24 Mar 2016 09:21
Cathay International Holdings Limited
("Cathay", the "Company" or the "Group")
Notification of class 2 transaction
Hong Kong, 24 March 2016 - Cathay International Holdings Ltd. (LSE: CTI.L), a leading operator and investor in the growing healthcare sector in the People's Republic of China, announces that Lansen Pharmaceutical Holdings Ltd (incorporated in the BVI, the "Subscriber"), wholly owned by the Company's 50.56% owned subsidiary, Lansen Pharmaceutical Holdings Ltd ("Lansen", incorporated in the Cayman Islands) (HKEX: 503), pursuant to the terms of a subscription agreement and shareholder's agreement, has agreed to subscribe for a first tranche of new shares in Haotian Holdings Limited ("Haotian"), an indirect wholly owned subsidiary of the Company, representing 19.1% of the enlarged issued share capital of Haotian. Within 15 months from the subscription, the Subscriber has the option, at its sole discretion but not obligation, to subscribe for a second tranche of new shares in Haotian, representing, in aggregate with the first subscription, up to 30% of the enlarged issued share capital of Haotian. Lansen has today made an announcement regarding the subscription in Haotian (the "Lansen Announcement"). The full text of the Lansen Announcement can be found at http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0324/LTN20160324334.pdf and will also be made available at the Announcements & Notices section of Lansen's homepage at http://www.lansen.com.cn/En/Announcements&Notices.asp.
Haotian is an investment holding company and indirectly wholly owns Yangling Dailyhealth (previously known as Yangling Haotian) and Xian Haotian, both of which are incorporated in the PRC. Yangling Dailyhealth and Xian Haotian are primarily engaged in the production and sale of plant extracts as ingredients for health products. In 2015, Yangling Dailyhealth completed the modification and expansion of its production facilities which now consist of three production lines, being (i) a production line for berries extracts; (ii) a production line for synthetic health products; and (iii) a multi-functional production line for a variety of plant extracts. Yangling Dailyhealth's production facilities are led by Ms. Yang Jianli, General Manager; and Mr. Wu Wenli, Deputy General Manager.
After the modification and expansion of its production facilities, Haotian has identified the need for additional resources to improve its marketing network, recruit additional management personnel and expand its plant extract business. The funding to be received by Haotian pursuant to the subscription agreement is expected to enable Haotian to grow its business rapidly. Upon completion of the subscription for first tranche subscription shares, and assuming the Subscriber subscribes for the second tranche subscription shares at the full amount, the Company's effective interest in Haotian will dilute to 85.2%. The Company considers that the level of dilution is acceptable with the additional growth expected to derive from access to the subscription capital. The subscription contemplated under the subscription agreement will allow a more efficient use of the plant extract resource within the Group and is in line with the Group's business strategy to develop its plant extract and health businesses under a single platform.
The consideration for the first tranche subscription shares, representing approximately 19.1% of the enlarged issued share capital of Haotian, shall be satisfied by the payment of either US$ or HK$ equivalent of RMB28,000,000 (approximately US$4.31 million) in cash and the transfer of the entire issued share capital of Natural Dailyhealth Tech Limited ("Natural Dailyhealth"), indirectly owned by the Subscriber, to Haotian. Natural Dailyhealth is the holding company of Ningbo Dailyhealth Biotechnology Ltd ("Ningbo Dailyhealth"), a company set up solely to apply for the approval of healthcare products in mainland China. The shares of Natural Dailyhealth are valued at RMB5,000,000 (approximately US$0.75 million) with reference to the company's net assets as at 31 December 2015 at RMB5,004,154 (approximately US$0.75 million). The Company intends to retain the shareholding in Natural Dailyhealth in the short term upon completion of the first tranche subscription.
The Subscriber shall, at any time within 15 months from the first subscription, also have the option at its sole discretion, but not the obligation, to subscribe for the second tranche subscription shares representing, in aggregate with the first tranche subscription, up to 30% of the enlarged issued share capital of Haotian. The consideration for the second tranche subscription shares shall be settled by the payment of either US$ or HK$ equivalent of up to RMB 26,920,000 (approximately US$4.15 million).
Haotian has also granted a put option to the Subscriber pursuant to which the Subscriber may require Haotian to repurchase all of the subscription shares in the three month period after the second anniversary of the date of the subscription agreement. Further details of the put option are set out in the Lansen Announcement.
In its unaudited management accounts for financial year to 31 December 2015, Haotian reported a loss after tax of US$1.18 million and has gross assets of US$41.60 million and net assets of US$15.76 million.
Under the terms of the shareholders agreement, for as long as the Subscriber owns not less than 15% of issued shares in Haotian, it shall have the right to appoint up to one-third of the number of directors on the board of Haotian from time to time and such number of appointment shall not be less than one director. This right has not been exercised as at the date of this announcement.
The transaction constitutes a class 2 transaction for the purposes of the Financial Conduct Authority's Listing Rules.
-ENDS-
For further enquiries, please contact:
Cathay International Holdings Limited
Eric Siu (Finance Director)
Patrick Sung (Director and Controller)
Tel: +852 2828 9289
N+1 Singer
+44 (0) 20 7496 3000
Aubrey Powell/ Lauren Kettle - Corporate Finance
Brough Ransom - Sales
Consilium Strategic Communications
Mary-Jane Elliott/ Matthew Neal / Lindsey Neville
Tel: +44 (0) 20 3709 5702
About Cathay
Cathay International Holdings Limited (LSE: CTI.L) is a main market listed investment holding company and a leading operator and investor in the growing healthcare sector in the People's Republic of China (the "PRC"). The Company and its subsidiaries (collectively the "Group") aim to leverage on growth opportunities in the strong and growing domestic demand for high quality healthcare products in the PRC and build its portfolio companies into market sector leaders with competitive edge. Cathay has already demonstrated a strong track record of identifying high-growth potential investment opportunities in this area including: Lansen, a leading specialty pharmaceutical company focused on rheumatology and dermatology in the PRC; Haizi, a company engaged in the manufacture, marketing and sale of inositol and its by-product, di-calcium phosphate; Yangling, a company engaged in production and sales of plant extracts for use as key active ingredients in healthcare products; and Botai, a company engaged in collagen products.
The Group employs approximately 2,000 people across the PRC, including over 30 specialist corporate and business development staff based at the holding company's offices in Hong Kong and Shenzhen. Cathay also has a hotel investment. For more information please visit the Company's website: www.cathay-intl.com.hk.
About Lansen
Lansen, whose shares are listed on the mainboard of the Hong Kong Stock Exchange, is a 50.56% owned subsidiary of Cathay. Lansen is engaged in the manufacture, distribution and development of specialty prescription drugs for treatment of autoimmune disorder in rheumatology and dermatology. Lansen is in the leading market position in disease modifying anti-rheumatic drugs ("DMARDs") for treatment of rheumatoid arthritis ("RA") in the PRC. Lansen has established an extensive distribution network, covering more than 1,000 hospitals in four municipalities, 25 provinces and cities in the PRC. For more information please visit the Lansen's website: http://www.lansen.com.cn/En/index.asp.