Dynagreen Environmental Protection Group Co., Ltd. — M&A Activity 2018

Jul 24, 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.

綠 色 動力 環 保 集 團 股 份 有 限 公 司 Dynagreen Environmental Protection Group Co., Ltd.[*]

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

(Stock Code: 1330)

ANNOUNCEMENT IN RELATION TO THE SIGNING OF EQUITY PURCHASE FRAMEWORK AGREEMENT

I. SUMMARY OF THE TRANSACTION

On 24 July 2018, Dynagreen Environmental Protection Group Co., Ltd.* (the ‘‘Company’’) entered into a framework agreement for purchase of equity by cash (the ‘‘Framework Agreement’’) with China Western Power Industrial Co., Ltd.* (華西能源工業股份有限公司), Dongguan Weiye Investment Limited* (東莞市煒業投資有限公司) and Dongguan Baorui Environmental Engineering Limited* (東莞市寶瑞環保工程有限公司) (the ‘‘Counterparties’’), pursuant to which, the Company expresses its intention to acquire 100% equity interest in Guangdong Promising Environmental Protection Company Limited* (廣東博海昕能環保有限公司) (the ‘‘Target Company’’) by cash (the ‘‘Transaction’’). The Framework Agreement is entered into only to express the preliminary intention of all parties after arm’s length negotiation, while relevant details including the transaction price shall be determined in the formal equity transfer agreement to be separately signed by all parties.

II. INFORMATION ON THE COUNTERPARTIES

China Western Power Industrial Co., Ltd. is a listed company (A share) duly established and validly existing under the PRC laws. Its stock name is CWPC, stock code is 002630.SZ, registered address is No. 66, Rongchuan Road, High-tech Industrial Zone, Zigong, Sichuan Province and its unified social credit code is 91510300762306858F. It holds 49% equity interest in the Target Company;

– 1 –

Dongguan Weiye Investment Limited* (東莞市煒業投資有限公司) is a company duly established and validly existing under the PRC laws. Its registered address is Room 1803, Nanfeng Center (南峰中心大廈), 106 Hongfu Road, Nancheng District, Dongguan and its unified social credit code is 91441900680631868Q. It holds 46.2% equity interest in the Target Company;

Dongguan Baorui Environmental Engineering Limited* (東莞市寶瑞環保工程有限公司) is a company duly established and validly existing under the PRC laws. Its registered address is Room 201, Building A, Xunda Complex (迅達綜合樓), 9 Housha Road, Shanmei Village, Houjie Town, Dongguan and its unified social credit code is 914419003040089921. It holds 4.8% equity interest in the Target Company;

The above Counterparties have no relation with the Company, its controlling shareholders, actual controllers, directors, supervisors or senior management.

III. INFORMATION ON THE TARGET COMPANY

1. General

The Target Company is a company duly established and validly existing under the PRC laws. Its registered address is Room 1101, Nanfeng Center (南峰中心大廈), 106 Hongfu Road, Nancheng District, Dongguan and the unified social credit code is 91441900692467620C. It is principally engaged in the business of domestic waste power generation. Its legal representative is Tan Weiliang and its registered capital is RMB584,500,000.

As at the date of this announcement, its shareholding structure is as follows:

Name of shareholderChina Western Power Industrial Co., Ltd.(華西能源工業股份有限公司)Dongguan Weiye Investment Limited(東莞市煒業投資有限公司)Dongguan Baorui Environmental Engineering Limited*(東莞市寶瑞環保工程有限公司)Total	Subscribedcapitalcontribution(RMB’000)286,405270,03928,056584,500	Percentage ofshareholding49.0%46.2%4.8%
		100%

– 2 –

2. Business

As at the date of this announcement, the Target Company had obtained five domestic wasteto-energy concession projects, including for projects located in Guangyuan, Sichuan; Sihui, Guangdong; Jiamusi, Heilongjiang; Yongxing, Hunan and Shulan, Jilin with a total processing capacity of 5,500 tons per day. Among its projects, the Guangyuan, Sichuan project has gone into operation with a daily processing capacity of 700 tons; the projects in Sihui, Guangdong and Jiamusi, Heilongjiang are under construction. Two domestic waste transfer concession projects were obtained, covering the domestic waste transfer projects in Chang’an Town, Dongguan, Guangdong and Shulan, Jilin with total transfer capacity of 1,250 tons per day. The domestic waste transfer project in Chang’an Town, Dongguan, Guangdong has gone into operation with daily transfer capacity of 800 tons.

3. Finance

Based on the audited financial reports provided by the Target Company, its basic financial information for the past year is as follows:

				Operating
Item		Total assets	Net assets	income	Net profit
Amount	(RMB’000)	1,285,670.4	463,729.5	60,649.2	(33,294)

IV. PRINCIPAL TERMS OF THE FRAMEWORK AGREEMENT

1. General

The Company intends to acquire the entire equity interests in the Target Company by cash. The specific payment arrangement will be subject to the final transaction documents to be signed by all parties, including the agreement for purchase of equity by cash.

As earnest money of the Transaction, the Company shall make the payment of RMB10 million to the bank account designated by the Counterparties within ten (10) business days after the Framework Agreement is reviewed and approved by the board of directors of the Company. In the event the Transaction is terminated or unable to proceed, the aforementioned earnest money will be returned to the Company in full. Should the Transaction be successfully completed, the earnest money will form part of the initial transfer payment of the Company.

2. Final Transaction Documents

If the Company decides to proceed with the Transaction after having conducted due diligence on relevant legal, financial and business issues, all parties shall further negotiate on and sign the finalized transaction documents. The finalization of the Transaction shall be subject to the approval of internal decision-making bodies of all parties and relevant regulatory authorities such as state asset supervision and administration departments.

– 3 –

3. Exclusivity

All parties agreed that within three months from the date of signing of the Framework Agreement, the Counterparties and the Target Company shall not, in any form, engage in negotiations and/or enter into any agreements and thereby creating a contractual relationship with any third party other than the Company over any projects similar in nature to the proposed Transaction specified under the Framework Agreement.

V. IMPACT OF THE EQUITY PURCHASE ON THE COMPANY

The acquisition will expand the scale of the Company’s domestic waste-to-energy business, increase its market share and optimize its market position. The implementation of the project will not affect the independence of the Company’s business, and no connected transaction, horizontal competition or business dependence will arise from the primary business of the Company as a result.

VI. IMPLICATIONS OF THE RULES GOVERNING THE LISTING OF SECURITIES ON THE STOCK EXCHANGE OF HONG KONG LIMITED (THE ‘‘LISTING RULES’’)

The signing of the Framework Agreement does not constitute a notifiable transaction under the Listing Rules. Upon the signing of the formal equity transfer agreement, the Company will comply with the relevant requirements under the Listing Rules, if applicable.

By Order of the Board Dynagreen Environmental Protection Group Co., Ltd.* Zhi Jun Chairman

Shenzhen, China 24 July 2018

As at the date of this announcement, the non-executive Directors of the Company are Mr. Zhi Jun, Mr. Guo Yitao, Mr. Liu Shuguang and Mr. Feng Changzheng, the executive Directors of the Company are Mr. Qiao Dewei and Mr. Hu Shengyong and the independent non-executive Directors of the Company are Ms. Chen Xin, Mr. Ou Yuezhou and Ms. Fu Jie.

• For identification purposes only

– 4 –