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.
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 00980)
CONNECTED TRANSACTION
FORMATION OF JOINT VENTURE
On 16 December 2019, Lianhua Huashang, a subsidiary of the Company, entered into the Joint Venture Agreement with Homemart and Jinnian Jiayuan in relation to the proposed formation of the Joint Venture. Pursuant to the Joint Venture Agreement, Lianhua Huashang agreed to make a capital contribution of RMB3.0 million in cash, representing 60% of the total capital contribution of the Joint Venture and Homemart and Jinnian Jiayuan agreed to make a capital contribution of RMB1.5 million and RMB0.5 million in cash, respectively, representing 30% and 10% of the total capital contribution of the Joint Venture.
As at the date of this announcement, Bailian Group is a substantial Shareholder and Homemart is a wholly-owned subsidiary of Bailian Group and therefore Homemart is a connected person of the Company. As such, the entering into of the Joint Venture Agreement constitutes a connected transaction of the Company.
As the highest applicable percentage ratio (as defined in the Listing Rules) for the transaction contemplated under the Joint Venture Agreement exceeds 0.1% but less than 5%, the entering into of the Joint Venture Agreement is subject to the reporting and announcement requirements, but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.
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- INTRODUCTION
On 16 December 2019, Lianhua Huashang, a subsidiary of the Company, entered into the Joint Venture Agreement with Homemart and Jinnian Jiayuan in relation to the proposed formation of the Joint Venture. Pursuant to the Joint Venture Agreement, Lianhua Huashang agreed to make a capital contribution of RMB3.0 million in cash, representing 60% of the total capital contribution of the Joint Venture and Homemart and Jinnian Jiayuan agreed to make a capital contribution of RMB1.5 million and RMB0.5 million in cash, respectively, representing 30% and 10% of the total capital contribution of the Joint Venture.
Upon the formation of the Joint Venture, Lianhua Huashang will hold 60% of the equity interests in the Joint Venture. Therefore, the Joint Venture will be a subsidiary of the Company, and its financial results will be consolidated into the financial statements of the Group.
II. JOINT VENTURE AGREEMENT
Date
16 December 2019
Parties
- Lianhua Huashang (a subsidiary of the Company);
- Homemart (a wholly-owned subsidiary of Bailian Group); and
- Jinnian Jiayuan.
To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Jinnian Jiayuan and its ultimate beneficial owners, Mr. Ding Jin- wei, Mr. Chen Jun and Ms. Liu Xuan, are independent third parties.
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Registered Capital | ||
Capital | Shareholding | |
Shareholder | Contribution | Percentage |
(RMB million) | ||
Lianhua Huashang | 3.0 | 60% |
Homemart | 1.5 | 30% |
Jinnian Jiayuan | 0.5 | 10% |
Total | 5.0 | 100% |
The registered capital of the Joint Venture is RMB5.0 million. Lianhua Huashang, Homemart and Jinnian Jiayuan shall pay its respective capital contribution in one lump sum to the account of the Joint Venture within 30 days after the setting up of such account.
The amount of the capital contributions under the Joint Venture Agreement was determined after arm's length negotiations among the parties, taking into account various factors, including the nature of the business, the demand for working capital and future development plans of the Joint Venture.
Principal Business
The Joint Venture will be principally engaged in the sale of construction and decoration materials, hardware products, arts and crafts (except for gold jewellery), chemical raw materials and products (except for hazardous products), furniture, household appliances, kitchenware, stationary and sport products, textile, general merchandise, packaging materials, ceramic products, flower and office supplies as well as indoor decoration.
Composition of Board of Directors
The board of directors of the Joint Venture shall comprise five directors. Lianhua Huashang, Homemart and Jinnian Jiayuan are entitled to appoint three directors, one director and one director, respectively. The chairman of the board of directors shall be assumed by the director appointed by Lianhua Huashang.
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- REASONS FOR AND BENEFITS OF THE FORMATION OF THE JOINT VENTURE
The entering into of the Joint Venture Agreement and the formation of the Joint Venture thereunder will facilitate the building of a brand new retail mode of "Service + Retail + Scene" of the Company and the exploration of the cooperation and synergy between the retail business and indoor decoration business in order to realize innovation in business mode. It will also enhance the backend retail consumption through the indoor decoration business to increase the traffic for traditional retail business of the Company, which will in turn enhance the influence and long-term development of the Company.
The Directors (including the independent non-executive Directors) consider that the terms of the Joint Venture Agreement are fair and reasonable and on normal commercial terms, and the formation of the Joint Venture thereunder, although not conducted in the ordinary and usual course of the business of the Company, is in the interests of the Company and its Shareholders as a whole.
IV. LISTING RULES IMPLICATIONS
As at the date of this announcement, Bailian Group is a substantial Shareholder and Homemart is a wholly-owned subsidiary of Bailian Group and therefore Homemart is a connected person of the Company. As such, the entering into of the Joint Venture Agreement constitutes a connected transaction of the Company.
As the highest applicable percentage ratio (as defined in the Listing Rules) for the transaction contemplated under the Joint Venture Agreement exceeds 0.1% but less than 5%, the entering into of the Joint Venture Agreement is subject to the reporting and announcement requirements, but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.
- BOARD'S APPROVAL
The Board has approved the entering into of the Joint Venture Agreement, and none of the Directors has any material interest in the transactions contemplated thereunder.
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Since Mr. Ye Yong-ming, Ms. Xu Zi-ying, Mr. Qian Jian-qiang, Mr. Xu Tao and Ms. Zheng Xiao-yun are either holding senior positions or are directors in Bailian Group and/or its subsidiaries, they have abstained from voting on the relevant resolution of the Board to approve the entering into of the Joint Venture Agreement.
VI. GENERAL INFORMATION
Lianhua Huashang is principally engaged in retail chain business, including the operation of hypermarkets, supermarkets and convenience stores in the PRC.
Homemart is principally engaged in the retail business of construction materials and houseware products as well as indoor decoration business in the PRC.
Jinnian Jiayuan is principally engaged in the construction decoration business as well as indoor and outdoor design and decoration business in the PRC.
VII. DEFINITIONS
In this announcement, unless the context requires otherwise, the following expressions shall have the following meanings:
"Bailian Group" | Bailian Group Co., Ltd.*(百聯集團有限公司), a |
limited liability company incorporated in the PRC and a | |
substantial Shareholder |
"Board"
"Company"
the board of Directors
Lianhua Supermarket Holdings Co., Ltd., a joint stock limited company incorporated in the PRC with limited liability, the H shares of which are listed on the Stock Exchange
"Director(s)" | the director(s) of the Company |
"Group" | the Company and its subsidiaries |
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"H Share(s)"
"Homemart"
"Hong Kong"
"Jinnian Jiayuan"
"Joint Venture"
"Joint Venture Agreement"
"Lianhua Huashang"
"Listing Rules"
"PRC"
the overseas listed foreign shares of nominal value of RMB1.00 each in the registered capital of the Company
Homemart Decoration and Construction Materials Co., Ltd.*(好美家裝潢建材有限公司), a wholly-owned subsidiary of Bailian Group
the Hong Kong Special Administrative Region of the
PRC
Shanghai Jinnian Jiayuan Decoration Co., Ltd.*(上海 進念佳園裝潢有限公司), a limited liability company incorporated in the PRC and an independent third party
the joint venture to be formed under the Joint Venture Agreement, the proposed name of which is Hangzhou Jingdian Home Decoration and Design Co., Ltd.*(杭州 鯨典家裝飾設計有限公司), a limited liability company incorporated in the PRC
the joint venture agreement entered into on 16 December 2019 among Lianhua Huashang, Homemart and Jinnian Jiayuan with respect to the proposed formation of the Joint Venture, details of which are disclosed in the announcement
Hangzhou Lianhua Huashang Group Co., Ltd*(杭州聯 華華商集團有限公司), a subsidiary of the Company
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
the People's Republic of China, and for the purpose of this announcement, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
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"RMB" | Renminbi, the lawful currency of the PRC |
"Shareholder(s)"the shareholder(s) of the Company
"Stock Exchange"The Stock Exchange of Hong Kong Limited
"%" | per cent |
By order of the Board
Lianhua Supermarket Holdings Co., Ltd.
Hu Li-ping
Company Secretary
Shanghai, the PRC, 16 December 2019
As at the date of this announcement, the Directors of the Company are:
Executive Director: | Xu Tao; |
Non-executive Directors: | Ye Yong-ming, Xu Zi-ying, Xu Hong, Qian Jian- |
qiang, Zheng Xiao-yun and Wong Tak Hung; | |
Independent Non-executive Directors: | Xia Da-wei, Lee Kwok Ming, Don, Chen Wei and |
Zhao Xin-sheng. |
- for identification purposes only
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Lianhua Supermarket Holdings Co. Ltd. published this content on 16 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 December 2019 10:50:07 UTC