(Gram Capital Limited
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23 September 2016
To: The independent board committee of Peak Sporl Products Co., Lin1ited
Dear Sirs,
PROPOSED PRIVATISATION OF
PEAK SPORT PRODUCTS COMPANY LIMITED BY THE OFFEROR
BY WAY OF A SCHEME OF ARRANGEMENT (UNDER SECTION 86 OF THE COMPANIES LAW) AND
PROPOSED WITHDRAWAL OF LISTING
INTRODUCTION
We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee in respect of the Proposal, the Scheme and the Option Offer, details of which are set out in the Scheme Document dated 23 September · 2016 jointly issued by the Company and the Offeror to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Scheme Document unless the context requires otherwise.
On 26 July 2016, the Offeror requested the Board to put forward a proposal to the Scheme Shareholders for the privatisation of the Company by way of a scheme of arrangement under Section 86 of the Companies Law involving the cancellation of the Scheme Shares and, in consideration therefor, the payment to the Scheme Shareholders of the Cancellation Price in cash for each Scheme Share, and the withdrawal of the listing of the Shares on the Stock Exchange.
In addition, the Offeror is making an appropriate offer, namely, the Option Offer, to the Optionholdcrs in accordance with Rule 13 of the Takeovers Code to cancel all outstanding Share Options, vested or unvested, in exchange for cash, being an amount equal to HK$0.662 (being the "see-through" price, which is the relevant Cancellation Price minus the relevant per Share exercise price under the Share Options) for each outstanding Share Option with an exercise price of HK$1.938. The Option Offer will be conditional upon the Scheme becoming effective.
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Room 1209, 121h Floor, Nan Fung Tower, 88 Connaught Road Central / 173 Des Voeux Road Cen1ral. Hong Kong
An Independent Board Committee comprising Dr. Xiang Bing, Mr. Feng Lisheng and Mr. Zhu Haibin (all being independent non-executive Directors) has been formed to advise the Independent Shareholders as to whether the terms of the Proposal and the Scheme are, or are not, fair and reasonable and as to voting, and to the Optionholders as to its views on acceptance of the Option Offer. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee in this respect, and our opinion herein is solely for the assistance of the Independent Board Committee in connection with ils consideration of the Proposal, the Scheme and the Option Offer pursuant to Rule 2.1 of the Takeovers Code. The appointment of Gram Capital as the Independent Financial Adviser has been approved by the Independent Board Committee.
BASIS OF OUR OPINION
In fonnulating our opinion to the Independent Board Committee, we have relied on the statements, information, opinions and representations contained or referred to in the Scheme Document and the information and representations as provided to us by the Directors and the Offeror (where applicable). We have assumed that all information and representations that have been provided by the Directors and the Offerer (where applicable), for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date, and should there be any material changes to our opinion after the Latest Practicable Date, Shareholders would be notified as soon as possible. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors and the Offerer (where applicable) in the Scheme Document were reasonably made af ter due enquiry and careful consideraLion. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Scheme Document, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors and the Offerer (where applicable), which have been provided to us. Our opinion is based on the Directors' and the Offerer's representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Proposal, the Scheme and the Option Offer. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in comp]iance with Rule 13.80 of the Listing Rules and Rule 2 of the Takeovers Code.
The information contained in the Scheme Document relating Lo the Group has been supplied by the Company. The issue of the Scheme Document has been approved by the Directors, who jointly and severally accept full responsibility for the accuracy of the information contained in the Scheme Document (other than that relating to the Offerer) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Scheme Document (other than those expressed by the Offerer) have been arrived at after due and careful consideration and there are no other facts not contained in the Scheme Document, the omission of which would make any statement in the Scheme Document misleading.
The information contained in the Scheme Document relating to Offerer has been supplied by Offerer. 'fhe issue of the Scheme Docu1nent has been approved by the directors of the Offerer, who accept full responsibility for the accuracy of the informalion contained in the Schen1e Document (other than that relating to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Scheme Document (other than those expressed by the Group) have been arrived at after due and careful consideration and there are no other facts not contained in the Scheme Document, the omission of which would make any statement in the Scheme Document misleading.
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Room 1209. 12th Floor, Nan Fung Tower, 88 Connaught Road Central / 173 Des Voeux Road Central. Hong Kong
We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Scheme Document, save and except for this letter of advice. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the Offeror or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group, the Shareholders or the Optionholders as a result of the Proposal, the Scheme and/ or the Option Offer.
We have assumed that the Proposal, the Scheme and the Option Offer will be consummated in accordance with the terms and conditions set forth in the Scheme Document without any waiver, amendment, addition or delay of any terms or conditions. We have assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents as required for the Proposal, the Scheme and the Option Offer, no delay, limitation, condition or restriction will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived from the Proposal, the Scheme and the Option Offer. In addition, our opinion is necessarily based on the financial, market, economic, industry-specific and other conditions as they existed on, and the information made available to us as at the Latest Practicable Date.
Lastly, where information in this letter has been extracted from pu blished or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has·been correctly and fairly extracted, reproduced or presented from the relevant sources while we are not obligated to cond uct any independent in-depth investigation into the accuracy and completeness of those information.
PRINCIPAL FACTORS AND REASONS CONSIDERED
In arriving at our opinion in respect of the Proposal, the Scheme and the Option Offer, we have taken into consideration the following principal factors and reasons:
(1) Background and terms of the Proposal, the Scheme and the Option Offer
On 26 July 2016, the Offerer requested the Board to put forward a proposal to the Scheme Shareholders for the privatisation of the Company by way of a scheme of arrangement under Section 86 of the Companies Law involving the cancellation of the Scheme Shares and, in consideration therefor, the payment to the Schen1e Shareholders of the Cancellation P1ice in cash for each Scheme Share, and the withdrawa1 of the listing of the Shares on the Stock Exchange.
If the Proposal is approved and implemented, under the Scheme, the share capital of the Company will, on the effective date of the Scheme, be reduced by cancelling and extinguishing the Scheme Shares. Upon such reduction, the share capital of the Co1npany will be increased to its former amount by the issuance at par to the Offerer, credited as fully paid, of the aggregate number of Shares as is equal to the number of Scheme Shares cancelled. The reserve created in the Company's books of account as a result of the capital reduction will be applied in paying up in full at par the new Shares so issued, credited as fully paid, to the Offeror.
The Scheme will provide that the Scheme Shares will be cancelled and, in consideration therefor, each Scheme Shareholder will be entitled to receive HK$2.60 in cash for each Scheme Share.
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Room 1209, 12th Floor, Nan Fung Tower, 88 Connaught Road Cen1ral / 173 Des Voeux Road Central. Hong Kong
Under the Scheme, the total consideralion payable for lhe cancellaLion of the Scheme Shares will be payable by the Offeror.
In addition, the Offeror is making an appropdate offer, namely, the Option Offer, to the Optionholders in accordance with Rule 13 of the Takeovers Code to cancel all outstanding Share Options, vested or unvested, in exchange for cash, being an amount equal to HK$0.662 (being the "see-through" price, which is the relevant Cancellation Price minus the relevant per Share exercise price under the Share Options) for each outstanding Share Option with an exercise price of HK$1.938. The Option Offer will be conditional upon the Scheme beco1ning effective.
On the basis of the Cancellation Price of HK$2.60 per Scheme Share and 927,326,148 Scheme Shares in issue as at the Latest Practicable Date, the Scheme Shares are in aggregate valued at approximately HK$2,411 ,047,985. As at the Latest Practicable Date, there are certain outstanding Share Options granted under the Share Option Scheme, pursuant to which u p to a maximum of 12,562,000 new Shares may be issued. Except the outstanding Share Options, there are no outstanding warrants, derivatives or other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) issued by the Company that carry a right to subscribe for or which are convertible into Shares.
On the assumption that no outstanding Share Options will be exercised or lapse before the Scheme Record Date, the amount of cash required to satisfy the consideration payable for the cancellation of the Scheme Shares (before taking into account the Option Offer to be made) is approximatel y HK$2,411,047,985, and the amount of cash required for the Option Offer is approximately HK$8,316,044, which is equal to the see-through price of HK$0.662 per Share under the Share Options multiplied by 12,562,000 Shares that may be issued if the Share Options are exercised in full.
On the assu1nption that all the outstanding Share Options (vested and unvested) will be exercised before the Scheme Record Date, the amount of cash required to satisfy the consideration payable for the cancellation of the Scheme Shares is approximately HK$2,443,709,185.
(2) Information on the Group
The Company is an exempted company incorporated in the Cayman Islands with limited liability whose shares have been listed on the Main Board of the Stock Exchange since 29 September 2009. 1'he Group is principally engaged in the manufacture and distribu tion of sports products including footwear, apparel and accessories.
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1i'lli;'P>FFilill 'f'88% il'!!liliiltcr 173's'JYJcl':kl!! 12!li 1 209:,s
Room 1209, 12th Floor, Non Fung Tower, 88 Connaught Road Central I 173 Des Voeux Road Ceniral, Hong Kong
Peak Sport Products Co. Ltd. published this content on 23 September 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 23 September 2016 03:03:36 UTC.
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