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: 688)
CONTINUING CONNECTED TRANSACTIONS
-RENEWAL OF MASTER ENGAGEMENT AGREEMENT
WITH
中國建築股份有限公司
(CHINA STATE CONSTRUCTION ENGINEERING CORPORATION LIMITED)
Reference is made to the announcements of the Company dated 16 May 2016 and 17 December 2018 relating to the Previous Master Engagement Agreement for the engagement of the CSCECL Group as construction contractor of the Construction Related Services in Mainland China and the Supplemental Agreement for the revision of the annual caps under the Previous Master Engagement Agreement respectively.
The Previous Master Engagement Agreement and the Supplemental Agreement will expire on 30 June 2019. The Directors expect that the Group will continue to invite the CSCECL Group to participate in competitive tender for the Group's Construction Related Services in Mainland China from time to time. In this connection, on 1 April 2019, the Company and CSCECL entered into the 2019 Master Engagement Agreement for a term of three years commencing from 1 July 2019 and ending on 30 June 2022.
CSCECL is the intermediate holding company of the Company. Accordingly, members of the CSCECL Group are connected persons of the Company. The transactions contemplated under the 2019 Master Engagement Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
Since the applicable percentage ratios as defined under the Listing Rules calculated for the Company in respect of the maximum total contract sum that may be awarded to the CSCECL Group for each year/period under the 2019 Master Engagement Agreement, i.e. the Cap, exceed 5%, the Continuing Connected Transactions are subject to the annual review, reporting, announcement and independent shareholders' approval requirements. Voting at the GM will be conducted by poll and CSCECL and its associates will abstain from voting at the GM.
An Independent Board Committee comprising all the independent non-executive directors of the Company has been formed to advise the Independent Shareholders in respect of the 2019 Master Engagement Agreement (together with the Caps) and the Continuing Connected Transactions. Red Sun has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this connection.
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A circular containing, among other things, particulars of the 2019 Master Engagement Agreement (together with the Caps), the recommendation of the Independent Board Committee, a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders and a notice convening the GM are expected to be despatched to the Shareholders on or before 24 April 2019 in accordance with the Listing Rules.
RENEWAL OF CONTINUING CONNECTED TRANSACTIONS
Reference is made to the announcements of the Company dated 16 May 2016 and 17 December 2018.
On 16 May 2016, the Company and CSCECL entered into the Previous Master Engagement Agreement, pursuant to which the Group may engage the CSCECL Group as construction contractor for the Construction Related Services in Mainland China, subject to the revised annual caps under the Supplemental Agreement dated 17 December 2018.
As the Previous Master Engagement Agreement and the Supplemental Agreement will expire on 30 June 2019 and the Directors expect that the Group will continue to invite the CSCECL Group to participate in competitive tender for the Group's Construction Related Services in Mainland China from time to time, on 1 April 2019, the Company and CSCECL entered into the 2019 Master Engagement Agreement for a term of three years commencing from 1 July 2019 and ending on 30 June 2022.
2019 MASTER ENGAGEMENT AGREEMENT
Date
1 April 2019
Parties
1.The Company; and
2.CSCECL
Condition Precedent
The 2019 Master Engagement Agreement is conditional upon the Company having obtained the approval of the Independent Shareholders at the GM by way of poll approving, among other things, the 2019 Master Engagement Agreement and the Continuing Connected Transactions.
Subject Matter
The parties agreed that, for a term of three years commencing from 1 July 2019 and ending on
30 June 2022:
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1.the CSCECL Group may tender for the Group's Construction Related Services in Mainland China in accordance with the tendering procedures of the Group which may be varied, amended, replaced or supplemented from time to time and on the same and normal terms as offered to other independent third party construction contractors;
2.if any contract is granted in favour of the CSCECL Group as a result of the above tender, the CSCECL Group may act as contractor providing the Construction Related Services to the Group in Mainland China based on the terms of the successful tender provided that the maximum total contract sum that may be awarded by the Group to the CSCECL Group shall not exceed the corresponding Cap set out as below:
For the period | |||
between 1 July 2019 | For the period from | ||
and 31 December | For the year ending | For the year ending | 1 January 2022 to |
2019 | 31 December 2020 | 31 December 2021 | 30 June 2022 |
RMB6,206 million | RMB19,768 million | RMB16,121 million | RMB8,473 million |
(approximately | (approximately | (approximately | (approximately |
HK$7,133 million) | HK$22,722 million) | HK$18,530 million) | HK$9,739 million) |
3.the fees payable by the Group to the CSCECL Group will be settled by the Group's internal resources pursuant to the payment terms set out in the tender documents for the relevant Construction Related Services contracts.
Pricing Basis
As a general principle, the prices and terms of the contracts shall be determined in the ordinary course of business, on normal commercial terms, negotiated on an arm's length basis and at prices and on terms no more favourable than those awarded to the independent third party contractors of the Group.
The Group will normally invite construction contractors to participate in competitive tender for the Construction Related Services in accordance with its tendering procedures.
In conducting the Group's invitations to tender, review of tenders and tender selection, the participation of the members of the CSCECL Group in the tender process shall not in any way affect the Group's tendering procedures, contract terms and selection principles. The members of the CSCECL Group shall be treated in the same way as independent third parties.
The price and terms of the tenders awarded by the Group to the CSCECL Group are subject to the standard and systematic tender procedures maintained by the Group, which apply to tenders submitted by both connected persons and independent third parties to ensure that the price and terms of the tender awarded by the Group to the CSCECL Group are no more favourable than those awarded to independent third parties.
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1.Invitations to Tender
(i)The Group has established its own list of approved contractors (which is subject to periodic review and update by its management). All contractors invited to submit tenders for the Group's projects are selected from such list. Contractors in the list include those contractors with or without prior working history with the Group. Contractors with working history with the Group will be subject to suitability assessment following completion of their works in the Group's project. A contractor can be retained in the list if the result of such assessment is satisfactory to the Group. The Group will remove a contractor from the list if it fails to meet the minimum criteria for retention. If a contractor has no prior working history with the Group, the contractor will be subject to qualification evaluation and review to ascertain if it is suitable for including the contractor in the list.
(ii)The number of tenders to be invited: for every tender for contract of the Construction Related Services, not less than three tenders will be invited.
(iii)Selection of contractors to be invited to tender: the suitability of a contractor is assessed with reference to selection criteria including but not limited to the contractor's qualification grade, financial ability, technical capability, cooperation record, project management ability, quality of work and business management capability. Depending on the estimated value of the relevant construction contract, the person in charge and line managers of the regional office or the district office shall conduct the vetting process to ascertain certain contractors to be invited to tender, following which the letter of invitation to tender will be issued.
2.Tendering and Selection of Bids
(i)Tendering: tender submission with price quotations shall be sealed and submitted in a manner as prescribed by the Group. The Group will collect all tender submission submitted and make registration.
(ii)Opening of tenders: tenders submitted will be opened in the presence of an officer from a non-tendering related department of the regional office of the members of the Group (such as finance department). The supervising officer will execute the tendering documents which will be confirmed and signed by all parties present at the opening.
(iii)Selection of tenders: based on the Group's established system of tendering, the winning bid will usually be the one conforming to the technical requirements with a reasonable and minimum price offered. The selection of tender is determined collectively by the decision-making body in a meeting where contents of the proposed tender, and the contractor's capability and risk of default are given full consideration. The relevant letter of award will be issued once the final decision is made in the meeting of the decision-making body based on the final tender amount.
3.To ensure that the tender exercise is open and fair, professional consultants are usually employed to prepare an evaluation report to review the proposed tender and recommend contractor for the relevant contract.
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Tendering Procedure
Preparation of tender invitation
documents
All contractors invited to tender
are selected from the list of
approved contractors
Review of tender invitation documents and ascertaining contractors to be invited to tender
Invitation to tender
Submission of tenders with price quotation
Opening of tenders
Preparation of evaluation report
Selection of tender
Issuance of letter of award
Independent non-executive directors of the Company will review the Continuing Connected Transactions to ensure that they are entered into through arm's length negotiations and on normal commercial terms, are fair and reasonable, and are carried out pursuant to the terms of such Continuing Connected Transactions. The auditor of the Company would also conduct an annual review on the pricing and the Caps under the 2019 Master Engagement Agreement. The Company will facilitate the provision of necessary information to its independent non- executive directors and auditor for the purpose of such review.
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China Overseas Land & Investment Limited published this content on 01 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 01 April 2019 09:31:14 UTC