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BEST FOOD HOLDING COMPANY LIMITED
百 福 控 股 有 限 公 司
(Formerly known as Lee & Man Handbags Holding Limited 理文手袋集團有限公司)
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 01488)
DISCLOSEABLE ANNOUNCEMENT
INVESTMENT IN SHANGHAI SEESAW COFFEE COMPANY LIMITED
THE CAPITAL INVESTMENT
On May 27, 2017, the Buyer (a wholly owned subsidiary of the Company), the Existing Seesaw Coffee Shareholders and Woye entered into the Investment Framework Agreement, pursuant to which, among others, the Buyer conditionally agreed to (a) invest RMB45,000,000 into Seesaw Coffee, of which RMB381,618 would be injected as the registered capital of Seesaw Coffee and the remaining RMB44,618,382 would be recorded as capital reserves of Seesaw Coffee; and (b) acquire the registered capital of Seesaw Coffee in the amount of RMB76,324 from the Transferor for a total consideration of RMB9,000,000.
The Seesaw Coffee Group is principally engaged in the management of specialty coffee shops and selling of specialty coffee and coffee related products. The Seesaw Coffee Group operates eight stores in Shenzhen and Shanghai and built up strong pipeline to open new stores.
Immediately after completion of the Capital Investment, the Group will hold 25% of the registered capital of Seesaw Coffee.
LISTING RULES IMPLICATION
As the relevant applicable percentage ratios (as defined in the Listing Rules) for the Capital Investment under the Investment Framework Agreement are more than 5% but less than 25%, the Capital Investment constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules.
Shareholders and potential investors of the Company should note that the Capital Investment is subject to a number of Conditions which may or may not be fulfilled. Shareholders and potential investors of the Company are reminded to exercise cautions when dealing in the securities of the Company.
THE CAPITAL INVESTMENT
On May 27, 2017, the Buyer (a wholly owned subsidiary of the Company), the Existing Seesaw Coffee Shareholders and Woye entered into the Investment Framework Agreement, pursuant to which, among others, the Buyer conditionally agreed to (a) invest RMB45,000,000 into Seesaw Coffee, of which RMB381,618 would be injected as the registered capital of Seesaw Coffee and the remaining RMB44,618,382 would be recorded as capital reserves of Seesaw Coffee; and (b) acquire the registered capital of Seesaw Coffee in the amount of RMB76,324 from the Transferor for a total consideration of RMB9,000,000.
THE INVESTMENT FRAMEWORK AGREEMENT
Date
May 27, 2017
Parties
the Buyer;
the Existing Seesaw Coffee Shareholders; and
Woye
To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the Existing Seesaw Coffee Shareholders and Woye are third parties independent of and not connected with the Company and its connected persons.
Subject matter
Pursuant to the Investment Framework Agreement, the buyer conditionally agreed to:
invest RMB45,000,000 into Seesaw Coffee, of which RMB381,618 would be injected as the registered capital of Seesaw Coffee and the remaining RMB44,618,382 would be recorded as capital reserves of Seesaw Coffee (the ''Capital Injection''); and
acquire the registered capital of Seesaw Coffee in the amount of RMB76,324 from the Transferor for a total consideration of RMB9,000,000 (the ''Transfer'').
Consideration
The consideration for the Capital Injection shall be RMB45,000,000 and shall be payable by the Buyer to Seesaw Coffee in cash.
The consideration for the Transfer shall be RMB9,000,000 and shall be payable by the Buyer to the Transferor in cash.
The Consideration was determined after arm's length negotiations between the Buyer, the Existing Seesaw Coffee Shareholders and Woye after taking into account, among other things, (i) the recent track records of the Seesaw Coffee Group in terms of revenue and profitability; (ii) the brand name of the Seesaw Coffee Group; and (iii) the business development and future prospects of the Seesaw Coffee Group.
Conditions
Completion of the Capital Investment is subject to the following Conditions being satisfied (or waived):
there is no material adverse change on the Seesaw Coffee Group from the date of signing the Investment Framework Agreement;
the Seesaw Coffee Group has complied with all applicable PRC laws in a material aspect and has engaged its business operations and all related activities in a manner consistent with PRC laws and generally accepted business ethics and guidelines in the PRC from the date of signing the Investment Framework Agreement; and
the reorganization of Seesaw Coffee has been completed according to the Investment Framework Agreement, and a new business license has been obtained.
INFORMATION ON THE SEESAW COFFEE GROUP
The Seesaw Coffee Group is principally engaged in the management of specialty coffee shops and selling of specialty coffee and coffee related products. Mr. Zong Xinkuang, the founder of Seesaw Coffee, started the company from scratch in 2012, after a long time of research and preparation. The Seesaw Coffee Group operates eight stores in Shenzhen and Shanghai and built up strong pipeline to open new stores.
Set out below is the unaudited financial information of the Seesaw Coffee Group for the two financial years ended December 31, 2015 and 2016 and the three months ended March 31, 2017:
For the financial year ended December 31,
For the three months ended March 31,
2015 2016 2017
RMB RMB RMB
Net profit (loss) before taxation (827,162.29) 382,346.96 993,811.87
Net profit (loss) after taxation (827,162.29) 382,346.96 993,811.87
REASONS FOR AND BENEFITS OF THE CAPITAL INVESTMENT
Seesaw Coffee brings refined industry standards such as direct selling, fresh roasting, hand-brewing and so on into the domestic coffee market. At the same time, Seesaw Coffee focuses on maintaining the balance of commercial coffee and specialty coffee for the product structure; Seesaw Coffee also decorates store images according to different environments and target customers to achieve a unified and personalized balance to avoid monotonous store style of commercial coffee, while ensuring a harmonic unity of all stores.
At present, Seesaw Coffee has established a leading brand position in the specialty coffee industry, with a good balance of product structure and a well-established team with experienced in training barista and potential for large-scale expansion.
Coffee industry is a rapid growing industry, and specialty coffee presents the next round of development direction of coffee industry. As mentioned in the Company's circular dated October 29, 2016, the Company intends to invest in the food and beverage industry in order to diversify its existing business portfolio and broaden its source of income and enhance value to the Shareholder. By investing in the Seesaw Coffee Group, the Group could extend its portfolio structure from the food industry into the beverage industry through specialty coffee, which will increase its future returns and profitability. Further, the multi-party collaboration between the portfolio companies of Hony Capital and the Group's platform will create a comprehensive ''food and beverage'' platform, which will provide better return to the Shareholders in the long run.
The Directors are of the view that the terms of the Capital Investment are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.
LISTING RULES IMPLICATION
As the relevant applicable percentage ratios (as defined in the Listing Rules) for the Capital Investment under the Investment Framework Agreement are more than 5% but less than 25%, the Capital Investment constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules.
Shareholders and potential investors of the Company should note that the Capital Investment is subject to a number of Conditions which may or may not be fulfilled. Shareholders and potential investors of the Company are reminded to exercise cautions when dealing in the securities of the Company.