DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION by jennyyingdi

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									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.




                          (Incorporated in Hong Kong with limited liability)
                                        (Stock Code: 270)

             DISCLOSEABLE AND CONNECTED TRANSACTION

 ACQUISITION OF INTEREST IN PROPERTY COMPANIES IN CHINA
 The Board wishes to announce that on 28 November 2011, the Company’s subsidiary,
 Guangdong Teem, and Guangdong Holdings have entered into the Agreement pursuant to
 which Guangdong Teem has agreed to acquire 40% equity interest respectively in each of
 the Target Companies. Guangdong Holdings has, on 23 November 2011, acquired 100%
 equity interest in the Target Companies through a public auction directed by the People’s
 Court.

 Guangdong Holdings, the Company’s ultimate holding company, holds through its
 subsidiaries an approximate 60.48% interest in the Company as of the date of this
 announcement, and is therefore a connected person of the Company. As the applicable
 percentage ratios (as defined in Chapter 14 of the Listing Rules) in respect of the
 Acquisition and the Further Assistance together are more than 5% but less than 25%, the
 entering into of the Agreement and the provision of the Further Assistance by Guangdong
 Teem constitute discloseable and connected transactions of the Company under the Listing
 Rules, and are subject to the reporting, announcement and independent Shareholders’
 approval requirements under the Listing Rules.

 A circular containing, among other things, further information on the Agreement, the
 Acquisition, the Further Assistance, the recommendation of the Independent Board
 Committee to the Shareholders, the letter of advice from the independent financial
 adviser to the Independent Board Committee in relation to the Acquisition and the Further
 Assistance and the notice to convene the EGM will be sent to the Shareholders on or before
 12 December 2011.

 If approval of the independent Shareholders for the Acquisition and the Further Assistance is
 not obtained at the EGM, the Agreement will cease to have effect and the Company will not
 acquire any interest in any of the Target Companies or their properties. Shareholders and
 potential investors of the Company should exercise caution when dealing in the Shares or any
 other securities of the Company.




                                                –1–
THE AGREEMENT

The Board wishes to announce that on 28 November 2011, the Company’s subsidiary,
Guangdong Teem, and Guangdong Holdings have entered into the Agreement pursuant to
which Guangdong Teem has agreed to acquire (by itself or through its subsidiary) 40% equity
interest respectively in each of the Target Companies.

Guangdong Holdings has, on 23 November 2011, acquired 100% equity interest in the Target
Companies through a public auction directed by the People’s Court. The tender price offered
by Guangdong Holdings was RMB327,679,100 and Guangdong Holdings was awarded the
tender in the auction. The completion of the acquisition of the Target Companies by
Guangdong Holdings will take place by or before 20 December 2011.

Based on the auction notice issued by agencies appointed by the People’s Court to conduct the
public auction, the outstanding loans owed by the Target Companies to the Bank of
Communications are in the principal amount of RMB4.513 billion. Further, according to the
information provided by the Bank of Communications, the accrued interests on the loans up
to 20 December 2011 would be approximately RMB1,009 million. The successful tenderer
would be required to pay the tender price and to guarantee the repayment of the loans plus
accrued interests owed by the Target Companies to the Bank of Communications.

Pursuant to the Agreement and based on the intended 40% equity interest in the Target
Companies, the consideration payable by Guangdong Teem in respect of the Acquisition will
be 40% of all of the costs (including the tender price, commission fee paid to auction agencies,
fees paid to a commercial bank for issuing a performance bond for Guangdong Holdings’
participation in the auction and related taxes) incurred by Guangdong Holdings in the tender
and this represents an amount of approximately RMB135 million. Also, Guangdong Teem will
be required to provide up to a total of approximately RMB2,325 million partly as
shareholders’ loans to the Target Companies, representing 40% of the amount required by
the Target Companies to repay the outstanding loans plus accrued interests to the Bank of
Communications, and partly as contributions to resolve (in the proportion of 40%) any valid
third party claims or litigation instituted against, and other liabilities of, or in connection
with, the Target Companies (including such liabilities and responsibilities as stated in the
auction notice to be handled by the successful tenderer). The Agreement provides that the
consideration payable by Guangdong Teem together with the amount of shareholders’ loans to
be provided by Guangdong Teem to the Target Companies and the contributions to the other
claims and liabilities of, or in connection with, the Target Companies to be responsible by
Guangdong Teem will not, in the aggregate, exceed RMB2,460 million. Please refer to the
section headed ‘‘Information about the Target Companies’’ below for further information.

The completion of the Agreement is conditional on the Company obtaining independent
Shareholders approval approving the Acquisition. Guangdong Teem has undertaken that it
will procure that an extraordinary general meeting of the Company be convened within 45
days from the date of the Agreement to consider the relevant resolutions.

Due to the outstanding loans owed by the Target Companies to the Bank of Communications,
the properties held by the Target Companies are subject to charges in favour of the Bank of
Communications. It is expected that the charges would be released upon the repayment of the
outstanding loans, which repayment will be made by or before 20 December 2011. Some of
these properties are also subject to court’s seizure orders due to other proceedings instituted
against the Target Companies for money due. Guangdong Holdings has agreed that, if these
charges and orders could not be finally released within six months from the completion of the

                                             –2–
Acquisition, Guangdong Teem has a right to request to cancel the transfer of interest of the
relevant Target Companies and have the consideration paid by Guangdong Teem and the
shareholder’s loans provided by Guangdong Teem to the relevant Target Companies return to
it.

If approval of the independent Shareholders for the Acquisition and the Further Assistance is not
obtained at the EGM, the Agreement will cease to have effect and the Company will not acquire
any interest in any of the Target Companies or their properties. Shareholders and potential
investors of the Company should exercise caution when dealing in the Shares or any other
securities of the Company.

ON-GOING COOPERATION IN RESPECT OF THE TARGET COMPANIES

After obtaining the requisite approval at the EGM, Guangdong Teem would also be required
to enter into a joint venture contract with Guangdong Holdings and amend the articles of
association of each of the Target Companies to reflect the changes in the shareholding
percentages. The board of each of the Target Companies is expected to consist of five
directors, three of whom would be nominated by Guangdong Holdings and the remaining two
directors would be nominated by Guangdong Teem. The chairman and vice chairman of each
board would be nominated by Guangdong Holdings and Guangdong Teem respectively. The
general manager of each Target Company would be appointed by its board of directors. In
addition, Guangdong Holdings and Guangdong Teem will each nominate one person to be the
supervisor of each Target Company.

As the properties held by Guangzhou Jindongyuan are underdevelopment (however, the
construction of which has since 2008 been suspended) and the land held by Guangdong
Sancheng is yet to be developed, it is expected that the Target Companies may raise funds to
pay for the development costs by way of bank loans or shareholders’ loans or capital from
Guangdong Holdings and Guangdong Teem. Accordingly, it is expected that Guangdong
Holdings and Guangdong Teem may be required to provide the Further Assistance in the form
of shareholders’ loans to and/or capital injection into the Target Companies, in proportion to
their respective interest in the Target Companies to assist the Target Companies to finance
part of the construction costs. The Company currently expects that Guangdong Teem may be
required to provide the Further Assistance in the approximate aggregate amount of up to
RMB415 million.

Guangdong Teem expects to finance the payment for the consideration for the Acquisition, the
provision of the shareholder’s loans to the Target Companies to repay the amounts owed to
the Bank of Communications and the provision of the Further Assistance through its internal
resources and obtaining bank loan facilities from commercial banks.

INFORMATION ABOUT THE TARGET COMPANIES

The Company understands that, according to a judgment of the People’s Court dated 17
December 2010, it was ruled that a borrower has through fraudulent means obtained loans
from the Bank of Communications, in the total approximate amount of RMB4.513 billion by
fraud, and had therefore committed an offence. The People’s Court ruled that 100% equity
interests of the Target Companies, which are under such borrower’s actual control, were
acquired by the funds fraudulently obtained by the borrower from the Bank of
Communications. According to the criminal law of the PRC, all of the interests of the
Target Companies should be treated as stolen properties and be traced and recovered. The
People’s Court ordered that the 100% equity interests in the Target Companies be sold by way

                                             –3–
of a public auction, and the sale proceeds be used in priority to repay the outstanding loans
and legal interests due to Bank of Communications as the victim, and any remaining amount
be confiscated by the treasury of the PRC. In addition, according to the information provided
by the agencies appointed by the People’s Court to conduct the auction, the properties held by
the Target Companies are subject to charges in favour of the Bank of Communications.

The Company understands that the key assets held by the Target Companies are properties
located in Guangzhou City, Guangdong Province, the PRC. Details of the Target Companies
(and Guangzhou Diyuan) and their key properties are as follows (the financial information set
out below is on an unaudited basis and has been adjusted according to the valuation prepared
by Vigers):

.   Guangzhou Tianyuan is a property company which owns the Comic City, Guangzhou (廣
    州動漫星城廣場), a developed property project which comprises a shopping mall complex
    located in Guangzhou City. The property has a total gross floor area of approximately
    32,641 square metres. Guangzhou Tianyuan has one wholly-owned subsidiary, namely
    Guangzhou Diyuan, and one branch company, namely 廣州天源投資管理有限公司動漫星
    城廣場分公司 (Guangzhou Tianyuan Investment Management Co., Ltd. Comic City,
    Guangzhou Branch Company*). Guangzhou Tianyuan’s subsidiary and branch company
    are principally engaged in the management of the Comic City, Guangzhou. As of 31
    October 2011, Guangzhou Tianyuan’s total assets was approximately RMB1,590 million
    and total liabilities was approximately RMB790 million. As of 31 October 2011,
    Guangzhou Diyuan’s total assets was approximately RMB4 million and total liabilities
    was approximately RMB5 million.

.   Guangzhou Jindongyuan is a property company which owns the Guangzhou Ming Cheng
    Commercial Plaza (廣州名城商業廣場), a commercial property project located in
    Guangzhou City which is underdevelopment. The property has a total land area of
    approximately 15,902 square metres and a total construction area of approximately
    110,825 square metres. As of 31 October 2011, Guangzhou Jindongyuan’s total assets was
    approximately RMB2,747 million and total liabilities was approximately RMB2,406
    million.

.   Guangdong Sancheng is a property company which owns a piece of land of approximately
    22,067 square metres located in Zhujiang New City, Guangzhou City, which is intended to
    be developed as a commercial property project. As of 31 October 2011, Guangdong
    Sancheng’s total assets was approximately RMB3,591 million and total liabilities was
    approximately RMB2,613 million.

In respect of the information on the net profits or losses before and after taxation of each of
the Target Companies for the two years ended 31 December 2009 and 2010, the Company
understands that Guangdong Teem is currently obtaining such information and expects to
provide such information in the circular to be despatched to the Shareholders on or before
12 December 2011.

The Company has engaged an independent valuer, Vigers, to conduct valuation on the above
properties held by the Target Companies. According to the valuation performed by Vigers, as
of 31 October 2011, Comic City, Guangzhou (廣州動漫星城廣場) was valued at RMB1,521
million, the commercial property project named Guangzhou Ming Cheng Commercial Plaza
(廣州名城商業廣場) was valued at RMB2,709 million, and the land located in Zhujiang New



                                            –4–
City which is intended to be developed as a commercial property project was valued at
RMB3,590 million. The valuation reports of Vigers will be included in the circular to be
despatched to the Shareholders on or before 12 December 2011.

As mentioned above, the People’s Court has ordered that the 100% equity interests in the
Target Companies be sold by way of a public auction. The auction notice required that the
interests in the Target Companies be bundled up and sold together. The auction notice also
stated that the successful tenderer would be required to appropriately resolve the related
liabilities and responsibilities according to law. In this regard, Guangdong Holdings has
agreed that Guangdong Teem’s liability in respect of the outstanding loans and accrued
interests due to the Bank of Communications, third party claims or litigation instituted
against, and other liabilities of, or in connection with, the Target Companies (including such
liabilities and responsibilities as stated in the auction notice to be handled by the successful
tenderer) and the liabilities included in the adjusted accounts of the Target Companies as of 31
October 2011, together with the payment of the consideration under the Agreement should not
exceed RMB2,460 million. To the extent there is any excess liabilities, Guangdong Holdings
will solely be responsible for such liabilities (other than any liability incurred by the Target
Companies in their ordinary course of business or construction of their properties after 31
October 2011 and which liability has been recognised by both Guangdong Holdings and
Guangdong Teem) and would indemnify Guangdong Teem and the Company for any loss
arising from such liabilities.

REASONS FOR THE ACQUISITION AND FURTHER ASSISTANCE

Included in the assets package that were directed by the People’s Court for public auction sale
are three commercial property projects undertaken by the Target Companies with high
comprehensive quality and located within Guangzhou’s core commercial circle or key-
development commercial circle, supported by ideal ancillary facilities and convenient
transport. Through the Acquisition and the provision of the Further Assistance,
Guangdong Teem could participate in the development of two of such commercial property
projects, and which projects are expected to be highly promising and delivering good value and
satisfying the long-term operational target and position of strategic development of
Guangdong Teem. Guangdong Teem considers that the acquisition of these three property
projects would enhance its leading position in the commercial property sector in Guangzhou.
In this collaborative investment in and development of these property projects with
Guangdong Holdings, the Company will adhere to the fair and equitable commercial
principle and fully leverage upon the integrated resources and support of Guangdong
Holdings, to achieve the commercial goal of complementary deployment of resources and
mutual benefits.

LISTING RULES IMPLICATIONS

Guangdong Holdings, the Company’s ultimate holding company, holds through its
subsidiaries an approximate 60.48% interest in the Company as of the date of this
announcement, and is therefore a connected person of the Company. By reference to the
consideration payable by Guangdong Teem in respect of the Acquisition, the shareholders’
loan to be provided by Guangdong Teem to the Target Companies to repay the outstanding
loans plus accrued interests due to the Bank of Communications, and the provision of the
Further Assistance, the percentage ratios are more than 5% but less than 25%. Accordingly,
the entering into of the Agreement and the provision of the Further Assistance constitute



                                             –5–
discloseable and connected transactions of the Company under the Listing Rules, and are
subject to the reporting, announcement and independent Shareholders’ approval requirements
under the Listing Rules.

The Independent Board Committee consisting of Dr. Chan Cho Chak, John, Dr. the
Honourable Li Kwok Po, David and Mr. Fung, Daniel Richard, being the independent non-
executive Directors was established to advise the independent Shareholders in connection with
the fairness and reasonableness of the terms of the Acquisition and the Further Assistance.
CIMB Securities (HK) Limited has been appointed as the independent financial adviser to
advise the Independent Board Committee and the independent Shareholders in this connection
as well.

The Directors (except the independent non-executive Directors whose view will be formed
after obtaining the advice of the independent financial adviser) believe that the terms of the
Acquisition and the Further Assistance were negotiated between the parties on an arm’s length
basis and are on normal commercial terms that are fair and reasonable, and that the
Acquisition and the Further Assistance are in the interest of the Company and the
Shareholders as a whole.

THE EGM

The EGM will be convened at which resolutions in relation to the Acquisition and the Further
Assistance as well as the arrangements contemplated thereunder will be proposed to seek the
approval of the independent Shareholders.

GENERAL

A circular containing, among other things, further information on the Agreement, the
Acquisition, the Further Assistance, the recommendation of the Independent Board
Committee to the Shareholders, the letter of advice from the independent financial adviser
to the Independent Board Committee in relation to the Acquisition and the Further Assistance
and the notice to convene the EGM will be sent to the Shareholders in accordance with the
requirements of the Listing Rules on or before 12 December 2011.

The Company is principally engaged in investment holding, property holding and investment,
investing in infrastructure and energy projects, water supply to Hong Kong, and Shenzhen and
Dongguan, hotel ownership and operations, hotel management and department stores
operation.

Guangdong Holdings is a company established in the PRC and the ultimate holding company
of the Company and its principal business is investment holding.




                                            –6–
DEFINITIONS

In this announcement, unless the context otherwise requires, the following words and
expressions shall have the meaning ascribed to them below:

‘‘Acquisition’’          the proposed acquisition by Guangdong Teem of 40% equity interest
                         of the Target Companies under the Agreement;

‘‘Agreement’’            a conditional agreement dated 28 November 2011 entered into
                         between Guangdong Holdings and Guangdong Teem in respect of
                         the sale and purchase of 40% equity interests of the Target
                         Companies;

‘‘Bank of                Bank of Communication, Guangzhou Huang Po District Branch;
  Communications’’

‘‘Board’’                the board of Directors;

‘‘Company’’              Guangdong Investment Limited, a company incorporated in Hong
                         Kong with its shares listed on the main board of the Stock Exchange;

‘‘connected person’’     has the meaning ascribed to it in the Listing Rules;

‘‘Director(s)’’          the director(s) of the Company;

‘‘EGM’’                  the extraordinary general meeting to be held by the Company to
                         approve the Acquisition and the Further Assistance;

‘‘Further Assistance’’   the further assistance in the form of shareholder’s loans and/or capital
                         injection to be provided by Guangdong Teem to the Target
                         Companies to finance part of the construction costs for the
                         development of the properties held by them, which is expected to be
                         up to an aggregate amount of RMB415 million;

‘‘Guangdong              廣東粵海控股有限公司 (Guangdong Holdings Limited*), a company
  Holdings’’             established in the PRC and the ultimate holding company of the
                         Company;

‘‘Guangdong              廣東三誠經濟發展有限公司              (Guangdong     Sancheng      Economic
  Sancheng’’             Development Company Limited*), a company established in the PRC;

‘‘Guangdong Teem’’       廣東天河城      (集團)    股份有限公司 (Guangdong Teem (Holdings)
                         Limited*), a company established in the PRC and an indirect
                         subsidiary of the Company, in which the Company holds an
                         effective interest of approximately 76%. The other shareholders of
                         Guangdong Teem are parties independent from the Company,
                         amongst whom 廣州市城市建設開發集團有限公司 (Guangzhou City
                         Construction & Development Group Co. Ltd.*) holds an effective
                         interest of approximately 14%;

‘‘Guangzhou Diyuan’’     廣州地源物業管理有限公司                 (Guangzhou     Diyuan     Property
                         Management Co., Ltd.*), a company established in the PRC and a
                         wholly-owned subsidiary of Guangzhou Tianyuan;


                                             –7–
‘‘Guangzhou              廣州金東源房地產開發有限公司 (Guangzhou Jindongyuan Real
  Jindongyuan’’          Estate Development Company Limited*), a company established in
                         the PRC;

‘‘Guangzhou              廣州天源投資管理有限公司 (Guangzhou Tianyuan Investment
  Tianyuan’’             Management Company Limited*), a company established in the PRC;

‘‘Hong Kong’’            the Hong Kong Special Administrative Region of the People’s
                         Republic of China;

‘‘Independent Board      An independent committee of the Board comprising the independent
   Committee’’           non-executive Directors of the Company to consider and advise the
                         independent Shareholders in connection with the fairness and
                         reasonableness of the terms of the Acquisition and the Further
                         Assistance;

‘‘Listing Rules’’        the Rules Governing the Listing of Securities on the main board of the
                         Stock Exchange;

‘‘People’s Court’’       the People’s Court in Yuexiu District, Guangzhou City, Guangdong
                         Province of the PRC;

‘‘PRC’’                  the People’s Republic of China, which for the purposes of this
                         announcement, excludes Hong Kong, the Macau Special
                         Administrative Region and Taiwan;

‘‘RMB’’                  the lawful currency of the PRC;

‘‘Shareholder(s)’’       shareholder(s) of the Company;

‘‘Stock Exchange’’       The Stock Exchange of Hong Kong Limited;

‘‘Target Companies’’     Guangdong Sancheng, Guangzhou Jindongyuan and Guangzhou
                         Tianyuan; and

‘‘Vigers’’               Vigers Appraisal and Consulting Limited, a property valuer.

                                                                          By Order of the Board
                                                                            HUANG Xiaofeng
                                                                               Chairman

Hong Kong, 28 November 2011

*   The English translation of the Chinese name of the relevant company or entity included in this
    announcement is prepared by the Company for reference only, and such translation may not
    be accurate and such company may not have an official English translation/version of its
    Chinese name.

As at the date of this announcement, the Board comprises three Executive Directors,
Mr. HUANG Xiaofeng, Mr. ZHANG Hui and Mr. TSANG Hon Nam; seven Non-Executive
Directors, Dr. CHENG Mo Chi, Moses, Mr. WU Jianguo, Ms. XU Wenfang, Mr. LI Wenyue,
Mr. LI Wai Keung, Mr. SUN Yingming and Ms. ZHAO Chunxiao; and three Independent Non-
Executive Directors, Dr. CHAN Cho Chak, John, Dr. the Honourable LI Kwok Po, David and
Mr. FUNG, Daniel R.

                                              –8–

								
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