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.

THE HONGKONG AND SHANGHAI HOTELS, LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00045)

Discloseable Transaction

Restructuring of Joint Venture Arrangements in Thailand

The Board of Directors of the Company wishes to announce that on 27 August 2020, PIIHL, a wholly-owned subsidiary of the Company, has entered into heads of terms with the Phataraprasit Shareholders, to confirm their agreement to restructure the current arrangements between the Company and the Phataraprasit Shareholders in relation to their respective shareholding in HSH-SCH. Subject to the signing of definitive and legally binding agreements and following the completion of the restructuring, the joint venture relationship between the parties in HSH-SCH will cease. Upon Completion, the Company will, through its subsidiaries, acquire the Phataraprasit Shareholders' 50% economic interest in The Peninsula Bangkok and its surrounding land in consideration for its 50% economic interest in the Thai Country Club and TCC Land Parcels and the Cash Consideration. The Cash Consideration shall be paid to the Phataraprasit Shareholders on Completion.

Prior to the restructuring, the Company, through its subsidiaries, and the Phataraprasit Shareholders had entered into 50/50 joint venture arrangements in HSH-SCH to own and for the Company to manage The Peninsula Bangkok and the Thai Country Club. As part of the restructuring, HSH-SCH and its subsidiaries shall undergo all necessary internal restructuring such that HSH-SCH shall own 100% equity interest in The Peninsula Bangkok and its surrounding land upon Completion.

Upon completion of the Transaction, the Company will (i) assume full responsibility and control over the development, management and future operations of The Peninsula Bangkok and its surrounding land, as well as be entitled to the profits and assume the liabilities and expenses of the hotel and its surrounding land; and (ii) cease to have any responsibility over the development, management and future operations of the Thai Country Club and TCC Land Parcels. The restructuring is in line with the Company's principal business of hotel ownership and management and reflects the desire of the Company and the Phataraprasit Shareholders to resolve all current and contingent disputes (including the dispute on the hotel management agreement relating to The Peninsula Bangkok).

The Total Consideration was arrived at after arm's length negotiations between the Parties and having regard to the market values of The Peninsula Bangkok and its surrounding land, the market values of the Thai Country Club and TCC Land Parcels and consideration to

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resolve all disputes between the Parties. The Cash Consideration shall be funded from the Company's own resources.

As the applicable percentage ratio of the Transaction under Chapter 14 of the Listing Rules is 5% or more, but is less than 25%, the Transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Transaction is subject to a number of conditions precedent. Appropriate disclosure will be made by the Company when the definitive agreements effecting the Transaction are signed.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Phataraprasit Shareholders are connected persons (as defined in the Listing Rules) at the level of the Company's subsidiary, HSH-SCH, and the Transaction with the Phataraprasit Shareholders are at the subsidiary level only. The exemption contained in rule 14A.73(10) of the Listing Rules shall apply and the Transaction shall not be regarded as a connected transaction.

The key terms of the Heads of Terms are set out below:

Heads of Terms

Parties:

PIIHL

Mr. Praphan Phatraprasit

Mr. Prasong Phataraprasit

Date:

27 August 2020

Purpose:

The parties have entered into the HOT to confirm their

agreement to restructure their respective shareholdings in

and assets of HSH-SCH. Upon completion of the

Transaction, the Company will (i) assume full

responsibility and control over the development,

management and future operations of The Peninsula

Bangkok and its surrounding land, as well as be entitled

to the profits and assume the liabilities and expenses of

the hotel and its surrounding land; and (ii) cease to have

any responsibility over the development, management

and future operations of the Thai Country Club and TCC

Land Parcels. The restructuring is in line with the

Company's principal business of hotel ownership and

management.

Transaction:

Upon Completion, the Phataraprasit Shareholders to

transfer their entire 50% interest in HSH-SCH to PIIHL

and/or its designated persons in exchange for the

Company's 50% economic interest in the Thai Country

Club and TCC Land Parcels and the Cash Consideration.

HSH-SCH and its subsidiaries shall undergo all

necessary internal restructuring such that HSH-SCH shall

own 100% equity interest in The Peninsula Bangkok and

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its surrounding land upon Completion.

The unaudited net profit/(loss) before and after tax attributable to HSH-SCH for the year ended 31 December 2018 amounted to THB10 million (approximately HK$2.5 million) and THB(35) million (approximately HK$(8.7) million) respectively. The unaudited net profits before and after tax attributable to HSH-SCH for the year ended 31 December 2019 amounted to THB42 million (approximately HK$10.4 million) and THB33 million (approximately HK$8.2 million) respectively.

SCH owns The Peninsula Bangkok and its surrounding

land. The unaudited net profit/(loss) before and after tax

attributable to SCH for the year ended 31 December

2018 amounted

to

THB32 million

(approximately

HK$7.9 million) and THB(3) million

(approximately

HK$(0.7) million) respectively. The unaudited net profits

before and after tax attributable to SCH for the year

ended 31 December 2019 amounted to

THB67 million

(approximately HK$16.6 million) and THB66 million

(approximately HK$16.3 million) respectively.

TCS owns the Thai Country Club and TCC Land Parcels.

The unaudited net losses before and after tax attributable

to TCS for the year ended 31 December 2018 amounted

to THB6 million (approximately HK$1.5 million) and

THB6 million (approximately HK$1.5 million)

respectively. The unaudited net losses before and after

tax attributable to TCS for the year ended 31 December

2019 amounted to THB5 million (approximately HK$1.2

million) and THB8 million (approximately HK$2

million) respectively. TCE is a dormant company.

Anticipated Completion

On or before 30 September 2020

Date:

Consideration and Financial Commitment

Total Consideration:

The Total Consideration comprises of the 50% economic

interest in the Thai Country Club and TCC Land Parcels

and the Cash Consideration. The Total Consideration

was arrived at after arm's length negotiations between

the Parties and having regard to the market values of The

Peninsula Bangkok and its surrounding land in the

aggregate amount of approximately THB3.1 billion

(approximately HK$770 million), the market values of

Thai Country Club and TCC Land Parcels in the

aggregate amount

of

approximately

THB2.4 billion

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(approximately HK$590 million) and consideration to

resolve all disputes between the Parties.

Cash Consideration:

The Cash Consideration for the Transaction is US$70

million (approximately HK$546 million) in cash,

exclusive of applicable taxes. The Cash Consideration

shall be paid to the Phataraprasit Shareholders and/or

their respective designated persons on Completion.

The Cash Consideration shall be funded from the

Company's own resources and would be paid on

Completion.

Financial impact:

On Completion, TCS and TCE will be deconsolidated

from the Group's financial statements resulting in a

decrease in the Company's net assets (approximately

HK$440 million) and the non-controlling interest in

respect of the Phataraprasit Shareholders' interest in

HSH-SCH (approximately HK$340 million) will be

eliminated. Excluding the related restructuring and

transaction costs, the Transaction will result in a negative

equity movement of approximately HK$650 million

based on existing book value of The Peninsula Bangkok

and its surrounding land, before taking into account any

assessment of the market values or redevelopment

potential of the same.

Upon Completion, HSH-SCH shall become an indirect wholly-owned limited liability subsidiary of the Company, and the financial results, assets and liabilities of HSH-SCH shall continue to be consolidated into the financial statements of the Group. In addition, TCS and TCE shall cease to be subsidiaries of the Company, and the financial results, assets and liabilities of TCS and TCE shall cease to be consolidated into the financial statements of the Group.

As the applicable percentage ratio of the Transaction under Chapter 14 of the Listing Rules is 5% or more, but less than 25%, the Transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

Reasons for the restructuring and Transaction

Prior to the restructuring, the Company, through its subsidiaries, and the Phataraprasit Shareholders had entered into 50/50 joint venture arrangements in HSH-SCH to own and for the Company to manage The Peninsula Bangkok and the Thai Country Club.

Upon Completion, the Company will (i) assume full responsibility and control over the development, management and future operations of The Peninsula Bangkok and its surrounding land, as well as be entitled to the profits and assume the liabilities and expenses of the hotel and its surrounding land; and (ii) cease to have any responsibility over the development, management and future operations of the Thai Country Club and TCC Land Parcels. The restructuring is in line with the Company's principal business of hotel ownership and management and reflects the desire of the Company and the Phataraprasit Shareholders

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The Hongkong and Shanghai Hotels Ltd. published this content on 28 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 August 2020 04:32:09 UTC