Rego Interactive Co., Ltd — Capital/Financing Update 2019

Sep 16, 2019

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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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1065)

Announcement on the Guarantee for the Loan Granted to Chibi Capital Water Company Limited

The Board of Directors (the “ Board ”) of the Company and all the Directors warrant that there are no false representations or misleading statements contained in, or material omissions from, this announcement, and severally and jointly accept responsibility for the truthfulness, accuracy and completeness of this announcement.

Reference is made to the announcement of the discloseable transaction in relation to the PPP Project dated 9 November 2018 of the Company (the “ Announcement ”). Terms used in this announcement shall have the same meanings as those defined in the Announcement unless the context requires otherwise.

The Board hereby announces that on 16 September 2019, the Board considered and approved that the Company intended to provide a full guarantee (the “ Guarantee ”) for the bank loan not exceeding RMB143,580,000 (the “ Loan ”) granted to Chibi Capital Water Company Limited[*] （赤壁 創業水務有限公司）(“ Chibi Company ”), an indirectly wholly-owned subsidiary of the Company.

As the total external guarantee of the Company exceeds 50% of the net assets in the consolidated financial statements of the most recent accounting year, in accordance with the Articles of Association of the Company, the Guarantee is subject to the approval of the shareholders at the general meeting of the Company. The Company will dispatch a notice of the general meeting containing, among other things, the provision of the Guarantee in respect of the Loan to the shareholders of the Company in due course.

The details of the Guarantee are as follows:

I. Reasons for entering into the Guarantee

On 18 May 2004, the Company entered into a cooperation framework agreement with the Chibi Development Bureau and intended to finance, construct and operate Chibi Sewage Treatment Plant by way of “Build-Operate-Transfer (BOT)” model, and acquire and operate No. 1 Water Plant, No. 2 Water Plant and Pufang Water Plant from Chibi Water Supply Corporation by way of “Transfer-Operate-Transfer (TOT)” model. On 29 June 2005, the Company contributed RMB33,250,000, with a shareholding of 95%, and Guizhou Capital Water Company Limited[*] （貴州創業水務有限公司）(“ Guizhou Company ”) contributed RMB1,750,000, with a shareholding of 5%, to establish Chibi Company which is engaged in construction and operation of Chibi Sewage Treatment Plant. On 15 July 2005, Chibi Company entered into the “Concession Agreement of the Chibi Sewage Treatment Plant (BOT) Project” with the Chibi Development Bureau.

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On 1 March 2009, the Company agreed to increase the capital in Wuhan Tianchuang Capital Environmental Protection Company Limited[*] （武漢天創環保公司）(“ Wuhan Company ”) by injection of 95% equity in the Chibi Company, while Guizhou Company transferred the 5% equity in Chibi Company to Wuhan Company. After the transfer, Chibi Company became a wholly-owned subsidiary of Wuhan Company. In October 2018, Chibi Company won the bid for the PPP Project. The Company agreed to contribute RMB62,000,000 to Wuhan Company for capital increase, and then Wuhan Company contributed RMB62,000,000 to Chibi Company for capital increase. Chibi Company is in charge of financing, design, construction, operation, maintenance and handover of the project, and collecting sewage treatment service fees. In December 2018, the fund provided by the Company to Wuhan Company for capital increase was available. In January 2019, Wuhan Company completed its capital increase to Chibi Company.

On 9 November 2018, Chibi Company and the Chibi Development Bureau completed entering into the Project Agreement for the PPP Project. According to the project estimation, the total investment for the PPP Project amounted to RMB205,580,000. The capital was funded by the increased capital of RMB62,000,000 and bank loan of RMB143,580,000. Based on the requirement of the intended lending bank, the Company was required to provide a guarantee for the PPP Project loan of RMB143,580,000. Chibi Company shall provide a counter-guarantee to the Company with the right of charges and proceeds from the PPP Project.

II. Basic information on the Guarantee

The Company’s Guarantee for Chibi Company will cover all its debts under the financing contract with the financial institution, including the principal under the financing contract not exceeding RMB143,580,000, as well as the interest, penalty interest, liquidated damages and other related fees. The Company will assume economic and legal joint liability for all the debts within the scope of the Guarantee.

The Company will also enter into a counter-guarantee agreement with Chibi Company, who will provide a counter-guarantee to the Company with the right of charges and proceeds from the Chibi expansion project, which is in line with the provisions for counter-guarantee in the Company’s Articles of Association.

III. Basic information on and financial conditions of Chibi Company

The Company indirectly holds 100% equity of Chibi Company through a directly wholly-owned subsidiary, Wuhan Company. Chibi Company was incorporated on 29 June 2005.

As at 31 December 2018, Chibi Company’s total assets amounted to RMB82,835,400, with net assets, liabilities, current assets and current liabilities of RMB55,209,300, RMB27,626,100, RMB12,521,200 and RMB16,261,000 respectively, and its gearing ratio was 33.35%.

As at 31 July 2019, Chibi Company’s total assets amounted to RMB144,352,100, with net assets, liabilities, current assets and current liabilities of RMB117,563,800, RMB26,788,300, RMB73,813,000 and RMB788,300 respectively, and its gearing ratio was 18.56%.

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IV. The Company’s decision-making procedures for the Guarantee

As at the date of this announcement, the total loan guarantees provided by Company to its subsidiaries amounted to RMB4,094,456,200 (including the Guarantee), accounting for approximately 70.38% of the latest audited net assets of the Company. As the total external guarantees of the Company exceeded 50% of the net assets in the consolidated financial statements of the most recent accounting year, in accordance with the Articles of Association of the Company, the Guarantee is subject to the approval of the shareholders at the general meeting of the Company.

By order of the Board Liu Yujun Chairman

Tianjin, the PRC 16 September 2019

As at the date of this announcement, the Board comprises three executive Directors: Mr. Liu Yujun, Ms. Wang Jing and Mr. Niu Bo; three non-executive Directors: Mr. Yu Zhongpeng, Mr. Han Wei and Mr. Si Xiaolong; and three independent non-executive Directors: Mr. Di Xiaofeng, Mr. Guo Yongqing and Mr. Wang Xiangfei.

• For identification purposes only

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