Yuexiu Property : DISCLOSEABLE TRANSACTION IN RELATION TO ...

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(Incorporated in Hong Kong with limited liability)

(Stock code: 00123)

DISCLOSEABLE TRANSACTION IN RELATION TO THE DISPOSAL OF 77.79% EQUITY INTEREST IN GUANGZHOU YUEHUI PROPERTY CO. LTD*

DISPOSAL OF 77.79% EQUITY INTEREST IN GUANGZHOU YUEHUI PROPERTY CO. LTD*

The Company announces that the Purchaser has been confirmed by Guangzhou Equity Exchange as the successful bidder in accordance with the Public Tender in relation to the Disposal, which commenced on 22 November 2018 and ended on 20 December 2018. The effective bid price is (i) RMB2,417,500,000 for the Equity Transfer and (ii) undertaking 77.79% of the related liabilities of Guangzhou Yuehui as at the date of transfer of such liabilities.

In connection with the Purchaser's successful bid, the Seller and the Purchaser entered into the Equity Transfer Agreement pursuant to which the Seller agreed to sell, and the Purchaser agreed to purchase, 77.79% of the equity interest in Guangzhou Yuehui for a consideration of RMB2,417,500,000. In addition, as at the Loan Reference Date, the total amount of debt owing by Guangzhou Yuehui to GCCD is RMB360,000,000, among which RMB280,044,000 (being approximately 77.79% of the Loan Amount) shall be injected by the Purchaser into Guangzhou Yuehui within 5 Business Days after the date of Completion. On the same day as the date of receipt of the Repayment Amount from the Purchaser, Guangzhou Yuehui shall pay to the Seller the same amount for the purpose of partial repayment of the Loan Amount.

The Total Consideration is estimated to be RMB2,697,544,000 (assuming that the entire amount owing from Guangzhou Yuehui to GCCD as at the date of Completion is the same as that as at the Loan Reference Date). The portion of the effective bidding price which relates to the consideration payable for a 77.79% equity interest in Guangzhou Yuehui was determined with reference to the appraised net asset value of Guangzhou Yuehui as at 30 September 2018, as valued by the Independent Valuer. On the other hand, the portion of the effective bidding price which relates to the amount payable for settlement of the 77.79% of the Loan Amount represents the dollar-for-dollar value of the Loan Amount. The Directors (including the independent non-executive Directors) consider that the Total Consideration is fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As the highest applicable percentage ratio (calculated in accordance with Rule 14.07 of the Listing Rules) of the Disposal exceeds 5% but is less than 25%, the Disposal is subject to the reporting and announcement requirements but is exempt from the shareholders' approval requirement under Chapter 14 of the Listing Rules.

As none of the Directors had a material interest in the Disposal, no Director has abstained from voting on the relevant board resolutions of the Company.

INTRODUCTION

Reference is made to the announcements dated 17 August 2018 and 22 November 2018 of the Company in relation to, among others, the potential disposal of certain equity interest in a subsidiary of the Company through public tender ("Public Tender") and the commencement of the public tender process of such potential disposal, respectively.

The Company announces that the Purchaser has been confirmed by Guangzhou Enterprises Mergers and Acquisition Services* (ᄿψପᛆʹ׸ה) (the "Guangzhou Equity Exchange") as the successful bidder in accordance with the Public Tender in relation to the Disposal, which commenced on 22 November 2018 and ended on 20 December 2018. The effective bid price is (i) RMB2,417,500,000 for the Equity Transfer and (ii) undertaking 77.79% of the related liabilities of Guangzhou Yuehui as at the date of transfer of such liabilities.

In connection with the Purchaser's successful bid, the Seller and the Purchaser entered into the Equity Transfer Agreement pursuant to which the Seller agreed to sell, and the Purchaser agreed to purchase, 77.79% of the equity interest in Guangzhou Yuehui for a consideration of RMB2,417,500,000.

EQUITY TRANSFER AGREEMENT

The principal terms of the Equity Transfer Agreement are set out below:

Date

21 December 2018

Parties

The Seller as seller and the Purchaser as purchaser

As at the date of this announcement, the Purchaser is wholly-owned by the No. 1 Fund. Save as disclosed, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, each of the Purchaser and its ultimate beneficial owner(s) is an Independent Third Party.

Asset to be disposed of

Pursuant to the Equity Transfer Agreement, the Seller agreed to sell, and the Purchaser agreed to purchase, 77.79% of the equity interest in Guangzhou Yuehui.

Consideration and payment terms

The Purchaser has paid earnest money in the amount of RMB483,500,000 (the "Earnest Money") to the Guangzhou Equity Exchange upon its registration to participate in the bidding process for the acquisition of the 77.79% equity interest in Guangzhou Yuehui by way of Public Tender.

The Equity Transfer Consideration of RMB2,417,500,000 shall be payable in instalments by the Purchaser to the Seller. The first instalment of RMB1,450,500,000 (the "First Instalment"), being 60% of the Equity Transfer Consideration (inclusive of the Earnest Money already paid to the Guangzhou Equity Exchange), shall be payable by the Purchaser to the Seller (via a custodian account designated by the Guangzhou Equity Exchange) within 5 Business Days from the effective date of the Equity Transfer Agreement. The Earnest Money will be transferred directly from theGuangzhou Equity Exchange to the Seller upon verification of the Purchaser's qualifications by the Guangzhou Equity Exchange and will automatically be regarded as the First Instalment and will automatically form part of the Equity Transfer Consideration upon receipt by the Seller.

The remaining amount of the Equity Transfer Consideration (less any withholding tax in respect of the Equity Transfer that the Purchaser is required to withhold according to the Applicable Laws) shall be payable by the Purchaser within 1 month from the effective date of the Equity Transfer Agreement with an annual interest rate of 6.5%, and the Purchaser shall provide guarantee acceptable to the Seller in respect of the above payment obligation.

In addition, as at the Loan Reference Date, the total amount of debt owing by Guangzhou Yuehui to GCCD is RMB360,000,000 (the "Loan Amount"), among which RMB280,044,000 (being approximately 77.79% of the Loan Amount, the "Repayment Amount") shall be injected by the Purchaser into Guangzhou Yuehui within 5 Business Days after the date of Completion. On the same day as the date of receipt of the Repayment Amount from the Purchaser, Guangzhou Yuehui shall pay to the Seller the same amount for the purpose of partial repayment of the Loan Amount.

Conditions precedent

Completion of the Equity Transfer is conditional upon the Seller having obtained the necessary internal authorisations and approvals, and approvals from the relevant stock exchange, third parties and government authorities (as applicable).

Completion of the Equity Transfer

Subject to the fulfilment of the above conditions precedent, Guangzhou Yuehui shall arrange for registration of the Disposal with the State Administration for Industry and Commerce of the PRC and the Ministry of Commerce of the PRC or their relevant local counterparts within 10 Business Days after the signing of the Equity Transfer Agreement. Completion shall take place on the date on which the Purchaser becomes the registered holder of 77.79% equity interest in Guangzhou Yuehui ("Completion").

Compensation

The non-defaulting party shall have a right to require the defaulting party to compensate the non-defaulting party for the loss suffered by the non-defaulting party that is caused by the defaulting party's breach of the Equity Transfer Agreement or any related subsidiary agreements or supplemental provisions.

Termination

The Equity Transfer Agreement shall be terminated upon performance of all rights and obligations set forth therein.

BASIS OF DETERMINATION OF TOTAL CONSIDERATION

The Total Consideration is estimated to be RMB2,697,544,000 (assuming that the entire amount owing from Guangzhou Yuehui to GCCD as at the date of Completion is the same as that as at the Loan Reference Date). Such amount has been determined in accordance with the rules and procedures of the Public Tender in relation to the Disposal and is equal to the effective bidding price. The portion of the effective bidding price which relates to the consideration payable for a 77.79% equity interest in Guangzhou Yuehui was determined with reference to the appraised net asset value of Guangzhou Yuehui as at 30 September 2018, as valued by the Independent Valuer. On the other hand, the portion of the effective bidding price which relates to the amount payable for settlement of the 77.79% of the Loan Amount represents the dollar-for-dollar value of the Loan Amount.

The Directors (including the independent non-executive Directors) consider that the Total Consideration is fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

INFORMATION OF GUANGZHOU YUEHUI

Guangzhou Yuehui is principally engaged in leasing of premises (excluding warehouse storage) and residential properties. The unaudited consolidated financial information of Guangzhou Yuehui prepared in accordance with the PRC Generally Accepted Accounting Principles for the financial years ended 31 December 2016 and 31 December 2017, respectively, is as follows:

For the financial year	For the financial year
ended 31 December 2016	ended 31 December 2017
RMB'000	RMB'000
Revenue	45,478	457,262
Net profit (or loss) before
taxation	(361,966)	131,401
Net profit (or loss) after
taxation	(243,893)	11,815
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