China Communications Construction : 20200910-Announcement - Connected Transaction - Formation...

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.

中國交通建設股份有限公司

CHINA COMMUNICATIONS CONSTRUCTION COMPANY LIMITED

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1800)

ANNOUNCEMENT

CONNECTED TRANSACTION

FORMATION OF A PROJECT COMPANY

The Board hereby announces that, on 10 September 2020, in order to jointly invest in the PPP project of the whole water treatment and clean water provision for counties and districts in Tangshan City, Certain Subsidiaries of the Company entered into the Shareholders' Agreement with China Urban and Rural (being a subsidiary of CCCG) and Other Project Partners for the formation of the Project Company. Pursuant to the Shareholders' Agreement, the registered capital of the Project Company is RMB2,361,564,000, of which RMB1,602,749,100 will be contributed by Certain Subsidiaries of the Company in total, accounting for 67.86% of the total registered capital of the Project Company; RMB8,164,000 will be contributed by China Urban and Rural, accounting for 0.35% of the total registered capital of the Project Company; and RMB750,650,900 will be contributed by Other Project Partners in total, accounting for 31.79% of the total registered capital of the Project Company.

As at the date of this announcement, China Urban and Rural is a subsidiary of CCCG, the controlling Shareholder of the Company which holds approximately 57.96% equity interests in the issued ordinary shares of the Company. China Urban and Rural is thus a connected person of the Company under the Hong Kong Listing Rules. As such, the formation of the Project Company under the Shareholders' Agreement constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules.

As the highest applicable percentage ratio in respect of the formation of the Project Company under the Shareholders' Agreement exceeds 0.1% but is less than 5%, the Shareholders' Agreement and the transaction contemplated thereunder is subject to the announcement requirement but is exempted from the independent Shareholders' approval requirement under the Hong Kong Listing Rules.

- 1 -

BACKGROUND

The Board hereby announces that, in accordance with the resolution passed at the thirty-sixth meeting of the fourth session of the Board, on 10 September 2020, in order to jointly invest in the

1. project of the whole water treatment and clean water provision for counties and districts in Tangshan City, Certain Subsidiaries of the Company entered into the Shareholders' Agreement with China Urban and Rural (being a subsidiary of CCCG) and Other Project Partners for the formation of the Project Company. Pursuant to the Shareholders' Agreement, the registered capital of the Project Company is RMB2,361,564,000, of which RMB1,602,749,100 will be contributed by Certain Subsidiaries of the Company in total, accounting for 67.86% of the total registered capital of the Project Company; RMB8,164,000 will be contributed by China Urban and Rural, accounting for 0.35% of the total registered capital of the Project Company; and RMB750,650,900 will be contributed by Other Project Partners in total, accounting for 31.79% of the total registered capital of the Project Company.

SHAREHOLDERS' AGREEMENT

The principal terms of the Shareholders' Agreement are set out as follows:

Date:	10 September 2020
Parties:	(1)	Certain Subsidiaries of the Company;
	(2)	China Urban and Rural; and
	(3)	Other Project Partners
			Capital
Registered capital:	Shareholder	Contribution	Percentage
			RMB	%
	(1)	Certain Subsidiaries of
		the Company	1,602,749,100	67.86
		CCCC First Harbour
		Engineering Co., Ltd.	360,233,800	15.25
		CCCC Hehai Engineering Co.,
		Ltd.	4,559,900	0.19
		CCCC Fourth Harbour
		Engineering Co., Ltd.	399,628,200	16.92
		CCCC Ecological
		Environmental Protection
		Investments Co., Ltd.	224,994,900	9.53

- 2 -

	Capital
Registered capital: Shareholder	Contribution	Percentage
	RMB	%
CCCC Tianjin Dredging Co.,
Ltd.	215,222,100		9.11
Road & Bridge International
Co., Ltd.	265,406,800		11.24
CCCC Third Highway
Engineering Co., Ltd.	132,703,400		5.62
(2) China Urban and Rural	8,164,000		0.35
(3) Other Project Partners	750,650,900	31.79
LN Water Group Co., Ltd.	91,198,400	3.86
Zhejiang First Hydro & Power
Construction Group Co., Ltd.	408,200	0.02
NWHG Group Co., Ltd.	44,234,500	1.87
STECOL Corporation	193,113,200	8.18
PowerChina Environment
Engineering Co., Ltd.*	185,540,200	7.86
Tangshan Whole Water
Treatment Development
Group Co., Ltd.*	236,156,400	10.00
Total	2,361,564,000		100.00

If any of the parties fails to pay the capital contribution within the specified period, then the other parties shall be jointly and severally liable for the specified amount of capital contributions within the agreed scope in accordance with the Shareholders' Agreement. Among which, the total amount of the capital contribution and joint and several liabilities by Certain Subsidiaries of the Company shall not exceed RMB1,746,754,200.

The amount of the capital contributions under the Shareholders' Agreement was determined after arm's length negotiations among the parties, taking into account various factors, including the nature of the business, the demand for project funding and future development plans of the Project Company.

- 3 -

Payment of capital The parties shall pay their respective capital contribution in cash in

contribution: installments in proportion to their respective shareholding in the Project Company:

1. The initial capital contribution is 50% of the total registered capital of the Project Company, which shall be paid within 30 days from the date of formation of the Project Company; and
2. The remaining capital contributions shall be paid gradually before 31 March 2023 according to the project progress and financing needs.

Scope of business: The business scope of the Project Company mainly includes construction of river and lake treatment projects; construction of environmental protection projects; construction, operation, maintenance and management activities of the project of the whole water treatment and clean water provision for counties and districts in Tangshan City (subject to registration with the industrial and commercial authorities).

Board of directors: The board of directors of the Project Company comprises seven directors. Certain Subsidiaries of the Company and Other Project Partners are entitled to nominate four directors and two directors, respectively, and the Project Company shall elect one employee representative director through its employee representative congress. The chairman of the board of directors shall be a director nominated by all parties in rotation.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The purpose of formation of the Project Company is to invest in the PPP project of the whole water treatment and clean water provision for counties and districts in Tangshan City, which mainly involves comprehensive river treatment projects, river and lake water system connection projects, riverside pit and pond reconstruction projects and water conservation and water supply projects. As the sole enterprise within CCCG with urban and rural water treatment as its core business and as the national leading service provider of urban and rural water investment and operation, China Urban and Rural has extensive experience in investment, construction and operation and technology accumulation in urban and rural water field. China Urban and Rural has participated in the evaluation work of user payment and operation and maintenance costs of the project in the early stage, its participation can further improve the project design, facilitate the promotion of the project implementation and enhance the project quality, and is thus beneficial to the realisation of the interests of the Company and its Shareholders as a whole.

- 4 -