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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E-COMMODITIES HOLDINGS LIMITED

(Incorporated in the British Virgin Islands with limited liability)

(Stock Code: 1733)

DISCLOSEABLE TRANSACTIONS ENTERING INTO THE CAPITAL INCREASE AGREEMENTS

CAPITAL INCREASE AGREEMENTS

The Board announces that, on 23 August 2021, the Company entered into (i) the E-35 Capital Increase Agreement with Inner Mongolia Haotong, E-35 Technology, Inner Mongolia E-35, which are subsidiaries of the Company, the Investor and Xiamen Xiangyu, pursuant to which the Investor agreed to subscribe for the additional registered capital of RMB159.10 million of Inner Mongolia E-35 for a cash consideration in the amount of RMB184.2709 million, representing 20% of the enlarged total equity interest in Inner Mongolia E-35 upon completion of the transactions contemplated under the E-35 Capital Increase Agreement; and (ii) the Haotong Capital Increase Agreement with Inner Mongolia Haotong, Jiangsu Haotong, Haotong Environmental Technology, which are subsidiaries of the Company, the Investor and Xiamen Xiangyu, pursuant to which the Investor agreed to subscribe for the additional registered capital of RMB86.7891 million of Haotong Environmental Technology for a cash consideration in the amount of RMB86.7891 million, upon completion of the transactions contemplated under the Haotong Capital Increase Agreement, the Investor will hold a 20% interest in Haotong Environmental Technology.

LISTING RULES IMPLICATIONS

deemed disposal exceed 5% but are less than 25%, the transactions contemplated under the Capital Increase Agreements constitute discloseable transactions for the Company and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As the completion of the transactions contemplated under of the Capital Increase Agreements are subject to the fulfilment of various condition precedents. Accordingly, the transactions contemplated under the Capital Increase Agreements may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

Reference is made to the announcement of the Company dated 25 July 2019 and the circular of the Company dated 30 August 2019 in relation to, among other things, the Cooperation Agreement, pursuant to which the Company agreed to proceed to set up logistics segment and integrate with relevant assets controlled by it in relation to Mongolian coal business. After the completion of integration, Xiamen Xiangyu intends to acquire not more than 20% equity interest in such segment by way of equity investment.

The Board announces that, on 23 August 2021, the Company entered into (i) the E-35 Capital Increase Agreement with Inner Mongolia Haotong, E-35 Technology, Inner Mongolia E-35, which are subsidiaries of the Company, the Investor and Xiamen Xiangyu, pursuant to which the Investor agreed to subscribe for the additional registered capital of RMB159.10 million of Inner Mongolia E- 35 for a cash consideration in the amount of RMB184.2709 million, representing 20% of the enlarged total equity interest in Inner Mongolia E-35 upon completion of the transactions contemplated under the E-35 Capital Increase Agreement; and (ii) the Haotong Capital Increase Agreement with Inner Mongolia Haotong, Jiangsu Haotong, Haotong Environmental Technology, which are subsidiaries of the Company, the Investor and Xiamen Xiangyu, pursuant to which the Investor agreed to subscribe for the additional registered capital of RMB86.7891 million of Haotong Environmental Technology for a cash consideration in the amount of RMB86.7891 million, upon completion of the transactions contemplated under the Haotong Capital Increase Agreement, the Investor will hold a 20% interest in Haotong Environmental Technology.

The principal terms of each of the Capital Increase Agreements are set out below.

A. E-35 CAPITAL INCREASE AGREEMENT

Date

23 August 2021

Parties

(1) Inner Monoglia E-35;
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(2) Inner Mongolia Haotong;
(3) E-35 Technology;
(4) the Investor;
(5) Xiamen Xiangyu; and
(6) the Company

To the best of the Directors’ knowledge, information and belief after making all reasonable enquiries, the Investor, Xiamen Xiangyu, their ultimate beneficial owners and their respective associates are third parties independent of the Company and the connected persons of the Company.

Transitional Arrangement

Capital Reduction

As at the date of this announcement, the registered capital of Inner Mongolia E-35 is RMB771.4 million, of which RMB635.4 million was subscribed by Inner Monglia Haotong representing approximately 82.37% of the total equity interest in Inner Mongolia E-35 and RMB136 million was subscribed by E-35 Technology representing approximately 17.63% of the total equity interest in Inner Mongolia E-35.

Under the E-35 Capital Increase Agreement, the parties agreed to reduce the registered capital subscribed by E-35 Technology to RMB1 million, accordingly, the total registered capital of Inner Mongolia E-35 shall be reduced to RMB636.4 million. Upon the completion of the capital reduction, Inner Mongolia E-35 will be owned as to approximately 99.84% and 0.16% by Inner Mongolia Haotong and E-35 Technology, respectively.

Obligations of Inner Mongolia E-35 and its existing shareholders

Under the E-35 Capital Increase Agreement, subject to the terms thereof, prior to the Closing Date or the termination date of the agreement (whichever is earlier), Inner Mongolia E-35, Inner Mongolia Haotong and E-35 Technology shall, among others, (i) not to enter into any contract or agreement that may have material adverse impact on the assets or financial position of Inner Mongolia E-35; and (ii) without prior written consent of the Investor, not to undertake merger, split, liquidation, acquisition, reorganisation or change the shareholding structure of Inner Mongolia E-35, sell, transfer or dispose of any assets or equity interest of Inner Mongolia E-35, amend its articles of association or change its business scope.

Capital Increase

Under the E-35 Capital Increase Agreement, upon the completion of the capital reduction, the Investor agreed to subscribe for the additional registered capital of RMB159.10 million of Inner Mongolia E-35 for a cash consideration in the amount of RMB184.2709 million, representing 20% of the enlarged total equity interest in Inner Mongolia E-35 upon completion of the transactions contemplated under the E-35 Capital Increase Agreement. The surplus part in the amount of RMB25.1709 million will be recorded in the capital reserve of Inner Mongolia E-35.

The consideration for the subscription of additional registered capital of Inner Mongolia E-35 was determined after arm’s-length negotiation between the parties based on the owners’ equity interest of Inner-Mongolia E-35 of RMB736.0837 million as at the Valuation Benchmark Date as set out in the Valuation Report prepared by the Appraiser using asset-based approach.

Shareholding Structure

The shareholding structure of Inner Mongolia E-35 before and after completion of the transactions contemplated under the E-35 Capital Increase Agreement is as follows:

Shareholders	Before completion	Before completion	After completion	After completion
	Capital	% of equity	Capital	% of equity
	contribution	interest	contribution	interest
	(RMB		(RMB
	million)		million)
Inner Mongolia Haotong	635.40	82.37%	635.40	79.87%
E-35 Technology	136.00	17.63%	1.00	0.13%
the Investor	–	–	159.10	20.00%
Total	771.40	100.00%	795.50	100.00%

Conditions Precedent

Pursuant to the E-35 Capital Increase Agreement, the Investor shall pay the consideration for the capital increase within 10 business days upon the fulfillment of, among others, the following conditions (or waived in writing by the Investor):

(1) the E-35 Capital Increase Agreement and the transactions contemplated thereunder having been duly approved by the Shareholders;
(2) the E-35 Capital Increase Agreement and the transactions contemplated thereunder having been duly filed by the Investor with the relevant competent authorities;
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(3) there being no material adverse change to the Inner Mongolia E-35’s financial position during the period from the date of the E-35 Capital Increase Agreement to the Closing Date; and
(4) all representation and warranties under the E-35 Capital Increase Agreement remaining true, accurate and not misleading on the date of the E-35 Capital Increase Agreement, the Closing Date and the date of payment of consideration for the capital increase.

Corporate Governance

The board of directors of Inner Mongolia E-35 shall consist of five directors, of which four directors shall be nominated by Inner Mongolia Haotong and E-35 Technology, and one director shall be nominated by the Investor. The chairman of board shall be elected from directors nominated by Inner Mongolia Haotong and E-35 Technology.

B. HAOTONG CAPITAL INCREASE AGREEMENT

Date

23 August 2021

Parties

(1) Haotong Environmental Technology;
(2) Inner Mongolia Haotong;
(3) Jiangsu Haotong;
(4) the Investor;
(5) Xiamen Xiangyu; and
(6) the Company

Transitional Arrangement

Capital Reduction

As at the date of this announcement, the registered capital of Haotong Environmental Technology is RMB580 million, of which RMB380 million was subscribed by Inner Monglia Haotong representing approximately 65.52% of the total equity interest in Haotong Environmental Technology and RMB200 million was subscribed by Jiangsu Haotong representing approximately 34.48% of the total equity interest in Haotong Environmental Technology.

Under the Haotong Capital Increase Agreement, the parties agreed to reduce the registered capital subscribed by Jiangsu Haotong to RMB1 million, accordingly, the total registered capital of Haotong Environmental Technology shall be reduced to RMB381 million. Upon the completion of the capital reduction, Haotong Environmental Technology will be owned as to approximately 99.74% and 0.26% by Inner Mongolia Haotong and Jiangsu Haotong, respectively.

Obligations of Haotong Environmental Technology and its existing shareholders

Under the Haotong Capital Increase Agreement, subject to the terms thereof, prior to the Closing Date or the termination date of the agreement (whichever is earlier), Haotong Environmental Technology, Inner Mongolia Haotong and Jiangsu Haotong shall, among others, (i) not to enter into any contract or agreement that may have material adverse impact on the assets or financial position of Haotong Environmental Technology; and (ii) without prior written consent of the Investor, not to undertake merger, split, liquidation, acquisition, reorganisation or change the shareholding structure of Haotong Environmental Technology, sell, transfer or dispose of any assets or equity interest of Haotong Environmental Technology, amend its articles of association or change its business scope.

Capital Increase and Further Capital Reduction

Under the Haotong Capital Increase Agreement, upon the completion of the capital reduction, the Investor agreed to subscribe for the additional registered capital of RMB86.7891 million of Haotong Environmental Technology for a cash consideration in the amount of RMB86.7891 million, representing approximately 18.55% of the enlarged total registered capital in Haotong Environmental Technology upon completion of the capital increase under the Haotong Capital Increase Agreement.

The consideration for the subscription of additional registered capital of Haotong Environmental Technology was determined after arm’s-length negotiation between the parties based on the owners’ equity interest of Haotong Environmental Technology of RMB346.2762 million as at the Valuation Benchmark Date as set out in the Valuation Report prepared by the Appraiser using asset-based approach.

Upon the completion of the above capital increase under the Haotong Capital Increase Agreement, the parties thereto further agreed that the registered capital of Haotong Environmental Technology shall be further reduced from RMB467.7891 to RMB433.9455 million by no later than 30 December 2022, of which the registered capital in the amount of RMB86.7891 million subscribed by the Investor shall remain unchanged, the registered capital in the amount of RMB380 million subscribed by Inner Mongolia Haotong shall be reduced to RMB346.2613 million and the registered capital in the amount of RMB1 million subscribed by Jiangsu Haotong shall be reduced to RMB0.8951 million. Following the completion of such further capital reduction, Haotong Environmental Technology will be owned as to 20%, 79.79% and 0.21% by the Investor, Inner Mongolia Haotong and Jiangsu Haotong, respectively.

Shareholding Structure

The shareholding structure of Haotong Environmental Technology before and after completion of the transactions contemplated under the Haotong Capital Increase Agreement is as follows:

Shareholders	Before completion	Before completion	After completion	After completion
	Capital	% of equity	Capital	% of equity
	contribution	interest	contribution	interest
	(RMB		(RMB
	million)		million)
Inner Mongolia Haotong	380.00	65.52%	346.2613	79.79%
Jiangsu Haotong	200.00	34.48%	0.8951	0.21%
the Investor	–	–	86.7891	20.00%
Total	580.00	100.00%	433.9455	100.00%

Conditions Precedent

Pursuant to the Haotong Capital Increase Agreement, the Investor shall pay the consideration for the capital increase within 10 business days upon the fulfillment of, among others, the following conditions (or waived in writing by the Investor):

(1) the Haotong Capital Increase Agreement and the transactions contemplated thereunder having been duly approved by the Shareholders;
(2) the Haotong Capital Increase Agreement and the transactions contemplated thereunder having been duly filed by the Investor with the relevant competent authorities;
(3) there being no material adverse change to the Haotong Environmental Technology’s financial position during the period from the date of the Haotong Capital Increase Agreement to the Closing Date; and
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(4) all representation and warranties under the Haotong Capital Increase Agreement remaining true, accurate and not misleading on the date of the Haotong Capital Increase Agreement, the Closing Date and the date of payment of consideration for the capital increase.

Corporate Governance

The board of directors of Haotong Environmental Technology shall consist of five directors, of which four directors shall be nominated by Inner Mongolia Haotong and Jiangsu Haotong, and one director shall be nominated by the Investor. The chairman of board shall be elected from directors nominated by Inner Mongolia Haotong and Jiangsu Haotong.

C. REASONS FOR AND BENEFIT OF ENTERING INTO THE CAPITAL INCREASE AGREEMENTS

As arranged under the Cooperation Agreement, the assets under the Capital Increase Agreements mainly serve the logistics, washing and processing business of the Group, the Investor is a company specialising in bulk commodities logistics business of Xiamen Xiangyu, which has extensive experience in bulk commodities logistics industry. The participation of the Investor will further integrate the logistics advantages of both parties to gain greater market competitiveness. At the same time, the assets under the Capital Increase Agreements mainly serve the logistics and processing services required by Xianghui Energy’s Mongolian coal trading business. The conclusion of the Capital Increase Agreements will help the Mongolian coal business of both the Company and Xiamen Xiangyu to achieve the integration of resources in trade, logistics, washing and processing, and further enhance market competitiveness.

Upon the completion of the transactions under the Capital Increase Agreements, Inner Mongolia E-35 and Haotong Environmental Technology will remain as subsidiaries of the Company.

The Directors believe that the terms of each of the Capital Increase Agreements are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

D. FINANCIAL IMPACT OF THE CAPITAL INCREASE

The transactions under the Capital Increase Agreements will not cause the Company to lose control over Inner Mongolia E-35 and Haotong Environmental Technology, nor will it result in any gains or losses in the consolidated income statement of the Company.

E. USE OF PROCEEDS

The proceeds from the Capital Increase Agreements to be received by the Inner Mongolia E-35 and Haotong Environmental Technology shall be used for working capital in the daily operations and development, construction and maintenance of logistic assets.

F. LISTING RULES IMPLICATIONS

Upon completion of the transactions contemplated under each of the Capital Increase Agreements, the aggregate equity interest in Inner Mongolia E-35 indirectly held by the Company will be decreased from 100% to 80% and the aggregate equity interest in Haotong Environmental Technology indirectly held by the Company will be decreased from 100% to 80%, therefore, the Capital Increase Agreements constitute a deemed disposal under Rule 14.29 of the Listing Rules. As the relevant applicable percentage ratios (as defined under the Listing Rules) in respect of the deemed disposal exceed 5% but are less than 25%, the transactions contemplated under the Capital Increase Agreements constitute discloseable transactions for the Company and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

G. INFORMATION ON THE TARGET COMPANIES

Inner Mongolia E-35

Inner Mongolia E-35 was incorporated on 4 June 2019 under the laws of the PRC and is mainly engaged in logistics services for bulk commodities. As at the date of this announcement, the Company indirectly holds 100% equity interest in Inner Mongolia E-35 through Inner Mongolia Haotong and E-35 Technology.

The table below sets forth the financial information of Inner Mongolia E-35 for the year ended 31 December 2020 and the three months ended 31 March 2021:

		For the year	For the three
		ended	months ended
		31 December	31 March
		2020	2021
		(RMB million)	(RMB million)
		(unaudited)	(audited)
Profit	before taxation	55.11	79.07
Profit	after taxation	47.05	56.99

As set out in the unaudited financial statements of Inner Mongolia E-35 prepared in accordance with the PRC Accounting Standards for Business Enterprises, the unaudited total assets of the Inner Mongolia E-35 as at 31 December 2020 was approximately RMB1,709.31 million. As at the Valuation Benchmark Date, the audited book value of the net assets of Inner Mongolia E-35 was approximately RMB548.05 million. As set out in the Valuation Report prepared by the Appraiser based on asset-based approach, the owners’ equity interest of Inner Mongolia E-35 was valued at RMB736.0837 million as at the Valuation Benchmark Date.

Haotong Environmental Technology

Haotong Environmental Technology was incorporated on 24 October 2019 under the laws of the PRC and is mainly engaged in coal processing services for bulk commodities. As at the date of this announcement, the Company indirectly holds 100% equity interest in Haotong Environmental Technology through Inner Mongolia Haotong and Jiangsu Haotong.

The table below sets forth the financial information of Haotong Environmental Technology for the year ended 31 December 2020 and the three months ended 31 March 2021:

		For the year	For the three
		ended	months ended
		31 December	31 March
		2020	2021
		(RMB million)	(RMB million)
		(unaudited)	(audited)
Profit/(loss)	before taxation	(5.01)	22.02
Profit/(loss)	after taxation	0.04	13.24

As set out in the audited financial statements of Haotong Environment Technology prepared in accordance with the PRC Accounting Standards for Business Enterprises, the unaudited total assets of the Haotong Environment Technology as at 31 December 2020 was approximately RMB640.65 million. As at the Valuation Benchmark Date, the audited book value of the net assets of Haotong Environment Technology was approximately RMB190.71 million. As set out in the Valuation Report prepared by the Appraiser based on asset-based approach and equity value approach, the owners’ equity interest of Haotong Environment Technology was valued at RMB346.2762 million as at the Valuation Benchmark Date.

H. INFORMATION ON THE PARTIES

The Company

The Company is a company incorporated in the British Virgin Islands and is principally engaged in the processing and trading of coal and other products and providing logistics services throughout the commodity supply chain.

Xiamen Xiangyu

Xiamen Xiangyu is a state-owned enterprise owned by Xiamen Xiangyu Group Co., Ltd. and its shares are listed on the main board of Shanghai Stock Exchange. Xiamen Xiangyu is principally engaged in procurement and supply and logistic services for bulk commodities, and the development and operator of logistics platforms (parks).

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Inner Mongolia Haotong

Inner Mongolia Haotong is a company incorporated under the laws of the PRC and a whollyowned subsidiary of the Company, which is mainly engaged in the related trading and logistics services for bulk commodities.

Jiangsu Haotong

Jiangsu Haotong is a company incorporated under the laws of the PRC and a wholly-owned subsidiary of the Company, which is mainly engaged in the relevant washing and processing business for bulk commodities.

E-35 Technology

E-35 Technology is a company incorporated under the laws of the PRC and a wholly-owned subsidiary of the Company, which is mainly engaged in the relevant transportation business for bulk commodities.

The Investor

The Investor is a company incorporated under the laws of the Company and a subsidiary of Xiamen Xiangyu, which is mainly engaged in the relevant transportation business for bulk commodities.

As the completion of the transactions contemplated under of the Capital Increase Agreements are subject to the fulfilment of various conditions precedent. Accordingly, the transactions contemplated under the Capital Increase Agreements may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

I. DEFINITIONS

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

“Appraiser” Xiamen City University Assets Appraisal Land and Real Estate Appraisal Co., Ltd.* (廈門市大學資產評估土地房產估價有限責任公司), an independent third-party valuer

“associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors

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“Capital Increase Agreements”
“Closing Date”
“Company”
“connected person(s)”
“Cooperation Agreement”
“Director(s)”
“E-35 Capital Increase Agreement”
“E-35 Technology”
“Group”
“Haotong Capital Increase Agreement”
“Haotong Environmental Technology”
the E-35 Capital Increase Agreement and Haotong Capital Increase Agreement

with respect to each of the Capital Increase Agreements, the date on which the renewed business licence, reflecting the changes in the registered capital of each of the Target Companies as a result from the capital increase under and in accordance with the terms of the Capital Increase Agreements, has been obtained by the relevant Target Companies

E-Commodities Holdings Limited, a limited liability company incorporated in the British Virgin Islands, the shares of which are listed on the main board of the Stock Exchange
has the meaning ascribed thereto under the Listing Rules
the cooperation agreement dated 25 July 2019 entered into between the Company and Xiamen Xiangyu in relation to, among others, the formation of a joint venture company. For further details, please refer to the Company’s announcement dated 25 July 2019
the director of the Company
the capital increase agreement dated 23 August 2021 entered into between the Inner Mongolia E-35, Inner Mongolia Haotong, E-35 Technology, the Investor, Xiamen Xiangyu and the Company.
E-35 Technology Co., Ltd.* (易至科技股份有限公司), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company
the Company and its subsidiaries
the capital increase agreement dated 23 August 2021 entered into between the Haotong Environmental Technology, Inner Mongolia Haotong, Jiangsu Haotong, the Investor, Xiamen Xiangyu and the Company
Inner Mongolia Haotong Environmental Technology Co., Ltd.* ( 內蒙古浩通環保科技有限公司 ), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company as at the date of this announcement
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the Hong Kong Special Administrative Region of the PRC

“Hong Kong”

“Inner Mongolia E-35”

Inner Mongolia E-35 Technology Co., Ltd.* (內蒙古易至科技股份有限公司), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company as at the date of this announcement
“Inner Mongolia Haotong”
Inner Mongolia Haotong Energy Joint Stock Co., Ltd.* (內蒙古浩通能源股份有限公司), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company
“Investor” Xiamen Xiangyu Logistics Group Co., Ltd.* (廈門象嶼物流集團有限責任公司), a company established under the laws of the PRC and a subsidiary of Xiamen Xiangyu
“Jiangsu Haotong” Jiangsu Haotong Environmental Protection Technology Co., Ltd. * (江蘇浩通環保科技有限公司), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange (as amended from time to time)
“PRC” the People’s Republic of China, which for the purpose of this announcement excludes Hong Kong, Taiwan and the Macau Special Administrative Region of the PRC
“RMB” Renminbi, the lawful currency of the PRC
“Share(s)” ordinary share(s) of the Company with no par value
“Shareholder(s)” holder(s) of the Shares
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Target Companies” Inner Mongolia E-35 and Haotong Environmental Technology
“Valuation Benchmark Date” 31 March 2021
“Valuation Report” the valuation report dated 6 August 2021 in relation to the Target Companies issued by the Appraiser
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“Xiamen Xiangyu”

Xiamen Xiangyu Joint Stock Company Limited* (廈門象嶼股份有限公司), a state-owned enterprise incorporated under the laws of PRC, the shares of which are listed on the Shanghai Stock Exchange (stock code: 600057.SH)

“%”

per cent.

By Order of the Board