TELEVISION BROADCASTS LIMITED 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.
(Incorporated in Hong Kong with limited liability) (Stock Code: 00511)
The Board announces that on 29 January 2015, TVBI and Countless, both wholly-owned subsidiaries of the Company, entered into the conditional Disposal Agreement with the Purchasers, pursuant to which TVBI and Countless agreed to conditionally sell respectively 47% and 6% of the shareholding in Liann Yee for a total consideration of NT$4,695,000,000 (representing approximately HK$1,149,101,250).
As the applicable percentage ratios in respect of the Disposal exceed 5% but are all less than 25%, the Disposal constitutes a discloseable transaction of the Company under the Listing Rules.
The Board announces that on 29 January 2015, TVBI and Countless, both wholly-owned subsidiaries of the Company, entered into the conditional Disposal Agreement with the Purchasers, the principal terms of which are summarised below.
THE DISPOSAL AGREEMENT Date29 January 2015
Parties and subject matter
Vendors : TVBI, to sell approximately 47% of the shareholding in Liann Yee
Countless, to sell approximately 6% of the shareholding in Liann Yee
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Purchasers : Li Mao, to purchase approximately 17% of the shareholding in Liann Yee De En, to purchase approximately 18% of the shareholding in Liann Yee Lien Xin, to purchase approximately 18% of the shareholding in Liann Yee
To the best of the Directors' knowledge, information and belief and having made all reasonable
enquiry, each of the Purchasers and their respective ultimate beneficial owners are third parties independent of the Group and connected persons of the Group.
The Consideration | is the sum | of NT$4,695,000,000 (representing | approximately |
HK$1,149,101,250), | comprising | of NT$1,505,943,402 (representing | approximately |
HK$368,579,648), NT$1,594,528,299 (representing approximately HK$390,260,801) and
NT$1,594,528,299 (representing approximately HK$390,260,801), being the respective purchase price payable by each of Li Mao, De En and Lien Xin, less any applicable Taiwan securities transaction tax payable for the transfer.
The Consideration shall be paid to the Vendors in immediately available funds at Completion.
The Consideration was arrived at after arm's length negotiations between the Vendors and the Purchasers, taking into consideration the earnings position of the Liann Yee Group on the basis that the Reorganization and the Distribution have been completed and the valuation comparables of similar disposals in the market.
Conditions precedent
Completion will be conditional upon, among others, the fulfilment of conditions on or before 30
June 2015, including:-
(1) the obtaining of requisite regulatory approvals, including from National Communications Commission of Taiwan, the Investment Commission of the Ministry of Economic Affairs of Taiwan, the Ministry of Economic Affairs of Taiwan and the Fair Trade Commission of Taiwan for the transactions contemplated under the Disposal Agreement; and
(2) the Reorganization and the Distribution having been completed in compliance with the applicable laws and there being no occurrence of any event, circumstance, or development which would or is expected to have a material adverse effect to Liann Yee's business immediately after the Reorganization.
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Reorganization
A reorganization of the Liann Yee Group ("Reorganization") will be undertaken prior to
Completion pursuant to which: -
(a) all interests (including all rights of exclusive possession and full beneficial and economic interests) in the Retained Properties will be transferred from the Liann Yee Group to the Group, and thereafter, the Group shall lease back certain portions of the Retained Properties to the Liann Yee Group on normal commercial terms for sub-leasing to other parties and/or for its own use; and
(b) the associated liabilities of Liann Yee comprising a NT$600,000,000 interest-free shareholder's loan due from Liann Yee to TVBI, and bank loans in the outstanding amount of NT$1,600,000,000 secured by the Retained Properties and mortgages in respect of the Retained Properties will be taken up by the Group.
Prior to Completion, Liann Yee will distribute NT$1,600,000,000 (representing approximately HK$391,600,000) in cash to TVBI and Countless in proportion to their respective shareholdings in Liann Yee prior to Completion.
Repayment of loanAt Completion, TVBI and Liann Yee will enter into an agreement to provide for the terms of repayment of an existing NT$1,200,000,000 (representing approximately HK$293,700,000) loan extended by TVBI to Liann Yee, pursuant to which Liann Yee will repay the loan by six equal instalments on each anniversary date following the Completion, together with accrued interests at a rate with reference to the Taipei Interbank Offered Rate plus 0.425% per annum.
CompletionCompletion shall take place on the 5th business day after fulfillment of the conditions precedent or such other date as the Vendors and the Purchasers may otherwise agree.
THE SHAREHOLDERS' AGREEMENTSimultaneously with the entering into of the Disposal Agreement, Countless, the Purchasers and Liann Yee entered into the Shareholders' Agreement setting out, among others, the manner of management and operation of the Liann Yee Group, to take effect following Completion, the principal terms of which are summarised below.
Board representationAfter Completion, the board of directors of Liann Yee shall comprise five directors, of which two will be nominated by Countless and three will be nominated by the Purchasers.
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Right of first refusalAny transfer of shares in Liann Yee by its shareholder shall be subject to a right of first refusal by the other shareholders. The shareholder intending to effect a transfer shall notify the non- transferring shareholders of such intent, and the non-transferring shareholders shall have the right to purchase all, but not less than all, of the shares offered by the transferring shareholder.
Dividend policySubject to requirements of applicable laws, Liann Yee will declare dividends in each financial year of no less than 25% and no more than 50% of its audited net profit for the immediately preceding financial year, or more than 50%, if the amount of its liquid assets exceeds or equals to its debts for the immediately preceding financial year, as its directors may consider appropriate.
Reserved mattersReserved matters, including but not limited to any change in board size of Liann Yee, non-pro-rata issuance of new securities by any member of the Liann Yee Group, significant acquisitions or capital expenditures and the cessation of any core business operations of Liann Yee Group require the affirmative vote of four directors of Liann Yee, at least one of which will be nominated by the Countless.
Effect and terminationThe Shareholders' Agreement shall become effective upon Completion, and shall continue in effect until the earlier of (a) the date as may be agreed in writing by Countless, the Purchasers and Liann Yee, or (b) the date on which Countless or the Purchasers, directly or indirectly, holds 85% or more of the shareholding in Liann Yee.
INFORMATION ON THE GROUP, THE PURCHASERS AND THE LIANN YEE GROUP
The Group is principally engaged in free-to-air terrestrial television broadcasting in Hong Kong, digital new media, Hong Kong pay television programme service, overseas pay television programme services, programme production, programme licensing and distribution, magazine publishing, movie production and other broadcasting related activities.
Each of the Purchasers is principally engaged in business investment and investment holding. Liann Yee operates various cable channels, namely, TVBS, TVBS News and TVBS Entertainment
in Taiwan. The Liann Yee Group is principally engaged in the business of television programmmes production, television channel transmission and operation in Taiwan, and being the television
operator for the TVBS channels in Taiwan.
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Set out below is a summary of the consolidated financial information of Liann Yee for the two years ended respectively 31 December 2012 and 31 December 2013, based on audited consolidated financial statements of Liann Yee, as aligned with the Hong Kong Financial Reporting Standards, the accounting standards adopted by the Group: -
For the year ended 31 December | ||
2012 | 2013 | |
Approximately NT$ (in HK$) | Approximately NT$(in HK$) | |
Net profit before taxation | 1,054,149,283 (276,907,096)* | 942,945,241 (245,932,377)* |
Adjusted net profit before taxation# | 998,264,921 (262,227,224)* | 886,212,044 (231,135,622)* |
Net profit after taxation | 799,248,863 (209,949,089)* | 717,514,482 (187,137,105)* |
Adjusted net profit after taxation# | 752,864,843 (197,764,796)* | 670,425,928 (174,855,798)* |
The unaudited consolidated net asset value of the Liann Yee as at 30 November 2014 was NT$4,109,955,572 (representing approximately HK$1,028,516,382*) as aligned with the Hong Kong Financial Reporting Standards.
The fair value of Liann Yee as at 30 November 2014 was valued at NT$7,121,382,185 (representing approximately HK$1,742,958,290).
#The above indicative adjusted net profit figures are provided for illustration taking into account the depreciation and rental expense on the Retained Properties as if the Reorganization and the Distribution have been completed as at the commencement of the respective periods.
*For the purpose of illustration, amounts denominated in NT$ have been converted into HK$ at historical conversion rates of NT$=HK$0.262683 for the year ended 31 December 2012, NT$=HK$0.260813 for the year ended 31 December 2013, and NT$=HK$0.25025 for the balances at 30 November 2014.
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FINANCIAL EFFECTS OF THE DISPOSAL
Following Completion, the Group's shareholding interests in Liann Yee will be reduced to 47% and the Liann Yee Group will cease to be subsidiaries of the Company, after which, Liann Yee will be held as to respectively, 47% by Countless, 17% by Li Mao, 18% by De En and 18% by Lien Xin (and as such in aggregate 53% by the Purchasers).
As a result, the assets and liabilities of the Liann Yee Group will be incorporated in the consolidated financial statements of the Company using the equity method of accounting upon Completion.The Group expects to recognize a gain of approximately HK$1,328,077,004 from the Disposal, which is calculated with reference to (i) the Consideration; (ii) the fair value of the remaining 47% shareholding interest in Liann Yee to be retained by the Group of approximately NT$3,178,584,641 (representing approximately HK$777,958,591) as at 30 November 2014; (iii) the unaudited consolidated net assets value of the 47% shareholding interest in Liann Yee of approximately NT$828,303,829 (representing approximately HK$202,727,362) attributable to the Group as at 30
November 2014; and (iv) the estimated costs and expenses relating to the Disposal. The actual amount of the gain on Disposal to be recognized by the Group will depend on the net assets value of the 53% of interest in Liann Yee on the date of Completion, and therefore may be different from the amount mentioned above.
When considering the final dividends for the financial year ended 31 December 2014, the Board of the Company will take into account of the net proceeds from the Disposal (after deducting all expenses arising from and/or incidental to the Disposal and all applicable taxes payable from the Consideration). The recommendation of dividend payments for the financial year ended 31
December 2014 will be considered at the Board meeting approving the final results of the Group for the year ended 31 December 2014.
The Disposal will allow the Group to unlock part of the value of its Taiwan investments, whilst allowing for the continued operation of the Liann Yee Group by retaining a strong presence in Taiwan post Completion. Further, by maintaining a continued business partnership with Liann Yee, the Group will encounter minimal business disruption and continue to benefit from the ongoing transactions with the Liann Yee Group in relation to the sourcing of programme content with the Liann Yee Group and retain stable income from the leasing transactions with respect to the Retained Properties with Liann Yee. At the same time, the Disposal would also allow the Group to focus and devote a larger percentage of its financial and management resources on and strengthening its presence in Hong Kong, PRC and other potential markets.The Disposal will also increase the total consolidated equity of the Company as disclosed in the financial effects section above, and is in alignment with the Group's long-term growth strategy.
The Directors consider that the terms of the Disposal are fair and reasonable and are in the interests of the Company and its shareholders as a whole.
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LISTING RULES IMPLICATIONSAs the applicable percentage ratios in respect of the Disposal exceed 5% but are all less than 25%, the Disposal constitutes a discloseable transaction under the Listing Rules.
DEFINITIONS
In this announcement, unless the context requires otherwise, the following expressions have the following meanings:
"Bade Real Estate" the building at the address of B2, B3, B4, 10F, 10F-1,13F,
13F-1, 15F, 15F-1, No. 23, Bade Road, Section 1, Zhongzheng Dist., Taipei City 100, Taiwan together with 8 car park lots and co-ownership of the land where the foregoing office building is located;
"Board" the board of Directors of the Company;
"Company" Television Broadcasts Limited ( 電視 廣播 有 限公司 ), a company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange (stock code: 511);
"Completion" completion of the Disposal in accordance with the terms of the Disposal Agreement;
"Countless" Countless Entertainment (Taiwan) Co., Ltd. (東方彩視股 份有限公司), a company incorporated and existing under
the laws of Taiwan and an indirect wholly-owned subsidiary of the Company and is the holder of approximately 53% of all issued shares of Liann Yee as at the date hereof;
"Consideration" the aggregate consideration payable by the Purchasers for the Disposal under the Disposal Agreement;
"De En" De En Investment Co. Ltd (德恩投資股份有限公司), a company incorporated and existing under the laws of Taiwan;
"Director(s)" director(s) of the Company;
"Disposal" the disposal of 53% shareholding in Liann Yee pursuant to the Disposal Agreement;
"Disposal Agreement" the conditional agreement dated 29 January 2015 between the Vendors and the Purchasers in respect of the Disposal;
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"Distribution" has the meaning as more particularly described in the section headed "The Disposal Agreement -Distribution" in this announcement;
"Group" the Company and its subsidiaries;
"HK$" Hong Kong dollars, the lawful currency of Hong Kong;
"Hong Kong" The Hong Kong Special Administrative Region of PRC;
"Li Mao" Li Mao Investment Co. Ltd. (利茂投資股份有限公司), a company incorporated and existing under the laws of Taiwan;
"Listing Rules" the Rules Governing the Listing of Securities on the Stock
Exchange;
"Liann Yee" Liann Yee Production Co. Ltd (聯意製作股份有限公司), a company incorporated and existing under the laws of the Taiwan;
"Liann Yee Group" Liann Yee and its subsidiaries;
"Lien Xin" Lien Xin Investment Co. Ltd. (連信投資股份有限公司), a company incorporated and existing under the laws of Taiwan;
"Neihu Real Estate" the building at the address of 1F, 2F, 3F, 4F, 5F, 5F-1, 6F, 7F,
8F, 9F, 10F, 10F-1, 11F, 11F-1, of 451 and 453, Rueiguang Road, Neihu Dist., Taipei City 114, Taiwan together with all car park lots and the land where the foregoing building, being the existing headquarters of Liann Yee, is located;
"Purchaser(s)" means Li Mao, De En and Lien Xin;
"PRC" the People's Republic of China;
"NT$" New Taiwan dollars, the lawful currency of Taiwan; "percentage ratios" has such meaning as ascribed under the Listing Rules; "Reorganization" has the meaning as more particularly described in the section
headed "The Disposal Agreement - Reorganization" in this announcement;
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"Retained Properties" | Bade Real Estate and Neihu Real Estate, being the properties which shall be transferred out of the Liann Yee Group during Reorganization and prior to Completion; |
"Shareholders' Agreement" | The shareholders' agreement dated 29 January 2015 entered into between Countless, Liann Yee, Li Mao, De En and Lien Xin in relation to, amongst others, the manner of management and operation of the Liann Yee Group; |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited; |
"TVBI" | TVB Investment Limited, a company incorporated and existing under the laws of Bermuda and a direct wholly- owned subsidiary of the Company and is the holder of approximately 47% of all issued shares of Liann Yee as at the date hereof; and |
"Vendors" | Countless and TVBI. |
For the purpose of illustration only, amounts denominated in NT$ have been converted into HK$ at the rate of NT$1 = HK$0.24475 unless otherwise indicated above. Such conversion should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all.
By Order of the Board Adrian MAK Yau Kee Company Secretary
Hong Kong, 29 January 2015
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As at the date of this announcement, the Board comprises:
Chairman and Non-executive DirectorDr. Charles CHAN Kwok Keung
Executive Directors
Mark LEE Po On Group Chief Executive Officer
Cheong Shin Keong General Manager
Mona FONG
Cher WANG Hsiueh Hong Jonathan Milton NELSON Anthony LEE Hsien Pin CHEN Wen Chi
Dr. CHOW Yei Ching GBS
Dr. Raymond OR Ching Fai SBS, JP
Dr. Allan YAP Alternate Director to Dr. Charles CHAN Kwok Keung
Harvey CHANG Hsiao Wei Alternate Director to Cher WANG Hsiueh Hong
Jessica Huang POULEUR Alternate Director to Jonathan Milton NELSON
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