Rego Interactive Co., Ltd — Capital/Financing Update 2020

Jun 25, 2020

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)

DISCLOSEABLE TRANSACTION CAPITAL INCREASE IN XI’AN COMPANY

References are made to the announcement of the Company dated 20 December 2007 in relation to the acquisition and licensed operation of the two Sewage Water Treatment Plants in Xi’an, the announcement dated 18 March 2008 in relation to the discloseable transaction of the acquisition and licensed operation of the Sewage Water Treatment Plants in Xi’an and the overseas regulatory announcement dated 12 June 2014 in relation to the capital increase in Xi’an Company.

On 24 June 2020, the Board considered and approved the implementation of the upgrade, renovation, covering and deodorization project in the Sewage Water Treatment Plant and Sewage Water Purification Center. Pursuant to which, Xi’an Company intends to enter into the Supplemental Agreement II with Xi’an Water Affairs Bureau, so as to implement the Project. The estimated total investment amount of the Project is approximately RMB473,900,000, of which RMB142,170,000 is the project capital, which is proposed to be funded by means of capital increase in Xi’an Company by the Company; the remainder will be financed by means of bank loans by Xi’an Company.

As one or more applicable percentage ratios are more than 5% but less than 25%, the transaction contemplated under the Supplemental Agreement II constitutes a discloseable transaction of the Company under the Listing Rules. Accordingly, the transaction is subject to the reporting and announcement requirements but exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

INTRODUCTION

References are made to the announcement of the Company dated 20 December 2007 in relation to the acquisition and licensed operation of the two Sewage Water Treatment Plants in Xi’an, the announcement dated 18 March 2008 in relation to the discloseable transaction of the acquisition and licensed operation of the Sewage Water Treatment Plants in Xi’an and the overseas regulatory announcement dated 12 June 2014 in relation to the capital increase in Xi’an Company.

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On 24 June 2020, the Board considered and approved the implementation of the upgrade, renovation, covering and deodorization project in the Sewage Water Treatment Plant and Sewage Water Purification Center. Pursuant to which, Xi’an Company intends to enter into the Supplemental Agreement II with Xi’an Water Affairs Bureau, so as to implement the Project. The estimated total investment amount of the Project is approximately RMB473,900,000. Except for the terms under the Supplemental Agreement II, the rest of the content should be based on the Licensed Operation Agreement, Supplemental Agreement I, Sewage Water Treatment Service Agreement and Asset Transfer Agreement.

The following is a summary of the principal terms of the Supplemental Agreement II:

SUPPLEMENTAL AGREEMENT II

(1) Parties

• (a) Xi’an Company; and

• (b) Xi’an Water Affairs Bureau.

(2) Principal terms

Pursuant to the Supplemental Agreement II, Xi’an Company intends to carry out the upgrade, renovation, covering and deodorization project for its Sewage Water Treatment Plant and Sewage Water Purification Center. The estimated total investment amount of the Project is approximately RMB473,900,000, of which RMB142,170,000 is the project capital, which is proposed to be funded by means of capital increase in Xi’an Company by the Company; the remainder will be financed by means of bank loans by Xi’an Company, etc.

Following the completion of the aforesaid capital increase, the registered capital of Xi’an Company will be increased from RMB334,000,000 to RMB476,170,000, and Xi’an Company will remain as a wholly-owned subsidiary of the Company.

(3) Information about the Project

Pursuant to the Supplemental Agreement II, the Project represents the upgrade, renovation, covering and deodorization project for the Sewage Water Treatment Plant and Sewage Water Purification Center with an existing designed capacity of 120,000 m[3] /day and 150,000 m[3] / day, respectively.

For the upgrade, renovation, covering and deodorization project for the Sewage Water Treatment Plant, the project site is located within Dengjiacun sewage water treatment plant, with the newly acquired land for upgrade and renovation located at the northwest corner of the plant with an additional area of 9.73 mu. The total investment amount of the upgrade, renovation, covering and deodorization project for the Sewage Water Treatment Plant is estimated to be approximately RMB221,610,000.

For the upgrade, renovation, covering and deodorization project for the Sewage Water Purification Center, the project site is located within Beishiqiao sewage water treatment plant, with the newly acquired land for upgrade and renovation located at the eastern side of the plant with an additional area of 1.65 mu. The total investment amount of the upgrade, renovation, covering and deodorization project for the Sewage Water Purification Center is estimated to be approximately RMB252,290,000.

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Upon implementation of the Project, the water discharged by the Sewage Water Treatment Plant and Sewage Water Purification Center will meet the standard under Comprehensive Sewage Water Discharge Standards for the Yellow River Basin in Shaanxi Province (DB61/224-2018) and higher standard of Standard Quasi-IV for surface water as specified in the Three-year Action Plan for Upgrade, Renovation, Covering and Deodorization of Recycled Water Discharged by Urban Sewage Water Treatment Plants in Xi’an (2018-2020); through odour treatment with the highly efficient biological deodorization method, we have satisfied the Class II Standards under the Pollutant Emission Standards for Urban Sewage Water Treatment Plants (GB18918-2002).

(4) Income model and payment mechanism

Pursuant to the Supplemental Agreement II, the income of the Project shall be realized by increasing the original unit price of sewage treatment services under the Sewage Water Treatment Service Agreement, and the new unit price of sewage water treatment services shall be implemented commencing from the date the commercial operation of the Project starts. The method of payment and the basic volume of sewage water treatment services are consistent with the one under the Sewage Water Treatment Service Agreement, and the sewage water treatment service fee is included in the annual financial budget by the Xi’an Finance Bureau* (西安市財政局) and the payment shall be made monthly to the Xi’an Company.

(5) Term of licensed operation

The terms of both licensed operation as agreed in the Licensed Operation Agreement and the Supplemental Agreement II shall expire on the end of May 2033.

(6) Letter of Guarantee

(a) Letter of performance guarantee

Within fifteen (15) working days following the effective date of the Supplemental Agreement II, Xi’an Company shall submit to Xi’an Water Affairs Bureau a letter of performance guarantee in the amount of RMB30,000,000 issued by a financial institution acceptable to Xi’an Water Affairs Bureau in order to guarantee the performance of Xi’an Company’s obligations under the Supplemental Agreement II in relation to the financing and construction of the project facilities.

(b) Letter of guarantee for project maintenance during the operation period

Within seven working days following the completion of the Project and the commencement of the operation period, Xi’an Company shall make up for the amount of RMB18,000,000 for the letter of guarantee for project maintenance during the operation period in accordance with the Licensed Operation Agreement, upon which the letter of guarantee for project maintenance during the operation period shall be returned to Xi’an Company.

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INFORMATION ABOUT THE COMPANY, XI’AN COMPANY AND XI’AN WATER AFFAIRS BUREAU

The Company is principally engaged in the 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.

Xi’an Company is principally engaged in the development, construction, management and operation of sewage water treatment plants, their auxiliary facilities and equipment for unused solid materials, research and development and promotion of environmental protection technology, application of renewable energy and the related equipment, installation services of equipment of sewage water treatment plants, and consultation services of water treatment facilities, environmental engineering, municipal engineering, road engineering and transportation engineering.

Xi’an Water Affairs Bureau is a functional department of the Xi’an Municipal People’s Government and is mainly responsible for ensuring the rational development and utilization of the city’s water resources, centralized treatment of domestic sewage water and utilization of recycled water as well as sludge disposal, etc.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, Xi’an Water Affairs Bureau and its ultimate beneficial owners are all third parties independent of the Company and its connected persons.

FINANCIAL INFORMATION OF XI’AN COMPANY

As at and for the period ended 31 December 2018, Xi’an Company’s audited total assets are RMB618,870,000, audited net assets are RMB407,600,000, audited liabilities are RMB211,270,000, audited current liabilities are RMB63,380,000, and audited operating revenue is RMB132,970,000, audited net profit (before tax) is RMB33,900,000, and audited net profit (after tax) is RMB30,070,000.

As at and for the period ended 31 December 2019, Xi’an Company’s audited total assets are RMB608,270,000, audited net assets are RMB433,560,000, audited liabilities are RMB174,710,000, audited current liabilities are RMB72,570,000, and audited operating revenue is RMB149,310,000, audited net profit (before tax) is RMB28,770,000, and audited net profit (after tax) is RMB25,950,000.

As at and for the period ended 31 May 2020, Xi’an Company’s unaudited total assets are RMB611,110,000, unaudited net assets are RMB449,680,000, unaudited liabilities are RMB161,430,000, unaudited current liabilities are RMB62,640,000, and unaudited operating revenue is RMB64,560,000, unaudited net profit (before tax) is RMB17,830,000, and unaudited net profit (after tax) is RMB16,130,000.

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REASONS FOR ENTERING INTO THE SUPPLEMENTAL AGREEMENT II

Upon implementation, the Project will stabilize and improve the quality of the water discharged from the Sewage Water Treatment Plant and Sewage Water Purification Center, and ensure that the water discharged from the Sewage Water Treatment Plant and Sewage Water Purification Center meets the requirements of the local government, which is of great significance in ensuring the normal and stable operation of Xi’an Company. Meanwhile, upon implementation, the Project will raise the price of the sewage water treatment services, which is conducive to the enhancement of the overall revenue and profitability of Xi’an Company and in line with the Company’s development strategy and planning.

The terms of the Supplemental Agreement II were determined after arm’s length negotiations between the parties. The Directors (including the independent non-executive Directors) are of the view that the terms of the Supplemental Agreement II are on normal commercial terms, fair and reasonable, and in the interests of the Group and its Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more applicable percentage ratios are more than 5% but less than 25%, the transaction contemplated under the Supplemental Agreement II constitutes a discloseable transaction of the Company under the Listing Rules. Accordingly, the transaction is subject to the reporting and announcement requirements but exempt from the Shareholders’ approval requirement pursuant to Chapter 14 of the Listing Rules.

DEFINITIONS

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

“Acquisition” the acquisition by Xi’an Company of all the rights and interests in Xi’an Sewage Water Treatment Plant from Xi’an Infrastructure Investment and Construction Company* (西安市基礎設施建設 投資總公司) at the Consideration, together with all the relevant operating manuals, operating summaries, memoranda, plans, documents and technical information required for the operation and management of Xi’an Sewage Water Treatment Plant

“Asset Transfer Agreement” the asset transfer agreement dated 18 March 2008 entered into between Xi’an Company and Xi’an Infrastructure Investment and Construction Company* (西安市基礎設施建設投資總公司) in relation to the Acquisition, details of which are set out in the Company’s announcement dated 18 March 2008

“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

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“connected person(s)”	has the same meaning as ascribed to it under the Listing Rules
“Consideration”	total consideration of RMB643,000,000 for the acquisition of
	Xi’an Sewage Water Treatment Plant
“Director(s)”	the directors of the Company, including independent
	non-executive directors
“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
“Licensed Operation	the licensed operation agreement entered into between Xi’an
Agreement”	Company and the Xi’an Municipal Administrative Commission*
	(西安市市政管理委員會) on 18 March 2008 in relation to the
	Xi’an Project, pursuant to which Xi’an Company operates the
	Sewage Water Treatment Plant in Xi’an under the “Transfer
	– Operate – Transfer (TOT)” model, and the term of licensed
	operation is 25 years. Relevant details are set out in the
	Company’s announcement dated 18 March 2008
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“percentage ratio(s)”	has the same meaning as ascribed to it under the Listing Rules, as
	applicable to a transaction
“PRC”	the People’s Republic of China, for the purpose of this
	announcement, excluding Hong Kong, Macau Special
	Administrative Region of the PRC and Taiwan
“Project”	the upgrade, renovation, covering and deodorization project for
	the Sewage Water Treatment Plant with a designed capacity of
	120,000 m3/day and the Sewage Water Purification Center with a
	designed capacity of 150,000 m3/day, pursuant to the terms of the
	Supplemental Agreement II
“RMB”	Renminbi, the lawful currency of the PRC
“Sewage Water Treatment	a sewage water treatment plant located in Xi’an, PRC
Plant”
“Sewage Water	Beishiqiao sewage water purification center located in Xi’an, PRC
Purification Center”

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• “Sewage Water Treatment the two sewage water treatment agreements entered into Service Agreement” between Xi’an Company and Xi’an Infrastructure Investment and Construction Company* (西安市基礎設施建設投資總公司) on 18 March 2008 for the provision of sewage water treatment services by the Sewage Water Treatment Plant and Sewage Water Purification Center, details of which are set out in the Company’s announcement dated 18 March 2008

• “Share(s)”

the ordinary shares in the existing share capital of the Company with nominal value of RMB1.00 each

• “Shareholder(s)”

holder(s) of Shares

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Supplemental Agreement I”

• the supplemental agreement to the Licensed Operation Agreement entered into between Xi’an Company and Xi’an Water Affairs Bureau on 12 May 2014, pursuant to which a direct investment was made by Xi’an Company to implement the upgrade and renovation project for the Sewage Water Treatment Plant and Sewage Water Purification Center

• “Supplemental Agreement II”

• the supplemental agreement to be entered into between Xi’an Company and Xi’an Water Affairs Bureau in relation to the licensed operation agreement (upgrade, renovation, covering and deodorization) of the Sewage Water Treatment Plant and Sewage Water Purification Centre “Transfer – Operate – Transfer (TOT)”, pursuant to which Xi’an Company intends to carry out the upgrade, renovation, covering and deodorization project for the Sewage Water Treatment Plant and Sewage Water Purification Center

• “Xi’an Company”

• Xi’an Capital Water Company Limited* (西安創業水務有限公 司), a company incorporated in the PRC with limited liability and wholly owned by the Company as of the date of this announcement

• “Xi’an Water Affairs Bureau”

• Xi’an Water Company Affairs Bureau* (西安市水務局), a company incorporated in the PRC with limited liability and a functional department of the Xi’an Municipal People’s Government

• “Xi’an Project”

the project in relation to the grant of an operation license to Xi’an Company for the exclusive rights to acquire, operate and manage Xi’an Sewage Water Treatment Plant and to provide sewage water treatment services

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“Xi’an Sewage Water Treatment Plant”

facilities, buildings, construction and other production-related fixed assets of the Sewage Water Treatment Plant and Sewage Water Purification Center in Xi’an, the PRC (excluding the intermediate water treatment systems)

“%”

percentage

By Order of the Board Liu Yujun Chairman

Tianjin, the PRC 24 June 2020

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. Gu Wenhui, 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 purpose only

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