RemeGen Co., Ltd. — M&A Activity 2015

Oct 9, 2015

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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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)

MAJOR ACQUISITION – ACQUISITION OF PROPERTIES

The Board is pleased to announce that on 9 October 2015 (after trading hours):

• (1) City Legend, a wholly-owned subsidiary of the Company, entered into the Asset Acquisition Agreement I with Chang’an Holdings to acquire Properties A located at Chang’an Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, the PRC at a maximum consideration of RMB537,146,862 (equivalent to approximately HK$655,057,149); and

• (2) City Legend, a wholly-owned subsidiary of the Company, entered into the Asset Acquisition Agreement II with Shaanxi Chang’an, Chang’an Holdings and Xi’an Fengsheng to acquire Properties B located at Chang’an Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, the PRC at a maximum consideration of RMB1,053,217,106 (equivalent to approximately HK$1,284,411,105).

IMPLICATIONS UNDER THE LISTING RULES

As the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Asset Acquisition Agreements, in aggregate, are more than 25% but less than 100%, the Asset Acquisition Agreements and the transactions contemplated thereunder constitute a major transaction of the Company for the purpose of the Listing Rules and are subject to the announcement requirement and the approval of the Shareholders under Chapter 14 of the Listing Rules.

As no Shareholder has material interest in the Asset Acquisition Agreements, none of the Shareholders is required to abstain from voting if the Company were to convene a general meeting for the approval of the Asset Acquisition Agreements and the transactions contemplated thereunder. The Company has obtained a written approval from Pacific Climax, which held 434,894,000 Shares as at the date of this announcement (representing approximately 66.66% of the issued share capital of the Company) for the approval of the Asset Acquisition Agreements

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and the transactions contemplated thereunder. As such, no extraordinary general meeting will be convened by the Company to approve the Asset Acquisition Agreements and the transactions contemplated thereunder.

In addition, a circular containing, among other things, (a) further details of the Asset Acquisition Agreements and the transactions contemplated thereunder and (b) such other information as required under the Listing Rules, is expected to be despatched to the Shareholders on or before 18 November 2015 as additional time is required for the preparation and finalisation of the contents of the circular.

INTRODUCTION

The Board is pleased to announce that on 9 October 2015 (after trading hours),

• (1) City Legend, a wholly-owned subsidiary of the Company, entered into the Asset Acquisition Agreement I with Chang’an Holdings to acquire Properties A located at Chang’an Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, the PRC at a maximum consideration of RMB537,146,862 (equivalent to approximately HK$655,057,149); and

• (2) City Legend, a wholly-owned subsidiary of the Company, entered into the Asset Acquisition Agreement II with Shaanxi Chang’an, Chang’an Holdings and Xi’an Fengsheng to acquire Properties B located at Chang’an Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, the PRC at a maximum consideration of RMB1,053,217,106 (equivalent to approximately HK$1,284,411,105).

Details of the Asset Acquisition Agreements are set out below.

PRINCIPAL TERMS OF THE ASSET ACQUISITION AGREEMENT I

Date

• 9 October 2015

Parties

1. City Legend

2. Chang’an Holdings

City Legend intends to set up Xi’an Project Company for the Acquisitions.

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Assets to be acquired

The assets to be acquired by City Legend or its subsidiaries from Chang’an Holdings are Block A, Block B, and certain storeys of Block D of Building 2# located at Chang’an Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, the PRC with a gross area of not more than approximately 30,177 sq.m.

Consideration and payment schedule

The consideration for acquisition of Properties A is subject to the adjustment according to actual gross area as stated in the certificate of property ownership to be obtained, and the maximum consideration for acquisition of Properties A will be RMB537,146,862 (equivalent to approximately HK$655,057,149), which shall be paid by City Legend or its subsidiaries to Chang’an Holdings in cash in the following manner:

• (i) RMB310,000,000 (equivalent to approximately HK$378,048,781) shall be paid after the date of completion of the registration of the second pledge of Properties A in favour of City Legend or its subsidiaries by Chang’an Holdings (the “ First Instalment ”); and

• (ii) the remaining balance of the consideration, being RMB227,146,862 (equivalent to approximately HK$277,008,368), shall be transferred to the escrow account of the secondhand housing transactions of the Housing Management Bureau of Xi’an City* (西安市房屋管理 局), which can be drawn by Chang’an Holdings after the registration of the title of Properties A being changed to Xi’an Project Company (City Legend or its subsidiaries obtain Certificate of Property Ownership).

Undertaking by Chang’an Holdings

The First Instalment will be used by Chang’an Holdings to repay the principal and interest owed by Chang’an Holdings to The Bank of East Asia Limited (Xi’an Branch). Chang’an Holdings undertakes to procure The Bank of East Asia Limited (Xi’an Branch) to release the first pledge of Properties A in favour of The Bank of East Asia Limited (Xi’an Branch) once Chang’an Holdings repays the aforesaid amount.

Breach of the Asset Acquisition Agreement I

(i) Delay by City Legend or its subsidiaries

Pursuant to the Asset Acquisition Agreement I, if City Legend or its subsidiaries delays in fulfilling their responsibilities under the Asset Acquisition Agreement I, save for those caused by Chang’an Holdings, City Legend or its subsidiaries shall be liable to compensate Chang’an Holdings in the amount of 0.1% of (i) the amount of outstanding consideration or (ii) the part of the consideration for the acquisition of the concerned portion of Properties A, for each day of delay.

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(ii) Delay by Chang’an Holdings

Pursuant to the Asset Acquisition Agreement I, if Chang’an Holdings delays in fulfilling its responsibilities under the Asset Acquisition Agreement I, save for those caused by City Legend or its subsidiaries, Chang’an Holdings shall be liable to compensate City Legend or its subsidiaries in the amount of 0.1% of the part of the consideration for the acquisition of the concerned portion of Properties A for each day of delay.

Termination of Asset Acquisition Agreement I

If a party is in default of responsibility in the Asset Acquisition Agreement I which subsists for a certain period of time, the non-defaulting party will have the right to terminate the Asset Acquisition Agreement I. Upon such termination, the defaulting party shall, among others, return the properties or consideration obtained as a result of the Asset Acquisition Agreement I, together with a penalty to be calculated based on twice the Benchmark Lending Rate and tax incurred, to the non-defaulting party within 7 working days.

PRINCIPAL TERMS OF THE ASSET ACQUISITION AGREEMENT II

Date

9 October 2015

Parties

1. City Legend

2. Shaanxi Chang’an

3. Chang’an Holdings and Xi’an Fengsheng

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Shaanxi Chang’an is owned as to 40% and 60% by Chang’an Holdings and Xi’an Fengsheng, respectively. Xi’an Fengsheng is owned as to 90% by Chang’an Holdings and 10% owned by an Independent Third Party. The chart below illustrates the holding structure of Shaanxi Chang’an:

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City Legend intends to set up Xi’an Project Company for the Acquisitions.

Assets to be acquired

The assets to be acquired by City Legend or its subsidiaries are Block C, a storey of Block D of Building 2#, Building 3# and 270 car parking spaces located at Chang’an Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, the PRC with a gross area of approximately 74,489 sq.m..

Consideration and payment schedule

The consideration for acquisition of Block C and a storey of Block D of Building 2# of Properties B with a gross area of not more than approximately 9,851 sq.m. is subject to the adjustment according to actual gross area as stated in the certificate of property ownership to be obtained, and the maximum consideration for acquisition of Block C and a storey of Block D of Building 2# of Properties B will be RMB175,344,596 (equivalent to approximately HK$213,834,873), which shall be paid by City Legend or its subsidiaries to Shaanxi Chang’an in cash in the following manner:

• (i) 50% of the consideration for acquisition of Block C and a storey of Block D of Building 2# of Properties B, being RMB87,672,298 (equivalent to approximately HK$106,917,437) shall be paid within 5 working days after City Legend or its subsidiaries obtain the confirmation of registration of properties transaction in the name of Xi’an Project Company from the housing management bureau; and

• (ii) the remaining balance of the consideration for Block C and a storey of Block D of Building 2# of Properties B, being RMB87,672,298 (equivalent to approximately HK$106,917,437) shall be paid within 2 working days after the registration of title of acquisition of Block C and a storey of Block D of Building 2# of Properties B being changed to Xi’an Project Company.

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The consideration for acquisition of Building 3# of Properties B with a gross area of approximately 48,336 sq.m., (after deducting approximately 2,453 sq.m. for self-use by Shaanxi Chang’an and Chang’an Holdings) is subject to the adjustment according to actual gross area as stated in the certificate of property ownership to be obtained, and the maximum consideration for acquisition of Building 3# of Properties B will be RMB821,712,510 (equivalent to approximately HK$1,002,088,427), which shall be paid by City Legend or its subsidiaries to Shaanxi Chang’an in cash in the following manner:

• (i) 50% of the consideration for acquisition of Building 3# of Properties B, being RMB410,856,255 (equivalent to approximately HK$501,044,213) shall be paid within 5 working days after (a) the release of pledge of Building 3# of Properties B; and (b) City Legend or its subsidiaries obtain the confirmation of registration of properties transaction in the name of Xi’an Project Company from the housing management bureau;

• (ii) 40% of the consideration for acquisition of Building 3# of Properties B, being RMB328,685,004 (equivalent to approximately HK$400,835,371) shall be paid within 2 working days after registration of the title of Building 3# of Properties B being changed to Xi’an Project Company; and

• (iii) the remaining 10% of the consideration for Building 3# of Properties B, being RMB82,171,251 (equivalent to approximately HK$100,208,843) (the “Third Tranche Consideration”) shall be paid within 5 working days after completion and inspection of retrofit construction of Building 3# of Properties B.

The consideration for the acquisition of the 270 car parking spaces with a gross area of approximately 16,302 sq.m. is subject to the adjustment according to actual gross area as stated in the certificate of property ownership to be obtained, and the maximum consideration for acquisition of the 270 car parking spaces is RMB56,160,000 (equivalent to approximately HK$68,487,805), which shall be paid by City Legend or its subsidiaries to Shaanxi Chang’an in cash in the following manner:

• (i) 50% of the consideration for the 270 car parking spaces, being RMB28,080,000 (equivalent to approximately HK$34,243,902), which shall be paid within 5 working days after (a) the release of pledge of 270 car parking spaces; and (b) City Legend or its subsidiaries obtain the confirmation of registration of properties transaction in the name of Xi’an Project Company from the housing management bureau; and

• (ii) the remaining balance of the consideration for the 270 car parking spaces, being RMB28,080,000 (equivalent to approximately HK$34,243,902) shall be paid within 2 working days after the registration of the title of the 270 car parking spaces being changed to Xi’an Project Company.

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Breach of the Asset Acquisition Agreement II

(i) Delay by City Legend or its subsidiaries

Pursuant to the Asset Acquisition Agreement II, if City Legend or its subsidiaries delay in fulfilling their responsibilities under the Asset Acquisition Agreement II, save for those caused by Shaanxi Chang’an, Chang’an Holdings and Xi’an Fengsheng, City Legend or its subsidiaries shall be liable to compensate Shaanxi Chang’an in the amount of 0.1% of (i) the amount of outstanding consideration or (ii) the part of the consideration for the acquisition of the concerned portion of Properties B for each day of delay.

(ii) Delay by Shaanxi Chang’an

Pursuant to the Asset Acquisition Agreement II, if Shaanxi Chang’an delays in fulfilling its responsibilities under the Asset Acquisition Agreement II, save for those caused by City Legend or its subsidiaries, Shaanxi Chang’an shall be liable to compensate City Legend or its subsidiaries in the amount of 0.1% of the part of consideration of the acquisition of the concerned portion of Properties B for each day of delay.

(iii) Retrofit construction by Shaanxi Chang’an

If Shaanxi Chang’an does not follow the standard of retrofit for retrofit construction on Building 3# of Properties B as agreed in the Asset Acquisition Agreement II, City Legend or its subsidiaries will have the right to request reconstruction of Building 3# of Properties B. Where City Legend or its subsidiaries are still not satisfied after inspection, City Legend or its subsidiaries will have the right to request compensation from Shaanxi Chang’an for the actual loss incurred and such amount can be deducted from the Third Tranche Consideration. Where there is delay of retrofit construction by Shaanxi Chang’an, Shaanxi Chang’an shall be liable to compensate City Legend or its subsidiaries in the amount of 0.1% of consideration of the subject properties for each day of delay.

Undertaking by Chang’an Holdings and Xi’an Fengsheng

Chang’an Holdings and Xi’an Fengsheng, being the shareholders of Shaanxi Chang’an, severally and jointly guarantee that (i) the representations made by Shaanxi Chang’an in the Asset Acquisition Agreement II are true and accurate; (ii) they procure Shaanxi Chang’an to perform its responsibilities under the Asset Acquisition Agreement II. Further, Chang’an Holdings and Xi’an Fengsheng undertake jointly and severally that they acknowledge and understand the terms of the Asset Acquisition Agreement II and they shall perform their responsibilities in accordance with the terms of the Asset Acquisition Agreement II and procure the transaction to be completed.

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Termination of Asset Acquisition Agreement II

If a party is in default of responsibility in the Asset Acquisition Agreement II which subsists for a certain period of time, the non-defaulting party will have the right to terminate the Asset Acquisition Agreement II. Upon such termination, the defaulting party shall, among others, return the properties or consideration obtained as a result of the Asset Acquisition Agreement II, together with a penalty to be calculated based on twice the Benchmark Lending Rate, to the non-defaulting party within 7 working days.

If the Asset Acquisition Agreement I is terminated, the parties to the Asset Acquisition Agreement II shall negotiate whether or not to proceed with Asset Acquisition Agreement II. Where no agreement is reached, the Asset Acquisition Agreement II shall be terminated and none of the party will be responsible for breach of the Asset Acquisition Agreement II save for antecedent breach.

VALUE OF THE PROPERTIES

In accordance with the information provided by Chang’an Holdings and Shaanxi Chang’an, the revenue and profits before and after tax attributed by the Properties for each of the two years ended 31 December 2013 and 2014 and the book value of the Properties as at 31 July 2015 were as follows:

	For the year ended	For the year ended
	31 December	31 December
	2013	2014
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Revenue	50,308	51,667
Profit before tax	29,019	31,431
Profit after tax	29,019	31,431
		As at 31 July
		2015
		RMB’000
		(unaudited)
Book value		1,785,692

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BASIS OF THE CONSIDERATIONS

The considerations pursuant to the Asset Acquisition Agreements were determined after arm’s length negotiations between, among others, the Company and Chang’an Holdings by reference to, among others, the initial estimation of the value of the Properties by an independent professional valuer, Savills. The Directors consider that the considerations pursuant to the Asset Acquisition Agreements are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

SOURCE OF FUNDING

The Company will fund the considerations pursuant to the Asset Acquisition Agreements by internal resources, borrowing from bank(s) and/or shareholder’s loan(s).

INFORMATION ABOUT CHANG’AN HOLDINGS

To the Directors’ best knowledge, information and belief, Chang’an Holdings is principally engaged in real estate development and property management. Chang’an Holdings is an Independent Third Party.

INFORMATION ABOUT SHAANXI CHANG’AN

To the Directors’ best knowledge, information and belief, Shaanxi Chang’an is principally engaged in real estate development and property management. Shaanxi Chang’an is an Independent Third Party.

INFORMATION ABOUT THE GROUP

The principal business activity of the Company is investment holding. The Group is principally engaged in the comprehensive development business and the manufacture and sale of cartons and paper products.

REASONS FOR AND BENEFITS OF THE ACQUISITION OF THE PROPERTIES

The Board believes that the Acquisitions are in line with the business strategy of the Group as (1) Xi’an, being one of the key cities under the “One Belt One Road” strategy of the PRC government, has active economy and convenient transportation and attracts population with great development potential; (2) the Properties are located in the city centre of Xi’an and are part of a complex which has high-class commercial ancillary facilities; (3) the Acquisitions will expand the project reserve of the Group and diversify the sources of revenue of the Group.

In light of the above, the Directors consider that the terms of the Acquisitions are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

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IMPLICATIONS UNDER THE LISTING RULES

As the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Asset Acquisition Agreements are more than 25% but less than 100%, the Asset Acquisition Agreements and the transactions contemplated thereunder constitute a major transaction of the Company for the purpose of the Listing Rules and are subject to the announcement requirement and the approval of the Shareholders under Chapter 14 of the Listing Rules.

As no Shareholder has a material interest in the Asset Acquisition Agreements, none of the Shareholders is required to abstain from voting if the Company were to convene a general meeting for the approval of the Asset Acquisition Agreements and the transactions contemplated thereunder. The Company has obtained a written approval from Pacific Climax, which held 434,894,000 Shares as at the date of this announcement (representing approximately 66.66% of the issued share capital of the Company) for the approval of the Asset Acquisition Agreements and the transactions contemplated thereunder. As such, no extraordinary general meeting will be convened by the Company to approve the Asset Acquisition Agreements and the transactions contemplated thereunder.

In addition, a circular containing, among other things:

• (a) further details of the Asset Acquisition Agreements and the transactions contemplated thereunder; and

• (b) such other information as required under the Listing Rules, is expected to be despatched to the Shareholders on or before 18 November 2015 as additional time is required for the preparation and finalisation of the contents of the circular.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

• “Acquisitions”

the transactions contemplated under the Asset Acquisition Agreement I and the Asset Acquisition Agreement II

• “Asset Acquisition the asset acquisition agreement dated 9 October 2015 entered into Agreement I” between Chang’an Holdings and City Legend in relation to Properties A

• “Asset Acquisition the asset acquisition agreement dated 9 October 2015 entered into Agreement II” between Shaanxi Chang’an, Chang’an Holdings, Xi’an Fengsheng and City Legend in relation to Properties B

• “Asset Acquisition the Asset Acquisition Agreement I and the Asset Acquisition Agreements” Agreement II

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“Benchmark Lending Rate”	the benchmark lending interest rate published by the People’s Bank
	of China prevailing over the periods
“Board”	the board of Directors
“Chang’an Holdings”	長安控股(集團)有限責任公司 (Chang’an Holdings (Group)
	Company Limited*), a company established under the PRC laws
	with limited liability
“City Legend”	City Legend International Limited (華昌國際有限公司), a company
	incorporated in Hong Kong with limited liability and is wholly-
	owned by the Company
“Company”	Overseas Chinese Town (Asia) Holdings Limited, 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
“Controlling Shareholder(s)”	has the meaning ascribed to in the Listing Rules
“Director(s)”	the director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Third	to the best of the Directors’ knowledge, information and belief after
Party(ies)”	making reasonable enquires, third party(ies) independent of the
	Company and its connected persons (as defined in the Listing
	Rules)
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Pacific Climax”	Pacific Climax Limited, a company incorporated in the British
	Virgin Islands with limited liability, who is a controlling
	shareholder of the Company
“PRC”	the People’s Republic of China, excluding, for the purpose of this
	announcement only, Hong Kong, the Macau Special Administrative
	Region and Taiwan
“Properties”	Properties A and Properties B

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“Properties A”	Block A, Block B, and storeys 30501, 30601, 30701,	30801, 30901
	and 31001 of Block D of Building 2# located	at Chang’an
	Metropolis Centre, No. 88 Nanguanzheng Street, Xi’an, The PRC.
“Properties B”	Block C and storey 30401 of Block D of Building 2#; Building 3#
	and the 270 car parking spaces located at Chang’an Metropolis
	Centre, No. 88 Nanguanzheng Street, Xi’an, The PRC
“RMB”	Renminbi, the lawful currency of the PRC
“Savills”	Savills Valuation and Professional Services	Limited, an
	independent property valuer
“Share(s)”	existing ordinary share(s) of HK$0.10 each in the	issued share
	capital of the Company
“Shaanxi Chang’an”	陝西長安建設投資開發有限責任公司(Shaanxi	Chang’an
	Construction & Investment Development Co., Ltd*), a company
	established under the PRC laws with limited liability
“Shareholder(s)”	holder(s) of Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Xi’an Fengsheng”	西安豐盛資產管理有限公司 (Xi’an Fengsheng Assets
	Management Ltd.*), a company established under the PRC laws
	with limited liability
“Xi’an Project Company”	a company to be established under the PRC laws	with limited
	liability and will be wholly-owned by City Legend
“%”	per cent.

In this announcement, the English names of the PRC entities or enterprises are translation of their Chinese names. In the event of any inconsistency, the Chinese names shall prevail.

* For identification purpose only

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For the purpose of this announcement and solely for the purpose of illustration, all amounts in RMB are translated into HK$ at an exchange rate of RMB0.82: HK$1.

By order of the board of Overseas Chinese Town (Asia) Holdings Limited Wang Xiaowen Chairman

Hong Kong, 9 October 2015

As at the date of this announcement, the Board of the Company comprises seven Directors, namely: Ms. Wang Xiaowen, Ms. Xie Mei and Mr. Lin Kaihua as executive Directors; Mr. Zhou Ping as non-executive Director; Mr. Lu Gong, Ms. Wong Wai Ling, and Professor Lam Sing Kwong Simon as independent non-executive Directors.

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