Cosmo Lady (China) Holdings Company 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 is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company. Cosmo Lady (China) Holdings Company Limited (Incorporated in the Cayman Islands with limited liability) (Stock code: 2298) INSIDE INFORMATION SUBSCRIPTION OF NEW SHARES UNDER THE GENERAL MANDATE This announcement is made by the Company pursuant to Rules and 13.09(2) of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the SFO. SUBSCRIPTION OF NEW SHARES On 5 May 2017, after the trading hours, the Company entered into the Subscription Agreement with the Subscriber, pursuant to which the Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 240,000,000 Subscription Shares, at the Subscription Price of HK$2.5 per Subscription Share. The Subscription Shares represent (i) approximately 12.59% of the existing issued share capital of the Company of 1,906,457,000 Shares as at the date of this announcement; and (ii) approximately 11.18% of the enlarged issued share capital of the Company of 2,146,457,000 Shares immediately following the Completion, assuming that there will be no change in the issued share capital of the Company (other than the issue of the Subscription Shares) between the date of this announcement and the Completion. 1

2 The Subscription Price of HK$2.5 per Subscription Share represents (i) a premium of approximately 9.17% to the closing price of HK$2.29 per Share as quoted on the Stock Exchange on 5 May 2017, being the date of the Subscription Agreement; and (ii) a premium of approximately 8.32% to the average closing price of approximately HK$2.308 per Share as quoted on the Stock Exchange for the last five consecutive trading days prior to the date of the Subscription Agreement. The Subscription Shares will be issued under the General Mandate and therefore the issue of the Subscription Shares will not be subject to the approval of the Shareholders. The gross proceeds and net proceeds to be raised from the Subscription will be HK$600,000,000 and approximately HK$599,000,000, respectively. The net issue price will be approximately HK$2.496 per Subscription Share. The net proceeds from the Subscription are intended to be used by the Company for financing the reforms in sales and distribution channels of the Group, potential merger, acquisition and cooperation opportunities, and general working capitals. Shareholders and potential investors should note that the Completion is subject to fulfilment of the conditions under the Subscription Agreement. As the Subscription may or may not proceed, Shareholders and potential investors should exercise caution when dealing in the Shares. INTRODUCTION On 5 May 2017, after the trading hours, the Company entered into the Subscription Agreement with the Subscriber, pursuant to which the Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 240,000,000 Subscription Shares, at the Subscription Price of HK$2.5 per Subscription Share. PRINCIPAL TERMS OF THE SUBSCRIPTION AGREEMENT Date 5 May 2017 (after trading hours) Parties Issuer : The Company Subscriber : Fosun Ruizhe Grace Investments Limited 2

3 The Subscriber is a company incorporated in the British Virgin Islands with limited liability, and is a wholly-owned subsidiary of Fosun International. The subscriber is principally engaged in industry investment and investment management. To the best of the Directors knowledge, information and belief and having made all reasonable enquiries, as at the date of this announcement, the Subscriber and its ultimate beneficial owners are Independent Third Parties. Number of Subscription Shares Pursuant to the Subscription Agreement, subject to the fulfilment or waiver (where applicable) of the conditions referred to in the paragraph headed Conditions of the Subscription below, the Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue 240,000,000 Subscription Shares at the Subscription Price. The Subscription Shares represent (i) approximately 12.59% of the existing issued share capital of the Company of 1,906,457,000 Shares as at the date of this announcement; and (ii) approximately 11.18% of the enlarged issued share capital of the Company of 2,146,457,000 Shares immediately following the Completion, assuming that there will be no change in the issued share capital of the Company (other than the issue of the Subscription Shares) between the date of this announcement and the Completion. The Subscriber will become a substantial shareholder (as defined under the Listing Rules) of the Company immediately after the Completion. Subscription Price The Subscription Price of HK$2.5 per Subscription Share represents: 1. a premium of approximately 9.17% to the closing price of HK$2.29 per Share as quoted on the Stock Exchange on 5 May 2017, being the date of the Subscription Agreement; and 2. a premium of approximately 8.32% to the average closing price of approximately HK$2.308 per Share as quoted on the Stock Exchange for the last five consecutive trading days prior to the date of the Subscription Agreement. The Subscription Price was determined after arm s length negotiation between the Company and the Subscriber with reference to the prevailing market price of the Shares, the recent market conditions and the future prospect of the Group. The aggregate nominal value of the Subscription Shares will be US$2,400,000. 3

4 The Directors consider that the terms of the Subscription Agreement (including the Subscription Price) are on normal commercial terms and are fair and reasonable and that the Subscription is in the interests of the Company and the Shareholders as a whole. Ranking of the Subscription Shares The Subscription Shares, when issued and fully paid-up, will rank pari passu in all respects among themselves and with the Shares in issue at the date of allotment and issue of the Subscription Shares. Conditions of the Subscription The Completion is conditional upon the fulfilment or (in respect of conditions (2) and/or (3) below only) waiver of the following conditions: 1. the Listing Committee having granted approval for the listing of, and permission to deal in, the Subscription Shares (if such approval is subject to any conditions, the Subscriber having consented to such conditions in writing, provided that the Subscriber shall not unreasonably withhold or delay its consent); 2. the representations and warranties of the Company under the Subscription Agreement being true, accurate and not misleading in all material respects as at the date of the Subscription Agreement and the date of the Completion and the Company having fully complied with the Subscription Agreement; and 3. there being no change in the controlling shareholder(s) of the Company. If the above conditions are not fulfilled or (in respect of conditions (2) and/or (3) above only) waived on or before 30 June 2017 (or such other date as may be agreed between the Company and the Subscriber), the rights and obligations of the Company and the Subscriber in respect of the Subscription shall forthwith terminate and none of them can have any claim against the other save and except any liability for antecedent breaches by either party. Completion of the Subscription The Completion is to take place on the third Business Day immediately following the fulfilment or waiver (where applicable) of the conditions referred to in the paragraph headed Conditions of the Subscription above or such other date as the Company and the Subscriber may mutually agree. If, after the fulfilment or waiver (where applicable) of such conditions, the Completion fails to take place due to any default of any party and the non-defaulting party elects to terminate the Subscription Agreement, the defaulting party shall pay the non-defaulting party a fee of HK$10,000,000. 4

5 Restrictions on disposal of Subscription Shares The Subscriber unconditionally and irrevocably undertakes to the Company that it shall not (and, if applicable, shall procure its nominee(s) not to), at any time: 1. dispose of or permit any disposal of the Subscription Shares if such disposal is in breach of any applicable laws or the Listing Rules; and 2. dispose of any Subscription Shares to any competitor(s) of the Company. Nomination of Director Pursuant to the Subscription Agreement, subject to applicable laws, regulations (including but not limited to the Listing Rules) and articles of association of the Company, the Subscriber or its nominee(s) (if applicable) shall have the right to nominate one candidate to be put forward for appointment to the Board as non-executive Director so long as the Subscriber holds 10% or more of the issued share capital of the Company, provided that such candidate and his/her appointment fulfil the requirements under applicable laws, regulations (including but not limited to the Listing Rules) and articles of association of the Company, including but not limited to requirements as to his/her qualification, experience, retirement and re-election. The parties further agree that: 1. the first Director nominated by the Subscriber or its nominee(s) (if applicable) shall be appointed for an initial term of three years (the Initial Term ; 2. during the Initial Term, as long as the Subscriber or its nominee(s) (if applicable) holds any Share of the Company but subject to applicable laws, regulations (including but not limited to the Listing Rules) and articles of association of the Company, such first Director shall be allowed to remain in office until the expiry of the Initial Term. If the Subscriber or its nominee(s) (if applicable) ceases to hold any Share of the Company during the Initial Term, such first Director shall resign immediately; and 3. after the Initial Term, any Director nominated by the Subscriber or its nominee(s) (if applicable) shall resign immediately if the Subscriber or its nominee(s) (if applicable) holds less than 10% of the total issued share capital of the Company. 5

6 General Mandate to allot and issue the Subscription Shares The Subscription Shares will be allotted and issued under the General Mandate granted by the Shareholders to the Directors. Accordingly, the issue of the Subscription Shares will not be subject to the approval of the Shareholders. The General Mandate entitles the Directors to allot, issue and deal with Shares not exceeding 20% of the issued capital of the Company. The Company is allowed to be issued up to 381,291,400 Shares under the General Mandate. Up to the date of this announcement, no Shares have been allotted and issued under the General Mandate. Application for listing An application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Subscription Shares. UNDERTAKINGS BY THE FOUR CONTROLLING SHAREHOLDERS In the belief that the Share subscription by the Subscriber will be beneficial to the Company and the Shareholders as a whole, at the request of the Subscriber, the Four Controlling Shareholders have agreed to provide certain undertakings to the Subscriber under the Letter of Undertaking. Minimum financial performance requested by the Subscriber As requested by the Subscriber, the Four Controlling Shareholders have guaranteed to the Subscriber (the Guarantee that : 1. (i) the revenue of the Group for the year ending 31 December 2017 will increase by no less than 3% when compared to the revenue of the Group for the year ended 31 December 2016 and the revenue of the Group for the year ending 31 December 2018 will increase by no less than 6% when compared to the revenue of the Group for the year ending 31 December 2017; or (ii) the revenue of the Group for the year ending 31 December 2018 will increase by no less than 9.18% when compared to the revenue of the Group for the year ended 31 December 2016; and 2. (i) excluding any Exceptional Items, the profit of the Group for the year ending 31 December 2017 will increase by no less than 20% when compared to the profit of the Group for the year ended 31 December 2016, and the profit of the Group for the year ending 31 December 2018 will increase by no less than 15% when compared to the profit of the Group for the year ending 31 December 2017; or (ii) excluding any Exceptional Items, the profit of the Group for the year ending 31 December 2018 will increase by no less than 38% when compared to the profit of the Group for the year ended 31 December

7 The above minimum percentage thresholds were arrived at purely based on the Subscriber s own requirement on a minimum investment return without taking into account any agreed valuations, forecast, estimate or projections. If the applicable minimum thresholds are not met, the Four Controlling Shareholders will be severally (based on their shareholdings in Harmonious Composition Investment Holdings Limited, the holding company of the Company holding approximately 61.75% of the total issued share capital of the Company as at the date of this announcement) liable to pay to the Subscriber a total sum of HK$100,000,000 as compensation. Other undertakings At the request of the Subscriber, the Four Controlling Shareholders further undertake on a several basis in the Letter of Undertaking that unless with the written consent of the Subscriber, none of them shall carry out any share transfer or create any encumbrances over shares such that their respective direct or indirect holding of the Shares of the Company falls below the following levels before the expiry of one month following the publication of the annual report of the Company for the year ending 31 December 2018: 1. Mr. Zheng shall directly or indirectly hold at least % of the issued Shares ; 2. Mr. Zhang shall directly or indirectly hold at least 5.574% of the issued Shares ; 3. Mr. Lin shall directly or indirectly hold at least 4.050% of the issued Shares; and 4. Mr. Cheng shall directly or indirectly hold at least 0.999% of the issued Shares. If any of the Four Controlling Shareholders breaches the above minimum shareholding undertakings, the relevant defaulting Four Controlling Shareholder(s) will be deemed as in breach of the Guarantee. The Letter of Undertaking will only become effective upon Completion. If the Subscription Agreement is terminated for any reason before Completion or the Subscriber (or its nominee(s) (if applicable)) disposes of any Share of the Company on or before 31 December 2018, the Letter of Undertaking shall automatically terminate forthwith. 7

8 STRATEGIC COOPERATION AGREEMENT WITH THE FOSUN GROUP The Subscriber is a wholly-owned subsidiary of Fosun International. Fosun Group has been persistently taking roots in China and investing in China s growth fundamentals. On 5 May 2017, the Company and the Fosun Group have also entered into a strategic cooperation agreement pursuant to which the parties agreed to utilize their respective resources, expertise and experience to explore various possible in-depth cooperations with a view to further promote the brands and development of the Group in the intimate wear industry in China. The Directors consider that the investment in the Group by Fosun Group as a strategic investor demonstrates Fosun Group s confidence towards the fashion industry of the PRC and the future development prospect of the Group. REASONS FOR THE SUBSCRIPTION AND USE OF PROCEEDS The Group is principally engaged in the designing, researching, developing and selling of intimate wear products in the PRC. The gross proceeds and net proceeds to be raised from the Subscription will be HK$600,000,000 and approximately HK$599,000,000, respectively. The net issue price will be approximately HK$2.496 per Subscription Share. The net proceeds from the Subscription are intended to be used by the Company for financing the reforms in sales and distribution channels of the Group, potential merger, acquisition and cooperation opportunities, and general working capitals. As at the date of this announcement, save as already disclosed by the Company, the Group has not entered into any agreement in relation to any potential new merger, acquisition and cooperation projects. The Directors consider that the Subscription represents a valuable opportunity for the Company to raise additional funds for the above-mentioned purpose as well as to introduce the Subscriber as important strategic Shareholder and to strengthen the capital base and the financial position of the Group. EQUITY FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST TWELVE MONTHS The Company had not conducted any other equity fund raising activities in the past twelve months immediately preceding the date of this announcement. 8

9 EFFECT OF THE SUBSCRIPTION OF NEW SHARES ON THE SHAREHOLDING STRUCTURE Set out below is the shareholding structure of the Company as at the date of this announcement and immediately after the Completion assuming there being no other change in the shareholding structure and share capital of the Company immediately after the date of this announcement and up to the Completion: Shareholders As at the date of this announcement Number Approximate of Shares percentage (%) (Note 3) Immediately after the Completion Number Approximate of Shares percentage (%) (Note 3) Non-public Shareholders: Harmonious Composition Investment Holdings Limited and parties acting in concert with it (Note 1) 1,177,257, ,177,257, The Subscriber 240,000, Mr. Wen Baoma (Note 2) 5,000, ,000, Public Shareholders: 724,199, ,199, Total 1,906,457, ,146,457, Notes: 1. Mr. Zheng Yaonan, Mr. Zhang Shengfeng, Mr. Lin Zonghong, Mr. Cheng Zuming, Great Brilliant Investment Holdings Limited, Forever Flourish International Holdings Limited, Forever Shine Holdings Limited, Mountain Dragon Investment Limited and Harmonious Composition Investment Holdings Limited, acting in concert, together controlled (and each of them was deemed to be interested in) approximately 61.75% of the total issued share capital of the Company as at the date of this announcement and are, together, expected to control (and each of them will be deemed to be interested in) approximately 54.85% of the total issued share capital of the Company immediately after the Completion. Ms. Wu Xiaoli (the spouse of Mr. Zheng), Ms. Cai Shaoru (the spouse of Mr. Zhang) and Ms. Cai Jingqin (the spouse of Mr. Lin) are deemed to be interested in the same number of Shares in which Mr. Zheng, Mr. Zhang and Mr. Lin are interested, respectively. 2. Mr. Wen Baoma is the non-executive Director of the Company. 3. The percentages are subject to rounding difference, if any. 9

10 Shareholders and potential investors should note that the Completion is subject to fulfilment of the conditions under the Subscription Agreement. As the Subscription may or may not proceed, Shareholders and potential investors should exercise caution when dealing in the Shares. DEFINITIONS In this announcement, the following expressions shall have the following meanings, unless the context requires otherwise: Board Business Day Company Completion Conditions controlling shareholder(s) Director(s) Exceptional Items the board of Directors any day (other than a Saturday, Sunday, or other public holidays in Hong Kong, or a day on which a tropical cyclone warning signal numbered 8 or above or a black rainstorm warning signal is hoisted in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.) on which licensed banks in Hong Kong are open for business Cosmo Lady (China) Holdings Company Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange (Stock Code: 2298) completion of the Subscription pursuant to the terms and conditions of the Subscription Agreement the conditions precedent to the Completion, as more particularly set out under the paragraph headed Principal terms of the Subscription Agreement Conditions of the Subscription in this announcement has the meaning ascribed to such term in the Listing Rules the director(s) of the Company the profit or loss arising from disposal of subsidiaries, associated companies, land use rights, intangible assets, property, plant and equipment of the Group 10

11 Four Controlling Shareholders Fosun Group Fosun International General Mandate Group HK$ Hong Kong Independent Third Party(ies) Letter of Undertaking Listing Committee Listing Rules Mr. Cheng Mr. Zheng, Mr. Zhang, Mr. Lin and Mr. Cheng Fosun International and its subsidiaries Fosun International Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange (stock code: 00656) general mandate granted to the Directors by the Shareholders pursuant to an ordinary resolution passed at the annual general meeting of the Company held on 25 May 2016 to issue, allot and deal with up to 381,291,400 new Shares, representing 20% of the number of Shares in issue as at the date of passing of the relevant resolution the Company and its subsidiaries Hong Kong dollar(s), the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC third party(ies) who is (are) not connected with the Company and its connected persons (as defined under the Listing Rules) a letter of undertaking to the Subscriber dated 5 May 2017 executed by the Four Controlling Shareholders on a several basis the listing committee of the Stock Exchange the Rules Governing the Listing of Securities on the Stock Exchange Mr. Cheng Zuming, a Director and a controlling shareholder of the Company 11

12 Mr. Lin Mr. Zhang Mr. Zheng PRC SFO Share(s) Shareholder(s) Stock Exchange Subscriber Subscription Agreement Subscription Price Subscription Share(s) Mr. Lin Zonghong, a Director and a controlling shareholder of the Company Mr. Zhang Shengfeng, a Director and a controlling shareholder of the Company Mr. Zheng Yaonan, the chairman, a Director and a controlling shareholder of the Company the People s Republic of China, and for the purpose of this announcement only, excluding Hong Kong, the Macau Special Administrative Region of the People s Republic of China and Taiwan Securities and Futures Ordinance (chapter 571 of the laws of Hong Kong) ordinary share(s) of US$0.01 each in the share capital of the Company holder(s) of the Shares The Stock Exchange of Hong Kong Limited Fosun Ruizhe Grace Investments Limited, company incorporated in the British Virgin Islands with limited liability and is a wholly-owned subsidiary of Fosun International the subscription agreement dated 5 May 2017 and entered into between the Company and the Subscriber the subscription price of HK$2.5 per Subscription Share a total of 240,000,000 new Shares to be allotted and issued by the Company to the Subscriber pursuant to the terms and conditions of the Subscription Agreement 12

13 US$ United States dollars, the lawful currency of United States % per cent. Hong Kong, 5 May 2017 By order of the Board Cosmo Lady (China) Holdings Company Limited Zheng Yaonan Chairman As at the date of this announcement, the Board comprises Mr. Zheng Yaonan, Mr. Zhang Shengfeng, Mr. Lin Zonghong, Mr. Cheng Zuming and Ms. Wu Xiaoli as executive directors; Mr. Wen Baoma as non-executive director; and Mr. Yau Chi Ming, Dr. Dai Yiyi and Mr. Chen Zhigang as independent non-executive directors. 13