China State Construction 'l : Announcements and Notices - Connected Transaction - Formation of Joint Venture with China Southwest Architectural Design and Research Institute Corp., Ltd. for the Jiangmen Project

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3311)

CONNECTED TRANSACTION

Formation of Joint Venture with

中國建築西南設計研究院有限公司

(China Southwest Architectural Design and Research Institute Corp., Ltd.*)

for the Jiangmen Project

On 9 April 2019, CSCIICL (a wholly-owned subsidiary of the Company), CSCIE (a wholly-owned subsidiary of the Company) and CSADRI entered into the Cooperation Agreement, pursuant to which the parties agreed to (a) form Jiangmen JV for the purpose of investing into the Jiangmen Project; and (b) regulate their respective rights and obligations in Jiangmen JV.

CSADRI is a subsidiary of CSCECL, which in turn is the intermediate holding company of the Company. Accordingly, CSADRI is a connected person of the Company and the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios calculated with reference to the Transaction exceed 0.1% but are less than 5%, the Transaction is subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

INTRODUCTION

Recently, CSCIICL (a wholly-owned subsidiary of the Company), CSCIE (a wholly-owned subsidiary of the Company) and CSADRI formed a tender consortium (the "Tender Consortium") and jointly submitted a bid for the Jiangmen Project. The Tender Consortium was awarded the bid for the Jiangmen Project. Pursuant to the tender documents, (i) the Tender Consortium will enter into the PPP Project Agreement with the Relevant Local Government, and (ii)CSCIICL, CSCIE and CSADRI will form Jiangmen JV at the equity interest ratio of 89.99%, 10% and 0.01% respectively for the purpose of investing into the Jiangmen Project.

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Then, CSCIICL, CSCIE, CSADRI and Jiangmen JV will enter into the Succession Agreement with the Relevant Local Government in relation to the Jiangmen Project, pursuant to which Jiangmen JV will take over the rights and obligations of CSCIICL, CSCIE, CSADRI and Jiangmen JV under the PPP Project Agreement.

On 9 April 2019, CSCIICL, CSCIE and CSADRI entered into the Cooperation Agreement, pursuant to which the parties agreed to (a) form Jiangmen JV for the purposes of investing into the Jiangmen Project; and (b) regulate their respective rights and obligations in Jiangmen JV.

COOPERATION AGREEMENT

Date

9 April 2019

Parties

(a)CSCIICL, a wholly-owned subsidiary of the Company;

(b)CSCIE, a wholly-owned subsidiary of the Company; and

(c)CSADRI, a subsidiary of CSCECL, which in turn is the intermediate holding company of the Company.

Formation of Jiangmen JV

CSCIICL, CSCIE and CSADRI shall hold 89.99%, 10% and 0.01% equity interests in Jiangmen JV respectively. Jiangmen JV will be accounted for as a subsidiary of the Group.

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CSCIICL, CSCIE and CSADRI agreed to the following major terms concerning Jiangmen JV in the Cooperation Agreement:

Capital commitment

:

Registered capital of Jiangmen JV

Jiangmen JV shall have a registered capital of RMB 100,000,000 (equivalent to approximately HK$116,279,070), which shall be contributed by the equity interest holders of Jiangmen JV in proportion to their respective equity interests in Jiangmen JV as follows:

CSCIICL	RMB 89,990,000 (equivalent		to
	approximately HK$104,639,535)
CSCIE	RMB10,000,000	(equivalent	to
	approximately HK$11,627,907)
CSADRI	RMB10,000	(equivalent	to
	approximately HK$11,628)

Project Capital of Jiangmen JV

Jiangmen JV shall have a project capital (exclusive of the registered capital of Jiangmen JV) of approximately RMB400,140,000 (equivalent to approximately HK$465,279,070), which shall be contributed by the equity interest holders of Jiangmen JV in proportion to their approximate equity interests in Jiangmen JV as follows:

CSCIICL	RMB360,090,000	(equivalent	to
	approximately HK$418,709,302)
CSCIE	RMB40,010,000	(equivalent	to
	approximately HK$46,523,256)
CSADRI	RMB40,000	(equivalent	to
	approximately HK$46,512)

The respective contribution to the registered capital and the project capital of Jiangmen JV is determined after arm's length negotiations between the parties with reference to the proposed capital requirements of the Jiangmen Project and the parties' interests in Jiangmen JV.

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Performance bond for construction by CSCIICL

		CSCIICL (for itself and CSCIE) and CSADRI shall
		provide a performance bond for construction in the
		sum	of	RMB29,997,000		(equivalent		to
		approximately HK$34,880,233) and RMB3,000
		(equivalent		to	approximately		HK$3,488)
		respectively to the Relevant Local Government
		within 30 business days after signing of the PPP
		Project Agreement in relation to the Jiangmen
		Project. The performance bond shall have effect
		from the effective date of the PPP Project
		Agreement and up to the date on which the
		Jiangmen Project has been completed and the
		performance bond for operation and maintenance
		of the Jiangmen Project having been submitted by
		Jiangmen JV.
Board composition	:	The board of directors of Jiangmen JV shall
		comprise three directors and all of them shall be
		appointed by CSCIICL.
Profit/loss sharing	:	The profits after tax and expenses in respect of
		Jiangmen JV shall be shared by CSCIICL and
		CSCIE in proportion to their respective capital
		contribution in Jiangmen JV. The losses after tax in
		respect of Jiangmen JV shall be shared by
		CSCIICL, CSCIE and CSADRI in proportion to
		and up to their respective capital contribution in
		Jiangmen JV.
Future financing	:	Any additional funding requirements of the
		Jiangmen Project (other than the registered capital
		and the project capital) shall be arranged by
		Jiangmen JV with banks or financial institutions.
Restriction on transfers	:	Neither CSCIICL, CSCIE nor CSADRI may
		transfer or assign all or any part of its equity
		interest in Jiangmen JV without written consent
		from the other parties.

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OWNERSHIP STRUCTURE OF JIANGMEN JV

The chart below shows the ownership structure of Jiangmen JV upon its establishment:

CSCIICLCSCIECSADRI

89.99%	10%	0.01%

Jiangmen

JV

INFORMATION ON JIANGMEN JV AND JIANGMEN PROJECT

Jiangmen JV is a joint venture company to be formed by CSCIICL, CSCIE and CSADRI for the purposes of project financing, investment, survey and design, construction, operation, maintenance and transfer of the Jiangmen Project.

The Jiangmen Project is a Public-Private-Partnership(PPP) project relating to the construction, operation, and establishment of infrastructure facilities in the Siqian Park (Pilot Zone) of the Equipment Manufacturing Park in Xinhui, Jiangmen Municipality, Guangdong Province, the PRC (江門市新會裝備產業園司前園區（啟 動區）基礎配套設施工程PPP項目). The total area of the entire Siqian Park is 10,248 mu (畝) (equivalent to approximately 6,832,000 square metres). The development of the Jiangmen Project will be divided into three phases. The area of the Pilot Zone of the Siqian Park is 4,000 mu (equivalent to approximately 2,666,667 square metres). The Jiangmen Project includes, but not limited to, the improvement and reconstruction of road networks, construction of a sewage treatment plant, sewage pipes and infrastructure facilities, greening, relocation of electricity cables, land levelling and requisition, and reconstruction of drainage pipes network.

Pursuant to the Cooperation Agreement, the construction period and the operation period for the Jiangmen Project shall be 3 years and not more than 15 years (varying with different sub-projects) respectively. The Tender Consortium will enter into the

PPPProject Agreement with the Relevant Local Government, pursuant to which the Tender Consortium will be granted a right for the management and operation of the Jiangmen Project. Then, CSCIICL, CSCIE, CSADRI and Jiangmen JV will enter into the Succession Agreement with the Relevant Local Government in relation to the Jiangmen Project, pursuant to which Jiangmen JV will take over the rights and obligations of CSCIICL, CSCIE, CSADRI and Jiangmen JV under the PPP Project

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