VIVA CHINA HOLDINGS 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. This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company. VIVA CHINA HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8032) ISSUE OF HK$778,000,000 CONVERTIBLE NOTE DUE 2021 UNDER THE GENERAL MANDATE On 5 December 2016 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement in respect of the conditional issuance of the Note to the Subscriber. The Note is convertible in full at the initial Conversion Price of HK$0.840 per Conversion Share into a maximum of 926,190,476 Conversion Shares, representing (i) approximately 10.57% of all issued Shares as at the date of this announcement; and (ii) approximately 9.56% of all issued Shares as enlarged by the allotment and issue of the Conversion Shares. On 5 December 2016 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement in respect of the conditional issuance of the Note to the Subscriber the terms of which are summarized below: THE SUBSCRIPTION AGREEMENT Date: 5 December 2016 (after trading hours) Parties: (i) The Company (ii) The Subscriber To the best of the Directors knowledge, information and belief having made all reasonable enquiries, the Subscriber and its ultimate beneficial owner(s) are independent third parties and not connected persons of the Group. 1

2 The subscription price The subscription price payable by the Subscriber for the Note is HK$778,000,000, being the full face value of the principal amount of the Note. Conditions precedent Completion is conditional upon: (a) (b) (c) the Stock Exchange having granted unconditionally the listing of and permission to deal in the Conversion Shares and such permission not being subsequently revoked prior to the issue of the Certificate to the Subscriber; all other requisite authorisations in connection with the entering into and performance of the terms of the Subscription Agreement having been obtained by the Group; the Subscriber having obtained relevant internal approval in connection with the subscription; (d) the representations and warranties of the Company in the Subscription Agreement being true, accurate and correct in all material respects and not misleading; and (e) no event of default as stipulated under the terms and conditions of the Note is continuing or would result from the issuance of the Note. The above conditions precedent are to be fulfilled as early as practicable and in any event not later than 31 March 2017 (or such later date as the parties may agree), failing which the Subscription Agreement will lapse. Completion Completion will take place on the 3rd business day (or such other date as the parties may agree) following the fulfilment or waiver of the above conditions precedent (save for condition (a) which cannot be waived), the Company will issue to the Subscriber the Certificate and the Subscriber will make payment for the principal amount of the Note being subscribed. Rights of the Subscriber Upon completion of the Subscription Agreement, VCHL, a wholly-owned subsidiary of the Company, will charge over to the Subscriber the LN PCS in the amount of HK$431,197,868 held by the Group for the due and punctual performance of the obligations of the Company under the Subscription Agreement and the Note towards the Subscriber. VCHL will, in the absence of any breach, be entitled to receive any dividends received in cash and to exercise the conversion rights attached to the LN PCS collateral at any time. VCHL may elect to release and discharge the whole or any part of the LN PCS collateral and substitute therefor with the share capital of other members of the Group, so long as the loan-to-value ratio (calculated as the percentage of the outstanding principal amount of the Note divided by the total value of collateral) immediately after the substitution will not exceed 50%. As a Noteholder, the Subscriber may also appoint one representative to attend Board meetings as a nonvoting observer, until such time the Subscriber ceases to be the single largest Noteholder. 2

3 PRINCIPAL TERMS OF THE NOTE The principal terms of the Note are summarised below: Issuer: Principal amount: Maturity Date: Status: Ranking: Transferability: Interest: Default interest: Conversion: Conversion Price: The Company HK$778,000,000 The date falling on the fifth (5th) anniversary of the Issue Date The Note will constitute general and unsecured obligations of the Company and the Note will rank pari passu with all other present and future unsecured and unsubordinated obligations of the Company except for obligations accorded preference by mandatory provisions of applicable law. The Conversion Shares will rank pari passu in all respects with the Shares in issue on the date of allotment and issue. The Note may be transferred in whole or in part and with the prior approval from the Stock Exchange, if necessary, for transfer to connected persons of the Company. 5% per annum payable quarterly in arrears after the Issue Date. 0.02% per day on any outstanding principal amount and interests (excluding any default interest), but the total default interest payable will not exceed the outstanding principal amount of the Note. The Noteholder may convert the whole or part of the principal amount of the Note into Conversion Shares at any time during the conversion period in principal amounts of not less than HK$10,000,000 on each conversion, provided that the Noteholders may not exercise the conversion rights, if following such exercise, the Company s minimum public float in Shares cannot be maintained, or if such exercise is prohibited by the Takeovers Code. The price at which each Share will be issued upon conversion will initially be HK$0.840 per Conversion Share, subject to adjustment as necessary in case of share consolidation, subdivision or reclassification, issue of Shares (other than in lieu of a cash dividend) by way of capitalisation of profits or reserve, capital distributions, right issues of shares or grant of options over shares exerciseable at less than 80% of the market price, or issues of shares or convertible securities to independent third parties at less than 80% of the market price or to connected person of the Company at less than 90% of the market price. 3

4 The initial Conversion Price represents: (i) (ii) a premium of 20% to the closing price of HK$0.700 per Share as quoted on the Stock Exchange on the trading day immediately preceding the date of signing of the Subscription Agreement; and a premium of approximately 18% to the average closing price of HK$0.712 per Share as quoted on the Stock Exchange for the five consecutive trading days immediately prior to the date of signing of the Subscription Agreement. Conversion Shares: Conversion period: Mandatory conversion: The Note is convertible in full at the initial Conversion Price of HK$0.840 per Conversion Share, into a maximum number of 926,190,476 Conversion Shares, representing: (i) approximately 10.57% of all issued Shares as at the date of this announcement; and (ii) approximately 9.56% of all issued Shares as enlarged by the allotment and issue of the Conversion Shares upon the exercise of the conversion rights in full. The maximum aggregate nominal value of the Conversion Shares (assuming no adjustment to the Conversion Price) is HK$46,309, the period commencing on the day following the first anniversary of the Issue Date of the Note and expiring on the 10th day preceding the Maturity Date (both days inclusive). the Company may at any time during the conversion period require the Noteholder to convert the whole or part of the outstanding principal amount of the Note, as the Company may determine, within 5 business days following: (i) (ii) the average daily closing price and the lowest closing price for Shares for a consecutive period of twelve full trading days reaches 180% and 150% respectively of the then prevailing Conversion Price; and the average daily turnover and the lowest daily turnover of the Shares for the period mentioned in sub-paragraph (i) above reaches HK$20,000,000 and HK$10,000,000 respectively. Maturity redemption: The Company will redeem the Note on the Maturity Date at the outstanding principal amount on the Note plus an additional amount resulting in an internal rate of return on the amount of the Note at 10.5% per annum (having included all interests paid and payable) calculated from the Issue Date up to (and including) the Maturity Date. 4

5 Issuer s redemption: At any time from the day following the first anniversary date of the Issue Date up to the Maturity Date, the Company may by written notice to the Noteholder redeem any part of the Note then outstanding at the outstanding principal amount on the Note being redeemed plus an additional amount resulting in an internal rate of return on the amount of the Note being redeemed at 10.5% per annum (having included all interests paid and payable) calculated from the Issue Date up to (and including) the date of the redemption notice. If the Group s finance costs (disregarding any finance costs in relation to the principal of the Note corresponding to the amount of the Group s investment commitment, if any, in the Sports Industry Fund) for two consecutive audited financial years after the Issue Date represent more than half of the Group s earnings before interest, tax, depreciation and amortization (excluding any non-cash expenses), the Subscriber may, under the Subscription Agreement, request the Company to redeem any part of the Note as held by it at the outstanding principal amount on the Note being redeemed plus an additional amount resulting in an internal rate of return on the amount being redeemed at 10.5% per annum (having included all interests paid and payable) calculated from the Issue Date up to (and including) the date of payment. Redemption upon default: If any event of default occurs and has not been remedied by the Company (within 10 business days following the Noteholder s or the Company s notification to the other (whichever is earlier), the Note will be redeemed by the Company at the outstanding principal amount on the Note plus an additional amount resulting in an internal rate of return on the amount of the Note at 12.0% per annum (having included all interests paid and payable) calculated from the Issue Date up to (and including) the date of payment. In addition to customary events of default, other events of default under the Note include: (a) (b) Mr. Li Ning and his family members ceasing to maintain his controlling status of the Company; any Borrowing by a member of the Group of more than HK$200,000,000 being in default; (c) the Group, without the Noteholder s prior written consent, sells any substantial assets at less than 80% of their book value; (d) the Group incurs, without the prior written consent of the Noteholder, additional Borrowing, resulting in the asset to equity ratio of the Group exceeding 2.5; and (e) a change having a material adverse effect in respect of the principal business scope of the Group, without the prior written consent of the Noteholder and any litigation which may have a material adverse effect on the Group as a whole. 5

6 Listing: The Company will make an application to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares on the Stock Exchange. No application will be made for listing of the Note. GENERAL MANDATE The Conversion Shares will be allotted and issued pursuant to the General Mandate granted to the Directors pursuant to an ordinary resolution passed by the Shareholders at the annual general meeting of the Company held on 6 June Accordingly, the issue of the Note and the allotment and issue of the Conversion Shares (upon conversion of the Note at the initial Conversion Price) are not subject to shareholders approval. Under the General Mandate, the Company is authorised to allot, issue and deal with additional Shares and to make or grant offers, agreement and options (including bonds, warrants, and debentures convertible into Shares) up to a maximum of 20% of the aggregate number of shares of the Company in issue as at the date of the aforesaid annual general meeting, which amounts to 1,749,889,745 new Shares. Immediately before the date of the Subscription Agreement, the General Mandate has not been utilized. INFORMATION ON THE GROUP AND THE SUBSCRIBER The Group is principally engaged in (i) sports competition and event production and management, sports talent management, and provision of sports-related consultancy service; and (ii) property and community development that includes, but not limited to, the management and operations of the Li Ning Sports Park and establishing sports communities in the PRC. It is the Group s strategy to drive the establishment of an integrated sports platform by capturing the commercial value of its various sports resources, and building people-oriented sports communities that promote national fitness with its sports portfolio infused with diversified entertainment and leisure elements, so as to enhance the quality of living and promote sportive and healthier lifestyle across the PRC. The Subscriber is wholly-owned by China Huarong International Holdings Limited, a company incorporated in Hong Kong with limited liability, which is in turn an indirect wholly-owned subsidiary of China Huarong. REASONS FOR THE SUBSCRIPTION AGREEMENT AND USE OF PROCEEDS The Group is positive about the growth potential of the sports industry backed by the preferential state policies and guidelines in needs of sports services and infrastructure network of fitness and recreation across the PRC, and integrated development of the sports industry with residential, cultural, commercial and entertainment facilities in achieving national physical fitness. In this regard, the issuance of the Note is beneficial to the Group by enhancing its financing capability and flexibility to timely seize investment and collaboration opportunities of potential community development projects for further developing Li Ning Sports Parks, national sport facilities, sports community and other related projects brought by the preferential national policies and the sports industry development during the 13th Five-Year Plan period. Furthermore, the issuance of the Note marks a closer relationship of the Company with the group of China Huarong for further collaboration and business development, since the Group intends to pursue the opportunity to jointly establish the Sports Industry Fund with the group of China Huarong for the purpose of investing in the Group s various sports-related projects. As at the date of this announcement, the formation of the Sports Industry Fund is still subject to negotiation and the entering into of formal agreement. If any arrangement between the parties in relation to the establishment of the Sports Industry Fund will constitute notifiable transactions of the Company pursuant to the GEM Listing Rules, further announcement will be made by the Company if and when appropriate. 6

7 The Directors consider the issuance of the Note as an appropriate means to ready financial resources for the Group for business expansion and investment, since there will be no immediate dilution effect on the shareholding of the existing Shareholders. The Directors consider that the issuance of the Note, taking into account its terms and conditions, are on normal commercial terms determined after arm s length negotiation between the Group and the Subscriber, and the terms and conditions thereof are fair and reasonable and in the interests of the Company and its Shareholders as a whole. The gross proceeds from the issue of the Note will be approximately HK$778,000,000. It is expected that net proceeds of approximately HK$777,000,000 will be raised after deduction of all relevant costs and expenses. The Company intends to use the net proceeds for investing into the Sports Industry Fund, for acquisitions and investments that are aligned with the Company s prioritized business strategy, and for its general working capital use. EFFECTS ON THE SHAREHOLDING OF THE COMPANY For illustrative purposes, the tables below set out the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after the full conversion of the Note at the initial Conversion Price pursuant to the Subscription Agreement (assuming that there is no other change in the existing shareholding of the Company): Shareholders As at the date of this announcement Immediately after the full conversion of the Note No. of Shares Approximate % No. of Shares Approximate % Mr. Li Ning and his family interests 5,832,451, ,832,451, Other connected persons 76,435, ,435, Public Shareholders The Noteholder 926,190, Other public Shareholders 2,855,474, ,855,474, Total 8,764,360, ,690,551, FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS The Company has not conducted any equity fund raising activities in the past twelve months prior to the date of this announcement. 7

8 DEFINITION In this announcement, the following expressions have the meanings set out below unless the context otherwise requires. Borrowing Board Certificate China Huarong Company connected person Conversion Price Conversion Share(s) Directors family member(s) General Mandate Group Hong Kong Issue Date GEM GEM Listing Rules means any financial indebtedness incurred but exclude any payables incurred in the ordinary course of day-to-day business operations of the Group the board of Directors the certificate to be issued in respect of the Note China Huarong Asset Management Co., Ltd., a state-owned, non-bank financial company incorporated in the PRC, the H shares of which are listed on the Main Board of the Stock Exchange (stock code: 2799) Viva China Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the Growth Enterprise Market of the Stock Exchange (stock code: 8032) has the meaning ascribed to it under the GEM Listing Rules the price at which each Share will be issued upon conversion, which will initially be HK$0.840 per Share and may be adjusted from time to time the Shares to be issued by the Company upon exercise or deemed exercise of the conversion rights the directors of the Company has meaning ascribed to it under the GEM Listing Rules a general mandate to allot and issue Shares granted by the Shareholders on 6 June 2016 the Company and its subsidiaries Hong Kong Special Administrative Region of the PRC the date on which the subscription moneys in respect of the Note is received in full by the Company The Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on GEM 8

9 LN PCS Maturity Date Note Noteholder PRC Shareholders Shares Sports Industry Fund Stock Exchange Subscriber Subscription Agreement Takeovers Code VCHL means the perpetual convertible securities issued by Li Ning Company Limited in 2013 or 2015, as the case may be, held by the Group from time to time, and if the context requires, may refer to any part thereof the date falling on the fifth anniversary of the Issue Date the convertible note(s) in the aggregate principal amount of HK$778,000,000, to be issued by the Company with the benefit of and subject to the provisions of its terms and conditions or, as the context may require, any part of the principal amount thereof the person(s) who is/are for the time being the registered holder(s) of the Note the People s Republic of China, which for the purpose of this announcement, excludes Hong Kong, Taiwan and Macau Special Administration Region of the PRC the holder of Shares the ordinary shares of HK$0.05 each in the issued share capital of the Company from time to time a fund to be jointly established by the Group and the affiliate(s) of the Subscriber in the PRC for, among other things, the investment, promotion and development of the sports and sport community businesses of the Group The Stock Exchange of Hong Kong Limited Lake Tai Investment Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, an indirect wholly-owned subsidiary of China Huarong the subscription agreement dated 5 December 2016 entered into between the Company and the Subscriber in relation to the subscription of the Note The Codes on Takeovers and Mergers and Share Buy-backs Viva China Holdings Ltd, a company incorporated in the British Virgin Islands, a wholly-owned subsidiary of the Company % per cent 9

10 In case of any inconsistency between the English version and the Chinese version of the announcement, the English version shall prevail. Hong Kong, 5 December 2016 As at the date of this announcement, the Board comprises: Executive Directors: Mr. LI Ning (Chairman and Chief Executive Officer) Mr. CHAN Ling (Chief Operating Officer) Mr. LI Chunyang Mr. Li Qilin Non-executive Directors: Mr. CHAN James Mr. MA Wing Man Independent non-executive Directors: Mr. CHEN Johnny Mr. LIEN Jown Jing, Vincent Mr. NG Sau Kei, Wilfred By order of the Board Viva China Holdings Limited Li Ning Chairman & Chief Executive Officer This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading. This announcement will remain on the GEM website at on the Latest Company Announcements page for at least seven days from the date of its posting and the website of the Company at 10