FIT Hon Teng Limited

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. FIT Hon Teng Limited (Incorporated in the Cayman Islands with limited liability under the name Foxconn Interconnect Technology Limited and carrying on business in Hong Kong as FIT Hon Teng Limited) (Stock code: 6088) (I) CONNECTED TRANSACTION: FORMATION OF JOINT VENTURE AND DEEMED DISPOSAL (II) CONTINUING CONNECTED TRANSACTIONS: (A) TECHNOLOGY LICENSE AGREEMENT (B) TRADEMARK LICENSE AGREEMENT FORMATION OF JOINT VENTURE AND DEEMED DISPOSAL The Board is pleased to announce that on February 7, 2018 (after trading hours), FIT Singapore and FOIT Singapore (each a direct wholly-owned subsidiary of the Company) entered into the Joint Venture Agreement with Sharp to regulate their respective rights and obligations in respect of the ownership and management of the JV Company. Immediately prior to the entering into of the Joint Venture Agreement, the JV Company was owned as to 100% by FIT Singapore, with a paid-up capital of US$1 divided into one JV Share. Pursuant to the Investments contemplated under the Joint Venture Agreement, FIT Singapore and FOIT Singapore shall make a total capital contribution of JPY1,541,000,000 (approximately HK$107,870,000) (with their respective capital contributions to be allocated between themselves) to the JV Company, and Sharp shall make a capital contribution of JPY1,481,000,000 (approximately HK$103,670,000) to the JV Company. In consideration of the Investments, the JV Company shall issue JV Shares to FIT Singapore, FOIT Singapore and Sharp such that the entire issued share capital of the JV Company will be owned as to 51% by FIT Singapore and FOIT Singapore and as to 49% by Sharp. Upon completion of the Investments, the JV Company will continue to be a subsidiary of the Company. TECHNOLOGY LICENSE AGREEMENT On February 7, 2018 (after trading hours), the JV Company and Sharp entered into the Technology License Agreement, pursuant to which Sharp agreed to grant to the JV Company, among other things, (i) the right to develop, assemble and manufacture the Specified Products in the Specified Territories for sale or distribution using the know-how from Sharp regarding control plans, manufacturing standards and research and development; and (ii) the right to have JPN Sub and CHN Sub use the aforesaid know-how for certain specified purposes, provided that the JV Company shall cause JPN Sub and CHN Sub to be bound by the terms and conditions of the Technology License Agreement as if they were parties thereto. 1

2 The Technology License Agreement is for a term of approximately two years and eleven months from February 7, 2018 to December 31, It shall automatically be renewed thereafter for another three years until December 31, 2023 with no additional fees, subject to compliance with the Listing Rules, the Tokyo Listing Rules and all other applicable laws, rules and regulations. TRADEMARK LICENSE AGREEMENT On February 7, 2018 (after trading hours), the JV Company and Sharp entered into the Trademark License Agreement, pursuant to which Sharp agreed to grant to the JV Company, among other things, (i) the right to use the Trade Names in JPN Sub s and CHN Sub s corporate name or trade name; (ii) the right to use the Trademark in connection with the manufacture, affixing, packaging, sales, marketing and distribution of the Specified Products in the Specified Territories; and (iii) the right to have JPN Sub and CHN Sub use the Trademark for certain specified purposes, provided that the JV Company shall cause JPN Sub and CHN Sub to be bound by the terms and conditions of the Trademark License Agreement as if they were parties thereto. The Trademark License Agreement is for a term of one year from February 7, 2018 to February 6, Towards the end of such term, the Parties shall negotiate in good faith the renewal of the Trademark License Agreement, subject to compliance with the Listing Rules, the Tokyo Listing Rules and all other applicable laws, rules and regulations. LISTING RULES IMPLICATIONS Following completion of the Investments, the shareholding of the Company in the JV Company will be diluted from 100% to 51%, thereby technically constituting a deemed disposal under Rule of the Listing Rules (the Deemed Disposal ). As the JV Company is currently an investment holding company with no substantive assets or operations, it is expected (subject to final audit) that no material gain or loss will accrue to the Company as a result of the Deemed Disposal. As at the date of this announcement, the Company is indirectly owned as to approximately 76.92% by Hon Hai, the controlling shareholder of the Company, which controls more than 30% interest in Sharp. Sharp is therefore deemed as an associate of Hon Hai and a connected person of the Company. Accordingly, the transactions contemplated under the Joint Venture Agreement, the Technology License Agreement, the Trademark License Agreement and the Deemed Disposal constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As the highest of all the applicable percentage ratios (as defined under Rule of the Listing Rules) in respect of the transactions contemplated under the Joint Venture Agreement, the Technology License Agreement, the Trademark License Agreement and the Deemed Disposal are more than 0.1% but less than 5% on an aggregated basis, the transactions contemplated thereunder are exempt from the circular (including independent financial advice) and independent shareholders approval requirements, but are subject to the reporting, announcement and annual review requirements under Chapter 14A of the Listing Rules. 2

3 JOINT VENTURE AGREEMENT The Board is pleased to announce that on February 7, 2018 (after trading hours), FIT Singapore and FOIT Singapore (each a direct wholly-owned subsidiary of the Company) entered into the Joint Venture Agreement with Sharp to regulate their respective rights and obligations in respect of the ownership and management of the JV Company. The principal terms of the Joint Venture Agreement are set out below: Parties (i) FIT Singapore; (ii) FOIT Singapore; and (iii) Sharp. Subject Matter Immediately prior to the entering into of the Joint Venture Agreement, the JV Company was owned as to 100% by FIT Singapore, with a paid-up capital of US$1 divided into one JV Share. Pursuant to the Investments contemplated under the Joint Venture Agreement, FIT Singapore and FOIT Singapore shall make a total capital contribution of JPY1,541,000,000 (approximately HK$107,870,000) (with their respective capital contributions to be allocated between themselves) to the JV Company, and Sharp shall make a capital contribution of JPY1,481,000,000 (approximately HK$103,670,000) to the JV Company. In consideration of the Investments, the JV Company shall issue JV Shares to FIT Singapore, FOIT Singapore and Sharp such that the entire issued share capital of the JV Company will be owned as to 51% by FIT Singapore and FOIT Singapore and as to 49% by Sharp. Upon completion of the Investments, the JV Company will continue to be a subsidiary of the Company. The total amount of the Investments, being JPY3,022,000,000 (approximately HK$211,540,000), was agreed after arm s length negotiations between the Company and Sharp taking into account the capital requirements for equipment procurement, research and development as well as daily operations of the JV Company in the foreseeable future. Nature of Business The Parties agreed that the JV Company s scope of business shall be, among others, the development, design, manufacturing, distribution and marketing for automotive cameras and electronic mirrors. Pursuant to the Joint Venture Agreement, the JV Company shall incorporate JPN Sub and CHN Sub as operating subsidiaries. After the incorporation of CHN Sub, Sharp shall cause WSEC, a Chinese manufacturer of electronic components which is owned as to 80% by Sharp, to transfer its business to CHN Sub in accordance with a business transfer agreement to be separately executed between WSEC and CHN Sub, so that such business will form part of the operations of CHN Sub. The Company will make further announcement(s) and comply with the applicable Listing Rules as and when appropriate. 3

4 Management The JV Board shall consist of five directors, of whom two shall be appointed by Sharp, two shall be appointed by FIT Singapore and FOIT Singapore, and one shall be appointed by consent of Sharp, FIT Singapore and FOIT Singapore. The chairman of the JV Board shall be appointed by FIT Singapore and FOIT Singapore. The JV Board shall be the highest authority of the JV Company and entitled to decide all material management issues. The chief executive officer of the JV Company, who is to be selected and appointed by the JV Board, shall be responsible for organizing and guiding the daily operation and management of the JV Company under the direction of the JV Board. Profit/Loss Sharing The profits, risks and losses of the JV Company shall be shared by the Parties in proportion to their respective capital contributions. Each Party is liable to the JV Company within the limit of its capital contribution. Future Financing To the extent that further funding, whether for capital or revenue expenditure, is necessary in order for the JV Company to develop or carry on its business, the Parties shall discuss in good faith the arrangements of such funding. If no consensus is reached after such good faith discussions, the Parties may submit a funding proposal to JV Board which proposal shall be voted on by the directors of the JV Company. Restrictions on Transfer None of the Parties may transfer the JV Shares that it holds without the prior written consent of the other Parties. TECHNOLOGY LICENSE AGREEMENT On February 7, 2018 (after trading hours), Sharp and the JV Company entered into the Technology License Agreement, the principal terms of which are set out below: Parties (i) Sharp; and (ii) JV Company. 4

5 Subject Matter Sharp agreed to grant to the JV Company, among other things, (i) the right to develop, assemble and manufacture the Specified Products in the Specified Territories for sale or distribution using the know-how from Sharp regarding control plans, manufacturing standards and research and development; and (ii) the right to have JPN Sub and CHN Sub use the aforesaid know-how for certain specified purposes, provided that the JV Company shall cause JPN Sub and CHN Sub to be bound by the terms and conditions of the Technology License Agreement as if they were parties thereto. Term The Technology License Agreement is for a term of approximately two years and eleven months from February 7, 2018 to December 31, It shall automatically be renewed thereafter for another three years until December 31, 2023 with no additional fees, subject to compliance with the Listing Rules, the Tokyo Listing Rules and all other applicable laws, rules and regulations. Consideration and Payment The JV Company shall pay Sharp a one-off license fee of JPY1,541,000,000 (approximately HK$107,870,000) for the Specified Products, which is payable within fifteen (15) business days after Sharp discloses and furnishes the relevant know-how to the JV Company, JPN Sub and CHN Sub but in any event no later than March 7, Additional royalties are payable in such amounts and at such rates as may be agreed between the Parties if new types or models are included in the Specified Products. The license fee was agreed after arm s length negotiations between the Company and Sharp with reference to a valuation report on the fair value of certain patents and technologies constituting the relevant know-how under the Technology License Agreement. Annual Caps The expected maximum aggregate annual license fees payable by the JV Company to Sharp under the Technology License Agreement for each of the three years ending December 31, 2020 are set forth in the table below, which were determined by taking into account the one-off license fee of JPY1,541,000,000 (approximately HK$107,870,000) which will be paid on or before March 7, For the year ending December 31, ,541,000,000 For the year ending December 31, For the year ending December 31, JPY 5

6 TRADEMARK LICENSE AGREEMENT On February 7, 2018 (after trading hours), Sharp and the JV Company entered into the Trademark License Agreement, the principal terms of which are set out below: Parties (i) Sharp; and (ii) JV Company. Subject Matter Sharp agreed to grant to the JV Company, among other things, (i) the right to use the Trade Names in JPN Sub s and CHN Sub s corporate name or trade name; (ii) the right to use the Trademark in connection with the manufacture, affixing, packaging, sales, marketing and distribution of the Specified Products in the Specified Territories; and (iii) the right to have JPN Sub and CHN Sub use the Trademark for certain specified purposes, provided that the JV Company shall cause JPN Sub and CHN Sub to be bound by the terms and conditions of the Trademark License Agreement as if they were parties thereto. Term The Trademark License Agreement is for a term of one year from February 7, 2018 to February 6, Towards the end of such term, the Parties shall negotiate in good faith the renewal of the Trademark License Agreement, subject to compliance with the Listing Rules, the Tokyo Listing Rules and all other applicable laws, rules and regulations. Consideration and Payment The JV Company shall pay Sharp a royalty at one point five percent (1.5%) of the Net Selling Price of all the Specified Products sold by the JV Company and its subsidiaries during the term of the Trademark License Agreement; provided, however, that Sharp shall not earn any such royalty for any products sold through Sharp or its group entities. The Specified Products are considered sold when billed (or invoiced) out to the purchaser, or if not billed out, when delivered or when paid for if paid for before delivery. The royalty shall be computed for a three months period terminating on the last day of March, June, September and December each year. The above basis of calculation of license fee was agreed after arm s length negotiations between the Company and Sharp with reference to the usual range of license fees charged by licensors for similar transactions between large international corporations as well as prevailing market conditions. Annual Caps The expected maximum aggregate annual license fees payable by the JV Company to Sharp under the Trademark License Agreement for each of the two years ending December 31, 2019 are set forth in the table below, which were determined by taking into account (i) the expected sales volume of Specified Products during the first year of the JV Company s operation; and (ii) the fact that the 6

7 term of Trademark License Agreement spans approximately eleven months in 2018 and one month in For the year ending December 31, ,000,000 For the year ending December 31, ,000,000 REASONS FOR AND BENEFITS OF ENTERING INTO THE JOINT VENTURE AGREEMENT, THE TECHNOLOGY LICENSE AGREEMENT AND THE TRADEMARK LICENSE AGREEMENT In recent years, the automotive industry has been investing heavily in the research and development of autonomous driving, which is considered to be the future of road transport. While fully driverless vehicles are unlikely to be commercially available in the short term, automobile manufacturers are already equipping their products with advanced driver assistance systems (ADAS), of which automotive cameras and electronic mirrors are indispensable hardware components. To embrace the enormous opportunities brought by this trend, the Company and Sharp are desirous of collaborating with each other and enhancing their automobile-related operations. Compared with the usual business model of Sharp being a brand company customer of the Company, the Company and Sharp believe that their Investments in the JV Company pursuant to the Joint Venture Agreement and the grant of Sharp s intellectual property rights to the JV Company pursuant to the Technology License Agreement and the Trademark License Agreement will create greater synergy between the two companies in terms of industrial expertise and geographical reach. With respect to industrial expertise, the Company is well-known for its quick-to-ramp large-scale production capabilities through automation while Sharp is a renowned manufacturer of cameras, so it is hoped that the JV Company will be able to mass-produce the Specified Products and other camera applications with quality and efficiency. With respect to geographical reach, the Company possesses well-established sales channels in Mainland China, Taiwan and North America while Sharp has a century-old presence in Japan, so the JV Company will be well-positioned to tap into the markets of the Specified Territories. Taking into account the above reasons and the respective terms of the Joint Venture Agreement, the Technology License Agreement and the Trademark License Agreement, all Directors (including the independent non-executive Directors) are of the view that the Annual Caps are fair and reasonable, and that the entering into of each of the Joint Venture Agreement, the Technology License Agreement and the Trademark License Agreement (and the conducting of transactions contemplated thereunder) are fair and reasonable, on normal commercial terms or better and in the Group s ordinary and usual course of business and in the interests of the Company and its shareholders as a whole. None of the Directors (including the independent non-executive Directors) has a material interest in any of the Joint Venture Agreement, the Technology License Agreement and the Trademark License Agreement, and none of the Directors has abstained from voting on the relevant board resolutions. 7 JPY

8 LISTING RULES IMPLICATIONS Following completion of the Investments, the shareholding of the Company in the JV Company will be diluted from 100% to 51%, thereby technically constituting a deemed disposal under Rule of the Listing Rules (the Deemed Disposal ). As the JV Company is currently an investment holding company with no substantive assets or operations, it is expected (subject to final audit) that no material gain or loss will accrue to the Company as a result of the Deemed Disposal. As at the date of this announcement, the Company is indirectly owned as to approximately 76.92% by Hon Hai, the controlling shareholder of the Company, which controls more than 30% interest in Sharp. Sharp is therefore deemed as an associate of Hon Hai and a connected person of the Company. Accordingly, the transactions contemplated under the Joint Venture Agreement, the Technology License Agreement, the Trademark License Agreement and the Deemed Disposal constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As the highest of all the applicable percentage ratios (as defined under Rule of the Listing Rules) in respect of the transactions contemplated under the Joint Venture Agreement, the Technology License Agreement, the Trademark License Agreement and the Deemed Disposal are more than 0.1% but less than 5% on an aggregated basis, the transactions contemplated thereunder are exempt from the circular (including independent financial advice) and independent shareholders approval requirements, but are subject to the reporting, announcement and annual review requirements under Chapter 14A of the Listing Rules. INFORMATION ON THE PARTIES The Group is a leading global interconnect solutions provider and one of the few global interconnect solutions providers whose offerings span wire-based, fiber-based and wireless interconnect solutions. FIT Singapore is a limited liability company established in Singapore, and a direct wholly-owned subsidiary of the Company. It is principally engaged in the sale of interconnect solutions and related products. FOIT Singapore is a limited liability company established in Singapore, and a direct wholly-owned subsidiary of the Company. It is principally engaged in the sale of interconnect solutions and related products. The JV Company is a limited liability company established in Singapore on December 6, 2017 and, prior to completion of the Investments, owned as to 100% by FOIT Singapore with a paid-up capital of US$1 divided into one JV Share. It is currently an investment holding company and its scope of business will be, among others, the development, design, manufacturing, distribution and marketing for automotive cameras and electronic mirrors. Sharp is a limited liability company registered in Japan, the shares of which are listed on the First Section of the Tokyo Stock Exchange. It is principally engaged in the manufacture of consumer and industrial electronics and operates its business worldwide. 8

9 DEFINITIONS Annual Caps associate Board Company connected person connected transaction(s) CHN Sub controlling shareholder Directors FIT Singapore FOIT Singapore Group HK$ collectively, the proposed annual caps for the transactions contemplated under the Technology License Agreement and the Trademark License Agreement as set out in the sections headed Technology License Agreement Annual Caps and Trademark License Agreement Annual Caps, respectively, of this announcement; has the meaning ascribed thereto in the Listing Rules; the board of Directors of the Company; FIT Hon Teng Limited ( 鴻騰六零八八精密科技股份有限公司 ), a company incorporated in the Cayman Islands with limited liability under the name Foxconn Interconnect Technology Limited and carrying on business in Hong Kong as FIT Hon Teng Limited, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 6088.HK); has the meaning ascribed thereto in the Listing Rules; has the meaning ascribed thereto in the Listing Rules; a company to be named SHARP Automotive Wuxi Co, Ltd. ( 夏普汽車零件 ( 無錫 ) 有限公司 ) and to be incorporated as a whollyowned Chinese subsidiary of the JV Company; has the meaning ascribed thereto in the Listing Rules; directors of the Company; Foxconn Interconnect Technology Singapore Pte. Ltd., a limited liability company established in Singapore, and a direct whollyowned subsidiary of the Company; Foxconn Optical Interconnect Technologies Singapore Pte. Ltd., a limited liability company established in Singapore, and a direct wholly-owned subsidiary of the Company; the Company and its subsidiaries; Hong Kong dollar(s), the lawful currency of Hong Kong; 9

10 Hon Hai Investments Joint Venture Agreement JPN Sub JPY JV Board JV Company JV Share(s) Listing Rules Net Selling Price Party(ies) Hon Hai Precision Industry Co., Ltd. ( 鴻海精密工業股份有限公司 ), a limited liability company established in Taiwan and listed on the Taiwan Stock Exchange (Stock Code: 2317.TW), the controlling shareholder of the Company; the capital contribution by each of the Parties to the Joint Venture Agreement, collectively, as described in the section headed Joint Venture Contract Subject Matter of this announcement; the joint venture agreement, dated February 7, 2018, entered into among FIT Singapore, FOIT Singapore and Sharp, as further described in the section headed Joint Venture Agreement of this announcement; a company to be named SHARP Automotive Technology Co, Ltd. ( シャープオートモーティブテクノロジー株式會社 ) and to be incorporated as a wholly-owned Japanese subsidiary of the JV Company; Japanese yen, the lawful currency of Japan; the board of directors of the JV Company; FIT Electronics Device Pte. Ltd., a limited liability company established in Singapore on December 6, 2017, and prior to completion of the Investments, owned as to 100% by FOIT Singapore with a paid-up capital of US$1 divided into one JV Share; ordinary share(s) with nominal value of US$1 each in the issued capital of the JV Company; the Rules Governing the Listing of Securities on the Stock Exchange; in relation to the Trademark License Agreement, the gross selling price of all Specified Products sold by the JV Company and its subsidiaries to any distributors or dealers in arm s length transactions less only trade discounts, accepted returns from customers, excise or other sales taxes directly imposed upon such transactions, and transportation charges of the Specified Products; the respective parties to each of the Joint Venture Agreement, the Technology License Agreement and the Trademark License Agreement, each a Party thereof; 10

11 Sharp Specified Products Specified Territories Stock Exchange subsidiary(ies) Technology License Agreement Tokyo Listing Rules Tokyo Stock Exchange Trademark Trade Names Trademark License Agreement US$ Sharp Corporation ( シャープ株式會社 ), a limited liability company registered in Japan, the shares of which are listed on the First Section of the Tokyo Stock Exchange (Stock Code: 6753.T); (i) in relation to the Technology License Agreement, certain types or models of automotive cameras and electronic mirrors specified therein; and (ii) in relation to the Trademark License Agreement, certain types or models of automotive cameras and electronic mirrors specified therein which use the Trademark; the official territories of (i) Singapore; (ii) Mainland China, Taiwan, Hong Kong and Macau; (iii) Japan; (iv) North America; and (v) Europe; The Stock Exchange of Hong Kong Limited; has the meaning ascribed thereto in the Listing Rules; the technology license agreement, dated February 7, 2018, entered into between Sharp and the JV Company, as further described in the section headed Technology License Agreement of this announcement; the Securities Listing Regulations of Tokyo Stock Exchange; Tokyo Stock Exchange, Inc.; the trademark SHARP, which is owned, controlled and/or used by Sharp, and/or under application in the Specified Territories; the trade names SHARP Automotive Technology Co, Ltd. and SHARP Automotive Wuxi Co, Ltd. ; the trademark license agreement, dated February 7, 2018, entered into between Sharp and the JV Company, as further described in the section headed Trademark License Agreement of this announcement; United States dollar(s), the lawful currency of the United States; 11

12 WSEC Wuxi Sharp Electronic Components Co., Ltd. ( 無錫夏普電子元器件有限公司 ), a limited liability company incorporated in China which is owned as to 80% by Sharp and 20% by Wuxi Electronics & Instruments Industry Co., Ltd. ( 無錫市電子儀表工業公司 ) as at the date of this announcement; and % percent. By order of the Board FIT Hon Teng Limited* LU Sung-Ching Chairman of the Board Hong Kong, February 7, 2018 For the purpose of this announcement, unless the context otherwise requires, the conversion of (i) US$ into HK$ is based on the approximate exchange rate of US$1 to HK$7.80, and (ii) JPY into HK$ is based on the approximate exchange rate of JPY1 to HK$0.07. Such exchange rates are for the purpose of illustration only and do not constitute a representation that any amounts in US$, JPY and HK$ have been, could have been or may be converted at such or any other rate or at all. As at the date of this announcement, the Board comprises Mr. LU Sung-Ching, Mr. LU Pochin Christopher and Mr. GILLESPIE William Ralph as executive Directors, Dr. CHEN Ga-Lane as non-executive Director, and Mr. CURWEN Peter D, Mr. TANG Kwai Chang and Mr. CHAN Wing Yuen Hubert as independent non-executive Directors. * Incorporated in the Cayman Islands with limited liability under the name Foxconn Interconnect Technology Limited and carrying on business in Hong Kong as FIT Hon Teng Limited 12