shougang

SHOUGANG CONCORD INTERNATIONAL ENTERPRISES COMPANY LIMITED
(Incorporated in Hong Kong with limited liability)
(Stock Code: 697)
DISCLOSEABLE TRANSACTION
The Board announces that on 20 March 2007, Timefull, a
wholly-owned subsidiary of the Company, and ARH have entered
into the Agreement, pursuant to which Timefull has agreed to
subscribe the Subscription Shares for an aggregate consideration
of AUD$28,000,000 (equivalent to approximately HK$174,160,000)
and ARH has agreed to grant to Timefull the Subscription
Options.
The Subscription constitutes a discloseable transaction for the
Company under Rule 14.06 of the Listing Rules. A circular
containing, amongst other things, further details relating to the
Subscription will be despatched to the Shareholders as soon as
practicable.
As completion of the Subscription is subject to a number of
conditions precedent, which may or may not be fulfilled,
Shareholders and the public are advised to exercise caution
when dealing in the shares of the Company.
THE AGREEMENT
Date of the agreement
20 March 2007
Parties to the agreement
(1) ARH, an Australian company listed on the ASX, is principally
engaged in investment holding and mining; and
(2) Timefull, a wholly-owned subsidiary of the Company, as the
subscriber of the Subscription Shares and Subscription Options.
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To the best of the Directors’ knowledge, information and belief,
having made all reasonable enquiry, ARH and its substantial
shareholders are independent third parties not connected with the
Company or any of its subsidiaries or any of their respective
directors, chief executive or substantial shareholders or any of their
respective associates.
Subscription Shares
28,000,000 new ARH Shares are to be subscribed by the Subscriber,
representing approximately 7.29% of the existing issued share capital
of ARH and approximately 6.40% of the issued share capital of
ARH as enlarged by the Subscription together with another
subscription agreement entered into by ARH on 20 March 2007 with
another party.
The Subscription Shares, when fully paid, will rank pari passu in
all respects with the ARH Shares in issue, including the right to
any dividends or distributions.
Consideration
The consideration for the Subscription Shares is AUD$28,000,000
(equivalent to approximately HK$174,160,000), which is determined
after arm’s length negotiation between the Subscriber and ARH by
reference to the closing price of the ARH Shares. ARH conducted
a reorganization of capital by consolidating 10 ARH Shares into 1
ARH Share on 19 December 2006 and the pre-consolidation closing
price of ARH Share as at 14 December 2006, the last trading date
of the ARH Shares prior to its suspension on the ASX, is
AUD$0.115. The subscription price of AUD$1.00 per Subscription
Share represents a discount of approximately of 13.04% to the
theoretical post-consolidation latest closing price of AUD$1.15 per
ARH Share.
The consideration will be satisfied by the internal resources of the
Group and is payable in full at Completion.
Conditions
The Subscription is subject to satisfaction of the following conditions
precedent:
(i) the first to occur of:
(A) the Treasurer of the Commonwealth of Australia
(“Treasurer”) ceasing under the Foreign Acquisitions and
Takeovers Act 1975 (“Act”) to be empowered to make
an order under Part II of the Act in relation to the
entering into and Completion of this Agreement; and
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(B) the receipt by the Subscriber of notice in writing issued
by or on behalf of the Treasurer to the effect that the
Government of the Commonwealth of Australia does not
object to the Subscriber entering into and completing the
transaction contemplated by this Agreement;
(ii) the Treasurer of the Commonwealth of Australia approving the
Subscriber’s application under Australia’s Foreign Investment
Policy with regard to direct investments by foreign governments
and their respective agencies in relation to entering into and
Completion of this Agreement;
(iii) the approval of ARH’s shareholders in a general meeting for
the issue of the Subscription Shares and the grant of the
Subscription Options in accordance with the requirements of
ASX listing rules 7.1 and 7.3 and any other applicable
regulatory requirements; and
(iv) the ARH Shares having been reinstated to official quotation
on ASX or ASX notifying ARH in writing that the ARH
Shares will be reinstated to official quotation on ASX subject
only to completion of the issue and allotment of the
Subscription Shares.
If the conditions precedent above are not satisfied or waived, as
the case may be, on or before 30 June 2007 or such later date
as the parties may agree in writing, then all rights and obligations
of the parties under the Agreement shall terminate save for
antecedent breaches.
Trading in ARH Shares has been suspended since 15 December 2006
pursuant to ASX Listing Rule 11.1 which requires that a company
undergoing a major change in the nature or scale of its activities
must, in certain circumstances, be suspended until the company has
satisfied certain re-listing requirements of ASX including completion
of a capital raising and the issue of a prospectus. The suspension
of the trading in ARH Shares was caused by the change in the
scale of its activities as a result of the acquisition of International
Minerals. ARH is seeking re-listing on ASX and anticipates re-listing
will take place within the next few weeks once it completes a
prospectus.
Completion
Completion will take place on the 2nd Business Day after the
satisfaction or waiver of the conditions of the Agreement.
Subscription Options
Pursuant to the Agreement, ARH will also grant to the Subscriber
without consideration the option to subscribe for 14,000,000 ARH
Shares at the exercise price of AUD$1.50 per ARH Share.
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The Subscription Options have an option period of three years from
the date of its issue. Subscription Options not exercised during the
option period will automatically expire. The Subscription Options
may be transferred to a related body corporate but otherwise may
not be sold, assigned, transferred or otherwise dealt with in any
way.
All ARH Shares issued pursuant to the exercise of the Subscription
Options will rank pari passu in all respects with the existing ARH
Shares in issue. The Company will comply with the relevant
requirements of the Listing Rules upon the exercise, transfer or
expiry of the Subscription Options.
ARH
ARH is a company incorporated in Australia, the shares of which
are listed on ASX. ARH is principally engaged in the business of
mineral exploration and through the interest of its wholly-owned
subsidiary, International Minerals, owns the rights to mine 1 billion
tonnes of magnetite iron ore from part of the Susan Palmer Deposit
located on tenements in the Pilbara region of Western Australia.
The audited net asset value of ARH as at 30 June 2005 and 30
June 2006 were approximately HK$116,216,000 and approximately
HK$115,802,000, respectively. The losses before and after tax of
ARH for the two financial years ended 30 June 2005 and 30 June
2006 were approximately HK$27,564,000 and approximately
HK$72,146,000, respectively. The financial reports of ARH have
been prepared in accordance with Australian Accounting Standards
which equivalent to International Financial Reporting Standards,
other authoritative pronouncements of the Australian Accounting
Standard Board, Urgent Issues Group Interpretations and the
Corporations Act 2001 of Australia.
ARH intends to use most of the proceeds towards the payment of
any assessed stamp duty for the purchase of International Minerals
and the undertaking of a bankable feasibility study for the Project.
Reason for the transaction
The Group is principally engaged in the manufacture, sale and
trading of steel products, shipping operations and electricity
generation.
In order to enhance the Group’s position in the manufacture and
sale of steel products in the PRC, the Board believes that the
investment in ARH, the principal business of which is mineral
exploration, is in the interest of the Shareholders as it would
potentially secure a long-term and stable source of supply of raw
materials for the Group’s steel manufacturing operation. The Group
will explore further opportunity to cooperate with ARH in future.
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The Directors (including the independent non-executive Directors)
consider that the Agreement has been made on normal commercial
terms and that such terms are fair and reasonable so far as the
Company and the Shareholders are concerned and that the Subscription
is in the interest of the Company and the Shareholders as a whole.
GENERAL
The Subscription constitutes a discloseable transaction for the
Company under Rule 14.06 of the Listing Rules. A circular
containing, amongst other things, further details relating to the
Subscription will be despatched to the Shareholders as soon as
practicable.
As completion of the Subscription is subject to a number of
conditions precedent, which may or may not be fulfilled,
Shareholders and the public are advised to exercise caution when
dealing in the shares of the Company.
DEFINITIONS
In this announcement, the following expressions have the following
meanings unless otherwise requires:
“Agreement” the agreement dated 20 March 2007, entered
into by and between Timefull and ARH in
respect of the Subscription
“ARH” Australasian Resources Limited, a company
incorporated in Western Australia, the
securities of which are listed on ASX
“ARH Shares” ordinary shares of AUD$1.00 each in the
share capital of ARH
“associate” has the meaning ascribed to it under the
Listing Rules
“ASX” Australian Securities Exchange
“AUD$” Australian dollar, the lawful currency of
Australia
“Board” the board of directors of the Company
“Business Day” a day on which banks are open for business
generally in Perth, Western Australia
“Company” Shougang Concord International Enterprises
Company Limited, a company incorporated
in Hong Kong, the securities of which are
listed on the Stock Exchange
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“Completion” completion of the Subscription
“Director(s)” the director(s) of the Company
“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative
Region of the PRC
“HK$” Hong Kong dollar, the lawful currency of
Hong Kong
“International International Minerals Pty Ltd, a company
Minerals” incorporated in Queensland and is a whollyowned
subsidiary of ARH
“Listing Rules” the Rules Governing the Listing of
Securities on the Stock Exchange
“PRC” the People’s Republic of China
“Project” the sole and exclusive right to mine and
process 1 billion tonnes of magnetite iron
ore from part of the Susan Palmer Deposit
located on tenements in the Pilbara region
of Western Australia
“Shareholder(s)” holder(s) of Shares
“Shares” ordinary shares of HK$0.20 each in the
share capital of the Company
“Subscriber” Timefull Investments Limited, a whollyowned
subsidiary of the Company
“Subscription” the subscription of the Subscription Shares
and the Subscription Options by Timefull
“Subscription Options” options to subscribe for 14,000,000 ARH
Shares granted by ARH to the Subscriber
pursuant to the terms of the Agreement
“Subscription Shares” 28,000,000 ordinary shares in the issued
share capital of ARH to be subscribed by
the Subscriber pursuant to the terms of the
Agreement
“Timefull” Timefull Investments Limited, a company
incorporated in the Samoa and is a whollyowned
subsidiary of the Company
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“Stock Exchange” The Stock Exchange of Hong Kong Limited
“%” per cent.
For illustration purposes, amounts in AUD$ in this announcement
have been translated into HK$ at AUD$1 = HK$6.22.
By Order of the Board
Shougang Concord International
Enterprises Company Limited
Cao Zhong
Managing Director
Hong Kong, 21 March 2007
As at the date of this announcement, the Board comprises Mr. Wang
Qinghai (Chairman), Mr. Cao Zhong (Managing Director), Mr. Chen
Zhouping (Deputy Managing Director), Mr. Zhang Wenhui (Deputy
Managing Director), Mr. Luo Zhenyu (Deputy Managing Director),
Mr. Ip Tak Chuen, Edmond (Non-executive Director), Mr. Leung Shun
Sang, Tony (Non-executive Director), Ms. Kan Lai Kuen, Alice
(Independent Non-executive Director), Mr. Wong Kun Kim (Independent
Non-executive Director) and Mr. Leung Kai Cheung (Independent
Non-executive Director).
Please also refer to the published version of this announcement in
South China Morning Post - Classified