholders" Registered holders of Ordinary Shares;
"Ordinary Shares" Ordinary shares of US$0.01 par value each in the issued share capital of the
Company, not including ordinary shares in the form of ADSs;
"Overseas Shareholders whose addresses, as shown on the Register or the register of holders
Shareholders" of ADSs maintained by The Bank of New York, in its capacity as the depositary for
the ADSs (as the case may be), are outside of Hong Kong as at the Latest
Practicable Date;
"PRC" The People's Republic of China;
"Principal Agreement" The agreement for the sale and purchase of the Sale Shares dated 18 December,
2002 and entered into between Huachen and the Foundation;
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DEFINITIONS
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"Qualifying Shareholders" Shareholders whose names appear on the Register, or the register of holders of
ADSs maintained by The Bank of New York, in its capacity as the depositary for
the ADSs (as the case may be), at the Latest Acceptance Time;
"Register" The register of members of the Company;
"Registrar" Computershare Hong Kong Investor Services Limited, the Hong Kong branch share
registrar of the Company, which is situated at Shops 0000-0000, 00xx Xxxxx,
Xxxxxxxx Centre, 000 Xxxxx'x Xxxx Xxxx, Xxxx Xxxx;
"Relevant Period" The period between 14 May, 2002, being the commencement of the six-month period
before the Company's announcement dated 14 November, 2002 relating to a
possible change in the substantial shareholder of the Company, and the Latest
Practicable Date;
"Remaining Director" Xx. Xxxx Xxx Xxxx, the remaining executive Director;
"Sale Shares" 1,446,121,500 Ordinary Shares;
"SDI Ordinance" The Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of
Hong Kong);
"SEC" The Securities and Exchange Commission of the US;
"SFC" The Securities and Futures Commission of Hong Kong;
"Shareholders" Registered holders of Shares;
"Shares" Ordinary Shares of US$0.01 par value each in the issued share capital of the
Company, including Shares represented by ADSs;
"Shenyang Automotive" (CHINESE CHARACTERS) (Shenyang Brilliance JinBei Automobile Co. Ltd.) (formerly
known as (CHINESE CHARACTERS) (Shenyang JinBei Passenger Vehicle Manufacturing
Company Limited)), a Sino-foreign equity joint venture established under the
Sino-Foreign Equity Joint Venture Law of the PRC and beneficially owned as to
51% by the Company and as to 49% by Shenyang JinBei Automotive Company Limited*
(CHINESE CHARACTERS);
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
"Syndication Letter" The letter issued by Xxxxxxx to the Management Directors on 18 December, 2002
pursuant to which the Management Directors agreed to join Xxxxxxx as the
Offerors;
"Takeovers Code" The Hong Kong Code on Takeovers and Mergers;
"US" United States of America;
"HK$" Hong Kong dollars, the lawful currency of Hong Kong;
"RMB" Renminbi, the lawful currency of the PRC; and
* For identification purposes only
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DEFINITIONS
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"US$" US dollars, the lawful currency of the US.
For the purpose of this document, conversion of Hong Kong dollar amounts
into US dollar amounts is based on the 17 December, 2002 noon buying rate in New
York City for cable transfers as certified by customs purposes by the Federal
Reserve Bank of New York of HK$7.7986 = US$1.00. This conversion is for the
purpose of illustration only and does not constitute a representation that any
amounts have been, could have been, or may be, exchanged at this or any other
rate.
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LETTER FROM CLSA ECM
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(CLSA LOGO)
9 January, 2003
To the Independent Shareholders and holders of Employee Options
(other than the Management Directors)
Dear Sir or Madam,
CONDITIONAL MANDATORY CASH OFFER BY
CLSA LIMITED
ON BEHALF OF THE OFFERORS,
TO ACQUIRE ALL ISSUED SHARES, INCLUDING SHARES REPRESENTED BY ADSS,
IN THE SHARE CAPITAL OF
BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED AND THE EMPLOYEE OPTIONS
(OTHER THAN THOSE ALREADY OWNED OR HELD BY THE OFFERORS
OR PARTIES ACTING IN CONCERT WITH THEM)
INTRODUCTION
The Board announced on 19 December, 2002 that the Foundation and Huachen
had entered into the Principal Agreement pursuant to which Huachen purchased
from the Foundation a total of 1,446,121,500 Ordinary Shares representing
approximately 39.446% of the issued share capital of the Company and the
Foundation's entire shareholding interest in the Company. The price paid by
Xxxxxxx for the Sale Shares was HK$0.10 per Sale Share.
The Board also announced that in addition to the Principal Agreement, each
of the Management Directors entered into a Call Option Agreement with Huachen,
immediately after the Principal Agreement was entered into and after completion
of the sale and purchase of the Sale Shares pursuant thereto. Pursuant to the
terms of the Call Option Agreements, Huachen granted to each of the Management
Directors a call option in respect of a specified number of Ordinary Shares
totalling 346,305,630 Shares in aggregate representing approximately 9.446% of
the issued share capital of the Company, at an exercise price of HK$0.95 per
Ordinary Share. Each call option is exercisable in whole or in part at any time
during the period of 3 years commencing from the date falling 6 months after the
earlier of: (a) the end of the Offer; and (b) the close of the Offer in
accordance with this document.
Under the Takeovers Code, the Management Directors are presumed to be
acting in concert with Xxxxxxx. As a result, and in order to facilitate the
making of the Offer, the Management Directors agreed to join Huachen to make the
Offer and form part of the Offerors, on the terms and conditions set out in the
Syndication Letter which was issued by Huachen to the Management Directors on 18
December, 2002. Following completion of the Principal Agreement, the Offerors
and parties acting in concert with them, will be interested in 1,572,306,500
Shares, in aggregate, representing approximately 42.888% of the entire issued
share capital of the Company (assuming that there is no exercise by any of the
Management Directors of any of the Employee Options or of any of the call
options under the Call Option Agreements). In compliance with Rule 26.1 of the
Takeovers Code, the Offerors are required to make a conditional mandatory
general offer for all of the Shares not already beneficially owned by them and
any parties acting in concert with them. The Offer is being made pursuant to
this requirement of the Takeovers Code.
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LETTER FROM CLSA ECM
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The purpose of this document is to provide you with, among others,
information relating to the Offer. The principal terms of the Offer are set out
in this letter. Further terms of the Offer and other information required by the
Takeovers Code to be disclosed by the Offerors are set out in the appendices to
this document and the accompanying form of acceptance and transfer (in the case
of Ordinary Shareholders) or the form of acceptance and cancellation of Employee
Options (in the case of holders of Employee Options) or the Letter of
Transmittal (in the case of holders of ADSs).
Under the Takeovers Code, the Offeree Document will be sent to you as soon
as practicable, and in any event, no later than 14 days from the date of posting
of this document unless the consent of the Executive has been obtained. If there
is a delay in the despatch of the Offeree Document, the Offerors agree to extend
the First Closing Date by the same number of days. The Offeree Document will
contain, amongst other things, a letter from an independent board committee, to
be formed, to advise you on the Offer and a letter from the independent
financial adviser, to be appointed, to advise the independent board committee in
respect of the Offer. SHAREHOLDERS ARE STRONGLY ADVISED TO READ THE OFFEREE
DOCUMENT BEFORE DECIDING WHETHER OR NOT TO ACCEPT THE OFFER.
Instructions on how to accept the Offer in respect of Shares and Employee
Options are set out in Appendix I to this document and in the Form of
Acceptance. The form of acceptance and transfer or the form of acceptance and
cancellation of Employee Options (as the case may be) should be completed,
signed and returned so as to be received by the Registrar and the Company
Secretary, respectively, no later than 4:00 p.m. (Hong Kong time) on 6 February,
2003 (or such later time and/or date as the Offerors may determine and
announce). Instructions on how ADS holders can accept the Offer are set out in
Appendix I to this document and in the Letter of Transmittal, which should be
completed, signed and returned so as to be received by the Depositary Agent no
later than 6:00 p.m. (E.S.T.) on 5 February, 2003 (or such later time and/or
date as the Offerors may determine and announce).
THE OFFER
Pursuant to Rule 26.1 of the Takeovers Code, Huachen and the Management
Directors are required to make a conditional mandatory general offer for all of
the Shares (including Shares represented by ADSs) and the Employee Options not
already beneficially owned or held by Xxxxxxx and the Management Directors and
parties acting in concert with them. CLSA will make the conditional Offer on
behalf of the Offerors on the following basis:
FOR EVERY ORDINARY SHARE TENDERED HK$0.10 IN CASH
FOR SHARES REPRESENTED BY EACH ADS TENDERED HK$10.00 IN CASH (APPROXIMATELY US$1.28)
FOR EVERY EMPLOYEE OPTION TENDERED HK$0.01 IN CASH
The cash Offer Price per Share is equal to the price per Sale Share paid by
Huachen pursuant to the Principal Agreement. As there have been no other
dealings in the Shares (including ADSs) by the Offerors and parties acting in
concert with any one of them (if any) which are dealings for the purpose of Rule
26.3 of the Takeovers Code during the period from 14 May, 2002, being the
commencement of the six-month period before the Company's announcement dated 14
November, 2002 relating to a possible change in the substantial shareholder of
the Company, up to the date of this document, the price per Sale Share paid by
Xxxxxxx pursuant to the Principal Agreement represents the highest price paid by
the Offerors for the acquisition of Shares during the period from 14 May, 2002
up to the date of this document.
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LETTER FROM CLSA ECM
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By accepting the Offer, Shareholders will sell their Shares (whether in the
form of Ordinary Shares or represented by ADSs) and all rights attached to them
as at the Announcement Date to the Offerors at HK$0.10 per Ordinary Share or
HK$10.00 per ADS tendered, including the right to receive all dividends and
distributions to be declared, made or paid on or after the Announcement Date.
As the exercise price of the Employee Options is HK$1.896 per Ordinary
Share, which is well above the Offer Price per Ordinary Share and the closing
price of HK$1.53 per Ordinary Share on the Stock Exchange on the Latest
Practicable Date, the Employee Options carry no intrinsic value. Hence, the
price for the outstanding Employee Options under the Offer pursuant to the
Takeovers Code was set at a nominal value of HK$0.01 per Employee Option.
The Offerors agree that the Employee Options in respect of which
acceptances are tendered under the Offer will be cancelled by the Company.
CONDITION OF THE OFFER
Under the Takeovers Code, as the Offeree Document will be despatched after
the date of despatch of this document, the Offer is required to remain open for
acceptance for at least 28 days after the despatch of this document.
Accordingly, the making of the Offer is conditional upon the Offerors having
received acceptances of the Offer (and such acceptances not, where permitted,
having been withdrawn) by 4 p.m. on the date which is 28 days after the despatch
of this document (or such later time(s) and/or date(s) as the Offerors may,
subject to the rules of the Takeovers Code, decide) which, together with Shares
(including Shares represented by ADSs) already owned or acquired by the Offerors
before or during the Offer period, will result in the Offerors and parties
acting in concert with them (if any) holding more than 50% of the voting rights
of the Company. If the Offerors do not receive valid acceptances of the Offer by
such time and date, which together with Shares (including Shares represented by
ADSs) already owned or acquired by the Offerors and parties acting in concert
with them (if any) before or during the Offer period (as defined under the
Takeovers Code) will result in the Offerors and parties acting in concert with
them (if any) holding more than 50% of the voting rights of the Company, the
Offer cannot become unconditional and the Offer will lapse.
SHAREHOLDERS AND PROSPECTIVE INVESTORS SHOULD EXERCISE EXTREME CAUTION IN
DEALING IN THE SHARES.
COMPARISON OF THE OFFER PRICE
The Offer Price values the entire issued share capital of the Company (as
at the Announcement Date) at HK$366,605,290 and values the Shares not already
owned by the Offerors and parties acting in concert with them (if any) at
HK$209,374,640 and the Employee Options at HK$178,280. The Offer Price per
Ordinary Share represents:
(a) a discount of approximately 89.8% to the closing price of HK$0.98 per
Ordinary Share on the Stock Exchange and a discount of approximately
89.86% to the closing price of US$12.65 per ADS on the New York Stock
Exchange, on 13 November, 2002 (being the last Business Day prior to
the commencement of the Offer);
(b) a discount of approximately 93.10% to the closing price of HK$1.45 per
Ordinary Share on the Stock Exchange, and a discount of approximately
93.11% to the closing price of US$18.60 per ADS on the New York Stock
Exchange, on 17 December, 2002 (being the last full Business Day prior
to the suspension of trading of the Ordinary Shares on the Stock
Exchange and the ADSs on the New York Stock Exchange prior to the
publication of the Announcement);
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LETTER FROM CLSA ECM
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(c) a discount of approximately 91.73% to the average closing price on the
Stock Exchange of approximately HK$1.2090 per Ordinary Share, and a
discount of approximately 91.99% to the average closing price of
US$16.007 per ADS on the New York Stock Exchange, for the 30 Business
Days immediately prior to and including the Announcement Date;
(d) a discount of approximately 90.82% to the average closing price on the
Stock Exchange of approximately HK$1.0895 per Ordinary Share, and a
discount of approximately 90.78% to the average closing price per ADS
of US$13.912 on the New York Stock Exchange, for the 3 months ended on
17 December, 2002 (being the last full Business Day prior to
suspension of trading of the Ordinary Shares on the Stock Exchange and
the ADSs on the New York Stock Exchange prior to the publication of
the Announcement);
(e) a discount of approximately 93.11% to the audited consolidated net
asset value per Share of approximately HK$1.4508 per Share
(approximately US$18.603 per ADS) for the financial year ended 31
December, 2001, being the last audited full financial year of the
Group (where the audited consolidated net asset value was
RMB5,412,703,000 (approximately HK$5,126,371,011) and the weighted
average number of shares outstanding during the financial year ended
31 December, 2001 of 3,533,552,900 Shares);
(f) a multiple of approximately 0.41 times the Group's audited
consolidated after-tax earnings of approximately HK$0.24 per Share
(approximately US$0.031) for the year ended 31 December, 2001 (based
on the weighted average number of shares outstanding during the
financial year ended 31 December, 2001 of 3,533,552,900 Shares); and
(g) a discount of approximately 93.46% to the closing price of HK$1.53 per
Ordinary Share on the Stock Exchange, and a discount of approximately
93.46% to the closing price of US$19.60 per ADS on the New York Stock
Exchange, on the Latest Practicable Date.
THE OFFERORS MAKE NO REPRESENTATION AS TO THE ADEQUACY OR FAIRNESS OF THE
OFFER PRICE. SHAREHOLDERS ARE ADVISED NOT TO TAKE ANY ACTION IN CONNECTION WITH
THE OFFER UNTIL THEY HAVE RECEIVED ADVICE FROM THE INDEPENDENT BOARD COMMITTEE
OF THE COMPANY. SHAREHOLDERS ARE ALSO STRONGLY ADVISED TO SEEK INDEPENDENT
FINANCIAL ADVICE.
THE PRINCIPAL AGREEMENT
On 18 December, 2002, Huachen and the Foundation entered into the Principal
Agreement. Pursuant to the terms of the Principal Agreement, Huachen purchased a
total of 1,446,121,500 Ordinary Shares from the Foundation, representing the
Foundation's entire shareholding interest in the Company.
The Sale Shares represent approximately 39.446% of the existing and issued
share capital of the Company and the aggregate purchase price paid by Huachen to
the Foundation for the Sale Shares was HK$144,612,150, equivalent to HK$0.10 per
Ordinary Share. The purchase price was determined on the basis of arm's length
negotiations. Completion of the Principal Agreement took place upon signing and
the purchase price was paid in cash by Xxxxxxx to the Foundation.
Prior to entering into the Principal Agreement, neither Huachen nor any of
its respective associates (as defined in the Listing Rules) nor any party acting
in concert with it (other than the Management Directors) had any interest in the
Shares. Following completion of the Principal Agreement, Huachen held
1,446,121,500 Ordinary Shares, representing approximately 39.446% of the issued
share capital of the Company.
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THE CALL OPTION AGREEMENTS
On 18 December, 2002, each of the Management Directors entered into a Call
Option Agreement with Huachen, immediately after the Principal Agreement was
entered into and after completion of the sale and purchase of the Sale Shares
pursuant thereto. Pursuant to the terms of the Call Option Agreements, Huachen
granted to each of the Management Directors a call option in respect of a
specified number of Ordinary Shares, totalling 346,305,630 Ordinary Shares in
aggregate and comprising part of the Sale Shares, at an exercise price of
HK$0.95 per Ordinary Share. Each call option is exercisable in whole or in part
at any time during the period of 3 years commencing from the date falling 6
months after the earlier of: (a) the end of the Offer; and (b) the close of the
Offer in accordance with this document.
Details of the purchases of Ordinary Shares by the Management Directors
from Huachen (assuming that the options under the Call Option Agreements are
fully exercised) are set out in the table below:
NUMBER OF PERCENTAGE OF THE COMPANY'S
MANAGEMENT DIRECTOR ORDINARY SHARES ISSUED SHARE CAPITAL
Xx. Xx 92,911,266 Approximately 2.534%
Xx. Xxxx 84,464,788 Approximately 2.304%
Mr. Su 84,464,788 Approximately 2.304%
Mr. He 84,464,788 Approximately 2.304%
----------- --------------------
TOTAL 346,305,630 Approximately 9.446%
=========== ====================
Under the terms of the Call Option Agreements, the Management Directors may
elect to pay the exercise price in full or to pay 10% of the exercise price at
the time of exercise of the option. If the Management Directors elect the latter
payment option, the balance of the exercise price will be payable (free of any
interest charge) within a 3-year period after the date of completion of the
purchase of the relevant Ordinary Shares pursuant to the exercise of such
option. Upon exercise of the option and as security for the balance of the
exercise price, the Management Directors will pledge the Ordinary Shares which
are so purchased from Huachen in favour of Huachen by delivering all relevant
Share certificates to Huachen. Huachen will, upon receipt of the balance of the
exercise price (or any part thereof) from the relevant Management Directors,
release to such Management Director certificates for a prorated number of
Ordinary Shares. Each Management Director has undertaken and agreed with Huachen
that he will not create any encumbrance over or grant in favor of any person any
interests in or do anything which may in any way prejudice the value of the
relevant Ordinary Shares pledged with Huachen. Each Management Director is
entitled to exercise the voting rights attached to the relevant pledged Ordinary
Shares.
If all the options under the Call Option Agreements were fully exercised,
Huachen would hold a 30% interest in the Company.
Other than the Call Option Agreements, the Offerors do not have any
agreement, arrangement or understanding with any party to transfer any of the
Ordinary Shares or ADSs or Employee Options acquired pursuant to the Offer to
any other person.
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RATIONALE FOR THE PRINCIPAL AGREEMENT AND THE CALL OPTION AGREEMENTS
REASONS FOR THE SALE OF THE SALE SHARES BY THE FOUNDATION TO HUACHEN
As a non-governmental and non profit-making social body corporate, the
Foundation's principal aim is to promote the development of financial education
in the PRC. Accordingly, the Foundation has indicated that it is not consistent
or appropriate for it to be engaged in long-term investments or the operation or
management of enterprises such as the Company. Therefore, the Foundation has
indicated that it no longer wishes to hold the Sale Shares as a long-term
investment or be a controlling Shareholder.
In addition, the Foundation has indicated that it believes that, from the
perspective of the long-term development of the Company, sale of the Sale Shares
to Huachen is appropriate because:
- The Liaoning Provincial Government, as the ultimate shareholder of
Huachen, has decided to make the automotive industry one of the
industrial pillars of the provincial economy, and the Company's
subsidiary, Shenyang Automotive, is one of the leading enterprises in
Liaoning's automotive industry. The Liaoning Provincial Government,
through Huachen, will be able to provide support in ways that the
Foundation has neither the ability nor resources to provide;
- The Chinese automotive industry has traditionally been heavily
regulated by the Chinese Government. Given such regulation,
governmental involvement such as that which may be afforded by the
Liaoning Provincial Government as a controlling Shareholder, is likely
to be beneficial to the future development and success of the Company;
- Since the Company's principal operations and assets are located in
Liaoning Province, having Huachen as the largest Shareholder will be
advantageous from the perspective of effective shareholder supervision
and director support and supervision. For a number of years, the
Liaoning Provincial Government has been providing strong support to
the long-term development of the Company, for instance in the launch
of the Zhonghua Sedan production and the proposed joint venture
project between the Company and BMW. Therefore, the Liaoning
Provincial Government's participation in the Company as a controlling
Shareholder is a logical and natural extension to this support.
REASONS FOR THE GRANT OF THE CALL OPTIONS TO THE MANAGEMENT DIRECTORS BY XXXXXXX
Xxxxxxx agreed to grant the call options to the Management Directors in
order to further incentivise the Management Directors to continue in their
successful management of the Group and its business. It is anticipated that with
the opportunity to increase their shareholding in the Company, the Management
Directors will use their best efforts to further develop the business of the
Group to maximise Shareholders' return. The exercise price of the call options
(being HK$0.95 per Ordinary Share) was set at a discount of approximately 34.48%
to the then market price (being HK$1.45 on 17 December, 2002, being the last
full Business Day before trading in the Ordinary Shares was suspended pending
the making of the Announcement) as an incentive to the Management Directors and
represents a discount of approximately 21.42% to the 30-day average closing
price of the Ordinary Shares up to 17 December, 2002.
THE SYNDICATION LETTER
On 18 December, 2002, Huachen issued a Syndication Letter to the Management
Directors. Pursuant to the terms of the Syndication Letter, it was agreed that
the Management Directors would join Huachen as the Offerors in making the Offer
to Shareholders, but that none of the Management Directors would have any
obligation to purchase any Shares tendered in the Offer (if any) and that
Huachen would be obliged to provide and/or arrange for the requisite funding
required to enable the Offerors to, subject to the satisfaction of the
Condition, acquire all of the Shares in respect of which acceptances are
received at the close of the Offer and to acquire solely for its account any and
all Shares tendered in the Offer (if any). Huachen will,
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among other things, provide and/or arrange for the requisite funding for the
Offerors' share of stamp duty payable in respect of any such Shares and the fees
and expenses which The Bank of New York, in its capacity as the Depositary Agent
of the ADSs, may charge in connection with any Ordinary Shares represented by
ADSs which may be tendered pursuant to the Offer (if any) (including fees and
expenses which may be charged for cancelling any such ADSs (if any) and
withdrawing Shares for delivery to Hong Kong (if any)).
Under the Takeovers Code, the Management Directors are presumed to be
acting in concert with Xxxxxxx. As a result, and in order to facilitate the
making of the Offer, the Management Directors agreed to join Huachen to make the
Offer and form part of the Offerors, on the terms and conditions set out in the
Syndication Letter.
SHAREHOLDING STRUCTURE
The shareholding structure of the Company immediately prior to the signing
of the Principal Agreement and the Call Option Agreements, immediately after
closing of the Offer and immediately after the exercise of all options under the
Call Option Agreements was and will be as follows:
IMMEDIATELY PRIOR TO SIGNING OF THE PRINCIPAL AGREEMENT AND THE CALL OPTION
AGREEMENTS
(PRINCIPAL AGREEMENT AND THE CALL OPTION AGREEMENTS CHART)
(The Chart shows the shareholding in the Company immediately prior to signing of
the Principal Agreement and the Call Option Agreements of the Foundation, the
Management Directors, the Remaining Director and the Public. This shareholding,
for: (1) the Foundation is 1,446,121,500 Shares, representing 39.446%; (2) the
Management Directors is 126,185,000 Shares*, representing 3.442%; (3) the
Remaining Director is 2,800,000 Shares, representing 0.076%; and (4) the Public
is 2,090,946,400 Shares, representing 57.036%.)
* Please refer to paragraph 2 of Appendix II to this document for particulars
of Shares held by each Management Director.
IMMEDIATELY AFTER CLOSING OF THE OFFER (Note)
(CLOSING OF THE OFFER CHART)
(The Chart shows the shareholding in the Company immediately after closing of
the Offer of Huachen, the Management Directors, the Remaining Director and the
Public. This shareholding, for: (1) Huachen is 1,446,121,500 Shares,
representing 39.446%; (2) the Management Directors is 126,185,000 Shares*,
representing 3.442%; (3) the Remaining Director is 2,800,000 Shares,
representing 0.076%; and (4) the Public is 2,090,946,400 Shares, representing
57.036%.)
Note: Assuming that the Condition is not satisfied and the Offer lapses and
assuming that none of the Employee Options is exercised.
* Please refer to paragraph 2 of Appendix II to this document for particulars
of Shares to be held by each Management Director.
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IMMEDIATELY AFTER THE EXERCISE OF ALL THE OPTIONS UNDER THE CALL OPTION
AGREEMENTS AND ASSUMING THAT NONE OF THE EMPLOYEE OPTIONS IS EXERCISED
(CALL OPTION AGREEMENTS CHART)
(The Chart shows the shareholding in the Company immediately after the exercise
of the all of the options under the Call Option Agreements and assuming that
none of the Employee Options is exercised. This shareholding, for: (1) Huachen
is 1,099,815,870 Shares, representing 30%; (2) the Management Directors is
472,490,630 Shares*, representing 12.888%; (3) the Remaining Director is
2,800,000 Shares, representing 0.076%; and (4) the Public is 2,090,946,400
Shares, representing 57.036%.)
* Please refer to paragraph 2 of Appendix II to this document for particulars
of Shares to be held by each Management Director.
INFORMATION ON THE OFFERORS
HUACHEN
Huachen is a PRC state-owned limited liability company which was
established under the laws of the PRC on 16 September, 2002 and is wholly
beneficially owned by the Liaoning Provincial Government of the PRC. The
directors of Huachen are Xx. Xxxx Xxx Xxxx, Xx. Xxxx Xxxxx Xx, Xx. Xxx Xxx Xxxx
and Mr. Xxx Xx. Its principal place of business is located at 00 Xxxxxxxxxxx
Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx 000000, XXX. Xxxxxxx's
principal business is the investment in automotive-related companies in the PRC.
Huachen has a registered capital of RMB200,000,000. As at the Latest
Practicable Date, Huachen was wholly-owned by the Liaoning Provincial Government
of the PRC.
Immediately following completion of the Principal Agreement, Xxxxxxx's
shareholding interest in the Company was as detailed below:
APPROXIMATE SHAREHOLDING
NUMBER OF SHARES PERCENTAGE
1,446,121,500 Ordinary Shares 39.446%
If all the options under the Call Option Agreements were fully exercised,
Xxxxxxx's shareholding interest in the Company would be as detailed below:
APPROXIMATE SHAREHOLDING
NUMBER OF SHARES PERCENTAGE
1,099,815,870 Ordinary Shares 30%
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THE MANAGEMENT DIRECTORS
The Management Directors are members of the board of Directors, which
comprises of 5 executive Directors and 3 independent non-executive Directors.
Xxxxxxx does not have any intention of changing the composition of the board of
Directors. It is intended that all of the Directors will continue to remain in
office. Save for the Management Directors, brief particulars of whom are set out
below, and the Remaining Director, who is the holder of outstanding Employee
Options in respect of 2,338,000 Ordinary Shares, none of the other Directors is
a party to any of the matters disclosed in this document.
Xx. Xx, aged 40, has been Chairman of the board of Directors since June
2002 and a Director and Executive Vice President of the Company since 1993. He
is responsible for the overall management and strategy of the Company. Xx. Xx
was the Vice Chairman and the Chief Financial Officer of the Company from 1993
to June 2002. He is also a director of Shenyang Automotive. Xx. Xx holds a
Bachelor of Arts degree from the Beijing Foreign Languages Institute and a
Master of Business Administration degree from Fordham University in New York. He
has served from 1988 to 1993 as Deputy Manager of the Bank of China, New York
Branch.
Xx. Xxxx, aged 39, has been the Vice Chairman of the Company since June
2002, and a Director and Executive Vice President of the Company since 1993. Xx.
Xxxx also serves currently as Company Secretary. Xx. Xxxx is also a director of
Shenyang Automotive. He received a Bachelor of Arts degree from the Beijing
Foreign Languages Institute in 1984. He also received a Doctor of Jurisprudence
degree from the Columbia University School of Law in New York and is a member of
the Bar of the State of New York. From 1985 to 1986, Xx. Xxxx worked as an
attache in the Ministry of Foreign Affairs of China. From 1986 to 1990, Xx. Xxxx
was an international civil servant at the United Nations headquarters in New
York.
Xx. Xx, aged 36, has been the President and Chief Executive Officer of the
Company since June 2002, and a Director and Executive Vice President of the
Company since 1992. He is responsible for the administrative and production
management of the Company. Xx. Xx is also the Chairman and a director of
Shenyang Automotive. He holds a Bachelor of Arts degree from the People's
University of China, as well as a graduation certificate from the Graduate
School of the People's Bank of China. Xx. Xx also served as General Manager of
Shenyang Automotive from 1995 to 1997.
Mr. Xx, aged 30, has been the Chief Financial Officer of the Company since
June 2002 and a Director since 1998. He is responsible for the financial
management of the Company. He is also a director of Shenyang Automotive, a
company which he joined in 1995. Mr. He received a Bachelor of Arts degree from
the University of Finance and Economics in Shanghai. From 1993 to 1995, he
worked as the manager of the accounting department of Brilliance China Machinery
Co., Ltd. in Luoyang, China.
Save for the fact that the Offerors include four Directors, the Offerors
are independent of, not acting in concert with and are not connected with the
directors, chief executive and substantial shareholders of the Company, any of
its subsidiaries or any of their respective associates (as defined in the
Listing Rules).
TOTAL CONSIDERATION AND FINANCIAL RESOURCES
As at the Latest Practicable Date, there were 3,666,052,900 Shares in
issue, including Shares represented by ADSs, and outstanding Employee Options in
respect of 8,014,000 Ordinary Shares (other than those held by the Management
Directors). At a cash offer price of HK$0.10 per Ordinary Share and a cash offer
price of HK$0.01 per Employee Option, the Offer Price values the entire issued
share capital of the Company at HK$366,605,290 and values the Shares not already
owned by the Offerors and parties acting in concert with them (if any) at
HK$209,374,640 and the Employees Options (other than those held by the
Management Directors) at HK$80,140.
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CLSA ECM, the financial adviser to the Offerors, is satisfied that
sufficient financial resources are available to the Offerors to enable them to
satisfy acceptance of the Offer in full. The funds will be provided solely by
Huachen and are sourced from internal resources of Huachen.
INTENTIONS OF THE OFFERORS FOLLOWING THE OFFER
It is the intention of the Offerors to maintain the listing of the Ordinary
Shares on the Stock Exchange and (in the form of ADSs) on the New York Stock
Exchange. Upon expiry or lapse of the Offer, the directors of Huachen intend
that the Company shall continue with the existing businesses of the Group and do
not intend to propose or seek any major changes to the existing operations,
management or the continued employment of, or the employment terms and
conditions, of the employees of the Group. Xxxxxxx does not have any intention
of injecting any assets into the Company nor does it have any intention of
disposing of or transferring any of the Company's assets to Huachen or any other
party.
MAINTAINING THE LISTING STATUS OF THE COMPANY
It is the intention of the Offerors to maintain the listing of the Ordinary
Shares on the Stock Exchange and (in the form of ADSs) on the New York Stock
Exchange after the close of the Offer. The Offerors anticipate that the Company
will continue to be subject to the reporting and other informational
requirements of the Exchange Act. The Offerors have undertaken to the Stock
Exchange that appropriate steps will be taken as soon as possible following the
close of the Offer to ensure that not less than 25% of the Shares will be held
in public hands so as to ensure compliance with Rule 8.08 of the Listing Rules.
These include arranging for a sale of the existing Shares by existing
Shareholders (who are not regarded as members of the public for the purpose of
the Listing Rules) to persons who are independent of the chief executive, any
director and substantial shareholders of the Company or its subsidiaries and
their respective associates (as defined in the Listing Rules) and/or such other
steps as may be appropriate to restore the minimum percentage of securities of
the Company held in the public hands in accordance with the Listing Rules.
THE STOCK EXCHANGE HAS INDICATED THAT IF, UPON THE CLOSING OF THE OFFER,
LESS THAN 25% OF THE ISSUED SHARE CAPITAL OF THE COMPANY IS HELD IN THE PUBLIC
HANDS OR IF THE STOCK EXCHANGE BELIEVES THAT A FALSE MARKET EXISTS OR MAY EXIST
IN THE TRADING OF THE SHARES OR THAT THERE ARE INSUFFICIENT SHARES IN PUBLIC
HANDS TO MAINTAIN AN ORDERLY MARKET, IT WILL CONSIDER EXERCISING ITS DISCRETION
TO SUSPEND DEALINGS IN THE SHARES.
THE STOCK EXCHANGE HAS ALSO INDICATED THAT IT WILL CLOSELY MONITOR ALL
FUTURE ACQUISITIONS OR DISPOSALS OF ASSETS BY THE COMPANY. IF THE ORDINARY
SHARES REMAIN LISTED ON THE STOCK EXCHANGE, ANY ACQUISITIONS OR DISPOSALS OF
ASSETS BY THE GROUP WILL BE SUBJECT TO THE PROVISIONS OF THE LISTING RULES.
PURSUANT TO THE LISTING RULES, THE STOCK EXCHANGE HAS THE DISCRETION TO REQUIRE
THE COMPANY TO ISSUE A CIRCULAR TO ITS SHAREHOLDERS IRRESPECTIVE OF THE SIZE OF
ANY PROPOSED ACQUISITIONS AND DISPOSALS OF ASSETS BY THE GROUP, PARTICULARLY
WHEN SUCH PROPOSED ACQUISITIONS AND DISPOSALS OF ASSETS BY THE GROUP REPRESENT A
DEPARTURE FROM THE PRINCIPAL ACTIVITIES OF THE GROUP. THE STOCK EXCHANGE HAS THE
POWER TO AGGREGATE A SERIES OF ACQUISITIONS AND DISPOSALS OF ASSETS BY THE GROUP
AND ANY SUCH ACQUISITIONS OR DISPOSALS OF ASSETS MAY RESULT IN THE COMPANY BEING
TREATED AS IF IT WERE A NEW LISTING APPLICANT AND SUBJECT TO THE REQUIREMENTS
FOR NEW LISTING APPLICATION AS SET OUT IN THE LISTING RULES.
SETTLEMENT OF CONSIDERATION
The consideration due to Ordinary Shareholders who accept the Offer will be
paid (less stamp duty in respect of the Ordinary Shares tendered by them under
the Offer) within ten days of the later of the date on which duly completed
valid forms of acceptance and transfer, the relevant share certificate(s) and/or
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transfer receipt(s) and/or any other document(s) of title, and/or any
satisfactory indemnity or indemnities required in respect thereof, are received
by the Registrar to render acceptance of the Offer complete and valid, and the
date when the Offer becomes or is declared unconditional. Cheques for the
requisite cash amount will be sent to the person named in the form of acceptance
and transfer at the address stated in such form or, if no such name and address
is stated in such form, to the first-named registered holder of the relevant
Ordinary Shares (in the case of joint registered Ordinary Shareholders) or the
sole registered holder of the relevant Ordinary Shares at the registered address
shown in the Register. Ordinary Shareholders who accept the Offer may elect to
receive the consideration due to them (less stamp duty in respect of the
Ordinary Shares tendered by them under the Offer) in Hong Kong dollars or US
dollars by so indicating in the form of acceptance and transfer. If no such
indication is given in the form of acceptance and transfer, the relevant
Ordinary Shareholder will be deemed to have elected to receive payment of the
consideration in Hong Kong dollars. If the relevant Ordinary Shareholder elects
to receive payment of the consideration in US dollars, the relevant amount will
be converted into US dollars based on the 5 February, 2003 noon buying rate in
New York City for cable transfers as certified by customs purposes by the
Federal Reserve Bank of New York.
The consideration due to holders of Employee Options who accept the Offer
will be paid within ten days of the later of the date on which duly completed
valid forms of acceptance and cancellation of Employee Options and the relevant
certificate(s) of Employee Options are received by the Company Secretary to
render acceptance of the Offer complete and valid, and the date on which the
Offer becomes or is declared unconditional. Cheques for the requisite cash
amount will be sent to the holders of the Employee Options at their respective
addresses as they appear in their forms of acceptance and cancellation of
Employee Options.
Please refer to the sub-paragraph headed "Acceptance for Payment and
Payment for Ordinary Shares represented by ADSs" in paragraph 7 of Appendix I to
this document for details of payment for Ordinary Shares represented by ADSs
tendered and accepted by the Offerors pursuant to the Offer.
All cheques will be sent at the risk of the persons entitled to them and
none of the Offerors, CLSA, CLSA ECM nor the Registrar nor any of the directors
of Huachen nor any other person involved in the Offer will be responsible for
any loss or delay in transmission or any other liabilities that may arise as a
result thereof.
GENERAL
Pursuant to the Takeovers Code, the Company is required to (i) form an
independent board committee to consider the Offer and make recommendation to the
Shareholders regarding the acceptance of the Offer; and (ii) appoint an
independent financial adviser to advise the independent board committee
regarding the Offer.
Pursuant to the Takeovers Code, the Company is required to despatch the
Offeree Document containing, amongst other things, the advice from the
independent board committee and the independent financial adviser to the
independent board committee within 14 days after the posting of this document,
unless the consent of the Executive has been obtained. If there is a delay in
the despatch of the Offeree Document, the Offerors agree to extend the First
Closing Date by the same number of days.
The Offerors do not intend to exercise any right which may be available to
them under the provisions of Section 102 or 103 of the Companies Act to acquire
compulsorily any Shares not acquired under the Offer after the Offer has closed
or ended.
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Settlement of the consideration to which any Shareholder is entitled under
the Offer will be implemented in full in accordance with the terms of the Offer
without regard to any lien, right of set-off, counterclaim or other analogous
right to which the Offerors may otherwise be, or claim to be, entitled against
such Shareholder.
FURTHER TERMS OF THE OFFER
Further terms of the Offer, including the procedure for acceptance, the
acceptance period and revisions of the Offer, are set out in Appendix I to this
document and the accompanying form of acceptance and transfer (in respect of
Ordinary Shareholders) or the form of acceptance and cancellation of Employee
Options (in respect of holders of Employee Options) or the Letter of Transmittal
(in respect of holders of ADSs).
STAMP DUTY
Seller's ad valorem stamp duty arising in connection with acceptance of the
Offer at the rate of HK$1.00 for every HK$1,000 (or part thereof) of the value
of the consideration payable in respect of the relevant acceptance by Ordinary
Shareholders and ADS holders (if any) will be deducted from the amount payable
to such Ordinary Shareholders or ADS holders (if any) who accept the Offer. The
Offerors will hold the amount so deducted and will pay the same on behalf of
such Ordinary Shareholders or ADS holders (if any) in respect of the relevant
acceptance to the Stamp Duty Office in accordance with the Stamp Duty Ordinance
(Chapter 117 of the Laws of Hong Kong).
TAXATION
Your attention is drawn to paragraph 8 of Appendix I to this document which
summarises certain of the US federal income tax consequences of an acceptance of
the Offer for US holders of Ordinary Shares or ADSs. You are strongly advised to
consult your tax and financial advisers before making any decision about the
Offer.
PROCEDURE FOR ACCEPTANCE OF THE OFFER IN RESPECT OF ORDINARY SHARES REPRESENTED
BY ADSS
INSTRUCTIONS ON HOW TO ACCEPT THE OFFER IN RESPECT OF ORDINARY SHARES
REPRESENTED BY ADSS ARE PROVIDED IN APPENDIX I TO THIS DOCUMENT AND IN THE
LETTER OF TRANSMITTAL.
The Bank of New York, the depositary for the ADSs, has provided the
Offerors with a list of ADS holders for the purpose of disseminating the Offer
to holders of ADSs subject to the Offer. This document and the related materials
are being mailed by the Offerors to holders of record of the ADSs and are being
furnished by the Offerors to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder lists or who are listed as participants in a clearing agency's
security position listing, for transmittal to beneficial owners of the ADSs.
Where an acceptance relates to Ordinary Shares represented by ADSs,
settlement of any consideration payment pursuant to the Offer to which the
accepting ADS holder is entitled will be paid to the Depositary Agent on behalf
of the ADS holder. The Depositary Agent will issue, or cause to be issued, the
cheque for the cash consideration as instructed by the ADS holder in his or her
Letter of Transmittal.
To accept the Offer in respect of Ordinary Shares represented by ADSs, the
Letter of Transmittal must be completed in accordance with its instructions and
returned, together with any document(s) of title, so as to be received by the
Depositary Agent, if by post, at The Bank of New York, Tender & Exchange
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Department, P.O. Box 00000, Xxxxxx Xxxxxx Xxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, XX, and if by hand, at The Bank of New York, Tender & Exchange
Department, 000 Xxxxxxx Xxxxxx, Receive and Delivery Window, New York, New York
10286, US, by no later than 6:00 p.m. (E.S.T.) on 5 February, 2003 (or such
later time and/or date as the Offerors may determine and announce).
FEES AND EXPENSES OF THE DEPOSITARY AGENT
The Offerors will pay all fees and expenses of the Depositary Agent
incurred in connection with the Offer, including any fees and expenses
associated with a cancellation of ADSs and a withdrawal of Ordinary Shares
underlying the ADSs that may be effected by the Depositary Agent in order to
effect the tender of Ordinary Shares represented by ADSs.
ADDITIONAL INFORMATION
Your attention is also drawn to the additional information set out in the
appendices which form part of this document.
Yours faithfully,
For and on behalf of
CLSA EQUITY CAPITAL MARKETS LIMITED
XXX XXXXXXXXX
Managing Director
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APPENDIX I DETAILED TERMS AND CONDITIONS OF THE OFFER
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1. DETAILED TERMS AND CONDITIONS OF THE OFFER
1.1 THE OFFER
CLSA has made a conditional cash offer, on behalf of the Offerors,
to acquire all of the Shares (including Ordinary Shares represented by
ADSs) in issue not already beneficially owned by the Offerors and any
parties acting in concert with them, at a price of HK$0.10 per Share, or
HK$10.00 per ADS (approximately US$1.28), and all of the Employee Options
(other than those held by the Management Directors) at a price of HK$0.01
per Employee Option.
1.2 CONDITION OF THE OFFER
The Offer is conditional upon the Offerors having received
acceptances of the Offer (and such acceptances not, where permitted,
having been withdrawn) by 4:00 p.m. on the date which is 28 days after the
date of this document (or such later time(s) and/or date(s) as the
Offerors may, subject to the rules of the Takeovers Code, decide) which,
together with Shares (including Shares represented by ADSs) already owned
or acquired by the Offerors before or during the Offer period, will result
in the Offerors holding more than 50% of the voting rights of the Company.
If the Offerors do not receive valid acceptances of the Offer by such time
and date, which together with Shares (including Shares represented by
ADSs) already owned or acquired by the Offerors before or during the Offer
period will result in the Offerors holding more than 50% of the voting
rights of the Company, the Offer cannot become unconditional and the Offer
will lapse.
1.3 QUALIFYING SHAREHOLDERS AND HOLDERS OF EMPLOYEE OPTIONS
The Offer is open to Qualifying Shareholders and to holders of
Employee Options (other than the Management Directors).
1.4 ACCEPTANCE PERIOD AND REVISIONS
Although the Offerors do not intend to extend or revise the Offer,
they reserve the right to do so after the despatch of this document,
either in their respective terms and conditions or in the value or nature
of the consideration offered or otherwise in accordance with the relevant
provisions of the Takeovers Code. Unless the Offer has previously been
revised or extended, the Offer will close, in respect of Ordinary Shares
and Employee Options, on Thursday, 6 February, 2003 (Hong Kong time) and,
in respect of Ordinary Shares represented by ADS, on Wednesday, 5
February, 2003 (E.S.T.). All acceptances, in respect of Ordinary Shares
and Employee Options, must be received by the Registrar and the Company
Secretary, respectively, by 4:00 p.m. (Hong Kong time) on Thursday, 6
February, 2003 (or such later time and/or date as the Offerors may
determine and announce) and, in respect of Ordinary Shares represented by
ADS, by the Depositary Agent by 6:00 p.m. (E.S.T.) on Wednesday, 5
February, 2003 (or such later time and/or date as the Offerors may
determine and announce).
If the Offer is extended, the announcement of such extension will
state the next closing date and the Offer shall, unless previously
extended or revised, be closed on the subsequent closing date. In the
event that the closing date of the Offer is extended, any reference in
this document, the form of acceptance and transfer, the form of acceptance
and cancellation of Employee Options or the Letter of Transmittal to the
closing date shall, except where the context otherwise requires, be deemed
to refer to the closing date of the Offer as so extended.
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If the Offer is revised, the announcement of such revision will
state the next closing date. If the Offer is revised, it will remain open
for acceptance for a period of not less than 14 days and unless previously
extended or revised shall be closed on the subsequent closing date. The
benefit of any revision of the Offer will be available to any Shareholder
(including any holder of ADSs) or holder of Employee Options who has
previously accepted the Offer. The execution by or on behalf of any
Ordinary Shareholder or holder of Employee Options who has previously
accepted the Offer by properly completing, duly executing and delivering a
form of acceptance and transfer or a form of acceptance and cancellation
of Employee Options (as the case may be) to the Registrar or the Company
Secretary (as the case may be), or holders of ADSs who have accepted the
Offer by properly completing, duly executing and delivering a Letter of
Transmittal, and any other documents required by the Letter of
Transmittal, to the Depositary Agent, shall be deemed to constitute
acceptance of the revised Offer unless such holder becomes entitled to
withdraw his or her acceptance and duly does so.
1.5 TIME OF ACQUISITION OF ORDINARY SHARES, ORDINARY SHARES
REPRESENTED BY ADSS AND EMPLOYEE OPTIONS
Ordinary Shares, Ordinary Shares represented by ADSs and Employee
Options which are properly tendered pursuant to the Offer will be acquired
only if the Condition is satisfied and only when the Offer closes.
1.6 GENERAL
(a) All communications, notices, Forms of Acceptance, Letters of
Transmittal and/or, share certificates, ADRs, transfer
receipts, and/or other documents of title (and/or any
satisfactory indemnity or indemnities required in respect
thereof) and/or certificate(s) in respect of Employee Options
(if any) and remittances to be delivered by or sent to or from
the accepting Shareholders and holders of Employee Options
will be delivered by or sent to or from them, or their
designated agents, at their own risk, and none of the Company,
the Offerors, the Depositary Agent and any of their respective
agents accepts any liability for any loss in postage or any
other liabilities that may arise as a result thereof.
(b) The accidental omission to despatch this document and/or the
Form of Acceptance, the Letter of Transmittal, any related
documents or any of them to any person to whom the relevant
Offer is made will not invalidate the Offer in any way.
(c) References to the Offer, in this document and in the
accompanying form of acceptance and transfer in respect of
Ordinary Shares or the form of acceptance and cancellation of
Employee Options in respect of Employee Options obtainable
from the principal office of the Company or the Letter of
Transmittal with respect to ADSs obtainable from the principal
office of the Company or the Information Agent (with respect
to Ordinary Shares represented by ADSs) at 00 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10005, US, shall include any
extension and/or revision thereof.
(d) The Offer is made in accordance with the Takeovers Code.
(e) The English text of this document and the Form of Acceptance
(including the Letter of Transmittal) shall prevail over the
Chinese text for the purpose of interpretation.
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2. OVERSEAS SHAREHOLDERS AND/OR HOLDERS OF EMPLOYEE OPTIONS
As the Offer to persons not resident in Hong Kong may be affected by the
laws of the relevant jurisdiction in which they are resident, Overseas
Shareholders and/or holders of Employee Options who are citizens or residents or
nationals of a jurisdiction outside Hong Kong should inform themselves about and
observe any applicable legal or regulatory requirements and where necessary seek
legal advice. It is the responsibility of Overseas Shareholders and/or holders
of Employee Options who wish to accept the Offer to satisfy themselves as to the
full observance of the laws of the relevant jurisdiction in connection therewith
(including the obtaining of any governmental or other consent which may be
required or the compliance with other necessary formalities and the payment of
any transfer or other taxes due in respect of such jurisdiction).
The Offerors are not aware of any jurisdiction where the making of the
Offer is prohibited by administrative or judicial action pursuant to any valid
state of the US or non-US jurisdiction statute. If the Offerors become aware of
any valid state of the US or non-US jurisdiction statute prohibiting the making
of the Offer or acceptance of ADSs pursuant thereto, the Offerors will make a
good faith effort to comply with such state of the US or non-US jurisdiction
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, the Offerors cannot comply with any such state of
the US or non-US jurisdiction statute, the Offer will not be made to (and
tenders will not be accepted from or on behalf of) holders of Ordinary Shares or
ADSs or Employee Options in such state of the US or non-US jurisdiction.
INFORMATION FOR US SHAREHOLDERS
The Offer is open to US Shareholders, including US holders of ADSs. The
Offer is being made for the securities of the Company, a company incorporated
outside the US. The Offer will be made in accordance with the requirements of
the Takeovers Code in Hong Kong and will be subject to disclosure and other
procedural requirements that are different from those under US law.
It may be difficult for US investors to enforce their rights and any claim
that they may have arising under US federal securities laws, since the Offerors
are located outside of the US, and all of the officers and directors of Huachen
and all of the Management Directors are residents of a country other than the
US. US investors may not be able to effect service of process upon a non-US
company or its officers or directors, or other non-US persons, for violations of
the US securities laws. It may be difficult for a US investor to enforce a
judgement obtained from a US court against the Offerors.
The Offer in the US is being made pursuant to an exemption from certain US
tender offer rules provided by Rule 14d-1(c) under the Exchange Act.
Holders of Ordinary Shares and ADSs in the US should be aware that the
Offerors may purchase securities in the Company otherwise than under the Offer,
such as in the open market or through privately negotiated purchases. Save as
provided in the Call Option Agreements, the Offerors do not presently intend to
make any such purchases. If made, any purchases (other than pursuant to the Call
Option Agreements (which cannot occur until six months after the Offer ends or
closes)) will be disclosed by publishing an announcement in accordance with the
requirements of the Takeovers Code.
The Offer in the US is being made directly by the Offerors and not by
CLSA. References to the Offer being made by CLSA contained herein should be read
accordingly.
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US holders of the Ordinary Shares and ADSs should be aware that tendering
the securities described herein may have tax consequences in the US. Such
consequences for investors who are residents in, or citizens of, the US may not
be described fully herein. See "US Federal Income Tax Consequences" in this
Appendix. The Offerors strongly advise investors to consult their own tax and
financial advisers before making any decisions about the Offer.
This document, the form of acceptance and transfer and the Letter of
Transmittal, together with exhibits, are being filed on Form CB with the SEC
pursuant to Rule 14d-1(c) under the Exchange Act. Copies of the Form CB and any
amendments thereto, including exhibits, will be available without charge at the
SEC website at xxx.xxx.xxx.
Any questions or requests for assistance in completing the forms included
in the Letter of Transmittal or requests for additional copies of this document
with respect to holders of Ordinary Shares represented by ADSs may be directed
to the Information Agent at: 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, XX, telephone number (0-000) 000 0000 (for banks and brokerage firms) or
(0-000) 000 0000 (for all others).
This document, the accompanying form of acceptance and transfer or the
accompanying Letter of Transmittal (as the case may be) contain important
information about the Offer. The Offerors urge holders of Ordinary Shares and
ADSs in the US to read them in their entirety before any decision is made with
regards to the Offer. The Offerors make no representation as to the adequacy or
fairness of the Offer Price.
This document has not been reviewed by any federal or state securities
commission or regulatory authority in the US, nor has any such commission or
authority passed upon the accuracy or adequacy of this document. Any
representation to the contrary is unlawful and may be a criminal offence.
Please also refer to the paragraph headed "The Syndication Letter" in
"Letter from CLSA ECM" and the sub-paragraph headed "Fees and Expenses and Stamp
Duty" in paragraph 7 of this Appendix for further information on the payment of
any fees and expenses which The Bank of New York, in its capacity as the
depositary of the ADSs, may charge in connection with any Ordinary Shares
represented by ADSs which may be tendered pursuant to the Offer (if any).
3. PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF ORDINARY SHARES AND
EMPLOYEE OPTIONS
(a) If the Share certificate(s) and/or transfer receipt(s) and/or any
other document(s) of title (and/or any satisfactory indemnity or
indemnities required in respect thereof) in respect of your Ordinary
Shares is/are in your name, and you wish to accept the Offer, you
must send the form of acceptance and transfer duly completed
together with the relevant Share certificate(s) and/or transfer
receipt(s) and/or other document(s) of title (and/or any
satisfactory indemnity or indemnities required in respect thereof)
to the Registrar.
(b) If the Share certificate(s) and/or transfer receipt(s) and/or any
other document(s) of the title (and/or any satisfactory indemnity or
indemnities required in respect thereof) in respect of your Ordinary
Shares is/are in the name of a nominee company or some name other
than your own, and you wish to accept the Offer, you must either:
(i) lodge your Share certificate(s) and/or transfer receipt(s)
and/or any other document(s) of title (and/or any satisfactory
indemnity or indemnities required in respect thereof) with the
nominee company, or other nominee, with instructions
authorising it to accept the Offer on your behalf and
requesting it to deliver the form of acceptance and transfer
duly completed
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together with the relevant Share certificate(s) and/or
transfer receipt(s) and/or other document(s) of title
(and/or any satisfactory indemnity or indemnities required in
respect thereof) to the Registrar; or
(ii) arrange for the Ordinary Shares to be registered in your name
by the Company through the Registrar and send the form of
acceptance and transfer duly completed together with the
relevant Share certificate(s) and/or transfer receipt(s)
and/or any other document(s) of title (and/or satisfactory
indemnity or indemnities required in respect thereof) to the
Registrar.
(c) If you have lodged (a) transfer(s) of any of your Ordinary Shares
for registration in your name and have not yet received your Share
certificate(s) and you wish to accept the Offer, you should
nevertheless complete the form of acceptance and transfer and
deliver it to the Registrar together with the transfer receipt(s)
duly signed by yourself. Such action will be deemed to be
irrevocable authority to the Offerors or their respective agent(s)
to collect from the Company or the Registrar on your behalf the
relevant Share certificate(s) when issued and to deliver such
certificate(s) to the Registrar and to authorise and instruct the
Registrar to hold such certificate(s), subject to the terms of the
Offer, as if it was/they were delivered to the Registrar with the
form of acceptance and transfer.
(d) If the Share certificate(s) and/or transfer receipt(s) and/or any
other document(s) of title (and/or any satisfactory indemnity or
indemnities required in respect thereof) is/are not readily
available and/or is/are lost and you wish to accept the Offer, the
form of acceptance and transfer should nevertheless be completed
and delivered to the Registrar together with a letter stating that
you have lost one or more of your Share certificate(s) and/or
transfer receipt(s)and/or other documents of title or that it/they
is/are not readily available. If you find such document(s) or if
it/they becomes/become available, the relevant Share certificate(s)
and/or transfer receipt(s) and/or any other document(s) of title
(and/or any satisfactory indemnity or indemnities required in
respect thereof) should be forwarded to the Registrar as soon as
possible thereafter. If you have lost your Share certificate(s),
you should also write to the Registrar for a form of letter of
indemnity which, when completed in accordance with the instructions
given, should be returned to the Registrar.
(e) If the certificate(s) (if any) in respect of your Employee Option(s)
is/are lost, and you wish to accept the Offer, the relevant form of
acceptance and cancellation of Employee Options should nevertheless
be completed and delivered to the principal place of business of the
Company in Hong Kong together with a letter stating that you have
lost one or more of the certificate(s) to which the relevant
Employee Option(s) relate (if any). If you find such certificate(s)
subsequently, the relevant certificate(s) of Employee Options (if
any) should be forwarded to the principal place of business of the
Company in Hong Kong as soon as possible thereafter.
(f) Seller's ad valorem stamp duty for the Ordinary Shares registered on
the Hong Kong branch register arising in connection with the
acceptance of the Offer will be payable by each Ordinary Shareholder
who accepts the Offer at the rate of HK$1 for every HK$1,000 or part
thereof for the consideration payable by the Offerors in respect of
the Ordinary Shares being sold by such Ordinary Shareholder. Such
stamp duty will be deducted from the cash amount due to such
Ordinary Shareholder on acceptance of the Offer. The Offerors will
hold the amount so deducted and will pay the same on behalf of such
Ordinary Shareholders in respect of the relevant acceptance to the
Stamp Duty Office in accordance with the Stamp Duty Ordinance
(Chapter 117 of the Laws of Hong Kong).
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(g) No acknowledgement of receipt for any Form(s) of Acceptance, Share
certificate(s), transfer receipt(s), certificate(s) in respect of
Employee Options and/or any other document(s) of title (and, or any
satisfactory indemnity or indemnities required in respect thereof)
will be given.
4. ANNOUNCEMENTS
By 6:00 p.m. (Hong Kong time) on the closing date of the Offer, or such
later time and/or date as the Executive may agree, the Offerors shall inform the
Executive and the Stock Exchange of its intentions in relation to the extension
or expiry of the Offer. The Offerors shall publish a teletext announcement
through the Stock Exchange and disseminated through news wire services in the
ordinary course in the US by 7:00 p.m. (Hong Kong time) on the closing date of
the Offer stating whether the Offer has been revised or extended. The Offerors
shall publish an announcement on the next Business Day stating whether the Offer
have been revised, extended or have expired. The announcement shall state the
total number of Shares and rights over Shares and Employee Options:
-- for which acceptances of the Offer have been received;
-- held, controlled or directed by the Offerors or persons acting in
concert with it before the Offer period; and
-- acquired or agreed to be acquired during the Offer period by the
Offerors or any parties acting in concert with it.
The announcement shall include the details of voting rights, rights over
shares, derivatives and arrangements as required by Rule 3.5(c), (d) and (f) of
the Takeovers Code. The announcement shall also specify the percentages of the
relevant classes of share capital, and the percentages of voting rights,
representing by these numbers.
In computing the number of Shares represented by acceptances, there may be
included or excluded, for announcement purposes, acceptances which are not in
all respects in order or are subject to verification. The number of these
acceptances will be separately stated.
As required under the Takeovers Code and the Listing Rules, all
announcements in relation to the Offer in respect of which the Executive and (if
applicable) the Stock Exchange have confirmed that they have no further comments
thereon, must be published as a paid announcement in at least one leading
English language newspaper and one leading Chinese language newspaper, being in
each case a newspaper which is published daily and circulating generally in Hong
Kong.
5. NO RIGHT OF WITHDRAWAL
Acceptances of the Offer will be irrevocable and cannot be withdrawn,
except in the circumstances set out in Rule 17 of the Takeovers Code (which is
to the effect that if the Offer has not become unconditional on the 21st day
from the First Closing Date, acceptances of the Offer may be withdrawn) and in
Rule 19.2 of the Takeovers Code (which is to the effect that if the Offerors are
unable to comply with any requirements of making announcements under Rule 19 of
the Takeovers Code relating to the Offer, the Executive may require that
Shareholders (including holders of ADSs) and holders of Employee Options who
have accepted the Offer be granted a right to withdraw such acceptance, on terms
acceptable to the Executive). A further announcement will be made by the
Offerors if any such right of withdrawal (as described in this paragraph) is
available to Shareholders (including holders of ADSs) and holders of Employee
Options.
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6. EFFECT OF ACCEPTANCE OF THE OFFER BY QUALIFYING SHAREHOLDERS (OTHER THAN
THOSE WHO ARE HOLDERS OF ADSS) AND BY HOLDERS OF EMPLOYEE OPTIONS
EFFECT OF ACCEPTANCE OF THE OFFER BY QUALIFYING SHAREHOLDERS (OTHER THAN
THOSE WHO ARE HOLDERS OF ADSS)
Each Ordinary Shareholder by whom, or on whose behalf, a Form of
Acceptance is executed irrevocably undertakes, represents, warrants and
agrees to and with the Offerors and CLSA, so as to bind him or her, his or
her personal representatives, heirs, successors and assigns, to the
following effect:
(a) that the execution of the relevant Form of Acceptance whether
or not any boxes are completed shall constitute:
(i) an acceptance of the Offer (as the case may be) in
respect of the number of Ordinary Shares (as the case
may be) in the Company inserted or deemed to be inserted
in such form on and subject to the terms and conditions
set out or referred to in this document and in such form
and that, subject only to the rights of withdrawal set
out or referred to in paragraph 5 of this Appendix, each
such acceptance and election shall be irrevocable; and
(ii) an undertaking to execute any further documents, take
any further actions and give any further assurances
which may be required in connection with the foregoing
including, without limitation, to secure the transfer of
the Ordinary Shares in respect of which he or she has
accepted or is deemed to have accepted the Offer, as the
case may be, to the Offerors and the benefit of all
dividends and distributions paid, made or declared on or
after the Announcement Date;
(b) the Ordinary Shares acquired under the Offer are sold by such
person or persons free from all claims, equities, liens,
charges, encumbrances, rights of pre-emption and any other
third party rights of any nature and together with all rights
attaching to them, including in respect of the Ordinary Shares
the right to receive in full all dividends and other
distributions, if any, declared, made or paid after the
Announcement Date;
(c) if such acceptor is an overseas holder, that he or she has
observed the laws of all relevant territories, obtained any
and all requisite governmental or other consents, complied
with all requisite formalities and paid any and all transfer
or other taxes due from him or her in connection with such
acceptance in the territory, that he or she has not taken or
omitted to take any action which will or may result in the
Offerors, CLSA or any other person acting or being in breach
of the legal or regulatory requirements of any territory in
connection with the Offer or his or her acceptance thereof and
he or she is permitted under all applicable laws to receive
and accept the Offer (and any revision thereof), and that such
acceptance is valid and binding in accordance with all
applicable laws;
(d) that such Ordinary Shareholder will deliver or procure the
delivery to the Registrar of his or her Share certificate(s)
and/or transfer receipt(s) and/or any other document(s) of
title and/or any satisfactory indemnity or indemnities in
respect thereof in respect of all Ordinary Shares held by him
or her in respect of which the Offer has been accepted or is
deemed to have been accepted and not validly withdrawn, or an
indemnity acceptable to the Offerors in lieu thereof, as soon
as possible;
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(e) that the execution and delivery of the relevant Form(s) of
Acceptance to the Registrar constitutes a separate and
irrevocable authority and request to the Offerors to procure
the despatch by post of a cheque in respect of any cash
payment in connection with the Offer, at the risk of such
Ordinary Shareholder, to the person or agent whose name and
address is set out in the relevant Form(s) of Acceptance or,
if none is set out, to the first-named registered holder of
the relevant Ordinary Shares (in the case of joint registered
Ordinary Shareholders) or the sole registered holder of the
relevant Ordinary Shares at the registered address shown in
the register of members of the Company;
(f) that in relation to the Offer, he or she will do all such acts
and things as shall be necessary or expedient to vest to the
Offerors, or their respective nominees or such other person as
it may decide, the Ordinary Shares to which such acceptance
relates;
(g) that he or she submits, in relation to all matters arising
out of the Offer and the Forms of Acceptance, to the
jurisdiction of the courts of Hong Kong;
(h) acceptance of the Offer by any nominee will be deemed to
constitute a warranty by such nominee to the Offeror that the
number of Ordinary Shares indicated in the Form of Acceptance
is the aggregate number of Ordinary Shares held by such
nominee for such beneficial owners who are accepting the
Offer;
(i) the Offer and all acceptances thereof, the Form of Acceptance
and all contracts made pursuant to the Offer, and all action
taken or made or deemed to be taken or made pursuant to these
terms are governed by and shall be construed in accordance
with the laws of Hong Kong. Execution of a Form of Acceptance
by or on behalf of the relevant Ordinary Shareholder will
constitute such Ordinary Shareholder's submission in relation
to all matters arising out of the Offer and the relevant
Form of Acceptance to the jurisdiction of the courts of
Hong Kong and the Ordinary Shareholder's agreement that
nothing shall limit the right of the Offerors or CLSA to
bring an action, suit or proceeding arising out of or in
connection with the creation, validity, effect,
interpretation or performance of the legal relations
established in relation to the Offer and the Forms of
Acceptance in any other manner permitted by law or in any
court of competent jurisdiction;
(j) in relation to any acceptance of the Offer in respect of a
holding of Ordinary Shares which is in uncertificated form,
the Offerors reserve the right to make such alternations,
additions or modifications as may be necessary or desirable to
give effect to any purported acceptance of the Offer whether
in order to comply with the facilities or requirements or
CCASS or otherwise, provided such alternations, additions or
modifications are consistent with the requirements of the
Takeovers Code or are otherwise made with the consent of the
Executive;
(k) the terms, provisions, instructions and authorities contained
in or deemed to be contained in the Form of Acceptance
constitute part of the terms of the Offer. The provisions of
this Appendix shall be deemed to be incorporated into the Form
of Acceptance; and
(l) due execution of the Form of Acceptance in respect of the
Offer will constitute an authority to the Offerors, CLSA, any
director of the Huachen or of CLSA or their respective agents
to complete, amend and execute on behalf of the Ordinary
Shareholders who accept the Offer, the Form of Acceptance and
any document and, in relation to the
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Offer, to do any other act that may be necessary or expedient
for the purpose of vesting in Huachen, or such person or
persons as it may direct, the Ordinary Shares which are the
subject of such acceptance.
EFFECT OF ACCEPTANCE OF THE OFFER BY HOLDERS OF EMPLOYEE OPTIONS
Each holder of Employee Options who executes a form of acceptance
and cancellation of Employee Options irrevocably undertakes, represents,
warrants and agrees to and with the Offerors and the Company to the
following effect:
(a) that the execution of the form of acceptance and cancellation
of Employee Options shall constitute an acceptance of the
Offer in respect of the number of Ordinary Shares in respect
of which the Employee Options to subscribe is surrendered for
cancellation is inserted or deemed to be inserted in such form
on and subject to the terms and conditions set out or referred
to in this document and in such form of acceptance and
cancellation of Employee Options and that, subject only to the
rights of withdrawal set out or referred to in paragraph 5 of
this Appendix, each such acceptance and cancellation shall be
irrevocable;
(b) that the execution and delivery of the form of acceptance and
cancellation of Employee Options to the Company Secretary at
the Company's principal place of business in Hong Kong
constitutes a separate and irrevocable authority and request
to the Offerors to procure the despatch of a cheque in respect
of such cash payment in connection with the Offer, at the risk
of such holder of Employee Options, to such holder of Employee
Options at the address in his or her form of acceptance and
cancellation of Employee Options;
(c) that he or she submits, in relation to all matters arising out
of the Offer and the form of acceptance and cancellation of
Employee Options, to the jurisdiction of the courts of Hong
Kong;
(d) the Offer and all acceptances thereof, the form of acceptance
and cancellation of Employee Options and all contracts made
pursuant to the Offer, and all action taken or made or deemed
to be taken or made pursuant to these terms are governed by
and construed in accordance with the laws of Hong Kong.
Execution of a form of acceptance and cancellation of
Employee Options by a holder of Employee Options will
constitute such holder's submission in relation to all
matters arising out of the Offer and the relevant form of
acceptance and cancellation of Employee Options to the
jurisdiction of the courts of Hong Kong and the holder's
agreement that nothing shall limit the right of the Offerors
to bring an action, suit or proceeding arising out of or in
connection with the creation, validity, effect,
interpretation or performance of the legal relations
established in relation to the Offer and the form of
acceptance and cancellation of Employee Options in any other
manner permitted by law or in any court of competent
jurisdiction;
(e) the terms, provisions, instructions and authorities contained
in or deemed to be contained in the form of acceptance and
cancellation of Employee Options constitute part of the terms
of the Offer. The provisions of this Appendix shall be deemed
to be incorporated into the form of acceptance and
cancellation of Employee Options; and
(f) due execution of the form of acceptance and cancellation of
Employee Options in respect of the Offer will constitute an
authority to the Offerors, any director of Huachen or their
respective agents to complete, amend and execute on behalf of
the holder of Employee Options who accepts the Offer, the form
of acceptance and cancellation of Employee
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Options and any document and, in relation to the Offer, to
do any other act that may be necessary or expedient for the
purpose of cancelling the rights under the Employee Options
which are the subject of such acceptance.
7. THE ADSS
PROCEDURE FOR TENDERING ORDINARY SHARES REPRESENTED BY ADSS
VALID TENDER OF ORDINARY SHARES REPRESENTED BY ADSS. This section
should be read together with the instructions in the Letter of
Transmittal. The provisions of this section shall be deemed to be
incorporated in and form a part of the Letter of Transmittal. The
instructions printed on the Letter of Transmittal form a part of the terms
of the Offer with respect to the ADSs.
In order to avoid "backup withholding" of US federal income tax at a
rate of 30% and other related tax penalties, each holder of ADSs
participating in the Offer is urged to provide the Offerors with such
holder's correct taxpayer identification number on Form W-9, or if
appropriate, a certificate of such holder's non-US status on a Form
W-8BEN, W-8IMY, W-8ECI or W-8EXP. A substitute Form W-9 has been included
as part of the Offer materials and a Form W-8BEN, W-8IMY, W-8ECI or W-8EXP
may be obtained from the Information Agent. For more information, see "US
Federal Income Tax Consequences" in paragraph 8 of Appendix I to this
document.
In order for ADSs to be validly tendered a properly completed and
duly executed Letter of Transmittal, with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a
book-entry delivery of ADSs, and any other required documents, must be
received by the Depositary Agent at one of its addresses set forth on the
Letter of Transmittal before the ADS Latest Acceptance Time and either (A)
the ADR certificates evidencing the tendered ADSs must be received by the
Depositary Agent along with the Letter of Transmittal or (B) the ADSs must
be tendered by book-entry transfer described below and a Book-Entry
Confirmation (as defined below) must be received by the Depositary Agent,
in each case before the ADS Latest Acceptance Time.
The Offer in respect of Ordinary Shares represented by ADSs shall be
validly accepted by the tendering holder upon delivery of a Letter of
Transmittal, the relevant ADR certificates evidencing ADSs (or, in the
case of a book-entry transfer, an Agent's Message and Book-Entry
Confirmation (each as defined below)) and other required documents to the
Depositary Agent by holders of ADSs (without any further action by the
Depositary Agent), subject to the terms and conditions of this Offer and
in the Letter of Transmittal. The acceptance of the Offer by a tendering
holder of ADSs under the procedures described above will be deemed to
constitute a binding agreement between such tendering holder of ADSs and
the Offerors upon the terms of the Offer.
IF ADR CERTIFICATES EVIDENCING ADSS HAVE BEEN DELIVERED BY A HOLDER
OF ADSS TO TENDER THE ORDINARY SHARES REPRESENTED BY SUCH ADSS, THEN THE
ORDINARY SHARES REPRESENTED BY SUCH ADSS MAY NOT ALSO BE SEPARATELY
TENDERED.
THE OFFERORS ADVISE EACH HOLDER OF ADSS THAT THE METHOD THE HOLDER
CHOOSES TO SEND ADR CERTIFICATES AND THE PROPER COMPLETION OF AND DELIVERY
OF THE LETTER OF TRANSMITTAL AND OTHER DOCUMENTS, INCLUDING DELIVERY
THROUGH THE DEPOSITORY TRUST COMPANY ("BOOK-ENTRY TRANSFER FACILITY"), IS
AT THE OPTION AND RISK OF HOLDER, AND THAT DELIVERY WILL BE DEEMED MADE
ONLY WHEN THE PROPER MATERIALS ARE ACTUALLY RECEIVED BY THE DEPOSITARY
AGENT (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY
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APPENDIX I DETAILED TERMS AND CONDITIONS OF THE OFFER
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BOOK ENTRY CONFIRMATION (AS DEFINED BELOW)). IF DELIVERY IS MADE BY MAIL,
THE OFFERORS RECOMMEND REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED. IN ALL CASES, A HOLDER OF ADSS SHOULD ALLOW SUFFICIENT
TIME TO ENSURE DELIVERY BEFORE THE ADS LATEST ACCEPTANCE TIME.
BOOK-ENTRY TRANSFER. The Depositary Agent will establish an account
with respect to interests in ADSs held in book-entry form at the Book-Entry
Transfer Facility for purposes of the Offer within two New York business
days after the date of this document. Any financial institution that is a
participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of ADSs by causing the Book-Entry Transfer Facility to
transfer such ADSs into the Depositary Agent's account at the Book-Entry
Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures for transfer.
Although delivery of interests in ADSs evidenced by ADRs may be
effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a copy of it), properly completed and duly
executed with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry delivery of interests in
ADSs, and any other required documents, must, in any case, be transmitted
to and received by the Depositary Agent at one of its addresses set forth
on the Letter of Transmittal before the ADS Latest Acceptance Time for ADSs
evidenced by ADRs to be validly tendered.
The term "Agent's Message" means a message transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary Agent, and
forming a part of the Book-Entry Confirmation, which states that such
Book-Entry Transfer Facility has received an express acknowledgment from
the participant in the Book-Entry Transfer Facility tendering the ADSs,
that such participant has received and agrees to be bound by the terms of
the Letter of Transmittal and that the Offerors may enforce such agreement
against the participant.
The term "Book-Entry Confirmation" means the confirmation of a
book-entry transfer of ADSs into the Depositary Agent's account at the
Book-Entry Transfer Facility.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE
DEPOSITARY AGENT AT ONE OF ITS ADDRESSES SET FORTH ON THE LETTER OF
TRANSMITTAL. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
ACCORDING TO THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY AGENT.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a financial institution (most commercial banks, savings and
loan associations and brokerage houses) which is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Program or the Stock Exchanges Medallion Program (each, an
"Eligible Institution") unless the ADSs tendered thereby are tendered: (i)
by a registered holder of ADSs who has not completed either the box
entitled "Special Delivery Instructions" or the box entitled. "Special
Payment Instructions" in the Letter of Transmittal, or (ii) for the account
of an Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If an ADR certificate is registered in the name of a person other than
the signer of the Letter of Transmittal, then the ADR certificate must be
endorsed or accompanied by appropriate stock powers, signed exactly as the
name(s) of the registered holder(s) appear on the ADR certificate, with the
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APPENDIX I DETAILED TERMS AND CONDITIONS OF THE OFFER
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signature(s) on such ADR certificate or stock powers guaranteed by an
Eligible Institution. Evidence of the payment of any applicable stock
transfer tax must also be presented. See Instructions 1 and 5 of the Letter
of Transmittal.
If the ADRs are forwarded separately to the Depositary Agent, a
properly completed and duly executed Letter of Transmittal (or a copy of
it) must accompany each such delivery.
Notwithstanding any other provisions hereof, payment for Ordinary
Shares represented by ADSs accepted for payment pursuant to the Offer will
in all cases be made only after receipt by the Depositary Agent within the
permitted period of time of ADRs evidencing such ADSs, or of Book-Entry
Confirmation, and a properly completed and duly executed Letter of
Transmittal (or copy of it), together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and any other documents required by the Letter of Transmittal, and only if
the Offer has become unconditional.
PARTIAL TENDERS. If fewer than all the ADSs evidenced by any ADRs
delivered to the Depositary Agent are to be tendered, the holder of those
ADSs should so indicate in the Letter of Transmittal by filling in the
number of ADSs that are to be tendered in the box entitled "Number of ADSs
Tendered". In such case, a new ADR for the remainder of the ADSs
represented by the surrendered ADR will be sent to the person(s) signing
such Letter of Transmittal (or delivered as such person properly indicates
in such Letter of Transmittal) as promptly as practicable following the ADS
Latest Acceptance Time.
APPOINTMENT AS PROXY AND ATTORNEY. By tendering ADSs, a holder
irrevocably appoints each of the Offerors and each of their directors and
officers from time to time jointly, and each of them severally, such
holder's true and lawful agents, attorneys-in-fact and proxies in the
manner set forth in the Letter of Transmittal, each with full power of
substitution, to receive all benefits and otherwise exercise all rights of
beneficial ownership of the ADSs tendered by such holder and accepted for
payment by the Offerors and with respect to any and all other securities
issued or issuable in respect of such ADSs on or after the date of this
document. All such appointments will be considered coupled with an interest
in the tendered ADSs. Any such appointment will be effective when, and only
to the extent that, the Offerors accept for payment ADSs tendered by such
holder as provided in this document. Upon the effectiveness of such
appointment, all prior powers of attorney, proxies and consents given by
such holder with respect to the ADSs will, without further action, be
revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given by such holder (and, if given, will not be deemed
effective). The designees of the Offerors will thereby be empowered to
exercise all voting and other rights with respect to such ADSs (and any
such other securities or rights issued or issuable in respect of such
securities) in respect of any annual, special or adjourned meeting of
otherwise, as they in their sole discretion deem proper. The Offerors
reserve the right to require that, in order for ADSs to be deemed validly
tendered, immediately upon the Offerors' acceptance for payment of Ordinary
Shares represented by such ADSs, the Offerors must be able to exercise full
voting, consent and other rights with respect to such ADSs (and any such
other securities or rights issued or issuable in respect of such
securities) including voting at any meeting of the holders of Ordinary
Shares or ADSs.
DETERMINATION OF VALIDITY OF THE TENDER OF ORDINARY SHARES AND ADSS.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tendered Ordinary Shares and
ADSs under any of the procedures described above will be determined by the
Offerors in their sole discretion and in accordance with Hong Kong law.
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The Offerors reserve the absolute right to reject any and all tenders
of ADSs and Ordinary Shares determined by it not to be properly tendered.
The Offerors reserve the right to reject any and all tenders of any ADSs
and Ordinary Shares if their acceptance may, in the opinion of the
Offerors' counsel, be unlawful. If any Ordinary Shares represented by ADSs
tendered are not purchased because of an invalid tender, the ADR
certificates evidencing such ADSs and other documents relating to such
ADSs, if any, will be returned, without expense to, but at the risk of, the
tendering holder (or, in the case of ADSs delivered by book-entry transfer,
the appropriate book-entry transfer will be effected), as promptly as
practicable. Any tendered Ordinary Shares not purchased because of an
invalid tender will similarly be returned by transfer of such Ordinary
Shares to the holder.
Neither the Offerors, nor the Depositary Agent, nor any other person
shall be under any duty to give or incur any liability for failure to give
any notification of defects or irregularities. Tenders of ADSs and Ordinary
Shares will not be deemed to have been made until all such defects or
irregularities have been cured or waived or satisfied before the ADS Latest
Acceptance Time.
WITHDRAWAL RIGHTS
EXCEPT AS SET OUT IN PARAGRAPH 5 IN THIS APPENDIX, TENDERS OF ORDINARY
SHARES REPRESENTED BY ADSS ARE IRREVOCABLE. ONLY IF PERMITTED MAY TENDERS
OF ORDINARY SHARES REPRESENTED BY ADSS INTO THE OFFER BE WITHDRAWN IN
ACCORDANCE WITH THE PROCEDURES SET FORTH BELOW.
Any withdrawals of tenders of Ordinary Shares represented by ADSs
effected pursuant to paragraph 5 in this Appendix may not be rescinded, and
any ADSs properly withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, the Offer may be accepted again in
respect of the withdrawn ADSs by the holder re-tendering those ADSs by
following one of the procedures described in "Procedure For Tendering
Ordinary Shares represented by ADSs".
For purposes of the Offer, a withdrawal of ADSs is considered to be a
withdrawal of the underlying Ordinary Shares. Withdrawals may be made in
whole or in part.
WITHDRAWAL OF ADSS. Withdrawal of ADSs is subject to the requirements
set out in paragraph 5 of this Appendix. For a withdrawal to be effective,
a written or facsimile notice of withdrawal of such ADSs must be received
by the Depositary Agent at one of its addresses set forth on the Letter of
Transmittal. Any such notice must specify the name of the person who
tendered the ADSs to be withdrawn and (if ADRs have been tendered) the name
of the registered holder, if different from that of the person who tendered
the ADSs evidenced by such ADRs. If ADRs evidencing ADSs to be withdrawn
have been delivered or otherwise identified to the Depositary Agent, then
before the physical release of such ADRs, the certificate numbers shown on
the particular ADRs evidencing the ADSs to be withdrawn must be submitted
to the Depositary Agent, and the signature(s) on the form of withdrawal
must be guaranteed by an Eligible Institution, unless interests in ADSs
evidenced by ADRs have been tendered for the account of an Eligible
Institution. If ADSs evidenced by ADRs to be withdrawn have been tendered
pursuant to the procedure for book-entry transfer as set forth in
"Procedure For Tendering Ordinary Shares represented by ADSs", any such
notice of withdrawal must also specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn ADSs,
in which case a notice of withdrawal will be effective if delivered to the
Depositary Agent as provided in the Offer Document.
DETERMINATION OF VALIDITY OF WITHDRAWAL OF ADSS. All questions as to
the form and validity (including time of receipt) of any notice of
withdrawal will be determined by the Offerors, in their sole discretion,
which determination shall be final and binding. No withdrawal of ADSs shall
be deemed to have been properly made until all defects and irregularities
have been cured
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APPENDIX I DETAILED TERMS AND CONDITIONS OF THE OFFER
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or waived. None of the Offerors, the Company, the Depositary Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for
failure to give such notification.
EFFECT OF ACCEPTANCE OF THE OFFER BY HOLDERS OF ORDINARY SHARES REPRESENTED
BY ADSS
Each holder of Ordinary Shares represented by ADSs by whom, or on
whose behalf, a Letter of Transmittal is executed irrevocably undertakes,
represents, warrants and agrees to and with the Offerors and CLSA, so as to
bind him or her, his or her personal representatives, heirs, successors and
assigns, to the following effect:
(a) the Ordinary Shares and/or ADSs acquired under the Offer are sold
by such person or persons free from all claims, equities, liens,
charges, encumbrances, rights of pre-emption and any other third
party rights of any nature and together with all rights attaching
to them, including in respect of the Shares the right to receive
in full all dividends and other distributions, if any, declared,
made or paid after the Announcement Date;
(b) that he or she submits, in relation to all matters arising out of
the Offer and the Letter of Transmittal, to the jurisdiction of
the courts of Hong Kong; and
(c) the Offer and all acceptances thereof, the Letter of Transmittal
and all contracts made pursuant to the Offer, and all action
taken or made or deemed to be taken or made pursuant to these
terms are governed by and shall be construed in accordance with
the laws of Hong Kong. Execution of a Letter of Transmittal by or
on behalf of the relevant holder of Ordinary Shares represented
by ADSs will constitute such holder's submission in relation to
all matters arising out of the Offer and the relevant Letter of
Transmittal to the jurisdiction of the courts of Hong Kong and
the holder's agreement that nothing shall limit the right of the
Offerors or CLSA to bring an action, suit or proceeding arising
out of or in connection with the creation, validity, effect,
interpretation or performance of the legal relations established
in relation to the Offer and the Letter of Transmittal in any
other manner permitted by law or in any court of competent
jurisdiction.
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR ORDINARY SHARES REPRESENTED BY ADSS
PAYMENT. Upon the terms and subject to the conditions of the Offer,
the Offerors will accept for payment and will pay for all Ordinary Shares
represented by ADSs validly tendered prior to the ADS Latest Acceptance
Time and not properly withdrawn in accordance with "Withdrawal Rights"
promptly after the later to occur of:
- the ADS Latest Acceptance Time; and
- the satisfaction or waiver of the conditions set forth in
"Detailed Terms and Conditions of the Offer-Condition of the
Offer".
Holders of Ordinary Shares represented by ADSs tendered may elect to
be paid in Hong Kong dollars or US dollars by so indicating in the Letter
of Transmittal. If no such indication is given in the Letter of
Transmittal, the relevant ADS holder will be deemed to have elected to
receive payment of the consideration in US dollars. If the relevant ADS
holder elects to be paid in US dollars, the relevant amount will be
converted into US dollars based on the 5 February, 2003 noon buying rate in
New York City for cable transfers as certified by customs purposes by the
Federal Reserve Bank of New York.
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ACCEPTANCE FOR PAYMENT OF ORDINARY SHARES REPRESENTED BY ADSs. In all
cases, payment for Ordinary Shares represented by ADSs tendered and
accepted for payment pursuant to the Offer will be made only after receipt
by the Depositary Agent within the permitted period of time of:
- either (A) the ADR certificates which evidence such ADSs or (B)
Book-Entry Confirmation of transfer of such ADSs into the
Book-Entry Transfer Facility pursuant to the procedure set forth
in "Procedure for Tendering Ordinary Shares represented by ADSs";
- either (A) the Letter of Transmittal, properly completed and duly
executed with any required signature guarantees, or (B) an
Agent's Message in connection with a book-entry transfer; and
- any other documents required by the Letter of Transmittal. For
purposes of the Offer, the Offerors will be deemed to have
accepted for payment, and thereby purchased, Ordinary Shares
represented by ADSs properly tendered to the Offerors and not
withdrawn if and when the Offerors give oral or written notice to
the Depositary Agent of the Offerors' acceptance of such Ordinary
Shares represented by ADSs for payment, and only if the Offer has
become unconditional. Payment for Ordinary Shares represented by
ADSs accepted pursuant to the Offer will be made by deposit of
the aggregate purchase price for those Ordinary Shares
represented by ADSs with the Depositary Agent, which under the
Letter of Transmittal will be appointed and will act as agent for
tendering holders for the purpose of receiving payment from the
Offerors and transmitting payment in accordance with such
tendering holder's instructions in the Letter of Transmittal. The
Offerors' acceptance for payment of ADSs tendered pursuant to the
Offer will constitute a binding agreement between the tendering
holder and the Offerors upon the terms and subject to the
conditions of the Offer.
Upon the deposit of funds with the Depositary Agent for the purpose of
making payments to tendering holders of ADSs, the Offerors' obligation to
make such payment shall be satisfied and tendering holders must thereafter
look solely to the Depositary Agent for payment of amounts owed to them by
reason of the acceptance for payment of Ordinary Shares represented by ADSs
pursuant to the Offer.
FEES AND EXPENSES AND STAMP DUTY
All fees and expenses of the Depositary Agent incurred in connection
with the Offer, including any fees and expenses associated with a
cancellation of ADSs and a withdrawal of the Ordinary Shares underlying the
ADSs that may be effected by the Depositary Agent in order to effect the
tender of the Ordinary Shares represented by ADSs, will be paid by the
Offerors. Seller's ad valorem stamp duty arising in connection with the
acceptance of the Offer at the rate of HK$1.00 for every HK$1,000 (or part
thereof) of the value of the consideration payable in respect of the
relevant acceptance by holders of Ordinary Shares and ADSs (if any) will be
deducted by the Offerors from the amount payable by the Offerors to such
holders who accept the Offer. The Offerors will pay the stamp duty on
behalf of such holders in respect of the relevant acceptance to the Stamp
Duty Office in Hong Kong in accordance with the Stamp Duty Ordinance
(Chapter 117 of the Laws of Hong Kong). Other than the above, the Offerors
will pay any stock transfer taxes (including stamp duty) incident to the
transfer to it of validly tendered ADSs and Ordinary Shares, except as
otherwise provided in the Letter of Transmittal and as indicated elsewhere
in this document, as well as any charges and expenses of the Depositary
Agent.
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If any tendered Ordinary Shares represented by ADSs are not purchased
pursuant to the Offer for any reason, or if the Offer lapses in accordance
with its terms, or if ADRs are submitted evidencing more ADSs than are
tendered, then ADRs evidencing unpurchased or untendered Ordinary Shares
represented by ADSs will be returned, without expense to the tendering
holder (or, in the case of Ordinary Shares represented by ADSs tendered by
book-entry transfer, the appropriate book-entry transfer will be effected),
as promptly as practicable following the lapse of the Offer.
8. US FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain US federal income tax
consequences associated with tendering the Ordinary Shares, including Ordinary
Shares represented by ADSs, for cash pursuant to the Offer. The summary is based
on currently existing provisions in the Internal Revenue Code of 1986, as
amended (the "Code"), applicable Treasury regulations promulgated and proposed
under the Code, judicial decisions and administrative interpretations, all of
which are subject to change, possibly with retroactive effect. US holders of
ADSs or Ordinary Shares should consult their own tax and financial advisers
before making any decisions about the Offer.
Holders of ADSs will be treated for US federal income tax purposes as
owners of the Ordinary Shares underlying the ADSs. Accordingly, except as noted,
the US federal income tax consequences apply equally to holders of the ADSs and
Ordinary Shares.
This discussion does not address all aspects of US federal income taxation
that may be relevant to particular holders in light of their personal
circumstances, including, for example, holders who acquired their ADSs and
Ordinary Shares through the exercise of options or otherwise as compensation,
holders who are deemed by the application of Sections 304(c) and/or 318(a) of
the Code to constructively own Shares owned by the Offerors, or holders subject
to special tax rules (e.g. financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, grantor trusts,
dealers or traders in securities or currencies, holders who hold their ADSs or
Shares as part of hedging, straddle, conversion or other integrated
transactions, US persons whose functional currency is not the US dollar, persons
who have ceased to be US citizens or to be taxed as resident aliens,
pass-through entities, and tax-exempt entities, or holders who do not hold their
ADSs and Shares as "capital assets" within the meaning of Section 1221 of the
Code (generally, property held for investment)).
As used in this paragraph 8, a "US holder" means a beneficial owner of ADSs
and Ordinary Shares, who is, for US federal income tax purposes:
- An individual who is a citizen or resident of the US as defined in the
Code;
- A corporation (or an entity taxable as a corporation for US federal
income tax purposes) created or organised in or under the laws of the
US or of any political subdivision thereof;
- An estate, the income of which is subject to US federal income
taxation regardless of its source; or
- A trust, either if (a) a US court is able to exercise primary
supervision over the administration of the trust and one or more US
persons have the authority to control all substantial decisions of the
trust or (b) the trust has a valid election in effect under applicable
US Treasury regulations to be treated as a US person.
A beneficial owner of ADSs and Ordinary Shares who is not a US holder is a
"non-US holder".
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US HOLDERS
A US holder will generally realise gain or loss in an amount equal to the
difference between the amount realised on the Offer and the holder's adjusted
tax basis in the ADSs and Ordinary Shares tendered. The amount realised will
equal the US dollar amount of cash received from the Offerors. Any such gain or
loss recognised generally will be capital in nature and will be treated as
long-term capital gain or loss if the US holder has held the ADSs and Ordinary
Shares for more than one year at the time of tendering the securities. Such gain
or loss generally will be income or loss from a foreign source for US foreign
tax credit limitation purposes.
NON-US HOLDERS
A non-US holder will generally not be required to pay US federal income or
withholding tax on any gain realised as a result of the exchange of ADSs and
Ordinary Shares for cash pursuant to the Offer, unless such gain is effectively
connected with the conduct by such non-US holder of a trade or business within
the US.
US HOLDERS AND NON-US HOLDERS: INFORMATION AND BACKUP WITHHOLDING
Payments made to holders pursuant to the Offer may be subject to
information reporting to the US Internal Revenue Service and to US backup
withholding at a rate of 30% on the gross amount of such payments. Backup
withholding will not apply to a holder who furnishes a correct taxpayer
identification number or a certificate of foreign status and makes certain other
required certifications, or who is otherwise exempt from backup withholding
(e.g., a US corporation).
To avoid information reporting and backup withholding, holders of the ADSs
and US holders of Ordinary Shares who tender their Shares pursuant to the Offer
should provide the Depositary Agent with a properly executed substitute Form
W-9, in the case of a US holder, or a properly executed Form W-8BEN, W-8ECI,
W-8EXP or W-8IMY, as appropriate, in the case of a non-US holder. Non-US holders
of Shares with accounts maintained at locations outside the US into which
payment will be transferred are not required to submit a certificate to prevent
backup withholding. Other non-US holders of Shares, including non-US holders
with accounts maintained at locations inside the US into which payment will be
transferred, may be requested to complete and submit a properly executed Form
W-8BEN, W-8ECI, W-8EXP or W8IMY, as appropriate.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against a holder's US
federal income tax liability, provided the required information is furnished to
the US Internal Revenue Service. Non-US holders should consult their own tax
advisors regarding the application of the information reporting rules that apply
to them. A substitute Form W-9 is included with the Offer materials for your
convenience. Additional forms may be obtained upon request from the Depositary
Agent or the Information Agent.
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9. PRICE RANGE OF ADSS
ADSS. The Company's ADSs trade on the New York Stock Exchange under the
symbol "CBA". The following table sets forth, for the quarter indicated, the
actual high and low sales prices per ADS (each representing 100 Ordinary Shares)
on the New York Stock Exchange.
NEW YORK STOCK EXCHANGE
PRICE OF ADSS
HIGH LOW
(US$) (US$)
Fiscal Year Ended 31 December, 2000
First Quarter 16.5625 11.5625
Second Quarter 20.9375 13.125
Third Quarter 37.625 17.25
Fourth Quarter 34.75 25.625
Fiscal Year Ended 31 December, 2001
First Quarter 31.3 23.5
Second Quarter 33.85 23.29
Third Quarter 25 11.68
Fourth Quarter 22.7 14.8
Fiscal Year Ended 31 December, 2002
First Quarter 21.32 16.2
Second Quarter 18.45 12.55
Third Quarter 15.15 12.13
Fourth Quarter 19 10.65
On 6 January, 2003, the last Business Day prior to printing of this
document, the last reported sale price of the ADSs on the New York Stock
Exchange was US$19.60 per ADS. HOLDERS ARE URGED TO OBTAIN CURRENT AND
HISTORICAL MARKET QUOTATIONS FOR THE ADSs.
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APPENDIX II GENERAL INFORMATION
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1. RESPONSIBILITY STATEMENT
The issue of this document has been approved by the directors of Huachen
and the Management Directors.
This document includes particulars given in compliance with the Securities
and Futures Commission Ordinance (Chapter 24 of the Laws of Hong Kong) and the
Takeovers Code for the purpose of giving information with regard to the Offerors
and the Offer.
The directors of Huachen and the Management Directors accept full
responsibility for the accuracy of the information in this document and confirm,
having made all reasonable enquiries, that to the best of their knowledge,
opinions expressed in this document have been arrived at after due and careful
consideration and there are no other facts not contained in this document the
omission of which would make any statements in this document misleading.
The information on the Group in this document has been extracted from the
published interim and annual reports of the Group and from previously published
information available as at the Latest Practicable Date. The directors of
Huachen and the Management Directors take full responsibility that such
information has been accurately extracted.
2. SHAREHOLDINGS AND DEALINGS
Huachen acquired 1,445,121,500 Ordinary Shares at a price of HK$0.10 per
Share pursuant to the Principal Agreement and completion took place on 18
December, 2002. As at the Latest Practicable Date, Huachen held 1,445,121,500
Shares.
The Management Directors' shareholdings in the Company are as follows:
IN THE EVENT THAT ALL OF THE MANAGEMENT
DIRECTORS EXERCISE THEIR RESPECTIVE CALL
OPTIONS UNDER THE CALL OPTION
AGREEMENTS IN FULL AND ASSUMING THAT
THERE IS NO CHANGE IN THE ISSUED SHARE
IMMEDIATELY PRIOR TO SIGNING OF THE CAPITAL OF THE COMPANY AND NO EXERCISE
CALL OPTION AGREEMENTS OF THE EMPLOYEE OPTIONS BY THEM
NAME OF (NUMBER (APPROXIMATE (NUMBER (APPROXIMATE
MANAGEMENT OF ORDINARY SHAREHOLDING OF ORDINARY SHAREHOLDING
DIRECTOR SHARES) PERCENTAGE) SHARES) PERCENTAGE)
Xx. Xx 30,000,000 Approximately 0.82% 122,911,266 Approximately 3.35%
Xx. Xxxx 26,640,000 Approximately 0.73% 111,104,788 Approximately 3.03%
Xx. Xx 34,500,000 Approximately 0.94% 118,964,788 Approximately 3.25%
Mr. He 35,045,000 Approximately 0.96% 119,509,788 Approximately 3.26%
Save as disclosed above, none of the Offerors and parties acting in concert
with them hold any Ordinary Shares (or Ordinary Shares represented by ADSs).
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APPENDIX II GENERAL INFORMATION
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The board of Directors has granted Employee Options to the Management
Directors and the details are as follows:
NUMBER OF OPTIONS
HELD AS AT
18 DECEMBER, 2002
(BEING THE LAST
SUBSCRIPTION BUSINESS DAY
EXERCISES PRICE PER PRIOR TO THE
NAME DATE OF GRANT PERIOD ORDINARY SHARE ANNOUNCEMENT DATE)
Xx. Xx 2 June, 2001 10 years from HK$1.896 2,800,000
2 June, 2001
Xx. Xxxx 2 June, 2001 10 years from HK$1.896 2,338,000
2 June, 2001
Mr. Su 2 June, 2001 10 years from HK$1.896 2,338,000
2 June, 2001
Mr. He 2 June, 2001 10 years from HK$1.896 2,338,000
2 June, 2001
Save for the Employee Options listed in the preceding table and the call
options granted pursuant to the Call Option Agreements, none of the Offerors
hold any convertible securities, derivatives, warranties or options in the
Company.
As at the Latest Practicable Date, outstanding Employee Options granted by
the Company were in respect of 17,828,000 Ordinary Shares, in aggregate, to the
Management Directors, the Remaining Director, and certain employees of the
Group. The Remaining Director holds outstanding Employee Options in respect of
2,338,000 Ordinary Shares. The Employee Options are exercisable at any time
during the period of 10 years from 2 June, 2001 at an exercise price of HK$1.896
per Ordinary Share. Such options are personal to the grantee and cannot be
transferred or assigned.
Other than the Employee Options, the Company does not have any convertible
securities, derivatives, warrants or options in issue.
During the Relevant Period, certain CLSA group companies, wholly
independent of and from the Offerors and in the ordinary and usual course of
their business in providing order facilitation services to other CLSA group
companies and to enhance liquidity in the Ordinary Shares and ADSs, have traded
in the Ordinary Shares and ADSs of the Company. Such CLSA group companies have
ceased trading in the Ordinary Shares and ADSs since 28 October, 2002 and will
not conduct any such trade prior to the close of the Offer. Such CLSA group
companies currently show a zero balance in both the Ordinary Shares and ADSs.
Pursuant to Note 4 to Rule 26.3 of the Takeovers Code, the CLSA group has been
granted a ruling by the Executive that such trades are not relevant for the
purposes of Rule 26.3 of the Takeovers Code.
Save as disclosed above, there were no dealings in Shares (including ADSs)
by the Offerors, the directors of Huachen, the Offerors and parties acting in
concert with them from 14 May, 2002 up to the Latest Practicable Date.
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APPENDIX II GENERAL INFORMATION
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3. MARKET PRICES
The table below sets out the closing prices per Ordinary Share as quoted
on the Stock Exchange and the closing prices per ADS as quoted on the New York
Stock Exchange on (i) the last Business Day for each of the six calendar months
immediately prior to the Announcement; (ii) the trading day immediately before
the announcement made by the Company on 14 November, 2002 relating to the
possible change in the substantial shareholder of the Company; (iii) on the last
trading day prior to the Announcement; and (iv) on the Latest Practicable Date.
CLOSING PRICE
PER ORDINARY CLOSING PRICE
DATE SHARE PER ADS
(HK$) (US$)
31 May, 2002 1.30 16.68
28 June, 2002 1.06 14.30
31 July, 2002 1.16 14.55
30 August, 2002 1.09 13.90
30 September, 2002 0.99 12.13
31 October, 2002 0.93 12.24
13 November, 2002 (the trading day immediately before the
announcement made by the Company on 14 November, 2002) 0.98 12.65
29 November, 2002 1.29 16.75
17 December, 2002 (the last full Business Day
prior to the Announcement) 1.45 18.60
The Latest Practicable Date 1.53 19.60
The highest and lowest closing prices per Ordinary Share quoted on the
Stock Exchange during the Relevant Period were HK$1.53 on the Latest Practicable
Date and HK$0.85 on 9 October, 2002, respectively.
The highest and lowest closing prices per ADS quoted on the New York Stock
Exchange during the Relevant Period were US$19.60 on the Latest Practicable Date
and US$10.65 on 9 October, 2002, respectively.
4. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection during
normal business hours at the offices of Xxxxx & XxXxxxxx at 14th Floor,
Xxxxxxxxx House, 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx while the Offer remains
open for acceptances:
(a) the letter from CLSA ECM, the text of which is set out on pages 6 to
18 of this document; and
(b) the memorandum and articles of association of Huachen.
5. MISCELLANEOUS AND RECENT DEVELOPMENTS
(a) None of the existing Directors will be given any benefit as
compensation for loss of office or otherwise in connection with the
Offer.
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APPENDIX II GENERAL INFORMATION
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(b) Save as provided in the Call Option Agreements (details of which are
set out on page 10 of this document), there is no agreement or
arrangement between any of the Directors and any other person which is
conditional on the outcome of the Offer or otherwise connected with
the Offer.
(c) Save as provided in the Call Option Agreements (details of which are
set out on page 10 of this document), there is no agreement,
arrangement or understanding (including any compensation arrangement)
which exists between the Offerors or any person acting in concert with
them and any of the directors, recent directors, shareholders or
recent shareholders of the Company having any connection with or
dependence upon the Offer.
(d) Save as provided in the Call Option Agreements (details of which are
set out on page 10 of this document), the Offerors do not have any
intention to transfer any Shares pursuant to the Offer to any other
person.
(e) It has been reported in certain newspaper articles that a former
executive Director has allegedly challenged the Foundation's
beneficial interest in the Sale Shares and that the Beijing court
before which such allegations were brought has transferred the case to
the Public Security Bureau of Liaoning Province. The Offerors do not
have any additional information about such allegations.
(f) None of the Offerors or any person acting in concert with the
Offerors has entered into any arrangement of the kind referred to in
Note 8 to Rule 22 of the Takeovers Code.
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