Central Development Holdings Limited — Capital/Financing Update 2021

Dec 1, 2021

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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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)

SUBSCRIPTION OF NEW SHARES BY DEBT CAPITALISATION

On 1 December 2021 (after trading hours), the Company entered into a debt capitalisation agreement with each of the Subscribers that have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue a total of 1,721,697,215 new Shares at the Subscription Price of HK$0.20 per Subscription Share.

The Subscription Price represents (i) a premium of approximately 1,439% to the closing price of HK$0.0130 per Share as quoted on the Stock Exchange on 1 December 2021, being the date of the Capitalisation Agreements; and (ii) a premium of 1,349% to the average of the closing prices of HK$0.0138 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the date of the Capitalisation Agreements.

The Subscription Shares represent (i) approximately 19.3% of the existing issued share capital of the Company; and (ii) approximately 16.18% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares.

The net Subscription Price, after deduction of relevant expenses, is approximately HK$0.199 per Subscription Share. The entire Subscription monies will be set off against an aggregate of HK$344,339,443 owed by the Company to the Subscribers.

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The Board announces that on 1 December 2021 (after trading hours), the Company entered into a Capitalisation Agreement with each of the Subscribers, pursuant to which the Subscribers have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 1,721,697,215 new Shares at the subscription price of HK$0.20 per Subscription Share. The Subscription Agreements entered into with each of the Subscribers are substantially in identical terms which are set out below:

Date

1 December 2021 (after trading hours)

Parties

• (i) The Company as issuer

• (ii) Subscribers

  • (a) Lucky Most Investments Limited, a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holdings;

  • (b) Viva Gain Investments Limited, a company incorporated in Seychelles with limited liability and is principally engaged in investment holdings;

  • (c) Mr. Fung Tsun Pong, the chairman and an executive director of the Company;

  • (d) Mr. Gao Zhiping, an executive director of the Company; and

  • (e) Mr. Jiang Tao, an executive director of the Company.

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The Debts to Be Capitalised

(i) Lucky

Reference is made to the announcement of the Company dated 1 June 2021 in relation to a settlement deed entered into between the Company and Mighty China (one of the holders of the 2019 Promissory Note), pursuant to which Mighty China converted an indebtedness of HK$296,000,000, being part of the Mighty China PN, into new shares of the Company. Lucky is the successor of the outstanding balance of the Mighty China PN with a principal amount of HK$104,000,000 and all accrued interest. As such, as at the date of the Subscription Agreement, Lucky is the holder of HK$104,000,000 promissory note and is entitled to the accrued interest of HK$45,182,466 under the Mighty China PN, i.e. a total indebtedness of HK$149,182,466 which will be fully settled by the issue of 745,912,330 Subscription Shares.

Lucky will become a substantial Shareholder (as defined under the Listing Rules) immediately upon completion of the Subscription.

• (ii) Viva Gain

Viva Gain is the holder of a promissory note with a principal amount of HK$183,348,066, which is part of the 2019 Promissory Note and part of the principal amount, i.e. HK$153,348,066 and accrued interest of HK$20,166,321 will be settled by the issue of 867,571,935 Subscription Shares. After issue of the Subscription Shares to Viva Gain, it is still entitled to a promissory note with principal amount of HK$30,000,000 being the balance of its promissory note, and all accrued interest.

Viva Gain will become a substantial Shareholder (as defined under the Listing Rules) immediately upon completion of the Subscription.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Lucky, Viva Gain and their respective ultimate beneficial owners are Independent Third Parties.

(iii) Mr. Fung

As at 30 November 2021, the Company owes an aggregate sum of HK$11,931,507 to Mr. Fung which is the accrued and unpaid directors fees. All the unpaid directors fee will be settled by the issue of 59,657,535 Shares to Mr. Fung at the Subscription Price.

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(iv) Mr. Gao

As at 30 November 2021, the Company owes an aggregate sum of HK$4,726,973 to Mr. Gao which is the accrued and unpaid directors fees. All the unpaid directors fee will be settled by the issue of 23,634,865 Shares to Mr. Gao at the Subscription Price.

• (v) Mr. Jiang

As at 30 November 2021, the Company owes an aggregate sum of HK$4,984,110 to Mr. Jiang which is the accrued and unpaid directors fees. All the unpaid directors fee will be settled by the issue of 24,920,550 Shares to Mr. Jiang at the Subscription Price.

Number of Subscription Shares

Assuming that there will be no change in the issued share capital of the Company between the date of this announcement and the completion of the Subscription, the Subscription Shares represent (i) approximately 19.3% of the existing issued share capital of the Company; and (ii) approximately 16.18% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares.

Subscription Price

The Subscription Price represents (i) a premium of approximately 1,439% to the closing price of HK$0.0130 per Share as quoted on the Stock Exchange on 1 December 2021, being the date of the Capitalisation Agreements; and (ii) a premium of 1,349% to the average of the closing prices of HK$0.0138 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the date of the Capitalisation Agreements. The net Subscription Price, after deduction of relevant expenses, is approximately HK$0.199 per Subscription Share.

The Subscription Price was arrived at after arm’s length negotiations between the Company and the Subscribers, taking into account, among others, the recent trading performance of the Shares and the par value of the Shares. The Directors consider that the Subscription Price and the terms of the Capitalisation Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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The aggregate Subscription Price for all the Subscription Shares shall be settled by the Subscribers upon completion by way of set off against an equivalent amount of debt owed by the Company to the Subscribers.

Rights of the Subscription Shares

The Subscription Shares, when allotted and issued, will rank equally in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Subscription Shares.

Conditions of the Subscription

The Subscriptions are conditional upon the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Subscription Shares.

In the event that the condition of the Subscriptions is not fulfilled on or before the Long Stop Date, the Capitalisation Agreements shall cease and determine and neither the Company nor the Subscribers shall have any obligations and liabilities under the Capitalisation Agreements.

Completion of the Subscription

Completion of the Subscriptions will take place within three (3) Business Days upon satisfaction of all the conditions of the Subscriptions or such other time and date as the parties may agree upon.

Application for listing

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

GENERAL MANDATE TO ALLOT AND ISSUE OF THE SUBSCRIPTION SHARES

The Subscription Shares will be issued under the General Mandate to allot, issue and deal with Shares granted to the Directors by resolution of the Shareholders passed at the AGM subject to the limit up to 20% of the then issued share capital of the Company as at the date of the AGM. Accordingly, the issue of the Subscription Shares is not subject to the approval of the Shareholders.

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Under the General Mandate, the Company is authorized to allot and issue up to 1,784,479,194 Shares. Up to the date of this announcement, no Shares has been issued under the General Mandate. Upon issue of the Subscription Shares, 62,781,979 Shares of the General Mandate are still available.

REASONS FOR THE CAPITALISATION AGREEMENTS

The Group is principally engaged in expressway operations, compressed natural gas, gas stations operations, growing and sales of forage and agricultural products and timber operations.

By entering into the Capitalisation Agreements, part of the outstanding sums under the 2019 Promissory Note and certain outstanding fees owing to the directors will be capitalized into equity capital, which will lower the gearing ratio of the Group. As such, the finance cost can be reduced and this will alleviate the difficulty of the Company to repay the 2019 Promissory Note as well as directors’ fees.

There will be no proceeds arising from the Subscription as all the Subscription Prices will be set off against the debts owing by the Company to the Subscribers on a dollar to dollar basis.

The Directors consider that the Capitalisation Agreements are entered into upon normal commercial terms following arm’s length negotiations between the Company and the Subscribers and that the terms of the Capitalisation Agreements are fair and reasonable so far as the interests of the Company and the Shareholders as a whole are concerned. The Directors also consider that the Subscriptions will strengthen the financial position (in particular, reduction of the gearing ratio) of the Group.

EQUITY FUND RAISING ACTIVITIES OF THE COMPANY DURING THE PAST 12 MONTHS

Reference is made to the announcements of the Company dated 1 and 18 June 2021 that the Company allotted and issued a total of 1,480,000,000 new Shares at the subscription price of HK$0.20 per Share, with an aggregate consideration of HK$296,000,000, to Mighty China on 18 June 2021 to set off part of the Mighty China PN.

Save as disclosed above, the Company has not conducted any other equity fund raising activities in the past twelve months immediately preceding the date of this announcement.

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EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquires, the existing shareholding structure of the Company and the effect on the shareholding structure of the Company upon completion of the Subscription (subject to completion of the Subscription and assuming that there is no other change in the shareholding structure of the Company before the allotment and issue of the Subscription Shares under the Subscription) are set out below:

ShareholdersSubstantial ShareholdersMs. Mak Siu Hang Viola (“Ms. Mak”)(Note 1)Mighty ChinaSubscribersLuckyViva GainMr. Fung_(Note 2)_Mr. GaoMr. JiangPublic Shareholders	As at the date ofthis announcementNumber ofissued SharesApproximate%1,816,330,00020.351,480,000,00016.59––––47,748,1220.54––––5,578,317,84862.528,922,395,970100.00	Immediately upon completionof the SubscriptionNumber ofissued SharesApproximate%1,816,330,00017.071,480,000,00013.90745,912,3307.01867,571,9358.15107,405,6571.0123,634,8650.2224,920,5500.235,578,317,84852.4110,644,093,185100.00	Immediately upon completionof the SubscriptionNumber ofissued SharesApproximate%1,816,330,00017.071,480,000,00013.90745,912,3307.01867,571,9358.15107,405,6571.0123,634,8650.2224,920,5500.235,578,317,84852.4110,644,093,185100.00
			100.00

1. As at the date of this announcement, VMS Investment Group Limited, Focal Sunshine Limited (a wholly-owned subsidiary of VMS Investment Group Limited) and Keywood Group Limited (a wholly-owned subsidiary of VMS Finance Group Limited) directly interested in 242,115,000 Shares, 974,215,000 Shares and 600,000,000 Shares, respectively. VMS Investment Group Limited and VMS Finance Group Limited are wholly-owned by Ms. Mak. By reason of interests of controlled corporations within the meaning of Part XV of the SFO, Ms. Mak is deemed to be interested in the 1,816,330,000 Shares held by these corporations.

2. As at the date of this announcement, Mr. Fung directly interested in 31,568,122 Shares. Ocean Gain Limited is wholly-owned by Mr. Fung and is interested in 16,180,000 Shares. By reason of interests of controlled corporations within the meaning of Part XV of the SFO, Mr. Fung is deemed to be interested in the 47,748,122 Shares held by the corporation.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings:

• “2019 Promissory Note”

  • the promissory notes issued by the Company to certain parties on 16 April 2019 with an aggregate principal amount of approximately HK$683 million for settlement of a debt owing to China Alliance International Holding Group Limited (中聚國際控股集團有限公司) with coupon interests of 5% per annum and repayable on 15 April 2024.

• “AGM”

  • the annual general meeting of the Company convened and held on 17 September 2021 to approve, among other things, the grant of the General Mandate

• “associates” has the meaning ascribed to this term under the Listing Rules

• “Board” the board of Directors

• “Business Day(s)” any day (not being a Saturday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• “Capitalisation a conditional debt capitalisation agreement dated 1 Agreement(s)” December 2021 entered into between the Company and each of the Subscribers in respect of the Subscriptions

• “Company”

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

• “connected person” has the meaning ascribed to this term under the Listing Rules

• “Director(s)”

• Director(s) of the Company

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“General Mandate”

the general mandate granted to the Directors at the AGM to allot, issue and deal with Shares

• “Group”

the Company and its subsidiaries

• “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China

• “Independent Third third party(ies) independent of and not connected with the Party(ies)” Company and its connected persons and is not acting in concert (as defined in the Hong Kong Codes on Takeovers and Mergers and Share Buy-backs) with any of the connected persons of the Company or any of their respective associates (as defined under the Listing Rules)

• “Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange

• “Long Stop Date” 15 December 2021, or such other date as may be agreed between the parties to the Capitalisation Agreements

• “Lucky”

  • Lucky Most Investments Limited, a limited Company incorporated in the British Virgin Islands with company number 1902041, being wholly owned by Mr. Lu Yajing, a PRC citizen

• “Mr. Fung”

  • Mr. Fung Tsun Pong, the chairman and an executive director of the Company

• “Mr. Gao”

  • Mr. Gao Zhiping, an executive director of the Company

• “Mr. Jiang”

  • Mr. Jiang Tao, an executive director of the Company

• “Mighty China” Mighty China International Limited, a company incorporated in Hong Kong with limited liability and is one of the noteholders of the 2019 Promissory Note.

• “Mighty China PN” the 5% coupon interest promissory note due 2024 in the aggregate principal amount of HK$400,000,000 issued by the Company to Mighty China on 16 April 2019

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“Share(s)”	ordinary share(s) in the share capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscribers”	Lucky, Viva Gain, Mr. Fung, Mr. Gao and Mr. Jiang
“Subscriptions”	the subscription for the Subscription Shares by the
	Subscribers pursuant to the Capitalisation Agreements
“Subscription Price”	the subscription price of HK$0.20 per Subscription Share
“Subscription Shares”	the share(s) to be subscribed by the Subscriber(s) pursuant
	to the Capitalisation Agreements entered into with the
	Company
“Viva Gain”	Viva Gain Investments Limited, a limited Company
	incorporated in Seychelles with company number 171286,
	being wholly owned by Mr. Ma Xingzhong, a PRC citizen
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

By order of the Board

China Resources and Transportation Group Limited Fung Tsun Pong Chairman

Hong Kong, 1 December 2021

As at the date of this announcement, the board of directors comprises four executive directors, namely Messrs Fung Tsun Pong, Gao Zhiping, Jiang Tao and Duan Jingquan; and four independent non-executive directors, namely Messrs Jing Baoli, Bao Liang Ming, Xue Baozhong and Ms. Chan Chu Hoi.

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