Discloseable Transaction in Relation to Acquisition of Land Use Rights
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (Incorporated in Cayman Islands with limited liability) (Stock code: 1129) DISCLOSEABLE TRANSACTION IN RELATION TO ACQUISITION OF LAND USE RIGHTS Reference is made to the announcements of the Company dated 29 April 2019, 17 May 2019 and 29 May 2019 in relation to the acquisition of a land use rights of the Land. The Board is pleased to announce that following the entering into the Confirmation Letter with Yugan County Land Resources Trade Service Centre on 29 April 2019, in order to stipulated the terms in relation to the acquisition of the land use rights of the Land, the Purchaser entered into the Land Use Rights Grant Contract with Yugan County Natural Resources Bureau on 3 June 2019 (after trading hours) for the acquisition of the land use rights of the Land at a total consideration of RMB300.08 million (equivalent to approximately HK$351.09 million). As one or more of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Land Acquisition exceeds 5% but is less than 25%, the Land Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the announcement requirement, but is exempt from the circular and Shareholders’ approval requirements, under the Listing Rules. INTRODUCTION Reference is made to the announcements of the Company dated 29 April 2019, 17 May 2019 and 29 May 2019 in relation to the acquisition of a land use rights of the Land. The Board is pleased to announce that following the entering into the Confirmation Letter with Yugan County Land Resources Trade Service Centre on 29 April 2019, in order to stipulated the terms in relation to the acquisition of the land use rights of the Land, the Purchaser entered into the Land Use Rights Grant Contract with Yugan County Natural Resources Bureau on 3 June 2019 (after trading hours) for the acquisition of the land use rights of the Land at a total consideration of RMB300.08 million (equivalent to approximately HK$351.09 million). * For identification purpose only 1 THE LAND USE RIGHTS GRANT CONTRACT Date 3 June 2019 Parties: the Purchaser and Yugan County Natural Resources Bureau Yugan County Natural Resources Bureau, a local PRC government authority which is in charge of, among others, the natural resources and land in Yugan County, Shangrao City, Jiangxi Province, the PRC and is also responsible for the sales of land use rights. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, these state-owned entities including, Yugan County Land Resources Trade Service Centre, Yugan County Natural Resources Bureau and their respective ultimate beneficial owner(s) are third parties independent of and not connected with the Company and its connected person(s). Information relating to the Land The Land is located at the East of Gai Zao Yu Ting Avenue, north of Century Avenue B18-02, Shanty Town, Yugan County, Shangrao City, Jiangxi Province*(江西省上饒市余干縣棚戶區 改造玉亭大道以東,世紀大道以北B18-02)with parcel No. DEI2019035. The Land has a total gross area of approximately 30,742 square meters with approximately 24,593 square meters to be of residential use and approximately 6,149 square meters to be of retail and commercial use. The terms of the land use rights of the Land for residential use is 70 years and retail and commercial use for 40 years, respectively. Pursuant to the Land Use Rights Grant Contract, the handover of the Land shall take place on or before 31 July 2019. Consideration and Payment Terms The total consideration for the land use rights of the Land is RMB300.08 million (equivalent to approximately HK$351.09 million). As at the date of this announcement, the Purchaser has paid RMB150.04 million by internal resources of the Group (equivalent to approximately HK$175.55 million) and remaining balance of the total consideration shall be payable on or before 3 April 2020. 2 As the payment of the total consideration for the land use rights of the Land will be settled by way of instalment payment, an interest will be charged to all remaining amounts unpaid after the first instalment at the rate pursuant to the PBOC borrowing rate on the date of the payment of the first instalment. Upon the settlement of consideration of the Land in full, the Purchaser by way of provision of the Land Use Rights Grant Contract and all relevant payment evidence will be able to apply for the land use rights of the Land. As the Land was acquired via online public auction, the price of the Land was determined by the result of the public auction which was subject to the relevant PRC laws and regulations. The Group expects that it will finance the remaining payment for the Land Acquisition by the internal resources and banking facilities of the Group. The Directors confirm that the consideration for the Land is fair and reasonable and in the interests of the Company and the Shareholders as a whole. The development and utilization of the Land The Land shall be utilized for the development of residential, retail and commercial properties and shall commence construction on or before 31 August 2019 and all development shall be completed by 31 August 2022. Should the commencement of construction is subject to delay, 1% of the consideration of the Land Acquisition shall be paid on a daily basis as penalty of such delay. If the Land shall be idle for more than one year but below two years, the Land will be subject to land idle charge, if the Land remained idle for more than two years, the Yugan County Natural Resources Bureau shall have the right to reclaim the land use right of the Land. Transfer, lease or pledge of the land use right Subject to relevant terms and conditions of the Land Use Rights Grant Contract, the transfer, lease or pledge of the land use right shall be permitted upon settlement of the total consideration of the land use right of the Land. REASONS FOR THE LAND ACQUISITION AND THE ENTERING INTO THE LAND USE RIGHTS GRANT CONTRACT The Group principally engages in (i) provision of water supply and sewage treatment services; (ii) construction of water supply and sewage treatment infrastructure; and (iii) investment and operation of new energy and renewable energy projects. With a view to broadening the revenue base and improving the profitability of the Group, in 2018, the Group commenced development of a research and development center comprising of 6 blocks of research and development centers and a underground car parks in Nanjing, the PRC, of which part of the development will be leased out to other tenants as investment properties or sold as property development depending on the then property market condition of Nanjing. The Group has also been continued to consider other investment opportunities to further invest into property development markets in the PRC (including investment in property development companies). 3 The Purchaser is a company established with limited liability in the PRC and is an indirect wholly- owned subsidiary of the Company. The Purchaser is principally engaged in trading of construction materials, office supplies, mechanical appliances and electrical appliances. As disclosed in the announcement of the Company dated 29 April 2019, the Purchaser entered into the Confirmation Letter with Yugan County Land Resources Trade Service Centre on 29 April 2019 (after trading hours) to confirm the acquisition of a land use rights of the Land, pursuant to the Confirmation Letter, the Group was required to enter into the Land Use Rights Grant Contract to govern the terms and condition of the Land Acquisition. The Purchaser will transfer the Land to its wholly-owned subsidiary, a project company, upon execution of the Land Use Rights Grant Contract for carrying out the property development. In view that: (i) the Land has a high development potential as it is easily accessible by transportation; and facilities in its proximity are relatively comprehensive; (ii) the Land Acquisition shall provide the Group a good business opportunity in the property development industry in Jiangxi Province; and (iii) the Land Acquisition will expand the Group’s land reserve, enhancing its ability for sustainable development, in order to complete the Land Acquisition, the Directors consider that the entering into of the Land Use Rights Grant Contract and the Land Acquisition are in the ordinary and usual course of business of the Company and the terms of the Land Use Rights Grant Contract are on normal commercial terms which is fair and reasonable and in the interests of the Company and the Shareholders as a whole. LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Land Acquisition exceeds 5% but is less than 25%, the Land Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the announcement requirement, but is exempt from the circular and Shareholders’ approval requirements, under the Listing Rules. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the