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.
CHU KONG PETROLEUM AND NATURAL GAS STEEL PIPE HOLDINGS LIMITED
मϪͩذ˂್ं፻၍છٰϞࠢʮ̡
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 1938)
VERY SUBSTANTIAL DISPOSAL
AND
CONNECTED TRANSACTION
IN RELATION TO
DISPOSAL OF 80% EQUITY INTEREST IN
AN INDIRECT SUBSIDIARY - PANYU CHU KONG STEEL PIPE CO. LIMITED
On 27 February 2019 (after trading hours), the Vendor (an indirect wholly-owned subsidiary of the Company), Xingchen, the Target Company (a subsidiary of the Vendor), Guangzhou Pearl River Coating, Guangdong Yuecai Trust, the Investment Manager, the Guarantors and the Company entered into the Disposal Agreement in relation to (i) the nomination of Xingchen by the Investment Manager under the terms of the Previous Agreement (being the subject matter of the Announcement and the Circular) as its nominee to acquire 40% equity interest of the Target Company; and (ii) the disposal of the remaining 40% equity interest of the Target Company by the Vendor to Xingchen, for a total consideration of RMB2,448 million with a possible payment of the Premium of RMB272 million.
As at the date of this announcement, the Target Company is held as to 20% by Guangdong Yuecai Trust and 80% by the Vendor, an indirectly wholly-owned subsidiary of the Company.
Upon completion of the Disposal, the Group will cease to have any equity interest in the Target Company, and the Target Company will cease to be a subsidiary of the Company.
As one or more of the applicable percentage ratios, calculated by reference to Rule 14.07 of the Listing Rules, is more than 75%, the Disposal constitutes a very substantial disposal for the Company and is subject to the requirements of reporting, announcement and approval by the shareholders at the EGM under Chapter 14 of the Listing Rules.
As at the date of this announcement, Guangdong Yuecai Trust holds 20% issued share capital of the Target Company, and accordingly is its substantial shareholder. Guangdong Yuecai Trust is a connected person at the subsidiary level according to Rule 14A.07(1) of the Listing Rules. Accordingly, the Disposal contemplated under the Disposal Agreement, to which Guangdong Yuecai Trust is a party, constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. By virtue of Rule 14A.101 of the Listing Rules, since (1) Guangdong Yuecai Trust is a connected person at the subsidiary level, (2) the Board has approved the Disposal; and (3) the independent non-executive Directors have confirmed that the terms of the Disposal are fair and reasonable and the Disposal is on normal commercial terms or better and in the interests of the Company and its shareholders as a whole, the Disposal is subject to the reporting and announcement requirements, and is exempt from the circular, independent financial advice and independent shareholders' approval requirements under Chapter 14A of the Listing Rules. As no Director has a material interest in the Disposal, no Director is required to abstain from voting on the Board resolution approving the Disposal. Save as aforesaid, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Xingchen, the Investment Manager and their respective ultimate beneficial owners are Independent Third Parties.
The Disposal shall be conditional upon the approval by the Shareholders at the EGM in accordance with the requirements under the Listing Rules.
The EGM will be convened and held for the Shareholders to consider and, if thought fit, to approve the Disposal. As no Shareholder has a material interest in the transactions contemplated in the Disposal Agreement, no Shareholder is required to abstain from voting.
A circular setting out, among other matters, details of the Disposal and valuation report in respect of the Land in industrial use and residential and commercial use, together with a notice of EGM to approve, among other matters, the Disposal is expected to be despatched to the Shareholders on or before 27 March 2019, which is more than 15 business days after the date of this announcement as additional time will be required to prepare the circular.
Completion of the Disposal is subject to the approval of the Shareholders at the EGM. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.
INTRODUCTION
Reference is made to the Announcement, the Circular and the Company's announcement dated 15 October 2018 regarding a very substantial disposal of the Company in relation to Change of Land Use and the disposal of 59% of the equity interest in the Target Company.
On 27 February 2019 (after trading hours), the Vendor, Xingchen, the Target Company, Guangzhou Pearl River Coating, Guangdong Yuecai Trust, the Investment Manager, the Guarantors and the Company entered into the Disposal Agreement.
Pursuant to the terms of the Disposal Agreement:
(a) the Investment Manager has nominated Xingchen under the terms of the Previous Agreement (being the subject matter of the Announcement and the Circular) as its nominee to acquire 40% equity interest of the Target Company; and
(b) Xingchen shall purchase and the Vendor shall sell the remaining 40% equity interest of the Target Company.
THE DISPOSAL AGREEMENT
The principal terms of the Disposal Agreement are as follows:
Date
27 February 2019
Parties
Vendor:
Chu Kong Steel Pipe Group Co., Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company
Xingchen:
Guangzhou Xingchen Consultation Company Limited €ᄿ ψ࢚ፔ༔Ϟࠢʮ̡ , a company established in the PRC with limited liability, being an investment company owned by limited partnership funds which are managed by Guangzhou Yuexiu Industry Investment Fund Management
Co., Ltd.€ᄿψ൳Ӹପุҳ༟ਿږ၍ଣٰ΅Ϟࠢʮ̡ and ultimately owned by certain state-owned enterprises in the PRC including Guangzhou Yuexiu Group Company
Limited€ᄿψ൳ӸණྠϞࠢʮ̡
Target Company:
Panyu Chu Kong Steel Pipe Co., Limited €೦߄मϪ፻၍ Ϟࠢʮ̡, a company established in the PRC with limited liability and held as to 80% by the Vendor and 20% by Guangdong Yuecai Trust as at the date of this announcement
Investment Manager:
Guangzhou Asset Management Company Limited €ᄿψ༟ ପ၍ଣϞࠢʮ̡, a company established in the PRC with limited liability, being an asset management company, acting as manager in respect of the transactions contemplated under the Previous Agreement
Guangdong Yuecai Trust:
Guangdong Yuecai Trust Co., Limited €ᄿ؇ຽৌڦϖϞ ࠢʮ̡ , a company established in the PRC with limited liability, being a finance trust company and is currently holding 20% issued share capital of the Target CompanyGuangzhou Pearl River Coating: Guangzhou Pearl River Petroleum Steel Pipe Coating
Co. Limited €ᄿψޜमئͩذ፻၍ԣၵϞࠢʮ̡ , a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company
Guarantors:
the Vendor, the Company and Mr. Chen Chang (the Chairman of the Board, an executive Director and a controlling shareholder of the Company), acting as guarantors in respect of the respective obligations of the Vendor and Guangzhou Pearl River Coating under the Disposal Agreement until the expiry of two years from the due date of the performance of the obligations under the Disposal Agreement
Guangdong Yuecai Trust, by virtue of being a substantial shareholder of the Target Company, is a connected person of the Company at the subsidiary level. Save as aforesaid, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Xingchen, the Investment Manager and their respective ultimate beneficial owners are Independent Third Parties.
Assets to be disposed of
Pursuant to the terms of the Previous Agreement, after four months upon signing of the Previous Agreement and immediately before the completion of Change of Land Use, the Vendor shall transfer 40% of the equity interest in the Target Company to the Nominee as nominated by the Investment Manager. In this connection, pursuant to the Disposal Agreement, (i) the Investment Manager has nominated Xingchen under the terms of the Previous Agreement (being the subject matter of the Announcement and the Circular) as its nominee to acquire 40% equity interest of the Target Company; (ii) the parties to the Previous Agreement and the Disposal Agreement have also acknowledged that the transfer of the 40% equity interest in the Target Company to Xingchen shall be carried out pursuant to terms of the Disposal Agreement instead of the Previous Agreement.
In addition, Xingchen shall also purchase and the Vendor shall sell the remaining 40% equity interest of the Target Company pursuant to the Disposal Agreement.
As a result, Xingchen shall acquire a total of 80% equity interest of the Target Company from the Vendor.
Upon completion of the Disposal, the Target Company will be owned as to 20% by Guangdong Yuecai Trust and 80% by Xingchen. The Group will cease to have any equity interest in the Target Company, and the Target Company will cease to be a subsidiary of the Company.
The Land will be the only asset of the Target Company upon completion of the Disposal. All the assets and liabilities, except the Land, will be carved out from the Target Company and be transferred to wholly-owned members of the Group prior to completion of the Disposal. The Land as at the date of this announcement is for industrial use only.
The graph below illustrates the corporate structure of the Target Company as at the date of this announcement:
(1) Target Company
(2) Al-Qahtani PCK Pipe Company | (5) PCK Steel (Middle East) FZE |
100%
(4) Guangzhou Zhu Gang Property Management Co., Ltd 廣州珠鋼物業管理 有限公司
Notes: | |
(1) | The Target Company was established in the PRC and is principally engaged in the manufacture and sale of |
welded steel pipes. As at the date of this announcement, it owns the Land and the Panyu Factory. | |
(2) | Al-Qahtani PCK Pipe Company was incorporated in Saudi Arabia and is principally engaged in the |
manufacture and sale of steel pipes. | |
(3) | Guangdong Pearl Steel Investment Management Co., Ltd.€ᄿ؇म፻ҳ༟၍ଣϞࠢʮ̡was established in |
the PRC and is principally engaged in property development and investment. Its major asset is the GDC. | |
(4) | Guangzhou Zhu Gang Property Management Co., Ltd€ᄿψम፻يุ၍ଣϞࠢʮ̡was established in the |
PRC and is principally engaged in property management. | |
(5) | PCK Steel (Middle East) FZE was incorporated in Dubai and is principally engaged in the trading of steel |
products. |
The above subsidiaries of the Target Company will be carved out from the Target Company and be transferred to wholly-owned members of the Group or disposed of to independent third parties prior to completion of the Disposal. Should the disposal of above subsidiaries to independent third parties constitute a notifiable transaction of the Company under Chapter 14 of the Listing Rules, the Company will comply with the relevant Listing Rules requirements.