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CIFI Holdings (Group) Co. Ltd. 旭輝控股（集團）有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock code: 00884)
DISCLOSEABLE AND CONNECTED TRANSACTIONS
FORMATION OF JOINT VENTURES IN RELATION TO RESIDENTIAL DEVELOPMENT PROJECTS IN SUZHOU, THE PRC
On 30 June 2017, the Group entered into the Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement with Henderson China (and its subsidiaries).
LUZHI EQUITY COOPERATION AGREEMENT
Pursuant to the Luzhi Equity Cooperation Agreement, the Company (through its subsidiary Suzhou Huizhe) and Henderson China will establish the Luzhi Project Company. Suzhou Huizhe succeeded in the bidding of the Luzhi Site located at the north side of Luzhi Road and the west side of Beigang River Road, Luzhi Town, Wuzhong District, Suzhou, Jiangsu Province, the PRC (中國江蘇省蘇州市吳中區甪直大道北側、北港江路西側) with a total planned gross floor area of 42,863.7 sq.m. for the land cost of RMB545,703,123. Upon completion of the Luzhi Equity Cooperation Agreement, the Luzhi Project Company will be owned as to 51% by Suzhou Huizhe and 49% by Henderson China, and will undertake the development of the Luzhi Site.
The average land cost of Luzhi Site is approximately RMB12,731 per sq.m. The Group’s total investment amount in its attributable interest for the Luzhi Site (including land cost, expected further commitment of construction, other development costs, interest and selling expenses) is estimated to be RMB465 million.
– 1 – XUKOU EQUITY COOPERATION AGREEMENT
Pursuant to the Xukou Equity Cooperation Agreement, the Company (through its subsidiary Xu Yao) will subscribe for and acquire 49% interest in the equity and shareholders’ loan of Heshan for a total consideration of HK$806,024,463.16. Henshan succeeded in bidding of the Xukou Site situated in Xukou Town, Wuzhong District, Suzhou, Jiangsu Province, the PRC (中國江蘇省蘇州市吳中區胥口鎮) with a total planned gross floor area of 121,279.5 sq.m. for the land cost of RMB1,442,322,666. Upon completion of the Xukou Equity Cooperation Agreement, Heshan will become a joint venture owned as to 49% by the Group and 51% by Henderson China and will hold the Xuwu Project Company for the development of the Xukou Site.
The average land cost of the Xukou Site to the Group as implied by the terms of the Xukou Equity Cooperation is approximately RMB11,893 per sq.m. The Group’s total investment amount in its attributable interest for the Xukou Site (including land cost, expected further commitment of construction, other development costs, interest and selling expenses) is estimated to be RMB1,130 million.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Henderson China owns 50% interest in Xu An, a subsidiary of the Company, which does not fall within the ambit of insignificant subsidiary under Rule 14A.09(1) of the Listing Rules. Accordingly, Henderson China is a connected person of the Company at its subsidiary level. The Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement therefore constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The Board has approved the Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement. None of the Directors have any material interest in such transactions and as such no Directors have abstained from voting on the resolutions of the Board approving such transactions. The Directors (including the independent non-executive Directors) are of the view that the Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement were entered into on normal commercial terms, and their respective terms and conditions are fair and reasonable and in the ordinary and usual course of business of the Company and such transactions are in the interests of the Company and the Shareholders as a whole.
As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Xukou Equity Cooperation Agreement are above 5% but all are less than 25%, the Xukou Equity Cooperation Agreement constitutes a discloseable and connected transaction for the Company. As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Luzhi Equity Cooperation Agreement are above 1% but all are less than 5%, the Luzhi Equity Cooperation Agreement constitutes a connected transaction for the Company. As Henderson China is a connected person of the Company only because of its connection with the Company’s subsidiary, namely Xu An, the Xukou Equity Cooperation Agreement and the Luzhi Equity Corporation Agreement are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but are exempt from the circular, independent financial advice and shareholders’ approval requirements under Rule 14A.101 of the Listing Rules. The transactions under the Xukou Equity Cooperation Agreement, even if aggregated with that under the Luzhi Equity Cooperation Agreement, are still classified as discloseable transaction which are subject to notification and announcement requirements under Chapter 14 of the Listing Rules.
– 2 – FORMATION OF JOINT VENTURES
(1) LUZHI EQUITY COOPERATION AGREEMENT
Date: 30 June 2017
Parties: (i) Henderson China
(ii) the Company, as guarantor to Suzhou Huizhe
(iii) CIFI (PRC), being a wholly-owned subsidiary of the Company
(iv) Suzhou Huizhe, being a wholly-owned subsidiary of the Company
Subject matter: Suzhou Huizhe is a wholly-owned subsidiary of CIFI (PRC) which is in turn a wholly-owned subsidiary of the Company. Suzhou Huizhe succeeded in the bidding of the Luzhi Site offered for sale by Suzhou Municipal Bureau of National Land and Resource (蘇 州市國土資源局) on 12 June 2017. Suzhou Huizhe and Henderson China (or its designated subsidiary) will then submit the application to relevant PRC authority for the establishment of the Luzhi Project Company which is intended to be owned by Suzhou Huizhe and Henderson China (or its designated subsidiary) as to 51% and 49% respectively for the development of the Luzhi Site.
Information of the Luzhi Site
Site location: Located at the north side of Luzhi Road and the west side of Beigang River Road, Luzhi Town, Wuzhong District, Suzhou, Jiangsu Province, the PRC (中國江蘇省蘇州市 吳中區甪直鎮甪直大道北側、北港江路西側)
Site area: 28,575.8 sq.m.
Planned gross floor area: 42,863.7 sq.m.
Term of land use rights: 70 years for residential
Land premium: Land cost of RMB545,703,123 (comprising land premium and related government charges), of which RMB105,000,000 has been already paid by Suzhou Huizhe as deposit while the remaining will be paid after the Land Use Rights Grant Contract is signed. The average land cost is approximately RMB12,731 per sq.m.
– 3 – Total capital commitment The Group’s total investment amount in its attributable payable by the Group: interest for the Luzhi Site (including land cost, expected further commitment of construction, other development costs, interest and selling expenses) is estimated to be RMB465 million.
The capital commitment amount was determined after arm’s length negotiation between the parties with reference to the land premium payable for the Luzhi Site and the development plan and related cost of the Luzhi Site. The capital contribution will be financed by internal resources of the Group.
Joint venture arrangement in respect of the Luzhi Project Company
Upon completion of the formation of the Luzhi Project Company, Luzhi Project Company will be beneficially owned as to 51% by Suzhou Huizhe and 49% by Henderson China (or its designated subsidiary). Subject to approval progress of relevant PRC authority, the development costs of the Luzhi Site shall be funded by shareholders’ loans and/or external bank financing as deemed suitable by the management and the board of directors of Luzhi Project Company.
Composition of the board of directors of the Luzhi Project Company
The board of directors of the Luzhi Project Company will comprise 5 directors, 3 of whom will be nominated by the Group and the remaining 2 of whom will be nominated by Henderson China. The Luzhi Project Company will also has 2 supervisors and each of the Group and Henderson China has right to nominate one supervisor. According to the Luzhi Equity Cooperation Agreement, unanimous consent of the directors is required for major decision relating to the development of the Luzhi Site and operation of the Luzhi Project Company, including but not limited to change in development plan and budget and financing arrangement.
(2) XUKOU EQUITY COOPERATION AGREEMENT
Date: 30 June 2017
Parties: (i) Henderson China, as guarantor to Westar
(ii) the Company, as guarantor to Xu Yao
(iii) Westar, being a wholly-owned subsidiary of Henderson China
(iv) Xu Yao, being a wholly-owned subsidiary of the Company
(v) Henshan
– 4 – Subject matter: As at the date of this announcement, Westar wholly owns one share in Henshan, being the entire issued share capital of Henshan. Westar is in turn wholly owned by Henderson China. Henshan currently owes Westar the Henshan Shareholder’s Loan for the total sum of HK$1,644,947,784. Henshan succeeded in the bidding of the Xukou Site offered for sale by Suzhou Municipal Bureau of National Land and Resource (蘇州市國土資源局) on 16 February 2017 and entered into the Land Use Rights Grant Contract on 21 March 2017. Henshan has established the Xuwu Project Company in the PRC with the registered capital of US$213 million for the development of the Xukou Site. To the best knowledge of the Directors based on the available information, other than the interest in the Xukou Site, Henshan has no other assets nor conducted any other business operation as at the date of this announcement.
Henshan is proposed to allot and issue 99 new shares, of which 50 shares will be subscribed by Westar and 49 shares will be subscribed by Xu Yao. Xu Yao will further acquire 49% of the Henshan Shareholder’s Loan. Henshan will then be owned as to 49% by Xu Yao and 51% by Westar.
Consideration HK$806,024,463.16 representing HK$49 for the equity interest in for the Henshan and HK$806,024,414.16 for assignment of 49% of the subscription Henshan Shareholder’s Loan. As at the date of this announcement, of shares and a deposit of USD$43 million has already been paid by the Group assignment of which will be treated as part of the consideration paid pursuant the Henshan to the Xukou Equity Cooperation Agreement. The remaining sum Shareholder’s would be payable on 30 September 2017 (or any other date to be Loan: mutually agreed by the Company and Henderson China).
Financial information of Henshan
Based on the audited financial statement of Henshan for the two years ended 31 December 2016 prepared under the Hong Kong Financial Reporting Standards, the financial information of Henshan is as follows:
For the year ended For the year ended 31 December 2016 31 December 2015
Net loss before and after taxation HK$9,005 HK$9,300
As at As at 31 December 2016 31 December 2015
Net liabilities HK$80,734 HK$71,729
– 5 – Information of the Xukou Site
Site location: Located at the north side of Sunwu Road and the south side of Maopeng Road, Xukou Town, Wuzhong District, Suzhou, Jiangsu Province, the PRC (中國江蘇省蘇州市 吳中區胥口鎮孫武路北側、茅蓬路南側)
Site area: 48,511.8 sq.m.
Planned gross floor area: 121,279.5 sq.m.
Term of land use rights: 70 years for residential
Land premium: Land cost of RMB1,442,322,666 (comparing land premium and related government charges), which has already been fully paid.
Implied land cost of Based on the consideration under the Xukou Equity the transaction: Cooperation Agreement and the Group’s attributable planned gross floor area, the implied average land cost to the Group is approximately RMB11,893 per sq.m..
Total capital commitment The Group’s total investment amount in its attributable payable by the Group: interest for the Xukou Site (including land cost, expected further commitment of construction, other development costs, interest and selling expenses) is estimated to be RMB1,130 million.
The consideration for the Xukou Equity Cooperation Agreement and the terms of the Xukou Equity Cooperation Agreement were determined after arm’s length negotiation between the parties with reference to the land premium payable for the Xukou Site, the market land prices in comparable locations as well as the financial information of Henshan. The capital contribution under the Xukou Equity Cooperation Agreement will be financed by internal resources of the Group.
Joint venture arrangement in respect of Henshan
Upon completion of the Xukou Equity Cooperation Agreement, Henshan will be beneficially owned as to 49% by the Group and 51% by Henderson China. The Company and Henderson China will, through the joint venture arrangement of Henshan, jointly develop the Xukou Site through Xuwu Project Company established by Henshan.
The development costs of the Xukou Site shall be funded by shareholders’ loans and/ or external bank financing as deemed suitable by the management and the board of directors of the Xuwu Project Company.
– 6 – Composition of the board of directors of Henshan and the Xuwu Project Company
Upon completion of the allotment, the board of directors of each of Henshan and the Xuwu Project Company will comprise 5 directors, 2 of whom will be nominated by the Group and the remaining 3 of whom will be nominated by Henderson China. Unanimous consent of the directors is required for major decision relating to the development of the Xukou Site and operation of the Xuwu Project Company, including but not limited to change in development plan and budget and financing arrangement.
INFORMATION OF HENDERSON CHINA AND HENSHAN
Henderson China is a company incorporated in Hong Kong and wholly-owned by Henderson Land. Henderson Land is an investment holding company and its subsidiaries are principally engaged in the businesses of property development and investment, construction, hotel operation, finance, department store operation, project management, investment holding and property management.
Henshan is a company incorporated in Hong Kong with limited liability. Henshan is a wholly- owned subsidiary of Henderson China as at the date of this announcement and is engaged in investment holding of the Xuwu Project Company.
REASONS FOR AND BENEFIT OF THE EQUITY COOPERATION AGREEMENTS
The Group is principally engaged in the property development and property investment in the PRC. It has been the strategy of the Group to cooperate with renowned property developers for development of particular project so as to achieve synergy benefits and diversify its financial exposure. Henderson China is a trusted and long-term strategic partner of the Group.
The Luzhi Equity Corporation Agreement and the Xukou Equity Cooperation Agreement enable the Group to further strengthen its cooperation with Henderson China and to enjoy the economic benefits and synergies of the two property development projects in Suzhou, the PRC.
Upon the completion of the transactions, the Group and Henderson China will be entitled to share the profit or bear the loss of the Joint Ventures in proportion to their respective equity interest therein.
The Joint Ventures are intended to be accounted for as non-subsidiaries of the Group, which will not be consolidated into the financial statements of the Group.
The Directors consider that the Luzhi Equity Corporation Agreement and the Xukou Equity Cooperation Agreement have been entered into on normal commercial terms, and the terms and conditions therein are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
– 7 – LISTING RULES IMPLICATIONS
As at the date of this announcement, Henderson China owns 50% interest in Xu An, a subsidiary of the Company, which does not fall within the ambit of insignificant subsidiary under Rule 14A.09(1) of the Listing Rules. Accordingly, Henderson China is a connected person of the Company at its subsidiary level. The Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement therefore constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The Board has approved the Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement. None of the Directors have any material interest in such transactions and as such no Directors have abstained from voting on the resolutions of the Board approving such transactions. The Directors (including the independent non-executive Directors) are of the view that the Luzhi Equity Cooperation Agreement and the Xukou Equity Cooperation Agreement were entered into on normal commercial terms, and their respective terms and conditions are fair and reasonable and in the ordinary and usual course of business of the Company and such transactions are in the interests of the Company and the Shareholders as a whole.
As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Xukou Equity Cooperation Agreement are above 5% but all are less than 25%, the Xukou Equity Cooperation Agreement constitutes a discloseable and connected transaction for the Company. As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Luzhi Equity Cooperation Agreement are above 1% but all are less than 5%, the Luzhi Equity Cooperation Agreement constitutes a connected transaction for the Company. As Henderson China is a connected person of the Company only because of its connection with the Company’s subsidiary, namely Xu An, the Xukou Equity Cooperation Agreement and the Luzhi Equity Corporation Agreement are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but are exempt from the circular, independent financial advice and shareholders’ approval requirements under Rule 14A.101 of the Listing Rules. The transactions under the Xukou Equity Cooperation Agreement, even if aggregated with that under the Luzhi Equity Cooperation Agreement, are still classified as discloseable transaction which are subject to notification and announcement requirements under Chapter 14 of the Listing Rules.
DEFINITIONS
In this announcement, the following expressions have the following meanings, unless the context requires otherwise:
“associates” has the same meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“CIFI (PRC)” CIFI Group Co., Ltd.* (旭輝集團股份有限公司), a joint stock company established in the PRC with limited liability and a wholly-owned subsidiary of the Company
– 8 – “Company” CIFI Holdings (Group) Co. Ltd. (旭輝控股（集團）有限公 司), a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange
“connected person” has the same meaning ascribed to it under the Listing Rules
“Directors” the directors of the Company
“Group” the Company and its subsidiaries
“Henderson China” Henderson China Properties Limited (恒基中國地產有限 公司), a company incorporated in Hong Kong with limited liability and wholly-owned by Henderson Land
“Henderson Land” Henderson Land Development Company Limited (恒基兆業 地產有限公司), a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (stock code: 00012)
“Henshan” Henshan Development Limited (恒山發展有限公司), a company incorporated in Hong Kong with limited liability and currently a wholly-owned subsidiary of Henderson China, which will become a joint venture to be jointly owned by the Company and Henderson China as to 49% and 51% respectively upon completion of the Xukou Equity Cooperation Agreement
“Henshan Shareholder’s Loan” the shareholder’s loan for the total amount of HK$1,644.9 million (equivalent to approximately RMB1,405.9 million) currently due by Henshan to Westar as at the date of this announcement
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Joint Ventures” collectively, Henshan and the Luzhi Project Company
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Luzhi Equity Cooperation the cooperation agreement dated 30 June 2017 entered into Agreement” between the Company, CIFI (PRC), Suzhou Huizhe and Henderson China in relation to the formation of the Luzhi Project Company
– 9 – “Luzhi Project Company” a sino-foreign equity joint venture to be established in the PRC and proposed to be owned by Suzhou Huizhe as to 51% of equity interest and Henderson China (or its designated subsidiary) as to 49% of equity interest for the development of the Luzhi Site
“Luzhi Site” a site located at the north side of Luzhi Road and the west side of Beigang River Road, Luzhi Town, Wuzhong District, Suzhou, Jiangsu Province, the PRC (中國江蘇省蘇州市吳中 區甪直鎮甪直大道北側、北港江路西側), details of which are set out in the section headed “Information of the Luzhi Site” of this announcement
“percentage ratios” has the same meaning ascribed to it under the Listing Rules
“PRC” the People’s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region and Taiwan
“RMB” Renminbi, the lawful currency of the PRC
“Shareholders” holders of the Shares
“Share(s)” the ordinary share(s) of HK$0.1 each of the Company
“sq.m.” square metre(s)
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Suzhou Huizhe” Suzhou Huizhe Business Consultancy Co., Ltd.* (蘇州輝 哲商務諮詢有限公司), a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company
“US$” United States dollar, the lawful currency of the United States of America
“Westar” Westar Investment Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly- owned subsidiary of Henderson China
“Xu An” Xu An Co. Limited (旭安有限公司), a company incorporated in the British Virgin Islands with limited liability and a non- wholly owned subsidiary of the Company
“Xu Yao” Xu Yao Co. Limited (旭耀有限公司), a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company
– 10 – “Xukou Equity Cooperation the cooperation agreement dated 30 June 2017 entered into Agreement” between the Company, Xu Yao, Henshan, Henderson China and Westar in relation to the allotment of 49 new shares by Henshan to Xu Yao and assignment of 49% of the Henshan Shareholder’s Loan by Westar to Xu Yao
“Xukou Site” a site located at the north side of Sunwu Road and the south side of Maopeng Road, Xukou Town, Wuzhong District, Suzhou, Jiangsu Province, the PRC (中國江蘇省蘇州市吳 中區胥口鎮孫武路北側、茅蓬路南側), details of which are set out in the section headed “Information of the Xukou Site” of this announcement
“Xuwu Project Company” Suzhou Xuwu Property Development Co., Ltd.* (蘇州旭吳 房地產開發有限公司), a company established in the PRC by Henshan for the development of the Xukou Site
“%” per cent.
By order of the Board CIFI Holdings (Group) Co. Ltd. LIN Zhong Chairman
Hong Kong, 30 June 2017
As at the date of this announcement, the Board comprises Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng as executive Directors and Mr. GU Yunchang, Mr. ZHANG Yongyue and Mr. TAN Wee Seng as independent non-executive Directors.
* For identification purpose only
** The exchange rates of (i) US$1.00 to HK$7.80; (ii) US$1.00 to RMB6.67; and (iii) RMB1.00 to HK$1.17 have been used for illustration purpose in this announcement.
– 11 –