News

Restructuring Of Subsidiary In Thailand & Incorporation Of Company In Thailand

Background

We refer to our Company's announcement dated 12 February 2001 in which we informed that Qian Hu Marketing Co., Ltd ("QHM"), the Company's subsidiary in Thailand, was not able to obtain a Foreign Business Licence to undertake the business of distributing pet food and accessories in Thailand (the "Thailand Distributing Business") and that the Company was seeking legal advice on the restructuring of QHM to enable QHM to undertake the Thailand Distributing Business without a Foreign Business Licence whilst maintaining effective control of QHM.


Restructuring of QHM

The Board of Directors wishes to announce that the Company has on 30 April 2001 completed the restructuring of QHM ("the Restructuring").

Under the new capital structure of QHM, the Company reduced its direct shareholding in QHM from 66% to 49%. NNTL (Thailand) Limited ("NNTL") (a company newly incorporated in Thailand and in which the Company has voting control at general meetings and Board meetings) now holds approximately 50.992% of the registered capital of QHM. The balance of approximately 0.008% of the registered capital of QHM is held by 5 individual Thai shareholders of QHM.

The Company maintains voting control at general meetings and Board meetings of QHM through its direct shareholding in QHM and through NNTL, and the QHM Agreement (as defined hereafter).

Upon the advice of the Company's Thai lawyers, QHM, on 4 April 2001, completed the amendment of its objects for QHM to undertake, inter alia, the distribution of pet food and accessories in Thailand.

The Company's Thai lawyers have advised that QHM may now lawfully undertake the Thailand Distributing Business without a Foreign Business Licence.


Financial Effects of the Restructuring

The Restructuring is not expected to have a material impact on the net tangible asset per share and earnings per share of the Company for the current financial year ending 31 December 2001.

With our plans for QHM to develop its business activities, the Directors believe that in the longer term, the Group's earnings will be enhanced.


Directors' and Substantial Shareholders' Interest in the Transaction

Save for their interest in the Company, none of the Directors of the Company has any interest, direct, or indirect in the transaction. The Board of Directors is not aware of any substantial shareholder of the Company having any interest, direct, or indirect in the transaction (save for their declared interest in the Company) and have not received any notification of any interest in the transaction from any substantial shareholder.


Brief information on the Restructuring

Agreements and Parties

1. The Company signed the following agreements:

(a) the Shareholders' Agreement dated 23 April 2001 relating to NNTL ("the NNTL Agreement") with Mr. Suwan Krairiksh, Mr. Siriwat Boonyasedtha, Miss Sopa Thepvuttisathaporn, Miss Bussakorn Ladnil, Miss Chonthicha Psomngam, Mr. Surasit Promnim and Miss Arana Sansing (collectively, the "NNTL Thai Parties");

(b) the Shareholders' Agreement dated 30 April 2001 relating to QHM ("the QHM Agreement") with (i) Mr. Suwan Krairiksh, Mr. Siriwat Boonyasedtha, Miss Sopa Thepvuttisathaporn, Miss Bussakorn Ladnil and Miss Chonthicha Psomngam (collectively, the "QHM Thai Parties"); (ii) NNTL; and (iii) QHM.

2. Save for Miss Bussakorn Ladnil, the NNTL Thai parties and the QHM Thai Parties are employees of QHM. The NNTL Thai parties and the QHM Thai Parties have warranted that they hold their respective shares for themselves, and not for any other persons.


Share Capital of NNTL

3. NNTL was incorporated on 24 April 2001 with a registered capital of Baht One Million and Five Hundred Thousand (Baht 1,500,000) divided into fifteen thousand (15,000) shares ("NNTL Shares") with a par value of Baht One Hundred (Baht 100) each.

4. All NNTL Shares are divided into two classes:

(a) Class A Shares ("Class A Shares"), which are preference shares, make up fifty-one percent (51%) of the registered capital of NNTL. These are held and owned by the NNTL Thai Parties as follows:

(i) Mr. Suwan Krairiksh, Mr. Siriwat Boonyasedtha, Miss Sopa Thepvuttisathaporn, Miss Bussakorn Ladnil, Miss Chonthicha Psomngam and Mr. Surasit Promnim hold 1 Class A Share each;

(ii) Miss Arana Sansing holds 7,644 Class A Shares;

(b) Class B Shares ("Class B Shares"), which are ordinary shares, make up forty-nine percent (49%) of the registered capital of NNTL. These are held and owned by the Company.

5. The NNTL Shares were allotted as twenty-five percent (25%) paid up in value and the balance seventy-five percent (75%) are to be paid upon a call to be made by the Directors of NNTL at their discretion.

6. Dividends of NNTL shall be paid to holders of Class A Shares prior to holders of Class B Shares at the rate of five percent (5%) of the paid up value of each Class A Share.


Transfers of QHM Shares to NNTL

7. On 30 April 2001, the following transfers of Shares in QHM (amounting to approximately 50.992% of the registered capital of QHM) were effected in favour of NNTL:

(a) 10,200 Shares in QHM (equivalent to 17% of the registered capital of QHM) were transferred by the Company to NNTL at the net tangible asset value of Baht 46.15 per share as at 31 December 2000 for a total consideration of Baht 470,730.

(b) 14,400 Shares in QHM (equivalent to 24% of the registered capital of QHM) were transferred by Mr Peh Hong Pheng, to NNTL for a total consideration of Baht 540,000.

(c) 5,995 Shares in QHM (approximately 9.992% of the registered capital of QHM) were transferred by Ms Arana Sansing, to NNTL for a total consideration of Baht 225,000.


Directors

8. Pending the restructuring of QHM, our directors, Messrs Kenny Yap Kim Lee and Alvin Yap Ah Seng resigned as the Company's nominees to the Board of Directors of QHM and Ms Lai Chin Yee, our Group Financial Controller was appointed as the Company's nominee to the Board of Directors of QHM with effect from 1 March 2001.