Shui On Land : DISCLOSEABLE TRANSACTION – FORMATION OF JOINT VENTURE

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Shui On Land Limited

瑞 安 房 地 產 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 272)

DISCLOSEABLE TRANSACTION

FORMATION OF JOINT VENTURE

FORMATION OF JOINT VENTURE

The Board is pleased to announce that on 22 December 2020, Pacific Wide, an indirect wholly-owned subsidiary of the Company, entered into the Deed with the JV Company and the JV Partner in relation to the formation of the JV Company, whereby the JV Partner will subscribe unconditionally for 50 new shares in the JV Company at a subscription price of HK$50 (representing a subscription price at HK$1 per share). The JV Company will be owned as to 50% by Pacific Wide and 50% by the JV Partner upon completion of the subscription.

Upon completion of the subscription, the WFOE is expected to enter into definitive agreements in respect of the acquisition of the entire equity interest of a project company in the PRC that holds the Property. To facilitate the acquisition of the Property, it is expected that SODH will provide certain Guarantees to the Vendor and the Lender Bank.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the entering into of the Deed and the Guarantees, on an aggregated basis, exceed 5% but is less than 25%, the entering into of the Deed and the Guarantees constitute a discloseable transaction for the Company and are subject to announcement requirement but exempt from shareholders' approval requirement under Chapter 14 of the Listing Rules.

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INTRODUCTION

The Board is pleased to announce that on 22 December 2020, Pacific Wide, an indirect wholly-owned subsidiary of the Company, entered into the Deed with the JV Company and the JV Partner in relation to the formation of the JV Company, whereby the JV Partner will subscribe unconditionally for 50 new shares in the JV Company at a subscription price of HK$50 (representing a subscription price at HK$1 per share). The JV Company will be owned as to 50% by Pacific Wide and 50% by the JV Partner upon completion of the subscription. Upon completion of the subscription, the WFOE is expected to enter into definitive agreements in respect of the acquisition of the entire equity interest of a project company in the PRC that holds the Property. To facilitate the acquisition of the Property, it is expected that SODH will provide certain Guarantees to the Vendor and the Lender Bank.

THE DEED

The principal terms of the Deed are as follows:

Date:	22 December 2020
Parties:	1.	Pacific Wide
	2.	JV Partner
	3.	JV Company
Subscription:	Upon the entering into of the Deed, the JV Company is
	wholly-owned by Pacific Wide. The JV Partner will
	unconditionally subscribe for 50 new shares in the JV
	Company at a subscription price of HK$50 (representing
	HK$1 per share in the JV Company) in total. After

completion of the subscription, the JV Company will be owned as to 50% by Pacific Wide and 50% by the JV Partner.

Upon completion of the subscription, the JV Company will be recognised as a joint venture company of the Group and its financial results, assets and liabilities will not be consolidated into the accounts of the Group.

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Purpose of the JV	The JV Company is the legal and beneficial owner of the
Company and	WFOE which will be used to acquire the entire equity
business of the	interest of a project company in the PRC that holds the
JV Group:	Property. Following completion of the acquisition, the
	purposes of the JV Group is to hold, operate, lease, market,
	maintain, manage, improve, renovate, dispose of and sell the
	Property for profits and any other business or activities as
	permitted by the business scope of the project company and
	as agreed by the shareholders from time to time.
Contribution of	The aggregate amount of committed contribution by the
Pacific Wide and	shareholders of the JV Company will not exceed
the JV Partner:	RMB1,620,000,000	(equivalent	to	approximately

HK$1,920,911,000) which comprises (i) acquisition related committed contribution; (ii) the default and liability damages the WFOE is required to pay under the definitive agreements for the acquisition (if any); (iii) the operation expenses of the JV Company and the WFOE; and (iv) future cash contribution (the "Committed Contribution"). Committed Contribution shall first be satisfied by shareholders' own funds via shareholders' loans which are non-interest bearing.

In the event the shareholders' loans fall short of the Committed Contribution, the chairman of the JV Company or at the reasonable request of any director of the JV Company, may request for a contribution from the shareholders on a pro rata basis and in accordance with the Deed.

The amounts of the Committed Contribution were arrived at after arm's length negotiation among the parties to the Deed with reference to the capital requirement for investing in the Property and the working capital requirement for the management and administration of the Property (as applicable). In particular, the acquisition related committed contribution was determined with reference to the independent property valuation conducted by a property valuer and the prevailing market value of the Property.

The Company intends to satisfy such contribution by internal resources.

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	In the event the acquisition of the project company does not
	proceed, the shareholders' loans will be repaid to Pacific
	Wide and the JV Partner on a pro rata basis after deducting
	any costs already incurred in relation to the acquisition.
Board	Any shareholder of the JV Company will be entitled to
representation:	appoint one director for each whole of 25% shareholding in
	the JV Company. The board of directors of the JV Company
	will therefore comprise of four directors, two of whom will
	be appointed by Pacific Wide and two of whom will be
	appointed by the JV Partner. The chairman of the board of
	directors will be appointed by Pacific Wide and shall not
	have a casting vote. The composition of the board of
	directors of each member of the JV Group shall be identical.
	There are also certain specific matters as set out in the Deed
	being reserved matters which require the approval of all
	directors.
Lock-up and	Pacific Wide and the JV Partner are both subject to a lock-up
transfer of	period which commences on the date of the Deed to the date
shares:	falling 60 months after the completion of the acquisition.
	Subject to and unless otherwise permitted by the terms and
	conditions of the Deed, Pacific Wide and the JV Partner
	must not transfer any of its shares in the JV Company to any
	third party during the lock-up period.

THE GUARANTEES

To secure the performance of all obligations of the WFOE under the definitive agreements in respect of the acquisition of the project company that holds the Property by the WFOE and under the facility agreement with the Lender Bank, it is expected that SODH will provide certain Guarantees to the Vendor and the Lender Bank which encompass:

1. a guarantee provided to the Vendor for an amount not more than RMB250,000,000 (equivalent to approximately HK$296,437,000) which commences on the date of the definitive agreements and ends two years after the date of fulfilment of the payment obligations of the WFOE arising from the acquisition of the project company under the definitive agreements; and
2. a guarantee provided to the Lender Bank for an amount not more than RMB725,000,000 (equivalent to approximately HK$859,667,000) which is of a transitional nature and commences on the loan drawdown by the WFOE and ends upon registration of the first-ranking mortgage over the Property under the name of the Lender Bank.

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