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(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 00144)
CONNECTED TRANSACTION
FORMATION OF JOINT VENTURE IN CONNECTION WITH OLD PORT LAND REDEVELOPMENT PROJECT IN DJIBOUTI
SUMMARY
The Board is pleased to announce that on 29 December 2020, the Company entered into the Investment Agreement with GHIH, CMSK, Top Chief, PDSA and DPFZA in relation to the proposed formation of the Red Sea World Joint Venture in connection with the Redevelopment Project in Djibouti. Pursuant to the Investment Agreement, each of the Djibouti Newco (a direct wholly-owned subsidiary of GHIH), CMHD (an indirect, wholly-owned subsidiary of the Company) and OHD (an indirect, wholly-owned subsidiary of Top Chief) shall have a 60%, 23.5% and 16.5% interest in the Red Sea World Joint Venture, respectively.
LISTING RULE IMPLICATIONS
Each of Top Chief and OHD is a wholly-owned subsidiary of CMSK and CMSK, is an associate of CMG, the ultimate holding company of the Company, and therefore they are all connected persons of the Company. Accordingly, the Investment Agreement constitutes a connected transaction of the Company under the Listing Rules.
Since the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the aggregate capital commitment by CMHD under the Investment Agreement exceeds 0.1% but are below 5%, the transaction is therefore exempt from the circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules.
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1. BACKGROUND
The Board is pleased to announce that on 29 December 2020, the Company entered into the Investment Agreement in relation to the Red Sea World Joint Venture in relation to the proposed formation of the Red Sea World Joint Venture in connection with the Redevelopment Project.
THE INVESTMENT AGREEMENT
The key terms of the Investment Agreement are set out below:
Date: | 29 December 2020 | |
Parties: | (1) | The Company |
(2) | GHIH | |
(3) | CMSK | |
(4) | Top Chief | |
(5) | PDSA | |
(6) | DPFZA | |
Purpose and scope | The Red Sea World Joint Venture shall be a company to be | |
of business: | established under the laws of Djibouti for the purpose of | |
developing, operating and managing the Redevelopment | ||
Project and holding all assets thereof (including the Phase I | ||
Land). | ||
PDSA shall enter into a transfer agreement with the Red Sea | ||
World Joint Venture for the transfer of the Phase I Land as | ||
soon as possible after the establishment of the Red Sea | ||
World Joint Venture. The transfer price of the Phase I Land | ||
shall be US$69,870,000 (equivalent to approximately | ||
HKD544,986,000) which will be funded by the capital | ||
contribution by the shareholders of the Red Sea World Joint | ||
Venture. | ||
Shareholding and | The registered share capital of the Red Sea World Joint | |
capital | Venture shall initially be an amount equivalent in DJF of | |
commitment: | US$14,000 (equivalent to approximately HKD109,200) of | |
which, each of Djibouti Newco, CMHD and OHD shall hold |
60%, 23.5% and 16.5%, respectively. The amount of capital contribution to be paid by each of Djibouti Newco, CMHD and OHD at this stage shall be US$8,400 (equivalent to approximately HKD65,520), US$3,290 (equivalent to approximately HKD25,662) and US$2,310 (equivalent to approximately HKD18,018), respectively.
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Immediately after the incorporation of the Red Sea World Joint Venture, Djibouti Newco, CMHD and OHD shall increase the registered share capital of the Red Sea World Joint Venture and make a second capital contribution of
US$120,000,000 (equivalent to approximately HKD100,800,000) to the Red Sea World Joint Venture on a pro rata basis. The amount of capital contribution to be paid by each of Djibouti Newco, CMHD and OHD at this stage shall be US$72,000,000 (equivalent to approximately HKD561,600,000), US$28,200,000 (equivalent to approximately HKD219,960,000) and US$19,800,000
(equivalent to approximately HKD154,440,000), respectively.
In addition, Djibouti Newco, CMHD and OHD shall provide up to an aggregate amount of US$10,000,000 (equivalent to approximately HKD78,000,000) to the Red Sea World Joint Venture on a pro rata basis. The amount of additional capital contribution to be paid by each of Djibouti Newco, CMHD and OHD for shall be US$6,000,000 (equivalent to approximately HKD46,800,000), US$2,350,000 (equivalent to approximately HKD18,330,000) and US$1,650,000
(equivalent to approximately HKD12,870,000), respectively.
Board of directors: The board of the Red Sea World Joint Venture shall comprise of five directors. Djibouti Newco shall be entitled to nominate three directors, each of CMHD and OHD shall be entitled to nominate one director.
The quorum for any board meeting shall be at least four directors comprising at least one director nominated by each of CMHD and OHD and at least two directors nominated by Djibouti Newco upon first and second calls for a meeting. Should a meeting still be inquorate after the first two calls, the quorum upon third call shall be a majority of the directors.
The chairman of the board of directors shall be nominated by Djibouti Newco and the vice-chairman of the board of directors shall be jointly nominated by CMHD and OHD. Neither the chairman nor the vice-chairman shall have a casting vote.
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All matters of the board shall be decided by a simple | |
majority of all directors attending a validly constituted | |
meeting or represented, save for the reserved matters | |
including inter alia, approving feasibility study, annual | |
business plan and budget, financial plan, plans, activities | |
and schemes to attract and promote investors, and | |
contractors and subcontractors in connection with the | |
Redevelopment Project which shall be decided by the | |
unanimous vote of all directors attending. | |
Conditions for | The establishment of the Red Sea World Joint Venture is |
taking effect: | subject to, inter alia, the obtaining of all necessary |
approvals and consents and land title to the Phase I Land | |
being granted to PDSA. | |
Parent guarantee: | Each of the Company, Top Chief and GHIH has agreed to |
guarantee the performance by each of CMHD, OHD and | |
Djibouti Newco, respectively, of their obligations under the | |
Investment Agreement. |
2. REASONS FOR THE TRANSACTION
The core business of the Group includes port and port-related business. In order to realise the Group's vision of being a world-class integrated port service provider, the Group has, in recent years, been actively exploring and, as and when deemed appropriate, capturing available opportunities overseas as one of the means to effectively add new growth drivers to its existing, sustainably growing ports business. The Company and CMSK jointly implemented the Group's 'Port-Park-City' strategy to realise business interaction and synergy within the Group, maximise benefits, and share benefits and risk with CMSK.
The Group sees great opportunities and economic benefits in developing, operating and managing the Redevelopment Project for the following key reasons. Djibouti has stable geo-political environment and the largest deep-water port in East Africa. The Redevelopment Project has prime location, as it is close to the Djibouti International Airport, the Nagad train station and one of the main highways in Djibouti. The market conditions of Djibouti are also in favour the Redevelopment Project due to the current low supply but high demand in residential properties, commercial properties, hotels and offices. Therefore, the Group is of the view that it will benefit from the Red Sea World Joint Venture.
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China Merchants Port Holdings Co. Ltd. published this content on 29 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 December 2020 09:28:08 UTC