Central Development Holdings Limited — Capital/Financing Update 2021

Jun 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.

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)

ISSUE OF NEW SHARES UNDER GENERAL MANDATE

On 1 June 2021 (after trading hours), the Company and the Noteholder entered into the Settlement Deed in relation to (i) certain settlement arrangements with respect to the Petition and the Promissory Note, and (ii) the Subscription.

Pursuant to the Settlement Deed, the Noteholder agrees to irrevocably withdraw and terminate the Petition and all related legal procedures. The Noteholder conditionally agreed to subscribe for, and the Company conditionally agreed to allot and issue, 1,480,000,000 new Shares at the Subscription Price of HK$0.20 per Subscription Share, with an aggregate consideration of HK$296,000,000. The Subscription Shares will be allotted and issued pursuant to the General Mandate. The Subscription Consideration will be set off against the Relevant Indebtedness upon Completion.

The Subscription Shares represent (i) approximately 19.89% of the issued share capital of the Company as at the date of this announcement and (ii) approximately 16.59% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares (assuming there will be no change in the issued share capital of the Company between the date of this announcement and completion of the Subscription, other than the issue of the Subscription Shares).

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Reference is made to the announcements of the Company dated 16 April 2021, 21 April 2021, 25 April 2021, 29 April 2021 and 27 May 2021 in relation to, among other things, the Petition.

On 1 June 2021 (after trading hours), the Company and the Noteholder entered into the Settlement Deed in relation to (i) certain settlement arrangements with respect to the Petition and the Promissory Note, and (ii) the Subscription.

THE SETTLEMENT DEED

Date: 1 June 2021 (after trading hours) Parties: (1) the Company; and (2) the Noteholder.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Noteholder and its ultimate beneficial owner(s) are independent of, and not connected with, the Company and its connected persons.

Settlement Arrangements

The Noteholder agrees to irrevocably withdraw and terminate the Petition and all related legal procedures.

The Noteholder agrees and undertakes that:

• (a) save for exercising its rights under the Settlement Deed, the Noteholder will not (and will procure its related parties not to) directly or indirectly claim against, or commence or initiate any arbitration, litigation or legal proceedings in any jurisdiction against the Company, its related parties, their respective directors, officials, employees or consultants in any manner arising from or in connection with the Promissory Note;

• (b) the Noteholder will not transfer, pledge or otherwise grant any rights under the Promissory Note; and

• (c) the Noteholder will discuss in good faith with the Company on its reorganization and use reasonable efforts to provide the Company with relevant information and assistance.

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The Subscription

Pursuant to the Settlement Deed, the Noteholder conditionally agreed to subscribe for, and the Company conditionally agreed to allot and issue, 1,480,000,000 new Shares at the Subscription Price of HK$0.20 per Subscription Share, with an aggregate consideration of HK$296,000,000 (the “ Subscription Consideration ”).

Number of Subscription Shares

The Subscription Shares represent:

• (i) approximately 19.89% of the issued share capital of the Company as at the date of this announcement; and

• (ii) approximately 16.59% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares (assuming there will be no change in the issued share capital of the Company between the date of this announcement and completion of the Subscription, other than the issue of the Subscription Shares).

With reference to the closing price of HK$0.018 per Share on the date of the Settlement Deed, the Subscription Shares have a market value of HK$26,640,000, and the aggregate nominal value of the Subscription Shares is HK$296,000,000 based on the par value of the Shares of HK$0.20 each.

Subscription Price

As at the date of this announcement, the outstanding amount of the Promissory Note held by the Noteholder and the relevant interest payable is approximately HK$442.6 million.

Pursuant to the Settlement Deed, the Subscription Consideration of HK$296,000,000 will be set off against the Relevant Indebtedness upon Completion. Accordingly, no cash proceeds will be received by the Company from the Subscription.

Immediately after such set-off and Completion:

• (i) the Noteholder will be deemed to have fulfilled its payment obligation with respect to the Subscription Consideration; and the Company will be deemed to have fulfilled its payment obligation with respect to the Relevant Indebtedness; and

• (ii) the Promissory Note in the principal amount of HK$104,000,000 will remain outstanding and continue to be in force in accordance with the term and conditions of the Promissory Note.

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The Subscription Price of HK$0.20 per Subscription Share represents:

• (i) a premium of approximately 1,011% over the closing price of HK$0.0180 per Share as quoted on the Stock Exchange on 1 June 2021, being the date of the Settlement Deed;

• (ii) a premium of approximately 1,011% over the average closing price of approximately HK$0.0180 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the Settlement Deed; and

• (iii) a premium of approximately 1,017% over the average closing price of approximately HK$0.0179 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the date of the Settlement Deed.

The Subscription Price was determined after arm’s length negotiations between the Company and the Noteholder with reference to (i) the prevailing market prices of the Shares; (ii) the prevailing market conditions; and (iii) the Company is not permitted to issue Shares at less than their par value without applying to the Cayman Court for an order sanctioning a capital reduction. The Directors consider that the Subscription Price is in the interest of the Company and its Shareholders as a whole.

Rights and ranking of Subscription Shares

The Subscription Shares will, when allotted and issued, rank pari passu in all respects among themselves and with all the Shares in issue free from all liens, charges and encumbrances, and together with all rights attaching to them as at the date of issue of the Subscription Shares, including the right to receive all dividends declared, made or paid on the record date of which falls on or after the date of allotment and issue of the Subscription Shares.

Condition of the Subscription

Completion of the Subscription is conditional upon the following conditions having been fulfilled and/or waived (as applicable):

• (i) the Listing Committee having granted the listing of, and permission to deal in, the Subscription Shares on the Stock Exchange; and

• (ii) the Noteholder having withdrawn all legal proceedings and the Cayman Court having issued an order to terminate the Petition and the related legal proceedings.

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None of the above conditions may be waived by any party to the Settlement Deed. If any of the above conditions has not been fulfilled on 30 June 2021 or such other date as the Company and the Noteholder may agree in writing, the Company shall be entitled to terminate the Settlement Deed in whole or in part.

As at the date of this announcement, condition (ii) has been fulfilled.

Completion

Completion of the Subscription shall take place on the third Business Day after the fulfilment of the conditions as set out above or such other date to be agreed between the Company and the Noteholder in writing.

Application for listing

An 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

The Subscription Shares will be allotted and issued pursuant to the General Mandate, which has been granted to the Directors to allot and issue up to 1,488,479,194 Shares, representing 20% of the total number of Shares in issue as at the date of the AGM.

As at the date of this announcement, the Directors have not exercised their power to allot and issue any new Shares pursuant to such General Mandate and 1,488,479,194 Shares remains available for issuance under such General Mandate. Accordingly, the issue of the Subscription Shares is not subject to further approval of the Shareholders.

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EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately upon completion of the Subscription (assuming there is no change in the issued share capital of the Company from the date of this announcement up to completion of the Subscription, other than the allotment and issue of the Subscription Shares) is set out below:

Shareholders of the CompanySubstantial ShareholdersMs. Mak Siu Hang Viola(“Ms. Mak”)(Note)NoteholderSub-totalPublic ShareholdersTotal	As at the date ofthis announcementNumber ofSharesApproximate%1,816,330,00024.41––1,816,330,00024.415,626,065,97075.597,442,395,970100.00	Immediately upon completion ofthe SubscriptionNumber ofSharesApproximate%1,816,330,00020.351,480,000,00016.593,296,330,00036.945,626,065,97063.068,922,395,970100.00	Immediately upon completion ofthe SubscriptionNumber ofSharesApproximate%1,816,330,00020.351,480,000,00016.593,296,330,00036.945,626,065,97063.068,922,395,970100.00
			36.9463.06
			100.00

Note: 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.

INFORMATION ON THE GROUP

The Company is an exempted company incorporated in the Cayman Islands with limited liability. The Group is principally engaged in expressway operations, compressed natural gas (CNG) gas stations operation, growing and sales of forage and agricultural products and timber operations.

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INFORMATION ON THE NOTEHOLDER

To the best of the Director’s knowledge, information and belief and having made all reasonable enquiries, the Noteholder is a company incorporated in Hong Kong with limited liability and its ultimate beneficial owner is Mr. Li Yongxiang. Its principal business is investing holding.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION

The Promissory Note carries interest at 5% per annum and its principal amount and accrued interest would be due for repayment in full by 15 April 2024. As at the date of this announcement, the outstanding principal amount of the Promissory Note (together with interest accrued) amounted to HK$442,630,136.94. It is expected that the Company will incur additional finance cost of approximately HK$57 million from the date of this announcement if the Relevant Indebtedness were to be repaid upon maturity. The repayment of the Relevant Indebtedness upon maturity will reduce the amount of available cash and capital resources of the Group. The Directors consider that the Group’s business would be better financed by equity rather than short-term debts that will adversely affect the profit margin of the Group. Accordingly, the Directors believe that it will be beneficial to the Group to implement the Subscription and the set-off arrangement thereunder with a view to alleviating the impact on the Company’s cash flow position upon repayment of the Promissory Note.

In view of the foregoing, the Directors (including the independent non-executive Directors) consider that the terms of the Settlement Deed (including the Subscription Consideration and the set-off arrangement thereunder) are on normal commercial terms and fair and reasonable, and the Subscription are in the interests of the Company and the Shareholders as a whole.

FUND RAISING ACTIVITIES IN THE PAST 12 MONTHS

The Company has not carried out any equity fund raising activities during the 12 months immediately preceding the date of this announcement.

As the Subscription is subject to the fulfillment of the conditions set out in the Settlement Deed and may or may not proceed, Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company, and should consult their stockbroker, bank manager, solicitor or other professional adviser if they are in any doubt about their position or as to actions they should take.

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DEFINITIONS

“AGM”

• the annual general meeting of the Company held on 3 November 2020

• “Board” the board of Directors “Business Day(s)” a day (other than a Saturday or Sunday, a public holiday or any weekday on which Typhoon Signal No. 8 or higher is hoisted or a black rainstorm warning signal is given in Hong Kong at any time during 9:00 a.m. to 5:00 p.m.) on which banks are generally open for ordinary business in Hong Kong

• “Cayman Court” the Grand Court of the Cayman Islands

• “Company” China Resources and Transportation Group Limited, an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange (Stock Code: 269)

• “Completion” completion of the Subscription

• “connected person(s)” has the meaning ascribed thereto in the Listing Rules “Directors” the directors of the Company

• “General Mandate” the general mandate granted to the Directors pursuant to the relevant resolution of the Shareholders passed at the AGM

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollar, the lawful currency of Hong Kong “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China

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“Listing Committee” the Listing Committee of the Stock Exchange

• “Listing Rules”

  • the Rules Governing the Listing of Securities on the Stock Exchange

• “Noteholder” Mighty China International Limited, a company incorporated in Hong Kong with limited liability, the issued share capital of which is beneficially owned as to 99.9% by Mr. Li Yongxiang (李永祥) and holder of the Promissory Note as at the date of this announcement

• “Petition” the winding-up petition from the Noteholder filed on 23 March 2021 at the Cayman Court against the Company pursuant to sections 92(d) and/or 92(e) of the Companies Act (2021 Revision) of the Cayman Islands and being dismissed by the Cayman Court on 26 May 2021 (Cayman Islands time)

• “Promissory Note” the 5% promissory note due 2024 in the aggregate principal amount of HK$400,000,000 issued by the Company to the Noteholder on 16 April 2019

• “Relevant Indebtedness” part of the principal amount of the Promissory Note amounting to HK$296,000,000

• “Settlement Deed” the settlement deed dated 1 June 2021 entered into between the Company and the Noteholder in relation to (i) certain settlement arrangements with respect to the Petition and the Promissory Note, and (ii) the Subscription

• “SFC”

  • the Securities and Futures Commission of Hong Kong

• “SFO”

  • the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of the Company of HK$0.20 each

• “Shareholder(s)” holders of the Share(s)

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

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“Subscription” the subscription of the Subscription Shares by the Noteholder pursuant to the terms and conditions of the Settlement Deed “Subscription Price” HK$0.20 per Subscription Share

• “Subscription Shares”

  • 1,480,000,000 new Shares to be allotted and issued by the Company to the Noteholder pursuant to the Settlement Deed

• “substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules

• “%” per cent

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

Hong Kong, 1 June 2021

As at the date of this announcement, the Board comprises six executive Directors, namely Messrs Cao Zhong, Fung Tsun Pong, Gao Zhiping, Tsang Kam Ching, David, 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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