CTI.L Regulatory News (CTI)

19 Aug 2005 07:00

Cathay International Holdings Ld19 August 2005 Cathay International Holdings Limited 19 August 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THEUNITED STATES, AUSTRALIA, CANADA, FRANCE, JAPAN OR NEW ZEALAND Results of Open Offer and update with regard to Proposed Investments inPharmaceutical Manufacturing and Distribution Companies Cathay International Holdings Limited ("CIH" or the "Company") announced on 28July 2005 that it had reached an agreement with a team of senior managersexperienced in the pharmaceutical manufacturing and distribution market in thePRC (the "Management") relating to: • the establishment of CI Pharma by the CIH Group and the Management, through which investments will be undertaken in the pharmaceutical industry in the PRC; • the proposed acquisition by Brilliant Manufacture (a wholly-owned subsidiary of CI Pharma) of Liwah, a company principally engaged in the manufacture and sale in the PRC of Chinese herbal medicine and herbal extracts, for US$1,121,202; • the proposed acquisition by Horizon Network (a wholly-owned subsidiary of CI Pharma) of Lansen, a company principally engaged in the marketing and distribution of pharmaceutical products in the PRC, for US$246,609; • the proposed contribution (in instalments and subject to certain conditions, including due diligence and, in the case of all instalments other than the initial instalment of US$4,440,000, CIH Board approval) of up to US$21,000,000 to be made by the CIH Group to the capital of CI Pharma. CIH also announced on 28 July 2005 that it proposed to make an Open Offer toQualifying Shareholders of 126,589,628 New Common Shares at 9 pence per NewCommon Share to raise up to £11,393,067 (US$19,853,558) (£10,991,368(US$19,153,558) net of expenses). On 16 August 2005 the Company announced that the resolutions to approve andimplement the Proposals and the Open Offer had been passed at the SpecialGeneral Meeting held on that day. CIH announces that by 3.00 p.m. on 18 August 2005 (being the latest time anddate for receipt of completed Application Forms and payment in full under theOpen Offer), valid applications had been received in respect of the BasicEntitlement under the Open Offer, representing 62.89% per cent of the New CommonShares available pursuant to the Open Offer and by the same time and date validapplications had been received in respect of the Excess Application Facilityunder the Open Offer, representing 0.23% per cent of the New Common Sharesavailable pursuant to the Open Offer. As a result £7,191,293.58 (US$13,014,803.12) (£6,804,510.51 (US$12,314,803.12)net of expenses) has been raised by the issue, subject to Admission, of79,903,262 New Common Shares at 9 pence per share pursuant to the terms of theOpen Offer. Application has been made for the New Common Shares to be admitted to theOfficial List and to trading on the London Stock Exchange's market for listedsecurities. It is expected that Admission will become effective and dealingswill commence at 08.00 a.m. today, 19 August 2005. As a result of the Open Offer Cathay Enterprises now controls sharesrepresenting approximately 68.96% of the votes capable of being cast at generalmeetings of the Company. The amount raised under the Open Offer is insufficient to fund the first threeinstalments of the capital contributions proposed to be made by the CIH Group toCI Pharma (amounting in aggregate to US$16,000,000). It was noted in theProspectus that, in such circumstances, CIH would explore the possibility offunding such capital contributions by additional debt facilities. Following theresult of the Open Offer a loan facility, on normal commercial terms and on anunsecured basis, (the "Loan") has been entered into by the Company with CathayInternational EW No. 43 Limited, the immediate parent undertaking of CathayEnterprises, for up to US$18,000,000. Together with the net proceeds of theOpen Offer, the Loan will be used to fund the capital contributions under theterms of the Shareholders' Agreement. The conditions precedent to the obligations of the CIH Group to make suchcontributions, including the completion of due diligence on Liwah and Lansen tothe satisfaction of CIH and the approval of the CIH Board have been satisfied. The Company will therefore proceed with the implementation of the Proposals. Enquiries to: Cathay International Holdings Limited25/F Standard Chartered Bank Building4-4A Des Voeux RoadCentralHong Kong Attention: Stephen Hunt, DirectorTel: +852 2828 9289 Grant Thornton UK LLPGerry Beaney 0870 991 2589 This press release does not constitute, or form part of the Open Offer or anyinvitation to sell or issue, or any solicitation of any offer to purchase orsubscribe for, any shares in the Company nor shall this press release or anypart of it, or the fact of its distribution, form the basis of, or be relied on,in connection with or act as any inducement to enter into any contract orcommitment whatsoever with respect to the Open Offer or otherwise. The distribution of the press release in certain jurisdictions may be restrictedby law and therefore persons into whose possession this press release comesshould inform themselves about and observe any such restrictions. Any suchdistribution could result in a violation of the law of such jurisdictions.Neither this press release nor any copy of it may be taken or transmitted ordistributed (directly or indirectly) in or into the United States, Australia,Canada, Japan, the Republic of Ireland or South Africa or to any national,citizen or resident thereof or any corporation, partnership or other entitycreated or organised under the laws thereof. The New Common Shares in theCompany have not been and will not be registered under the United StatesSecurities Act 1933, as amended ("U.S. Securities Act") or under the applicablelaws of Australia, Canada, Japan, the Republic of Ireland or South Africa and,subject to certain exemptions, may not be offered for sale or subscription, orsold or subscribed directly or indirectly, within the United States, Australia,Canada, Japan, the Republic of Ireland or South Africa to or by any national,resident or citizen of such countries. Grant Thornton UK LLP, which is regulated in the United Kingdom by the FinancialServices Authority, is acting as sponsor and financial adviser to CIH and no oneelse in connection with the Proposals and Open Offer and will not be responsibleto anyone other than CIH for providing the protections afforded to its customersor for providing advice in relation to the Proposals and Open Offer. This announcement has been issued by the Company and is the sole responsibilityof the Company. It has not been independently verified by Grant Thornton UK LLPor any other person. This announcement does not purport to be comprehensive orto contain all the information that a recipient may need in order to evaluatethe Company. No representation or warranty, express or implied, is given and, sofar as is permitted by law and except in the case of fraud, no responsibility orliability is accepted by any person, with respect to the accuracy orcompleteness of the announcement or its contents or any oral or writtencommunication in connection with the Proposals and Open Offer. In particular,but without limitation, no representation or warranty is given as to theachievement or reasonableness of, and no reliance should be placed on, anyprojections, targets, estimates or forecasts contained in this announcement. Inall cases, interested parties should conduct their own investigation andanalysis of the Company and the data contained in this announcement. DEFINITIONS The following definitions apply throughout this announcement, unless the contextotherwise requires: "Acquisitions" the proposed acquisitions of Lansen and Liwah on the terms of the Acquisition Agreements "Acquisition Agreements" the Liwah Acquisition Agreement and the Lansen Acquisition Agreement "Admission" the admission of the New Common Shares to the Official List and to trading on the London Stock Exchange's market for listed securities becoming effective "Application Forms'' the application forms for use by Qualifying Shareholders in connection with the Open Offer "Basic Entitlement" the number of New Common Shares for which a Qualifying Shareholder is entitled to apply, being 7 New Common Shares for every 10 Existing Shares registered in its name at the Record Date "Board" or "Directors" the directors of the Company "Brilliant Manufacture" Brilliant Manufacture Limited, formerly known as "Cathay International Pharma Manufacture Limited", a company legally established and existing under the laws of the British Virgin Islands and a wholly-owned subsidiary of CI Pharma "Cathay Enterprises" Cathay International Enterprises Limited, an exempted company incorporated in Bermuda with limited liability under the Bermuda Companies Act, which is the immediate parent undertaking of the Company. Mr. Wu Zhen Tao and members of his family are the beneficiaries of the trust which owns Cathay Enterprises "CI Pharma" Cathay International Pharma Manufacture and Distribution Limited, a company legally established and existing under the laws of the British Virgin Islands "CIH" or "Company" Cathay International Holdings Limited an exempted company incorporated in Bermuda with limited liability under the Bermuda Companies Act "CIH Group" or "Group" CIH and its subsidiary undertakings "Excess Application Facility'' the arrangement being made available to Qualifying Shareholders pursuant to which Qualifying Shareholders may apply for additional New Common Shares in excess of their Basic Entitlement on the terms set out in paragraph 2 of Part XIV of the Prospectus "Horizon Network" Horizon Network Limited, a company legally established and existing under the laws of the British Virgin Islands and a wholly-owned subsidiary of CI Pharma "Lansen" Shenzhen Lansen Medicine Company Limited, a limited liability company established in Shenzhen, PRC "Lansen Acquisition Agreement" the share transfer agreement dated 26 April 2005 between Liwah and Horizon Network relating to the transfer of a 90% equity interest in Lansen and the share transfer agreement dated 26 April 2005 between Shenzhen Qiangmeng Enterprises Company Limited and Horizon Network relating to the transfer of a 10% equity interest in Lansen "Liwah" Ningbo Liwah Pharmaceutical Company Limited, a limited liability company established in Ningbo city, Zhejiang province, PRC "Liwah Acquisition Agreement" the share transfer agreement dated 14 March 2005 between San Jiu Medical and Pharmaceutical Company Limited and Brilliant Manufacture relating to the transfer of a 45% equity interest in Liwah, the share transfer agreement dated 10 May 2005 between Wang Ting and Brilliant Manufacture relating to the transfer of a 35% equity interest in Liwah and the share transfer agreement dated 10 May 2005 between Shenzhen Qiangmeng Enterprises Company Limited and Brilliant Manufacture relating to the transfer of a 20% equity interest in Liwah "London Stock Exchange" London Stock Exchange Plc "New Common Shares" the 126,589,628 Common Shares which are the subject of the Open Offer "Open Offer" the conditional offer to Qualifying Shareholders to apply for the New Common Shares at the Offer Price "Overseas Shareholders" Shareholders who have registered addresses in, or who are citizens or residents of, countries other than the United Kingdom "PRC" the People's Republic of China "Proposals" the capital contributions of up to US$16,000,000 proposed to be made by the CIH Group to the capital of CI Pharma (subject to certain conditions, including due diligence and CIH Board approval), the Acquisitions, the issue of shares of CI Pharma to the Management (subject, in part, to the achievement of certain profit targets), the making of loans by CI Pharma to the Management, and the right of the Management to acquire the CIH Group's equity interest in CI Pharma in the event that the CIH Group fails to make the second and/or third instalment payments of the capital contributions and the implementation of the Shareholders' Agreement (including the completion of the Technology Transfer Agreement), all as provided for and subject to the terms and conditions contained in the Transaction Agreements "Prospectus" the prospectus relating to the Proposals and the Open Offer published by the Company on 28 July 2005 "Qualifying Shareholder(s)" shareholder(s) on the register of members of the Company at the Record Date, other than certain Overseas Shareholders who are not entitled to participate in the Open Offer "Record Date" the record date for the Open Offer, being the close of business on 22 July 2005 "Resolutions" the resolutions to be proposed at the Special General Meeting as set out in the Notice of SGM "Shareholders" the holders of the Existing Shares "Shareholders' Agreement" the shareholders' agreement dated 14 March 2005 between Cathay International Pharma Manufacture and Distribution (China) Limited (a wholly-owned indirect subsidiary of CIH) and the Management regarding the establishment of CI Pharma and regulating the respective rights and obligations of the Management and Cathay International Pharma Manufacture and Distribution (China) Limited as shareholders in CI Pharma "Transaction Agreements" the Acquisition Agreements, the Shareholders' Agreement and the Technology Transfer Agreement "United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland "United States" or "US" the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia Where amounts in US$ are shown in brackets after £ amounts an exchange rate ofUS$1.8098:£1 has been used, being the rate published in the Financial Times on18 August 2005, the last practicable date prior to the date of this announcement(save where this announcement contains a reference to a previous announcement inwhich case an exchange rate of US$1.7426: £1 has been used, being the ratepublished in the Financial Times on 27 July 2005, the last practicable dateprior to the date of the Prospectus). 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