China Glass : 2019-06-27DISCLOSEABLE TRANSACTION – NEW FINANCE LEASE ARRANGEMENT

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CHINA GLASS HOLDINGS LIMITED

中 國 玻 璃 控 股 有 限 公 司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 3300)

DISCLOSEABLE TRANSACTION

NEW FINANCE LEASE ARRANGEMENT

The Board would like to announce that on 27 June 2019, Dongtai CNG and the Joint Lessors entered into the New Finance Lease Arrangement, involving the Finance Lease Agreement and the Service Agreements, pursuant to which the Joint Lessors agreed, among other things, to (i) purchase the Leased Asset from Dongtai CNG at a consideration of RMB100 million, and (ii) lease back the Leased Asset to Dongtai CNG for a period of thirty-six (36) months with an aggregate lease payment of approximately RMB106.48 million, which is to be payable by Dongtai CNG to the Joint Lessors in nine (9) instalments.

LISTING RULES IMPLICATIONS

In addition to the New Finance Lease Arrangement, the Group also entered into the Existing Finance Lease Arrangements with the Joint Lessors on 4 September 2018, 18 September 2018, 3 October 2018 and 14 November 2018, respectively. As the Existing Finance Lease Arrangements also involved the leasing of certain machinery and equipment from the Joint Lessors, the consideration of the Existing Finance Lease Arrangements, together with the New Finance Lease Arrangement, are aggregated for the purpose of classification of notifiable transactions in accordance with Rule 14.22 of the Listing Rules.

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Since (i) one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the New Finance Lease Arrangement on a standalone basis exceeds 5% but are all less than 25%; (ii) the Company has complied with the Listing Rules in respect of the requirements for a major transaction contemplated under the Existing Finance Lease Arrangements; and (iii) the transaction contemplated under the New Finance Lease Arrangement, when aggregated with the Existing Finance Lease Arrangements, would not result in a higher transaction classification under Chapter 14 of the Listing Rules, the transaction contemplated under the New Finance Lease Arrangement constitutes a discloseable transaction for the Company under the Listing Rules, which is subject to the notification and announcement requirements but exempt from the shareholders' approval requirement pursuant to Chapter 14 of the Listing Rules.

THE NEW FINANCE LEASE ARRANGEMENT

The Finance Lease Agreement

The principal terms of the Finance Lease Agreement are set out below:

Date: 27 June 2019

Parties:

1. the Joint Lessors; and
2. Dongtai CNG

Purchase of the Leased Asset

As part of the New Finance Lease Arrangement and pursuant to the Finance Lease Agreement, Dongtai CNG agreed to sell, and the Joint Lessors agreed to purchase, the Leased Asset owned by Dongtai CNG at a consideration of RMB100 million (the "Purchase Price"). The Purchase Price was determined after arm's length negotiations between the parties to the Finance Lease Agreement with reference to the book value of the Leased Asset, which is approximately RMB102.87 million.

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Lease back of the Leased Asset

As part of the New Finance Lease Arrangement and pursuant to the Finance Lease Agreement, the Leased Asset will be leased back to Dongtai CNG for a period of thirty- six (36) months.

Lease payments

The aggregate lease payments (the "Lease Payments") payable by Dongtai CNG to the Joint Lessors under the Finance Lease Agreement shall be approximately RMB106.48 million, payable in nine (9) instalments during the Lease Period in accordance with the payment schedule in the Finance Lease Agreement, comprising (i) the principal amount of RMB100 million, which is equal to the Purchase Price; and (ii) interest payments of approximately RMB6.48 million, estimated based on an annual interest rate of approximately 4.75% (determined and may be adjusted with reference to the benchmark interest rate for RMB loans with the same maturity as the Lease Period as promulgated by the People's Bank of China from time to time). As part of the New Finance Lease Arrangement and pursuant to the Service Agreements, Dongtai CNG shall pay the service fee of RMB3.2 million to Ping An Financial Leasing (Tianjing) and the service fee of RMB0.6 million to Ping An Financial Leasing (collectively, the "Service Fees") for the provision of industry competition analysis, business, development, financial planning and management consulting services. The Lease Payments and the Service Fees were determined after arm's length negotiations between the parties to the Finance Lease Agreement and the Service Agreements with reference to the prevailing market rates for finance lease arrangements for similar assets.

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Deposit

As part of the New Finance Lease Arrangement and pursuant to the Finance Lease Agreement, Dongtai CNG shall pay a deposit of RMB9 million to the Joint Lessors (the "Deposit"), which will be deducted directly from the Purchase Price under the Finance Lease Agreement. If Dongtai CNG fails to pay the lease payments or any other liabilities under the Finance Lease Agreement in time, the Joint Lessors are entitled to deduct the corresponding amount from the Deposit and Dongtai CNG shall replenish the deposit immediately. If no Deposit has been deducted, or if the Deposit has been fully replenished, the Deposit may be used to set off the final lease payments.

Ownership of the Leased Asset

The ownership of the Leased Asset under the Finance Lease Agreement will be vested in the Joint Lessors throughout the Lease Period. At the end of the Lease Period and subject to payment by Dongtai CNG of (i) all amounts due under the Finance Lease Agreement; and (ii) a nominal repurchase price of RMB100, the ownership of the Leased Asset will be transferred back to Dongtai CNG.

Early Termination

During the period between the expiry of the first 6 months after the beginning of the Lease Period and the end of the Lease Period, Dongtai CNG may serve a month's written notice to the Joint Lessors requesting for an early termination of the Finance Lease Agreement. Subject to the agreement of the Joint Lessors, Dongtai CNG shall make a payment in full to the Joint Lessors of the following: (i) all of the outstanding Lease Payments and Service Fees that has been due; (ii) the principal portion of the undue Lease Payments and undue Service Fees; (iii) 20% of the interest portion of the undue Lease Payments; and (iv) the nominal repurchase price of RMB100. Upon receipt of all the above payment by the Joint Lessors, the Finance Lease Agreement shall be terminated, upon which the ownership of the Leased Asset shall be transferred to Dongtai CNG.

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THE GUARANTEE BY TRIUMPH GROUP COMPANY

In connection with the New Finance Lease Arrangement, Triumph Group Company agreed to provide corporate guarantee to the Joint Lessors for the liabilities of Dongtai CNG under the New Finance Lease Arrangement.

REASONS FOR AND BENEFITS OF THE NEW FINANCE LEASE ARRANGEMENT

The terms of the New Finance Lease Arrangement, including the Purchase Price, the Lease Payments and the Service Fees, were determined after arm's length negotiations with reference to the average fair market price of similar assets and the prevailing market rates for finance lease arrangements for similar assets. The Directors are of the view that the Group will be able to replenish the operating cash of Dongtai CNG through the New Finance Lease Arrangement and that the terms and conditions of the New Finance Lease Arrangement are on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders as a whole.

INFORMATION ABOUT THE RELEVANT PARTIES

The Company and the Group

The Company is an investment holding company. The Group is one of China's leading manufacturers of flat glass, specialised in the research and development, manufacturing and selling of a variety of building coated glass, energy-efficient and environmental- friendly glass and new-energy products, in which it occupies a leading technological position.

Dongtai CNG is an indirect wholly-owned subsidiary of the Company. Dongtai CNG is a limited liability company established in the PRC and is principally engaged in the business of the production, marketing and distribution of float glass and glass products.

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