HUTCHISON WHAMPOA LIMITED
(Incorporated in Hong Kong with limited liability)
CONNECTED TRANSACTIONS
The board of directors (the "Board") of Hutchison Whampoa Limited (the "Company") announces that on 12 July 2000, New Millennium Corp. ("NMC"), an indirect wholly owned subsidiary of the Company, and the Company entered into a conditional agreement with NTT DoCoMo, Inc. ("NTT DoCoMo") (the "Sale and Purchase Agreement") in relation to the disposal, for a cash consideration of  1.2 billion, of the entire issued share capital of Brilliant Design Limited ("Brilliant Design"), a wholly owned subsidiary of NMC (the "Disposal"). At completion of the Sale and Purchase Agreement, the principal asset of Brilliant Design will be a 20% shareholding in Hutchison 3G UK Holdings Limited ("3G HoldCo"), the holding company of Hutchison 3G UK Limited ("3G OpCo") which holds a third-generation mobile licence issued in the United Kingdom (the "UK").
On the same day, the Company, NMC, KPN Mobile N.V. ("KPN Mobile") and Koninklijke KPN N.V. ("KPN") entered into a subscription agreement (the "Subscription Agreement") pursuant to which KPN Mobile agreed to subscribe for a 15% holding in the issued share capital of 3G HoldCo at completion at a consideration of In conjunction with the Subscription, a wholly owned subsidiary of the Company has agreed with TIW UMTS United Kingdom B.V. ("TIW"), an existing shareholder of 3G HoldCo, that it would pay TIW a fee of approximately The Disposal and the Subscription are not connected and are independent of each other. Details on the Subscription and the TIW Waiver are provided only for information to the shareholders. In addition, the Company will procure the grant of a banking facility of NTT DoCoMo is a connected person of the Company by virtue of it being a substantial shareholder of an existing subsidiary of the Company. The Disposal and the Guarantee therefore constitute connected transactions for the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"). The Company has applied for and obtained from The Stock Exchange of Hong Kong Limited (the "Stock Exchange") a waiver from compliance with the requirement of obtaining shareholders' approval for the Disposal and the Guarantee at a general meeting (the "Stock Exchange Waiver") based on a written certificate approving the Disposal and the Guarantee given by a closely allied group of its shareholders who together hold more than 50 per cent in nominal value of the securities giving the right to attend and vote at a general meeting of the Company. A circular containing further information regarding the Disposal and the Guarantee and setting out the advice of the independent financial adviser to the Board will be despatched to shareholders of the Company as soon as practicable. |
THE SALE AND PURCHASE AGREEMENT
| Date: | 12 July 2000 |
| Parties: | |
| The Vendor: | NMC, a company incorporated in the Cayman Islands and an indirect wholly owned subsidiary of the Company |
| The Purchaser: | NTT DoCoMo or any of its wholly owned subsidiaries |
| The Guarantor: | the Company |
| Assets Sold: | Two ordinary shares with a par value of US$1 each, representing the entire issued share capital of Brilliant Design, a company incorporated in the British Virgin Islands which is wholly owned by NMC. The principal asset of Brilliant Design at completion of the Sale and Purchase Agreement will be 889,097,351 ordinary shares in 3G HoldCo, representing a 20% shareholding in 3G HoldCo. 3G HoldCo is the holding company of 3G OpCo which holds a third-generation mobile licence issued in the UK under the UK Telecommunications Act 1984. |
| Consideration: | 1.2 billion (approximately HK$14.2 billion, at an exchange rate of 1: HK$11.8131) payable in cash at completion. The consideration was arrived at after arm's length negotiations. |
| Completion: | Completion will take place on the later of 20 business days after the signing of the Sale and Purchase Agreement and 10 business days after the satisfaction or waiver of the last of all conditions precedent to the Disposal provided that the long stop date for the Disposal is the last day of a 28 week period commencing on the date of the Sale and Purchase Agreement. At completion, the Company will enter into shareholders' agreement with NTT DoCoMo to govern their bilateral relationship as shareholders of 3G HoldCo. |
THE SUBSCRIPTION AGREEMENT
| Date: | 12 July 2000 |
| Parties: | The Company, NMC, KPN Mobile and KPN |
| Shares Subscribed: | KPN Mobile agreed to subscribe for 666,823,013 ordinary shares with par value of each in 3G HoldCo (the "Subscription Shares"), representing 15% of the issued share capital of 3G HoldCo at completion of the Subscription. |
| Consideration: | the aggregate consideration of 900 million (approximately HK$10.6 billion) is to be paid by KPN Mobile as follows:
(i) subscription price of (ii) a fee of |
| Completion: | Completion will take place on the later of 20 business days after the signing of the Subscription Agreement and 10 business days after the satisfaction or waiver of the last of all conditions precedent to the Subscription provided that the long stop date for the Subscription is the last day of a 28 week period commencing on the date of the Subscription Agreement. At completion of the Subscription Agreement, the Company will enter into a shareholders' agreement with KPN Mobile to govern their bilateral relationship as shareholders of 3G HoldCo. |
THE TIW WAIVER
| Date: | 12 July 2000 |
| Parties: | The Company and TIW |
| Option Waiver: | TIW, an indirect holder of 0.011% of the issued share capital of 3G HoldCo, is the parent of TIW UMTS UK Limited ("TIW UK"), the winning bidder of the "A" licence in the recent UK third-generation mobile licence auction. On 29 June 2000, upon the acquisition of TIW UK (renamed Hutchison 3G UK Limited i.e. "3G OpCo") by 3G HoldCo and the cancellation of wholesale capacity arrangements between 3G HoldCo and 3G OpCo, TIW was granted an option to acquire from the Company, prior to 8 November 2000, a total of up to 10% of the issued share capital of 3G HoldCo (the "Option"). TIW has agreed with the Company to waive part of its right under the Option such that the Option will only entitle TIW to acquire up to 6.5% of the issued share capital of 3G HoldCo in consideration of the waiver fee payable by the Company. |
| Consideration: | The waiver fee of 54,407,963.63 (approximately HK$643 million) less certain costs of approximately 4.4 million (approximately HK$52 million). |
| Completion: | Conditional upon completion of the Disposal and the Subscription, TIW will receive the waiver fee and amend its bilateral relationship with the Company as shareholders of 3G HoldCo. |
THE GUARANTEE
Following the signing of the Sale and Purchase Agreement and the Subscription Agreement, the Company will provide the Guarantee for a short term banking facility of 25 million to be extended to 3G OpCo for working capital purposes, pending long term financing to be obtained. The Company has agreed with NTT DoCoMo and KPN Mobile to continue the provision of the Guarantee after completion of the Disposal and the Subscription until long term financing is obtained. As such, the Guarantee has the effect of granting financial assistance to NTT DoCoMo in the amount of 5 million being 20% of the amount guaranteed.
REASONS FOR ENTERING INTO THE CONNECTED TRANSACTIONS
The Board considers that the introduction of new investors to its third-generation mobile communications business in the UK is in the interests of the Company: NTT DoCoMo being the world's leading technology proprietor and developer of mobile multimedia networks and services, and KPN Mobile being a strong operator with experience and infrastructure capabilities in Europe. The transactions also provide an opportunity for the Company to further strengthen its relationship with an existing partner and forge a new alliance with a new partner.
The proceeds from the transactions will be applied by the Company towards start-up costs of its 3G business in Europe and elsewhere.
The Board further considers that the Disposal is on normal commercial terms and the terms are fair and reasonable so far as the shareholders of the Company are concerned and in the interests of the Company. The provision of the Guarantee for 3G OpCo in respect of its short-term banking facility is, in the opinion of the Board, also in the interests of the Company. The Guarantee will allow 3G OpCo to be adequately provided for in the short term prior to long term financing to be supported by the shareholders of 3G OpCo on a pro-rata basis being put in place.
GENERAL
NTT DoCoMo is a connected person of the Company by virtue of it being a substantial shareholder of an existing subsidiary of the Company but has no representation on the Board. The Disposal and the Guarantee therefore constitute connected transactions for the Company under the Listing Rules.
As the aggregate amount of the consideration for the Disposal and 20% of the amount subject to the Guarantee exceeds 3% of the latest published net tangible asset value of the Company as adjusted to take into account subsequent transactions in the manner described in Rule 14.04(6) of the Listing Rules, the Disposal and the Guarantee require the approval of the shareholders of the Company at a general meeting. The Company has applied for and has obtained from the Stock Exchange the Stock Exchange Waiver based on a written certificate approving the Disposal and the Guarantee given by a closely allied group of its shareholders who together hold more than 50 per cent in nominal value of the securities giving the right to attend and vote at a general meeting of the Company. An independent financial adviser will be appointed to advise the Board on the fairness and reasonableness of the Disposal and the Guarantee.
A circular containing further details of the Disposal and the Guarantee setting out the advice of the independent financial adviser to the Board will be despatched to the shareholders of the Company as soon as practicable.
By Order of the Board
Edith Shih
Company Secretary
Hong Kong, 12 July 2000
Hutchison Whampoa Limited
22/F, Hutchison House, 10 Harcourt Road, Hong Kong.
Tel: 2128 1188 Fax: 2128 1705
Please also refer to the published version of this announcement in Hong Kong iMail and Sing Tao Daily.
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