Contents :
1.0 INTRODUCTION
The Board of Directors of CHHB is pleased to announce that CHHB had on 23 February 2000 entered into a Memorandum of Understanding with Sunsino International Development Associate Inc, Taiwan R.O.C. to agree in principle to form a strategic alliance in Malaysia to undertake the development, promotion and commercial exploitation of all forms of information technology and advanced technological inventions ("Proposed Alliance").
2.0 DETAILS OF THE PROPOSED ALLIANCE
2.1
CHHB and Sunsino have agreed to undertake the Proposed Alliance as follows :
a CHHB shall form an information technology venture capital company in Malaysia with an initial paid up capital of RM20 million. Sunsino is to be appointed as the Manager to jointly manage the operation of the proposed new company.
b CHHB shall subscribe up to 6,000,000 shares of par value NT$10 each (RM7.4 million equivalent assuming an exchange rate of RM1.00 : NT$8.09) representing 10% of the capital of a proposed company to be called China Silicon Internet Technology Venture Capital Ltd, ("China Silicon") with an initial paid up capital of NT$600 million. China Silicon will be an IT company sponsored and promoted by Sunsino to invest in IT related acitivities globally particularly in the Silicon Valley of USA, Canada, Taiwan and Malaysia. CHHB will be entitled to a Directorship on the Board of Directors of China Silicon.
c CHHB and Sunsino further agreed to enter into a Management Agreement and Subscription Agreement within 60 days from 23 February 2000.
2.2 Basis of consideration
The total consideration for the Proposed Alliance is at par value of each share.
2.3 Rationale for the Proposed Alliance
a The Proposed Alliance is a means to participate in and invest in the technology sector so as to enable the Group to secure an IT competitive edge in the commercial world.
b Sunsino was appointed to manage the fund based on its expertise and proven track record in the technology sector.
c The Proposed Alliance will provide added investment opportunities for CHHB on a global basis.
d The Proposed Alliance will also provide new growth opportunity for the local technology sector.
3.0 FINANCIAL EFFECTS OF THE PROPOSED ALLIANCE
The financial effects of the Proposed Alliance on the issued and paid up Share Capital, Earnings Per Share ("EPS") and Net Tangible Assets ("NTA") of CHHB are summarised as below :-
3.1 On Share Capital
The Proposed Alliance will not have effect on the issued and paid-up share capital as it does not involve the issue of any new CHHB shares.
3.2 On EPS
The Proposed Alliance is not expected to have a material effect on the earnings of the CHHB Group for the current financial year ending 31 December 2000 but is expected to contribute positively to the future profitability of the Group.
3.3 On NTA
The Proposed Alliance is not expected to have a material impact on the NTA of CHHB at company and group levels for the financial year ending 31 December 2000.
4.0 APPROVALS TO BE SOUGHT
The Proposed Alliance is subject to the approval of the relevant authorities, if any.
5.0 DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS
5.1 None of the Directors or persons connected/related to the directors of CHHB, have any interest, direct or indirect in the Proposed Alliance.
5.2 None of the substantial shareholders or persons connected/related to the substantial shareholders of CHHB, have any interest, direct or indirect in the Proposed Alliance except for the following :-
Mr Shih Yu-Lung who is the Chairman and a shareholder of approximately 2% in Sunshino, is deemed interested by virtue of his ownership of 4.933% direct equity interest in CHHB.
6.0 DIRECTORS' RECOMMENDATION
The Board of Directors is of the opinion that the Proposed Alliance is in the best interest of the Company.
