Xinchen China Power : Announcements and Notices - (1) Discloseable and Connected Transaction in Relation to the Acquisition of the Engine Assembly Line and (2) Renewal of Continuing Connected Transactions

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(Incorporated in the Cayman Islands with limited liability)

1. DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENGINE ASSEMBLY LINE AND
2. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

On 3 October 2017 (after trading hours), Mianyang Xinchen, an indirect wholly-owned subsidiary of the Company, and BBA entered into the Assets Transfer Agreement pursuant to which BBA will transfer to Mianyang Xinchen the Acquired Assets at a Consideration of approximately RMB119.44 million (equivalent to approximately HK$143.33 million).

On 3 October 2017, Mianyang Xinchen entered into (i) the Sichuan Anji Logistics Services Agreement with Sichuan Anji, a wholly-owned subsidiary of Wuliangye; and (ii) the Wuliangye Cleaning and Greening Services Agreement with Xinhua Combustion Engine, a non wholly-owned subsidiary of Wuliangye, as to the continued conduct of the Continuing Connected Transactions for the three financial years commencing from 1 January 2018 to 31 December 2020.

As at the date of this announcement, Brilliance China and Wuliangye are interested in 400,000,000 Shares and 400,000,000 Shares, representing approximately 31.20% and 31.20% of the issued share capital of the Company, respectively. Accordingly, each of Brilliance China and Wuliangye is a connected person of the Company under Rule 14A.07(1) of the Listing Rules.

As at the date of this announcement, Brilliance China is indirectly interested in 50% of the issued share capital of BBA. As BBA is an associate of Brilliance China, it is a connected person of the Company under Chapter 14A of the Listing Rules. As at the date of this announcement, Sichuan Anji is a wholly-owned subsidiary of Wuliangye and Xinhua Combustion Engine is a non wholly-owned subsidiary of Wuliangye. As each of Sichuan Anji and Xinhua Combustion Engine is an associate of Wuliangye, Sichuan Anji and Xinhua Combustion Engine are connected persons of the Company under Chapter 14A of the Listing Rules.

Mianyang Xinchen is an indirect wholly-owned subsidiary of the Company.

As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Acquisition exceed(s) 5% but is/are less than 25%, the Acquisition constitutes a discloseable and connected transaction of the Company and is therefore subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14 and Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules for the Continuing Connected Transactions are, on an annual basis, over 0.1% but less than 5%, the Continuing Connected Transactions are subject to the reporting, announcement, annual review requirements but exempt from the circular, independent financial advice and shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising Mr. Chi Guohua, Mr. Wang Jun, Mr. Huang Haibo and Mr. Wang Songlin, being the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the terms of the Assets Transfer Agreement.

The Company has appointed the Independent Financial Adviser to make recommendations to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Assets Transfer Agreement.

A circular containing, amongst other things, (i) details of the Assets Transfer Agreement;

(ii) the letter from the Independent Board Committee to the Independent Shareholders, setting out its recommendations in connection with the Assets Transfer Agreement; (iii) the letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders in connection with the Assets Transfer Agreement; and (iv) a notice to the Shareholders convening the Extraordinary General Meeting to approve the transactions contemplated under the Assets Transfer Agreement in accordance with the requirements of the Listing Rules, will be despatched to the Shareholders on or before 25 October 2017.

1. ASSETS TRANSFER AGREEMENT

   On 3 October 2017 (after trading hours), Mianyang Xinchen, an indirect wholly-owned subsidiary of the Company, and BBA entered into the Assets Transfer Agreement in connection with the Acquisition by Mianyang Xinchen of the Acquired Assets from BBA.

   Date: 3 October 2017 (after trading hours)

   Transferor: BBA

   Transferee: Mianyang Xinchen

   Consideration:

   The Consideration for the Acquired Assets is approximately RMB119.44 million (equivalent to approximately HK$143.33 million), was agreed upon between BBA and Mianyang Xinchen through arm's length negotiations after taking account of: (a) the book value of the Acquired Assets of approximately RMB95.25 million (equivalent to approximately HK$114.30 million) as at 31 August 2017; (b) 5% margin on the book value of the Acquired Assets of approximately RMB4.76 million (equivalent to approximately HK$5.71 million); (c) value added tax of approximately RMB17.35 million (equivalent to approximately HK$20.83 million); and (d) surcharge of approximately RMB2.08 million (equivalent to approximately HK$2.49 million). The Consideration will be settled by internal resources and bank borrowing.

   The Consideration shall be payable as to approximately RMB35.83 million (equivalent to approximately HK$43.00 million) within 5 days after the approval of the transactions contemplated under the Assets Transfer Agreement as required by the Listing Rules by the Independent Shareholders at the Extraordinary General Meeting and shall be no later than 30 November 2017; and as to approximately RMB83.61 million (equivalent to approximately HK$100.33 million) on or before 31 December 2018.

   The original purchase costs of the Acquired Assets were approximately RMB137.69 million (equivalent to approximately HK$165.22 million).

   Conditions Precedent:

   Closing of the Assets Transfer Agreement will occur after the satisfaction of the following conditions precedent:

2. the Consideration being fully paid by or on behalf of Mianyang Xinchen to BBA;

3. BBA having obtained the approval from the competent customs authority and, if required by such customs authority, paid the relevant duty and tax in respect of the transfer of imported Acquired Assets under customs custody (if any) pursuant to the applicable laws;

4. the passing by the requisite majority of the Independent Shareholders at the Extraordinary General Meeting of all resolutions required under the Listing Rules (if any) to approve the transactions contemplated under the Assets Transfer Agreement;

5. all necessary approvals, permits, licenses, registrations and filings from the competent development and reform commission and other related governmental authorities regarding environment protection and urban planning for the transactions contemplated under the Assets Transfer Agreement being obtained by Mianyang Xinchen (if any);

6. each party having obtained all necessary approvals from its shareholders or board of directors as required for the transactions contemplated under the Assets Transfer Agreement in accordance with its articles of association; and

7. each related transaction document has been duly executed by the relevant parties, and there is no reasonable suspicion that any of such transaction documents may not come into effect in accordance with its terms and conditions.

   Closing:

   Subject to the satisfaction or waiver (by the party or parties who have the right to do so) of the conditions, the parties agree that Closing shall take place on the day on which the Consideration has been fully paid by Mianyang Xinchen, and shall be no later than 31 December 2018. On the date of Closing, the title of the Acquired Assets will pass to Mianyang Xinchen.

8. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

On 3 October 2017, Mianyang Xinchen entered into (i) the Sichuan Anji Logistics Services Agreement with Sichuan Anji, a wholly-owned subsidiary of Wuliangye; and

(ii) the Wuliangye Cleaning and Greening Services Agreement with Xinhua Combustion Engine, a non wholly-owned subsidiary of Wuliangye, as to the continued conduct of the Continuing Connected Transactions for the three financial years commencing from 1 January 2018 to 31 December 2020.