Shenzhen Investment : Announcements and Notices - Voluntary Announcement Further Update on Formation of Joint Venture

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(Incorporated in Hong Kong with limited liability)

The Board is pleased to announce that the JV Co received a letter from the Lands Department on 21 June 2017 confirming that its tender for the Land at the Land Premium of approximately HK$3,169 million has been accepted.

On 14 July 2017, Medos (a direct wholly-owned subsidiary of the Company), Profit City (an indirect wholly-owned subsidiary of Road King), the Company, Road King and the JV Co entered into the Shareholders' Agreement to provide for the arrangements regarding the operations and management of the JV Co to engage in the development of the Land, and the sale of and provision of ancillary management for the properties to be constructed thereon.

Pursuant to the Shareholders' Agreement, the aggregate capital commitment to be provided by each of Medos and Profit City to the JV Co, whether by way of shareholders' loans and/or other form of financial assistance, will not exceed HK$3,000 million.

The formation of the joint venture and the provision of financial assistance by Medos in relation to the JV Co as contemplated under the Shareholders' Agreement are exempt from the requirements under Chapter 14 of Listing Rules pursuant to Rule 14.04(1)(f). This announcement is made by the Company on a voluntary basis to update the shareholders and investors of the Company in relation to the joint venture arrangement.

Reference is made to the announcement of the Company dated 16 June 2017 in relation to the New Cooperation Framework Agreement.

The Board is pleased to announce that the JV Co received a letter from the Lands Department on 21 June 2017 confirming that its tender for the Land at the Land Premium of approximately HK$3,169 million has been accepted.

On 14 July 2017, Medos (a direct wholly-owned subsidiary of the Company), Profit City (an indirect wholly-owned subsidiary of Road King), the Company, Road King and the JV Co entered into the Shareholders' Agreement to provide for the arrangements regarding the operations and management of the JV Co, which shall supersede the New Cooperation Framework Agreement.

Set out below is a summary of the principal terms of the Shareholders' Agreement:

14 July 2017

1. Medos;

2. Profit City;

3. the Company (as guarantor for Medos);

4. Road King (as guarantor for Profit City); and

5. the JV Co.

   Profit City is an investment holding company and an indirect wholly-owned subsidiary of Road King. The Company is a substantial shareholder of Road King, holding approximately 27.14% of the issued share capital of Road King. Road King is principally engaged in investment in, and development, operation and management of, property development in the People's Republic of China, Hong Kong and elsewhere. To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, Profit City, Road King and their ultimate beneficial owner are third parties independent of the Company and the connected persons of the Company.

   As at the date of this announcement, each of Medos and Profit City owns 50% of all issued shares of the JV Co.

   Scope of business of the JV Co

   Unless Medos and Profit City agree otherwise, the scope of business of the JV Co is limited to the development of the Land, and the sale of and provision of ancillary management for of the properties to be constructed thereon.

   Maximum capital commitment

   Each of Medos and Profit City has provided HK$12.5 million by way of shareholders' loan to the JV Co to finance the payment of deposit by the JV Co upon submission of the tender for the Land.

   The Shareholders' Agreement provides that the aggregate capital commitment provided by each of Medos and Profit City to the JV Co, whether by way of shareholders' loans and/or other form of financial assistance, will not exceed HK$3,000 million.

   Funding arrangement

   The funding arrangement for the payment of the Land Premium and operational needs of the JV Co will be as follows:

6. first, to the extent possible, the JV Co should meet its funding needs by obtaining bank financing, and subject to the agreement by Medos and Profit City, Medos and Profit City will provide guarantee or other financial assistance, on a several but not joint basis and pro rata to their shareholding in the JV Co, for such bank financing; and

7. secondly, Medos and Profit City will discuss and agree on the amount to be contributed by them after taking into account the bank financing obtained by the JV Co, and they will provide the JV Co with shareholders' loans and (if applicable) other financial assistance required by the JV Co, which will be given pro rata to their shareholding in the JV Co.

The JV Co Board

The JV Co Board will comprise five directors, of which three directors are to be nominated by Medos and the remaining two directors are to be nominated by Profit City.

The quorum of meetings of the JV Co Board is two directors (including at least one director nominated by Medos and one director nominated by Profit City). The passing of resolutions of the JV Co Board requires the approval by a simple majority of the directors present (including at least one director nominated by Medos and one director nominated by Profit City).

Reserved matters

In particular, certain reserved matters are expressly provided to require the approval of the JV Co Board by a simple majority of the directors present (including at least one director nominated by Medos and one director nominated by Profit City). These reserved matters include, among other things, the change in nature or scope of business of the JV Co, change in share capital structure (including increase in share capital and share buy-back), change in quorum for meetings of the JV Co Board, liquidation, disposal of material assets of the JV Co (including the property to be developed on the Land or any part thereof), and the entering into of any transactions which are not on arm's length basis or which are not in the ordinary course of the business of JV Co.

Distribution of Profit

All distributable profits of the JV Co in respect of any financial year, after setting aside sufficient funds for the operation of the JV Co for the next financial year and the reserve capital approved by the JV Co Board and provided that the development of the Land will not be prejudiced, will be distributed to Medos and Profit City by way of dividends in proportion to their respective shareholding in the JV Co.

Restrictions on Transfer

Any proposed transfer of shares in the JV Co by Medos or Profit City (except for intra-group transfer) shall be subject to the other party's written consent. If Medos or Profit City intends to transfer any of its shares in the JV Co to an intended transferee, the other party shall have (i) the right of first refusal to purchase such shares in the JV Co, and (ii) a tag-along right to sell its shares to the intended transferee on the same terms and conditions.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SHAREHOLDERS' AGREEMENT

The Group is principally engaged in property development, property investment and property management. The Board believes that the property market in Hong Kong has a long-term development potential. Road King is an associate of the Company with experience in the development of property in Hong Kong. The Board considered the successful acquisition of the Land with Road King through the JV Co can provide the Group with a good foundation for participating in the property market in Hong Kong in the future.

The Directors are of the view that the terms of the Shareholders' Agreement, which were determined based on arm's length negotiations between the parties thereto, are normal commercial terms, fair and reasonable; and consider that the entering into of the Shareholders' Agreement and the transactions contemplated thereunder, which is in the ordinary and usual course of business of the Company, is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

The formation of the joint venture and the provision of financial assistance by Medos in relation to the JV Co as contemplated under the Shareholders' Agreement are exempt from the requirements under Chapter 14 of Listing Rules pursuant to Rule 14.04(1)(f). This announcement is made by the Company on a voluntary basis to update the shareholders and investors of the Company in relation to the joint venture arrangement.

DEFINITIONS

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

"Board" the board of Directors

"Company" Shenzhen Investment Limited, a company incorporated in Hong Kong with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange

"connected person" has the meaning ascribed to it under the Listing Rules "Directors" the directors of the Company

"Group" the Company and its subsidiaries

"HK$" Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong" the Hong Kong Special Administrative Region of the People's

Republic of China

"JV Co" Shum King Company Limited, a company incorporated in Hong Kong, which is owned as to 50% by each of Medos and Profit City as at the date of this announcement

"JV Co Board" the board of directors of the JV Co