CTF Services Limited — Capital/Financing Update 2020

Nov 5, 2020

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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ASIA ENERGY LOGISTICS GROUP LIMITED 亞洲能源物流集團有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 351)

MAJOR TRANSACTION IN RELATION TO DISPOSAL OF VESSEL — M/V ASIA ENERGY

THE MEMORANDUM OF AGREEMENT

The Board is pleased to announce that on 5 November 2020 (after trading hours), Asia Energy Inc., an indirect wholly-owned subsidiary of the Company, entered into a MOA with the Buyer in relation to the disposal of M/V Asia Energy for a total cash Consideration of US$3,300,000 (equivalent to approximately HK$25,740,000).

LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Disposal exceeds 25% and all of the applicable percentage ratios are below 75%, the Disposal constitutes a major transaction of the Company and is subject to reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

GENERAL

To the best of the Directors’ knowledge, information, belief, and having made all reasonable enquires, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Disposal. In accordance with Rule 14.44 of the Listing Rules, the Company has obtained a written approval from Oriental Solar Group Limited, which holds 1,100,000,000 Shares of the Company (representing approximately 64.90% of the issued share capital of the Company as at the date of this announcement), in lieu of holding a general meeting to approve the Disposal.

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A circular containing, among other things, (i) further information in respect of the Disposal; and (ii) other information as required by the Listing Rules, is expected to be despatched to the Shareholders on or before 26 November 2020 in compliance with the Listing Rules.

Completion is subject to fulfillment of the conditions precedent as set out in the section headed “Conditions precedent” below of this announcement. As the Disposal may or may not proceed, Shareholders and potential investors of the Company are advised to exercise caution when dealing in securities of the Company, and if they are in any doubt about their position, they should consult their professional advisers.

INTRODUCTION

The Board is pleased to announce that on 5 November 2020 (after trading hours), Asia Energy Inc., an indirect wholly-owned subsidiary of the Company, entered into a MOA with the Buyer in relation to the disposal of M/V Asia Energy. Brief particulars of the MOA are as follows:

THE MEMORANDUM OF AGREEMENT

Date 5 November 2020

Parties: (i) Seller: Asia Energy Inc.

(ii) Buyer: Shipping World 2000 Co. S.A.

Pursuant to the MOA, the Buyer has conditionally agreed to acquire and the Seller has conditionally agreed to dispose of M/V Asia Energy with carrying capacity of approximately 28,000 dwt at the Consideration of US$3,300,000 (approximately HK$25,740,000).

To the best of Directors’ knowledge, information and belief having made all reasonable enquiries, the Buyer and its ultimate beneficial owners are Independent Third Parties.

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Consideration and payment terms

The Consideration for the Disposal is US$3,300,000 (equivalent to approximately HK$25,740,000) and shall be payable by the Buyer to the Seller in the following manner:

• (1) The Deposit (equivalent to 10% of the Consideration) shall be lodged in an interest bearing escrow account for the parties with the Deposit Holder within three (3) Banking Days after the date that (i) the MOA and the Deposit Holder’s standard escrow agreement have been signed and exchanged by the parties; and (ii) the Deposit Holder had confirmed in writing to the parties that the escrow account has been opened and is ready to receive the funds; and

• (2) The Deposit together with the 90% balance of the Consideration should be released in full free of bank charges to the escrow account for further payment to the Seller’s nominated bank account, but not later than three (3) Banking Days after (i) the Vessel is in every respect ready; and (ii) a notice of readiness has been given in exchange of signed protocol of delivery and acceptance signed by both parties’ authorized representatives and all other documents the parties have agreed.

If the Buyer fails to pay the Deposit or the balance of the Consideration in accordance with the terms of the MOA, the Seller shall have the right to cancel the MOA, where appropriate, forfeit the Deposit and claim compensation for loss and all expenses incurred together with interest.

The Consideration was arrived at after arm’s length negotiation between the Buyer and the Seller with reference to market situations in particular the year of build of the Vessel and also market intelligence provided by a professional shipbroker engaging in facilitating vessel transfer internationally.

Delivery of M/V Asia Energy

The Vessel is to be delivered between 1 January 2021 and 31 January 2021 upon serving of a notice of readiness by the Seller. The Buyer shall have the option of cancelling the MOA should the Seller fails to give the notice of readiness or the parties may agree on a new delivery date in accordance with the MOA.

Conditions precedent

The Disposal shall be subject to (i) approval from the Stock Exchange in accordance with the Listing Rules within 30 days from the date of the MOA; and (ii) the approval from the Shareholders of the Company for the sale of the Vessel. If any of these conditions are not fulfilled, the Deposit shall be returned to the Buyer and the MOA shall become null and void in accordance with the terms of the MOA.

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INFORMATION ON M/V ASIA ENERGY

M/V Asia Energy is a bulk carrier vessel with carrying capacity of approximately 28,000 dwt. It is a bareboat registered under the flag of Hong Kong with underlying registry being Hong Kong and was inspected in Laem Chabang, Thailand, on 19 October 2020.

M/V Asia Energy is the sole principal asset of Asia Energy Inc., which is an indirect wholly-owned subsidiary of the Company.

Set out below is the audited financial information of Asia Energy Inc. for the two years ended 31 December 2018 and 2019:

	For the year ended	For the year ended
	31 December
	2019	2018
	Approximately Approximately
	HK$’000	HK$’000
	(audited)	(audited)
Revenue	16,705	17,749
(Loss) profit before taxation	(12,841)	9,783
(Loss) profit after taxation	(12,841)	9,783

The audited carrying value of M/V Asia Energy as at 31 December 2019 was approximately HK$31,000,000.

INFORMATION OF THE GROUP AND THE SELLER

The Group is principally engaged in shipping and logistics and the Seller is a subsidiary principally engaged in ship chartering and ship owning..

INFORMATION OF THE BUYER

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Buyer is a company incorporated in Liberia with limited liability and its performance in respect of this transaction contemplated is guaranteed by Blue Fleet Group, a group established in Greece principally engaged in the business of vessel chartering and other shipping businesses.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Buyer and the ultimate beneficial owner of the Buyer are Independent Third Parties.

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REASONS FOR AND BENEFIT OF THE DISPOSAL

The Group currently operates a fleet of three dry bulk carriers/vessels trading worldwide. Of the three vessels, two of which were built in year 2009 and one of which, namely M/V Asia Energy, was built in year 2001. To comply with the new marine legal requirement in relation to the water purifying system of vessels which will take effect in February 2021, the water purifying system of M/V Asia Energy has to be changed. As M/V Asia Energy has been in operation for around 20 years, it will be more cost effective to acquire a new vessel with the relevant water purifying system installed.

Based on the above, the Directors are of the view that the Disposal is on normal commercial terms and ordinary and usual course of business of the Company, and the terms and conditions of the MOA are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

No Director has a material interest in the Disposal and no Director was required to be abstained from voting on the board resolutions to approve the Disposal.

FINANCIAL EFFECT OF THE DISPOSAL

As at 31 December 2019, the audited carrying value of the Group’s investment in M/V Asia Energy was approximately HK$31,000,000. For illustrative purpose, as a result of the Disposal, it is estimated that the Company will realize a loss on disposal of asset of approximately HK$5,260,000, which will be debited to the profit and loss, being the difference of the proceeds from the Disposal of US$3,300,000 (approximately HK$25,740,000) and the audited carrying value of the Vessel as at the date of delivery of the Vessel in accordance with the MOA and is subject to audit that such loss will be reflected in the consolidated profit or loss account of the Group for the financial year in which the Disposal taken place.

USE OF PROCEEDS

The net proceeds from the Disposal after deducting related expenses are estimated to be approximately US$3,190,000 (approximately HK$24,882,000), which is intended to be utilized towards acquiring a new vessel in replacement of M/V Asia Energy and/or funding other potential business developments.

LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Disposal exceeds 25% and all of the applicable percentage ratios are below 75%, the Disposal constitutes a major transaction of the Company and is subject to reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

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GENERAL

To the best of the Directors’ knowledge, information, belief, and having made all reasonable enquires, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Disposal. In accordance with Rule 14.44 of the Listing Rules, the Company has obtained a written approval from Oriental Solar Group Limited, which holds 1,100,000,000 Shares of the Company (representing approximately 64.90% of the issued share capital of the Company as at the date of this announcement), in lieu of holding a general meeting to approve the Disposal.

A circular containing, among other things, (i) further information in respect of the Disposal; and (ii) other information as required by the Listing Rules, is expected to be despatched to the Shareholders on or before 26 November 2020 in compliance with the Listing Rules.

Completion is subject to fulfillment of the conditions precedent as set out in the section headed “Conditions precedent” above of this announcement. As the Disposal may or may not proceed, Shareholders and potential investors of the Company are advised to exercise caution when dealing in securities of the Company, and if they are in any doubt about their position, they should consult their professional advisers.

DEFINITIONS

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

“Asia Energy Inc.” or Asia Energy Inc., incorporated in Liberia with limited liability and “Seller” is an indirect wholly-owned subsidiary of the Company “Banking Days” days on which banks are open in Greece, Luxembourg, USA and Hong Kong “Board” the board of Directors “Buyer” Shipping World 2000 Co. S.A., incorporated in Liberia with limited liability “Company” Asia Energy Logistics Group Limited, a company incorporated in Hong Kong with limited liability whose issued shares are listed on the Stock Exchange “connected person(s)” has the meaning ascribed thereto under the Listing Rules “Consideration” a total cash consideration of US$3,300,000 (approximately HK$25,740,000) payable by the Buyer to the Seller under the terms of the MOA

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“Deposit”	a deposit of 10% of the Consideration
“Deposit Holder”	means Ince & Co, Hong Kong, which shall hold and release the
	Deposit in accordance with the MOA
“Directors”	directors of the Company
“Disposal”	the disposal of M/V Asia Energy by the Seller to the Buyer subject
	to and upon the terms and conditions of the MOA
“dwt”	an acronym for deadweight tonnage, a measure expressed in metric
	tons or long tons of a ship’s carrying capacity, including bunker
	oil, fresh water, crew and provisions
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	Hong Kong Special Administrative Region of the People’s Republic
	of China
“Independent Third	third party(ies) independent of the Company and the connected
Party(ies)”	persons (has the meaning ascribed to it under the Listing Rules)
	of the Company
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“MOA”	the memorandum of agreement dated 5 November 2020 entered
	into between the Seller and the Buyer in relation to the Disposal
“M/V Asia Energy”	M/V Asia Energy, a bulk carrier vessel with carrying capacity of
or “Vessel”	approximately 28,000 dwt and beneficially owned by the Seller as
	at the date of this announcement
“Share(s)”	ordinary share(s) of the Company
“Shareholder(s)”	the registered holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

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“US$”

United States dollars, the lawful currency of the United States of America

“%”

per cent

By Order of the Board of Asia Energy Logistics Group Limited Pang Yuet Chairman and Executive Director

Hong Kong, 5 November 2020

As at the date of this announcement, the executive Directors of the Company are Mr. Pang Yuet (Chairman), Ms. Jian Qing and Mr. Sun Peng; and the independent non-executive Directors of the Company are Mr. Ng Kwun Wan, Mr. Wong Cheuk Bun and Mr. Chan Sing Fai.

The exchange rate used for reference purpose in this announcement is US$1 to HK$7.8.

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