Kaisa Group Holdings Ltd. — M&A Activity 2012

Jul 17, 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.

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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 TRANSACTION

PROPOSED ACQUISITION OF EQUITY INTERESTS IN DALIAN HUAHAO AND DALIAN HUAPU

The Company is pleased to announce that on 17 July 2012, the Vendors and the Purchaser entered into the Agreement in relation to the Transaction at a total consideration of RMB814,000,000 (equivalent to approximately HK$999,509,000).

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Vendors are Independent Third Parties.

As the largest applicable percentage ratio exceeds 5% but is less than 25%, the Transaction constitutes a discloseable transaction and is therefore subject to the notification and announcement requirements under Chapter 14 the Listing Rules.

BACKGROUND OF THE TRANSACTION

The Company is pleased to announce that the Vendors and the Purchaser entered into the Agreement in relation to the Transaction at a total consideration of RMB814,000,000 (equivalent to approximately HK$999,509,000). The entering into of the Agreement by the Purchaser constitutes a discloseable transaction under Chapter 14 of the Listing Rules.

The Consideration is determined after arm’s length negotiations between the parties with reference to, among others, the prevailing real estate market conditions in Dalian city, Liaoning province. The Consideration will be satisfied by the internal resources of the Company.

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The Directors are of the opinion that the Consideration is fair and reasonable and was determined after arm’s length negotiations between the Vendors and the Purchaser after considering various factors.

THE AGREEMENT

Date

17 July 2012

Parties

• (1) Purchaser: Kaisa Shenzhen

• (2) Vendors: Dalian Huiyao Dalian Huijing

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Vendors are Independent Third Parties.

Subject Matter

Pursuant to the Agreement, the Vendors have agreed to sell and the Purchaser has agreed to purchase the entire equity interests in each of the Target Companies at the Consideration, and part of the Consideration will be used by the Vendors to settle the Debt owed by the Target Companies to the relevant creditors.

Upon completion of the Transaction, the Purchaser shall be interested in the entire equity interests in each of the Target Companies. The Target Companies will be treated as indirect wholly-owned subsidiaries of the Company and the results of the Target Companies will be consolidated into the financial statements of the Group.

Land owned by the Target Companies

As at the date of this announcement, the Target Companies jointly and directly own the Land with a site area of 26,609.80 square meters for a term of 40 years. The Land is designated for commercial use.

Consideration

The total consideration for the Transaction amounts to RMB814,000,000 (equivalent to approximately HK$999,509,000).

The Consideration is determined after arm’s length negotiations between the parties with reference to, among others, the prevailing real estate market conditions in Dalian city, Liaoning province. The Consideration will be satisfied by the internal resources of the Company.

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Payment

The Purchaser shall pay Dalian Huiyao a refundable deposit and settle the Consideration as follows:

• (a) within three business days after the signing of the Agreement, the Purchaser shall pay Dalian Huiyao the sum of RMB100,000,000 as a refundable deposit (the “ Deposit ”), which is not counted as part of the Consideration;

• (b) within 20 business days after the payment of the Deposit, the Purchaser shall pay the Vendors a prepayment of RMB743,000,000, representing a portion of the Consideration, part of which will be used by the Vendors to settle the Debt; and

• (c) after making the prepayment described in paragraph (b) above and completion of paragraph (b) in the section headed “Undertakings by the Purchaser” below, subject to the written consent of Dalian Huiyao and within three business days after receipt of such consent, the Purchaser shall pay the Vendors the balance of the Consideration.

Undertakings by the Purchaser

Pursuant to the Agreement, the Purchaser undertakes to do the following:

• (a) it shall make due and punctual payments to the Vendors in accordance with the Agreement; and

• (b) within four months after the signing of the Agreement, it shall arrange for obtaining the land use rights certificate in the names of the respective Target Companies under the Land Grant Contract.

Failure to perform any of the above undertakings by the Purchaser constitutes a breach of the Agreement. If such breach occurs, Dalian Huiyao shall:

• (a) have the right to terminate the Agreement and other agreements entered into pursuant to the Agreement;

• (b) withhold the entire sum of the Deposit; and

• (c) have the right to claim the Purchaser against damages suffered by the Vendors in the amount not sufficiently set off by the Deposit.

REASONS FOR THE TRANSACTION

The Group is principally engaged in property development in the PRC. The Transaction is aligned with the Company’s growth strategy by seeking development opportunities in real estate markets in the PRC. The Directors consider that the Transaction will allow the Group to achieve a more balanced geographical coverage and to expand its presence in Dalian city, Liaoning province, the PRC. The Directors are optimistic about the prospect of the property market in Dalian city.

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The Directors are of the opinion that the Agreement and the transactions contemplated thereunder are on normal commercial terms after arm’s length negotiation between the parties, fair and reasonable and in the interests of the Company and its Shareholders as a whole.

INFORMATION OF THE COMPANY, THE VENDORS AND THE TARGET COMPANIES

The Company is one of the leading property developers in the PRC and is principally engaged in the development of large-scale residential properties and integrated commercial properties in the PRC.

The Vendors are Independent Third Parties. As at the date of this announcement, Dalian Huijing wholly owns each of the Target Companies. Within five business days after the signing of the Agreement and the payment of the Deposit, Dalian Huijing will transfer 95% equity interests in each of the Target Companies to Dalian Huiyao. Dalian Huiyao and Dalian Huijing will own as to 95% and 5% equity interest of the each of the Target Companies respectively.

The Target Companies are property development companies established under the laws of the PRC.

Immediately after completion of the Transaction, each of the Target Companies will be a wholly-owned subsidiary of the Purchaser and will become indirect wholly-owned subsidiaries of the Company.

The following information is a summary of the unaudited pro forma consolidated financial statements of the Target Companies for the two years ended 31 December 2010 and 2011:

	For the years	ended
	31 December
	2010	2011
	(unaudited)	(unaudited)
	RMB’000	RMB’000
Turnover	—	—
Net profit/(loss) before tax and
extraordinary items	20	(5,965)
Net profit/(loss) after tax and
extraordinary items	20	(5,965)
Net assets	99,938	93,973

IMPLICATION OF THE LISTING RULES

As the largest applicable percentage ratio exceeds 5% but is less than 25%, the Transaction constitutes a discloseable transaction and is therefore subject to the notification and announcement requirements under Chapter 14 the Listing Rules.

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DEFINITIONS

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

• “Agreement” the agreement dated 17 July 2012 in respect of the proposed acquisition of the entire equity interests in each of the Target Companies entered into between the Purchaser and the Vendors

• “Company” Kaisa Group Holdings Ltd., a company incorporated in the Cayman Islands with limited liability and the issued Shares are listed on the main board of the Stock Exchange

• “Consideration” the total consideration under the Agreement, being R M B 8 1 4 , 0 0 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y HK$999,509,000)

• “Dalian Huahao” 大連華灝置業有限公司 (Dalian Huahao Zhiye Co., Ltd.*), a company established under the laws of the PRC, and an Independent Third Party

• “Dalian Huapu” 大連華普置業有限公司 (Dalian Huapu Zhiye Co., Ltd.*), a company established under the laws of the PRC, and an Independent Third Party

• “Dalian Huijing” 大連匯景投資有限公司 (Dalian Huijing Investment Co., Ltd.*), a company established under the laws of the PRC, and an Independent Third Party

• “Dalian Huiyao” 大連輝耀科技開發有限公司 (Dalian Huiyao Technology Development Co., Ltd.*), a company established under the laws of the PRC, and an Independent Third Party

• “Dalian Land Reserve Bureau” 大連市國土資源和房屋局 (Dalian Municipal Land Reserve and Housing Bureau*)

• “Debt” the total amount of debt (including the outstanding amount of loans plus interest accrued thereon) owed by the Target Companies, being RMB671,143,437.50 (equivalent to approximately HK$824,095,576.50)

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

• “Group” the Company and its subsidiaries

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

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“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

“Independent Third Party(ies)”	third party(ies) independent of and not connected with the
	Company or any of its connected persons (as defined under
	the Listing Rules)
“Land”	the land parcel B16 located in Donggang District, Zhongshan
	Municipality, Dalian city, Liaoning province
“Land Grant Contract”	the state-owned land grant contract (《國有建設用地使用
	權出讓合同》) (contract number: 2102022011A015) dated
	30 September 2011 entered into among Dalian Huahao,
	Dailian Huapu and Dalian Land Reserve Bureau
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China, and, for the purpose of this
	announcement, shall exclude Hong Kong, Taiwan and the
	Macau Special Administrative Region
“Purchaser” or “Kaisa	佳兆業集團（深圳）有限公司(Kaisa Group (Shenzhen)
Shenzhen”	Co., Ltd.*), a company established under the laws of PRC
	and an indirectly wholly-owned subsidiary of the Company
“RMB”	Renminbi, the lawful currency of the PRC
“Shareholders”	holders of the Shares
“Shares”	the ordinary shares of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Companies”	Dalian Huahao and Dalian Huapu
“Transaction”	the proposed acquisition of the entire equity interests in each
	of the Target Companies by the Purchaser from the Vendors
	pursuant to the Agreement
“Vendors”	Dalian Huiyao and Dalian Huijing
“%”	per cent.

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For the purpose of this announcement, the exchange rate of RMB0.8144 = HK$1 has been used for currency translation. Such exchange rates are for illustration purposes and do not constitute representations that any amount in RMB or HK$ have been, could have been or may be converted at such rates.

By Order of the Board of KAISA GROUP HOLDINGS LTD. KWOK YING SHING Chairman

Hong Kong, 17 July 2012

As at the date of this announcement, the executive Directors are Mr. Kwok Ying Shing, Mr. Kwok Ying Chi, Mr. Sun Yuenan, Dr. Tam Lai Ling, Mr. Chen Gengxian, Mr. Han Zhenjie, Mr. Jin Zhigang and Mr. Ji Jiaming and the independent non-executive Directors are Mr. Rao Yong, Mr. Zhang Yizhao and Mr. Fok Hei Yu.

• for identification purpose only

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