HAIER ELECTRONICS GROUP CO., LTD.

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. HAIER ELECTRONICS GROUP CO., LTD. * (incorporated in the Bermuda with limited liability) (Stock Code: 1169) CONNECTED TRANSACTION IN RESPECT OF SUBSCRIPTION OF CONVERTIBLE BOND AND SPECIFIC MANDATE TO ISSUE NEW SHARES Financial Adviser to the Company Standard Chartered Bank (Hong Kong) Limited Independent Financial Adviser Mizuho Securities Asia Limited ISSUE OF CONVERTIBLE BOND On 28 August 2010, the Company and the Subscriber entered into the CB Subscription Agreement in respect of the issue of the Convertible Bond with the principal amount of HK$786,600,000. Completion of the CB Subscription is subject to the conditions as set out in the paragraph headed Conditions precedent below. Detailed terms of the Convertible Bond are set out in the paragraph headed Principal terms of the Convertible Bond. The Convertible Bond shall be due on the Maturity Date. The Convertible Bond is convertible into Conversion Shares at an initial Conversion Price of HK$5.70 per Conversion Share. The net proceeds from the Convertible Bond of approximately HK$785,600,000 will be used for financing the possible future capital needs on the Group s logistics business and further investments in new acquisitions or business ventures in the integrated channel business. - -

2 As the Subscriber is a wholly-owned subsidiary of Qingdao Haier, the controlling shareholder of the Company and thus a connected person of the Company, the CB Subscription constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the approval of the Independent Shareholders. The Independent Board Committee has been formed to advise the Independent Shareholders and Mizuho Securities Asia Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the CB Subscription Agreement and the transactions contemplated thereunder. The SGM will be held to consider and, if thought fit, approve by way of an ordinary resolution the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors at the SGM. A circular containing, among other things, (i) details of the CB Subscription Agreement; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from Mizuho Securities Asia Limited to the Independent Board Committee and the Independent Shareholders as regards the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors at the SGM; and (iv) the notice of the SGM is expected to be despatched to Shareholders on or before 17 September CB SUBSCRIPTION AGREEMENT On 28 August 2010, the Company entered into the CB Subscription Agreement with the Subscriber, a wholly-owned subsidiary of Qingdao Haier in respect of the issue of the Convertible Bond with the principal amount of HK$786,600,000. (1) Parties and Date Date: 28 August 2010 Issuer: Subscriber: the Company Haier Shareholdings (Hong Kong) Limited, a wholly-owned subsidiary of Qingdao Haier (the Subscriber ) As at the date of this announcement, the Subscriber is interested in approximately 31.68% of the issued share capital of the Company and is wholly-owned by Qingdao Haier. Qingdao Haier, a company listed on the Shanghai Stock Exchange (under stock code: SH) in the PRC, is the Company s controlling shareholder. As at the date of this announcement, Qingdao Haier is interested in approximately 50.80% of the issued share capital of the Company and is also one of the parties to the CB Subscription Agreement

3 (2) Principal terms of the Convertible Bond Principal amount: Issue price: Interest rate: Transferability: Conversion period: Conversion Shares: HK$786,600, % of the principal amount of the Convertible Bond the Convertible Bond shall not bear any interests No assignment or transfer of the Convertible Bond shall be permitted within six months after the date of issuance of the Convertible Bond. Thereafter, subject to the compliance of all relevant laws and regulations and having obtained all necessary approvals or permissions, the Convertible Bond shall only be transferred or assigned between the bondholder and any Associated Entity the holder of the Convertible Bond shall have the right to convert the whole or part (in integral multiples of HK$100,000) of the principal amount of the Convertible Bond into Conversion Shares at any time during the period commencing from the Business Day immediately after the issue date of the Convertible Bond and ending on and excluding the maturity date of the Convertible Bond The Conversion Shares shall be allotted and issued by the Company, credited as fully paid, to the holder of the Convertible Bond or as it may direct within three Business Days after the date of conversion (or such other date as the Company and the holder of the Convertible Bond may mutually agree in writing) Limitation on (i) During the conversion period, the Company shall not issue any conversion: Conversion Shares thereof if, immediately following such issue, the holder of the Convertible Bond together with the parties acting in concert with it will hold or control such amount of the Company s voting power at general meetings as may trigger a mandatory general offer under the Takeovers Code (unless a waiver of the mandatory general offer obligation has been granted); and (ii) The holder of the Convertible Bond shall not exercise any of the conversion rights attaching to the Convertible Bond, if following such exercise, the Company s minimum public float of the Shares as required under the Listing Rules cannot be maintained

4 Conversion price: The conversion price is initially HK$5.70 per Share, subject to adjustment for, among other matters, subdivision or consolidation of Shares, rights issue, extraordinary stock or cash distribution, and other dilutive events (which are the standard anti-dilution adjustment). The conversion price represents: (i) (ii) a premium of approximately 12.20% over the closing price per Share as quoted on the Stock Exchange of HK$5.08 on 27 August 2010, being the last day of trading in the Shares on the main board of the Stock Exchange immediately prior to the entering into of the CB Subscription Agreement; a premium of approximately 5.99% over the average of the closing prices per Share of HK$5.38 for the last five trading days ended on 27 August 2010, being the last day of trading in the Shares on the main board of the Stock Exchange immediately prior to the entering into of the CB Subscription Agreement. (iii) a premium of approximately 7.32% over the average of the closing prices per Share of HK$5.31 for the last thirty trading days ended on 27 August 2010, being the last day of trading in the Shares on the main board of the Stock Exchange immediately prior to the entering into of the CB Subscription Agreement. Maturity Date: Voting: Ranking: The Convertible Bond will mature on the date falling 24 months from the date of issue of the Convertible Bond. Unless previously redeemed, repurchased and cancelled or converted, the Company will repay the principal amount outstanding under the Convertible Bond on the Maturity Date. The holder of the Conversion Bond will not be entitled to attend or vote at any general meeting of the Company by reason only of it being the holder of the Convertible Bond. The Conversion Shares shall rank pari passu in all respects with all other issued Shares as at the date of their conversion and all Conversion Shares shall include rights to participate in all dividends and other distributions the record date of which falls on or after the date of their Conversion, except that such Conversion Shares shall be subject to a lock-up period of six months after the date of issue of the Conversion Shares

5 Qingdao Haier and the Subscriber further undertake to the Company that each of them shall not dispose of any of the Shares held by them as at the date of this announcement, which in aggregate represent approximately 50.80% of the then issued share capital of the Company, within a period of six months after the date of issuance of the Bond. Based on the conversion price of HK$5.70 per Conversion Share, a maximum number of 138,000,000 Conversion Shares will be allotted and issued upon exercise of the conversion rights attached to the Convertible Bond in full, which represent: (i) approximately 6.72% of the issued share capital of the Company as at the date of this announcement; (ii) approximately 6.30% of the issued share capital of the Company as to be enlarged by the allotment and issue of the Conversion Shares upon the exercise of the conversion rights attaching to the Convertible Bond in full. No application will be made for the approval for the listing of, or permission to deal in, the Convertible Bond on the Stock Exchange or any other stock exchange. Application will be made by the Company to the Stock Exchange for the approval for the listing of, and permission to deal in, the Conversion Shares that may be allotted and issued upon conversion of the Convertible Bond. (3) Conditions precedent Completion is conditional upon the fulfillment of the following conditions precedent: (a) (b) (c) (d) (e) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the Conversion Shares to be allotted and issued upon exercise of the conversion rights attached to the Convertible Bond ; the passing by the Independent Shareholders at the SGM of an ordinary resolution of the Company approving the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the grant of a specific mandate for the allotment and issue of the Conversion Shares; (if required) the Bermuda Monetary Authority granting its consent to the issue of the Convertible Bond and the issue and allotment and free transferability of the Conversion Shares; all necessary consents, authorisations, licences and approvals in relation to the CB Subscription Agreement and the transactions contemplated hereunder having been obtained; and all warranties of the CB Subscription Agreement remaining true and accurate in all material respects. If any of the above conditions are not fulfilled on or before 31 December 2010 or such other date as the Company and the Subscriber may agree, the CB Subscription Agreement will lapse and become null and void and the parties shall be released from all obligations hereunder, save the liabilities for any antecedent breaches thereof

6 (4) Completion Completion of the CB Subscription shall take place on the third Business Day after the Conditions Precedent have been fulfilled or waived (as the case may be) or such other time and date as the parties may mutually agree. SPECIFIC MANDATE TO ISSUE THE CONVERSION SHARES The Conversion Shares will be allotted and issued pursuant to the specific mandate sought to be granted to the Directors at the SGM. Under the general mandate granted by the Shareholders to the Board and the resolution of the Shareholders passed in the annual general meeting held on 28 June 2010, the Company was authorized to allot, issue or otherwise to deal with up to 407,334,781 new Shares. As at the date of this announcement, the Company has not issued any new Shares pursuant to such general mandate. CHANGES OF SHAREHOLDING STRUCTURE Upon full conversion of the Convertible Bond into the Conversion Shares, assuming there would not be any adjustments to the conversion price of the Convertible Bond and there would not be any issue or repurchase of Shares by the Company, the shareholding structure of the Company would be changed as follows: Upon full conversion of the Convertible As at the Upon full Upon full Bond and the Warrant date of this conversion of Upon exercise of the Share conversion of and the exercise of the announcement the Convertible Bond Options in full the Warrant Share Options in full Approximate Approximate Approximate Approximate Approximate Number of shareholding Number of shareholding Number of shareholding Number of shareholding Number of shareholding Shareholders Shares held percentage Shares held percentage Shares held percentage Shares held percentage Shares held percentage Shares % Shares % Shares % Shares % Shares % Qingdao Haier Investment and Development Co., Ltd. ( Haier Investment ) 336,600, ,600, ,600, ,600, ,600, Qingdao Haier 392,677, ,677, ,677, ,677, ,677, Haier Shareholdings (Hong Kong) Limited 650,545, ,545, ,545, ,545, ,545, Warrant Holders 273,000, ,000, Other public shareholders 673,851, ,851, ,461, ,851, ,461, Total (Note 5) 2,053,673, ,191,673, ,163,283, ,326,673, ,574,283,

7 Notes: 1. By virtue of the Securities and Futures Ordinance ( SFO ), Haier Collective Asset Management is deemed to be interested in an aggregate of 1,379,822,592 Shares, including (i) 336,600,000 Shares held by its non wholly-owned subsidiary, namely Haier Investment; and (ii) given Haier Investment is acting in concert with Haier Corp and Qingdao Haier is a non wholly-owned subsidiary of Haier Corp, Haier Collective Asset Management is also deemed to be interested in an aggregate of 1,043,222,592 Shares held directly and indirectly by Qingdao Haier, which Haier Corp is deemed to be interested pursuant to the SFO. 2. As Haier Corp directly and indirectly holds 43.54% interest in Qingdao Haier, it is deemed to be interested in the 1,043,222,592 Shares held directly and indirectly by Qingdao Haier. Furthermore, as Haier Corp is acting in concert with Haier Investment, Haier Corp is deemed to be interested in 336,600,000 Shares held by Haier Investment. 3. Haier Investment holds 336,600,000 Shares and is deemed to be interested in 1,043,222,592 Shares held directly and indirectly by Qingdao Haier pursuant to the SFO by reason of its acting in concert with Haier Corp. 4. Qingdao Haier holds 392,677,482 Shares and is deemed to be interested in 650,545,110 Shares held by Haier Shareholdings (Hong Kong) Limited, its wholly-owned subsidiary pursuant to the SFO. 5. The shareholding figures above may not add up to 100 due to rounding to 2 decimal places. REASONS FOR THE ISSUE OF CONVERTIBLE BOND AND USE OF PROCEEDS As mentioned in the interim results announcement dated 26 August 2010 of the Company for the six months ended 30 June 2010, the growth of our integrated channel business depends on the introduction of more suppliers and the reach of our physical distribution network. The implementation of such business plan would involve developing supplier relationships with non-haier brand suppliers, which may involve an increase of our capital commitment in order to continue to provide effective supply chain services, after-sale services and other marketing activities to such suppliers. The Group expects to make significant investments in our integrated channel business in the future to strengthen our integrated supply chain service provider capabilities, through strategic alliances or acquisitions that may involve using significant portion of our capital resources. The net proceeds from the Convertible Bond of approximately HK$785,600,000 will provide funding for the Group s possible future capital needs on its logistics business and to enable us to make further investments in new acquisitions or business ventures in the integrated channel business when suitable opportunities arise in the future. The Directors, having considered that (i) the interest-free Convertible Bond would be a more favourable source of financing when compared to the interest rate of bank loans (if and to the extent available) that are generally available to the Group; (ii) while developing its integrated channel business, the availability of funds will help to ensure the financial flexibility of the Group to capture investment and acquisition opportunities arising from this segment in the future; and (iii) there is no immediate dilution effect on the shareholding of the existing Shareholders, are of the view that the issue of the Convertible Bond - 7 -

8 is an appropriate means to raise additional funds for the Group. Based on the above, the Directors (excluding the independent non-executive Directors who will form their view after considering the advice of the independent financial adviser) consider that the CB Subscription is in the interests of the Company and the Shareholders as a whole and the terms of the Subscription Agreement are fair and reasonable so far as the Independent Shareholders are concerned. FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS The Company has not conducted any equity fund raising activities in the past twelve months before the date of this announcement. LISTING RULES IMPLICATIONS As the Subscriber is a wholly-owned subsidiary of Qingdao Haier, the controlling shareholder of the Company, and thus a connected person of the Company, the CB Subscription constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the approval of the Independent Shareholders. The Independent Board Committee has been formed to advise the Independent Shareholders and Mizuho Securities Asia Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the CB Subscription Agreement and the transactions contemplated thereunder. The SGM will be held to consider and, if thought fit, approve by way of an ordinary resolution the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors. A circular containing, among other things, (i) details of the CB Subscription Agreement; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from Mizuho Securities Asia Limited to the Independent Board Committee and the Independent Shareholders as regards the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors; and (iv) the notice of the SGM is expected to be despatched to Shareholders on or before 17 September GENERAL The Group is currently engaged in the research, development, manufacture and sale of washing machines and water heaters in the PRC under the brand name of Haier. The Group also began engaging in the integrated channel services business for other home appliance products such as refrigerators, televisions and air-conditioners, of both Haier and non-haier brands, substantially broadening its sources of revenue and driving its profit growth. The principal business activity of the Company and the Subscriber is investment holding

9 Qingdao Haier is the controlling shareholder of the Company and is currently engaged in the manufacture and sale of household electric appliances in the PRC under the brand name of Haier. DEFINITIONS Unless the context requires otherwise, the following terms have the following meanings in this announcement: Associated Entities associates Board Business Day CB Subscription CB Subscription Agreement Company Completion connected persons Conversion Shares Convertible Bond (i) any entity which is a subsidiary or holding company of the bondholder, or is a fellow subsidiary of any of such holding company; and (ii) Haier Group Corporation, Qingdao Haier Investment and Development Co., Ltd. and Qingdao Haier and their respective subsidiaries, and an Associated Entity refers to any of them has the meaning ascribed thereto in the Listing Rules board of the Directors means any day (excluding a Saturday, Sunday and other public holidays) on which banks in Hong Kong are generally open for business throughout their normal business hours the subscription of the Convertible Bond by Qingdao Haier pursuant to the terms of the CB Subscription Agreement the subscription agreement dated 28 August 2010 and entered into between the Company and the Subscriber, a subsidiary of Qingdao Haier in relation to the CB Subscription Haier Electronics Group Co., Ltd., a company incorporated in Bermuda with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange completion of the CB Subscription Agreement has the meaning ascribed thereto in the Listing Rules the Shares which may fall to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bond the convertible bond in principal amount of HK$786,600,000 million to be issued by the Company to the Subscriber, a whollyowned subsidiary of Qingdao Haier pursuant to the CB Subscription Agreement - 9 -

10 Directors Group Haier Corp Haier Group Haier Investment Hong Kong directors of the Company the Company and its subsidiaries (Haier Group Corporation), a company established in the PRC which is acting in concert with Haier Investment and a substantial shareholder of the Company Haier Corp and Haier Investment together with their respective subsidiaries and associates but excluding the Group, where appropriate (Qingdao Haier Investment and Development Co., Ltd.*), a company established in the PRC, a substantial shareholder of the Company and a party acting in concert with Haier Corp Hong Kong Special Administrative Region of the People s Republic of China Independent Board Committee an independent board committee of the Company, comprising all the independent non-executive Directors formed for the purpose of advising the Independent Shareholders in respect of the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors Independent Shareholders Listing Committee Listing Rules the shareholders of the Company other than Qingdao Haier and its associates who are required to abstain from voting on the resolutions to approve, inter alia, the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors at the SGM pursuant to the Listing Rules the listing committee of the Stock Exchange for considering applications for listing and the granting of listing the Rules Governing the Listing of Securities on the Stock Exchange

11 Qingdao Haier SGM Share(s) (Qingdao Haier Co., Ltd.*), a company which A shares are listed on the Shanghai Stock Exchange (stock code: ), which is held, directly and indirectly, by Haier Corp as to 43.54% of its issued share capital and accounted for as subsidiaries in the audited consolidated accounts of Haier Corp a special general meeting of the Company to be convened to consider and approve by way of an ordinary resolution the CB Subscription Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the Conversion Shares to be allotted and issued pursuant to the specific mandate sought to be granted to the Directors ordinary share(s) of HK$0.10 each in the capital of the Company Share Options the aggregate of 83,650,000 share options to subscribe for 83,650,000 Shares at an exercise price of HK$1.70 per Share and 25,960,000 share options to subscribe for 25,960,000 Shares at an exercise price of HK$4.82 per Share granted to certain employees of the Company on 18 September 2009 and 18 May 2010, respectively, pursuant to the share option scheme adopted by the Company on 28 February 2002 Shareholder(s) Stock Exchange Takeovers Code Warrant holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited Hong Kong Code on Takeovers and Mergers an aggregate of 273,000,000 outstanding non-listed transferable warrants entitling the holder of each warrant to subscribe for one new Share at the exercise price of HK$0.66 (subject to adjustment) at any time for a period of four years from the date of issue of each Warrant (i.e. 23 March 2009)

12 HK$ Hong Kong dollars, the lawful currency of Hong Kong % per cent. By Order of the Board of Haier Electronics Group Co., Ltd. Yang Mian Mian Chairman Hong Kong, 28 August 2010 As at the date of this announcement, the executive Directors are Ms. Yang Mian Mian (Chairman), Mr. Zhou Yun Jie, Mr. Li Hua Gang and Mr. Sun Jing Yan; the non-executive Director are Mr. Wu Ke Song (Deputy Chairman) and Mr. Liang Hai Shan; the independent non-executive Directors are Mr. Wu Yinong, Mr. Yu Hon To, David and Dr. Liu Xiao Feng. * for identification purposes only