Discloseable Transaction - Disposal of Entire Equity Interest in Disposal Company and Sale Loan

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.

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(Incorporated in Bermuda with limited liability) (Stock Code: 163)

DISCLOSEABLE TRANSACTION

DISPOSAL OF ENTIRE EQUITY INTEREST IN

DISPOSAL COMPANY AND SALE LOAN

On 30 December 2021, after trading hours, the Vendor entered into the Sale and Purchase Agreement with the Purchaser in relation to the sale and purchase of the Sale Share and the Sale Loan at a consideration of HK$688.0 million (subject to adjustments).

INTRODUCTION

On 30 December 2021, after trading hours, the Vendor entered into the Sale and Purchase Agreement with the Purchaser in relation to the sale and purchase of the Sale Share and the Sale Loan at a consideration of HK$688.0 million (subject to adjustments).

SALE AND PURCHASE AGREEMENT

To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, the Purchaser, together with its ultimate beneficial owner, are Independent Third Parties.

Assets to be disposed of

1. the Sale Share; and
2. the Sale Loan.

Consideration and payment terms

The Consideration shall be HK$688.0 million (subject to adjustments) and shall be payable as follows:

1. a sum of HK$20.64 million, as earnest money (the "Earnest Money") and part payment of the Consideration, had been paid to the Vendor's solicitors as stakeholder;
2. a sum of HK$48.16 million (the "Further Deposit", which together with the Earnest Money, the "Deposits"), has been paid by the Purchaser to the Vendor's solicitors upon signing of the Sale and Purchase Agreement; and
3. the remaining balance thereof in the amount equivalent to HK$619.20 million, subject to adjustment set out below, shall be paid to the Vendor at or before 3 p.m. on the Completion Date.

The Consideration is subject to the following adjustments by reference to the Completion Accounts:

1. to add the aggregate amount of the total assets of the Disposal Company (but excluding the Property, any deferred tax assets, any plant and equipment, any financial derivative assets, any money retained on account for legal costs and tax) as at and including the Completion Date as shown in the Completion Accounts; and
2. to minus the aggregate amount of the total liabilities of the Disposal Company as at and including the Completion Date, other than the Sale Loan, as shown in the Completion Accounts.

If the Consideration calculated with reference to the Completion Accounts is less than the Consideration paid by the Purchaser, the Vendor shall repay to the Purchaser the excess amount within seven (7) Business Days after agreement or determination of the Completion Accounts.

If the Consideration calculated with reference to the Completion Accounts is more than the Consideration paid by the Purchaser, the Purchaser shall pay to the Vendor the amount of such shortfall within seven (7) Business Days after agreement or determination of the Completion Accounts.

The Consideration payable by the Purchaser shall be made by cashier's order drawn on a licensed bank or financial institution in Hong Kong or cheque(s) drawn by the Purchaser's solicitors.

The Consideration was arrived at after arm's length negotiations between the Company and the Purchaser on normal commercial terms with reference to the latest financial information of the Disposal Company and the prevailing market condition of the property market in Hong Kong.

Conditions Precedent

Completion is conditional upon the following conditions being satisfied or waived in accordance with the Sale and Purchase Agreement on or before the Completion Date:

1. the Vendor, shall at its own costs, procure the Disposal Company in accordance with sections 13 and 13A of the Conveyancing and Property Ordinance (Chapter 219 of the laws of Hong Kong) to prove and give a good title to the Property, subject to the scope in accordance with the Sale and Purchase Agreement; and

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1. all the representations, undertakings and warranties (including the warranties as set out in the Sale and Purchase Agreement) given by the Vendor under the Sale and Purchase Agreement are and shall remain true, accurate, correct and complete and not misleading in all material respects up to the Completion.

If any of the Conditions is not fulfilled or not waived by the Purchaser on or before the Completion Date, the Purchaser shall be entitled to cancel the transaction contemplated under the Sale and Purchase Agreement, and the Vendor shall return the Deposits to the Purchaser forthwith and the Purchaser shall have no further claim against the Vendor for damages or interest or costs.

Completion

Completion shall take place at the office of the Vendor's solicitors at or before 3 p.m. on the Completion Date or at such place or time as the Vendor and the Purchaser shall agree and each part hereto shall perform their respective obligations as set out in the Sale and Purchase Agreement.

Following Completion, the Company will not hold any equity interest in the Disposal Company and the Disposal Company will cease to be a subsidiary of the Company.

INFORMATION OF THE PURCHASER

The Purchaser is principally engaged in property development.

To the best of the Directors' knowledge, information and belief (having made all reasonable enquiries) and based on the information provided, the Purchaser and its ultimate beneficial owner are Independent Third Parties.

INFORMATION OF THE DISPOSAL COMPANY AND THE PROPERTY

Information of the Disposal Company

The Disposal Company is a company incorporated in Hong Kong and wholly-owned by the Vendor as at the date of this announcement. The principal business is holding of the Property.

The audited financial information of the Disposal Company for the two years ended 31 March

2020 and 2021 is as below:

The unaudited net liabilities of Disposal Company as at 31 October 2021 was approximately HK$111.6 million.

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Information of the Property

The site located at Nos. 67-77 Nam On Street, Shau Kei Wan, Hong Kong with an aggregate site area of approximately 5,900 sq. ft.

FINANCIAL EFFECT OF THE DISPOSAL AND USE OF PROCEEDS

The carrying value of the Property as shown in the audited accounts of the Disposal Company as at 31 March 2021 was approximately HK$405.0 million together with the additions incurred in the seven months period ended 31 October 2021 at HK$68.9 million. The Group is expected to record a gain of approximately HK$214.1 million from the Disposal before expenses, which is calculated based on the amount of HK$688.0 million less the aggregate costs of HK$473.9 million. The actual financial effect in connection with the Disposal will be assessed after the Completion and is subject to review and final audit by the Company's auditors.

The net proceeds of the Disposal is estimated to be approximately HK$687.5 million (subject to adjustments), which will be applied for future business development of the Group and general working capital.

REASONS AND BENEFITS FOR THE DISPOSAL

The Company is an investment holding company and its subsidiaries are principally engaged in property investment, property development and hospitality service businesses in the Greater China and overseas.

The Directors considered that the Disposal represents a good opportunity for the Group to crystalise the gain. The Directors expect that the net proceeds from the Disposal will enhance the financial position of the Group and save up additional reserve for backing up its investment opportunities in the future.

The Board considered that the terms and conditions for the Disposal are on normal commercial terms, which are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As one of the applicable percentage ratios (as defined in Listing Rules) in respect of the Disposal is greater than 5% but all of them are less than 25%, the Disposal constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to reporting and announcement requirements but exempt from the Shareholders' approval requirement under the Listing Rules.

Shareholders and potential investors of the Company should note that the Completion is subject to the fulfilment (or waiver, if applicable) of certain conditions precedent under the Sale and Purchase Agreement, and the Completion may or may not proceed. Shareholders and potential investors of the Company are therefore advised to exercise caution when dealing in the Shares.

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TERMS USED IN THIS ANNOUNCEMENT

In this announcement, unless the context otherwise requires, capitalized terms used shall have the following meanings:

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