Xinchen China Power : CONNECTED TRANSACTION FINANCIAL ASSISTANCE FROM BBA

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XINCHEN CHINA POWER HOLDINGS LIMITED

新 晨 中 國 動 力 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1148)

CONNECTED TRANSACTION

FINANCIAL ASSISTANCE FROM BBA

On 11 May 2021 (after trading hours), Mianyang Xinchen, Mianyang Xinchen (Shenyang Branch) and Shenyang Xinchen, all of which are wholly-owned subsidiaries of the Company, entered into with BBA:

1. the Support Agreement, pursuant to which, among others, BBA has conditionally agreed to lend, and Mianyang Xinchen, Mianyang Xinchen (Shenyang Branch) and Shenyang Xinchen have conditionally agreed to borrow, the Loan in the principal amount of RMB500 million at an interest rate of 4.6% per annum; and
2. the MOU which sets out provisions relating to, among others, the Loan and the Potential Disposal.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Brilliance China, a controlling shareholder of the Company, is indirectly interested in 50% of the issued share capital of BBA. As BBA is an associate of Brilliance China, it is a connected person of the Company under Chapter 14A of the Listing Rules. Therefore, the making of the Loan as contemplated under the Support Agreement and the MOU constitute a connected transaction for the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the Loan is higher than 5% and the principal amount of the Loan exceeds HK$10 million, the Support Agreement, the Mortgage Agreements, the MOU (to the extent which concerns the Loan) and the transactions contemplated thereunder (in respect of the MOU, to the extent which concerns the Loan) are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

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GENERAL

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the Support Agreement, the Mortgage Agreements, the MOU (to the extent which concerns the Loan) and the transactions contemplated thereunder (in respect of the MOU, to the extent which concerns the Loan).

The Independent Financial Adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Support Agreement, the Mortgage Agreements, the MOU (to the extent which concerns the Loan) and the transactions contemplated thereunder (in respect of the MOU, to the extent which concerns the Loan).

A circular containing, amongst other things, details of the Support Agreement, the Mortgage Agreements and the MOU (to the extent which concerns the Loan), the letter from the Independent Board Committee and the letter from the Independent Financial Adviser and a notice convening the Extraordinary General Meeting for the Independent Shareholders to consider and, if thought fit, approve the Support Agreement, the Mortgage Agreements, the MOU (to the extent which concerns the Loan) and the transactions contemplated thereunder (in respect of the MOU, to the extent which concerns the Loan) is expected to be despatched on or before 3 June 2021.

The Board announces that on 11 May 2021 (after trading hours), Mianyang Xinchen, Mianyang Xinchen (Shenyang Branch) and Shenyang Xinchen, all of which are wholly-owned subsidiaries of the Company, entered into with BBA:

1. the Support Agreement, pursuant to which, among others, BBA has conditionally agreed to lend, and Mianyang Xinchen, Mianyang Xinchen (Shenyang Branch) and Shenyang Xinchen have conditionally agreed to borrow, the Loan in the principal amount of RMB500 million at an interest rate of 4.6% per annum; and
2. the MOU which sets out provisions relating to, among others, the Loan and the Potential Disposal.

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SUPPORT AGREEMENT

The principal terms of the Support Agreement are set out below:

Date:	11 May 2021
Parties:	(1)	BBA, as lender
	(2)	Mianyang Xinchen, Mianyang Xinchen (Shenyang Branch) and
		Shenyang Xinchen, all of which are wholly-owned subsidiaries of the
		Company, as joint borrowers
Subject:	the Loan in the principal amount of RMB500 million
Term:	The term shall be for a period commencing from the day on which BBA
	releases the proceeds of the Loan in accordance with the Support Agreement
	and ending on the day on which the Loan shall be repaid in accordance with
	the Support Agreement. Notwithstanding any other provisions of the Support
	Agreement, the repayment date of the Loan shall not exceed 190 business
	days after execution of the Support Agreement, i.e. the Loan together with
	interest accrued thereon shall be repaid by the Borrowers to BBA no later
	than 10 business days from the 180th business day after execution of the
	Support Agreement.
Use:	The Borrowers shall use the proceeds of the Loan in first priority to repay the
	outstanding principal amount and interest accrued of the term loan facilities
	provided to Mianyang Xinchen by Hang Seng Bank Limited under the Hang
	Seng Facility Letter.
Interest:	4.6% per annum (unless BBA and the Borrowers otherwise agree in writing),
	calculated on the basis of the number of days from (and including) the
	payment date of the Loan to (but excluding) the day on which the term of the
	Loan ends and on a 360-day basis, and payable in one lump sum upon the end
	of the Loan.

Penalty interest and misuse interest:

If the Borrowers neither repay the principal amount of the Loan in accordance with the terms of the Support Agreement, nor reach an agreement with BBA on the extension of the term of the Loan, BBA shall have the right to charge penalty interest from the date of overdue on the outstanding principal amount of the Loan based on the penalty interest rate published by the People's Bank of China, which means 30% interest over the ordinary interest rate of 4.6%, until the outstanding principal amount of the Loan and the interest accrued and due are repaid in full. If the Borrowers use the Loan for purposes not provided in the Support Agreement, BBA shall have the right to charge misuse penalty interest of the misused amount based on the misuse penalty interest rate published by the People's Bank of China, which is 50% interest over the ordinary interest rate of 4.6%.

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Conditions precedent:

The Loan shall be made subject to satisfaction of the following conditions, unless any of them or any part thereof has been waived by BBA in writing:

1. the Borrowers have executed with BBA the Mortgage Agreements as requested by BBA;
2. the registration formalities for the mortgages created by the Mortgage Agreements with the competent governmental authorities have been completed and BBA has been registered as the sole mortgagee of the Mortgaged Assets;
3. the Borrowers have provided a proposal to BBA regarding the utilisation of the Loan;
4. an approval by the board of directors of BBA on the Loan has been obtained;
5. all necessary internal and external consents, licenses, approvals and waivers in connection with the execution of the Support Agreement and performance of their obligations under the Support Agreement have been obtained by the Borrowers; and
6. all the representations and warranties of the Borrowers in the Support Agreement are true and correct in all respects.

Mandatory repayment:

Under any of the following circumstances, BBA may request repayment of the Loan and interest accrued thereon by serving a written notice on the Borrowers, and the Borrowers shall repay to BBA the Loan already made and interest accrued thereon within 10 business days upon receipt of such notice:

1. any of the Borrowers becomes insolvent, bankrupt, or a significant part of its assets are ruled to be bankruptcy assets in any bankruptcy proceeding;
2. any encumbrance other than, among others, the mortgages created by the Mortgage Agreements is created over the Mortgaged Assets, or the Mortgaged Assets or equity interests of the Borrowers are under seizure or freezing proceedings;
3. any of the Mortgage Agreements is terminated, withdrawn, confirmed or ruled to be invalid, illegal or unenforceable at any time;
4. any of the business arrangements under the Support Agreement cannot be implemented due to whatsoever reason;
5. any of the Borrowers materially breaches its representations, warranties, covenants and obligations under the Support Agreement or other agreements to which it is a party with respect to the arrangement under the Support Agreement.

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In addition, where the Borrowers intend to transfer the Mortgaged Assets and BBA has the intention to purchase the Mortgaged Assets, BBA may under any of the following circumstances request repayment of the Loan and interest accrued thereon by serving a written notice on the Borrowers, and the Borrowers shall repay to BBA the Loan already made and interest accrued thereon within 10 business days upon receipt of such notice:

1. the approval by the Shareholders for all the transactions and matters covered by the Support Agreement (if applicable) is not obtained within 40 business days after the execution of the Support Agreement, or the Borrowers fail to initiate the Mortgaged Assets Public Listing Process within 20 business days after the obtaining of the above approval of the Shareholders;
2. BBA is not selected as the winning bidder during the Mortgaged Assets Public Listing Process; and
3. the land use right/property right of the Mortgaged Assets is not delivered to BBA within 180 business days after execution of the Support Agreement.

Termination:

The Support Agreement may be unilaterally terminated by BBA with a ten-day notice under any of the following circumstances:

1. the financial status of the Borrowers has significantly improved;
2. BBA decides to provide other financial support to the Borrowers; and
3. other circumstances as deemed reasonable by BBA to terminate the Support Agreement.

Upon the unilateral termination of the Support Agreement by BBA, the Borrowers shall repay the Loan and the interest accrued within 10 business days and BBA and the Borrowers shall conclude a new agreement in relation to, among others, the deregistration of the mortgages created by the Mortgage Agreements (if necessary).

Security:

The repayment of the Loan by the Borrowers is secured by the mortgages to be created over the Mortgaged Assets under the Mortgage Agreements.

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