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RemeGen Co., Ltd. — M&A Activity 2019
Mar 26, 2019
51206_rns_2019-03-26_b1c0de8a-241c-4930-a7de-8b852f715dbe.pdf
M&A Activity
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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)
MAJOR TRANSACTION ACQUISITION OF 21% OF EQUITY INTEREST AND DEBT INTEREST IN ZHONGSHAN YUHONG REAL ESTATE DEVELOPMENT LIMITED
COOPERATION AGREEMENT
The Board is pleased to announce that, on 26 March 2019 (after trading hours), Shenzhen Huajing, a wholly-owned subsidiary of the Company, entered into the Cooperation Agreement with Zhuhai Yiyun, Xiamen Yuzhou and the Target Company, pursuant to which Shenzhen Huajing agreed to acquire and Xiamen Yuzhou agreed to sell (i) the Target Equity Interest in the Target Company at a consideration of RMB1,263,447; and (ii) the Target Debt Interest in the principal amount of RMB331,551,594.94 owing by the Target Company to Xiamen Yuzhou together with the interest at an annual rate of 8% accrued thereon for a consideration equivalent to the amount of the Target Debt Interest.
Pursuant to the Cooperation Agreement, the total capital commitment (which includes the total amount committed to the Target Company for, but not limited to: (i) the registered capital of the Target Company, (ii) land transfer fees, (iii) capital required for land development, (iv) tax payable by the Target Company, (v) any loans from the shareholders of the Target Company required for the development of the Target Company and/or (vi) as guarantees) to the Target Company to be provided by the shareholders of the Target Company shall not exceed RMB4,500,000,000, of which RMB945,000,000 shall be attributable to Shenzhen Huajing, which is in proportion to its equity interest to be held in the Target Company after the completion of the Acquisition.
LISTING RULES IMPLICATIONS
As one or more of the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Cooperation Agreement is/are more than 25% but less than 100%, the Cooperation Agreement 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 requirements and the approval of the Shareholders under Chapter 14 of the Listing Rules.
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As no Shareholder has material interest in the Cooperation Agreement and the transactions contemplated thereunder, none of the Shareholders is required to abstain from voting if the Company were to convene a general meeting for the approval of the Cooperation Agreement and the transactions contemplated thereunder. The Company has obtained a written approval from Pacific Climax, which held 530,894,000 Shares as at the date of this announcement (representing approximately 70.94% of the issued share capital of the Company) for the approval of the Cooperation Agreement and the transactions contemplated thereunder in lieu of a resolution to be passed at a general meeting of the Company pursuant to Rule 14.44 of the Listing Rules. As such, no extraordinary general meeting will be convened by the Company to approve the Cooperation Agreement and the transactions contemplated thereunder.
In addition, a circular containing, among other things, further details of the Cooperation Agreement and the transactions contemplated thereunder and such other information as required under the Listing Rules, is expected to be despatched to the Shareholders on or before 25 April 2019, which is more than 15 business days after the publication of this announcement, as more time is required for the preparation of certain information to be included in the circular.
INTRODUCTION
The Board is pleased to announce that, on 26 March 2019 (after trading hours), Shenzhen Huajing, a wholly-owned subsidiary of the Company, entered into the Cooperation Agreement with Zhuhai Yiyun, Xiamen Yuzhou and the Target Company, pursuant to which Shenzhen Huajing agreed to acquire and Xiamen Yuzhou agreed to sell (i) the Target Equity Interest in the Target Company at a consideration of RMB1,263,447; and (ii) the Target Debt Interest in the principal amount of RMB331,551,594.94 owing by the Target Company to Xiamen Yuzhou together with the interest at an annual rate of 8% accrued thereon for a consideration equivalent to the amount of the Target Debt Interest.
Pursuant to the Cooperation Agreement, the total capital commitment (which includes the total amount committed to the Target Company for, but not limited to: (i) the registered capital of the Target Company, (ii) land transfer fees, (iii) capital required for land development, (iv) tax payable by the Target Company, (v) any loans from the shareholders of the Target Company required for the development of the Target Company and/or (vi) as guarantees) to the Target Company to be provided by the shareholders of the Target Company shall not exceed RMB4,500,000,000, of which RMB945,000,000 shall be attributable to Shenzhen Huajing, which is in proportion to its equity interest to be held in the Target Company after the completion of the Acquisition.
THE COOPERATION AGREEMENT
The principal terms of the Cooperation Agreement are as follows:
Date
26 March 2019
Parties
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(1) Shenzhen Huajing, a wholly-owned subsidiary of the Company, as the purchaser;
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(2) Xiamen Yuzhou, as the vendor;
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(3) Zhuhai Yiyun, as the existing shareholder of the Target Company; and
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(4) the Target Company
Xiamen Yuzhou is a non-wholly owned subsidiary of Yuzhou Properties, which, as at the date of this announcement, was held by the Company as to 9.98%. Save as disclosed above, to the best information, knowledge and belief of the Directors, after having made all reasonable enquiries, Xiamen Yuzhou and Zhuhai Yiyun and its ultimate beneficial owners are Independent Third Parties.
Assets to be acquired
The Target Company was established in the PRC on 30 November 2018 with limited liability. Its principal asset is the Land, a plot of land called “New Grass Tail” (“新草尾”) which is located in the Zhongshan Torch Development Zone (中山市火炬開發區) with a total site area of approximately 90,500.50 square metres and a maximum permissible gross floor area of approximately 271,501.50 square metres. The Land is purported to be used as residential purpose with a land use right of 70 years. The total consideration of the Land acquired by the Target Company was RMB1,523,123,415 (excluding the tax on the deed for land transfer).
To finance the acquisition of the Land, Zhuhai Yiyun and Xiamen Yuzhou had advanced shareholders’ loan to the Target Company in the amount of approximately RMB1,578,817,117.45 in proportion to their respective shareholding in the Target Company at an annual interest rate of 8%.
Zhuhai Yiyun and Xiamen Yuzhou are all holders of equity interests in the Target Company. Their respective capital contributions made and shareholders’ loans advanced to the Target Company, as at the date of this announcement, for the acquisition and development of the Land were as follows:
| Name Zhuhai Yiyun Xiamen Yuzhou Total |
Registered capital and equity interests (%) RMB255,000,000 (51%) RMB245,000,000(49%) RMB500,000,000 (100%) |
Principal amount of the shareholder’s loan advanced RMB805,196,729.25 RMB773,620,388.20 RMB1,578,817,117.45 |
|---|---|---|
Pursuant to the terms of the Cooperation Agreement, Shenzhen Huajing will acquire the Target Equity Interest in the Target Company and the Target Debt Interest in the principal amount of RMB331,551,594.94 together with the interest at an annual rate of 8% accrued thereon from Xiamen Yuzhou.
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Immediately after completion of the Acquisition, the capital contributions and shareholders’ loans attributable to the shareholders of the Target Company are as follows:
| Name Zhuhai Yiyun Xiamen Yuzhou Shenzhen Huajing Total |
Registered capital and equity interests (%) RMB255,000,000 (51%) RMB140,000,000 (28%) RMB105,000,000(21%) RMB500,000,000 (100%) |
Principal amount of the shareholder’s loan advanced RMB805,196,729.25 RMB442,068,793.26 RMB331,551,594.94 RMB1,578,817,117.45 |
|---|---|---|
Following completion of the Acquisition, the Company will indirectly own 21% of equity interest in the Target Company. The Target Company will not be a subsidiary of the Company and its financial statements will not be consolidated into the Group.
Shenzhen Huajing also entered into the Equity Transfer Agreement and the Debt Transfer Agreement on 26 March 2019 with Xiamen Yuzhou in respect of the Acquisition.
Consideration for the Target Equity Interest
The consideration for the Target Equity Interest is RMB1,263,447, the payment of which is conditional upon the completion of the registration for the Acquisition within 15 working days, specifically:
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(a) Shenzhen Huajing be registered as the holder of 21% equity interest in the Target Company;
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(b) registration of change of directors of the Target Company (one of the directors of the Target Company be designated by Shenzhen Huajing);
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(c) the articles of association of the Target Company be amended to reflect the aforesaid changes; and
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(d) obtain a new business licence of the Target Company.
Shenzhen Huajing shall pay the consideration for the Target Equity Interest in one lump sum to the designated account of Xiamen Yuzhou within three working days from the issue of new business licence of the Target Company.
Consideration for the Target Debt Interest
The consideration for the Target Debt Interest is the principal amount of the Target Debt Interest, being RMB331,551,594.94 plus the interest on the Target Debt Interest accrued thereon, which shall be payable by Shenzhen Huajing to Xiamen Yuzhou within 20 working days from the date of signing of the Equity Transfer Agreement and the Debt Transfer Agreement..
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Capital commitment to the Target Company
Should the Target Company require working capital and such amount cannot be fully covered by bank loans and proceeds from sale, the shareholders of the Target Company shall provide shareholders’ loan to the Target Company in proportion to their respective equity interests in the Target Company to cover the deficient amount.
The shareholders of the Target Company shall also provide corporate guarantees in proportion to their respective equity interests required for the bank loan(s) to be obtained by the Target Company.
Pursuant to the Cooperation Agreement, the total capital commitment (which includes the total amount committed to the Target Company for, but not limited to: (i) the registered capital of the Target Company, (ii) land transfer fees, (iii) capital required for land development, (iv) tax payable by the Target Company, (v) any loans from the shareholders of the Target Company required for the development of the Target Company and/or (vi) as guarantees) to the Target Company to be provided by the shareholders of the Target Company shall not exceed RMB4,500,000,000, of which RMB945,000,000 shall be attributable to Shenzhen Huajing, which is in proportion to its equity interest to be held in the Target Company after the completion of the Acquisition.
The Group intends to fund the consideration for the Acquisition and the capital commitment by its internal resources and bank loans.
The consideration for the Acquisition and the amount of capital commitment was determined upon arm’s length negotiations between the parties after taking into account: (i) financial information of the Target Company; (ii) the preliminary valuation, prepared by a Hong Kong independent valuer, on the Land (which was valued based on the direct comparison approach); (iii) the development potential of the Land; and (iv) the projected funding for the development of the Land.
Board composition of the Target Company
The board of directors of the Target Company shall comprise five directors, of which three directors will be appointed by Zhuhai Yiyun, one director will be appointed by Xiamen Yuzhou and one director will be appointed by Shenzhen Huajing. The chairman (the “ Chairman ”) of the board of directors of the Target Company will be appointed by Xiamen Yuzhou. The Chairman shall also be the legal representative of the Target Company. All directors and the chairman of the Target Company shall be appointed for a term of three years, but can be re-appointed after the three years.
Profit and loss sharing
The profit and loss of the Target Company will be shared by the shareholders of the Target Company proportional to their respective capital injection in the Target Company.
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REASONS FOR AND BENEFIT OF ENTERING INTO THE COOPERATION AGREEMENT
The Acquisition will enable the Group to acquire 21% equity interest in the Target Company, which holds the land use rights of the Land. Benefiting from the governmental policies and rapid development of the Guangdong-Hong Kong-Macao Greater Bay Area, the Land occupies a superior geographical location with convenient traffic and good ancillary facilities. Furthermore, the beneficial owners of Xiamen Yuzhou, Zhuhai Yiyun and Shenzhen Huajing are leading companies in their respective industries and have successful experience in property development. The Board believes that the Acquisition will bring a satisfied return and is in line with the interest of the Company.
The Directors (including the independent non-executive Directors) are of the opinion that the terms of the Acquisition and the transactions contemplated thereunder are fair and reasonable and the Acquisition is in the interest of the Company and the Shareholders as a whole.
INFORMATION OF THE GROUP
Shenzhen Huajing is a wholly-owned subsidiary of the Company. The principal business activity of the Shenzhen Huajing is investment holding. The Group is principally engaged in the comprehensive development business and investment in the new urbanization industrial ecosphere business.
As at the date of this announcement, Pacific Climax is a controlling shareholder of the Company, holding approximately 70.94% of the issued share capital of the Company.
INFORMATION OF THE TARGET COMPANY
The Target Company was established in the PRC with limited liability on 30 November 2018. Its principal asset is the Land.
Since the Target Company was newly established on 30 November 2018, no audited financial information of the Target Company for the two financial years ended 31 December 2018 is presented in this announcement.
However, based on the unaudited financial information of the Target Company prepared in accordance with the generally accepted accounting principles in the PRC for one month ended 31 December 2018 and the two months ended 28 February 2019:
For the one month For the two months ended 31 December 2018 ended 28 February 2019 RMB RMB
Loss before (and after) tax 5,872,444.54 21,930,915.73
As at 28 February 2019 RMB
Total assets Total liabilities Net asset value
1,578,997,655.27 1,606,801,015.54 (27,803,360.27)
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INFORMATION OF XIAMEN YUZHOU
Xiamen Yuzhou is a company established in the PRC and is a non-wholly owned subsidiary of Yuzhou Properties, which, as at the date of this announcement, was held by the Company as to 9.98%. It principally engages in real estate project developments and operations; property services.
INFORMATION OF ZHUHAI YIYUN
Zhuhai Yiyun is a company established in the PRC, which is principally engaged in real estate services (property management/estate brokerage).
LISTING RULES IMPLICATIONS
As one or more of the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Cooperation Agreement is/are more than 25% but less than 100%, the Cooperation Agreement 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 Cooperation Agreement and the transactions contemplated thereunder, none of the Shareholders is required to abstain from voting if the Company were to convene a general meeting for the approval of the Cooperation Agreement and the transactions contemplated thereunder. The Company has obtained a written approval from Pacific Climax, which held 530,894,000 Shares as at the date of this announcement (representing approximately 70.94% of the issued share capital of the Company) for the approval of the Cooperation Agreement and the transactions contemplated thereunder in lieu of a resolution to be passed at a general meeting of the Company pursuant to Rule 14.44 of the Listing Rules. As such, no extraordinary general meeting will be convened by the Company to approve the Cooperation Agreement and the transactions contemplated thereunder.
In addition, a circular containing, among other things, further details of the Cooperation Agreement and the transactions contemplated thereunder and such other information as required under the Listing Rules, is expected to be despatched to the Shareholders on or before 25 April 2019, which is more than 15 business days after the publication of this announcement, as more time is required for the preparation of certain information to be included in the circular..
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DEFINITIONS
In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings:
| “Acquisition” | the acquisition of the Target Equity Interest in the Target |
|---|---|
| Company and the Target Debt Interest by Shenzhen Huajing from | |
| Xiamen Yuzhou | |
| “Board” | the board of directors of the Company |
| “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 | |
| “connected person(s)” | has the meaning ascribed to it under the Listing Rules |
| “controlling shareholder” | has the meaning ascribed to it under the Listing Rules |
| “Cooperation Agreement” | the cooperation agreement entered into on 26 March 2019, |
| between, Zhuhai Yiyun, Xiamen Yuzhou, Shenzhen Huajing and | |
| the Target Company | |
| “Debt Transfer Agreement” | the debt transfer agreement dated 26 March 2019 and entered |
| into between Xiamen Yuzhou, Shenzhen Huajing in respect of the | |
| acquisition of the Target Debt Interest | |
| “Directors” | the directors of the Company |
| “Equity Transfer Agreement” | the equity transfer agreement dated 26 March 2019 and entered |
| into between Xiamen Yuzhou, Shenzhen Huajing in respect of the | |
| acquisition of the Target Equity Interest | |
| “Group” | the Company and its subsidiaries as at the date of this |
| announcement | |
| “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 | |
| “Independent Third Party(ies)” | third party(ies) independent of and not connected to the Company |
| and any of its connected persons (as defined in the Listing Rules) | |
| or their respective associates |
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| “Land” | plot of land called “New Grass Tail”* (“新草尾”) in Zhang Second |
|---|---|
| Village* (張二村) located in the Zhongshan Torch Development | |
| Zone* (中山市火炬開發區) with a total site area of approximately | |
| 90,500.50 square meters | |
| “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, which is a controlling | |
| Shareholder of the Company | |
| “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 | |
| “RMB” | Renminbi, the lawful currency of the PRC |
| “Share(s)” | ordinary shares of HK$0.10 each in the capital of the Company |
| “Shareholder(s)” | the shareholders of the Company |
| “Shenzhen Huajing” | 深圳市華京投資有限公司(Shenzhen Huajing Investment Limited*), |
| a company incorporated in Shenzhen with limited liability and is | |
| wholly-owned by the Company | |
| “Stock Exchange” | The Stock Exchange of Hong Kong Limited |
| “Target Company” | 中山禹鴻房地產開發有限公司(Zhongshan Yuhong Real Estate |
| Development Limited*) a company established under the laws | |
| of the PRC with limited liability, which, as at the date of this | |
| announcement, was owned as to 51% and 49% by Zhuhai Yiyun | |
| and Xiamen Yuzhou, respectively | |
| “Target Debt Interest” | a loan owing to Xiamen Yuzhou by the Target Company in the |
| aggregate amount of RMB331,551,594.94 together with an | |
| interest accrued thereon to Shenzhen Huajing at an annual interest | |
| rate of 8% | |
| “Target Equity Interest” | the 21% equity interests in the Target Company to be acquired |
| by Shenzhen Huajing from Xiamen Yuzhou pursuant to the | |
| Cooperation Agreement |
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“Xiamen Yuzhou” 廈門禹洲鴻圖地產開發有限公司 (Xiamen Yuzhou Grand Future Real Estate Development Company Limited*), a company established under the laws of the PRC with limited liability and an indirectly wholly owned subsidiary of Yuzhou Properties
“Yuzhou Properties” Yuzhou Properties Company Limited (禹洲地產股份有限公司), an exempted company incorporated in the Cayman Islands on 23 April 2008 with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock code: 1628)
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“Zhuhai Yiyun” 珠海依雲房地產有限公司 (Zhuhai Yiyun Real Estate Limited*), a company established under the laws of the PRC with limited liability
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“%” per cent
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For identification purposes only
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, 26 March 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; Mr. Lu Gong, Ms. Wong Wai Ling, and Mr. Lam Sing Kwong Simon as independent non-executive Directors.
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