should consult your stockbroker or other registered dealer in securities, bank manager, solicitor,
professional accountant or other professional adviser.
If you have sold or transferred all your shares in Deson Development International Holdings
Limited, you should at once hand this circular to the purchaser or the transferee or to the bank,
stockbroker or other agent through whom the sale or the transfer was effected for transmission to
the purchaser or the transferee.
DESON DEVELOPMENT INTERNATIONAL HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
(Stock Code: 262)
CONNECTED AND DISCLOSEABLE TRANSACTION
DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF AN
INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE COMPANY AND
THE RELATED SHAREHOLDER’S LOAN
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
18 October 2007
Page
DEFINITIONS ...................................................... 1
LETTER FROM THE BOARD
1. Introduction ................................................. 3
2. The Agreement .............................................. 4
3. Information on Fitness Concept ................................. 5
4. Information on the Group and the Purchaser ........................ 5
5. Reasons for the Disposal ....................................... 5
6. Listing Rules Implications ...................................... 6
7. Additional Information......................................... 6
APPENDIX – GENERAL INFORMATION .......................
| 7 |
| CONTENTS |
| –i– |
In this circular, unless the context otherwise requires, the following expressions have
the following meaning:-
“Agreement” the sale and purchase agreement dated 25 September
2007 entered into between the Vendor and the
Purchaser in relation to the sale of Sale Shares and the
Shareholder’s Loan
“Announcement” the announcement dated 27 September 2007 issued by
the Company
“Board” the board of Directors
“Bye-Laws” the bye-laws of the Company (as amended from time to
time)
“Company” Deson Development International Holdings Limited, an
exempted company incorporated in Bermuda with
limited liability and the shares of which are listed on
the main board of the Stock Exchange
“Completion” completion of the Agreement pursuant to the terms of
the Agreement
“connected person” has the meaning ascribed to it under the Listing Rules
“Directors” the directors of the Company
“Disposal” the disposal of the Sale Shares and the Shareholder’s
Loan by the Vendor to the Purchaser pursuant to the
terms of the Agreement
“Fitness Concept” Fitness Concept Limited, a company incorporated in
Hong Kong with limited liability, and a wholly-owned
subsidiary of the Vendor before the Completion
“Fitness Concept Group” Fitness Concept and its subsidiaries
“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative Region of the
People’s Republic of China
“HK$” Hong Kong dollars, the lawful currency in Hong Kong
DEFINITIONS
– 1 –
“Latest Practicable Date” 16 October 2007, being the latest practicable date prior
to the printing of this circular for the purpose of
ascertaining certain information contained in this
circular
“Listing Rules” the Rules Governing the Listing of Securities on the
Stock Exchange
“Mr. Tjia” Mr. Tjia Boen Sien, the Managing Director and Deputy
Chairman of the Company who personally and through
a company controlled by him held approximately
46.21% of the issued shares of the Company at the
Latest Practicable Date
“Purchaser” Ideal Choice Holdings Limited, a company
incorporated in the British Virgin Islands with limited
liability and is wholly-owned by Mr. Tjia, a connected
person of the Company
“Sale Shares” 11,611,111 shares representing the entire issued share
capital of Fitness Concept held by the Vendor before
Completion
“Shareholder’s Loan” the shareholder’s loan due and owing by Fitness
Concept to the Vendor before Completion which stood
at HK$76,749,269 as at the date of the Agreement
“Shareholders” shareholders of the Company
“substantial shareholder” has the meaning ascribed to it under the Listing Rules
“Stock Exchange” Wang Ke Duan (Chairman)
Mr. Tjia Boen Sien (Managing Director and Deputy Chairman)
Mr. Wang Jing Ning
Mr. Keung Kwok Cheung
Mr. Ong Chi King
Independent non-executive Directors:
Dr. Ho Chung Tai, Raymond
Mr. Siu Man Po
Mr. Wong Shing Kay, Oliver
Registered office:
Canon’s Court
22 Victoria Street
Hamilton HM12
Bermuda
Head office and principal place
of business in Hong Kong:
11th Floor
Nanyang Plaza
57 Hung To Road
Kwun Tong
Kowloon
Hong Kong
18 October 2007
To the Shareholders and for information only,
holders of outstanding share options issued by the Company
Dear Sirs,
CONNECTED AND DISCLOSEABLE TRANSACTION
DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF AN
INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE COMPANY AND
THE RELATED SHAREHOLDER’S LOAN
INTRODUCTION
Reference is made to the Announcement in which the Board announced that on 25
September 2007, the Vendor, an indirectly wholly-owned subsidiary of the Company, entered
into the Agreement with the Purchaser pursuant to which the Vendor agreed to sell the Sale
Shares and the Shareholder’s Loan to the Purchaser at a total consideration of
HK$6,000,000.
LETTER FROM THE BOARD
– 3 –
The Disposal constituted a connected and discloseable transaction for the Company
under the Listing Rules. The purpose of this circular is to provide you with further
information regarding the Disposal and other information prescribed by the Listing Rules.
THE AGREEMENT
Date
25 September 2007
The Vendor
Grace Profit Investments Limited, a company incorporated in the British Virgin Islands
and is indirectly wholly-owned by the Company.
The Purchaser
Ideal Choice Holdings Limited, a company incorporated in the British Virgin Islands
and is wholly-owned by Mr. Tjia, who is the Managing Director and Deputy Chairman and a
substantial shareholder of the Company. The Purchaser is accordingly a connected person of
the Company within the meaning of the Listing Rules.
The Sale Shares and the Shareholder’s Loan
Pursuant to the Agreement, the Vendor agreed to sell and the Purchaser agreed to
purchase the 11,611,111 shares of HK$1.00 each, representing the entire issued share capital
of Fitness Concept, together with the total amount owing by Fitness Concept to the Vendor
as at Completion. As at the date of the Agreement, the amount of the Shareholder’s Loan
was HK$76,749,269. The Shareholder’s Loan was an interest free and unsecured loan
repayable on demand.
Consideration
The total consideration payable by the Purchaser for the Sale Shares and the
Shareholder’s Loan was HK$6,000,000, which was satisfied by way of cash in one lump
sum on Completion. The consideration was determined by reference to the consolidated net
liabilities of Fitness Concept Group and the Shareholder’s Loan. The consolidated net
liabilities of Fitness Concept Group were HK$68,519,151 as at 31 March 2007, which have
taken into account the liabilities represented by the Shareholder’s Loan which stood at
HK$76,749,269 as at the date of the Agreement. The consideration of HK$6,000,000 was the
entire amount payable by the Purchaser in respect of not only the Sale Shares, but also the
Shareholder’s Loan. Had the Shareholder’s Loan been excluded in calculating the net assets/
liabilities of the Fitness Concept Group, the net assets value of Fitness Concept would have
been HK$8,230,118 as of 31 March 2007.
The Group intends to apply the sale proceeds from the Disposal as general working
capital.
LETTER FROM THE BOARD
– 4 –
Completion
Completion took place on 30 September 2007, and Fitness Concept ceased to be an
indirectly wholly-owned subsidiary of the Company since then.
INFORMATION ON FITNESS CONCEPT
Fitness Concept is a company incorporated in Hong Kong on 10 April 1985, which was
wholly-owned by the Vendor before Completion. The principal business of Fitness Concept
includes the operation of fitness centers, trading of fitness equipments and the provision of
related installation and maintenance services.
INFORMATION ON THE GROUP AND THE PURCHASER
The Group is principally engaged in (i) the construction business, as a main contractor,
as well as the provision of contracting intelligent building engineering and electrical and
mechanical engineering services, mainly in Hong Kong and the PRC; (ii) the property
development and investment; and (iii) the operation of fitness club and trading of fitness
equipment.
The Purchaser is an investment holding company and has not carried on any business
activity since its incorporation apart from entering into the Agreement.
REASONS FOR THE DISPOSAL
The Group some time ago diversified into in the business of the operation of fitness
centers, trading of fitness equipments and the provision of related installation and
maintenance services. As this line of fitness related services business of the Group had been
continuing to operate at a loss, the Group had intended to dispose of this entire line of
business, and the disposal of Fitness Concept was in line with the Group’s business plan.
After the Completion, the only business of the Group in relation to the operation of fitness
centers and the trading of fitness equipments is that of (Megafit
(Chengdu) Recreation Development Company Limited), which is an indirectly
wholly-owned subsidiary of the Company.
The losses before tax attributable to the Fitness Concept Group for the two financial
years ended 31 March 2006 and 31 March 2007 were HK$19,621,270.71 and
HK$17,631,994.45 respectively and the net losses for the year attributable to the Fitness
Concept Group for the two financial years ended 31 March 2006 and 31 March 2007 were
HK$19,800,377.07 and HK$17,590,707.09 respectively.
The expected loss of the Disposal to the Group is approximately HK$2.2 million based
on the consolidated net liabilities of Fitness Concept Group as at 31 March 2007, estimated
transaction costs and the Shareholder’s Loan owing by Fitness Concept to the Vendor of
HK$76,749,269 as at the date of the Agreement.
LETTER FROM THE BOARD
– 5 –
The Directors (including the independent non-executive Directors, but excluding Mr.
Tjia) considered the terms of the Agreement and the Disposal contemplated therein were on
normal commercial terms and were fair and reasonable and in the interests of the
Shareholders as a whole.
LISTING RULES IMPLICATIONS
As the Purchaser is wholly-owned by Mr. Tjia, who is the Managing Director and
Deputy Chairman and a substantial shareholder of the Company, the Purchaser is a
connected person of the Company within the meaning of the Listing Rules and the Disposal
constituted a connected transaction of the Company.
As each of the applicable percentage ratios of the Disposal was more than 2.5% but
less than 25% and the total consideration involved was less than HK$10,000,000, pursuant
to Rule 14A.32 of the Listing Rules, the Disposal was exempted from the independent
shareholders’ approval requirement and was only subject to the reporting and disclosure
requirements in accordance with Rules 14A.45 to 14A.47 of the Listing Rules.
The Disposal also constituted a discloseable transaction for the Company under the
Listing Rules.
ADDITIONAL INFORMATION
Your attention is also drawn to the additional information set out in the appendix to
this circular.
By order of the Board of
DESON DEVELOPMENT
INTERNATIONAL HOLDINGS LIMITED
Ong Chi King
Executive Director and Company Secretary
LETTER FROM THE BOARD
– 6 –
A. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing Rules for the
purpose of giving information with regard to the Company. The Directors collectively and
individually accept full responsibility for the accuracy of the information contained in this
circular and confirm, having made all reasonable enquiries, that to the best of their
knowledge and belief there are no other facts the omission of which would make any
statement herein misleading.
B. DISCLOSURE OF INTERESTS
(i) Save as disclosed below, as at the Latest Practicable Date, none of the Directors
and chief executive of the Company had any interest or short position in the
shares, underlying shares or debentures of the Company or any associated
corporations (within the meaning of Part XV of the SFO) which will have to be
notified to the Company and the Stock Exchange pursuant to the provisions under
Divisions 7 and 8 of Part XV of the SFO (including the interests and short
positions which he would be deemed or taken to have under Sections 344 and 345
of the SFO) or the Model Code for Securities Transactions by Directors of Listed
Companies, or which will have to be, pursuant to Section 352 of the SFO, entered
in the register referred to herein:
Long positions in the shares
Name of Director Capacity
Number of
shares
Approximate
percentage of
the Company’s
issued share
capital
Mr. Tjia Interest by attribution
(Note 1)
226,250,000 39.51%
Beneficial Owner 38,389,400 6.70%
Mr. Wang Jing
Ning
Beneficial Owner 12,839,600 2.24%
Mr. Wang Ke Duan Beneficial Owner 268,960 0.05%
Mr. Siu Man Po Beneficial Owner 180,000 0.03%
Note 1: These shares are held by Sparta Assets Limited (“Sparta Assets”), a company incorporated
in the British Virgin Islands which is wholly owned by Mr. Tjia. Mr. Tjia is also a director
of Sparta Assets.
APPENDIX GENERAL INFORMATION
– 7 –
Long positions in the underlying shares of the Company
Name Capacity
Number of
options
Exercise
price Exercise period
HK$
Dr. Ho Chung Tai,
Raymond
Beneficial
Owner
400,000 0.340 5 March 2006 to
4 March 2008
Mr. Siu Man Po Beneficial
Owner
400,000 0.340 5 March 2006 to
4 March 2008
(ii) Save as disclosed below, the Directors or chief executive of the Company are not
aware of any other person (other than a Director or chief executive whose
interests are disclosed under (i) above) who, as at the Latest Practicable Date, had
an interest or short position in the shares or the 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 or who will be interested, directly or indirectly, in 10% 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 member of the Group:
Long positions in the shares or underlying shares
Name of Shareholder Capacity
Number of
shares
Number of
underlying
shares (under
equity
derivatives of
the
Company)
Aggregate
interest
Approximate
percentage of
the
Company’s
issued share
capital
Sparta Assets Beneficial
Owner
226,250,000 – 226,250,000 39.51%
Penta Investment
Advisers Limited
(“Penta”)
(Note 1)
Investment
Manager
97,260,000 35,000,000 132,260,000 23.09%
Mr. John Zwaanstra
(Note 2)
Interest by
attribution
97,260,000 35,000,000 132,260,000 23.09%
Penta Japan Fund, Ltd.
(“Penta Japan”)
(Note 3)
Interest by
attribution
66,897,000 23,333,333 90,230,333 15.76%
Mr. Todd Zwaanstra
(Note 4)
Trustee (other
than a bare
trustee)
66,897,000 23,333,333 90,230,333 15.76%
Mercurius GP LLC
(“Mercurius”)
(Note 5)
Founder of a
discretionary
trust
66,897,000 23,333,333 90,230,333 15.76%
Note 1: These include (i) an interest in 97,260,000 Shares and (ii) a derivative interest in
35,000,000 shares.
Note 2: Mr. John Zwaanstra has declared the interest and derivative interest in the same shares
in which Penta has declared the same interests as Penta is his controlled corporation.
Note 3: These include (i) an interest in 66,897,000 shares and (ii) a derivative interest in
23,333,333 shares.
APPENDIX GENERAL INFORMATION
– 8 –
Note 4: Mr. Todd Zwaanstra has declared the interest and derivative interest in the same shares
in which Penta Japan has declared the same interests pursuant to his capacity as trustee
of the Mercurius Partners Trust and as Penta Japan is his controlled corporation.
Note 5: Mercurius has declared the interest and derivative interest in the same shares in which
Penta Japan has declared the same interests in its capacity as founder of Mercurius
Partners Trust.
C. SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors or proposed Directors has
entered into any existing or proposed service contracts with the Company or any other
member of the Group save for those expiring or determinable by the relevant employer
within one year without payment of compensation (other than statutory compensation).
D. MATERIAL LITIGATION
As far as the Directors are aware, save as disclosed below in respect of the outstanding
pending litigations as at the Latest Practicable Date, no member of the Group is engaged in
any litigation or claim of material importance and no litigation or claim of material
importance is known to the Directors to be pending or threatened against any member of the
Group.
(i) On 7 December 2006, legal proceedings were instituted against Kenworth
Engineering Limited (“Kenworth”), a 100%-owned subsidiary of the Company, by
Watfield Technology Limited (“Watfield”), in respect of Kenworth Watfield Joint
Venture Limited, a joint venture established in Hong Kong which is owned as to
50% by Kenworth and as to 50% by Watfield (the “Joint Venture”). In its
Statement of Claim, Watfield averred that Kenworth is in breach of the joint
venture agreement dated 13 November 2003. In addition to the claim for damages
as a result of the alleged breach by Kenworth, Watfield is seeking for the court’s
declaration that (1) Watfield is entitled to have the loan of HK$2,500,000
provided by Watfield to set off, as first priority, against its credit balance in the
Joint Venture accounts; (2) Kenworth holds on trust for the Joint Venture and
Watfield all monies received by the Joint Venture from Kaden-Leader-Kenworth
Joint Venture, a consortium formed by Kaden Construction Limited, Leader Civil
Engineering Corporation Limited and Kenworth (the “Consortium”); (3) Kenworth
shall deliver all other necessary accounts and enquiries for tracing all monies
received by the Joint Venture from the Consortium; (4) Kenworth was in breach
of its duty towards Watfield by failing to render full information in respect of the
financial affairs of the Joint Venture; and (5) Kenworth do forthwith render all
books and accounts kept by the Joint Venture and full information in respect of
the financial affairs of the Joint Venture.
(ii) On 9 January 2007, legal proceedings were instituted against Watfield by
Kenworth, in respect of the outstanding working capital to be provided by
Watfield and a loan provided by Kenworth under a loan facility. In its Statement
of Claim, Kenworth averred that Watfield has not paid 50% of the total working
APPENDIX GENERAL INFORMATION
– 9 –
capital in the sum of HK$9,797,740.63 to the Joint Venture and Watfield owed
Kenworth the amount of HK$2,787,126.22 being the loan provided by Kenworth
to Watfield under a loan facility for operation of the Joint Venture.
(iii) On 7 December 2006, legal proceedings were instituted against Kenworth by
Allied Electric Corporation Limited (“AEC”) in respect of the alleged work
performed under a construction project. According to its Statement of Claim,
AEC’s construction claims include outstanding payments, variation claims and
claims in respect of loss and expenses in the total sum of HK$19,673,246.57.
The Directors have obtained an advice letter dated 11 October 2007 from the Group’s
legal counsel and:
(a) in relation to proceedings (i), the Directors are of the view that Kenworth has a
reasonable chance to successfully defend these proceedings and set-off the claims
of Watfield against the payments that Kenworth has made in carrying out the
construction works for the project to which these proceedings relate;
(b) in relation to proceedings (ii), a default judgment has been obtained by Kenworth
against Watfield in the sum of HK$12,584,866.85 with interest, costs and further
damages to be assessed. In view of the present status of the proceedings and the
default judgment obtained by Kenworth, the Directors are of the view that
Kenworth has a reasonable chance of recovering payments from Watfield;
(c) in relation to proceedings (iii), from the information available, the Directors are
of the view that Kenworth has a reasonable chance to successfully defend these
proceedings.
E. COMPETING INTEREST
Save for the interests in the Fitness Concept Group held by Mr. Tjia following the
Completion, as at the Latest Practicable Date, none of the Directors or their respective
associates has any interest in a business which competes or is likely to compete, either
directly or indirectly, with the business of the Group.
As at the Latest Practicable Date, none of the Directors has any material interest in any
contract or arrangement which is significant in relation to the business of the Group.
F. NO MATERIAL ADVERSE CHANGE
The Directors are not aware of any material adverse change in the financial or trading
positions of the Group since 31 March 2007, being the date to which the latest audited
financial statements of the Group were made up.
APPENDIX GENERAL INFORMATION
– 10 –
G. INTEREST IN ASSETS
Save as disclosed in this circular, none of the Directors has any direct or indirect
interest in any asset which has been acquired or disposed of by or leased to any member of
the Group since 31 March 2007 (the date to which the latest published audited consolidated
financial statements of the Group were made up to) or proposed to be so acquired, disposed
of or leased.
H. GENERAL
(i) The Company’s registered office is at Canon’s Court, 22 Victoria Street, Hamilton
HM12 Bermuda.
(ii) The head office and principal place of business of the Company in Hong Kong is
at 11th Floor, Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong
Kong.
(iii) The branch share registrar and transfer office of the Company in Hong Kong is
Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong
Kong.
(iv) Mr. Ong Chi King is an executive director and the secretary of the Company. Mr.
Ong holds a bachelor degree in Business Administration from the Hong Kong
University of Science and Technology. He is a fellow of the Association of
Chartered Certified Accountants and a Certified Public Accountant of the Hong
Kong Institute of Certified Public Accountants.
(v) Ms. Wong Ka Yan is the financial controller and qualified accountant of the
Company. Ms. Wong holds a Bachelor degree in Commerce from the University
of Adelaide, Australia and is a Certified Public Accountant of CPA Australia.
(vi) The English text of this circular shall prevail over the Chinese text.
I. DOCUMENT FOR INSPECTION
A copy of the Agreement will be available for inspection during normal business hours
at 11th Floor, Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong Kong up to
and including 1 November 2007.
APPENDIX GENERAL INFORMATION
– 11 –
