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 thisannouncement.
(Incorporated in Bermuda with limited liability)
*
website: www.kerryprops.com
(Stock Code: 683)
DISCLOSEABLE AND CONNECTED TRANSACTIONS: ACQUISITION OF TWO WAREHOUSES IN HONG KONG
Sale and Purchase Agreements
On 28 March 2019, the Parties entered into the Sale and Purchase Agreements relating to the acquisition by the Purchaser from the Vendor of the entire issued share capital in the Target Companies which hold the Warehouses.
Pursuant to the Chai Wan Warehouse SPA, the Purchaser, a wholly-owned subsidiary of the Company, agreed to purchase from the Vendor, a wholly-owned subsidiary of KLN, the entire issued share capital of the First Target Company, which holds the Chai Wan Warehouse. The consideration payable by the Purchaser for the acquisition is HK$2,270 million.
Pursuant to the Sha Tin Warehouse SPA, the Purchaser agreed to purchase from the Vendor, the entire issued share capital of the Second Target Company, which holds the Sha Tin Warehouse. The consideration payable by the Purchaser for the acquisition is HK$1,330 million.
Listing Rules Implications
KLN is a subsidiary of KHL which is the controlling shareholder of the Company and is therefore a connected person of the Company under the Listing Rules.
As the applicable percentage ratios for the Company in respect of the aggregate consideration in the amount of HK$3,600 million payable by the Purchaser to the Vendor under the Sale and Purchase Agreements exceed 5% but less than 25%, the Transactions constitute discloseable and connected transactions for the Company and are subject to the reporting, announcement and approval of the Independent Shareholders requirements under Chapters 14 and 14A of the Listing Rules.
A circular containing, among others, further details of the Transactions, a valuation report, a letter of advice from its independent financial adviser to its independent board committee, a letter of advice containing the recommendation of its independent board committee to the Independent Shareholders, and a notice of its special general meeting, is expected to be despatched to the Shareholders on or before 6 May 2019 as additional time is required to prepare the information for inclusion in the circular.
* For identification purpose only
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INTRODUCTION
On 28 March 2019, the Parties entered into the Sale and Purchase Agreements relating to the acquisition by the Purchaser from the Vendor of the entire issued share capital of the Target Companies which hold the Warehouses.
Pursuant to the Chai Wan Warehouse SPA, the Purchaser, a wholly-owned subsidiary of the Company, agreed to purchase from the Vendor, a wholly-owned subsidiary of KLN, the entire issued share capital of the First Target Company, which holds the Chai Wan Warehouse. The consideration payable by the Purchaser for the acquisition is HK$2,270 million.
Pursuant to the Sha Tin Warehouse SPA, the Purchaser agreed to purchase from the Vendor, the entire issued share capital of the Second Target Company, which holds the Sha Tin Warehouse. The consideration payable by the Purchaser for the acquisition is HK$1,330 million.
CHAI WAN WAREHOUSE SPA
Pursuant to the Chai Wan Warehouse SPA, the Purchaser agreed to purchase from the Vendor the entire issued share capital of the First Target Company, which holds the Chai Wan Warehouse.
The principal terms of the Chai Wan Warehouse SPA are set out below:-
Date: | 28 March 2019 | |
Parties: | (a) | the Purchaser |
(b) | the Vendor | |
(c) | the Company (as the guarantor for the Purchaser) | |
(d) | KLN (as the guarantor for the Vendor) | |
Consideration: | The consideration payable is HK$2,270 million | |
Payment: | (a) | on the date of the execution of the Chai Wan Warehouse |
SPA, the Purchaser has paid HK$227 million as deposit to | ||
Purchaser's solicitors as stakeholder in accordance with the | ||
provisions of the Chai Wan Warehouse SPA; and | ||
(b) | upon completion, the Purchaser shall pay the remaining | |
balance of the consideration of HK$2,043 million to the | ||
Vendor. | ||
Conditions precedent: | Completion of the Chai Wan Warehouse SPA is conditional upon, | |
inter alia,:- | ||
(a) | the passing of the Company Resolution; and | |
(b) | the passing of the KLN Resolution, | |
in each case by not later than the long stop date. | ||
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Long stop date:
Performance guarantee:
Representations,
warranties, undertaking and indemnities:
The long stop date under the Chai Wan Warehouse SPA is 14 June 2019 or such later date as agreed by the Vendor and Purchaser in writing.
If the conditions relating to the passing of the relevant resolutions by the Company and KLN is not satisfied on or before the aforesaid long stop date, the Sale and Purchase Agreements shall be terminated and the full amount of the deposit (together with all interests, if any, accrued thereon) shall be returned to the Purchaser.
In consideration of the Vendor agreeing to enter into the Chai Wan Warehouse SPA with the Purchaser, the Company unconditionally and irrevocably guarantees to the Vendor the due and punctual performance and discharge by the Purchaser of all of its obligations and liabilities under the Chai Wan Warehouse SPA and any related transaction documents.
In consideration of the Purchaser agreeing to enter into the Chai Wan Warehouse SPA with the Vendor, KLN also unconditionally and irrevocably guarantees to the Purchaser the due and punctual performance and discharge by the Vendor of all of its obligations and liabilities under the Chai Wan Warehouse SPA and any related transaction documents.
The Chai Wan Warehouse SPA contains representations and warranties of the Vendor which are usual and customary for a transaction of this nature and scale.
SHA TIN WAREHOUSE SPA
Pursuant to the Sha Tin Warehouse SPA, the Purchaser agreed to purchase from the Vendor the entire issued share capital of the Second Target Company, which holds the Sha Tin Warehouse.
The principal terms of the Sha Tin Warehouse SPA are set out below:-
Date: | 28 March 2019 | |
Parties: | (a) | the Purchaser |
(b) | the Vendor | |
(c) | the Company (as the guarantor for the Purchaser) | |
(d) | KLN (as the guarantor for the Vendor) | |
Consideration: | The consideration payable is HK$1,330 million | |
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Payment:
Conditions precedent:
Long stop date:
Performance guarantee:
Representations,
warranties, undertakings and indemnities:
(a)on the date of the execution of the Sha Tin Warehouse SPA, the Purchaser has paid HK$133 million as deposit to Purchaser's solicitors as stakeholder in accordance with the provisions of the Sha Tin Warehouse SPA; and
(b)upon completion, the Purchaser shall pay the remaining balance of the consideration of HK$1,197 million to the Vendor.
Completion of the Sha Tin Warehouse SPA is conditional upon, inter alia,:-
(a)the passing of the Company Resolution; and
(b)the passing of the KLN Resolution,
in each case by not later than the long stop date.
The long stop date under the Sha Tin Warehouse SPA is 14 June 2019 or such later date as agreed by the Vendor and Purchaser in writing.
If the conditions relating to the passing of the relevant resolutions by the Company and KLN is not satisfied on or before the aforesaid long stop date, the Sale and Purchase Agreements shall be terminated and the full amount of the deposit (together with all interests, if any, accrued thereon) shall be returned to the Purchaser.
In consideration of the Vendor agreeing to enter into the Sha Tin Warehouse SPA with the Purchaser, the Company unconditionally and irrevocably guarantees to the Vendor the due and punctual performance and discharge by the Purchaser of all of its obligations and liabilities under the Sha Tin Warehouse SPA and any related transaction documents.
In consideration of the Purchaser agreeing to enter into the Sha Tin Warehouse SPA with the Vendor, KLN also unconditionally and irrevocably guarantees to the Purchaser the due and punctual performance and discharge by the Vendor of all of its obligations and liabilities under the Sha Tin Warehouse SPA and any related transaction documents.
The Sha Tin Warehouse SPA contains representations and warranties of the Vendor which are usual and customary for a transaction of this nature and scale.
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ONGOING MANAGEMENT AND LEASE(S) OF THE WAREHOUSES
After completion of the Sale and Purchase Agreements, KLN Group may enter into (1) management agreements for the provision of services relating to management and operation of warehouse facilities, including building management, leasing and licensing management and warrant operations and other related services with the Group in relation to the Warehouses; and
(2)lease(s), licence(s) or agreement(s) with the Group permitting KLN Group to occupy and/or use parts of the Warehouses. The terms and conditions of these agreements are to be discussed and agreed between the Parties. The Company will comply with the applicable requirements under the Listing Rules accordingly and make further announcements in this regard as and when appropriate.
DETAILS OF THE TARGET COMPANIES
The First Target Company beneficially owns the First Subsidiary which in turn owns the Chai Wan Warehouse. The Chai Wan Warehouse is situated at 50 Ka Yip Street, Chai Wan, Hong Kong and used as warehouse. The book value of the Chai Wan Warehouse as at 31 December 2018 is approximately HK$880 million.
The Second Target Company beneficially owns the Second Subsidiary which in turn owns the Sha Tin Warehouse. The Sha Tin Warehouse is situated at 36-42 Shan Mei Street, Shatin, New Territories, Hong Kong and used as warehouse. The book value of the Sha Tin Warehouse as at 31 December 2018 is approximately HK$747 million.
The summary of the unaudited consolidated financial information of the Target Companies for the years ended 31 December 2017 and 2018 is set out as follows:
The First Target Company
For the year ended | For the year ended | |
31 December 2017 | 31 December 2018 | |
(unaudited) | (unaudited) | |
HK$ million | HK$ million | |
Net profit before taxation | 117 | 140 |
Net profit after taxation | 112 | 135 |
As at 31 December 2018 | |
(unaudited) | |
HK$ million | |
Total assets | 900 |
Net assets | 881 |
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