09:40     BALTRANS HOLD<00562> - Announcement (3)                             

    Payment terms:                                                            
                                                                              
    HK$20,844,000 of the purchase price is due in cash on completion and the  
    balance of HK$11,600,000 will be paid in cash within 12 months            
    thereafter.                                                               
                                                                              
    Use of proceeds:                                                          
                                                                              
    The proceeds of the disposal will be added to the Company's cash          
    resources overall, and which the Company will be able to apply towards    
    general working capital.                                                  
                                                                              
    Condition of the agreement:                                               
                                                                              
    Completion of the agreement is conditional upon the approval of the       
    shareholders at a special general meeting of the Company.                 
                                                                              
    If the condition is not fulfilled on or before the 90th day after the     
    date of the agreement (or such other date as the parties may agree in     
    writing), the parties may by written notice given to the other terminate  
    the agreement.                                                            
                                                                              
    Completion date:                                                          
                                                                              
    The Vendors shall give prior written notice of not less than 5 days but   
    not more than 10 days to the Purchasers specifying the date of            
    completion, which notice is expected to be given as soon as the           
    agreement becomes unconditional.                                          
                                                                              
    Reasons for the transaction:                                              
                                                                              
    The Company's original intent with respect to its investment in the Fond  
    Group was to acquire a profit contributor which would continue to         
    operate under the Fond brand name, and to realize some synergies from     
    rate negotiation and securing air cargo space to North America by         
    leveraging on each other's carrier relationships. However, although the   
    Fond Group continues to be a profit contributor to the Company, the       
    envisaged synergies from co-operation in rate negotiation and securing    
    air cargo space have not materialized due to lack of operational          
    integration in terms of information sharing and cargo allocation.         
                                                                              
    With increased scale and bargaining power of the Company, there is no     
    longer any need to leverage on the Fond Group's carrier relationships.    
    In the meantime, the management has revamped its business expansion       
    strategy in order for the Company to be successful in global expansion    
    drive, the Company needs to develop a seamless integrated platform        
    globally under a unified brand name of BALtrans.                          
                                                                              
    The Fond Group's management has all along operated on a sole-proprietor   
    business model and its strategy and philosophy is no longer aligned with  
    the strategy of the Company. Given that the Fond Group is not actively    
    managed by the Company, has little synergy potential and clearly follows  
    a different set of business strategy, the directors consider the          
    transaction an opportunity to exit from the investment in the Fond        
    Group, with a cash-based Internal Rate of Return (IRR) of approximately   
    17% realised.                                                             
                                                                              
    There will be little impact on the Company in terms of competition from   
    the Fond Group as the market is highly fragmented and the Purchasers      
    have never had access to the Company's customer base or customer data.    
                                                                              
    Although there will be a short term impact due to the absence of profit   
    contribution from the Fond Group after its disposal, the directors of     
    the Company believe that this is a positive step for the Company to       
    streamline its operations and exit from non-core investments in order to  
    focus on its global strategy of building an integrated platform.          
                                                                              
    Connection between the parties:                                           
                                                                              
    Each of the Purchasers is a director and a shareholder of, holding 5%     
    interests in Fond and Fondair respectively. As the Purchasers are         
    connected persons of the Company, the disposal constitutes a connected    
    transaction of the Company under the Listing Rules.                       
                                                                              
    Information for shareholders:                                             
                                                                              
    The Company and its subsidiaries are principally engaged in the           
    provision of freight forwarding services. As at the date of this          
    announcement, the executive directors of the Company are Messrs. Lau Siu  
    Wing Anthony, Wai Chung Hung David and Ng Hooi Chong, the non-executive   
    directors are Messrs. Peter James Holland Riley, William Hugh Purton      
    Bird and Christopher John David Clarke, and the independent               
    non-executive directors are Messrs. Yu Hon To David, Lau Kin Yee Miriam   
    and Ng Cheung Shing.