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China Eastsea Bus (CESG)

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Tuesday 23 February, 2010

China Eastsea Bus

Proposed Cancellation of trad

RNS Number : 5078H
China Eastsea Business Software Ltd
23 February 2010
 



Not for release, publication or distribution, in whole or in part, in, into or from any prohibited territory or jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

China Eastsea Business Software Limited

('China Eastsea' or 'the 'Company')

Proposed cancellation of admission to trading on AIM

Proposed Tender Offer

1. Introduction

The Company announces that it is proposing to delisting from AIM and offering a tender offer to certain Shareholders, for some of the Company's shares not already owned by certain major Shareholders and Directors.

The Company is therefore seeking Shareholder approval to:

(a)     purchase Ordinary Shares by way of the Tender Offer; and

(b)     cancel the admission of its Ordinary Shares to trading on AIM.

The price to be paid for each Ordinary Share subject to the Tender Offer is 10 pence. The Tender Offer applies to a maximum of approximately 24,921,847 Ordinary Shares representing approximately 32.2 per cent. of the current issued share capital.

The Company has today posted a circular (the 'Circular') to shareholders which sets out, inter alia, the terms of the Tender Offer. A copy of the Circular will be available on the Company's website (www.sinopo.com). 

2. The De-listing

Reasons for the De-listing

The Directors believe that since the Company was admitted to trading on AIM, including during the period when the Company`s profits were exceeding market expectations, the performance of the Company's share price has been disappointing. The Directors believe that the development of the business, in terms of general trading, strategic partnerships and underlying operational infrastructure, and the growth potential of the Chinese information technology and business process outsourcing services market and the strength of the Company's management team have not been adequately reflected in the value attributed by the public market to the Company's shares. The Directors believe the reasons for this under-valuation are multiple and complex, but include a lack of liquidity (common to many small cap companies) in the Company's shares, global economic uncertainty, a measure of reliance on strategic partners and how fast they adapt their businesses in a changing environment.  In light of the above the Directors also believe that the costs of remaining on AIM are prohibitively high for a Company of the size and profile of China Eastsea.

Accordingly, the Directors strongly believe that it is no longer in the best interests of the Company or its Shareholders as a whole for the Company to retain its AIM quotation.

Effect of the De-listing

The principal effect of the Proposals and the De-listing is that Shareholders will no longer be able to buy and sell shares in the Company through a public stock market. It is anticipated that cancellation in the trading of the Ordinary Shares on AIM will significantly reduce the liquidity and marketability of Shares not acquired by the Company via the Tender Offer.

 

The Company also proposes to disapply articles 12.1 to 12.25 of its articles of association for the purposes of the Tender Offer and Repurchase Agreement as these provisions could require further offers for the shares in the Company to be made by certain shareholders as a result of the Tender Offer and Repurchase Agreement. Resolution 3 of the Notice seeks shareholder approval for such disapplication.

Summary

The Board has accordingly concluded that it is in the best interests of Shareholders as a whole that the De-listing be approved.

Under the AIM Rules for Companies, the De-listing can only be effected by the Company after securing a resolution of Shareholders in an Extraordinary General Meeting passed by a majority of not less than 75 per cent. of the votes cast, and the expiration of a period of twenty Business Days from the date on which notice of the De-listing is given. In addition, a period of at least five Business days following the Shareholder approval of the De-listing is required before the De-listing may be put into effect.

Resolution 1 contained in the Notice seeks Shareholder approval for the De-listing. The Company and Seymour Pierce have received irrevocable undertakings from Shareholders holding in aggregate, 52,693,153 Ordinary Shares, representing 68.2 per cent. of the current issued ordinary share capital of the Company, to vote in favour of the De-listing. Assuming that Shareholders approve this resolution, it is proposed that the De-listing would take place on 1 April 2010.

3. Tender Offer

The Board recognises that not all Shareholders will be able or willing to continue to own shares in the Company following the De-listing. Although it is under no formal obligation to do so, the Board is therefore arranging for Seymour Pierce to provide the Tender Offer Shareholders with the opportunity to sell Ordinary Shares in the Company at the Record Date by means of the accompanying Tender Form (in the case of Tender Offer Shares held in certificated form) or by TTE Instruction (in respect of Tender Offer Shares held in uncertificated form).

 

The Tender Offer will be made on the terms and subject to the conditions set out in Part 2 of the Circular. The Tender Offer is to be effected by Seymour Pierce purchasing Tender Offer Shares as principal and then selling such Tender Offer Shares on the London Stock Exchange to the Company for cancellation pursuant to the Repurchase Agreement. The maximum aggregate number of Ordinary Shares which may be purchased in the Tender Offer is 22,921,847 representing 32.2 per cent. of the issued share capital of the Company. The price to be paid for each Ordinary Share subject to the Tender Offer is 10 pence being a premium of 53.8 per cent. to the closing mid-market price of a China Eastsea Business Software Limited Ordinary Share on 22 February 2010, the day before the announcement of the Proposals.

 

The Receiving Agent will act as agent for the Tender Offer Shareholders in the Tender Offer.

 

Ordinary Shares purchased by Seymour Pierce pursuant to the Tender Offer will be acquired with full title guarantee, free of all liens, charges, restrictions, claims, equitable interests and encumbrances and together with all rights attaching to them. The Tender Offer is conditional upon, inter alia, the Repurchase Agreement becoming unconditional in all respects (save in respect of any condition relating to the Tender Offer becoming unconditional).

 

The Company and Seymour Pierce have received irrevocable undertakings from Eric Zhaofa Zu and certain other Shareholders currently holding 52,393,153 Ordinary Shares in aggregate at the date of this document, representing 67.8 per cent. of the current issued ordinary share capital of the Company that they will not accept the Tender Offer or will procure that the Tender Offer is not accepted.

 

Tender Offer Shareholders may tender some, all, or none of their holdings. The Tender Offer will enable equally all Tender Offer Shareholders (excluding those having irrevocably committed not to accept or procure non-acceptance of the Tender Offer), to sell should they elect to do so all or part of their holding of Tender Offer Shares. 

4. Current Trading

As announced on 6 November 2009, the Company traded at a loss in the first half of the current financial year. Although the Directors are expecting the Company to trade profitably for the year as a whole, the level of profits is expected to be below the levels achieved before the economic downturn. Long term prospects for the business remain strong because of the quality of the customer base and the Company`s technical expertise but in the current period the Company's  recovery has been delayed because the fortunes of its customers, especially in the Government sectors, are lagging behind the recovery in other parts of the Chinese economy.

 

The Directors have always been clear that one of the main reasons for being admitted to trading on AIM was to obtain access to substantial new capital needed to enable the Company to seize and make the most of its business opportunities. There has been no opportunity to raise new capital in the past two years and the likelihood of such an opportunity occurring in the reasonably near term, seems remote. Although the Company retains cash on deposit, levels of cash are reduced because of depressed profitability and the position has been exacerbated by the significantly extended time our strained customers  are taking to settle their debts. Unless the Company can find other means of raising new capital, its ability to make the most of eventual recovery opportunities will be badly impaired.

 

5. EGM

A circular outlining the Proposals has today been sent to Shareholders. Included in the circular is a notice convening the Extraordinary General Meeting of the Company to be held at the offices of the Company at 7/F Information Mansion, 28 Xinxi Road, Shangdi, Haidian District, Beijing, China, at 11.00 a.m. (Beijing time or 3:00 a.m. UK time) on 24 March 2010. At this Extraordinary General Meeting, the Resolutions will be proposed.

6. Recommendation

The Directors unanimously recommend that Shareholders vote in favour of the Resolutions as they have undertaken to do in respect of their own current beneficial holdings of 21,750,000 Ordinary Shares, representing 28.13 per cent. of the existing issued shares capital of the Company.

The Directors make no recommendation as to whether Tender Offer Shareholders should accept the Tender Offer but recommend that all Tender Offer Shareholders consult their duly authorised independent advisers before they make a decision as to whether to tender some, all, or none of their Tender Offer Shares, in order to obtain advice relevant to their particular circumstances.

 

Eric Zhaofa Zhu (together with his connected persons) being the only Director who has a beneficial holding of Ordinary Shares (other than James Anthony Heyworth-Dunne), has irrevocably undertaken not to accept the Tender Offer, or procure that the Tender Offer is not accepted on his behalf, in respect of all his beneficial holdings of Ordinary Shares.

 

James Anthony Heyworth-Dunne intends to accept the Tender Offer in respect of 300,000 Ordinary Shares which represents the entirety of his beneficial holding in Ordinary Shares of the Company.

 

Shareholders should note that if for any reason the Tender Offer does not take place, the De-listing will still occur if it is approved by Shareholders at the EGM.

The Directors who have beneficial holdings of Ordinary Shares (other than James Heyworth-Dunne), have all irrevocably undertaken not to accept the Tender Offer, or procure that the Tender Offer is not accepted on their behalf in respect of all of their beneficial holdings of Ordinary Shares.

James Anthony Heyworth-Dunne intends to accept the Tender Offer in respect of his beneficial holding of Ordinary Shares. Shareholders should note that if for any reason the Tender Offer does not take place, the De-listing will still occur if it is approved by Shareholders at the Extraordinary General Meeting.

Enquiries:

China Eastsea

Seymour Pierce Limited

Angie Chen

Chris Howard

Company Secretary

Christopher Wren





Tel: +86 10 6298 8850

Tel: 020 7107 8000

[email protected]

[email protected]

www.sinobpo.com


Definitions:

"AIM"

 

AIM, a market operated by the London Stock Exchange;

"AIM Rules for Companies"

 

the AIM Rules for Companies published by the London Stock Exchange from time to time;

 

"Board"

the directors of the Company whose names are set out in the Circular to Shareholders dated 22 February 2010;

 

"Business Day"

 

means a day other than a day which is a Saturday, a Sunday or public holiday in Jersey or England;

 

"certificated" or "in certificated form"

 

 

where a security is not held in uncertificated form (i.e. not in CREST);

"Clear Day /(s)"

 

in relation to a period of notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect;

 

"Company" or "China Eastsea"

 

 

China Eastsea Business Software Limited;

 

"CREST"

 

 

The relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations);

 

"CREST Regulations"

 

The Uncertificated Securities Regulations 2001 (SI2001/3755) as amended and the Companies (Uncertificated Securities) (Jersey) Order 1999;

 

"De-listing"

 

the proposed cancellation of admission of the Ordinary Shares to trading on AIM;

 

"Directors"

 

 

the directors of the Company whose names are set out in Part 1 of the Circular to Shareholders dated 22 February 2010;

 

"Euroclear"

 

 

Euroclear UK and Ireland Limited, the operators of CREST;

 

"Extraordinary General Meeting" or "EGM"

the Extraordinary General Meeting of the Company convened for 11:00 a.m. (Beijing time) on 24 March 2010, notice of which is set out at the end of the Circular to Shareholders dated 22 February 2010;

 

"Form of Proxy"

 

the form of proxy enclosed with this document for use by Shareholders in connection with the Extraordinary General Meeting;

 

"Jersey"

 

The Bailiwick of Jersey;

 

"London Stock Exchange"

 

London Stock Exchange Plc;

 

"Notice"

the notice of Extraordinary General Meeting set out at the end of  the Circular to Shareholders dated 22 February 2010;

 

"Optionholders"

 

holders of Option(s);

 

"Options"

 

options to subscribe for Ordinary Shares;

 

"Ordinary Shares"  or "Shares"

 

the ordinary shares of 5 pence each in the capital of the Company;

 

"Prohibited Territory"

any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure for Seymour Pierce if information or documents concerning the Tender Offer were to be sent or made available to Shareholders in that jurisdiction;

"Proposals"

 

the Tender Offer and De-listing;

 

"Receiving Agent"

 

Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH;

 

"Record Date"

"Registrars"

"Regulatory Information Service"

 

 

5:00 pm on 22 March 2010;

 

Computershare Investor Services (Jersey) Limited, PO Box 83, Ordnance House, 31 Pier Road, Jersey, JE4 8PW;

any of the services approved by the London Stock Exchange plc for the distribution of AIM announcements and included within the list maintained on the website of the London Stock Exchange plc;

 

"Repurchase Agreement"

 

the agreement dated 22 February 2010 between the Company and Seymour Pierce for the repurchase by the Company as an on market purchase on the London Stock Exchange, of the Ordinary Shares purchased by Seymour Pierce pursuant to the Tender Offer;

 

"Resolutions"

 

the resolutions to be proposed at the Extraordinary General Meeting as set out in the Circular to Shareholders dated 22 February 2010;

 

"Shareholders"

 

holders of Ordinary Shares and "Shareholder" mean any one of them;

 

"Seymour   Pierce"

 

 

Seymour Pierce Limited;

 

"Tender Form"

 

 

the form enclosed with the Circular to Shareholders dated 22 February 2010 for use by Shareholders in connection with the Tender Offer;

 

"Tender Offer"

 

 

the tender offer to Tender Offer Shareholders to be made by Seymour Pierce on the terms and subject to the conditions set out in this document and also, in the case of certificated Ordinary Shares, the Tender Form;

 

"Tender Offer Shares"

 

Ordinary Shares to which the Tender Offer relates being, in aggregate, the total number of Ordinary Shares in issue as at 5.00 p.m. on the Record Date other than those Ordinary Shares held by certain shareholders who have irrevocably committed to limit their participation in the Tender Offer or not to participate at all, including any Ordinary Shares issued and allotted on or before such time pursuant to the valid exercise of Options. As there are no Options capabel of exercise at or beneath the Tender Offer price, it is not anticipated that any such Option exercise will occur;

 

"Tender Offer Shareholders"

 

holders of Tender Offer Shares save for those Shareholders who are resident in the United States, Canada, Australia, New Zealand, Japan, the Republic of Ireland, South Africa or any Prohibited Territory;

 

"TTE Instruction"

 

a transfer to escrow instruction (as defined by the CREST manual issued by Euroclear) made in respect of Tender Offer Shares;

 

"uncertificated" or "in

uncertificated form"

Ordinary Shares which are recorded on the register of members of the Company as being held in uncertified form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST; and

 

"United States"

the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.

Expected Timetable of Principal Events:

Tender Offer Commences                                                                                                   23 February 2010

 

Latest time and date for receipt of Tender Forms and share certificates                    1:00 p.m. on 22

for certificated shares                                                                                                          March 2010

 

Transfer to escrow account of tendered uncertificated Tender                                   1:00 p.m. on 22

Offer Shares settled by                                                                                                       March 2010

               

Record Date for Tender Offer                                                                                            5:00 p.m. on 22 March 2010

 

Latest time and date for receipt of Forms of Proxy                                                         11:00 a.m. (Beijing time or 3:00 a.m. UK time) on 22 March 2010

 

Announcement of take-up level under Tender Offer by                                               8:00 a.m.on 24 March 2010

 

Extraordinary General Meeting                                                                                          11:00 a.m. (Beijing time or 3:00 a.m. UK time) on 24 March 2010

 

Purchase of Tender Offer Shares under the Tender Offer                                             25 March 2010

 

CREST Account credited with Tender Offer proceeds                                                  25 March 2010

 

Despatch of cheques for Tender Offer proceeds                                                           by 30 March 2010

 

Despatch of share certificates for Tender Offer Shareholders                                     by 30 March 2010

not tendering their entire holding of Ordinary Shares

 

Earliest date that the admission to trading of the Ordinary Shares                             1 April 2010

 on AIM will be cancelled

 

If any of the above times / dates change, the revised times / dates will be notified to Shareholders by announcement through a Regulatory Information Service.

 

All references to the times of day are to United Kingdom (UK) time unless otherwise stated.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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