RemeGen Co., Ltd. — Capital/Financing Update 2019

Dec 13, 2019

Hong Kong Exchange 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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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司 (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

VERY SUBSTANTIAL ACQUISITION ACQUISITION OF LAND USE RIGHTS IN HEFEI AIRPORT INTERNATIONAL TOWN

ACQUISITION OF LAND USE RIGHTS

The Board is pleased to announce that Hefei OCT Industry, an indirect non-wholly owned subsidiary of the Company, has successfully won the bid of the land use rights of the Land, being five parcels of land (i.e. the first phase of Hefei Airport International Town) at the total consideration of approximately RMB2,644 million. Hefei OCT Industry has signed the Confirmation Letter with the Hefei Natural Resources and Planning Bureau on 13 December 2019.

Hefei OCT Industry was established for the development of the Project pursuant to the terms of Joint Venture Agreement, and is held by OCT Ganghua, an indirect wholly-owned subsidiary of the Company and Huaxing Investment as to 51% and 49%, respectively.

LISTING RULES IMPLICATIONS

The Land Acquisition is regarded as a qualified property acquisition under Rule 14.04(10C) of the Listing Rules as the Land Acquisition involves an acquisition of governmental land(s) from the PRC Governmental Body (as defined under the Listing Rules) through an auction governed by the PRC laws (as defined under the Listing Rules) in the PRC, which is undertaken by the Group in its ordinary and usual course of business.

The Land Acquisition is undertaken by the Group and Huaxing Investment via Hefei OCT Industry on a joint basis. According to the Joint Venture Agreement which is prepared on an arm’s length basis and on normal commercial terms, Hefei OCT Industry was established for the single purpose relating to the acquisition of land use rights and development in relation to the Project which is consistent with the purpose of the acquisition of the Land. The Joint Venture Agreement also contains clauses that Hefei OCT Industry must not, (i) without the unanimous consent from OCT Ganghua and Huaxing Investment, change the nature or scope of Hefei OCT Industry’s business and its scope of business shall be at all times consistent with the requirements specified in documents relating to the land acquisition for the Project; or (ii) enter into any transactions which are not on an arm’s length basis.

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The Board confirms that the Land Acquisition is in the Group’s ordinary and usual course of business and that the Land Acquisition and the joint venture arrangement contemplated under the Joint Venture Agreement (including its financing and profit distribution arrangements) are on normal commercial terms, fair and reasonable and in the interests of the Company and Shareholders as a whole. The Transaction is subject to reporting and announcement requirements but is exempt from Shareholders’ approval requirements pursuant to Rule 14.33A of the Listing Rules.

As one or more of the relevant applicable percentage ratios (as defined in the Listing Rules) in respect of the Transaction are more than 100%, the Transaction constitutes a very substantial acquisition of the Company under Chapter 14 of the Listing Rules and subject to reporting, announcement and circular requirements but is exempt from shareholders’ approval requirement pursuant to Rule 14.33A of the Listing Rules.

GENERAL

A circular containing, among other things, further details of the Transaction will be despatched to the Shareholders in accordance with the Listing Rules for information purposes as soon as practicable. It is expected that the circular will be despatched to Shareholders on or before 24 January 2020 in order to allow sufficient time for the Company to prepare relevant information for inclusion in the circular.

ACQUISITION OF LAND USE RIGHTS

The Board is pleased to announce that Hefei OCT Industry, an indirect non-wholly owned subsidiary of the Company, has successfully won the bid of the land use rights of the Land, being five parcels of land (i.e, the first phase of Hefei Airport International Town) at the total consideration of approximately RMB2,644 million. Hefei OCT Industry has signed the Confirmation Letter with the Hefei Natural Resources and Planning Bureau on 13 December 2019.

Within 10 business days from the date of the Confirmation Letter, Hefei OCT Industry shall enter into the Land Use Rights Grant Contract with the Hefei Natural Resources and Planning Bureau in relation to the Land Acquisition.

CONSIDERATION

The Consideration, being the land premium payable for the land use rights of the Land amounting to approximately RMB2,644 million (a refundable bid deposit in the sum of RMB510,000,000 has been paid by Hefei OCT Industry at the time of bidding and contributed by the JV Partners in proportion to their respective shareholdings in Hefei OCT Industry which shall be used to offset the corresponding portion of the Consideration for the Land Acquisition), shall be paid by Hefei OCT Industry in the following manner, either:

• (1) the Consideration shall be settled in full within 30 days from the date of entering into the Land Use Rights Grant Contract; or

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• (2) 50% of the Consideration shall be settled within 30 days from the date of entering into the Land Use Rights Grant Contract and the remainder of the Consideration, along with the interest accrued on the remainder of the Consideration (the interest rate of which shall be determined by the rate published by the People’s Bank of China (中國人民銀行) as at the date of the settlement of the first 50% of the Consideration) shall be settled within 3 months from the date of entering into the Land Use Rights Grant Contract.

In determining the Consideration, the Directors have taken into account of (i) the reference land price listed for the Land comprising five parcels of land (ranging from RMB1,300,000 to RMB2,900,000 per mu), and the ceiling auction price for the five parcels of the Land ranging from RMB1,860,000 to RMB4,140,000 per mu specified by the Hefei Natural Resources and Planning Bureau; (ii) the land selling price of six parcels of land sold since 2017 in the proximity of the Land ranging from RMB2,310,000 to RMB13,290,000 per mu (such price range is for reference only as the usage, ratio and location of the said six parcels of land may vary from that of the Land); and (iii) the development potential of the Land which is connected to Hefei Changxin Integrated Circuit Base (合肥長鑫集成電路基地) where there is a strong foundation of high-end industries with high-end industrial clusters.

The Directors confirm that the Consideration is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The portion of the Consideration in proportion to the shareholding of OCT Ganghua in Hefei OCT Industry (approximately RMB1,348 million) will be financed by the Group’s internal resources and bank borrowings.

INFORMATION ON THE LAND

The Project concerns the development of Hefei Airport International. Hefei Airport International Town is expected to cover a scope of 9.2 sq.km. and located in the core district of the Airport Economic Demonstration Zone (空港經濟示範區，the “ Demonstration Zone ”) of the North District of Hefei Economic and Technological Development Zone in Anhui Province of the PRC (中國安徽省合肥市經濟技術開發區北區) with a view to cultivating an industrial cluster with international competitiveness. Hefei Airport International Town will provide ancillary living service facilities to Changxin Integrated Circuit Industry Base (長鑫集成電路基地), and is planned to develop commercial offices, ecological green land, ancillary living facilities and integrated service centres. The Land is part of the Project, and it occupies a total site area of approximately 1,042 mu, of which 832 mu are residential area. The Land, which has a planned total gross floor area of approximately 848,000 sq.m., is designated for commercial and residential usage with a term of 40 and 70 years, respectively. As at the date of this announcement, the Land is a vacant site without any properties on it.

INFORMATION ON HEFEI OCT INDUSTRY

Hefei OCT Industry was established for the development of the Hefei Airport International Town pursuant to the terms of Joint Venture Agreement, and is held by OCT Ganghua, an indirect wholly-owned subsidiary of the Company and Huaxing Investment as to 51% and 49%, respectively.

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Registered capital

The total registered capital of Hefei OCT Industry is RMB10 billion, of which OCT Ganghua agreed to subscribe for RMB5,100,000,000 and Huaxing Investment agreed to subscribe for RMB4,900,000,000, representing 51% and 49% of the total registered capital of Hefei OCT Industry, respectively. As at the date of this announcement, no capital contribution into Hefei OCT Industry has been made by the JV Partners.

The JV Partners will be required to pay up the amount of capital contribution in proportion to their respective equity holding according to the actual funding requirement of Hefei OCT Industry, and shall settle the capital contribution within 30 days upon receipt of the notice issued by Hefei OCT Industry.

The amount of the registered capital of the Hefei OCT Industry was determined after valuation by the JV Partners with reference to (i) the Consideration (approximately RMB2,644 million); (ii) the estimated costs for the development of the Land of approximately RMB5,230,000,000; and (iii) the estimated costs of development for possible acquisition and development of other parcels of land in Hefei Airport International Town which may be rolled out in phases by the government in the future. As at the date of this announcement, no plan has been announced by relevant governmental authorities for the sale of remaining parcels of land in Hefei Airport International Town.

The maximum capital contribution to be made to the Hefei OCT Industry by OCT Ganghua, being RMB5,100,000,000 shall be funded by the Group’s internal resources, shareholders’ loan and banking borrowings. The actual amount of capital contribution will be subject to the actual funding requirement of the Project.

Financing of the Hefei OCT Industry

(1) Land Acquisition Costs

Each of the JV Partners shall pay to the Hefei OCT Industry, the balance of the land premium, the relevant tax as a result of the land acquisition in respect of the Project, ancillary fees for urban construction and other relevant expenses in proportion to their respective shareholdings in the Hefei OCT Industry within three business days before the due date for payment in accordance with the terms of the Land Use Rights Grant Contract and relevant policies, and the Hefei OCT Industry shall then pay the same to the Hefei Resources and Planning Bureau.

The registered capital shall pay the Consideration in priority. To the extent that the amount of the registered capital is insufficient to cover the land costs, such shortfalls will be financed by shareholders’ loan in proportion to their respective shareholdings in the Hefei OCT Industry.

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(2) Development of the Project

The funding for the development of the Project shall be satisfied by, firstly, the registered capital, secondly, revenue of the Hefei OCT Industry and thirdly, external loans from financial institutions. If the aforesaid fundings were insufficient to satisfy the funding requirement for the development plan of the Project as approved by the board of directors of the Hefei OCT Industry, such shortfall will be financed by shareholders’ loan in proportion to their respective shareholdings in the Hefei OCT Industry.

The JV Partners shall provide guarantee for the financing of the Hefei OCT Industry in proportion to their respective shareholdings in the Hefei OCT Industry if required by the financial institutions for external loans.

If any of the JV Partners fails to perform its obligations under the Joint Venture Agreement with regard to the aforesaid financing arrangement of the Hefei OCT Industry and as a result thereof, the Hefei OCT Industry fails to obtain normal financing or available funds for the operation of the Hefei OCT Industry and the Project, the JV Partner who has performed its obligations:

• (1) may, by itself or its designated third party, acquire the equity interest of the defaulting JV Partner by way of subscription of capital or equity acquisition, and the price of the acquisition shall not be more than the appraised value of the equity interest concerned, and the defaulting JV Partner shall pay a default penalty equal to 20% of the appraised value of the equity interest concerned; or

• (2) has the right (but not an obligation) to perform the obligations (wholly or in part) of the defaulting JV Partner. If the defaulting JV Partner makes the repayment the other JV Partner within 20 days from the notice served by the other JV Partner to the defaulting JV Partner as regards the performance of such obligation, the defaulting JV Partner shall pay an interest at an annual interest rate of 12% and a guarantee fee at a rate of 12% of the amount of the guarantee. If the defaulting JV Partner fails to make the repayment 20 days after the service of the said notice, the other JV Partner shall have the right to determine the proportion of dividend, the equity interest holding and voting right according to the actual paid-up registered capital and the amount paid by the other JV Partner for the defaulting JV Partner. The defaulting JV Partner shall pay the interest at an annual interest rate of 12%, which will be accrued up to the adjustment of the proportion of dividend, equity interest and voting right, and the guarantee fee, and pay a default penalty equal to 12% of the amount which the defaulting JV Partner fails to settle according to the Joint Venture Agreement.

The annual interest rate of 12% and guarantee fee rate of 12% is agreed by the JV Partners after arm’s length negotiation and with reference to the one-year benchmark lending rate of commercial banks in the PRC of 4.75% and the finance costs of each of the JV Partners. The Board is of the view that such rates are fair and reasonable.

Profit sharing

The Hefei OCT Industry may distribute to the JV Partners, in proportion to their equity interest in the Hefei OCT Industry, operating profits after tax after deducting the regulatory requirements on legal reserve and the working capital requirements of the Hefei OCT Industry, and complying with the regulatory requirements on the distribution of profits.

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Board

The board of directors of the Hefei OCT Industry shall consist of five directors, three of whom shall be nominated by OCT Ganghua and two shall be nominated by Huaxing Investment. The chairman of the board of directors of the Hefei OCT Industry shall be the director nominated by OCT Ganghua. Each of the director and chairman of the board of directors of the Hefei OCT Industry shall be appointed for a term of three years and shall be eligible for re-election after the end of the three years.

Other terms

The Hefei OCT Industry must not:

• (i) without the unanimous consent of the JV Partners, change the nature or scope of its business, and if there are changes then they must still be consistent with the scope or purpose specified in documents relating to the Land Acquisition; or

• (ii) enter into any transactions which are not on an arm’s length basis.

INFORMATION ON THE GROUP

The principal business activity of the Company is investment holding. The Group is principally engaged in the comprehensive development business (including the development and operation of tourism theme park, developed and sold residential properties, construction contract, development and management of properties, and property investment) and investment in the new urbanization industrial ecosphere business.

OCT Ganghua is a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company, which is principally engaged in foreign investment as encouraged and permitted by the PRC Government, investment in and management of cultural tourism and sport facilities, provision of management services for industrial park, leasing self-owned properties and advisory services.

INFORMATION ON THE PARTIES

Hefei Natural Resources and Planning Bureau is a PRC governmental authority and the seller of the Land.

Huaxing Investment is a limited liability company established in the PRC, which is principally engaged in industrial investment and investment management. The ultimate beneficial owner of Huaxing Investment is the State-owned Assets Supervision and Administration Commission of Hefei Municipal People’s Government.

The controlling shareholder of Huaxing Investment indirectly owns 49% equity interest in an insignificant subsidiary (as defined in the Listing Rules) of the Company.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Hefei Natural Resources and Planning Bureau, Huaxing Investment and their respective ultimate beneficial owners are Independent Third Parties.

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REASONS FOR AND BENEFITS OF THE TRANSACTION

The Land, which is part of the Project, is located in the heart of Hefei Airport International Town. It is planned to develop low-rise buildings, townhouses and high-rise buildings in the residential area, and commercial blocks, business offices, hotels and exhibition centres in the commercial area. The Directors believe that the Transaction may provide a good investment opportunity and allow the Group to expand its land reserves and in turn enhance the Group’s income and profitability, and is in the interest of the Company and the Shareholders as a whole.

The controlling shareholder of Huaxing Investment is a financial holding group under the the State-owned Assets Supervision and Administration Commission of Hefei Municipal People’s Government which has extensive experience in investment management and possesses capital strength. By collaboration with Huaxing Investment, the Group can unleash its years of experience in the development and operation of large-scale comprehensive development projects, expand its source of fund and achieve complimentary advantages.

The Directors confirm that Transaction is in the ordinary and usual course of business of the Company and on normal commercial terms which is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

The Land Acquisition is regarded as a qualified property acquisition under Rule 14.04(10C) of the Listing Rules as the Land Acquisition involves an acquisition of governmental land(s) from the PRC Governmental Body (as defined under the Listing Rules) through an auction governed by the PRC laws (as defined under the Listing Rules) in the PRC, which is undertaken by the Group in its ordinary and usual course of business.

The Land Acquisition is undertaken by the Group and Huaxing Investment via Hefei OCT Industry on a joint basis. According to the Joint Venture Agreement which is prepared on an arm’s length basis and on normal commercial terms, Hefei OCT Industry was established for the single purpose relating to the acquisition of land use rights and development in respect of the Project which is consistent with the purpose of the acquisition of the Land. The Joint Venture Agreement also contains clauses that Hefei OCT Industry must not, (i) without the unanimous consent from OCT Ganghua and Huaxing Investment, change the nature or scope of Hefei OCT Industry’s business and its scope of business shall be at all times consistent with the requirements specified in documents relating to the Project; or (ii) enter into any transactions which are not on an arm’s length basis.

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The Board confirms that the Transaction is in the Group’s ordinary and usual course of business and that the Land Acquisition and the joint venture arrangement contemplated under the Joint Venture Agreement (including its financing and profit distribution arrangements) are on normal commercial terms, fair and reasonable and in the interests of the Company and Shareholders as a whole. The Transaction is subject to reporting and announcement requirements but exempt from Shareholders’ approval requirements pursuant to Rule 14.33A of the Listing Rules.

As one or more of the relevant applicable percentage ratios (as defined in the Listing Rules) in respect of the Transaction are more than 100%, the Transaction constitutes a very substantial acquisition of the Company under Chapter 14 of the Listing Rules and subject to reporting, announcement and circular requirements but is exempt from shareholders’ approval requirement pursuant to Rule 14.33A of the Listing Rules.

GENERAL

A circular containing, among other things, further details of the Transaction will be despatched to the Shareholders in accordance with the Listing Rules for information purposes as soon as practicable. It is expected that the circular will be despatched to Shareholders on or before 24 January 2020 in order to allow sufficient time for the Company to prepare relevant information for inclusion in the circular.

DEFINITIONS

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

“Board”	the board of directors of the Company
“Business Day(s)”	a day on which licensed banks in the PRC are open for business
“Company”	Overseas Chinese Town (Asia) Holdings Limited (華僑城（亞洲）
	控股有限公司), an exempted company incorporated in the Cayman
	Islands with limited liability, the shares of which are listed on the
	main board of the Stock Exchange
“Confirmation Letter”	the auction confirmation letter (成交確認書) entered into between
	Hefei OCT Industry and the Hefei Natural Resources and Planning
	Bureau on 13 December 2019 as a result of successfully winning the
	bid for the auction
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the consideration for the acquisition of the land use rights of the
	Land
“controlling shareholder”	has the meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries as at the date of this announcement

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“Hefei Airport	Hefei Airport International Town (合肥空港國際小鎮) located in
International Town”	Hefei Airport Economic Demonstration Zone in the PRC
“Hefei Natural Resources	Hefei Municipal Natural Resources and Planning Bureau (合肥市自
and Planning Bureau”	然資源和規劃局)
“Hefei OCT Industry”	合肥華僑城實業發展有限公司(Hefei OCT Industry Development
	Co., Ltd.), a company established in the PRC which is held by OCT
	Guanghua and Huaxing Investment as to 51% and 49%, respectively
“HK$”	the Hong Kong dollar(s), the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Huaxing Investment”	合肥華興空港投資有限公司(Hefei Huaxing Konggang Investment
	Co., Ltd.), a company established in the PRC
“Independent Third Parties”	an independent third party not connected with the Company and
	its subsidiaries, their respective directors, chief executives and
	substantial shareholders and any of their associates within the
	meaning of the Listing Rules
“Joint Venture Agreement”	the joint venture agreement dated 20 June 2019 and entered into
	between OCT Ganghua and Huaxing Investment in relation to the
	establishment of Hefei OCT Industry
“JV Partners”	OCT Ganghua and Huaxing Investment
“Land Acquisition”	the acquisition of land use rights of the Land through public bidding
	process at the auction
“Land”	five (5) parcels of land, located in the first phase of Hefei Airport
	International Town, with a total site area of approximately 1,042 mu
“Land Use Rights	State-owned Land Use Rights Grant Contract (國有土地使用權出讓
Grant Contract”	合同) to be entered into pursuant to the Confirmation Letter
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“OCT Ganghua”	深圳華僑城港華投資控股有限公司(Shenzhen OCT Ganghua
	Investment Holdings Co., Ltd.), a company established in the PRC
	and a wholly-owned subsidiary of the Company
“PRC Governmental Body”	has the meaning ascribed to it under the Listing Rules
“PRC”	the People’s Republic of China, and for the purpose of this
	announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the People’s Republic of China and
	Taiwan

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“Project”

the entire project in respect of the development of Hefei Airport International Town

“RMB” Renminbi, the lawful currency of the PRC “Share(s)” the share(s) of the Company “Shareholder(s)” the shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “sq.m.” square metre(s) “Transaction” the Land Acquisition and the transaction contemplated under the Joint Venture Agreement “%” per cent

In this announcement, if there is any inconsistency between the Chinese names of the entities or enterprises established in the PRC and their English translations, the Chinese names shall prevail.

By the order of the Board Overseas Chinese Town (Asia) Holdings Limited He Haibin Chairman

Hong Kong, 13 December 2019

As at the date of this announcement, the Board comprises seven Directors, namely: Mr. He Haibin, Ms. Xie Mei and Mr. Lin Kaihua as executive Directors; Mr. Zhang Jing as non-executive Director; Ms. Wong Wai Ling, Mr. Lam Sing Kwong Simon and Mr. Chu Wing Yiu as independent non-executive Directors.

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