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.
This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.
瑋 俊 生 物 科 技 有 限 公 司
Wai Chun Bio-Technology Limited
(Incorporated in the Cayman Islands with limited liabilities)
(Stock Code: 0660)
PROPOSED ISSUE OF CONVERTIBLE BONDS
UNDER SPECIFIC MANDATE
PROPOSED ISSUE OF CONVERTIBLE BONDS
On 21 September 2020 (after trading hours), after further assess of the market environment, the Company entered into the Subscription Agreement with the Subscriber, pursuant to which the Subscriber conditionally agreed to subscribe for and the Company conditionally agreed to issue the Convertible Bonds with an aggregate principal amount of HK$67,000,000.
The Convertible Bonds carry the conversion rights to convert into the Conversion Shares at the Conversion Price of HK$0.012 per Conversion Share (subject to adjustment) for the Debt Settlement. The subscription amount payable by the Subscriber under the Subscription Agreement shall be satisfied by way of offsetting the outstanding principal amount and accrued interest under the Loan, payable by the Company to the Subscriber and/or its associates which is expected to amount to a total of HK$67,000,000 as at Completion Date.
Assuming the conversion rights are exercised in full at the Conversion Price, a total of 5,583,333,333 new Shares, being the Conversion Shares, may be allotted and issued to the Subscriber accordingly subject to certain conversion restrictions under the Subscription Agreement. The Conversion Shares represent approximately 33.65% of the total number of issued Shares as at the date of this announcement and approximately 25.18% of the total number of issued Shares as enlarged by the allotment and issue of the Conversion Shares to the Subscriber, assuming that there is no other change to the total number of Shares from the date of this announcement to the date when the conversion rights are exercised in full. The Conversion Shares will be allotted and issued under the Specific Mandate to be approved by the Independent Shareholders at the EGM.
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No application will be made by the Company for the listing of the Convertible Bonds on the Stock Exchange. Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.
The EGM will be convened for the purpose of considering and approving, the Subscription Agreement and the transactions contemplated thereunder, including but not limited to the issue of the Convertible Bonds, the allotment and issue of the Conversion Shares, and the grant of the Specific Mandate. A circular containing, among other things, (i) further details of the Subscription Agreement and the Specific Mandate; and (ii) notice convening the EGM, is expected to be despatched to the Shareholders on or before Monday, 30 November 2020. To the best information, knowledge and belief of the Board after having made all reasonable enquiries, as at the date of this announcement, save for the Subscriber who is interested in an aggregate of 61,214,000 Shares as at the date of this announcement, no Shareholder has any interest in the Subscription Agreement, the transactions contemplated thereunder that is materially different from the other Shareholders. Therefore, save for the Subscriber, no Shareholder is required to abstain from voting on the resolutions to be proposed at the EGM.
Completion of the subscription of the Convertible Bonds is subject to the satisfaction of the conditions precedent set out in the Subscription Agreement. Accordingly, the issue of the Convertible Bonds may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.
PROPOSED ISSUE OF CONVERTIBLE BONDS
On 21 September 2020 (after trading hours), the Company entered into the Subscription Agreement with the Subscriber, pursuant to which the Subscriber conditionally agreed to subscribe for and the Company conditionally agreed to issue the Convertible Bonds in the principal amount of HK$67,000,000. The principal terms of the Convertible Bonds are set out below.
THE SUBSCRIPTION AGREEMENT
Date: | 21 September 2020 (after trading hours) | |
Parties: | ||
Subscription Agreement: | (1) | The Company as issuer; and |
(2) | Subscriber as subscriber | |
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As at the date of this announcement, Subscriber, through direct and indirect interest, is the beneficial owner of 61,214,000 Shares, representing approximately 0.37% of the existing issued share capital of the Company.
Set out below are the principal terms of the Subscription Agreement:
Subscription of Convertible Bonds
Pursuant to the Subscription Agreement, the Subscriber conditionally agreed to subscribe for Convertible Bonds as follows:
Principal | |||||
amount of | |||||
Convertible | |||||
Bonds to | |||||
Subscriber | be subscribed | ||||
(HK$) | |||||
Subscriber | 67,000,000 | ||||
67,000,000 | |||||
Terms and conditions of the Convertible Bonds | |||||
Issue price | : 100% of the principal amount | ||||
Conversion price | : HK$0.012 per Conversion Share, subject to adjustments | ||||
Form and denomination | The Convertible Bonds will be issued in registered | ||||
form in the denomination of HK$5,000,000 each. | |||||
Adjustment events | : The Conversion Price shall from time to time be subject | ||||
to adjustment upon occurrence of certain events such | |||||
as consolidation or sub-division of the Shares, | |||||
capitalisation of profits or reserves, capital distribution, | |||||
issue of new Shares for subscription by way of rights, | |||||
issue of convertible or exchangeable securities, | |||||
modification of rights of convertible or exchangeable | |||||
securities. | |||||
Interest rate | : 4% per annum accrued on a daily basis of a 365-day year | ||||
and payable quarterly in arrears. |
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Conversion Shares | : Based on the aggregate principal amount of the |
Convertible Bonds of HK$67,000,000, the Convertible | |
Bonds is convertible into a total of 5,583,333,333 | |
Conversion Shares at the initial conversion price of | |
HK$0.012 per Conversion Share (subject to adjustments). | |
Conversion period | : The period commencing from the issue date of the |
Convertible Bonds up to 4:00 p.m. on the day immediately | |
prior to and exclusive of the maturity date of the | |
Convertible Bonds. | |
Conversion rights | : The holder of the Convertible Bonds shall, subject to |
and restrictions | compliance with the procedures set out in the terms and |
conditions thereunder, have the right at any time during | |
the conversion period to convert the whole or part of | |
the outstanding principal amount of the Convertible | |
Bonds registered in its name into the Conversion | |
Shares provided further that (i) any conversion shall be | |
made in amounts of not less than a whole multiple of | |
HK$5,000,000 on each conversion save that if at any | |
time the aggregate outstanding principal amount of the | |
Convertible Bonds is less than HK$5,000,000, the | |
whole (but not part only) of the outstanding principal | |
amount of the Convertible Bonds may be converted; | |
and (ii) the exercise of the conversion right attaching to | |
the Convertible Bonds will not cause the Company to | |
be unable to meet the public float requirement under | |
the Listing Rules. | |
Early redemption at the | : The Company shall be entitled at its sole discretion, by |
option of the Company | giving not less than fourteen (14) days' notice to the |
holders of the Convertible Bonds, propose to the | |
holders to redeem the outstanding Convertible Bonds | |
(in multiples of HK$5,000,000 or such lesser amount | |
as may represent the entire principal amount thereof) | |
an amount equivalent to 100% of the principal amount | |
of such outstanding Convertible Bonds at any time | |
after the date of issue of the Convertible Bonds up to | |
and including the date falling fourteen (14) days | |
immediately before the maturity date of the Convertible | |
Bonds. |
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Ranking of Conversion | : The Conversion Shares, when allotted and issued, shall | |
Shares | rank pari passu in all respects with the Shares in issue | |
on the relevant conversion date including the right to | ||
all dividends or other distributions, paid or made on or | ||
after the relevant conversion date other than any | ||
dividend or other distribution previously declared or | ||
recommended or resolved to be paid or made if the | ||
record date thereof shall be on or before the relevant | ||
conversion date. | ||
Maturity date | : The date falling on the third anniversary of the date of | |
issue of the Convertible Bonds. | ||
Voting rights | : The Subscriber shall not have any right to attend or | |
vote in any general meeting of the | Company. | |
Transferability | : Subject to compliance with the | Listing Rules, the |
Convertible Bonds may be transferred or assigned in | ||
whole or in part in integral multiples of HK$5,000,000 by | ||
the Subscriber to any party. | ||
Listing | : No application will be made by the Company for the | |
listing of the Convertible Bonds on the Stock Exchange. | ||
Application will be made to the Listing Committee of the | ||
Stock Exchange for the listing of, and permission to deal | ||
in, the Conversion Shares. | ||
Security | : The obligations of the Company under the Convertible | |
Bonds are unsecured. |
Conversion Shares
Upon full conversion of the Convertible Bonds at the Conversion Price of HK$0.012 each (subject to adjustments), a maximum of 5,583,333,333 Conversion Shares will be allotted and issued which represents:
- approximately 33.65% of the issued share capital of the Company as at the date of this announcement; and
- approximately 25.18% of the issued share capital of the Company as to be enlarged by the allotment and issue of the Conversion Shares (assuming that there is no other change to the total number of Shares from the date of this announcement to the Completion Date).
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Conversion Price
The Conversion Price of HK$0.012 (subject to adjustments) per Conversion Share represents:
- the same closing price of HK$0.012 per Share (no premium or discount) as quoted on the Stock Exchange on the Last Trading Day;
- a discount of approximately 6.25% to the average closing price of approximately HK$0.0128 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days up to and including the Last Trading Day; and
- a discount of approximately 13.67% to the average closing price of approximately HK$0.0139 per Share as quoted on the Stock Exchange for the last ten (10) consecutive trading days up to and including the Last Trading Day.
The Conversion Price of HK$0.012 (subject to adjustments) per Conversion Share was arrived at after arm's length negotiations between the Company and the Subscriber with reference to the recent trading prices of the Shares. The Directors consider that the Conversion Price pursuant to the Subscription Agreement and the reasons for and benefits of the Subscription are fair and reasonable and are in the interests of the Shareholders as a whole.
Conditions precedent
The completion of the Subscription Agreement is conditional upon:
- the passing by the Independent Shareholders of relevant resolution(s) at the EGM in compliance with the requirements of the Listing Rules approving (a) the Subscription Agreement and the transactions contemplated thereunder; and (b) the issue of the Convertible Bonds and the grant of the Specific Mandate for the allotment and issue of the Conversion Shares to the Subscriber in accordance with the terms of the Subscription Agreement;
- all necessary consents and approvals required to be obtained on the part of the Company in respect of the Subscription Agreement and the transactions contemplated thereunder having been obtained;
- all necessary consents and approvals required to be obtained on the part of the Subscriber in respect of the Subscription Agreement and the transactions contemplated thereunder having been obtained;
- the Listing Committee of the Stock Exchange granting listing of and permission to deal in the Conversion Shares to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bonds;
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- none of the warranties given by the Company thereunder having been breached in any material respect (or, if capable of being remedied, has not been remedied), or is misleading or untrue in any material respect; and
(vi) none of the warranties given by the Subscriber thereunder having been breached | in |
any material respect (or, if capable of being remedied, has not been remedied), | or |
is misleading or untrue in any material respect. |
The Company shall use its best endeavours to procure the fulfilment of the conditions precedent set out in conditions (i), (ii), (iv) and (v) above as soon as practicable and in any event on or before the Long Stop Date. The Subscriber shall use its best endeavours to procure the fulfilment of the conditions precedent set out in conditions (iii) and (vi) above as soon as practicable and in any event on or before the Long Stop Date. The conditions precedent set out in conditions (i), (ii), (iii) and (iv) above are incapable of being waived. The Subscriber may at any time by notice in writing to the Company waive the condition set out in condition (v) above. The Company may at any time by notice in writing to the Subscriber to waive the condition set out in condition (vi) above.
In the event that any of the conditions precedent referred to above is not fulfilled or waived (to the extent it is capable of being waived) on or before the Long Stop Date, the Subscription Agreement shall cease and determine and no party shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Subscription Agreement save in respect of any antecedent breach of any obligation hereof.
Completion of each of the Subscription Agreement is not inter-conditional but it is intended that completion of the Subscription Agreement will take place simultaneously.
Completion
The completion of the Subscription Agreement shall take place at or before 4:00 p.m. on the second Business Day (or such other date as agreed by the Company and the Subscriber) after fulfilment of all the conditions precedent set out above, which is expected to be 30 November 2020.
INFORMATION ON THE SUBSCRIBER
The Subscriber is an individual investor who is experienced in investments and the finance industry. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Subscriber is a third party independent of the Company and its connected persons as at the date of this announcement and the Subscriber is independent from and not acting in concert (as defined in the Hong Kong Code on Takeovers and Mergers) with each other or their respective associates.
Since the Subscriber (i) is not a connected person of the Company; (ii) is not a director or substantial shareholder of the Company or their respective associates; and (iii) is independent of and not connected with the Company and its connected persons, the Subscriber is regarded as a public shareholder of the Company as at the date of this announcement.
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As at the date of this announcement, based on the terms and conditions of the Subscription Agreement and the Convertible Bonds, the Subscriber is not entitled to appoint any individual as a Director.
REASONS FOR THE SUBSCRIPTION
The Group is principally engaged in the manufacture and sale of modified starch and other biochemical products and general trading including the trading of electronic parts and components and electrical appliances.
The subscription amount payable by the Subscriber under the Subscription Agreement shall be satisfied by way of offsetting the outstanding principal amount and accrued interest under the Loan, payable by the Company to the Subscriber and/or their associates which is expected to amount to a total of HK$67,000,000 as at Completion Date.
The Board considers that the Loan which bears interest at 6.25% per annum together represents a heavy financial burden to the Group as the Group was in a net liabilities position with cash or cash equivalents in the amount of HK$19,462,000 and current liabilities in the amount of HK$109,960,000 as at 30 June 2020. In view of the above, the Board has reviewed and explored different approaches to settle the Loan (together with the accrued interest) and considered the issue of the Convertible Bonds to be the most effective and suitable for reducing the amount of interest expense incurred by the Group per annum, enhancing the financial position of the Group and reducing the gearing ratio of the Group as (i) the Convertible Bonds bear a lower interest rate of 4% per annum and will be able to minimize the short-term financial burden to the Group; (ii) the principal amount of the Loan (together with the accrued interest) will be fully settled upon the exercise in full of the conversion rights without requiring any cash outflow; and (iii) the issue of the Convertible Bonds does not have an immediate dilution effect on the shareholding of the Company.
There is no agreement, arrangement, undertaking or understanding of any form that provides the Subscriber the right to assign the Loan back to Mr. Lam Ching Kui in the event that the Company defaults the Loan or is unable to settle the Loan by issuance of the Convertible Bonds.
In view of the above, the Directors are of the view that the terms of Subscription Agreement are on normal commercial terms and the issue of the Convertible Bonds are fair and reasonable, and in the interests of the Company and the Shareholders as a whole.
THE SPECIFIC MANDATE
The Conversion Shares will be issued pursuant to the Specific Mandate proposed to be sought from the Independent Shareholders at the EGM.
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EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY
For illustration purposes only, set out below the shareholding structure of the Company as at the date of this announcement, and the effect on the shareholding structure of the Company upon completion of the allotment and issue of the Conversion Shares (assuming full conversion of the Convertible Bonds into the Conversion Shares and that there is no other change in the number of issued Shares from the date of this announcement up to the date when the conversion rights are exercised in full) is as follows:
Immediately after | |||||||
full exercise of the | |||||||
As at the date | conversion rights attaching | ||||||
Name of Shareholder | of this announcement | to the Convertible Bonds (note3) | |||||
Number of | Approximate | Number of | Approximate | ||||
Shares | % | Shares | % | ||||
Chinese Success Limited (note 1) | 7,898,064,320 | 47.61 | 7,898,064,320 | 35.62 | |||
Lam Ching Kui (note 2) | 280,040,000 | 1.69 | 280,040,000 | 1.26 | |||
8,178,104,320 | 49.29 | 8,178,104,320 | 36.88 | ||||
Subscriber (note 5) | 61,124,000 | 0.37 | 5,644,547,333 | 25.46 | |||
Public Shareholders (note 4) | 8,412,581,056 | 50.71 | 8,412,581,056 | 37.94 | |||
Total | 16,590,685,376 | 100.00 | 22,174,018,709 | 100.00 | |||
Notes:
- Chinese Success Limited, a company owned as to 100% by Wai Chun Investment Fund, which is wholly- owned by Mr. Lam Ching Kui, an executive Director, Chinese Success Limited holds 7,898,064,320 Shares and 216,960,000 convertible preference shares.
- Mr. Lam Ching Kui, the Chairman and executive Director of the Company, directly holds 280,040,000 Shares.
- Certain percentage figures included in the above tables have been subject to rounding adjustments. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them.
- Pursuant to the terms and conditions of the Convertible Bonds, the Subscriber shall not exercise the conversion rights attaching to the Convertible Bonds if, as a result of such exercise, it will cause the public float of the Company to fall below the percentage prescribed under the Listing Rules.
- Subscriber has 162,706,853 share options under the Share Option Scheme, representing approximately 0.98% of the existing issued share capital of the Company and approximately 0.83% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds. The exercise period of the options is 5 years from the date of grant of the options, i.e. from 16 July 2018 to 15 July 2023.
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EQUITY FUND RAISING EXERCISES OF THE COMPANY IN THE PAST TWELVE MONTHS
Save for the proposed issue of convertible bonds as disclosed in the announcements of the Company dated on 23 January 2020 and 28 July 2020, which was subsequently terminated and not proceeded with in accordance with the announcements dated on 15 July 2020 and 9 September 2020, the Company did not raise funds on any issue of equity securities raising activities during the past twelve months immediately preceding the date of this announcement.
PROPOSED SHARE CONSOLIDATION
Save for the proposed share consolidation as disclosed in the announcement of the Company dated 24 January 2020, the Board of the Company is aware that the ordinary shares of the Company (the "Shares") have been trading at a price range level below HK$0.10 for a period of time, and that there is a possibility that the trading price of the Shares would approach the extremity of HK$0.01, being the lowest acceptable trading price of the securities of an issuer as referred to under Rule 13.64 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. In view of the foregoing, the Board proposes to implement a share consolidation of the Shares. A meeting of the Board will be convened to consider and, if thought fit, approve such share consolidation as soon as possible.
GENERAL
The EGM will be convened for the purpose of considering and approving, the Subscription Agreement and the transactions contemplated thereunder, including but not limited to the issue of the Convertible Bonds, the allotment and issue of the Conversion Shares, and the grant of the Specific Mandate. A circular containing, among other things, (i) further details of the Subscription Agreement and the Specific Mandate; and (ii) notice convening the EGM, is expected to be despatched to the Shareholders on or before Monday, 30 November 2020. To the best information, knowledge and belief of the Board after having made all reasonable enquiries, as at the date of this announcement, save for the Subscriber who is interested in an aggregate of 61,214,000 Shares as at the date of this announcement, no Shareholder has any interest in the Subscription Agreement, the transactions contemplated thereunder that is materially different from the other Shareholders. Therefore, save for the Subscriber, no Shareholder is required to abstain from voting on the resolutions to be proposed at the EGM.
Completion of the subscription of the Convertible Bonds is subject to the satisfaction of the conditions precedent set out in the Subscription Agreement. Accordingly, the issue of the Convertible Bonds may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.
DEFINITIONS
Unless otherwise specified, the following terms have the following meanings in this announcement:
"associate(s)" | has the meaning ascribed thereto under the Listing Rules |
"Board" | the board of Directors |
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"Business Day" | a day (excluding Saturday, Sunday, public holiday and |
any day on which a tropical cyclone warning signal no. 8 | |
or above is hoisted or remains hoisted between 9:00 | |
a.m. and 12:00 noon and is not lowered at or before 12: | |
00 noon or on which a "black" rainstorm warning | |
signal is hoisted or remains in effect between 9:00 a.m. | |
and 12:00 noon and is not discontinued at or before | |
12:00 noon) on which licensed banks in Hong Kong are | |
open for business throughout their normal business | |
hours | |
"Company" | Wai Chun Bio-Technology Limited, a company |
incorporated in Cayman Islands with limited liability, the | |
issued Shares of which are listed on the main board of the | |
Stock Exchange | |
"Completion Date" | the date of closing, being the day falling on the second |
Business Day (or such other day as agreed by the | |
Company and the Subscriber) after fulfillment of all | |
the conditions precedent set out in the Subscription | |
Agreement which is expected to be 30 November 2020 | |
"connected person(s)" | has the meaning ascribed thereto under the Listing Rules |
"Conversion Price" | HK$0.012 per Conversion Share, subject to adjustments |
and the terms and conditions of the Convertible Bonds | |
"Conversion Share(s)" | new Shares to be issued by the Company upon the exercise |
of the conversion rights attaching to the Convertible Bonds | |
by the Subscriber | |
"Convertible Bonds" | convertible bonds in an aggregate principal amount of |
HK$67,000,000 to be issued by the Company, and | |
subscribed by the Subscriber, pursuant to the Subscription | |
Agreement for the Debt Settlement | |
"Debt Settlement" | the settlement of the Loan |
"Director(s)" | the director(s) of the Company from time to time |
"Group" | the Company and its subsidiaries |
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
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"Independent Shareholder(s)" | the Shareholders other than the Subscriber and those who |
are required under the Listing Rules to abstain from voting | |
on the resolution(s) approving the Subscription Agreement | |
and the transactions contemplated respectively thereunder | |
at the EGM | |
"Last Trading Day" | 21 September 2020, being the last trading day of the |
Shares on the Stock Exchange prior to the date of | |
this announcement | |
"Long Stop Date" | 30 November 2020 or such other date as may be agreed |
by the Company and the Subscriber | |
"Listing Committee" | has the meaning ascribed to it in the Listing Rules |
"Listing Rules" | the Rules Governing the Listing of Securities on the Stock |
Exchange | |
"Loan" | a loan due by the Company to the Subscriber which is |
expected to amount to HK$ 67,000,000 as at | |
Completion Date at an interest rate of 6.25% per annum | |
"PRC" | People's Republic of China, which for the purpose of this |
announcement shall exclude Hong Kong, Taiwan and | |
Macau Special Administrative Region of the PRC | |
"EGM" | the extraordinary general meeting of the Company to be |
convened and held for the Independent Shareholders to | |
approve the Subscription Agreement and the transactions | |
contemplated respectively thereunder | |
"Share(s)" | existing ordinary share(s) of HK$0.0025 each in the share |
capital of the Company | |
"Shareholder(s)" | the holder(s) of the issued Shares |
"Specific Mandate" | the specific mandate to the Board to allot, issue and |
deal with the Conversion Shares to be proposed for | |
approval as an ordinary resolution of the Shareholders at | |
the EGM | |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited |
"Subscriber" | Mr. Huang Zhiyong (Official Chinese name as "黃志勇"), |
being the subscriber under the Subscription Agreement | |
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"Subscription"
"Subscription Agreement "
the subscription of the Convertible Bonds by the Subscriber pursuant to the terms of the Subscription Agreement
the conditional subscription agreement dated 21 September 2020 entered into between the Company and the Subscriber in relation to the Subscription of Convertible Bonds in the principal amount of HK$67,000,000
"HK$" | Hong Kong dollar(s), the currency of Hong Kong |
"%" | per cent |
By order of the Board
Wai Chun Bio-Technology Limited
LAM Ching Kui
Chairman and Chief Executive Officer
Hong Kong, 21 September 2020
As at the date of this announcement, the Board consists of one executive Director, namely Mr. Lam Ching Kui (Chairman and Chief Executive Officer) and two independent non-executive Directors, namely Mr. Chan Chun Wai, Tony and Mr. Hau Pak Man.
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