ISSUE OF CONVERTIBLE BOND AND RESUMPTION OF TRADING by hedongchenchen

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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.




                                     (Incorporated in Bermuda with limited liability)
                                                   (Stock Code: 726)

         ISSUE OF CONVERTIBLE BOND AND RESUMPTION OF TRADING

 On 9 April 2008, the Company entered into the Subscription Agreement with the Subscriber pursuant to
 which the Subscriber has agreed conditionally to subscribe for the Convertible Bond with a principal amount
 of HK$68,000,000.

 The Convertible Bond will bear interest at the rate of 2.5% per annum and will be due on the third anniversary
 of the date of issue of the Convertible Bond. The Convertible Bond is convertible into Conversion Shares at
 an initial Conversion Price, HK$1.03 per Conversion Share.

 Assuming full conversion of the Convertible Bond at the initial Conversion Price, the Convertible Bond will
 be converted into 66,019,417 Shares, representing approximately 19.36% of the existing issued share capital
 of the Company and approximately 16.22% of the issued share capital of the Company as enlarged by the
 conversion. The Conversion Shares will be allotted and issued under the General Mandate. The estimated net
 proceeds from the issue of the Convertible Bond will be about HK$67,700,000 and will be applied towards
 the general working capital of the Group and/or any suitable investment projects.

 Trading in the Shares on the Stock Exchange was suspended at the request of the Company with effect from
 9:30 a.m. on 10 April 2008 pending the release of this announcement. The Company has applied to the Stock
 Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 15 April 2008.

ISSUE OF CONVERTIBLE BOND

Subscription Agreement

Date             :        9 April 2008 (as amended by a supplemental agreement dated 14 April 2008)

Issuer           :        The Company

Subscriber       :        Loyal Delight Group Limited

                          To the best of the Directors’ knowledge, information and belief having made all
                          reasonable enquiries, each of the Subscriber and its ultimate beneficial owner is a
                          third party independent of the Company and not connected person (as defined under
                          the Listing Rules) of the Company.



                                                    —1—
                         As at the date of this announcement, the Subscriber does not have any interest in the
                         existing Shares of the Company.

Principal terms of the Convertible Bond

Principal Amount    :      The principal amount of the Convertible Bond is HK$68,000,000.

Interest             :     2.5% per annum on the Outstanding Principal Amount of the Convertible Bond.
                           Interest will be payable annually in arrears.

Conversion Price    :      HK$1.03 per Conversion Share, which is subject to adjustment in the event of
                           rights issues of Shares or options over Shares.

                           The Conversion Price represents:

                           (a)   a discount of approximately 8.85% to the closing price of HK$1.13 per Share
                                 as quoted on the Stock Exchange on 9 April 2008, being the trading day on
                                 the date of entering into the Subscription Agreement; and

                           (b)   a discount of approximately 3.38% to the average closing prices of HK$1.066
                                 per Share as quoted on the Stock Exchange for the last five consecutive
                                 trading days up to and including 9 April 2008, being the trading day on the
                                 date of entering into the Subscription Agreement.

                           (c)   a premium of approximately 6.74% to the average closing prices of HK$0.965
                                 per Share as quoted on the Stock Exchange for the last ten consecutive trading
                                 days up to and including 9 April 2008, being the trading day on the date of
                                 entering into the Subscription Agreement.

                           The Conversion Price was arrived at after arm’s length negotiations between the
                           Company and the Subscriber with reference to the closing prices as shown above.
                           The Directors consider the Conversion Price is fair and reasonable.

Maturity Date       :      The third anniversary of the issue date of the Convertible Bond.

Status              :      The Convertible Bond constitutes general, unsecured obligations of the Company
                           and will rank pari passu with all future unsecured and unsubordinated obligations
                           of the Company. No application will be made for a listing of the Convertible Bond
                           in any jurisdiction.

Transferability     :      The Convertible Bond may be assigned or transferred in respect of the whole
                           Outstanding Principal Amount in accordance with the provisions of the Convertible
                           Bond, subject to the written consent of the Company and subject to the satisfaction
                           or compliance with the conditions, approvals, requirements and any other
                           provisions of or under (1) the Stock Exchange (and any Alternative Stock
                           Exchange) or their rules and regulations; (2) the approval for listing in respect of
                           the Conversion Shares; and (3) all applicable laws and regulations.


                                                  —2—
                        Any assignee or transferee of the Convertible Bond may not assign or transfer the
                        Convertible Bond without the written consent of the Company. The Company
                        may at its discretion determine that the Convertible Bond may not be assigned or
                        transferred if the Company considers that:

                        (a)   the assignee or the transferee or any of its associates or controller directly or
                              indirectly compete with any businesses of the Company; or

                        (b)   the assignee or the transferee or any of its associates is or was in dispute or
                              legal proceedings with the Company, any of its shareholders holding 5% or
                              more of the Company issued share capital and/or any of its directors; or

                        (c)   the assignee or the transferee, its legal owner or its ultimate beneficial owner
                              is not independent of or is connected with any one or more of the directors,
                              chief executives and substantial shareholders of the Company and its
                              subsidiaries and their respective associates (as defined under the Listing
                              Rules).

Conversion Rights   :   All or any part of the Outstanding Principal Amount of the Convertible Bond may
                        be converted into Shares at any time after the date of issue of the Convertible
                        Bond provided that not less than 10 million Shares are converted pursuant to each
                        conversion.

                        The Conversion Rights are subject to compliance with the Securities and Futures
                        Ordinance (Chapter 571 of the Laws of Hong Kong), the Listing Rules and any
                        other statutory and regulatory instruments. The Bondholder agrees and undertakes
                        with the Company that it will not be entitled to exercise its Conversion Rights
                        attached to the Convertible Bond if the result of exercise of such Conversion Rights
                        will result in a failure to comply with the minimum public holding of the Shares
                        under the prevailing Listing Rules.

Ranking of          :   The Conversion Shares will, upon issued, rank pari passu in all respects with the
  Conversion Shares     Shares then in issue.

Voting              :   The Bondholder will not be entitled to receive notices of, attend or vote at any
                        meetings of the Company by reason only of being the Bondholder.

Redemption          :   The Company has no obligation to redeem the Convertible Bond prior to the
                        Maturity Date unless an event of default as provided in the terms and conditions
                        of the Convertible Bond has occurred prior to the Maturity Date and the Bondholder
                        serves a notice on the Company requiring the Convertible Bond to be redeemed.
                        The Company may, at any time, prepay without penalty, the Outstanding Principal
                        Amount of the Convertible Bond in integral amounts of HK$1,000,000.




                                               —3—
Conditions of the Subscription Agreement

Completion of the Subscription Agreement is conditional upon the following conditions:

(a)   the Listing Committee of the Stock Exchange having granted (either unconditionally or subject only to
      conditions to which the Company and the Subscriber do not reasonably object) listing of and permission
      to deal in the Conversion Shares;

(b)   the Stock Exchange having approved (either unconditionally or subject only to conditions to which the
      Company and the Subscriber do not reasonably object) the issue of the Convertible Bond, or the Company
      not having received any objection from the Stock Exchange to the issue of the Convertible Bond; and

(c)   Directors approving the terms of the Subscription Agreement and the transactions contemplated therein.

Completion

Completion of the Subscription Agreement will take place on the tenth Business Day following the day of
notification by the Company to the Subscriber of the conditions that the above have been fulfilled or waived (in
respect of the Condition Precedent set out in (c) above) or such other date as the parties may agree.

In the event that the conditions have not been fulfilled and/or waived (in respect of the Condition Precedent set
out in (c) only) on or before 31 July 2008 or such other date as may be agreed between the Company and the
Subscriber, the Subscription Agreement will cease to have any force and effect and neither party shall have any
rights or obligations thereunder.

GENERAL MANDATE

The Conversion Shares will be allotted and issued under the General Mandate. Based on the 337,642,880
Shares in issue as at the date of the annual general meeting of the Company held on 24 September 2007,
67,528,576 Shares can be allotted and issued under the General Mandate (representing 20% of the issued share
capital of the Company as at 24 September 2007), which was approved by Shareholders at the aforementioned
general meeting. The General Mandate has not been utilized since it was granted. Assuming full conversion of
the Convertible Bond at the initial Conversion Price, the Convertible Bond will be converted into 66,019,417
Shares, representing approximately 19.36% of the existing issued share capital of the Company and
approximately 16.22% of the issued share capital of the Company as enlarged by the conversion. The Conversion
Shares of 66,019,417 Shares will utilize about 97.77% of the General Mandate.

The Conversion Rights shall be subject to the General Mandate, which permits the Company to issue and allot
up to 67,528,576 Shares only. Under the provision of the supplemental agreement entered into between the
Company and the Subscriber on 14 April 2008, the Conversion Rights are limited to a maximum of 67,528,576
Shares pursuant to the General Mandate. The Bondholder is not entitled to exercise its Conversion Rights
attached to the Convertible Bond for any conversion that will result in the Company issuing and allotting more
than the said 67,528,576 Shares.




                                                    —4—
REASONS FOR THE ISSUE OF THE CONVERTIBLE BOND

The Directors believe that the issue of the Convertible Bond will provide immediate funding to the Company at
relatively low cost. The availability of additional funds will improve the Group’s working capital position and
enable the pursuit of suitable investment opportunities. There is no immediate dilution effect on the shareholding
of the existing Shareholders. Even if the conversion rights attaching to the Convertible Bond are exercised, the
equity capital base of the Company will be enlarged and strengthened. Therefore, the Directors are of the view
that the issue of the Convertible Bond is an appropriate mean to raise additional funds for the Group. The
Directors consider that the terms of the Convertible Bond are fair and reasonable and are in the interests of the
Company and its Shareholders as a whole.

USE OF PROCEEDS

The estimated net proceeds from the issue of the Convertible Bond will be about HK$67,700,000 and will be
applied towards the general working capital of the Group and/or any suitable investment projects. Based on the
estimated net proceeds of about HK$67,700,000, the net price for each Conversion Share will be about HK$1.025.

FUND RAISING ACTIVITY IN THE PAST TWELVE MONTHS

No fund raising activity has been carried out by the Group in the 12 months immediately prior to the date of
this announcement.

EFFECT ON SHAREHOLDING STRUCTURE AS A RESULT OF THE CONVERSION OF THE
CONVERTIBLE BOND

As at the date of this announcement, the Company has 341,020,880 Shares in issue. The effect on the shareholding
structure upon full conversion of the Convertible Bond, assuming there would not be any adjustments to the
Conversion Price and there would not be any allotment or issue of new Shares or share repurchase by the
Company, will be as follows:

                                                   As at the date of this               Upon full conversion of
                                                      announcement                       the Convertible Bond
                                                               Approximate                           Approximate
                                                  Number of shareholding                Number of shareholding
Shareholders                                         Shares       percentage                Shares     percentage

Brilliant Express International
  Limited (Note)                                  92,000,000          26.98%             92,000,000          22.60%

Loyal Delight Group Limited                                —               —             66,019,417          16.22%

Public and other                                 249,020,880          73.02%           249,020,880           61.18%

Total                                            341,020,880            100%           407,040,297             100%

Note: Brilliant Express International Limited is beneficially owned by Mr. Wu Siu Chung, the chairman and an executive
      Director of the Company.


                                                       —5—
APPLICATION FOR LISTING

An application will be made by the Company to the Listing Committee for the listing of, and permission to deal
in, the Conversion Shares.

RESUMPTION OF TRADING

Trading in the Shares on the Stock Exchange was suspended at the request of the Company with effect from
9:30 a.m. on 10 April 2008 pending the release of this announcement. The Company has applied to the
Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 15 April 2008.

DEFINITIONS

In this announcement, unless the context otherwise required, the following expressions shall have the following
meanings:

“Board”                      the board of Directors

“Bondholder”                 any person whose name is for the time being registered in the register of Bondholder
                             and any person entitled by transmission to be registered as such

“Company”                    South East Group Limited, a company incorporated in Bermuda with limited
                             liability, whose shares are listed on the Stock Exchange

“Conversion Price”           Hong Kong one dollar and three cents (HK$1.03), being the price per Share at
                             which the Outstanding Principal Amount of the Convertible Bond may be converted
                             into Shares

“Conversion Shares”          the Shares to be issued by the Company upon exercise by the Bondholder of the
                             conversion rights attaching to the Convertible Bond

“Convertible Bond”           the convertible bond in the principal amount of Hong Kong dollars sixty eight
                             million (HK$68,000,000), to be issued by the Company and subscribed by the
                             Subscriber carrying an interest of two and an half per cent. (2.5%) per annum and
                             expiring on the third anniversary of the date of the grant and with the benefit of
                             and subject to the terms and conditions attached to or form part of the convertible
                             bond

“Directors”                  the directors of the Company

“General Mandate”            the general mandate granted to the Directors at the annual general meeting of the
                             Company held on 24 September 2007 to allot and issue up to 67,528,576 Shares
                             based on 337,642,880 Shares in issue as at that date

“Group”                      the Company and its subsidiaries

“Hong Kong”                  the Hong Kong Special Administrative Region of the People’s Republic of China


                                                      —6—
“Listing Rules”            the Rules Governing the Listing of Securities on the Stock Exchange

“Maturity Date”            the date falling on the third anniversary of the date of issue of the Convertible
                           Bond, being the date on which the Convertible Bond matures

“Outstanding Principal     the principal amount of HK$68,000,000 less any amount that has been repaid by
  Amount”                  the Company or converted into Shares from time to time before the Maturity Date

“Share(s)”                 ordinary share(s) of HK$0.10 each in the share capital of the Company

“Shareholder(s)”           registered holder(s) of the Shares of the Company

“Stock Exchange”           The Stock Exchange of Hong Kong Limited

“Subscriber”               Loyal Delight Group Limited, a BVI business company limited by shares,
                           incorporated in the British Virgin Islands

“Subscription Agreement” the conditional subscription agreement dated 9 April 2008 between the Company
                         and the Subscriber (as amended by a supplemental agreement dated 14 April 2008)
                         in relation to the subscription by the Subscriber of the Convertible Bond

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

“%”                        per cent.


                                                                  By order of the Board
                                                                South East Group Limited
                                                                     Chan Sau Chee
                                                                   Company Secretary

Hong Kong, 14 April 2008

The directors of the Company as at the date of this announcement are Mr. Wu Siu Chung (Chairman) and
Mr. Chen Xiaoping as executive directors; Mr. Chen Yuan Shou, Budiman and Mr. Eduard Will as non-executive
directors; and Mr. Lo Yuk Lam, Mr. Wong Kam Wah and Mr. David R. Peterson as independent non-executive
directors.




                                                 —7—

								
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