DT Capital Limited — M&A Activity 2012

Aug 29, 2012

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.

INTERCHINA HOLDINGS COMPANY LIMITED

國中控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 202)

LETTER OF INTENT

IN RELATION TO THE PROPOSED DISPOSAL

This announcement is made pursuant to rule 13.09 of the Listing Rules.

The Board is pleased to announce that on 28 August 2012 (after the trading hours), Equal Smart, an indirect wholly-owned subsidiary of the Company as the Intended Vendor had entered into a non-legally binding Letter of Intent with the Intended Purchaser for the disposal of the Property.

The Board wishes to emphasise that no definitive agreement in relation to the Proposed Disposal has been entered into as at the date of this announcement. As the Proposed Disposal may or may not proceed, public investors and shareholders of the Company are urged to exercise caution when dealing in the Shares.

If the Proposed Disposal materializes, the transaction will constitute a notifiable transaction under the Listing Rules. The Company will comply with the applicable local laws and regulations and the applicable provision of the Listing Rules in relation to such possible notifiable transaction.

This announcement is made pursuant to rule 13.09 of the Listing Rules.

LETTER OF INTENT

Date of the Letter of Intent

28 August 2012, (after the trading hours)

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Parties to the Letter of Intent

(a) Equal Smart Profits Limited (“Equal Smart”), an indirect wholly-owned subsidiary of the Company as the Intended Vendor; and
(b) Warburg Pincus Asia LLC (“Warburg Pincus”) as the Intended Purchaser.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Intended Purchaser and its ultimate beneficial owner are independent third parties of the Company and its connected person.

Material terms of the Letter of Intent

Proposed Disposal

Under the Letter of Intent, it is proposed that Equal Smart will dispose of the second basement, the first basement, the first floor and second floor of No. 1546 Dalian Road, Yangpu District, Shanghai, the PRC, with the total building areas of approximately 18,370.15 square metres (the “Property”) to the Intended Purchaser.

Consideration

The consideration for the Proposed Disposal shall be RMB280,000,000 and shall be paid by the Intended Purchaser to the Intended Vendor in the manner as follows:

(a) RMB124,500,000 will be paid within 5 days after the signing of the formal agreement in relation to the Proposed Disposal;
(b) RMB140,000,000 will be paid upon the completion of the arrangement in relation to transfer of the title of the Property and all outstanding payable about the Property including but not limit to the renovation cost have been paid; and
(c) the final remaining balance of RMB15,500,000 will be paid within 30 days after the title of the Property has been transferred to the Intended Purchaser as well as the repair work of the Property has been completed.

The Intended Purchaser is also willing to pay RMB30,000,000 as compensation to the renovation of the Property to Equal Smart after the title of the Property has been transferred to the Intended Purchaser and the relevant invoice of the renovation has been obtained.

Exclusivity period

4 weeks from 28 August 2012

It is also agreed that Equal Smart will grant to the Intended Purchaser an exclusive 2 weeks period for the due diligence review on the Property from 28 August 2012. During the due diligence period, Equal Smart and the shareholder, director and employee of Equal Smart and its related and associate party, can not enter into any agreement or arrangement with third party in relation to the disposal of the Property without consent from the Intended Purchaser. Upon the Intended Purchaser is satisfied with results of the due diligence review on the Property and both parties have started to prepare a definitive agreement in relation to the Proposed Disposal, the exclusive period will be automatically extended by 2 weeks or any other date to be agreed by the both parties.

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Termination

The Letter of Intent is effect from 28 August 2012 to 30 September 2012 (the “Effective Period”). Except for the term of confidentiality, the Letter of Intent will be terminated in the following conditions:

(i) Expiration of the Effective Period;
(ii) Mutually agreed by the both parties;
(iii) The Intended Purchaser is not satisfied with results of the due diligence and issue a written notice of termination of the Letter of Intent to Equal Smart; or
(iv) Any party in the Letter of Intent have seriously breached the legally-binding terms under the Letter of Intent.

Other than the provisions relating to the Consideration, Purchaser’s exclusive right, confidentiality, governing law and jurisdiction and the terms of Termination, the Letter of Intent does not constitute the parties’ legally binding commitments as to the Proposed Disposal. Further announcement(s) will be made by the Company once the definitive agreement in relation to the Proposed Disposal is entered into.

REASONS FOR ENTERING INTO THE LETTER OF INTENT

As at the date of this announcement, the principal activities of the Group are environmental water treatment operation, property investment operation and natural resources operation.

The Property is suitable for the developing consolidate entertainment centre in the district but have been vacant for over one year. As at 31 March 2012, the carrying amount of the Property is RMB319,000,000. Due the PRC economic development are currently under fine-tune adjustment, the Group has difficulty in looking for potential tenants. The Proposed Disposal is expected to provide a good opportunity for the Group to strengthen its working capital and reserve the proceed from the Proposed Disposal as funding to seek for another high quality investment/assets, which is in the commercial interest of the Company and its shareholders in the long run.

GENERAL

The Board wishes to emphasise that the Proposed Disposal may or may not proceed. In the event that any formal agreement is entered into, the Proposed Disposal may constitute a notifiable transaction for the Company under the Listing Rules and the Company will comply with the applicable local laws and regulations and the applicable provision of the Listing Rules in relation to such possible notifiable transaction. Shareholders and potential investors should exercise caution when dealing in the Shares. The announcement in relation to, among other things, a very substantial disposal, which is price sensitive in nature will be made by the Company as soon as possible. Trading in the shares of the Company will remain suspended.

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DEFINITIONS

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

“Board” the board of Directors

“Company” Interchina Holdings Company Limited, a company incorporated in Hong Kong with limited liabilities, the issued Shares of which are listed on the Stock Exchange

“connected person” has the meaning ascribed to it in Rule 1.01 of the Listing Rules and as extended under Rule 14A.11 of the Listing Rules

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

“Group” the Company and its subsidiaries

“Letter of Intent” the non-legally binding letter of intent dated 28 August 2012 entered into between the Equal Smart and Warburg Pincus in relation to the Proposed Disposal

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

“PRC” People’s Republic of China (excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan)

“Shareholder(s)” holder(s) of the Shares

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“HK$” Hong Kong dollar, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of the PRC

By Order of the board of directors

Interchina Holdings Company Limited

Lam Cheung Shing, Richard

Chief Executive Officer and Executive Director

Hong Kong, 29 August 2012

As at the date of this announcement, the executive Directors are Mr. Shen Angang, Mr. Lam Cheung Shing, Richard, Mr. Zhu Yongjun and Mr. Choi Fun Tai; and the independent non-executive Directors are Mr. Ho Yiu Yue, Louis, Mr. Ko Ming Tung, Edward and Mr. Chen Yi, Ethan.