Road King Infrastructure : DISCLOSEABLE TRANSACTION ACQUISITION OF 45% EQUITY INTEREST IN AN INDONESIAN COMPANY

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ROAD KING INFRASTRUCTURE LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1098)

DISCLOSEABLE TRANSACTION ACQUISITION OF 45% EQUITY INTEREST IN AN

INDONESIAN COMPANY

The Board is pleased to announce that on 5 March 2021 (after trading hours), Kings Ring (an indirect subsidiary owned as to 75% by the Company) entered into the Conditional Sale and Purchase Agreements with the Vendors pursuant to which Kings Ring agreed to purchase (i) 15% equity interest in the Target Company from PP at the consideration of Rp412 billion (approximately HK$226.76 million); and (ii) 30% equity interest in the Target Company from WTR at the consideration of Rp824 billion (approximately HK$453.53 million). Upon completion of the Acquisition, the Target Company will be owned by Kings Ring and PTJM as to 45% and 55%, respectively.

As the highest of all applicable percentage ratios calculated in accordance with Rule 14.07 of the Listing Rules in respect of the Acquisition is more than 5% but less than 25%, the Acquisition constitutes discloseable transaction for the Company and is subject to the announcement requirement but exempt from the shareholders' approval requirement under the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 5 March 2021 (after trading hours), Kings Ring (an indirect subsidiary owned as to 75% by the Company) entered into the Conditional Sale and Purchase Agreements with the Vendors pursuant to which Kings Ring agreed to purchase (i) 15% equity interest in the Target Company from PP at the consideration of Rp412 billion (approximately HK$226.76 million); and (ii) 30% equity interest in the Target Company from WTR at the consideration of Rp824 billion (approximately HK$453.53 million).

BACKGROUND AND REASONS FOR AND BENEFITS OF THE ACQUISITION

The Target Company is a company established on 25 November 2014 in Indonesia and is principally engaged in operation of an expressway in Sumatra, Indonesia, an island located to the northwest of Indonesia. It currently holds the concession rights of the Medan-Kualanamu-Tebing Tinggi toll road, which is part of the Trans Sumatra toll expressway network and has a total length of 61.7km. The total concession period of this toll road is 40 years up to 2056. The toll road has been completed and started in operation progressively since October 2017.

The Company is an investment holding company and the Group is principally engaged in property development and investment in the PRC and Hong Kong, with a focus on residential developments, investment and asset management businesses, and development, operation and management of toll roads through the infrastructure joint ventures in the PRC and Indonesia. The Group is committed to maintaining and further optimizing its established toll road business by seeking strategic opportunities to invest in expressway projects and to focus on existing revenue-generating expressway projects to optimize returns, with priority given to invest in toll road projects that are already operating and collecting tolls. Since the Target Company owns an expressway that is already operating and collecting tolls, the Acquisition is a great opportunity for the Group to expand its expressway portfolio in Indonesia. As at 30 June 2020, the current toll road portfolio of the Group consists of seven expressways, of which five are in the PRC and two are in Indonesia, spanning over 500km in total.

The Acquisition will enable the Group to expand its portfolio of expressway projects in Indonesia. As the Medan-Kualanamu-Tebing Tinggi toll road is already operating and collecting tolls, following the completion of the Acquisition, the Group will be entitled immediately to share of revenue from this toll road through the Target Company.

DETAILS OF THE ACQUISITION

Principal terms of the Conditional Sale and Purchase Agreements are substantially the same except as to parties, shares being sold and consideration.

Date:

5 March 2021 (after trading hours)

Parties:

• (i) Kings Ring Limited, an indirect subsidiary owned as to 75% by the Company;

• (ii) PT Waskita Toll Road, being the vendor under WTR Conditional SPA; and

• (iii) PT Pembangunan Perumahan (Persero) Tbk, being the vendor under PP Conditional SPA.

As of the date of this announcement, each of PP and WTR and their ultimate beneficial owners is an Independent Third Party.

Subject matter

Pursuant to the Conditional Sale and Purchase Agreements, Kings Ring agreed to purchase (i) 15% equity interest in the Target Company from PP at the consideration of Rp412 billion (approximately HK$226.76 million); and (ii) 30% equity interest in the Target Company from WTR at the consideration of Rp824 billion (approximately HK$453.53 million), respectively.

As at the date of this announcement, the Target Company is owned by WTR, PTJM and PP as to 30%, 55% and 15%, respectively. Following the completion of the Acquisition, the Target Company will be owned by Kings Ring and PTJM as to 45% and 55%, respectively.

Each of PTJM and its ultimate beneficial owner is an Independent Third Party. PTJM is also the joint venture partner of the Group currently holding 42.62% and 45.03% equity interest in JSN and JNKK that respectively operates the Solo-Ngawi toll road and Ngawi-Kertosono toll road, which are parts of the Transjava toll expressway network that connects Central and East Java of Indonesia.

Considerations and Payment terms

The considerations for PP Sale Shares and WTR Sale Shares are Rp412 billion (approximately HK$226.76 million) and Rp824 billion (approximately HK$453.53 million), respectively. Pursuant to the Conditional Sale and Purchase Agreements, Kings Ring agreed to purchase: (i) from PP for the PP Sale Shares; and (ii) from WTR for the WTR Sale Shares, respectively, in the payment manner set out below:

The considerations for PP Sale Shares and WTR Sale Shares are subject to adjustment in accordance with the Settlement Accounts. If, following the agreement or finalization of the Settlement Accounts, the Settlement Accounts show that the Settlement Date Net Debt Amount is more than 2% of the Estimated Net Debt Amount, the relevant Vendor shall, within 20 Business Days of the Settlement Accounts being finalized, unless agreed otherwise, compensate Kings Ring for such difference (or otherwise settle such amount through a suitable set-off arrangement between Kings Ring and the relevant Vendor).

The consideration payable by Kings Ring under each of the Conditional Sale and Purchase Agreements is determined based on arm's length negotiations between Kings Ring and PP or WTR (as the case may be). The Company has taken into account the development of the traffic network in Indonesia and an independent traffic study report prepared by WB Group International Limited as of 28 February 2021 for Medan-Kualanamu-Tebing Tinggi toll road.

Conditions precedent

Completion of each Conditional Sale and Purchase Agreement is subject to and dependent upon the fulfillment of, among others, the following key conditions precedent:

• (a) all representations and warranties of the respective Vendor and Kings Ring as listed in the relevant Conditional Sale and Purchase Agreement being true, correct and accurate in all material aspects as at the Condition Satisfaction Date;

• (b) the Target Company obtaining approval in respect of the Acquisition from its existing creditors under certain loan facility agreements of the Target Company, including but not limited to in relation to the change of the shareholding structure of the Target Company and the change of the status of the Target Company from a local company to a foreign direct investment company;

• (c) the Vendor obtaining approval from its board of commissioners in respect of the Acquisition;

• (d) the Target Company receiving evidence of the waiver (or lapse) of the rights of first refusal of PTJM and PP (in case of WTR Conditional SPA) or WTR (in case of PP Conditional SPA) in relation to the Acquisition;

• (e) the Target Company receiving a letter from the existing creditors under certain loan facility agreements of the Target Company confirming that the Target Company has never breached (or been in default under) those loan facility agreements and that no breach or default by the Target Company is continuing or on-going under those loan facility agreements;

• (f) Kings Ring providing the Vendor with an amendment to the joint venture agreement of the Target Company signed by Kings Ring (acting reasonably in its position as a potential new shareholder of the Target Company) and PTJM which shall be immediately effective on the Completion Date; and

(g) no material adverse event in relation to the financial condition (including turnover and profitability), properties, assets, liabilities, business or results of operations or prospects of the Target Company (taken as a whole) having occurred.

If: (i) Kings Ring and the relevant Vendor fail to sign a minutes of fulfillment and/or waiver of each of the conditions precedent under the relevant Conditional Sale and Purchase Agreement within 2 Business Days as of the Condition Satisfaction Date; and (ii) the conditions precedent are not fulfilled or not waived by Kings Ring or the relevant Vendor (in accordance with the relevant Conditional Sale and Purchase Agreement) by 30 April 2021 or such later date as Kings Ring and the relevant Vendor may agree in writing, Kings Ring or the relevant Vendor may by notice to the other party, at its sole discretion, terminate the relevant Conditional Sale and Purchase Agreement, in which case, Kings Ring and the relevant Vendor shall not make any claim against each other and the relevant Conditional Sale and Purchase Agreement shall terminate.

Completion

Completion of the PP Conditional SPA or WTR Conditional SPA, as the case may be, will be carried out on the date which is 5 Business Days after the satisfaction (or waiver) of the last condition precedent under the relevant Conditional Sale and Purchase Agreement (or such other date as the parties may agree). Completion will only be effected on the basis that completions for both Conditional Sale and Purchase Agreements occur simultaneously.

The Directors are of the view that transactions contemplated under the Conditional Sale and Purchase Agreements and their terms are fair and reasonable and in the interests of the Company and its shareholders as a whole.

Amendments to the joint venture agreement

Upon completion of the Acquisition, the Target Company will be owned by Kings Ring and PTJM as to 45% and 55%, respectively. As one of the conditions precedent to the completion of the Acquisition, Kings Ring and PTJM are required to enter into an amendment to the joint venture agreement of the Target Company (the "JV Agreement") to regulate the relationship between the shareholders of the Target Company with effect from the Completion Date. Pursuant to the draft amendments to the JV Agreement (to be settled prior to completion), subject to the completion of the Acquisition, the board of directors of the Target Company shall consist of three directors, of which Kings Ring shall be entitled to nominate one director, and Kings Ring will have the veto right to certain reserved matters of the Target Company.

FINANCIAL INFORMATION ON TARGET COMPANY

Set out below is a summary of the financial information of the Target Company for the two financial years ended 31 December 2020 prepared in accordance with IGAAP:

The net losses of the Target Company incurred for each of the two financial years ended 31 December 2020 were mainly due to finance costs for the loans incurred by the Target Company for construction of the Medan-Kualanamu-Tebing Tinggi toll road. The unaudited net asset value of the Target Company as at 31 December 2020 under IGAAP was approximately Rp1,068 billion (approximately HK$587.83 million).

Upon completion of the Acquisition, the Target Company will be taken up by way of equity accounting in the consolidated financial statements of the Company.

INFORMATION ON WTR, PP AND PTJM

WTR is owned as to 81.48% by PT Waskita Karya (Persero) Tbk. (which was established in Indonesia on 1 January 1961 and has been listed on the Indonesia Stock Exchange (index: WSKT) since 19 December 2012), 7.90% by PT Taspen (a 100% Indonesian state-owned pension and insurance fund first established in 1963) and 10.62% by PT Sarana Multi Infrastuktur (a state-owned enterprise first established in 2009 to accelerate infrastructure projects in Indonesia and to support public private partnership schemes, which is owned by the Government of Indonesia through the Ministry of Finance), respectively. PT Waskita Karya (Persero) Tbk. is principally engaged in civil works, engineering, procurement and construction, and mining in Indonesia and is in turn owed as to approximately 66.04% by the Government of Indonesia and approximately 33.96% by public shareholders, respectively.

PP was established in Indonesia on 26 August 1953 and has been listed on the Indonesia Stock Exchange (index: PTPP) since 9 February 2010. PP is owned as to 51% by the Government of Indonesia and 49% by public shareholders, respectively. PP is principally engaged in provision of building and civil construction services.

PTJM was established in Indonesia on 1 March 1978 and has been listed on the Indonesia Stock Exchange (index: JSMR) since 12 November 2007. PTJM is principally engaged in the toll road industry in Indonesia and is owned as to 70% by the Government of Indonesia and 30% by public shareholders, respectively.

IMPLICATIONS UNDER THE LISTING RULES

As the highest of all applicable percentage ratios calculated in accordance with Rule 14.07 of the Listing Rules in respect of the Acquisition is more than 5% but less than 25%, the Acquisition constitutes discloseable transaction for the Company and is subject to the announcement requirement but exempt from the shareholders' approval requirement under the Listing Rules.

DEFINITIONS

"PP Conditional SPA"

the conditional sale and purchase agreement dated 5 March 2021 entered into between Kings Ring and PP in respect of the PP Sale Shares

"PP Sale Shares"

211,605 shares in the Target Company held by PP, representing 15% of the existing shares issued by the Target Company

"PRC"

the People's Republic of China, which for the purpose of this announcement does not include Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

"PTJM"

PT Jasa Marga (Persero), Tbk., one of the current shareholders of JSN, JNKK and the Target Company

"PTLMJ"

PT Lintas Marga Jawa, one of the current shareholders of JSN and JNKK

"RKE"

Road King Expressway International Holdings Limited, a company incorporated in Bermuda and an indirect subsidiary owned as to 75% by the Company

"Rp"

Rupiah, the lawful currency of Indonesia

"Settlement Account"

the statement of financial position and the Settlement Date Net Debt Amount of the Target Company as at the Completion Date, prepared in accordance with Conditional Sale and Purchase Agreements and IGAAP and on the same basis on which the Estimated Net Debt Amount was prepared

"Settlement Date Net Debt

Amount"

the aggregate value of 15% (in case of PP Conditional SPA) or 30% (in case of WTR Conditional SPA) of: (i) the gross debt amount; plus (ii) the accounts payable amount; plus (iii) committed capex amount; plus (iv) the shareholders' loans amount; minus (v) the cash and cash equivalent amount, each calculated as at the Completion Date

"Shares"

ordinary share(s) of HK$0.10 each in the share capital of the Company

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

Note: For the purpose of this announcement and for illustrative purpose only, Rp is converted into HK$ at the rate of Rp1:HK$0.0005504. No representation is made that any amounts in Rp has been or could be converted at the above rates or at any other rates.

By Order of the Board

Road King Infrastructure Limited

Zen Wei Peu, Derek

Chairman

Hong Kong, 5 March 2021

As at the date of this announcement, the Board comprises Messrs. Zen Wei Peu, Derek, Ko Yuk Bing and Fong Shiu Leung, Keter as Executive Directors, Messrs. Mou Yong and Dong Fang as Non-executive Directors and Messrs. Lau Sai Yung, Tse Chee On, Raymond and Wong Wai Ho as Independent Non-executive Directors.