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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.

The announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.


SILVERNET GROUP LIMITED*
(Incorporated in Bermuda with limited liability)

SHARE AND CONNECTED TRANSACTION

The board of directors of Silvernet Group Limited is pleased to announce that on 11th September, 2000, Datalink Asia Limited has conditionally agreed to acquire from Win Profits its entire equity interest in Great Choices, representing 15.29% of the entire issued share capital of Great Choices at a consideration of HK$14 million to be satisfied by the issue and allotment of the Consideration Shares. The sole material asset of Great Choices is its interest in the entire issued share capital of W3 Fusion, an e-business integrator that specialises in the provision of integrated e-business and strategic branding solutions and the building of public key infrastructure solutions to secure data transmitted across IP networks, including e-mail and e-commerce.

The proposed Asset Acquisition constitutes a share and connected transaction for the Company under the Listing Rules as it relates to an acquisition by the Company of an interest in a company the substantial shareholder of which is a director of the Company and will be subject to the approval by the Independent Shareholders in the Special General Meeting of the Company.

Trading of Shares on the Stock Exchange has been suspended at the request of the Company from 10:00 a.m. on 12th September, 2000, pending the issue of this announcement. The Company has applied to the Stock Exchange for trading in Shares to resume with effect from 10.00 a.m., 14th September, 2000.

GREAT CHOICES AGREEMENT

Date:11th September, 2000
Parties:  
Purchaser:Datalink Asia Limited, a wholly owned subsidiary of the Company
Vendor:Win Profits, a company wholly and beneficially owned by Mr. Koo, the Chief Executive Officer and a director of the Company.

All the other shareholders of Great Choices are independent third parties not connected with the Directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules).

Asset to be acquired:257,069 shares of Great Choices, representing 15.29% of its entire issued share capital
Consideration:HK$14 million
Payment terms:The consideration shall be satisfied by the issue and allotment of 35 million new Shares at HK$0.40 per Share to Win Profits.

The issue of the Consideration Shares to Win Profits represents: -

(i) a premium of approximately 5.26 % to the closing price of the Share as quoted on the Stock Exchange of HK$0.38 per Share on 11th September, 2000, being the immediate trading day prior to the date of this announcement; and

(ii) a premium of approximately 2.56% to the average closing price of the Shares as quoted on the Stock Exchange of approximately HK$0.39 per Share in the five consecutive trading days immediately prior to 11th September 2000.

The Consideration Shares represent approximately 0.97% of the existing issued share capital of the Company and approximately 0.96% of the existing issued share capital of the Company as enlarged by the issue and allotment of the Consideration Shares. The Consideration Shares are to be issued pursuant to the general mandate granted to the Directors at the special general meeting of the Company held on 5th July, 2000.

The Consideration Shares shall, when issued, rank pari passu in all respects with the existing Shares in issue including the right to participate in all dividends, distributions, declared or proposed to be declared or paid by the Company on or after the date of their allotment.

Basis for consideration:The number of Consideration Shares was determined by valuing Great Choices based on the agreed value of its underlying interest in W3 Fusion. The Company has not engaged any third party to conduct any valuation on W3 Fusion.

The consideration was determined after arm's length negotiations among the parties thereto. The Directors (including the independent non-executive directors) consider the consideration for the Asset Acquisition to be fair and reasonable.

Conditions

The sale and purchase of the Sale Shares under the Great Choices Agreement is conditional upon:

(a) the Listing Committee of the Stock Exchange granting or agreeing to grant (either unconditionally or subject only to conditions to which neither the Purchaser nor Win Profits shall reasonably object) the listing of, and permission to deal in the Consideration Shares;

(b) the passing by the Independent Shareholders in general meeting of an ordinary resolution approving the Great Choices Agreement and the transactions contemplated thereunder including, inter alia, the allotment of the Consideration Shares;

(c) the Purchaser and the other shareholders of Great Choices agreeing to the terms and conditions of (i) a new shareholders agreement to be entered into by them upon Completion, or alternatively (ii) as the Purchaser may elect, a deed to be entered into by the Purchaser whereby the Purchaser agrees to be bound by the terms of the agreement between Great Choices, Flindwood and each of its shareholders as if it had been a party thereto.

Completion

Completion shall take place within three business days after satisfaction or waiver of the last of the conditions under the Great Choices Agreement or such later day as the parties thereto may agree.

On Completion, a new shareholders agreement is expected to be entered into among the Purchaser and other shareholders of Great Choices providing for the ownership, management of Great Choices and the rights and duties among the shareholders of Great Choices.

No director is expected to be appointed by the Purchaser to the board of Great Choices after Completion.

Information on Great Choices

Great Choices is an investment holding company incorporated in the British Virgin Islands with limited liability on 20th October, 1999. The sole asset of Great Choices is its interest in the entire issued share capital of W3 Fusion. The audited consolidated net loss attributable to shareholders of Great Choices for the year ended 31st December, 1999 was approximately HK$1.6 million.

Information on W3 Fusion

W3 Fusion commenced business in December 1999 and is an e-business integrator that specialises in building powerful enterprise-class Internet solutions and the provision of integrated e-business and strategic branding solutions and related electronic commercial services and products including transitive e-commerce platform, knowledge management, customer relationship management, strategic consulting and communications. W3 Fusion also specialises in the building of public key infrastructure solutions to secure data transmitted across IP networks, including e-mail and e-commerce. The audited consolidated net loss attributable to shareholders of W3 Fusion for the year ended 31st December, 1999 was approximately HK$1.6 million.

Share and Connected transaction

Mr. Koo, the Chief Executive Officer and a director of the Company is the beneficial owner of Win Profits, which in turn is interested in approximately 15.29% of the entire issued share capital of Great Choices. The Company will, through the Purchaser, be acquiring an interest in a company, a substantial shareholder of which is a director of the Company and will issue Consideration Shares as consideration for such sale and purchase. The Great Choices Agreement will therefore constitute a share and connected transaction for the Company and is subject to Independent Shareholders' approval at the Special General Meeting according to the Listing Rules. An independent board committee will be formed to advise the Independent Shareholders on the fairness and reasonableness of the Great Choices Agreement. An independent financial adviser will be appointed to advise the independent board in respect of the same.

Reasons for the entering into the Great Choices Agreement

As stated in the announcement of interim results for the six months ended 29th February 2000, the Group's retailing businesses continued to operate at a loss. Following a review of the Group's long-term strategy, the Board decided to shift the Group's focus from its traditional retail businesses into technology related investment opportunities. The Directors believe that the indirect acquisition of 15.29 % of the equity interest in W3 Fusion presents a prime opportunity for the Company to diversify into the fast-growing high-technology area in Asia, which would have positive impact on the profitability of the Company in the long term. The Directors (including the independent non-executive Directors) consider the terms of the Great Choices Agreement to be fair and reasonable as far as the shareholders of the Company as a whole are concerned.

Further Information

A circular containing, amongst other things, further information of the Great Choices Agreement, a letter from the independent board committee of the Company and a letter from the independent financial adviser to the independent board committee regarding the Great Choices Agreement and a notice to convene the Special General Meeting for the Independent Shareholders to consider and approve the same will be despatched in due course.

General

The Company is an investment holding company incorporated in Bermuda with limited liability. The principal activities of its subsidiaries and associated companies are (i) online travelling and related services in the PRC; (ii) online e-commerce and software application businesses in the PRC and (iii) investment of properties in Hong Kong and the PRC.

The Company will make an application to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Consideration Shares.

Trading of Shares

Trading of Shares on the Stock Exchange has been suspended at the request of the Company from 10:00 a.m. on 12th September, 2000, pending the issue of this announcement. The Company has applied to the Stock Exchange for trading in Shares to resume with effect from 10.00 a.m., 14th September, 2000.

Definitions

"associate"as defined in the Listing Rules
"Asset
    Acquisition"
the acquisition of 250,769 shares in Great Choices, representing 15.29% of the entire issued share capital of Great Choices by the Company
"Board"the board of Directors
"Company"Silvernet Group Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the Stock Exchange
"Consideration
    Shares"
the 35 million new Shares in the Company to be issued to Win Profits as consideration for the Asset Acquisition at HK$0.40 per Share.
"Director(s)"Director(s) of the Company
"Flindwood"Flindwood International Limited, a company incorporated in the British Virgin Islands with limited liability and wholly owned by Mr. Philip Tam, the founder of W3 Fusion and an independent third party not connected with the Directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules)
"Great Choices"Great Choices Int'l Limited, a company incorporated in the British Virgin Islands with limited liability
"Great Choices
    Agreement"
the agreement relating to the Asset Acquisition
"HK$"Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong"The Hong Kong Special Administrative Region of the PRC
"Independent
    Shareholders"
Shareholders other than Win Profits, Mr. Koo or their associates
"Listing Rules"The Rules Governing the Listing of Securities on the Stock Exchange
"Mr. Koo"Mr. Koo Fook Sun Louis, the Chief Executive Officer and a director of the Company
"Purchaser"Datalink Asia Limited, a wholly owned subsidiary of the Company
"Sale Shares"257,069 shares of US$1.00 each in Great Choices, representing 15.29% of the entire issued share capital of Great Choices
"Shares"shares of HK$0.10 each in the capital of the Company
"Stock Exchange"The Stock Exchange of Hong Kong Limited
"Special General
    Meeting"
the special general meeting to be held among the Shareholders of the Company to consider and approve the Great Choices Agreement and the transactions contemplated thereunder
"the PRC"The People's Republic of China
"US$"United States dollars, the lawful currency of the United Stated of America
"Vendor"Win Profits, a company wholly and beneficially owned by Mr. Koo
"W3 Fusion"W3 Fusion.com Limited, a company incorporated in Hong Kong, the entire issued share capital of which is owned by Great Choices
"Win Profits"Win Profits Investment Limited, a company incorporated in the British Virgin Islands with limited liability, the entire issued share capital of which is wholly and beneficially owned by Mr. Koo

(Note: an exchange rate of HK$1 to RMB1.067 and US$1 to HK$7.78 has been used for reference only)



By order of the Board
Zhao Jian Gong
Managing Director

Hong Kong, 12th September, 2000

* for identification purposes only

Please also refer to the published version of this announcement in South China Morning Post and Hong Kong Economic Times.


Source: Silvernet Group Limited
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