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.

GREENLAND HONG KONG HOLDINGS LIMITED ၠή࠰ಥછٰϞࠢʮ̡

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 337)

MAJOR TRANSACTION CONNECTED TRANSACTION FORMATION OF JOINT VENTURE

AND

CONTINUING CONNECTED TRANSACTION

FINANCIAL ASSISTANCE

The Board is pleased to announce that after trading hour on 19 March 2021, Guangdong Greenland agreed to jointly develop the Land owned by the Project Company with Guangdong SPG and to acquire an approximately 35% attributable interest in the Project Company at the Consideration of RMB175 million (approximately HK$208.3 million), for which Guangdong SPG, Guangdong Greenland, Guangzhou SPG and Guangzhou Greenland have entered into the JV Agreement. Pursuant to the JV Agreement and subject to the fulfilment of the Conditions:

(i) Guangdong Greenland and Guangdong SPG will establish the JV Company to acquire a 49% interest in the Project Company, the remaining 51% of which is owned by Guangdong SPG;

  • (ii) the JV Company will be owned as to 71.42% by Guangdong Greenland and as to 28.58% by Guangdong SPG so that Guangdong Greenland and Guangdong SPG will have approximately 35% and approximately 65% attributable interests in the Project respectively;

  • (iii) the Consideration and the Financial Assistance is expected to be not more than approximately RMB2,175 million (approximately HK$2,589.3 million); and

  • (iv) certain management and corporate affairs of the JV Company and the Project Company shall be bounded by the terms of the JV Agreement.

As the highest Applicable Percentage Ratio for the transactions contemplated under the JV Agreement is more than 25% but less than 100%, the entering into the JV Agreement constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the notification, publication and shareholders' approval requirements under Chapter 14 of the Listing Rules.

As at the date of this announcement, Guangdong SPG is ultimately 80%-owned by the family trust of Mr. Wang, who is a Director. Hence, Guangdong SPG is a connected person of the Company. As the Project Company is owned as to 51% by Guangdong SPG, the Project Company is a connected person of the Company. As the highest Applicable Percentage Ratio for the transactions contemplated under the JV Agreement exceeds 5%, the entering into the JV Agreement constitutes a connected transaction for the Company subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules. As the highest Applicable Percentage Ratio for the Financial Assistance exceeds 5%, the Financial Assistance constitutes a continuing connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all independent non-executive Directors, will be formed to advise the Independent Shareholders on the fairness and reasonableness of the terms of the JV Agreement. An independent financial adviser will be appointed to make recommendations to the Independent Board Committee and the Independent Shareholders in respect of the same.

A circular containing, among other things, details of the JV Agreement, a letter from the Independent Board Committee and a letter from the independent financial adviser, both advising on the terms of the JV Agreement, and a notice of extraordinary general meeting is expected to be despatched to the Shareholders around 21 April 2021 to allow sufficient time to prepare the necessary information for inclusion in the circular.

The Board is pleased to announce that after trading hour on 19 March 2021, Guangdong Greenland agreed to jointly develop the Land owned by the Project Company with Guangdong SPG and to acquire an approximately 35% attributable interest in the Project Company at the Consideration of RMB175 million (approximately HK$208.3 million), for which Guangdong SPG, Guangdong Greenland, Guangzhou SPG and Guangzhou Greenland have entered into the JV Agreement. Pursuant to the JV Agreement and subject to the fulfilment of the Conditions:

  • (i) Guangdong Greenland and Guangdong SPG will establish the JV Company to acquire a 49% interest in the Project Company, the remaining 51% of which is owned by Guangdong SPG;

  • (ii) the JV Company will be owned as to approximately 71.42% by Guangdong Greenland and as to approximately 28.58% by Guangdong SPG so that Guangdong Greenland and Guangdong SPG will have approximately 35% and approximately 65% attributable interests in the Project respectively;

  • (iii) the Consideration and the Financial Assistance is expected to be not more than approximately RMB2,175 million (approximately HK$2,589.3 million); and

  • (iv) certain management and corporate affairs of the JV Company and the Project Company shall be bounded by the terms of the JV Agreement.

Details of the JV Agreement are set out below.

THE JV AGREEMENT

Date:

  • 19 March 2021

    Parties:

  • (1) Guangdong SPG as a joint venture partner

  • (2) Guangdong Greenland as the other joint venture partner

  • (3) Guangzhou SPG as the guarantor to guarantee the due performance of all the obligations of Guangdong SPG under the JV Agreement

  • (4) Guangzhou Greenland as the guarantor to guarantee the due performance of all the obligations of Guangdong Greenland under the JV Agreement

Establishment of the JV Company:

Guangdong Greenland and Guangdong SPG shall establish the JV Company in the PRC within 10 working days from the date of the JV Agreement for the purposes of acquiring a 49% interest in the Project Company. The JV Company will be owned as to 71.42% by Guangdong Greenland and as to 28.58% by Guangdong SPG. The registered capital of the JV Company will be RMB10 million (approximately HK$11.9 million), for which Guangdong Greenland and Guangdong SPG will contribute in cash approximately RMB7.14 million (approximately HK$8.5 million) and approximately RMB2.86 million (approximately HK$3.4 million). The JV Company will be accounted for as a subsidiary of the Company.

Acquisition of Interest in the JV Company:

On 20 December 2020, Guangdong SPG entered into an agreement with Yonglong Plastic (being an Independent Third Party) and Yonglong International (being an Independent Third Party), pursuant to which Guangdong SPG will acquire the 49% interest in the Project Company owned by Yonglong Plastic and Yonglong International (the "SPG's 49% Acquisition") in aggregate in consideration of the Project Company transferring to Yonglong Plastic or its nominee completed units and areas to be developed on the Land (the "Excluded Properties") with a total area of 37,000 sq.m. and some related carparking spaces. Pursuant to an equity transfer agreement dated 22 December 2020, Guangdong SPG acquired a 51% interest in the Project Company (the "SPG's 51% Acquisition") from Guangzhou Junhui (being an Independent Third Party) at a consideration of approximately RMB493.6 million (approximately HK$587.6 million).

The JV Company will, subject to the fulfilment of the Conditions, acquire a 49% interest in the Project Company from Guangdong SPG (the "JV Co's Acquisition") at a consideration of RMB245 million (approximately HK$291.7 million) (the "JV Co's Consideration"). Based on the purchase price paid by Guangdong SPG for the SPG's 51% Acquisition, the original acquisition cost to Guangdong SPG in respect of the 49% interest in the Project Company to be sold by it to the JV Company is approximately RMB474.2 million (approximately HK$564.5 million). As a result of the above acquisitions by them, Guangdong Greenland and Guangdong SPG will have approximately 35% and approximately 65% attributable interests in the Project Company respectively.

Funding for JV Co's Acquisition:

In view of the foregoing circumstance, the Consideration payable by Guangdong Greenland for the acquisition of an approximately 35% attributable interest in the Project Company is RMB175 million (approximately HK$208.3 million), which is expected to be funded by the internal resources of the Group. To finance the JV Co's Acquisition at the JV Co's Consideration of RMB245 million (approximately HK$291.7 million) payable to Guangdong SPG, Guangdong Greenland and Guangdong SPG shall contribute RMB175 million (approximately HK$208.3 million) and RMB70 million (approximately HK$83.3 million) to the JV Company respectively. On 19 March 2021, Guangdong Greenland shall pay the Consideration of RMB175 million to Guangdong SPG, which will be applied as prepayment of its contribution for the JV Co's Consideration. The said RMB175 million contribution will be accounted for as capital contribution to the JV Company in respect of approximately RMB7.14 million thereof, and as shareholder's loan to the JV Company as to approximately RMB167.86 million thereof. The balance of the JV Co's Consideration of RMB70 million to be contributed by Guangdong SPG will be accounted for as capital contribution to the JV Company in respect of approximately RMB2.86 million thereof, and as shareholder's loan to the JV Company as to approximately RMB67.14 million thereof. Upon completion of the JV Co's Acquisition, the Project Company will be equity accounted for in the accounts of the Group.

The Consideration is determined based on the arm's length negotiation between Guangdong Greenland and Guangdong SPG with reference to the financial position and business prospect of the Project Company (including the value of the Land).

Conditions:

The completion of the JV Co's Acquisition shall be conditional upon the fulfilment of the following Conditions:

  • (a) the Company having obtained the approval from the Independent Shareholders as required by the Listing Rules in respect of the transactions contemplated under the JV Agreement; and

  • (b) Guangdong SPG not having breached any of the obligations imposed on it or any of its undertakings under the JV Agreement in any material respects.

Completion of the JV Co's Acquisition shall take place within 10 working days from the fulfilment of all the Conditions. If any of the above Conditions has not been fulfilled on or before 31 August 2021, the transactions contemplated under the JV Agreement will not proceed and the JV Agreement shall cease to have any effect. Guangdong SPG shall repay the Consideration to Guangdong Greenland within 10 working days upon demand by Guangdong Greenland.

Background of the Project Company:

The Project Company was established on 30 September 2002 with a registered capital of RMB77 million (approximately HK$91.7 million), which have been fully contributed. The unaudited net asset of the Project Company as at 31 December 2020 was RMB74 million (approximately HK$88.1 million). The unaudited net asset of the Project Company as at 28 February 2021 was RMB73 million (approximately HK$86.9 million). The audited net profit before taxation and net loss after taxation of the Project Company for year ended 31 December 2019 were approximately RMB184,000 and RMB83,000 respectively. The unaudited net loss before and after taxation of the Project Company for year ended 31 December 2020 were approximately RMB3.7 million and RMB3.7 million respectively. The Project Company does not have any other business operation apart from the property development project in respect of the Land.

The Land:

The principal asset of the JV Company is the Land situated at Luojia Village, Shiji Town, Panyu District, Guangzhou City, Guangdong Province, the PRC* (ʕ਷ᄿ؇޲ᄿψ̹೦߄ ਜͩਿᕄᖯ࢕Ӏ), for which the JV Company has obtained a State-owned Land Use Right Certificate (no. G08-001157) (਷ϞɺήԴ͜ᛆᗇ(ᇜ໮jG08-001157)). According to the said certificate, the Land has an area of approximately 27,256 sq.m. with construction land use area of approximately 19,588 sq.m. and a land use right of 40 years for commercial and office land use, and 70 years for residential land use. Based on the reply from the Guangzhou City Planning and Natural Resources Bureau* (ᄿψ̹஝ྌձІ್༟๕҅) issued on 5 March 2020 in respect of planning conditions for the Land, the Land has been approved to increase the plot ratio to up to 9.0 subject to the payment of land premium for those increased area. It is expected that the Land will be develop into a commercial, office and residential complex with a total area of approximately 139,000 sq.m. and some carparks (exclusive of the Excluded Properties).

Financial Assistance:

The Project Company aims to finance the development of the Land without reliance on any financial assistance from its shareholders (and/or their respective owners), there may be circumstances that the lenders would require the Project Company's shareholders (and/or their respective owners) to provide guarantees for their loans to the Project Company (the "Financial Assistance"). The Financial Assistance may be in proportion to the respective attributable interests of Guangdong Greenland and Guangdong SPG in the Project Company. In the event that the Group is required to guarantee any loans of the Project Company for a proportionexceeding its proportion of attributable interest in the Project Company, a guarantee fee shall be paid by the Project Company to Guangdong Greenland at an amount to be determined based in the following manner:

Guarantee Fee = Guaranteed Amount x Loan Period x Guarantee Percentage

Note:

  • (i) Guaranteed Amount means the amount of the loan advanced and guaranteed by the Group.

  • (ii) Loan Period means the period in which the loan is outstanding.

  • (iii) Guarantee Percentage means the percentage to be agreed upon between Guangdong Greenland and Guangdong SPG at or before the granting of any guarantee for a particular loan taking into account the then market environment provided that such percentage shall be not less than 2% and not more than 3%.

The period of a Financial Assistance shall be not more than three years. Guangdong SPG will provide counter-indemnity in favour of the Group in respect of the said non pro rata guarantee.

The Company estimates that the maximum amount of the Financial Assistance will be not more than RMB2,000 million (approximately HK$2,381 million). The Financial Assistance was determined after arm's length negotiations between the parties, taking into account, among other factors, the funding need for the development of the Land, the amount of the guarantee fee, and the business potential of the development of the Land.

Corporate Governance of the JV Company:

The JV Company will have one director and one supervisor only. Guangdong Greenland shall have the right to nominate the sole director and the sole supervisor. The director of the JV Company shall act as the legal representative of the JV Company. Approvals at shareholders' meeting of the JV Company shall be obtained based on the simple majority of the votes cast by the shareholders at the shareholders' meeting. If any shareholder of the JV Company proposes to transfer its equity interest to any third party, it shall obtain the prior consent of the other shareholder of the JV Company. In the event that the JV Company proposes to increase its registered capital, shareholders of the JV Company shall have pre-emptive to acquire portions of the amount of the registered capital to be increased in proportion to their respective contributed capital to the JV Company.

Corporate Governance of the Project Company:

The board of directors of the Project Company will comprise five directors. Guangdong SPG shall have the right to nominate three directors (one of them being the chairman of the board). The said chairman shall act as the legal representative of the Project Company. Guangdong Greenland has the right to nominate two directors (one of them being the vice chairman of the board). Quorum for board meeting of the Project Company is four. Approvals at board meeting of the Project Company require unanimous approvals of all the directors present at such board meeting. The Project Company shall have two supervisors and each of Guangdong Greenland and Guangdong SPG has the right to nominate one supervisor. Guangdong SPG shall also have the right to nominate the general manager of the Project Company. Approvals at shareholders' meeting of the Project Company require the unanimous approval of the shareholders of the Project Company.

If any shareholder of the Project Company proposes to transfer its equity interest to any third party, it shall obtain the prior consent of the other shareholder of the Project Company. In the event that the Project Company proposes to increase its registered capital, shareholders of the Project Company shall have the pre-emptive right to acquire portions of the amount of the registered capital to be increased in proportion to their respective contributed capital to the Project Company.

Cooperation Priority

In relation to the "Three Old Redevelopment" projects (ɧᔚҷிධͦ) in the Greater Bay Area (i.e. Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan and Jiangmen), Guangdong SPG and its affiliates shall consult Guangdong Greenland before cooperating with other parties. Under equal conditions, Guangdong SPG shall be given priority to cooperate with Guangdong Greenland in relation to such projects.

REASONS FOR AND BENEFITS OF ENTERING INTO THE JV AGREEMENT

The Directors consider that the Land has attractive development potential. The Board (excluding Mr. Wang and Ms. Wang Xuling (being the sister of Mr Wang), who abstained from voting at the meeting of the Board due to conflict of interest, and the independent non-executive Directors who will give their opinion in the circular after considering the recommendations of the independent financial adviser) considers that the JV Agreement was entered into in the ordinary and usual course of business of the Group, and the transactions contemplated thereunder (including the Finance Assistance) are in the ordinary and usual course of business of the Group, and that the terms of the JV Agreement (including the Finance Assistance) have been negotiated on an arm's length basis and are normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

GENERAL INFORMATION

The Company is an investment holding company. The Group is principally engaged in property development, property and hotel investment and property management.

Guangdong SPG is ultimately 80%-owned by the family trust of Mr. Wang and is principally engaged in property development.

Guangzhou SPG is ultimately 80%-owned by the family trust of Mr. Wang and is principally engaged in property investment.

Guangdong Greenland is a wholly owned subsidiary of the Company and is principally engaged in property investment.

Guangzhou Greenland is a wholly owned subsidiary of the Company and is principally engaged in property investment and development.

LISTING RULES IMPLICATIONS

As the highest Applicable Percentage Ratio for the transactions contemplated under the JV Agreement is more than 25% but less than 100%, the entering into the JV Agreement constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the notification, publication and shareholders' approval requirements under Chapter 14 of the Listing Rules.

As at the date of this announcement, Guangdong SPG is ultimately 80%-owned by the family trust of Mr. Wang, who is a Director. Hence, Guangdong SPG is a connected person of the Company. As the Project Company is owned as to 51% by Guangdong SPG, the Project Company is a connected person of the Company. As the highest Applicable Percentage Ratio for the transactions contemplated under the JV Agreement exceeds 5%, the entering into the JV Agreement constitutes a connected transaction for the Company subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules. As the highest Applicable Percentage Ratio for the Financial Assistance exceeds 5%, the Financial Assistance contemplated under the JV Agreement constitutes a continuing connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all independent non-executive Directors, will be formed to advise the Independent Shareholders on the fairness and reasonableness of the terms of the JV Agreement. An independent financial adviser will be appointed to make recommendations to the Independent Board Committee and the Independent Shareholders in respect of the same.

A circular containing, among other things, details of the JV Agreement, a letter from the Independent Board Committee and a letter from the independent financial adviser, both advising on the terms of the JV Agreement, and a notice of extraordinary general meeting is expected to be despatched to the Shareholders around 21 April 2021 to allow sufficient time to prepare the necessary information for inclusion in the circular.

DEFINITIONS

In this announcement, the following expressions have the following meanings unless the context otherwise requires:

"Applicable Percentage

have the meanings ascribed to them under the Listing Rules;

Ratio", and

"connected person(s)"

"Board"

the board of Directors;

"Company"

Greenland Hong Kong Holdings Limited (ၠή࠰ಥછٰϞ

ࠢʮ̡), a company incorporated with limited liability in the

Cayman Islands and the ordinary shares of which are listed

on the Main Board of the Stock Exchange;

"Conditions"

the conditions precedent to be fulfilled before the completion

of the JV Co's Acquisition, details of which are set out in the

paragraph headed "Conditions" in this announcement;

"Consideration"

the cash consideration of RMB175 million (approximately

HK$208.3 million) payable by Guangdong Greenland for the

acquisition of an approximately 35% attributable interest in

the Project Company under the JV Agreement;

"Director(s)"

the director(s) of the Company;

"Group"

the Company and its subsidiaries;

"Guangdong Greenland"

Guangdong Greenland Investment Co., Limited* (ᄿ؇

ၠήҳ༟Ϟࠢʮ̡), a company established in the PRC

with limited liability and a wholly-owned subsidiary of the

Company;

"Guangdong SPG"

Guangdong SPG Co., Limited* (ᄿ؇ସ৷ໄήϞࠢʮ̡), a

company established in the PRC with limited liability;

"Guangzhou Greenland"

Guangzhou Greenland Real Property Development Limited*

(ᄿψၠήגήପක೯Ϟࠢʮ̡), a company established in

the PRC with limited liability and a wholly-owned subsidiary

of the Company;

"Guangzhou SPG"

Guangzhou SPG Investment Limited* (ᄿψସ৷ҳ༟Ϟࠢʮ

̡), a company established in the PRC with limited liability;

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong;

"Hong Kong"

the Hong Kong Special Administrative Region of the PRC;

"Independent Board

the committee of the Board comprising all the independent

Committee"

non-executive Directors (namely, Mr. Fong Wo, Felix, JP,

Mr. Kwan Kai Cheong and Dr. LAM, Lee G.);

"Independent Shareholders"

Shareholders other than those who are required by the Listing

Rules to abstain from voting on the resolutions approving the

JV Agreement and the transactions contemplated thereunder;

"Independent Third Party"

a third party independent of the Company and connected

persons of the Company;

"JV Agreement"

the cooperation agreement dated 19 March 2021 entered

into between Guangdong SPG, Guangdong Greenland,

Guangzhou SPG and Guangzhou Greenland governing the

equity contributions into the JV Company, acquisition of the

Project Company, and the management and corporate affairs

of the JV Company and the Project Company;

"JV Company"

a joint venture company to be established in the PRC with

limited liability;

"Land"

the land parcel situated at Luojia Village, Shiji Town, Panyu

District, Guangzhou City, Guangdong Province, the PRC*

(ʕ਷ᄿ؇޲ᄿψ̹೦߄ਜͩਿᕄᖯ࢕Ӏ), which is the

subject of the State-owned Land Use Right Certificate (no.

G08-001157) (਷ϞɺήԴ͜ᛆᗇ (ᇜ໮jG08-001157));

"Listing Rules"

Rules Governing the Listing of Securities on the Stock

Exchange;

"Mr. Wang"

Mr. Wang Weixian, an executive Director and a Shareholder;

"PRC"

People's Republic of China, which, for the purposes of this

announcement, excludes Hong Kong, the Macau Special

Administrative Region and Taiwan;

"Project Company"

Guangzhou Panyu Yonglong Real Estate Development Co.,

Limited* (ᄿψ೦߄͑ඤגήପක೯Ϟࠢʮ̡), a company

established in the PRC with limited liability;

"RMB"

Renminbi, the lawful currency of the PRC;

"Shareholders"

holders of the ordinary share(s) of HK$0.50 each in the share

capital of the Company;

"sq.m."

square meters;

"Stock Exchange"

The Stock Exchange of Hong Kong Limited;

"Yonglong International"

Yonglong International Group Co., Limited* (͑ඤ਷ყණ

ྠϞࠢʮ̡), a company established in Hong Kong with

limited liability;

"Yonglong Plastic"

Yonglong (Guangzhou Panyu) Plastic Hardware Electrical

Co., Ltd.* ( ͑ඤ€ᄿψ೦߄෧ࣘʞږཥኜϞࠢʮ̡), a

company established in the PRC with limited liability; and

"%"

per cent.

For the purposes of this announcement, an exchange rate HK$1 = RMB0.84 has been used for currency translation, where applicable. Such exchange rate is for illustration purposes only and does not constitute representations that any amount in RMB or HK$ has been, could have been or may be converted at such rate.

By order of the Board Greenland Hong Kong Holdings Limited

Chen Jun

Chairman

Hong Kong, 21 March 2021

As at the date of this announcement, the executive directors of the Company are Mr. Chen Jun, Mr. Wang Weixian, Mr. Hou Guangjun, Mr. Wu Zhengkui and Ms. Wang Xuling; and the independent non-executive directors of the Company are Mr. Fong Wo, Felix, JP, Mr. Kwan Kai Cheong and Dr. Lam, Lee G..

*

For identification purposes only

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Greenland Hong Kong Holdings Limited published this content on 21 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2021 10:26:05 UTC.