Weiye Holdings Limited — M&A Activity 2019

May 21, 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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CHINA TANGSHANG HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 674)

MAJOR TRANSACTION

IN RELATION TO THE ACQUISITION OF 73% OF THE SHARE EQUITY IN THE TARGET COMPANY

THE ACQUISITION

The Board is pleased to announce that, on 21 May 2019 (after trading hours of the Stock Exchange), the Purchaser, a wholly-owned subsidiary of the Company, the Vendor, an independent third party, and the Remaining Shareholder entered into the Acquisition Agreement, pursuant to the terms and conditions of which, among other things, the Purchaser agreed to acquire from the Vendor, and the Vendor agreed to sell to the Purchaser, the Sale Shares, which shall represent the 73% share equity of the Target Company, for consideration in the amount of RMB40 million (equivalent to approximately HK$45.6 million), which shall be payable in cash within three business days upon Completion.

Upon Completion, the Target Company will become an indirect non-wholly owned subsidiary of the Company and accordingly, the financial results of the Target Company will be consolidated into the accounts of the Group.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Acquisition exceed 25%, but are all less than 100%, the Acquisition constitutes a major transaction of the Company and is therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

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To the best knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholders or any of their respective associates have any material interest in the Acquisition. As such, no Shareholders would be required to abstain from voting in favour of the resolution approving the Acquisition. As at the date of this announcement, Grand Nice International Limited, being the controlling shareholder of the Company, is holding approximately 53.80% of the total issued share capital of the Company. Accordingly, pursuant to Rule 14.44 of the Listing Rules, written Shareholders’ approval is accepted in lieu of holding a general meeting of the Company to approve the terms of, and the transactions contemplated, under the Acquisition Agreement upon satisfaction of the conditions set out under Rule 14.44 of the Listing Rules.

A circular containing, among other things, further information on the Acquisition is expected to be despatched by the Company to the Shareholders on or before 12 June 2019.

Completion of the Acquisition is conditional upon fulfilment or waiver of the Condition Precedent. There is no assurance that Completion will take place or as to when it may take place. Shareholders and potential investors should therefore exercise caution when dealing in the securities of the Company.

THE ACQUISITION

The Board is pleased to announce that, on 21 May 2019 (after trading hours of the Stock Exchange), the Purchaser, a wholly-owned subsidiary of the Company, the Vendor, an independent third party, and the Remaining Shareholder entered into the Acquisition Agreement, pursuant to the terms and conditions of which, among other things, the Purchaser agreed to acquire from the Vendor, and the Vendor agreed to sell to the Purchaser, the Sale Shares, which shall represent the 73% share equity of the Target Company, for consideration in the amount of RMB40 million (equivalent to approximately HK$45.6 million), which shall be payable in cash within three business days upon Completion.

THE ACQUISITION AGREEMENT

The principal terms of the Acquisition Agreement are summarized as follow:

Date: 21 May 2019 (after trading hours of the Stock Exchange)

Parties: (1) the Purchaser (2) the Vendor

(3) the Remaining Shareholder

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Vendor and its ultimate beneficial owners and the Remaining Shareholder are Independent Third Parties.

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ASSETS TO BE ACQUIRED

As at the date of this announcement, the Vendor holds 85% of the share equity in the Target Company, and the remaining share equity of the Target Company is held by one other individual minority shareholder, Mr. Zeng PinLian (the “ Remaining Shareholder ”). By entering into the Acquisition Agreement, the Remaining Shareholder has agreed to give up his preemptive rights to the Sale Shares and agreed with the share transfer contemplated under the Acquisition Agreement.

Subject to the terms and conditions of the Acquisition Agreement, the Vendor has agreed to sell and the Purchaser has agreed to purchase, with effect from Completion, the Sale Shares. The Sale Shares, representing 73% of the issued shares of the Target Company held by the Vendor, will be sold free from any encumbrances and together with all rights that attach to such Sale Shares at Completion (including all dividends and distributions declared, paid or made in respect of the Sale Shares on or after the date of Completion).

CONSIDERATION

The consideration for the acquisition of the Sale Shares is RMB40 million (equivalent to approximately HK$45.6 million), which shall be paid within three business days upon Completion.

The Consideration was determined on the basis of normal commercial terms, following arms’ length negotiations between the parties to the Acquisition Agreement and with reference to, among other things, (i) the net asset value of the Target Company as at 31 December 2018; and (ii) the historical financial performance and prospects of the Target Company.

CONDITIONS PRECEDENT

The Purchaser shall, and shall procure its agents, forthwith upon the signing of the Acquisition Agreement, to conduct such review regarding the assets, liabilities, operation and affairs of the Target Company as it may reasonably consider appropriate, and the Vendors shall provide and procure the Target Company and its agents to provide such assistance as the Purchaser or its agents may reasonably require in connection with such review.

Completion is conditional upon fulfillment of the followings, inter alia ,:

• (a) the Purchaser has completed the due diligence in relation to the Target Company and has been satisfied with the results;

• (b) the Company having complied with the requirements under the Listing Rules in respect of the transactions contemplated under the Acquisition Agreement;

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• (c) the Company being satisfied, from the date of the Acquisition Agreement and at any time before the Completion, that the Warranties remain true, accurate and not misleading and that no events have occurred that would result in any breach of any of the Warranties or other provisions of the Acquisition Agreement by the Vendor;

• (d) there being no Material Adverse Change up to Completion;

• (e) (if applicable) all such waivers, consents or other documents as the parties to the Acquisition Agreement may require in relation to the completion of the transactions contemplated under the Acquisition Agreement having been obtained; and

The Company may waive the conditions precedent referred to in paragraphs (a), (c) and (d) above at any time before the Long Stop Date by notice in writing to the Vendor. Save as aforesaid, none of the other conditions precedent above is capable of being waived.

If the Condition Precedent is not fulfilled (or waived by the Purchaser) on or before 31 July 2019 (or another date as mutually agreed by the parties), the Acquisition Agreement will terminate automatically, but without prejudice to rights and remedies accrued before termination.

COMPLETION

The parties shall commence completion procedures in PRC upon all conditions precedent to the Acquisition Agreement have been satisfied (or such other time and date as the parties to the Acquisition Agreement may agree in writing).

Upon Completion, the Purchaser, the Vendor and the Remaining Shareholder will respectively hold approximately 73%, 12%, and 15% of the share equity in the Target Company. Immediately after Completion, the Target Company will become a non-wholly owned subsidiary of the Company, and the financial results of the Target Company will be consolidated with the results of the Group.

INFORMATION OF THE COMPANY AND THE PARTIES

The Company

The Company is an investment holding company and the Group is principally engaged in exhibitionrelated business, property sub-leasing, development and investment business, and money lending business.

The Purchaser

The Purchaser is an indirectly wholly-owned subsidiary of the Company established in PRC, which is principally engaged in the business of property leasing, property management, corporate consulting and advisory services in PRC.

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The Vendor

The Vendor is established in PRC and is principally engaged in the business of property management, property leasing, and hotel management in PRC.

The Remaining Shareholder

The Remaining Shareholder is an individual who is an Independent Third Party.

INFORMATION ABOUT THE TARGET COMPANY

The Target Company is a limited company incorporated in Shenzhen, Guangdong province, PRC and is principally engaged in the business of property management, property leasing, estate agency, and domestic trading. The principal operating business of the Target Company is sub-leasing and related services of the Jin Luan International Commercial Building（金鑾國際商務大廈 , the “ Building ”）, which is located in Long Hua District of Shenzhen city and near the subway station of Line No.4 of Shenzhen subway.

FINANCIAL INFORMATION OF THE TARGET COMPANY

Set out below is the financial information of the Target Company for the financial years ended 31 December 2017 and 2018 respectively:

	For the financial	year ended
	31 December
	2017	2018
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Revenue	35,736	33,122
Net profit/(loss) before taxation_(note)_	9,337	(49,424)
Net profit/(loss) after taxation_(note)_	6,226	(50,993)
Net profit after taxation, excluding one-off adjustment_(note)_	6,226	4,705

Note:

The net loss before and after taxation for the financial year ended 31 December 2018 included an onetime write-off of amounts due from the Vendor, a related party and an individual third party totaling RMB55,698,000.

The total assets and the net asset value of the Target Company as at 31 December 2018 were approximately RMB68,757,000 and RMB16,043,000, respectively.

Upon Completion, the Target Company has become an indirect wholly-owned subsidiary of the Company and the financial results of the Target Company will be consolidated into the Group’s financial statements.

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REASONS FOR AND BENEFITS OF THE ACQUISITION

It has been the Company’s objective to explore suitable investment opportunities in property sub-leasing, investment and development in Hong Kong, the PRC and other overseas countries, with an aim to deliver substantial returns for shareholders of the Company through a series of acquisitions and proposed cooperation. The Building is located in the core area of Long Hua District of Shenzhen City and is adjacent to subway satiation with ideal geographical location and convenient transportation. As such, the Company considers that the Acquisition is in line with the overall business direction of the Group and is a good investment opportunity to develop and expand the Group’s property sub-leasing business in the PRC.

Having considered the nature of and the benefits resulting from the Acquisition, the Directors believe that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Acquisition exceed 25%, but are all less than 100%, the Acquisition constitutes a major transaction of the Company and is therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholders or any of their respective associates have any material interest in the Acquisition. As such, no Shareholders would be required to abstain from voting in favour of the resolution approving the Acquisition. As at the date of this announcement, Grand Nice International Limited, being the controlling shareholder of the Company, is holding approximately 53.80% of the total issued share capital of the Company. Accordingly, pursuant to Rule 14.44 of the Listing Rules, written Shareholders’ approval is accepted in lieu of holding a general meeting of the Company to approve the terms of, and the transactions contemplated, under the Acquisition Agreement upon satisfaction of the conditions set out under Rule 14.44 of the Listing Rules.

CIRCULAR DESPATCH

A circular containing, among other things, further information on the Acquisition is expected to be despatched by the Company to the Shareholders on or before 12 June 2019.

Completion of the Acquisition is conditional upon fulfilment or waiver of the Condition Precedent. There is no assurance that Completion will take place or as to when it may take place. Shareholders and potential investors should therefore exercise caution when dealing in the securities of the Company.

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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 Sale Shares as contemplated under the Acquisition
	Agreement
“Acquisition Agreement”	the sale and purchase agreement entered into between the Purchaser,
	the Vendor, the Target Company, and the Remaining Shareholder on
	21 May 2019 in relation to the sale and purchase of the 73% equity
	interest in the Target Company, as more particularly described in the
	section “The Acquisition Agreement” in this announcement
“Board”	the board of Directors
“Business Day(s)”	any day(s) except Saturday, Sunday or other day on which licensed
	banks in Hong Kong are open for business throughout their normal
	business hours
“Completion”	Completion of the Acquisition Agreement
“Completion Date”	a day falling on the three (3) days following the conditions precedent
	are fulfilled (or waived, as the case maybe)
“Directors”	the directors of the Company, including the independent non-
	executive Directors of the Company
“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 China
“Independent Third	the third party(ies) independent of the Company and connected
Party(ies)”	persons (as defined in the Listing Rules)
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Long Stop Date”	31 July 2019, or such other date as otherwise agreed in written by
	the parties under the Acquisition Agreement

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“Material Adverse Change”	any change (or effect) which has a material and adverse effect on the
	financial position, business or prospects or results of operations, of
	the Target Company as a whole
“PRC”	the People’s Republic of China, which for the purpose of this
	announcement shall exclude Hong Kong, Macau and Taiwan
“Purchaser”	深圳市唐商產業園管理有限公司(Shenzhen Tangshang Industrial
	Park Management Co., Ltd.)*, a company incorporated in PRC with
	limited liability and an indirectly wholly-owned subsidiary of the
	Company
“Sale Shares”	73% of the share equity of the Target Company held by the Vendor
“Share(s)”	ordinary share(s) in the issued share capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Company”	深圳市金帆投資發展有限公司(Shenzhen Jinfan Investment
	Development Co., Ltd.)*, a company incorporated in PRC with
	limited liability
“Vendor”	深圳市金騏集團有限公司(Shenzhen Jinqi Group Co., Ltd.)*, a
	company incorporated in PRC with limited liability
“Warranties”	the representations, warranties and undertakings given by the Vendor
	under the Acquisition Agreement
“%”	per cent.

In this announcement, unless the context otherwise requires, the terms “associate(s)”, “connected person(s)”, “connected transaction(s)”, “percentage ratio(s)”, “subsidiary(ies)” and “substantial shareholder(s)” shall have the meanings given to such terms in the Listing Rules, as modified by the Stock Exchange from time to time.

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Unless otherwise specified in this announcement, translation of RMB into HK$ is made in this announcement, for illustration purpose only, at the rate of RMB1 to HK$1.14. No representation is made that any amount in RMB could have been or could be converted at such rate or any other rates.

By Order of the Board China Tangshang Holdings Limited Chen Weiwu Chairman

Hong Kong, 21 May 2019

As at the date of this announcement, the executive Directors are Mr. Chen Weiwu (Chairman) and Mr. Zhou Houjie; and the independent non-executive Directors are Mr. Chen Youchun, Mr. Chan Chien Kwong William and Ms. Lui Mei Ka.

• For identification purpose only

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