TORONTO, Jan. 21, 2015 /CNW/ - Sunwah International Limited (TSX: SWH) ("Sunwah"), an Asian based financial services firm, announces that Perfect Dream Holdings Limited, a British Virgin Islands company jointly owned by Dr. Jonathan Koon Shum Choi and Mr. Michael Koon Ming Choi, (the "Offeror"), has commenced an offer (the "Offer") to acquire all of the issued and outstanding common shares (the "Shares") of Sunwah, other than the Shares beneficially owned or controlled by Dr. Jonathan Koon Shum Choi and Mr. Michael Koon Ming Choi (together, the "Offering Shareholders") and their joint actors, for cash at a price of $0.20 per Share, and mailed the Offer and take-over bid circular (the "Offeror's Circular") to Sunwah's shareholders (the "Shareholders"). The directors' circular (the "Directors' Circular") of Sunwah's board of directors (the "Board") was mailed together with the Offeror's Circular. Full details of the Offer are contained in the Offeror's Circular, and along with the Directors' Circular, are available under Sunwah's SEDAR profile at www.sedar.com.
On November 4, 2014, the Offering Shareholders informed the Sunwah of a proposal to acquire the Shares held by Mr. Paul Lam and Ms. Erica Lam at a proposed price of $0.20 per Share. This proposed price represented a premium of greater than 115% of the market price at that time and did not qualify as an exempt takeover bid. Therefore, to comply with securities regulations, the Offering Shareholders proposed (1) to make an offer to all shareholders by way of a take-over to acquire Shares not already owned or controlled by Dr. Jonathan Koon Shum Choi and Mr. Michael Koon Ming Choi for consideration of approximately $0.20 per Share in cash, and (2) that Mr. Paul Lam and Ms. Erica Lam enter into lock-up agreements whereby they would deposit all of their Shares under such proposed offer. The proposed offer would not be made unless such lock-up agreements were also entered into by Mr. Paul Lam and Ms. Erica Lam (and no agreements to acquire Mr. Paul Lam and Ms. Erica Lam's Shares would exist until then).
On December 11, 2014, the Offeror entered into binding lock-up agreements (the "Lock-Up Agreements") with each of Mr. Paul Lam and Ms. Erica Lam (together, the "locked-up shareholders") pursuant to which the locked up shareholders have agreed to tender their shares under the Offer. The locked-up shareholders own, in the aggregate, 17,363,526 shares, representing approximately 18.6% of the issued and outstanding Shares.
Each of Dr. Jonathan Choi and Mr. Michael Choi is a director of Sunwah and Dr. Jonathan Choi is also the Chairman of the Board. Dr. Jonathan Choi and Mr. Michael Choi are joint actors and between them they own or control, directly and indirectly, 61,816,247 Shares representing approximately 66.4% of the issued and outstanding share capital of Sunwah. Accordingly, the Offer constitutes an "insider bid" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Shareholders in Special Transactions of the Canadian Securities Administrators ("MI 61-101").
For purposes of evaluating the Offer, in compliance with MI 61-101, the Board established an independent committee (the "Special Committee") consisting of Mr. Robert Fung, Ms. Elizabeth Law and Dr. Lee Lam. As Ms. Law and Dr. Lam also serve as independent directors of one or more Sunwah's subsidiaries, they may not be considered independent directors under MI 61-101, and therefore, the Board also established another independent committee (the "Independent Committee"), consisting of Mr. Robert Fung who is the sole independent director for purposes of MI 61-101, for determining the valuator and for supervising the preparation of the valuation.
In compliance with MI 61-101, the Independent Committee and the Offeror engaged Evans & Evans, Inc. to prepare a valuation and fairness opinion. The Evans & Evans' valuation concludes that, based on the factors set out therein, the fair market value of the Shares on November 30, 2014 is in the range of $0.95 to $0.98 per Share, and it is their opinion that, as at December 15, 2014, the terms of the Offer are not fair, from a financial point of view, giving consideration to the factors set out in the fairness opinion. The valuation is included in Offeror's Circular and the fairness opinion is included in the Directors' Circular. Both the valuation and fairness opinion should be read in their entirety.
The Board, after careful consideration and acting upon the unanimous recommendation of the Special Committee, and with the Offering Shareholders abstaining by reason of their interest in the Offer, is recommending that Shareholders reject the Offer. The factors considered by the Special Committee in recommending to Shareholders that they not accept the Offer are set out in the Directors' Circular, which should be read in its entirety.
Some of the factors that the Board considered in reaching its unanimous recommendation are as follows:
- The independent valuation sets out a fair market value of the Shares, as at November 30, 2014, in the range of $0.95 to $0.98 per Share, which is approximately five times the Offer price of $0.20 per Share. The independent fairness opinion supports the conclusion that the Offer is unfair to the Shareholders from a financial point of view.
- The purchase of Shares by the Offeror pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and reduce the number of Shareholders and could, therefore, adversely affect the liquidity and market value of the remaining Shares held by Shareholders who did not tender to the Offer. The prospect that there might be any future third party offers for Sunwah or for any of its significant assets will also be very unlikely.
- Depending on the number of Shares deposited and taken up under the Offer and the market price of the Shares, Sunwah may not be in compliance with the continued listing rules of the Toronto Stock Exchange (the "TSX") upon completion of the Offer. If Sunwah is unable to remediate to the satisfaction of the TSX, then the Shares could be halted or be delisted and this could, in turn, adversely affect the market or result in a lack of an established market for such Shares.
- Although the Offeror or the Offering Shareholders intend to carry out a secondary offering of Shares or support a primary offering of Shares by Sunwah and otherwise to take reasonable commercial efforts to maintain Sunwah's listing on the TSX (as stated in a letter delivered to the Board) including compliance with the TSX's market value and public distribution requirements, there is no assurance that the Offeror, the Offering Shareholders or Sunwah will be able to take remedial action to comply with such requirements. The Offeror does not intend to effect a second step going private transaction or to acquire Shares on a compulsory basis.
- The Offeror and Offering Shareholders intend to support Sunwah with considering any strategic review of the business to enhance shareholder value. Their support for any proposal resulting from such review will depend on whether it will deliver value to all shareholders of Sunwah. They will encourage management to consider and pursue such proposals and actions, and if no such proposals or actions are taken by December 31, 2015 to bring liquidity and fair value to all shareholders, then they will support the establishment of an independent committee of directors to propose a course of action to the Board of Directors for its consideration. However, there is no assurance that any strategic review of Sunwah's business may be considered or completed.
Shareholders who are attracted by the certainty of an opportunity to sell their Shares for cash at this time may prefer to accept the Offer. Upon completion of the Offer, there will be no certainty with respect to the liquidity of the Common Shares, although it is the stated intention of the Offering Shareholders that they will take reasonable commercial steps for Sunwah to maintain its listing on the TSX including compliance with the TSX's market value and public distribution requirements.
The Directors' Circular is not, and is not intended to be, investment advice to Shareholders as each Shareholder's circumstances are different. Any Shareholder who is in doubt as to how to respond to the Offer, including whether or not to deposit or to withdraw his or her Shares, should consult his or her own investment dealer, tax advisor, lawyer or other professional advisor. Shareholders are urged to make their own decisions regarding whether to accept or reject the Offer after carefully considering the Offer and the factors set out the attached Directors' Circular. The Board strongly encourages you to read the Directors' Circular in its entirety, in particular the "Reasons For a Rejection Recommendation".
The Offer will be open for acceptance until 5:00 p.m. (Toronto time) on February 26, 2015 (the "Expiry Time"), unless extended or withdrawn. The Offeror will extend the Offer for an additional 10 days after all conditions of the Offer are satisfied (except those waived by the Offeror) and the Offeror announces its intention to immediately take-up and pay for the Shares deposited under the Offer. The Offeror will announce the number of Shares to be taken-up and paid prior to the expiry of the extended Offer.
Upon take-up of the Shares deposited under the Lock-Up Agreements, the Offering Shareholders will beneficially own, directly and indirectly, or exercise control or direction over, an aggregate of 79,060,836 Shares, representing approximately 84.9% of the outstanding Shares.
Computershare Investor Services Inc. is the depositary for the Offer. Shareholders whose Shares are registered in the name of an investment dealer, stockbroker, bank, trust company or other nominee should contact such nominee if they wish to accept the Offer.
About Sunwah International Limited
Sunwah International Limited (TSX: SWH) is a strategically positioned asset-based financial services provider, linking the global investment community with China's high growth economy. Founded in 1990 and backed by prominent Hong Kong based conglomerate, Sunwah Group, a key element of Sunwah's growth strategy involves identifying and advancing select international opportunities that are poised to benefit from proliferating consumerism in China and development in key areas of Southeast Asia. Sunwah is uniquely positioned to capitalize on this demand and the global economic changes stemming from this shift, leveraging a 24-year track record and an extensive relationship/strategic investor network throughout Asia. Sunwah operates from six offices located in Hong Kong, Beijing, Shanghai, Shenzhen, Macau and Toronto.
The organization's primary Hong Kong-based subsidiary, Sunwah Kingsway Capital Holdings Limited, is listed on the Stock Exchange of Hong Kong under the stock code 188. Sunwah Kingsway is licensed to provide a range of financial solutions in Hong Kong and abroad that include award-winning brokerage services and innovative corporate finance offerings.
Founded in 1990, Sunwah is listed on the Toronto Stock Exchange under the symbol SWH.
This press release contains forward-looking statements which reflect Sunwah's current expectations regarding future events. The forward-looking statements, such as those relating to the Offer, involve risks and uncertainties, such as the risk that the Offer may be varied or terminated in certain circumstances; the risks relating to general business, economic, competitive, political, regulatory and social uncertainties; the risks related to factors beyond the control of Sunwah; the risks relating to regulatory requirements; the risks related to certain directors and executive officers of Sunwah having interests in the Offer that are different from other Shareholders; the risks relating to the delivery and availability of relevant documentation in connection with the Offer; the risks relating to the outcome and merits of the Offer; the risks relating to impact of the Offer on the liquidity and market value of Sunwah's shares and on Sunwah's ability to maintain its TSX listing; the risks relating to developments in the capital markets; the risk of material adverse developments in Sunwah's business; the risk of there being no assurance that any strategic review of Sunwah's business may be considered or completed; and other factors discussed under "Risk Factors" in the Annual Information Form of the Company dated September 23, 2014. Actual results could differ materially from those projected herein. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize.
SOURCE Sunwah International Limited
For further information: please contact: Kristen Humphrey, Sunwah International Limited, (416) 888-2323, [email protected]