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

Jun 18, 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.

==> picture [50 x 50] intentionally omitted <==

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

DISCLOSEABLE TRANSACTION A PPP PROJECT FOR THE CONSTRUCTION OF THE FIRST AND SECOND SEWAGE TREATMENT PLANTS IN SUZHOU DISTRICT, JIUQUAN CITY

On 18 June 2019, the Board considered and approved the establishment of the Project Company and the implementation of the PPP Project for the construction of the First and Second Sewage Treatment Plants in Suzhou District, Jiuquan City, pursuant to which, the Company proposed to initiate the Project Agreement with Suzhou Development Bureau, under which the Project Company, by adopting the model of “Reconstruction—Operation—Transfer (ROT)”, shall be responsible for, among others, the optimization, investment, financing, construction, operation, maintenance and transfer of the Existing Projects and the New Projects during the term of cooperation. The total investment amount of the PPP Project is expected to be approximately RMB594,126,200 in the near future.

On the same date, the Company and the Government Representative entered into the JV Agreement, pursuant to which, among others, both parties agreed to establish the Project Company for the PPP Project. The registered capital of the PPP Project amounted to RMB178,237,900, which is expected to account for 30% of the total investment amount of the PPP Project in the near future. The Company agreed to contribute RMB158,237,900 in cash, representing approximately 88.78% of the registered capital of the Project Company, while the Government Representative agreed to contribute RMB20,000,000 in cash, representing approximately 11.22% of the registered capital of the Project Company. The scope of business of the Project Company will include, among others, the development, construction, operation and management of the sewage treatment plants and their ancillary facilities, the solid waste treatment facilities and the reclaimed water recycling facilities.

— 1 —

As one or more of the applicable percentage ratios are more than 5% but less than 25%, the transactions contemplated under the Project Agreement and the JV Agreement constitute discloseable transactions of the Company under the Listing Rules. Accordingly, such transactions are subject to the reporting and announcement requirements only but exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

INTRODUCTION

Reference is made to the announcement of the Company dated 15 May 2019 in relation to the success in the bid for the PPP Project.

On 18 June 2019, the Board considered and approved the establishment of the Project Company and the implementation of the PPP Project for the construction of the First and Second Sewage Treatment Plants in Suzhou District, Jiuquan City, pursuant to which, the Company proposed to initiate the Project Agreement with Suzhou Development Bureau, under which the Project Company, by adopting the model of “Reconstruction—Operation—Transfer (ROT)”, shall be responsible for, among others, the optimization, investment, financing, construction, operation, maintenance and transfer of the Existing Projects and the New Projects during the term of cooperation. The total investment amount of the PPP Project is expected to be approximately RMB594,126,200 in the near future.

A summary of the principal terms of the Project Agreement is set out below.

The Project Agreement

(1) Initiation Date

18 June 2019

(2) Parties

• (a) Suzhou Development Bureau; and

• (b) the Company.

Upon establishment of the Project Company, the Project Company will officially enter into the Project Agreement with Suzhou Development Bureau.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Suzhou Development Bureau and its ultimate beneficial owner are third parties independent of the Company and its connected persons.

— 2 —

(3) PPP Project

As stipulated under the Project Agreement, PPP Project refers to the PPP project for the construction of the first and second sewage treatment plants in Suzhou District, Jiuquan City, which will be jointly implemented by the Company and Suzhou Development Bureau, and consists of the Existing Projects and the New Projects.

For the Existing Projects, the scope of the first sewage treatment plant of Suzhou District, Jiuquan City is 40,000 cubic meters per day; and the scope of the second sewage treatment plant of Suzhou District, Jiuquan City is 60,000 cubic meters per day. The scope of sludge disposal project for the first and second sewage treatment plants in Suzhou District, Jiuquan City is 80 tons per day.

For the New Projects, the scope for construction of the upgrading and reconstruction project for the first sewage treatment plant of Suzhou District, Jiuquan City is 40,000 cubic meters per day; and the scope for construction of the reclaimed water recycling construction project in Suzhou District is 30,000 cubic meters per day and has an ancillary pipeline network of 42 kilometers (subject to the final project construction plan).

The Parties shall launch the construction of long-term facilities in a timely manner based on the water volume, mud volume, reclaimed water consumption and other conditions of the PPP Project in the near future, so as to reach the long-term capacity as planned in the PPP Project. Such facilities shall be invested in, constructed and operated by the Project Company.

The total investment amount of the PPP Project is expected to be approximately RMB594,126,200 in the near future, which comprises: (1) for the Existing Projects, the consideration for the transfer of concession rights of the first and second sewage treatment plants in Suzhou District, Jiuquan City in the sum of RMB267,500,000 and the estimated total investment in the project construction of the sludge disposal project of RMB63,186,300 (the specific amount is subject to the audited results upon completion); (2) for the New Projects, the estimated total amount of approximately RMB263,439,900.

The total investment amount of the PPP Project in the near future is determined with reference to, among others, (i) the conclusion of other projects; (ii) the appraisal value of the Existing Projects; (iii) the scope of the Existing Projects; and (iv) the requirements for the scope of sewage treatment and water quality.

— 3 —

(4) Concession Rights

As stipulated under the Project Agreement, Suzhou Development Bureau agreed to grant the concession rights of the PPP Project to the Project Company, including the investment, construction, operation and maintenance of the Existing Projects and the New Projects, and the rights to charge availability service fees, sewage treatment service fees and reclaimed water treatment service fees from Suzhou Development Bureau during the term of cooperation.

The term of cooperation for the PPP Project shall be 30 years from the signing and effective date of the Project Agreement, starting from the date on which the Project Company completes the transfer of the Existing Projects and commences commercial operation. Upon expiry of the term of cooperation, the Project Company shall transfer all assets under the PPP Project to Suzhou Development Bureau as stipulated under the Project Agreement, while ensuring that the PPP Project is well maintained and in good operating condition.

(5) Establishment of the Project Company

As stipulated under the Project Agreement, the Company shall jointly establish the Project Company with the Government Representative. The registered capital of the PPP Project amounted to RMB178,237,900, which is expected to account for 30% of the total investment amount of the PPP Project in the near future, of which the Company shall contribute RMB158,237,900 and the Government Representative shall contribute RMB20,000,000, while the remainder shall be funded by the Project Company through financing.

Upon establishment of the Project Company and until the termination of the Project Agreement, the Project Company shall inherit all rights and obligations under the Project Agreement originally borne by the Company.

The Company shall retain a major shareholding in the Project Company (the proportion of equity interests shall not be less than 51%) throughout the term of cooperation. The proportion of equity interests held by the Company in the Project Company may not change without the written consent of the Suzhou Development Bureau.

(6) Letter of Guarantee

(a) Letter of Performance Guarantee in Relation to Construction Period

Within 30 days from the signing of the Project Agreement, the Project Company shall submit a letter of guarantee in relation to performance of construction period on unconditional payment upon demand within the construction period issued by a

— 4 —

financial institution with sound reputation as satisfied by both parties to Suzhou Development Bureau or its designated department, in order to guarantee the duly performance of the Project Company’s obligations of project financing, investment and construction under the Project Agreement. The amount of such letter of performance guarantee in relation to construction period shall be RMB30,000,000. The letter of performance guarantee in relation to construction period shall be discharged upon completion and acceptance inspection of the New Projects under PPP Project. Suzhou Development Bureau shall return the letter of performance guarantee in relation to construction period to the Project Company within 15 business days from the completion and acceptance inspection of the New Projects under PPP Project.

(b) Letter of Guarantee in Relation to Operation and Maintenance

Within 15 business days from the completion and acceptance inspection of the PPP Project, the Project Company shall submit a letter of guarantee in relation to operation and maintenance on unconditional payment upon demand issued by a financial institution with sound reputation as satisfied by both parties to Suzhou Development Bureau, in order to guarantee the Project Company’s performance of its obligations in operation and maintenance services under the Project Agreement. The amount of such letter of guarantee in relation to operation and maintenance shall be RMB10,000,000. Suzhou Development Bureau shall return the letter of guarantee in relation to operation and maintenance to the Project Company within 15 business days from the date marking 12 months prior to the termination date of the term of cooperation .

(c) Letter of Guarantee in Relation to Transfer and Repair

Within 15 business days from the date marking 12 months prior to the termination date of the term of cooperation, the Project Company shall submit a letter of guarantee in relation to transfer and repair on unconditional payment upon demand issued by a financial institution with sound reputation as satisfied by both parties to Suzhou Development Bureau, in order to guarantee the Project Company’s performance of its obligations in transfer under the Project Agreement. The amount of such letter of guarantee in relation to transfer and repair shall be RMB20,000,000. Subsequent to the termination of the PPP Project or the duly fulfillment of the Project Company’s obligations in transfer, Suzhou Development Bureau shall return the letter of guarantee in relation to transfer and repair to the Project Company within 15 business days from the expiry date of the 12-month period beginning with the signing of the transfer and delivery list by the Project Company and Suzhou Development Bureau.

— 5 —

The JV Agreement

(1) Signing Date

18 June 2019

(2) Parties

• (a) the Government Representative; and

• (b) the Company.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Government Representative and its ultimate beneficial owner are third parties independent of the Company and its connected persons.

(3) Scope of Business

The business scope of the Project Company will include, among others, the development, construction, operation and management of the sewage treatment plants and their ancillary facilities, the solid waste treatment facilities and the reclaimed water recycling facilities.

(4) Total Investment Amount and Registered Capital

The total investment amount of the PPP Project is expected to be approximately RMB594,126,200 in the near future; and the registered capital of the Project Company will be approximately RMB178,237,900, accounting for 30% of the total investment amount of the PPP Project in the near future. The Company agreed to contribute RMB158,237,900 in cash, representing approximately 88.78% of the registered capital of the Project Company; while the Government Representative agreed to contribute RMB20,000,000 in cash, representing approximately 11.22% of the registered capital of the Project Company.

The difference between the total investment amount of the PPP Project in the near future and the registered capital of the Project Company shall be settled by the Project Company through bank loans and other means. If the Project Company cannot successfully complete project financing, the Project Company shall settle the amount through shareholder loans, replenishment of guarantees or other means.

(5) Profit Distribution

Profit after tax after the Project Company covers deficits and withdraws provident fund shall be allocated to the shareholders of the Company. Shareholders of the Government Representative shall not participate in dividend distribution and are not entitled for profit distribution.

— 6 —

(6) Organizational Structure

The board of directors of the Project Company shall comprise five directors, of which, four directors shall be nominated by the Company while one director shall be nominated by the Government Representative. The chairman of the board of directors shall be nominated by the Company and shall be elected by the board of directors.

(7) Equity Transfer

The shareholders of the Project Company shall not, within ten years from the effective date of the Project Agreement, transfer all or part of their equity interest in the Project Company to any third party, unless the transfer is required by laws or approved by Suzhou District Government in advance .

INFORMATION OF THE COMPANY, SUZHOU DEVELOPMENT BUREAU AND THE GOVERNMENT REPRESENTATIVE

The Company is principally engaged in investment, construction, design, management, operation, technical consultation and auxiliary services of treatment facilities of sewage water, tap water and other types of water; design, construction, management, building and operation management of municipal infrastructures; license operation, technical consultation and auxiliary services of Southeastern Half Ring Urban Road of the Middle Ring of Tianjin City; development and operation of environmental protection technology and products; leasing of self-owned properties, etc.

Suzhou Development Bureau is a department of the people’s government of Suzhou District. It is responsible for the policies, regulations and reform plans in respect of Suzhou District’s urban planning, construction and other sectors.

The Government Representative is the investor representative of the People’s Government of Suzhou District, Jiuquan City (i.e. Suzhou District Construction Investment LLC* (肅州區建設投資有限責任公司)).

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Suzhou Development Bureau, the Government Representative and their ultimate beneficial owners are third parties independent of the Company and its connected persons.

— 7 —

REASONS FOR ENTERING INTO THE PROJECT AGREEMENT

The investment and operation of the Project are in line with both the development strategies of the Company and the national strategic deployment of the Belt and Road Initiative, and allow the Company to enter the Jiuquan market, enabling its business scope to irradiate the entire Northwest territory, which will have positive effects on the Company’s environment-related businesses in the Northwest region and expansion of the Company’s brand influence. On-the-spot investigation indicates that the inflow water is sound in both quality and volume and the local government is in a good financial position, therefore the Project is not expected to encounter major operational risks in the future.

The terms of the Project Agreement and JV Agreement were determined after arm’s length negotiations among the parties thereto. The Directors (including the independent non-executive Directors) consider that the terms of the Project Agreement and JV Agreement are on normal commercial terms, fair and reasonable and in the interest of the Group and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios are more than 5% but less than 25%, the transactions contemplated under the Project Agreement and the JV Agreement constitute discloseable transactions of the Company under the Listing Rules. Accordingly, such transactions are subject to the reporting and announcement requirements only but exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

— 8 —

DEFINITIONS

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

• “Board” the board of Directors

• “Company” Tianjin Capital Environmental Protection Group Company Limited, a joint stock limited company established in the PRC whose A Shares and H Shares are listed on the Shanghai Stock Exchange and the Stock Exchange respectively

• “connected person(s)” has the same meaning as ascribed to it under the Listing Rules

• “Directors” the directors of the Company, including the independent non-executive directors

• “Existing Projects” First Sewage Treatment Plant of Suzhou District, Jiuquan City, Second Sewage Treatment Plant of Suzhou District, Jiuquan City and the sludge disposal project of the First and Second Sewage Treatment Plant of Suzhou District, Jiuquan City

• “Government the investor representative of the people’s government Representative” of Suzhou District, Jiuquan City (i.e. Suzhou District Construction Investment LLC* (肅州區建設投資有限責 任公司)), an investing shareholder proposing to jointly establish the Project Company with the Company

• “Group” the Company and its subsidiaries

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

— 9 —

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “JV Agreement”

• the joint venture agreement in relation to the establishment of the Project Company entered into by the Company and the Government Representative on 18 June 2019

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “New Projects”

• the upgrading and reconstruction project of First Sewage Treatment Plant of Suzhou District, Jiuquan City and the reclaimed water recycling construction project of Suzhou District

• “percentage ratios”

• has the same meaning as ascribed to it under the Listing Rules, as applicable to a transaction

• “PRC”

• the People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

• “Project Agreement”

• the Project Agreement proposed to be initiated by the Company and Suzhou Development Bureau to establish the Project Company and implement the PPP Project

• “Project Company”

• the project company tentatively named Jiuquan Capital Water Company Limited* (酒泉創業水務有限公司), subject to the final registration at the industrial and business administration, which is proposed to be established by the Company and the Government Representative

• “PPP Project” or the PPP Project for the construction of the first and “Project” second sewage treatment plants in Suzhou District, jointly implemented by the Company and Jiuquan Development Bureau, under which the Project Company, by adopting the model of “Reconstruction—Operation—Transfer (ROT)”, shall be responsible for, among others, the optimization, investment, financing, construction, operation, maintenance and transfer of the Existing Projects and the New Projects during the term of cooperation

— 10 —

“RMB” Renminbi, the lawful currency of the PRC “Shareholder(s)” registered holder(s) of the Shares “Share(s)” share(s) of the Company with nominal value of RMB1.00 each

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Suzhou Development Housing and Urban-Rural Development Bureau of Bureau” Suzhou District, Jiuquan City

“%”

per cent

By Order of the Board Liu Yujun Chairman

Tianjin, the PRC

18 June 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.

— 11 —