Proview Proposes Capital Restructuring, Debt Restructuring and a Reverse Takeover by TCL Display to Engage in Sustainable and Profitable Smartphone LCD Module Manufacturing Business

Minority shareholders, creditors and other stakeholders are set to benefit
Proview International Holdings Limited
2014-06-30 17:03 3080

HONG KONG, June 30, 2014 /PRNewswire/ -- Proview International Holdings Limited ("Proview" or the "Company", stock code: 00334.HK) today announced that the Company proposes capital restructuring, debt restructuring as well as acquisition of smartphone LCD module manufacturing business from TCL Corporation ("TCL Corp", stock code: 000100.SZ), which constitutes a reverse takeover and a change of the Company's name to TCL Display Technology Holdings Limited ("TCL Display"). The proposed moves are conditional upon the approval by Proview's independent shareholders at a special general meeting, a Hong Kong Court hearing, a creditor meeting as well as other conditions stated in the Proview's circular. Proview's shares are expected to resume trading in the first quarter of 2015 if all these requirements are met.

Trading in Proview's shares has been suspended since August 2010. The Company has ceased all operations and heavily insolvent. On 30 December 2011, the Company was placed into the third delisting stage by The Stock Exchange of Hong Kong pursuant to the Listing Rules, implying that the Company will very likely be delisted and all minority shareholders' investments will become total loss. As a result, the restructuring and resumption proposal involving acquisition of TCL Display, the last and only choice for trading in Proview's shares to be resumed.

Proview is heavily insolvent and its entire accumulated loss was approximately HK$3,853 million as at 30 June 2013. In order to offset the accumulated losses and possibly declare dividend payments in the future, Proview proposes to carry out a capital restructuring plan, which includes a) capital reduction (nominal value per share from HK$0.10 to HK$0.01), b) share consolidation (every ten reorganised shares of HK$0.01 each in the then issued share capital of the Company will be consolidated into one new share of HK$0.10 each), c) share premium reduction, and d) authorised capital increase; debt restructuring by schemes of arrangement.

Upon completion of the capital restructuring and the schemes for the creditors, Proview proposes to acquire 100% of TCL Display for the total consideration of HK$550.0 million, of which HK$340.5 million will be satisfied by issuance and allotment of approximately 972.86 million consideration shares at HK$0.35 each, HK$199.50 million by issuance of convertible bonds with the same conversion price, and a HK$10 million 3-year bond issue. At HK$0.35 per share, the new share issue price and conversion price represent a significant premium over the net liabilities position of Proview. In order to fulfill the Hong Kong Code on Takeovers and Mergers, a mandatory unconditional cash offer will be made to independent shareholders at HK$0.35 per share, upon completion of the capital restructuring, debt restructuring and asset injection.

Upon closing of the mandatory unconditional cash offer, the Company also proposes an open offer for the existing shareholders a pre-emptive right to subscribe for new shares at the same issue price as the consideration shares and conversion shares. Consequently, the Company's existing shareholders will have their own choices to exit, continue to hold or increase the Company's shares, which provide fair and flexible investment options to all shareholders.

Moreover, T.C.L. Industries Holdings (H.K.) Limited ("TCL Industries"), a wholly-owned subsidiary by TCL Corp., will inject HK$10 million in cash by subscription of the bond issue to the Company's creditors' schemes for the debt restructuring. TCL Industries will further subscribe for HK$50 million additional bonds to the Company's creditors' scheme upon the successful resumption trading in Proview's shares, aggregating HK$60 million cash available for repayment of all the Company's liabilities under the schemes. It is expected that the debt restructuring will be supported by the creditors because of the HK$60 million cash for debt repayment as otherwise they will receive nothing.

Established in 2004, TCL Display is a wholly-owned subsidiary of TCL Corp. TCL Display is one of the major providers of small to medium size display modules (≤10.1") in China, engaged primarily in research and development, manufacturing, sales and distribution of LCD modules for use mainly in mobile phones on an original design manufacturing (ODM) basis, mainly to major overseas and local well-known smart phone brands. According to global research organization Euromonitor, TCL Display ranked the 3rd among all smart phone LCD modules manufacturers in the PRC in terms of sales revenue in 2013.

TCL Display maintained a solid financial position, and recorded steady revenue and net profit growth during last three years. For the year ended 31 December 2013, TCL Display's revenue and net profit amounted to approximately RMB1,936.6 million and RMB64.9 million, representing a year-on-year growth of 89.6% and 133.7%, respectively. The acquisition of TCL Display presents a historical reference price-to-earnings ratio of approximately 6.6 times, based on the net profit of RMB64.9 million (equivalent to approximately HK$83.0 million) in 2013 and the total consideration of HK$550.0 million.

According to Proview, "The Company has been suspended from trading for years, has ceased all operations and is heavily insolvent, the Stock Exchange has decided to delist the Company on 14 September 2012. Following the Company's efforts in seeking a retrial by the Stock Exchange and submitting restructuring proposal to acquire TCL Display, resumption of trading in the Company's shares is finally in sight. Therefore, we believe that the proposals detailed in the shareholder circular are in the best interests of Proview's minority shareholders, creditors and other stakeholders. All shareholders of Proview are recommended to consider seriously and accept the proposals in the shareholder circular."

"TCL Display is a key LCD module supplier in the region, providing LCD module display production solutions to domestic and foreign renown-branded smart phones. Backed by TCL Corp's strength and support and deriving benefits from the keen demand for smart phones in the consumer markets around the world, the Company, following its successful acquisition of TCL Display, will contribute to the sustainable operations and growth of the Company," Proview concluded.

TCL Corp, listed on Shenzhen Stock Exchange in China, is the controlling shareholder of the three companies listed on The Stock Exchange of Hong Kong, including TCL Multimedia Technology Holdings Limited (stock code: 01070), TCL Communication Technology Holdings Limited (stock code: 02618) and Tonly Electronics Holdings Limited (stock code: 01249).

Emperor Capital Limited is the sponsor to Proview's new listing application. Yu Ming Investment Management is the financial advisor to the Company. Beijing Securities Limited is the independent financial advisor to the independent shareholders of Proview.

Proview will host a special general meeting of shareholders on 23 July 2014.

Source: Proview International Holdings Limited
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