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China Oil Resources Holdings Limited
China Oil Resources Holdings Limited
07/30/2010 | Press release
CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF 51% OF THE ENTIRE EQUITY INTEREST IN AN OIL TECHNOLOGY COMPANY
publié par noodls le 07/29/2010 21:22
This announcement is for information only and does not constitute an invitation or offer to
acquire, purchase or subscribe for the securities mentioned herein.
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.
PetroAsian Energy Holdings Limited
· - · U > p Þ " ® !
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 850)
CONNECTED TRANSACTION
IN RELATION TO THE
ACQUISITION OF 51% OF THE ENTIRE EQUITY INTEREST IN
AN OIL TECHNOLOGY COMPANY
ACQUISITION OF SALE SHARES
Reference is made to the announcements of the Company dated 21 December 2009, 28
February 2010 and 31 May 2010 respectively in relation to, inter alia, the MOU for the
acquisition of the PRC Company.
The Board is pleased to announce that on 29 July 2010 (after trading hours), Easyrich, a
wholly-owned subsidiary of the Company, and Mr. Poon, the chairman of the Company
and an executive Director, as purchasers, entered into the Agreement with the Vendor and
the Warrantors pursuant to which Easyrich and Mr. Poon have agreed to purchase, and the
Vendor has agreed to sell, the First Sale Shares and the Second Sale Shares to Easyrich
and Mr. Poon respectively at an aggregate consideration of RMB56 million (equivalent to
HK$63.64 million).
The First Sale Shares and the Second Sale Shares respectively represent 51% and 19% of
the entire issued share capital of the Target.
1
The aggregate consideration for the Sale Shares of RMB56 million (equivalent to
approximately HK$63.64 million) has been/shall be satisfied by Easyrich and Mr. Poon in
proportion to their respective holding in the Sale Shares in the following manner:
(1) the Deposit in the sum of RMB6 million (equivalent to approximately HK$6.82
million) has been paid by Easyrich and Mr. Poon as to approximately RMB4.37
million (equivalent to approximately HK$4.97 million) and approximately RMB1.63
million (equivalent to approximately HK$1.85 million) respectively within 7 days
after the signing of the MOU;
(2) the sum of RMB36.42 million (equivalent to approximately HK$41.38 million) shall
be satisfied by Easyrich by procuring the Company to allot and issue 59,118,571
Consideration Shares, credited as fully paid, at the issue price of approximately
HK$0.7 per Consideration Share to the Vendor (or its nominee) upon Completion; and
(3) the balance of RMB13.58 million (equivalent to approximately HK$15.44 million)
shall be satisfied by Mr. Poon by transferring the 22,050,000 Poon Shares at the
transfer price of approximately HK$0.70 for each Poon Share to the Vendor upon
Completion.
FIRST CALL OPTION AND SECOND CALL OPTION
In addition, simultaneously upon signing of the Agreement, Easyrich has entered into the
First Option Agreement with the Vendor, pursuant to which Easyrich shall have an option to
acquire the First Option Shares, representing 24% of the entire issued share capital of the
Target, from the Vendor at the exercise price to be determined based on the valuation of the
First Option Shares as at the exercise date of the First Call Option for a period of two years
since the Effective Date (or such longer period as Easyrich and the Vendor may agree).
Furthermore, also simultaneously upon signing of the Agreement, Easyrich has entered into
the Second Option Agreement with Mr. Poon, pursuant to which Easyrich shall have an
option to acquire the Second Option Shares, representing the Second Sale Shares, from Mr.
Poon at the exercise price to be determined based on the valuation of the Second Option
Shares as at the exercise date of the Second Call Option for a period of two years since the
Effective Date (or such longer period as Easyrich and Mr. Poon may agree).
2
LISTING RULES IMPLICATIONS
As none of the relevant percentage ratio exceeds 5%, the Acquisition does not constitute any
notifiable transaction on the part of the Company under Chapter 14 of the Listing Rules.
Mr. Poon, being the chairman of the Company and an executive Director, is a controller (as
defined in the Listing Rules) of the Company and will become a substantial shareholder
of the Target upon Completion. Accordingly, the Acquisition constitutes a non-exempt
connected transaction on the part of the Company under Rule 14A.13(1)(b)(i) of the Listing
Rules and is subject to reporting, announcement and Independent Shareholders' approval
requirement.
As no premium is payable by Easyrich for the grant of the First Call Option and the
Second Call Option, the entering into of the First Option Agreement and the Second Option
Agreement shall not constitute any notifiable transaction and/or connected transaction under
Chapter 14 or Chapter 14A of the Listing Rules.
The Vendor, the Warrantors and Mr. Poon and their respective associates are required
to abstain from voting on the resolution at the EGM to approve the Agreement and the
transactions contemplated thereunder.
The Independent Board Committee comprising Mr. Chan Kam Ching, Paul, Mr. Chan Shu
Kin and Mr. Cheung Kwan Hung, being all the independent non-executive Directors, will be
formed to advise the Independent Shareholders as to the fairness and reasonableness of the
Acquisition. An independent financial adviser will be appointed to advise the Independent
Board Committee in this regard.
GENERAL
The EGM will be convened and held by the Company to consider and approve, if thought
fit, the Agreement and the transactions contemplated thereunder, including but not limited
to the allotment and issue of the Consideration Shares and the entering into of the Option
Agreements.
A circular containing, among other matters, further information on the Acquisition, notice
of the EGM, the letter from the independent financial adviser to the Independent Board
Committee and the Independent Shareholders, the letter from the Independent Board
Committee to the Independent Shareholders, will be despatched to the Shareholders within
15 business days after the publication of this announcement (i.e. on or before 19 August
2010).
3
Reference is made to the announcements of the Company dated 21 December 2009, 28
February 2010 and 31 May 2010 respectively in relation to, inter alia, the MOU for the
acquisition of the PRC Company.
The Board is pleased to announce that on 29 July 2010 (after trading hours), Easyrich, a
wholly-owned subsidiary of the Company, and Mr. Poon, the chairman of the Company and
an executive Director, as purchasers, entered into the Agreement with the Vendor and the
Warrantors pursuant to which Easyrich and Mr. Poon have agreed to purchase, and the Vendor
has agreed to sell, the First Sale Shares and the Second Sale Shares to Easyrich and Mr.
Poon respectively at an aggregate consideration of RMB56 million (equivalent of HK$63.64
million). Details of the Agreement are as follows:
THE AGREEMENT
Date: 29 July 2010
Parties: Vendor: Mr. Lam Ka Wai -- < [ ·
Purchasers: (1) Easyrich, a wholly-owned subsidiary of the Company;
and
(2) Mr. Poon, the chairman of the Company and an
executive Director
Warrantors: (1) Mr. Chen Pingkui Ó S ò < [ · ;
(2) Mr. Shen Tungping Ï p ; < [ · ;
(3) Mr. Yan Dejun ... C i < [ · ; and
(4) Mr. Lin Sen OE < [ · .
4
The Vendor and the Warrantors are private investors having extensive experience in the
oil exploration technology business in the PRC. To the best of the Directors' knowledge,
information and belief having made all reasonable enquiries, each of the Vendor and the
Warrantors and their respective associates is an Independent Third Party.
After the entering into of the MOU, with consent of Easyrich and Mr. Poon, an internal
reorganisation had been conducted by the Target Group to the effect that the PRC Company,
being the original target company under the MOU, has become an indirect wholly-owned
subsidiary of the Target. Pursuant to the deed of novation and assignment entered into among
the Warrantors (being the original vendors under the MOU) and the Vendor, the Warrantors
have novated and assigned all the obligations and benefits (including the Deposit received)
under the MOU to the Vendor. As the Warrantors remain to be members of the management
of the PRC Company, they have agreed to provide certain warranties, guarantees and
undertakings under the Agreement.
Mr. Poon is the chairman of the Company, an executive Director and a substantial Shareholder
interested in 560,565,011 Shares, representing about 15.21% of the entire issued share capital
of the Company as at the date of this announcement. Therefore, Mr. Poon and his associates
are connected persons of the Company.
Assets to be acquired
Easyrich and Mr. Poon will acquire 51% and 19% of the entire issued share capital of the
Target respectively from the Vendor. After Completion, the Vendor shall remain interested in
30% of the entire issued share capital of the Target.
Consideration
The consideration of RMB56 million (equivalent to approximately HK$63.64 million) for the
sale and purchase of the Sale Shares has been/shall be satisfied by Easyrich and Mr. Poon in
the following manner:
(1) the Deposit in the sum of RMB6 million (equivalent to approximately HK$6.82
million) has been paid by Easyrich and Mr. Poon as to approximately RMB4.37 million
(equivalent to approximately HK$4.97 million) and approximately RMB1.63 million
(equivalent to approximately HK$1.85 million) respectively within 7 days after the
signing of the MOU;
5
(2) the sum of RMB36.42 million (equivalent to approximately HK$41.38 million) shall
be satisfied by Easyrich by procuring the Company to allot and issue 59,118,571
Consideration Shares, credited as fully paid, at the Issue Price of approximately HK$0.7
per Consideration Share to the Vendor (or its nominee) at Completion; and
(3) the balance of RMB13.58 million (equivalent to approximately HK$15.44 million) shall
be satisfied by Mr. Poon by transferring the 22,050,000 Poon Shares at the transfer price
of approximately HK$0.70 for each Poon Share to the Vendor upon Completion.
If Completion does not take place or the conditions above have not been fulfilled as a result
of the sole default of the Purchasers, the Agreement shall cease and determine in which event
the Vendor shall be entitled to forfeit the Deposit absolutely and neither party shall have
any obligations and liabilities thereunder and neither party shall take any action to claim for
damages or to enforce specific performance or any other rights and remedies.
If Completion does not take place or the conditions above have not been fulfilled otherwise
than due to the sole default of the Purchaser, the Agreement shall cease and terminate and the
Vendor shall refund the Deposit (without interest) to the Purchasers, and neither party shall
have any obligations and liabilities thereunder and neither party shall take any action to claim
for damages or to enforce specific performance or any other rights and remedies.
The consideration for the Sale Shares was determined with reference to: (i) the valuation of
the Target of not less than RMB80 million (equivalent to approximately HK$90.91 million);
and (ii) the future prospectus of the oil exploitation technology business which the Target
Group is engaged in. The Directors consider the terms and conditions of the Acquisition
have been arrived at after arm's length negotiations among Easyrich, Mr. Poon, the Vendor
and the Warrantors and are fair and reasonable and in the interests of the Company and the
Shareholders as a whole. The Directors (excluding the independent non-executive Directors
who shall provide their view after considering the advice from the independent financial
adviser) consider the terms and conditions of the Acquisition to be on normal commercial
terms and fair and reasonable and are in the interest of the Company and the Shareholders as a
whole.
6
Conditions
The Agreement is conditional upon:
(1) the Vendor having obtained all necessary consents and approvals required in respect of
the Agreement;
(2) there being no matter, fact or circumstance which will constitute or likely to constitute a
breach of the warranties or the provisions in the Agreement;
(3) the Listing Committee of the Stock Exchange granting listing of and permission to deal
in the Consideration Shares;
(4) the passing by the Independent Shareholders at the EGM of an ordinary resolution to
approve the Agreement and the transactions contemplated hereunder, including but not
limited to the allotment and issue of the Consideration Shares and the entering into of
the Option Agreements;
(5) the obtaining of a PRC legal opinion issued by a qualified PRC legal advisers nominated
by the Purchasers in relation of the Agreement and the transactions contemplated
thereunder, in form and substance satisfactory to the Purchasers;
(6) the Purchasers being satisfied with the results of the due diligence review conducted on
the assets, liabilities, operations and affairs of the Target Group;
(7) the obtaining of a valuation report on the Sale Shares issued by a firm of qualified
valuers appointed by the Purchaser showing the valuation of the Target to be not less
than RMB80 million (equivalent to approximately HK$90.91 million);
(8) the entering into of the Profit Sharing Agreement between Panjin Liaohe and PetroChina
Liaohe and all necessary consents and approvals required in respect of the Profit Sharing
Agreement having been obtained and remain subsisting;
(9) the entering into of the First Option Agreement; and
(10) the entering into of the Second Option Agreement.
7
Except the Purchasers can waive all or any of the conditions (5) and (6) above, none of the
above conditions are capable to be waived. If the conditions above have not been satisfied or
waived (as appropriate) at or before 4:00 p.m. on 30 September 2010, or such later date as the
Purchasers and the Vendor may agree in writing, the Agreement shall cease and determine,
and thereafter neither party to the Agreement shall have any obligations and liabilities towards
each other thereunder save for any antecedent breaches of the terms thereof.
Completion
Completion shall take place at 4:00 p.m. on the date falling three Business Days after the
fulfilment of the conditions or such later date as may be agreed among the Purchasers and the
Vendor.
Upon Completion, the Target will become a non wholly-owned subsidiary of the Company.
Undertakings
Under the Agreement, various undertakings and guarantees have been provided by the Vendor,
the Warrantors, Easyrich and/or Mr. Poon as follows:
(1) Easyrich and Mr. Poon shall be responsible for the entire capital injection of the PRC
Company (in proportion to their respective shareholdings in the Target from time to
time) in relation to the oil increment project to be conducted on the Oilfield pursuant to
the Service Agreement;
(2) Easyrich and Mr. Poon shall also be responsible for the entire capital injection of the
PRC Company (in proportion to their respective shareholdings in the Target from time
to time) in relation to the oil increment project to be conducted on the New Oilfield
pursuant to the New Service Agreement;
(3) the capital injection to be made by Easyrich and Mr. Poon pursuant to paragraphs (1)
and (2) above shall be injected by way of shareholders' loan to the Target, which shall
carry no interest, unsecured and without specific term of repayment;
(4) unless with consent from the Purchasers, no dividend may be declared by the Target
Company before the shareholder's loan owed by the PRC Company has been repaid in
full;
8
(5) the amount of incremental oil output for the Oilfield shall not be less than 20,000 tonnes
and 45,000 tonnes for the first year and the second year respectively, each commencing
from the date of Completion respectively. The Vendor and the Warrantors shall deliver,
or procure the delivery to the Purchasers, certificates (in the form and substance
satisfactory to the Purchasers) showing the amount of incremental oil output as at the
date of the Completion, the date falling the first anniversary of the Completion and the
date falling the second anniversary of the Company respectively, each to be delivered to
the Purchasers within 7 days after each of the aforementioned dates;
(6) the Vendor and the Warrantors have guaranteed that the share of incremental oil by the
PRC Company under the New Service Agreement will be not less than 30% of the entire
amount of incremental oil from the New Oilfield;
(7) the Vendor and the Warrantors have guaranteed that the share of incremental oil by
Panjin Liaohe under the Profit Sharing Agreement will be not less than 50% of the entire
amount of incremental oil from the Oilfield; and
(8) the Vendor and the Warrantors have undertaken and guaranteed that the Warrantors
will fully repay the Shareholders' Debt (together with the interest accrued) owed to the
PRC Company prior to Completion. The Vendor has further undertaken and guaranteed
that should the Warrantors fail to fully repay the Shareholders' Debt (together with the
interest accrued) in full prior to the Completion, the Purchasers may deduct the relevant
outstanding amount of the Shareholders' Debt from the consideration payable by the
Purchasers to the Vendor upon Completion.
THE OPTION AGREEMENTS
Simultaneously upon signing of the Agreement, Easyrich has entered into the First Option
Agreement and the Second Option Agreement with the Vendor and Mr. Poon respectively,
pursuant to which Easyrich shall have the right to acquire the First Option Shares from the
Vendor and/or the Second Option Shares from Mr. Poon during the Exercise Period.
9
The principal terms of the Option Agreements are set out below:
Option Shares:
First Call Option: 240 Target Shares, representing 24% of the entire issued share
capital of the Target
Second Call Option: 190 Target Shares, equivalent to the Second Sale Shares,
representing 19% of the issued share capital of the Target
Exercise price: The exercise price shall be determined based on the valuation
of the First Option Shares or the Second Option Shares (as
appropriate) as at the relevant exercise date of the First Call
Option or the Second Call Option (as appropriate) as shown in
the valuation report(s) (which shall be in the form and substance
satisfactory to the parties to the First Option Agreement or
the Second Option Agreement (as appropriate)) issued by the
independent valuer to be jointly appointed by the parties to the
First Option Agreement or the Second Option Agreement (as
appropriate)
Conditions: the Option Agreements are conditional upon the Agreement having
become unconditional
Effective Date: being the Completion Date
Exercise Period: Easyrich may exercise the First Call Option and/or the Second
Call Option (in whole or in part) for a period of two years since
the Effective Date (or such longer period as the parties to the
relevant Option Agreement may agree)
The terms and conditions of the Option Agreements were arrived at after arm's length
negotiations between Easyrich and the Vendor and Mr. Poon and the exercise price was
determined by reference to the valuation on the First Option Shares and the Second Options
Shares as at the relevant exercise date of the First Call Option or the Second Call Option (as
appropriate). As such, the Directors consider that the exercise price is fair and reasonable and
is in the interests of the Company and the Shareholders as a whole.
10
THE CONSIDERATION SHARES
59,118,571 Consideration Shares will be issued at the Issue Price of approximately HK$0.70
per Consideration Share, credited as fully paid. The Consideration Shares, when allotted
and issued, shall rank pari passu in all respects with the Shares then in issue on the date of
allotment and issue of the Consideration Shares.
The Issue Price of approximately HK$0.70 represents: (i) no discount to the closing price
of HK$0.7 per Share as stated in the daily quotations sheets of the Stock Exchange on 29
July 2010, being the date of the Agreement; (ii) a discount of approximately 4.2% to the
average of the closing prices of HK$0.73 per Share as stated in the daily quotations sheets
of the Stock Exchange for the last five consecutive trading days up to and including 28 July
2010, being the date immediately preceding the date of the Agreement; and (iii) a discount
of approximately 8.4% to the average of the closing prices of HK$0.759 per Share as stated
in the daily quotations sheets of the Stock Exchange for the last ten consecutive trading
days up to and including 28 July 2010, being the date immediately preceding the date of the
Agreement.
The Issue Price was arrived at after arm's length negotiations between Easyrich and the
Vendor with reference to various factors including the trading price of the Shares as set out
above and the recent financial performance of the Group. The Directors consider that the Issue
Price is fair and reasonable and issue of the Consideration Shares at the Issue Price is in the
interests of the Company and the Shareholders as a whole.
The Consideration Shares will be allotted and issued pursuant to the specific mandate to be
sought at the EGM and will be allotted and issued pursuant to the terms and conditions of the
Agreement.
As at the date of this announcement, the Company has 3,684,546,286 Shares in issue. The
59,118,571 Consideration Shares represent approximately 1.6% of the existing issued share
capital of the Company and approximately 1.58% of the issued share capital of the Company
as enlarged by the allotment and issue of the Consideration Shares.
Application for listing
Application will be made by the Company to the Listing Committee of the Stock Exchange for
the listing of, and permission to deal in, the Consideration Shares.
11
CHANGES IN SHAREHOLDING STRUCTURE
Assuming there being no other change in the shareholding structure of the Company
(other than those as contemplated under the Agreement), the following table sets out the
shareholding structure of the Company (i) as at the date of this announcement and before
Completion; and (ii) immediately after Completion and the allotment and issue of the
Consideration Shares and the transfer of the Poon Shares:
Immediately after Completion
As at the date of and the allotment and issue of
this announcement and the Consideration Shares and the
Shareholders before Completion transfer of the Poon Shares
Approximate Approximate
No. of Shares Percentage No. of Shares percentage
Mr. Poon Sum (Note 1) 182,770,453 4.96% 160,720,453 4.29%
Mr. Poon Sau Tin (Note 2) 35,334,916 0.96% 35,334,916 0.94%
Ever Source (Note 3) 377,794,558 10.25% 377,794,558 10.09%
Public Shareholders 3,088,646,359 83.83% 3,088,646,359 82.51%
Vendor Nil Nil 81,168,571 2.17%
Total 3,684,546,286 100.00% 3,743,664,857 100.00%
Notes:
1. Mr. Poon Sum is the chairman of the Company and is one of the purchasers under the Agreement.
2. Mr. Poon Sau Tin is the elder brother of Mr. Poon Sum.
3. The issued share capital of Ever Source Enterprises Limited is beneficially owned as to 50% by Time
Concord Limited, a company incorporated in the British Virgin Islands and indirectly owned by a
discretionary trust, the beneficiaries of which are family members of Mr. Poon Sum, and as to 50% by
Guidance Investments Limited, a company incorporated in the British Virgin Islands and indirectly owned
by a discretionary trust, the beneficiaries of which are family members of Mr. Poon Sau Tin.
12
INFORMATION ON THE TARGET GROUP
The Target is a company incorporated in the British Virgin Islands with limited liability on
30 April 2010 and is principally engaged in investment holding, and its principal asset is the
entire issued share capital of the HK Company.
The HK Company is a company incorporated in Hong Kong with limited liability on 8
February 2010 and is principally engaged in investment holding, and its principal asset is the
entire equity interests in the PRC Company.
The PRC Company is a company established under the laws of the PRC with limited liability
on 6 July 2009. It is principally engaged in the oil exploitation technology business, including
the development of oil viscosity reducers, in the PRC.
The following tables show the consolidated turnover, net profit before tax, net profit after
tax, net asset value and total asset value of Target Group based on its unaudited consolidated
proforma financial statements for period commencing from 6 July 2009 until 27 July 2009:
For the period commencing from
6 July 2009 (being the date of
incorporation of the PRC Company)
until 31 December 2009 As at 31 December 2009
Net loss Net loss Net Total
Turnover before tax after tax assets asset value
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
The PRC Company 2,886 2,886 8,469 8,469
For the period from 1 January 2010
until 27 July 2010 As at 27 July 2010
Net loss Net loss Net Total
Turnover before tax after tax assets asset value
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
The Target Group 6,762 6,762 862 862
13
REASONS FOR THE ACQUISITION
As at the date hereof, the Group is principally engaged in manufacture and sale of paints,
blended solvents and plastic colorants, trading of chemical materials, provision of painting
service, property investment and exploitation and sale of crude oil.
On 29 September 2009, the PRC Company has entered into the Service Agreement with
Panjin Liaohe, a company under the management of PetroChina Liaohe, pursuant to which the
PRC Company shall provide the Oilfield, which is managed by q & 0 ^ è ¢ ® 0 @ (Liaohe
Oilfield Shenyang Exploitation Plant#), with nuclease flooding for high pour-point reserve and
increment technology service.
Pursuant to the Service Agreement, the PRC Company shall provide specialized onsite oil
viscosity reducing fixture and equipment and nuclease flooding and associated technology
as well as consumable material, and shall bear all related economic expenses and HSE risk.
The return of the PRC Company will be derived from the profit sharing based on the amount
of incremental oil. According to the Service Agreement, the PRC Company shall be entitled
to 92% of the incremental oil shared by Panjin Liaohe under the Profit Sharing Agreement,
which shall be not less than 50% of the entire amount of incremental oil from the Oilfield as
guaranteed by the Vendor and the Warrantors. Hence, the share of the PRC Company under the
Service Agreement will in effect be not less than 46% of the entire amount of incremental oil
from the Oilfield.
The Service Agreement commands a term of 8 years. As informed by the Vendor and the
Warrantors, the PRC Company has successfully implemented bio-nuclease oil displacing for
an oil well group of two oil wells in the Oilfield prior to the date of this announcement.
Furthermore, as informed by the Vendor and the Warrantors, the PRC Company will enter into
the New Service Agreement with Panjin Liaohe, pursuant to which the PRC Company will
provide the New Oilfield with nuclease flooding for high pour-point reserve and increment
technology service in terms similar to those of the Service Agreement. As mentioned in the
section headed "Undertakings" above, the Vendor and the Warrantors have undertaken to the
Purchasers that the share of profit by the PRC Company under the New Service Agreement
will be not less than 30% of the entire amount of incremental oil from the New Oilfield.
14
In addition, on 29 December 2009, Mr. Lin Sen, being one of the Warrantors, as licensor has
granted a patent licence in favour of the PRC Company, as licensee, in respect of the use of
the patented "Electromagnetic underground heat-induction device e > Ð oe h !
Ä · " for free for the period of 8 years between 1 January 2010 and 31 December 2017. This
technology can replace steam injection technique in oil field operation. The cost will be lower
and less pollution will be caused during the operation.
The Directors (excluding all independent non-executive Directors who shall form their view
after taking into account the advice given by the independent financial adviser) consider that
the Acquisition can facilitate the Group's further development in the oil-field exploitation
related business of the Group and is beneficial to the Group and the Shareholders as a
whole. The Directors are also of the view that the Acquisition can strengthen the technology
development base with the expertise of the Vendor and the Warrantors, the members of expert
team and the technical team of the Target Group. The Acquisition will also allow the Company
to tap into the benefits of the Service Agreement as mentioned above.
Besides, the Acquisition also allows the Group to acquire a controlling stake in the Target
upon Completion, and the grant of the First Call Option and the Second Call Option under the
Option Agreements further provides the Group with a flexibility to step up its interests in the
Target during the Exercise Period depending on the performance of the Target Group and the
market conditions of energy-resources related business worldwide from time to time.
In light of the above and having considered the favourable market conditions of energy-
resources related business worldwide, the Directors believe that the potential of the oilfield-
exploitation related product market is tremendous and consider it desirous to developing
its own base for the development and manufacture of oilfield-exploitation related products.
Through the Acquisition, the Group will be able to further explore the market of oilfield-
exploitation services related products, thus diversifying its revenue and profit base.
As such, the Directors (excluding all independent non-executive Directors who shall form
their view after taking into account the advice given by the independent financial adviser)
consider that terms of the Acquisition are fair and reasonable and the Acquisition is in the
interests of the Shareholders and the Company as a whole.
15
LISTING RULES IMPLICATION
As none of the relevant percentage ratio exceeds 5%, the Acquisition does not constitute any
notifiable transaction on the part of the Company under Chapter 14 of the Listing Rules.
Mr. Poon, being the chairman of the Company and an executive Director, is a controller (as
defined in the Listing Rules) of the Company and will become a substantial shareholder of
the Target upon Completion. Accordingly, the Acquisition constitutes a non-exempt connected
transaction on the part of the Company under Rule 14A.13(1)(b)(i) of the Listing Rules and is
subject to reporting, announcement and Independent Shareholders' approval requirement.
As no premium is payable by Easyrich for the grant of the First Call Option and the
Second Call Option, the entering into of the First Option Agreement and the Second Option
Agreement shall not constitute any notifiable transaction and/or connected transaction
under Chapter 14 or Chapter 14A of the Listing Rules. The Company shall comply with all
necessary requirements under the Listing Rules upon the exercise of any of the Call Options.
The EGM will be convened and held by the Company to consider and approve, if thought
fit, the Agreement and the transactions contemplated thereunder, including but not limited
to the allotment and issue of the Consideration Shares and the entering into of the Option
Agreements.
Pursuant to Chapters 14 and 14A of the Listing Rules, the Vendor, the Warrantors, Mr. Poon
and their respective associates are required to abstain from voting on the resolution at the
EGM to approve the Agreement and the transactions contemplated thereunder.
To the best of the Directors' knowledge, information and belief having made all reasonable
enquiries, (i) Mr. Poon is interested in 560,565,001 Shares as at the date hereof; and (ii)
save and except the Consideration Shares to be allotted and issued pursuant to the terms
and conditions of the Agreement, none of the Vendor, the Warrantors and their respective
associates is interested in any Shares as at the date thereof.
16
GENERAL
The Independent Board Committee comprising Mr. Chan Kam Ching, Paul, Mr. Chan Shu
Kin and Mr. Cheung Kwan Hung, being all the independent non-executive Directors, will be
formed to advise the Independent Shareholders as to the fairness and reasonableness of the
Acquisition. An independent financial adviser will be appointed to advise the Independent
Board Committee in this regard.
A circular containing, among other matters, further information on the Acquisition, notice
of the EGM, the letter from the independent financial adviser to the Independent Board
Committee and the Independent Shareholders, the letter from the Independent Board
Committee to the Independent Shareholders, will be despatched to the Shareholders within 15
business days after the publication of this announcement (i.e. on or before 19 August 2010) in
compliance with the Listing Rules.
DEFINITIONS
In this announcement, unless the context otherwise requires, the following words and
expressions shall have the meaning ascribed to them below:
"Acquisition" the proposed acquisition by the Purchasers of the Sale Shares
subject to and upon the terms and conditions of the Agreement
"Agreement" the agreement dated 29 July 2010 and made among Easyrich,
Mr. Poon, the Vendor and the Warrantors for the sale and
purchase of the Sale Shares
"associate(s)" has the meaning ascribed to it in the Listing Rules
"Board" the board of Directors
"Call Options" collectively, the First Call Option and the Second Call Option
"Company" PetroAsian Energy Holdings Limited, a company incorporated
in the Cayman Islands with limited liability, the issued Shares
of which are listed on the Stock Exchange
17
"Completion" completion of the sale and purchase of the Sale Shares in
accordance with the terms and conditions of Agreement
"connected person" has the meaning ascribed to it in the Listing Rules
"Consideration Shares" 59,118,571 new Shares to be allotted and issued to the Vendor
on Completion, and each a "Consideration Share", as partial
settlement of the consideration for the acquisition of the First
Sale Shares
"Deposit" the sum of RMB6 million (equivalent to approximately
HK$6.82 million) paid by the Purchasers to the Vendor within
seven (7) days after the date of the MOU, being the refundable
deposit for the Acquisition
"Directors" directors of the Company
"Easyrich" Easyrich Group Holdings Limited, a company incorporated in
Hong Kong with limited liability, being an indirect wholly-
owned subsidiary of the Company and one of the purchasers
under the Agreement
"Effective Date" the effective date of the First Call Option and the Second Call
Option, being the date of Completion
"EGM" a n e x t r a o r d i n a r y g e n e r a l m e e t i n g o f t h e I n d e p e n d e n t
S h a r e h o l d e r s t o b e h e l d a n d c o nve n e d t o a p p r ove t h e
Agreement and the transactions contemplated thereunder,
including but not limited to the allotment and issue of the
Consideration Shares and the entering into of the Option
Agreements
18
"First Call Option" the call option for Easyrich to acquire the First Option Shares
from the Vendor within two years since the Effective Date
"First Option the option agreement dated 29 July 2010 entered into between
Agreement" Easyrich as the grantee and the Vendor as the grantor, pursuant
to which the Vendor has granted the First Call Option in favour
of Easyrich
"First Option Shares" 240 Target Shares, representing 24% of the entire issued share
capital of the Target
"First Sale Shares" 510 Target Shares, representing 51% of the entire issued share
capital of the Target
"Group" the Company together with its subsidiaries
"HK Company" Talent Plus Trading Limited E q ø Þ " ® ! · , a company
incorporated in Hong Kong with limited liability
"Hong Kong" the Hong Kong Special Administrative Region of the PRC
"Independent Board the independent committee of the Board, comprising the
Committee" independent non-executive Directors, formed for the purpose
of advising the Independent Shareholders in relation to the
Acquisition
"Independent Shareholders which are not required to abstain from voting
Shareholders" at EGM to approve the Agreement and the transactions
contemplated thereunder
"Independent Third the independent third party who is, to the best of the Directors'
Party" knowledge, information and belief having made all reasonable
enquiry, independent of the Company and connected persons of
the Company
19
"Issue Price" the issue price of approximately HK$0.70 per Consideration
Share
"Listing Rules" the Rules Governing the Listing of Securities on the Stock
Exchange
"MOU" the non-legally binding memorandum of understanding dated
21 December 2009 entered into among Easyrish, Mr. Poon and
the Warrantors setting out the preliminary understanding in
relation to the acquisition of the PRC Company
"Mr. Poon" Mr. Poon Sum, the chairman of the Company, an executive
Director and a substantial Shareholder, being one of the
purchasers under the Agreement
"New Oilfield" any new oilfield located in q & 0 ^ (Liaohe Oilfield#),
Liaoling Province, PRC, which may be granted to the Target by
Panjin Liaohe
"New Service the new service agreement to be entered into between the PRC
Agreement" Company and Panjin Liaohe regarding the provision of oil
increment technical consultancy service by the PRC Company
to Panjin Liaohe for the New Oilfield, which shall be in terms
similar to the Service Agreement
"Oilfield" è 95ï (Shen 95 Block Oilfield#) located in q & 0 ^ (Liaohe
Oilfield#), Liaoling Province, PRC
"Option Agreements" collectively, the First Option Agreement and the Second Option
Agreement
"Panjin Liaohe" µ q & 0 ^ ? U ÷ - ¦ " ¼ ï Þ " ® ! (Panjin Liaohe
Oilfield Guangyuen Advanced-and-New Technology Research
and Development Company Limited#), being a party to the
Service Agreement
20
"PetroChina Liaohe" · 7 i 0 q & 0 ^ ® ! V / ® ! (PetroChina Liaohe Oilfield
Sales Company#)
"Poon Shares" the 22,050,000 Shares to be transferred by Mr. Poon to the
Vendor on Completion as partial settlement of the consideration
for the acquisition of the Second Sale Shares
"PRC" the People's Republic of China, which for the purpose of this
announcement, shall exclude Hong Kong, the Macau Special
Administrative Region of the PRC and Taiwan
"PRC Company" - @i i 0 s ® ¦ " T Þ " ® ! (Shenzhen Baohui Oil
Exploration Technology Consultancy Company Limited#), a
company established under the laws of the PRC with limited
liability
"Profit Sharing the profit sharing agreement to be entered into between Panjin
Agreement" Liaohe and PetroChina Liaohe in relation to the sharing of
incremental oil from the Oilfield
"Purchasers" collectively, Easyrich and Mr. Poon collectively
"Sale Shares" collectively, the First Sale Shares and the Second Sale Shares,
and each a "Sale Share"
"Second Call Option" the call option for Easyrich to acquire the Second Option
Shares from Mr. Poon within two years since the Effective Date
"Second Option the option agreement dated 29 July 2010 entered into between
Agreement" Easyrich as the grantee and Mr. Poon as the grantor, pursuant to
which the Vendor has granted the First Call Option in favour of
Easyrich
"Second Option Shares" 190 Target Shares, representing 19% of the entire issued share
capital of the Target
"Second Sale Shares" 190 Target Shares, representing 19% of the entire issued share
capital of the Target
21
"Service Agreement" the service agreement entered into between the PRC Company
and Panjin Liaohe for a term of 8 years from the date of such
service agreement regarding the provision of oil increment
technical consultancy service by the PRC Company to Panjin
Liaohe for the Oilfield
"Share(s)" ordinary share(s) of HK$0.01 each in the capital of the
Company
"Shareholder(s)" holder(s) of issued Share(s)
"Shareholders' Debt" the debts owing by the Warrantors to the PRC Company on
or at any time prior to Completion whether actual, contingent
or deferred and irrespective of whether the same is due and
payable on Completion which as at the date of the Agreement,
amounted to RMB690,000 (equivalent to approximately
HK$784,100)
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Target" Rich Luck Group Limited E Ü « Þ " ® ! · , a company
incorporated in the British Virgin Islands, the entire issued
share capital of which is legally and beneficially owned by the
Vendor as at the date hereof
"Target Group" the Target and its subsidiaries, including the HK Company and
the PRC Company
"Target Share(s)" ordinary shares of US$1.00 each in the capital of the Target
"Vendor" Mr. Lam Ka Wai -- · , an Independent Third Party
"Warrantors" collectively, Mr. Chen Pingkui Ó S ò · , Mr. Shen Tungping
Ï p ; · , Mr. Yan Dejun ... C i · and Mr. Lin Sen OE · ,
being the warrantors under the Agreement, all are Independent
Third Parties
22
"HK$" Hong Kong dollars, the lawful currency of Hong Kong
"RMB" Renminbi, the lawful currency of the PRC
"sq. km" square kilometres
"%" per cent.
# English translations of the Chinese words for illustration purpose only
For the purpose of this announcement, unless otherwise specified, conversion of RMB into
HK$ and US$ into HK$ are based on the approximate exchange rate of RMB88 to HK$100
and US$1 to HK$7.8 respectively. These exchange rates are for illustration purpose only and
do not constitute a representation that any amounts have been, could have been, or may be
exchanged at these or any other rate at all.
By order of the Board
PetroAsian Energy Holdings Limited
Poon Sum
Chairman
Hong Kong, 30 July 2010
As at the date of this announcement, the Board comprises (i) three executive Directors,
namely Mr. Poon Sum, Mr. Wong Kwok Leung and Mr. Poon Wai Kong; and (ii) three
independent non-executive Directors, namely Mr. Chan Kam Ching, Paul, Mr. Chan Shu Kin
and Mr. Cheung Kwan Hung.
23
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