discloseable transaction proposed acquisition of shares ... - HKEXnews

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Dec 8, 2014 - Hong Kong Exchanges and Clearing Limited and The Stock ... 2014 (after trading hours), HTIH (a direct whol
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.

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 6837) / (Stock Code: 5986)

DISCLOSEABLE TRANSACTION PROPOSED ACQUISITION OF SHARES IN BANCO ESPÍRITO SANTO DE INVESTIMENTO, S.A. THE PROPOSED ACQUISITION On 8 December 2014 (after trading hours), HTIH (a direct wholly-owned subsidiary of the Company) and Novo Banco entered into the Sale and Purchase Agreement, on the terms and subject to the conditions of which HTIH has agreed to acquire the Target Shares of BESI from Novo Banco for the purchase price of EUR 379,000,000.00. Upon Completion, BESI will become a direct subsidiary of HTIH and an indirect subsidiary of the Company. Completion of the Proposed Acquisition is subject to the satisfaction or waiver of a number of conditions on or before the Long-Stop Date which is nine months after the date of the Sale and Purchase Agreement. HONG KONG LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios (as defined under the Hong Kong Listing Rules) under Chapter 14 of the Hong Kong Listing Rules in relation to the Proposed Acquisition exceeds 5% but less than 25%, the Proposed Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Hong Kong Listing Rules and is subject to the announcement requirement but exempt from Shareholders’ approval requirement under the Hong Kong Listing Rules. Shareholders and potential investors in the Company should be aware that Completion is subject to the satisfaction (or waiver, where applicable) of various conditions on or before the Long-Stop Date and therefore the Proposed Acquisition may or may not proceed to Completion. Shareholders and potential investors in the Company should exercise caution when dealing in the securities of the Company.

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I. INTRODUCTION The Board is pleased to announce that on 8 December 2014 (after trading hours), HTIH and Novo Banco entered into the Sale and Purchase Agreement, on the terms and subject to the conditions of which HTIH has agreed to acquire (together with person(s) designated by HTIH) the Target Shares of BESI from Novo Banco for the purchase price of EUR 379,000,000.00. Upon Completion pursuant to the terms of the Sale and Purchase Agreement, BESI will become a direct subsidiary of HTIH and an indirect subsidiary of the Company. II.

THE SALE AND PURCHASE AGREEMENT Date 8 December 2014 Parties (a) Novo Banco, the seller (b) HTIH, the buyer Purchase Price The purchase price for the Proposed Acquisition payable by HTIH under the Sale and Purchase Agreement is in the amount of EUR 379,000,000.00 which was agreed to by the parties after arm’s length negotiations having considered the estimated consolidated net asset value of the Target Group as at 31 December 2014 after minority interests and the prospects of the Target Group. If any leakages occur between the signing of the Sale and Purchase Agreement and Completion that are unpermitted, the purchase price payable by HTIH at Completion will be reduced. These unpermitted leakages may include (a) any dividend or other distribution declared, paid or made by any Target Group Company to the seller; (b) any fees, bonuses or expenses in connection with the Proposed Acquisition contemplated by the Sale and Purchase Agreement, to the extent paid, payable, assumed, indemnified or incurred by any Target Group Company; (c) any payments made or assets transferred to or liabilities assumed, indemnified, or incurred for the benefit of any member of Novo Banco Group (excluding the Target Group) by the Target Group other than in the ordinary course of business and; (d) the waiver by any Target Group Company of any amount owed or owing to that Target Group Company by any member of Novo Banco Group (other than a Target Group Company); (e) any asset transfer or disposal by a Target Group Company otherwise than in the ordinary course of business and on arm’s length market terms; and (f) the waiver, forgiveness or discount of any amounts due by any person to a Target Group Company other than in the ordinary course of business.

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Payment of Purchase Price The purchase price for the Proposed Acquisition will be financed using internal resources of HTIH as well as external financings as it may see fit, necessary or desirable and will be paid by HTIH in cash as follows: (a) by 19 December 2014, HTIH is required to pay to Novo Banco an amount of EUR 56,850,000.00 (the “Initial Payment”); and (b) at Completion, HTIH is required to pay to Novo Banco an amount in Euro representing purchase price deducting the Initial Payment and all amounts of disclosed but unpermitted leakages (if any). Conditions Precedent The obligations of Novo Banco and HTIH to sell and purchase the Target Shares pursuant to the Sale and Purchase Agreement are subject to the satisfaction (or waiver, if applicable) of each of the following conditions: (a) that the sale and purchase of the Target Shares should be approved, cleared, expressly not objected or granted an exemption by: (i) The Bank of Portugal in relation to the acquisition by HTIH of a qualifying shareholding in BESI; (ii) The Bank of Portugal in relation to the sale of the Target Shares by Novo Banco as a bridge bank pursuant to article 145-I of Decree-Law no.298/92, dated 31 December 1992, as subsequently amended; (iii) the Antitrust Authority of Portugal or the European Commission, as the case may be (and HTIH’s reasonable endeavours to procure this approval should, subject to certain limitations, include HTIH agreeing to or proposing conditions for such approval); (iv) China Securities Regulatory Commission; (v) Shanghai Municipal Financial Service Office; and (vi) the relevant governmental authorities in Brazil, England & Wales and the United States of America; (b) none of the parties to the Sale and Purchase Agreement being subject to any injunction, order, judgment or decree, of any court of any jurisdiction or other governmental authorities, which prevents the consummation of the Proposed Acquisition (which allows a 30-day remedy period); (c) the European Commission declaring or accepting that the Proposed Acquisition does not include an element of state aid to Novo Banco or to HTIH; or if and to the extent the Proposed Acquisition is qualified by the European Commission as a state aid, such aid is assessed as compatible with applicable laws by the European Commission.

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In the event that any of the above conditions is not fulfilled or waived on or before 5:00 p.m. on the Long-Stop Date, the parties should not be bound to proceed with the sale and purchase of the Target Shares and the Sale and Purchase Agreement should automatically terminate with immediate effect. As of the date of this announcement, none of the conditions set out in paragraph (a) and (c) above is satisfied or waived. In the event that Completion does not occur and the Sale and Purchase Agreement is terminated other than by reason of the non-satisfaction of any of the conditions set out in paragraph (a)(iv) and (v) above as a result of a breach by HTIH of its obligation to use reasonable endeavours to procure the satisfaction of these conditions, Novo Banco should return the Initial Payment to HTIH with interest at the agreed rate. If after six months from the date of Completion, relevant approval(s) required from governmental authorities in Brazil has not been obtained (and all other conditions have been satisfied or waived), the parties should enter into good faith negotiations to agree to a mutually satisfactory solution which allows for the temporary carve-out from Completion of the Target Group Companies that are affected so that Completion could take place in relation to the other Target Group Companies before the Long-Stop Date. If within three years after Completion such approval(s) from governmental authorities in Brazil is still outstanding, the affected Target Group Companies will be permanently carved out from the Proposed Acquisition and Novo Banco will return to HTIH that part of the purchase price representing 80% (to reflect the percentage of share capital held by BESI in the relevant Target Group Companies) of the net asset value (audited) of the affected Target Group Companies as at 31 December 2014 with interest at the agreed rate. Completion Completion should take place on the date that is 15 business days following the date on which the last of the abovementioned conditions precedent has been satisfied or waived in accordance with the Sale and Purchase Agreement, which date should not be later than the Long-Stop Date. Upon Completion, HTIH (together with person(s) designated by HTIH, if any) will hold the Target Shares and accordingly, BESI will become a direct subsidiary of HTIH and an indirect subsidiary of the Company. Other undertakings and transitional arrangements Under the Sale and Purchase Agreement, the parties have agreed to certain undertakings which include the following: (a) Novo Banco should, and should cause the Target Group to, use best endeavours to support HTIH in obtaining, by Completion, third party consent or waiver required under certain contracts of the Target Group, which consent or waiver is needed as a result of the Proposed Acquisition; (b) Novo Banco should not, and should cause the Target Group not to, carry out certain actions or activities between the signing of the Sale and Purchase Agreement and Completion, unless with the prior written consent of HTIH; (c) cancel or replace, by Completion, certain guarantees provided by the Target Group for the benefit of Novo Banco Group and certain guarantees provided by Novo Banco Group for the benefit of the Target Group; 4

(d) the non-solicitation of employees of the Target Group (in respect of Novo Banco Group’s undertaking) and the non-solicitation of employees of Novo Bank Group (in respect of HTIH’s undertaking) for a period of three years from Completion; and (e) restriction on the usage of certain prescribed Target Group’s information by Novo Banco Group for unfair competition against the Target Group and restriction on the usage of certain prescribed Novo Banco Group’s information by HTIH and the Target Group for unfair competition against Novo Banco Group, for a period of two years from Completion. The parties have also agreed to implement the following transitional arrangements for a limited period after Completion: (a) the parties will, upon Completion, enter into transitional services agreements for the mutual provision of certain transitional services for a period of two years from Completion; (b) the parties will, upon Completion, enter into distribution agreements whereby Novo Banco Group will agree to distribute, on a best effort basis, debt instruments of the Target Group, debt and equity instruments of Target Group’s customers and structured products and derivative products for a period of three years from Completion or, if earlier, until the change of control of Novo Banco; and (c) the parties will, upon Completion, enter into relevant agreement(s) to refinance BESI existing debt up before the Novo Banco Group in the amount of EUR 750 million for a term of three years at an interest rate to be agreed between the parties. BESI’s performance obligations under such refinancing will be secured by a corporate guarantee from the Company as the ultimate holding company of BESI. The Directors are of the view that the terms of the Sale and Purchase Agreement (including the purchase price) are on normal commercial terms and are fair and reasonable and in the interests of the Company and its Shareholders as a whole. III. INFORMATION ON THE TARGET GROUP General Information BESI is a private company established in Portugal and a direct wholly-owned subsidiary of Novo Banco. As at the date of this announcement, the issued share capital of BESI is EUR 326,269,000.00, fully subscribed and paid up. The share capital is divided into 65,253,800 shares with a nominal value of EUR 5.00 each, and all the issued shares are held by Novo Banco. BESI is a fully licensed bank which has a number of controlled core subsidiaries in several countries, namely BESI Brasil and BESI Securities in Brazil, Execution Noble in the UK, ES Securities in India, ESIP in Ireland, Lusitania in Mexico and ES Capital in Portugal. BESI also develops its activities through its branches in London, Madrid, New York and Warsaw. The main activities carried out by the Target Group include advisory, corporate finance, equities, fixed income, structured finance, among others.

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Headquartered in Lisbon, BESI is a leading investment bank in Iberia, with over 25 years of investment banking experience. Over the course of the years, BESI has developed a successful international expansion strategy with highly recognized expertise in emerging markets, such as Brazil. BESI has over 750 professionals geographically located across 141 countries, including access to the most important financial centers worldwide: London and New York. Shareholding Structure of the Target Group The shareholding structure of the Target Group as at the date of this announcement is as follows:

Novo Banco, SA

BESI

BRANCHES

MADRID

LONDON

NEW YORK

WARSAW

SUBSIDIARIES BES INVESTIMENTO DO BRASIL, S.A. – BANCO DE INVESTIMENTO (BRAZIL) (80%)

BES SECURITIES DO BRASIL, S.A. – CORRETORA DE CÂMBIOS E VALORES MOBILIÁRIOS (BRAZIL) (80%)

ESPÍRITO SANTO CAPITAL – SOCIEDADE DE CAPITAL DE RISCO, S.A. (PORTUGAL) (100%)

BESI UK (100%)

ESPÍRITO SANTO SECURITIES INDIA PRIVATE LIMITED (INDIA) (75%)

EXECUTION NOBLE LIMITED (UK) (100%)

ESPÍRITO SANTO INVESTMENT P.L.C. (IRELAND) (100%)

LUSITANIA CAPITAL S.A.P.I. DE C.V., SOFOM, E.N.R. (MEXICO) (100%)

REPRESENTATIVE OFFICES MEXICO CITY

GERMANY

Note: Simplified Structure Not exhaustive, for complete information please see BESI’s website.

(1)

Geographic footprint including commercial partnerships. In Angola and Mozambique BESI operates through specialized originating local teams, with operations execution in Lisbon.

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The shareholding structure of the Target Group upon Completion is expected to be as follows: Haitong Securities Co., Ltd.

HTIH

BESI

BRANCHES

MADRID

LONDON

NEW YORK

WARSAW

SUBSIDIARIES BES INVESTIMENTO DO BRASIL, S.A. – BANCO DE INVESTIMENTO (BRAZIL) (80%)

BES SECURITIES DO BRASIL, S.A. – CORRETORA DE CÂMBIOS E VALORES MOBILIÁRIOS (BRAZIL) (80%)

ESPÍRITO SANTO CAPITAL – SOCIEDADE DE CAPITAL DE RISCO, S.A. (PORTUGAL) (100%)

BESI UK (100%)

ESPÍRITO SANTO SECURITIES INDIA PRIVATE LIMITED (INDIA) (75%)

EXECUTION NOBLE LIMITED (UK) (100%)

ESPÍRITO SANTO INVESTMENT P.L.C. (IRELAND) (100%)

LUSITANIA CAPITAL S.A.P.I. DE C.V., SOFOM, E.N.R. (MEXICO) (100%)

REPRESENTATIVE OFFICES MEXICO CITY

GERMANY

Note: Simplified Structure Not exhaustive, for complete information please see BESI’s website.

Financial information on the Target Group Set out below is a summary of the consolidated audited financial information of the Target Group for the two years ended 31 December 2012 and 2013 and the consolidated unaudited financial information of the Target Group for the six-month period ended 30 June 2014. For the year ended 31 December 2012 (€ million)

For the year ended 31 December 2013 (€ million)

For the six month period ended 30 June 2014 (€ million)

261.170 39.013 20.542

246.525 15.426 7.363

183.281 8.976 4.303

22.028

7.062

2.512

Operating Income Net Profit (loss) before taxation Net Profit (loss) after taxation Net Profit (loss) attributable to shareholders   of the Target Group

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Set out below is a summary of the consolidated audited financial information of the Target Group as at 31 December 2013 and the consolidated unaudited financial information of the Target Group as at 30 June 2014. As at 31 December 2013 (€ million) Total assets Total liabilities Net assets

5,961.799 5,342.304 619.495

As at 30 June 2014 (€ million) 5,810.887 5,193.308 617.579

In accordance with Regulation (EC) no. 1606/2002, of 19 July from the European Council and Parliament, and as implemented into Portuguese law through Decree-Law no. 35/2005, of 17 February and Regulation no. 1/2005 from The Bank of Portugal, BESI is required to prepare its consolidated financial statements in accordance with the International Financial Reporting Standards as adopted by the European Union. International Financial Reporting Standards comprise accounting standards issued by the International Accounting Standards Board and its predecessor body as well as interpretations issued by the International Financial Reporting Interpretations Committee and its predecessor body. IV. INFORMATION ABOUT THE PARTIES Novo Banco Novo Banco is a company incorporated under the laws of Portugal and is holding all the issued share capital of BESI as at the date of this announcement. It is ultimately whollyowned by the Resolution Fund. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, Novo Banco and its ultimate beneficial owner are third parties independent of and not connected with the Company and the connected persons of the Company. The Resolution Fund is a public entity functioning before The Bank of Portugal, which scope is to provide financial support to the execution of resolution measures adopted by The Bank of Portugal, as well as all functions required to implement such resolution measures. HTIH HTIH is a company incorporated in Hong Kong and is an investment holding company directly wholly-owned by the Company. HTIH is the controlling shareholder of Haitong International Securities Group Limited, a company incorporated in Bermuda whose shares are listed on the Hong Kong Stock Exchange under the stock code of 665.

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The Company The Company is a leading full-service securities firm in the PRC with an integrated business platform, extensive branch network and substantial customer base. The Company provides a comprehensive range of financial products and services, and primarily focuses on six principal business lines in the PRC, comprising securities and futures brokerage (including margin financing and securities lending), investment banking, asset management, proprietary trading, direct investment and financial leasing. The Company also provides a variety of securities products and services overseas. V.

HONG KONG LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios (as defined under the Hong Kong Listing Rules) under Chapter 14 of the Hong Kong Listing Rules in relation to the Proposed Acquisition exceeds 5% but less than 25%, the Proposed Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Hong Kong Listing Rules and is subject to the announcement requirement but exempt from Shareholders’ approval requirement under the Hong Kong Listing Rules.

VI. REASONS FOR AND BENEFITS OF THE Proposed ACQUISITION The Group has always been interested in looking for opportunity for the Group to expand its existing businesses. The Board is active in seeking opportunities to enlarge the Group’s revenue stream in order to enhance Shareholders’ value, and is optimistic about the expansion in the investment banking business. The Company believes that the Proposed Acquisition will bring significant strategic value for the Group. The potential synergies to be generated from the Proposed Acquisition may include: Further development of cross border business The Group has built up an integrated financial service platform for Renminbi related business. Through undertaking the Proposed Acquisition, the Group can further explore the crossborder business and take advantage of the Renminbi internationalization opportunity, so as to further develop its integrated financial service platform. The integrated operations will also help the Group to diversify its source of revenues and mitigate market volatility risk. Improvement of client service capabilities By leveraging on and further developing the established platform of the Target Group in the investment banking sector, the Group is able to provide a more comprehensive service portfolio including direct equity investment, capital market financing, leasing, mergers & acquisition advisory and asset management, to its clients, which will eventually increase its customer loyalty. Synergy from resources sharing The Group and BESI could share their sales channels, financing sources and client relationships, to realize effective cross-selling and create strategic value to both parties.

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Shareholders and potential investors in the Company should be aware that Completion is subject to the satisfaction (or waiver, where applicable) of various conditions on or before the Long-Stop Date and therefore the Proposed Acquisition may or may not proceed to Completion. Shareholders and potential investors in the Company should exercise caution when dealing in the securities of the Company. VII. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below: “Bank of Portugal”

the Portuguese Central Bank

“BESI”

Banco Espírito Santo de Investimento, S.A., a limited liability company incorporated under the laws of Portugal, whose entire issued share capital is owned by Novo Banco as at the date of this announcement

“Board”

the board of Directors of the Company

“Company”

Haitong Securities Co., Ltd. (海通證券股份有限公司), a joint stock company incorporated in the PRC with limited liability, the H Shares of which are listed on the Hong Kong Stock Exchange under the stock code of 6837 and the A Shares of which are listed on the Shanghai Stock Exchange under the stock code of 600837

“Completion”

completion of the Proposed Acquisition pursuant to the terms of the Sale and Purchase Agreement

“Director(s)”

the directors of the Company

“EUR” or “€”

the lawful currency of the Euro Zone

“Group”

the Company and its subsidiaries

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Hong Kong Listing Rules”

the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange

“Hong Kong Stock Exchange”

The Stock Exchange of Hong Kong Limited

“HTIH”

Haitong International Holdings Limited, a company incorporated in Hong Kong and a direct wholly-owned subsidiary of the Company

“Long-Stop Date”

a day which is nine months from the date of the Sale and Purchase Agreement, which may be extended by mutual agreement between the parties

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“Novo Banco”

Novo Banco, S.A., which was created by The Bank of Portugal, pursuant a resolution measure, as a transitional bank

“Novo Banco Group”

Novo Banco, S.A. and its subsidiaries

“PRC”

the People’s Republic of China, which for the purpose of this announcement only, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

“Proposed Acquisition”

the proposed acquisition of the Target Shares of BESI by HTIH on the terms and subject to the conditions of the Sale and Purchase Agreement

“Resolution Fund”

a public law entity (pessoa coletiva de direito público), with administrative and financial autonomy, with registered offices located in Lisbon, functioning before the Bank of Portugal, created by Decree-Law no. 31-A/2012, of February 10

“Sale and Purchase  Agreement”

the conditional agreement dated 8 December 2014 entered into between HTIH and Novo Banco in relation to the sale and purchase of the Target Shares of BESI

“Shareholders”

the shareholders of the Company

“Target Group” or   “Target Group Companies”

BESI, each subsidiary, directly or indirectly controlled by BESI (including all branches of BESI and/or of each and all of BESI’s subsidiaries)

“Target Shares”

65,253,800 ordinary shares of BESI, representing the entire issued share capital of BESI By order of the board of directors Haitong Securities Co., Ltd. WANG Kaiguo Chairman

Shanghai, the PRC 8 December 2014 As at the date of this announcement, our executive directors are Mr. WANG Kaiguo and Mr. Qu Qiuping; our non-executive directors are Mr. ZHUANG Guowei, Mr. ZHOU Donghui, Mr. HE Jianyong, Mr. ZHANG Jianwei, Mr. XU Chao, Mr. WANG Hongxiang, Mr. LI Gewei and Mr. FENG Huang; and our independent non-executive directors are Mr. XIA Bin, Mr. CHEN Qiwei, Mr. ZHANG Huiquan, Mr. ZHANG Ming, Mr. DAI Genyou, Mr. LIU Cheeming and Mr. XIAO Suining. *  For identification purpose only

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