CHINA WATER INDUSTRY GROUP LIMITED 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 the Cayman Islands with limited liability)
(Stock code: 1129)
SUPPLEMENTAL ANNOUNCEMENT
DISCLOSEABLE TRANSACTION FINANCE LEASE ARRANGEMENT
Reference is made to the announcement of the Company dated 11 February 2021 in relation to, among other things, the Finance Lease Arrangement (the "Announcement"). Capitalised terms used in this announcement shall have the same meanings as those defined in the Announcement, unless defined herein or the context requires otherwise.
The Board wishes to provide the Shareholders and potential investors of the Company with additional information in relation to the Existing Finance Leases and Incidental Documentation, which consists of Existing Finance Lease Arrangement I and Existing Finance Lease Arrangement II, as set out below.
EXISTING FINANCE LEASE ARRANGEMENT I
On 27 August 2020, the Existing Lessee, Greengold Leasing and the Vendor entered into the Existing Sale and Purchase Agreement I, pursuant to which Greengold Leasing shall purchase the Leased Assets I from the Vendor for the Purchase Price I of RMB12,000,000 (equivalent to approximately HK$14,400,000).
On the same date, the Existing Lessee and Greengold Leasing entered into the Existing Finance Lease Agreement I, pursuant to which the Greengold Leasing shall lease the Leased Assets I to the Existing Lessee for a lease consideration comprising of principal amount equivalent to the Purchase Price I and the interest accrued thereon at a rate of 6.5% per annum for a lease period of 36 months commencing from the payment date of the Purchase Price I.
As security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I, the Existing Lessee executed the Legal Charge A in favour of Greengold Leasing.
*For identification purpose only 1
As security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and Existing Finance Lease Agreement II, (i) the Existing Lessee procured and the Guarantor 1 executed the Legal Charge B in favour of Greengold Leasing; (ii) the Existing Lessee procured and the Guarantors executed the Guarantee Letter in favour of Greengold Leasing; and (iii) the Existing Lessee executed the Pledge over Account Receivable in favour of Greengold Leasing.
EXISTING SALE AND PURCHASE AGREEMENT I AND EXISTING FINANCE LEASE AGREEMENT I
The principal terms of the Existing Sale and Purchase Agreement I and the Existing Finance Lease Agreement I are as follows:
Date:
27 August 2020
Parties:
(i) the Existing Lessee
(ii) Greengold Leasing
(iii) the Vendor
Sale and lease of the Leased Assets I
Greengold Leasing shall purchase and the Vendor shall sell the Leased Assets I for the Purchase Price I of RMB12,000,000 (equivalent to approximately HK$14,400,000) and Greengold Leasing shall then lease the Leased Assets I to the Existing Lessee for a lease period of 36 months commencing from the payment date of the Purchase Price I.
As the Leased Assets I and the Vendor whom Greengold Leasing shall purchase the Leased Assets I from were determined by the Existing Lessee at its sole discretion, the Existing Lessee shall be liable for its decision.
Each of the Vendor and the Existing Lessee has warranted the marketability of the Leased Assets I. If there are restrictions or prohibitions on the circulation of the Leased Assets I which cause liabilities or costs to be incurred on the part of Greengold Leasing, the Vendor and the Existing Lessee shall compensate Greengold Leasing for such loss in full.
Greengold Leasing shall transfer its rights and benefits as a purchaser under the Existing Sale and Purchase Agreement I, including right to acceptance, right to repair and maintenance service from the Vendor and right to claim, to the Existing Lessee. If the Vendor fails to perform its obligations under the Existing Sale and Purchase Agreement I, the Existing Lessee shall make a claim against the Vendor directly, and Greengold Leasing shall not be held liable but shall assist in pursuing such claim if necessary. If a compensation agreement has been made between the Vendor and the Existing Lessee, notice shall be given to Greengold Leasing within three Business Days and a copy of such agreement shall be delivered to Greengold Leasing for record.
The Leased Assets I principally comprise of containerised generators.
Purchase Price I
Pursuant to the terms and conditions of the Existing Sale and Purchase Agreement I, the full payment of the Purchase Price I for the Leased Assets I in the sum of RMB12,000,000 (equivalent to approximately HK$14,400,000) by Greengold Leasing to the Vendor is conditional upon the following conditions having been fulfilled:
(i) the Existing Finance Lease Agreement I having been executed and become effective;
(ii) Greengold Leasing having received the executed security documents relevant to the Existing Finance Lease Agreement I and other executed legal documents;
(iii) Greengold Leasing having received the payment notice jointly issued by the Vendor and the Existing Lessee under a seal;
(iv) the Existing Lessee having paid Greengold Leasing the Security Deposit I as required under the Existing Finance Lease Agreement I;
(v) Greengold Leasing having received a confirmation from the Existing Lessee on the delivery of the Leased Assets I to the satisfaction of Greengold Leasing;
(vi) Greengold Leasing having received a confirmation from the Existing Lessee on the acceptance of the Leased Assets I to the satisfaction of Greengold Leasing; and
(vii) other conditions expressly requested by Greengold Leasing in the Existing Sale and Purchase Agreement I.
Pursuant to the terms and conditions of the Existing Finance Lease Agreement I, on the date of fulfillment of all the following conditions, Greengold Leasing shall pay the Purchase Price I to the Vendor and be entitled to lease consideration in accordance with the terms therein:
(i) the Existing Finance Lease Agreement I, the Existing Sale and Purchase Agreement I and other relevant legal documents having been duly executed and become effective;
(ii) Greengold Leasing having received the relevant resolutions of the governing body of the Existing Lessee approving the transactions contemplated under the Existing Sale and Purchase Agreement I and the Existing Finance Lease Agreement I, and the authorisation documents of the relevant authorised signatory;
(iii) Greengold Leasing having received the initial expenses including the Security Deposit I (if applicable) from the Existing Lessee in full;
(iv) security documents and security interest contemplated under the Existing Finance Lease Agreement I having become effective, and Greengold Leasing having received evidence that such security documents and security interest have been duly registered if required by law or terms therein;
(v) there being no non-compliance with any terms and conditions of the Existing Finance Lease
Agreement I, the Existing Sale and Purchase Agreement I and other relevant legal documents, nor violation of the representations, warranties and undertakings given by the Existing Lessee thereunder; and
(vi) the terms and conditions under the Existing Finance Lease Agreement I and other terms and conditions requested by Greengold Leasing in writing.
Greengold Leasing may at its sole discretion waive part of the conditions above. In such event, Greengold Leasing is still entitled to demand the Existing Lessee to procure the fulfilment of all conditions above after the commencement of the lease period. If the conditions above have not been satisfied (or waived as the case may be) within 30 days from the date of the Existing Finance Lease Agreement I or such other period Greengold Leasing may agree in writing, the Existing Finance Lease Agreement I and the Existing Sale and Purchase Agreement I shall automatically terminate, and Greengold Leasing shall not be obliged to pay the Purchase Price I to the Vendor.
As at the date of the Announcement, all conditions above under the Existing Sale and Purchase Agreement I and the Existing Finance Lease Agreement I have been satisfied and the Purchase Price I has been fully settled by Greengold Leasing. If the Existing Lessee has already made partial payment of the Purchase Price I or other sums payable to the Vendor, the Vendor shall refund such amounts to the Existing Lessee.
Lease consideration
In consideration of the finance lease service provided by Greengold Leasing under the Existing Finance Lease Agreement I, the Existing Lessee shall pay Greengold Leasing lease consideration comprising of principal amount equivalent to the Purchase Price I and the interest accrued thereon at a rate of 6.5% per annum. The obligations of the Existing Lessee to pay lease consideration and all other payables shall be unconditional, and shall not be subject to any deduction or set-off at the Existing Lessee's sole discretion.
If the Existing Lessee fails to pay the lease consideration and other payables pursuant to the terms and conditions of the Existing Finance Lease Agreement I, it shall pay to Greengold Leasing a default interest on such overdue sum at the rate of 0.06% per day from the overdue date to the date of actual payment in full.
Repayment
The Existing Lessee shall repay Greengold Leasing the principal amount equivalent to the Purchase Price I and interest accrued thereon by 36 monthly installments of approximately RMB367,600 (equivalent to approximately HK$441,100) each.
Security Deposit I
The Existing Lessee shall pay and has paid Greengold Leasing the security deposit in the sum of RMB360,000 (equivalent to approximately HK$432,000) (the "Security Deposit I") in full after the execution of the Existing Finance Lease Agreement I but prior to the payment of the Purchase Price I by Greengold Leasing to the Vendor.
If the Existing Lessee fails to perform its obligations under the Existing Finance Lease Agreement I, Greengold Leasing may forfeit the Security Deposit I to recover any compensation and/or early termination fee, lease consideration whether or not due and payable, relevant costs and expenses incurred or loss arising therefrom.
In the event that the Security Deposit I has been forfeited, Greengold Leasing may by notice to the Existing Lessee demand further security deposit, which the Existing Lessee shall provide within three Business Days from the date of receipt of such notice.
If there is no non-compliance on the part of the Existing Lessee during the term of the Existing Finance Lease Agreement I, the Existing Lessee may apply to Greengold Leasing, and upon obtaining written consent from Greengold Leasing, for the Security Deposit I to be used for the repayment of final instalment(s) of the lease consideration.
Legal ownership and use of the Leased Assets I
The legal ownership of the Leased Assets I shall be transferred from the Vendor to Greengold Leasing upon the delivery of the Leased Assets I to the Existing Lessee or its nominee. The Existing Lessee shall not dispose of, transfer, sublet, mortgage, invest or take other actions which may affect Greengold Leasing's legal ownership of the Leased Assets I.
Provided that there is no non-compliance with the Existing Finance Lease Agreement I on the part of the Existing Lessee during the lease period, Greengold Leasing shall warrant the Existing Lessee's right of use of the Leased Assets I during the lease period.
Risks
The Vendor shall take all risks in relation to the Leased Assets I before delivery, including but not limited to risks arising from the quality, quantity, packaging, transport and insurance of the Leased Assets I.
The Existing Lessee shall take all risks in relation to the Leased Assets I, including risk of damage or loss, upon delivery during the term of the Existing Finance Lease Agreement I. If the Leased Assets I are damaged or lost, the Existing Lessee shall promptly notify Greengold Leasing in writing and, at the discretion of Greengold Leasing, repair or replace the Leased Assets I at the Existing Lessee's own expense. If the Leased Assets I suffer damage or loss which cannot be repaired or replaced, and the Existing Lessee can prove that such damage or loss is not caused by itself, the Existing Finance Lease Agreement I may be early terminated by Greengold Leasing at its discretion.
The payment and other obligations of the Existing Lessee under the Existing Finance Lease Agreement I shall not be affected in the event that the Leased Assets I suffer damage, loss or alike.
Insurance
The Existing Lessee shall keep the Leased Assets I insured from the commencement date of lease period and for the remaining term of the Existing Finance Lease Agreement I, and be responsible for all costs incurred, with Greengold Leasing being named as the first beneficiary.
Early termination
The Existing Lessee may, by serving a 60 days' prior written notice to Greengold Leasing and upon obtaining Greengold Leasing's written consent, terminate the Existing Finance Lease Agreement I early, provided that the relevant lease consideration, compensation (if any) and other payables under the Existing Finance Lease Agreement I have been fully settled.
In the event of early termination, lease consideration and other payments made to Greengold Leasing shall not be refundable and the Existing Lessee shall pay Greengold Leasing the following:
(i) outstanding lease consideration due and payable up to the date of early termination;
(ii) outstanding principal amount not yet due and payable as at the date of early termination;
(iii) early termination fee, being an amount equivalent to 20% of all the interest not yet due and payable as at the date of early termination;
(iv) purchase fee for the Leased Assets I in the sum of RMB1,000 (equivalent to approximately HK$1,200); and
(v) other payables under the Existing Finance Lease Agreement I.
Purchase of the Leased Assets I by the Existing Lessee
Upon early termination or expiry of the lease period, the Existing Lessee shall purchase the Leased Assets I from Greengold Leasing on an "as is" basis in consideration of the purchase fee, which shall be deducted from the Security Deposit I, and the legal ownership of the Leased Assets I shall then be transferred to the Existing Lessee.
Default
If the Existing Lessee defaults, Greengold Leasing shall be entitled to, among others, (i) terminate the Existing Finance Lease Agreement I, (ii) take possession or prohibit the Existing Lessee from using the Leased Assets I, (iii) enforce the security documents, and (iv) claim for compensation for any losses incurred against the Existing Lessee.
If the Existing Lessee defaults and the Leased Assets I are sold or auctioned by Greengold Leasing, all proceeds arising thereof shall first be applied towards the settlement of the costs and expenses incurred from taking possession, transport, custody and repair of the Leased Assets I, followed by the outstanding compensation, outstanding lease consideration whether or not due and payable, purchase fee and any loss arising therefrom; and lastly any other outstanding payables. If such proceeds are insufficient to cover the above amounts, the Existing Lessee shall compensate Greengold Leasing for the shortfall.
EXISTING CONSULTANCY AGREEMENT I
On 27 August 2020, Greengold Leasing and the Existing Lessee also entered into the Existing Consultancy Agreement I, pursuant to which Greengold Leasing shall provide the Existing Lessee consultancy service for a term of one month at a total consultancy fee of RMB216,000 (equivalent to approximately HK$259,200).
The total consultancy fee shall be payable and has been paid by the Existing Lessee to Greengold Leasing within three Business Days from the date of the Existing Consultancy Agreement I.
LEGAL CHARGES, GUARANTEE LETTER AND PLEDGE OVER ACCOUNT RECEIVABLE
As security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I, the Existing Lessee executed the Legal Charge A in favour of Greengold Leasing.
As security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and Existing Finance Lease Agreement II, (i) the Existing Lessee procured and the Guarantor 1 executed the Legal Charge B in favour of Greengold Leasing; (ii) the Existing Lessee procured and the Guarantors executed the Guarantee Letter in favour of Greengold Leasing; and (iii) the Existing Lessee executed the Pledge over Account Receivable in favour of Greengold Leasing.
Legal charges
Pursuant to the terms of the Legal Charge A, Greengold Leasing authorised the Existing Lessee to provide a legal charge over the Leased Assets I in favour of Greengold Leasing for, including but not limited to, the due and punctual performance of the Existing Lessee of its payment obligations under the Existing Finance Lease Agreement I.
Pursuant to the terms of the Legal Charge B, Guarantor 1 shall provide a legal charge over the entire equity interest of the Existing Lessee in favour of Greengold Leasing for, including but not limited to, the due and punctual performance of the Existing Lessee of its payment obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II.
Guarantee Letter
Pursuant to the terms of the Guarantee Letter, the Guarantors shall provide an unconditional guarantee in favour of Greengold Leasing for, including but not limited to, the due and punctual performance of the Existing Lessee of its payment obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II.
Pledge over Account Receivable
Pursuant to the terms of the Pledge over Account Receivable, the Existing Lessee shall provide a pledge over account receivable with a valuation of approximately RMB20,000,000 (equivalent to approximately HK$24,000,000) in favour of Greengold Leasing for, including but not limited to, the due and punctual performance of the Existing Lessee of its payment obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II.
EXISTING FINANCE LEASE ARRANGEMENT II
On 24 September 2020, the Existing Lessee and Greengold Leasing entered into the Existing Sale and Purchase Agreement II, pursuant to which Greengold Leasing shall purchase the Leased Assets II from the Existing Lessee for the Purchase Price II of RMB3,000,000 (equivalent to approximately HK$3,600,000).
On the same date, Existing Lessee and Greengold Leasing entered into the Existing Finance Lease Agreement II, pursuant to which Greengold Leasing shall lease back the Leased Assets II to the Existing Lessee for a lease consideration comprising of principal amount equivalent to the Purchase Price II and the interest accrued thereon at a rate of 6.5% per annum for a lease period of 36 months commencing from the payment date of the Purchase Price II.
As security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement II, the Existing Lessee executed the Legal Charge C in favour of Greengold Leasing.
As disclosed above, as security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II, (i) the Existing Lessee procured and the Guarantor 1 executed the Legal Charge B in favour of Greengold Leasing; (ii) the Existing Lessee procured and the Guarantors executed the Guarantee Letter in favour of Greengold Leasing; and (iii) the Existing Lessee executed the Pledge over Account Receivable in favour of Greengold Leasing.
EXISTING SALE AND PURCHASE AGREEMENT II AND EXISTING FINANCE LEASE AGREEMENT II
The principal terms of the Existing Sale and Purchase Agreement II and the Existing Finance Lease Agreement II are as follows:
Date:
24 September 2020
Parties:
(i) the Existing Lessee
(ii) Greengold Leasing
Sale and leaseback of the Leased Assets II
Greengold Leasing shall purchase and the Existing Lessee shall sell the Leased Assets II for the Purchase Price II of RMB3,000,000 (equivalent to approximately HK$3,600,000) and Greengold Leasing shall then lease back the Leased Assets II to the Existing Lessee for a lease period of 36 months commencing from the payment date of the Purchase Price II.
The Leased Assets II principally comprise of high and low voltage power distribution system and substation system equipment as well as pretreatment system.
Purchase Price II
Pursuant to the terms and conditions of the Existing Sale and Purchase Agreement II, the full payment of the Purchase Price II for the Leased Assets II in the sum of RMB3,000,000 (equivalent to approximately HK$3,600,000) shall be made by Greengold Leasing to the Existing Lessee on the date of fulfillment (or waiver by Greengold Leasing at its discretion) of all the following conditions:
(i) Greengold Leasing having received the payment notice issued by the Existing Lessee in the form and substance agreed by Greengold Leasing;
(ii) Greengold Leasing having received a sealed copy of (a) the latest business license, articles of association and authorisation for commencement of business (if applicable) of the Existing Lessee and (b) internal approval document(s) and government approval(s) (if applicable) in relation to the purchase of the Leased Assets II;
(iii) there being no non-compliance with any terms and conditions of the Existing Sale and Purchase Agreement II, and the representations, warranties or undertakings given by the Existing Lessee thereunder remain true, accurate and in force;
(iv) there being no damage, loss or encumbrance on the Leased Assets II;
(v) there being no adverse change on the Existing Lessee, which Greengold Leasing may reasonably consider that the rights and benefits under the Existing Sale and Purchase Agreement II and the Existing Finance Lease Agreement II may be materially affected therefrom;
(vi) save for the payment of Purchase Price II by Greengold Leasing to the Existing Lessee, conditions precedent under the Existing Finance Lease Agreement II for Greengold Leasing's entitlement to lease consideration having been fulfilled; and
(vii) Greengold Leasing having received the relevant original sale and purchase agreement, evidence of payment of purchase price, insurance policy and insurance contract from the Existing Lessee in respect of the Leased Assets II.
Greengold Leasing may at its sole discretion waive any condition(s) above. If the conditions above have not been fulfilled (or waived as the case may be) (for reasons other than Greengold Leasing) within one month from the date of the Existing Sale and Purchase Agreement II, Greengold Leasing may terminate the Existing Sale and Purchase Agreement II and the Existing Finance Lease Agreement II and seek compensation from the Existing Lessee for any loss arising therefrom.
As at the date of the Announcement, all conditions above under the Existing Sale and Purchase Agreement II have been satisfied (or waived as the case may be) and the Purchase Price II has been fully settled by Greengold Leasing.
Lease consideration
In consideration of the finance lease service provided by Greengold Leasing under the Existing Finance Lease Agreement II, the Existing Lessee shall pay Greengold Leasing lease consideration comprising of principal amount equivalent to the Purchase Price II and the interest accrued thereon at a rate of 6.5% per annum. The obligations of the Existing Lessee to pay lease consideration and all other payables shall be unconditional, and shall not be subject to any deduction or set-off at the Existing Lessee's sole discretion.
If the Existing Lessee fails to pay the lease consideration and other payables pursuant to the terms and conditions of the Existing Finance Lease Agreement II, it shall pay to Greengold Leasing a default interest on such overdue sum at a rate of 0.06% per day from the overdue date to the date of actual payment in full.
Pursuant to the terms and conditions of the Existing Finance Lease Agreement II, Greengold Leasing shall be entitled to lease consideration in accordance with the terms therein commencing from the date on which the following conditions have been fulfilled:
(i) the Existing Finance Lease Agreement II, the Existing Sale and Purchase Agreement II and other relevant legal documents having been duly executed and become effective;
(ii) Greengold Leasing having received the relevant resolutions of the governing body of the Existing Lessee approving the transactions contemplated under the Existing Finance Lease Agreement II and the authorisation documents of the relevant authorised signatory;
(iii) Greengold Leasing having received the initial expenses including the Security Deposit II (if applicable) from the Existing Lessee in full;
(iv) security documents and security interest contemplated under the Existing Finance Lease
Agreement II having become effective, and the Existing Lessee shall assist Greengold Leasing in completing the registration thereof;
(v) Greengold Leasing having received evidence showing the Existing Lessee's legal ownership of the Leased Assets II and other necessary document(s) from the Existing Lessee;
(vi) there being no non-compliance with any terms and conditions of the Existing Finance Lease Agreement II, the Existing Sale and Purchase Agreement II and other relevant legal documents, nor violation of the representations, warranties and undertakings given by the Existing Lessee thereunder;
(vii) conditions precedent under the Existing Sale and Purchase Agreement II for the payment of Purchase Price II having been fulfilled;
(viii) the Purchase Price II having been paid by Greengold Leasing to the Existing Lessee;
(ix) the Existing Lessee having insured the Leased Assets II as required under the Existing Finance Lease Agreement II and delivered the relevant original insurance policy and insurance contract in respect of the Leased Assets II to Greengold Leasing; and
(x) the terms and conditions under the Existing Finance Lease Agreement II and other terms and conditions requested by Greengold Leasing.
Greengold Leasing may at its sole discretion waive part of the conditions above (save for the payment of the Purchase Price II set out in condition (viii)). In such event, Greengold Leasing is still entitled to demand the Existing Lessee to procure the fulfillment of all conditions above after the commencement of the lease period.
As at the date of the Announcement, all conditions precedent under the Existing Finance Lease Agreement II set out above have been satisfied.
Repayment
The Existing Lessee shall repay Greengold Leasing the principal amount equivalent to the Purchase Price II and interest accrued thereon by 36 monthly installments of approximately RMB91,900 (equivalent to approximately HK$110,300) each.
Security Deposit II
The Existing Lessee shall pay and has paid Greengold Leasing the security deposit in the sum of RMB90,000 (equivalent to approximately HK$108,000) (the "Security Deposit II") in full on the commencement date of the lease period.
If the Existing Lessee fails to perform its obligations under the Existing Finance Lease Agreement II, Greengold Leasing may forfeit the Security Deposit II to recover any compensation and/or early termination fee, lease consideration whether or not due and payable, relevant costs and expenses incurred or direct financial loss on the part of Greengold Leasing arising therefrom.
In the event that the Security Deposit II has been forfeited, Greengold Leasing may by notice to the Existing Lessee demand further security deposit, which the Existing Lessee shall provide within three Business Days from the date of receipt of such notice.
If there is no non-compliance on the part of the Existing Lessee during the term of the Existing Finance Lease Agreement II, the Existing Lessee may apply to Greengold Leasing, and upon obtaining written consent from Greengold Leasing, for the Security Deposit II to be used for the repayment of final instalment(s) of the lease consideration.
Legal ownership and use of the Leased Assets II
The legal ownership of the Leased Assets II shall be transferred from the Existing Lessee to Greengold Leasing on the date of payment of the Purchase Price II, and delivery of the Leased Assets II to the Existing Lessee on an "as is" basis shall be deemed to be completed upon such transfer of legal ownership. The Existing Lessee shall not dispose of, transfer, sublet, mortgage, invest or take other actions which may affect Greengold Leasing's legal ownership of the Leased Assets II.
Provided that there is no non-compliance with the Existing Finance Lease Agreement II on the part of the Existing Lessee during the lease period, Greengold Leasing shall warrant the Existing Lessee's right of use of the Leased Assets II during the lease period.
Risks
The Existing Lessee shall take all risks in relation to the Leased Assets II, including risk of damage or loss, upon delivery during the term of the Existing Finance Lease Agreement II. If the Leased Assets II are damaged or lost, the Existing Lessee shall promptly notify Greengold Leasing in writing and, at the discretion of Greengold Leasing, repair or replace the Leased Assets II at the Existing Lessee's own expense. If the Leased Assets II suffer damage or loss which cannot be repaired or replaced, and the Existing Lessee can prove that such damage or loss is not caused by itself, the Existing Finance Lease Agreement II may be early terminated by Greengold Leasing at its discretion.
The payment and other obligations of the Existing Lessee under the Existing Finance Lease Agreement II shall not be affected in the event that the Leased Assets II suffer damage, loss or alike.
Insurance
The Existing Lessee shall keep the Leased Assets II insured during the term of the Existing Finance Lease Agreement II, and be responsible for all costs incurred, with Greengold Leasing being named as the first beneficiary.
Early termination
The Existing Lessee may, by serving a 60 days' prior written notice to Greengold Leasing and upon obtaining Greengold Leasing's written consent, terminate the Existing Finance Lease Agreement II early, provided that the relevant lease consideration, compensation (if any) and other payables under the Existing Finance Lease Agreement II have been fully settled.
In the event of early termination, lease consideration and other payments made to Greengold Leasing shall not be refundable and the Existing Lessee shall pay Greengold Leasing the following:
(i) outstanding lease consideration due and payable up to the date of early termination;
(ii) outstanding principal amount not yet due and payable as at the date of early termination;
(iii) early termination fee, being an amount equivalent to 20% of all the interest not yet due and payable as at the date of early termination;
(iv) buyback fee for the Leased Assets II in the sum of RMB1,000 (equivalent to approximately HK$1,200); and
(v) other payables under the Existing Finance Lease Agreement II.
Buyback of Leased Assets II by Existing Lessee
Upon early termination or expiry of the lease period, the Existing Lessee shall buyback the Leased Assets II from Greengold Leasing on an "as is" basis in consideration of the buyback fee, which shall be deducted from the Security Deposit II, and the legal ownership of the Leased Assets II shall then be transferred to the Existing Lessee.
Default
If the Existing Lessee defaults, Greengold Leasing shall be entitled to, among others, (i) terminate the Existing Finance Lease Agreement II, (ii) take possession or prohibit the Existing Lessee from using the Leased Assets II, (iii) enforce the security documents, and (iv) claim for compensation for any losses incurred against the Existing Lessee.
If the Existing Lessee defaults and the Leased Assets II are sold or auctioned by Greengold Leasing, all proceeds arising thereof shall first be applied towards the settlement of the costs and expenses incurred from taking possession, transport, custody and repair of the Leased Assets II, followed by the outstanding compensation, outstanding lease consideration whether or not due and payable, buyback fee and any direct financial loss on the part of Greengold Leasing arising therefrom; and lastly any other outstanding payables. If such proceeds are insufficient to cover the above amounts, the Existing Lessee shall compensate Greengold Leasing for the shortfall.
EXISTING CONSULTANCY AGREEMENT II
On 28 September 2020, Greengold Leasing and the Existing Lessee also entered into the Existing Consultancy Agreement II, pursuant to which Greengold Leasing shall provide the Existing Lessee consultancy service for a term of one month at a total consultancy fee of RMB54,000 (equivalent to approximately HK$64,800).
The total consultancy fee shall be payable and has been paid by the Existing Lessee to Greengold Leasing within three Business Days from the date of the Existing Consultancy Agreement II.
LEGAL CHARGES, GUARANTEE LETTER AND PLEDGE OVER ACCOUNT RECEIVABLE
As security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement II, the Existing Lessee executed the Legal Charge C in favour of Greengold Leasing.
Pursuant to the terms of the Legal Charge C, Greengold Leasing authorised the Existing Lessee to provide a legal charge over the Leased Assets II in favour of Greengold Leasing for, including but not limited to, the due and punctual performance of the Existing Lessee of its payment obligations under the Existing Finance Lease Agreement II.
As disclosed above, as security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II, (i) the Existing Lessee procured and the Guarantor 1 executed the Legal Charge B in favour of Greengold Leasing; (ii) the Existing Lessee procured and the Guarantors executed the Guarantee Letter in favour of Greengold Leasing; and (iii) the Existing Lessee executed a Pledge over Account Receivable in favour of Greengold Leasing.
INFORMATION ON GREENGOLD LEASING AND THE VENDOR
Greengold Leasing is a company established in the PRC with limited liability and principally engaged in the provision of finance, including through finance leasing, with a focus on environmental protection projects in the PRC. It is a subsidiary of China Investments Holdings Limited, being a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 132).
The Vendor is a company established in the PRC with limited liability and principally engaged in the provision of mechanical and electrical equipment installation service; retail and wholesale trading of commodities (except for commodities subject to permit or approval); import and export of technology and goods (except for franchised or specially controlled commodities); and property leasing. As at the date of this announcement, the Vendor is owned as to 65% by Mr. Lai Jiaxiang* and 35% by Mr. Lai Zhixiong*.
To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, each of Greengold Leasing and the Vendor and their respective ultimate beneficial owner(s) is an Independent Third Party.
REMEDIAL MEASURES
As disclosed in the Announcement, the applicable percentage ratios for the transactions contemplated under the Existing Finance Leases and Incidental Documentation were less than 5% and hence exempt from the disclosure requirements under Chapter 14 of the Listing Rules.
The Company is aware that the Announcement in respect of the Finance Lease and the Incidental Documentation entered into by the Group on 7 February 2021 constituted a late announcement under the Listing Rules. The Company regrets the delay and omission of such disclosure which only came to the senior management's attention a few days later.
At the material time when the Finance Lease and the Incidental Documentation were entered into, the Lessees were in the opinion that such Finance Lease and Incidental Documentation were normal commercial finance agreement, and their terms were on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, the Lessees were not aware of the implications of the Finance Lease Arrangement under the Listing Rules, and did not draw the attention of the Directors to such transaction particularly.
Once the Directors became aware of the misunderstanding, the Company has taken steps to comply with the Listing Rules, including but not limited to, the publication of the Announcement.
To avoid occurrence of similar non-compliance of the Listing Rules in the future, the Company has/ will implement(ed) the following measures and procedures:
1. the Directors have instructed the management to take all necessary measures to ascertain all the finance lease arrangement(s) of the Group and ensure such transaction(s) are in full compliance with the Listing Rules;
2. the Company will arrange to (i) hold regular departmental meetings to regularly monitor notifiable transactions, (ii) strengthen the reporting system between departments and directors, and (iii) provide more guidance materials and trainings on compliance matters to the Directors, senior management and the financial staff of the Group on a regular basis to increase their awareness and knowledge of the Listing Rules; and
3. the Company will work more closely with its legal advisers on compliance issues.
It is always the intention of the Company to fully comply with the Listing Rules. The Board and senior management of the Group are now fully aware of the relevant requirements under the Listing Rules and will ensure that the Company will comply with the relevant Listing Rules and to avoid the recurrence of similar events in the future.
The additional information set out above does not affect other information contained in the Announcement and the contents in the Announcement remain unchanged.
DEFINITIONS
"Business Day(s)" | any day(s) other than a Saturday, Sunday or statutory holiday in |
the PRC | |
"Existing Consultancy | the consultancy agreement dated 27 August 2020 and entered into |
Agreement I" | between Greengold Leasing and the Existing Lessee in relation to |
the provision of consultancy services by Greengold Leasing to the | |
Existing Lessee | |
"Existing Consultancy | the consultancy agreement dated 28 September 2020 and entered |
Agreement II" | into between Greengold Leasing and the Existing Lessee in |
relation to the provision of consultancy services by Greengold | |
Leasing to the Existing Lessee | |
15 |
"Existing Finance | the finance lease agreements dated 27 August 2020 and 24 |
Leases and Incidental | September 2020 entered into between Greengold Leasing and the |
Documentation" | Existing Lessee and incidental documentation |
"Existing Finance Lease | the finance lease agreement dated 27 August 2020 and entered |
Agreement I" | into between the Existing Lessee and Greengold Leasing which |
sets out the rights and obligations of the Existing Lessee and | |
Greengold Leasing in relation to the Existing Finance Lease | |
Arrangement I | |
"Existing Finance Lease | the finance lease agreement dated 24 September 2020 and entered |
Agreement II" | into between the Existing Lessee and Greengold Leasing which |
sets out the rights and obligations of the Existing Lessee and | |
Greengold Leasing in relation to the Existing Finance Lease | |
Arrangement II | |
"Existing Finance Lease | transactions contemplated under the Existing Finance Lease |
Arrangement I" | Agreement I, the Existing Sale and Purchase Agreement I, the |
Existing Consultancy Agreement I, the Guarantee Letter, the | |
Legal Charge A, the Legal Charge B and the Pledge over Account | |
Receivable | |
"Existing Finance Lease | transactions contemplated under the Existing Finance Lease |
Arrangement II" | Agreement II, the Existing Sale and Purchase Agreement II, the |
Existing Consultancy Agreement II, the Guarantee Letter, the | |
Legal Charge B, the Legal Charge C and the Pledge over Account | |
Receivable | |
"Existing Lessee" | Zhuzhou New China Water Environmental Technology Ltd.*（株 |
洲新中水環保科技有限公司）, a company established in the | |
PRC with limited liability, which is a subsidiary of the Company | |
"Existing Sale and | the sale and purchase agreement dated 27 August 2020 and |
Purchase Agreement I" | entered into amongst the Existing Lessee, Greengold Leasing |
and the Vendor in relation to the sale and purchase of the Leased | |
Assets I | |
"Existing Sale and | the sale and purchase agreement dated 24 September 2020 and |
Purchase Agreement II" | entered into between the Existing Lessee and Greengold Leasing |
in relation to the sale and purchase of the Leased Assets II | |
"Greengold Leasing" | Canton Greengold Financial Leasing Ltd.* （廣東綠金融資租賃 |
有限公司） (formerly known as Canton Risen Financial Leasing | |
Co., Ltd.* （廣東粵盛科融資租賃有限公司） ), a company | |
established in the PRC with limited liability and a subsidiary of | |
China Investments Holdings Limited（中國興業控股有限公司）, | |
being a company incorporated in Bermuda with limited liability, | |
the shares of which are listed on the Main Board of the Stock | |
Exchange (Stock Code: 132) | |
16 |
"Guarantee Letter"
a guarantee letter executed by the Guarantors in favour of Greengold Leasing as security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II
"Guarantor 1"
"Guarantor 2"
New China Water (Nanjing) Renewable Resources Investment
Company Limited* （新中水（南京）再生資源投資有限公司） , a company established in the PRC with limited liability, which is a subsidiary of the Company
Shenzhen City New China Water Environmental Technology Limited* （深圳市新中水環保科技有限公司） , a company established in the PRC with limited liability, which is a subsidiary of the Company
"Guarantors"
collectively, Guarantor 1 and Guarantor 2
"Leased Assets I"
subject leased assets under the Existing Finance Lease Arrangement I, which principally comprise of containerised generators
"Leased Assets II"
subject leased assets under the Existing Finance Lease Arrangement II, which principally comprise of high and low voltage power distribution system and substation system equipment as well as pretreatment system
"Legal Charge A"
a legal charge over the Leased Assets I executed by Existing Lessee in favour of Greengold Leasing as security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I
"Legal Charge B"
a legal charge over the entire equity interest of the Existing Lessee executed by Guarantor 1 in favour of Greengold Leasing as security for the the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II
"Legal Charge C"
a legal charge over the Leased Assets II executed by the Existing Lessee in favour of Greengold Leasing as security for the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement II
"Pledge over Account
Receivable"
a pledge over account receivable executed by the Existing Lessee in favour of Greengold Leasing as security for the the due and punctual performance of the Existing Lessee's obligations under the Existing Finance Lease Agreement I and the Existing Finance Lease Agreement II
"Purchase Price I"
an amount of RMB12,000,000 (equivalent to approximately HK$14,400,000), being the purchase price for the Leased Assets I paid by Greengold Leasing to the Vendor
"Purchase Price II"
an amount of RMB3,000,000 (equivalent to approximately HK$3,600,000), being the purchase price for the Leased Assets II paid by Greengold Leasing to the Existing Lessee
"Security Deposit I"
has the meaning ascribed thereto in the paragraph headed "Security Deposit I" under the section headed "Existing Sale and Purchase Agreement I and Existing Finance Lease Agreement I" in this announcement
"Security Deposit II"
has the meaning ascribed thereto in the paragraph headed "Security Deposit II" under the section headed "Existing Sale and Purchase Agreement II and Existing Finance Lease Agreement II" in this announcement
"Vendor"
Guangzhou Shenfa Electromechanical Industry Development
Company Limited* （廣州市深發機電實業發展有限公司） , a company established in the PRC with limited liability, which is owned as to 65% by Mr. Lai Jiaxiang* （賴家祥） and 35% by Mr. Lai Zhixiong* （賴志雄） and is an Independent Third Party
*the English translation of Chinese names or words in this announcement, where indicated, is included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words
For the purpose of this announcement, unless otherwise indicated, conversion of Renminbi into Hong Kong dollars is calculated at the approximate exchange rate of RMB1.00 to HK$1.20. This exchange rate is adopted for the purpose of illustration purpose only and does not constitute a representation that any amounts have been, could have been, or may be, exchanged at this rate or any other rates at all.
By order of the Board
China Water Industry Group Limited
Mr. Zhu Yongjun
Chairman and Executive Director
Hong Kong, 2 March 2021
As at the date of this announcement, the Board comprises Mr. Zhu Yongjun (Chairman), Mr. Zhong Wei Guang (COO), Mr. Lin Yue Hui, Ms. Chu Yin Yin, Georgiana and Ms. Deng Xiao Ting, all being executive Directors, Mr. Ho Chi Ho being a non-executive Director and Mr. Wong Siu Keung, Joe, Ms. Qiu Na and Mr. Lam Cheung Shing, Richard, all being independent non-executive Directors.
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China Water Industry Group Limited published this content on 02 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 March 2021 11:58:01 UTC.
