National Arts Entertainment chair says Convoy deal to diversify risk

Business | 30 Jul 2020 1:36 pm

Trading in the shares of National Arts Entertainment and Culture (8228) was suspended this morning.

The group announced last night that it planned to acquire Convoy Global (1019) through share exchange transactions. The group planned to engage in the financial business and also acquire virtual banks, online e-commerce business, and consumer financing business early this year.

Originally, National Arts proposed possible acquisition to Convoy on 23 June but it did not proceed further. Until 22 June, the group contacted the board of Convoy to discuss the acquisition. They are still in discussions.

National Arts has to pay HK$10 million in management fee to its financial consultancy.

To preserve cash resources of National Arts, it proposed to pay Yu Ming its financial advisory fees by way of issuing the new National Arts Shares at the issue price of HK$0.185, equivalent to the closing price of the National Arts shares on the last trading date before the suspension of trading on 23 June.

A total of 54,054,054 fee shares will be issued to Yu Ming, which amounts to HK$10 million.

Sin Kwok-lam, chairman of National Arts Entertainment and Culture said the acquisition of Convoy Global was a risk-diversifying strategy for the company and he had never contacted shareholders of Convoy before the purchase.

He denied that the company is being a white knight for Convoy, saying they have made the decision because the management performance of Convoy has been better during the past two years.

Sin expects the sales and marketing team of Convoy, combined with the film producing and resort business of National Arts, to create synergies. The two companies are both among the 50 stocks in the “Enigma Network” dubbed and criticized by veteran activist investor David Webb.

National Arts had also filed a lawsuit against Convoy and its board in 2018 for selling its stake in GEM board-listed First Credit Finance Group (8215), shares of which were suspended from trading.

 

 

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