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    124   BMG4182K1009

GUANGDONG LAND HOLDINGS LIMITED

(124)
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Guangdong Land : Connected Transaction - Provision of Loan by the Shenzhong No.1 Partnership for investing in the Zhongshan Ma'an Island Project

04/16/2021 | 11:30am EST

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 Bermuda with limited liability)

(Stock Code: 00124)

Connected Transaction

Provision of Loan by the Shenzhong No.1 Partnership for investing in the Zhongshan Ma'an Island Project

INTRODUCTION

The Group has adopted the Property Project Co-investment Scheme which allows the Participants to invest in different Property Projects of the Group in the form of loan to be provided to the respective project companies of the Group. Accordingly, certain Participants (including directors of the Company and/or its subsidiaries, hence connected persons of the Company) have formed the Shenzhong No.1 Partnership for the purpose of investing in the Zhongshan Ma'an Island Project.

SHENZHONG NO.1 LOAN AGREEMENT

The Board hereby announces that, on 16 April 2021, the Zhongshan Project Company (an indirect non-wholly owned subsidiary of the Company) and the Shenzhong No.1 Partnership entered into the Shenzhong No.1 Loan Agreement, pursuant to which the Zhongshan Project Company has agreed to borrow the Loan in the principal amount of RMB5,260,000 (equivalent to approximately HK$6,257,000) from the Shenzhong No.1 Partnership.

LISTING RULES IMPLICATIONS

Certain partners of the Shenzhong No.1 Partnership are or controlled by directors of the Company and/or its subsidiaries, hence connected persons of the Company under Chapter 14A of the Listing Rules. Thus, the Shenzhong No.1 Loan Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

1

As the highest applicable percentage ratio in respect of the Shenzhong No.1 Loan Agreement calculated pursuant to the Listing Rules is more than 0.1% but all of the applicable percentage ratios are less than 5%, the Shenzhong No.1 Loan Agreement is therefore subject to the reporting and announcement requirements under the Listing Rules, but is exempt from the independent shareholders' approval requirement.

INTRODUCTION

The Group has adopted the Property Project Co-investment Scheme which allows the Participants to invest in different Property Projects of the Group in the form of loan to be provided to the respective project companies of the Group. Accordingly, certain Participants (including directors of the Company and/or its subsidiaries, hence connected persons of the Company) have formed the Shenzhong No.1 Partnership for the purpose of investing in the Zhongshan Ma'an Island Project.

The Board hereby announces that, on 16 April 2021, the Zhongshan Project Company (an indirect non-wholly owned subsidiary of the Company) and the Shenzhong No.1 Partnership (of which certain partners are or controlled by directors of the Company and/or its subsidiaries, hence connected persons of the Company) entered into the Shenzhong No.1 Loan Agreement, pursuant to which the Zhongshan Project Company has agreed to borrow a loan (the "Loan") in the principal amount of RMB5,260,000 (equivalent to approximately HK$6,257,000) from the Shenzhong No.1 Partnership.

SHENZHONG NO.1 LOAN AGREEMENT

The salient terms of the Shenzhong No.1 Loan Agreement are set out below:

Date

16 April 2021

Parties

  1. The Zhongshan Project Company (as borrower)
  2. The Shenzhong No.1 Partnership (as lender)

Principal and Interest Return

The principal amount (the "Principal") of the Loan is RMB5,260,000 (equivalent to approximately HK$6,257,000).

The Principal shall be payable by the Shenzhong No.1 Partnership to the Zhongshan Project Company within 10 business days from the date of the Shenzhong No.1 Loan Agreement.

The interest return (the "Interest Return") in respect of the Loan shall be calculated as follows:

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Interest Return

= Profit x Contribution Factor x Performance Factor

whereas:

Profit = Revenue of the Zhongshan Ma'an Island Project at the

relevant time - project development costs and expenses - taxes

Contribution Factor = Principal / the registered capital of the

Zhongshan Project Company

Performance Factor shall be:

  1. if the Actual Project IRR is 0% or higher, a figure between

0.4 to 2.5 according to the levels of IRR Percentage Difference(Note 1) from the lowest level of "-20% or below" to the highest level of "20% or above"; or

  1. if the Actual Project IRR is less than 0%, equal to 1.

Note 1: IRR Percentage Difference = (Actual Project IRR - Expected Project IRR as at the time of approval of the Zhongshan Ma'an Island Project) / Expected Project IRR as at the time of approval of the Zhongshan Ma'an Island Project

In event that the Actual Project IRR is a negative figure, the Interest Return (which would also be a negative figure) shall be regarded as a loss (the "Loss") attributable to the Principal. The Loss will be deducted from the Principal and shall be capped at the amount of the Principal.

The Interest Return shall be payable by the Zhongshan Project Company to the Shenzhong No.1 Partnership in cash in the following manner:

  1. a maximum of 50% of the Expected Interest Return(Note 2) shall be payable after the cumulative operating cash flow of the Zhongshan Ma'an Island Project becomes positive and the Zhongshan Project Company's working capital is sufficient to satisfy its requirements for its business operations for the next three months;
  2. a maximum of 80% (cumulative) of the Expected Interest Return(Note 2) shall be payable after the Sell-through Rate of the Zhongshan Ma'an Island Project reaches 90%; and
  3. the remaining amount of the Interest Return shall be payable after the Sell-through Rate of the Zhongshan Ma'an Island Project reaches 95%. In the event that the aggregated amount paid under paragraphs (a) and (b) above, is greater than the Interest Return calculated at the end of the project, the amount in excess shall be repaid by the Shenzhong No.1 Partnership to the Zhongshan Project Company within 10 business days from the date of notice given by the Zhongshan Project Company.

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Note 2: Expected Interest Return = The expected Profit at the relevant time (as estimated by the Zhongshan Project Company) x Contribution Factor x the expected Performance Factor at the relevant time (as estimated by the Zhongshan Project Company)

The Zhongshan Project Company and the Shenzhong No.1 Partnership have agreed that the annualised rate of return of the Loan shall not exceed 18.6%, being four times the over-five-year loan prime rate published by the National Interbank Funding Center as the date of the Shenzhong No.1 Loan Agreement.

The Interest Return is determined by the parties after arm's length negotiation, taking into account (i) the amount of the Principal; (ii) the Expected Project IRR of the Zhongshan Ma'an Island Project; (iii) the expected period(s) of repayment of the Loan; and (iv) the return rate(s) of similar property project co-investment schemes.

Repayment of Principal

Repayment of the Principal shall be made by the Zhongshan Project Company to the Shenzhong No.1 Partnership in cash in the following manner:

  1. a maximum of 60% of the Principal shall be repaid after the cumulative net negative cash flow of the Zhongshan Ma'an Island Project begins to fall from its highest point and the Zhongshan Project Company's working capital is sufficient to satisfy its requirements for its business operations for the next three months;
  2. a maximum of 30% of the Principal shall be repaid after the cumulative operating cash flow of the Zhongshan Ma'an Island Project becomes positive and the Zhongshan Project Company's working capital is sufficient to satisfy its requirements for its business operations for the next six months; and
  3. the remaining amount of the Principal (after the deduction of the Loss, if any) shall be repaid after the Sell-through Rate of the Zhongshan Ma'an Island Project reaches 95%.

In respect of (a) and (b) above, the rate of repayment of Principal shall be the same as that of the payment of the relevant return(s) in relation to the total contribution (in form of equity and loan(s)) made to the Zhongshan Project Company by the shareholders of the Zhongshan Project Company. In other words, at the relevant time, the cumulative amount of the Principal repaid in relation to the Principal shall not exceed the cumulative return (paid or payable) to the shareholders of the Zhongshan Project Company in relation to the shareholder's total contribution.

INFORMATION ON THE GROUP AND THE ZHONGSHAN PROJECT COMPANY

The Group is principally engaged in property development and investment businesses.

The Zhongshan Project Company is an indirect non-wholly owned subsidiary of the Company. As at the date of this announcement, the Company and the People's Government of Panyu District, Guangzhou City (廣州市番禺區人民政府) have,

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indirectly, 80% and 20% interest in the Zhongshan Project Company, respectively. The Zhongshan Project Company is principally engaged in investment in and development of the Zhongshan Land which at the starting area of Ma'an Island New District, Zhongshan City, the PRC, with a site area of approximately 43,284 square metres and a maximum total gross floor area included in the calculation of the plot ratio of approximately 151,493 square metres. The use of the Zhongshan Land is for the development, construction and sale of properties, including residential units and car parking spaces, etc., all of which will be for sale (the "Zhongshan Ma'an Island Project").

INFORMATION ON THE SHENZHONG NO.1 PARTNERSHIP

The Shenzhong No.1 Partnership is a limited partnership enterprise (有限合夥企業) established in the PRC on 30 March 2021. The purpose of the Shenzhong No.1 Partnership is to invest in the Zhongshan Ma'an Island Project by providing the Loan to the Zhongshan Project Company.

The General Partner of the Shenzhong No.1 Partnership is a company established in the PRC with limited liability. The ultimate beneficial owners of the General Partner are Mr. WANG Jie and Mr. YAN Chao, who are directors of certain subsidiaries of the Company, hence connected persons of the Company. The General Partner is responsible for managing the Shenzhong No.1 Partnership, and will only contribute a nominal amount to the Shenzhong No.1 Partnership and such nominal amount will not form part of the Loan.

The limited partners of the Shenzhong No.1 Partnership who are connected persons of the Company (the "Connected Partners") are listed below:

Name of partners who

Amount contributed

are connected person(s)

Positions held with

to the Shenzhong No.1

of the Company

the Group

Partnership

RMB

XU Yeqin

Chairman of the Board and

360,000

Executive Director of the

Company

LI Yonggang

Executive Director and

300,000

Managing Director of the

Company

ZHANG Jun

Executive Director and Chief

120,000

Financial Officer of the

Company

LI Qing

Director of certain subsidiaries

500,000

of the Company

MEI Qingjun

Director of certain subsidiaries

250,000

of the Company

LU Jingheng

Director of a subsidiary of the

150,000

Company

ZHOU Ziwen

Director of certain subsidiaries

100,000

of the Company

5

LAO Jie

Director of certain subsidiaries

500,000

of the Company

SHI Jianwei

Director of a subsidiary of the

300,000

Company

YAN Chao

Director of a subsidiary of the

30,000

Company

JIE Yongchao

Director of certain subsidiaries

30,000

of the Company

WANG Jie

Director of a subsidiary of the

30,000

Company

In addition to the Connected Partners, there are a total of 29 other limited partners in the Shenzhong No.1 Partnership and they are employees of the Group and Guangdong Holdings Group. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, save for being employees of the Group or Guangdong Holdings Group, the aforementioned limited partners are third parties independent of the Company and its connected persons.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SHENZHONG NO.1 LOAN AGREEMENT

The Group is principally engaged in property development and investment businesses in the PRC and holds interests in various property development projects in the PRC (the "Property Project(s)"). In February 2021, the Group adopted a property project co-investment scheme (the "Property Project Co-investmentScheme") which allows the participants (the "Participants") to invest in different Property Projects (of which the properties to be constructed and developed will be mainly for sale) in the form of loan to be provided to the respective project companies of the Group. In respect of the Zhongshan Ma'an Island Project, the relevant Participants participated in the Property Project Co-investment Scheme have formed the Shenzhong No.1 Partnership to invest in the form of the Loan.

As the Participants are employees of the Group and Guangdong Holdings Group, the purposes of the Property Project Co-investment Scheme are to establish a "profit and risk sharing" incentive mechanism to directly link up the return to the Participants with the operational efficiency of the Property Projects and align the interests of the Participants with that of the Shareholders and the Property Projects. The Company believes that, as a result, the Property Project Co-investment Scheme will enable the Group to effectively manage the investment and operational risks, further increase the motivation of the operation team of the Property Projects in respect of management and operation, enhance the operation efficiency and quality of the Property Projects and further the positive development of the Group's property businesses. Accordingly, the Company considers that the entering into of the Shenzhong No.1 Loan Agreement will bring the aforementioned benefits to the Group's Zhongshan Ma'an Island Project.

The terms of the Shenzhong No.1 Loan Agreement (including the basis for calculating the Interest Return) were arrived at after arm's length negotiations between the Zhongshan Project Company and the Shenzhong No.1 Partnership.

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Having considered the reasons and benefits aforementioned, the Directors (including the independent non-executive Directors) are of the view that (i) the Shenzhong No.1 Loan Agreement is conducive to the Group's development, hence conducted its ordinary and usual course of business, and on normal commercial terms; and (ii) the terms of the Shenzhong No.1 Loan Agreement are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As disclosed in the section headed "Information on the Shenzhong No.1 Partnership" in this announcement, certain partners of the Shenzhong No.1 Partnership are or controlled by directors of the Company and/or its subsidiaries, hence connected persons of the Company under Chapter 14A of the Listing Rules. Accordingly, the Shenzhong No.1 Loan Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the Shenzhong No.1 Loan Agreement calculated pursuant to the Listing Rules is more than 0.1% but all of the applicable percentage ratios are less than 5%, the Shenzhong No.1 Loan Agreement is therefore subject to the reporting and announcement requirements under the Listing Rules, but is exempt from the independent shareholders' approval requirement.

Mr. XU Yeqin, Mr. LI Yonggang and Mr. ZHANG Jun, being the Directors, are also limited partners of the Shenzhong No.1 Partnership. All of the abovementioned Directors present at the relevant Board meetings abstained from voting on the relevant Board resolutions to approve the Shenzhong No.1 Loan Agreement and the transactions contemplated thereunder. Save as disclosed, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no other Directors had any material interest in the Shenzhong No.1 Loan Agreement and the transactions contemplated thereunder.

DEFINITIONS

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

"Actual Project IRR" the actual internal rate of return of the Zhongshan Ma'an Island Project as calculated by the Zhongshan Project Company

"Board"

the board of Directors

"Company"Guangdong Land Holdings Limited (粤海置地控股有限公

), a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange

"Connected Partners" has the meaning ascribed to it under the section headed "Information on the Shenzhong No.1 Partnership" in this announcement

7

"connected person(s)"

has the meaning ascribed to it under the Listing Rules

"Contribution Factor"

has the meaning ascribed to it under the section headed

"Shenzhong No.1 Loan Agreement - Principal and Interest

Return" in this announcement

"Director(s)"

the director(s) of the Company

"Expected Interest

has the meaning ascribed to it under the section headed

Return"

"Shenzhong No.1 Loan Agreement - Principal and Interest

Return" in this announcement

"Expected Project

the internal rate of return of the Zhongshan Ma'an Island

IRR"

Project as estimated by the Zhongshan Project Company

"General Partner"

珠 海 置 勝 投 資 有 限 公 司 (Zhuhai Zhisheng Investment

Company Limited), a company established in the PRC with

limited liability

"Group"

"Guangdong Holdings

Group "

the Company and its subsidiaries

廣 東 粤 海 控 股 集 團 有 限 公 司 (Guangdong Holdings Limited), a company established in the PRC with limited liability and the ultimate controlling shareholder of the Company, and it subsidiaries (including the Group)

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong"the Hong Kong Special Administrative Region of the PRC

"Interest Return" has the meaning ascribed to it under the section headed "Shenzhong No.1 Loan Agreement - Principal and Interest Return" in this announcement

"IRR Percentage has the meaning ascribed to it under the section headed

Difference" "Shenzhong No.1 Loan Agreement - Principal and Interest Return" in this announcement

"Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time

"Loan"has the meaning ascribed to it under the section headed

"Introduction" in this announcement

"Loss"has the meaning ascribed to it under the section headed "Shenzhong No.1 Loan Agreement - Principal and Interest Return" in this announcement

8

"Participants"

has the meaning ascribed to it under the section headed

"Reasons for and benefits of entering into the Shenzhong

No.1 Loan Agreement" in this announcement

"percentage ratio(s)"

has the meaning ascribed to it under the Listing Rules

"Performance Factor"

has the meaning ascribed to it under the section headed

"Shenzhong No.1 Loan Agreement - Principal and Interest

Return" in this announcement

"RMB"

Renminbi, the lawful currency of the PRC

"PRC"

the People's Republic of China and, for the purpose of this

announcement, excludes Hong Kong, the Macao Special

Administrative Region of the PRC and Taiwan

"Principal"

has the meaning ascribed to it under the section headed

"Shenzhong No.1 Loan Agreement - Principal and Interest

Return" in this announcement

"Profit"

has the meaning ascribed to it under the section headed

"Shenzhong No.1 Loan Agreement - Principal and Interest

Return" in this announcement

"Property Project Co-

has the meaning ascribed to it under the section headed

investment Scheme"

"Reasons for and benefits of entering into the Shenzhong

No.1 Loan Agreement" in this announcement

"Property Project(s)"

has the meaning ascribed to it under the section headed

"Reasons for and benefits of entering into the Shenzhong

No.1 Loan Agreement" in this announcement

"Sell-through Rate"

the percentage represented by dividing the aggregated value

of the property units sold with the then total value of the

saleable area of the Zhongshan Ma'an Island Project

"Shenzhong No.1 Partnership"

珠 海 置 勝 深 中 一 號 投 資 合 夥 企 業 ( 有 限 合 夥 ) (Zhuhai Zhisheng Shenzhong No.1 Partnership Enterprise (Limited Partnership)), a limited partnership enterprise (有限合夥企 業) established in the PRC

"Shenzhong No.1

the loan agreement entered into between the Zhongshan

Loan Agreement" Project Company (as borrower) and the Shenzhong No.1

Partnership (as lender) on 16 April 2021 in relation to, among

other things, the provision of a loan in the amount of

RMB5,260,000 (equivalent to approximately HK$6,257,000)

by the Shenzhong No.1 Partnership to the Zhongshan Project

Company

"Share(s)"

the share(s) of the Company

9

"Shareholder(s)" the shareholder(s) of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Zhongshan Land" a parcel of land located at at Xierwei, Nanlang Town (the starting area of Tsuihang New District), Zhongshan City, the PRC (No. G28-2020-0132), the land use rights of which are held by the Zhongshan Project Company

"Zhongshan Project

Company"

中山粤海置地有限公司 (Zhongshan Yuehai Land Company Limited), a company established in the PRC with limited liability and an indirect non-wholly owned subsidiary of the Company

"Zhongshan Ma'an has the meaning ascribed to it under the section headed

Island Project" "Reasons for and benefits of entering into the Shenzhong No.1 Loan Agreement" in this announcement

"%"

per cent.

In this announcement, the English names of the PRC entities and persons are translations of their Chinese names, and are included herein for identification purposes only. In the event of any inconsistency, the Chinese names shall prevail.

For the purpose of this announcement, unless otherwise specified, conversion of Renminbi, the lawful currency of the PRC, into Hong Kong dollars, the lawful currency of Hong Kong, is based on the approximate exchange rate of HK$1 to RMB0.8406. No representation is made that any amount in HK$ and RMB could be converted at such rate.

By Order of the Board

Guangdong Land Holdings Limited

XU Yeqin

Chairman

Hong Kong, 16 April 2021

As at the date of this announcement, the Board comprises five Executive Directors, namely Mr. XU Yeqin, Mr. LI Yonggang, Mr. WU Mingchang, Ms. ZHU Guang and Mr. ZHANG Jun; and three Independent Non-Executive Directors, namely Mr. Alan Howard SMITH, Mr. Felix FONG Wo and Mr. Vincent Marshall LEE Kwan Ho.

10

Disclaimer

Guangdong Land Holdings Limited published this content on 16 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 April 2021 15:29:04 UTC.


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