GRAND BAOXIN AUTO GROUP LIMITED
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.
BAOXIN AUTO GROUP LIMITED
寶 信 汽 車 集 團 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 1293)
CONNECTED TRANSACTION
DISPOSAL OF ENTIRE INTEREST IN EXTENSIVE PROSPEROUS INVESTMENTS LIMITED
The Board is pleased to announce that on August 28, 2015, the Company and Orient Rich entered into the Sale and Purchase Agreement pursuant to which the Company has agreed to sell and Orient Rich has agreed to purchase 50,000 shares in Extensive Prosperous held by the Company, representing 100% of its issued shares. The consideration for the Disposal is RMB100,000,000.
As at the date of this announcement, Orient Rich is wholly-owned by Mr. Yang Aihua, an executive director and one of the controlling shareholders of the Company controlling the voting rights of approximately 53.58% of the total issued share capital of the Company, and hence a connected person of the Company under the Listing Rules. Therefore, the Disposal constitutes a connected transaction of the Company according to Chapter 14A of the Listing Rules.
As the applicable percentage ratios in respect of the Disposal are more than 0.1% but less than 5%, the Disposal is subject to the reporting and announcement requirements but exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
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THE SALE AND PURCHASE AGREEMENT
The key terms of the Sale and Purchase Agreement are summarized as follows:
Date
August 28, 2015
Parties
Seller: the Company
Purchaser: Orient Rich
Assets to be disposed of
Pursuant to the Sale and Purchase Agreement, the Company has agreed to sell and Orient Rich has agreed to purchase 50,000 shares in Extensive Prosperous held by the Company, representing 100% of its issued shares.
Consideration
The consideration for the Disposal is RMB100,000,000 and shall be paid by cash by Orient
Rich to the Company on the Completion Date.
The consideration was determined between the parties after arm's length negotiations with reference to the investment amount of RMB100,000,000 made by the Company in Extensive Prosperous, which was further invested by Extension Prosperous in Autostreets. The only asset of Extensive Prosperous is a 38% equity interest in Autostreets.
A gain in an amount of approximately RMB13,699,000 is expected to accrue to the Company as a result of the Disposal based on the excess of the consideration for the Disposal over the carrying value of Extensive Prosperous of approximately RMB86,301,000 as of June 30, 2015 in accordance with the books and records of Extensive Prosperous.
Conditions Precedent
Completion of the Sale and Purchase Agreement is conditional upon, among others, the parties' obtaining all requisite approvals of government entities and consents or waivers of any third party under any agreements to which each of the Company, Orient Rich and Extensive Prosperous has entered into.
Completion
Completion of the Sale and Purchase Agreement shall take place on the Completion Date and thereafter, Extensive Prosperous shall cease to be a subsidiary of the Company.
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REASONS FOR AND BENEFITS OF THE DISPOSAL
The only asset of Extensive Prosperous is a 38% equity interest in Autostreets, which operates an integrated platform for both online and offline auto service. The Company's investment in Extensive Prosperous and hence Autostreets since September 2014 was due to its plan to expand its automobile business. However, the financial performance of Extensive Prosperous has been disappointing and it made a net loss of RMB23,374,000 for the 2014 financial year. Therefore, the Company wishes to terminate its investment in Extensive Prosperous and Autostreets, recover its funds and concentrate on the development of the principal business of the Group. The proceeds arising from the Disposal will be used as general working capital of the Group.
The terms of the Sale and Purchase Agreement are determined after arm's length negotiations between the parties. The directors of the Company (including the independent non-executive directors but excluding Mr. Yang Aihua who has abstained from voting on the Sale and Purchase Agreement and the Disposal due to his interests involved) consider that the terms of the Sale and Purchase Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole.
INFORMATION ON EXTENSIVE PROSPEROUS
Extensive Prosperous is a company incorporated in the British Virgin Islands with limited liability and an investment holding company. The only asset of Extensive Prosperous is a
38% equity interest in Autostreets which operates an integrated platform for both online and offline auto service aiming to provide Chinese automobile owners with one-stop auto-related services, enabling customers to enjoy traditional offline services covering all cycles of automobile business.
As at June 30, 2015, the unaudited net asset value of Extensive Prosperous under Hong Kong Financial Reporting Standards was approximately RMB86,301,000. Extensive Prosperous was incorporated in July 2014. The unaudited net loss (before and after taxation and extraordinary items) of Extensive Prosperous for the financial year ended December 31,
2014 was RMB23,374,000.
INFORMATION ON THE GROUP
The Group is a leading luxury 4S dealership group in the PRC and is principally engaged in the sale and service of motor vehicles.
INFORMATION ON ORIENT RICH
Orient Rich is a company incorporated in the British Virgin Islands and an investment holding company. It is wholly-owned by Mr. Yang Aihua, an executive director and one of the controlling shareholders of the Company controlling the voting rights of approximately
53.58% of the total issued share capital of the Company, and hence a connected person of the Company under the Listing Rules.
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LISTING RULES IMPLICATIONS
As at the date of this announcement, Orient Rich is wholly-owned by Mr. Yang Aihua, an executive director and one of the controlling shareholders of the Company controlling the voting rights of approximately 53.58% of the total issued share capital of the Company, and hence a connected person of the Company under the Listing Rules. Therefore, the Disposal constitutes a connected transaction of the Company according to Chapter 14A of the Listing Rules.
As the applicable percentage ratios in respect of the Disposal are more than 0.1% but less than 5%, the Disposal is subject to the reporting and announcement requirements but exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
The Board (including the independent non-executive directors of the Company) has considered and approved the Sale and Purchase Agreement and the Disposal. Since Mr. Yang Aihua holds 100% shareholding in Orient Rich, he was considered to have conflict of interest in the Disposal and had accordingly abstained from voting on the board resolutions approving the Sale and Purchase Agreement and the Disposal.
Definitions
In this announcement, unless the context otherwise requires, the following terms shall have the meaning below:
''Autostreets'' Autostreets Development Limited (汽車街發展有限公司), a company incorporated in the Cayman Islands on September
3, 2014 with limited liability
''Board'' the board of directors of the Company
''Company'' Baoxin Auto Group Limited (寶信汽車集團有限公司) (formerly known as Baoxin Auto Group Ltd.), an exempted company incorporated in the Cayman Islands on September
6, 2010 with limited liability, the ordinary shares of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited (stock code: 1293)
''Completion Date'' the date on which completion of the Sale and Purchase Agreement shall occur, which is expected to be on or before September 29, 2015
''connected person'' has the meaning ascribed thereto under the Listing Rules
''controlling shareholder'' has the meaning ascribed thereto under the Listing Rules
''Disposal'' the disposal of 50,000 shares in Extensive Prosperous (representing 100% of its issued shares) by the Company to Orient Rich in accordance with the terms of the Sale and Purchase Agreement
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''Extensive Prosperous'' Extensive Prosperous Investments Limited (昌廣投資有限公
司), a company incorporated in the British Virgin Islands on
July 2, 2014 with limited liability
''Group'' the Company and its subsidiaries
''Hong Kong'' Hong Kong Special Administrative Region of the PRC
''Listing Rules'' Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as amended from time to time)
''Orient Rich'' Orient Rich Investment Development Limited, a company incorporated in the British Virgin Islands with limited liability and a connected person
''PRC'' The People's Republic of China, for the purpose of this announcement, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan
''RMB'' Renminbi, the lawful currency of the PRC
''Sale and Purchase
Agreement''
the sale and purchase agreement in relation to the Disposal entered into by the Company as seller and Orient Rich as purchaser on August 28, 2015
''subsidiary'' has the meaning ascribed thereto under the Listing Rules
By order of the Board
Baoxin Auto Group Limited
YANG Aihua
Chairman
The PRC, August 30, 2015
As at the date of this announcement, the executive directors of the Company are Mr. YANG Aihua, Mr. YANG Hansong, Mr. YANG Zehua, Ms. HUA Xiuzhen and Mr. ZHAO Hongliang, the non-executive director of the Company is Mr. LU Linkui, and the independent non- executive directors of the Company are Mr. DIAO Jianshen, Mr. WANG Keyi and Mr. CHAN Wan Tsun Adrian Alan.
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