Tender Offer and De-listing from AIM-part 1

22/10/2008

22 October 2008

EBT Mobile China plc

("EBT" or the "Company")

Proposed Tender Offer at 6 pence per Ordinary Share and De-listing from AIM

Cancellation of admission of Ordinary Shares to trading on AIM

Authority to purchase Ordinary Shares

Reduction of capital

Adoption of new articles of association

Tender offer by Panmure Gordon to purchase Ordinary Shares

Notice of General Meeting

EBT Mobile China plc announces that it is today posting a circular to shareholders regarding a proposed Tender Offer for Ordinary Shares, a De-listing from AIM and other related matters.  The proposed Tender Offer applies to a maximum of approximately 10.0% of the Company's current issued share capital and the price at which the Tender will be undertaken is 6 pence per Ordinary Share.  A Shareholder General Meeting is called for 14 November 2008 to consider the Proposals which are contained in the Circular.

The Company has received irrevocable commitments from Shareholders representing 72.3% of the current issued share capital to vote in favour of the Proposals.

In order to effect the Tender Offer, the Company will need to apply to the Court for the approval of the reduction of its share capital by way of cancellation of its share premium account and of its deferred share capital.  Accordingly completion of the Tender Offer is conditional, amongst other things, upon the approval of the Court.    

Shareholders should note that if, for any reason the Capital Reduction does not take place by 5.00pm on 30 December 2008, the Board intends to continue with the De-listing.

Capitalised terms in this announcement follow the same definitions as in the Circular unless otherwise specified.

The key points of the Circular are summarised as follows: 

Introduction

• On 27 August 2008 the Company announced it was considering the feasibility and desirability from a shareholder perspective of a partial tender offer for some of the Company's shares not already owned by certain major Shareholders (principally Audley European Opportunities Master Fund Limited, certain funds managed by Gartmore Investment Limited, James Reiman, EBT's Chairman, and certain senior management accounting for 62.6 per cent. of the current issued share capital of the Company).  

• Prior to this, the Company had received an indicative offer approach which has not culminated in an offer being made, as well as a number of other preliminary expressions of interest which the Board, having duly considered them, did not deem to be in the best interests of shareholders.

• Having carefully considered, together with its advisers, the current position including recent feedback from major shareholders the Company now proposes to: 

Current Trading

• EBT has faced a tougher trading environment since the second half of 2007. The Board adjusted the Company's strategy at that time from a focus on an aggressive expansion programme to drive volume, to one focused upon operational improvements to enhance margins.

• The Group has made progress in improving its overall operating performance during the first half of 2008 and expects to make a modest adjusted profit in the second half of the year.

• EBT believes that the outlook for the Chinese mobile phone market remains positive and will continue to grow its store footprint selectively in the world's largest wireless telecommunications market.

• Leading wireless providers are set to invest heavily to provide 3G services, the introduction of which, while subject to uncertain timing, is expected to provide substantial additional growth opportunities in due course.

• While the near-term operating environment remains challenging, the Board considers its operational systems and profit focused strategy to be appropriate to consolidating the Group's position and preparing for future expansion and economic recovery.

• The Board retains a positive outlook and believes EBT is well placed to become China's leading end to end provider of wireless products and services. 
  

De-listing

• The Directors believe that the development of the business, in terms of store footprint, strategic partnerships and underlying operational infrastructure, and the growth potential of the Chinese mobile telephony market and the strength of the Company's management team have not been adequately reflected in the value attributed by the public market. 

• In response to a preliminary approach received in December 2007, the Board initiated a strategic review in order to consider the options available to help create and/or realise value in the business. In addition to the initial approach, a number of other preliminary expressions of interest in various forms were declared. 

• Discussions with these third parties did not reach a conclusion that the Board considered to be in the best interests of shareholders.

• The Board concluded that the best option would be for the Company to de-list and continue its growth trajectory away from the public market, at least in the near term.

• De-listing is subject to shareholder approval.  The Company and Panmure Gordon have received irrevocable undertakings from shareholders holding 160,275,948 Ordinary Shares, representing 72.3 per cent of the current issued ordinary share capital to vote in favour of the De-listing. 
  

Tender Offer

• The Board recognises that not all shareholders will be able or willing to continue to own shares in the Company following the De-listing. 

• Therefore a Tender Offer is to be effected by Panmure Gordon purchasing Tender Offer Shares as principal and then selling such Tender Offer Shares on the London Stock Exchange to the Company for cancellation.  

• Under the Tender Offer a maximum of 22,170,089 Ordinary Shares may be purchased, representing approximately 10.0 per cent. of the issued ordinary share capital at a price of 6 pence per Ordinary Share, for a maximum aggregate cash consideration of £1.33 million. 

• The price of 6 pence per share represents the closing mid-market price as derived from the AIM section of the London Stock Exchange Daily Official List on 21 October 2008 (being the latest practicable date before the Company's announcement of the Proposals on 22 October 2008).

• The Company and Panmure Gordon have received irrevocable undertakings from the Directors and other shareholders holding 138,686,145 Ordinary Shares in aggregate, representing 62.6 per cent of the current issued ordinary share capital of the Company, that they will not accept or procure the acceptance of the Tender Offer in respect of a total of 133,784,563 Ordinary Shares. 

• A Tender Offer Shareholder may tender some, all, or none of their holdings. The Tender Offer will enable equally all Tender Offer Shareholders (excluding those having irrevocably committed not to accept or procure acceptance of the Tender Offer), to sell a certain minimum per cent of their holding of Tender Offer Shares (the "Basic Entitlement").

• Tender Offer Shareholders with valid individual tenders greater than the Basic Entitlement Amount will be satisfied to the extent that other eligible Shareholders tender less than their Basic Entitlement Amount or do not tender any shares.  

• In the event that more than 22,170,089 Tender Offer Shares are tendered, tenders in excess of the Basic Entitlement Amount will be scaled back, subject to any preference given to smaller Shareholders at the absolute discretion of the Company. 

• Although it is not possible to know the future behaviour of Shareholders able to participate in the Tender Offer, it is possible, given certain assumptions and the irrevocable commitments signed by certain parties, to estimate that the Basic Entitlement would be approximately 19.9 per cent. of individual share holdings.

• The above estimate of the Basic Entitlement assumes that the exercise of all options capable of exercise and the valid allotment and issuance of shares pursuant to the terms of the JXJL acquisition.

• The Tender Offer is conditional upon Shareholder approval and the Capital Reduction outlined below being confirmed by the Court.

Effects of the Tender Offer

• The principal effect of the Proposals and the De-Listing in particular is that Shareholders will no longer be able to buy and sell shares in the Company through a public stock market; that is liquidity in the Company's shares will be very limited. However, in order to provide a measure of liquidity in the Company's shares after de-listing, the Company intends to set up and maintain a matched bargain settlement facility.

• Under this facility, shareholders or persons wishing to acquire shares will be able to leave an indication with the facility provider that they are prepared to buy or sell at an agreed price. In the event that the facility provider is able to match that order with an opposite sell or buy instruction, the facility provider will contact both parties and then effect the order. Shareholders who do not have their own broker may need to register with the facility provider as a new client. This can take some time to process and therefore shareholders who consider they are likely to avail themselves of this facility are encouraged to register at the earliest opportunity. 

• The contact details of the matched bargain settlement facility provider, once arranged, will be made available to Shareholders.

• The shareholders' agreement referred to below provides that, following De-Listing, the Company will, although it is not required to do so, continue to provide its shareholders with both the interim and final year end accounts. In addition, the Company will provide material news updates as the Board considers appropriate. A summary of the provisions of this shareholders' agreement can be found in paragraph 7 of Part 1 of the Circular.

(Part 1 of full document)