connected transaction – loan capitalisation … · a letter from the independent board committee...
TRANSCRIPT
If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult yourlicensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your securities in Polyard Petroleum International Group Limited (the“Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or thetransferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effectedfor transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take noresponsibility for the contents of this circular, make no representation as to its accuracy or completeness andexpressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole orany part of the contents of this circular.
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 08011)
CONNECTED TRANSACTION – LOAN CAPITALISATIONINCREASE IN AUTHORISED SHARE CAPITAL
ANDNOTICE OF EXTRAORDINARY GENERAL MEETING
Financial Adviser to the Company
Independent Financial Adviser to the Independent Board Committeeand the Independent Shareholders
A letter from the Board is set out on pages 4 to 10 of this circular. A letter from the Independent Board Committeecontaining its recommendation in respect of the Loan Capitalisation is set out on page 11 of this circular. A letterfrom the Independent Financial Adviser containing its advice to the Independent Board Committee and theIndependent Shareholders in respect of the Loan Capitalisation is set out on pages 12 to 28 of this circular.
A notice convening an extraordinary general meeting (the “EGM”) of the Company to be held at Carianna (ChiuChow) Restaurant, 1/F., 151 Gloucester Road, Wanchai, Hong Kong on Monday, 4 May 2015 at 12:00 noon is setout on pages 33 to 34 of this circular. Whether or not you are able to attend the EGM, you are requested tocomplete and return the accompanying form of proxy in accordance with the instructions printed thereon anddeposit the same as soon as possible and in any event not later than 48 hours before the time of the EGM or anyadjournment thereof to the Company’s Hong Kong branch share registrar and transfer office, Tricor StandardLimited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the form ofproxy will not preclude you from attending and voting at the EGM or any adjournment thereof should you so wishand in such event, the proxy shall be deemed to be revoked.
This circular will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.comfor at least 7 days from the date of its posting and on the Company’s website at www.ppig.com.hk.
10 April 2015
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
R20.67(4)
R2.19/R14.09(1)R20.68(1)
R17.52AA1B-1
GEM has been positioned as a market designed to accommodate companies to which a higherinvestment risk may be attached than other companies listed on the Stock Exchange. Prospectiveinvestors should be aware of the potential risks of investing in such companies and should make thedecision to invest only after due and careful consideration. The greater risk profile and othercharacteristics of GEM mean that it is a market more suited to professional and other sophisticatedinvestors.
Given the emerging nature of companies listed on GEM, there is a risk that securities traded onGEM may be more susceptible to high market volatility than securities traded on the Main Board andno assurance is given that there will be a liquid market in the securities traded on GEM.
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CHARACTERISTICS OF GEM
R2.20/14.09(1)
Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Letter from Astrum Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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CONTENT
In this circular, the following expressions shall have the following meanings unless the context
requires otherwise:
“associate(s)” has the meaning ascribed thereto in the GEM Listing Rules;
“Board” the board of Directors;
“Business Day(s)” means a day on which banks are open for business to the general
public in Hong Kong, excluding Saturday and Sunday;
“Company” Polyard Petroleum International Group Limited, a company
incorporated under the laws of the Cayman Islands with limited
liability, the Shares of which are listed on the GEM (Stock Code:
8011);
“Completion” completion of the Loan Capitalisation in accordance with the terms
and conditions of the Subscription Agreement;
“connected person(s)” has the meaning ascribed thereto in the GEM Listing Rules;
“Director(s)” director(s) of the Company;
“EGM” an extraordinary general meeting of the Company to be convened
and held to consider and, if thought fit, approve (i) the Subscription
Agreement and the transactions contemplated thereunder including
the grant of the Specific Mandate pursuant to Loan Capitalisation
by the Independent Shareholders; and (ii) the Share Capital Increase
by the Shareholders;
“GEM” Growth Enterprise Market of Stock Exchange;
“GEM Listing Committee” the listing sub-committee appointed by GEM for considering
applications for listing and the granting of listing;
“GEM Listing Rules” the Rules Governing the Listing of Securities on the GEM;
“Group” the Company and its subsidiaries;
“Hong Kong” the Hong Kong Special Administrative Region of the People’s
Republic of China;
“Independent Board Committee” a committee of the Board, comprising all independent non-
executive Directors to advise the Independent Shareholders on the
Subscription Agreement and the transactions contemplated
hereunder including the grant of the Specific Mandate pursuant to
the Loan Capitalisation;
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DEFINITIONS
“Independent Financial Adviser” or
“Astrum Capital”
Astrum Capital Management Limited, a corporation licensed to
carry on type 1 (dealing in securities), type 2 (dealing in futurescontracts), type 6 (advising on corporate finance), and type 9 (asset
management) regulated activities under the SFO and the
independent financial adviser appointed to advise the Independent
Board Committee and the Independent Shareholders in respect of
the terms of the Loan Capitalisation and the transactions
contemplated thereunder;
“Independent Shareholder(s)” Shareholders other than the Subscriber, Mr. Lam and their
respective associates and parties acting in concert with any of them;
“Independent Third Party” a party which is not connected persons of the Company and is
independent of the Company and its connected persons;
“Latest Practicable Date” 2 April 2015, being the latest practicable date for ascertaining
certain information in this circular before printing of this circular;
“Loan Capitalisation” the subscription of the Subscription Shares at the Subscription Price
of HK$0.195 in accordance with the terms and conditions of theSubscription Agreement by capitalising the amount of the loan of
HK$126,750,000;
“Loan Repayment Amount” a total amount of HK$126,750,000 due from the Group to Mr. Lam
and his associates which the Company will use to set off the
Subscription Price payable by the Subscriber under the Subscription
Agreement upon Completion;
“Long Stop Date” 30 June 2015 or such later date as may be agreed in writing
between the parties to the Subscription Agreement;
“Mr. Lam” Mr. Lam Nam, the controlling shareholder of the Company;
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong);
“Share(s)” ordinary share(s) of HK$0.04 each in the share capital of the
Company;
“Share Capital Increase” the proposed increase in the authorised share capital of the
Company from HK$100,000,000 divided into 2,500,000,000
Shares of a par value of HK$0.04 each to HK$200,000,000
divided into 5,000,000,000 Shares of a par value of HK$0.04 each;
“Shareholder(s)” holder(s) of the Share(s);
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DEFINITIONS
“Specific Mandate” the special mandate to be granted by the Shareholders to the Board
at the EGM for the allotment and issue of 650,000,000 SubscriptionShares;
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“Subscriber” Silver Star Enterprises Holdings Inc., a company incorporated
under the laws of the British Virgin Islands and is wholly-owned by
Mr. Lam;
“Subscription Agreement” a subscription agreement dated 11 March 2015 (equivalent to the
Subscription Agreement I as defined in the announcement of the
Company dated 12 March 2015) and entered into between the
Company and the Subscriber in respect of the capitalisation of the
amount of the loan of HK$126,750,000 due from the Group to Mr.
Lam and his associates;
“Subscription Price” the subscription price of HK$0.195 per Subscription Share;
“Subscription Share(s)” the 650,000,000 new Shares to be issued by the Company andsubscribed by the Subscriber pursuant to the terms and conditions
of the Subscription Agreement;
“HK$” Hong Kong dollars, the lawful currency of Hong Kong;
“%” per cent.
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DEFINITIONS
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 08011)
Executive Directors:
Mr. Kuai Wei (Chairman)
Mr. Lai Chun Liang
Mr. Lin Zhang
Independent non-executive Directors:
Mr. Pai Hsi-Ping
Ms. Xie Qun
Mr. Kwan King Chi George
Registered office:
Cricket Square
Hutchins Drive
P.O. Box 2681Grand Cayman KY1-1111
Cayman Islands
Head office and principal
place of business:
Room 801-802, 8/F.,
Shanghai Industrial Investment
Building
48-62 Hennessy Road
Wanchai
Hong Kong
10 April 2015
To the Shareholders
Dear Sir/Madam,
CONNECTED TRANSACTION – LOAN CAPITALISATION,PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL,
ANDNOTICE OF EXTRAORDINARY GENERAL MEETING
INTRODUCTION
References are made to the announcement of the Company dated 12 March 2015 and the
supplemental announcement of the Company dated 13 March 2015 in respect of (1) the Loan Capitalisation
as contemplated under the Subscription Agreement entered into between the Company and the Subscriber on
11 March 2015 whereby the Subscriber agreed to subscribe for, and the Company agreed to issue and allot,
an aggregate of 650,000,000 new Shares at the Subscription Price of HK$0.195 per new Share and to set off
the Subscription Price pro tanto the Loan Repayment Amount due from the Group to Mr. Lam and his
associates in full; (2) the subscription of 100,000,000 new Shares by an Independent Third Party; and (3) the
proposed Share Capital Increase.
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LETTER FROM THE BOARD
R17.56AA1B-36
R20.68(2)
The Loan Capitalisation is subject to the approval of the Independent Shareholders at the EGM. The
Share Capital Increase is subject to the approval of the Shareholders at the EGM. The subscription of100,000,000 new Shares by the Independent Third Party was completed on 18 March 2015.
The purpose of this circular is to provide you with information relating to the Loan Capitalisation, the
Share Capital Increase and the notice of the EGM.
THE SUBSCRIPTION AGREEMENT
Date: 11 March 2015
Parties: The Company, as the issuer
The Subscriber, as the subscriber
The principal business activity of the Subscriber is investment holding.
As at the date of the Subscription Agreement, the Group was indebted to Mr. Lam and his associates
in the sum of approximately HK$131,839,000, which comprised:
(1) a sum of HK$36,352,231.22 for the redemption of the convertible bonds issued by the
Company to Mr. Lam and due on 10 October 2011 (for additional details, please refer to the
Company’s announcement and circular dated 8 July 2011 and 12 August 2011 respectively);
(2) a sum of HK$9,000,000 for the redemption of the promissory note issued by the Company to
Mr. Lam and due on 21 October 2013 (for additional details, please refer to the Company’s
announcement dated 9 September 2011); and
(3) the remaining balance of HK$86,486,768.78 for the financial support of the daily operation of
the Group.
The above indebtedness is unsecured and interest free. The total subscription amount payable by the
Subscriber to the Company under the Subscription Agreement will be satisfied by way of the capitalisation
of the loan due from the Group to Mr. Lam and his associates in an aggregate sum of HK$126,750,000 by
the allotment and issue of the 650,000,000 Subscription Shares at the Subscription Price of HK$0.195 per
Subscription Share to the Subscriber. After Completion, the total amount of loan due from the Group to Mr.
Lam and his associates will be reduced by HK$126,750,000.
Assuming that there will be no change in the issued share capital of the Company between the Latest
Practicable Date and Completion, the 650,000,000 Subscription Shares represent approximately 31.90% of
the issued share capital of the Company as at the Latest Practicable Date and approximately 24.19% of the
issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares.
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LETTER FROM THE BOARD
R20.68(3)(4)
A1B-10(1)
Conditions
The completion of the Subscription Agreement is conditional upon:
(a) the passing of the ordinary resolution by the Independent Shareholders approving, inter alia,
the Subscription Agreement and the transactions contemplated thereunder;
(b) the GEM Listing Committee of the Stock Exchange having granted approval for the listing of,
and permission to deal in, the Subscription Shares; and
(c) the Subscriber being satisfied in its absolute discretion, from the date of the Subscription
Agreement and at any time before completion of the Subscription Agreement, that the
warranties as stated in the Subscription Agreement having remained true and accurate in all
material respects, not misleading or in breach in any material respect and that no events have
suggested that there were any breach in any material respect of any of the above warranties or
other provisions of the Subscription Agreement by the Company.
The Company undertakes to use its best endeavours to procure the satisfaction of the conditions
precedent as soon as practicable, but in any event not later than 4:00 p.m. on the Long Stop Date.
In the event that not all the conditions precedent have been satisfied by 4:00 p.m. on the Long Stop
Date (or such later date to be agreed between the parties hereto in writing), the Subscription Agreement shall
terminate, lapse and be of no further effect, and the Company and the Subscriber shall be released from all
obligations hereunder and no party shall have any claim against the other for any costs or losses save in
respect of any antecedent breaches of the Subscription Agreement.
Completion
Completion of the Subscription Agreement will take place within 3 Business Days after the
conditions of the Subscription Agreement having been fulfilled.
Subscription Price
The Subscription Price of HK$0.195 per Subscription Share represents:
(i) a premium of approximately 2.63% over the closing price of HK$0.190 per Share as quoted on
the Stock Exchange at the date of the Subscription Agreement;
(ii) a premium of approximately 4.84% over the average closing price of HK$0.186 per Share as
quoted on the Stock Exchange for the last five consecutive trading days up to and including the
date of the Subscription Agreement;
(iii) a premium of approximately 3.94% over the average closing price of approximately
HK$0.1876 as quoted on the Stock Exchange for the last ten consecutive trading days up to
and including the date of the Subscription Agreement;
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LETTER FROM THE BOARD
(iv) a premium of approximately 414.51% over the audited net asset value of the Company as at 31
December 2014 of approximately HK$0.0379 per Share (calculated by dividing the auditedequity attributable to owners of the Company as at 31 December 2014 of approximately
HK$73,412,000 as shown in the 2014 Annual Report by the total number of Shares in issue as
at 31 December 2014 of 1,937,537,811 Shares); and
(v) a premium of approximately 4.84% over the closing price of HK$0.186 per Share as quoted on
the Stock Exchange on the Latest Practicable Date.
The Subscription Price was arrived at after arm’s length negotiations between the Company and the
Subscriber with reference to the current market conditions and the prevailing market price of the Shares. The
Directors consider that the Subscription Price and the terms and conditions of the Subscription Agreement
are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.
PROPOSED GRANT OF SPECIAL MANDATE TO ISSUE THE NEW SUBSCRIPTION SHARES
The Company proposes to seek the grant of the Specific Mandate from the Independent Shareholders
at the EGM to be convened and held by the Company for allotment and issue of the Subscription Shares.
RIGHTS
The Subscription Shares, when allotted and issued, will rank pari passu in all respects among
themselves and with the Shares in issue on the date of allotment and issue of the Subscription Shares,
including as to the right to receive all dividends and distributions which may be declared made or paid after
the completion date of the Subscription Agreement and will be issued free and clear of all liens,
encumbrances, equities or other third party rights.
LISTING
Application will be made by the Company to the GEM Listing Committee of the Stock Exchange for
the grant of the listing of, and permission to deal in, the Subscription Shares.
REASONS FOR THE LOAN CAPITALISATION
The Group is principally engaged in the exploration, exploitation and production of oil, natural gas
and coal, and trading of petroleum-related products.
As at the date of the Subscription Agreement, the Group was indebted to Mr. Lam and his associatesin the sum of approximately HK$131,839,000 and the Loan Repayment Amount of HK$126,750,000 will be
settled by way of set-off against the Subscription Price after the Completion. The Directors believe that it is
in the interests of the Company to capitalise the Loan Repayment Amount due from the Group to Mr. Lam
and his associates into share capital as the Subscription Agreement can alleviate the repayment pressure of
the Group and avoid unnecessary cash outflows from the Group in the future.
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LETTER FROM THE BOARD
R14.09(5)(b)
A1B-9(1)
R20.67(1)(2)(3)
The Board also considers that following the completion of the Subscription Agreement, it will enlarge
the capital base of the Company and will reduce the gearing level of the Group thereby strengthening thefinancial position of the Group. It is expected that the Loan Capitalisation will not have any material adverse
impact on the operation and financial position of the Group.
The Board considers that the Subscription Agreement is entered into upon normal commercial terms
following arm’s length negotiations between the parties to the Subscription Agreement and that the
conditions and terms of the Subscription Agreement are fair and reasonable and are in the interests of the
Company and the Shareholders as a whole.
SHAREHOLDING STRUCTURE
Set out below are the shareholding structures of the Company (i) as at the Latest Practicable Date;
and (ii) immediately after the issue and allotment of the Subscription Shares upon completion of the
Subscription Agreement:
As at the Latest Practicable DateImmediately after the completion of
the Subscription AgreementNumber of Shares Approximate % Number of Shares Approximate %
Mr. Lam and his associates 1,256,155,931 61.65 1,906,155,931 70.93
Public 781,381,880
(Note)
38.35 781,381,880 29.07
Total 2,037,537,811 100.00 2,687,537,811 100.00
Note: Includes the 100,000,000 new Shares issued to Big Concept Technology Limited (as the subscriber) on 18
March 2015 upon completion of the subscription agreement entered into between the Company (as the issuer)
and Big Concept Technology Limited on 11 March 2015, details of which were set out in the announcements of
the Company dated 12 March 2015, 13 March 2015 and 18 March 2015.
GEM LISTING RULES IMPLICATION
As at the Latest Practicable Date, Mr. Lam was a substantial Shareholder interested in 1,256,155,931
Shares, representing approximately 61.65% of the issued share capital of the Company. As such, Mr. Lam is
a connected person of the Company and therefore the Loan Capitalisation constitutes a connected transaction
of the Company under Chapter 20 of the GEM Listing Rules. As certain of the relevant applicable
percentage ratios in respect of the Loan Capitalisation calculated in accordance with the GEM Listing Rulesare more than 25%, and the Loan Repayment Amount in respect of the Loan Capitalisation is more than
HK$10,000,000, the Loan Capitalisation is subject to the approval, as a connected transaction of the
Company under the GEM Listing Rules, by the Independent Shareholders at the EGM to be convened at
which Mr. Lam and his associate(s) are required to abstain from voting on the resolution approving the Loan
Capitalisation and the transactions contemplated thereunder. None of the Directors has a material interest in
the Loan Capitalisation and hence no Director is required to abstain from voting on such board resolutions in
accordance with the GEM Listing Rules.
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LETTER FROM THE BOARD
R2.28(1)R20.68(12)
The Company has established an Independent Board Committee to advise the Independent
Shareholders and the Independent Financial Adviser has been appointed to advise the Independent BoardCommittee and the Independent Shareholders in respect of the Loan Capitalisation and the transactions
contemplated thereunder.
PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL
The current authorised share capital of the Company is HK$100,000,000 divided into 2,500,000,000
Shares of a par value of HK$0.04 each, and the existing issued share capital of the Company as of the Latest
Practicable Date was HK$81,501,512.44 divided into 2,037,537,811 Shares. In order to have sufficient
authorised share capital to accommodate the allotment of Subscription Shares pursuant to the Loan
Capitalisation and future expansion and growth of the Company, the Board proposes to increase the
authorised share capital of the Company to HK$200,000,000 divided into 5,000,000,000 Shares of a par
value of HK$0.04 each. The Share Capital Increase is subject to the approval of the Shareholders by way of
an ordinary resolution at the EGM.
EGM
The notice of the EGM is set out on pages 33 to 34 of this circular. A form of proxy for use at the
EGM is enclosed. Whether or not the Shareholders are able to attend the EGM, the Shareholders arerequested to complete and return the enclosed form of proxy in accordance with the instructions printed
thereon to the office of the branch share registrar of the Company in Hong Kong, Tricor Standard Limited at
Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not
less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion
and return of the form of proxy will not preclude the Shareholders from attending and voting in person at
the EGM or any adjournment thereof should the Shareholders so wish and in such event, the proxy shall be
deemed to be revoked.
RECOMMENDATION
The Directors (including all the independent non-executive Directors) are of the view that the Loan
Capitalisation and the proposed Share Capital Increase are fair and reasonable, and are in the interests of the
Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote
in favour of the ordinary resolutions to be proposed at the EGM to approve the Loan Capitalisation and the
proposed Share Capital Increase.
Your attention is drawn to (i) the letter from the Independent Board Committee; and (ii) the letter
from the Independent Financial Adviser of this circular.
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LETTER FROM THE BOARD
A1B-22(1)
ADDITIONAL INFORMATION
Your attention is also drawn to the addition information set out in the appendix to this circular.
Yours faithfully,
By Order of the Board
Polyard Petroleum International Group LimitedKuai WeiChairman
- 10 -
LETTER FROM THE BOARD
The following is the text of the letter of recommendation, prepared for the purpose of incorporation in
the circular, from the Independent Board Committee to the Independent Shareholders regarding the Loan
Capitalisation.
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 08011)
10 April 2015
To the Independent Shareholders
Dear Sir or Madam,
CONNECTED TRANSACTION – LOAN CAPITALISATION
We refer to the circular (the “Circular”) dated 10 April 2015 issued by the Company of which this
letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the
Circular unless specified otherwise.
We have been formed to advise the Independent Shareholders in relation to the terms of the Loan
Capitalisation and the transactions contemplated thereunder. Astrum Capital has been appointed by theCompany as the Independent Financial Adviser to advise us in this regard. Details of its advice, together
with the principal factors and reasons it has taken into consideration in giving its advice, are contained in its
letter set out on pages 12 to 28 of the Circular. Your attention is also drawn to the letter from the Board and
the additional information set out in the appendix to the Circular.
After taking into account the factors and reasons considered by the Independent Financial Adviser
and its conclusion and advice, we concur with their views and consider that the terms of the Loan
Capitalisation and the transactions contemplated thereunder are fair and reasonable so far as the Company
and the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as
a whole. Accordingly, we recommend that the Independent Shareholders should vote in favor of the
resolution to be proposed at the EGM to approve the Loan Capitalisation and the transactions contemplated
thereunder.
Yours faithfully
For and on behalf of the
Independent Board CommitteeMr. Pai Hsi-Ping Ms. Xie Qun Mr. Kwan King Chi George
Independent non-executive Directors
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LETTER FROM THE INDEPENDENT BOARD COMMITTEE
R20.68(6)
The following is the full text of the letter from Astrum Capital setting out the advice to the
Independent Board Committee and the Independent Shareholders in respect of the Loan Capitalisation,
which has been prepared for the purpose of inclusion in this circular.
11/F, 122 QRC,Nos. 122-126 Queen’s Road Central, Hong Kong
10 April 2015
To the Independent Board Committee and
the Independent Shareholders of
Polyard Petroleum International Group Limited
Dear Sirs,
CONNECTED TRANSACTION: LOAN CAPITALISATION
INTRODUCTION
We refer to our engagement as the independent financial adviser to make recommendations to the
independent board committee (the “Independent Board Committee”) and the independent shareholders (the
“Independent Shareholders”) of Polyard Petroleum International Group Limited (the “Company”) in
relation to the subscription of 650,000,000 new shares of the Company at the subscription price of
HK$0.195 per share in accordance with the terms and conditions of the subscription agreement (the
“Subscription Agreement”) dated 11 March 2015 entered into between the Company and Silver Star
Enterprises Holdings Inc. (the “Subscriber”) by capitalising the amount of the loan of HK$126,750,000 (the
“Loan Capitalisation”). Details of the Loan Capitalisation are disclosed in the announcements of the
Company dated 12 March 2015 and 13 March 2015 (the “Announcements”) and in the letter from the board(the “Letter from the Board”) set out on pages 4 to 10 of the circular of the Company dated 10 April 2015
(the “Circular”) to its shareholders, of which this letter forms part. Capitalised terms used in this letter shall
have the same meanings as defined in the Circular unless the context otherwise requires.
On 11 March 2015 (after trading hours), the Company and the Subscriber entered into the
Subscription Agreement pursuant to which the Subscriber agreed to subscribe for, and the Company agreed
to allot and issue, an aggregate of 650,000,000 new Shares at the Subscription Price of HK$0.195 per new
Share and to set off the aggregate Subscription Price of the Subscription Shares pro tanto the Loan
Repayment Amount due from the Group to Mr. Lam and his associates in full. As at the date of the
Subscription Agreement, the Group was indebted to Mr. Lam and his associates in the sum of approximately
HK$131,839,000 and the Loan Repayment Amount of HK$126,750,000 will be settled after Completion.
- 12 -
LETTER FROM ASTRUM CAPITAL
R20.68(6)A1B-5(3)
Given Mr. Lam was a substantial Shareholder interested in 1,256,155,931 Shares, representing
approximately 61.65% of the issued share capital of the Company as at the Latest Practicable Date, Mr. Lamis a connected person of the Company and therefore the Loan Capitalisation constitutes a connected
transaction of the Company under Chapter 20 of the GEM Listing Rules. As certain of the relevant
applicable percentage ratios in respect of the Loan Capitalisation calculated in accordance with the GEM
Listing Rules are more than 25%, and the Loan Repayment Amount in respect of the Loan Capitalisation is
more than HK$10,000,000, the Loan Capitalisation is subject to approval, as a connected transaction of the
Company under the GEM Listing Rules, by the Independent Shareholders at the EGM to be convened at
which Mr. Lam and his associates are required to abstained from voting on the resolution approving the
Loan Capitalisation and the transactions contemplated thereunder. None of the Directors has a material
interest in the Loan Capitalisation and hence no Director is required to abstain from voting on such board
resolutions in accordance with the GEM Listing Rules.
An Independent Board Committee, comprising all the independent non-executive Directors, namely
Mr. Pai Hsi-Ping, Ms. Xie Qun and Mr. Kwan King Chi George, has been formed to advise the Independent
Shareholders whether or not (i) the terms of the Subscription Agreement are on normal commercial terms,
and fair and reasonable as far as the Independent Shareholders are concerned; and (ii) the Loan
Capitalisation is in the interests of the Company and the Shareholders as a whole, and to make
recommendations to the Independent Shareholders in respect thereof. We, Astrum Capital Management
Limited, have been appointed as the independent financial adviser to advise the Independent BoardCommittee and the Independent Shareholders in this regard.
BASIS OF OUR OPINION
In formulating our opinion and recommendations, we have reviewed, inter alia, the Announcements,
the Circular, the Subscription Agreement, the annual report of the Company for the year ended 31 December
2013 (the “2013 Annual Report”) and the annual report of the Company for the year ended 31 December
2014 (the “2014 Annual Report”). We have also reviewed certain information provided by the management
of the Company (the “Management”) relating to the operations, financial conditions and prospects of the
Group. We have (i) considered such other information, analyses and market data which we deemed relevant;
and (ii) conducted verbal discussions with the Management regarding the Loan Capitalisation, the
businesses, financial position and future outlook of the Group. We have assumed that such information and
statements, and any representation made to us, are true, accurate and complete in all material respects as of
the date hereof and we have relied upon them in formulating our opinion.
All Directors collectively and individually accept full responsibility for the purpose of giving
information with regard to the Company in the Announcements and the Circular and, having made all
reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in theAnnouncements and the Circular is accurate and complete in all material respects and not misleading or
deceptive, and there are no other matters not contained in the Announcements and the Circular, the omission
of which would make any statement herein or in the Announcements and the Circular misleading. We
consider that we have performed all necessary steps to enable us to reach an informed view regarding the
Loan Capitalisation and to justify our reliance on the information provided so as to provide a reasonable
basis of our opinion. We have no reasons to suspect that any material information has been withheld by the
Directors or the Management, or is misleading, untrue or inaccurate. We have not, however, for the purpose
of this exercise, conducted any independent detailed investigation or audit into the businesses or affairs or
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LETTER FROM ASTRUM CAPITAL
future prospects of the Group. Our opinion is necessarily based on financial, economic, market and other
conditions in effect, and the information made available to us, as at the Latest Practicable Date. This letter isissued to provide the information for the Independent Board Committee and the Independent Shareholders
solely in connection with their consideration of the Loan Capitalisation. Except for the inclusion in the
Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall it be used for any other
purposes, without our prior written consent.
PRINCIPAL FACTORS AND REASONS CONSIDERED
In arriving at our advice with regard to the Loan Capitalisation, we have taken into consideration the
following factors and reasons:
I. Information of the Group
A. Business of the Group
According to the Letter from the Board, the Group is principally engaged in the exploration,
exploitation and production of oil, natural gas and coal, and trading of petroleum-related products.
Currently, the Group is participating in three energy exploration and exploitation projects inthe Philippines, namely, Philippines Central Luzon Gas Project, Philippines San Miguel Coal Mine
Project and Philippines South Cebu Oil and Gas Project (collectively, the “Projects”). Brief
description of each of the Projects as extracted from the 2014 Annual Report was set out as follow:
(i) Philippines Central Luzon Gas Project
The project’s original 2012 work program was for re-entry work at the Victoria-3 well
and drilling a new well. However, the re-entry activity and the drilling of a new well were
delayed due to rig availability. In 2012, project management gave up the re-entry work and,
instead, conducted a further support study for a new drilling plan. The support study and new
well design has continued into 2013. As a result of the above-described delay, applications for
extensions of the current exploration sub-phase to 28 February 2016 have been granted by the
Department of Energy, on condition that one exploration well will be drilled by end of this
sub-phase. It is intended that the rig currently sourced for the Cebu project will be mobilized
to Central Luzon to drill the well in 2015.
(ii) Philippines San Miguel Coal Mine Project
The project has progressed into the development phase. Construction of the phase-2
road, which will extend the vehicle-assessable road into the initial mining area, began in the
second quarter 2011 but was suspended pending receipt of clearance from governmental
agencies overseeing environmental protection. Construction can only be resumed upon the
grant of tree cutting permit. A moratorium on the work commitments for the project has been
granted by the Department of Energy to 31 December 2015.
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LETTER FROM ASTRUM CAPITAL
(iii) Philippines South Cebu Oil and Gas Project
The project (“SC49”) is situated at the southern part of Cebu, central Philippines. Oil
and gas have been discovered in previous drillings. China International Mining Petroleum
Company Limited (“CIMP”) acquired 80% participating interests of SC49 and became the
operator of SC49 in July 2009. The Group indirectly acquired 51% of CIMP’s issued capital in
October 2012, and an additional 12% in April 2014, bringing the effective interest in the
project to 50.4% after the latest acquisition.
CIMP signed a drilling service agreement with a contractor in March 2014 for SC49. In
the third quarter of 2014, site construction for the first well was completed and the contractor
mobilized the rig components and materials to the well site in Cebu. SC49 spudded its first
appraisal well, Polyard-2 (“P2”), on 22 October, 2014 under the approval of Department of
Energy. During 47 days of safe operations, the Group and its contractor’s drilling crew
conquered such technical difficulties as abnormally high pressure encountered in Maingit
Sandstone oil and gas zones, successfully conducted drilling, mud logging, wireline logging
and cementing under the original well design of a total depth of 1,240 meters, and completed
the third section drilling at 1,252 meters.
P2 well also underwent wireline logging activities on 2 December 2014. The Group’son-site senior exploration geologist, well test geologists and contractor’s well data
interpretation experts made comprehensive analysis and interpretation on the mud logging
and wireline logging results, and confirmed that all hydrocarbon zones combined reached a net
pay thickness of 82 meters, which demonstrated that the block has good oil and gas reservoirs
and great potential for oil and gas development.
P2 well successfully completed oil testing operations on 2 February 2015. After
carrying out different tests, it has proven that the block has tested gas with daily production
capacity of over 80,000 cubic meters. The Group’s team now is conducting preparation work
to turn the well into a production well.
The drilling rig has been moved to Block No. 6 in mid February 2015 to drill Polyard-1
well (“P1”). Based on the geological design, P1 will explore mainly for oil zones.
An extension of the current exploration sub-phase to 1 March 2016 has been granted by
Department of Energy to allow CIMP to complete all pre-development activities necessary for
evaluating the petroleum resource and initiating transition of the project to development/
commercial production stage.
One of the major steps leading to development includes securing an Environment
Compliance Certificate from Department of Environment and Natural Resources by
demonstrating the project’s benign impact to the environment and affected communities.
Professionals have been retained to conduct scientific impact assessments and host public
consultations with stakeholders in the field. Project production is expected to begin in the third
quarter of 2015.
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LETTER FROM ASTRUM CAPITAL
On 19 March 2015, the Group signed a memorandum of agreement with a leading
petroleum distributor, Unioil Petroleum Philippines, Inc. to jointly develop and explore apotential strategic alliance for the sale of natural gas in the Philippines.
B. Financial information of the Group
Set forth below are the audited consolidated financial information of the Group for the three
years ended 31 December 2012, 31 December 2013 and 31 December 2014 (“FY2012”, “FY2013”and “FY2014”, respectively) as extracted from the 2013 Annual Report and the 2014 Annual Report:
Table 1: Financial information of the Group
FY2012 FY2013 FY2014(audited) (audited) (audited)
HK$’000 HK$’000 HK$’000
Turnover 462 – –
Operating loss (21,973) (16,389) (20,050)
Loss before tax (70,569) (48,379) (1,120,483)
(Loss) attributable to owners of theCompany for the year (61,342) (40,104) (1,076,075)
As at 31December
2012
As at 31December
2013
As at 31December
2014(audited) (audited) (audited)
HK$’000 HK$’000 HK$’000
Cash and bank balances 1,668 1,381 2,779
Current assets 18,161 18,200 33,802
Current (liabilities) (34,340) (35,198) (140,350)
Net current (liabilities) (16,179) (16,998) (106,548)
Total assets 1,491,640 1,469,271 274,724
Total (liabilities) (200,797) (225,213) (149,656)
Equity attributable to owners of the
Company 1,158,844 1,117,858 73,412
Total (borrowings) (Note 1) (187,832) (211,580) (138,905)
Gearing ratio (Note 2) 15% 18% 117%
Notes:
1. Total borrowings comprise amount due to directors, amount due to a shareholder, bank borrowing,
convertible bonds, promissory note and obligations under finance leases.
2. Gearing ratio is calculated based on the Group’s net debt to the Shareholders’ equity.
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LETTER FROM ASTRUM CAPITAL
(i) For the year ended 31 December 2013 (i.e. FY2013)
The Group did not generate any turnover in FY2013, as compared to a slight turnover of
approximately HK$462,000 in FY2012. Due to the reduction of the administrative and other
operating expenses, the Group’s operating loss narrowed from approximately HK$22.0 million
in FY2012 to approximately HK$16.4 million in FY2013. In FY2013, the Group recorded loss
attributable to owners of the Company of approximately HK$40.1 million. Such loss was
mainly attributable to (i) an impairment loss on the Philippines San Miguel Coal Mine Project
of approximately HK$16.8 million; and (ii) an impairment loss of approximately HK$11.1
million on the Philippines South Cebu Oil and Gas Project, and partially offset by a gain on
derecognition of convertible bonds of approximately HK$11.0 million.
As at 31 December 2013, the Group’s total assets, total liabilities and equity attributable
to owners of the Company were approximately HK$1,469.3 million, approximately HK$225.2
million and approximately HK$1,117.9 million, respectively. The Group’s total assets mainly
comprised (i) interests in joint ventures of approximately HK$1,383.0 million; (ii) interests in
associates of approximately HK$44.0 million; and (iii) deferred exploration expenditure of
approximately HK$23.7 million, while the Group’s total liabilities was principally attributable
to (i) outstanding convertible bonds with carrying amount of approximately HK$123.2 million;
and (ii) amount due to Mr. Lam of approximately HK$80.3 million, which is unsecured andinterest-free. Without taking into account the non-current assets and the non-current liabilities,
the Group recorded a net current liabilities position of approximately HK$17.0 million as at 31
December 2013.
As at 31 December 2013, the Group’s total borrowings and gearing ratio were
approximately HK$211.6 million and approximately 18%, respectively.
(ii) For the year ended 31 December 2014 (i.e. FY2014)
In FY2014, the Group did not record any turnover. Operating loss of the Group
increased from approximately HK$16.4 million in FY2013 to approximately HK$20.1 million
in FY2014. In FY2014, the Group recorded loss attributable to owners of the Company of
approximately HK$1,076.1 million, representing an increase of over 25 times as compared to
that in FY2013. Such intensive deterioration was principally due to the loss on disposal of the
entire issued share capital of China Sino Oil Company Limited (the “China Sino OilDisposal”) of approximately HK$962.7 million.
As a result of the China Sino Oil Disposal, the Group’s total assets decreased materiallyfrom approximately HK$1,469.3 million as at 31 December 2013 to approximately HK$274.7
million as at 31 December 2014. Given that the consideration of HK$120 million for the China
Sino Oil Disposal was settled by way of set off against the convertible bonds in the amount of
HK$120 million due from the Company to China International Mining Holding Company
Limited (a company legally and beneficially owned by Mr. Lam), the Group’s total liabilities
decreased from approximately HK$225.2 million to approximately HK$149.7 million. Due to
the substantial reduction of the Group’s total assets, equity attributable to owners of the
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LETTER FROM ASTRUM CAPITAL
Company decreased by approximately 93.4% to approximately HK$73.4 million as at 31
December 2014. The Group’s net current liabilities further increased to approximatelyHK$106.5 million as at 31 December 2014.
The Group’s total borrowings reduced from approximately HK$211.6 million as at 31
December 2013 to approximately HK$138.9 million as at 31 December 2014. Nevertheless, the
Group’s gearing ratio deteriorated from approximately 18% as at 31 December 2013 to
approximately 117% as at 31 December 2014 due to the significant decrease in the
Shareholders’ equity.
II. Background of, reasons for and benefits of the Loan Capitalisation
The Group is principally engaged in the exploration, exploitation and production of oil, natural gas
and coal, and trading of petroleum-related products. Currently, the Group is participating in three energy
exploration and exploitation projects in the Philippines (details of which were disclosed in the sub-paragraph
headed “A. Business of the Group” under the paragraph headed “I. Information of the Group” above).
In light of meeting the capital requirements for operating the Projects, the Group has been from time
to time raising funds from the financial market, and in the meanwhile, obtaining financial assistance from a
substantial Shareholder, Mr. Lam. According to the Letter from the Board, as at the date of the SubscriptionAgreement, the Group was indebted to Mr. Lam and his associates in the sum of approximately HK$131.8
million (the “Lam’s Indebtedness”), which comprised (i) a sum of HK$36,352,231.22 for the redemption of
the convertible bonds issued by the Company to Mr. Lam and due on 10 October 2011; (ii) a sum of
HK$9,000,000 for the redemption of the promissory note issued by the Company to Mr. Lam and due on 21
October 2013; and (iii) the remaining balance for financial support of the daily operation of the Group.
With an aim of strengthening the Group’s financial position, on 11 March 2015 (after trading hours),
the Company and the Subscriber entered into the Subscription Agreement pursuant to which the Subscriber
agreed to subscribe for, and the Company agreed to allot and issue, an aggregate of 650,000,000 new Shares
at the Subscription Price of HK$0.195 per Share. The total subscription amount payable by the Subscriber to
the Company under the Subscription Agreement will be satisfied by way of the capitalisation of the Loan
Repayment Amount. Upon Completion, the Loan Repayment Amount of HK$126,750,000 will be settled,
and the Lam’s Indebtedness will be reduced substantially from approximately HK$131.8 million to
approximately HK$5.1 million assuming that there will be no additional indebtedness due from the
Company to Mr. Lam and his associates during the period commencing from the date of the Subscription
Agreement and up to the date of Completion.
We have discussed with the Management about the Lam’s Indebtedness, and were advised that theLam’s Indebtedness is unsecured and interest-free, and there is no specific repayment schedule agreed
between the Company and Mr. Lam in respect of the Lam’s Indebtedness. Mr. Lam and his associates have
undertaken that they would not demand the Group for the repayment of the Lam’s Indebtedness until the
Company has sufficient funds to meet its operations and pay any financial obligations as and when they fall
due. Having considered the financial position of the Group as detailed in the sub-paragraph headed “B.
Financial information of the Group” under the paragraph headed “I. Information of the Group” above, in
particular, (i) the Group recorded continual loss for the last three financial years ended 31 December 2014;
(ii) the Group recorded a net current liabilities position of approximately HK$106.5 million as at 31
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LETTER FROM ASTRUM CAPITAL
December 2014; (iii) the Group’s total borrowings amounted to approximately HK$138.9 million as at 31
December 2014; and (iii) the Lam’s Indebtedness represents approximately 47.4 times of the Group’s cashand bank balances of HK$2.8 million as at 31 December 2014, we consider that the Group may not be able
to repay the Lam’s Indebtedness unless the Group obtains new funds from equity fund raising or debt
financing. We concur with the Management’s view that the Loan Capitalisation will, on one hand, alleviate
the repayment pressure of the majority portion of the Lam’s Indebtedness on the Group without cash outlay
and, on the other hand, lower the gearing ratio of the Group thereby strengthening the Group’s financial
position.
Upon enquiry, the Management advised us that they had considered alternative means of repaying the
Lam’s Indebtedness (such as by way of bank borrowings and equity financing) other than the Loan
Capitalisation. Given the current financial performance and position of the Group (in particular, the
continual loss-making position for the last three financial years ended 31 December 2014 and the high
gearing ratio of approximately 117% as at 31 December 2014), the Management believes that it is difficult
for the Group to obtain a considerable amount of borrowing from banks at a reasonable interest rate.
Furthermore, bank borrowing will inevitably increase interest burden and further deteriorate the gearing
level of the Group, whereas the Lam’s Indebtedness is unsecured and interest-free. In respect of equity
financing (such as placing of Shares, open offer and rights issue), the Management are of the view that (i) it
may be difficult for the Group to secure placing agent or underwriter for placing of Shares, open offer or
rights issue without offering deep discount to the issue price to attract the Shareholders’ subscription in lightof the Group’s current unfavorable financial performance and position; (ii) the success of equity financing is
highly dependent on the then market condition and sentiment; (iii) time taken for completion of open offer
or rights issue is considerably long; and (iv) cost for documentation works, administrative and professional
fees for equity financing is relatively high as compared to the Loan Capitalisation. On the contrary, the Loan
Capitalisation will (i) alleviate the repayment pressure of the majority portion of the Lam’s Indebtedness on
the Group without cash outlay; (ii) enlarge the capital base of the Company; and (iii) moderate the Group’s
gearing level. As such, the Management is of the view that the Loan Capitalisation is a more desirable
means for the Group to settle the Loan Repayment Amount.
Notwithstanding that the Loan Capitalisation will incur dilution effect on the shareholding of the
existing Shareholders as discussed below, after taking into consideration (i) the Loan Capitalisation will
alleviate the repayment pressure of the majority portion of the Lam’s Indebtedness on the Group without
cash outlay and allow the Group to retain working capital for its daily operation and future business
development; (ii) the Loan Capitalisation will lower the gearing ratio of the Group thereby strengthening the
Group’s financial position, which will, in turn, place the Group at a better position to negotiate and obtain
fund raising arrangements or debt financing for its business development and expansion in future when
necessary; (iii) the Loan Capitalisation will enlarge the Company’s capital base; (iv) the Loan Capitalisation,
to a certain extent, reflects Mr. Lam’s commitment and confidence on the long-term prosperity of the Group;and (v) the terms of the Subscription Agreement are fair and reasonable so far as the Independent
Shareholders are concerned (please refer to the paragraph headed “III. Principal terms of the Subscription
Agreement” below for our relevant analysis), we are of the view that the Loan Capitalisation is in the
interests of the Company and the Shareholders as a whole.
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LETTER FROM ASTRUM CAPITAL
III. Principal terms of the Subscription Agreement
The table below summarises the major terms of the Subscription Agreement:
Date: 11 March 2015 (after trading hours)
Issuer: The Company
Subscriber: Silver Star Enterprises Holdings Inc. (i.e. the Subscriber), a
company wholly owned by Mr. Lam
Number of Subscription Shares: The Subscriber agreed to subscribe for, and the Company agreed
to allot and issue, an aggregate of 650,000,000 new Shares.
Assuming that there will be no change in the issued share
capital of the Company between the Latest Practicable Date and
Completion, the 650,000,000 Subscription Shares represent (i)
approximately 31.90% of the issued share capital of the
Company as at the Latest Practicable Date; and (ii)
approximately 24.19% of the issued share capital of theCompany as enlarged by the allotment and issue of the
Subscription Shares.
Subscription Price: HK$0.195 per Subscription Share
Analysis on the Subscription Price
The Subscription Price of HK$0.195 per Subscription Share represents:
(i) a premium of approximately 2.63% over the closing price of HK$0.190 per Share as
quoted on the Stock Exchange on the date of the Subscription Agreement (being 11
March 2015, the “Last Trading Day”);
(ii) a premium of approximately 4.84% over the average closing price of HK$0.186 per
Share as quoted on the Stock Exchange for the last five consecutive trading days up to
and including the Last Trading Day;
(iii) a premium of approximately 3.94% over the average closing price of HK$0.1876 perShare as quoted on the Stock Exchange for the last ten consecutive trading days up to
and including the Last Trading Day;
(iv) a premium of approximately 414.5% over the audited net asset value of the Company as
at 31 December 2014 of approximately HK$0.0379 per Share (calculated by dividing
the audited equity attributable to owners of the Company as at 31 December 2014 of
approximately HK$73,412,000 as shown in the 2014 Annual Report by the total number
of Shares in issue as at 31 December 2014 of 1,937,537,811 Shares); and
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LETTER FROM ASTRUM CAPITAL
(v) a premium of approximately 4.84% over the closing price of HK$0.186 per Share as
quoted on the Stock Exchange as at the Latest Practicable Date.
According to the Letter from the Board, the Subscription Price was arrived at after arm’s
length negotiations between the Company and the Subscriber with reference to the current market
conditions and the prevailing market price of the Shares. The Directors consider that the Subscription
Price and the terms and conditions of the Subscription Agreement are fair and reasonable and are in
the interests of the Company and the Shareholders as a whole.
We further noted from the Announcements that on 11 March 2015 (being the date of the
Subscription Agreement), the Company entered into another subscription agreement with Big Concept
Technology Limited (“Big Concept”), which is an Independent Third Party, for the subscription of
100,000,000 new Shares. The subscription price of such Shares is equivalent to the Subscription
Price. Please refer to the Announcements for further details. We are of the view that the Subscription
Price is no more favorable to the Subscriber, as compared to that offered to Big Concept.
(a) Review on historical trading price
To assess the fairness and reasonableness of the Subscription Price, we have compared
the Subscription Price with the historical trading price of the Shares. The chart belowillustrates the daily closing price of the Shares as quoted on the Stock Exchange versus the
Subscription Price for the period commencing from 11 March 2014, being the twelve-month
period prior to the Subscription Agreement, and up to and including the Latest Practicable
Date (the “Review Period”):
Chart 1: Closing price of Shares during the Review Period
Source: the website of the Stock Exchange (www.hkex.com.hk)
Note: Trading of Shares was suspended on 7 April 2014, 8 April 2014, from 22 April 2014 to 29
April 2014, and 12 March 2015.
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LETTER FROM ASTRUM CAPITAL
During the Review Period, the highest and lowest closing price of the Shares as quoted
on the Stock Exchange were HK$0.27 per Share recorded on 14 November 2014 and HK$0.11per Share recorded on 3 November 2014, respectively. The Subscription Price represents a
premium of approximately 17.4% over the average closing price of the Shares during the
Review Period of approximately HK$0.166 per Share.
As illustrated in Chart 1 above, the closing price of the Shares generally exhibited a
downward trend from the commencement of the Review Period and up to early November
2014 and hit the lowest point at HK$0.11 per Share on 3 November 2014. On 10 November
2014 (after trading hours), the Company issued its third quarterly results announcement for the
nine months ended 30 September 2014. The closing price of the Shares rebounded to
HK$0.195 per Share on the next trading day and further climbed to the highest level during the
Review Period of HK$0.27 per Share on 14 November 2014. The closing price of the Shares
then experienced another downward trend and gradually decreased to HK$0.14 per Share on 27
January 2015. On 28 January 2015, the Company released news in its website in relation to the
Group’s operation in the Philippines. After the release of the aforesaid news, the closing price
of the Shares on 28 January 2015 skyrocketed to HK$0.228 per Share from HK$0.14 per Share
on the previous day. The closing price of the Shares then fluctuated in a narrow range of
HK$0.180 and HK$0.209 per Share during the period commencing from 29 January 2015 and
up to the Latest Practicable Date.
The closing price of the Shares were HK$0.190 and HK$0.186 per Share on the Last
Trading Day and the Latest Practicable Date, respectively.
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LETTER FROM ASTRUM CAPITAL
(b) Review on historical trading volume
Further to the historical trading price, we have also reviewed the trading volume of the
Shares during the Review Period as illustrated in the table below:
Table 2: Monthly trading volume of Shares during the Review Period
Month/PeriodTotal trading
volumeNumber of
trading days
Average dailytrading volumeof the Shares
Total numberof Shares in
issue as at theend of each
month/period
Average dailytrading volumeas a percentage
of the totalnumber of
Shares in issue(No. of Shares) (No. of Shares) (No. of Shares) (%)
March 2014 (from
11 March 2014)
2,671,959 15 178,131 1,832,991,386 0.010
April 2014 14,782,214 12 1,231,851 1,932,991,386 0.064
May 2014 5,348,785 20 267,439 1,937,537,811 0.014
June 2014 21,463,430 20 1,073,172 1,937,537,811 0.055July 2014 16,895,067 22 767,958 1,937,537,811 0.040
August 2014 11,403,321 21 543,015 1,937,537,811 0.028
September 2014 22,761,500 21 1,083,881 1,937,537,811 0.056
October 2014 5,729,875 21 272,851 1,937,537,811 0.014
November 2014 118,254,576 20 5,912,729 1,937,537,811 0.305
December 2014 16,171,035 21 770,049 1,937,537,811 0.040
January 2015 22,297,387 21 1,061,780 1,937,537,811 0.055
February 2015 7,253,785 18 402,988 1,937,537,811 0.021
March 2015 8,359,500 21 398,071 2,037,537,811 0.020
April 2015
(up to 2 April
2015))
434,000 2 217,000 2,037,537,811 0.011
Source: the website of the Stock Exchange (www.hkex.com.hk)
Note: Trading of Shares was suspended on 7 April 2014, 8 April 2014, from 22 April 2014 to 29
April 2014, and 12 March 2015.
We noted that the average number of Shares traded per trading day in each month in the
Review Period ranged from approximately 178,131 Shares to approximately 5,912,729 Shares.
The average daily trading volume of the Shares during the Review Period amounted to
approximately 1,073,829 Shares, representing approximately 0.053% of the issued share capital
of the Company as at the Latest Practicable Date.
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LETTER FROM ASTRUM CAPITAL
(c) Comparable analysis
In an attempt to provide further analysis on the Subscription Price, we have identified
all placing and subscription of new shares under specific mandate entered into and announced
by companies listed on the Stock Exchange during the period commencing from 1 January
2015 and up to 11 March 2015 (being the date of the Subscription Agreement). To the best of
our knowledge and as far as we are aware of, we identified an exhaustive list of 13
transactions which met the said criteria and were not subsequently terminated prior to the
Latest Practicable Date (the “Comparable Issues”). As the capital market changes rapidly, we
consider that the Comparable Issues reflect the latest market conditions and sentiments of
placing and subscription of new shares. As such, we believe that the Comparable Issues are
fair and indicative in reflecting the current market conditions. However, Shareholders should
note that the businesses, operations and prospects of the Company are not the same as the
relevant issuers of the Comparable Issues and thus the Comparable Issues are merely used to
provide a general reference for the recent market practice of companies listed on the Stock
Exchange in placing and subscription of new shares. The following table sets forth the relevant
details of the Comparable Issues:
Table 3: Details of the Comparable Issues
Date of
announcement Company name
Stock
code
Premium/
(discount) of issue
price over/to the
share price as at
the last trading
day prior to the
release of the
announcement
Premium/
(discount) of issue
price over/to the
average share
price for the last
five consecutive
trading days prior
to the relevant last
trading day
Premium/
(discount) of issue
price over/to the
consolidated net
asset value per
share
10/03/2015 China Properties Investment
Holdings Limited
736 (15.25%) (18.83%) (69.64%)
(Note 3)
09/03/2015 South East Group Limited 726 (42.86%) (35.06%) N/A
(Note 1)
27/02/2015 Bestway International Holdings
Limited
718 (51.30%) (42.97%) (13.80%)
27/02/2015 New Ray Medicine
International Holding
Limited
8180 (16.67%) (15.34%) 34.57%
24/02/2015 Harmonic Strait Financial
Holdings Limited
33 (13.79%) (14.97%) N/A
(Note 2)
11/02/2015 China Tian Lun Gas Holdings
Limited
1600 (19.60%) (20.60%) 270.10%
(Note 3)
29/01/2015 Good Fellow Resources
Holdings Limited
109 (31.41%) (20.76%) 54.52%
28/01/2015 Realord Group Holdings
Limited
1196 (52.38%) (42.40%) 248.54%
21/01/2015 WLS Holdings Limited 8021 (42.31%) (41.06%) 3.43%
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LETTER FROM ASTRUM CAPITAL
Date of
announcement Company name
Stock
code
Premium/
(discount) of issue
price over/to the
share price as at
the last trading
day prior to the
release of the
announcement
Premium/
(discount) of issue
price over/to the
average share
price for the last
five consecutive
trading days prior
to the relevant last
trading day
Premium/
(discount) of issue
price over/to the
consolidated net
asset value per
share
12/01/2015 Guangzhou Baiyunshan
Pharmaceutical Holdings
Company Limited
874 (12.06%) (10.88%) 297.78%
(Note 3)
11/01/2015 Wing Tai Investment Holdings
Limited
876 (21.57%) (19.68%) 773.75%
07/01/2015 China Taifeng Beddings
Holdings Limited
873 (26.83%) (25.86%) (69.53%)
(Note 3)
05/01/2015 Town Health International
Medical Group Limited
3886 (19.76%) (19.41%) 103.57%
Maximum: (12.06%) (0.52%) 773.75%
Minimum: (52.38%) (42.97%) (69.64%)
Median: (20.67%) (20.14%) 54.52%
Average: (27.24%) (23.45%) 148.48%
Subscription Agreement 2.63% 4.84% 414.5%
Notes:
1. South East Group Limited (stock code: 726) recorded net liabilities as at 30 September 2014.
2. Harmonic Strait Financial Holdings Limited (stock code: 33) recorded net liabilities as at 31
December 2014.
3. For illustrative purpose only, conversion of RMB to HK$ is based on the approximate exchange
rate of RMB1.00000 to HK$1.24935.
As illustrated in Table 3 above, the issue prices of the Comparable Issues were set at a
discount to the then market price of shares of the relevant listed issuers. On the contrary, the
Subscription Price was set at (i) a premium of approximately 2.63% over the closing price of
the Share on the Last Trading Day; and (ii) a premium of approximately 4.84% over the
average closing price of the Share for the last five consecutive trading days up to and including
the Last Trading Day. In case of share subscription, the higher the subscription price, the fewer
the subscription shares will be allotted and issued to the subscriber by the issuer and the lesser
extent of the dilution effect on shareholding will be brought to the existing shareholders. As
such, we are of the view that the Subscription Price, which represents a premium over the
market price of the Shares, is fair and reasonable.
- 25 -
LETTER FROM ASTRUM CAPITAL
Furthermore, as shown in Table 3 above, the issue price of the Comparable Issues
ranged from a discount of approximately 69.64% to a premium of approximately 773.75% overthe consolidated net asset value per share (the “NAV Range”) with a median of premium of
approximately 54.52%. The Subscription Price represents a premium of approximately 414.5%
over the audited net asset value per Share of the Company as at 31 December 2014, which
falls within the NAV Range and is higher than the median of the NAV Range.
Conclusion
Having considered the above, particularly the facts that:
(i) the Subscription Price represents a premium of approximately 17.4% over the average
closing price of the Share during the Review Period of approximately HK$0.166 per
Share;
(ii) the Subscription Price is no more favorable to the Subscriber, as compared to that
offered to Big Concept, who is an 3Independent Third Party;
(iii) the Subscription Price was set at (i) a premium of approximately 2.63% over the closing
price of the Share on the Last Trading Day; and (ii) a premium of approximately 4.84%over the average closing price of the Share for the last five consecutive trading days up
to and including the Last Trading Day, while the issue prices of the Comparable Issues
were set at a discount to the then market price of shares of the relevant listed issuers;
and
(iv) the Subscription Price represents a premium of approximately 414.5% over the audited
net asset value per Share of the Company as at 31 December 2014, which falls within
the NAV Range and is higher than the median of the NAV Range,
we are of the view that the terms of the Subscription Agreement (including the Subscription
Price) are fair and reasonable so far as the Independent Shareholders are concerned.
- 26 -
LETTER FROM ASTRUM CAPITAL
IV. Potential dilution effect on shareholding in the Company
The following table sets forth the shareholding structure of the Company (i) as at the Latest
Practicable Date; and (ii) immediately after Completion:
Table 4: Shareholding structure of the Company
As at theLatest Practicable Date Immediately after CompletionNo. of Shares % No. of Shares %
Mr. Lam and his associates 1,256,155,931 61.65 1,906,155,931 70.93
Public Shareholders 781,381,880
(Note)
38.35 781,381,880 29.07
2,037,537,811 100.00 2,687,537,811 100.00
Note: The figure includes the 100,000,000 new Shares issued to Big Concept (as subscriber) on 18 March 2015 upon
completion of the subscription agreement entered into between the Company (as the issuer) and Big Concept on
11 March 2015, details of which were set out in the Announcements and the announcement of the Company
dated 18 March 2015.
As shown in Table 4 above, the shareholding of the existing public Shareholders will be diluted from
approximately 38.35% of the issued share capital of the Company as at the Latest Practicable Date to
approximately 29.07% of the issued share capital of the Company immediately after Completion. Having
considered the benefits of the Loan Capitalisation as detailed in the section headed “II. Background of,
reasons for and benefits of the Loan Capitalisation” above, including but not limited to (i) the Loan
Capitalisation will alleviate the repayment pressure of the majority portion of the Lam’s Indebtedness on the
Group without cash outlay and allow the Group to retain working capital for its daily operation and future
business development; (ii) the Loan Capitalisation will lower the gearing ratio of the Group thereby
strengthening the Group’s financial position, which will, in turn, place the Group at a better position to
negotiate and obtain fund raising arrangements or debt financing for its business development and expansion
in future when necessary; and (iii) the Loan Capitalisation will enlarge the Company’s capital base, we are
of the view that such dilution effect is acceptable and commercially justifiable.
V. Possible financial effects of the Loan Capitalisation
A. Effect on gearing ratio
As at 31 December 2014, the gearing ratio of the Group (which was calculated based on the
Group’s net debt of approximately HK$146.9 million and the Group’s total equity of approximately
HK$125.1 million) was approximately 117.4%. Upon Completion, the Group’s net debt will be
substantially reduced by the settlement of the Loan Repayment Amount and the Shareholders’ equity
will be enlarged by the allotment and issue of the Subscription Shares. Accordingly, the gearing ratio
of the Group will be substantially improved as a result of the decrease in the Group’s total
borrowings and the enlarged capital base of the Group.
- 27 -
LETTER FROM ASTRUM CAPITAL
B. Effect on total liabilities
According to the 2014 Annual Report, the audited total liabilities of the Group as at 31
December 2014 amounted to approximately HK$149.7 million. Upon Completion, the Group’s total
liabilities will be decreased by the Loan Repayment Amount of approximately HK$126.8 million to
approximately HK$22.9 million assuming that there will be no other settlements of the Group’s
liabilities or new borrowings.
C. Effect on net assets
According to the 2014 Annual Report, the audited net assets of the Group as at 31 December
2014 was approximately HK$125.1 million. Upon Completion and without taking into account the
proceeds from the subscription of 100,000,000 Shares by Big Concept, the net assets of the Group
will be increased by the Loan Repayment Amount to approximately HK$251.9 million, representing
an increase of approximately 101.4%. Given that the Subscription Price is higher than the audited
consolidated net asset value per Share as at 31 December 2014, it is expected that the net asset value
per Share would be increased upon Completion.
D. Effect on working capital
As the Loan Repayment Amount will be settled in full by the allotment and issue of the
Subscription Shares without cash outlay by the Group, the Loan Capitalisation would enable the
Company to free the cash flow for the development of its business.
It should be noted that the aforementioned analyses are for illustrative purpose only and do not
purport to represent how the financial position of the Group will be upon Completion.
OPINION
Having taken into account the above principal factors and reasons, we are of the view that although
the Loan Capitalisation is not in the ordinary and usual course of business of the Group, the terms of the
Subscription Agreement are on normal commercial terms, and fair and reasonable as far as the Independent
Shareholders are concerned, and the Loan Capitalisation is in the interests of the Company and the
Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise, and
ourselves recommend, the Independent Shareholders to vote in favor of the relevant resolution at the EGM
to approve the Loan Capitalisation.
Yours faithfully,For and on behalf of
Astrum Capital Management LimitedHidulf Kwan
Executive Director
Rebecca MakAssociate Director
- 28 -
LETTER FROM ASTRUM CAPITAL
RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept full responsibility, includes
particulars given in compliance with the GEM Listing Rules for the purpose of giving information with
regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their
knowledge and belief the information contained in this circular is accurate and complete in all material
respects and not misleading or deceptive, and there are no other matters the omission of which would make
any statement herein or this circular misleading.
MATERIAL ADVERSE CHANGES
As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the
financial or trading position of the Group since 31 December 2014, the date to which the latest published
audited accounts of the Company were made up.
DIRECTORS’ INTEREST IN COMPETING BUSINESS
As at the Latest Practicable Date, none of the Directors or their respective associates had any interests
in any business which competes or is likely to compete, either directly or indirectly, with the business of the
Group as required to be disclosed pursuant to the GEM Listing Rules.
INTERESTS AND SHORT POSITIONS OF DIRECTORS AND CHIEF EXECUTIVE OF THECOMPANY IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANYOR ANY ASSOCIATED CORPORATION
As at the Latest Practicable Date, none of the Directors and chief executive of the Company had any
interests or short positions in the Shares, underlying Shares or debentures of the Company or any of its
associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the
Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which were
required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were
required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM
Listing Rules relating to the securities transactions by Directors.
As at the Latest Practicable Date, none of the Directors was a director or employee of a company
which had an interest or short position in the Shares or underlying Shares which would fall to be disclosed
to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN THE SHARES,UNDERLYING SHARES AND DEBENTURES OF THE COMPANY
As at the Latest Practicable Date, the interests and short positions of persons, other than Directors or
chief executive of the Company, in the Shares and/or underlying Shares which would fall to be disclosed to
the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or,
who is, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital
- 29 -
APPENDIX GENERAL INFORMATION
R2.18/14.23A1B-2
A1B-32A1B29(1)(a)
R11.04R20.68(15)
A1B-38(1)(a)-(c)A1B-38A
A1B-34
A1B-38(4)A1B-38B(1)(a)
carrying rights to vote in all circumstances at general meetings of any other members of the Group, or
substantial Shareholders as recorded in the register of substantial Shareholders required to be kept by theCompany under Section 336 of the SFO were as follows:
Name of personNumber ofShares held Capacity
Approximatepercentage of
interest(Note 1)
Silver Star Enterprises
Holdings Inc. (Note 2)
1,244,255,931 (L) Beneficial Owner 61.07%
Lam Nam 1,244,255,931 (L)
(Note 2)
Interest of a controlled
corporation
61.07%
11,900,000 (L) Beneficial Owner 0.58%
Notes:
1. The letter “L” denotes long positions in Shares or underlying Shares.
2. The entire issued share capital of Silver Star Enterprises Holdings Inc. is beneficially owned by Mr. Lam Nam.
Mr. Lam Nam is deemed to be interested in 1,244,255,931 Shares held by Silver Star Enterprises Holdings Inc.
Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other
person who had an interest or short position in the Shares and/or underlying Shares which would fall to be
disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of
the SFO or, who is, directly or indirectly, interested in 5% or more of the nominal value of any class of
share capital carrying rights to vote in all circumstances at general meetings of any other members of the
Group, or any other substantial Shareholders whose interests or short positions were recorded in the register
required to be kept by the Company under Section 336 of the SFO.
OTHER INTERESTS DISCLOSEABLE UNDER THE SFO
Save as disclosed above, so far as is known to the Directors, there is no other person who has an
interest or short position in the Shares and underlying Shares that is discloseable under section 336 of the
SFO.
DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS
As at the Latest Practicable Date, none of the Directors was materially interested in any contract or
arrangement subsisting which was significant in relation to the business of the Group.
As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any
assets which had been acquired or disposed of by, or leased to, or which were proposed to be acquired or
disposed of by, or leased to, any member of the Group since 31 December 2014, being the date to which the
latest published audited accounts of the Group were made up.
- 30 -
APPENDIX GENERAL INFORMATION
A1B-38(3)(4)
A1B-40(1)(2)
DIRECTORS’ SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts
with any member of the Group or any associated company of the Company (excluding contracts expiring or
determinable within one year without payment of compensation, other than statutory compensation).
EXPERT’S QUALIFICATION AND CONSENT
The following is the qualification of the expert who has given its opinion and advice which are
included in this circular:
Name Qualification
Astrum Capital A corporation licensed to carry on type 1 (dealing in securities), type 2
(dealing in futures contracts), type 6 (advising on corporate finance),
and type 9 (asset management) regulated activities under the SFO
As at the Latest Practicable Date, Astrum Capital did not have any shareholding, directly or
indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or
to nominate persons to subscribe for securities in any member of the Group.
As at the Latest Practicable Date, Astrum Capital did not have any interest, directly or indirectly, in
the promotion of, or in any assets which had been within the two years immediately preceding the issue of
this circular acquired or disposed of by or leased to, any member of the Group.
As at the Latest Practicable Date, Astrum Capital did not have any direct or indirect interest in any
assets which had been acquired, or disposed of by, or leased to any member of the Group, or were proposed
to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2014, the date
to which the latest published audited financial statements of the Group were made up.
Astrum Capital has given and has not withdrawn its written consent to the issue of this circular, with
the inclusion of the references to its name and/or its opinion or report in the form and context in which they
are included.
GENERAL
(a) The registered office of the Company is situated at Cricket Square, Hutchins Drive, P.O. Box
2681, Grand Cayman KY1-1111, Cayman Islands.
(b) The head office and principal place of business of the Company in Hong Kong is at Room
801-802, 8th Floor, Shanghai Industrial Investment Building, 48-62 Hennessy Road, Wanchai,
Hong Kong.
- 31 -
APPENDIX GENERAL INFORMATION
A1B-39
A1B-5(1)
A1B-5(2)
(c) The branch share registrar and transfer office of the Company in Hong Kong is Tricor
Standard Limited which is situated at Level 22, Hopewell Centre, 183 Queen’s Road East,Hong Kong.
(d) In the event of inconsistency, the English text of this circular shall prevail over the Chinese
text.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the principal place of business
of the Company in Hong Kong at Room 801-802, 8th Floor, Shanghai Industrial Investment Building, 48-62
Hennessy Road, Wanchai, Hong Kong during normal business hours from the date of this circular up to and
including the date of the EGM.
(a) the Subscription Agreement;
(b) the memorandum and articles of association of the Company;
(c) the letter from the Independent Board Committee, the text of which is set out in the section
headed “Letter from the Independent Board Committee” of this circular;
(d) the letter of advice from the Independent Financial Adviser, the text of which is set out in the
section headed “Letter from Astrum Capital” of this circular;
(e) the letter of consent referred to under the paragraph headed “Expert’s qualification and
consent” in this Appendix; and
(f) a copy of this circular.
- 32 -
APPENDIX GENERAL INFORMATION
A1B-42
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 08011)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Polyard Petroleum
International Group Limited (the “Company”) will be held at Carianna (Chiu Chow) Restaurant, 1/F., 151
Gloucester Road, Wan Chai, Hong Kong on Monday, 4 May 2015 at 12:00 noon to consider and, if thought
fit, pass the following resolutions, with or without amendment(s), as ordinary resolutions of the Company:
ORDINARY RESOLUTIONS
1. “THAT
(a) the subscription agreement (the “Subscription Agreement”) dated 11 March 2015 (acopy of which has been produced to the meeting marked “A” and signed by thechairman of the meeting for the purpose of identification) entered into between theCompany as issuer and Silver Star Enterprises Holdings Inc. (the “Subscriber”) assubscriber in relation to the subscription of 650,000,000 new shares of the Company(the “Subscription Shares”) by the Subscriber at a subscription price of HK$0.195 pernew share of the Company which will be paid by way of set off against a sum ofHK$126,750,000 due from the Company and its subsidiaries to Mr. Lam Nam and hisassociates, and the transaction contemplated thereunder, be and are hereby approved,confirmed and ratified; and
(b) the directors of the Company be and are hereby authorised to allot and issue theSubscription Shares; and
(c) the directors of the Company be and are hereby authorised to do all such further actsand things and execute such further documents which in their opinion may be necessaryor expedient to give effect to the terms of the Subscription Agreement, the issue of theSubscription Shares or any of the transactions contemplated under the SubscriptionAgreement.”
2. “THAT the authorised share capital of the Company be and is hereby increased fromHK$100,000,000 divided into 2,500,000,000 Shares of HK$0.04 each (“Shares”) toHK$200,000,000 divided into 5,000,000,000 Shares of HK$0.04 each by the creation of2,500,000,000 new Shares of HK$0.04 each.”
By order of the Board
Polyard Petroleum International Group LimitedKuai WeiChairman
Hong Kong, 10 April 2015
- 33 -
NOTICE OF THE EGM
R17.56A
As of the date hereof, the Board comprised the following Directors:
Executive Directors:
Mr. Kuai Wei (Chairman)
Mr. Lai Chun Liang
Mr. Lin Zhang
Independent non-executive Directors:
Mr. Pai Hsi-Ping
Ms. Xie Qun
Mr. Kwan King Chi George
Registered office:
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
Head office and principal place of
business in Hong Kong:
Room 801-802, 8/F.,
Shanghai Industrial Investment Building
48-62 Hennessy Road
Wanchai
Hong Kong
Notes:
1. Any member entitled to attend and vote at the above meeting is entitled to appoint one or, if he/she is the holder of two
or more Shares, more than one proxy to attend and vote on his/her behalf in accordance with the articles of association
of the Company. A proxy need not be a member of the Company.
2. To be valid, a form of proxy together with the power of attorney or other authority, if any, under which is signed or a
notarially certified copy of that power or authority must be deposited at the Company’s Hong Kong branch share
registrar and transfer office, Tricor Standard Limited, of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong
Kong, not less than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting.
3. Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the
EGM or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.
4. In the case of joint holders of a Share, any one of such joint holders may vote, either in person or by proxy, in respect
of such Share as if he/she were solely entitled thereto. If more than one of such joint holders are present at the EGM,
the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the
register of members of the Company in respect of the joint holding.
5. Any voting of the meeting should be taken by poll.
- 34 -
NOTICE OF THE EGM