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.
KONGSUNHOLDINGSLIMITED 江 山 控 股 有 限 公 司 (Incorporated in Hong Kong with limited liability) (Stock Code: 295)
VERYSUBSTANTIALDISPOSALS AND RESUMPTIONOFTRADING
THEDISPOSALS
On 15 November 2019 (after trading hours of the Stock Exchange), Kong Sun Yongtai, a wholly-owned subsidiary of the Company, the Purchaser and the Project Companies, entered into the Disposal Agreements, pursuant to which Kong Sun Yongtai (together with Junsheng Jingshi, as the case may be), conditionally agreed to sell the entire equity interests in the Project Companies (which hold in total ten (10) solar power projects in the PRC) to the Purchaser for a total consideration (comprising the Equity Consideration and the repayment of the Related Party Debts) of approximately RMB1,166,400,000.
Upon completion of the Disposals, the Project Companies will cease to be subsidiaries of the Company and their financial statements will no longer be consolidated into the Group’s financial statements.
LISTINGRULESIMPLICATIONS
As the highest of the applicable percentage ratios set forth under Rule 14.07 of the Listing Rules in respect of the Disposals, on an aggregated basis, exceeds 75%, the Disposals constitute very substantial disposals for the Company under Chapter 14 of the Listing Rules and are therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.
– 1 – GENERAL
The EGM will be convened and held for the Shareholders to consider and, if thought fit, to approve each of the Disposal Agreements and the transactions contemplated thereunder. Insofar as the Company is aware, none of the Shareholders has any material interest in the Disposals. Hence, no Shareholder is required to abstain from voting on the resolutions in relation to the Disposal Agreements and the transactions contemplated thereunder at the EGM.
A circular containing, among other things, further details of the Disposals, the financial information of the Group, the financial information and the valuation reports of the Project Companies, the notice convening the EGM and other information as required under the Listing Rules is expected to be despatched to the Shareholders on or before 31 December 2019 which is more than 15 business days after the publication of this announcement as additional time is required to prepare the information to be included in the circular.
RESUMPTIONOFTRADING
At the request of the Company, trading in the Shares on the Stock Exchange has been halted with effect from 9:00 a.m. on Monday, 18 November 2019 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange from 9:00 a.m. on Wednesday, 27 November 2019.
Shareholders and potential investors should note that completion of the Disposals is conditional upon satisfaction of certain condition precedent as set out in this announcement. Accordingly, the Disposals may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares and other securities of the Company.
THEDISPOSALS
On 15 November 2019 (after trading hours of the Stock Exchange), Kong Sun Yongtai, a wholly-owned subsidiary of the Company, the Purchaser and the Project Companies, entered into the Disposal Agreements, pursuant to which Kong Sun Yongtai (together with Junsheng Jingshi, as the case may be) conditionally agreed to sell the entire equity interests in the Project Companies (which hold in total ten (10) solar power projects in the PRC) to the Purchaser for a total consideration (comprising the Equity Consideration and the repayment of the Related Party Debts) of approximately RMB1,166,400,000.
– 2 – The principal terms of the Disposal Agreements are summarized as follows:
PRINCIPALTERMSOFTHEDISPOSALAGREEMENTS
(1) Taike Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Taike.
Subject Matter
The entire equity interest in Taike.
Consideration
Approximately RMB172,465,000, comprising the Taike Equity Consideration and repayment of the Taike Related Party Debts.
(A) Taike Equity Consideration
The consideration for the entire equity interest in Taike (the ‘‘Taike Equity Consideration’’) is approximately RMB61,538,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB6,154,000 (the ‘‘Taike Deposit’’), representing approximately 10% of the Taike Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Taike Deposit shall be released from the Escrow Account and be paid into the Designated Account, and the Purchaser shall pay a sum of approximately RMB36,923,000, representing approximately 60% of the Taike Equity Consideration, to the Designated Account;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB12,345,000, representing approximately 20.06% of the Taike Equity Consideration, to the Designated Account; and
– 3 – (iv) the balance of approximately RMB6,116,000, representing approximately 9.94% of the Taike Equity Consideration, shall be paid by the Purchaser to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Taike Agreement, the Purchaser shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Taike Disposal, the Purchaser shall pay the sum of approximately RMB3,496,000 in one lump sum to the Designated Account, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB110,927,000 (after set-off against relevant amounts due to Taike and taking into account the Taike Dividend) was due and payable by Taike to Kong Sun Yongtai and its affiliates (the ‘‘Taike Related Party Debts’’).
The Taike Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Taike after completion of the Taike Disposal in the following manner:
(i) within twenty (20) business days after completion of the Taike Disposal, Taike shall pay a sum of approximately RMB18,523,000 to the Designated Account; and
(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Taike shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB92,404,000.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Taike during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
– 4 – During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Taike will continue its normal business operations in accordance with its past practices and, save as permitted under the Taike Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Taike without the prior written consent of the Purchaser.
Taike shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB31,643,000, representing the accumulated distributable profits of Taike up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Taike (the ‘‘Taike Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Taike has been pledged in favour of CDB Leasing to secure the finance lease entered into between Taike and CDB Leasing over the assets of the Lanzhou Taike Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Taike under the finance lease was approximately RMB211,860,000.
Pursuant to the Taike Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Taike Disposal, and (b) the Purchaser shall provide relevant documents as may be required by CDB Leasing for the release of equity pledge and arrange for necessary re-financing facilities for Taike.
Termination of Guarantee
By no later than twenty (20) business days after completion of the Taike Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates to secure the borrowings of Taike. The Purchaser and Taike shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Taike Disposal as a result of any breach by Taike under the relevant financing arrangement prior to the release of guarantee.
(2) Huaguang Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai, as vendor of 1.75% equity interest in Huaguang;
(iii) Junsheng Jingshi, as vendor of 98.25% equity interest in Huaguang; and
(iv) Huaguang.
– 5 – Subject Matter
The entire equity interest in Huaguang.
Consideration
Approximately RMB224,909,000, comprising the Huaguang Equity Consideration and repayment of the Huaguang Related Party Debts.
(A) Huaguang Equity Consideration
The consideration for the entire equity interest in Huaguang (the ‘‘Huaguang Equity Consideration’’) is approximately RMB224,801,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB22,480,000 (the ‘‘Huaguang Deposit’’), representing approximately 10% of the Huaguang Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Huaguang Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB134,881,000, representing approximately 60% of the Huaguang Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Purchaser shall pay a sum of approximately RMB80,485,000, representing approximately 35.80% of the Huaguang Equity Consideration, to the Designated Account;
(b) within five (5) business days after Huaguang has received each payment of state renewable energy subsidy granted to it prior to the Reference Date, the Purchaser shall pay the equivalent amount so received by Huaguang, up to approximately RMB54,396,000, representing approximately 24.20% of the Huaguang Equity Consideration, to the Designated Account;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB63,605,000, representing approximately 28.29% of the Huaguang Equity Consideration, to the Designated Account; and
– 6 – (iv) the balance of approximately RMB3,835,000, representing approximately 1.71% of the Huaguang Equity Consideration, shall be paid by the Purchaser to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Huaguang Agreement, the Purchaser shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Huaguang Disposal, the Purchaser shall pay the sum of approximately RMB1,225,000 in one lump sum to the Designated Account, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB108,000 (after set- off against relevant amounts due to Huaguang and taking into account the Huaguang Dividend) was due and payable by Huaguang to Kong Sun Yongtai and its affiliates (the ‘‘Huaguang Related Party Debts’’).
The Huaguang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, and subject further to the total amount of state renewable energy subsidies that Huaguang has received having exceeded approximately RMB54,396,000 on a cumulative basis, shall be repaid by Huaguang within five (5) business days after it receives further amount of state renewable energy subsidies.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Huaguang during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
During the Transition Period, Kong Sun Yongtai and Junsheng Jingshi shall ensure that, among other things, Huaguang will continue its normal business operations in accordance with its past practices and, save as permitted under the Huaguang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Huaguang without the prior written consent of the Purchaser.
Huaguang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB31,794,000, representing the accumulated distributable profits of Huaguang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Huaguang (the ‘‘Huaguang Dividend’’).
– 7 – (3) Xingguang Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai, as vendor of 0.38% equity interest in Xingguang;
(iii) Junsheng Jingshi, as vendor of 99.62% equity interest in Xingguang; and
(iv) Xingguang.
Subject Matter
The entire equity interest in Xingguang.
Consideration
Approximately RMB226,384,000, comprising the Xingguang Equity Consideration and repayment of the Xingguang Related Party Debts.
(A) Xingguang Equity Consideration
The consideration for the entire equity interest in Xingguang (the ‘‘Xingguang Equity Consideration’’) is approximately RMB231,263,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB23,126,000 (the ‘‘Xingguang Deposit’’), representing approximately 10% of the Xingguang Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Xingguang Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB138,758,000, representing approximately 60% of the Xingguang Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Purchaser shall pay a sum of approximately RMB84,254,000, representing approximately 36.43% of the Xingguang Equity Consideration, to the Designated Account;
– 8 – (b) within five (5) business days after Xingguang has received each payment of state renewable energy subsidy granted to it prior to the Reference Date, the Purchaser shall pay the equivalent amount so received by Xingguang, up to approximately RMB54,504,000, representing approximately 23.57% of the Xingguang Equity Consideration, to the Designated Account;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB66,363,000, representing approximately 28.70% of the Xingguang Equity Consideration, to the Designated Account (the ‘‘Xingguang Further Payment’’); and
(iv) the balance of approximately RMB3,016,000, representing approximately 1.30% of the Xingguang Equity Consideration, shall be paid by the Purchaser to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Xingguang Agreement, the Purchaser shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Xingguang Disposal, the Purchaser shall pay the sum of approximately RMB1,225,000 in one lump sum to the Designated Account, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB4,879,000 (after set- off against relevant amounts due from Xingguang and taking into account the Xingguang Dividend) was due and payable to Xingguang by Kong Sun Yongtai and Junsheng Jingshi and their affiliates (the ‘‘Xingguang Related Party Debts’’).
The Xingguang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be repaid by Kong Sun Yongtai and Junsheng Jingshi, without interest, within ten (10) business days after they have received the Xingguang Further Payment.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Xingguang during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
– 9 – During the Transition Period, Kong Sun Yongtai and Junsheng Jingshi shall ensure that, among other things, Xingguang will continue its normal business operations in accordance with its past practices and, save as permitted under the Xingguang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Xingguang without the prior written consent of the Purchaser.
Xingguang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB38,219,000, representing the accumulated distributable profits of Xingguang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Xingguang (the ‘‘Xingguang Dividend’’).
(4) Zhaoxiang Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Zhaoxiang.
Subject Matter
The entire equity interest in Zhaoxiang.
Consideration
Approximately RMB102,677,000, comprising the Zhaoxiang Equity Consideration and repayment of the Zhaoxiang Related Party Debts.
(A) Zhaoxiang Equity Consideration
The consideration for the entire equity interest in Zhaoxiang (the ‘‘Zhaoxiang Equity Consideration’’) is approximately RMB7,195,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB720,000 (the ‘‘Zhaoxiang Deposit’’), representing approximately 10% of the Zhaoxiang Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Zhaoxiang Deposit shall be released from the Escrow Account and be paid into the Designated Account, and the Purchaser shall pay a sum of approximately RMB4,317,000, representing approximately 60% of the Zhaoxiang Equity Consideration, to the Designated Account; and
– 10 – (iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB2,158,000, representing approximately 30% of the Zhaoxiang Equity Consideration, to the Designated Account.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB95,482,000 (after set-off against relevant amounts due to Zhaoxiang and taking into account the Zhaoxiang Dividend) was due and payable by Zhaoxiang to Kong Sun Yongtai and its affiliates (the ‘‘Zhaoxiang Related Party Debts’’).
The Zhaoxiang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Zhaoxiang after completion of the Zhaoxiang Disposal in the following manner:
(i) within twenty (20) business days after completion of the Zhaoxiang Disposal, Zhaoxiang shall pay a sum of approximately RMB44,138,000 to the Designated Account;
(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Zhaoxiang shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB45,968,000; and
(iii) approximately RMB5,376,000 shall be paid by the Purchaser to Kong Sun Yongtai after completion of the Zhaoxiang Disposal in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Zhaoxiang Agreement, the Purchaser shall pay the corresponding agreed sum to Kong Sun Yongtai; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Zhaoxiang Disposal, the Purchaser shall pay the sum of approximately RMB3,186,000 in one lump sum to Kong Sun Yongtai, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
Arrangements during the Transition Period
Any profits and losses incurred and any changes to the net assets of Zhaoxiang during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
– 11 – During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Zhaoxiang will continue its normal business operations in accordance with its past practices and, save as permitted under the Zhaoxiang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Zhaoxiang without the prior written consent of the Purchaser.
Zhaoxiang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB8,079,000, representing the accumulated distributable profits of Zhaoxiang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Zhaoxiang (the ‘‘Zhaoxiang Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Zhaoxiang has been pledged in favour of CDB Leasing to secure the finance lease entered into between Zhaoxiang and CDB Leasing over the assets of the Hami Zhaoxiang Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Zhaoxiang under the finance lease was approximately RMB67,810,000.
Pursuant to the Zhaoxiang Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Zhaoxiang Disposal, (b) the Purchaser shall provide relevant documents as may be required by CDB Leasing for the release of equity pledge and arrange for necessary re-financing facilities for Zhaoxiang.
Termination of Guarantee
By no later than twenty (20) business days after completion of the Zhaoxiang Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates or Zhongke Hengyuan to secure the borrowings of Zhaoxiang. The Purchaser and Zhaoxiang shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Zhaoxiang Disposal as a result of any breach by Zhaoxiang under the relevant financing arrangement prior to the release of guarantee.
(5) Xushuang Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Xushuang.
Subject Matter
The entire equity interest in Xushuang.
– 12 – Consideration
Approximately RMB100,169,000, comprising the Xushuang Equity Consideration and repayment of the Xushuang Related Party Debts.
(A) Xushuang Equity Consideration
Approximately RMB5,275,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB528,000 (the ‘‘Xushuang Deposit’’), representing approximately 10% of the Xushuang Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Xushuang Deposit shall be released from the Escrow Account and be paid into the Designated Account, and the Purchaser shall pay a sum of approximately RMB3,165,000, representing approximately 60% of the Xushuang Equity Consideration, to the Designated Account; and
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB1,582,000, representing approximately 30% of the Xushuang Equity Consideration, to the Designated Account.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB94,894,000 (after set-off against relevant amounts due to Xushuang and taking into account the Xushuang Dividend) was due and payable by Xushuang to Kong Sun Yongtai and its affiliates (the ‘‘Xushuang Related Party Debts’’).
The Xushuang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Xushuang after completion of the Xushuang Disposal in the following manner:
(i) within twenty (20) business days after completion of the Xushuang Disposal, Xushuang shall pay a sum of approximately RMB41,188,000 to the Designated Account;
(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Xushuang shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB44,367,000; and
– 13 – (iii) approximately RMB9,339,000 shall be paid by the Purchaser to Kong Sun Yongtai after completion of the Xushuang Disposal in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Xushuang Agreement, the Purchaser shall pay the corresponding agreed sum to Kong Sun Yongtai; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Xushuang Disposal, the Purchaser shall pay the sum of approximately RMB6,127,000 in one lump sum to Kong Sun Yongtai, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Xushuang during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Xushuang will continue its normal business operations in accordance with its past practices and, save as permitted under the Xushuang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Xushuang without the prior written consent of the Purchaser.
Xushuang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB10,638,000, representing the accumulated distributable profits of Xushuang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Xushuang (the ‘‘Xushuang Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Xushuang has been pledged in favour of Huaxia Finance to secure the finance lease entered into between Xushuang and Huaxia Finance over the assets of the Hejing Xushuang Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Xushuang under the finance lease was approximately RMB89,920,000.
Pursuant to the Xushuang Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Xushuang Disposal, (b) the Purchaser shall provide relevant documents as may be required by Huaxia Finance for the release of equity pledge and arrange for necessary re-financing facilities for Xushuang.
– 14 – Termination of Guarantee
By no later than twenty (20) business days after completion of the Xushuang Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates to secure the borrowings of Xushuang. The Purchaser and Xushuang shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Xushuang Disposal as a result of any breach by Xushuang under the relevant financing arrangement prior to the release of guarantee.
(6) Minghui Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Minghui.
Subject Matter
The entire equity interest in Minghui.
Consideration
Approximately RMB69,500,000, comprising the Minghui Equity Consideration and repayment of the Minghui Related Party Debts.
(A) Minghui Equity Consideration
Approximately RMB42,979,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB4,298,000 (the ‘‘Minghui Deposit’’), representing approximately 10% of the Minghui Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Minghui Deposit shall be released from the Escrow Account and be paid into the Designated Account;
– 15 – (ii) a sum of approximately RMB25,787,000, representing approximately 60% of the Minghui Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Purchaser shall pay a sum of approximately RMB11,867,000, representing approximately 27.61% of the Minghui Equity Consideration, to the Designated Account;
(b) within five (5) business days after Minghui having received the first payment of state renewable energy subsidy granted to it prior to the Reference Date, and subject to Minghui having set aside a specified amount thereof as Minghui Warranty Deposit (as defined below) for replacement of parts in the manner set out in the Minghui Agreement, the Purchaser shall pay an equivalent amount so received by Minghui to the Designated Account, up to the total amount of approximately RMB13,920,000, representing approximately 32.39% of the Minghui Equity Consideration;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB8,571,000, representing approximately 19.94% of the Minghui Equity Consideration, to the Designated Account; and
(iv) the balance of approximately RMB4,323,000, representing approximately 10.06% of the Minghui Equity Consideration, shall be paid by the Purchaser to the Designated Account in the following manner: within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Minghui Agreement, the Purchaser shall pay the corresponding agreed sum to the Designated Account.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB26,521,000 (after set-off against relevant amounts due to Minghui and taking into account the Minghui Dividend) was due and payable by Minghui to Kong Sun Yongtai and its affiliates (the ‘‘Minghui Related Party Debts’’).
The Minghui Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Minghui after completion of the Minghui Disposal in the following manner:
(i) subject to Minghui having set aside a sum of approximately RMB2,623,000 as warranty deposit for parts replacement purpose from payment received as state renewable energy subsidies that were granted to it prior to the Reference Date (the ‘‘Minghui Warranty Deposit’’), within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Minghui Disposal,
– 16 – Minghui shall release the Minghui Warranty Deposit in one lump sum to Kong Sun Yongtai, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, Minghui shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement; and
(ii) subject to the total amount of state renewable energy subsidies granted to Minghui prior to the Reference Date and which Minghui has received having exceeded approximately RMB16,543,000 on a cumulative basis, Minghui shall, within five (5) business days after it has received any further amount of state renewable energy subsidies, pay the equivalent amount so received to the Designated Account, up to the total amount of approximately RMB23,898,000.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Minghui during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Minghui will continue its normal business operations in accordance with its past practices and, save as permitted under the Minghui Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Minghui without the prior written consent of the Purchaser.
Minghui shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB26,958,000, representing the accumulated distributable profits of Minghui up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Minghui (the ‘‘Minghui Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Minghui has been pledged in favour of Hebei Finance to secure the finance lease entered into between Minghui and Hebei Finance over the assets of the Julu Minghui Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Minghui under the finance lease was approximately RMB111,970,000.
Pursuant to the Minghui Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Minghui Disposal, (b) the Purchaser shall provide relevant documents as may be required by Hebei Finance for the release of equity pledge and arrange for necessary re-financing facilities for Minghui.
Termination of Guarantee
By no later than twenty (20) business days after completion of the Minghui Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates to secure the borrowings of Minghui. The Purchaser and Minghui shall be jointly and severally liable to these guarantors for any liabilities that
– 17 – may be incurred under any such guarantee after completion of the Minghui Disposal as a result of any breach by Minghui under the relevant financing arrangement prior to the release of guarantee.
(7) Xinhui Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Xinhui.
Subject Matter
The entire equity interest in Xinhui.
Consideration
Approximately RMB96,272,000, comprising the Xinhui Equity Consideration and repayment of the Xinhui Related Party Debts.
(A) Xinhui Equity Consideration
Approximately RMB26,004,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB2,600,000 (the ‘‘Xinhui Deposit’’), representing approximately 10% of the Xinhui Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Xinhui Deposit shall be released from the Escrow Account and be paid into the Designated Account, and the Purchaser shall pay a sum of approximately RMB15,603,000, representing approximately 60% of the Xinhui Equity Consideration, to the Designated Account; and
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB7,801,000, representing approximately 30% of the Xinhui Equity Consideration, to the Designated Account.
– 18 – (B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB70,268,000 (after set-off against relevant amounts due to Xinhui and taking into account the Xinhui Dividend) was due and payable by Xinhui to Kong Sun Yongtai and its affiliates (the ‘‘Xinhui Related Party Debts’’).
The Xinhui Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Xinhui in the following manner:
(i) within twenty (20) business days after completion of the Xinhui Disposal, Xinhui shall pay a sum of approximately RMB33,682,000 to the Designated Account;
(ii) within five (5) business days after each time it receives payment of state renewable energy subsidy granted to it prior to the Reference Date, Xinhui shall pay an equivalent amount so received to the Designated Account, up to the total amount of approximately RMB30,020,000; and
(iii) approximately RMB6,566,000 shall be paid by the Purchaser to Kong Sun Yongtai after completion of the Xinhui Disposal in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Xinhui Agreement, the Purchaser shall pay the corresponding agreed sum to Kong Sun Yongtai; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Xinhui Disposal, the Purchaser shall pay the sum of approximately RMB2,304,000 in one lump sum to Kong Sun Yongtai, provided that if Kong Sun Yongtai has not completed the replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Xinhui during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Xinhui will continue its normal business operations in accordance with its past practices and, save as permitted under the Xinhui Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Xinhui without the prior written consent of the Purchaser.
– 19 – Xinhui shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB20,206,000, representing the accumulated distributable profits of Xinhui up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Xinhui (the ‘‘Xinhui Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Xinhui has been pledged in favour of Huaxia Finance to secure the finance lease entered into between Xinhui and Huaxia Finance over the assets of the Liyang Xinhui Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Xinhui under the finance lease was approximately RMB74,980,000.
Pursuant to the Xinhui Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Xinhui Disposal, (b) the Purchaser shall provide relevant documents as may be required by Huaxia Finance for the release of equity pledge and arrange for necessary re-financing facilities for Xinhui.
Termination of Guarantee
By no later than twenty (20) business days after completion of the Xinhui Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates to secure the borrowings of Xinhui. The Purchaser and Xinhui shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Xinhui Disposal as a result of any breach by Xinhui under the relevant financing arrangement prior to the release of guarantee.
(8) Baoyuan Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Baoyuan.
Subject Matter
The entire equity interest in Baoyuan.
Consideration
Approximately RMB89,181,000, comprising the Baoyuan Equity Consideration and repayment of the Baoyuan Related Party Debts.
– 20 – (A) Baoyuan Equity Consideration
The consideration for the entire equity interest in Baoyuan (the ‘‘Baoyuan Equity Consideration’’) is approximately RMB61,047,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB6,105,000 (the ‘‘Baoyuan Deposit’’), representing approximately 10% of the Baoyuan Equity Consideration, shall be paid into the Escrow Account, and within ten (10) business days after the fulfillment of the Second Payment Conditions, the Baoyuan Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(ii) a sum of approximately RMB36,628,000, representing approximately 60% of the Baoyuan Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Purchaser shall pay a sum of approximately RMB28,475,000, representing approximately 46.64% of the Baoyuan Equity Consideration, to the Designated Account;
(b) within five (5) business days after each time Baoyuan receives payment of state renewable energy subsidy granted to it prior to the Reference Date, the Purchaser shall pay an equivalent amount so received by Baoyuan to the Designated Account, up to the total amount of approximately RMB8,153,000, representing approximately 13.36% of the Baoyuan Equity Consideration;
(iii) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB12,678,000, representing approximately 20.77% of the Baoyuan Equity Consideration, to the Designated Account; and
(iv) the balance of approximately RMB5,636,000, representing approximately 9.23% of the Baoyuan Equity Consideration, shall be paid by the Purchaser to the Designated Account in the following manner:
(a) within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Baoyuan Agreement, the Purchaser shall pay the corresponding agreed sum to the Designated Account; and
(b) within five (5) business days after Kong Sun Yongtai has replaced certain equipment of the project as identified by the technical consultant engaged by the Purchaser which replacement shall be completed within two years after the completion of the Baoyuan Disposal, the Purchaser shall pay the sum of approximately RMB3,186,000 in one lump sum to the Designated Account, provided that if Kong Sun Yongtai has not completed the
– 21 – replacement by the aforesaid deadline, the Purchaser shall not be required to make such payment and Kong Sun Yongtai shall not be required to complete such replacement.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB28,134,000 (after set-off against relevant amounts due to Baoyuan and taking into account the Baoyuan Dividend) was due and payable by Baoyuan to Kong Sun Yongtai and its affiliates (the ‘‘Baoyuan Related Party Debts’’).
The Baoyuan Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be settled by Baoyuan in the following manner: subject to the total amount of state renewable energy subsidies granted to Baoyuan prior to the Reference Date and which Baoyuan has received having exceeded approximately RMB8,153,000 on a cumulative basis, Baoyuan shall, within five (5) business days after it has received any further amount of state renewable energy subsidies, pay the equivalent amount so received to the Designated Account, up to the total amount of approximately RMB28,134,000.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Baoyuan during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Baoyuan will continue its normal business operations in accordance with its past practices and, save as permitted under the Baoyuan Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Baoyuan without the prior written consent of the Purchaser.
Baoyuan shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB19,744,000, representing the accumulated distributable profits of Baoyuan up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Baoyuan (the ‘‘Baoyuan Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Baoyuan has been pledged in favour of Sino Lease to secure the finance lease entered into between Baoyuan and Sino Lease over the assets of the Qianyan Baoyuan Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Baoyuan under the finance lease was approximately RMB100,890,000.
Pursuant to the Baoyuan Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Baoyuan Disposal, (b) the Purchaser shall provide relevant documents as may be required by Sino Lease for the release of equity pledge and arrange for necessary re-financing facilities for Baoyuan.
– 22 – Termination of Guarantee
By no later than twenty (20) business days after completion of the Baoyuan Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates to secure the borrowings of Baoyuan. The Purchaser and Baoyuan shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Baoyuan Disposal as a result of any breach by Baoyuan under the relevant financing arrangement prior to the release of guarantee.
(9) Yunyang Agreement
Date
15 November 2019
Parties
(i) the Purchaser;
(ii) Kong Sun Yongtai; and
(iii) Yunyang.
Subject Matter
The entire equity interest in Yunyang.
Consideration
Approximately RMB84,842,000, comprising the Yunyang Equity Consideration and repayment of the Yunyang Related Party Debts.
(A) Yunyang Equity Consideration
The consideration for the entire equity interest in Yunyang (the ‘‘Yunyang Equity Consideration’’) is approximately RMB100,212,000, which shall be paid by the Purchaser in the following manner:
(i) within ten (10) business days after the fulfillment of the First Payment Conditions, a sum of approximately RMB10,021,000 (the ‘‘Yunyang Deposit’’), representing approximately 10% of the Yunyang Equity Consideration, shall be paid into the Escrow Account;
(ii) within ten (10) business days after the fulfillment of the Second Payment Conditions, the Yunyang Deposit shall be released from the Escrow Account and be paid into the Designated Account;
(iii) within five (5) business days after Yunyang having received the first payment of state renewable energy subsidy granted to it prior to the Reference Date, and subject to Yunyang having set aside approximately RMB21,900,000
– 23 – thereof as Yunyang warranty deposit for replacement of parts in the manner set out in the Yunyang Agreement, the Purchaser shall pay an equivalent amount so received by Yunyang to the Designated Account, up to the total amount of approximately RMB60,127,000 representing approximately 60% of the Yunyang Equity Consideration;
(iv) a sum of approximately RMB27,104,000 (the ‘‘Yunyang Further Payment’’), representing approximately 27.05% of the Yunyang Equity Consideration, shall be paid as follows:
(a) within ten (10) business days after the fulfillment of the Third Payment Conditions, the Purchaser shall pay a sum of approximately RMB23,780,000, representing approximately 23.73% of the Yunyang Equity Consideration, to the Designated Account; and
(b) within five (5) business days after each time Yunyang receives payment of state renewable energy subsidy granted to it prior to the Reference Date and provided that the accumulated amount of state renewable energy subsidy received by Kong Sun Yongtai under (iii) above having exceeded approximately RMB38,227,000, the Purchaser shall pay an equivalent amount so received by Yunyang to the Designated Account, up to the total amount of approximately RMB3,324,000, representing approximately 3.32% of the Yunyang Equity Consideration, to the Designated Account; and
(v) the balance of approximately RMB2,960,000 representing approximately 2.95% of the Yunyang Equity Consideration, shall be paid by the Purchaser to the Designated Account in the following manner: within ten (10) business days after obtaining each outstanding regulatory approval or completing each rectification work (as the case may be) as set out in the relevant schedule to the Yunyang Agreement, the Purchaser shall pay the corresponding agreed sum to the Designated Account.
(B) Repayment of Related Party Debts
As at the Reference Date, a net amount of approximately RMB15,370,000 (after set-off against relevant amounts due from Yunyang and taking into account the Yunyang Dividend) was due and payable by Kong Sun Yongtai and its affiliates to Yunyang (the ‘‘Yunyang Related Party Debts’’).
The Yunyang Related Party Debts, subject to adjustment for any net increase or decrease thereof during the Transition Period with reference to the Transition Period Audit, shall be repaid by Kong Sun Yongtai, without interest, within ten (10) business days after it has received the Yunyang Further Payment.
Arrangements during the Transition Period
Any profits generated and any losses incurred and any changes to the net assets of Yunyang during the Transition Period, subject to the Transition Period Audit, shall be borne by the Purchaser.
– 24 – During the Transition Period, Kong Sun Yongtai shall ensure that, among other things, Yunyang will continue its normal business operations in accordance with its past practices and, save as permitted under the Yunyang Agreement, no encumbrances or other third party rights will be created with respect to the equity interest in Yunyang without the prior written consent of the Purchaser.
Yunyang shall declare a dividend in favour of Kong Sun Yongtai in the sum of approximately RMB21,415,000, representing the accumulated distributable profits of Yunyang up to the Reference Date, which will be regarded as a dividend receivable by Kong Sun Yongtai from Yunyang (the ‘‘Yunyang Dividend’’).
Termination of Equity Pledge and Finance Lease
The entire equity interest in Yunyang has been pledged in favour of Hayin Finance to secure the finance lease entered into between Yunyang and Hayin Finance over the assets of the Suzhou Yunyang Project and the Suzhou Yunyang Yongqiao Project. As at the Reference Date, the total amount (including, among others, rental payments, interests and handling fees) payable by Yunyang under the finance lease was approximately RMB213,230,000.
Pursuant to the Yunyang Agreement, (a) Kong Sun Yongtai shall procure for release of the equity pledge prior to completion of the Yunyang Disposal, (b) the Purchaser shall provide relevant documents as may be required by Hayin Finance for the release of equity pledge and arrange for necessary re-financing facilities for Yunyang.
Termination of Guarantee
By no later than twenty (20) business days after completion of the Yunyang Disposal, the Purchaser shall procure for release of any outstanding guarantee provided by Kong Sun Yongtai and its affiliates to secure the borrowings of Yunyang. The Purchaser and Yunyang shall be jointly and severally liable to these guarantors for any liabilities that may be incurred under any such guarantee after completion of the Yunyang Disposal as a result of any breach by Yunyang under the relevant financing arrangement prior to the release of guarantee.
BASISOFDETERMININGTHECONSIDERATIONFORTHEDISPOSALS
The consideration for the Disposals was determined after arm’s length negotiations between the parties to the Disposal Agreements with reference to the unaudited net assets value of the Project Companies as at 30 June 2019 (the ‘‘NAV’’), in the aggregate amount of approximately RMB1,181,511,000, and adjusted by applying a discount of approximately 18.0%, resulting in the aggregate amount of approximately RMB969,009,000. The amount of approximately RMB969,009,000 is the sum of Equity Consideration and the Total Dividend, which is considered as the actual equity consideration if the Project Companies do not declare dividend in favour of Kong Sun Yongtai. The NAV was considered by the Directors because it reflects the underlying value of the assets of the Project Companies.
– 25 – In considering the discount to be applied to the value of the underlying assets of the Project Companies for the determination of the consideration for the Disposals, the management of the Company took into consideration of the reasons for the Disposals as set out in the paragraph headed ‘‘REASONSFORANDBENEFITSOFTHEDISPOSALS’’ below as well as:
(i) the unaudited total assets and liabilities of the Project Companies as at the Reference Date;
(ii) the amount of renewable energy subsidies receivable by the Project Companies from the relevant PRC governmental entity;
(iii) the outstanding Related Party Debts as at the Reference Date;
(iv) the registered capital of the Project Companies as at the Reference Date;
(v) the financial and cash flow position of Project Companies, in particular, their net cash outflow position for the years ended 31 December 2017 and 2018 if shareholders’ loans (being part of the Related Party Debts) were not provided;
(vi) the expected annual finance costs saving of the Group upon completion of the Disposals; and
(vii) the expected annual solar power plant operation and maintenance service fee income of the Group to be generated upon the completion of the Disposals.
In particular, the aggregated amount of the financial benefit to the Group is approximately RMB97,535,000, being the sum of (a) the saving of annual finance costs of not less than approximately RMB80,000,000 and (b) the operation and maintenance service fee of approximately RMB17,535,000 to be receivable by the Group.
Although the Project Companies are profit-making, their capital and operating expenses have been partially funded by interest-free shareholder’s loans from the Group, which in turn are funded by interest-bearing borrowings incurred by the Group at the prevailing market rate. As at the Reference Date, such shareholder’s loans (in the form of Related Party Debts) amounted to approximately RMB406,087,000. The Disposals represent an opportunity for the Group to recoup its capital investments in the Project Companies and to relieve the Group from its funding commitment to the Project Companies in the form of shareholder’s loans, which are costly to maintain.
In addition, the Company notes that the NAV included goodwill of approximately RMB52,221,000. The portion of loss on the Disposals attributable to goodwill will not have cash effect on the Group.
– 26 – In arriving at the total consideration for the Disposals of approximately RMB1,166,400,000, the Directors had also assessed the value of the Project Companies with reference to the unaudited total assets of the Project Companies as at 30 June 2019 in the amount of approximately RMB3,500,093,000, and adjusted by (i) applying a discount rate of approximately 6.1%, resulting in the amount of approximately RMB3,287,597,000 and (ii) subtracting the total liabilities due to third parties (being the total liabilities of the Project Companies less the Related Party Debts) as at 30 June 2019 in the amount of approximately RMB2,121,197,000, which will remain payable by the Project Companies upon completion of the Disposals. The discount rate of approximately 6.1% is within the range of comparable transactions considered by the Company in determining the consideration for the Disposals.
Given the Group highly relies on external financing in order to obtain investment capital for new solar power plants development, any interest rate changes will have impact on the Group’s capital expenditure and finance costs, hence, affecting the Group’s operating results. Transformation into asset-light model is an effective way to reduce debts and interest rate exposure. The Disposals represent a good opportunity for the Group to implement its asset- light strategy through the disposal of 10 solar power projects in bulk.
Taking into consideration the factors as highlighted above, and considering that the Group will be able to realize its investments in 10 solar power projects in bulk pursuant to the Disposals, the Directors are of the view that the aforesaid discount to the NAV is justifiable and the consideration for the Disposals is fair and reasonable and in the interests of the Company and the Shareholders as a whole.
CONDITIONPRECEDENT
Each Disposal Agreement shall take effect subject to each party thereto having completed all internal procedures and obtained or completed all necessary approvals or filings under applicable laws for effecting the transactions contemplated under such Disposal Agreement, and in particular:
(a) with respect to Kong Sun Yongtai, it shall have obtained the necessary approval from the Shareholders at the EGM in accordance with the Listing Rules; and
(b) with respect to the Purchaser, it shall have obtained the necessary approval from CNNP and completed the filing of the relevant valuation report issued by an independent valuer in respect of the relevant Sale Equity Interest of the relevant Project Company.
As at the date of this announcement, the above condition has not yet been satisfied.
COMPLETIONOFTHEDISPOSALS
Within ten (10) business days after the Purchaser has paid the relevant Deposit into the Escrow Account, Kong Sun Yongtai and/or Junsheng Jingshi (as the case may be) together with the Purchaser shall jointly attend to registration filings for the transfer of equity interest in the relevant Project Company and the change in the legal representative, director(s) and supervisor(s) of such Project Company.
– 27 – Prior to completion of registration for the equity transfer of a Project Company in favour of the Purchaser, the Purchaser shall procure for discharge of the relevant finance lease entered into by such Project Company, as the case may be, and arrange for necessary re-financing facilities for such Project Company, where applicable.
On the day on which the registration for equity transfer of a Project Company is effected, the company seals and chops, accounts, licenses and other corporate documents and records of such Project Company shall be handed over to the Purchaser.
Completion of each Disposal shall take place on the date on which the transfer of 100% equity interest in the relevant Project Company has been registered with the relevant administration for industry and commerce and a new business license has been issued to such Project Company.
Default Penalty
If the Purchaser fails to complete the registration formalities for effecting the equity transfer or pay or procure payment of any amount in breach of the relevant Disposal Agreement(s), the Purchaser will be liable to pay to Kong Sun Yongtai a daily default payment of 0.05% of the relevant amount due, and if the default continues for more than 30 days, Kong Sun Yongtai will be entitled to, among other things, terminate the relevant Disposal Agreement(s), require the Purchaser to return the relevant equity interest that has been transferred to the Purchaser and seek for damages from the Purchaser for all losses incurred by Kong Sun Yongtai.
Failure of the Purchaser to perform its obligation to pay the consideration or the default interest rate or if the Purchaser refuse to return the equity interest and assets of the Project Companies pursuant to the Disposal Agreements constitutes an event of default on the part of the Purchaser and the Purchaser is liable for losses incurred thereunder. Upon which, Kong Sun Yongtai is entitled to commence litigation against the Purchaser in the PRC court with competent jurisdiction and claim restitution in accordance with the PRC Contract Law. If the Purchaser refuses to perform the court decision in favour of Kong Sun Yongtai, Kong Sun Yongtai may seek enforcement by the court. Under this circumstance, the Purchaser will be added into 失信執行人名錄 (the List of Untrustworthy Executors*) (an effective enforcement machinery in the PRC), which will have a material negative effect on the assessment of the Purchaser’s credit rating and reputation. Taking into consideration of the background of the Purchaser, the Company is of the view that the possibility that the Purchaser would not honour its contractual commitment is relatively low.
Arrangements with Junsheng Jingshi regarding Huaguang and Xingguang
With reference to the Company’s circular dated 21 December 2018, (i) Huaguang and Xingguang were originally wholly-owned by Kong Sun Yongtai, (ii) Junsheng Jingshi acquired 98.25% and 99.62% equity interest in Huaguang and Xingguang respectively and such equity interests will be repurchased by Kong Sun Yongtai when the 5-year term of the partnership of Junsheng Jingshi expires; (iii) each of Huaguang and Xingguang continues to be under the control of the Group and treated as a subsidiary of the Company; and (iv) from the Company’s perspective, the investment and repurchase agreements with Junsheng Jingshi in respect of Huaguang and Xingguang are in substance financing arrangements with the pledge of the equity interests in Huaguang and Xingguang. Following completion of the
– 28 – Huaguang Disposal and the Xingguang Disposal and upon payment of consideration (comprising cost of equity of RMB270,000,000 and premium on equity calculated based on the cost of equity multiplied by 7% annualized rate of return) as agreed under the equity repurchase agreement dated 10 September 2018, the obligation of Kong Sun Yongtai to repurchase such equity interests from Junsheng Jingshi will be treated as discharged.
INFORMATIONONTHEPARTIES
The Company is principally engaged in the investment in and operation of solar power plants, provision of solar power plant operation and maintenance services, provision of financial services, trading of liquefied natural gas and asset management.
The Vendor is an indirect wholly-owned subsidiary of the Company which is principally engaged in investment holding.
Junsheng Jingshi is a limited partnership established in the PRC, with (i) 君盛投資管理有限 公司 (Junsheng Investment Management Co., Ltd.*) (‘‘Junsheng’’), a company established in the PRC, as general partner and executive partner; (ii) Tianan Life Insurance Co., Ltd. (‘‘Tianan’’), a company established in the PRC, as senior limited partner, and (iii) the Vendor as junior limited partner. The business scope of Junsheng Jingshi is equity investments and related consulting services. Junsheng Jingshi is mainly engaged in, among other things, investments in high-tech, energy sector and other high growth unlisted enterprises. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, each of Junsheng, Tianan and their respective ultimate beneficial owners are third parties independent of the Company and connected persons of the Company. Further details on Junsheng Jingshi and its partners are set out in the Company’s circular dated 21 December 2018.
The Purchaser is a company established in the PRC with limited liability. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, (i) the Purchaser is a wholly-owned subsidiary of CNNP and is ultimately controlled by 國務院國有資產監督管理委員會 (the State-Owned Assets Supervision and Administration Commission of the State Council*); (ii) the Purchaser is principally engaged in investment holding; and (iii) each of the Purchaser and its ultimate beneficial owner(s) is a third party independent of the Company and connected persons of the Company.
INFORMATIONONTHEPROJECTCOMPANIES
Taike
Taike was established in the PRC on 19 April 2013. As at the date of this announcement, Taike has a registered capital of RMB88,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Lanzhou Taike Project. The construction of Lanzhou Taike Project has been completed and started power generation and the power plant has been connected to the power grid.
– 29 – The unaudited financial results of Taike for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 7,644 12,076 Net profit after tax 7,644 11,152
The unaudited net asset value of Taike as at 31 December 2018 was approximately RMB170,261,000.
Artux Huaguang
Artux Huaguang was established in the PRC on 21 July 2014. As at the date of this announcement, Artux Huaguang has a registered capital of RMB285,000,000 and is owned as to 98.25% by Junsheng Jingshi and 1.75% by the Vendor. It is principally engaged in the development, construction and operation of the Artux Huaguang Project. The construction of Artux Huaguang Project has been completed and started power generation and the power plant has been connected to the power grid.
The unaudited financial results of Artux Huaguang for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 11,409 12,779 Net profit after tax 11,409 12,779
The unaudited net asset value of Artux Huaguang as at 31 December 2018 was approximately RMB317,305,000.
Artux Xingguang
Artux Xingguang was established in the PRC on 20 April 2014. As at the date of this announcement, Artux Xingguang has a registered capital of RMB261,000,000 and is owned as to 99.62% by Junsheng Jingshi and 0.38% by the Vendor. It is principally engaged in the development, construction and operation of the Artux Xingguang Project. The construction of Artux Xingguang Project has been completed and started power generation and the power plant has been connected to the power grid.
– 30 – The unaudited financial results of Artux Xingguang for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 13,137 15,381 Net profit after tax 13,137 15,381
The unaudited net asset value of Artux Xingguang as at 31 December 2018 was approximately RMB299,891,000.
Zhaoxiang
Zhaoxiang was established in the PRC on 10 September 2012. As at the date of this announcement, Zhaoxiang has a registered capital of RMB30,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Hami Zhaoxiang Project. The construction of Hami Zhaoxiang Project has been completed and started power generation and the power plant has been connected to the power grid.
The unaudited financial results of Zhaoxiang for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 2,186 4,734 Net profit after tax 2,186 4,734
The unaudited net asset value of Zhaoxiang as at 31 December 2018 was approximately RMB38,224,000.
Xushuang
Xushuang was established in the PRC on 27 September 2012. As at the date of this announcement, Xushuang has a registered capital of RMB20,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Hejing Xushaung Project. The construction of Hejing Xushuang Project has been completed and started power generation and the power plant has been connected to the power grid.
– 31 – The unaudited financial results of Xushuang for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 5,231 2,745 Net profit after tax 5,231 2,745
The unaudited net asset value of Xushuang as at 31 December 2018 was approximately RMB27,727,000.
Minghui
Minghui was established in the PRC on 31 May 2015. As at the date of this announcement, Minghui has a registered capital of RMB60,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Julu Minghui Project. The construction of Julu Minghui Project has been completed and started power generation and the power plant has been connected to the power grid.
The unaudited financial results of Minghui for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 11,310 5,853 Net profit after tax 11,310 5,853
The unaudited net asset value of Minghui as at 31 December 2018 was approximately RMB88,609,000.
Xinhui
Xinhui was established in the PRC on 11 March 2015. As at the date of this announcement, Xinhui has a registered capital of RMB20,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Liyang Xinhui Project. The construction of Liyang Xinhui Project has been completed and started power generation and the power plant has been connected to the power grid.
– 32 – The unaudited financial results of Xinhui for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 7,746 9,248 Net profit after tax 7,746 8,952
The unaudited net asset value of Xinhui as at 31 December 2018 was approximately RMB40,549,000.
Baoyuan
Baoyuan was established in the PRC on 4 March 2014. As at the date of this announcement, Baoyuan has a registered capital of RMB60,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Qianyang Baoyuan Project. The construction of Qianyang Baoyuan Project has been completed and started power generation and the power plant has been connected to the power grid.
The unaudited financial results of Baoyuan for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 5,031 5,423 Net profit after tax 5,031 5,423
The unaudited net asset value of Baoyuan as at 31 December 2018 was approximately RMB80,459,000.
Yunyang
Yunyang was established in the PRC on 25 September 2013. As at the date of this announcement, Yunyang has a registered capital of RMB68,000,000 and is wholly-owned by Kong Sun Yongtai. It is principally engaged in the development, construction and operation of the Suzhou Yunyang Project and the Suzhou Yunyang Yongqiao Project. The construction of the Suzhou Yunyang Project and the Suzhou Yunyang Yongqiao Project has been completed and started power generation and the power plants have been connected to the power grid.
– 33 – The unaudited financial results of Yunyang for the two years immediately preceding the date of this announcement are as follows:
For the year ended 31 December 2017 2018 (Unaudited) (Unaudited) RMB’000 RMB’000
Net profit before tax 18,749 5,710 Net profit after tax 18,749 4,495
The unaudited net asset value of Yunyang as at 31 December 2018 was approximately RMB116,726,000.
REASONSFORANDBENEFITSOFTHEDISPOSALS
The Company has been proactively considering innovative business opportunities, which could strengthen the Group’s core business and reduce its finance costs. The Disposals represent one of the Group’s programmes in line with its long-term asset-light strategy. The Directors consider that it is a good opportunity for the Group to realise its investment in the Project Companies so as to better allocate the Group’s resources, optimise its operation model, enhance the efficiency of equipment in solar power plants and accelerate its pace in transforming to asset-light model. Upon completion of the Disposals, the Group will continue to provide operation and maintenance services to the Project Companies, which will generate a service fee income of approximately RMB17,535,000 to the Group under such asset-light model.
The Disposals will also lower the Group’s gearing ratio for the following reasons: (i) the net proceeds from the Disposals will be applied to repay existing debts to reduce the finance costs of the Group; and (ii) related debts incurred by the Project Companies will no longer be consolidated into the Group’s financial statements upon completion of the Disposals. By utilizing the net proceeds from the Disposals for repayment of debts, the remaining Group can benefit from saving of annual finance costs of not less than approximately RMB80,000,000. The Disposals will eliminate the remaining Group’s continuous commitment as shareholder of the Project Companies including, among others, the provision of shareholder’s loans to the Project Companies that are funded by borrowings incurred by the remaining Group at the prevailing market rate. The Directors consider that these benefits to the Company can outweigh the impact of realizing a net loss on the Disposals in the long run.
Further, upon completion of the Disposals, the Company will continue to have 35 completed solar power plants with a total installed capacity of 1,378.8 MW. The Company will continue to engage in the solar power plants business with (a) the generation of solar power and sale of electricity to power grid companies through its remaining solar power plants and two solar power plants under construction and (b) the provision of solar power plant operation and maintenance services to third parties, including the various project companies disposed by the Group, through the Group’s own workforce of engineers and maintenance staff. The management team for the operation and management of the remaining Group (after completion of the Disposals) will not be downsized as a result of the Disposals.
– 34 – Solar power generating business is a capital intensive industry, which highly relies on external financing in order to fund for the construction of solar power plant while the recovery of capital investment takes a long period of time. Any delay in enlisting of the solar power plants of the Group on 可再生能源電價附加資金補助目錄 (Renewable Energy Tariff Subsidy Catalogue*) (the ‘‘Subsidy Catalogue’’) or any delay in the receipt of renewable energy subsidies for its solar power plants that have been enlisted on the Subsidy Catalogue could have a material adverse effect on the Group’s business, financial condition, cash flow and operating results. To cope with the gearing risk, the Group will pay close attention to the market dynamics, and to avoid any unfavorable changes to the Group. The Group has been actively seeking for opportunities to transform into the asset-light model to optimize its finance structure and lower its gearing ratio. The Disposals represent a good opportunity for the Group to implement its asset-light strategy through the disposal of 10 solar power projects in bulk.
Taking into account the financial benefits from the Disposals of not less than approximately RMB97,535,000, including saving of annual finance costs of not less than RMB80,000,000 and additional service fee income of approximately RMB17,535,000, as well as the scale of the remaining Group’s solar power plants business, the Board is of the view that the remaining Group (after completion of the Disposals) will remain viable and sustainable and will maintain a sufficient level of operations whilst in the transition to the asset-light strategy.
Based on the foregoing, the Directors are of the view that the Disposals and the terms of the Disposal Agreements, including the consideration, were entered into on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
FINANCIALEFFECTOFTHEDISPOSALS
Upon completion of the Disposals, the Project Companies will cease to be subsidiaries of the Company and their financial statements will no longer be consolidated in the Group’s financial statements.
Subject to final audit, it is expected that the Group will realise a net loss on the Disposals of not more than approximately RMB215,000,000, which is calculated by reference to the differences between the sum of the Equity Consideration and the Total Dividend of approximately RMB969,009,000 and (i) the net asset value of the Project Companies of approximately RMB1,181,511,000 based on the unaudited financial information of the Project Companies as at 30 June 2019; and (ii) the related transaction costs, taxes and expenses of the Disposals. Despite the net loss on the Disposals, having taking into consideration of the reasons for the Disposals as stated under the paragraph headed ‘‘REASONSFORANDBENEFITSOFTHEDISPOSALS’’ above, the Company is of the view that the Disposals will be in the interests of the Company and its Shareholders as a whole as it will improve the Group’s cash flow position in the long run.
– 35 – USEOFPROCEEDS
The net proceeds from the Disposals after deducting the taxation and transaction costs are estimated to be approximately RMB1,165,000,000. The Group intends to apply the net proceeds from the Disposals to repay its debts to reduce the finance costs of the Group, which will lower the Group’s gearing ratio.
LISTINGRULESIMPLICATIONS
As the highest of the applicable percentage ratios set forth under Rule 14.07 of the Listing Rules in respect of the Disposals, on an aggregated basis, exceeds 75%, the Disposals constitute very substantial disposals for the Company under Chapter 14 of the Listing Rules and are therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.
LATESTDEVELOPMENTOFTHEGROUP
As at the date of this announcement, the Group is negotiating with independent third parties for the possible disposal of three (3) project companies, each holding one (1) solar power plant of the Group, respectively, with a total installed capacity of 180 MW (the ‘‘Further Disposals’’), and the Group has not yet entered into any legally binding agreements for the Further Disposals. If the Further Disposals materialize and assuming completion of the Disposals, the number of completed solar power plants of the Group will be further reduced to 32 and the total installed capacity will be further decreased to 1,198.8 MW. Similar to the Disposals and the previous disposals by the Group in 2019, the Board expects that the Further Disposals will be in line with the Group’s asset-light strategy, with a focus on lowering the Group’s finance costs and gearing ratio and increasing the Group’s service fee income from provision of operation and maintenance services to the disposed project companies. The Company will only implement the Further Disposals if it is satisfied that the Further Disposals will be beneficial to the Company and the Shareholders as a whole. The Company will make further announcement(s) in respect of the Further Disposal(s) as and when appropriate under the Listing Rules. On the other hand, the management of the Company will look into opportunities to enhance the Company’s capabilities in providing operation and maintenance services, and thus accelerate the shift to asset-light model. However, as at the date of this announcement, the Group has not entered into any legally binding agreement, and is not undergoing any negotiation with any party, for any such acquisition or business opportunities. Save as aforesaid, the Company currently has no intention to dispose or cease any of its remaining businesses or to start or acquire any new business within the coming 12 months.
GENERAL
The EGM will be convened and held for the Shareholders to consider and, if thought fit, to approve each of the Disposal Agreements and the transactions contemplated thereunder. Insofar as the Company is aware, none of the Shareholders has any material interest in the Disposals. Hence, no Shareholder is required to abstain from voting on the resolutions in relation to the Disposal Agreements and the transactions contemplated thereunder at the EGM.
– 36 – A circular containing, among other things, further details of the Disposals, the financial information of the Group, the financial information and the valuation reports of the Project Companies, the notice convening the EGM and other information as required under the Listing Rules is expected to be despatched to the Shareholders on or before 31 December 2019 which is more than 15 business days after the publication of this announcement as additional time is required to prepare the information to be included in the circular.
RESUMPTIONOFTRADING
At the request of the Company, trading in the Shares on the Stock Exchange has been halted with effect from 9:00 a.m. on Monday, 18 November 2019 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange from 9:00 a.m. on Wednesday, 27 November 2019.
Shareholders and potential investors should note that completion of the Disposals is conditional upon satisfaction of certain condition precedent as set out in this announcement. Accordingly, the Disposals may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares and other securities of the Company.
DEFINITIONS
In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:
‘‘Artux Huaguang Project’’ a 30 MW solar power plant owned by Huaguang in Artux, Xinjiang Province, PRC
‘‘Artux Xingguang Project’’ a 30 MW solar power plant owned by Xingguang in Artux, Xinjiang Province, PRC
‘‘Baoyuan’’ 千陽縣寶源光伏電力開發有限公司 (Qianyang Baoyuan Photovoltaic Power Development Limited*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Baoyuan Disposal’’ the sale and transfer of the entire equity interest in Baoyuan by Kong Sun Yongtai and to the Purchaser
‘‘CDB Leasing’’ 國 銀 金 融 租 賃 股 份 有 限 公 司 (China Development Bank Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability, the H-shares of which are listed on the Stock Exchange (stock code: 1606)
‘‘CNNP’’ 中國核能電力股份有限公司 (China National Nuclear Power Co., Ltd.*), a company established in the PRC with limited liability, the shares of which are listed on the Shanghai Stock Exchange (stock code: 601985)
– 37 – ‘‘Company’’ Kong Sun Holdings Limited, a company incorporated in Hong Kong with limited liability, the Shares of which are listed on the main board of the Stock Exchange
‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Deposit’’ the Taike Deposit, the Huaguang Deposit, the Xingguang Deposit, the Zhaoxiang Deposit, the Xushuang Deposit, the Minghui Deposit, the Xinhui Deposit, the Baoyuan Deposit or the Yunyang Deposit
‘‘Designated Account’’ in respect of each Disposal Agreement, the bank account as may be designated by Kong Sun Yongtai or Junsheng Jingshi (as the case may be) to receive payment under such Disposal Agreement
‘‘Director(s)’’ director(s) of the Company
‘‘Disposal(s)’’ the Taike Disposal, the Huaguang Disposal, the Xingguang Disposal, the Zhaoxiang Disposal, the Xushuang Disposal, the Minghui Disposal, the Xinhui Disposal, the Baoyuan Disposal and/or the Yunyang Disposal
‘‘Disposal Agreement(s)’’ the Taike Agreement, the Huaguang Agreement, the Xingguang Agreement, the Zhaoxiang Agreement, the Xushuang Agreement, the Minghui Agreement, the Xinhui Agreement, the Baoyuan Agreement and/or the Yunyang Agreement
‘‘EGM’’ the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approve, among other things, the Disposal Agreements and transactions contemplated thereunder
‘‘Equity Consideration’’ the Taike Equity Consideration, the Huaguang Equity Consideration, the Xingguang Equity Consideration, the Zhaoxiang Equity Consideration, the Xushuang Equity Consideration, the Minghui Equity Consideration, the Xinhui Equity Consideration, the Baoyuan Equity Consideration and the Yunyang Equity Consideration
‘‘Escrow Account’’ in respect of each Disposal Agreement, the bank account to be jointly established and operated by Kong Sun Yongtai (or Junsheng Jingshi, as the case may be) and the Purchaser for holding the relevant Deposit pursuant to the terms of such Disposal Agreement
– 38 – ‘‘First Payment Conditions’’ with respect to each Disposal, (i) where applicable, the relevant financing party (being CDB Leasing, Hayin Finance, Hebei Finance, Huaxia Finance or Sino Lease, as the case may be) having agreed to release the existing share pledge over the relevant Sale Equity Interest in respect of the relevant Project Company; (ii) the relevant Project Company having entered into written agreement(s) with the relevant contractors to settle outstanding amounts; (iii) the shareholder(s) of the relevant Project Company having passed the relevant resolution(s) for declaration of dividend in respect of the accumulated distributable profits up to the Reference Date; (iv) Kong Sun Yongtai and/or Junsheng Jingshi (as the case may be) having confirmed with the relevant Project Company in writing that there is no outstanding amount due by such Project Company to Kong Sun Yongtai, Junsheng Jingshi and/or their respective affiliates (as the case may be); and/or (v) the relevant Disposal Agreement becoming effective upon satisfaction of the condition set forth under ‘‘CONDITIONPRECEDENT’’ in this announcement
‘‘Group’’ the Company and its subsidiaries
‘‘Hami Zhaoxiang Project’’ a 20 MW solar power plant owned by Zhaoxiang in Hami, Xinjiang Province, PRC
‘‘Hayin Finance’’ 哈銀金融租賃有限責任公司 (Hayin Finance Lease Co., Ltd.*), a company established in the PRC with limited liability
‘‘Hebei Finance’’ 河北省金融租賃有限公司 (Hebei Finance Lease Co., Ltd.*), a company established in the PRC with limited liability
‘‘Hejing Xushuang Project’’ a 20 MW solar power plant owned by Xushuang in Hejing, Xinjiang Province, PRC
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the People’s Republic of China
‘‘Huaguang’’ 阿 圖 什 市 華 光 能 源 有 限 公 司 (Artux Huaguang Energy Limited*), a company incorporated in the PRC and an indirect subsidiary of the Company as at the date of this announcement
‘‘Huaguang Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai, Junsheng Jingshi and Huaguang in relation to the Huaguang Disposal
‘‘Huaguang Disposal’’ the sale and transfer of the entire equity interest in Huaguang by Kong Sun Yongtai and Junsheng Jingshi to the Purchaser
– 39 – ‘‘Huaxia Finance’’ 華夏金融租賃有限公司 (Huaxia Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
‘‘Julu Minghui Project’’ a 21 MW solar power plant owned by Minghui in Julu, Hebei Province, PRC
‘‘Junsheng Jingshi’’ 蘇 州 君 盛 晶 石 股 權 投 資 合 夥 企 業 ( 有 限 合 夥 ) (Suzhou Junsheng Jingshi Equity Investment Partnership (Limited Partnership)*), a limited partnership established in the PRC
‘‘Kong Sun Yongtai’’ 江山永泰投資控股有限公司 (Kong Sun Yongtai Investment Holdings Limited*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company
‘‘Lanzhou Taike Project’’ a 49.5 MW solar power plant owned by Taike in Lanzhou, Gansu Province, PRC
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Liyang Xinhui Project’’ a 20 MW solar power plant owned by Xinhui in Liyang, Jiangsu Province, PRC
‘‘Minghui’’ 巨鹿縣明暉太陽能發電有限公司 (Julu Minghui Photovoltaic Power Limited*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Minghui Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai and Minghui in relation to the Minghui Disposal
‘‘Minghui Disposal’’ the sale and transfer of the entire equity interest in Minghui by Kong Sun Yongtai to the Purchaser
‘‘MW’’ mega watts
‘‘PRC’’ The People’s Republic of China
‘‘Project Company(ies)’’ Taike, Huaguang, Xingguang, Zhaoxiang, Xushuang, Minghui, Xinhui, Baoyuan and/or Yunyang
‘‘Purchaser’’ 中核山東能源有限公司 (CNNP Shandong Energy Co., Ltd.*), a company established in the PRC
‘‘Qianyang Baoyuan Project’’ a 20 MW solar power plant owned by Baoyuan in Qianyang, Shaanxi Province, PRC
‘‘Reference Date’’ 30 June 2019
– 40 – ‘‘Related Party Debts’’ the Taike Related Party Debts, the Huaguang Related Party Debts, the Xingguang Related Party Debts, the Zhaoxiang Related Party Debts, the Xushuang Related Party Debts, the Minghui Related Party Debts, the Xinhui Related Party Debts, the Baoyuan Related Party Debts and the Yunyang Related Party Debts
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘Sale Equity Interest’’ with respect to each Disposal, the entire equity interest in the relevant Project Company
‘‘Second Payment with respect to each Disposal, (i) where applicable, the Conditions’’ existing share pledge over the relevant Sale Equity Interest in respect of the relevant Project Company having been released by the relevant financing party (being CDB Leasing, Hayin Finance, Hebei Finance, Huaxia Finance or Sino Lease, as the case may be); (ii) the handover of the relevant Project Company as specified in the relevant Disposal Agreement having been completed; (iii) the industry and commerce registration for (1) the transfer of the relevant Sale Equity Interest, (2) change in legal representative, director(s), supervisor(s) and other officers of the relevant Project Company as may be required by the Purchaser, and (3) the change in articles of association of the relevant Project Company having been completed, and the relevant Project Company having been issued with a new business license; and/or (iv) the relevant Project Company having terminated the employment of all of its existing employees and settled all relevant salaries, social insurance, provident fund contributions and other payments
‘‘Share(s)’’ ordinary shares in the share capital of the Company
‘‘Shareholders’’ holders of the Shares
‘‘Sino Lease’’ 中國金融租賃有限公司 (China Financial Leasing Co., Ltd.*), a company established in the PRC with limited liability
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Suzhou Yunyang Project’’ a 20 MW solar power plant owned by Yunyang in Suzhou City, Anhui Province, PRC
‘‘Suzhou Yunyang Yongqiao a 20 MW solar power plant owned by Yunyang in Yongqiao Project’’ District, Suzhou City, Anhui Province, PRC
– 41 – ‘‘Taike’’ 蘭州太科光伏電力有限公司 (Lanzhou Taike Photovoltaic Power Limited*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Taike Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai and Taike in relation to the Taike Disposal
‘‘Taike Disposal’’ the sale and transfer of the entire equity interest in Taike by Kong Sun Yongtai to the Purchaser
‘‘Third Payment Conditions’’ with respect to each Disposal, the relevant Transition Period Audit in respect of the relevant Project Company having been completed with the issuance of an audit report
‘‘Total Dividend’’ the Taike Dividend, the Huaguang Dividend, the Xingguang Dividend, the Zhaoxiang Dividend, the Xushuang Dividend, the Minghui Dividend, the Xinhui Dividend, the Baoyuan Dividend and the Yunyang Dividend
‘‘Transition Period’’ in respect of each Disposal, the period from (but excluding) the Reference Date to (and including) the date of completion of such Disposal
‘‘Transition Period Audit’’ in respect of each Project Company, an audit to be performed by an auditor engaged by the Purchaser with respect to such Project Company from the Reference Date to the completion date of the relevant Disposal
‘‘Xingguang’’ 阿 圖 什 市 興 光 能 源 有 限 公 司 (Artux Xingguang Energy Limited*), a company incorporated in the PRC and an indirect subsidiary of the Company as at the date of this announcement
‘‘Xingguang Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai, Junsheng Jingshi and Xingguang in relation to the Xingguang Disposal
‘‘Xingguang Disposal’’ the sale and transfer of the entire equity interest in Xingguang by Kong Sun Yongtai and Junsheng Jingshi to the Purchaser
‘‘Xinhui’’ 溧 陽 新 暉 光 伏 發 電 有 限 公 司 (Liyang Xinhui Photovoltaic Power Generation Limited*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Xinhui Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai and Xinhui in relation to the Xinhui Disposal
– 42 – ‘‘Xinhui Disposal’’ the sale and transfer of the entire equity interest in Xinhui by Kong Sun Yongtai to the Purchaser
‘‘Xushuang’’ 和靜旭雙太陽能科技有限公司 (Hejing Xushuang Photovoltaic Technology Limited*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Xushuang Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai and Xushuang in relation to the Xushuang Disposal
‘‘Xushuang Disposal’’ the sale and transfer of the entire equity interest in Xushuang by Kong Sun Yongtai to the Purchaser
‘‘Yunyang’’ 宿 州 市 雲 陽 新 能 源 發 電 有 限 公 司 (Suzhou Yunyang New Energy Electricity Co., Ltd.*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Yunyang Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai, Junsheng Jingshi and Yunyang in relation to the Yunyang Disposal
‘‘Yunyang Disposal’’ the sale and transfer of the entire equity interest in Yunyang by Kong Sun Yongtai and Junsheng Jingshi to the Purchaser
‘‘Zhaoxiang’’ 哈 密 朝 翔 新 能 源 科 技 有 限 公 司 (Hami Zhaoxiang New Energy Technology Limited*), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company as at the date of this announcement
‘‘Zhaoxiang Agreement’’ the equity transfer agreement dated 15 November 2019 among the Purchaser, Kong Sun Yongtai and Zhaoxiang in relation to the Zhaoxiang Disposal
‘‘Zhaoxiang Disposal’’ the sale and transfer of the entire equity interest in Zhaoxiang by Kong Sun Yongtai to the Purchaser
‘‘Zhongke Hengyuan’’ 中科恒源科技股份有限公司 (Zhongke Hengyuan Technology Co., Ltd.*), a company established in the PRC with limited liability
‘‘%’’ per cent.
By Order of the Board of Directors of Kong Sun Holdings Limited Mr. Jin Yanbing Executive Director
Hong Kong, 26 November 2019
– 43 – As of the date of this announcement, the Board comprises two executive Directors, Mr. Jin Yanbing and Mr. Deng Chengli, three non-executive Directors, Mr. Wu Tak Kong, Mr. Wang Ke and Mr. Jiang Hengwen and four independent non-executive Directors, Mr. Miu Hon Kit, Mr. Chen Kin Shing, Ms. Wang Fang and Ms. Wu Wennan.
* For identification purposes only
– 44 –