Wai Chun Mining Industry : DISCLOSEABLE AND CONNECTED TRANSACTION – LOAN CAPITALISATION

Microsoft Word - Announcement - Loan Cap (d2) - 20160123_ocl comments

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 purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of Wai Chun Mining Industry Group Company Limited.

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 660)

DISCLOSEABLE AND CONNECTED TRANSACTION - LOAN CAPITALISATION THE LOAN CAPITALISATION

On 22 January 2016 (after trading hours), the Company and the Subscriber entered into the

Subscription Agreement whereby the Subscriber agreed to subscribe for, and the Company agreed to issue and allot, the Convertible Shares at the Issue Price of HK$0.05 per Convertible Share (or HK$0.1 per Consolidated Convertible Share assuming the Share Consolidation becoming effective) for capitalising the Shareholder's Loan.

LISTING RULES IMPLICATION

As at the date of this announcement, the Subscriber is the controlling Shareholder, and therefore the Subscriber is considered as a connected person of the Company. As such, the Loan Capitalisation constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As certain of the relevant applicable percentage ratios in respect of the Loan Capitalisation calculated in accordance with the Listing Rules are more than 5% but less than 25%, the Loan Capitalisation constitutes a discloseable transaction of the Company and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules. However, since the Subscriber is a connected person of the Company and the Loan Capitalisation is more than HK$10 million, the entering into of the Subscription Agreement constitutes a non-exempt connected transaction for the Company and is therefore subject to reporting, announcement and Independent Shareholders' approval requirements for the purpose of Chapter 14A of the Listing Rules.

GENERAL

An Independent Board Committee comprising the independent non-executive Directors will be formed to advise the Independent Shareholders on whether the terms of the Subscription Agreement and the transactions contemplated thereunder (including the Loan Capitalisation) are fair and reasonable and are on normal commercial terms or better, in the ordinary and usual course of business of the Group and in the interest of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote with respect to the resolution to be proposed at the EGM to approve the Loan Capitalisation and transactions contemplated thereunder, taking into account of advice from the Independent Financial Adviser.

* for identification purpose only

A circular containing, amongst other things, details of the Loan Capitalisation, a letter from the Independent Board Committee, a letter from the Independent Financial Adviser setting out its advice in relation to the Subscription Agreement and the Loan Capitalisation and a notice to convene the EGM, will be despatched to the Shareholders on or before 17 February 2016 in compliance with the Listing Rules.

THE SUBSCRIPTION AGREEMENT

Date : 22 January 2016 Parties :

Subscriber :

Issuer :

Chinese Success Limited, a company incorporated in the British Virgin Islands with limited liability, is the controlling shareholder of the Company. Therefore the Subscriber is considered as the connected person to the Company under the Listing Rules.

the Company

Conditions precedent:

Completion of the Loan Capitalisation shall be conditional upon all the following conditions being fulfilled:

1. the approval of the Independent Shareholders of the Subscription Agreement and the transactions contemplated thereunder, including without limitation, the terms and the creation and issue of the Convertible Shares and allotment and issue of the Conversion Shares pursuant to the exercise of the conversion rights attached to the Convertible Shares;

   
   

2. the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Conversion Shares; and

   
   

3. all necessary consents, approvals (or waivers), authorisation, permission or exemption from any third parties, including but not limited to government or regulatory authorities, having been obtained by the parties to the Subscription Agreement for completion of the transactions contemplated thereunder.

   
   

   If the above conditions precedent are not fulfilled by 30 April 2016 (or such other date as the parties to the Subscription Agreement may agree), the Subscription Agreement shall lapse and become null and void and the parties thereto shall be released from all their respective obligations hereunder, save for any liability arising out of any antecedent breaches hereof.

   
   

   Convertible Shares

   
   

   Principal terms of the Convertible Shares are set out below: Issuer: The Company

   Number of Convertible Shares:

   536,960,000 Convertible Shares (or 268,480,000 Consolidated Convertible Shares assuming the Share Consolidation becoming effective)

   Rank of the Convertible Shares:

   The Convertible Shares shall at all times rank pari passu among themselves and with the Shares in issue except that the Convertible Shares shall be non-listed and without any voting right. The Convertible Shares shall have the same right to declare and claim dividend with the Shares in issue.

   
   

   Issue Price: HK$0.05 per Convertible Share (or HK$0.1 per Consolidated

   Convertible Share assuming the Share Consolidation becoming effective).

   
   

   Par Value: HK$0.0025 per Convertible Share (or HK$0.005 per

   Consolidated Convertible Share assuming the Share Consolidation becoming effective).

   
   

   Maturity: The day immediately before the fifth (5th) anniversary of the issue date of Convertible Shares, or if that day is not a Business Day, the first Business Day thereafter.

   
   

   Conversion: Holders of the Convertible Shares has the right to convert all or

   part of its Convertible Shares into the Conversion Shares at any time commencing from Completion to Maturity Date on one to one basis (i.e. one Convertible Share shall be converted into one Conversion Share), provided that holders of the Convertible Shares may only convert such number of Convertible Shares as

4. would not cause the Company not to comply with the minimum public float requirement under the Listing Rules following the conversion; or (ii) would not trigger any general offer obligations under the Takeovers Code.




Notwithstanding the above, the Company shall have the right to defer the issue and allotment of the Conversion Shares to a date falling ninety (90) days after conversion or such longer period as the Board shall consider appropriate and necessary in the event a conversion will result in the failure by the Company to comply with the level of public float prescribed in the Listing Rules from time to time and the Company shall be entitled to defer the issue and allotment of the Conversion Shares to until the proposal by the holders of the Convertible Shares to restore the public float is implemented to its satisfaction.




Redemption: Non-redeemable.




Transferability: The Convertible Shares may be transferred by delivery to the

Company of a duly executed instrument of transfer, bought and sold note and form of transfer together with the share certificate(s) for the Convertible Shares being transferred. The Company shall, within five Business Days of receipt of such documents from the holder of the Convertible Shares, cancel the existing Convertible Shares, issue new certificate(s) in respect thereof under the seal of the Company in favour of the transferee. All and any part of the Convertible Shares may not be assigned or transferred to a connected person (as defined in the Listing Rules)

of the Company without the prior written consent of the Company.




Voting rights: Holders of the Convertible Shares shall not be entitled to receive

notices of, attend or vote at any meetings of the Company by reason only of it being a holder of the Convertible Shares.




Listing: No application will be made for the listing of the Convertible Shares on the Stock Exchange or any other stock exchange. An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.




Governing law: Laws of Hong Kong




SHAREHOLDING STRUCTURE




Set out below are the shareholding structure of the Company (i) as at the date of this announcement; (ii) immediately after the Share Consolidation becoming effective; (iii) immediately after Completion; the issue and allotment of the Convertible Shares and exercise in full of the conversion rights attaching to the Convertible Shares and assuming the Share Consolidation becoming effective; and (iv) immediately after Completion; the issue and allotment of the Convertible Shares and exercise in full of the conversion rights attaching to the Convertible Shares and assuming the Share Consolidation did not become effective:







As at the date of this announcement Immediately after the Share Consolidation becoming effective Immediately after (i) Completion; (ii) the issue and allotment of the Convertible Shares and exercise in full of the conversion rights attaching to the Convertible Shares; and (iii) assuming the Share Consolidation becoming effective (Note2) Immediately after (i) Completion; (ii) the issue and allotment of the Convertible Shares and exercise in full of the conversion rights attaching to the Convertible Shares; and (iii) assuming the Share Consolidation did not become effective (Note2)




Chinese Success Limited

Number of

Shares

Approx imately

%

Number of

Shares

Approx imately

%

Number of

Shares

Approx imately

%

Number of Shares Approxim

ately %

• Existing shares (Note 1)

• Conversion Shares

7,578,064,320 46.57 3,789,032,160 46.57 3,789,032,160 45.09 7,578,064,320 45.09




- - - - 268,480,000 3.19 536,960,000 3.19

Sub-total 7,578,064,320 46.57 3,789,032,160 46.57 4,057,512,160 48.28 8,115,024,320 48.28

Public 8,692,621,056 53.43 4,346,310,528 53.43 4,346,310,528 51.72 8,692,621,05651.72

Total 16,270,685,376 100.00 8,135,342,688 100.00 8,403,822,688 100.00 16,807,645,376100.00




Note:

1. These shares are beneficially owned by Chinese Success Limited, which in turn is wholly owned by Wai Chun Investment Fund. Mr. Lam is the beneficial owner of the entire issued share capital of Wai Chun Investment Fund. Mr. Lam is the director of Chinese Success Limited and Wai Chun Investment Fund.

2. This column is shown for illustrative purpose only as any conversion of the Convertible Shares will not trigger a mandatory offer obligation under Rule 26 of the Takeovers Code on the part of Mr. Lam and his parties acting in concert or any holder of the Convertible Shares pursuant to the terms of the Convertible Shares.