XIWANG SPECIAL STEEL COMPANY LIMITED 
By 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.
This announcement is for information purpose only and does not constitute on invitation or offer to acquire, purchase or subscribe for any securities of the Company.
XIWANG SPECIAL STEEL COMPANY LIMITED(Incorporated in Hong Kong with limited liability)
(Stock Code: 1266) SUBSCRIPTION OF NON-LISTED WARRANTS SUBSCRIPTION OF NON-LISTED WARRANTS
The Directors are pleased to announce that on 16 May 2014 (after trading hours), the Company as issuer had entered into the conditional Warrant Subscription Agreement with the Subscriber as subscriber in relation to the subscription of a total of 150,000,000
Warrants at the Issue Price of HK$0.01.
The Warrants entitle the Subscriber to subscribe for in aggregate 150,000,000 Warrant Shares at the Warrant Subscription Price of HK$1.20 per Warrant Share (subject to adjustment) for a period commencing on the date falling six months after the date of issue of the Warrants and ending on the date falling 12 months after the date of the issue of the Warrants.
Completion of the Warrant Subscription is subject to the fulfillment of the conditions stated in the section headed "Conditions of Warrant Subscription" in this announcement.
It is intended that the net proceeds from the Warrant Subscription of approximately HK$1.4 million will be applied as general working capital of the Group.
Assuming the full exercise of the subscription rights attaching to the Warrants, it is expected that approximately HK$179.8 million will be raised. The net proceeds of approximately HK$179.8 million (with a net subscription price of approximately HK$1.199 per Warrant Share) will be utilised by the Group as general working capital of the Group.
The Warrant Shares will be issued under the General Mandate.
The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Warrant Shares which may fall to be allotted and issued upon exercise of the subscription rights attaching to the Warrants. No listing of the Warrants will be sought on the Stock Exchange or any other stock exchanges.
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Date: 16 May 2014 (after trading hours) Parties: (i) the Company; and
(ii) the Subscriber.
The Subscriber is principally engaged in investment holding. The entire issued share capital of the Subscriber is beneficially and legally owned as to 50% by Mr. SHEK Ho Fai and as to
50% by Mr. CHEUNG Chi Bun Kenneth. To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, the Subscriber and its ultimate beneficial owners are Independent Third Parties.
Pursuant to the Warrant Subscription Agreement, the Subscriber has agreed to subscribe for and the Company has agreed to issue a total of 150,000,000 Warrants.
Warrant Issue PriceThe Warrant Issue Price is HK$0.01 per Warrant. Taking into account, among other fees, legal fees, printing expenses and the fees for the application of listing of the Warrant Shares, the net Warrant Issue Price is approximately HK$0.009 per Warrant.
Warrant Subscription Price and adjustment
The Warrant Subscription Price is HK$1.20 per Warrant Share, which is subject to adjustment based on the prescribed formulas as set out in the instrument creating the Warrants for the happening of the following events:
(1) alteration by reason of any subdivision or consolidation of Shares; or
(2) issue of Shares by way of capitalisation of profit or reserves; or
(3) capital distribution to all Shareholders; or
(4) grant to Shareholders rights to acquire for cash assets of the Company or any of its subsidiaries; or
(5) offer to the Shareholders new Shares for subscription by way of rights, or grant of any options or warrants to all Shareholders to subscribe for new Shares, at a price which is less than 80% of the market price.
Every adjustment to the Warrant Subscription Price shall be certified either (at the option of the Company) by the auditors of the Company or by an approved merchant bank.
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For the avoidance of doubt, in the event that following any adjustments of the Warrant Subscription Price made in accordance with the terms and conditions of the Warrants, the number of such excess Warrant Shares which may fall to be allotted and issued pursuant to the exercise of the subscription rights attaching to the Warrants that exceed the authorisation under the General Mandate, will not be allotted or issued. In other words, only up to an aggregate 222,222,222 Warrant Shares may be allotted and issued notwithstanding any adjustments to the Warrant Subscription Price. The number of the Warrant Shares to be allotted and issued upon the full exercise of the subscription rights attaching to the Warrants will not be adjusted except in the case of share consolidation or share subdivision.
It is intended that the net proceeds from the exercise of Warrants of approximately HK$179.8 million will be applied as general working capital of the Group.
The Warrant Subscription Price of HK$1.20 represents:
(i) a premium of approximately 18.81% over the closing price of HK$1.01 per Share as quoted on the Stock Exchange on 16 May 2014, being the date of entering into the Warrant Subscription Agreement; and
(ii) a premium of approximately 19.05% over the average of the closing prices of HK$1.008 per Share as quoted on the Stock Exchange for the last five (5) trading days immediately prior to the date of the Warrant Subscription Agreement.
The aggregate of the Warrant Issue Price and the Warrant Subscription Price represents:
(i) a premium of approximately 19.80% over the closing price of HK$1.01 per Share as quoted on the Stock Exchange on 16 May 2014, being the date of entering into the Warrant Subscription Agreement; and
(ii) a premium of approximately 20.04% over the average of the closing prices of HK$1.008 per Share as quoted on the Stock Exchange for the last five (5) trading days immediately preceding the date of the Warrant Subscription Agreement.
Having considered, amongst other things, the recent market prices of the Shares and the overall stock market sentiment, the Board considers that both the Warrant Subscription Price and the aggregate of it with the Warrant Issue Price, which were determined after arm's length negotiations between the Company and the Subscriber, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.
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The Warrants are transferable only to the Independent Third Parties and with the prior written consent of the Company, in integral multiples of 10,000,000 Warrants (or if at the time of transfer, the outstanding number of Warrants are less than 10,000,000 Warrants, the whole but not part of the outstanding Warrants). Apart from the aforesaid, there are no restrictions on the transfer of the Warrants from the Subscriber to other parties.
Completion DateCompletion will take place within three (3) Business Days after the fulfillment of the conditions referred to in the section headed "Conditions of Warrant Subscription" below. HK$1.5 million, being the aggregate Warrant Issue Price for 150,000,000 Warrants, shall be payable by the Subscriber at Completion. The Warrant Subscription Price shall be payable by holder(s) of Warrants upon the exercise of the subscription rights attaching to the Warrants.
Information of the Warrants
The Warrants will be issued to the Subscriber upon Completion in registered form and constituted by a deed poll. The Warrants will rank pari passu in all respects among themselves.
Subject to adjustment(s) in accordance with the terms of the Warrants, each Warrant carries the right to subscribe for one Warrant Share at the Warrant Subscription Price and is issued at the Warrant Issue Price.
The subscription rights attaching to the Warrants may be exercised at any time during a period commencing on the date falling six months after the date of issue of the Warrants and ending on the date falling 12 months after the date of the issue of the Warrants at integral multiples of
10,000,000 Warrants. Where the number of the outstanding Warrants is less than 10,000,000
Warrants, the Warrant Subscriber shall have the right to exercise the whole but not in part of the outstanding number of Warrants to subscribe for the Warrant Shares in cash at the Warrant Subscription Price per Warrant Share.
The Warrant Shares, when fully paid and allotted, will rank pari passu in all respects with the issued Shares in issue as at the date of allotment and issue of such Warrant Shares. The integral multiples of 10,000,000 Warrants for the transfer of and exercise of the subscription rights under the Warrants was arrived at by the parties to the Warrant Subscription Agreement after taking into consideration of the costs and expenses for transferring or exercising the subscription rights under the Warrants.
Any subscription rights attaching to the Warrants which have not been exercised upon the expiration of the subscription period shall lapse.
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A total of 150,000,000 Warrants for subscription of Warrant Shares at the initial Warrant Subscription Price of HK$1.20 per Warrant Share are proposed to be issued. Upon full exercise of the subscription rights attaching to the Warrants, a total of 150,000,000 Warrant Shares will be issued, representing (i) approximately 7.50% of the issued share capital of the Company as at the date of this announcement; and (ii) approximately 6.98% of the issued share capital of the Company as enlarged by the Warrant Shares which may fall to be allotted and issued upon the full exercise of the subscription rights attaching to the Warrants.
Apart from the restriction on Warrant transfer as set out under the heading "Transferability" above, subject to the relevant provisions under the Listing Rules, there are no other prohibitions on the Company to issue further securities nor are there any limitation on the Subscriber to transfer the Warrant Shares in the Warrant subscription agreement.
Completion shall be subject to and conditional upon, among other things, the following:
(1) (if required) the Listing Committee of the Stock Exchange shall have approved the issue of the Warrants either unconditionally or subject to conditions to which neither the Company nor the Subscriber shall reasonably object and the satisfaction of such conditions; and
(2) the Listing Committee of the Stock Exchange granting the listing of, and the permission to deal in, the Warrant Shares; and
(3) without prejudice to conditions (1) and (2) above, all necessary consent and approval to be obtained by the Company in respect of the issue of the Warrants have been obtained.
If the conditions of the Warrant subscription agreement are not fulfilled on or before 5:00 p.m. on or before 5 June 2014 (or such later date as may be agreed between the Company and the Subscriber), the Warrant Subscription Agreement will terminate and cease to have any effect and none of the parties shall have any claim against the other save for any antecedent breaches of the provisions thereof.
The holders of the Warrants will not have any right to attend or vote at any meeting of the Company by virtue of them being the holders of the Warrants. The holders of the Warrants shall not have the right to participate in any distributions and/or offers of further securities made by the Company.
Issue of Warrant Shares under General Mandate
The Warrant Shares will be issued under the General Mandate to allot, issue and deal with Shares granted to the Directors by a resolution of the Shareholders passed at the annual general meeting of the Company held on 22 May 2013 subject to the limit up to 20% of the then issued share capital of the Company as at the date of the annual general meeting of the Company.
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Under the General Mandate, the Company was authorised to issue up to 400,000,000 Shares. As at the date of this announcement, no Share has been issued under the General Mandate. Accordingly, the Warrant Subscription Agreement and the allotment and issue of Warrant Shares will not be subject to Shareholders' approval at a general meeting. The 150,000,000
Warrant Shares to be allotted and issued will utilise approximately 37.50% of the General
Mandate.
The Company will apply to the Stock Exchange for the listing of, and permission to deal in, the Warrant Shares which may fall to be allotted and issued upon exercise of the subscription rights attaching to the Warrants. No listing of the Warrants will be sought on the Stock Exchange or any other stock exchanges.
REASONS FOR WARRANT SUBSCRIPTION AND USE OF PROCEEDS
The Group is principally engaged in the production and sale of steel products in the People's
Republic of China.
The Board considers that Warrant Subscription represent an opportunity to raise additional funds for the Company while broadening the Shareholder and capital base of the Company. The net proceeds from Warrant Subscription, after the deduction of the related expenses, are estimated to be approximately HK$1.4 million, representing a net issue price of approximately HK$0.009 per Warrant. The net proceeds will be applied by the Group as the general working capital of the Group.
Assuming the full exercise of the subscription rights attaching to the Warrants, it is expected that approximately HK$179.8 million will be raised. The net proceeds of approximately HK$179.8 million (with a net subscription price of approximately HK$1.199 per Warrant Share) will be utilised by the Group as general working capital of the Group.
The Directors consider that the Warrant Subscription Agreement is entered into upon normal commercial terms following arm's length negotiations between the Company and the Subscriber and that the terms of the Warrant Subscription Agreement is fair and reasonable and are in the interests of the Company and the Shareholders as a whole.
The Company has not conducted any equity fund raising activities in the past twelve months immediately preceding the date of this announcement.
CHANGES OF SHAREHOLDING STRUCTURE
As at the date of this announcement, the Company has 2,000,000,000 Shares in issue. The shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after completion of the Warrant Subscription and full exercise of the subscription
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rights attaching to the Warrants (assuming that there is no change in the shareholding structure of the Company from the date of this announcement to immediately prior to Completion of the Warrant Subscription) is as follows:
Number of Shares Approximate % Number of Shares Approximate %
Xiwang Investment Company
Limited ("Xiwang
Investment") (Note) 1,500,000,000 75 1,500,000,000 69.77
Public Shareholders
The Subscriber - - 150,000,000 6.98
Public Shareholders 500,000,000 25 500,000,000 23.25
2,000,000,000 100.00 2,150,000,000 100.00
Note:
The entire issued share capital of Xiwang Investment is beneficially and legally owned by Xiwang Holdings Limited ("Xiwang Holdings"). The entire issued share capital of Xiwang Holdings is owned as to 95% by Xiwang Hong Kong Company Limited ("Xiwang HK") and as to 5% by certain individual investors (the
"Individual Investors"), namely, Wang Yong (E�), Wang Di (E1>), Ning Li Jiang ('Ì"l.ÌI), Wang Ming He (E
IJijjl), Wang Gang (EIl), Wang Dong (Eli!), Wang Liang (E.;è), Wang Fang Ming (E1JIJi), Wang Tao (El$),
Wang Chuan Wu (Efi!li), Han Zhong (fil!:), Wang Jian Xin (Eltli), Wang Cheng Lin (E��), Sun Xin
Hu (�tliffi), Li Wei ('$1), Liu Ji Qiang ('i!IClii), Wang Cheng Long (E�i!), Wang Hui Yi (EWÌil), Wang
Cheng Jun (E�JI), Han Ben Fang (fil;2J'), Wang Chuan Yu (Efi!:l), He Xiao Guang ('i'�J't), Wang Ming
Shi (EIJi�) and Wang Yan (E�). The entire issued share capital of Xiwang HK is beneficially and legally
owned by Xiwang Group Company Limited ("Xiwang Group"). The entire issued share capital of Xiwang Group is
beneficially and legally owned by the Individual Investors.
GENERAL AND LISTING RULES IMPLICATIONS
The Warrant Subscription is not subject to the Shareholders' approval.
Pursuant to Rule 15.02(1) of the Listing Rules, the Warrant Shares to be issued upon exercise of Warrants must not, when aggregated with all other equity securities which remain to be issued on exercise of any other subscription rights, if all such rights were immediately exercised, whether or not such exercise is permissible, exceed 20% of the issued share capital of the Company at the time the Warrants are issued.
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As at the date of this announcement, the Company did not have any outstanding options, derivatives, warrants or securities which are convertible or exchangeable into Shares.
Assuming full exercise of the subscription rights attaching to the Warrants, a maximum of
150,000,000 Warrant Shares (representing 7.50% of the existing issued share capital of the
Company as at the date of this announcement) will be issued.
Terms or expressions used in this announcement shall, unless the context otherwise requires, have the meanings ascribed to them below:
"Board" the board of Directors
"Business Day" any day (not being Saturdays, Sundays or public holidays) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours
"Company" Xiwang Special Steel Company Limited, a company incorporated in Hong Kong with limited liability, the Shares are listed on the main board of the Stock Exchange
"Completion" completion of Warrant Subscription in accordance with the terms and conditions of the Warrant subscription agreement
"connected persons" has the meanings as ascribed thereto under the Listing Rules
"Directors" the directors of the Company
"General Mandate" the general mandate granted to the Directors by the Shareholders pursuant to an ordinary resolution passed at the annual general meeting of the Company held on 22 May 2013, pursuant to which a maximum of 400,000,000 new Shares may fall to be allotted and issued as at the date of this announcement
"Group" the Company and its subsidiaries
"Hong Kong" the Hong Kong Special Administrative Region of the People's
Republic of China
"Independent Third
Party(ies)"
independent third parties who are not connected person(s) (as defined in the Listing Rules) of the Company and are independent of and not connected with the Company and directors, chief executive, controlling shareholders and substantial shareholders of the Company or any of its subsidiaries or their respective associates
"Last Trading Day" 16 May 2014, being the last trading day for the Shares prior to this announcement
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"Listing Rules" t h e Rules Governing the Listing of Securities on the Stock
Exchange
"Share(s)" ordinary share(s) in the share capital of the Company
"Shareholders" holders of the issued Shares
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Subscriber" Wealthy Gold Limited, a company incorporated in the British
Virgin Islands with limited liability, being the subscriber of
150,000,000 Warrants in the Warrant Subscription Agreement
"Warrants" 150,000,000 non-listed warrants to be issued by the Company at the Warrant Issue Price, each entitles the holder thereof to subscribe for one Warrant Share at the Warrant Subscription Price at any time during a period commencing on the date falling six months after the date of issue of the Warrants and ending on the date falling 12 months after the date of the issue of the Warrants
"Warrant Issue Price" HK$0.01 per Warrant to be issued pursuant to Warrant
Subscription
"Warrant Shares" initially up to 150,000,000 Warrant Shares to be allotted and issued upon exercise of the subscription rights attaching to the Warrants
"Warrant Subscription" t h e subscription of the Warrants at the Warrant Issue Price pursuant to the Warrant Subscription Agreement
"Warrant Subscription
Agreement"
subscription agreement dated 16 May 2014 and entered into between the Company and the Subscriber in relation to the Warrant Subscription
"Warrant Subscription
Price"
an initial Subscription Price of HK$1.20 per Warrant Share (subject to adjustment) at which holder of the Warrants may subscribe for the Warrant Shares
"HK$" Hong Kong dollars, the lawful currency of Hong Kong
"%" per cent.
By order of the Board
Chairman
Hong Kong, 16 May 2014
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As at the date of this announcement, the Board comprises the following directors:
Executive directors Independent non-executive directors
Mr. WANG Hui Mr. LEUNG Shu Sun Sunny
Mr. JIANG Chang Lin Mr. ZHANG Gongxue
Mr. HE Qing Wen Mr. YU Kou
Non-executive directors
Mr. WANG Yong
Mr. WANG Di
Mr. SUN Xinhu
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