Titan Petrochemicals Group Limited (Incorporated in Bermuda with limited liability) (Stock Code: 1192)

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement. This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities. Titan Petrochemicals Group Limited (Incorporated in Bermuda with limited liability) (Stock Code: 1192) PROPOSED ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE On 15 December 2017 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Company has conditionally agreed to allot and issue and the Subscriber has conditionally agreed to subscribe for the Convertible Bonds of up to an aggregate principal amount of HK$150,000,000 in cash. Based on the Conversion Price of HK$0.11 per Conversion Share, a maximum number of 1,363,636,363 Conversion Shares may fall to be allotted and issued upon exercise of the conversion rights attached to the Convertible Bonds in full. The gross proceeds from the issue of the Convertible Bonds is HK$150,000,000. The net proceeds from the issue of the Convertible Bonds (after deducting the relevant costs and expenses) is approximately HK$149,500,000. The net proceeds from the issuance of the Convertible Bonds will be used as (i) the repayment of debts of the Group including the Existing Convertible Bonds, which is due in April 2018, with a principal amount and the accrued interest thereon of approximately HK$84,000,000; and (ii) for the remaining of approximately HK$65,500,000 is for the general working capital and for the purpose of future expansion of the Group s business. SPECIFIC MANDATE FOR THE ISSUE OF THE CONVERSION SHARES The Conversion Shares shall be allotted and issued by the Company pursuant to the Specific Mandate sought to be granted from the Shareholders at the SGM. The issue of the Convertible Bonds and the Conversion Shares by the Company are subject to 1

2 Shareholders approval. The Company will apply to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares which may fall to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bonds. No listing of the Convertible Bonds will be sought on the Stock Exchange or any other stock exchanges. Completion of the Subscription is subject to the satisfaction of the conditions precedent under the Subscription Agreement. As the Subscription may or may not complete, Shareholders and potential investors are advised to exercise caution when dealing in the Shares. THE SUBSCRIPTION AGREEMENT The principal terms of the Subscription Agreement are set out below: Date : 15 December 2017 Issuer : Subscriber : the Company Newton Asset Management Limited Principal terms of the Convertible Bonds The Subscriber is a limited liability company incorporated in Republic of Vanuatu. It is an investment holding company. To the best of the Directors knowledge, information and belief and having made all reasonable enquiries, the Subscriber and its ultimate beneficial owner(s) are Independent Third Parties. The principal terms of the Convertible Bonds are summarised below: Issuer: Principal amount: Issue Price: Number of Conversion Shares: the Company HK$150,000, % of the principal amount Based on the Conversion Price of HK$0.11 per Conversion Share and assuming that there will not be any change in the issued share capital of the Company before the exercise of the 2

3 conversion rights in full (other than the issue of the Conversion Shares), upon the exercise of the conversion rights in full, 1,363,636,363 Conversion Shares will be issued, representing approximately 27.71% of the existing issued share capital of the Company and approximately 21.70% of the issued share capital as enlarged by the allotment and issue of the Conversion Shares. Maturity Date: Conversion Price: Adjustment of the Conversion Price: the first anniversary from the issue of the Convertible Bonds Each Convertible Bond carries the right to convert Shares at a Conversion Price of HK$0.11 per Conversion Share (subject to adjustments set out below), provided that the Conversion Price shall not be less than the par value of the Shares. The Conversion Price is subject to adjustment in accordance with the terms and conditions of the Convertible Bonds including, among others: (a) (b) (c) (d) (e) stock split, consolidation or reclassification of the Shares; capital distribution; grant or issue to the Shareholders Shares or options, warrants or other rights to subscribe for or purchase any Shares at less than 90% of the then current market price of the Shares; grant or issue to the Shareholders any securities or, options or warrants or other rights to subscribe for or purchase or otherwise acquire any securities (other than Shares or options and any securities convertible or exchangeable into Shares, warrants or other rights to subscribe or purchase Shares); and issue any securities (other than the Convertible Bonds) which carry rights of conversion into, or exchange or subscription for, Shares by the Company or other person or entity at a consideration per Share which is less than 90% of the then current market price of the Shares. 3

4 Conversion Period: Status: Listing: Form: Interest: Rights of the Conversion Shares: Transferability: Denomination: Redemption on the Maturity Date: The conversion rights attaching to the Convertible Bonds may be exercised at any time from and including the Issue Date, up to the close of business on the day falling 14 days prior to the Maturity Date. The Convertible Bonds constitute direct, unconditional, unsubordinated and unsecured obligations of the Company, ranking pari passu and rateably without any preference among themselves. No application will be made for the listing of the Convertible Bonds on the Stock Exchange or any other exchange. The Convertible Bonds will be issued upon Completion in registered form. The Convertible Bonds bear interest from and including the date of issue of the Convertible Bonds to the Maturity Date at the rate of 7.5% per annum payable annually. When interest is required to be calculated in respect of a period of less than the full year, it shall be calculated on the actual number of days elapsed and a 365-day year. The Conversion Shares that are to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds will be credited as fully paid free from any encumbrance and will rank pari passu in all respects with and within the same class as the Shares in issue on the conversion date of the Convertible Bonds. The Convertible Bonds are freely transferable except that no Convertible Bond may be transferred to any person who is a connected person (as defined under the Listing Rules) of the Company unless with: (i) full compliance with the Listing Rules; (ii) full compliance with the requirements (if any) that the Stock Exchange may impose from time to time; and (iii) the consent (if applicable) of the Stock Exchange. HK$1,000,000 The Company will redeem all of the Convertible Bonds on the Maturity Date at the price of 100% of the outstanding principal amount of the Convertible Bonds together with the 4

5 accrued interest thereon, unless previously redeemed, converted, purchased or cancelled. Redemption right for events of default: The Company must redeem all or such part of the outstanding principal amount of the Convertible Bonds upon the issuance of a notice of redemption by the Bondholder after occurrence of an event of default at the price of 100% of the outstanding principal amount together with the accrued interest thereon. Conversion Price and Conversion Shares: The Conversion Price of HK$0.11 per Conversion Share represents: (i) (ii) the closing price of HK$0.11 per Share quoted on the Stock Exchange on the Last Trading Day; and a premium of approximately 0.36% to the average closing price of HK$ per Share for the last five (5) consecutive trading days prior to the Last Trading Day; The Conversion Price was determined after arm s length negotiations between the Company and the Subscriber, taking into account the recent trading prices of the Shares. The Directors consider that the Conversion Price is fair and reasonable and in the interest of the Company and the Shareholders as a whole. Based on the Conversion Price of HK$0.11 per Conversion Share, the 1,363,636,363 Conversion Shares will be allotted and issued pursuant to the Specific Mandate. The Company will seek the grant of the Specific Mandate from the Shareholders at the SGM. Application for listing of Conversion Shares The Company will apply to the listing committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares which may fall to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bonds. No listing of the Convertible Bonds will be sought on the Stock Exchange or any other stock exchanges. Conditions precedent for the Subscription (i) the Shares remaining listed and traded on the Stock Exchange, and no notification or indication being received from the Stock Exchange or the SFC prior to Completion that the listing of the Shares on the Stock Exchange will or may be, for whatever reason, withdrawn or suspended for more than fifteen (15) consecutive Business Days (excluding any suspension for the purpose of 5

6 obtaining clearance from the SFC or the Stock Exchange for any notices, announcements or circulars relating to the transactions contemplated under the Subscription Agreement); (ii) (iii) (iv) (v) (vi) (vii) the passing by the requisite Shareholders at the SGM of all resolutions required under the Listing Rules (if any) to approve the transactions contemplated under the Subscription Agreement, including without limitation the grant of the mandate to be sought from the Shareholders at the SGM for the allotment and issue of the Conversion Shares with respect to the Convertible Bonds; the granting of approval by the Stock Exchange for the listing of, and the permission to deal in, the Conversion Shares which may only be subject to conditions as are customarily stipulated by the Stock Exchange for listing of shares, and such approval not having been revoked; all necessary approvals and consents by government and regulatory authorities (including but not limited to the Stock Exchange) in respect of the Subscription Agreement and the transactions contemplated hereunder having been obtained; in relation to the transactions contemplated under the Subscription Agreement, all relevant regulatory requirements (including but not limited to those under the Listing Rules and all relevant regulatory requirements in Hong Kong) having been complied with and satisfied; execution of the Bond Instrument; no material adverse change or prospective material adverse change in the Group s business, operations, financial conditions or prospects has occurred since the date of the Subscription Agreement; and (viii) the warranties given by the Company and the Subscriber having remained true and accurate in all material respects. If any of the conditions above have not been fulfilled or waived at or before 12:00 noon on the Long Stop Date (or such later date as the Company and the Subscriber may agree), the Subscription Agreement shall lapse, whereupon all rights and obligations of the parties thereto shall cease to have effect except in respect of any of their accrued rights and obligations. Completion of the Subscription The Convertible Bonds, subject to fulfilment or waiver (as the case may be) of the applicable conditions precedent, will be issued to the Subscriber on such date on or 6

7 before the Long Stop Date as the Company and the Subscriber may agree in writing (or such later date as mutually agreed). Events of default under the Convertible Bonds The Convertible Bonds may be declared immediately due and repayable by the Bondholders upon the happening of certain events of default including but not limited to a default payment of any principal, interest (if any), premium (if any) due in respect of the Convertible Bonds, failure to deliver any Shares upon conversion of the Convertible Bonds and breach of any obligations as set out in the terms and conditions of the Convertible Bonds. PUBLIC FLOAT Notwithstanding any other conditions of the Convertible Bonds, each Bondholder shall exercise the conversion rights attaching to the Convertible Bonds only if the allotment and issue of the Conversion Shares to such Bondholder pursuant to an exercise of the conversion right will not cause the Company to be in breach of the minimum public float requirement stipulated under Rule 8.08 of the Listing Rules. REASONS FOR THE ISSUE OF THE CONVERTIBLE BONDS The Group is principally engaged in ship repair and shipbuilding business, commodity trading business of oil, petrochemical and related products. Considering the ship repair and shipbuilding business, which the Group focuses on now, is a capital intensive industry and requires substantial capital investment, and the gearing ratio of the Group is relatively high, the Board considers that it is necessary and expedient for the Group to improve its overall liquidity and financial position. The Company s announcement dated 17 November 2017 disclosed that the Company is seeking opportunities to raise additional funds, including but not limited to equity and debt financings, to meet the possible financial needs for business development of the Group. After thoroughly considering practically feasible ways of raising funds, the Board considers that the issue of the Convertible Bonds is an appropriate way for the Group to refinance certain existing indebtedness and raise funds to replenish its working capital, since the Convertible Bonds will not result in any immediate dilution effect on the shareholding of the existing Shareholders. The Directors consider that the terms of the Subscription Agreement in relation to the issue of the Convertible Bonds and the term of the Convertible Bonds are on normal 7

8 commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. USE OF PROCEEDS The net proceeds from the issuance of the Convertible Bonds of approximately HK$149,500,000 will be used as to (i) the repayment of debts of the Group including the Existing Convertible Bonds, which is due in April 2018, with a principal amount and the accrued interest thereon of approximately HK$84,000,000; and (ii) for the remaining of approximately HK$65,500,000 is for the general working capital and for the purpose of future expansion of the Group s business. FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST TWELVE MONTHS The equity fund raising activity conducted by the Company in the past 12 months prior to the date of this announcement is set out below: Date of Fund Net proceeds raised Proposed use of the Actual use of announcement raising (approximately) net proceeds the net activity proceeds 13 April 2017 Issue of convertible bonds HK$78 million Working capital and for the purpose of future expansion of the Group s business Working capital amounting to approximately HK$20 million and the capital injection of subsidiaries and joint venture amounting to approximately HK$54 million. EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY Assuming there being no other changes in the share capital of the Company, the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after the full conversion of the Convertible Bonds (at the Conversion Price of HK$0.11) (assuming that there will not be any change in the issued share capital of the Company before the exercise of such conversion rights) are as follows: 8

9 Shareholders As at the date of this announcement Immediately after the full conversion of the Convertible Bonds at the Conversion Price of HK$0.11 (assuming that there will not be any change in the issued share capital of the Company before the exercise of such conversion rights) Number of Shares Approximate % Number of Shares Approximate % GZE and parties acting in concert (Note 1 and 2) Sino Team Investment Development Limited 2,362,556, ,362,556, ,666, ,666, The Subscriber 1,363,636, Other public Shareholders 1,766,337, ,766,337, ,920,560,060 =========== ===== 6,284,196,423 =========== ===== Note 1: 榮龍國際投資有限公司 (Fame Dragon International Investment Limited) ("Fame Dragon") (in liquidation) is directly, wholly and beneficially owned by 廣東振戎 ( 香港 ) 有限公司 (Guangdong Zhenrong (Hong Kong) Company Limited) ("Guangdong Zhenrong HK") (in liquidation), which is directly, wholly and beneficially owned by 廣東振戎能源有限公司 (Guangdong Zhenrong Energy Co., Ltd.*) ( GZE ) (in liquidation). As disclosed in our announcement dated 5 May 2017, the Official Receiver s Office of The Government of the Hong Kong Special Administrative Region was appointed as the provisional liquidator of Fame Dragon as per a winding up petition filed by 振戎有限公司 (Zhenrong Company Limited*), an offshore subsidiary of 珠海振戎公司 (Zhuhai Zhenrong Company*) ( Zhuhai Zhenrong ). Zhuhai Zhenrong is the largest shareholder of GZE, which wholly owns Fame Dragon through its wholly owned subsidiary, Guangdong Zhenrong HK. Zhuhai Zhenrong and 海南利津投資有限公司 (Hainan Li Jin Investment Co. Ltd.*) ( Hainan Li Jin ) were interested in 44.3% and 35% respectively in the share capital of GZE, and were deemed under the Securities and Futures Ordinance and to be interested in the shares in which GZE had an interest. Hainan Li Jin was owned as to 34% by Xia Ying Yan, as to 33% by He Xiao Qun and as to 33% by Liang Wei. As disclosed in our announcement dated 27 September 2017, GZE and its wholly-owned subsidiary GZE (HK) were ordered for winding up by the High Court of Hong Kong. The order was made according to the petitions filed by Industrial Bank Co., Ltd.. For details, please refer to the announcements of the Company dated 5 May 2017 and 27 September 2017 respectively. 9

10 Note 2: According to the filing of 北京中融穩達資產管理有限公司 made pursuant to Section 336 of the SFO, it held 2,547,323,685 shares in long position and 240,212,500 shares in short position of the Company, representing approximately 61.69% and 5.81% of the issued shares of the Company respectively as at the date of this Announcement. SPECIFIC MANDATE FOR THE ISSUE OF THE CONVERSION SHARES The Conversion Shares will be allotted and issued by the Company pursuant to the Specific Mandate sought to be granted from the Shareholders at the SGM. The issue of the Convertible Bonds and the Conversion Shares by the Company are subject to Shareholders approval. SGM A SGM will be held to consider, and, if thought fit, to approve, among other things, by way of ordinary resolution(s) the Subscription Agreements and the transactions contemplated thereunder (including the issue of the Convertible Bonds and the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Bonds). A circular containing, among other things, further details of the Subscription Agreements (including details of the Convertible Bonds and the Conversion Shares), the notice convening the SGM and a form of proxy will be despatched to the Shareholders as soon as practicable. Completion of the Subscription is subject to the satisfaction of the conditions precedent under the Subscription Agreement. As the Subscription may or may not complete, Shareholders and potential investors are advised to exercise caution when dealing in the Shares. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms have the following meanings: Board Bond Instrument Bondholder(s) the board of directors of the Company a separate instrument to be executed by the Company by way of a deed poll containing terms and conditions of the Convertible Bonds holder(s) of the Convertible Bonds 10

11 Business Day(s) Company Completion Completion Date connected person(s) a day (other than a Saturday, Sunday or public holiday) on which commercial banks in Hong Kong and the PRC are generally open for business and in the case a surrender of a certificate in respect of the Convertible Bonds, in the place where the certificate is surrendered Titan Petrochemicals Group Limited completion of the subscription of the Convertible Bonds the date (being a Business Day) on or before the Long Stop Date (or such later date as the Company and the Subscriber may agree) to be agreed between the Company and the Subscriber on which Completion shall take place has the meaning ascribed thereto under the Listing Rules Conversion Period the period from and including the date of issue of the Convertible Bonds up to the close of business on the day falling 14 days prior to the Maturity Date Conversion Price Conversion Share(s) Convertible Bond(s) Director(s) Existing Convertible Bonds Group HK$ Hong Kong HK$0.11 (subject to adjustment) the Share(s) to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bond(s) The 7.5% coupon convertible bond(s) in the aggregate principal amount of HK$150,000,000 to be issued by the Company pursuant to the Subscription Agreement the director(s) of the Company the 7.5% coupon convertible bond(s) in the aggregate principal amount of HK$78,000,000 issued by the Company as disclosed in the Company s announcements dated 13 April 2017 and 28 April 2017 the Company and its subsidiaries Hong Kong dollars, the lawful currency of Hong Kong Hong Kong Special Administrative Region of the PRC 11

12 Independent Third Party(ies) Issue Date Last Trading Day Listing Rules an independent third party(ies) which, to the best of the Directors knowledge, information and belief having made all reasonable enquiry, is/are not connected person(s) of the Company and is/are independent of the Company and its connected persons (as defined under the Listing Rules) the date of the Bond Instrument, which shall be the same date as the Completion Date 14 December 2017, being the last trading day for the Shares prior to the publication of this announcement the Rules Governing the Listing of Securities on the Stock Exchange Long Stop Date 28 February 2018 Maturity Date PRC SFC SGM Share(s) Shareholder(s) Specific Mandate the date falling on the first anniversary of the date of issue of the Convertible Bonds the People s Republic of China (excluding, for the purpose of this announcement, Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan) the Securities and Futures Commission of Hong Kong the special general meeting of the Company to be convened to consider, and, if thought fit, to approve, among other things, by way of ordinary resolution(s) the Subscription Agreements and the transactions contemplated thereunder (including the issue of the Convertible Bonds and the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Bonds) the ordinary share(s) of HK$0.08 each in the share capital of the Company holder(s) of the Shares the specific mandate to be sought from the Shareholders at the SGM to approve, inter alia, the allotment and the issue of the Conversion Shares 12

13 Stock Exchange The Stock Exchange of Hong Kong Limited Subscriber Newton Asset Management Limited, a company incorporated in the Republic of Vanuatu with limited liability Subscription Subscription Agreement Trading Day(s) the subscription of the Convertible Bonds the subscription agreement entered into between the Company and the Subscriber dated 15 December 2017 in relation to Subscription a day when the Stock Exchange is open for dealing business, provided if no closing price is reported for one or more consecutive dealing days, such day or days will be disregarded in any relevant calculation and shall be deemed not have existed when ascertaining any period of dealing days % per cent. By order of the Board Titan Petrochemicals Group Limited Zhang Weibing Executive Director Hong Kong, 15 December 2017 As at the date of this announcement, the executive directors are Dr. Zhang Weibing, Mr. Tang Chao Zhang, Mr. Hu Hongwei and Dr. Liu Liming; and the independent non-executive directors are Mr. Lau Fai Lawrence, Ms. Xiang Siying and Dr. Han Jun. 13