WANT WANT CHINA HOLDINGS LIMITED 
By Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.
This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act of
1933, as amended (the "Securities Act"), or the securities laws of any state of the United States or other jurisdiction. Unless they are registered, the securities may be offered only in transactions that are exempt from registration under the Securities Act or the securities laws of any other jurisdiction. Accordingly, the securities are only being offered to "qualified institutional buyers" as defined in Rule 144A under the Securities Act and outside the United States in reliance on Regulation S under the Securities Act. No public offering of the securities will be made in the United States or in any other jurisdiction where such an offering is restricted or prohibited.
WANT WANT CHINA HOLDINGS LIMITED(Incorporated in the Cayman Islands with limited liability)
(Stock code: 0151) PROPOSED NOTES ISSUE TO BE GUARANTEED BY THE COMPANY
In connection with the Proposed Notes Issue, the Company proposes to commence a series of roadshow presentations to institutional investors. The Notes are proposed to be issued by Want Want China Finance Limited, a direct wholly-owned subsidiary of the Company, and will be guaranteed by the Company.
Pricing of the Notes will be determined through a book building exercise to be coordinated by BofA Merrill Lynch and J.P. Morgan as the joint lead managers and joint bookrunners. As at the date of the announcement, the principal amount, the interest and other terms and conditions of the Proposed Notes Issue are yet to be determined. Upon finalisation of the terms of the Proposed Notes Issue, the Issuer, the Company, BofA Merrill Lynch and J.P. Morgan are expected to enter into a purchase agreement and other ancillary documents in relation to the Proposed Notes Issue.
The net proceeds of the Proposed Notes Issue are currently intended to be used towards refinancing of certain of the existing bank borrowings of the Group and for general corporate purposes.
The Issuer will seek a listing of the Notes on the Stock Exchange. A confirmation of eligibility for the listing of the Notes has been received from the Stock Exchange. A listing of the Notes on the Stock Exchange is not to be taken as an indication of the merits of the Notes, the Issuer, the Company or any member of the Group.
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Further announcement(s) in respect of the Proposed Notes Issue will be made by the Company as and when appropriate.
In connection with the Proposed Notes Issue, the Company proposes to commence a series of roadshow presentations to institutional investors. The Notes are proposed to be issued by Want Want China Finance Limited, a direct wholly-owned subsidiary of the Company, and will be guaranteed by the Company.
Completion of the Proposed Notes Issue is subject to, among others, global market conditions and investor interest. Pricing of the Notes will be determined through a book building exercise to be coordinated by BofA Merrill Lynch and J.P. Morgan as the joint lead managers and the joint bookrunners. As at the date of the announcement, the principal amount, the interest and other terms and conditions of the Proposed Notes Issue are yet to be determined. Upon finalisation of the terms of the Proposed Notes Issue, the Issuer, the Company, BofA Merrill Lynch and J.P. Morgan are expected to enter into a purchase agreement pursuant to which BofA Merrill Lynch and J.P. Morgan will be the initial purchasers of the Notes.
For the purpose of equal and timely dissemination of information to the shareholders of the Company and the investment community, an extract of the draft offering memorandum is attached hereto.
The Notes and the related guarantee by the Company have not been, and will not be, registered under the Securities Act. The Notes are being offered only to (i) "qualified institutional buyers" in the United States as defined in Rule 144A under the Securities Act, and (ii) outside the United States in reliance on Regulation S under the Securities Act. None of the Notes will be offered to the public in Hong Kong or placed to any connected persons of the Company.
The net proceeds of the Proposed Notes Issue are currently intended to be used for refinancing of certain of the existing bank borrowings of the Group and for general corporate purposes.
Reason for the Proposed Notes Issue
The Company believes that the Proposed Notes Issue is in the interest of the Company as the Notes will fix the interest cost of the Group in the medium to long term and enhance the working capital requirement of the Group. A fixed interest rate will also reduce the Group's exposure to fluctuation in interest rates.
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The Issuer will seek a listing of the Notes on the Stock Exchange. A confirmation of eligibility of the Notes for listing has been received from the Stock Exchange. A listing of the Notes on the Stock Exchange is not to be taken as an indication of the merits of the Notes, the Issuer, the Company or any member of the Group.
General As no binding agreement in relation to the Proposed Notes Issue has been entered into as at the date of this announcement, the Proposed Notes Issue may or may not materialise. Completion of the Proposed Notes Issue is subject to a number of conditions, including but not limited to global market conditions and investor interest. Investors and shareholders of the Company are urged to exercise caution when dealing in the securities of the Company.Further announcement(s) in respect of the Proposed Notes Issue will be made by the Company as and when appropriate.
DEFINITIONS
In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:
"BofA Merrill Lynch" Merrill Lynch International, one of the joint lead managers and joint bookrunners in respect of the offer and the sale of the Notes
"Company" Want Want China Holdings Limited, a company incorporated with limited liability under the law of the Cayman Islands
"connected person(s)" has the meaning ascribed to it under the Rules Governing the
Listing of Securities on the Stock Exchange
"Group" the Company and its subsidiaries
"Hong Kong" the Hong Kong Special Administrative Region of the People's
Republic of China
"Issuer" Want Want China Finance Limited, a company incorporated with limited liability under the law of the British Virgin Islands and a direct wholly-owned subsidiary of the Company
"J.P. Morgan" J.P. Morgan Securities plc, one of the joint lead managers and joint bookrunners in respect of the offer and sale of the Notes
"Notes" the US$ guaranteed notes proposed to be issued by the Issuer and guaranteed by the Company
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"Proposed Notes Issue" the proposed issuance of the Notes as described in this announcement
"Securities Act" the United States Securities Act of 1933, as amended
"Stock Exchange" The Stock Exchange of Hong Kong Limited
By order of the Board of Directors Want Want China Holdings Limited TSAI Eng-Meng
Chairman
Hong Kong, 30 April 2013
As at the date of this announcement, the e xecutive director s of the Company are Mr. TSAI Eng-Meng, Mr. LIAO Ching-Tsun, Mr. TSAI Wang-Chia, Mr. CHU Chi-Wen and Mr. CHAN Yu-Feng; the non-executive directors are Mr. TSAI Shao-Chung, Mr. MAKI Haruo and Mr. CHENG Wen-Hsien; and the independent non-executive directors are Mr. TOH David Ka Hock, Dr. PEI Kerwei, Mr. CHIEN Wen-Guey, Mr. LEE Kwang-Chou and Dr. KAO Ruey-Bin.
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ExTRACT OF THE DRAFT OFFERING MEMORANDUM Overview
We are one of the leading food and beverage companies in China with more than 20 years of operating history in the food and beverage market in China. We became one of the pioneers in food and beverage market in China by introducing our flagship products from Taiwan, including rice crackers, to the market in China, and we also developed other flagship products in China, including flavored milk beverages and soft candies. We believe we have achieved a leading market position across the three main product categories that we are focused on. We believe our core brand, "Want Want" (), which symbolizes prosperity and good fortune in Chinese, is one of the most widely recognized food and beverage brands among Chinese communities. During each year beginning in 2009 we have been listed as one of "Asia's Fab 50" by Forbes and our "Want Want" brand has been ranked in the top ten in the Taiwan Top 20 Global Brands list published by the Bureau of Foreign Trade of the Ministry of Economic Affairs of Taiwan since 2009 for four consecutive years.
We have a diversified product mix that includes products in the following key categories:
• rice crackers, including sugar coated crackers, savory crackers and fried crackers;
• dairy products and beverages, including flavored milk, yogurt drinks, ready-to-drink coffee,
juice drinks, carbonated drinks, herbal tea and milk powder;
• snack foods, including candies, popsicles and jellies, ball cakes, and beans and nuts; and
• other products, including mainly alcoholic beverage and other food products.
For the year ended December 31, 2012, revenues from the sales of rice crackers, dairy products and beverages, snack foods and other products accounted for 24.2%, 50.9%, 24.7% and 0.2% of our total revenue, respectively.
We have an extensive nationwide sales and distribution network throughout China conducted through 356 sales offices owned by us and around 8,000 distributors located throughout China as of December 31, 2012. Our extensive sales and distribution network allows us to distribute our products throughout China. We primarily sell our products through traditional distribution channels, where wholesale distributors distribute our products to retailers or sub-distributors who then on-sell our products to end customers. Our products are also sold through modern channels directly to retailers, mainly supermarkets, hypermarkets, chain stores and convenience stores. Since the implementation of our "Delivering Want Want to Villages Project" in November 2007, we have significantly increased our business penetration directly into rural towns and villages and have enjoyed leading market position through our traditional distribution channels in fast growing rural areas.
Most of our operations are in China, the second largest economy and one of the fastest growing economies in the world. We generated our sales primarily in China in each of 2010, 2011 and 2012. We also have operations in Taiwan, Hong Kong, Singapore and Japan, and export our products to other markets, including the United States, Canada and countries in South-East Asia and Europe.
We manufacture all of our own products and, as of December 31, 2012, we had a total of 36 production bases and 96 factories across China. This extensive production base and proximity to our target markets improves our market penetration and enhances our distribution efficiency.
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Our primary raw materials are rice, milk powder and sugar, as well as packaging materials and consumables. We procure a majority of our raw materials from domestic markets and source the remainder from other countries. Raw materials (including packaging materials and consumables) constituted approximately 81.6%, 81.9% and 80.7% of our cost of goods sold for our operations for 2010, 2011 and 2012, respectively.
We adhere to a strict quality control system throughout our operations, from sourcing of raw materials to processing, packaging and inventory storage, to sales and distribution. We are in the process of obtaining HACCP (Hazard Analysis and Critical Control Points) and ISO 22000 (a set of standards and guidelines relating to food safety management system) certifications, both of which are voluntary certifications, for most of our factories. In addition, we have satisfied all quality control measures as required by the PRC General Administration of Quality Supervision, Inspection and Quarantine. In order to achieve continuous quality enhancement and cost control effectiveness, we have carried out a nationwide Quality Control Circle (QCC) program across our factories since 2011, which enabled us to achieve continuous improvement in production quality and efficiency.
We increase consumer awareness of our brands and products through our advertising and promotional activities. We focus on television advertising, which allows us to reach a wide consumer audience. Our advertisements are strategically focused on non-prime time slots, which enables us to promote our products to certain target groups in a cost-effective manner. Most of our TV advertisements have been produced in-house, which not only significantly reduces third party production costs but also ensures the consistency of our branding. Our marketing efforts also include continuing to enhance our product displays at selected points of sales by standardizing and eye-catching shelf spaces and using unique product display strategies to help customers readily locate our products.
For 2010, 2011 and 2012, our total sales are US$2,244.1 million, US$2,946.5 million and US$3,358.7 million, respectively, growing at a compound annual growth rate, CAGR, of 22.3% from 2010 to 2012. Our net profit for the same periods was US$358.8 million, US$419.6 million and US$554.0 million, respectively, representing a CAGR of 24.3% from 2010 to 2012.
Our history began with the establishment of I Lan Foods Industrial Co., Ltd. in Taiwan in May
1962 which manufactured canned agricultural products mainly for export. In 1983, we collaborated with Iwatsuka Confectionery Co. Ltd., or ICCL, one of the leading Japanese rice cracker producers, to jointly develop the rice cracker market in Taiwan. From 1983, we have been producing and marketing our products under our "Want Want" brand. We began selling our rice cracker products in China in 1992. In the following years, we successfully evolved from a pure rice cracker company to a diversified food and beverage company.
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Our Company, incorporated in the Cayman Islands on October 3, 2007, is the holding company of the Group. We listed on the Hong Kong Stock Exchange on March 26, 2008. In the same year, we were selected as a constituent of the Hang Seng Mainland Composite Index and the Morgan Stanley Capital International China Index. Our Taiwan Depositary Receipts were listed on the Taiwan Stock Exchange Corporation on April 28, 2009. Our Company was selected as a constituent stock of the Hang Seng Index in Hong Kong on December 5, 2011.
We believe the following competitive strengths contribute to our success and distinguish us from our competitors:
• Well established food and beverage company with leading market position in multiple distinctive product categories in China;
• Extensive and efficient nationwide distribution network throughout China;
• Strong brand recognition, diversified product portfolio and strong product development capability;
• Strong capability to maintain profit margins;
• Stringent quality control and strong commitment to maintaining exceptional food quality;
• Highly experienced management team with demonstrated track record; and
• Robust liquidity position attributable to prudent financial management.
We intend to pursue a business growth strategy based on the following principal objectives:
• Maintain a leading position across our unique food and beverage product categories and further strengthen our brand recognition;
• Further optimize product mix and expand product portfolio;
• Continue expanding and deepening our distribution network and enhancing product penetration; and
• Continue to enhance operating efficiencies and supply chain management to maintain cost
advantages.
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Our legal and commercial name is Want Want China Holdings Limited. We were incorporated under the Cayman Islands law as an exempted company with limited liability on October 3, 2007. Our principal place of business address is #1088 Hong Song Dong Road, Shanghai, China. Our shares are listed on the main board of the Hong Kong Stock Exchange under stock code 0151 and our Taiwan Depository Receipts are listed on the Taiwan Stock Exchange Corporation under TDR code 9151.
The Issuer
The Issuer, our wholly owned subsidiary, was incorporated in the British Virgin Island on April 15, 2013 as a company with limited liability. The Issuer's registration number is 1769674. Its registered office is located at Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.
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