SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[x] Definitive Proxy Statement by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
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CHINA PACIFIC, INC.
------------------------------------
(Name of Registrant As Specified In Its Charter)
----------------------------------------------------
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CHINA PACIFIC, INC.
ROOM 2008, SUN HUNG KAI CENTRE
30 HARBOUR ROAD
WANCHAI, HONG KONG
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, JULY 9, 1996
To the Shareholders of China Pacific, Inc.:
An Annual Meeting of Shareholders of China Pacific, Inc. (the "Company")
will be held at Los Angeles Airport Hilton, 5711 West Century Boulevard, Los
Angeles, California 90045 at 11:00 a.m., on Tuesday, July 9, 1996 for the
following purposes:
1. To elect five directors of the Company to hold office until the
next annual meeting of shareholders or until their successors are duly
elected and qualified.
2. To consider a proposal to ratify the appointment of Arthur
Andersen & Co. as the Company's independent certifying accountants.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on May 29, 1996 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you are
planning to attend the meeting, you are urged to complete, date and sign the
enclosed proxy card and return it promptly.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING AND WISH
TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS
VOTED.
By Order of the Board of Directors
Cheng Yuk Ching
SECRETARY
Hong Kong
June 14, 1996
CHINA PACIFIC, INC.
ROOM 2008, SUN HUNG KAI CENTRE
30 HARBOUR ROAD
WANCHAI, HONG KONG
----------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 9, 1996
----------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of China Pacific, Inc. (the
"Company") for use at the 1996 Annual Meeting of the Shareholders of the Company
and at any adjournment thereof (the "Annual Meeting"). The Annual Meeting is
scheduled to be held at the Los Angeles Airport Hilton, 5711 West Century
Boulevard, Los Angeles, California 90045, on Tuesday, July 9, 1996 at 11:00 a.m.
local time. This Proxy Statement will first be sent to shareholders on or about
June 14, 1996.
PROXIES
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Annual
Meeting prior to the closing of the polls, will be voted in accordance with the
specifications made thereon. Proxies on which no specification has been made by
the shareholder will be voted FOR the election to the Board of Directors of the
nominees of the Board of Directors named herein, FOR the ratification of the
appointment of the designated independent accountants, and as the proxy holders
deem advisable on other matters that may come before the meeting. Proxies are
revocable by written notice received by the Secretary of the Company at any time
prior to their exercise or by executing a later dated proxy. Proxies will be
deemed revoked by voting in person at the Annual Meeting.
VOTING SECURITIES
Shareholders of record at the close of business on May 29, 1996 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. On
the Record Date, the total number of shares of common stock of the Company,
$.001 par value per share (the "Common Stock"), outstanding and entitled to vote
was 32,907,550. The holders of all outstanding shares of Common Stock are
entitled to one vote for each share of Common Stock registered in their names on
the books of the Company at the close of business on the Record Date.
QUORUM AND OTHER MATTERS
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum. The Board of Directors is
not aware of any matters that are expected to come before the Annual Meeting
other than those referred to in this Proxy Statement. If any other matter
should come before the Annual Meeting, the persons named in the accompanying
proxy intend to vote such proxies in accordance with their best judgment.
Shares of Common Stock represented by a properly dated, signed and returned
proxy will be counted as present at the Annual Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting a
vote or abstaining. Directors will be elected by a plurality of the votes cast
at the Annual Meeting. Each of the other matters scheduled to come before the
Annual Meeting requires the approval of a majority of the votes cast at the
Annual Meeting. Therefore, abstentions and broker non-votes will have no effect
on the election of directors or any such other matter.
Under the laws of the State of Nevada, dissenters rights are not available
to shareholders of the Company with respect to any matter scheduled to be
brought before the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Five directors are to be elected to serve until the next annual meeting of
shareholders and until their successors are elected and shall have qualified.
The Board of Directors has nominated Mak Shiu Tong, Clement, Cheng Yuk Ching,
Huang Jinhui, Tan Jian Sheng and Zhang Guo Liang to serve as directors (the
"Nominees"). Each of the Nominees is currently serving as a director of the
Company (Dong Hu Chen resigned as a director in March of 1996 and Tan Jian Sheng
and Zhang Guo Liang were appointed as directors in March of 1996). Directors
shall be elected by shareholders holding a plurality of the shares of Common
Stock present at the Annual Meeting. In the event that any one of the Nominees
is unable or declines to serve as a director, the Board of Directors intends to
substitute another person of their choice as nominee, in his place and stead, or
to presennt such lesser number of directors in accordance with the Company's
Bylaws. The Board of Directors has no reason to believe that any Nominee will
be unable to serve or decline to serve as a director. Any vacancy occurring
between shareholders' meetings, including vacancies resulting from an increase
in the number of directors, may be filled by the Board of Directors. A director
elected to fill a vacancy shall hold office until the next annual shareholders'
meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
INFORMATION REGARDING NOMINEES
The following table sets forth information with respect to each Nominee for
election as a director. The information as to age, principal occupation and
directorships held has been furnished by each such nominee.
SERVED AS
DIRECTOR
PRINCIPAL CONTINUOUSLY
NAME AND AGE OCCUPATION (1) SINCE
------------ -------------- -----
Mak Shiu Tong, Clement (43) President, Chief Executive Officer
and Chairman of the Board 1993
Cheng Yuk Ching (42) Vice President and Secretary 1994
Huang Jinhui (42) Deputy Governor of the People's
Government of Huiyang City since
1987 1994
Tan Jian Sheng (37) General Manager of The
Construction Bank of China -
Guangdong Branch International
Division since 1994 (2) 1996
Zhang Guo Liang (51) General Manager of Xinhua News
Agency - Asia-Pacific Region
since 1992 (3) 1996
- ---------------------
(1) Unless indicated otherwise in the table or in the section of this Proxy
Statement captioned "Information Regarding Executive Officers," the
individuals named in the table have held their positions for more than five
years.
(2) From 1989 to 1994, Mr. Tan served as Department Head of the International
Division of The People's Construction Bank of China - Gaungdong Branch.
(3) From 1989 to 1994, Mr. Zhang served as Secretary General of the Xinhua News
Agency.
2
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table sets forth the names, ages and offices of the present
executive officers of the Company. The periods during which such persons have
served in such capacities are indicated in the description of business
experience of such persons below. Information with respect to non-employee
directors is set forth above.
Mak Shiu Tong, Clement (43) . President and Chief Executive Officer
Mo Kat Ling, Connie (34). . . Vice President
Cheng Yuk Ching (42). . . . . Vice President and Secretary
Tong Long Tin, Thomas (29). . Chief Financial Officer
Officers and directors are elected on an annual basis. The present terms
for each director will expire at the next annual meeting of shareholders or at
such time as a successor is duly elected. Officers serve at the discretion of
the Board of Directors. See "Beneficial Ownership of Common Stock."
There are no family relationships among any of the directors or officers of
the Company.
The following is a biographical summary of the business experience of the
present executive officers of the Company.
MAK SHIU TONG, CLEMENT. Mr. Mak has served as President, Chief Executive
Officer and Chairman of the Board of the Company since the acquisition of China
Pacific Construction (formerly China Treasure Construction) by Bulls on the Run
Productions in May of 1994. Mr. Mak was a founder of China Pacific Construction
and its affiliates and has served as Chairman of China Pacific Construction
since its inception in 1993. Since 1979, Mr. Mak has served as Chairman, and
was the founder, of Kiu Yin Investment Co., Ltd. (formerly, Bondwell Electronics
Limited), an electronics manufacturer.
MO KAT LING, CONNIE. Ms. Mo has served as Vice President of the Company
since the acquisition of China Pacific Construction in May of 1994. Ms. Mo
previously served as Treasurer and a director of the Company from May of 1994
until June of 1995. Previously, Ms. Mo served as Vice President, Treasurer and
a director of Kiu Yin Investment Co., Ltd. from 1989 to 1995.
CHENG YUK CHING. Mr. Cheng has served as Vice President, Secretary and a
director of the Company since the acquisition of China Pacific Construction in
May of 1994. Previously, Mr. Cheng served as Vice President, Secretary and a
director of Kiu Yin Investment Co., Ltd. from 1984 to 1995.
TONG LONG TIN, THOMAS. Mr. Tong has served as Financial Controller of the
Company since 1994 and as Chief Financial Officer since 1996. Prior to joining
the Company, Mr. Tong served as an audit supervisor of Ho and Ho & Co., a
certified public accounting firm in Hong Kong from 1988 to 1994.
COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this Proxy Statement
any failure to file by these dates during 1995. All of the filing requirements
were satisfied on a timely basis in 1995. In making these disclosures, the
Company has relied solely on written statements of its directors, executive
officers and shareholders and copies of the reports that they filed with the
Commission.
3
COMMITTEES AND ATTENDANCE OF THE BOARD OF DIRECTORS
The Company presently maintains no standing committees of its board of
directors. The Company intends to evaluate the creation of a standing Audit
Committee and a standing Compensation Committee at such time as the board deems
appropriate.
During the year ended December 31, 1995, the Board of Directors held nine
formal meetings. With the exception of Messrs. Tan Jiang Sheng and Zhang Gang
Liang, each director (during the period in which each such director served)
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board of Directors, plus (ii) the total number of meetings held by all
committees of the Board of Directors on which the director served.
COMPENSATION OF DIRECTORS
The Company reimburses each director for all expenses of attending board
meetings. Otherwise, no compensation of any nature is paid to employee
directors.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning cash and non-cash
compensation paid or accrued for services in all capacities to the Company
during the year ended December 31, 1995 of the Chief Executive Officer and each
of the next four most highly compensated executive officers of the Company whose
compensation exceeded $100,000 (the "Named Officers").
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------
OTHER ANNUAL STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS (#)
- --------------------------- ---- ---------- --------- ---------------- -----------
Mak Shiu Tong, Clement 1995 194,069 - (1) -
President, Chief Executive 1994 252,264 - (1) -
Officer and Chairman 1993 - - (1) -
- ----------------------
(1) Although the officers receive certain perquisites such as auto allowances
and Company provided life insurance, the value of such perquisites did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
EMPLOYMENT CONTRACTS
The Company has no employment agreements with any of its employees and has
no arrangements of any nature which would result in payments to officers or
other persons as a result of any termination of employment or change in control
of the Company.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table is furnished as of May 1, 1996, to indicate beneficial
ownership of shares of the Company's Common Stock by (1) each shareholder of the
Company who is known by the Company to be a beneficial owner of more than 5% of
the Company's Common Stock, (2) each director, nominee for director and Named
Officer of the Company, individually, and (3) all officers and directors of the
Company as a group. The information in the following table was provided by such
persons.
4
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership (1)(2) Percent of Class (2)
------------------- --------------------------- --------------------
Mak Shiu Tong, Clement . . . . . . 6,775,715 (2)(4) 20.6%
Room 2008, Sun Hung Kai Centre
30 Harbour Road
Wanchai, Hong Kong
The Construction Bank of
China - Guangdong Branch . . . . 6,509,999 (3)(4) 19.8%
No. 555, Dong Feng Dong Road
Guangzhou, Guangdong Province, China
Cheng Yuk Ching. . . . . . . . . . -0- 0.0%
Huang Jinhui . . . . . . . . . . -0- (5) 0.0%
Tan Jian Sheng . . . . . . . . . . -0- 0.0%
Zhang Guo Liang. . . . . . . . . . -0- 0.0%
All executive officers and directors
as a group (7 persons). . . . . . 6,775,715 20.6%
- -------------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws, where applicable, and the information
contained in the footnotes to the table.
(2) All shares indicated as being held by Mr. Mak are held of record by C.P.
Investment (B.V.I.) Ltd. ("CPI"), a wholly owned subsidiary of China
Pacific Investment Holdings Ltd. ("CPIH"). CPIH is owned 51% by Kiu Yin
Investment Co., Ltd., a company controlled by a discretionary trust
established for the benefit of Mr. Mak's family.
(3) All shares indicated as held by The Construction Bank of China - Guangdong
Branch are held of record by CPI. CPIH, the parent of CPI, is owned 49% by
Guangdong Construction (B.V.I.) Co., Ltd., which is, in turn, controlled by
The Construction Bank of China - Guangdong Branch.
(4) In connection with the Company's disposal of its interest in the Sun City
project, Mak Shiu Tong, Clement and The Construction Bank of China -
Guangdong Branch formed China Pacific Investment Holdings Ltd. which
acquired all of the shares of C.P. Investment (B.V.I.) Ltd. (formerly China
Treasure Investment (B.V.I.) Limited) from China Treasure Holding (B.V.I.)
Limited. As a result of such transactions, The Construction Bank of China
- Guangdong Branch increased its beneficial ownership in the Company by
3,188,571 shares and the beneficial ownership of a like number of shares by
The People's Government of Huiyang City, which previously was the
beneficial owner of such shares through its ownership in China Treasure
Holding (B.V.I.) Ltd., was terminated. See "Certain Relationships and
Transactions."
(5) Huang Jinhui is Deputy Governor of The People's Government of Huiyang City,
a former 5% shareholder of the Company, but disclaims any interest in the
shares previously beneficially held by The People's Government of Huiyang
City.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Due to the nature of Company's participation in the development of "Sun
City" and the Company's operations within the People's Republic of China, the
Company's operations from the commencement of the "Sun City" project involved
significant transactions with affiliates, including SanHe Group, which is
controlled by the Huiyang City government, which, until December 31, 1995, was a
principal shareholder of the Company.
The Company's former subsidiary, China Treasure Industrial Enterprise
("CTIE"), acquired the land use rights with respect to the "Regent on the Park"
and "Star Place" sites in Sun City from SanHe Group in 1992. CTIE acquired the
land use rights with respect to such sites for $31.3 million and was obligated
to pay 20% of the after-tax profit on the development of Star Place to SanHe
Group and 10% of such after-tax profits to Huiyang Property Development Company
Limited, a company also controlled by the Huiyang City
5
government. $7.3 million of the consideration payable to SanHe for the land use
rights was paid through December 31, 1995.
C.P. Investment Ltd. (formerly known as China Treasure Investment Ltd.), an
intermediate holding company, loaned $8.8 million and China Treasure Holding
Ltd. (the prior owner of China Treasure Investment Ltd.) loaned $0.8 million to
the Company's subsidiary, China Pacific Construction (B.V.I.) Limited (formerly
known as China Treasure Construction (B.V.I.) Limited) through December 31,
1994. Such loans were repayable with interest accruing at commercial bank rates
which ranged from 8% to 9% in 1994. During 1995, China Treasure Holding loaned
US$12 million to China Pacific Steel Limited in the form of a non-interest
bearing promissory note which is secured by the stock of China Pacific Steel
Limited. China Treasure Holding also loaned US$1.3 million to China Pacific,
Inc. and its subsidiaries at a commercial interest rate of 9% per annum. Both
of such companies agreed not to require repayment of such loans until the
Company was financially capable of repaying such amounts.
The Construction Bank of China, Guangdong Branch, a shareholder of the
Company established a banking facility for the Company totaling $92 million for
the Sun City project, of which $9.1 million and $-0- had been utilized at
December 31, 1994 and 1995, respectively. Such facility is no longer available
after the disposal of the Sun City subsidiaries.
During 1994 and 1995, the Company paid management fees to China Treasure
Holding (B.V.I.) Limited, an indirect controlling shareholder of the Company, of
approximately $155,000 and $-0-, respectively.
On December 29, 1995, the Company entered into an agreement with Open View
Properties Ltd, which is controlled by the People's Government of Huiyang City,
whereby the Company's 51% owned subsidiary, China Pacific Construction (formerly
China Treasure Construction), sold its interest in each of its subsidiaries
involved in the Sun City development and, along therewith, its entire interest
in Sun City. As consideration for the Company's interest in Sun City, Open View
Properties delivered a series of three year 8% promissory notes in the amount of
$16.2 million representing a return of China Pacific Construction's original
capital contributions and loans to the project subsidiaries plus a fee for
services to be provided of $4.1 million. Additionally, the Company was granted
a five year option to develop and market 5 million square meters of land
surrounding Sun City at a price of RMB100 ($12) per square meter and a five year
option to repurchase the Company's interest in Sun City at cost plus a 10%
premium per year.
Prior to the Company's disposal of the Sun City subsidiaries, the Company,
during 1995, paid interest on amounts advanced by its principal shareholders in
the amount of $1,114,000.
The Company has no existing corporate policy which prohibits or governs the
terms of any such transactions.
Other than elections to office, no director, nominee for director,
executive officer or associate of any of the foregoing persons has any
substantial interest, direct or indirect, by security holdings or otherwise, in
any matter to be acted upon at the Annual Meeting.
PROPOSAL 2
INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen & Co. as independent
auditors for the year ending December 31, 1996, and recommends that the
shareholders vote for ratification of such appointment. Arthur Andersen & Co.
were also the Company's independent auditors in fiscal years 1995 and 1994. In
the event of a negative vote on such ratification, the Board of Directors will
reconsider its selection.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual Meeting, will be afforded an opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
inquiries from shareholders.
6
Following the acquisition of China Treasure Construction (B.V.I.) Limited
by Bulls on the Run Production Corporation, on February 1, 1995, the Company's
Board of Directors selected Arthur Andersen & Co. to serve as its new
independent accountants and dismissed H.J. Swart & Company, P.A. which
previously served as the independent accountants for Bulls on the Run Production
Corporation.
H.J. Swart & Company's reports on the financial statements of Bulls on the
Run Production Corporation for the fiscal years 1993 and 1992 contain no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. In connection with its
audits for fiscal years 1993 and 1992 and through February 1, 1995, there were
no disagreements with H.J. Swart & Company on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of H.J. Swart
& Company would have caused them to make reference thereto in its reports on the
financial statements for such years.
The information described above regarding the Company's decision to dismiss
H.J. Swart & Company as its independent accountants and select Arthur Andersen &
Co. as its new independent accountants, along with a letter from H.J. Swart &
Company stating that it agrees with the above information regarding the
Company's change of accountants, was fully disclosed in a Form 8-K filed with
the SEC on February 1, 1995.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and has not been informed that any other matters are to be
presented by others.
By Order of the Board of Directors
Cheng Yuk Ching
SECRETARY
Hong Kong
June 14, 1996
7
CHINA PACIFIC, INC.
ROOM 2008, SUN HUNG KAI CENTRE
30 HARBOUR ROAD
WANCHAI, HONG KONG
Proxy for Annual Meeting of Shareholders to be held on July 9, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mak Shiu Tong and Cheng Yuk Ching, and each
of them, as Proxies, with full power of substitution in each of them, in the
name, place and stead of the undersigned, to vote at an Annual Meeting of
Shareholders (the "Meeting") of China Pacific, Inc., a Nevada corporation (the
"Company"), on July 9, 1996, at 11:00 a.m., or at any adjournment or
adjournments thereof, in the manner designated below, all of the shares of the
Company's common stock that the undersigned would be entitled to vote if
personally present.
1. GRANTING / / WITHHOLDING / / authority to vote for the election as
directors of the Company the following nominees:
Mak Shiu Tong, Cheng Yuk Ching, Huang Jinhui, Tan Jian Sheng and Zhang Guo
Liang.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME.)
2. Proposal to ratify the appointment of Arthur Andersen & Co. as the Company's
independent certifying accountants.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournments thereof.
(CONTINUED ON REVERSE SIDE)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF
NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 2 AND FOR THE
ELECTION OF ALL NOMINEES AS DIRECTORS.
Please sign exactly as your name
appears hereon. When shares are
held by joint tenants, both should
sign. When signing as an attorney,
executor, administrator, trustee,
guardian, or corporate officer,
please indicate the capacity in
which signing.
DATED: ________________, 199______
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.