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Convertible Loan Agreement

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					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.

This announcement for which the directors of Essex Bio-Technology Limited collectively and
individually accept full responsibility includes particulars given in compliance with the GEM
Listing Rules for the purpose of giving information with regard to Essex Bio-Technology
Limited. The directors, having made all reasonable enquiries, confirm that, to the best of
their knowledge and belief (i) the information contained in this announcement is accurate
and complete in all material respects and not misleading; (ii) there are no other matters the
omission of which would make any statement in this announcement misleading; and (iii) all
opinions expressed in this announcement have been arrived at after due and careful
consideration and are founded on bases and assumptions that are fair and reasonable.




          (incorporated in the Cayman Islands with limited liability)

                   DISCLOSEABLE TRANSACTION
                   CONVERTIBLE LOAN AGREEMENT

 On 2nd December, 2003, Essex Bio-Investment entered into the Convertible
 Loan Agreement whereby Essex Bio-Investment, a wholly-owned subsidiary
 of the Company, agreed to make available to the Borrower a loan in the
 principal amount of US$1,200,000 (equivalent to HK$9,360,000).

 Based on the net tangible assets of the Company as shown in its latest
 audited accounts for the year ended 31 December, 2002 (as adjusted by
 taking into account the loss attributable to shareholders as publicized in the
 quarterly report of the Company for the nine months ended 30 September,
 2003 pursuant to rule 19.13 of the GEM Listing Rules), the Transaction
 constitutes a discloseable transaction on the Company under Chapter 19 of
 the GEM Listing Rules. A circular containing further details of the
 Transaction will be despatched to the Shareholders as soon as practicable.

 The Company will make an announcement when it has decided to exercise
 the Conversion Right or not to do so.


                                         — 1 —
THE CONVERTIBLE LOAN AGREEMENT DATED 2 DECEMBER,
2003

Parties

Investor:         Essex Bio-Investment

Borrower:         Asiapharm Group Ltd, a company incorporated in Bermuda
                  with limited liability on 7 July, 2003 and its ultimate
                  beneficial owners are independent of and not connected
                  with the directors, chief executive and substantial
                  shareholders of the Company and its subsidiaries or any of
                  their respective associates (as defined in the Listing Rules)
                  (the “Borrower”)
The subject matter

The Investor agreed to make available to the Borrower a convertible loan
facility of an aggregate principal amount of US$1,200,000 (equivalent to
HK$9,360,000) (the “Convertible Loan Facility”).

Conditions precedent

The obligations of the Investor under the Convertible Loan Agreement are
subject to the following conditions precedent unless waived by the Investor:

(a) the Borrower shall provide a certified extract of the resolutions of its
    board of directors accepting the Convertible Loan Facility;

(b) all necessary legal documentation are in a form and substance satisfactory
    to the Investor;

(c) completion of financial due diligence audits on the Borrower for the
    financial years ended 31 December 2001 and 31 December 2002 as well as
    management accounts for the period 1 January 2003 to 31 October 2003,
    which results are satisfactory to the Investor at its sole discretion;

(d) completion of the review of the profit forecast of the Borrower’s Group for
    the financial years ended 31 December 2004 and 31 December 2005, the
    Borrower’s Group corporate structure, the proposed time-table for the
    listing of the Borrower on a recognised stock exchange (the “Listing”) and
    the terms offered by the manager, underwriter and placement agent for the
    Listing, to the satisfaction of the Investor at its sole discretion;


                                   — 2 —
(e) evidence to the satisfaction of the Investor at its sole discretion that all
    government, regulatory and third party approvals and consents, if
    required, for the restructuring of the Borrower’s Group have been
    obtained;

(f) all acts, conditions and things required to be done and performed and to
    have happened precedent to the execution and delivery of the Convertible
    Loan Agreement and to constitute the Convertible Loan Agreement a legal,
    valid and binding obligation enforceable in accordance with its terms,
    shall have been done and performed and have happened in due and strict
    compliance with all applicable laws; and

(g) all representations, warranties and statements contained herein or
    otherwise made in writing in connection herewith or in any certificate or
    statement furnished pursuant to any provisions hereof or in any document
    or instrument referred to herein shall be true and correct with the same
    effect as though made on the Funding Date.

Purpose

The Borrower shall use the Convertible Loan Facility to fund the corporate
restructuring involved the acquisition by a wholly-owned subsidiary of the
Borrower of a group of companies principally engage in research,
development, production and sale of western medicines, sale of active
ingredients for western medicines and sale of research and development results
and/or patents for new drugs in the PRC.

Interest

No interest shall be payable if the Listing is completed by the Listing Target
Date. If the Listing is not completed before the Listing Target Date, the
Borrower shall pay an interest at a rate of 15% per annum from the Funding
Date up to the Repayment Date (as defined below).

Maturity and repayment

The term of the Convertible Loan Facility shall expire on the earlier of (a) 31
May, 2004 (the “Final Maturity”); or (b) the date of Listing (both (a) and (b),
the “Repayment Date” as the case may be). The term of the Convertible Loan
Facility may be extended for a maximum of 3 calendar months from the Final
Maturity if the Listing is delayed as a result of a delay in obtaining regulatory
approvals.


                                    — 3 —
The Borrower shall on the expiry of the term of the Convertible Loan Facility
repay all outstanding sums of the principal amount of the Loan in United
States dollars, plus all interest, fees, costs, expenses and other monies
whatsoever which are expressed to be payable to the Investor. If the Borrower
fails to repay such sum or any part thereof, the Investor shall be entitled to
convert the full outstanding principal amount of the Loan into fully paid
ordinary shares of the Borrower, equivalent to 10% of the issued and paid-up
capital of the Borrower after the exercise of such conversion right.

Conversion of the Loan

The Investor shall have the right to convert the full sum of the principal
amount of the Loan into fully paid new ordinary shares (the “Borrower’s New
Shares”) of the Borrower (the “Conversion Right”).

The Investor can exercise its Conversion Right by delivering to the Borrower
a conversion notice at least five business days before the date of lodgement of
the prospectus with the relevant authority for the Listing and in any event on
or before the Repayment Date.

The number of the Borrower’s New Shares to be issued upon the conversion
of the Convertible Loan Facility (expressed as a percentage of the share capital
of the Borrower as at the conversion date) shall be in accordance with the
following formula:
      PA
N =      x 100%
      EV
where    “N”      is the number of the Borrower’s New Shares to be issued
                  expressed as a percentage of the share capital of the Borrower
                  as at the conversion date, fractional number of shares to be
                  disregarded

         “PA”     is the principal amount of the Loan

         “EV” is the pre-Listing valuation which is derived at based on the
              following:

                  EV = PER x PAT X 0.65

         where “PER” is a price earnings ratio of 10

                  “PAT” is a profit after tax of RMB40,000,000 (equivalent to
                  US$4,820,000)


                                    — 4 —
Provided that if PER is less 10 and/or PAT is less than RMB40,000,000
(equivalent to US$4,820,000), the Borrower shall pay the Investor a cash
amount in United States dollars computed as follows:

PA - ((actual PER x actual PAT x 0.65) x N)

where 9≤actual PER<10 and actual PAT≤ RMB40,000,000 (equivalent to
US$4,820,000)

Upon conversion, the right of the Investor to repayment of the principal
amount of the Loan shall be extinguished and released. Upon the full
conversion of the principal amount of the Loan, the Convertible Loan
Agreement shall ipso facto cease and determine without affecting the prior
accrued rights of the Investor as against the Borrower.

The Borrower’s New Shares allotted and issued on conversion will rank pari
passu in all respects with the existing shares of the Borrower.

The Borrower shall not be permitted to prepay the Convertible Loan Facility
unless agreed otherwise in writing between the Investor and the Borrower.

Save as required by the recognised stock exchange for the purpose of the
Listing, the Borrower’s New Shares shall not be subject to any moratorium.

Based on the information provided by the Borrower on its proposed Listing,
the Directors confirmed that upon conversion of the Loan, the Company
estimates to hold approximately not more than 4% of the issued share capital
of the Borrower upon its Listing.

INFORMATION OF THE INVESTOR

Essex Bio-Investment is a wholly-owned subsidiary of the Company and its
principal business activity is investment holding. The Company is an
investment holding company for a group of companies principally engage in
manufacture and selling of biopharmaceutical products, research and
development and sale of biopharmaceutical products and projects in the PRC.

BUSINESS OF THE BORROWER

The Borrower is a company incorporated in Bermuda with limited liability and
its ultimate beneficial owners are independent of and not connected with the
directors, chief executive or substantial shareholders of the Company and its
subsidiaries or any of their respective associates (as defined in the GEM
Listing Rules). The Borrower is an investment holding company, and through


                                  — 5 —
a corporate restructuring, will become a holding company of a group of
companies principally engage in research, development, production and sale of
western medicines comprising mainly (a) medicines manufactured from the
natural active ingredients extracted from plants of the Borrower’s Group; and
(b) drugs with new formulation, for the fields of orthopaedics, neurology,
gastroenterology and hepatology, sale of active ingredients for western
medicines and sale of research and development results and/or patents for new
drugs in the PRC.

According to the information available to the Directors, the unaudited
turnover, net profit and net assets value of the proposed Borrower’s Group for
the 10 months ended 31 October, 2003 and upon its completion of the
corporate restructuring is expected to be RMB170,000,000, RMB20,000,000
and RMB80,000,000 respectively.

According to the draft audited accounts of the Borrowor’s Group prepared for
the purpose of the Listing, the turnover, net profit and net assets value of the
proposed Borrower’s Group for the year ended 31 December, 2001 is about
RMB135,553,000, RMB4,881,000 and RMB64,016,000 respectively, and that
for the year ended 31 December, 2002 is RMB156,886,000, RMB12,558,000
and RMB76,574,000 respectively.

REASONS FOR THE TRANSACTION

Upon completion of the corporate restructuring, the principal business
activities of the Borrower’s Group will be principally engaging in the research,
development, production and sale of western medicines. The Directors,
including the independent non-executive Directors, are of the view that the
Transaction will, upon conversion of the Loan, enable the Company to invest
in the Borrower’s Group, build up and maintain a closer relationship with the
Borrower and subsequently to benefit from the synergies between the
distribution network and technical know-how of the Borrower’s Group which
will strengthen the Group’s distribution network in the PRC and development
of the existing and new products. The Directors confirmed that other than the
Transaction, the Company has entered into no other agreements or
arrangements with the Borrower.

The Directors confirmed that one of the business objectives of the Group is to
establish an extensive and efficient distribution network. Since the Group may
benefit from the distribution network of the Borrower, the Directors are of the
view that the Transaction is in line with the business objectives of the Group.

                                   — 6 —
GENERAL

The Directors confirmed that the Loan will be funded by internally-generated
funds of the Group.

Based on the net tangible assets of the Company as shown in its latest audited
accounts made up to 31 December, 2002 (as adjusted by taking into account
the loss attributable to shareholders as publicized in the quarterly report of the
Company for the nine months ended 30 September, 2003 pursuant to rule 19.13
of the GEM Listing Rules), the Transaction will constitute a discloseable
transaction under Chapter 19 of the GEM Listing Rules. A circular containing
details of the Transaction will be issued to the Shareholders as soon as
practicable.

The Company will make an announcement when it has decided to exercise the
Conversion Right or not to do so.

DEFINITION

“Borrower’s Group”          the Borrower and its subsidiaries or proposed
                            subsidiaries

“Company”                   Essex Bio-Technology Limited, a company
                            incorporated in the Cayman Islands with limited
                            liability and whose securities are listed on GEM

“Convertible Loan           the convertible loan agreement dated 2 December,
 Agreement”                 2003 entered into between Essex Bio-Investment
                            and the Borrower with respect to the Convertible
                            Loan Facility

“Directors”                 directors of the Company

“Essex Bio-                 Essex Bio-Investment Limited, a company
 Investment”                incorporated in the British Virgin Islands with
                            limited liability and is a wholly-owned subsidiary
                            of the Company

“Funding Date”              the date on which the Investor transfers by way of
                            telegraphic transfer to the Borrower the Loan,
                            which shall be within 7 days of the date of the
                            Convertible Loan Agreement


                                    — 7 —
“GEM”                   the Growth Enterprise Market of The Stock
                        Exchange of Hong Kong Limited

“GEM Listing Rules”     the Rules Governing the Listing of Securities on
                        GEM

“Group”                 the Company and its subsidiaries

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

“Investor”              Essex Bio-Investment

“Listing Target Date”   on or before 30 June 2004

“Loan”                  the loan in the principal sum of US$1,200,000
                        (equivalent to HK$9,360,000) granted by the
                        Investor to the Borrower pursuant to the
                        Convertible Loan Agreement

“PRC”                   the People’s Republic of China

“Shareholders”          shareholders of the Company

“Transaction”           the making available of US$1,200,000 (equivalent
                        to HK$9,360,000) by Essex Bio-Investment to the
                        Borrower pursuant to the terms and conditions of
                        the Convertible Loan Agreement

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

“RMB”                   Renminbi, the lawful currency of the PRC

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




                               — 8 —
Exchange rate used in this announcement between United States dollars and
Hong Kong dollars is US$1:HK$7.8, between United States dollars and
Renminbi is US$1:RMB:8.3.

                                                 By order of the board of Directors
                                                      Ngiam Mia Je Patrick
                                                             Chairman
Hong Kong, 3 December, 2003

This announcement will remain on the “Latest Company Announcements” page of the GEM
website at http://www.hkgem.com for at least 7 days of its publication and on the Company’s
website at http://www.essexbio.com.




                                        — 9 —

				
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