DISCLOSABLE AND CONNECTED TRANSACTION ISSUE OF CONVERTIBLE NOTES

Transcription

1 The Stock Exchange of Hong Kong takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (Stock Code: 2618) DISCLOSABLE AND CONNECTED TRANSACTION ISSUE OF CONVERTIBLE NOTES The Board is pleased to announce that on 11 May 2005, the Company has entered into a Subscription Agreement with its ultimate controlling shareholder, TCL Corporation, pursuant to which the Company has agreed to issue and TCL Corporation has agreed to subscribe for, subject to the terms and conditions stated therein, an aggregate of 20,000,000 principal amount (in its HK$ equivalent of about HK$199,510,000) of 3% Convertible Notes. The Notes Issue constitutes a discloseable transaction for the Company under the Listing Rules. As the Subscriber is a connected person of the Company, the Notes Issue also constitutes a connected transaction for the Company under the Listing Rules. As the amount involved in the Notes Issue exceeds 2.5% of the Relevant Ratio, the Notes Issue is subject to the requirements of reporting, announcement and the Independent Shareholders approval in accordance with Chapter 14A of the Listing Rules. The Directors wish to emphasize that the Notes Issue is subject to conditions precedent. If such conditions are not fulfilled by 31 July 2005, it will lapse. Accordingly, Shareholders and investors are advised to exercise caution when dealing with the Shares. At the request of the Company, trading in its Shares was suspended with effect from 9: 30 am, 12 May 2005, pending the issuance of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 9: 30 am, 17 May I. NOTES ISSUE A. The Subscription Agreement Date: 11 May 2005 Issuer: the Company Subscriber: TCL Corporation B. Principal Terms of the Convertible Notes The principal terms of the Convertible Notes are as follows: Issue Size An aggregate of 20,000,000 principal amount (in its HK$ equivalent of about HK$199,510,000) of 3% Convertible Notes. Issue Price The Convertible Notes will be issued at par. 1

2 Term and Maturity Date Unless previously redeemed, converted or purchased and cancelled, the Company shall repay such principal moneys outstanding under the Convertible Notes to the holder of the Convertible Notes together with all interest accrued thereon up to and including on the third anniversary of the Issue Date. Interest The Convertible Notes will bear interest from the Issue Date at the rate of 3% per annum, payable semi-annually in arrears. The rate of interest was determined with reference to the market interest rate for a comparable loan at the time of the Notes Issue. Conversion Period The Conversion Period commences on the Issue Date and ending on the Maturity Date. Conversion Rights The Subscriber will have the right at any time during the Conversion Period to convert the Convertible Notes in whole or in part in the principal amount into Shares in amounts of not less than HK$10,000,000 on each conversion, save that if at any time, the principal outstanding amount of the Note is less than HK$10,000,000, the whole (but not part only) of the principal outstanding amount of the Note may be converted at the Conversion Price. Conversion Price The Convertible Notes will be convertible into Shares at an initial Conversion Price of HK$ at the option of the Subscriber at any time during the Conversion Period. The initial Conversion Price of HK$ , subject to adjustment in certain circumstances, represents a premium of approximately 30% over the average of the closing prices of the Shares on the Stock Exchange for the last 10 trading days immediately before the date of the Subscription Agreement. The closing price as at the date of the Subscription Agreement was HK$0.45 per Share and the average closing price for the 5 trading days prior to the date of this announcement was HK$0.448 per Share. Conversion Shares Shares to be issued by the Company upon the exercise of the Conversion Rights under the Convertible Notes will rank pari passu in all respects with the Shares in issue as at the relevant conversion date. Assuming full conversion of the Convertible Notes at the initial Conversion Price, the maximum number of Shares to be issued will be 342,948,000, representing approximately 12.13% of the existing issued share capital of the Company and approximately 10.82% of the issued share capital of the Company as enlarged by the issue of such Shares. As the initial Conversion Price will be subject to adjustment in certain circumstances (including, among other things, consolidation or sub-division of the Shares, capitalisation of profits or reserves, capital distribution and rights issue), the maximum number of Shares to be issued upon full conversion of the Convertible Notes may be varied from 342,948,000. Any conversion of the Convertible Notes (in part or in full) shall be subject to the terms and conditions of the Notes Issue as set out in the Subscription Agreement. 2

3 The Subscriber s shareholdings in the Company before and after the completion of full conversion of the Convertible Notes are as follows: Before completion of full conversion of Convertible Notes TCL Corporation (Note 1) Cheerful Asset Investments Mate Fair Group Jasper Ace other shareholders 57.4% 10% 4.2% 9% 19.4% The Company After completion of full conversion of Convertible Notes TCL Corporation (Note 1) Cheerful Asset Investments Mate Fair Group Jasper Ace other shareholders 62% 8.92% 3.75% 8.03% 17.3% The Company Note: (1) TCL Corporation currently holds through T.C.L. Industries Holdings (H.K.), its wholly owned subsidiary, about 1,622,748,516 Shares representing about 57.4% of the issued share capital of the Company. After completion of full conversion of the Convertible Notes, TCL Corporation will hold about 1,965,696,516 Shares representing about 62% of the issued share capital of the Company. (2) Jasper Ace and other shareholders (save for certain Directors) are regarded as public shareholders under the Listing Rules. (Please refer to the annual report of the Company for the interest of the Directors.) Redemption at the option of the Issuer The Company has option to redeem, in whole or any part, the Convertible Notes (being HK$10,000,000 in principal amount or an integral multiple thereof) at 100% of their principal amount plus interest accrued to but excluding the date of redemption after 24 months from the Issue Date. C. Conditions Completion of the subscription and issue of the Convertible Notes will be conditional upon: (a) (b) the Listing Committee of the Stock Exchange granting listing of, and permission to deal in, any new Shares arising on conversion of the Convertible Notes; and the approval by the Independent Shareholders at the EGM of the Subscription Agreement, the creation and issue of the Convertible Notes pursuant thereto and the issue of Conversion Shares upon the exercise of the Conversion Rights. If any of the above conditions precedent is not fulfilled on or before 31 July 2005 or such later date as the Subscriber and the Company may agree, it will lapse. 3

4 D. Use of Proceeds Out of the entire amount of the net proceeds from the Notes Issue (which is anticipated to be close to 20,000,000 (about HK$199,510,000) principal amount due to minimal expenses to be involved in the Notes Issue), about HK$40 million is intended to be applied to pay for the listing expenses, and about HK$120 million will be applied to Huizhou TCL Mobile Communication Co., Ltd., a wholly-owned subsidiary of the Company incorporated in the PRC, for its operating needs, and the remaining net proceeds will be used as working capital of the Group for its general operating usage. The Company has not raised any funds since its listing on the Stock Exchange on 27 September E. Reasons for the Notes Issue The Notes Issue on the principal terms set out above will increase the Group s working capital and can be used by the Group to finance its operation and is therefore beneficial for the Company. The Directors believe that the Subscription Agreement was entered into on an arm s length basis in the ordinary and usual course of business of the Group and on normal and commercial terms which are fair and reasonable and in the interests of the Shareholders as a whole. F. Application for Listing II. EGM No application will be made for the listing of, or permission to deal in, the Convertible Notes on the Stock Exchange or any other exchange. An application will be made to the Stock Exchange forthelistingof,andpermissiontodealin,thenewshareswhichmaybeissueduponthe conversion of the Convertible Notes. The Notes Issue constitutes a discloseable transaction for the Company under the Listing Rules. As the Subscriber is a connected person of the Company by virtue of its indirect about 57.4% interest in the Company, the Notes Issue also constitutes a connected transaction for the Company under the Listing Rules. As the amount involved in the Notes Issue exceeds 2.5% of the Relevant Ratio, the Notes Issue is subject to the requirements of reporting, announcement and the Independent Shareholders approval in accordance with Chapter 14A of the Listing Rules. An EGM will be convened as soon as practicable at which ordinary resolution will be proposed to approve the Notes Issue. In view of the interest of the Subscriber in the Notes Issue, the Subscriber and its associates will abstain from voting at the EGM in respect of the resolution to approve the Notes Issue. The Independent Board Committee has been formed to advise the Independent Shareholders on whether or not the terms of the Notes Issue are fair and reasonable so far as the Independent Shareholders are concerned. An independent financial adviser will be appointed to advise the Independent Board Committee in respect of the terms and conditions of the Notes Issue. III. GENERAL The Company is an investment holding company. The Group is principally engaged in research, development, manufacturing and sale of mobile handsets. For further information on the Group, please visit The Subscriber is a major PRC conglomerate that designs, develops, manufactures and markets a wide range of the electronic, telecommunications, information technology and electrical products. The brand name TCL is among the most widely recognized in China. According to recent survey by Beijing Famous-Brand Evaluation Co. Ltd., TCL was the sixth most valuable brand name in China in For further information on the Subscriber, please visit 4

5 A circular containing, among other things, further information on the Notes Issue, the letter from an independent financial adviser containing its advice to the Independent Board Committee in relation to the Notes Issue, the recommendation of the Independent Board Committee in relation to the Notes Issue and the notice convening the EGM referred to above will be dispatched to the Shareholders as soon as practicable. DBS Asia Capital has been appointed as the independent financial adviser to advise the Company on the transactions contemplated by the Notes Issue. This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the Shares or any securities of the Company. IV. RESUMPTION OF TRADING The Directors wish to emphasize that the Notes Issue is subject to conditions precedent. If such conditions are not fulfilled by 31 July 2005, it will lapse. Accordingly, Shareholders and investors are advised to exercise caution when dealing with the Shares. At the request of the Company, trading in its Shares was suspended with effect from 9: 30 am, 12 May 2005, pending the issuance of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 9: 30 am, 17 May DEFINITIONS In this announcement, the following expressions have the following meanings, unless the context otherwise requires: associate has the meaning ascribed thereto under the Listing Rules; Board Company controlling shareholder Conversion Period Conversion Price Conversion Rights Conversion Shares Convertible Notes Directors the board of Directors; TCL Communication Technology Holdings, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange; has the meaning ascribed thereto under the Listing Rules; the period commencing on the Issue Date and ending on the Maturity Date; HK$ per Share, subject to adjustment; the rights attached to the Convertible Notes to convert the same or a part thereof into Conversion Shares; the Shares to be issued by the Company upon exercise by the holder of the Convertible Notes of the Conversion Rights; the 3% Convertible Notes due after 3 years from the Issue Date with an aggregate principal amount of 20,000,000 (in its HK$ equivalent of about HK$199,510,000) to be issued by the Company pursuant to the terms and conditions of the Subscription Agreement; the director(s) of the Company; 5

6 EGM Euro or Group HK$ Hong Kong Independent Board Committee Independent Shareholders Issue Date Listing Rules Notes Issue Notes Issue Completion Maturity Date Relevant Ratio Shareholder Shares Stock Exchange Subscriber Subscription Agreement subsidiary an extraordinary general meeting of the Company to be convened to approve the Notes Issue; the currency introduced at the start of the third stage of European economic and monetaryunionpursuanttothetreatyestablishing the European Community as amended by the Treaty on European Union and the Treaty of Amsterdam or otherwise participates in European economic and monetary union in a manner and with similar effect to such third stage; the Company together with its subsidiaries from time to time prior to the Notes Issue Completion; Hong Kong dollars, the lawful currency in Hong Kong; the Hong Kong Special Administrative Region of the People s Republic of China; a board of committee comprising 3 independent non-executive Directors having been appointed to advise the Independent Shareholders in respect of the Notes Issue; Shareholders other than the Subscriber and its associates; the date on which the Convertible Notes is issued pursuant to the terms and conditions of the Subscription Agreement; the Rules Governing the Listing of Securities on the Stock Exchange; the issue of the Convertible Notes pursuant to the terms and conditions of the Subscription Agreement; completion of the Convertible Notes pursuant to the terms and conditions of the Subscription Agreement; the third anniversary of the Issue Date; any of the ratio (except the profits ratio) set out in Rule of the Listing Rules; holder of the Share(s); shares of HK$0.10 each in the issued share capital of the Company; The Stock Exchange of Hong Kong ; TCL Corporation, the controlling shareholder of the Company which indirectly holds about 57.4% interest of the Company; the conditional subscription agreement in connection with the Notes Issue dated 11 May 2005 entered into between TCL Corporation and the Company; and has the meaning ascribed thereto in section 2 of the Companies Ordinance (Cap. 32) of the Laws of Hong Kong. 6

7 As at the date hereof, the Board comprises Messrs. Li Dong Sheng, Yuan Xin Cheng, Wan Mingjian, Wong Toe Yeung, Yan Yong, Vincent, Du Xiaopeng, Simon and Guo Aiping, George as executive directors and Messrs. Shi Cuiming, Wang Chongju and Lau Siu Ki, Kevin as independent non-executive directors. For your convenience, this announcement contains translation between Hong Kong dollars and Euro at the rate of HK$ = 1. The translation shall not be taken as representations that the Hong Kong dollars amount could actually be converted into Euro at the rate, or at all. Hong Kong, 13 May 2005 Please also refer to the published version of this announcement in the (South China Morning Post) On behalf of the Board Li Dong Sheng Chairman 7