SHENTONG ROBOT EDUCATION GROUP COMPANY LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.
This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.
VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF
THE TARGET GROUP
PROPOSED GRANT OF PLACING SPECIFIC MANDATE
PROPOSED GRANT OF SUBSCRIPTION SPECIFIC MANDATE AND CONNECTED TRANSACTION
AND
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
Financial adviser to the Company
Independent financial adviser to
the Independent Board Committee and the Independent Shareholders
THE ACQUISITION
The Board is pleased to announce that on 9 December 2015 (after trading hours), the Company and Profuse Year (being the Vendor) entered into the Sale and Purchase Agreement, pursuant to which the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the Sale Shares, being the entire issued share capital of the Target Company at the total consideration of HK$30 million. The Acquisition Completion is conditional upon, among other things, completion of the Placing(s) and the Subscription. Upon Acquisition Completion, the Target Group Companies will become wholly-owned subsidiaries of the Company.
The Consideration shall be payable by the Purchaser at HK$30 million. The Consideration is intended to be settled by the Company by using the proceeds to be raised in the Placing and the Subscription.
The Target Group is principally engaged in the promotion, sales and management services related to CRC Shentong Cards facilitated by the provision of education and training courses as well as the organisation and hosting of CRC competition events in Heilongjiang Province of the PRC, which are authorised by Heilongjiang General
Administration of Sport (黑龍江省體育總局), a provincial organisation of the General Administration of Sport (國家體育總局) of the PRC, and regarded as the major marketing
tool for the provision of the above services.
THE SERVICE AGREEMENT
On 21 November 2015, CCI and the Target Company entered into the Service Agreement, pursuant to which the Target Company agreed to pay CCI a service fee of HK$350,000,000 in connection with CCI having procured the following for the Target Company: (i) the exclusive right to use the CRC Shentong Card payment system in Heilongjiang Province of the PRC; and (ii) the exclusive right to organise and develop CRC competition events and to provide CRC education and training courses in Heilongjiang Province of the PRC.
The Service Fee is charged on an one-off basis will be paid by the Target Company to CCI within 360 days after the date of the Service Agreement, which payment is not subject to any condition precedent, is not conditional on the independent Shareholders' approval and the Acquisition Completion and is expected to commence after Acquisition Completion and accordingly be borne by the Enlarged Group.
The Service Fee is payable by the Target Company and is intended to be settled by the Enlarged Group by using the proceeds to be raised in the Placing and the Subscription. As such and together with the Consideration, the total payment obligation of the Company would be HK$380 million.
THE PLACING AND THE SUBSCRIPTION
Proposed Grant of Specific Mandates
In light of the Acquisition and the payment under the Service Agreement, the Directors will seek the approval of the Independent Shareholders at the EGM for the grant of the Placing Specific Mandate and the Subscription Specific Mandate to authorise the Directors to allot and issue the Placing Shares and the Subscription Shares. The proceeds from the Placing(s) and Subscription will primarily be used to settle the Consideration for the Acquisition and for payment of the Service Fee under the Service Agreement by the Target Company (being a member of the Enlarged Group after Acquisition Completion) and the remaining balance will be used for general corporate purposes of the Group.
Placing Specific Mandate
The Board proposes to seek the grant of a Placing Specific Mandate from the Independent Shareholders at the EGM to allot and issue the Placing Shares (i.e. up to an aggregate of not more than 670,809,083 new Shares) by way of one or more potential Placing(s). The Placing Shares represent: (i) approximately 51.81% of the existing issued share capital of the Company of 1,294,697,017 Shares as at the date of this announcement; and (ii) approximately 30.21% of the enlarged issued share capital of the Company of 2,220,444,365 Shares immediately after the allotment and issue of the maximum number of the Placing Shares and the Subscription Shares in aggregate (assuming there will be no other changes in the issued share capital of the Company).
Subscription Specific Mandate
The Board proposes to seek the grant of a Subscription Specific Mandate from the Independent Shareholders at the EGM to allot and issue the Subscription Shares (i.e. up to an aggregate of not more than 254,938,265 new Shares) to CCI. The Subscription Shares represent: (i) approximately 19.69% of the existing issued share capital of the Company of 1,294,697,017 Shares as at the date of this announcement; and (ii) approximately 11.48% of the issued share capital of the Company of 2,220,444,365 Shares as enlarged by the allotment and issue of the maximum number of the Placing Shares and the Subscription Shares in aggregate (assuming there will be no other changes in the issued share capital of the Company).
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
Upon Acquisition Completion, the Target Company and the Target Subsidiaries will become subsidiaries of the Company, and accordingly certain ongoing transactions of the Target Group with the Parent Group will become continuing connected transactions of the Company under Chapter 20 of the GEM Listing Rules.
Among others, it is expected that upon Acquisition Completion, the Non-Exempt Continuing Connected Transactions of the Target Group with the Parent Group will be subject to reporting, annual review, announcement and Independent Shareholders' approval requirements under Chapter 20 of the GEM Listing Rules, and written agreement(s) have been or will be entered into between the Target Group and the Parent Group in accordance with Rule 20.48 of the GEM Listing Rules on or before the Acquisition Completion.
GEM LISTING RULES IMPLICATIONS
As one or more of the relevant percentage ratios applicable to the Company in respect of the Acquisition exceeds 100%, the entering into of the Sale and Purchase Agreement constitutes a very substantial acquisition of the Company under Chapter 19 of the GEM Listing Rules.
As at the date of this announcement, each of CCC, China Communication Heilongjiang, Harbin China Communication Skill Training and China Communication Heilongjiang Bin County Branch is an associate of CCI and is therefore a connected person of the Company. Accordingly, immediately upon Acquisition Completion, the Non-Exempt Continuing Connected Transactions will constitute continuing connected transactions of the Company under Chapter 20 of the GEM Listing Rules. Since the annual caps under each of the Non-Exempt Continuing Connected Transactions represent more than 5% of the relevant applicable percentage ratios under the GEM Listing Rules and are expected to exceed HK$10 million, the Non-Exempt Continuing Connected Transactions and the proposed annual caps for the Non-Exempt Continuing Connected Transactions are subject to reporting, annual review, announcement and Independent Shareholders' approval requirements under Chapter 20 of the GEM Listing Rules.
As at the date of this announcement, Profuse Year and CCI are connected persons of the Company under Chapter 20 of the GEM Listing Rules by virtue of them being an associate of a substantial Shareholder (i.e. CCI) and a substantial Shareholder, respectively. Accordingly, the entering into of the Sale and Purchase Agreement and the Subscription constitute connected transactions of the Company pursuant to the GEM Listing Rules and are subject to reporting, announcement and Independent Shareholders' approval requirements under Chapter 20 of the GEM Listing Rules. Furthermore, upon the Acquisition Completion, the Non-Exempt Continuing Connected Transactions will constitute continuing connected transactions of the Company pursuant to the GEM Listing Rules and are subject to reporting, announcement and Independent Shareholders' approval requirements under Chapter 20 of the GEM Listing Rules.
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