|
Hong
Kong, 24 March 2004 - An Independent Financial Adviser
(IFA) appointed by Shui On Construction & Materials
Ltd (SOCAM - HKSE 0983) has concluded that the Shui
On Land (SOL) transactions announced on 23 February
are "overall fair and reasonable" and recommends
that SOCAM's independent shareholders be advised to
vote in favour of the deal at the Special General Meeting
(SGM).
Previously, SOCAM established a committee consisting
of its independent directors to consider and advise
independent shareholders on its proposals to inject
the company's stake in Rainbow City (Rui Hong Xin Cheng)
as well as a cash injection of US$50 million into SOL.
Mr Anthony Griffiths and Professor Michael John Enright
are the two directors who make up this Independent Board
Committee (IBC) and BNP Paribas Peregrine Capital Limited
were appointed to provide them with impartial financial
advice. The IFA is completely independent of the directors,
chief executive and substantial shareholders of the
Shui On Group, SOCAM or any of their respective subsidiaries
or associates.
In arriving at their advice, the IFA considered all
the significant and relevant factors and their Report,
published today, fully supports the view that the transactions
are beneficial to, and in the interests of, SOCAM shareholders.
Benefits of Asset Injection
In consideration of the injection of its stake in Rainbow
City, which has a total investment value (at 30.06.03)
of US$81.9 million, SOCAM will receive up to US$138.8
million worth of Ordinary shares in SOL.
The IFA report highlights the following benefits of
the asset (Rainbow City) injection for SOCAM's independent
shareholders:
| - |
SOCAM will maintain an interest in Rainbow City
and continue to participate actively in its development
through SOL |
| - |
SOCAM
will become an investor in an entity (SOL) with
access to a larger land bank in the Chinese Mainland
that includes not only the Taipingqiao Redevelopment
Project with Shanghai Xintiandi, Corporate Avenue
and luxury residential developments in downtown
Shanghai - but also the existing pipeline of Shui
On Group projects in Hangzhou and Chongqing |
| - |
SOCAM will avoid funding calls (estimated at up
to HK$1,792.45 million over the next two years)
for the future development of Rainbow City |
| - |
SOCAM will gain a substantial profit on disposal
of up to US$56.9 million if, as expected, the bonus
share consideration of US$8.8 million is paid in
full |
| - |
Furthermore, SOCAM expects to be reimbursed the
additional funding it provided for the development
of Rainbow City after 30 June 2003 (a minimum of
approximately HK$120 million) |
Based
on the independent valuation's proforma adjusted net
asset value, the consideration payable by SOL for Rainbow
City is at a substantially lower discount than for Taipingqiao
(17.6% compared with 30.3%).
Benefits of Cash Injection
SOCAM's directors have also agreed to invest US$50 million
cash in return for 50 million Junior Preference shares
in SOL; SOCAM would thus increase its shareholding in
SOL to more than 20% and so be in a position to equity-account
SOL's earnings. The SOL Junior Preference shares carry
a 7% fixed annual rate of dividend return and have priority
over Ordinary shares for dividend payments. Further,
these shares are convertible into Ordinary Shares at
a conversion price of US$1.07 at the time of an IPO.
Therefore, the cash injection would provide SOCAM with
a steadier income while, at the same time, opening the
prospect of a higher capital gain at the time of a listing.
The IFA's analysis of the effect of the cash injection
on SOCAM's financial projections led them to conclude
that it would be beneficial to the company.
The IFA report concludes that the proposed asset and
cash injections are overall fair and reasonable with
respect to the interests of the independent shareholders.
And it advises the independent board committee to recommend
that independent SOCAM shareholders should "vote
in favour of the ordinary resolutions to be proposed
at the SGM to approve the Rainbow Sale and Purchase
Agreement and the Cash Injection."
The SGM is scheduled to take place on 15th April, 2004.
NOTES TO EDITORS
About Shui On Group
Shui On Group, the lead developer of Shanghai Xintiandi,
was founded in Hong Kong in 1971 by Mr. Vincent H.S.
Lo. Through the years he has built Shui On from a small
construction company into a diversified group engaged
in property development, construction and construction
materials with interests in Hong Kong, the Chinese Mainland
and North America.
About Shui On Construction & Materials Ltd
Shui On Construction & Materials Ltd (SOCAM), a
member of the Shui On Group, was listed on the Stock
Exchange of Hong Kong in 1997 (HKSE 0983). SOCAM's core
businesses include cement, construction, construction
materials and global materials trading.
About
Rainbow City (Rui Hong Xin Cheng)
Rainbow City is an integrated residential development
project targeting the fast growing middle-income segment
of the Shanghai market. The project covers a site area
of about 354,000 square metres and is conveniently located
in Hongkou District, a short journey away from the historic
Bund. Rainbow City transforms existing neighbourhoods
into a modern residential community complete with full
amenities. The project is close to several leading universities
and will soon be served by its own Metro station. The
whole development will be constructed in phases and
will comprise various high-rise residential blocks with
a total gross floor area of approximately 1,620,000
square metres.
|
