Sino I Technology : MAJOR AND CONNECTED TRANSACTIO...

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 disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

MAJOR AND CONNECTED TRANSACTION

LOAN EXTENSION

References are made to (1) the joint announcement of the Company and Nan Hai dated 29 May 2009 and the circular of the Company dated 12 June 2009 in relation to the Advance made by the Lender to the Borrower pursuant to the Loan Agreement; (2) the announcement dated 20 May 2011 and circular dated 10 June 2011 of the Company in relation to the extension of the repayment of the outstanding principal for two (2) years from 30 June 2011 to 29 June 2013 pursuant to the First Supplemental Agreement; (3) the announcement dated 31 October 2012 and circular dated 21 November 2012 of the Company in relation to (i) variation of the security under the Loan Agreement (as supplemented by the First Supplemental Agreement) by substituting the Listar Share Mortgage with the NHD Share Mortgage, and (ii) release of the Listar Share Mortgage pursuant to the Second Supplemental Agreement; (4) the announcement dated 9 May 2013 and circular dated 24 May 2013 of the Company in relation to the second extension of the repayment of the outstanding principal for two (2) years from 30 June 2013 to 29 June 2015 pursuant to the Third Supplemental Agreement; (5) the announcement dated 30 April 2015 and circular dated 18 May 2015 of the Company in relation to the third extension of the repayment of the outstanding principal for two (2) years from 30 June 2015 to 29 June 2017 pursuant to the Fourth Supplemental Agreement; and (6) the announcement dated 2 May 2017 and circular dated 26 May 2017 of the Company in relation to the fourth extension of the repayment of the outstanding principal for two (2) years from 30 June 2017 to 29 June 2019 pursuant to the Fifth Supplemental Agreement.

On 21 March 2019 after trading hours, the Company and Nan Hai entered into the Sixth Supplemental Agreement under which the Company conditionally agreed to extend the due date of repayment of the Outstanding Principal by Nan Hai to the Company under the Loan Agreement (as supplemented by the First Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement, the Fourth Supplemental Agreement and the Fifth Supplemental Agreement) for a period of two (2) years from 30 June 2019 to 29 June 2021.

The Sixth Supplemental Agreement constitutes a major transaction for the Company under Chapter 14 of the Listing Rules. As Nan Hai is the holding company of the Company, the Sixth Supplemental Agreement also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. Accordingly, the Sixth Supplemental Agreement will be subject to the approval of the independent Shareholders at the EGM.

Nan Hai and its associates shall abstain from voting on the ordinary resolution(s) to approve the Sixth Supplemental Agreement and the transactions contemplated thereunder at the EGM.

Mr. Xiao Sui Ning, an independent non-executive Director, is also an independent non-executive director of Nan Hai. Thus, Prof. Jiang Ping and Mr. Fung Wing Lap, the remaining independent non-executive Directors, have been appointed to form the Independent Board Committee and to give recommendations to the independent Shareholders in respect of the Sixth Supplemental Agreement and the transactions contemplated thereunder. An independent financial adviser will also be appointed to advise the Independent Board Committee.

A circular containing, amongst other things, details of the Sixth Supplemental Agreement, the recommendation of the Independent Board Committee, the advice of the independent financial adviser, together with a notice of the EGM will be despatched to the Shareholders on or before 12 April 2019.

INTRODUCTION

References are made to:

(1) the joint announcement of the Company and Nan Hai dated 29 May 2009 and the circular of the Company dated 12 June 2009 in relation to the Advance made by the Lender to the Borrower pursuant to the Loan Agreement;

• (2) the announcement dated 20 May 2011 and circular dated 10 June 2011 of the Company

• in relation to the extension of the repayment of the outstanding principal for two (2) years from 30 June 2011 to 29 June 2013 pursuant to the First Supplemental Agreement;

• (3) the announcement dated 31 October 2012 and circular dated 21 November 2012 of the Company in relation to (i) variation of the security under the Loan Agreement (as supplemented by the First Supplemental Agreement) by substituting the Listar Share Mortgage with NHD Share Mortgage, and (ii) release of the Listar Share Mortgage pursuant to the Second Supplemental Agreement;

(4) the announcement dated 9 May 2013 and circular dated 24 May 2013 of the Company in relation to the second extension of the repayment of the outstanding principal for two (2) years from 30 June 2013 to 29 June 2015 pursuant to the Third Supplemental Agreement;

(5) the announcement dated 30 April 2015 and circular dated 18 May 2015 of the Company in relation to the third extension of the repayment of the outstanding principal for two (2) years from 30 June 2015 to 29 June 2017 pursuant to the Fourth Supplemental Agreement; and

(6) the announcement dated 2 May 2017 and circular dated 26 May 2017 of the Company in relation to the fourth extension of the repayment of the outstanding principal for two (2) years from 30 June 2017 to 29 June 2019 pursuant to the Fifth Supplemental Agreement.

As of the date of this announcement, the Outstanding Principal and outstanding accrued interest are approximately HK$1,005,858,000 and HK$138,891,000 respectively, which are being secured by the NHD Share Mortgage.

THE SIXTH SUPPLEMENTAL AGREEMENT

On 21 March 2019 after trading hours, the Company and Nan Hai entered into the Sixth Supplemental Agreement under which the Company conditionally agreed to extend the due date of repayment of the Outstanding Principal by Nan Hai to the Company under the Loan Agreement (as supplemented by the First Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement, the Fourth Supplemental Agreement and the Fifth Supplemental Agreement) for a period of two (2) years from 30 June 2019 to 29 June 2021, the material terms and conditions of which are set out below:

Date

21 March 2019

Parties

• (1) Lender: The Company

• (2) Borrower: Nan Hai

Outstanding Principal

Approximately HK$1,005,858,000.

Extension of Repayment of the Outstanding Principal

The due date for repayment of the Outstanding Principal shall be extended for two (2) years from 30 June 2019 to 29 June 2021.

Interest Rate

8.0% per annum during the extension period which shall accrue from day to day, be calculated on the basis of the actual number of days lapsed and a 365-day year, and be paid in arrears when the Outstanding Principal (or the relevant part thereof) shall be repaid/ prepaid. The interest rate of 8.0% per annum was set with reference to the prevailing prime lending rates in Hong Kong.

Default Interest Rate

10% per annum on the default amount, which shall accrue from day to day on the basis of a 365-day year commencing from and including the due date of payment to the date of actual payment.

Security

Repayment of the Outstanding Principal and outstanding accrued interest will continue to be secured by share mortgage (by way of first fixed charge) in respect of the NHD Shares, representing 100% of the issued share capital of Nan Hai Development. Details of Nan Hai Development are set out below.

Conditions

The Sixth Supplemental Agreement is conditional upon:

• (a) Nan Hai having settled in full the outstanding interest accrued on the Outstanding Principal on or before 29 June 2019, being approximately HK$160,937,000 up to 29 June 2019; and

• (b) the independent Shareholders having approved the Sixth Supplemental Agreement and the transactions contemplated thereunder in accordance with the provisions of the Listing Rules.

If the conditions set out above are not fulfilled by 29 June 2019, or such later date as the parties may agree, the Sixth Supplemental Agreement will be null and void and of no further effect.

Save as amended by the Sixth Supplemental Agreement, all other terms and provisions of the Loan Agreement (as supplemented by the First Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement, the Fourth Supplemental Agreement and the Fifth Supplemental Agreement) shall remain unchanged and in full force and effect and binding on both the Lender and the Borrower.

REASONS FOR AND BENEFITS OF THE SIXTH SUPPLEMENTAL AGREEMENT

As at the date of this announcement, the Outstanding Principal and outstanding accrued interest are approximately HK$1,005,858,000 and HK$138,891,000 respectively.

Comparing with the prevailing interest rate for time deposits being offered by banks to the public, the interest rate under the Sixth Supplemental Agreement remains attractive. The Company considers that the Sixth Supplemental Agreement will generate a stable interest income and offer a higher return to the Group when comparing with the interest to be earned by making a Hong Kong dollar time deposit with financial institutions in Hong Kong.

The Group does not have material funding requirement in the next two (2) years despite it will keep on spending in research and development for maintaining the competitiveness of its product lines. As a result, the Group considers the opportunity of gaining the interest at the relatively higher rate of 8.0% per annum from Nan Hai to be beneficial to the Group. Nan Hai expects to repay the Outstanding Principal within two years from 30 June 2019.

The Board (excluding (i) members of the Independent Board Committee whose views will be subject to the opinion of an independent financial adviser to be appointed in connection with the Sixth Supplemental Agreement, and (ii) Mr. Yu Pun Hoi who is deemed to be interested in Nan Hai and has abstained from voting on the relevant resolution at the board meeting) considers that the Sixth Supplemental Agreement and the transactions contemplated therein are on normal commercial terms and the terms and conditions of the Sixth Supplemental Agreement are fair and reasonable and in the interests of the Company and Shareholders as a whole.

As Mr. Xiao Sui Ning, an independent non-executive Director, is also an independent non-executive director of Nan Hai, he is not considered sufficiently independent to give advice or recommendation to the independent Shareholders in relation to the Sixth Supplemental Agreement. Accordingly, Prof. Jiang Ping and Mr. Fung Wing Lap, the remaining independent non-executive Directors, have been appointed to form the Independent Board Committee to advise the independent Shareholders, and an independent financial adviser will be appointed to advise the Independent Board Committee in relation to the Sixth Supplemental Agreement.

INFORMATION ON NAN HAI DEVELOPMENT

Nan Hai Development is an investment holding company incorporated in Hong Kong with limited liability, which directly holds 100% of the issued share capital of LWD and 100% of the issued share capital of Listar.

LWD ultimately holds 100% equity interest in a property project namely ''The Peninsula'' in Shenzhen City, Guangdong Province, the PRC. ''The Peninsula'' is a large-scale residential property development project and consists of five phases. ''The Peninsula'' occupies a total site area of approximately 313,000 sq.m., with a total GFA of approximately 873,000 sq.m.. As per the valuation report dated 19 March 2019 issued by an independent valuer to Nan Hai, the total value of ''The Peninsula'' as of 31 December 2018 was approximately RMB16,532,000,000 (equivalent to approximately HK$19,340,197,000). Listar ultimately holds 100% equity interest in a property project namely ''Free Man Garden'' in Guangzhou City, Guangdong Province, the PRC. ''Free Man Garden'' is a large-scale residential property development project and consists of eight phases. ''Free Man Garden'' occupies a total site area of approximately 615,000 sq.m., with a total GFA of approximately 1,033,000 sq.m.. As per the valuation report dated 19 March 2019 issued by an independent valuer to Nan Hai, the total value of ''Free Man Garden'' as of 31 December 2018 was approximately RMB8,510,000,000 (equivalent to approximately HK$9,955,545,000).