Louis XIII Holdings Limited 路易十三集團有限公司

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION Hong Kong Exchanges and Clearing Limited and the Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular. If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Louis XIII Holdings Limited (the Company ), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank manager, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. Louis XIII Holdings Limited 路易十三集團有限公司 * (Incorporated in Bermuda with limited liability) (Stock code: 577) PROPOSED SHARE CONSOLIDATION AND CONTINUING CONNECTED TRANSACTION BUSINESS SERVICES AGREEMENT Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders A notice convening the special general meeting of the Company to be held at Victoria Room, 2nd Floor, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on Friday, 24 May 2013 at 10:30 a.m. is set out on pages 34 to 36 of this circular. If you are not able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the principal place of business of the Company in Hong Kong at 16th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish. * For identification purpose only 8 May 2013

2 CONTENTS Page DEFINITIONS... 1 EXPECTED TIMETABLE... 4 LETTER FROM THE BOARD Introduction... 6 Proposed Share Consolidation... 7 Business Services Agreement SGM Recommendation Additional Information APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE APPENDIX II LETTER FROM RHB OSK CAPITAL APPENDIX III GENERAL INFORMATION NOTICE OF THE SGM

3 DEFINITIONS In this circular, the following expressions have the following meanings unless the context requires otherwise: Associate(s) Board Business Day has the meaning ascribed thereto under the Listing Rules; the board of Directors; any day (other than Saturday or Sunday or public holiday) on which banks in Hong Kong are open for business during their normal business hours; Business Services Agreement the agreement between PYE and ITC Properties Holdings dated 24 April 2013; CCASS Company Consolidated Share(s) Convertible Bonds Directors Exchange Right Existing Share Certificate(s) Falloncroft Falloncroft Shares the Central Clearing and Settlement System established and operated by the HKSCC; Louis XIII Holdings Limited (HK Stock Code: 577), a company incorporated in Bermuda with limited liability whose shares are listed on the Stock Exchange; ordinary share(s) of HK$2.00 each in the share capital of the Company after the Share Consolidation; the zero coupon convertible bonds due 2025 in the outstanding principal amount of HK$1,202 million issued by the Company; the directors of the Company; the right to exchange Falloncroft Shares subscribed by the management of Falloncroft for Shares in the Company, as further described in the circular of the Company dated 5 January 2013; certificate(s) in respect of the existing Share(s) either: (a) in blue bearing the former name of the Company, Paul Y. Engineering Group Limited; or (b) in yellow bearing the name of the Company; Falloncroft Investments Limited, a company incorporated in the British Virgin Islands; ordinary shares in the capital of Falloncroft; 1

4 DEFINITIONS FY Group HK$ HKSCC Hong Kong Independent Board Committee Independent Financial Adviser or RHB OSK Capital Independent Shareholders ITC Properties ITC Properties Group ITC Properties Holdings ITC Properties Holdings Group Latest Practicable Date Listing Rules Macau New Share Certificate(s) the financial year ending 31 March of the relevant year; the Company and its subsidiaries; Hong Kong dollars, the lawful currency of Hong Kong; Hong Kong Securities Clearing Company Limited; Hong Kong Special Administrative Region of the PRC; an independent committee of the Board which comprises Ir James Chiu, Professor Lee Chack Fan, Mr Iain Ferguson Bruce and Mr Francis Goutenmacher; RHB OSK Capital Hong Kong Limited, a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and Independent Shareholders on the fairness and reasonableness of the Business Services Agreement and the annual cap amounts and the transactions contemplated thereunder; shareholders of the Company other than ITC Properties and its Associates; ITC Properties Group Limited, a company incorporated in Bermuda with limited liability whose shares are listed on the Stock Exchange; ITC Properties and its subsidiaries; ITC Properties Holdings Group Limited, a company incorporated in the British Virgin Islands with limited liability; ITC Properties Holdings and its Associates from time to time; 6 May 2013, being the latest practicable date for ascertaining certain information in this circular prior to its publication; The Rules Governing the Listing of Securities on the Stock Exchange; Macau Special Administrative Region of the PRC; certificate(s) in respect of the Consolidated Share(s) in pink; 2

5 DEFINITIONS PRC PYE PYE Group Services SFO SGM Share(s) the People s Republic of China, and for the purpose of this circular, excluding Hong Kong, Macau and Taiwan; Paul Y. Engineering (BVI) Limited, a company incorporated in the British Virgin Islands with limited liability; PYE and its subsidiaries from time to time; services covering construction, maintenance, property development management, project management, building management, facilities management, construction related advisory services and other related services, including provision of services as main contractor, project manager, consultant and sub-contractor for a variety of works including superstructure, foundation, civil engineering, maintenance, construction and interior decoration; the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong); the special general meeting of the Company to be held at Victoria Room, 2nd Floor, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on Friday, 24 May 2013 at 10:30 a.m., notice of which is set out on pages 34 to 36 of this circular; ordinary share(s) of HK$0.20 each in the share capital of the Company before the Share Consolidation; Share Consolidation the proposed share consolidation of every 10 Shares into 1 Consolidated Share; Shareholders Stock Exchange the shareholders of the Company; and The Stock Exchange of Hong Kong Limited. 3

6 EXPECTED TIMETABLE Set out below is the expected timetable for the implementation of the Share Consolidation. The below expected timetable is subject to the satisfaction of all of the conditions for the Share Consolidation, including without limitation, the approval of the Share Consolidation by Shareholders at the SGM, and is therefore for indicative purpose only. Further announcement(s) will be made by the Company regarding any significant change to the following expected timetable as and when appropriate: 2013 Despatch of circular and notice of the SGM... On or before Wednesday, 8 May Latest time for lodging the form of proxy for the SGM... 10:30 a.m. on Wednesday, 22 May Date and time of the SGM... 10:30 a.m. on Friday, 24 May Announcement of voting results of the SGM... Friday, 24 May Effective date for the Share Consolidation.... Monday, 27 May First day of free exchange of Existing Share Certificates for New Share Certificates... Monday, 27 May Dealings in the Consolidated Shares commences... 9:00 a.m. on Monday, 27 May Original counter for trading in the existing Shares in board lots of 2,000 Shares (in the form of Existing Share Certificates) temporarily closes... 9:00 a.m. on Monday, 27 May Temporary counter for trading in the Consolidated Shares in board lots of 200 Consolidated Shares (in the form of Existing Share Certificates) opens... 9:00 a.m. on Monday, 27 May Original counter for trading in the Consolidated Shares in board lots of 2,000 Consolidated Shares (in the form of New Share Certificates) re-opens.... 9:00 a.m. on Monday, 10 June Parallel trading in the Consolidated Shares (in the form of both Exiting Share Certificates and New Share Certificates) commences... 9:00 a.m. on Monday, 10 June Operation of odd lot trading facility for the Consolidated Share commences Monday, 10 June 4

7 EXPECTED TIMETABLE Parallel trading in the Consolidated Shares (in the form of both Existing Share Certificates and New Share Certificates) ends... 4:00 p.m. on Tuesday, 2 July Operation of odd lot trading facility for the Consolidated Shares ends.... Tuesday, 2 July Temporary counter for trading in the Consolidated Shares in board lots of 200 Consolidated Shares (in the form of Existing Share Certificates) closes.... 4:00 p.m. on Tuesday, 2 July Last day for free exchange of Existing Share Certificates for New Share Certificates... Thursday, 4 July Note: All times and dates in this circular refer to Hong Kong local times and dates. 5

8 LETTER FROM THE BOARD Louis XIII Holdings Limited 路易十三集團有限公司 * (Incorporated in Bermuda with limited liability) (Stock code: 577) Executive Directors: Registered Office: Mr Stephen Hung (Joint Chairman) Clarendon House Mr Peter Lee Coker Jr. (Joint Chairman) 2 Church Street Mr Lau Ko Yuen, Tom (Deputy Chairman) Hamilton HM 11 Mr Walter Craig Power (Chief Executive Officer) Bermuda Independent Non-Executive Directors: Ir James Chiu, OBE, JP Professor Lee Chack Fan, SBS, JP Mr Iain Ferguson Bruce Mr Francis Goutenmacher Principal Place of Business in Hong Kong: 16th Floor, Paul Y. Centre 51 Hung To Road Kwun Tong, Kowloon Hong Kong 8 May 2013 To the Shareholders and, for information only, holders of the convertible bonds of the Company Dear Sir or Madam, INTRODUCTION PROPOSED SHARE CONSOLIDATION AND CONTINUING CONNECTED TRANSACTION BUSINESS SERVICES AGREEMENT Reference is made to the announcement of the Company dated 24 April The purpose of this circular is to provide you with, among other things: (i) details of the Share Consolidation; (ii) details of the Business Services Agreement; (iii) the advice of the Independent Financial Adviser in relation to the Business Services Agreement; (iv) the recommendation of the Independent Board Committee in relation to the Business Services Agreement; and (v) the notice of the SGM. * For identification purpose only 6

9 LETTER FROM THE BOARD The Independent Board Committee, comprising Ir James Chiu, Professor Lee Chack Fan, Mr Iain Ferguson Bruce and Mr Francis Goutenmacher, being independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the resolution to approve the Business Services Agreement and the annual cap amounts. The Independent Financial Adviser has also been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Business Services Agreement and the annual cap amounts. PROPOSED SHARE CONSOLIDATION The Board proposes to implement the Share Consolidation on the basis that every 10 issued and unissued Shares of HK$0.20 each in the share capital of the Company be consolidated into 1 Consolidated Share of HK$2.00 each. Conditions of the Share Consolidation The Share Consolidation is conditional upon the following conditions being satisfied: (i) (ii) passing of an ordinary resolution by Shareholders at the SGM to approve the Share Consolidation; compliance with all relevant procedures and requirements under Bermuda law (where applicable) to effect the Share Consolidation; and (iii) the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares to be in issue, upon the Share Consolidation becoming effective. Subject to the satisfaction of all of the above conditions, it is expected that the Share Consolidation will become effective on the Business Day following the date of the SGM. Effects of the Share Consolidation As at the Latest Practicable Date, the authorised share capital of the Company is HK$3,000,000,000 divided into 15,000,000,000 Shares of HK$0.20 each, of which 3,546,628,343 Shares have been issued and fully paid. Immediately upon the Share Consolidation becoming effective and assuming there will be no change in the issued share capital of the Company from the Latest Practicable Date up to the effective date of the Share Consolidation, the authorised share capital of the Company will remain at HK$3,000,000,000, but will be divided into 1,500,000,000 Consolidated Shares of HK$2.00 each, of which 354,662,834 Consolidated Shares will be in issue. Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other. Other than the expenses to be incurred in relation to the Share Consolidation (including without limitation professional fees and printing fees), the implementation thereof will not, of itself, alter the underlying assets, business operations, management or financial position of the Company or the proportionate interests or rights of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled. 7

10 LETTER FROM THE BOARD Listing application An application will be made by the Company to the Stock Exchange for the grant of listing of, and permission to deal in, the Consolidated Shares (which will be in issue upon the Share Consolidation becoming effective) and the underlying Consolidated Shares which may fall to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Bonds and the exercise of the Exchange Right. Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or, under contingent situation, such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. None of the securities of the Company is listed or dealt in on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is being or is proposed to be sought. Board lot size The current board lot size for trading in the Shares on the Stock Exchange is 2,000 Shares. Upon the Share Consolidation becoming effective, the board lot size for trading in the Consolidated Shares will remain at 2,000 Consolidated Shares. Reasons for the proposed Share Consolidation The Share Consolidation will increase the nominal value of the Shares. It is expected that the Share Consolidation would bring about a corresponding upward adjustment in the trading price of the Consolidated Shares on the Stock Exchange. As such, this may remove the constraint and/or restriction of financial institutions on investing in a company with a trading price of less than HK$1.00 per share. Also, this may attract more investors and extend the shareholders base of the Company. Moreover, as the market value of each board lot upon the Share Consolidation becoming effective will be higher than the market value of each existing board lot, the transaction costs as a proportion of the market value of each board lot will be lowered. It is expected that the liquidity in trading of the shares will increase accordingly and the market value of the shares will more precisely reflect the intrinsic value of the Company. The Board therefore believes that the Share Consolidation is in the best interests of the Company and the Shareholders as a whole. Odd lot trading arrangement Fractional Consolidated Shares will be disregarded and will not be issued to Shareholders but all such fractional Consolidated Shares will be aggregated and, if possible, sold and retained for the benefit of the Company. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a holder of the Consolidated Shares regardless of the number of share certificates held by such holder. 8

11 LETTER FROM THE BOARD In order to facilitate the trading of odd lots (if any) of the Consolidated Shares arising from the Share Consolidation, the Company has appointed Kingston Securities Limited to provide matching services for the sale and purchase of odd lots of the Consolidated Shares at the relevant market price per Consolidated Share for Shareholders, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares, during the period from Monday, 10 June 2013 to Tuesday, 2 July Holders of odd lots of the Consolidated Shares may contact Ms Rosita Kiu of Kingston Securities Limited at Suite 2801, 28th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong at (852) during office hours within the aforesaid period. Holders of odd lots of the Consolidated Shares should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares are not guaranteed. If any Shareholder is in doubt about the odd lot trading arrangement, such Shareholder should consult his/her/its own professional advisers. Exchange of share certificates Subject to the Share Consolidation becoming effective, Shareholders may, during the specified period indicated in the expected timetable, submit the Existing Share Certificates in blue (bearing the former name of the Company, Paul Y. Engineering Group Limited) or yellow (bearing the name of the Company) for existing Shares to the Company s share registrar in Hong Kong, Tricor Standard Limited, at 26th Floor, Tesbury Centre, 28 Queen s Road East, Wanchai, Hong Kong, in exchange for New Share Certificates in pink for Consolidated Shares with a new nominal value of HK$2.00 each, at the expense of the Company. Thereafter, the Existing Share Certificates will be accepted for exchange only on payment of a prescribed fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange from time to time) for each New Share Certificate to be issued or each Existing Share Certificate submitted for cancellation, whichever number of certificates involved is higher. Nevertheless, certificates for existing Shares will continue to be good evidence of legal title and may be exchanged for certificates for Consolidated Shares at any time. Adjustments to the Convertible Bonds and the Exchange Right As at the Latest Practicable Date: (i) (ii) there are outstanding Convertible Bonds in the principal amount of HK$1,202 million entitling the holders thereof to convert the same, at the initial conversion price of HK$0.68 per Share, into an aggregate of 1,767,647,058 Shares upon exercise of the conversion rights attaching thereto; and were 10% of the Falloncroft Shares to have been held by Falloncroft management pursuant to the exercise of options held by Falloncroft management and were they to have paid HK$600 million for the subscription of such Falloncroft Shares, Falloncroft management would have been entitled, upon exercise of the Exchange Right in full, to exchange such Falloncroft Shares, based on an issue price of HK$0.68 per Share, for an aggregate of 882,352,941 Shares. 9

12 LETTER FROM THE BOARD Save as aforesaid, the Company has no other outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares as at the Latest Practicable Date. Pursuant to the instrument constituting the Convertible Bonds and the terms of the Exchange Right, the Share Consolidation will cause adjustments, respectively, to the conversion price of the outstanding Convertible Bonds, and the number of shares to be allotted on exercise of the Exchange Right. Subject to certification by the auditors of the Company or an independent financial adviser, it is understood that: the Convertible Bonds in the principal amount of HK$1,202 million would be convertible, at a new conversion price of HK$6.80, into an aggregate of 176,764,705 Consolidated Shares; and the Falloncroft Shares (as described above) could be exchanged, based on an issue price of HK$6.80, into an aggregate of 88,235,294 Consolidated Shares. Details of the Convertible Bonds and the Exchange Right are set out in the circular of the Company dated 5 January BUSINESS SERVICES AGREEMENT On 24 April 2013, PYE and ITC Properties Holdings entered into the conditional Business Services Agreement pursuant to which the PYE Group agreed to provide the Services to the ITC Properties Holdings Group on normal commercial terms. The key terms of the Business Services Agreement are as follows: Date: 24 April Parties: (1) PYE, a 51% owned subsidiary of the Company; and (2) ITC Properties Holdings, a direct wholly owned subsidiary of ITC Properties. ITC Properties is a substantial shareholder of the Company and indirectly owns approximately 11.22% of the Company s issued share capital, according to the published information. ITC Properties and ITC Properties Holdings are therefore connected persons of the Company within the meaning of the Listing Rules and the transactions under the Business Services Agreement constitute non-exempt continuing connected transactions for the Company under Chapter 14A of the Listing Rules. 10

13 LETTER FROM THE BOARD Services: The PYE Group may from time to time during the term of the Business Services Agreement provide the Services to the ITC Properties Holdings Group on normal commercial terms and subject to the annual cap amounts set out below. Relevant members of the PYE Group and relevant members of the ITC Properties Holdings Group will enter into subsidiary agreements for providing the Services under the Business Services Agreement. Each subsidiary agreement will set out the particulars and the terms upon which particular Services will be rendered by the PYE Group to the ITC Properties Holdings Group. The terms of each subsidiary agreement must: (i) comply with the terms of the Business Services Agreement; (ii) provide that the Services to be provided in any one year in aggregate shall be subject to the annual cap amounts set out below; and (iii) be in compliance with the relevant requirements under the Listing Rules. Condition Precedent: The Business Services Agreement is conditional on its approval by the Independent Shareholders. Term: The Business Services Agreement shall take effect from 1 April 2013 if the condition precedent becomes fulfilled, and will continue thereafter for a term expiring on 31 March Upon expiry, the parties may renew the Business Services Agreement subject to compliance with the Listing Rules and all applicable laws. As the financial year end of the Company is 31 March, the reason for the Business Services Agreement to take effect from 1 April 2013 is to coincide with the Company s financial year end, in order for the annual caps to be determined based on each entire financial year. The Company believes that this provides a more accurate estimate of the annual cap amounts, rather than having annual caps determined on a pro rata basis. Reasons for the Business Services Agreement The Services to be provided by the PYE Group to the ITC Properties Holdings Group under the Business Services Agreement will be in the usual and ordinary course of business of the PYE Group and will be conducted on arm s length basis and on normal commercial terms. Whilst the PYE Group has to go through a tender process to obtain contracts from the ITC Properties Holdings Group, the ITC Properties Holdings Group does not accord any priority to the PYE Group to provide the Services, and the tender may be awarded to an independent third party. During the tender process, the ITC Properties Holdings 11

14 LETTER FROM THE BOARD Group, like other customers of the PYE Group, will assess each tenderer s pricing, experience, technical skills and abilities, as well as other factors relevant to the projects to determine the successful tenderer. The pricing of the Business Services Agreement takes into account the following: (i) (ii) (iii) the award of any contract by the ITC Properties Holdings Group will be subject to a tender normally involving two or more bidders, which is similar to the award of contracts by independent third parties to the PYE Group; as the pricing under the Business Services Agreement will necessarily have had to take into account a competitive bidding process in tender, it can be said therefore to have been determined with reference to market rates; and the determination of award of contracts to the PYE Group through a tender process is in line with similar construction and/or engineering services agreements in Hong Kong, and such arrangements normally allow the prices of awarded contracts to be made with reference to market rates. The Directors therefore consider that it would not be in the interests of the Company to deliberately exclude the ITC Properties Holdings Group as customers of the PYE Group purely because they are connected persons of the Company. The Business Services Agreement would enable the PYE Group to continue to provide the Services in compliance with the requirements of the Listing Rules, to contribute to the revenue and results of the Group, and is therefore in the interests of and are beneficial to the Group. Proposed annual cap amounts and basis of determination The Directors propose that the annual cap amounts of the value of Services to be rendered under the Business Services Agreement by the PYE Group to the ITC Properties Holdings Group for each of the three years ending 31 March 2014, 2015 and 2016 are set out below: FY 2014 FY 2015 FY 2016 Annual transaction amount cap (HK$ million) 500 1,900 2,900 Revenue from a construction contract is recognised on the percentage of completion method, measured by reference to the value of work certified. Revenue from maintenance, property development management, project management, construction related advisory services, building management and facilities management and other related services are recognised when the services are provided. Fees from construction contracts (including interior contractor works and electrical and mechanical works) and maintenance contracts are charged by reference to the value of works certified. The fees may change if the works specified in the contract are varied. Fees from property development management services, project management services, facilities management services and construction related advisory services are usually charged based on a percentage of the property development costs or the construction costs of the development or construction project. The fees may vary in line with changes in the project costs. 12

15 LETTER FROM THE BOARD The estimates for the three financial years have been made based on: (i) information provided by the ITC Properties Holdings Group regarding the proposed construction schedules and/or completion or delivery of the relevant projects in progress and under discussion, the gross/construction floor area covered by the relevant projects and indicative scope of services required; (ii) historical and market rates and method for calculation of fees for the relevant services (the component of services provided which are to be charged by reference to value of works certified, as opposed to a fixed percentage of development costs having increased leading to a need to adjust the estimated timing for revenue recognition); (iii) a buffer of about 20% in respect of projects in progress and under discussion, to allow for further upward adjustments in revenue recognised in the relevant years, whether because of increases in sizes of the relevant projects, acceleration or alteration of construction or delivery schedules which are not within the PYE Group s control, or changes to the final scope of services that may be required; and (iv) additional allowances for other new projects not identified at present. For projects not currently identified but which may be taken up and/or generate revenue during FY 2014, FY 2015 and FY 2016 (per item (iv) above), PYE has factored in further allowances of HK$63 million (for FY 2014), HK$176 million (for FY 2015) and HK$238 million (for FY 2016), representing an allowance of approximately 9% to 14% over the adjusted estimates for revenue contribution from projects in progress and under discussion determined on the basis referred to above. The allowances included in the transaction caps for FY 2014, FY 2015 and FY 2016 cater for the possible continued growth of the PYE Group s services and allow for the PYE Group to readily capture potential business opportunities with the ITC Properties Holdings Group. Shareholders and investors should note that the annual cap amounts referred to above are prepared to enable the Company to comply with the requirements of Chapter 14A of the Listing Rules. No assurance is given as to whether or not, and the extent to which, the PYE Group will be able to secure the additional projects for Services and/or generate revenue as contemplated or estimated for the sole purpose of establishing the caps or at all. Particulars of past transactions The historical transaction amounts for the Services provided by the PYE Group to the ITC Properties Holdings Group for the three years ended 31 March 2013 are set out below: FY 2011 FY 2012 FY 2013 Total transaction value (HK$ million) For the period from 1 April 2013 to 30 April 2013, the revenue recognised by the PYE Group for the Services provided by the PYE Group to the ITC Properties Holdings Group was approximately HK$9.6 million. Those transactions, together with the transactions for the year ended 31 March 2013, were in respect of specific underlying contracts identified in the Company s announcement dated 2 April 2013 issued under Rule 14A.41 of the Listing Rules. 13

16 LETTER FROM THE BOARD General information and Listing Rules implications The Company will develop a parcel of land situated on the Cotai Strip, Macau on which it proposes to build and manage a hotel and entertainment destination which it intends to be called Louis XIII. This project is the first of a series of ultra luxurious lifestyle experiences the Group is planning to offer the world s wealthiest. The Group is also engaged in international engineering services spanning Hong Kong, the PRC, Macau and the international market. ITC Properties and ITC Properties Holdings are investment holding companies and the subsidiaries of ITC Properties Holdings are principally engaged in property development and investment in Macau, the PRC and Hong Kong and golf and leisure operations in the PRC. ITC Properties, through other subsidiaries, is also engaged in securities investments and the provision of loan financing services. The Business Services Agreement and the annual cap amounts for each of the three years ending 31 March 2016 are subject to the requirements of reporting, announcement and the approval of the Independent Shareholders (by way of poll) as set out in Chapter 14A of the Listing Rules at the SGM. As at the Latest Practicable Date, ITC Properties and its Associates were interested in 398,012,000 Shares, representing approximately 11.22% of the issued share capital of the Company. ITC Properties and its Associates will abstain from voting on the resolution to approve the Business Services Agreement and the annual cap amounts at the SGM. None of the Directors have a material interest in the transactions contemplated under the Business Services Agreement and accordingly, no Director was required to abstain from voting on the board resolutions in respect thereof. SGM The notice convening the SGM is set out on pages 34 to 36 of this circular. At the SGM, ordinary resolutions will be proposed to approve (i) the Share Consolidation; and (ii) the Business Services Agreement and the annual cap amounts. Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. The chairman of the SGM will therefore put each of the resolutions to be proposed at the SGM to be voted by way of a poll pursuant to Bye-law 66. A form of proxy for use by the Shareholders at the SGM is enclosed. If you do not intend to attend the meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the Company s principal place of business in Hong Kong at 16th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish. 14

17 LETTER FROM THE BOARD As set out in the paragraph headed General information and Listing Rules implications above, the Business Services Agreement and the annual cap amounts for each of the three years ending 31 March 2016 are subject to the approval of the Independent Shareholders at the SGM. ITC Properties and its Associates who are Shareholders will abstain from voting on the resolution to approve the Business Services Agreement and the annual cap amounts at the SGM. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholder will be required to abstain from voting on the resolution in relation to the Share Consolidation. RECOMMENDATION Your attention is drawn to (i) the letter from the Independent Board Committee contained in this circular which contains its advice to the Independent Shareholders as regards the Business Services Agreement and the annual cap amounts; and (ii) the letter from RHB OSK Capital contained in this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Business Services Agreement and the annual cap amounts. The Independent Shareholders are advised to read these letters before deciding how to vote on the resolution concerning the Business Services Agreement and the annual cap amounts. The Directors (including the independent non-executive Directors) consider that (i) the Share Consolidation; and (ii) the Business Services Agreement and the proposed annual cap amounts for each of the three years ending 31 March 2016 are fair and reasonable and in the interests of the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders and the Independent Shareholders to vote in favour of the resolutions to approve (i) the Share Consolidation; and (ii) the Business Services Agreement and the annual cap amounts respectively. ADDITIONAL INFORMATION Your attention is also drawn to the additional information set out in the appendices to this circular. Yours faithfully, For and on behalf of the Board of Louis XIII Holdings Limited Stephen Hung & Peter Lee Coker Jr. Joint Chairmen 15

18 APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE Louis XIII Holdings Limited 路易十三集團有限公司 * (Incorporated in Bermuda with limited liability) (Stock code: 577) 8 May 2013 To the Independent Shareholders Dear Sir or Madam, PROPOSED SHARE CONSOLIDATION AND CONTINUING CONNECTED TRANSACTION BUSINESS SERVICES AGREEMENT We refer to the circular dated 8 May 2013 issued by the Company (the Circular ) of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires. We have been appointed as the members of the Independent Board Committee to consider the Business Services Agreement, the annual cap amounts for each of the three years ending 31 March 2016 and the transactions contemplated thereunder and to advise the Independent Shareholders whether, in our opinion, the Business Services Agreement and the annual cap amounts for each of the three years ending 31 March 2016 are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. The Independent Financial Adviser, RHB OSK Capital, has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard. RECOMMENDATION We wish to draw your attention to the letter from the Board, as set out on pages 6 to 15 of the Circular, which contains, inter alia, information on the Business Services Agreement, and the letter from the Independent Financial Adviser which contains its advice to the Independent Board Committee and the Independent Shareholders in connection with the Business Services Agreement as set out on pages 18 to 27 of the Circular. * For identification purpose only 16

19 APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE After taking into consideration the advice from the Independent Financial Adviser, we concur with the views of the Independent Financial Adviser and consider that the Business Services Agreement and the annual cap amounts for each of the three years ending 31 March 2016 are in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Business Services Agreement, the annual cap amounts for each of the three years ending 31 March 2016 and the transactions contemplated thereunder. Yours faithfully, Independent Board Committee James Chiu Lee Chack Fan Iain Ferguson Bruce Francis Goutenmacher Independent Non-Executive Directors 17

20 APPENDIX II LETTER FROM RHB OSK CAPITAL The following is the letter of advice from RHB OSK Capital to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular. 12/F., World-Wide House 19 Des Voeux Road Central Hong Kong 8 May 2013 The Independent Board Committee and the Independent Shareholders Louis XIII Holdings Limited Dear Sirs, CONTINUING CONNECTED TRANSACTION BUSINESS SERVICES AGREEMENT INTRODUCTION We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders with respect to the terms of the Business Services Agreement and the annual cap of the value of services rendered or to be rendered under the Business Services Agreement for each of the three years ending 31 March 2016, details of which are set out in the circular of Louis XIII Holdings Limited (the Company ) dated 8 May 2013 (the Circular ) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter have the same meanings as defined in the Circular, unless the context requires otherwise. As set out in the letter from the Board in the Circular (the Letter from the Board ), PYE, a 51% owned subsidiary of the Company, and ITC Properties Holdings, a direct wholly owned subsidiary of ITC Properties, entered into the conditional Business Services Agreement on 24 April 2013, pursuant to which the PYE Group agreed to provide the Services to the ITC Properties Holdings Group. ITC Properties is a substantial shareholder of the Company and indirectly owns approximately 11.22% of the Company s issued share capital. Each of ITC Properties and ITC Properties Holdings is therefore a connected person of the Company within the meaning of the Listing Rules and the transactions under the Business Services Agreement constitute non-exempt continuing connected transaction for the Company under Chapter 14A of the Listing Rules. The Business Services Agreement, the annual cap amounts and the transactions contemplated thereunder are subject to the approval by the Independent Shareholders. ITC Properties and its Associates are required to abstain from voting on the resolution at the SGM to approve the Business Services Agreement, the annual cap amounts and the transactions contemplated thereunder. The Independent Board Committee comprising all the independent non-executive Directors, namely Ir James Chiu, OBE, JP, Professor Lee Chack Fan, SBS, JP, Mr Iain Ferguson Bruce, Mr Francis Goutenmacher, has been established to advise the Independent Shareholders in respect of the terms of the Business Services Agreement and the annual cap. As the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to whether the terms of the Business Services Agreement and the annual cap amounts are fair and reasonable so far as the Shareholders are 18

21 APPENDIX II LETTER FROM RHB OSK CAPITAL concerned and whether the possible transactions under the Business Services Agreement will be carried out on normal commercial terms and in the ordinary and usual course of business of the Group, and in the interests of the Company and the Shareholders as a whole. BASIS OF OUR OPINION In formulating our advice and recommendation, we have relied on the accuracy of the information and facts supplied, and the opinions expressed by the Group, the Directors and the Group s management to us. We have assumed that all statements of belief and intention made by the Directors in the Circular were made after due enquiry. We have also assumed that all information, representations and opinion made or referred to in the Circular were true, accurate and complete at the time they were made and will continue to be true at the date of the SGM. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Group, the Directors and the Group s management, and have been advised by the Directors that no material facts have been omitted from the information provided by or referred to in the Circular. In rendering our opinion, apart from discussions with the Group s management, we have researched, analyzed and relied on information in relation to the Group, the ITC Properties Group, the Business Services Agreement and the annual cap as set out below: (i) the Business Services Agreement; (ii) the annual report of the Company for the financial year ended 31 March 2011; (iii) the annual report of the Company for the financial year ended 31 March 2012; (iv) the interim report of the Company for the six months ended 30 September 2012; (v) the annual report of ITC Properties for the financial year ended 31 March 2011; (vi) the annual report of ITC Properties for the financial year ended 31 March 2012; (vii) the interim report of ITC Properties for the six months ended 30 September 2012; (viii) the announcement dated 2 April 2013 issued by the Company; (ix) (x) the announcement dated 24 April 2013 issued by the Company; and the Circular. We have assumed such information to be accurate and reliable and have not carried out any independent verification on the accuracy of such information, which provides us with a basis on which we have been able to formulate our independent opinion. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We also consider that 19

22 APPENDIX II LETTER FROM RHB OSK CAPITAL we have performed all reasonable steps as required under Rule of the Listing Rules (including the notes thereto) to formulate our opinion and recommendation. We have not, however, conducted any form of in-depth investigations into the business affairs, financial position and future prospects of the Group and the parties to the Business Services Agreement, nor carried out any independent verification of the information supplied, representations made or opinions expressed by the Group, the Directors and the Group s management. PRINCIPAL REASONS AND FACTORS CONSIDERED In formulating our opinion in respect of the terms of the Business Services Agreement and the annual cap, we have taken into consideration, among other things, the following principal reasons and factors: I. Information on the Group The Company will develop a parcel of land situated on the Cotai Strip, Macau on which it proposes to build and manage a hotel and entertainment destination which it intends to be called Louis XIII. This project is the first of a series of ultra luxurious lifestyle experiences the Group is planning to offer the world s wealthiest. The Group is also engaged in international engineering services spanning Hong Kong, the PRC, Macau and the international market. PYE is a 51% owned subsidiary of the Company, and its subsidiaries has three core areas of business: management contracting, property development management and property investment. The Group s turnover for the three financial years ended 31 March 2012 is set out below: Financial year ended 31 March (HK$ 000) (HK$ 000) (HK$ 000) (Audited) (Audited) (Audited) The Group s turnover 3,644,873 4,333,791 4,304,247 From the financial year ended 31 March 2010 to the financial year ended 31 March 2012, the Group s audited turnover achieved a compound average growth rate (the CAGR ) of approximately 8.7% (the Group Growth Rate ). II. Information on the ITC Properties Group and its relationship with the Group ITC Properties Holdings is a direct wholly owned subsidiary of ITC Properties. As referred to the Letter from the Board, ITC Properties and ITC Properties Holdings are investment holding companies and the subsidiaries of ITC Properties Holdings are principally engaged in property development and investment in Macau, the PRC and Hong Kong and golf and leisure operations in the PRC. ITC Properties, through other subsidiaries, is also engaged in securities investments and the provision of loan financing services. 20

23 APPENDIX II LETTER FROM RHB OSK CAPITAL The ITC Properties Group s revenue for the three financial years ended 31 March 2012 is set out below: Financial year ended 31 March (HK$ 000) (HK$ 000) (HK$ 000) (Audited) (Audited) (Audited) The ITC Properties Group s revenue 239, , ,098 The ITC Properties Group s audited revenue for the financial year ended 31 March 2012 amounted to approximately HK$111.1 million, which represented a significant decrease of approximately 50.9% as compared with that in the financial year ended 31 March 2011, mainly due to slower growth in development of and investment in properties during the year. III. Reasons for and benefits of the entering into of the Business Services Agreement The scope of the Services under the Business Services Agreement are set out in the Letter from the Board. As advised by the Group s management, the Group had provided transactions similar to the possible transactions contemplated under the Business Services Agreement to the ITC Properties Holdings Group in the three financial years ended 31 March As referred to in the Letter from the Board, the Business Services Agreement would enable the PYE Group to provide the Services to the ITC Properties Holdings Group and would contribute to the Group s revenue and results. The Services to be provided by the Group to the ITC Properties Holdings Group under the Business Services Agreement will be in the ordinary and usual course of business of the Group and will be conducted on arm s length basis and on normal commercial terms. IV. The terms of the Business Services Agreement The major terms of the Business Services Agreement are set out in the Letter from the Board. We wish to draw the attention of the Independent Shareholders to the following: (i) (ii) (iii) the Business Services Agreement shall take effect on 1 April 2013 if the condition precedent becomes fulfilled and will continue thereafter for a term expiring on 31 March 2016; the Group (through the PYE Group) may, from time to time during the term of the Business Services Agreement, provide the Services to the ITC Properties Holdings Group on normal commercial terms and subject to the annual cap amounts; the relevant members of the PYE Group and the relevant members of the ITC Properties Holdings Group will enter into subsidiary agreements for providing the Services. Each subsidiary agreement will set out the particulars and the terms upon which particular Services will be rendered by the PYE Group to the ITC Properties Holdings Group; 21

24 APPENDIX II LETTER FROM RHB OSK CAPITAL (iv) (v) (vi) in respect of the Services, the Group has also supplied similar services to independent third parties. As advised by the Group s management, the prices of the Services are based on construction contracts which are formulated based on tendering system. Separate tenders are submitted by the PYE Group to its customers in view of the scope of work of a particular contract. By the competitive nature of the tender system, the Group is able to make reference to the prevailing market prices and availability of materials, labour and machinery in making the orders. As advised by the Group s management, the tender system also apply to similar transactions provided by the PYE Group to its other customers which are independent third parties; as advised by the Group s management, the Group also takes into account the historical prices for similar types of projects which adopt comparable engineering technology of other property developers in Hong Kong as an indicative price range in submitting the tenders. After the tender return, the consultant team of the transaction counterparty will examine the tenders and award the contracts; and the PYE Group does not and would not provide preferential pricing to ITC Properties Holdings Group in respect of the Services, and the pricing is determined based on normal commercial terms and similar to those comparable services provided by the Group to independent third parties. Through our research via the website of the Stock Exchange, we have, to the best of our knowledge and information, identified six listed companies which are engaged in construction and/or engineeringrelated services in Hong Kong, namely, Build King Holdings Limited (stock code: 240), China State Construction International Holdings Limited (stock code: 3311), Chun Wo Development Holdings Limited (stock code: 711), Hanison Construction Holdings Limited (Stock Code: 896), Hsin Chong Construction Group Limited (stock code 404) and Wai Kee Holdings Limited (stock code: 610). From the annual reports of these companies, we noted that it is common for providers of construction and/or engineeringrelated services in Hong Kong to go through a tender process to obtain contracts. We have discussed with the Group s management and noted that the Business Services Agreement shall take effect from 1 April 2013 to coincide with the start of the Company s financial year, in order to determine the annual cap amounts based on each entire financial year. Such will provide a more accurate estimate of the annual cap amounts, rather than determining annual cap amounts on a pro rata basis. We have, on a sampling basis, reviewed a number of transactions for each of the year ended 31 March 2011, 2012 and 2013, respectively, pursuant to which services were provided by the PYE Group to (i) the ITC Properties Holdings Group similar to those under the Business Services Agreement; and (ii) independent third parties in respect of services similar to the Services. We noted that the rates charged by the PYE Group to each of the ITC Properties Holdings Group and independent third parties were consistent with the pricing bases of the Business Services Agreement. We have discussed with the Group s management and noted that whilst the PYE Group has to go through a tender process to obtain contracts from the ITC Properties Holdings Group, the ITC Properties Holdings Group does not accord any priority to the PYE Group to provide the Services, and the tender may be awarded to an independent third party. During the tender process, the ITC Properties Holdings Group, like other customers of the PYE Group, will assess each tenderer s pricing, experience, technical skills and abilities, as well as other factors relevant to the projects to determine the successful tenderer. 22