CK Hutchison : CONNECTED TRANSACTION - SALE OF COMPANIES ENGAGED IN AIRCRAFT LEASING BUSINESS

Date

:

2 December 2016.

Parties

:

1. CKHH Sub, an indirect wholly-owned subsidiary of the Company, as vendor.

2. CKP Sub, as purchaser.

Subject matter

:

CKHH Sub agreed to sell to CKP Sub (i) the CK Capital Sale Shares; and (ii) the Harrier Global Sale Share.

The CK Capital Sale Shares represent the entire issued share capital of CK Capital. The Harrier Global Sale Share represents the entire issued share capital of Harrier Global.

Consideration

:

The consideration for the CK Capital Sale Shares is approximately US$973 million (approximately HK$7,550 million), subject to adjustments in accordance with the Sale and Purchase Agreement (with the upward adjustment, if any, limited to a maximum of US$8 million (approximately HK$62 million)).

The consideration for the Harrier Global Sale Share is approximately US$5 million (approximately HK$39 million), subject to adjustments in accordance with the Sale and Purchase Agreement (with the upward adjustment, if any, limited to a maximum of US$3 million (approximately HK$23 million)).

The consideration for the CK Capital Sale Shares is to be satisfied as to approximately US$172 million (approximately HK$1,335 million) by way of the assumption by CKP Sub of the existing liability of CKHH Sub under the CK Capital Loan, and as to the balance to be settled in cash by CKP Sub. The consideration for the Harrier Global Sale Share is to be settled wholly in cash by CKP Sub.

The amount of the consideration for each of the Transactions was negotiated and determined by the parties on an arm's length basis after taking into consideration respectively, among others, the consolidated net book value of the CK Capital Group, and the net book value of Harrier Global and with reference to the price to book ratio of a number of established public companies engaged in the aircraft ownership and leasing business, the securities of which are listed on securities markets.

Settlement terms and price adjustments

:

The consideration in respect of each of the Transactions will be settled in full at Completion, subject to adjustments in respect of net assets of the CK Capital Group and Harrier Global, by reference to completion accounts to be prepared in accordance with the Sale and Purchase Agreement.

The adjustment amounts shall be settled within 10 business days of the determination of the net assets of the CK Capital Group and Harrier Global with reference to the completion accounts mentioned above.

Conditions Precedent

:

Completion of the Transactions is conditional upon the fulfillment (or waiver by CKP Sub, as applicable) of the following conditions:

1. all Consents from any government authority, whether of Hong Kong or elsewhere, or any other third parties which may be required in connection with the transactions contemplated under the Sale and Purchase Agreement under any existing contractual arrangements, including loan and other finance documentation, or any applicable laws, rules and regulations having been obtained and where any Consent is subject to conditions, such conditions being reasonably satisfactory to CKP Sub and CKHH Sub; and

2. the representations, warranties and undertakings given by CKHH Sub under the Sale and Purchase Agreement remaining true and accurate and not misleading as of the date of Completion by reference to the facts and circumstances subsisting as at that date.

If any of the Conditions Precedent (which have not previously been waived by CKP Sub) have not been fulfilled on 31 March 2017 (or such later date as CKHH Sub and CKP Sub may agree), the Sale and Purchase Agreement shall lapse.

Completion

:

Completion is to take place on the 7th business day after all the Conditions Precedent have either been fulfilled or waived (or on such other date as CKHH Sub and CKP Sub may agree).

Subject to the fulfilment of the Conditions Precedent, Completion is expected to take place within two months from the date of the Sale and Purchase Agreement. Completion of the sale of the CK Capital Sale Shares and completion of the sale of the Harrier Global Sale Share are conditional upon each other, and are to take place at the same time.

Upon Completion, each of CK Capital and Harrier Global will cease to be a subsidiary of the Company.

As a result, upon Completion, a US$150 million (approximately HK$1,164 million) several guarantee currently provided by the Company in respect of bank borrowings of a number of subsidiaries of Vermillion will be replaced by another guarantee of the same amount to be provided by CKP.

For the period ended 31 December 2014 (in million)

For the year ended 31 December 2015 (in million)

Consolidated profit before taxation

US$14.05

(approximately HK$109.03)

US$77.29

(approximately HK$599.77)

Consolidated profit after taxation

US$14.52

(approximately HK$112.68)

US$79.78

(approximately HK$619.09)

For the period ended 31 December 2014 (in million)

For the year ended 31 December 2015 (in million)

(Loss) profit before and after taxation

(US$0.28)

(approximately (HK$2.17))

US$6.05

(approximately HK$46.95)