WINTO GROUP (HOLDINGS) LIMITED If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Winto Group (Holdings) Limited (the ''Company''), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or the transfer was effected for transmission to the purchaser or transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.
Winto Group (Holdings) Limited
惠 陶 集 團（ 控 股 ）有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 8238)
MAJOR TRANSACTION AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
Financial adviser to the Company
Capitalised terms used in this cover page shall have the same meanings as those defined in this circular.
A letter from the Board of the Company is set out from pages 5 to 19 of this circular. A notice convening the EGM to be held at Jasmine Room, 3/F., Best Western Plus Hotel Hong Kong, 308 Des Voeux Road West, Hong Kong on Friday, 21 July 2017 at 10 : 00 a.m. or any adjournment is set out from pages 50 to 51 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying form of proxy to the Company's Hong Kong branch share registrar and transfer office, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM. Completion and return of the proxy form shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so desire.
This circular will remain on the ''Latest Company Announcements'' page of the GEM website at http://www.hkgem.com for at least 7 days from the date of its publication and on the website of the Company at http://www.wintogroup.hk/.
6 July 2017
GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.
Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.
Page
Definitions ....... ....... ........ ....... ....... ........ ....... ........ ....... ....... 1
Letter from the Board ... ........ ....... ....... ........ ....... ........ ....... ....... 5
Appendix I - Financial information of the Group 20
Appendix II - Valuation report on the Target Group 21
Appendix III - Letter from Deloitte in relation to the Valuation Report 38
Appendix IV - Letter from Gram Capital in relation to the Valuation Report 40
Appendix V - General Information 41
Notice of Extraordinary General Meeting 50
In this circular, the following expressions shall have the following meanings unless the context requires otherwise:
''Announcement'' the announcement of the Company dated 5 June 2017 in relation to the Disposal
''associate(s)'' has the meaning ascribed thereto under the GEM Listing Rules
''Blue Sky'' Beijing Gas Blue Sky Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are primary listed on the main board of the Stock Exchange and secondary listed on Singapore Exchange Limited and is the sole shareholder of Goldlink Capital
''Blue Sky Shares'' ordinary share(s) in the issued and unissued capital of Blue Sky ''Board'' the board of Directors
''Business Day(s)'' a day on which commercial banks are open for business in Hong Kong (excluding Saturdays, Sundays, public holidays and any weekday on which Typhoon Signal No. 8 or higher is hoisted or a black rain storm warning is given in Hong Kong at any time during 9 : 00 a.m. to 5 : 00 p.m.)
''BVI'' the British Virgin Islands
''Company'' Winto Group (Holdings) Limited, a company incorporated in Cayman Islands with limited liability, the issued Shares of which are listed on GEM (stock code: 8238)
''Completion'' completion of the Disposal
''Completion Date'' the third Business Day after the date of fulfillment of the conditions precedent as set out in the Disposal Agreement
''Consideration'' the consideration for the Disposal in the amount of HK$36,000,000
''Deed of Novation and Assignment''
the deed of novation and assignment entered into between the Company, the Purchaser and Goldlink Capital on 5 June 2017 in respect of the novation and assignment of certain rights and obligations of the Company under the Previous Acquisition Agreement and the Promissory Notes to the Purchaser
''Deep Rich'' Deep Rich Limited (裕深有限公司), a company incorporated in
Hong Kong with limited liability
''Director(s)'' director(s) of the Company
''Disposal'' the disposal of the Sale Share pursuant to the Disposal Agreement
''Disposal Agreement'' the agreement dated 5 June 2017 entered into between the Company and the Purchaser in relation to the Disposal
''EGM'' the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve the Disposal Agreement and the transactions contemplated thereunder
''GEM'' the Growth Enterprise Market of the Stock Exchange ''GEM Listing Rules'' the Rules Governing the Listing of Securities on GEM
''Goldlink Capital'' Goldlink Capital Limited, a company incorporated in the BVI with limited liability
''Group'' the Company and its subsidiaries
''He Chuang'' 寧夏中際合創能源有限公司 (Ning Xia Zhong Ji He Chuang Energy Company Limited*), a company incorporated in the PRC with limited liability
''HK$'' Hong Kong dollars, the lawful currency of Hong Kong
''Hong Kong'' the Hong Kong Special Administrative Region of the PRC
''Independent Third Party(ies)''
third party(ies) and their ultimate beneficial owner(s) (if applicable) which are independent of the Company and its connected persons
''Ji Qi Mao'' 寧夏集氣貓網絡科技有限公司 (Ning Xia Ji Qi Mao Network
Technology Company Limited*), a company incorporated in the PRC with limited liability
''Latest Practicable Date''
3 July 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein
''Long-Stop Date'' 31 July 2017, or such other date as may be agreed between the Purchaser and the Company in writing
''LNG'' liquefied natural gas
''MOU'' the memorandum of understanding dated 28 April 2017 entered into between the Company and the Purchaser in relation to the Disposal
''PRC'' the People's Republic of China
''Previous Acquisition Agreement''
the sale and purchase agreement dated 24 June 2016 entered into between the Company and Goldlink Capital in respect of the acquisition of the entire issued share capital of the Target Company, which was completed on 28 June 2016
''Promissory Notes'' the promissory notes in the aggregate principal amount of HK$33,000,000 issued by the Company on 28 June 2016 in favour of Goldlink Capital in two separate tranches as partial settlement of the consideration under the Previous Acquisition Agreement
''Purchaser'' Luck Ocean Limited, a company incorporated in Hong Kong with limited liability
''Sale Share'' the one ordinary share of the Target Company, representing 100% of the issued share capital of the Target Company
''SFO'' the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
''Share(s)'' ordinary share(s) in the issued and unissued capital of the Company
''Shareholder(s)'' the holder(s) of Shares
''Shenzhen Yushen'' 深圳裕深能源發展有限公司 (Shenzhen Yu Shen Energy Development Company Limited*), a company incorporated in the PRC with limited liability
''Stock Exchange'' The Stock Exchange of Hong Kong Limited
''substantial
shareholder(s)''
has the meaning ascribed thereto under the GEM Listing Rules
''Takeovers Code'' the Code on Takeovers and Mergers issued by the Securities and Futures Commission of Hong Kong
''Target Company'' Lasermoon Limited, a company incorporated in BVI with limited liability
''Target Group'' the Target Company and its subsidiaries
''Yu Bao'' 深圳裕寶網絡有限公司 (Shenzhen Yu Bao Network Company Limited*), a company incorporated in the PRC with limited liability
''Yu Shen Bao'' 深圳裕深寶科技有限公司 (Shenzhen Yu Shen Bao Technology
Company Limited*), a company incorporated in the PRC with limited liability
''%'' or ''per cent.'' percentage or per centum
In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.
If there is any inconsistency between the Chinese names of the PRC entities mentioned in this circular and their English translations, the Chinese names shall prevail.
* For identification purposes only
Winto Group (Holdings) Limited
惠 陶 集 團（ 控 股 ）有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 8238)
Executive Directors: Mr. Mak Wai Kit Ms. Law Shiu Wai Mr. Lan Zhi Cheng
Non-executive Director:
Mr. Liu Kwong Chi Nelson
Independent non-executive Directors:
Mr. Tsang Ho Ka Eugene Ms. Wong Fei Tat
Mr. Pang Siu Yin
Registered office: Cricket Square, Hutchins Drive
PO Box 2681
Grand Cayman KY1-1111
Cayman Islands
Head office and principal place of business:
Room 1001, 10/F Grandmark
No. 10 Granville Road
Tsim Sha Tsui, Kowloon, Hong Kong
6 July 2017
To the Shareholders
Dear Sir or Madam,
MAJOR TRANSACTION
INTRODUCTION
Reference is made to the Announcement regarding the Disposal.
On 5 June 2017 (after trading hours), the Company (as the vender) and the Purchaser entered into the Disposal Agreement, pursuant to which the Company has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Sale Share at the Consideration of HK$36 million.
This circular provides you with information regarding, amongst others, (i) further details of the Disposal Agreement and the transactions contemplated thereunder; (ii) the valuation report of the Target Group; and (iii) the notice of the EGM.
THE DISPOSAL
The Disposal Agreement
Set out below are the principal terms of the Disposal Agreement:
Date
5 June 2017
Parties involved
the Company; and
the Purchaser
To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, (i) the Purchaser and its associates are Independent Third Parties and do not hold any Shares or other convertible securities in the Company as at the Latest Practicable Date; (ii) the Purchaser and its associates do not have any business, financial or other relationship with Goldlink Capital; and (iii) there was no previous transaction or business relationship among the Company, the Purchaser and/or its associates in the previous 12 months which would result in aggregation under Rule
of the GEM Listing Rules.
Subject matter
Pursuant to the Disposal Agreement, the Company has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Sale Share, representing the entire equity interest in the Target Company.
Upon Completion, the Target Company and its subsidiaries will cease to be subsidiaries of the Company and their respective financial results will no longer be consolidated into the financial results of the Group.
Consideration
The Consideration for the Disposal is HK$36 million and shall be satisfied by the Purchaser as follows:
as to HK$3 million, within ten Business Days from the date of the Disposal Agreement as deposit (the ''Deposit'') and part payment of the Consideration in cash to be paid or caused to be paid by the Purchaser in immediately available funds by wire transfer to an account or accounts that have been designated by the Company at least three Business Days prior to the Purchaser making such payment; and
as to HK$33 million, on Completion Date by the Purchaser's assumption of the rights and obligations of the Company under the Promissory Notes in accordance with the terms and conditions of the Deed of Novation and Assignment.
As at the Latest Practicable Date, the Deposit of HK$3 million has been paid by the Purchaser to the Company.
The Consideration was arrived after arm's length negotiations between the Company and the Purchaser after taking into account the preliminary valuation of the Target Group of approximately HK$35 million as at 31 March 2017 prepared by Crowe Horwath (HK) Consulting Valuation Limited, an independent valuer based on income approach. The valuation of the Target Group was HK$35 million as at 31 March 2017. The Board considers that the assumptions made in the financial forecast and the assumptions made and parameters used by the valuer in the Valuation Report are fair and reasonable and factually supportable.
The valuation report on the Target Group (the ''Valuation Report'') is set out in Appendix II to this circular.
The Promissory Notes were issued by the Company to Goldlink Capital on 28 June 2016 to settle part of the consideration payable by the Company to Goldlink Capital upon completion of the acquisition of the entire issued share capital of the Target Company (the ''Previous Acquisition'') on 28 June 2016. By the execution of the Deed of Novation and Assignment, all rights and obligations under each of the Promissory Notes shall be assigned and novated to the Purchaser and the principal amount of each of the Promissory Notes payable by the Company to Goldlink Capital shall be reduced to zero.
Profit guarantee
Under the Deed of Novation and Assignment, the Company shall, with effect immediately after Completion, assign the rights of the Company under the Previous Acquisition Agreement to the Purchaser so as to extend the right to a profit guarantee given by Goldlink Capital in favour of the Company under the Previous Acquisition Agreement to the Purchaser.
Under the Previous Acquisition Agreement, Goldlink Capital guaranteed to the Company that the consolidated net profit after tax of the Target Group (based on its audited financial statements) for each of the two financial years ending 31 December 2017 and 31 December 2018 shall not be less than HK$3,500,000 for each respective year.
in the event that the guaranteed profit has been met or satisfied, no compensation shall be paid by Goldlink Capital to the Company;
in the event that the Target Group records a consolidated profit but fails to meet the guaranteed profit (the shortfall being the difference between the guaranteed profit and the actual profit) in any of the two financial years ending 31 December 2017 and 31 December 2018, Goldlink Capital shall pay the Company a compensation in cash, within 30 days upon the Company serving a written notice to Goldlink Capital after the Company receiving the audited consolidated financial statement of the Target Group on or before 31 March 2018 and 31 March 2019 respectively, or such other dates as the parties to the Previous Acquisition Agreement may from time to time mutually agree in writing, of an amount equivalent to 2.5 times the shortfall for the corresponding year;
in the event of any excess between the guaranteed profit and actual profit earned by the Target Group in the financial year ending 31 December 2017, the amount in excess shall be carried forward as an additional amount of the actual profit earned by the Target Group in the following financial year and no compensation shall be paid by Goldlink Capital to the Company in the financial year ending 31 December 2017;
in the event that the Target Group has not earned any profit or recorded a loss in any of the two financial years ending 31 December 2017 and 31 December 2018, Goldlink Capital shall pay the Company a compensation in cash, within 30 days upon the Company serving a written notice to Goldlink Capital after the Company receiving the audited consolidated financial statement of the Target Group on or before 31 March 2018 and 31 March 2019 respectively, or such other dates as the parties to the Previous Acquisition Agreement may from time to time mutually agree in writing, of an amount of HK$8,750,000, equivalent to 2.5 times the respective guaranteed profit for the corresponding year;
in the event that Goldlink Capital has to, but fails to, pay the Company compensation in cash pursuant to (ii) and (iv) as set out above, Goldlink Capital shall pay the Company an interest at a rate of 3% p.a. calculated with reference to such unpaid amount of compensation, until Goldlink Capital has repaid all the amount due.
Deed of Novation and Assignment
Set out below are the principal terms of the Deed of Novation and Assignment:
Date
5 June 2017
Parties involved
the Company;
the Purchaser; and
Goldlink Capital
Condition precedent
Completion is conditional upon the Company having obtained the approval of the Shareholders at an extraordinary general meeting of the Company for the transactions contemplated under the Disposal Agreement in accordance and compliance with the GEM Listing Rules.
If the above condition has not been satisfied on or before the Long-Stop Date, or such later date as the Company and the Purchaser may agree in writing, the Disposal Agreement shall automatically lapse and neither party shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the terms thereof. The above condition cannot be waived by any party to the Disposal Agreement.
As at the Latest Practicable Date, the above condition has not been fulfilled.
Completion
Upon compliance with or fulfilment of the condition set out in the sub-section headed ''Conditions precedent'' above, Completion shall take place on the Completion Date at the principal place of business of the Company in Hong Kong at 5 : 00 p.m., or such other time and place as the Company and the Purchaser may agree.
To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, Goldlink Capital and their respective associates are Independent Third Parties, save and except for that as at the Latest Practicable Date, the Company holds 6,400,000 Blue Sky Shares, representing approximately 0.07% of the total issued share capital of Blue Sky.
Novation
With effect immediately after Completion, the Company shall novate to the Purchaser all obligations and liabilities of the Company under or in relation to each of the Promissory Notes (the ''PN Novation'').
Winto Group (Holdings) Ltd. published this content on 05 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 19 July 2017 14:18:05 UTC.
Original documenthttp://file.irasia.com/listco/hk/wintogroup/circulars/c170705.pdf
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