The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. Belle International Holdings Limited (Incorporated in the Cayman Islands with limited liability) (Stock code: 1880) DISCLOSEABLE TRANSACTIONS - ACQUISITION OF COMPANIES AND ASSETS AND RESUMPTION OF TRADING SUMMARY The Board is pleased to announce that on 11 November 2007, New Belle, a wholly-owned subsidiary of the Company, entered into the Reorganisation Agreement with Jiangsu Senda, pursuant to which New Belle has agreed to acquire interests in certain companies engaged in manufacturing and retail sale of men s and ladies footwear products in the PRC and certain assets related thereto. The aggregate consideration for the acquisition of the companies and assets amounts to approximately RMB1.6 billion. DISCLOSEABLE TRANSACTIONS As the applicable percentage ratios of the Transactions, when aggregated, exceed 5% but are less than 25%, the entering into of the Transaction Agreements constitutes a discloseable transaction of the Company under the Listing Rules. A circular containing, among other things, further information on the Transaction Agreements will be sent to the shareholders of the Company as soon as practicable. RESUMPTION OF TRADING Trading in the shares of the Company on the Stock Exchange was suspended from 9:30 a.m. on 12 November 2007 at the request of the Company pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in its shares on the Stock Exchange with effect from 9:30 a.m. on 14 November 2007. 1
I. THE REORGANIZATION AGREEMENT On 11 November 2007, New Belle and Jiangsu Senda entered into the Reorganisation Agreement pursuant to which Jiangsu Senda agreed to transfer to New Belle the Target Companies and Target Assets. Jiangsu Senda has also undertaken to perform certain reorganisation involving the Jiangsu Senda Group, the Target Companies and Target Assets before the Completion. The major terms and conditions of the Reorganisation Agreement are set out as follows: A Date of the agreement: 11 November 2007 B Parties to the agreement: New Belle (Shenzhen) Footwear Co., Ltd. as the purchaser and Jiangsu Senda Group Co., Ltd. as the vendor C Major terms of the agreement: The Jiangsu Senda Group has agreed to sell, assign and transfer to New Belle the entire interests in the Target Companies and the Target Assets free and clear of all encumbrances. The Jiangsu Senda Group has also undertaken to New Belle to perform certain group reorganisation before the Completion which include the following: (a) capital injection by way of transfer of land and properties to one of the Target Companies; (b) transfer of certain trademarks and intellectual property rights relating to Senda, Basto, Haorenyuan and other brand names owned by the Jiangsu Senda Group to the Target Companies and license of such trademarks and intellectual property rights to the Target Companies before the completion of the transfer; and (c) execution or renewal of certain lease agreements, license agreements, concessionaire agreements and franchise agreements entered into between the Target Companies and the respective parties to the agreements. Pursuant to the Reorganisation Agreement, New Belle have also entered into various share transfer agreements with Jiangsu Senda and assets acquisition agreements with members of the Jiangsu Senda Group on 11 November 2007, which set out the specific terms and conditions for the acquisition of the respective Target Companies and Target Assets. 2
D The Target Companies and Target Assets The Target Companies comprise five wholly-owned subsidiaries of Jiangsu Senda, namely: (a) (b) (c) (d) (e) (Jiangsu Senda Footwear Co., Ltd.), a limited liability company incorporated in the PRC which is principally engaged in manufacturing, distribution and retail sale of footwear products with the brand name Senda ; (Zigui Yongxu Footwear Co., Ltd.), a limited liability company incorporated in the PRC which is principally engaged in manufacturing of parts and accessories of footwear products; (Jiangsu Senda Group Sanxia Footwear Co., Ltd.), a limited liability company incorporated in the PRC which is principally engaged in manufacturing of parts and accessories of footwear products; (Shanghai Basto Footwear Co., Ltd.), a limited liability company incorporated in the PRC which is principally engaged in distribution and retail sale of footwear products with the brand name Basto ; and (Shanghai Xiweideng International Trading Co., Ltd.), a limited liability company incorporated in the PRC which is principally engaged in distribution of footwear products with the brand name Clarks. The Target Assets are assets owned by the Jiangsu Senda Group which include inventories and stocks, work-in-progress and semi-finished products, raw materials, production facilities and equipment, motor vehicles and other assets in relation to the manufacturing and distribution of footwear products as more particularly set out in the respective assets acquisition agreements entered into between New Belle and members of the Jiangsu Senda Group. E Consideration and the basis: The aggregate initial consideration for acquisition of the Target Companies is approximately RMB1,471,870,000. The initial consideration of the Target Companies is determined by arm s length negotiation between the parties having regard to a number of factors including the value of the assets and properties owned by the Target Companies, the historical revenue and profit generated by the Target Companies, the strength and goodwill attached to the trademarks and brand names owned by the Target Companies, the expected synergy effect and contribution brought by the Target Companies to the Group s existing brand portfolio and business operations. 3
The aggregate initial consideration for acquisition of the Target Assets is approximately RMB139,130,000, representing the aggregate book value of the Target Assets as at 31 July 2007. New Belle shall pay to Jiangsu Senda cash in an aggregate amount of RMB200,000,000 as deposit for the acquisition within 7 business days after the execution of the Reorganisation Agreement. The balance of the consideration shall be paid by New Belle to the Jiangsu Senda Group on or before 10 January 2008 and as soon as practicable after the completion of the transfer of the respective Target Companies and Target Assets in accordance with the terms in the respective share transfer agreements and assets acquisition agreements. The consideration will be funded by the internal resources of the Group. The initial consideration may be adjusted with reference to the value of the Target Companies and Target Assets as at the Completion Date as confirmed by New Belle and Jiangsu Senda in writing pursuant to the final stock take and valuation of the Target Companies and Target Assets. Notwithstanding the adjustment of the final consideration, the parties to the Reorganisation Agreement have agreed that the maximum consideration for acquisition of the Target Companies and the Target Assets shall not exceed RMB1,700,000,000. F Value of the Target Companies and Target Assets: For the financial year ended 31 December 2005, the audited consolidated net profits before and after taxation and extraordinary items of the Target Companies were RMB72,248,349.78 and RMB68,168,318.35 respectively. For the financial year ended 31 December 2006, the audited consolidated net profits before and after taxation and extraordinary items of the Target Companies were RMB98,760,538.53 and RMB72,750,809.32 respectively. As at 31 December 2006, the aggregate audited net asset value of the Target Companies was approximately RMB603,419,488.22. As at 30 September 2007, the aggregate unaudited net asset value of the Target Companies was approximately RMB643,366,929.46. As at 31 December 2006, the aggregate audited book value of the Target Assets was approximately RMB100,349,066.35. As at 31 July 2007, the aggregate unaudited book value of the Target Assets was approximately RMB138,596,706.27. 4
G Completion: New Belle s obligations to acquire the Target Companies and Target Assets are subject to, inter alia, the following conditions: (a) presentation of the relevant trademark transfer agreements and license agreements executed by the Jiangsu Senda Group and the Target Companies pursuant to the terms of the Reorganisation Agreement for registration and approval by the relevant PRC governmental authority, and the full payment of the consideration under the respective agreements; (b) completion of the due diligence review on the Target Companies and Target Assets by New Belle to its satisfaction; (c) completion of the transfer of assets to the Target Companies in accordance with the terms of the Reorganisation Agreement; (d) execution of the relevant agreements relating to the reorganisation involving the Jiangsu Senda Group, the Target Companies and Target Assets in accordance with the terms of the Reorganisation Agreement; and (e) execution of the service contracts by the Target Companies in accordance with the terms of the Reorganisation Agreement. Completion of the Transaction Agreements will take place according to the terms and conditions of the Reorganisation Agreement and the respective share transfer agreements and assets acquisition agreements, which are currently expected to be on or before 5 January 2008 or such other date as may be agreed in writing by the parties. II. INFORMATION ON THE GROUP, THE JIANGSU SENDA GROUP AND THE TARGET COMPANIES The Group is principally engaged in the manufacturing, distribution and sale of ladies footwear, and distribution and sale of sportswear and apparel in the PRC, Hong Kong, Macau and the United States of America. The Jiangsu Senda Group (including the Target Companies) is principally engaged in the manufacturing, distribution and sale of men s and ladies footwear products in the PRC. 5
To the best of the Directors knowledge, information and belief and having made all reasonable enquiry, Jiangsu Senda and the ultimate beneficial owner(s) of the Jiangsu Senda Group are third parties independent of the Company and its connected persons. III. REASONS FOR AND BENEFITS OF ENTERING INTO THE TRANSACTION AGREEMENTS The Group is the registered and beneficial owner of six in-house brands, including Belle, Staccato and Teenmix, and is the authorized retailer in the PRC for a wide range of well-known brands including Nike, Adidas and Reebok. It has been one of the Group s objectives and strategies to widen its brand portfolio by introducing new brands that target specific group of customers and to expand its nationwide retail network. The Jiangsu Senda Group (including the Target Companies) is one of the largest retailers of footwear products in the PRC and is the registered and beneficial owner of a wide range of well-recognised brand names including Senda, Basto and Haorenyuan. The products offered under these brand names include men s and ladies footwear products. According to the statistics published by China Industrial Information Issuing Centre, Senda brand name ranked the fifth amongst the top ten footwear products in the PRC based on sale revenue for the financial year 2006. The Target Companies are also the non-exclusive authorised distributor of footwear products for Clarks in certain provinces in the PRC. To leverage on the recognition of the trademarks and brand names owned by the Target Companies, the Group s acquisition of the Target Companies and the Target Assets is expected to increase the Group s coverage of the consumer market, enhance the overall revenue and profit of the Group and further strengthen its market position. Furthermore, the production facilities owned by the Target Companies and the Target Assets acquired by the Group will also expand the Group s production capacity which enables the Group to react more rapidly to market trends and to meet the fast growing market demand. The Directors, including the independent non-executive Directors, consider that the terms of the Reorganisation Agreement and other agreements in connection with the Transactions are on normal commercial terms which are fair and reasonable and the entering into of such agreements is in the best interests of the Group and the shareholders of the Company as a whole. 6
IV. DISCLOSEABLE TRANSACTIONS The acquisition of the Target Companies and the Target Assets are related to each other since they are entered into by the Group with the Jiangsu Senda Group in connection with the acquisition of various companies and assets engaged in footwear products business. As such, for the purpose of calculating the percentage ratios under Chapter 14 of the Listing Rules, the transactions contemplated under the Transactions Agreements should be aggregated pursuant to Rule 14.22 of the Listing Rules. As the applicable percentage ratios of the Transactions, when aggregated, exceed 5% but are less than 25%, the entering into of the Transaction Agreements constitutes a discloseable transaction of the Company under the Listing Rules. A circular containing, among other things, further information on the Transaction Agreements will be sent to the shareholders of the Company as soon as practicable. V. RESUMPTION OF TRADING Trading in the shares of the Company on the Stock Exchange was suspended from 9:30 a.m. on 12 November 2007 at the request of the Company pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in its shares on the Stock Exchange with effect from 9:30 a.m. on 14 November 2007. VI. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: associate(s) Board has the meaning ascribed to it under the Listing Rules; the board of Directors; Company Belle International Holdings Limited, a company incorporated in the Cayman Islands, the shares of which are listed on the Stock Exchange; Completion Completion Date Directors completion of the Transaction Agreements; the date of Completion, which is currently scheduled to take place on or before 5 January 2008; the directors of the Company; 7
Group Hong Kong Jiangsu Senda Jiangsu Senda Group Listing Rules New Belle PRC Reorganisation Agreement RMB Stock Exchange subsidiary Target Assets the Company and its subsidiaries; Hong Kong Special Administrative Region of the PRC; (Jiangsu Senda Group Co., Ltd.), a limited liability company incorporated in the PRC; Jiangsu Senda and its subsidiaries; the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited; (New Belle (Shenzhen) Footwear Co., Ltd.), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of the Company; the People s Republic of China, which for the purposes of this announcement, shall not include Hong Kong, Macau and Taiwan; the agreement dated 11 November 2007 entered into between New Belle and Jiangsu Senda in connection with the acquisition of the Target Companies and Target Assets and certain reorganisation arrangements in relation thereto; Renminbi, the lawful currency of the PRC. The Stock Exchange of Hong Kong Limited; has the meaning ascribed to it under the Listing Rules; the assets owned by the Jiangsu Senda Group which include inventories and stocks, work-in-progress and semi-finished products, raw materials, production facilities and equipment, motor vehicles and other assets in relation to the manufacturing and distribution of footwear products as more particularly set out in the respective assets acquisition agreements to be entered into between New Belle and members of the Jiangsu Senda Group; 8
Target Companies Transaction Agreements Transactions the five wholly-owned subsidiaries of Jiangsu Senda, namely (Jiangsu Senda Footwear Co., Ltd.), (Zigui Yongxu Footwear Co., Ltd.), (Jiangsu Senda Group Sanxia Footwear Co., Ltd.), (Shanghai Basto Footwear Co., Ltd.), and (Shanghai Xiweideng International Trading Co., Ltd.); collectively the Reorganisation Agreement and the relevant share transfer agreements and assets acquisition agreements to be entered into between New Belle and members of the Jiangsu Senda Group; and the transactions contemplated under the Transactions Agreements. Notes: The English translations of the names of the companies incorporated in the PRC are for identification purpose only. By order of the Board Belle International Holdings Limited Tang Yiu Chairman Hong Kong, 13 November 2007 Our directors are Mr Tang Yiu, Mr Sheng Baijiao, Mr Yu Mingfang and Ms Tang Ming Wai as executive Directors, Mr Gao Yu and Ms Hu Xiaoling as non-executive Directors, and Mr Ho Kwok Wah, George, Mr Chan Yu Ling, Abraham and Dr Xue Qiuzhi as independent non-executive Directors. 9