RYKADAN CAPITAL LIMITED 宏基資本有限公司 - Sundart Holdings

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RYKADAN CAPITAL LIMITED 宏基資本有限公司 - Sundart Holdings Powered By Docstoc
					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.




                         RYKADAN CAPITAL LIMITED

                      (Incorporated in the Cayman Islands with limited liability)
                                         (Stock code: 2288)

                         CONTINUING CONNECTED TRANSACTIONS


 On 11 July 2012, the Board announced that Talent Step, an indirect wholly-owned subsidiary of
 the Company, has entered into the Restructuring Agreement, the Subscription Agreement and the
 Shareholders’ Deed, pursuant to which Talent Step would acquire further interests in KLR Hong
 Kong so that KLR Hong Kong would become a subsidiary of the Company. Following the completion
 of each of the Restructuring Agreement and the Subscription Agreement and the Shareholders’ Deed
 becoming effective, KLR Hong Kong has become a subsidiary of the Company since 30 July 2012.

 It has recently come to the attention of the Directors that KLR Hong Kong has entered into the
 following agreements prior to 30 July 2012:

 (1) the Service Agreement with SCJREP in respect of the provision of the Services by KLR Hong
     Kong to SCJREP; and

 (2) the Consulting Services Agreement with Lucky View in respect of the provision of the
     Consulting Services by Lucky View to KLR Hong Kong.

 Since (i) SCJREP is a substantial shareholder of Wit Legend (a subsidiary of the Company) and
 (ii) Lucky View is company owned by an associate of Mr. Ivan Ho, a director of Wit Legend (a
 subsidiary of the Company), each of SCJREP and Lucky View is a connected person of the Company.
 Accordingly, each of (a) the provision of the Services by KLR Hong Kong to SCJREP pursuant to the
 Service Agreement; and (b) the provision of the Consulting Services by Lucky View to KLR Hong
 Kong pursuant to the Consulting Services Agreement has since 30 July 2012, the date on which KLR
 Hong Kong became a subsidiary of the Company, become continuing connected transactions of the
 Company.



                                                  1
 Pursuant to Rule 14A.41 of the Listing Rules, each of the Service Agreement and the Consulting
 Services Agreement is subject to the reporting, annual review and disclosure requirements of Chapter
 14A of the Listing Rules and upon any variation of the Service Agreement and the Consulting
 Services Agreement, the Company will comply in full all applicable reporting, disclosure and
 independent shareholders’ approval requirements of Chapter 14A of the Listing Rules.


BACKGROUND

Reference is made to the announcement of the Company dated 11 July 2012 in respect of the acquisition
of further interests in KLR Hong Kong. On 11 July 2012, Talent Step, an indirect wholly-owned
subsidiary of the Company, entered into the Restructuring Agreement, the Subscription Agreement and
the Shareholders’ Deed, pursuant to which Talent Step would acquire further interests in KLR Hong
Kong so that KLR Hong Kong would become a subsidiary of the Company. Following the completion
of each of the Restructuring Agreement and the Subscription Agreement and the Shareholders’ Deed
becoming effective, KLR Hong Kong has become a subsidiary of the Company since 30 July 2012.

It has recently come to the attention of the Directors that KLR Hong Kong has entered into (1) the
Service Agreement with SCJREP in respect of the provision of the Services by KLR Hong Kong to
SCJREP; and (2) the Consulting Services Agreement with Lucky View in respect of the provision of the
Consulting Services by Lucky View to KLR Hong Kong prior to 30 July 2012, the major terms of which
are summarised below.

THE SERVICE AGREEMENT

Date       : 1 July 2011

Parties    : KLR Hong Kong

              SCJREP

Subject Matter:

Pursuant to the Service Agreement, KLR Hong Kong shall provide the Services in respect of the Asset to
SCJREP.

Services to be rendered by KLR Hong Kong to SCJREP

The services to be provided by KLR Hong Kong includes, amongst others, (A) the preparation and
provision of reports in respect of (i) the implementation of business plans and budgets in respect of
the Asset; (ii) accounting reporting services such as cash flow projections in respect of the Asset; (iii)
suggested improvements or updates upon review of construction progress reports submitted by the
engineering construction consultant and project manager in respect of the Asset; (iv) work progress of
third party service providers of the Asset; and (B) the provision of assistance to Vital Success and the
project manager in respect of the Asset from time to time and ensure that usual and customary insurance
policies in respect of the Asset are purchased and maintained (the “Services”).

                                                    2
Fees and Payment Terms

KLR Hong Kong is entitled to the following compensation for the provision of the Services and other
asset management services under the Asset Management Agreement:-

(a) a fee in the amount equivalent to US$169,426.26 which shall be due and payable by SCJREP
    within 1 month from the completion of the disposal of 35% interests in Wit Legend pursuant to the
    agreement for sale and purchase dated 14 June 2011 entered into between Keen Virtue, SCJREP and
    Green Capital; and

(b) a fee (the “Incentive Fees”) payable quarterly in arrears, from Net Cash Flow from the Asset
    distributed to SCJREP, if any, attributable to the preceding calendar quarter as follows:

    (i) first, 20% of Net Cash Flow distributed to SCJREP, if and to the extent that as of the date of
        determination, SCJREP’s Investments have yielded an IRR equal to or in excess of 15% and less
        than 20%; and

    (ii) second, 25% of Net Cash Flow distributed to SCJREP, if and to the extent that as of the date of
         determination, SCJREP’s Investments have yielded an IRR equal to or in excess of 20%.

The aforesaid fees are determined with reference to market practice.

In the event that the Asset Management Agreement expires, or is terminated other than by the default of
KLR Hong Kong of the Asset Management Agreement, KLR Hong Kong shall be entitled to payment of
the Incentive Fees as if the Asset Management Agreement had not expired or been terminated.

THE CONSULTING SERVICES AGREEMENT

Date       : 1 July 2011

Parties    : KLR Hong Kong

              Lucky View

Subject Matter:

Pursuant to the Consulting Services Agreement, KLR Hong Kong has appointed Lucky View to provide
certain project management related consulting services in connection with the Asset to facilitate KLR
Hong Kong in rendering advisory, consultation and management services to Vital Success pursuant to the
Asset Management Agreement.




                                                    3
Consulting Services to be rendered by Lucky View to KLR Hong Kong

The services to be provided by Lucky View include, amongst others, (i) coordinating the works of
all design consultants including preparation of general building plan and working drawings both for
submission and tender/construction purposes; (ii) monitoring design progress and site work progress and
report to KLR Hong Kong on a regular basis; (iii) carrying out constant inspection and supervision on
site at all work stages; (iv) providing general management services such as maintenance of staff records
and provision of head office services and professional support; (v) managing financing affairs such as
identifying prospective third party lenders for financing of the Asset and advising KLR Hong Kong and
Vital Success on the terms and conditions of such financing; and (vi) providing proactive assistance
and support to KLR Hong Kong in respect of its rendering of services to Vital Success under the Asset
Management Agreement (the “Consulting Services”).

Fees and payment terms

Lucky View is entitled to the following remuneration for the provision of the Consulting Services:

(a) a fee in the amount equivalent to HK$343,000 which is computed based on 0.1% of the budgeted
    construction cost of HK$343,000,000 of the Asset, payable within 15 business days from the receipt
    by KLR Hong Kong of the project management fees pursuant to the Asset Management Agreement;
    and

(b) a fee in the amount equivalent to 0.025% of the Disposition Fee, payable within 15 business days
    from the receipt by KLR Hong Kong of the Disposition Fee from Vital Success pursuant to the Asset
    Management Agreement.

The aforesaid fees are determined with reference to the service scope, underlying efforts and workload of
Lucky View.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The reasons for and benefits of entering into the Service Agreement is for KLR Hong Kong to receive
management and performance fees for services rendered.

The reasons for and benefits of entering into the Consulting Services Agreement is that KLR Hong Kong
does not have sufficient human resources in Hong Kong and that Lucky View is able to provide the
services without KLR Hong Kong incurring greater costs in running larger operations in Hong Kong.

The Directors (including the independent non-executive Directors) consider that the terms of each of the
Service Agreement and the Consulting Services Agreement are fair and reasonable and that the entering
into of each of the Service Agreement and the Consulting Services Agreement is in the interests of the
Company and the Shareholders as a whole.




                                                    4
LISTING RULES IMPLICATIONS

Since (i) SCJREP is a substantial shareholder of Wit Legend (a subsidiary of the Company) and (ii)
Lucky View is company owned by an associate of Mr. Ivan Ho, a director of Wit Legend (a subsidiary
of the Company), each of SCJREP and Lucky View is a connected person of the Company. Accordingly,
each of (a) the provision of the Services by KLR Hong Kong to SCJREP pursuant to the Service
Agreement; and (b) the provision of the Consulting Services by Lucky View to KLR Hong Kong
pursuant to the Consulting Services Agreement has since 30 July 2012, the date on which KLR Hong
Kong became a subsidiary of the Company, become continuing connected transactions of the Company.

Pursuant to Rule 14A.41 of the Listing Rules, each of the Service Agreement and the Consulting Services
Agreement is subject to the reporting, annual review and disclosure requirements of Chapter 14A of the
Listing Rules and upon any variation of the Service Agreement and the Consulting Services Agreement,
the Company will comply in full all applicable reporting, disclosure and independent shareholders’
approval requirements of Chapter 14A of the Listing Rules.

GENERAL

The Group is a real estate development, real estate investment, fund management and asset management
company operating in Hong Kong and the PRC.

SCJREP is a special purpose company which is established by a real estate investment fund managed by
Secured Capital. Secured Capital carries out property investment in Japan and Asia-Pacific countries.

Lucky View is principally engaged in investment holding activities.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the
following meanings when used herein:

“Asset”                         all those piece or parcel of ground registered at the Land Registry as
                                Kwun Tong Inland Lot no. 526 together with the messuages erections
                                and buildings erected or to be erected thereon which is held by Vital
                                Success

“Asset Management               the asset management agreement dated as of 29 July 2011 between KLR
  Agreement”                    Hong Kong and Vital Success




                                                   5
“Asset Revenue”         revenue received with respect to the Asset during such period from any
                        source whatsoever, including, without limitation (i) operating income,
                        rental payments, interest, late fees or other payments, payments or
                        refunds received, income, receipts, collections, recoveries, insurance or
                        condemnation proceeds, proceeds from the voluntary sale or foreclosure
                        auction of the Asset, or similar revenues, and other proceeds of any
                        type (other than Investments), and (ii) the net purchase price received
                        from a Disposition, but specifically excluding any funds received from
                        any lender/creditor or in any financing transaction in which Wit Legend
                        or Vital Success has to repay such funds when such funds are used as
                        part of the acquisition or refinancing of the Asset but including funds
                        received from such financing transaction that are distributed to Wit
                        Legend with no obligation to repay such funds

“Board”                 the board of Directors

“Company”               Rykadan Capital Limited, the shares of which are listed on The Stock
                        Exchange of Hong Kong Limited (Stock Code: 2288)

“connected person(s)”   has the meaning ascribed thereto in the Listing Rules

“Consulting Services”   as such term is defined in the section headed “The Consulting Service
                        Agreement – Consulting Services to be rendered by Lucky View to
                        KLR Hong Kong” in this announcement

“Consulting Services    a service agreement dated as of 1 July 2011 entered into between
  Agreement”            KLR Hong Kong and Lucky View in respect of the provision of the
                        Consulting Services by Lucky View to KLR Hong Kong

“Disposition”           the sale of all or part of the Asset, or the sale of ownership of all or
                        part of the equity interests in Vital Success and/or the equity interests
                        in Wit Legend, but excluding any financing or refinancing thereof or
                        the transfer thereof resulting from an exercise of any security interest
                        thereon, to any person other than SCJREP, Green Capital or Keen
                        Virtue (or their respective affiliate(s))

“Disposition Fee”       fee for Disposition related services provided by KLR Hong Kong
                        pursuant to the Asset Management Agreement, which shall equal to 5%
                        of the Net Disposition Proceeds




                                           6
“Distributions”    distributions made by Wit Legend to its shareholders whether as
                   repayment of shareholder loans, whether as principal or interest, or
                   equity distributions, including but not limited to any Net Disposition
                   Proceeds from the sale of ownership of the equity interests in Wit
                   Legend (or any successor of Wit Legend) by SCJREP, Green Capital,
                   Keen Virtue in a Disposition

“Directors”        the directors of the Company

“Green Capital”    Green Capital Group Limited, a company incorporated in the British
                   Virgin Islands with limited liability

“Group”            the Company and its subsidiaries

“HK$”              Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong”        Hong Kong Special Administrative Region of the PRC

“Incentive Fees”   as such term is defined in the section headed “The Service Agreement –
                   Fees and Payment Terms” in this announcement

“IRR”              the annual percentage rate, compounded quarterly, which, when utilized
                   to calculate the present value of all Distributions to SCJREP, Green
                   Capital or Keen Virtue, causes such present value of Distributions to
                   equal the present value of the Investments by SCJREP, Green Capital or
                   Keen Virtue (or their respective affiliate(s))

“Investments”      capital contributions of SCJREP, Green Capital or Keen Virtue (or their
                   respective affiliate(s)) received by Wit Legend or its predecessor for the
                   purposes of investing in the Asset

“Keen Virtue”      Keen Virtue Group Limited, a company incorporated in the British
                   Virgin Islands with limited liability and a wholly owned-subsidiary of
                   the Company

KLR Hong Kong”     Kailong REI Project Investment Consulting (Hong Kong) Co., Limited,
                   a company incorporated in Hong Kong and a non-wholly owned
                   subsidiary of the Company

“Listing Rules”    the Rules Governing the Listing of Securities on The Stock Exchange of
                   Hong Kong Limited

“Lucky View”       Lucky View Limited, a company incorporated in Hong Kong owned by
                   Mr. Ivan Ho and a connected person of the Company

“Mr. Ivan Ho”      Mr. Ho Chun Tung Ivan, a director of Wit Legend and a connected
                   person of the Company


                                      7
“Net Cash Flow”              means all of the Asset Revenue received during the applicable period
                             of determination less (i) Asset level operating and administrative
                             expenses, including property and other taxes, whether or not such
                             expenses directly relate to Asset level operating income, (ii) Vital
                             Success-level operating and administrative expenses, (iii) Wit Legend-
                             level operating and administrative expenses, (iv) all fees payable
                             to KLR Hong Kong pursuant to the Asset Management Agreement
                             other than Incentive Fees, and (v) any costs and expenses relating to a
                             Disposition

“Net Disposition Proceeds”   The amount equal to the gross proceeds received by Vital Success, Wit
                             Legend or SCJREP with respect to a Disposition minus any broker fees,
                             Disposition Fee(s) paid to KLR Hong Kong, and other transaction costs
                             incurred in connection therewith

‘‘PRC’’                      the People’s Republic of China, which for the purpose of this
                             announcement excludes Hong Kong, Macau Special Administration
                             Region and Taiwan

“Restructuring Agreement ”   the restructuring agreement dated 11 July 2012 entered into between
                             Talent Step, Good Grace Investment Limited, Borrison (B.V.I.) Limited
                             and Kailong REI Holdings Limited

“RMB”                        Renminbi, the lawful currency of the PRC

“SCJREP”                     SCJREP IV Cayman E., Ltd., a company incorporated in the Cayman
                             Islands and a connected person of the Company

“Services”                   as such term is defined in the section headed “The Service Agreement
                             – Services to be rendered by KLR Hong Kong to SCJREP” in this
                             announcement

“Service Agreement”          the service agreement dated as of 1 July 2011 entered into between
                             SCJREP in respect of the provision of the Services by KLR Hong Kong
                             to SCJREP

“Share(s)”                   share(s) of HK$0.01 each in the Company

“Shareholder(s)”             holder(s) of Share(s)

“Shareholders’ Deed”         the shareholders’ deed dated 11 July 2012 entered into between Talent
                             Step, Good Grace Investments Limited, Borrison (B.V.I.) Limited, Mr.
                             Stephen Anthony Roth, Secured Capital Investment Management Co.,
                             Limited, PAG Real Estate Limited, Mr. Cheng Hei Ming, Mr. Ivan Ho,
                             Ms. Woo Wai Yu and Mr. Geng Ho and KLR Hong Kong



                                                8
“Subscription Agreement”      the subscription agreement dated 11 July 2012 entered into between
                              Talent Step, Good Grace Investments Limited, Borrison (B.V.I.)
                              Limited, Mr. Cheng Hei Ming, Mr. Ivan Ho, Mr. Stephen Anthony
                              Roth, PAG Real Estate Limited and KLR Hong Kong

“Talent Step”                 Talent Step Investments Limited, a company incorporated in the British
                              Virgin Islands and a wholly owned subsidiary of the Company

“US$”                         United States dollars, the lawful currency of the United States of
                              America

“Vital Success”               Vital Success Development Limited, a company incorporated in the
                              British Virgin Islands and a non wholly-owned subsidiary of the
                              Company

“Wit Legend”                  Wit Legend Investments Limited, a company incorporated in the British
                              Virgin Islands and a non wholly-owned subsidiary of the Company

“%”                           per cent.

                                                                     By order of the Board
                                                                   Rykadan Capital Limited
                                                                       CHAN William
                                                              Chairman and Chief Executive Officer

Hong Kong, 3 October 2012

As at the date of this announcement, the Board comprises Mr. Chan William (Chairman and Chief
Executive Officer), Mr. Ng Tak Kwan and Mr. Yip Chun Kwok (Chief Financial Officer) as Executive
Directors, and Mr. To King Yan, Adam, Mr. Wong Hoi Ki and Mr. Ho Kwok Wah, George as
Independent Non-executive Directors.




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