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EAGLE NICE _INTERNATIONAL_ HOLDINGS LIMITED

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EAGLE NICE _INTERNATIONAL_ HOLDINGS LIMITED Powered By Docstoc
					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.




                                                                           EAGLE NICE (INTERNATIONAL) HOLDINGS LIMITED
                                                                                                                                                                                                                *
                                                                                                              (Incorporated in the Cayman Islands with limited liability)
                                                                                                                                               (Stock code: 2368)
                                                                                                                      DISCLOSEABLE TRANSACTION
  Summary
  On 19th June 2004, the Purchaser, a wholly-owned subsidiary of the Company, entered into the Agreement with C.D. Real Estate whereby, C.D. Real Estate will construct and sell, and the Purchaser will purchase, the New Production Plant free from encumbrances. The
  consideration for the Agreement is RMB102,175,000 (approximately HK$96,391,509) (which is based on the planned gross floor area of the New Production Plant of approximately 67,000 sq.m. and the unit price of RMB1,525 (approximately HK$1,438.68) per sq.m. and is
  subject to adjustment).
  Most of the Group’s existing production facilities are currently leased from independent third parties on short term tenancies, a majority of which are due to expire before the end of 2006. It would, therefore, be in the Company’s interest to have a contingency plan in place in
  case of any possible non-renewal of such short term tenancies or any significant increase in rental expenses in the future. Moreover, as stated in the Prospectus and the Circular, the Company has plans to set up new production facilities for the manufacture of sportswear for
  men, women and children in the PRC (including Shantou) and Asia. As such, the Directors consider that the Acquisition is in the interest of the Company and its Shareholders as a whole as it not only provides the Group with the flexibility to relocate part or all of its existing
  production facilities to the New Production Plant as and when such short term tenancies expire but is also in line with the Group’s business expansion plans. When completed, the New Production Plant is expected to have a production capacity of approximately 750,000 dozens
  of sportswear per annum and will increase the Group’s existing production capacity of approximately 245,000 dozens of sportswear per annum by approximately 200 per cent.. With such expanded production capacity, the Group will be able to capture an anticipated increase in
  sales orders resulting from the possible referral of the existing customers of the Yue Yuen Group to the Group and the geographical expansion of the Group’s markets to the United States and Europe as disclosed in the Circular.
  The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. The Company will send a circular containing further information on the Acquisition to the Shareholders as soon as practicable.

DETAILS OF THE AGREEMENT                                                                                                                                              Condition
Date of agreement                                                                                                                                                     The Agreement shall be conditional upon C.D. Real Estate having obtained (i) all relevant permits and approvals for the commencement
19th June 2004                                                                                                                                                        of construction of the New Production Plant as stated under the paragraph headed ‘‘Principal obligations of C.D. Real Estate’’ above
                                                                                                                                                                      within 30 days after the date of signing of the Agreement and (ii) the Land Use Right Certificate within 50 days after the date of signing
Parties                                                                                                                                                               of the Agreement, failing which the Agreement shall automatically terminate.
(1)        C.D. Real Estate. According to its business licence, C.D. Real Estate is principally engaged in the development of industrial
           villages in Shantou Special Economic Zone and the leasing and sale of industrial buildings and ancillary facilities. To the best                           REASONS FOR AND BENEFIT OF THE ACQUISITION
           of the knowledge of the Directors having made all reasonable enquiries, the Directors confirm that C.D. Real Estate and its
           ultimate beneficial owner(s) are independent of the Company and not connected persons (as defined in the Listing Rules) of the                             The Company is an investment holding company. Its subsidiaries are principally engaged in the design and manufacture of sportswear for
           Company. Prior to the Agreement, neither the Company nor any of its subsidiaries had any business relationship with C.D. Real                              men, women and children on an OEM basis.
           Estate. C.D. Real Estate was recommended to the Group through its business contacts in Shantou Special Economic Zone.                                      Most of the Group’s existing production facilities are currently leased from independent third parties on short term tenancies, a majority
(2)        The Purchaser.                                                                                                                                             of which are due to expire before the end of 2006. It would, therefore, be in the Company’s interest to have a contingency plan in place in
                                                                                                                                                                      case of any possible non-renewal of such short term tenancies or any significant increase in rental expenses in the future. Moreover, as
Principal obligations of C.D. Real Estate                                                                                                                             stated in the Prospectus and the Circular, the Company has plans to set up new production facilities for the manufacture of sportswear for
Pursuant to the Agreement, C.D. Real Estate will construct and sell, and the Purchaser will purchase, the New Production Plant free from                              men, women and children in the PRC (including Shantou) and Asia. As such, the Directors consider that the Acquisition is in the interest
encumbrances.                                                                                                                                                         of the Company and its Shareholders as a whole as it not only provides the Group with the flexibility to relocate part or all of its existing
                                                                                                                                                                      production facilities to the New Production Plant as and when such short term tenancies expire but is also in line with the Group’s
In addition, C.D. Real Estate will be responsible for:                                                                                                                business expansion plans. When completed, the New Production Plant is expected to have a production capacity of approximately
(i)        planning and designing of the New Production Plant;                                                                                                        750,000 dozens of sportswear per annum and will increase the Group’s existing production capacity of approximately 245,000 dozens of
                                                                                                                                                                      sportswear per annum by approximately 200 per cent.. With such expanded production capacity, the Group will be able to capture an
(ii)       applying for and obtaining the Land Use Right Certificate and all relevant permits and approvals (including the preliminary                                anticipated increase in sales orders resulting from the possible referral of the existing customers of the Yue Yuen Group to the Group and
           approvals of the planned gross floor area referred to in the paragraph below) in relation to the construction and pre-sale of the                          the geographical expansion of the Group’s markets to the United States and Europe as disclosed in the Circular.
           New Production Plant from the relevant PRC authorities; and
                                                                                                                                                                      GENERAL
(iii)      attending to the procedures in relation to the transfer of the property rights (including land and building) of the New Production
           Plant to the Purchaser.                                                                                                                                    The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. The Company will send a circular
                                                                                                                                                                      containing further information on the Acquisition to the Shareholders as soon as practicable.
Description of the New Production Plant and information on the Land
The New Production Plant will be erected on the Land with a site area of approximately 23,334 sq.m.. When completed, the New                                          As at the date of this announcement, the Board comprises six executive Directors, namely, Mr. Chung Yuk Sing, Ms. Tsang Yuk Ni, Mr.
Production Plant will comprise a 7-storey industrial building with a planned gross floor area of approximately 67,000 sq.m. together with                             Chung Tung Sau, Ms. Tsang Sau Fan, Mr. Edward Ku Yu San and Mr. Kuo Tai Yu, one non-executive Director, namely, Mr. Ong Chor
ancillary facilities including a basket ball court and a car port. As at the date of this announcement, the planned gross floor area of the                           Wei and two independent non-executive Directors, namely, Mr. Chan Cheuk Ho and Mr. Li Chi Chung.
New Production Plant has been preliminarily approved by the relevant PRC authorities.
                                                                                                                                                                      DEFINITIONS
Pursuant to the Land Grant Contract, C.D. Real Estate agreed to acquire the land use rights of the Land for a term of 50 years
commencing on 26th October, 1991 and expiring on 25th October, 2041 at the consideration of RMB7,077,065 (approximately                                               ‘‘Acquisition’’                          the acquisition of the New Production Plant by the Purchaser pursuant to the Agreement
HK$6,676,476.42) payable in cash and C.D. Real Estate had already fully paid such consideration. Under the Land Grant Contract, the                                   ‘‘Agreement’’                            the agreement dated 19th June 2004 made between C.D. Real Estate and the Purchaser relating to the
Land shall be used for industrial purposes only. C.D. Real Estate is in the process of applying to the relevant PRC authorities for the issue                                                                  Acquisition
of the Land Use Right Certificate in the name of C.D. Real Estate and it is expected that C.D. Real Estate will obtain the Land Use Right
Certificate in the name of C.D. Real Estate in or around July 2004.                                                                                                   ‘‘Board’’                                the board of Directors
Consideration and payment terms                                                                                                                                       ‘‘C.D. Real Estate’’                                                              (Shantou Special Economic Zone Cheng De Industrial Village
                                                                                                                                                                                                               Development Co. Ltd.), a corporation incorporated in the PRC
The consideration for the Agreement is RMB102,175,000 (approximately HK$96,391,509) (which is based on the planned gross floor
area of the New Production Plant of approximately 67,000 sq.m. and the unit price of RMB1,525 (approximately HK$1,438.68) per sq.m.                                   ‘‘Circular’’                             the circular of the Company dated 24th March, 2004 in relation to, among other things, the
and is subject to adjustment). If the actual completed gross floor area as stated in the Real Estate Title Certificate is less than the planned                                                                Subscription and the Placing
gross floor area, C.D. Real Estate will reimburse to the Purchaser an amount equal to the shortfall in gross floor area and conversely, if                            ‘‘Company’’                              Eagle Nice (International) Holdings Limited, an exempted company incorporated in the Cayman
the actual completed gross floor area of the New Production Plant as stated in the Real Estate Title Certificate is more than the planned                                                                      Islands with limited liability, the shares of which are listed on the Stock Exchange
gross floor area, the Purchaser will pay to C.D. Real Estate an amount equal to the excess in gross floor area. The Company shall issue a                             ‘‘Deposit’’                              the deposit in the sum of RMB20,000,000 (approximately HK$18,867,924.53) to be paid by the
further announcement if there shall be any adjustment to the consideration for the Agreement.                                                                                                                  Purchaser to and held by the Escrow Agent pursuant to the terms of the Agreement
The consideration for the Agreement will be payable in cash as follows:                                                                                               ‘‘Directors’’                            directors of the Company
(i)        as to RMB20,000,000 (approximately HK$18,867,924.53), within 30 days after the satisfaction of the condition referred to                                   ‘‘Escrow Agent’’                         a bank to be designated by the Purchaser to hold the Deposit
           below.
                                                                                                                                                                      ‘‘Formal Contract’’                      the formal contract for the sale and purchase of the New Production Plant to be entered into between
           The Deposit will be paid to and held by the Escrow Agent upon the following terms:                                                                                                                  C.D. Real Estate and the Purchaser pursuant to the Agreement
                                                                                                                                                                      ‘‘Group’’                                the Company and its subsidiaries
           (a)        the Escrow Agent shall release the Deposit (together with interest at the prevailing interest rate given by the Escrow
                      Agent on savings deposits, which is currently at approximately 0.1 per cent. per annum) to C.D. Real Estate within 10                           ‘‘The Hong Kong’’                        the Hong Kong Special Administrative Region of the PRC
                      days after receipt of written confirmation together with evidence from C.D. Real Estate that it has obtained the Pre-                           ‘‘Land’’                                 the piece of land located at                                         (15th Street District, Cheng Di
                      sale Permit and signed the Formal Contract with the Purchaser; and                                                                                                                       Industrial Village, Shantou Special Economic Zone) with a site area of approximately 23,334 sq.m.
                                                                                                                                                                                                               on which the New Production Plant is to be erected
           (b)        the Escrow Agent shall release the Deposit (together with interest referred to in sub-paragraph (a) above) to the
                      Purchaser upon receipt of written confirmation from the Purchaser that:                                                                         ‘‘Land Grant Contract’’                  the contract for the grant of land use rights dated 26th October, 1991 made between
                                                                                                                                                                                                                                           (Shantou Special Economic Zone Administration Commission) and C.D.
                      (i)        C.D. Real Estate has failed to sign the Formal Contract within 3 days after it has obtained the Pre-Sale                                                                      Real Estate as supplemented by a notice regarding the adjustment of the usable area of the Land
                                 Permit; or                                                                                                                                                                    issued by                         (Shantou City Longhu Land Bureau) dated 14th September, 1992
                      (ii)       C.D. Real Estate has failed to obtain the Pre-Sale Permit on or before 28th February, 2005 (or such later date                       ‘‘Land Use Right Certificate’’           the land use right certificate in respect of the Land
                                 as C.D. Real Estate and the Purchaser may agree);                                                                                    ‘‘Listing Rules’’                        the Rules Governing the Listing of Securities on the Stock Exchange
                                                                                                                                                                      ‘‘New Production Plant’’                 the new production plant of the Group to be erected on the Land
(ii)       as to RMB25,000,000 (approximately HK$23,584,905.66), within 5 days after the signing of the Formal Contract;
                                                                                                                                                                      ‘‘OEM’’                                  an acronym for ‘‘original equipment manufacturer’’ which produces or customises products according
(iii)      as to RMB25,000,000 (approximately HK$23,584,905.66), within 5 days after the examination and acceptance of the New                                                                                 to the design supplied by others
           Production Plant by the relevant PRC authorities;
                                                                                                                                                                      ‘‘Placing’’                              the placing of 35,000,000 new Shares as described in the Circular
(iv)       as to RMB31,153,250 (approximately HK$29,389,858.49), after the issue of the Real Estate Title Certificate to the Purchaser;                               ‘‘PRC’’                                  the People’s Republic of China (excluding for the purpose of this announcement, Hong Kong, the
           and                                                                                                                                                                                                 Macau Special Administrative Region of the PRC and Taiwan)
(v)        as to the balance of RMB1,021,750 (approximately HK$963,915.09) upon the expiry of 2 years after the examination and                                       ‘‘Pre-sale Permit’’                      the pre-sale permit in respect of the New Production Plant
           acceptance of the New Production Plant by the relevant PRC authorities.
                                                                                                                                                                      ‘‘Prospectus’’                           the prospectus of the Company dated 12th August, 2003 in relation to the Share Offer
The consideration for the Agreement was determined after arm’s length negotiations between the parties and with reference to the                                      ‘‘Purchaser’’                                                        (Yue Mei (Shantou) Garment Manufacturing Co. Ltd.), a wholly foreign
purchase prices of comparable industrial buildings varying from approximately RMB1,460 (approximately HK$1,377.36) per sq.m. to                                                                                owned enterprise established in the PRC and a wholly-owned subsidiary of the Company
approximately RMB1,700 (approximately HK$1,603.77) per sq.m. according to enquiries made by the Group into recently completed
transactions in the vicinity in the Shantou Special Economic Zone. The Directors consider that the terms and conditions of the Agreement                              ‘‘Real Estate Title Certificate’’        the real estate title certificate in respect of the New Production Plant
(including the consideration which is based on a unit price of RMB1,525 (approximately HK$1,438.68) per sq.m. and falls within the                                    ‘‘Share Offer’’                          the placing, public offer and offer for sale of 50,000,000 Shares as described in the Prospectus
above range) are fair and reasonable so far as the Shareholders are concerned. No property valuation has been performed in respect of the                             ‘‘Share(s)’’                             shares of HK$0.01 each in the capital of the Company
Land.
                                                                                                                                                                      ‘‘Shareholders’’                         holders of Shares
The Company intends to finance the consideration for the Agreement partly from the proceeds of the Share Offer, the Subscription and
the Placing and partly from its internal resources.                                                                                                                   ‘‘Stock Exchange’’                       The Stock Exchange of Hong Kong Limited
As at the date of this announcement, the Group had utilised approximately HK$8 million from the net proceeds of the Share Offer of                                    ‘‘Subscription’’                         the subscription of 105,000,000 Shares and a convertible note in the principal amount of
approximately HK$22 million as follows: (i) as to approximately HK$2 million for financing the acquisition of new machinery and                                                                                HK$207,060,000 by the Yue Yuen Group as described in the Circular
fixtures and fittings to support the expansion of the Group’s production capacity; (ii) as to approximately HK$3 million for financing the                            ‘‘Yue Yuen’’                             Yue Yuen Industrial (Holdings) Limited, an exempted company incorporated in Bermuda with
expansion of the Group’s marketing team and sales network; and (iii) as to approximately HK$3 million for general working capital                                                                              limited liability, the shares of which are listed on the Stock Exchange
purposes. As at the date of this announcement, the Group had utilised approximately HK$50 million from the net proceeds of the
Subscription and the Placing of approximately HK$339.8 million (of which approximately HK$229.8 million had been allocated for                                        ‘‘Yue Yuen Group’’                       Yue Yuen and its subsidiaries
general working capital purposes) for repayment of all the Group’s existing bank borrowings. The Directors confirm that such usages                                   ‘‘HK$’’                                  Hong Kong dollars, the lawful currency of Hong Kong
were in line with the intended use of proceeds as stated in the Prospectus and the Circular. The Directors further confirm that the intended                          ‘‘RMB’’                                  Renminbi, the lawful currency of the PRC
financing of the Acquisition from the net proceeds of the Share Offer, the Subscription and the Placing will be in line with the intended
use of net proceeds as stated in the Prospectus and the Circular.                                                                                                     ‘‘sq.m.’’                                square metres
Completion and delivery of the New Production Plant
                                                                                                                                                                                                                                                                                       By Order of the Board of
C.D. Real Estate will complete and deliver the New Production Plant to the Purchaser on or before 15th April, 2005 (the ‘‘Delivery
                                                                                                                                                                                                                                                                              Eagle Nice (International) Holdings Limited
Date’’). In the event that the New Production Plant has not been completed and delivered to the Purchaser by the Delivery Date (other
                                                                                                                                                                                                                                                                                            Chung Yuk Sing
than due to natural disasters beyond the control of C.D. Real Estate), C.D. Real Estate will be liable to pay to the Purchaser a late penalty
                                                                                                                                                                                                                                                                                               Chairman
in the amount calculated at the rate of 0.03% per day on all amounts paid by the Purchaser under the Agreement in respect of each day the
delivery of the New Production Plant has been delayed. Furthermore, in the event that such delay shall be more than 45 days after the
Delivery Date, the Purchaser will be entitled to terminate the Agreement and C.D. Real Estate will be liable to refund to the Purchaser all                           Hong Kong, 23rd June 2004
amounts paid by the Purchaser prior to the termination of the Agreement and pay to the Purchaser an additional penalty in the amount
calculated at the rate of 5% on all amounts paid by the Purchaser prior to the termination of the Agreement. The Directors consider that                              In this announcement, RMB is converted into HK$ at the exchange rate of RMB106 : HK$100.
the additional penalty of 5% has taken into account the interest which the Group would otherwise have earned had it lent such amounts to
other independent third parties in loan or other similar transactions and such rate is fair and reasonable.                                                           * For identification purpose only

				
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