KVB Kunlun Financial Group Ltd (HKG:8077) has today announced that CITIC Securities has agreed to purchase 1.2 billion shares in the firm for HK$780 million.
KVB Kunlun was informed by the Vendor, being the controlling shareholder of KVB Kunlun that on 29 January 2015, the Vendor and CITIC Securities entered into the Share Purchase Agreement pursuant to which CITIC Securities has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares, being 1,200,000,000 KVB Shares, for a total Consideration of HK$780,000,000, equivalent to HK$0.65 per Sale Share.
The sale of shares represents 60% of the 2,000,000,000 KVB shares in issue of KVB Kunlun as at the date of this joint announcement.
As at the date of this joint announcement, CITIC Securities and parties acting in conjunction with it do not own any KVB Shares or other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of KVB Kunlun, other than the interest in the Sale Shares under the Share Purchase Agreement.
Immediately after completion, CITIC Securities and parties acting in conjunction with it will be interested in a total of 1,200,000,000 KVB Shares, representing 60% of the total issued share capital of KVB Kunlun as at the date of this joint announcement.
Pursuant to Rules 26.1 and 13.5 of the Takeovers Code, immediately following Completion, CITIC Securities and parties acting in concert with it will be required to make an unconditional mandatory cash offer to acquire all the issued KVB Shares (other than those KVB Shares already owned or agreed to be acquired by CITIC Securities and parties acting in concert with it and the 300,000,000 KVB Shares to be retained by the Vendor upon Completion) and to cancel all the outstanding KVB Options in the period prior to the close of the Share Offer.
An important matter to consider is that shares in KVB Kunlun will resume trading on Feb 27 at 9am Hong Kong time as it was suspended in the advent of the announcement of a deal.
Full details of the offer
For each Offer Share – HK$0.65 in cash
With regard to the option offer, for cancellation of each outstanding KVB Option, (with an exercise price of HK$0.414) , HK$0.236 in cash will be payable.
As at the date of this joint announcement, there are 2,000,000,000 KVB Shares in issue, and KVB Kunlun has outstanding KVB Options to subscribe for up to 38,280,000 KVB Shares at the exercise price of HK$0.414 per KVB Share.
Assuming that none of the outstanding KVB Options is exercised prior to the close of the Offers and there is no change in the issued share capital of KVB Kunlun up to the close of the Offers, a total of 500,000,000 KVB Shares will be subject to the Share Offer and outstanding KVB Options to subscribe for up to a total of 38,280,000 KVB Shares will be subject to the Option Offer.
Assuming that all the outstanding KVB Options are fully exercised prior to the close of the Offers and there is no other change in the issued share capital of KVB Kunlun up to the close of the Offers, a total of 538,280,000 KVB Shares will be subject to the Share Offer.
The Share Offer Price of HK$0.65 per KVB Share equals the purchase price per Sale Share payable by CITIC Securities under the Share Purchase Agreement.
The principal terms of the Offers are set out under the section headed “Possible Unconditional Mandatory Cash Offers” of this joint announcement. CITIC Securities Corporate Finance (HK) Limited, the financial adviser to CITIC Securities in respect of the Offers, is satisfied that sufficient financial resources are available to CITIC Securities to satisfy full acceptance of the
Offers.
Independent Board Committee of KVB Kunlun
The independent board committee, comprising Mr. Stephen Gregory McCoy, a non-executive director and all the independent non-executive directors of KVB Kunlun, has been formed to advise the Independent KVB Kunlun shareholders and the KVB Option Holders in respect of the offers.
Further announcement will be made in respect of the appointment of the independent financial adviser to the independent board committee of KVB Kunlun.
Pending the release of this joint announcement, trading in the KVB Shares on the Stock Exchange was suspended with effect from 9:00 a.m. on 30 January 2015 at the request of KVB Kunlun.
An application has been made by KVB Kunlun to the Stock Exchange for resumption of trading in the KVB Shares with effect from 9:00 a.m. on 27 February 2015, as previously mentioned.
Consideration and transaction details
The Consideration for the Sale Shares is HK$780,000,000, equivalent to HK$0.65 per Sale Share.
The Consideration was determined after arm’s length negotiations between CITIC Securities and the Vendor, after taking into consideration (i) the audited consolidated net assets value of the KVB
Kunlun Group as at 31 December 2013; (ii) the financial position of the KVB Kunlun Group; (iii) the prevailing market prices of the KVB Shares as further described in the sub-section headed
“Comparison of value” under the section headed “Possible Unconditional Mandatory Cash Offers”
This transaction ensures that CITIC Securities can obtain a controlling interest in KVB Kunlun after completion.
Manner of payment of the Consideration
The Consideration is payable by CITIC Securities to the Vendor in the following manner:
(i) a first payment of HK$390,000,000 (the “First Payment”), representing 50% of the Consideration, was paid to the Vendor (and shall upon Completion be applied as part of the consideration) on 30 January 2015;
(ii) the Exclusivity Fee of HK$50,000,000 (being paid by CITIC Securities pursuant to the LOI) shall upon Completion be applied as part of the Consideration;
(iii) if the Conditions as set out in paragraph (ii) in the sub-section headed “Conditions” under the section headed “The Share Purchase Agreement” in this joint announcement have not been fully satisfied by the Initial Long Stop Date, the balance of HK$340,000,001 shall be payable by CITIC Securities to the Vendor on the first Business Day immediately following the Initial Long Stop Date; (and by then the Long Stop Date for the Share Purchase Agreement will be extended to the Extended Long Stop Date),
If the Conditions as set out in paragraph (ii) in the sub-section headed “Conditions” under the section headed “The Share Purchase Agreement” in this joint announcement are satisfied by the Initial Long Stop Date, HK$340,000,001 shall be payable by CITIC Securities to the Vendor at Completion.
For the official announcement via Hong Kong Exchange, click here.