Central Development Holdings Limited — Capital/Financing Update 2013

Sep 11, 2013

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 the securities of the Company.

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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)

PROPOSED ISSUE OF 9% CONVERTIBLE BONDS DUE 2016

On 11 September 2013, the Company and the CB Subscriber entered into the CB Agreement pursuant to which the CB Subscriber has conditionally agreed to subscribe for the 2016 Convertible Bonds with the principal amount of HK$1,500 million.

Assuming full conversion of the 2016 Convertible Bonds at the conversion price of HK$0.37 per Conversion Share, the 2016 Convertible Bonds will be convertible into 4,054,054,054 new Shares. The Conversion Shares represent approximately 14.42% of the existing issued share capital of the Company and approximately 12.61% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares.

The estimated net proceeds from the issue of the 2016 Convertible Bonds would be approximately HK$1,499.5 million. The Company intends to apply the net proceeds from the issue of the 2016 Convertible Bonds as general working capital of the Group and for funding the Capital Increase.

The Conversion Shares which may fall to be issued upon the exercise of the conversion rights under the 2016 Convertible Bonds will be issued under the General Mandate.

As the CB Agreement may or may not proceed to completion, Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

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THE CB AGREEMENT

Date

11 September 2013

Parties

• (1) The Company; and

• (2) Strait Capital Service Limited, a company incorporated in the Cayman Islands which is principally engaged in the business of privately negotiated and structured investments.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

Principal terms of the 2016 Convertible Bonds

Principal amount HK$1,500 million

Maturity date The date falling on the third anniversary of the issue date.

Interest The 2016 Convertible Bonds bear interest from the issue date of the 2016 Convertible Bonds at the rate of 9% per annum on the principal amount of the 2016 Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price

HK$0.37 per Conversion Share, subject to adjustment in accordance with the terms of the 2016 Convertible Bonds including, among other things, subdivision or consolidation of Shares, the making of a free distribution of Shares, bonus issue, the declaration of a dividend in Shares, capital distribution, issuance of options, rights or warrants, and other dilutive events such as issue of new Shares.

Number of Conversion 4,054,054,054 new Shares will be issued upon full Shares issuable conversion of the 2016 Convertible Bonds based on the initial conversion price of HK$0.37.

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Conditions precedent of the 2016 Convertible Bonds

The obligations of the CB Subscriber under the CB Agreement are conditional upon:

• (i) the Stock Exchange having granted the listing of, and permission to deal in, the Conversion Shares with respect to the 2016 Convertible Bonds;

• (ii) the representations and warranties of the Company set out in the CB Agreement not having been breached and remaining true and accurate in all material respects and not misleading in any material respect as at the closing date; and

• (iii) there being no event existing or having occurred and no condition being in existence which would (had the 2016 Convertible Bonds already been issued) constitute an event of default and no event or act having occurred which would constitute an event of default.

Completion of the CB Agreement will take place on the third business day following the date upon receipt of a notice from the Company notifying the CB Subscriber of the conditions precedent under the CB Agreement have been fulfilled. If the conditions precedent cannot be fulfilled by 30 November 2013 or such later date as the Company and the CB Subscriber may agree in writing, the CB Agreement will terminate and cease to be of any effect.

Application for listing

No Shareholders’ approval is required for the allotment and issue of the new Shares that may fall to be issued upon the conversion of the 2016 Convertible Bonds. The new Shares that may fall to be issued upon the conversion of the 2016 Convertible Bonds will be issued under the General Mandate.

At the annual general meeting held on 26 August 2013, the Shareholders have granted to the Directors the General Mandate to issue up to 5,121,156,779 Shares, being 20% of the issued share capital of the Company on 26 August 2013 of 25,605,783,895 Shares. As at the date of this announcement, the General Mandate has not been utilized. Upon completion of the issue of the 2016 Convertible Bonds, the Company will have remaining mandate to issue up to 1,067,102,725 Shares under the General Mandate.

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An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares which may fall to be issued upon conversion of the 2016 Convertible Bonds.

Other terms of the 2016 Convertible Bonds

Set out below is a summary of the other principal terms of the 2016 Convertible Bonds:

Issue price

100% of the principal amount of the 2016 Convertible Bonds, payable in full at completion of the CB Agreement.

Conversion period

Each Bondholder has the right to convert the 2016 Convertible Bonds in whole or in part into Conversion Shares at any time on or after the issue date of the 2016 Convertible Bonds up to the maturity date.

Notwithstanding the conversion rights attaching to the 2016 Convertible Bonds, the Company may not issue any Share and the relevant 2016 Convertible Bonds will continue until redeemed on the maturity date if and to the extent that upon such issue of the 2016 Convertible Bonds, the shareholding in the Company by the public will be less than 25% of the minimum prescribed percentage as set out in the Listing Rules from time to time.

Redemption at maturity

Each 2016 Convertible Bond will be redeemed on maturity at a value equal to 100% of its outstanding principal amount.

Repayment

If, at any time prior to the maturity date, the current market price of the Shares is more than HK$0.74 (such cut-off amount being subject to adjustment in the event of any subdivision or consolidation of the Shares) for 15 consecutive trading days, a repayment premium of 100% of the outstanding principal amount of the 2016 Convertible Bonds as at the maturity date will be payable by the Company on the maturity date.

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Redemption at the option of the Company

• The Company may, at any time and from time to time, purchase the 2016 Convertible Bonds at any price in the open market or otherwise in compliance with applicable laws and regulations.

• The Company may also, at any time up to (and excluding) the commencement of the seven calendar day period ending on (and including) the maturity date, when the principal amount of the 2016 Convertible Bonds outstanding is equal to or less than 10% of the original aggregate principal amount issued by the Company, by written notice to the Bondholders elect to redeem the whole or part of the then outstanding principal amount of the 2016 Convertible Bonds at an amount equal to the sum of (a) 100% of the principal amount of the 2016 Convertible Bonds sought to be redeemed as specified in the redemption notice and (b) all unpaid interest thereon.

Transferability

The 2016 Convertible Bonds will be transferable.

Status

The 2016 Convertible Bonds will represent direct, unconditional, unsubordinated and unsecured obligations of the Company and will at all times rank pari passu with all existing and future unsubordinated and unsecured obligations of the Company.

Voting

• A Bondholder will not be entitled to vote at any general meetings of the Company by reason only of it being a Bondholder.

Listing

No application will be made for the listing of the 2016 Convertible Bonds on the Stock Exchange or any other exchange.

The CB Subscriber may by not later than three business days prior to the closing date give notice to the Company to split the issue of the 2016 Convertible Bonds into one tranche occurring on the closing date and not more than three further tranches occurring on a date or dates within one month of the closing date, the aggregate of such tranches representing all of the 2016 Convertible Bonds.

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Comparison of conversion price

The initial conversion price of HK$0.37 per Conversion Share was arrived at after arm’s length negotiation between the Company and the CB Subscriber and represents:

• (i) a premium of approximately 5.71% to the closing price of the Shares of HK$0.350 as quoted on the Stock Exchange on the date of the CB Agreement;

• (ii) a premium of approximately 1.93% to the average closing price of HK$0.363 per Share for the last 5 consecutive trading days up to and including 11 September 2013, the date of the CB Agreement; and

• (iii) a premium of approximately 3.21% to the average closing price of HK$0.359 per Share for the last 30 consecutive trading days up to and including 11 September 2013, the date of the CB Agreement.

Conversion Shares

Assuming full conversion of the 2016 Convertible Bonds at the conversion price of HK$0.37 per Conversion Share, the 2016 Convertible Bonds will be convertible into 4,054,054,054 new Shares. The Conversion Shares represent approximately 14.42% of the existing issued share capital of the Company and approximately 12.61% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares.

The Conversion Shares have a nominal value of approximately HK$40.54 million and a market value of approximately HK$1,418.92 million based on the closing price of the Shares of HK$0.350 on 11 September 2013.

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

REASONS FOR THE CB AGREEMENT AND USE OF PROCEEDS

The Company announced on 14 June 2013 that Cheer Luck and Shu Ren Wood, both being wholly-owned subsidiaries of the Company, have entered into a capital increase agreement in relation to Zhunxing pursuant to which Cheer Luck will subscribe for further registered capital in Zhunxing to bring the Group’s interests in Zhunxing from 55.9% to 82.27%. The Directors consider that the issue of the 2016 Convertible Bonds represents an opportunity for the Company to raise additional funds for its operations. The estimated net proceeds from the issue of the 2016 Convertible Bonds will be approximately HK$1,499.5 million. The Company intends to apply the net proceeds as general working capital of the Group and for funding the Capital Increase.

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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 full conversion of the 2016 Convertible Bonds, assuming no further issue or repurchase of Shares and no conversion of any of the convertible securities of the Company:

China Alliance International Holding Group Limited Vivid Beyond Securities Limited Turbo View Investment Limited Directors Mr. Cao Zhong (Note 1) Mr. Fung Tsun Pong (Note 2) CB Subscriber Public Shareholders Total	Shareholding as at the date of this announcement No. of Shares % 4,275,862,068 15.21 2,500,000,000 8.89 1,500,000,000 5.34 2,194,500,000 7.81 2,356,662,449 8.39 4,551,162,449 16.20 – – 15,278,759,378 54.36 28,105,783,895 100.00	Shareholding immediately upon full conversion of the Convertible Bonds No. of Shares % 4,275,862,068 13.30 2,500,000,000 7.77 1,500,000,000 4.66 2,194,500,000 6.82 2,356,662,449 7.33 4,551,162,449 14.15 4,054,054,054 12.61 15,278,759,378 47.51 32,159,837,949 100.00	Shareholding immediately upon full conversion of the Convertible Bonds No. of Shares % 4,275,862,068 13.30 2,500,000,000 7.77 1,500,000,000 4.66 2,194,500,000 6.82 2,356,662,449 7.33 4,551,162,449 14.15 4,054,054,054 12.61 15,278,759,378 47.51 32,159,837,949 100.00
			14.15 12.61
			47.51
			100.00

Notes:

1. 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.

2. 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.

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FUND RAISING ACTIVITIES OF THE COMPANY IN THE LAST 12 MONTHS

The Company issued conditional warrants in the amount of HK$960,000,000 expiring 20 December 2015 to Joint Gain Holdings Limited pursuant to the agreement dated 20 December 2012. The warrants were conditional warrants and may only be exercised after the Company has exercised the call option to require Join Gain Holdings Limited to sell to the Company all of the interests in the project company that holds the development and operating rights to the petrol and gas stations of the service areas of the Zhunxing Expressway. As at the date of this announcement, the warrants have not been exercised and no proceeds have been received.

On 14 June 2013, the Company entered into agreements with the 2015 CB Subscribers for the issue of the 2015 Convertible Bonds in the principal amount of HK$2,584 million. As at the date of this announcement, HK$1,400 million of the net proceeds have been applied as set off against repayment of the Company’s convertible bonds due 2014, and the balance will be used to fund the Capital Increase.

On 14 June 2013, the Company also entered into subscription agreements with two subscribers for the subscription of an aggregate of 2,500,000,000 Shares to raise fund of approximately HK$747 million. The proceeds from the subscription will be used as to approximately HK$727 million to fund the Capital Increase and as to approximately HK$20 million as general working capital of the Company.

Save as disclosed above, the Company has not carried out any equity fund raising exercise in the 12 months immediately preceding the date of this announcement.

GENERAL

The Group was principally engaged in expressway and auxiliary facility investment, expressway operation, management and maintenance, property development and asset management and forest operation and management.

The Conversion Shares which may fall to be issued upon the exercise of the conversion rights under the 2016 Convertible Bonds will be issued under the General Mandate.

As the CB Agreement may or may not proceed to completion, Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

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DEFINITIONS

• “2015 Convertible Bonds”

• 9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$2,584 million issued by the Company;

• “2016 Convertible Bonds” 9% unlisted convertible bonds due 2016 in the aggregate principal amount of HK$1,500 million to be issued by the Company to the CB Subscriber;

• “associate” has the meaning ascribed to it under the Listing Rules;

• “Board” the board of Directors;

• “Bondholders” holders of the 2016 Convertible Bonds;

• “Capital Increase”

• the increase of the Group’s interest in Zhunxing from 55.9% to 82.27%, the details of which are set out in the Company’s announcement and circular dated 14 June 2013 and 30 July 2013, respectively;

• “CB Agreement” the agreement dated 11 September 2013 entered into between the Company and the CB Subscriber;

• “CB Subscriber” Strait Capital Service Limited;

• “Cheer Luck”

• Cheer Luck Technology Limited (展裕科技有限公司), a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company;

• “Company”

• China Resources and Transportation Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange;

• “connected person” has the meaning ascribed to it under the Listing Rules;

• “Conversion Shares”

• new Shares to be issued upon conversion of the 2016 Convertible Bonds;

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“Directors” the directors of the Company; “General Mandate” the authorisation granted to the Directors pursuant to an ordinary resolution of the Company passed at the annual general meeting of the Company held on 26 August 2013 to allot and issue up to 20% of the aggregate of the nominal value of the share capital of the Company in issue on the date of the passing of the resolution; “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; “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange; “PRC” the People’s Republic of China, excluding Hong Kong, the Macau Special Administrative Region and Taiwan; “Shareholders” registered holders of Shares from time to time; “Shares” shares of HK$0.01 each in the capital of the Company; “Shu Ren Wood” Shu Ren Wood (Shenzhen) Limited (樹人木業（深圳）有限 公司), a company established in the PRC and a wholly-owned subsidiary of the Company; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “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 as at the date of this announcement;

• For identification purposes only

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“Zhunxing Expressway”

a 265-kilometer heavy haul toll expressway in Inner Mongolia, the PRC being built by Zhunxing; and

“%”

per cent.

By Order of the Board China Resources and Transportation Group Limited Cao Zhong

Chairman

Hong Kong, 11 September 2013

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

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