Discloseable Transaction - dah chong hong holdings limited

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.
(Incorporated in Hong Kong with limited liability)
(Stock Code: 01828)
DISCLOSEABLE TRANSACTION
Formation of Joint Venture and Grant of Options
On 2 July 2014, DCH Marine (a wholly-owned subsidiary of the Company) entered into the
Shareholders Agreement with, amongst others, Gondwana. Pursuant to the Shareholders
Agreement, amongst other things, (i) DCH Marine agrees to subscribe for new shares
representing 70% of the enlarged issued share capital of the JV Company and Gondwana
agrees to subscribe for new shares representing 30% of the enlarged issued share capital of the
JV Company; (ii) DCH Marine will provide Shareholder’s Loan of not more than
HK$209,650,000 and Gondwana will provide Shareholder’s Loan of not more than
HK$89,850,000 to the JV Company (in proportion to their respective shareholdings in the JV
Company) on an interest-free unsecured basis, based on the estimated capital requirements
and business needs of the JV Company; (iii) DCH Marine has the right (i.e. the Call Option) to
oblige Gondwana to sell all the JV Shares held by Gondwana and to assign the entire
Shareholder’s Loan owing to Gondwana to DCH Marine; and (iv) Gondwana has the right (i.e.
the Put Option) to oblige DCH Marine to purchase all the JV Shares held by Gondwana and to
assume the entire Shareholder’s Loan owing to Gondwana.
The JV Company is to carry on the business of distribution and sale of motor yachts and
provision of after-sales service of motor yachts in the PRC, Hong Kong and Macao.
Since the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in
respect of the formation of the JV Company together with the grant of the Put Option (which is
treated as if exercised subject to the Cap) exceed 5% but less than 25%, the entering into the
Shareholders Agreement constitutes a discloseable transaction and is subject to the reporting
and announcement requirements but exempt from the shareholders’ approval requirement
under Chapter 14 of the Listing Rules.
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THE SHAREHOLDERS AGREEMENT
Date
2 July 2014
Parties
(1)
(2)
(3)
(4)
(5)
DCH Marine
Gondwana
Princess Yachts
Mr. Law Siu Wah Eddie
JV Company
The controlling shareholder of Gondwana is interested in approximately 0.12% of the enlarged
issued share capital of CITIC Pacific Limited (stock code: 00267), the controlling shareholder
of the Company. To the best knowledge, information and belief of the Directors having made
all reasonable enquiries, Princess Yachts, Gondwana and its ultimate beneficial owners and Mr.
Law Siu Wah Eddie are third parties independent of the Company and its connected persons.
Business of the joint venture
Distribution and sale of motor yachts and provision of after-sales service of motor yachts
(which includes repair, servicing, and maintenance) in the PRC, Hong Kong and Macao.
Investment commitments
After the execution of the Shareholders Agreement, (i) DCH Marine shall subscribe for 3,499
new shares in the JV Company at HK$349,900 in cash. After such subscription, DCH Marine
will hold 70% of the enlarged issued share capital of the JV Company; and (ii) Gondwana shall
subscribe for 1,500 new shares in the JV Company, representing 30% of the enlarged issued
share capital of the JV Company, at HK$150,000 in cash.
Subject to the fulfilment of the Conditions, DCH Marine will provide Shareholder’s Loan of
not more than HK$209,650,000 and Gondwana will provide Shareholder’s Loan of not more
than HK$89,850,000 to the JV Company (in proportion to their respective shareholdings in the
JV Company) on an interest-free unsecured basis. The maximum amount of such
Shareholder’s Loans was determined after arm’s length negotiation between the parties to the
Shareholders Agreement, based on the estimated capital requirements and business needs of
the JV Company.
The Company intends to finance such investment commitment from its internal resources.
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Board composition and control
Before the exercise of the Call Option or Put Option, the board of directors of the JV Company
will have a maximum number of seven directors, of which DCH Marine is entitled to appoint
five directors and Gondwana will be entitled to appoint two directors. The JV Company will
be accounted for as a non-wholly owned subsidiary of the Company.
Grant of options
DCH Marine has the Call Option, exercisable from the second anniversary of the date on which
the Conditions are fulfilled to the fifth anniversary of such date, to oblige Gondwana to sell all
the JV Shares held by Gondwana at the Call Option Price and to assign the entire Shareholder’s
Loan owing to Gondwana to DCH Marine on a dollar-for-dollar basis.
Gondwana has the Put Option, exercisable from the second anniversary of the date on which
the Conditions are fulfilled to the fifth anniversary of such date, to oblige DCH Marine to
purchase all the JV Shares held by Gondwana at the Put Option Price and to assume the entire
Shareholder’s Loan owing to Gondwana on a dollar-for-dollar basis. The total consideration
for all the JV Shares held by Gondwana and the entire Shareholder’s Loan owing to Gondwana
is subject to the Cap.
REASONS FOR AND BENEFITS OF ENTERING INTO THE SHAREHOLDERS
AGREEMENT
The Group is a business conglomerate with key interest in the consumer market and has gained
strong foothold in the Greater China, Singapore and Japan. It has a diversified business
portfolio with core businesses in motor and motor related business, and food and consumer
products business which is supported by our logistics services.
Gondwana is an investment holding company. Princess Yachts, a wholly-owned subsidiary of
Gondwana, presently engages in the business of distribution and sale of motor yachts produced
by PYI, a motor yachts manufacturer based in the United Kingdom. DCH Marine and
Gondwana wish to establish a joint venture in the same line of business in place of Princess
Yachts through the JV Company and its subsidiaries. To facilitate such establishment, Mr.
Law Siu Wah Eddie will be retained as the chief consultant to the board of directors of an
operating subsidiary of the JV Company for a period of one year from fulfilment of the
Conditions. In view of the potential growth in the motor yachts business in the PRC, the
Directors consider that the formation of the joint venture will offer an attractive opportunity for
the Group to enter into a new motor yachts related business in the PRC, Hong Kong and
Macao.
The Directors (including the independent non-executive Directors) consider that the terms of
the Shareholders Agreement are on normal commercial terms, fair and reasonable and in the
interests of the Company and its shareholders as a whole.
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LISTING RULES IMPLICATIONS
Since the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in
respect of the formation of the JV Company together with the grant of the Put Option (which is
treated as if exercised subject to the Cap) exceed 5% but less than 25%, the entering into the
Shareholders Agreement constitutes a discloseable transaction and is subject to the reporting
and announcement requirements but exempt from the shareholders’ approval requirement
under Chapter 14 of the Listing Rules.
DEFINITIONS
In this announcement, unless the context otherwise requires, the following terms have the
following meanings:
“Board”
the board of Directors;
“Call Option”
the right of DCH Marine to oblige Gondwana to sell all the JV
Shares held by Gondwana and to assign the entire Shareholder’s
Loan owing to Gondwana to DCH Marine on a dollar-for-dollar
basis;
“Call Option Price”
the consideration payable by DCH Marine upon the exercise of the
Call Option, which shall be the fair market value determined by
third-party valuer(s);
“Cap”
the cap to which the total consideration for all the JV Shares held by
Gondwana and the entire Shareholder’s Loan owing to Gondwana is
subject, which is HK$900,000,000;
“Company”
Dah Chong Hong Holdings Limited (大昌行集團有限公司), a
company incorporated in Hong Kong with limited liability, the
shares of which are listed on the Stock Exchange (stock code:
01828);
“Conditions”
the conditions precedent of the Shareholders Agreement which shall
be fulfilled on or before 18 July 2014, namely (a) the entering into a
new distribution agreement in relation to motor yachts between the
operating subsidiary of the JV Company and PYI, (b) the
termination of the existing distribution agreement between Princess
Yachts and PYI; and (c) a confirmation from PYI that it has no right
to make any claim against the operating subsidiary of the JV
Company in respect of the existing distribution agreement and
contracts made with Princess Yacht for sale of motor yachts made
pursuant thereto;
“connected person”
and “controlling
shareholder”
each has the meaning ascribed to it in the Listing Rules;
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“DCH Marine”
DCH Marine Limited, a company incorporated in the British Virgin
Islands with limited liability and a wholly-owned subsidiary of the
Company;
“Directors”
the directors of the Company;
“Gondwana”
Gondwana Capital Management Limited, a company incorporated
in the British Virgin Islands with limited liability;
“Group”
the Company and its subsidiaries;
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”
Hong Kong Special Administrative Region of the PRC;
“JV Company”
Pacific Leisure Boat Limited, a company incorporated in the British
Virgin Islands with limited liability;
“JV Shares”
the ordinary shares of HK$100 each in the issued share capital of the
JV Company;
“Listing Rules”
the Rules Governing the Listing of Securities on the Stock
Exchange;
“Macao”
Macao Special Administrative Region of the PRC;
“percentage ratios”
has the meaning ascribed to it in the Listing Rules;
“PRC”
the People's Republic of China, and for the purpose of this
announcement, excluding Hong Kong and Macao;
“Princess Yachts”
Princess Yachts Southern China Limited, a company incorporated in
Hong Kong with limited liability and a wholly-owned subsidiary of
Gondwana;
“PYI”
Princess Yacht International Plc, a motor yachts manufacturer based
in the United Kingdom;
“Put Option”
the right of Gondwana to oblige DCH Marine to purchase all the JV
Shares held by Gondwana and to assume the entire Shareholder’s
Loan owing to Gondwana on a dollar-for-dollar basis;
“Put Option Price”
the consideration payable by DCH Marine upon the exercise of the
Put Option by Gondwana, which shall be the fair market value
determined by third-party valuer(s);
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“Shareholders
Agreement”
the shareholders agreement dated 2 July 2014 entered into between
DCH Marine, Gondwana, Princess Yachts, Mr. Law Siu Wah Eddie
and the JV Company;
“Shareholder’s Loan”
a loan to the JV Company made available by a shareholder and for
the time being outstanding or due owing from the JV Company;
“Stock Exchange”
The Stock Exchange of Hong Kong Limited;
“subsidiary(ies)”
has the meaning ascribed to it in the Listing Rules; and
“%”
per cent.
By order of the Board
Dah Chong Hong Holdings Limited
Tso Mun Wai
Company Secretary
Hong Kong, 2 July 2014
As at the date of this announcement, the Directors are:Executive Directors: Yip Moon Tong, Lau Sei Keung, Glenn Robert Sturrock Smith and Wai King Fai, Francis
Non-executive Directors: Zhang Jijing (Chairman), Kwok Man Leung and Fei Yiping
Independent non-executive Directors: Cheung Kin Piu, Valiant, Hsu Hsung, Adolf, Yeung Yue Man and
Chan Kay Cheung
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