CMON Limited — Capital/Financing Update 2018

Sep 12, 2018

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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瀋陽公用發展股份有限公司 Shenyang Public Utility Holdings Company Limited

(a joint stock limited company incorporated in the People’s Republic of China)

(Stock code: 747)

MAJOR TRANSACTION – DISPOSAL OF 20% EQUITY INTERESTS IN GUANGZHOU HAI YUE REAL ESTATE DEVELOPMENT COMPANY LIMITED*

THE DISPOSAL

On 12 September 2018 (after trading hours), the Vendor, being a wholly-owned subsidiary of the Company entered into the Disposal Agreement with the Purchaser, whereby the Purchaser has conditionally agreed to purchase and the Vendor has conditionally agreed to sell 20% equity interests of the Disposal Company at the consideration of RMB133,000,000.

IMPLICATIONS UNDER THE LISTING RULES

As one of the relevant percentage ratios (as defined in the Listing Rules) in respect of the Disposal exceeds 25% but is below 75%, the Disposal constitutes a major transaction of the Company and is subject to reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

GENERAL

An EGM will be convened to consider and, if thought fit, to approve the Disposal Agreement and the transactions contemplated thereunder. To the best of the Directors’ knowledge, information and belief, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for approving the Disposal Agreement and the Disposal.

A circular containing, amongst others, details of the Disposal and the valuation report of the Property and a notice of the EGM will be despatched to the Shareholders in accordance with the requirements of the Listing Rules on or before 5 October 2018.

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Shareholders and investors should note that the Disposal are subject to, inter alia, Shareholders’ approval at the EGM and therefore the Disposal may or may not be effected. As such, Shareholders and investors are urged to exercise caution when dealing in the Shares.

THE DISPOSAL AGREEMENT

Date

12 September 2018 (after trading hours)

Parties

Vendor:

Shenzhen Tai He Chuang Jian Investment Development Company Limited* 深圳市泰合創建投資發展有限責任公司, a whollyowned subsidiary of the Company

Purchaser: Shenzhen Hou Feng Trading Company Limited* 深圳市厚豐貿易 有限公司

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Purchaser is an Independent Third Party.

Subject of the Disposal

Pursuant to the Disposal Agreement, the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the sell 20% equity interests of the Disposal Company.

Consideration

Pursuant to the Disposal Agreement, the Consideration shall be RMB133,000,000, which will be satisfied by the Purchaser in the following manner:

• (a) the first instalment of RMB20,000,000 shall be payable by the Purchaser to the Vendor within 5 Business Days upon signing of the Disposal Agreement; within 30 Business Days upon the payment of the first instalment, the Vendor shall assist the Purchaser to complete the registration with the Administration for Industry and Commerce in relation to the transfer of the equity interests of the Disposal Company;

• (b) the second instalment of RMB50,000,000 shall be payable by the Purchaser to the Vendor within 5 Business Days upon the Disposal Agreement and the transactions contemplated thereunder having been approved by the Shareholders at a general meeting of the Company;

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• (c) the remaining balance of RMB63,000,000 shall be payable by the Purchaser to the Vendor within 5 Business Days after the expiry date of 4 months from the date on which the Disposal Agreement and the transactions contemplated thereunder having been approved by the Shareholders at a general meeting of the Company;

The Consideration has been determined after arm’s length negotiations among the parties to the Disposal Agreement with reference to (i) the unaudited net asset value of the Disposal Company of approximately RMB661,932,350.97 as at 31 July 2018; and (ii) market value of the Property attributable to the Group as at 31 July 2018 as valued by an independent qualified professional valuer of RMB102,700,000.

Conditions precedent

Completion of the Disposal Agreement is conditional upon satisfaction of all of the following conditions:

1. the Purchaser having obtained its shareholder’s approval of the entering into of the Disposal Agreement and the transactions contemplated thereunder;

2. the Company having obtained the approval by its Board and its Shareholders’ approval at a general meeting of the entering into of the Disposal Agreement and the transactions contemplated thereunder;

3. the Disposal Company having completed the industrial and commercial registration with the Administration for Industry and Commerce in relation to the Disposal;

4. all necessary statutory governmental and regulatory obligations shall have been complied with and all approvals, consents, authorisations, permissions, licences, agreements, exemptions and waivers (so far as are necessary) in relation to the Disposal Agreement and the transactions contemplated thereunder shall have been obtained from the relevant governmental and regulatory authorities in Hong Kong , PRC or any other regions if applicable; and

5. the Company having been satisfied that, at all time from the date of the Disposal Agreement up to the date of Completion, all warranties given by the Purchaser and the Vendor under the Disposal Agreement remain true, in place, not misleading in all material aspect and not breached, and that there has been no event or situation leading to any material adverse change.

The above conditions shall be fulfilled within 9 months upon signing of the Disposal Agreement or such later date as the parties to the Disposal Agreement may agree in writing.

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In the event that the Disposal Agreement and the transactions contemplated thereunder have not been approved by the Shareholders at a general meeting of the Company or the Purchaser fail to settle the Consideration in accordance with the stipulated time as agreed in the Disposal Agreement, the Purchaser shall unconditionally and irrevocably guaranteed that the Vendor shall have the right and the Purchaser shall unconditionally agree to reinstate the industrial and commercial registration of the Disposal Company to its original status. The Vendor also guaranteed that it shall refund all the amount paid by the Purchaser within 10 days upon the organization structure and the industrial and commercial registration of the Disposal Company were reinstated to its original status.

Completion

Completion shall take place on the date on which the conditions precedent to the Disposal Agreement had been completely fulfilled or such other date as the Vendor and Purchaser may agree in writing.

INFORMATION OF THE DISPOSAL COMPANY

The Disposal Company is a company with limited liability established under the laws of the PRC and is owned as to 80% by the Purchaser and 20% by the Vendor immediately prior to Completion. The Disposal Company is principally engaged in developing, selling, renting and managing of commercial building, namely Dongshan Plaza (東山廣場) located at No. 69 Xian Lie Zhong Road, Yue Xiu District, Guangzhou, the PRC.

As at the date of this announcement, the Property comprises 166 office units and 122 underground car parking spaces of a 34-storey commercial building (including 2-sotroey basement car park). The total gross floor area of the Property is approximately 22,026.54 sq.m. exclusive of underground car parking spaces.

According to the current tenancy schedule, the Property is subject to various tenancy agreements with the latest expiry date on 10 June 2022.

Set out below summaries the audited financial information of the Disposal Company for the two financial years ended 31 December 2016 and 2017:

	For the year ended	31 December
	2016	2017
	(audited)	(audited)
	RMB	RMB
Gain before taxation and extraordinary items	5,175,467.38	7,207,474.40
Gain after taxation and extraordinary items	3,865,477.70	5,363,950.80

As of 31 July 2018, the unaudited net asset value of the Disposal Company is approximately RMB661,932,350.97.

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INFORMATION ON THE PURCHASER

The Purchaser is a company incorporated under the laws of the PRC and is principally engaged in sales of electrolytic copper, lead, zinc, precious metals and lubricants; domestic trade; and goods and technology import and export business.

FINANCIAL EFFECTS OF THE DISPOSAL AND PROPOSED USE OF PROCEEDS

The Disposal is expected to realize a net gain of approximately RMB1,918,048.32 for the Group which is derived from the difference between the Consideration of approximately RMB133,000,000.00 and the aggregate of (i) the cost of 20% equity interests of the Disposal Company of RMB130,000,000.00; (ii) the related profit tax of approximately RMB671,599.68; and (iii) the related legal costs and expenses of the Disposal of approximately RMB410,352.00.

The actual financial impacts of the Disposal is subject to the review of the Company’s auditors. The Group is expected to receive a net proceeds of approximately RMB131,918,048.32 from the Disposal. The Group currently intends to use the proceeds as general working capital.

REASONS FOR THE DISPOSAL

As at the date of this announcement, the Group is principally engaged in infrastructure and construction business in the PRC. The Directors considered that the Disposal enables the Company to realize cash from its investment in the Disposal Company and unlock the value in its investment in the Property with a premium on its fair market value. Therefore, the Directors consider the Disposal is in line with the Group’s overall business strategy.

The Directors also consider that the terms and conditions of the Disposal are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATION OF THE DISPOSAL

As one of the relevant percentage ratios (as defined in the Listing Rules) in respect of the Disposal exceeds 25% but is below 75%, the Disposal constitutes a major transaction of the Company and is subject to reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

GENERAL

An EGM will be convened to consider and, if thought fit, to approve the Disposal Agreement and the transactions contemplated thereunder. To the best of the Directors’ knowledge, information and belief, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for approving the Disposal Agreement and the Disposal.

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A circular containing, amongst others, details of the Disposal and the valuation report of the Property and a notice of the EGM will be despatched to the Shareholders in accordance with the requirements of the Listing Rules on or before 5 October 2018.

DEFINITIONS

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

“Board”	the board of Directors
“Business Day”	a day (excluding Saturday, Sunday and any other public
	holidays) on which banks in the PRC are generally open for
	settlement business
“Company”	Shenyang Public Utility Holdings Company Limited
“Completion”	the completion of the Disposal
“connected person”	has the meaning ascribed to it in the Listing Rules
“Consideration”	consideration of the Disposal amounted to RMB133,000,000
“Director(s)”	means the directors of the Company
“Disposal”	the disposal of 20% equity interests of the Disposal Company
	by the Vendor to the Purchaser pursuant to the Disposal
	Agreement
“Disposal Agreement”	the sale and purchase agreement dated 12 September 2018
	entered into between the Vendor and the Purchaser in
	relation to the Disposal
“Disposal Company”	Guangzhou Hai Yue Real Estate Development Company
	Limited*廣州海粵房地產發展有限公司
“Domestic Share(s)”	domestic share(s) with a nominal value of RMB1 each in the
	share capital of the Company which are subscribed for in
	RMB

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“EGM”	the extraordinary general meeting of the Company to be
	convened and held for the purposes of approving, among
	other things, the Disposal and the transactions contemplated
	thereunder
“Group”	the Company and its subsidiaries
“H-Share(s)”	overseas listed foreign ordinary shares in the share capital of
	the Company, with a nominal value of RMB1.00 each, all of
	which are listed on the main board of the Stock Exchange,
	and subscribed for and traded in Hong Kong dollars
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Independent Third Party”	the independent third party who is, to the best of the
	Directors’ knowledge, information and belief having made
	all reasonable enquiry, independent of the Company and its
	connected persons (as defined under the Listing Rules)
“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 circular excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“Property”	The commercial building, namely Dongshan Plaza (東山
	廣場) located at No. 69 Xian Lie Zhong Road, Yue Xiu
	District, Guangzhou, the PRC
“Purchaser”	Shenzhen Hou Feng Trading Company Limited*深圳市厚豐
	貿易有限公司
“RMB”	Renminbi, the lawful currency of the PRC

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“Shareholder(s)”

holder(s) of the H-Shares and the Domestic Shares

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“%”

per cent.

* For identification purpose only

By Order of the Board Shenyang Public Utility Holdings Company Limited Zhang Jing Ming Chairman

Shenyang, PRC, 12 September 2018

As at the date of this announcement, the executive directors of the Company are Mr. Zhang Jing Ming, Mr. Deng Xiao Gang and Mr. Leng Xiao Rong, the non-executive directors of the Company are Mr. Yin Zong Chen and Mr. Ye Zhi E and the independent non-executive directors of the Company are Mr. Chan Ming Sun Jonathan, Mr. Guo Lu Jin and Ms. Gao Hong Hong.

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