CHANGYOU ALLIANCE 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.
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 1039) CONNECTED TRANSACTION ADVANCEMENT OF TERM LOAN Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders
The Company (as lender) and Century Network (as borrower) entered into the Loan Agreement on 11
June 2015 (after trading hours), pursuant to which the Company conditionally agreed to advance an unsecured loan of an aggregate amount of not more than US$22 million to its 51% owned subsidiary, Century Network.
As at the date of this announcement, Century Network is owned as to 51% by the Company and as to 49% by Century East Network Limited. Century East Network Limited is owned as to 69% by Century Investment (Holding) Limited, which is a substantial shareholder of the Company. Century Network is therefore a connected person of the Company under Rule 14A.16 of the Listing Rules and the advancement of the Loan will constitute a connected transaction for the Company. As the highest applicable percentage ratio (as defined in the Listing Rules) in respect of the advancement of the Loan is 5% or more, the advancement of the Loan is subject to the reporting, announcement and the Independent Shareholders' approval requirements under the Listing Rules.
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An Independent Board Committee has been established to make recommendations to the Independent Shareholders in relation to the Loan Agreement and the transactions contemplated thereunder. The Company has appointed Southwest HK Capital as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.
EGM
An EGM will be convened for the Independent Shareholders to consider and, if thought fit, approve the Loan Agreement and the transactions contemplated thereunder.
A circular containing, inter alia, (a) further information on the Loan Agreement and the transactions contemplated thereunder; (b) a letter of advice containing the recommendations from the Independent Board Committee to the Independent Shareholders in relation to the Loan Agreement and the transactions contemplated thereunder; (c) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its advice on the Loan Agreement and the transactions contemplated thereunder; and (d) a notice convening the EGM, will be despatched to the Shareholders on or before 3 July 2015.
After trading hours of the Stock Exchange on 11 June 2015, the Company as lender and Century Network as borrower entered into the Loan Agreement pursuant to which the Company conditionally agreed to advance an unsecured loan of an aggregate amount of not more than US$22 million to Century Network with the principal terms as follows:
Date: 11 June 2015
Parties: (i) the Company, as lender; and
(ii) Century Network, as borrower
the borrower, being Century Network Holding Limited, is a company incorporated in the BVI with limited liability. As at the date of this announcement, Century Network is owned as to 51% by the Company and as to 49% by Century East Network Limited. Century East Network Limited is owned as to 69% by Century Investment (Holding) Limited, which is a substantial shareholder of the Company. Century Network is therefore a connected person of the Company under Rule 14A.16 of the Listing Rules
Loan amount: up to US$22 million, at the option of Century Network
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Loan purpose: for developing the e-commerce business, and for general working capital and capital expenditure of Century Network
Conditions precedent: the Loan is conditional upon the Independent Shareholders having at the EGM approved the advancement of the Loan and Century Network having performed its obligations under the Loan Agreement
Drawdown: Century Network may draw the Loan from the date on which the conditions precedent of the Loan Agreement are satisfied provided that at least 24 hours' prior written notice (or a shorter notice as Century Network and the Company may agree) of the date on which Century Network wants to draw the Loan available for advancement thereunder is given. Century Network may draw the Loan in a single amount or in multiple amounts
Interest rate: 13% per annum (on the basis of a 365-day year), payable in advance semi- annually
Interest payment date: throughout the term of the Loan Agreement from the drawdown date, the
1st day of each June and December, being a date upon which interest on the outstanding principal is due and payable
Maturity date: the third anniversary of the drawdown date or such later date as Century Network and the Company may agree in writing, being the date for repayment of the Loan and the interest accrued thereon in full
Voluntary repayment: Century Network may at any time prior to the maturity date repay the Loan in whole or in part (and/or the interest accrued thereon), without any penalty at any time after the Loan has been advanced
Reborrowing: Century Network will not reborrow any part of the Loan which is repaid
Costs and expenses: the Company and Century Network will bear their own costs and expenses in connection with the negotiation and preparation, amendment, extension, alteration, and enforcement of the Loan and/or the Loan Agreement. Century Network, on a pro rata basis, will bear the finance costs incurred by the Company in financing the Loan
Century Network is part of a corporate group which started their electronic commerce business in May
2013 through the establishment of a cross-border business-to-business electronic distribution platform, CCIGMALL.com. It is principally engaged in sourcing, importing and channeling authentic goods from suppliers abroad, and then distributing and reselling such goods to domestic retailers in the PRC. Century Network currently is owned as to 51% by the Company.
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The Company is an investment holding company incorporated in the Cayman Islands with limited liability. The Group is an independent axle component provider for the PRC's medium duty truck ("MDT") and heavy duty truck ("HDT") aftermarket, and also an independent axle assembly providers for the PRC's MDT and HDT original equipment manufacturers ("OEM") market. The Group is engaged in the manufacture and sales of axle assemblies and axle components in the PRC. The Group, through the Company's shareholding in Century Network, is also engaged in electronic commerce business through a cross-border business-to-business electronic distribution platform sourcing, importing and channeling authentic goods from suppliers abroad and then distributing and reselling such goods to domestic retailers in the PRC.
The terms of the Loan Agreement, including the applicable interest rate, were agreed by the Company and Century Network after arm's length negotiations having taken into account the prevailing market practices and the finance costs incurred by the Company in financing the Loan. The Directors (including independent non-executive Directors) consider that the advancement of the Loan would be beneficial to support the development of the Group's electronic commerce business as stated in the preceding paragraph.
Given Century Network has a relatively short trading history, the finance costs for Century Network to obtain borrowings from commercial banks may be higher when compared with the finance costs to be incurred by Century Network for the Loan, the Directors therefore consider that the advancement of the Loan by the Company will be a more efficient way to satisfy the financing needs of Century Network.
In view of the above, the Directors (excluding independent non-executive Directors, who will express their view in the circular after considering the advice from the Independent Financial Adviser) are of the view that the terms of the Loan Agreement are on normal commercial basis and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
As at the date of this announcement, Century Network is owned as to 51% by the Company and as to 49% by Century East Network Limited. Century East Network Limited is owned as to 69% by Century Investment (Holding) Limited, which is a substantial shareholder of the Company. Century Network is therefore a connected person of the Company under Rule 14A.16 of the Listing Rules and the advancement of the Loan will constitute a connected transaction for the Company. As the highest applicable percentage ratio (as defined in the Listing Rules) in respect of the advancement of the Loan is
5% or more, the advancement of the Loan is subject to the reporting, announcement and the Independent
Shareholders' approval requirements under the Listing Rules.
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An Independent Board Committee has been established to make recommendations to the Independent Shareholders in relation to the Loan Agreement and the transactions contemplated thereunder. The Company has appointed Southwest HK Capital as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.
EGM
An EGM will be convened for the Independent Shareholders to consider and, if thought fit, approve the Loan Agreement and the transactions contemplated thereunder. Century Investment (Holding) Limited and its associates will abstain from voting at the EGM.
A circular containing, inter alia, (a) further information on the Loan Agreement and the transactions contemplated thereunder; (b) a letter of advice containing the recommendations from the Independent Board Committee to the Independent Shareholders in relation to the Loan Agreement and the transactions contemplated thereunder; (c) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its advice on the Loan Agreement and the transactions contemplated thereunder; and (d) a notice convening the EGM, will be despatched to the Shareholders on or before 3 July 2015.
In this announcement, the following expressions have the following meanings unless the contexts otherwise require:
"associate" has the meaning ascribed to it under the Listing Rules
"Board" the board of Directors
"BVI" the British Virgin Islands
"Century Network" Century Network Holding Limited, a company incorporated in the BVI
with limited liability
"Company" Changfeng Axle (China) Company Limited ( ��Jlfil('P�):f�%R' ), a company incorporated in the Cayman Islands, the Shares of which are listed on the Main Board of the Stock Exchange
"connected person(s)" has the meaning ascribed to it under the Listing Rules
"Director(s)" director(s) of the Company
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"EGM" an extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve, among other things, the Loan Agreement and the transactions contemplated thereunder
"Group" the Company and its subsidiaries
"Hong Kong" the Hong Kong Special Administrative Region of the People's Republic of
China
"Independent Board
Committee"
the independent committee of the Board, comprising all the independent non-executive Directors namely Mr. Wong Chi Keung, Mr. Liu Erhfei and Mr. Chan Chi Keung Alan, established to advise the Independent Shareholders as to the Loan Agreement and the transactions contemplated
thereunder
"Southwest HK Capital" or
"Independent Financial
Adviser"
Southwest Securities (HK) Capital Limited, a corporation licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and the independent financial adviser to the Independent
Board Committee and the Independent Shareholders
"Independent
Shareholders"
Shareholders other than Century Investment (Holding) Limited and its
associates
"Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange
"Loan" an unsecured loan up to the principal amount of US$22 million to be advanced by the Company to Century Network on the terms set out in the Loan Agreement, details of which are set out in the paragraph headed "Loan Agreement" in this announcement
"Loan Agreement" the loan agreement entered into between the Company as lender and
Century Network as borrower for the Loan dated 11 June 2015
"PRC" the People's Republic of China, excluding Hong Kong, the Macau Special Administrative Region of the People's Republic of China and Taiwan (Republic of China) for the purposes of this announcement
"Shares" the ordinary share(s) of the Company with a par value of US$0.01 each
"Shareholder(s)" the holder(s) of the Share(s)
"Stock Exchange" The Stock Exchange of Hong Kong Limited
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"subsidiary" any undertaking in relation to which another undertaking is its parent undertaking under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong)
"substantial shareholder" has the meaning ascribed to it under the Listing Rules
"US$" United States dollar, the lawful currency of the United States of America
"%" per cent
By Order of the Board
Chairman
Hong Kong, 11 June 2015
As at the date of this announcement, the executive directors of the Company are Mr. Cheng Jerome, Ms. Wu Ching and Mr. Yuan Weitao; the non-executive directors of the Company are Ms. Dong Ying, Dorothy, Mr. Feng Xiaohui and Mrs. Guo Yan; and the independent non-executive directors of the Company are Mr. Wong Chi Keung, Mr. Liu Erhfei and Mr. Chan Chi Keung Alan.
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