Tianjin Capital Environmental Protection : Announcement on the Provision of Guarantee for the Loan Granted to Karamay Tianchuang Water Company Limited

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(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1065)

Announcement on the Provision of Guarantee for the

Loan Granted to Karamay Tianchuang Water Company Limited

The Board of Directors (the "Board") of the Company and all the Directors warrant that there are no false representations or misleading statements contained in, or material omissions from, this announcement, and severally and jointly accept responsibility for the truthfulness, accuracy and completeness of this announcement.

Reference is made to the announcement of the discloseable transaction dated 4 November 2016 and

the overseas regulatory announcement in relation to the guarantee for the loan granted to Karamay Tianchuang Water Company Limited* (克拉瑪依天創水務有限公司) ("Karamay Company") dated on 24 November 2017 (the "Announcements"). Terms used in this announcement shall have

the same meanings as those defined in the Announcements unless the context requires otherwise.

On 19 August 2020, the Board received temporary motion from TMICL, the controlling shareholder of the Company, requesting the Board to table the resolutions regarding the provision of guarantee for the loan granted to Karamay Company for consideration at the EGM.

The Board hereby announces that, on the same day, the Board considered and approved that the Company intended to provide a guarantee for the payment obligation of Karamay Company under the Loan Contract based on the 90% equity interests of Karamay Company held by the Company. The Company will enter into a guarantee contract with the Lender for the Guarantee.

As the gearing ratio of Karamay Company exceeded 70% as at the end of July 2020, pursuant to the Articles of Association, the Guarantee shall be subject to the consideration and approval of the Shareholders at the general meeting by way of special resolution. A notice of the EGM was dispatched to the Shareholders on 24 July 2020, and a supplemental notice of the EGM relating to the consideration of the resolution on the provision of guarantee by the Company for the loan granted to Karamay Company will be dispatched to the Shareholders on 20 August 2020.

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1. Reasons for entering into the Guarantee
   In September 2016, the Company won the bid for the PPP Project. The Board considered and approved in its 22nd meeting of the seventh Board that the Company contributes RMB108,000,000 to Karamay Company, representing 90% of the registered capital of
   Karamay Company; while Karamay City Construction Investment and Development Company Limited* (克拉瑪依市城市建設投資發展有限責任公司) ("Karamay Urban Investment") contributes RMB12,000,000 to Karamay Company, representing 10% of the registered capital of Karamay Company, pursuant to which, Karamay Company was established by joint investment. On 4 November 2016, the Company entered into the PPP Project Agreement with Karamay Construction Bureau (currently known as Bureau of Housing and Urban-Rural Development of the Karamay City) (the "BOHURD of Karamay"). On 8 December 2016, Karamay Company was established.
   On 15 December 2016, the Company, Karamay Company and the BOHURD of Karamay entered into the supplementary agreement for inheriting the rights and obligations of the counterparty by the project company, pursuant to which the parties agreed that Karamay Company shall be responsible for the financing, design, construction, operation, maintenance and handover of the PPP Project, and the concession period shall be 27 years with a total project investment of approximately RMB450,000,000. In order to meet the fund demands for the PPP Project, Karamay Company intends to apply for a new loan of RMB330,000,000 (including the amount to replace the loan for the second phase of the Project of RMB189,000,000) from the Lender. According to the requirements of the Lender, the aforementioned loan must be secured by the Guarantee based on the 90% equity interest of Karamay Company held by the Company.

1. Key terms of the Guarantee

Scope of the Guarantee:	the principal not exceeding RMB297,000,000 under the
	Loan Contract and related interests, penalty interests,
	liquidated damages and all other related expenses to be
	repaid by Karamay Company
Guarantee type:	The Company will assume economic and legal joint
	liability for all the debts within the scope of the Guarantee
	(according to Chinese laws)
Counter-guarantee:	Karamay Company will provide a counter-guarantee to the
	Company with the right of charges and proceeds from the

1. 1. Project (based on ratio of the guarantee provided by the Company for the loan under the Loan Contract)
2. Basic information on and financial conditions of Karamay Company
   The Company contributed RMB108,000,000 in Karamay Company, holding 90% of the equity interest of Karamay Company; Karamay Urban Investment contributed RMB12,000,000 in Karamay Company, holding 10% of the equity interest of Karamay Company. Karamay Company was incorporated on 8 December 2016.

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The business scope of Karamay Company includes sewage water treatment and recycling; construction and installation business; engineering management services; machinery and equipment sales and maintenance; promotion services for environmental protection technology; manufacture of environmental protection equipment; monitoring of environmental protection; management of solid wastes; production and supply of tap water; manufacture of machineries special for water resources; production and supply of heating; property management. (For projects that are subject to approval in accordance with the laws, business activities shall only be carried out after approval was obtained from relevant authorities)

As at the end of December 2019, Karamay Company's audited total assets amounted to RMB406,224,800, with audited net assets, liabilities, current assets, current liabilities, operating revenue for the year and the net profits of RMB109,665,900, RMB296,558,900, RMB27,508,600, RMB34,015,400, RMB3,661.8 and RMB-7,445,200, respectively.

As at the end of July 2020, Karamay Company's unaudited total assets amounted to RMB389,866,000, with unaudited net assets, liabilities, current assets, current liabilities, operating revenue for the period from January to July 2020 and the net profits of RMB107,098,900, RMB282,767,100, RMB18,371,500, RMB26,218,800, RMB22,888,200 and RMB-2,567,000, respectively.

IV. The Company's decision-making procedures for the Guarantee

As at the date of this announcement, the total loan guarantees provided by Company to its subsidiaries amounted to RMB4,133,377,300 (including the Guarantee), accounting for approximately 66.95% of the latest audited (as of 31 December 2019) net assets of the Company.

As the gearing ratio of Karamay Company exceeded 70% as at the end of July 2020, pursuant to the Articles of Association, the Guarantee shall be subject to the consideration and approval of the Shareholders at the general meeting by way of special resolution.

1. General
   On 19 August 2020, the Board received temporary motion from TMICL, the controlling shareholder of the Company, requesting the Board to table the resolutions regarding the provision of guarantee for the loan granted to Karamay Company for consideration at the EGM. Votes at the EGM will be taken by poll.

A notice of the EGM was dispatched to the Shareholders on 24 July 2020, and a supplemental notice of the EGM relating to the consideration of the resolution on the provision of guarantee by the Company for the loan granted to Karamay Company will be dispatched to the Shareholders on 20 August 2020.

VI. Opinion of the Board

The Directors (including independent non-executive Directors) are of the view that the terms of and the resolution relating to the provision of guarantee by the Company for the loan granted to Karamay Company is fair and reasonable, and in the interest of the Company and its Shareholders as a whole. Therefore, the Directors recommend the Shareholders to vote for the relevant special resolution to be proposed at the EGM.

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DEFINITIONS

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

"Articles of Association"

"Company"

"Director(s)"

"EGM"

"Guarantee"

"Lender"

"Loan Contract"

"PPP Project"

"PPP Project Agreement"

the articles of association of the Company

Tianjin Capital Environmental Protection Group Company Limited, a joint stock limited company established in the PRC whose A Shares and H Shares are listed on the Shanghai Stock Exchange and the Stock Exchange respectively

director(s) of the Company, including the independent non- executive Director(s)

the first extraordinary general meeting of the Company for the year 2020 to be held on 7 September 2020 to seek the Shareholders' approval for, amongst others, the resolution in relation to the provision of guarantee by the Company for the loan granted to Karamay Company

the guarantee to be provided by the Company (as the guarantor) for the principal not exceeding RMB297,000,000 under the Loan Contract and other expenses

the bank who intends to enter into the Loan Contract with Karamay Company

the loan contract under which Karamay Company (as the borrower) intends to enter into with the Lender in relation to the loan with a principal amount of RMB330,000,000

the Public-Private-Partnership (PPP) project of the Second Sewage Water Treatment Plant of Karamay to be conducted by the Company and Karamay Construction Bureau, including the transfer of the concession rights of Existing Phase I by adopting the model of "Transfer-Operate-Transfer (TOT)" and the construction of New Phase II by adopting the model of "Design- Build-Operate-Transfer (DBOT)"

the project agreement entered into between the Company and Karamay Construction Bureau on 4 November 2016 in relation to the PPP Project

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"Shareholders"

"TMICL"

Tianjin, the PRC 19 August 2020

the shareholder(s) of the Company

Tianjin Municipal Investment Company Limited* (天津市政投資 有限公司), the controlling shareholder of the Company, holding approximately 50.14% equity interest in the Company

By order of the Board

Liu Yujun

Chairman

As at the date of this announcement, the Board comprises three executive Directors: Mr. Liu Yujun, Ms. Wang Jing and Mr. Niu Bo; three non-executive Directors: Mr. Gu Wenhui, Mr. Han Wei and Mr. Si Xiaolong; and three independent non-executive Directors: Mr. Di Xiaofeng, Mr. Guo Yongqing and Mr. Wang Xiangfei.

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