Central Development Holdings Limited — Capital/Financing Update 2012

Dec 20, 2012

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of China Resources and Transportation Group Limited.

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CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED 中國資源交通集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 269)

DISCLOSEABLE TRANSACTION AND ISSUE OF CONDITIONAL WARRANTS

On 20 December 2012, the Company and Joint Gain entered into the Agreement pursuant to which:

• (1) the Group agreed to sell to Joint Gain the Operating Rights to be held by the Project Company for the aggregate consideration of RMB301,000,000 (equivalent to HK$374,143,000); and

• (2) after completion of the construction of the petrol and gas stations of the service areas of the Zhunxing Expressway, the Company may exercise the Call Option and acquire the Operating Rights to be held by the Project Company, and the Company agreed to issue the conditional Warrants to Joint Gain. Assuming full exercise of the Warrants, Joint Gain would hold approximately 9.9% of the Company’s existing issued share capital and approximately 9.0% of the Company’s issued share capital as enlarged by the issue of the Warrant Shares (assuming that none of the other convertible instruments of the Company are exercised). The Warrants may only be exercised after completion of the exercise of the Call Option.

The Company will apply to the Stock Exchange for the listing of, and permission to deal in, the Warrant Shares.

As the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal is more 5% but less than 25%, the Disposal constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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THE AGREEMENT

Date: 20 December 2012 Parties: The Company; and Joint Gain.

Joint Gain is principally engaged in the business of investment holding. To the best knowledge of the Directors, having made all reasonable enquiry, Joint Gain and its ultimate beneficial owners are independent of and not connected with the Company and its connected persons.

The Disposal

Under the Agreement, the Company has agreed to procure the transfer to Joint Gain the Operating Rights by transferring to Joint Gain the entire equity interest in the Project Company.

As at the date of this announcement, the Company is indirectly interested in 55.9% of the registered capital of Zhunxing. Zhunxing holds the exclusive right to build and operate the Zhunxing Expressway for a period of 30 years (excluding the construction period). The Zhunxing Expressway is a 265-kilometer heavy-duty toll expressway specifically designed for coal transportation in Inner Mongolia. It will run from Jungar Banner, a major coal production area south of Hohhot in Ordos, towards northeast to Xinghe County, a major logistic hub for coal distribution in the northern part of the PRC.

The Company will set up the Project Company for the holding of the Operating Rights. Joint Gain will be responsible for all the costs related to the construction and development of petrol and gas stations in the service areas.

Subject to final audit, it is expected that the Group will receive net proceeds of approximately HK$373.5 million as a result of the sale of the Project Company to Joint Gain, which the Directors currently intend to apply as general working capital of the Group. After completion of the Disposal, the Group will cease to have any interest in the Project Company.

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Consideration

The consideration for the Disposal is RMB301,000,000 (equivalent to approximately HK$374,143,000), which will be payable by Joint Gain in cash in the following manner:

• (a) a sum of HK$60,000,000 is payable within 3 working days from the execution of the Agreement;

• (b) a sum of HK$60,000,000 is payable within 30 working days from the execution of the Agreement;

• (c) a sum of HK$20,000,000 is payable on the latest of (i) 31 March 2013, (ii) the date of completion of the Disposal, and (iii) the date on which the lands to the service areas have been delivered to Joint Gain (the “Third Payment Date”);

• (d) a sum of HK$20,000,000 is payable on the later of (i) 30 June 2013 and (ii) the Third Payment Date;

• (e) a sum of HK$20,000,000 is payable on the later of (i) 30 September 2013 and (ii) the Third Payment Date; and

• (f) the balance of the consideration is payable on the later of (i) 31 December 2013 and (ii) the date on which the construction of the Zhunxing Expressway is completed.

The consideration for the Disposal was determined between the Company and Joint Gain after arm’s length negotiations with reference to the operation of similar petrol and gas stations in the toll road industry. Given that the consideration was determined after arm’s length negotiations and on normal commercial terms, the Directors (including the independent non-executive Directors) are of the view that the terms and conditions of the Disposal are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Completion of the Disposal is expected to take place within 52 days of the execution of the Agreement.

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Call Option

Pursuant to the terms of the Agreement, Joint Gain has granted the Call Option to the Company under which the Company has the right to require Joint Gain to sell all of its interests in the Project Company to the Company.

No premium is payable by the Company for the grant of the Call Option. The Call Option is exercisable at the discretion of the Company. The price for the acquisition of the Project Company will be determined with reference to the total construction and development costs of the petrol and gas stations in the service areas. The Company will comply with the requirements of the Listing Rules on the exercise of the Call Option.

THE WARRANTS

Pursuant to the terms of the Agreement and subject to the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Warrant Shares, the Company agreed to issue the conditional Warrants to Joint Gain. The Warrants may only be exercised after completion of the exercise of the Call Option. The principal terms of the Warrants are set out below:

Issuer: The Company Number of Warrants to be 2,000,000,000 issued:

Issue price: HK$1.00 Exercise price: HK$0.48 per Share, subject to adjustment in accordance with the terms of the Warrants including, among other things, subdivision or consolidation of Shares, capital distribution, and other dilutive events.

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Exercise period:

The Warrants may be exercised at any time during the period commencing from the completion of the exercise of the Call Option and the Project Company becomes a subsidiary of the Company to the third anniversary of the date of execution of the Agreement.

Status:

The Warrants will rank pari passu in all respects with one another.

• Number of Shares issuable: Upon the full exercise of the Warrants, 2,000,000,000 Shares will fall to be issued and represent approximately 9.9% of the existing issued share capital of the Company and approximately 9.0% of the issued share capital of the Company as enlarged by the allotment and issue of the Warrant Shares (assuming that none of the other convertible instruments of the Company are exercised).

Transferability of subscription rights:

The subscription rights will be transferable, subject to certain restrictions imposed pursuant to the terms of the Warrants.

Voting: The Warrant holder will not be entitled to vote at any general meetings of the Company by reason only of it being a holder.

Listing: No application will be made for the listing of the Warrants on the Stock Exchange or any other exchange.

Comparison of exercise price

The initial exercise price of HK$0.48 per Warrant Share was determined after arm’s length negotiations and represents:

• (i) a premium of approximately 75% over the closing price of the Shares of HK$0.275 as quoted on the Stock Exchange on the date of the Agreement;

• (ii) a premium of approximately 76% over the average closing price of HK$0.273 per Share for the last 5 consecutive trading days up to and including 20 December 2012, the date of the Agreement; and

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• (iii) a premium of approximately 68% over the average closing price of HK$0.285 per Share for the last 30 consecutive trading days up to and including 20 December 2012, the date of the Agreement.

The Warrant Shares have a nominal value of HK$20,000,000 and a market value of HK$550 million based on the closing price of the Shares of HK$0.275 on 20 December 2012. The net price of the Warrant Shares is estimated to be approximately HK$0.48 per Warrant Share.

The Warrant Shares will rank pari passu in all respects with the Shares then in issue on the relevant exercise date.

General mandate

No shareholders’ approval is required for the proposed issue of the Warrants, and the Warrant Shares will be issued under the general mandate granted to the Board at the annual general meeting of the Company held on 8 August 2012, where the Directors were authorized to allot, issue or otherwise deal with 4,038,156,779 Shares, representing 20% of the issued share capital of the Company as at the date of the Shareholders’ resolution granting such mandate to the Directors. As at the date of this announcement, no Shares had been issued pursuant to the aforesaid existing general mandate. The Warrant Shares to be issued at the initial exercise price will cover approximately 49.5% of such general mandate.

The Company has not raised any funds from any issue of equity securities in the last 12 months.

Application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Warrant Shares which may fall to be issued upon exercise of the subscription rights attaching to the Warrants. No listing application will be made for the listing of the Warrants on the Stock Exchange or any other stock exchange.

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Shareholding of the Company

The table below sets out the Company’s shareholding structure as at the date of this announcement and upon the full exercise of the subscription rights attaching to the Warrants:

Shareholders China Alliance International Holding Group Limited Directors Mr. Cao Zhong (Note 2) Mr. Fung Tsun Pong (Note 3) Mr. Tsang Kam Ching, David Allkeen Investments Limited Joint Gain Other public Shareholders Total Notes:	Shareholding as at the date of this announcement No. of Shares % 4,275,862,068 21.16 2,194,500,000 10.86 2,356,662,449 11.67 51,624,499 0.25 1,016,000,000 5.03 – – 10,296,134,879 50.99 20,190,783,895 100.00	Shareholding immediately upon full exercise of the Warrants (Note 1) No. of Shares % 4,275,862,068 19.27 2,194,500,000 9.89 2,356,662,449 10.62 51,624,499 0.23 1,016,000,000 4.58 2,000,000,000 9.01 10,296,134,879 46.40 22,190,783,895 100.00	Shareholding immediately upon full exercise of the Warrants (Note 1) No. of Shares % 4,275,862,068 19.27 2,194,500,000 9.89 2,356,662,449 10.62 51,624,499 0.23 1,016,000,000 4.58 2,000,000,000 9.01 10,296,134,879 46.40 22,190,783,895 100.00
			100.00

1. Assuming the other convertible instruments of the Company are not exercised. As at the date of the announcement, the outstanding convertible instruments of the Company comprise the followings:

2. (a) 1,000 million warrants exercisable on or before 7 February 2013 at the subscription price of HK$0.23 per Share and convertible into 365,000,000 Shares;

3. (b) Convertible bonds issued to China Alliance International Holding Group Limited on 9 February 2010, the outstanding amount of which as at the date of this announcement was HK$282.8 million and may be convertible to 5,050,000,000 Shares at HK$0.056 per Share;

4. (c) Convertible bonds issued to Li Ka Shing (Canada) Foundation on 28 September 2011, the outstanding amount of which as at the date of this announcement was HK$1,300 million and may be convertible to 3,250,000,000 Shares at HK$0.40 per Share;

5. (d) Convertible bonds issued to China Life Insurance (Overseas) Company Limited on 28 September 2011, the outstanding amount of which as at the date of this announcement was HK$600 million and may be convertible to 1,500,000,000 Shares at HK$0.40 per Share; and

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• (e) Convertible bonds issued to Dr. Lo Ka Shui on 28 September 2011, the outstanding amount of which as at the date of this announcement was HK$100 million and may be convertible to 250,000,000 Shares at HK$0.40 per Share.

• Mr. Cao Zhong, the chairman and executive Director is interested in 124,200,000 Shares personally and 2,070,300,000 Shares through Champion Rise International Limited, a company wholly owned by him.

• Mr. Fung Tsun Pong, the vice chairman and an executive Director, holds 1,242,362,449 Shares personally and 1,114,300,000 Shares through Ocean Gain Limited, a company wholly owned by him.

REASONS FOR THE DISPOSAL AND THE ISSUE OF THE WARRANTS

The construction of the Zhunxing Expressway has been in full gear and the Group has made an all-out effort to ensure its opening in 2013. In line with the Group’s development directions and commitment on expressway business and auxiliary facilities, the development of the petrol and gas stations in the service areas will also form an important part of the facilities to support the Zhunxing Expressway. There will be 4 pairs of service areas for petrol and gas stations, and 6 car parks. As the borrowing facility to be obtained from a financial institution by the Group will only be utilized for the construction of the Zhunxing Expressway and will not cover the construction and development costs of the service areas, the Company considers that it is in the interest of the Company to enter into the Agreement to develop the petrol and gas stations in the service areas. Given that the consideration of the Disposal was determined after arm’s length negotiations and on normal commercial terms, the Directors (including the independent non-executive Directors) consider that the terms and conditions of the Agreement are fair and reasonable and that the entering into of the Agreement is in the interests of the Company and the Shareholders as a whole.

The Board considers the issue of the conditional Warrants to Joint Gain is part of the Group’s effort in attracting independent and significant shareholders to the Company. The proposed issue of the Warrants also represents an opportunity for the Company to raise additional funds. Upon full exercise of the subscription rights attaching to the Warrants, the net proceeds will be approximately HK$960 million and will be applied as general working capital of the Company.

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IMPLICATIONS UNDER THE LISTING RULES

As the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal is more than 5% but less than 25%, the Disposal constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

GENERAL

The Group was principally engaged in expressway and auxiliary facility investment, expressway operation, management and maintenance, property development and asset management, forest operation and management, timber logging and trading, sale of timber products, plantation and trading of seedlings, and cold storage warehouse rental.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms have the meanings set opposite them below:

“Agreement”	the agreement dated 20 December 2012 between the
	Company and Joint Gain;
“associate(s)”	has the meaning ascribed to it in the Listing Rules;
“Board”	the board of Directors;
“Call Option”	the call option granted by Joint Gain to the Company under
	the Agreement requiring Joint Gain to sell all the equity
	interest in the Project Company to the Company;
“Company”	China Resources and Transportation Group Limited, a
	company incorporated in the Cayman Islands as an
	exempted company with limited liability, the shares of
	which are listed on the main board of the Stock Exchange;
“connected person”	has the meaning ascribed to it under the Listing Rules;
“Director(s)”	the director(s) of the Company;
“Disposal”	the sale of the entire equity interest in the Project Company
	to Joint Gain;

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“Group”	the Company and its subsidiaries;
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Joint Gain”	Joint Gain Holdings Limited, a company incorporated in the
	British Virgin Islands;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Operating Rights”	the development and operating rights to the petrol and gas
	stations of the service areas of the Zhunxing Expressway;
“PRC”	the People’s Republic of China, excluding Hong Kong, the
	Macao Special Administrative Region of the PRC and
	Taiwan for the purpose of this announcement;
“Project Company”	the project company to be established by Zhunxing to hold
	the Operating Rights;
“RMB”	Renminbi, the lawful currency of the PRC;
“Shareholder(s)”	shareholder(s) of the Company;
“Shares”	ordinary shares of HK$0.01 in the share capital of the
	Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Warrants”	the 2,000 million warrants to be issued by the Company
	entitling the holders thereof to, subject to conditions,
	subscribe for 2,000 million new Shares at the initial exercise
	price of HK$0.48 each;
“Warrant Shares”	new Shares to be issued upon the exercise of the
	subscription rights attaching to the Warrants;

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內蒙古准興重載高速公路有限責任公司 (Inner Mongolia Zhunxing Heavy Haul Expressway Company Limited*), a 55.9% non-wholly owned subsidiary of the Group;

“Zhunxing” 內蒙古准興重載高速公路有限責任公司 (Inner Mongolia Zhunxing Heavy Haul Expressway Company Limited*), a 55.9% non-wholly owned subsidiary of the Group; “Zhunxing Expressway” a 265-kilometer heavy haul toll expressway in Inner Mongolia, the PRC; “%” per cent.

In this announcement, translations from RMB to HK$ is based on an exchange rate of RMB1.00 to HK$1.243, which are used for illustration purpose only.

By Order of the Board

China Resources and Transportation Group Limited Cao Zhong Chairman

Hong Kong, 20 December 2012

As at the date of this Announcement, the Board comprises four executive Directors, namely Messrs Cao Zhong, Fung Tsun Pong, Duan Jingquan and Tsang Kam Ching, David; and three independent non-executive Directors, namely Messrs Yip Tak On, Jing Baoli and Bao Liang Ming.

• for identification purposes only.

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