major transaction - acquisition of 60% of the issued share capital of aggressive resources limited

126 Pages·2017·1.01 MB·English

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
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 Megalogic Technology Holdings Limited (the ‘‘Company’’),
you should at once hand this circular together with the enclosed form of proxy to the purchaser or the transferee or
to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom
the sale or transfer was effected for transmission to the purchaser or the transferee. This circular appears for
information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of
the Company.
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.
MEGALOGIC TECHNOLOGY HOLDINGS LIMITED
宏 創 高 科 集 團 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8242)
MAJOR TRANSACTION –
ACQUISITION OF 60% OF THE ISSUED SHARE CAPITAL OF
AGGRESSIVE RESOURCES LIMITED
AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
Financial adviser of the Company
A notice convening the EGM to be held at 2:00 p.m. on Wednesday, 10 January 2018 at Gloucester Luk Kwok
Hong Kong, 72 Gloucester Road, Wan Chai, Hong Kong, is set out on pages EGM-1 to EGM-3 of this circular.
A form of proxy for use at the EGM is enclosed with this circular.
Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in
accordance with the instructions printed thereon and return the same to the branch share registrar of the Company
in Hong Kong, Tricor Investor Services 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 the holding of the EGM
or any adjournment thereof. Completion and return of the form of proxy 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 GEM website at www.hkgem.com on the Latest Company Announcements page for
at least 7 days from the date of its posting and on website of the Company at www.megalogic.com.hk.
22 December 2017
CHARACTERISTICS OF GEM
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.
– i –
CONTENTS
Page
CHARACTERISTICS OF GEM ............................................... i
DEFINITIONS ............................................................... 1
LETTER FROM THE BOARD ................................................ 5
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP ............... I-1
APPENDIX II – ACCOUNTANTS’ REPORT ON THE TARGET GROUP ....... II-1
APPENDIX III – MANAGEMENT DISCUSSION AND ANALYSIS OF
THE TARGET GROUP ................................... III-1
APPENDIX IV – LAWS AND REGULATIONS RELATING TO
THE BUSINESS OPERATIONS OF
THE TARGET GROUP IN HONG KONG .................. IV-1
APPENDIX V – UNAUDITED PRO FORMA FINANCIAL INFORMATION OF
THE ENLARGED GROUP ................................ V-1
APPENDIX VI – GENERAL INFORMATION ................................. VI-1
NOTICE OF EGM ........................................................... EGM-1
– ii –
DEFINITIONS
In this circular, unless the context requires otherwise, the following expressions have the
followingmeaning:
‘‘Acquisition’’ the proposed acquisition of the Sale Shares by the
Purchaser from the Vendor pursuant to the terms and
conditions of the Acquisition Agreement
‘‘Acquisition Agreement’’ the sale and purchase agreement dated 29 September 2017
entered into between Purchaser and the Vendor in respect
of the Acquisition
‘‘Announcement’’ the announcement of the Company dated 29 September
2017, in relation to, among others, the Acquisition
‘‘associate(s)’’ has the meaning ascribed thereto in the GEM Listing Rules
‘‘Board’’ the board of Directors of the Company
‘‘Business Day(s)’’ a day (excluding Saturday, Sunday and other general
holidays in Hong Kong and any day on which a tropical
cyclone warning no. 8 or above is hoisted) on which
licensed banks in Hong Kong are generally open for
business
‘‘BVI’’ the British Virgin Islands
‘‘Company’’ Megalogic Technology Holdings Limited, a company
incorporated in the Cayman Islands with limited liability
and the Shares of which are listed on GEM
‘‘Completion’’ completion of the Acquisition
‘‘Completion Date’’ the date of Completion, which is within seven (7) Business
Days after the fulfillment, or in the case may be, waiver, of
the Conditions Precedent or such other date as the Vendor
and the Purchaser may agree in writing
‘‘Conditions Precedent’’ the conditions precedent of the Acquisition Agreement,
details of which are set out in the subsection headed
‘‘Conditions Precedent’’ in this circular
‘‘connected person(s)’’ has the meaning ascribed thereto in the GEM Listing Rules
– 1 –
DEFINITIONS
‘‘Consideration’’ the consideration in relation to the sale and purchase of the
Sale Shares, the details of which are set out in
the subsection headed ‘‘Consideration and Method of
Payment’’ in this circular
‘‘Consolidated Net Profit’’ the consolidated net profit after tax of the Target Group
which is based on its audited accounts for the respective
financial year
‘‘Director(s)’’ the director(s) of the Company
‘‘Due Diligence Review’’ due diligence to be carried out by the Purchaser on Target
Group including without limitation to its assets, liabilities,
contracts, commitments, business, financial, legal and
taxation aspects
‘‘EGM’’ the extraordinary general meeting of the Company to be
convened for the purpose of considering and, if thought fit,
approving the terms of the Acquisition Agreement and the
transactions contemplated thereunder
‘‘Enlarged Group’’ the Group immediately after the Completion
‘‘GEM’’ the Growth Enterprise Market of the Stock Exchange
‘‘GEM Listing Rules’’ the Rules Governing the Listing of Securities on GEM
‘‘Group’’ the Company and its subsidiaries
‘‘Guaranteed Profit’’ or the Consolidated Net Profit that the Vendor guaranteed to
‘‘Profit Guarantee’’ the Purchaser pursuant to the Acquisition Agreement,
details of which are set out in the subsection headed
‘‘Profit Guarantee’’ in this circular
‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the
People’s Republic of China
‘‘Independent Third Party(ies)’’ third party(ies) independent of the Company and its
connected persons (as defined under the GEM Listing
Rules)
– 2 –
DEFINITIONS
‘‘Latest Practicable Date’’ 20 December 2017, being the latest practicable date prior
to the printing of this circular for ascertaining certain
information contained herein
‘‘Long Stop Date’’ 29 December 2017 or such other date(s) as may be agreed
in writing by the Parties from time to time on which the
Conditions Precedent shall be fulfilled
‘‘Parties’’ the Purchaser and the Vendor (and individually as a
‘‘Party’’)
‘‘PRC’’ the People’s Republic of China, for the purpose of
this circular, excludes Hong Kong, Macau Special
Administrative Region and Taiwan
‘‘Promissory Notes’’ Promissory Note 1 and Promissory Note 2
‘‘Promissory Note 1’’ HK$35,000,000, as partial settlement of the total
Consideration for the Acquisition
‘‘Promissory Note 2’’ HK$57,800,000, as partial settlement of the total
Consideration for the Acquisition
‘‘Purchaser’’ Excellence Steps Limited, a company incorporated in the
BVI with limited liability, a direct and wholly-owned
subsidiary of the Company
‘‘Sale Shares’’ 30,000 shares in the capital of the Target Company,
representing 60% of the issued share capital of the Target
Company
‘‘SFC’’ the Securities and Futures Commission of Hong Kong
‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of
the Company
‘‘Shareholder(s)’’ holder(s) of the Share(s)
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Symphony Holdings’’ Symphony Holdings Limited, a company listed on the main
board of the Stock Exchange (stock code: 1223)
– 3 –
DEFINITIONS
‘‘Takeovers Code’’ the Codes on Takeovers and Mergers and Share Buy-backs
issued by the Securities and Futures Commission of Hong
Kong
‘‘Target Company’’ Aggressive Resources Limited, a company incorporated in
the BVI with limited liability
‘‘Target Group’’ the Target Company and its subsidiaries
‘‘Vendor’’ Perfect Day Ventures Limited
‘‘%’’ per cent
Inthiscircular,theEnglishtranslationofnamesoranydescriptionsinChinesewhichare
markedwith‘‘*’’isforidentificationpurposeonly.
– 4 –
LETTER FROM THE BOARD
MEGALOGIC TECHNOLOGY HOLDINGS LIMITED
宏 創 高 科 集 團 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8242)
ExecutiveDirectors: RegisteredOffice:
Mr. Zhang Qing (Chairman) 190 Elgin Avenue
Dr. Sung Tak Wing Leo (ChiefExecutiveOfficer) George Town
Mr. Lau Mo Grand Cayman KY1-9005
Cayman Islands
Non-executiveDirector:
Mr. Liu Kam Lung Principalplaceofbusiness
inHongKong:
Independentnon-executiveDirectors: Suite 2101, 21st Floor
Mr. Cheung Chi Man Dennis Chinachem Century Tower
Mr. Chiu Yu Wang 178 Gloucester Road
Mr. Ko Yin Wai Wan Chai, Hong Kong
22 December 2017
TotheShareholders
Dear Sir or Madam,
MAJOR TRANSACTION –
ACQUISITION OF 60% OF THE ISSUED SHARE CAPITAL OF
AGGRESSIVE RESOURCES LIMITED
AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
INTRODUCTION
Reference is made to the Announcement. On 29 September 2017, the Purchaser and the
Vendor entered into the Acquisition Agreement in relation to the sale and purchase of the Sale
Shares. Completion of the Acquisition Agreement is conditional upon, among others, the
Conditions Precedent as set out in the Acquisition Agreement being satisfied on or before the
Long Stop Date. The Consideration of an aggregate sum of HK$97,800,000 shall be paid by the
Purchaser to the Vendor by (i) a sum of HK$5,000,000 in cash; and (ii) a sum of HK$92,800,000
by the issue of Promissory Notes by the Company upon Completion.
– 5 –
LETTER FROM THE BOARD
The purpose of this circular is to provide you with, among others, (i) further information on
the Acquisition Agreement and the transactions contemplated thereunder; (ii) financial
information of the Target Group; (iii) other information required under the GEM Listing Rules;
and (iv) a notice convening the EGM.
THE ACQUISITION AGREEMENT
Date
29 September 2017 (After trading hours)
Parties
Purchaser : Excellence Steps Limited, a direct and wholly-owned subsidiary of the
Company
Vendor : Perfect Day Ventures Limited, a company incorporated in the BVI and
is indirectly wholly-owned by Symphony Holdings
Assets to be acquired by the Purchaser
The Sale Shares, being 60% of the issued share capital of the Target Company.
Consideration and Method of Payment
Pursuant to the terms of the Acquisition Agreement, the Consideration of HK$97,800,000
shall be satisfied in the following manner:
(i) a sum of HK$5,000,000 shall be payable in cash by the Purchaser to the Vendor or its
designated nominee(s), payable in the following manner:
a. HK$1,000,000 to be paid upon the signing of the Acquisition Agreement;
b. HK$4,000,000 to be paid within seven (7) Business Days after the Conditions
Precedent as set out in the Acquisition Agreement are satisfied; and
– 6 –
LETTER FROM THE BOARD
(ii) a sum of HK$92,800,000 shall be payable by way of issue of Promissory Notes by the
Purchaser to the Vendor or its designated nominee(s) upon Completion. The
Promissory Notes shall be issued in the following manner:
a. HK$35,000,000 in the form of Promissory Note 1 which shall mature upon
expiry of six (6) months from the issue date; and
b. HK$57,800,000 in the form of Promissory Note 2 which shall mature upon
expiry of twelve (12) months from the issue date with an interest of two (2) %
per annum calculated on the daily balances from time to time with payment in
arrears on the repayment date of the Promissory Note 2.
As at the Latest Practicable Date, the cash consideration in the amount of HK$1,000,000 has
been paid.
Bases of Consideration
The Consideration was determined after arm’s length negotiations between the Purchaser and
the Vendor and was determined with reference to a combination of the following factors:
(i) the recent financial performance of the Target Group;
For the three years ended 31 December 2016, the revenue of the Target Group
increased from approximately HK$20.5 million in 2014 to HK$27.9 million in 2016.
As a result, the Target Group recorded an increase in net profit of approximately
HK$3.0 million in 2014 to HK$9.9 million in 2016. The improvement was principally
due to the increase in (i) number of health supplement products and (ii) selling price of
health supplement products. The Directors consider that the historical track records of
the Target Group have demonstrated a strong business growth of the Target Group and
have established a solid ground for the continuous business development of the Target
Group.
(ii) the reasons for the Acquisition as discussed in the section headed ‘‘Reasons for the
Acquisition’’ in this circular;
(iii) the Guaranteed Profit;
The Guaranteed Profit is determined based on, among others, the historical track
records of the Target Group, the ongoing business operation of the Target Group to its
customers and its business development and prospects.
– 7 –