Brilliance China Automotive Holdings Limited (OTC Bulletin Board: BCAHY; HKEx: 1114)...

Tue Dec 2, 2008 11:32am EST

* Reuters is not responsible for the content in this press release.

Brilliance China Automotive Holdings Limited (OTC Bulletin Board: BCAHY; HKEx:
1114) Announces (1) Connected Transaction - Subscription for Shares by a
Connected Person; (2) Whitewash Waiver; And (3) Resumption of Trading
BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED (Incorporated in Bermuda with
limited liability) (Stock Code: 1114)

HONG KONG, Dec. 2 /PRNewswire-Asia-FirstCall/ --
    THE SUBSCRIPTION
    On 1st December, 2008, the Company and Huachen, a controlling Shareholder
which is interested in approximately 39.41% of the issued share capital of the
Company, entered into the Subscription Agreement in relation to the
subscription of 1,313,953,488 new Shares at HK$0.43 each Subscription Share.
    The net proceeds from the Subscription in the amount of approximately
RMB490 million (equivalent to approximately HK$553.7 million) will be applied
in the manner set out in the paragraph headed "Use of proceeds".
    Huachen is a controlling Shareholder and hence a connected person under
the Listing Rules.  The Subscription contemplated under the Subscription
Agreement constitutes a connected transaction under Chapter 14A of the Listing
Rules and is subject to the approval of the Independent Shareholders taken on
poll at the SGM.
    WHITEWASH WAIVER
    Under Rule 26 of the Takeovers Code, the issue of the Subscription Shares
to Huachen pursuant to the Subscription Agreement will trigger a conditional
mandatory offer by Huachen for all the securities of the Company other than
those already owned by Huachen and parties acting in concert with it.
Application will be made by Huachen to the Executive for the Whitewash Waiver
pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code.  The
Whitewash Waiver, if granted by the Executive, will be subject to the approval
of the Independent Shareholders taken on poll at the SGM.
    GENERAL
    An independent board committee, comprising all the independent non-
executive Directors, namely Mr. Xu Bingjin, Mr. Song Jian and Mr. Jiang Bo,
who have no direct or indirect interest in the Whitewash Waiver, has been
formed to advise the Independent Shareholders on the terms of the Subscription
and the Whitewash Waiver.  Mr. Wu Xiao An (also known as Mr. Ng Siu On) is a
director of Huachen, Mr. Qi Yumin is a director, the Chairman and President of
Huachen, Mr. He Guohua is a director and Vice President of Huachen, Mr. Wang
Shiping is a Vice President of Huachen and Mr. Lei Xiaoyang is the Deputy
Chief Economist and the General Manager of the Department of Assets Operation
of Huachen.  Accordingly, none of the Directors other than the independent
non-executive Directors is considered to be sufficiently independent to become
a member of the Independent Board Committee.  Partners Capital International
Limited has been appointed as the independent financial adviser to advise the
Independent Board Committee and the Independent Shareholders on the terms of
the Subscription and the Whitewash Waiver.  Such appointment has been approved
by the Independent Board Committee.
    A circular containing, among other things, information relating to the
Subscription and the Whitewash Waiver, a letter from the Independent Board
Committee and a letter of advice from the independent financial adviser
together with a notice convening the SGM will be dispatched to the
Shareholders in due course.
    RESUMPTION OF TRADING
    At the request of the Company, trading in the Shares on the Main Board of
the Stock Exchange was suspended with effect from 2:30 p.m. on Monday, 1st
December, 2008 pending the release of this announcement.
    Application has been made by the Company for the resumption of trading in
the Shares on the Main Board of the Stock Exchange with effect from 9:30 a.m.
on Wednesday, 3rd December, 2008.
    A. THE SUBSCRIPTION
    The Subscription Agreement
    On 1st December, 2008, the Company and Huachen, a controlling Shareholder
which is interested in approximately 39.41% of the issued share capital of the
Company, entered into the Subscription Agreement in relation to the
subscription of 1,313,953,488 new Shares at HK$0.43 each Subscription Share.
    Huachen is a state-owned limited liability company which was established
under the laws of the PRC on 16th September, 2002 and is wholly beneficially
owned by the Liaoning Provincial Government of the PRC.  The principal
activities of Huachen is investment holding.  The directors of Huachen are Mr.
Qi Yumin, Mr. Wu Xiao An (also known as Mr. Ng Siu On) and Mr. He Guohua, all
of whom are executive Directors; and Mr. Qin Li, Mr. Zhao Jian and Mr. Tang
Qi.
    Subscription Price
    The subscription price of HK$0.43 each Subscription Share was determined
on an arm's length basis.  The Directors consider the Subscription Price to be
fair and reasonable.  The net price of each Subscription Share is HK$0.42.
    The Subscription Monies in the total amount of approximately RMB500
million (equivalent to approximately HK$565 million) is to be settled in cash
by Huachen by no later than the date of completion of the Subscription.
    The Subscription Price represents:
    (i)   a premium of approximately 10.3% to the closing price of HK$0.39 per
          Share for the morning trading session of the Stock Exchange on 1st
          December, 2008, the date of the Subscription Agreement;
    (ii)  a premium of approximately 13.2% to the closing price of HK$0.38 per
          Share as stated in the daily quotation sheet of the Stock Exchange
          on the Last Trading Day;
    (iii) a premium of approximately 24.6% to the average closing price of
          approximately HK$0.345 per Share as stated in the daily quotation
          sheet of the Stock Exchange for the last five trading days up to and
          including the Last Trading Day;
    (iv)  a premium of approximately 28.0% to the average closing price of
          approximately HK$0.336 per Share as stated in the daily quotation
          sheet of the Stock Exchange for the last 10 trading days up to and
          including the Last Trading Day; and
    (v)   a premium of approximately 35.2% to the average closing price of
          approximately HK$0.318 per Share as stated in the daily quotation
          sheet of the Stock Exchange for the last 30 trading days up to and
          including the Last Trading Day.

    Ranking of the Subscription Shares
    The Subscription Shares, when issued and fully paid, will rank pari passu
among themselves and with Shares in issue at the time of issue and allotment
of the Subscription Shares.  The Subscription Shares will be issued and
allotted pursuant to a specific mandate to be approved by the Independent
Shareholders at the SGM.
    There is no restrictions on subsequent sale of the Subscription Shares.
    The Subscription Shares
    The Subscription Shares represented approximately 35.80% and 26.36% of the
existing issued share capital of the Company and the issued share capital of
the Company as enlarged by the Subscription Shares, respectively.
    The Subscription Shares will be issued under a specific mandate to be
considered by the Independent Shareholders at the SGM.  Application will be
made by the Company to the Listing Committee of the Stock Exchange for the
grant of the listing of, and permission to deal in, the Subscription Shares.
    Conditions of the Subscription Agreement

    Completion of the Subscription Agreement is conditional upon:
    (i)   the Listing Committee of the Stock Exchange granting the listing of,
          and permission to deal in, the Subscription Shares;
    (ii)  the granting of the Whitewash Waiver by the Executive; and
    (iii) the Independent Shareholders approving by way of poll at the SGM the
          Subscription Agreement, the Whitewash Waiver and the issue and
          allotment of the Subscription Shares to Huachen and the
          implementation of the transactions contemplated under the
          Subscription Agreement.

    The above conditions cannot be waived by the parties to the Subscription
Agreement.  In the event that the conditions to the Subscription Agreement are
not fulfilled by 22nd May, 2009, or such later date as may be agreed between
the Company and Huachen, all rights, obligations and liabilities of the
parties in respect of or under the Subscription Agreement shall cease and
terminate, and no party shall have any claim of any nature whatsoever against
the other parties under the Subscription Agreement (except in respect of any
antecedent breach of any obligation under the Subscription Agreement) other
than the refund of the Subscription Monies to Huachen or to deal with the
Subscription Monies in such manner as to be agreed between Huachen and the
Company upon the occurrence of such event.
    Completion shall take place on the third business day after fulfillment of
the conditions and shall be no later than 27th May, 2009.
    B. USE OF PROCEEDS
    The gross proceeds from the Subscription are approximately RMB500 million
(equivalent to approximately HK$565 million).  After deducting expenses
relating to the Subscription, net proceeds in the amount of approximately
RMB490 million (equivalent to approximately HK$553.7 million) will be used to
reduce the outstanding indebtedness of the Group and for working capital of
Shenyang Automotive.
    C.   REASONS FOR THE SUBSCRIPTION
    The Group is engaged in the manufacture and sale of minibuses and
automotive components and sedans.  The Group would like to raise funds to
reduce debt and increase working capital to improve its liquidity and cash
flow position.  The price of the Shares has been adversely impacted by the
current financial turmoil and negative market sentiment.  The Company wishes
to issue Shares at a premium.  Huachen is prepared to subscribe for the
Subscription Shares at a premium to the trading price of the Shares and inject
cash to further support the business of the Group.  The Subscription will
provide the Group with additional cash to strengthen its financial position,
and to better equip the Group in weathering through the current economic
downturn.
    The Directors (including the independent non-executive Directors) believe
that the terms of the Subscription Agreement are fair and reasonable.  Having
considered the above factors, the Board is of the view that the Subscription
is in the interests of the Company and the Shareholders as a whole.
    D. SHAREHOLDING STRUCTURE
    The following table sets out the shareholding structure of the Company
before and after completion of the Subscription:
                        Existing shareholding     Immediately after completion
                                                  of the Subscription (taking
                                                  into account the issue and
                                                  allotment of the
                                                  Subscription Shares and
                                                  assuming no exercise of the
                                                  subscription rights
                                                  attaching to the outstanding
                                                  options and the conversion
                                                  rights of the convertible
                                                  bonds)

                     Number of Shares Approximate Number of Shares Approximate
                                     Percentage %                 percentage %
    Huachen and parties
     acting in concert
     with it (Note 1)   1,446,121,500       39.41  2,760,074,988       55.38

    Templeton Asset
     Management Ltd.
      (Note 2)            477,219,632       13.00    477,219,632  9.58(Note 6)

    Public Shareholders 1,746,424,768       47.59  1,746,424,768 35.04(Note 6)

    Total               3,669,765,900      100.00  4,983,719,388       100.00

    Notes:

    1. The 1,446,121,500 Shares are held by Huachen.  The parties acting in
       concert with Huachen has no interest in the share capital of the
       Company.
    2. The 477,219,632 Shares in long position are held in the capacity as
       investment manager.
    3. As at the date of this announcement, none of the Directors is
       interested in any Shares.
    4. As at the date of this announcement, Mr. Wu Xiao An (also known as Mr.
       Ng Siu On), an executive Director and the Chairman holds options to
       subscribe for 2,800,000 Shares, exercisable at any time during 10-year
       period from 2 June 2001 at the subscription price of HK$1.896 per
Share.
    5. Save for the options to subscribe for 2,800,000 Shares mentioned in
       note 4 above and the zero coupon guaranteed convertible bonds due 2011,
       as at the date of this announcement, the Company did not have other
       outstanding options, derivatives, warrants or securities which are
       convertible or exchangeable into Shares.
    6. Upon completion of the Subscription, the interest of Templeton Asset
       Management Ltd. will be decreased to 9.58%.  It will no longer be a
       substantial Shareholder and its interest will be counted as part of the
       public float.  Accordingly, the percentage interest of public
       Shareholders will be 44.62%.

    As at the date of this announcement, apart from the outstanding options to
subscribe for 2,800,000 Shares held by Mr. Wu Xiao An (also known as Mr. Ng
Siu On) referred to in note 4 above, none of Huachen or parties acting in
concert with it have any share options granted by the Company nor any other
outstanding derivatives in respect of the securities of the Company.
    E. WHITEWASH WAIVER
    Upon completion of the Subscription, Huachen's interest in the Company
will increase from approximately 39.41% to approximately 55.38%.  The parties
acting in concert with Huachen has no interest in the share capital of the
Company.  Under Rule 26 of the Takeovers Code, the issue of the Subscription
Shares to Huachen pursuant to the Subscription Agreement will trigger a
conditional mandatory offer by Huachen for all the securities of the Company
other than those already owned by Huachen and parties acting in concert with
it.  Application will be made by Huachen to the Executive for the Whitewash
Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code.
The Whitewash Waiver, if granted by the Executive, will be subject to the
approval of the Independent Shareholders taken on poll at the SGM.  Huachen
and parties acting in concert with it will abstain from voting on the
resolution to approve the Whitewash Waiver at the SGM.
    None of Huachen or parties acting in concert with it has acquired any
voting rights of the Company for the period from 2nd June, 2008 (being six
months prior to the date of this announcement) to the date of this
announcement.
    Save for the Subscription Agreement, there are no arrangements (whether by
way of option, indemnity or otherwise) in relation to the Shares or shares of
Huachen and which might be material to the Whitewash Waiver.  Other than the
Subscription Agreement, there are no agreements or arrangements to which
Huachen is a party which relate to the circumstances in which it may or may
not invoke or seek to invoke a pre-condition or a condition to the Whitewash
Waiver.
    None of Huachen or parties acting in concert with it has borrowed or lent
any securities of the Company.
    F. REQUIREMENTS OF THE LISTING RULES
    Huachen is a controlling Shareholder and hence a connected person under
the Listing Rules.  The Subscription contemplated under the Subscription
Agreement constitutes a connected transaction under Chapter 14A of the Listing
Rules and is subject to the approval of the Independent Shareholders taken on
poll at the SGM.
    As at the date of this announcement, Huachen is interested in
approximately 39.41% of the issued share capital of the Company.  In
accordance with the requirements of the Listing Rules, Huachen and its
associates will abstain from voting on the resolutions to approve the
Subscription Agreement at the SGM.
    G. GENERAL
    An independent board committee, comprising all the independent non-
executive Directors, namely Mr. Xu Bingjin, Mr. Song Jian and Mr. Jiang Bo,
who have no direct or indirect interest in the Whitewash Waiver, has been
formed to advise the Independent Shareholders on the terms of the Subscription
and the Whitewash Waiver.  Mr. Wu Xiao An (also known as Mr. Ng Siu On), is a
director of Huachen, Mr. Qi Yumin is a director, the Chairman and President of
Huachen, Mr. He Guohua is a director and Vice President of Huachen, Mr. Wang
Shiping is a Vice President of Huachen and Mr. Lei Xiaoyang is the Deputy
Chief Economist and the General Manager of the Department of Assets Operation
of Huachen.  Accordingly, none of the Directors other than the independent
non-executive Directors is considered to be sufficiently independent to become
a member of the Independent Board Committee.  Partners Capital International
Limited has been appointed as the independent financial adviser to advise the
Independent Board Committee and the Independent Shareholders on the terms of
the Subscription and the Whitewash Waiver.  Such appointment has been approved
by the Independent Board Committee.
    A circular containing, among other things, information relating to the
Subscription and the Whitewash Waiver, a letter from the Independent Board
Committee and a letter of advice from the independent financial adviser
together with a notice convening the SGM will be dispatched to the
Shareholders in due course.
    H. RESUMPTION OF TRADING
    At the request of the Company, trading in the Shares on the Main Board of
the Stock Exchange was suspended with effect from 2:30 P.M. on Monday, 1st
December, 2008 pending the release of this announcement.
    Application has been made by the Company for the resumption of trading in
the Shares on the Main Board of the Stock Exchange with effect from 9:30 a.m.
on Wednesday, 3rd December, 2008.
    I. DEFINITIONS
    In this announcement, unless otherwise defined, terms used herein shall
have the following meanings:

    "associates"                   Has the meaning ascribed thereto in the
                                   Listing Rules;

    "Board"                        The board of Directors

    "Company"                      Brilliance China Automotive Holdings
                                   Limited, an exempted company incorporated
                                   in Bermuda with limited liability, whose
                                   securities are listed on the Stock
                                   Exchange

    "connected persons"            Has the meaning ascribed thereto in the
                                   Listing Rules

    "Directors"                    The directors of the Company

    "Executive"                    The Executive Director of the Corporate
                                   Finance Division of the Securities and
                                   Futures Commission of Hong Kong or any of
                                   his delegates

    "Group"                        The Company and its subsidiaries

    "HK$"                          Hong Kong dollars, the lawful currency of
                                   Hong Kong

    "Hong Kong"                    The Hong Kong Special Administrative of
                                   the PRC

    "Huachen"                      Huachen Automotive Group Holdings Company
                                   Limited, the controlling shareholder of
                                   the Company which as at the date of this
                                   announcement is in approximately 39.41%
                                   of the issued share capital of the
                                   Company

    "Independent Board Committee"  The independent committee of Board,
                                   comprising Mr. Xu Bingjin, Mr. Song
                                   Jian and Mr. Jiang Bo, all of whom are
                                   independent non-executive Directors,
                                   formed to advise the Independent
                                   Shareholders as to the Subscription and
                                   the Whitewash Waiver

    "Independent Shareholders"     Shareholders other than (i) Huachen and
                                   its associates and parties acting concert
                                   with it; and (ii) those who are involved
                                   or interested in the Subscription

    "Last Trading Day"             The last full trading day immediately
                                   before the signing of the Subscription
                                   Agreement, ie. 28th November, 2008

    "Listing Rules"                The Rules Governing the Listing of
                                   Securities on the Stock Exchange

    "PRC"                          The People's Republic of China and for
                                   the sole purpose of this announcement
                                   shall exclude Hong Kong, Macau Special
                                   Administrative Region and Taiwan

    "RMB"                          Reminbi, the lawful currency of the PRC

    "SGM"                          The special general meeting of the
                                   Company to be convened for the purpose of
                                   considering, and if thought fit,
                                   approving the Subscription Agreement, the
                                   Whitewash Waiver and the issue and
                                   allotment of the Subscription Shares to
                                   Huachen and the implementation of the
                                   transactions contemplated under the
                                   Subscription Agreement

    "Shareholder(s)"               Holder(s) of Shares

    "Shares"                       Shares at par value of US$0.01 each in
                                   the share capital of the Company

    "Shenyang Automotive"          Shenyang Brilliance JinBei Automobile Co.,
                                   Ltd., a sino-foreign equity joint venture
                                   established in the PRC on 19 July 1991
                                   and a 51% owned subsidiary of the Company

    "Stock Exchange"               The Stock Exchange of Hong Kong Limited

    "Subscription"                 The subscription for the Subscription
                                   Shares as contemplated under the
                                   Subscription Agreement

    "Subscription Agreement"       The subscription agreement dated 1st
                                   December, 2008 entered into between the
                                   Company and Huachen in respect of the
                                   Subscription

    "Subscription Monies"          Approximately RMB500 million (equivalent
                                   to approximately HK$565 million)

    "Subscription Price"           HK$0.43 each Subscription Share

    "Subscription Shares"          1,313,953,488 new Shares to be issued and
                                   allotted under the Subscription Agreement

    "Takeovers Code"               The Hong Kong Code on Takeovers and
                                   Mergers

    "US$"                          United States dollars, the lawful
                                   currency of the United States of America

    "Whitewash Waiver"             A waiver from the Executive pursuant to
                                   Note 1 on dispensations from Rule 26 of
                                   the Takeovers Code, in respect of the
                                   obligations of Huachen and parties acting
                                   in concert with it to make a mandatory
                                   general offer for all the securities of
                                   the Company not already owned by Huachen
                                   and parties acting in concert with it
                                   which would otherwise arise as a result of
                                   the issue and allotment of the Subscription
                                   Shares under the Subscription Agreement


    In this announcement, RMB1.00 is taken to be equivalent to HK$1.13. The
conversion rate is for the purpose of illustration only and does not
constitute a representation that any amounts have been, could have been, or
may be exchanged at the aforementioned or any other rates.
    As at the date of this announcement, the Board comprises four executive
Directors, Mr. Wu Xiao An (also known as Mr. Ng Siu On) (Chairman), Mr. Qi
Yumin (Chief Executive Officer), Mr. He Guohua and Mr. Wang Shiping; one non-
executive Director, Mr. Lei Xiaoyang; and three independent non-executive
Directors, Mr. Xu Bingjin, Mr. Song Jian and Mr. Jiang Bo.
                            By order of the Board
                 Brilliance China Automotive Holdings Limited
                                  Wu Xiao An
                          (also known as Ng Siu On)
                                   Chairman

Hong Kong, 2nd December, 2008
    The Directors jointly and severally accept full responsibility for the
accuracy of the information contained in this announcement (other than
information relating to Huachen) and confirm, having made all reasonable
enquiries, that to the best of their knowledge, opinions expressed in this
announcement have been arrived at after due and carefully consideration and
there are no other facts not contained in this announcement the omission of
which would make any statements in this announcement misleading.
    The directors of Huachen jointly and severally accept full responsibility
for the accuracy of the information contained in this announcement (other than
information relating to the Group) and confirm, having made all reasonable
enquiries, that to the best of their knowledge, opinions expressed in this
announcement have been arrived at after due and carefully consideration and
there are no other facts not contained in this announcement the omission of
which would make any statements in this announcement misleading.
    The Stock Exchange of Hong Kong Limited takes no responsibility for the
contents of this announcement, makes no representation as to its accuracy or
completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the
content of this announcement.
    This announcement appears for information purpose only and does not
constitute an invitation or offer to acquire, purchase, or subscribe for
securities.
    For further information, please contact:

    Brilliance China Automotive Holdings Limited
     Lisa Ng
     Tel: +852-2523-7227

    Weber Shandwick in Hong Kong
     Carol Lau
     Tel: +852-2533-9981

SOURCE  Brilliance China Automotive Holdings Limited

Lisa Ng of Brilliance China Automotive Holdings Limited at +852-2523-7227; or
Carol Lau of Weber Shandwick at +852-2533-9981, for Brilliance China
Automotive Holdings Limited
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