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Central China Securities Co., Ltd. — Capital/Financing Update 2017
Jun 29, 2017
49885_rns_2017-06-29_341d4ddd-3305-4ab5-993c-b0cb854bb2ab.pdf
Capital/Financing Update
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
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Central China Securities Co., Ltd.
(a joint stock company incorporated in 2002 in Henan Province, the People’s Republic of China with limited liability under the Chinese corporate name “ 中原證券股份有限公司 ” and carrying on business in Hong Kong as “ 中州證券 ”) (Stock Code: 01375)
CONNECTED TRANSACTION CAPITAL REDUCTION OF ZDKY VENTURE CAPITAL AND EXIT OF OTHER ZDKY VENTURE CAPITAL SHAREHOLDERS
CAPITAL REDUCTION OF ZDKY VENTURE CAPITAL AND EXIT OF OTHER ZDKY VENTURE CAPITAL SHAREHOLDERS
The Company announces that as at the date of this announcement, the ZDKY Venture Capital Shareholders passed the Shareholders’ Resolutions pursuant to which ZDKY Venture Capital will carry out the Capital Reduction whereby the Other ZDKY Venture Capital Shareholders will withdraw their respective capital contribution in ZDKY Venture Capital at a consideration on the basis of RMB1.17 for every RMB1 of their respective capital contribution. The Capital Reduction will be carried out pursuant to the requirements of the Management Rules for the Private Investment Funds Subsidiaries of Securities Companies promulgated by the Securities Association of China.
Upon completion of the Capital Reduction and amendments to the relevant industrial and commercial registration of ZDKY Venture Capital, ZDKY Venture Capital will become a wholly owned subsidiary of the Company with a registered capital of RMB895 million. The Other ZDKY Venture Capital Shareholders will cease to be the shareholders of ZDKY Venture Capital and the Company will become the sole shareholder of ZDKY Venture Capital.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Dahe Media and Zhengfa Group holds approximately 14.49% and 10.87%, respectively, of the equity interest of ZDKY Venture Capital. Whereas ZDKY Venture Capital is a subsidiary of the Company, Dahe Media and Zhengfa Group are substantial shareholders of a subsidiary of the Company and thus connected persons at the subsidiary level of the Group under Rules 14A.06(9) and 14A.07 of the Listing Rules. The Dahe Media and Zhengfa Group Capital Reduction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
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Calculated with reference to the consideration to be paid to Dahe Media and Zhengfa under the Capital Reduction, as one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) (other than the profits ratio) in respect of Dahe Media and Zhengfa Group Capital Reduction are more than 1%, and as the Directors have approved the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) and the independent non-executive Directors have confirmed that the terms of the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) are fair and reasonable and the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) is on normal commercial terms and in the interests of the Company and its Shareholders as a whole, the carrying out of the Dahe Media and Zhengfa Group Capital Reduction is subject to the reporting and announcement requirements but exempt from the circular and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
CAPITAL REDUCTION OF ZDKY VENTURE CAPITAL AND EXIT OF OTHER ZDKY VENTURE CAPITAL SHAREHOLDERS
The Company announces that as at the date of this announcement, the ZDKY Venture Capital Shareholders passed the Shareholders’ Resolutions pursuant to which ZDKY Venture Capital will carry out the Capital Reduction whereby the Other ZDKY Venture Capital Shareholders will withdraw their respective capital contribution in ZDKY Venture Capital at a consideration on the basis of RMB1.17 for every RMB1 of their respective capital contribution.
Upon completion of the Capital Reduction and amendments in the relevant industrial and commercial registration, ZDKY Venture Capital will become a wholly owned subsidiary of the Company with a registered capital of RMB895 million. The Other ZDKY Venture Capital Shareholders will cease to be the shareholders of ZDKY Venture Capital and the Company will become the sole shareholder of ZDKY Venture Capital.
MAIN DETAILS OF THE SHAREHOLDERS’ RESOLUTIONS
The main details of the Shareholders’ Resolutions, which were unanimously passed by the ZDKY Venture Capital Shareholders on the date of this announcement, are set out as follows:
Date : 28 June 2017
Subject Matter of the Shareholders’ Resolutions
Pursuant to the Shareholders’ Resolutions, the Other ZDKY Venture Capital Shareholders will withdraw their respective capital contribution in ZDKY Venture Capital at a consideration on the basis of RMB1.17 for every RMB1 of their respective capital contribution.
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CONSIDERATION OF THE CAPITAL REDUCTION
The total consideration in respect of the Capital Reduction is RMB567,450,000, among which the consideration for the capital reduction in respect of the original capital contribution by Dahe Media and Zhengfa Group are RMB234,000,000 and RMB175,500,000 respectively. The original costs of Dahe Media and Zhengfa Group in respect of their respective capital contribution to ZDKY Venture Capital are RMB200,000,000 and RMB150,000,000 respectively.
The consideration in respect of the Capital Reduction shall be fully paid in cash by ZDKY Venture Capital to the respectively Other ZDKY Venture Capital Shareholders upon completion of the Capital Reduction. The said consideration shall be funded by internal resources of ZDKY Venture Capital.
The consideration was determined after arm’s length negotiations among the Company and the Other ZDKY Venture Capital Shareholders taking into account the appraised market value of the total equity interest of ZDKY Venture Capital pursuant to a valuation report prepared by an independent valuer by way of asset-based approach and the audited consolidated net asset value of ZDKY Venture Capital as at 31 March 2017.
SHAREHOLDING STRUCTURE OF ZDKY VENTURE CAPITAL BEFORE AND AFTER THE CAPITAL REDUCTION
Shareholding Structure of ZDKY Venture Capital before the Capital Reduction
The shareholding structure of ZDKY Venture Capital before the Capital Reduction is set out as follows:
| Name of shareholders Capital contribution amount (RMB) The Company 895,000,000 Dahe Media 200,000,000 Zhengfa Group 150,000,000 Shanghai Qianying 75,000,000 Henan Hengchang 60,000,000 Total 1,380,000,000 |
Percentage of equity interest held by the shareholders (approximately) 64.86% 14.49% 10.87% 5.43% 4.35% 100% |
|---|---|
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Shareholding Structure of ZDKY Venture Capital after the Capital Reduction
The shareholding structure of ZDKY Venture Capital after the Capital Reduction is set out as follows:
| Name of shareholder Capital contribution amount (RMB) The Company 895,000,000 Total 895,000,000 |
Percentage of equity interest held by the shareholder 100% 100% |
|---|---|
REASONS FOR AND BENEFITS OF THE CAPITAL REDUCTION
In order to improve the self-discipline management system of private equity fund subsidiaries and alternative investment subsidiaries of securities firms, to bring the control of securities firms as parent companies and the self-discipline of the subsidiaries into full play and to effectively prevent systemic risks, having the consent of the CSRC, the Securities Association of China issued the “Management Criteria for Private Equity Fund Subsidiaries of Securities Firms” and “Management Criteria for Alternate Investment Subsidiaries of Securities Firms”, and required securities firms to make rectifications within a time limit. After adequate communication with ZDKY Venture Capital Shareholders, ZDKY Venture Capital intends to adjust the shareholding structure through the reduction and withdrawal of capital contribution by certain shareholders, so as to meet regulatory requirements.
The Directors (including the independent non-executive Directors) are of the view that the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) is on normal commercial terms and is fair and reasonable and the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) is in the interests of the Group and the Shareholders as a whole. None of the Directors has any material interest in the Capital Reduction and thus be required to abstain from voting on the relevant Board resolutions.
INFORMATION OF THE COMPANY, ZDKY VENTURE CAPITAL AND OTHER ZDKY VENTURE CAPITAL SHAREHOLDERS
The Company
The Company is a leading securities firm in Henan Province with a full-service business platform and strategic presence in the PRC, which principally engages in, among others, securities and futures brokerage, investment banking, investment management and proprietary trading businesses.
ZDKY Venture Capital
ZDKY Venture Capital is a subsidiary of the Company established to develop direct investment businesses and is principally engaged in (1) using its own fund capital or establishing direct investment funds to make equity or debt investments in enterprises, or investing in other investment funds in relation to equity or debt investments; (2) providing clients with financial advisory services in relation to equity and bond investments; and (3) carrying out other businesses approved by the CSRC.
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Dahe Media
Dahe Media is a limited company established under the laws of the PRC, and is principally engaged in investments in the media industry.
Zhengfa Group
Zhengfa Group is a limited company established under the laws of the PRC, and is principally engaged in civil construction and comprehensive urban development businesses.
Shanghai Qianying
Shanghai Qianying is a limited company established under the laws of the PRC, and is principally engaged in investment management and industrial investments.
Henan Hengchang
Henan Hengchang is a limited company established under the laws of the PRC, and is principally engaged in the importing and exporting of commodities and technology.
To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the date of this announcement, Shanghai Qianying and Henan Hengchang and their respective ultimate beneficial owners are all third parties independent of the Company and the connected persons of the Company.
FINANCIAL INFORMATION OF ZDKY VENTURE CAPITAL
Set out below are the audited consolidated financial information of ZDKY Venture Capital for the years ended 31 December 2015 and 2016, and for the three months ended 31 March 2017, prepared in accordance with CASBE:
| For the year | For the year | For the three | |
|---|---|---|---|
| ended 31 | ended 31 | months ended | |
| December 2015 | December 2016 | 31 March 2017 | |
| (RMB) | (RMB) | (RMB) | |
| Net profits(losses) before | |||
| taxation and extraordinary | |||
| items | 39,387,157.46 | 71,772,193.12 | 21,224,091.32 |
| Net profits(losses) after | |||
| taxation and extraordinary | |||
| items | 30,005,664.76 | 61,502,117.19 | 15,190,297.50 |
The audited net asset value of ZDKY Venture Capital (on a consolidated basis) as at 31 March 2017 was RMB1,534,840,405.87, and the appraised market value of the entire equity interest of ZDKY Venture Capital as at 31 March 2017 was approximately RMB1,613,916,100.
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LISTING RULES IMPLICATIONS
As at the date of this announcement, Dahe Media and Zhengfa Group holds approximately 14.49% and 10.87%, respectively, of the equity interest of ZDKY Venture Capital. Whereas ZDKY Venture Capital is a subsidiary of the Company, Dahe Media and Zhengfa Group are substantial shareholders of a subsidiary of the Company and thus connected persons at the subsidiary level of the Group under Rules 14A.06(9) and 14A.07 of the Listing Rules. The Dahe Media and Zhengfa Group Capital Reduction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
Calculated with reference to the consideration to be paid to Dahe Media and Zhengfa under the Capital Reduction, as one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) (other than the profits ratio) in respect of Dahe Media and Zhengfa Group Capital Reduction are more than 1%, and as the Directors have approved the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) and the independent non-executive Directors have confirmed that the terms of the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) are fair and reasonable and the Capital Reduction (including the Dahe Media and Zhengfa Group Capital Reduction) is on normal commercial terms and in the interests of the Company and its Shareholders as a whole, the carrying out of the Dahe Media and Zhengfa Group Capital Reduction is subject to the reporting and announcement requirements but exempt from the circular and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
DEFINITIONS
In this announcement, the following expressions shall have the following meanings unless the context requires otherwise:
| “A Shares” | : | domestic listed ordinary shares with a nominal value of |
|---|---|---|
| RMB1.00 each in the share capital of the Company, which are | ||
| listed and traded on the Shanghai Stock Exchange | ||
| “Board” | : | Board of Directors |
| “Capital Reduction” | : | the reduction and withdrawal of all their respective capital |
| contribution by the Other ZDKY Venture Capital Shareholders | ||
| “CASBE” | : | China Accounting Standards for Business Enterprises, financial |
| reporting standards and interpretations for business enterprises | ||
| issued by the China Accounting Standards Committee of the | ||
| China Ministry of Finance | ||
| “Company” | : | Central China Securities Co., Ltd. (中原證券股份有限公 |
| 司) (carrying on business in Hong Kong as “中州證券”, a | ||
| joint stock company incorporated on 8 November 2002 in | ||
| Henan Province, the PRC with limited liability, the H Shares | ||
| and A Shares of which are listed on the Main Board of the | ||
| Stock Exchange (stock code: 01375) and the Shanghai Stock | ||
| Exchange (stock code: 601375), respectively) |
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| “connected person” | : | has the meaning ascribed to it under the Listing Rules |
|---|---|---|
| “connected transaction” | : | has the meaning ascribed to it under the Listing Rules |
| “CSRC” | : | the China Securities Regulatory Commission |
| “Dahe Media” | : | Dahe Media Investment Co., Limited* (大河傳媒投資有限公 |
| 司), a limited company incorporated in the PRC and holding | ||
| approximately 14.49% equity interest in ZDKY Venture Capital | ||
| as at the date of this announcement | ||
| “Dahe Media and | : | the reduction and withdrawal of all their respective capital |
| Zhengfa Group Capital | contribution by Dahe Media and Zhengfa Group | |
| Reduction” | ||
| “Directors” | : | directors of the Company |
| “Group” | : | the Company and its subsidiaries |
| “H Shares” | : | overseas listed foreign ordinary shares with a nominal value of |
| RMB1.00 each in the share capital of the Company, which are | ||
| listed and traded on the Main Board of the Stock Exchange | ||
| “Henan Hengchang” | : | Henan Province Hengchang Commerce Co., Limited* (河南 |
| 省恒昌商貿有限公司), a limited company incorporated in the | ||
| PRC and an Independent Third Party of the Group as at the | ||
| date of this announcement | ||
| “Hong Kong” | : | Hong Kong Special Administrative Region of the PRC |
| “Independent Third Party” | : | a company which is not connected person of the Company |
| “Listing Rules” | : | the Rules Governing the Listing of Securities on the Stock |
| Exchange | ||
| “Other ZDKY Venture | : | Dahe Media, Zhengfa Group, Shanghai Qianying and Henan |
| Capital Shareholders” | Hengchang collectively | |
| “PRC” | : | the People’s Republic of China (excluding, for the purpose of |
| this announcement, Hong Kong Special Administrative Region, | ||
| Macau Special Administrative Region and Taiwan) | ||
| “RMB” | : | the lawful currency of the PRC, Renminbi, the basic unit of |
| which is “yuan” |
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“Shanghai Qianying” : Shanghai Qianying Investment Management Co., Limited (上 海乾贏投資管理有限公司), a limited company incorporated in the PRC and an Independent Third Party of the Group as at the date of this announcement “Shareholders” : the shareholders of the Company “Shareholders’ : the resolutions of the meeting of the ZDKY Venture Capital Resolutions” Shareholders held as at the date of this announcement pursuant to which, among other things, the resolutions in respect of the Capital Reduction was passed “Shares” : ordinary share(s) with a nominal value of RMB1.00 each in the share capital of the Company, including A Shares and H Shares “Stock Exchange” : The Stock Exchange of Hong Kong Limited “subsidiary” : has the meaning ascribed to it under the Listing Rules “substantial shareholder” : has the meaning ascribed to it under the Listing Rules “ZDKY Venture Capital” : Zhongding Kaiyuan Venture Capital Management Co., Ltd. (中鼎開源創業投資管理有限公司), a limited liability company incorporated in the PRC, a subsidiary of the Company in which the Company owns approximately 64.86% of its equity interest as at the date of this announcement “ZDKY Venture Capital : the shareholders of ZDKY Venture Capital as at the date of Shareholders” this announcement, namely the Company and the Other ZDKY Venture Capital Shareholders “Zhengfa Group” : Zhengzhou Development Investment Group Co., Limited* (鄭 州發展投資集團有限公司), a limited company incorporated in the PRC and holding approximately 10.87% equity interest in ZDKY Venture Capital as at the date of this announcement “%” :
per cent
By Order of the Board Central China Securities Co., Ltd. Jian Mingjun Chairman
Henan, the PRC 28 June 2017
As at the date of this announcement, the Board comprises executive Directors Mr. JIAN Mingjun and Mr. ZHOU Xiaoquan, non-executive Directors Mr. LI Xingjia, Mr. WANG Lixin, Mr. ZHANG Qiang, Mr. ZHANG Xiaoqi and Mr. YU Zeyang, and independent non-executive Directors Mr. YUAN Dejun, Mr. YUEN Chi Wai, Mr. NING Jincheng and Mr. YU Xugang.
* For identification purpose only
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