CWT International : Announcements and Notices - MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF GOLF COURSES IN THE US THROUGH THE DISPOSAL OF A SUBSIDIARY

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CWT INTERNATIONAL LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 521)

MAJOR TRANSACTION

IN RELATION TO

THE DISPOSAL OF GOLF COURSES IN THE US THROUGH

THE DISPOSAL OF A SUBSIDIARY

The Board is pleased to announce that, on 1 November 2019 (after trading hours), the Seller (a direct wholly-owned subsidiary of the Company) has entered into the Sale and Purchase Agreement with the Purchaser, pursuant to which the Seller has conditionally agreed to sell and assign, and the Purchaser has conditionally agreed to purchase and acquire, the Sale Share and the Sale Loan at a total consideration of US$86,500,000 (equivalent to approximately HK$674,700,000). As at the date of the Sale and Purchase Agreement, the Target Company holds the US Properties through indirectly owning the entire equity interests in the US Project Companies.

As one or more of the relevant percentage ratios of the Proposed Disposal for the Company exceed 25% but are less than 75%, the Proposed Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules. The Company has obtained a written shareholder's approval from HNA Group (International) and Hong Kong HNA (being a closely allied group of Shareholders) on 30 and 29 September 2019 respectively for approving the Proposed Disposal in lieu of holding a general meeting of the Company to approve the Proposed Disposal according to Rule 14.44 of the Listing Rules.

As the completion of the Proposed Disposal is subject to the satisfaction of the conditions precedent stated in the Sale and Purchase Agreement, the Proposed Disposal may or may not proceed to Completion. Accordingly, Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

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INTRODUCTION

On 1 November 2019 (after trading hours), the Seller (a direct wholly-owned subsidiary of the Company) has entered into the Sale and Purchase Agreement with the Purchaser, pursuant to which the Seller has conditionally agreed to sell and assign, and the Purchaser has conditionally agreed to purchase and acquire, the Sale Share and the Sale Loan (which represents the entire amount of outstanding shareholder's loan owed by the Target Company to the Seller as at 31 August 2019) at a total consideration of US$86,500,000 (equivalent to approximately HK$674,700,000). As at the date of the Sale and Purchase Agreement, the Target Company holds the US Properties through indirectly owning the entire equity interests in the US Project Companies.

PRINCIPAL TERMS OF THE SALE AND PURCHASE AGREEMENT

Date:	1 November 2019
Parties:
Seller:	HNA International Recreational Property Company Limited, a direct
	wholly-owned subsidiary of the Company holding all the issued shares
	of the Target Company
Purchaser:	Magic Radiance Limited, a company incorporated in the Independent
	State of Samoa with limited liability

Assets Agreed to be Disposed of

The Sale Share which represents the entire issued share capital of the Target Company as at the date of the Sale and Purchase Agreement and the Sale Loan which represents the entire amount of outstanding shareholder's loan owed by the Target Company to the Seller as at 31 August 2019.

The Target Company holds the US Properties through indirectly owning the entire equity interests in the US Project Companies.

Earnest Money Deposit

Pursuant to the Project Earnest Money Agreements, the Purchaser had paid to the Seller an aggregate amount of US$3,000,000 as earnest money deposit (the "Earnest Money Deposit"), which will be applied towards part payment of the Consideration on the Completion Date.

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Consideration

The total consideration for the Proposed Disposal is US$86,500,000 (equivalent to approximately HK$674,700,000) (the "Consideration").

The Consideration is payable by the Purchaser as follows:

1. within five days from the Confirmation Date, the Purchaser is required to pay to the Seller an amount of US$5,650,000 (equivalent to approximately HK$44,070,000) (the "First Installment") by depositing the same amount into the Seller's account;
2. if the Escrow Account has been set up within three weeks from the Confirmation Date, the Purchaser is required to, at the Seller's election (i) pay an amount of US$77,850,000 (equivalent to approximately HK$607,230,000) (the "Second Installment") into the Escrow Account in the name of the escrow agent within six weeks from the Confirmation Date and give an instruction to the escrow agent to release and transfer the Second Installment to the Seller's account or its designated account on Completion, or (ii) pay the full amount of the Second Installment into the Seller's account or its designated account on the Completion Date; and if the Escrow Account has not been set up within three weeks from the Confirmation Date, on Completion, the Purchaser is required to pay the full amount of the Second Installment into the Seller's account or its designated account; and
3. on the Completion Date, the Earnest Money Deposit will be automatically applied towards part payment of the Consideration, and the Second Installment will (to the extent that it is paid into the Escrow Account) be released to the Seller or paid by the Purchaser (to the extent that it is not paid into the Escrow Account) to the Seller as the balance of the Consideration.

The Consideration has been determined after arm's length negotiations between the Seller and the Purchaser with reference to various relevant factors, including the latest valuation report prepared in respect of the US Properties for the purposes of the preparation of the 2019 interim report of the Company and the matters stated under the heading "Reasons for and Benefits of the Proposed Disposal" of this announcement.

The Group has been searching for interested buyers for quite some time and has been negotiating terms relating to the disposal of the US Properties with such parties. Given the recent geopolitical situation which has affected interest in the US Properties, it has been a challenge for the Company to identify suitable buyers.

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Given the difficult market conditions, the Company believes the price reflects a relative fair value of the US Properties and the Purchaser is the best possible purchaser after months of searching under the circumstances. This transaction will also allow the Company to liquidate its assets and generate cash efficiently to repay outstanding debts of the Company under the Facility Agreement and enhance the general working capital of the Company.

Conditions Precedent

Purchaser Closing Conditions

The Seller's obligation to proceed to Completion is conditional upon the satisfaction of the following conditions with respect to the Purchaser, unless waived in writing by the Seller (the "Purchaser Closing Conditions"):

1. all representations and warranties made by the Purchaser as at the date of the Sale and Purchase Agreement and the Completion Date are in all material respects true, accurate and not misleading;
2. the Purchaser having paid the First Installment to the Seller; and
3. if applicable, the Purchaser having paid the Second Installment into the Escrow Account within six weeks from the Confirmation Date.

As of the date of this announcement, item (b) of the Purchaser Closing Conditions has been satisfied.

On the basis that the Seller has fulfilled all Seller Closing Conditions and the Seller is not liable for the Purchaser's failure in fulfilling any of the Purchaser Closing Conditions, in the event that any of the Purchaser Closing Conditions is not satisfied or waived, the Seller shall have the right to either: (i) postpone Completion to a date which is no later than five business days after the Long Stop Date or otherwise agreed by the parties in writing, or (ii) terminate the Sale and Purchase Agreement and have the Earnest Money Deposit and the First Installment (if already paid by the Purchaser) forfeited to it in full, after which the Purchaser shall have no further obligation to the Seller under the Sale and Purchase Agreement apart from those stated to survive the termination of the Sale and Purchase Agreement.

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Seller Closing Conditions

The Purchaser's obligation to proceed to Completion is conditional upon the satisfaction of the following conditions with respect to the Seller, unless waived in writing by the Purchaser (the "Seller Closing Conditions"):

1. the Company having obtained the approval from its Shareholders in the general meeting approving the Proposed Disposal as required under the Listing Rules, or if permitted under the Listing Rules, the written approval from a Shareholder or closely allied group of Shareholders who together holds more than 50% of the voting rights at the general meeting which, but for such written approval, would be convened to consider the Proposed Disposal;
2. the Company having obtained the Lender Group Consent; and
3. all warranties made by the Seller as at the date of the Sale and Purchase Agreement and the Completion Date are in all material respects true, accurate and not misleading.

As of the date of this announcement, item (a) of the Seller Closing Conditions has been satisfied.

On the basis that the Purchaser has fulfilled all Purchaser Closing Conditions and the Purchaser is not liable for the Seller's failure in fulfilling any of the Seller Closing Conditions and (i) the Seller Closing Condition under paragraph (a) or (b) above is not satisfied by the Seller by three business days prior to the Long Stop Date or (ii) the Seller Closing Condition under paragraph

1. above is not satisfied or waived, the Purchaser shall have the right to either: (i) postpone Completion to a date which is no later than five business days after the Long Stop Date or otherwise agreed by the parties in writing, or (ii) terminate the Sale and Purchase Agreement and, in such case, the Seller shall return (or procure the Company to return) the Earnest Money Deposit and the First Installment (if already paid by the Purchaser) in full to the Purchaser or a third party designated by the Purchaser, after which the Seller shall have no further obligation to the Purchaser under the Sale and Purchase Agreement apart from those stated to survive the termination of the Sale and Purchase Agreement.

Completion

Subject to the satisfaction or waiver (as appropriate) of the conditions precedent contained in the Sale and Purchase Agreement, Completion will take place on the Completion Date. Upon Completion, the Purchaser will own the entire issued share capital of the Target Company and hold the benefit of the full amount of Sale Loan and the Target Company will cease to be a subsidiary of the Company.

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