Kaisa Group Holdings Ltd. — Capital/Financing Update 2015

Feb 5, 2015

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KAISA GROUP HOLDINGS LTD. 佳兆業集團控股有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1638)

DISCLOSEABLE TRANSACTIONS

ACQUISITIONS OF EQUITY INTEREST IN CHENGDU JINXINRUI

On 24 July 2014, Chengdu Kaisa entered into the First Agreement with Zhongrong Trust, pursuant to which Chengdu Kaisa has agreed to acquire, and Zhongrong Trust has agreed to dispose of, 80% of the equity interest in Chengdu Jinxinrui.

On 13 January 2015, Chengdu Kaisa entered into the Second Agreement with Shenzhen Jinxinrui, pursuant to which Chengdu Kaisa has conditionally agreed to acquire, and Shenzhen Jinxinrui has conditionally agreed to dispose of, 20% of the equity interest in Chengdu Jinxinrui.

As one of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisitions on an aggregated basis exceeds 5% but is less than 25%, the Acquisitions constitute discloseable transactions of the Company under the Listing Rules and are therefore subject to the reporting and announcement requirements but is exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

• For identification purposes only

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THE AGREEMENTS

The principal terms of the Agreements are set out below.

1. The First Agreement

Date : 24 July 2014

• Parties : (1) Chengdu Kaisa, a wholly-owned subsidiary of the Company as purchaser

• (2) Zhongrong Trust as vendor

Assets to be acquired

Pursuant to the First Agreement, Chengdu Kaisa has agreed to acquire, and Zhongrong Trust has agreed to dispose of, 80% of the equity interest in Chengdu Jinxinrui.

As at the date of the First Agreement, Chengdu Jinxinrui was owned as to 80% by Zhongrong Trust and 20% by Shenzhen Jinxinrui, respectively. Upon completion of the First Acquisition, Chengdu Jinxinrui was owned as to 80% by Chengdu Kaisa and 20% by Shenzhen Jinxinrui, respectively and Chengdu Jinxinrui became a subsidiary of the Company.

Consideration

The total consideration for the First Acquisition is RMB530,993,150.68 (equivalent to approximately HK$672,739,000) which shall be payable by Chengdu Kaisa to Zhongrong Trust in cash on or before the fifth business day after the signing of the First Agreement. The total consideration for the First Acquisition was settled in cash by the internal resources of the Group.

The consideration for the First Acquisition was determined after arm’s length negotiations between Chengdu Kaisa and Zhongrong Trust with reference to 80% of the acquisition cost of the land held by Chengdu Jinxinrui and 80% of the paid-up registered capital of Chengdu Jinxinrui.

The Directors are of the view that the consideration for the First Acquisition is fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Completion

Completion of the First Acquisition shall take place on the date of registration of the transfer of 80% of the equity interest in Chengdu Jinxinrui from Zhongrong Trust to Chengdu Kaisa with the relevant Administration of Industry and Commerce. Completion of the First Acquisition took place on 22 August 2014.

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2. The Second Agreement

Date : 13 January 2015 Parties : (1) Chengdu Kaisa, a wholly-owned subsidiary of the Company as purchaser

(2) Shenzhen Jinxinrui as vendor

Assets to be acquired

Pursuant to the Second Agreement, Chengdu Kaisa has conditionally agreed to acquire, and Shenzhen Jinxinrui has conditionally agreed to dispose of, 20% of the equity interest in Chengdu Jinxinrui.

As at the date of the Second Agreement, Chengdu Jinxinrui was owned as to 80% by Chengdu Kaisa and 20% by Shenzhen Jinxinrui, respectively. Upon completion of the Second Acquisition, Chengdu Jinxinrui became a wholly-owned subsidiary of the Company.

Consideration

The total consideration for the Second Acquisition is RMB190,000,000 (equivalent to approximately HK$240,720,000) which shall be payable by Chengdu Kaisa to Shenzhen Jinxinrui in cash on or before the tenth business day upon completion of the condition precedent of the Second Acquisition. The total consideration for the Second Acquisition was settled in cash by the internal resources of the Group.

The consideration for the Second Acquisition was determined after arm’s length negotiations between Chengdu Kaisa and Shenzhen Jinxinrui with reference to 20% of the net asset value of Chengdu Jinxinrui as at 30 June 2014 and 20% of the premium value of the land held by Chengdu Jinxinrui by reference to a valuation report (with a valuation reference date of 30 June 2014) as appraised by an independent valuer.

The Directors are of the view that the consideration for the Second Acquisition is fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Condition precedent

Completion of the Second Acquisition is conditional upon completion of the due diligence on Chengdu Jinxinrui and that Chengdu Kaisa is satisfied with the results of the due diligence.

Completion

Completion of the Second Acquisition shall take place on the date of registration of the transfer of 20% of the equity interest in Chengdu Jinxinrui from Shenzhen Jinxinrui to Chengdu Kaisa with the relevant Administration of Industry and Commerce. Completion of the Second Acquisition took place on 13 January 2015.

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REASONS FOR THE ACQUISITIONS

The Group is principally engaged in the development of large-scale residential properties and integrated commercial properties in the PRC. The transactions contemplated under the Agreements align with the Company’s growth strategy by seeking development opportunities in real estate markets in the PRC. The Directors consider that the Acquisitions could further strengthen its property development businesses in Chengdu, the PRC. The Directors are optimistic about the prospect of the property market in Chengdu.

The Directors (including the independent non-executive Directors) consider that the terms and conditions of the Agreements are fair and reasonable and the entering into of the Agreements is in the interests of the Company and the Shareholders as a whole.

INFORMATION OF CHENGDU JINXINRUI

Chengdu Jinxinrui is a limited liability company established in the PRC on 7 November 2012. As at the date of this announcement, the registered capital of Chengdu Jinxinrui amounted to RMB50,000,000 (equivalent to approximately HK$63,347,000) which has been fully paid up. Chengdu Jinxinrui is principally engaged in property development and property management.

As at the date of this announcement, Chengdu Kaisa is holding the 100% equity interests in Chengdu Jinxinrui, which is in turn holding the entire interest in a parcel of land located in 青 羊區馬場社區1,2組界內 (Boundary 1 and 2, Machang Community, Qingyang District) in Chengdu, the PRC and occupies an aggregate site area of approximately 60,938.71 sq. m. and an aggregate gross floor area per allowed plot ratio of approximately 268,096.67 sq. m for the purposes of 城鎮混合住宅用 (urban and rural mixed residential use). The land was acquired by Chengdu Jinxinrui in November 2012 through public auction at a total acquisition cost of RMB675,000,000 (equivalent to approximately HK$855,188,000). According to a valuation report of the land as appraised by an independent valuer, the total premium value of the land as at 30 June 2014 was RMB510,347,000 (equivalent to approximately HK$646,582,000). The land is currently held for the development of phase 1 and phase 2 of 成都佳兆業廣場 (Cheungdu Kaisa City Plaza*).

The following information is a summary of the audited financial information of Chengdu Jinxinrui:

	For the
	six months	For the	year ended
	ended 30 June	31 December
	2014	2013	2014
	(unaudited)	(audited)	(unaudited)
	RMB’000	RMB’000	RMB’000
Net loss (before taxation and
extraordinary items)	(10,364)	(9,807)	(19,969)
Net loss (after taxation and
extraordinary items)	(10,364)	(9,807)	(19,969)

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The net asset value of Chengdu Jinxinrui as at 30 June 2014 was RMB489,653,000 (equivalent to approximately HK$620,364,000).

INFORMATION ON THE GROUP AND CHENGDU KAISA

The Group is principally engaged in the development of large-scale residential properties and integrated commercial properties in the PRC. Chengdu Kaisa is a wholly-owned subsidiary of the Company which is principally engaged in property development and investment business.

INFORMATION ON ZHONGRONG TRUST AND SHENZHEN JINXINRUI

Zhongrong Trust is a financial institution approved by China Banking Regulatory Commission and is principally engaged in trust business as permitted under the financial licence. To the best of the knowledge, information and belief of the Directors, save for Zhongrong Trust being a substantial shareholder of another insignificant subsidiary of the Company as defined under Rule 14A.09 of the Listing Rules, Zhongrong Trust and its ultimate beneficial owners were not connected persons (as defined in the Listing Rules) of the Company as at the date of the First Agreement. The First Acquisition was therefore not a connected transaction of the Company.

Shenzhen Jinxinrui is principally engaged in investment business and trading in the PRC. Upon completion of the First Acquisition, Shenzhen Jinxinrui became a substantial shareholder which was interested in 20% equity interest in Chengdu Jinxinrui. Since Chengdu Jinxinrui was an insignificant subsidiary of the Company pursuant to Rule 14A.09 of the Listing Rules as at the date of the Second Agreement, Shenzhen Jinxinrui was not a connected person (as defined in the Listing Rules) of the Company by virtue of its shareholdings in Chengdu Jinxinrui. To the best of the knowledge, information and belief of the Directors, Shenzhen Jinxinrui and its ultimate beneficial owners were not connected persons (as defined in the Listing Rules) of the Company as at the date of the Second Agreement. The Second Acquisition was therefore not a connected transaction of the Company.

IMPLICATIONS UNDER THE LISTING RULES

As one of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisitions on an aggregated basis exceeds 5% but is less than 25%, the Acquisitions constitute discloseable transactions of the Company under the Listing Rules and are therefore subject to the reporting and announcement requirements but is exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

DEFINITIONS

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

“Acquisitions” the First Acquisition and the Second Acquisition; “Agreements” the First Agreement and the Second Agreement; “Board” the board of Directors;

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“Chengdu Jinxinrui”	成都市錦新瑞房地產開發有限公司(Chengdu Jinxinrui
	Property Development Co., Ltd.*), a company established in
	the PRC with limited liability;
“Chengdu Kaisa”	成都佳兆業房地產開發有限公司(Chengdu Kaisa Property
	Development Co. Ltd*), a company established in the PRC with
	limited liability and wholly owned by the Company as at the
	date of this announcement;
“Company”	Kaisa Group Holdings Ltd. (佳兆業集團控股有限公司*), a
	company incorporated in the Cayman Islands as an exempted
	company with limited liability and the shares of which are
	listed on the Stock Exchange;
“Director(s)”	the director(s) of the Company;
“First Acquisition”	the acquisition of 80% of the equity interest in Chengdu
	Jinxinrui from Zhongrong Trust by Chengdu Kaisa;
“First Agreement”	the equity transfer agreement dated 24 July 2014 entered into
	between Chengdu Kaisa as purchaser and Zhongrong Trust as
	vendor in relation to the First Acquisition;
“Group”	the Company and its subsidiaries;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“PRC”	the People’s Republic of China, excluding Hong Kong, the
	Macau Special Administrative Region of the PRC and Taiwan
	for the purpose of this announcement;
“RMB”	Renminbi, the lawful currency of the PRC;
“Second Acquisition”	the acquisition of 20% of the equity interest in Chengdu
	Jinxinrui from Shenzhen Jinxinrui by Chengdu Kaisa;
“Second Agreement”	the equity transfer agreement dated 13 January 2015 entered
	into between Chengdu Kaisa as purchaser and Shenzhen
	Jinxinrui as vendor in relation to the Second Acquisition;
“Shareholder(s)”	shareholder(s) of the Company;

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“Shenzhen Jinxinrui” 深圳市錦新瑞投資有限公司 (Shenzhen Jinxinrui Property Investment Co., Ltd.*), a company established in the PRC with limited liability which is 100% owned by parties which are not connected persons (as defined in the Listing Rules) of the Company as at the date of the Second Agreement;

“Stock Exchange” The Stock Exchange of Hong Kong Limited;

“sq. m.” square meter;

“Zhongrong Trust” 中融國際信託有限公司 (Zhongrong International Trust Co., Ltd.), a company established in the PRC with limited liability which is 100% owned by parties which are not connected persons (as defined in the Listing Rules) of the Company as at the date of the First Agreement;

“%” per cent.

For the purpose of this announcement, the exchange rate of HK$1.00 = RMB0.7893 has been used for currency translation, where applicable. Such exchange rates are for illustration purposes and do not constitute representation that any amount in RMB or HK$ have been or may be converted in such rates.

By order of the Board of KAISA GROUP HOLDINGS LTD. Sun Yuenan Co-chairman and Executive Director

5 February 2015

As at the date of this announcement, the executive Directors are Mr. Sun Yuenan, Mr. Ye Lieli, Mr. Lei Fugui, Mr. Jin Zhigang and Mr. Yu Jianqing; the non-executive Director is Ms. Chen Shaohuan; and the independent non-executive Directors are Mr. Zhang Yizhao and Mr. Rao Yong.

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