Press Room
£5.5m Fundraising
Et-china.com International Holdings Limited, the leading travel services group in the fast growing region of South China, announces today that it has agreed to issue £5,500,000 in aggregate principal amount of Zero Coupon Convertible Bonds due 2011 (the "Bonds"). The Bonds are not to be listed on any stock exchange and they cannot be transferred without the consent of the Company. Och-Ziff and Ellerston Capital have each agreed to subscribe for £2.5m worth of the Bonds and LFG Group has subscribed for the balance. (the "Investors").
Et-china.com currently operates in two travel market segments, Frequent Independent Travel (FIT), (encompassing both independent corporate and leisure) through Et-china; and group leisure travel through its 53.95 per cent. owned subsidiary, GZL. In addition, Et-china operates a dedicated e-ticketing service platform exclusively for China Southern Airlines and its group subsidiaries. The new funds provided by the convertible bonds will be used to accelerate the growth of Et-China.com's expansion through:
- Pursuing identified strategic acquisitions in the tour operator and travel agency segments to increase critical mass and take advantage of the fragmented nature of the Southern Chinese travel market
- A step up of the current marketing campaign in order to build upon the significant growth we are already achieving in the Frequent Independent Travel segment.
The subscribers are Och-Ziff, a leading, global institutional alternative asset management firm. It is one of the largest alternative asset managers in the world, with approximately $30 billion of assets under management for over 700 fund investors as of September 30, 2007. Och Ziff has strong investment track record spanning more than 13 years. Ellerston Capital is a specialist absolute return fund manager, wholly owned by Consolidated Press Holdings one of Australia's largest private investment groups, controlled by the Packer family. The third subscriber is LFG Group, an existing investor and a fund controlled by Australia's Lowy family.
The Bonds are unsecured and convertible at any time at the option of the Investors into Ordinary Shares in the Company at an initial conversion price of £1.15 (the "Initial Conversion Price"). The Initial Conversion Price shall be reset automatically at the end of 6 months, and half yearly after that (the "Reset Dates"), if for thirty consecutive Trading Days ending on a Reset Date the average daily volume weighted average price (the "VWAP") of the Ordinary Shares is less than the conversion price in effect on that Reset Date. However, no adjustment shall be made if it would cause the conversion price to be less than £0.80.
In addition, the Bonds will convert automatically if the average daily VWAP of the Ordinary Shares is equal to or greater than £2.30 for thirty consecutive days after an agreement which would effect a reverse takeover has been notified to the Company or a firm intention to make a takeover offer for the Company has been announced.
Under the terms of the Bonds, the Investors have a put option at the end of year two, on a change of control or on a de-listing of the Company (the "Put Option"). If an Investor exercises its Put Option, the Company will redeem that Investor's Bonds at their principal amount plus an amount that would equal a yield of 7% calculated on a semi-annual basis.
Matthew Ng, President and Chief Executive Officer, commented:
"We are delighted to have raised £5.5m which will allow us to enter the next phase of our development. The travel market in China continues to provide tremendous opportunities and these new funds will enable Et-china to aggressively capture market share.
"We are also pleased that this bond issue has been supported by a small number of high quality investors, namely Och-Ziff, Ellerston Capital and LFG, all with a keen eye on the Chinese travel market, to have this support in the current volatile climate is a clear endorsement of our growth strategy."
Et-China will release its final results for the year to 31 December 2007 in mid-May.
Contact details for enquiries:
| Et-china.com International Holdings Limited | +44 (0)207 067 0700 |
| Matthew Ng, President and Chief Executive Ian Smith, Chairman |
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| Seymour Pierce, Nomad and Broker | +44 (0)207 107 8000 |
| Mark Percy | |
| Weber Shandwick Financial | +44 (0)207 067 0700 |
| Terry Garrett Stephanie Badjonat John Moriarty |