SUNRAY HOLDINGS LIMITED (Incorporated in Bermuda)

Transcription

1 1. Introduction SUNRAY HOLDINGS LIMITED (Incorporated in Bermuda) Proposed Sale of Obstetric Medical Equipment Business The Board of Directors of Sunray Holdings Limited (the Company or Sunray ) wishes to announce that its wholly-owned subsidiary Zust Services Limited ( ZUST ) has on 28 March 2008 entered into a conditional sale and purchase framework agreement (the Agreement ) with Guangzhou Fa Ming Medical Supplies Pte Ltd ( 广州琺明医疗装备用品有限公司 ) and Qinghua Tongren Information Technology Pte Ltd ( 清华同仁联科资讯有限公司 ) (collectively, the Purchasers ), for the sale of all of ZUST s interests in its 100%-owned subsidiary, Guangzhou Sunray Medical Apparatus Co., Ltd ( Guangzhou Sunray ) (the Proposed Sale ). Guangzhou Sunray currently develops, manufactures and markets primarily obstetric medical equipment such as fetal monitors, and gynaecological medical apparatus. The Proposed Sale is conditional, among others, on the completion of a restructuring exercise of Guangzhou Sunray as more particularly described below. The Proposed Sale is also conditional on the grant of approval by the Company s Shareholders if and as required under Chapter 10 of the listing manual ( Listing Manual ) of the Singapore Exchange Securities Trading Limited ( SGX-ST ). The Proposed Sale is to be effected by the payment of an initial aggregate consideration of RMB 2.88 million by the Purchasers to ZUST, and is subject to an adjustment in relation to the asset valuation of certain assets of Guangzhou Sunray as at 31 March Restructuring of Guangzhou Sunray Pursuant to the Agreement, ZUST will undertake a restructuring of Guangzhou Sunray and procure a transfer of part of the assets and liabilities of Guangzhou Sunray to the Company s subsidiary Guangzhou Fengbao Zede Technology Limited ( Guangzhou Fengbao ), prior to the Proposed Sale. Guangzhou Fengbao has a registered capital of RMB 11.5 million and is principally engaged in the business of research and development, manufacture and sale of biomedical products, medical equipment, software and electronic apparatus, as well as the provision of consultancy and technical support services. ZUST and Alliance Elite (Hong Kong) Limited (a wholly-owned subsidiary of the Company) own 73.91% and 26.09% of Guangzhou Fengbao respectively. Under the Agreement, ZUST shall procure the following: (a) (b) ZUST s share of the required capital contribution to Guangzhou Fengbao amounting to RMB 8.5 million will be funded by cash and an ownership transfer of Guangzhou Sunray s existing production facility located at No. 38 Gaoke Road, Gaotang Industrial Region, Guangshan Er Road, Guangzhou. ZUST will also transfer to Guangzhou Fengbao any other assets and liabilities associated with the gynaecological medical apparatus business that ZUST wishes to retain apart from Guangzhou Sunray. These additional assets Page 1 of 6

2 would include other fixed assets such as the Thin-Layer Cytology Testing ( TCT ) systems, inventories comprising primarily of TCT consumables, raw materials, semi-finished products and imported medical apparatus, trade receivables, cash balances, trademarks, and technical know-how related to the TCT products, and for development of new consumable products. (c) (d) After completion of the above actions, Guangzhou Sunray s remaining business would comprise mainly of the obstetric medical equipment business, that is, the fetal monitoring systems, fetal dopplers, umbilical cord bloodstream monitors and women rehabilitation bio-feedback therapy system ( Restructured Guangzhou Sunray ). ZUST will transfer 75% interest in Guangzhou Sunray (following the abovementioned restructuring) to Guangzhou Fa Ming Medical Supplies Pte Ltd, and the balance of 25% interest to Qinghua Tongren Information Technology Pte Ltd for an initial aggregate consideration of RMB 2.88 million (subject to adjustment as mentioned above). (Please refer to Sale Consideration). 3. Rationale for the Proposed Sale The Company is of the view that the Proposed Sale is in the best interests of the Company and its shareholders for the following reasons : (a) (b) (c) It offers the Company with an opportunity to fully divest its traditional fetal monitoring business, which has been adversely affected by the increasingly challenging operating environment in China s medical apparatus industry. For the nine months ended 31 December 2007, the Company witnessed a sharp decline of 72.3% in revenue from its fetal monitoring business to RMB 13.1 million. It would lead to a streamlining of the Company s current operations which is expected to result in cost-savings in the form of lower staff salaries and production costs. It is in line with the Company s strategic shift to focus on the development, manufacture and sale of medical consumable products that would enable the Company to benefit from more stable and recurring revenue streams. The Company intends to expand its consumable product lines beyond the TCT systems and consumables targeted at the women s healthcare market. In addition, the Company has already acquired technical know-how relating to the research and development of antimicrobial agents for gynaecological infections, and endometrial cell sampler. 4. Salient Terms of the Agreement The Agreement was entered into between ZUST and the Purchasers on, inter alia, the following material terms: (a) Completion date of the Proposed Sale shall be three months from the date of the Agreement, unless ZUST and the Purchasers agree on another date as a result of delays in obtaining the requisite regulatory approvals and registrations in the PRC to complete the transactions contemplated in the Agreement; Page 2 of 6

3 (b) (c) (d) (e) (f) The Purchasers shall undertake to change the name of Restructured Guangzhou Sunray within 6 months following completion of the Proposed Sale; ZUST agrees to provide the Purchasers with information pertaining to current customers (including end-users and distributors) of Restructured Guangzhou Sunray, other than customer information related to the TCT business on completion of the Proposed Sale. The Purchasers have undertaken to assume responsibility of the after-sales services for existing customers of Restructured Guangzhou Sunray; ZUST shall grant the Purchasers the rights to use the Guangzhou Sunray trademarks (which will be assigned to and owned by Guangzhou Fengbao after completion of the restructuring of Guangzhou Sunray) for two years. The use of rights to these trademarks will be free during the first year with a fee of RMB 100,000 to be charged for the second year. In addition, ZUST has agreed to permit the Purchasers the use of its current production facility for a period of three months from completion of the Proposed Sale without charge; The Purchasers shall undertake that the Restructured Guangzhou Sunray will not compete against ZUST and its subsidiaries in that the Restructure Guangzhou Sunray and its subsidiaries (if any) will not engage in businesses and the R&D, production, distribution of products that are similar to those of ZUST and/or its subsidiaries after completion of the Proposed Sale. This undertaking covers but is not limited to the TCT business, products and related consumables and systems; ZUST and its subsidiaries shall have given the undertaking that they will not engage in businesses similar to those undertaken by the Restructured Guangzhou Sunray after completion of the Proposed Sale; and (g) The Purchasers are required to issue a security deposit of RMB 100,000 ( Security Deposit ) to ZUST within ten days from the date of the Agreement. If the Proposed Sale takes place according to the obligations and conditions set out in the Formal SPA, the Security Deposit shall be used to satisfy part of the Consideration. In the event of a breach of contract by the Purchasers, the Security Deposit will be forfeited. Conversely, if ZUST commits a breach of contract, ZUST will be required to return the Security Deposit and pay a penalty amounting to RMB 100,000 to the Purchasers. 5. Sale Consideration The initial aggregate consideration payable to ZUST is RMB 2.88 million and is to be satisfied in the following manner: a) RMB 100,000 in cash to be deducted from the Security Deposit subject to the conditions stated in paragraph 4(g) above; b) the balance is to be paid upon completion of the Proposed Sale within ten days from the approval of the relevant authorities. The consideration for the Proposed Sale shall be adjusted subject to valuation of certain assets of Guangzhou Sunray as at 31 March Page 3 of 6

4 The aggregate sale consideration under the Proposed Sale was arrived on an arm s length basis, and represents a discount of 55.4% of the net asset value of the Restructured Guangzhou Sunray of RMB 6,452,000 as at 31 December The proceeds from the Proposed Sale will be used for general working capital purposes. 6. Financial Effects The pro forma unaudited financial effects of the Disposal are purely for illustrative purposes and are neither indicative of the actual financial effects of the Disposal on the net asset value for the Group ( NAV ) and earnings/(loss) per share ( EPS ) of the Company nor indicative of the financial performance of the Company for the financial year ending 31 March 2008 ( FY2008 ). The effects of the Proposed Sale on the EPS for the nine months ended 31 December 2007 ( 9M FY2008 ) (assuming that the Proposed Sale had been effected on 1 April 2007) and the NAV per share of the Company as at 31 December 2007 (assuming that the Proposed Sale had been effected on 31 December 2007) are illustrated below: Before Proposed Sale (Unaudited) After Proposed Sale (Unaudited) Earnings/(loss) per share (RMB (28.03) (18.47) cents) Net Asset Value (RMB million) No. of Shares Outstanding ( 000) 335, ,000 Net Asset Value per Share (RMB cents) Interests of Directors and Controlling Shareholders None of the Directors or controlling shareholders of the Company has any direct or indirect interest in the above transaction (other than their shareholdings in the Company). 8. Relative Figures Computed Pursuant to Rule 1006 of the Listing Manual of the SGX The relative unaudited figures for the above Disposal computed on the bases set out in Rule 1006 of the Listing Manual, are as follows:- Rule 1006(a) Net asset value of the assets to be disposed of as at 31 December 2007 Net asset value of the Group as at 31 December 2007 Net asset value of the assets to be disposed of compared with the net asset value of the Group RMB6,452,000 RMB267,794, % Rule 1006(b) Net loss attributable to the disposed assets for 9M FY2008 RMB (32,047,000) Page 4 of 6

5 Net loss attributable to equity holders of the Company for 9M FY2008 Net loss attributable to the disposed assets compared with the net loss attributable to equity holders of the Company RMB (93,913,000) 34.12% Rule 1006(c) Initial aggregate consideration Company s market capitalization as at 27 March Initial aggregate consideration compared with the Company s market capitalization RMB2,880,000 (approximately S$ 567,000 1 ) S$20,075, % Rule 1006(d) Number of equity securities to be issued by the Company as consideration Not Applicable Number of equity securities in issue -- Size of relative figure Not Applicable 9. Approval by Shareholders and Special General Meeting The transaction is subject to the approval of the shareholders of the Company at a Special General Meeting if so required and the Company will be seeking the guidance of the SGX-ST in this respect. A further announcement will be made following receipt of guidance from the SGX-ST. Further details as to the date, time and venue of the Special General Meeting (if required to be convened) will be provided to all Shareholders in due course. 10. Information on the Purchasers Guangzhou Fa Ming Medical Supplies Pte Ltd ( 广州琺明医疗装备用品有限公司 ) is a PRC company engaged in the manufacture and sale of obstetric and gynaecological systems. Qinghua Tongren Information Technology Pte Ltd ( 清华同仁联科资讯有限公司 ) is a Macau company engaged in the research and development of obstetric and gynaecological systems. None of the Purchasers are interested persons for the purposes of Chapter 9 of the Listing Manual. 1 Using an exchange rate of S$1.00 : RMB Based on the total number of issued shares (excluding treasury shares) multiplied by the weighted average price of the shares of the Company transacted on the market day preceding the date of the Agreement. Page 5 of 6

6 11. Documents for Inspection A copy of the Agreement is available for inspection during normal business hours at the office of the Company s Share Transfer Agent in Singapore at 3 Church Street #08-01, Samsung Hub, Singapore for 3 months commencing from the date of this announcement. BY ORDER OF THE BOARD SUNRAY HOLDINGS LIMITED Hong Yuexiong Executive Chairman 31 March 2008 For Investor Relations enquiries, please contact Octant Consulting at , Herman Phua (herman@octant.com.sg) or Lisa Heng (lisa@octant.com.sg) Page 6 of 6