Best Pacific : Announcements and Notices -Loan Agreement with Specific Performance Covenant / Other – Business Update

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Best Pacific International Holdings Limited

超 盈 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2111)

ANNOUNCEMENT

1. DISCLOSURE PURSUANT TO RULE 13.18 OF THE LISTING RULES AND

2. LAND LEASES IN VIETNAM

   
   

   The Board is pleased to announce that on 8 January 2016, the Company, the Borrowers, the Banks and the Agent entered into the Facility Agreement for the Syndicated Loan, in connection with which Mr. Lu, the controlling shareholder of the Company, has made certain specific performance covenants.

   
   

   The Board is also pleased to announce that in furtherance of the recent entering into of the Letter of Offer between the Company and VSIP Hai Duong (an Independent Third Party) on 30 September 2015 in relation to the leasing of the Land-A in Vietnam, on 8 January 2016, the Company and VSIP Hai Duong entered into the Letter of Intent in relation to the proposed leasing of the Land-B which is next to the Land-A for construction of certain production facilities on the Lands.

   
   

   DISCLOSURE PURSUANT TO RULE 13.18 OF THE LISTING RULES

   The disclosure under this paragraph is made pursuant to Rule 13.18 of the Listing Rules.

   
   

   The Board is pleased to announce that on 8 January 2016, the Company, the Borrowers, the Banks and the Agent entered into the Facility Agreement, major terms of which are as follows:

   Borrowers: (i) BPT

3. BPT (HK)

4. BP (Vietnam)

5. New Horizon Elastic

6. New Horizon Investment




All of the above entities are wholly-owned subsidiaries of the Company.




Guarantor: The Company has agreed to provide unconditional and irrevocable guarantee in respect of the Borrowers' obligations towards the Syndicated Loan.

Facility amount and type: HK$1 billion equivalent multicurrency term loan and

revolving credit facilities. The facility amount may be increased up to HK$1.2 billion subject to the terms and conditions of the Facility Agreement.

Denomination: The Syndicated Loan can be drawn in Hong Kong dollars,

United States dollars and/or Euro dollars.




Maturity: 3 years from the date of first drawdown of the term loan facility.




Disclosure under Rule 13.18 of the Listing Rules in relation to the specific performance covenants of the controlling shareholder of the Company:

The Facility Agreement requires that, among others, Mr. Lu shall at all times:




1. maintain, directly or indirectly, at least 30% of the issued share capital of the Company;

   
   

2. continue to be the single largest Shareholder of the Company;

3. continue to be the Chairman of the Board; and

   
   

4. maintain control over the management and business of the Borrowers, the Company and the Material Subsidiaries.




As at the date of this announcement, Mr. Lu is the Chairman of the Board and an executive Director as well as the controlling shareholder of the Company, holding direct and indirect interests in 640,500,000 Shares, representing approximately 62.71% of the issued share capital of the Company, and is treated as the single largest Shareholder of the Company.




If Mr. Lu breaches any of his specific performance covenants as mentioned above, the Borrowers shall prepay the Syndicated Loan together with the interests and all other amounts accrued in connection with the Syndicated Loan.

Usage: The Syndicated Loan shall be firstly used for the repayment of the Group's outstanding term loan in the principal amount of HK$435 million and after the full repayment, shall be used for financing the Group's general working capital requirements.




It is the current intention of the Company that after repayment of the above outstanding term loan in full, the remaining amount of the Syndicated Loan will be used to increase the Group's production capacities in Dongguan, the PRC and Vietnam.




Shareholders and potential investors are reminded that the Syndicated Loan is subject to fulfillment of a number of conditions precedent and therefore drawdown of the Syndicated Loan may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

LAND LEASES IN VIETNAM




The disclosure under this paragraph is made on a voluntary basis for the purpose of keeping the Shareholders and potential investors informed of the latest business development of the Group.




The Board is pleased to announce that the Company has recently entered into the Letter of Offer with VSIP Hai Duong (an Independent Third Party) on 30 September 2015 in relation to the leasing of the Land-A in Vietnam. On 8 January 2016, the Company and VSIP Hai Duong further entered into the Letter of Intent in relation to the proposed leasing of the Land-B. Both the Land-A and the Land-B are located on the same piece of land in the Vietnam Singapore Industrial Park in Hai Duong Province, Vietnam.




Details of the Lands

Land-A Land-B




Size of the Lands approximately 70,569 sq. m.,

one parcel of which is approximately 52,280 sq. m. and the other parcel of which is approximately 18,289 sq. m. (subject to final survey)

approximately 51,235 sq. m. (subject to final survey)




Land Lease Price US$71 per sq. m. (total US$5,010,399)

US$71 per sq. m. (total US$3,637,685)




Expected Handover Date by the end of June 2016 by the end of February 2017




Lease Term Up to 5 August 2058 Up to year 2058

Formal and definitive agreements




Pursuant to the Letter of Offer in relation to the leasing of the Land-A, the Company and VSIP Hai Duong shall enter into formal and definitive land lease agreement(s) for leasing the Land-A up to 5 August 2058 by March 2016, failing which the Letter of Offer shall cease to have effect and in which case no handover of the Land-A will take place.




Pursuant to the Letter of Intent in relation to the proposed leasing of the Land-B, the Company and VSIP Hai Duong agree to negotiate in good faith to enter into formal and definitive land lease agreement(s) for leasing the Land-B up to year 2058. The Letter of Intent shall expire when a formal offer with detailed terms and conditions for the leasing of the Land-B has been made by VSIP Hai Duong to the Company, or when both parties mutually agree in writing to terminate the Letter of Intent. The Letter of Intent is non-legally binding.




The Company will make further announcement(s) in relation to the Land Leases and comply with the applicable requirements under the Listing Rules as and when appropriate.




Reasons for and benefits of entering into the Land Leases for the development plan in Vietnam




The Company is an investment holding company. The Group is principally engaged in the manufacture and trading of elastic fabric, elastic webbing and lace, which are used as lingerie and sportswear materials. As disclosed in the prospectus of the Company dated 13 May 2014, the Group has conducted intensive cooperation with customers of leading brands, such as ^Aimer, Chantelle, Embry Form, Lululemon, Maniform, Marks & Spencer, Spanx, Triumph, Under Armour, Victoria's Secret and Wacoal. As of the date of this announcement, the Group is utilising approximately 70% to 80% of its total designed production capacity for its core products and is therefore seeking to expand its production capacity by establishing new production facilities and installing additional machinery in order to further increase its market share and core competencies. By entering into the Land Leases and constructing the new production facilities on the Lands, it is anticipated that the Group will increase the total designed annual production capacity of its core products by approximately 20% to 25% in 2017 when the construction of the production facilities is completed.




In addition, the Board believes that by establishing the proposed production facilities on the Lands, the Group would be able to capture the business potential as a result of the Free Trade Agreement signed between the European Union and Vietnam in early August 2015 and the trade framework agreement for the Trans-Pacific Partnership reached among several countries including Vietnam and the United States of America in early October 2015. The Free Trade Agreement will remove nearly all tariffs on goods trade between the European Union and Vietnam. The Trans-Pacific Partnership will eliminate or reduce tariffs and other barriers to goods imported from Vietnam to other Trans-Pacific Partnership member countries. Benefiting from the implementation of the Free Trade Agreement and the Trans- Pacific Partnership should it become effective, the Group anticipates an increase in orders placed by its customers.




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