New World Group Reorganisation plans to enhance shareholder value
The New World Group today announced a reorganisation, aimed at enhancing value for the shareholders of New World Development Company Limited ("New World Development") (17.HK), New World Infrastructure Limited ("New World Infrastructure") (301.HK) and Pacific Ports Company Limited ("Pacific Ports") (659.HK).
The initiative will give the New World Group a more efficient corporate and capital structure, reduce gearing for New World Infrastructure, enable Pacific Ports to become a leading services, infrastructure and ports company in Hong Kong, Macau and the Mainland and increase the free float in Pacific Ports shares.
The reorganisation incorporates the following changes:
- Pacific Ports will acquire the traditional infrastructure assets from New World Infrastructure Limited for a total consideration of approximately HK$10.2 billion.
- Pacific Ports will acquire New World Services Limited ("New World Services") from New World Development for shares valued at approximately HK$10.9 billion.
- New World Infrastructure will distribute all Pacific Ports shares it holds to its shareholders in the ratio of approximately 5.87 Pacific Ports' shares for every New World Infrastructure share held.
- The issued share capital of Pacific Ports will increase.
- New World Development will remain the majority shareholder of New World Infrastructure and Pacific Ports and will hold an interest of approximately 54 per cent in New World Infrastructure and approximately 52 per cent in Pacific Ports' shares.
- Pacific Ports will be renamed NWS Holdings Limited ("NWS Holdings") (659.HK).
The reorganisation is subject to approval by the respective independent shareholders of New World Development, New World Infrastructure and Pacific Ports.
Morgan Stanley is acting as financial adviser to New World Development and New World Infrastructure in this transaction.
The resulting benefits for New World Development, its subsidiaries and their shareholders are as follows:
Benefits for New World Development
- More efficient corporate and capital structure for the New World Group
- Better alignment and utilisation of assets and liabilities of these principal subsidiaries
- Streamlined and more effective corporate and capital structures for the principal subsidiaries
- Unlock potential of New World Development's principal subsidiaries for NWD shareholders giving enhanced platform for shareholder value creation
- Benefits for New World Infrastructure
- Reduce the company's borrowings
- Provide shareholders with the opportunity to own separate shareholdings in two companies, one focusing on telecommunications, media and technology and one on infrastructure, ports and services
Benefits for Pacific Ports
- Extend and deepen the company's asset base and scope of its business
- Improve free float of Pacific Ports shares
- Pacific Ports is expected to become one of the leading infrastructure, ports development and services companies in Hong Kong, Macau and the Mainland Independent business valuers and independent financial advisers are advising each of New World Development, New World Infrastructure and Pacific Ports.
Commenting on the reorganisation, Dr. Henry Kar-Shun Cheng, Managing Director of New World Development, said, "Our goal has been to address investor concerns of transparency and gearing, while seeking to realise and unlock the value of the Group's portfolio of services and infrastructure assets in Hong Kong, Macau and the Mainland. The reorganisation is a transforming event that will enable the New World Group to put in place a more efficient corporate and capital structure. NWS Holdings will focus on services, infrastructure and ports projects and New World Infrastructure will focus on investing in technology, media and telecommunications. This more rational organisation will increase management focus and optimise the companies' capital structure, thus enhancing value to shareholders."
New World Infrastructure's Managing Director, Douglas Chan commented, "The reorganisation will enable us to put in place a more robust capital structure for our businesses. New World Infrastructure's gearing level will be reduced significantly. Additionally, the reorganisation will enable us to have a clear business strategy which will focus on largely early stage telecommunications, media and technology projects."
Dr. Henry Kar-Shun Cheng, Chairman of Pacific Ports (to be renamed NWS Holdings), highlighted the benefits for the Pacific Ports' shareholders, stating, "The reorganisation will give NWS Holdings scope to its business. In addition, improved free float will enable the company to access the capital markets effectively and these increased funding alternatives will enhance the company's ability to execute future growth strategies."
K.L. Chan, Managing Director of New World Services who will take on a leadership role within NWS Holdings after the reorganisation, added that "the reorganization will enable NWS Holdings to pursue growth opportunities in services, infrastructure and ports in the Mainland and provide a compelling story for the investor community. We are confident that the reorganisation will help us become one of the leading services, infrastructure and ports companies in HK, Macau and the Mainland."
NWS Holdings principal assets, following the reorganisation, will include:
Services - Over 30 major operating companies, including Hip Hing Construction Company Limited, Hong Kong Convention and Exhibition Centre (Management) Limited, New World First Bus Services Limited and Urban Property Management Limited.
Infrastructure and Ports - More than 70 projects in total, including Guangzhou Northern Ring Road, Sino-French water treatment plant and Zhujiang Power Stations I & II. Key interests in port and port-related businesses include CT-3, CT-9 and various China port projects.
Pacific Ports' acquisition of New World Infrastructure's traditional assets constitutes a major and connected transaction for New World Infrastructure and for Pacific Ports under the Listing Rules of the Stock Exchange of Hong Kong. The acquisition of New World Services also constitutes a major and connected transaction for New World Infrastructure and for Pacific Ports. It is also a disclosable and connected transaction for New World Development.
Circulars will be dispatched to shareholders on or around November 11, 2002 with a shareholders' vote on the transaction on or around December 5, 2002.
BOCI Asia Limited and Industrial and Commercial Bank of China are acting as financial advisors to Pacific Ports in this transaction.
About New World Development Company
New World Development Company Limited (17.HK), established in Hong Kong in 1970 as a property development company, has gradually developed into one of Hong Kong's leading diversified conglomerates. The Company, listed in Hong Kong in 1972, is one of the constituent stocks of the Hang Seng Index with total assets exceeding HK$130 billion. Through acquisitions and start-ups, the Group has expanded its core businesses to include property, infrastructure, services and telecommunications. New World Infrastructure, Pacific Ports, New World Services and New World China Land Limited are principal subsidiaries of the Company. As at the date of this press release, the Company has an effective interest of approximately 54.4% in New World Infrastructure (which, in turn, has an interest of 75% in Pacific Ports) and an interest of approximately 52.4% in New World
Services.
For further information, please visit our website: www.nwd.com.hk
About New World Infrastructure
In October 1995, New World Infrastructure (301.HK) became the first infrastructure company to list on the Hong Kong Stock Exchange. With basic infrastructure and TMT investments exceeding US$2 billion, the company is among the largest investors in the Mainland, Hong Kong and Macau. The company is present in 14 PRC provinces, 2 municipalities and 2 Special Administrative Regions. The basic infrastructure portfolio includes cargo handling, toll roads, bridges, energy and water treatment. The company has stakes in over 70 projects, encompassing 1,146 km of highways, six bridges, power generation of 1,924 MW, cargo handling capacity of 5.2 million TEUs per year and water treatment capacity of 2.8 million cubic meters per day. In addition, New World Infrastructure invests in the TMT segment in telecommunications, media and technology companies and services.
For further information, please visit our website: www.nwi.com.hk