Pou Sheng International ends Jiezhixing venture

16 Mar '10

2 min read

Termination of investment in joint venture involving disposal of 50% equity interest in Hubei Jiezhixing Clothing and Accessories Company Limited being a discloseable and connected transaction for Pou Sheng International (Holdings) Limited and a connected transaction for Yue Yuen Industrial (Holdings) Limited.

On 11 March 2010, Pou Sheng's subsidiaries, the Dragonlight Entities, entered into the Termination Framework Agreement with Mr. Qiu, Ms. Wang and Jiezhixing under which the Dragonlight Entities agreed to terminate its investment in 50% equity interest in Jiezhixing. On the same date, the Dragonlight Entities, Mr. Qiu, Ms. Wang and Jiezhixing entered into the Call Option Termination Agreement under which the Call Option was terminated.

As Mr. Qiu is a substantial shareholder of a subsidiary of Pou Sheng, Hubei Shengdao, Mr. Qiu is a connected person of Pou Sheng under the Listing Rules. As Jiezhixing is an associate of Mr. Qiu by virtue of Mr. Qiu's interest in 50% of its equity interest, Jiezhixing is also a connected person of Pou Sheng under the Listing Rules.

The entering into of the Transaction Documents therefore constitutes a connected transaction for Pou Sheng under Chapter 14A of the Listing Rules which is subject to announcement, reporting and independent shareholders' approval requirements. As the results of the size tests exceed 5%, the entering into of the Transaction Documents also constitutes a discloseable transaction for Pou Sheng under Chapter 14 of the Listing Rules.

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Pou Sheng started operation in 1992 as an integral part of Yue Yuen Industrial (Holdings) Limited, the world's largest footwear manufacturer and a constituent stock of Hang Seng Index. It began with brand licensee business for distributing Converse products in the PRC and later expanded into sportswear retail business.

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