CNQC International : DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF EQUITY INTERESTS OF A SUBSIDIARY

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CNQC INTERNATIONAL HOLDINGS LIMITED

青 建 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(STOCK CODE: 1240)

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF EQUITY INTERESTS OF A SUBSIDIARY

THE SALE AND PURCHASE AGREEMENT

On 12 May 2021, Qingjian Realty (an indirect wholly-owned subsidiary of the Company), OSS Property and ZACD (BBW6) (as the Vendors) and the Purchaser entered into the Sale and Purchase Agreement, pursuant to which the Vendors have conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, (a) the Sale Shares, representing the entire issued share capital of the Target Company, at the Sale Shares Consideration, and (b) the Shareholders' Loan at the Shareholders' Loan Consideration. The Vendors will, in effect, dispose of the Property through the Disposal.

Upon Completion, the Target Company will cease to be a subsidiary of the Company and its results will no longer be consolidated into the consolidated financial statements of the Group.

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios in respect of the Disposal under the Sale and Purchase Agreement exceed 5% but are less than 25%, the Disposal constitutes a discloseable transaction for the Company and is therefore subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

Further, as ZACD (BBW6) is an associate of Mr. Yeo Choon Guan and Ms. Sim Kain Kain, who are directors of certain non-wholly owned subsidiaries of the Company, ZACD (BBW6) is therefore a connected person of the Company at the subsidiary level under Chapter 14A of the Listing Rules. Accordingly, the Disposal also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

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As (i) ZACD (BBW6) is a connected person of the Company at the subsidiary level; (ii) the Board has approved the Disposal; and (iii) the independent non-executive Directors have confirmed that the Disposal is on normal commercial terms and its terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole, the Disposal is subject to the reporting and announcement requirements, and is exempt from the circular, independent financial advice and independent shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

The Disposal is subject to the satisfaction or waiver of conditions precedent. There is no assurance that the Disposal will take place or as to when it may take place. Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company.

INTRODUCTION

On 12 May 2021, Qingjian Realty (an indirect wholly-owned subsidiary of the Company), OSS Property and ZACD (BBW6) (as the Vendors) and the Purchaser entered into the Sale and Purchase Agreement, pursuant to which the Vendors have conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, (a) the Sale Shares, representing the entire issued share capital of the Target Company, at the Sale Shares Consideration, and (b) the Shareholders' Loan at the Shareholders' Loan Consideration. The Vendors will, in effect, dispose of the Property through the Disposal.

THE SALE AND PURCHASE AGREEMENT

The principal terms of the Sale and Purchase Agreement are set out as below:

Date

12 May 2021

Parties

1. Qingjian Realty (as one of the Vendors);
2. OSS Property (as one of the Vendors);
3. ZACD (BBW6) (as one of the Vendors); and
4. the Purchaser.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, OSS Property (other than being co-owner of the equity interests of the Target Company with Qingjian Realty) and the Purchaser and their respective ultimate beneficial owner(s) are Independent Third Parties. ZACD (BBW6) is a connected person of the Company at the subsidiary level by virtue of being an associate of Mr. Yeo Choon Guan and Ms. Sim Kain Kain, who are directors of certain non-wholly owned subsidiaries of the Company.

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Assets to be disposed

Subject to the terms and conditions of the Sale and Purchase Agreement, the Vendors have conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, (a) the Sale Shares, representing the entire issued share capital of the Target Company, at the Sale Shares Consideration, and (b) the Shareholders' Loan at the Shareholders' Loan Consideration, free from all encumbrances and with all rights attached thereto.

The Vendors will, in effect, dispose of the Property through the Disposal. For further details of the Property, please refer to the section headed ''Information on the Target Company'' in this announcement.

Consideration

The Sale Shares Consideration shall be equal to the adjusted net asset value of the Target Company as set out in the Pre-completion NAV Statement which shall be no less than SGD27,795,196 (subject to post-Completion adjustment) and the Shareholders' Loan Consideration shall be equal to the outstanding balance amount of the Shareholders' Loan at Completion (the amount of which is expected to be approximately SGD10,254,197). The Sale Shares Consideration and the Shareholders' Loan Consideration shall be settled by the Purchaser in cash to the Vendors in proportion to their respective shareholding interests in the Target Company in the following manner:

1. a first deposit of SGD3 million (equivalent to approximately HK$17.43 million) shall be paid by the Purchaser to the Vendors' solicitors on the date of signing of the Sale and Purchase Agreement, which shall be released to the Vendors on Completion;
2. a second deposit of SGD1 million (equivalent to approximately HK$5.81 million) shall be paid by the Purchaser to the Vendors' solicitors after satisfaction of the conditions set out in paragraph (i) under the section headed ''The Sale and Purchase Agreement - Conditions Precedent'' in this announcement, which shall be released to the Vendors on Completion; and
3. the Completion Amount shall be paid by the Purchaser to the Vendors on Completion.

Post-Completion adjustment of the Sale Shares Consideration

The Sale Shares Consideration is subject to post-Completion adjustment by adding to or subtracting from, as the case may be, the Sale Shares Consideration the difference in amount between the net asset value of the Target Company as set out in the Pre-completion NAV Statement and that in the Post-completion NAV Statement on a dollar-for-dollar basis. In any event, the aggregate sum of the Sale Shares Consideration (after post-Completion adjustment) and the Shareholders' Loan Consideration shall not exceed SGD60 million.

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Basis of consideration of the Disposal

The Sale Shares Consideration and the Shareholders' Loan Consideration were determined upon arm's length negotiations between the parties to the Sale and Purchase Agreement with reference to, among others, (i) the financial condition and business operation of the Target Company; (ii) the assets and liabilities of the Target Company; and (iii) the outstanding amount of the Shareholders' Loan.

Conditions precedent

Completion is conditional upon the fulfilment (or waiver) of a number of conditions, including:

1. a licensed bank in Singapore (which is acceptable to Qingjian Realty and the Purchaser) having (a) issued an offer letter setting out terms for bank facilities to be granted to the Target Company (the ''Bank Financing'') which are substantially similar to the terms currently offered to the Target Company; and (b) consented to the contemplated change in control of the Target Company pursuant to the Sale and Purchase Agreement, and that no addition or amendment of terms to the offer letter which may materially affect the Target Company or the Purchaser;
2. the Purchaser being satisfied with the replies to the legal requisitions in relation to the Property it raised to the relevant regulatory authorities;
3. the net assets of the Target Company as set out in the Pre-completion NAV Statement being not less than a certain percentage of a targeted net asset value as set out in the Sale and Purchase Agreement;
4. the Vendors having performed and complied with all material obligations and conditions in the Sale and Purchase Agreement that are required to be performed or complied with by the Vendors prior to Completion;
5. no event at Completion rendering any of the warranties given by the Vendors untrue or incorrect in any material respect;
6. the Bank Financing having been drawn down and the proceeds being applied to repay in full any outstanding payables owing by the Target Company to Qingjian Realty (BBR) Pte. Ltd., a non-wholly owned subsidiary of the Company;
7. no demand for repayment of the Bank Financing having been served and remaining outstanding by the relevant bank on the Target Company as at the date of Completion; and
8. all loans owing by the Company to any bank (excluding the Bank Financing) and all encumbrances over the Property (for the avoidance of doubt, excluding any encumbrances relating to the Bank Financing) having been or will be fully, unconditionally and irrevocably discharged.

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The conditions under (i) and (vi) to (viii) may only be waived (in whole or in part) by mutual consent of the Vendors and the Purchaser. The conditions under (ii) to (v) may only be waived (in whole or in part) by the Purchaser in its sole and absolute discretion.

Save as otherwise provided in the Sale and Purchase Agreement, if any of the conditions precedent set out above is not fulfilled (or waived) within 90 days from the date of the Sale and Purchase Agreement or such other date as the Vendors and the Purchaser may agree in writing, the Sale and Purchase Agreement shall automatically terminate. The Purchaser shall pay SGD0.1 million to the Vendors in proportion to their respective shareholding interests in the Target Company if the Sale and Purchase Agreement is terminated by reason of the non- fulfilment of condition (vi). If the Purchaser does not proceed with Completion for any reasons other than a breach by the Vendors or the non-fulfilment of condition (vi), the Vendors shall be entitled to the entire amount of the Deposits in proportion to their shareholding interests in the Target Company. Other than as a result of default of the Purchaser or non-fulfilment of condition (vi) as described above, the Vendors shall refund the Deposits in full (together with any interest accrued thereon) to the Purchaser, after which any claim by either party against any other party to the Sale and Purchase Agreement in respect of any antecedent breach shall be limited to transaction costs incurred of not exceeding SGD0.1 million.

Completion

Subject to the satisfaction (or waiver) of all the conditions precedent as set out in the Sale and Purchase Agreement, Completion shall take place within 60 days after the date of the Sale and Purchase Agreement or such other date as the Vendors and the Purchaser may agree in writing.

Upon Completion, the Target Company will cease to be a subsidiary of the Company and its results will no longer be consolidated into the consolidated financial statements of the Group.

INFORMATION ON THE COMPANY AND THE PARTIES TO THE SALE AND PURCHASE AGREEMENT

The Company

The Company was incorporated in the Cayman Islands with limited liability and the Shares are listed on the Main Board of the Stock Exchange. The Company is an investment holding company and the Group is principally engaged in property development, foundation and construction business in Singapore and Southeast Asia, Hong Kong and Macau.

The Vendors

Qingjian Realty is a company incorporated in Singapore with limited liability and a wholly- owned subsidiary of the Company. It is principally engaged in the business of property development for investment. As at the date of this announcement, it held 73% of the total issued shares of the Target Company.

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