Hengli Commercial Properties : Announcements and Notices - Major and Connected Transaction in Relation to the Proposed Acquisition of the Entire Equity Interest in Wanda Hotel Management

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 Bermuda with limited liability)

On 26 September 2017 (after trading hours), the Company entered into the Sale and Purchase Agreement with Wanda HK in respect of the Proposed Acquisition of the entire equity interest in Wanda Hotel Management, the principal terms and conditions of which are set out in this announcement.

The applicable percentage ratios of the transactions contemplated under the Sale and Purchase Agreement exceed 25% but are less than 100%. As at the date of this announcement, Dalian Wanda Commercial is an indirect holding company and a controlling shareholder of the Company, and hence is a connected person of the Company under the Listing Rules. Since Wanda HK is directly and wholly-owned by Dalian Wanda Commercial, Wanda HK is an associate of Dalian Wanda Commercial, and therefore also a connected person of the Company under the Listing Rules. Accordingly, the Proposed Acquisition contemplated in the Sale and Purchase Agreement between the Company and Wanda HK constitutes a major and non-exempt connected transaction of the Company under Chapters 14 and 14A of the Listing Rules, and will be subject to the reporting, announcement, circular and Independent Shareholders' approval requirements under Chapters 14 and 14A of the Listing Rules.

The SGM will be held to consider and, if thought fit, pass the resolution(s) to approve, among others, the Sale and Purchase Agreement and the transactions contemplated thereunder. Wanda HK and its associates shall abstain from voting on the relevant resolution(s) to be proposed at the SGM to approve the Proposed Acquisition. As at the date of this announcement, Wanda Overseas, being an associate of Wanda HK, is interested in 3,055,043,100 Shares representing approximately 65.04% of the issued share capital of the Company as at the date of this announcement, and will abstain from voting on such resolution(s).

A circular containing, among other things, (i) details of the Proposed Acquisition; (ii) the advice and recommendation of the Independent Board Committee; (iii) the advice and recommendation of the Independent Financial Adviser; and (iv) a notice convening the SGM and a proxy form will be despatched to the Shareholders on or before 19 October 2017.

Reference is made to the announcement of the Company dated 9 August 2017 in respect of the non-binding Framework Agreement entered into between the Company, Wanda Culture and Dalian Wanda Commercial regarding the possible asset restructuring involving the proposed acquisition of Wanda Hotel Management, the proposed acquisition of Wanda Travel and the proposed disposal of the Project Companies.

The Board is pleased to announce that on 26 September 2017 (after trading hours), the Company entered into the Sale and Purchase Agreement with Wanda HK in respect of the Proposed Acquisition of the entire equity interest in Wanda Hotel Management, the principal terms and conditions of which are set out in this announcement.

As regards the remaining possible transactions under the Framework Agreement, the Company, Wanda Culture and Dalian Wanda Commercial are still in discussion regarding the structure and terms of the proposed acquisition of Wanda Travel and the proposed disposal of the Project Companies by the Group, and need time to formulate detailed implementation plan for such proposals (if materialise). Should the parties proceed to enter into the relevant definitive agreements, further announcement(s) will be made and the Company will comply with the applicable legal and regulatory requirements (including the requirements of the Listing Rules).

Date

26 September 2017

Parties

1. the Company, as purchaser; and

2. Wanda HK, a wholly-owned subsidiary of Dalian Wanda Commercial (a controlling shareholder of the Company, which is in turn majority-owned by Mr. Wang Jianlin and his family), as the vendor.

   Interest to be acquired

   Pursuant to the Sale and Purchase Agreement, Wanda HK has conditionally agreed to sell, and the Company has conditionally agreed to purchase the Sale Share, which represents the entire issued share capital of Wanda Hotel Management.

   Acquisition Consideration

   The Acquisition Consideration payable for the Sale Share is HK$878,000,000 (subject to downward adjustment), which shall be paid by cash in the following manner:

3. the Company shall pay HK$5,000,000, being the deposit (the "Deposit") and the part payment towards the Acquisition Consideration, within ten (10) Business Days from the date of signing of the Sale and Purchase Agreement; and

4. the Company shall pay the remaining balance of the Acquisition Consideration on the date of expiration of the 12-month period from Completion or such earlier date as the Company may notify Wanda HK in writing.

Payment of the Acquisition Consideration (net of the Deposit paid) is to be deferred till the date of expiration of the 12-month period after Completion or such earlier date as the Company may notify Wanda HK in writing in respect of which interest at the rate of 4% per annum is payable by the Company to Wanda HK but no security is to be provided to Wanda HK. The Company will seek appropriate sources of financing to pay the Acquisition Consideration as soon as practicable.

The Acquisition Consideration was determined after arm's length negotiations between the parties to the Sale and Purchase Agreement with reference to the historical financial performance of the Sale Companies and the preliminary estimation of the fair market value of the Sale Companies of HK$894,112,400 as at 30 June 2017 pursuant to the preliminary valuation (to be finalised) carried out by the Independent Valuer adopting the market approach with reference to price-to-earnings ratios of listed companies engaged in businesses similar to that of the Sale Companies. To protect the Company's interest in the Sale Companies, pursuant to the Sale and Purchase Agreement, Wanda HK shall procure that Wanda Hotel Management shall not declare, pay or make any dividends or other distributions at any time prior to Completion.

In the event that the fair market value of the Sale Companies under the final valuation report to be issued by the Independent Valuer is less than HK$878,000,000, the Acquisition Consideration shall be adjusted downward to an amount equivalent to such lower fair market value of the Sale Companies under the final valuation report.

No adjustment shall be made to the Acquisition Consideration if the fair market value of the Sale Companies under the final valuation report to be issued by the Independent Valuer equals to or is higher than HK$878,000,000.

In the event that the Acquisition Conditions Precedent have not been satisfied (or waived, as permitted) on or before the Long Stop Date or Completion does not take place in accordance with the terms of the Sale and Purchase Agreement, Wanda HK shall immediately refund the Deposit in full (without interest) to the Company.

Acquisition Conditions Precedent

The Sale and Purchase Agreement and the obligations of the Company to effect the Completion are subject to the satisfaction or (if applicable) waiver of the following Acquisition Conditions Precedent:

1. the purchase of the Sale Share according to the terms of the Sale and Purchase Agreement and all other transactions as contemplated under the Sale and Purchase Agreement having been approved by the Shareholders (who are not required to abstain from voting in such respect under the Listing Rules or otherwise) at the SGM;

2. the Hotel Management CCTs (as further explained in the section headed "Implications under the Listing Rules" below) and the proposed annual caps thereunder having been approved by the Shareholders (who are not required to abstain from voting in such respect under the Listing Rules or otherwise) at a general meeting of the Company;

3. the completion of the sale of assets (which include hotels) by Dalian Wanda Commercial to both R&F Properties and Sunac Real Estate as announced in the respective announcements of R&F Properties and Sunac China Holdings Limited, both dated 19 July 2017;

4. the Company having complied with all applicable requirements under the Listing Rules in respect of the transactions contemplated under the Sale and Purchase Agreement; and

5. (if required) all requisite waivers, consents and approvals from any third parties (including the Stock Exchange) in connection with the transactions contemplated under the Sale and Purchase Agreement required to be obtained on the part of the parties thereto having been granted and if such waivers, consents or approvals contain any conditions, such conditions are reasonably acceptable to the parties on which such conditions are imposed.

The parties may waive the Acquisition Conditions Precedent above (except that Acquisition Condition Precedent (c) above may only be waived by the Company by notice in writing to Wanda HK at any time after 30 June 2018 and Acquisition Conditions Precedent (a), (b) and (d) above are not capable of being waived in any event) in writing at any time on or before the Long Stop Date.

If the above Acquisition Conditions Precedent shall not have been fulfilled (or waived, where applicable), other than as a result of the default of Wanda HK and/or the Company, in full at or before 5:00 p.m. on the Long Stop Date, Wanda HK shall immediately refund the Deposit (without interest) to the Company and all rights and obligations of Wanda HK and the Company under the Sale and Purchase Agreement shall cease and terminate, save and except that certain administrative and miscellaneous provisions shall remain in full force and effect, and no party shall have any claim against the other save for claim (if any) in respect of such continuing provisions or any antecedent breach.

Completion of the Proposed Acquisition

Completion of the sale and purchase of the Sale Share shall take place at 4:30 p.m. on a date to be agreed between the Company and Wanda HK, provided that such date shall be no later than 15 Business Days after the date on which the last outstanding Acquisition Conditions Precedent shall have been fulfilled or waived (or such other date as the Company and Wanda HK shall agree in writing).