CHWI China West.

 

TIDMCHWI 
 
RNS Number : 6451P 
China Western Investments PLC 
21 July 2010 
 
 
21 July 2010 
 
China Western Investments plc ("China Western" or the "Company") 
 
Circular to shareholders in respect of authority to allot shares and disapply 
pre-emption rights; authority to make market purchases; authority to amend 
articles of association and notice of EGM 
 
China Western announces that it has today posted a circular to shareholders (the 
"Circular") together with a notice convening an extraordinary general meeting of 
the Company ("EGM") to approve the following proposals (together, the 
"Proposals"): 
 
·    to authorise the allotment of up to 310,400,000 new Ordinary Shares in the 
Company to Wong Wing Hay (the "Conversion Shares") pursuant to a conversion 
agreement to be entered into between the Company and Wong Wing Hay ("Conversion 
Agreement") whereby he is granted the right to convert a proportion of 
outstanding loan principal and interest owed by China Western into the 
Conversion Shares at a price of 1p per share; 
 
·    to generally authorise the Directors to allot up to twenty per cent. of the 
Company's issued share capital free of statutory pre-emption rights; 
 
·    to authorise the Directors to make market purchases pursuant to section 701 
of the Companies Act 2006 (the "Act") of up to ten per cent. of the Company's 
issued share capital; and 
 
·    to update the Company's articles of association ("Articles") by deleting 
references to authorised share capital (as this concept no longer exists under 
the Act) and reducing the number of days' notice required to call a meeting for 
the passing of a special resolution from 21 to 14. 
 
An EGM of the Company has been convened for 12.30 p.m. (Hong Kong time) at 1510, 
15th Floor, Melbourne Plaza, 33 Queens Road, Hong Kong on 13 August 2010. 
 
Background to and reasons for the Proposals 
In 2005, the Company entered into a loan agreement with Wong Wing Hay (the "Loan 
Agreement").  The Loan Agreement is an oral agreement pursuant to which Wong 
Wing Hay has agreed to provide a debt facility to the Company.  The interest 
rate is 12 per cent. per annum, with interest accruing monthly but rolled up. 
The facility under the Loan Agreement is repayable on demand but Wong Wing Hay 
has provided the Company with a letter, dated 17 June 2010 that he will not call 
for repayment until alternative funding has been put in place by the Company. 
Interest will continue to accrue on the loan but this will not be payable until 
the principal is repaid or earlier if the Company considers that its cashflow 
would justify payment. The total amount outstanding under the Loan Agreement as 
at the date of this announcement is HK$46,910,402 (equivalent to approximately 
GBP3.9 million). 
 
The Directors now propose to enter into the Conversion Agreement with Wong Wing 
Hay to convert his loans in the sum of HK$35,696,000 to CWI to be satisfied by 
the issue of 310,400,000 Ordinary Shares at 1p under the proposed Conversion 
Agreement.  Any loans over and above HK$35,696,000 will only be repaid to Wong 
Wing Hay when CWI is financially able to do so. 
 
The Directors believe that the above proposals will benefit the Company as they 
will substantially reduce the Company's debt. Moreover, the conversion price of 
1p per share is approximately 48 per cent. above the current trading price of 
the Company's shares as at the date of this announcement. 
 
Principal terms of the Proposals 
Principal terms of the Conversion Agreement 
Conditional on the passing of the Resolutions numbered 1 and 2 (as set out in 
the notice of EGM) the Company will enter into the Conversion Agreement with 
Wong Wing Hay pursuant to which it will grant Wong Wing Hay or his nominees the 
right to subscribe for the Conversion Shares at an exercise price of 1p per 
Ordinary Share.  The exercise price will be funded by the Company repaying the 
principal amount and accrued interest outstanding under the Loan Agreement and 
Wong Wing Hay agreeing to immediately apply such sum in settling the aggregate 
exercise price payable under the Conversion Agreement. The right to acquire 
Ordinary Shares pursuant to the Conversion Agreement must be exercised not later 
than 2 July 2012, after which it will lapse. 
 
Authority to make market purchases 
A special resolution will be proposed at the EGM to authorise the Directors to 
make one or more market purchases for the purposes of section 701 of the Act. 
The maximum number of Ordinary Shares which may be acquired pursuant to this 
authority is 72,837,549 which is 10 per cent. of the issued share capital of the 
Company as at the date of this announcement. This authority will expire at the 
conclusion of the annual general meeting of the Company to be held in 2011 or on 
the date 18 months from the passing of the Resolution, whichever is the earlier. 
 
The Directors will only make market purchases if such purchases are expected to 
result in an increase in the Company's earnings per share and are in the best 
interests of the Company's shareholders. The Directors must ensure that any 
market purchases made are made between a minimum price of 1p per Ordinary Share 
and a maximum price equal to the higher of (i) 105 per cent. of the average of 
the middle market quotations for the Ordinary Shares of the Company (derived 
from the AIM Appendix to the Stock Exchange Daily Official List) for the five 
business days prior to the date of purchase, or (ii) the higher of the price of 
the last independent trade and the highest current independent bid on AIM. 
 
Authority to amend the Articles 
A special resolution will be proposed at the EGM to amend the Articles to take 
advantage and account of the fact that the Act removes the requirement for the 
Company to have an authorised share capital. The Directors will still be limited 
as to the number of shares they can at any time allot because authority to allot 
shares continues to be required under the Act, save in respect of employee share 
schemes. The special resolution will also reduce the number of days' notice 
required to call a meeting for the passing of a special resolution from 21 to 
14. 
 
Copies of the Articles showing the proposed change will be available for 
inspection during normal business hours at the registered office of the Company 
until the date of the EGM or upon request of the Company Secretary. Copies will 
also be available at the EGM until its conclusion. 
 
A copy of the Circular is available at the company's website: 
http://www.chwi.co.uk/ 
 
Enquiries: 
 
+--------------------+-----------------+---------------------+ 
| China Western      | Harry Jeffs     | Tel: +44 01539      | 
| Investments plc    |                 | 723233              | 
|                    |                 |                     | 
+--------------------+-----------------+---------------------+ 
| Nominated Adviser  | Pascal Keane    | Tel: +44 020 7408   | 
| Shore Capital      |                 | 4090                | 
|                    |                 |                     | 
+--------------------+-----------------+---------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 CIRRMMATMBITBJM 
 

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