Coastal Greenland : VERY SUBSTANTIAL DISPOSAL IN RELATION TO THE DISPOSAL OF 70% EQUITY INTERESTS IN A WHOLLY OWNED SUBSIDIARY AND RESUMPTION OF TRADING (in PDF)

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沿海綠色家園有限公司 *

(Incorporated in Bermuda with limited liability)

On 3 August 2016 (after trading hours of the Stock Exchange), the Vendors, the Target Company and the Purchaser entered into the Disposal Agreement, pursuant to which the Vendors conditionally agreed to transfer 70% equity interests in the Target Company to the Purchaser for a total consideration of RMB875 million (equivalent to approximately HK$1,029.4 million), which is payable as follows:

1. cash deposit in the sum of RMB100 million (equivalent to approximately HK$117.6 million) and the first instalment of the Consideration in the sum of RMB337.5 million (equivalent to approximately HK$397.1 million) shall be payable by the Purchaser to Shanghai Coastal within 5 days after the date of signing of the Disposal Agreement; and

2. RMB437.5 million (equivalent to approximately HK$514.7 million) shall be payable by the Purchaser to the Vendors within 5 days after the date of Completion.

Preferred Profits of RMB1,834 million (equivalent to approximately HK$2,157.6 million) shall be payable by the Purchaser to Coastal Wuhan within 24 months after the date of Completion according to the payment schedule pursuant to the Disposal Agreement.

Completion of the Disposal Agreement is conditional upon passing by the Shareholders at a general meeting of the Company of the ordinary resolution(s) to approve the Disposal Agreement and the transactions contemplated thereunder.

As one of the applicable percentage ratios set forth under Rule 14.07 of the Listing Rules in respect of the Disposal is 75% or more, the Disposal constitutes a very substantial disposal for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules. The SGM will be convened and held for the Shareholders to consider and, if thought fit, to approve the Disposal.

A circular containing, among other things, details of the Disposal Agreement and the Target Company, the financial information of the Group, the financial information of the Target Company, the notice convening the SGM and other information as required under the Listing Rules is expected to be despatched to the Shareholders on or before Friday, 30 September 2016, so as to allow sufficient time for the preparation of the relevant information for inclusion in the circular.

At the request of the Company, trading in the Shares on the Stock Exchange has been halted from 9:53 a.m. on Thursday, 4 August 2016 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange from 9:00 a.m. on Tuesday, 9 August 2016.

On 3 August 2016 (after trading hours of the Stock Exchange), the Vendors, the Target Company and the Purchaser entered into the Disposal Agreement, pursuant to which the Vendors conditionally agreed to transfer 70% equity interests in the Target Company to the Purchaser for a total consideration of RMB875 million (equivalent to approximately HK$1,029.4 million).

3 August 2016

Vendors : Coastal Greenland Development (Wuhan) Ltd.

Shanghai Coastal Greenland Real Estate Ltd.

Target Company : Tianjin Harmonious Realty Development Co., Limited Purchaser : Tianjin Vanke Real Estate Company Limited

Coastal Wuhan is a company established in the PRC with limited liability. It is a wholly-owned subsidiary of the Company and is principally engaged in property development. As at the date of this announcement, Coastal Wuhan is holding 61.87% equity interests in the Target Company.

Shanghai Coastal is a company established in the PRC with limited liability. It is a wholly-owned subsidiary of the Company and is principally engaged in investment holding. As at the date of this announcement, Shanghai Coastal is holding 38.13% equity interests in the Target Company.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, (i) the Purchaser is a company established in the PRC with limited liability and is principally engaged in property development; and (ii) the Purchaser and its ultimate beneficial owner(s) are Independent Third Parties.

Pursuant to the Disposal Agreement, Coastal Wuhan shall dispose of its 31.87% interests in the Target Company and Shanghai Coastal shall dispose of its 38.13% interests in the Target Company, representing in aggregate 70% of the equity interests in the Target Company to the Purchaser, upon Completion. After the Disposal, the Target Company will be owned as to 70% by the Purchaser and 30% by Coastal Wuhan.

The Consideration is RMB875 million (equivalent to approximately HK$1,029.4 million), which is payable as follows:

1. cash deposit in the sum of RMB100 million (equivalent to approximately HK$117.6 million) and the first instalment of the Consideration in the sum of RMB337.5 million (equivalent to approximately HK$397.1 million) shall be payable by the Purchaser to Shanghai Coastal within 5 days after the date of signing of the Disposal Agreement; and

2. RMB437.5 million (equivalent to approximately HK$514.7 million) shall be payable by the Purchaser to the Vendors within 5 days after the date of Completion.

Preferred profits of RMB1,834 million (equivalent to approximately HK$2,157.6 million) shall be payable by the Purchaser to Coastal Wuhan within 24 months after the date of Completion according to the payment schedule pursuant to the Disposal Agreement.

As at 30 June 2016, the unaudited net asset value of the Target Company was approximately RMB1,249.1 million (equivalent to approximately HK$1,461.5 million). The Consideration was determined after arms' length negotiations with reference to (i) the net asset value of the Target Company; (ii) the Preferred Profits to Coastal Wuhan as stated in the paragraph headed "Preferred Profits to Coastal Wuhan" below; (iii) the future prospect of the Target Company; and (iv) the expected returns of the existing property development projects undertaken by the Target Company.

The Directors consider each of the factors above is a fair and reasonable basis as (i) RMB875 million represents approximately 70% of the unaudited net asset value of the Target Company of RMB1,249.1 million as at 30 June 2016; (ii) the Preferred Profits provide a guaranteed return that recognise the preparatory work and initial investment efforts of the Group in the Project; and (iii) after the Completion, the 30% interests in the Target Company enables the Group to share the result of the Target Company in the future.

The Directors consider that the terms and conditions of the Disposal are fair and reasonable and are on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

Preferred Profits to Coastal Wuhan

Due to the preparatory work performed and investment by the Vendors, the Purchaser agreed to distribute profits (the "Preferred Profits") up to RMB1,834 million (equivalent to approximately HK$2,157.6 million) to Coastal Wuhan after the completion of the transfer of the Sale Capital in the following way:

1. a profit distribution by the Target Company to Coastal Wuhan in the amount of RMB600 per sq.m. of the gross floor area developable by the land sold by the Target Company within 5 days upon the receipt of proceeds from such sale;

2. in the event Coastal Wuhan receives (a) less than RMB100 million of the Preferred Profits within 6 months after Completion; (b) cumulatively less than RMB300 million of the Preferred Profits within 12 months after Completion; (c) cumulatively less than RMB600 million of the Preferred Profits within 18 months after Completion; and (d) cumulatively less than RMB1,834 million of the Preferred Profits within 24 months after Completion, the Target Company shall make up the shortfall accordingly;

3. in the event Jingdian, being engaged by the Target Company in relation to the construction of resettlement area of approximately gross floor area 0.6 million sq.m., fails to deliver the construction of such resettlement area to the Government within 2 years after Completion, the Target Company shall deduct from the Preferred Profits payable to Coastal Wuhan (a) 150% of the development cost for the incomplete portion of such resettlement area; and (b) any loss incurred by the Target Company as a result of the late delivery of such resettlement area to the Government; and

4. in the event the Target Company does not have sufficient funds to distribute the Preferred Profits, the Purchaser shall be responsible to resolve the issue or to provide funds to the Target Company and the Target Company shall pay the amount as an interest-free loan to Coastal Wuhan, such interest-free loan shall offset against the Preferred Profits upon the Target Company receiving of the proceeds from each land sale. If the total distributable profits of the Target Company is less than RMB1,834 million upon the sale of all land in the Project, Coastal Wuhan shall be exempted from the obligation to repay the remaining balance of the interest-free loan due to the Target Company and the Purchaser shall then be obligated to settle such remaining balance.

The Preferred Profits of RMB1,834 million is determined based on the calculation of RMB600 per sq.m. for the gross floor area of the total saleable construction area in relation to the Project of approximately 3.1 million sq.m. while the profit distribution of RMB600 per sq.m. is determined based on the Directors' view of expected investment return for the Project.