Chen Xing Development Holdings Limited — M&A Activity 2017

Sep 17, 2017

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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Chen Xing Development Holdings Limited 辰興發展控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2286)

DISCLOSEABLE TRANSACTION IN RESPECT OF ACQUISITION OF 100% EQUITY INTEREST IN TARGET COMPANY

THE AGREEMENT

On 15 September 2017 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company, entered into the Agreement with the Vendors, pursuant to which the Purchaser has conditionally agreed to acquire and the Vendors have conditionally agreed to sell 100% equity interest in the Target at a consideration of RMB147,000,000 (equivalent to approximately HK$174,930,000) subject to the terms and conditions of the Agreement. To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, each of the Vendors is an Independent Third Party.

Upon Completion, the Company will indirectly hold 100% of the equity interest in the Target and the Target will become an indirect wholly-owned subsidiary of the Company.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceed 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements but is exempt from circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

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INTRODUCTION

On 15 September 2017 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company, entered into the Agreement with the Vendors, pursuant to which the Purchaser has conditionally agreed to acquire and the Vendors have conditionally agreed to sell 100% equity interest in the Target at a maximum consideration of RMB147,000,000 (equivalent to approximately HK$174,930,000) subject to the terms and conditions of the Agreement.

THE AGREEMENT

Date: 15 September 2017

• Parties: (1) the Purchaser; and

• (2) the Vendors.

As at the date of this announcement and to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Vendors is an Independent Third Party.

Assets to be acquired

Pursuant to the Agreement, the Purchaser has conditionally agreed to acquire and the Vendors have conditionally agreed to sell 100% equity interest in the Target.

Consideration

The Consideration payable by the Purchaser for the Acquisition is RMB147,000,000 (equivalent to approximately HK$174,930,000), among which RMB3,000,000 (equivalent to HK$3,570,000) has been paid as a deposit. The remaining amount of the Consideration in the sum of RMB144,000,000 (equivalent to approximately HK$171,360,000) which shall be conditionally deposited into the Escrow Account.

The Consideration was determined with reference to the market value, the future development potential of the Land and the prevailing market price of land in Hainan Province, the PRC. The Directors consider the terms and conditions of the Acquisition have been arrived at after arm’s length negotiations between the Purchaser and the Vendors and are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. The Directors consider the terms and conditions of the Acquisition to be on normal commercial terms.

The Group intends to finance the Consideration by internal resources of the Group.

Conditions for release of Consideration

The release of the Consideration to the Vendors shall be subject to the satisfaction of the following conditions:

• (a) After entering into the Agreement, the Purchaser and the Vendors agree to engage the notary office of Haikou City to notarize an announcement setting out the debt and obligations of the

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Company and such announcement shall be made available to the public according to applicable laws for a period of 30 calendar days (“ publication period ”);

• (b) Within three business days after the publication period, the Purchaser shall pay RMB144,000,000 (equivalent to HK$171,360,000) into the Escrow Account;

• (c) Within 20 business days after completion of the requirements under paragraphs (a) and (b) above, the Vendors shall complete the registration of the transfer of equity interests such that the equity interests shall be held by the Purchaser or the Purchaser’s nominee and upon the Vendors obtaining the receipt of acceptance of such transfer documents issued by the relevant government authority which has been verified by notary office of Haikou, the Vendors’ agent shall be allowed to withdraw the sum of RMB134,000,000 (equivalent to HK$159,460,000) from the Escrow Account;

• (d) Upon the Vendors receiving the updated business licence and the Purchaser obtaining the relevant tax certificates and providing the income tax certificates to the Sellers, the relevant corporate documents and records of the Target reflecting the transfer of equity interests shall be passed to the Purchaser in the presence of the staff of the notary office of Haikou, the Vendors’ Agent shall be allowed to withdraw the sum of RMB9,000,000 (equivalent to HK$10,710,000) from the Escrow Account; and

• (e) If no other outstanding issues have occurred within six months after the updated business licence takes effect, the Vendors’ Agent shall be allowed to withdraw the sum of RMB1,000,000 (equivalent to HK$1,190,000 from the Escrow Account.

The Purchaser shall be responsible to liaise with the relevant government authorities on the change in land use and planning in relation to the Land and to settle any existing and future compensation in relation to farmers and crops. The Purchaser is also responsible for settling other outstanding payments of the Target in the sum of RMB3,000,000 (equivalent to HK$3,570,000) and outstanding tax of the Target and tax incurred by the Vendors as a result of the Acquisition which is estimated to be of an aggregate maximum amount of RMB30,000,000 (equivalent to HK$35,700,000.

Completion

Upon Completion, the Company will indirectly hold 100% of the equity interest in the Target and the Target will become an indirect wholly-owned subsidiary of the Company.

INFORMATION ON THE TARGET

The Target is a company established under the laws of the PRC with limited liability on 3 March 2008. The Target currently is not engaged in any business activity and its major assets are the two land parcels situated in Haiyu East Line in Haikou City, Hainan Province, the PRC with an estimated aggregate area of 87,021.33 sq. m.

The unaudited net asset value of the Target as at 31 December 2015 and 31 December 2016 were approximately RMB6,300,000 (equivalent to approximately HK$7,497,000) and RMB5,250,000 (equivalent to approximately HK$6,247,500). Set out below is a summary of the unaudited financial

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information of the Target:

	For the year	ended
	31 December
	2015	2016
	RMB	RMB
Net loss before and after taxation (unaudited)	930,000	1,050,000

REASONS FOR THE ACQUISITION

The Company is an investment holding company and its subsidiaries are principally engaged in property development with focuses on development projects of residential and commercial properties.

As at the date of this announcement, the Target holds two land parcels situated in Haiyu East Line in Haikou City, Hainan Province, the PRC with an estimated aggregate area of 87,021.33 sq. m.

The Directors consider that the Acquisition would enable the Company to develop the Land held by the Target and to expand its business network to other geographic locations across the PRC, which are strategically important to the Group’s long term prospects as well as the broadening of its revenue base.

Taking into account of the above, the Board believes that the Acquisition is in the ordinary and usual course of business of the Group. The Board considers that the terms of the Acquisition are fair and reasonable and in the interests of the Company and Shareholders as a whole.

LISTING RULES IMPLICATION

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceed 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements but is exempt from circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

• “Acquisition” the acquisition by the Purchaser of 100% equity interest in the Target from the Vendors subject to and upon the terms and conditions of the Agreement

• “Agreement” the conditional equity transfer agreement dated 15 September 2017 entered into between the Purchaser and the Vendors in respect of the Acquisition

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“Board” board of the Directors

• “Consideration” the maximum amount of consideration payable by the Purchaser to the Vendors under the Agreement in relation to the Acquisition

• “Company” Chen Xing Development Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability and the issued Shares are listed on Main Board of the Stock Exchange

• “Completion” completion of the Acquisition in accordance with the terms and conditions of the Agreement

• “connected person(s)” has the meaning ascribed to it under the Listing Rules

• “Director(s)” director(s) of the Company

• “Escrow Account” an escrow account nominated by the notary office of Haikou

• “Group” the Company together with its subsidiaries

• “Hong Kong” Hong Kong Special Administrative Region of the PRC

• “Independent third party(ies) who is/are independent of and not connected with, the Third Party(ies) ” Company and its connected persons

• “Land” Two land parcels situated in Haiyu East Line in Haikou City, Hainan Province, the PRC with an estimated aggregate area of 87,021.33 sq. m.

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

• “PRC” the People’s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

• “Purchaser” Chenxing Real Estate Development Co., Ltd.* ( 辰興房地產發展有限公 司 ), a company established in the PRC with limited liability, being an indirect wholly-owned subsidiary of the Company and the purchaser to the Agreement

• “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited

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“Target”

Hainan Yousheng Hongtor Real Estate Development Company Limited*( 海南友升宏拓房地產開發有限公司 ), a company established in the PRC with limited liability

“Vendors”

Five natural persons who are Independent Third Parties, being the vendors to the Agreement

“HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

• The English translation of Chinese names or words in this announcement is included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words

For illustration purpose, amounts in RMB in this announcement have been translated in to HK$ at the exchange rate of RMB1=HK$1.19.

By order of the Board Chen Xing Development Holdings Limited Bai Xuankui Chairman

Hong Kong, 17 September 2017

As at the date of this announcement, the executive directors of the Company are Mr. Bai Xuankui, Mr. Bai Wukui, Mr. Bai Guohua and Mr. Dong Shiguang and the independent non-executive directors of the Company are Mr. Gu Jiong, Mr. Tian Hua and Mr. Qiu Yongqing.

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