[TodayIR] HKRH: KRH Announces the Implementation of CGS’Agreement with Luk Fook - Two Renowned Brands to Generate Synergies Further Enhances Brand Position of 3D-GOLD and Expands Retail Network to Meet Demand from Different Strata of Customers (Hong Kong, 28 January 2014) – Hong Kong Resources Holdings Company Limited ("HKRH" or the "Group"; SEHK: 2882) is pleased to announce the implementation of CGS’ agreement with Luk Fook 3D Management Company Limited (“Luk Fook”; wholly-owned by Luk Fook Holdings (International) Limited; SEHK: 0590) and CGS Group (“CGS”). Luk Fook will purchase 50% issued share capital in CGS, the wholly-owned subsidiary of HKRH at a consideration of HK$ 282,700,000. The consideration and transaction are subject to conditions precedent to the CGS Agreement. CGS is engaged in the retailing and franchising of jewellery in Hong Kong, Macau and the PRC under the brand name of “3D-GOLD” and “La Milky Way”. Upon completion, CGS will continue to be one of the Group’s major business arms and subsidiaries. In addition, HKRH has agreed to issue, and Luk Fook has agreed to subscribe for the HKRH convertible bonds in an aggregate principal amount of HK$57,080,000, carrying interest of 3% per annum, due five years from the issue date. Based on the exchange rate of HK$0.18 per share, the bonds can be converted into 317,111,111 HKRH shares, representing approximately 9.09% of its enlarged issue share capital. CGS has also agreed to grant Share Option to Luk Fook. Upon full exercise of the CGS share option, a total of 205 CGS Share Option shares will be issued to Luk Fook, representing approximately 5.48% of its enlarged issue share capital. The gross and net proceeds from the exercise of the CGS Share Option in full are estimated to be approximately US$5,000,000, and the proceeds shall be used for the purpose of general working capital and business expansion of the CGS Group. This allows HKRH to further strengthen the relationship with Luk Fook, which Luk Fook will be HKRH’s strategic partner in CGS. Upon completion, Maxigood Enterprises Limited, a wholly-owned subsidiary of Luk Fook will become one of the suppliers of CGS. Moreover, Luk Fook’s related company and a member of CGS will enter into the Competitiveness Enhancement Agreement. Pursuant to the Competitiveness Enhancement Agreement, Luk Fook’s related party shall provide to member(s) of CGS such services and assistance that enhance and improve operation efficiency and competitiveness. HKRH and Luk Fook have agreed that each party is to provide funding of HK$100,000,000 to CGS by way of shareholders’ loans for the purpose of general working capital and business expansion of CGS. Dr. Kennedy Wong, Chairman of HKRH and 3D-GOLD, said, “I am delighted in announcing Luk Fook’s investment in CGS Group under HKRH. I am confident that 3D-GOLD’s brand awareness, which has been strengthened over the past years, successful marketing strategies and strong design capability, coupled with Luk Fook’s rich operational experience, expertise and extensive network will generate powerful synergies. These synergies will lead to a more rapid enhancement of 3D-GOLD’s brand position and expand its retail network, bolstering its long-term development. As a result, this will create greater value for HKRH and deliver better returns to our shareholders and investors. “The investment will also improve the liquidity and cash flow position of HKRH. We will continue investing resources in our existing businesses and look forward to cooperating with Luk Fook on the business of CGS Group to achieve results that benefit both parties. We believe that the two renowned jewellery brands will be able to meet the vast demands of customers at different levels of the market. “HKRH is highly confident in the prospects of the jewellery retail business and “3D-GOLD”, it will maintain its holdings in “3D-GOLD” over the long term and direct resources in the “3D-GOLD” business. The Group will also continue to engage in and contribute to the jewellery market in Hong Kong, Macau and the PRC through the “3D-GOLD” brand.”
[TodayIR] HKRH: KRH Announces the Implementation of
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