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Win Hanverky Holdings Limited
永 嘉 集 團 控 股 有 限 公 司
(incorporated in the Cayman Islands with limited liability)
(Stock code: 3322)
DISCLOSEABLE TRANSACTION
DISPOSAL OF THE ENTIRE EQUITY INTEREST IN BOWKER PROPERTY
The Board announces that on 26 September 2017, Bowker Garment (an indirect wholly-owned subsidiary of the Company) entered into the Equity Transfer Agreement with, among others, Dongguan Aochuang Property, pursuant to which, Bowker Garment agrees to transfer its entire equity interest in Bowker Property (a wholly-owned subsidiary of Bowker Garment) to Dongguan Aochuang Property at a consideration of approximately RMB178 million (equivalent to approximately HK$206 million).
As the applicable percentage ratio(s) (as defined in the Listing Rules) in respect of the Transaction exceed 5% but are less than 25%, the Transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.
The Board announces that on 26 September 2017, Bowker Garment (an indirect wholly-owned subsidiary of the Company) entered into the Equity Transfer Agreement with, among others, Dongguan Aochuang Property, pursuant to which, Bowker Garment agrees to transfer its entire equity interest in Bowker Property (a wholly-owned subsidiary of Bowker Garment) to Dongguan Aochuang Property at a consideration of approximately RMB178 million (equivalent to approximately HK$206 million).
EQUITY TRANSFER AGREEMENT
Below sets out the salient terms of the Equity Transfer Agreement: Date : 26 September 2017
Parties : (1) Bowker Garment as the transferor;
Dongguan Aochuang Property as the transferee; and
Dongguan Aoyu Property as the guarantor
Asset to be disposed : Bowker Garment agrees to dispose and Dongguan
Aochuang Property agrees to acquire the entire equity interest in Bowker Property, subject to and in accordance with the terms of the Equity Transfer Agreement.
Consideration : Approximately RMB178 million (equivalent to approximately HK$206 million)
Payment terms : The Consideration shall be payable by Dongguan
Aochuang Property to Bowker Garment in the following manner:
RMB20 million shall be payable by bank counter transfer (or other means as agreed by the parties) as deposit on the date of signing the Equity Transfer Agreement; and
the remaining sum of approximately RMB158 million (''Final Payment'') shall be payable to a bank account designated by Bowker Garment on or before 30 April 2018.
Conditions to the Completion
: The parties' obligation to complete the transfer of the equity interest in Bowker Property shall be conditional upon the full payment of the Consideration and entering into a lease agreement among Bowker Property (as the lessor), Bowker Yee Sing (as the lessee) and Dongguan Aochuang Property (as the guarantor) with the terms below:
Bowker Property shall lease the Specified Land to Bowker Yee Sing for a term from the date of receipt of the Final Payment to 30 April 2019 (''Initial Term'') at a monthly rental of RMB450,000 for manufacturing purpose;
Bowker Yee Sing has the option to extend the tenancy for a term from 1 May 2019 to 30 June 2019 by giving 10 days written notice to Bowker Property before the expiry of the Initial Term at a daily rental of RMB45,000.
Guarantee : Dongguan Aoyu Property guarantees for the performance
of, and shall be jointly and severally responsible for the fulfilment of obligations of Dongguan Aochuang Property under the Equity Transfer Agreement.
INFORMATION OF BOWKER PROPERTY
Bowker Property is a wholly-foreign owned enterprise established under the laws of the PRC on 9 December 2013 with a registered and fully paid up capital of RMB80 million as at the date of this announcement. It is the registered owner of the Land and does not have any business operation.
As at 31 July 2017, the unaudited net asset value of Bowker Property amounted to approximately HK$91 million. Set out below is its unaudited results for the two years ended 31 December 2015 and 2016 :
For the year ended 31 December
2015 HK$'000 | 2016 HK$'000 | |
Loss before taxation | (301) | (3,324) |
Loss after taxation | (301) | (3,324) |
As at the date of this announcement, Bowker Property is wholly-owned by Bowker Garment. Following the Completion, Bowker Property would cease to be a subsidiary of the Group.
REASONS FOR, AND BENEFITS OF, THE EQUITY TRANSFER AGREEMENT
As disclosed in our annual reports for the recent years, we had been gradually relocating the production facilities of the Group from the PRC to Southeast Asian countries aiming for lower operating costs. Also as disclosed in the announcement of the Company dated 27 November 2013, the permitted use of part of the Land was to be converted from industrial use to residential and commercial use. The whole parcel of the Land was subsequently converted from industrial use to residential and commercial use in 2015 in accordance with the applicable laws in the PRC.
Given the Group does not have any experience in property development business, the Group decides not to develop the Land, but to sell the Land to other property developer to realise the gain. Upon the Completion, it is expected that the Group will recognise a gain (before taxation) in its consolidated income statement of approximately HK$115 million arising from the disposal under the Equity Transfer Agreement, which is calculated as the difference between the Consideration and the unaudited net asset value of Bowker Property as at 31 July 2017. The gain has not yet been audited or reviewed by the auditor of the Company.
The Consideration was determined after arm's length negotiation between the parties with reference to the valuation of the Land in the amount of approximately RMB170.5 million as of 31 May 2017 by an independent valuer and the net asset value of Bowker Property.
The Directors expect that the net proceeds from the disposal under the Equity Transfer Agreement after deducting the expenses directly attributable thereto will be used for general working capital of the Group.
Bowker Yee Sing, an indirect non-wholly owned subsidiary of the Company, has been occupying part of the Land as a garment factory for manufacturing purpose and the Group plans to relocate the production capacity to other production plant in the PRC or Southeast Asian countries. To ensure Bowker Yee Sing have sufficient time for the relocation which would not cause material interruption to the operation of the Group, it is proposed to enter into the Lease Agreement at the terms thereunder.
The Directors believe that entering into the Equity Transfer Agreement and the transactions contemplated thereunder are beneficial to the Group and the terms under the Equity Transfer Agreement are fair and reasonable and in the interests of the Shareholders as a whole.
IMPLICATION UNDER THE LISTING RULES
As the applicable percentage ratio(s) (as defined in the Listing Rules) in respect of the Transaction exceed 5% but are less than 25%, the Transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.