Hwa Hong Corporation Limited (the “Company”)
wishes to announce that Norwest Holdings Pte Ltd (“Norwest
Holdings”), a company in which the Company’s wholly-owned subsidiary,
Hwa Hong Edible Oil Industries Pte. Ltd. (“Hwa Hong Edible Oil”),
has a 49.5% equity interest, has today entered into a conditional
agreement (“Agreement”) with Asset Backed Holdings Limited (“ABK”)
and David Argyle, a director of both Norwest Holdings and ABK, for the
disposal of its 100% equity interest in Norwest Chemicals Pte Ltd (“Norwest
Chemicals”), comprising two (2) ordinary shares of S$1.00 each in the
capital of Norwest Chemicals, to ABK (“Proposed Transaction”). ABK is a corporation incorporated in Australia
and listed on the Australian Stock Exchange Limited (“ASX”).
Norwest Chemicals has a wholly-owned
subsidiary, Sichuan Mianzhu Norwest Phosphate Chemical Company Limited (“Sichuan
Mianzhu”), a company incorporated in The People’s Republic of China which
carries on the principal business of manufacturing, refining,
distributing and marketing premium grade value-added phosphate chemicals
(collectively, Norwest Holdings, Norwest Chemicals and Sichuan Mianzhu
are hereinafter referred to as the “Norwest Group”).
The consideration payable by ABK
under the Agreement will be satisfied as follows:
(i)
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payment by ABK to Norwest Holdings
of a cash consideration of AUD2,120,000 (“Cash Consideration”);
and
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(ii)
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the
allotment and issue by ABK of an aggregate of 21,400,000 new ordinary
shares in the capital of ABK (“Consideration Shares”),
representing approximately 29.61% of the enlarged issued share capital
of ABK immediately after completion of the Proposed Transaction,
comprising:
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(a)
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1,700,416 Consideration Shares to
be allotted and issued to Hwa Hong Edible Oil as part payment of debts
owing to it by the Norwest Group;
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(b)
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1,799,584
Consideration Shares to be allotted and issued to David Argyle as
payment in full of debts owing to him by the Norwest Group;
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(c)
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400,000
Consideration Shares to be allotted and issued to Strategic Alliance
Capital Pte Ltd as part payment of debts owing to it by the Norwest
Group; and
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(d)
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17,500,000
Consideration Shares to be allotted and issued to Norwest Holdings (or
as it may direct).
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The last traded price of ABK shares
on the ASX on 2
April 2004 was AUD0.19 per share.
The purchase consideration for the
Proposed Transaction was arrived at on a willing buyer-willing seller
basis, taking into account, inter alia, the adjusted unaudited
consolidated net asset value of Norwest Chemicals as at 29 February 2004.
The Proposed Transaction is conditional upon the satisfaction
(or waiver, as the case may be) of, inter alia, the following
conditions:
(a)
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ABK completing its due
diligence investigations on Norwest Chemicals within 42 days after the
date of the Agreement and the results of ABK’s due diligence
investigations on Norwest Chemicals being satisfactory to ABK in all
material respects, and Norwest Holdings completing its due diligence
investigations on ABK within 28 days after the date of the Agreement
and the results of Norwest Holding’s due diligence investigations on
ABK being satisfactory to Norwest Holdings in all material respects;
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(b)
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the approval of the
shareholders of ABK and Norwest Holdings respectively for the Proposed
Transaction having been obtained and such approvals having been
obtained, not being varied, revoked or withdrawn;
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(c)
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ABK obtaining all necessary
regulatory approvals (including the approval of the ASX for the listing
and quotation of the Consideration Shares on the ASX to the extent that
no ASX escrow restrictions apply and, if the ASX does impose escrow
restrictions on any of the Consideration Shares, that these
restrictions are acceptable to Norwest Holdings and, if imposed, are
imposed for a period not exceeding 24 months from the date of
completion of the Proposed Transaction) and other approvals required to
complete the Proposed Transaction, and such approvals having
been obtained, not being varied, revoked and withdrawn, and if such
approvals are granted subject to conditions, such conditions being
acceptable to Norwest Holdings;
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(d)
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there not being any order,
ruling or directive from the Australian Securities & Investments
Commission or any other regulatory body that Norwest Holdings, its
shareholders or any of their related corporations are required to make
a takeover bid for ABK as a consequence of the issue of the
Consideration Shares on completion of the Proposed
Transaction;
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(e)
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the execution of an
agreement between Norwest Holdings, its shareholders and certain
creditors of the Norwest Group in relation to, inter alia, the
use of part of the Cash Consideration by Norwest Holdings to repay
certain debts owing to such creditors on the terms therein (“Debt
Payment Agreement”);
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(f)
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Norwest Holdings and the
Company having received evidence satisfactory to them of the release
and discharge of all guarantees, securities, undertakings or other
obligations given by Norwest Holdings, the Company and/or any of their
respective related corporations (save for Norwest Chemicals and Sichuan
Mianzhu) in respect of any indebtedness, liability or obligation of Norwest
Chemicals or Sichuan Mianzhu (including but not limited to a corporate
guarantee given by the Company (“Hwa Hong Guarantee”));
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(g)
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the trading of ABK’s shares
on the ASX not being or having been suspended for a period of 30
consecutive days or longer; and
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(h)
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the volume weighted average
share price of ABK’s shares traded on the ASX during a period of 30
days prior to the date of completion of the Proposed
Transaction
not being less than AUD0.10 per share.
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Completion of the Proposed Transaction is to take place within 7
days after satisfaction or waiver of all the conditions precedent set out
in the Agreement. If any of the conditions precedent are not satisfied or
waived by the date falling 90 days from the date of the Agreement or such
later date as the parties may agree (“Cut-off Date”), the
Agreement shall be deemed to be terminated.
Within 7 days after the date of the Agreement, ABK shall pay a
sum of AUD250,000 as a deposit to be held in escrow and which is to be
released to Norwest Holdings as part payment of the Cash Consideration on
completion of the Proposed Transaction.
In the event that completion does not occur within 120 days from
the date of the Agreement or the conditions precedent are not satisfied
or waived by the Cut-off Date, the deposit will be returned to ABK.
The audited net carrying value of Hwa Hong Group’s equity
interest in Norwest Holdings was approximately S$0.886 million as at 31 December 2003. The release
and discharge of the Hwa Hong Guarantee contemplated under the Agreement
is expected to give rise to a writeback of provision for corporate
guarantee of approximately S$0.8 million for the Company, and the
repayment in cash of certain debts owing by the Norwest Group to Hwa Hong
Edible Oil contemplated under the proposed Debt Payment Agreement is
expected to result in a writeback of provision for doubtful debts of
approximately S$2.4 million for Hwa Hong Edible Oil.
Effect on net tangible assets (“NTA”) per share
Based on the audited consolidated results of the Hwa Hong Group
for the financial year ended 31 December
2003,
and assuming that the Proposed Transaction had been completed as at 31 December 2003, the Proposed Transaction would have increased the
consolidated NTA per share of the Hwa Hong Group as at 31 December 2003 from 64.98 cents to 65.47 cents.
Effect on earnings per share
Based on the audited consolidated results of the Hwa Hong Group
for the financial year ended 31 December 2003, and assuming that the
Proposed Transaction had been completed as at 1 January 2003, the
Proposed Transaction would have increased the consolidated earnings per
share of the Hwa Hong Group for the financial year ended 31 December 2003
from 2.08 cents to 2.57 cents.
None
of the Directors of the Company has any interest, direct or indirect, in
the Proposed Transaction. The
Directors of the Company are not aware of any substantial shareholder of
the Company having any interest, direct or indirect, in the Proposed
Transaction.
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