TIDMAGP
RNS Number : 8786A
Asian Growth Properties Limited
01 October 2015
1 October 2015
Asian Growth Properties Limited
("AGP" or the "Company")
Proposed Disposal of Land at Fo Tan
The Company is pleased to announce that on 30 September 2015 the
AGP Group entered into the Option Agreement and the Sale Agreement,
in relation to the proposed disposal of development land held by
the AGP Group at Fo Tan, to Centralcon Investment Holding (Hong
Kong) Company Limited (a nominee of the Option Holder, Chung Sing
Real Estate Company Limited), for a gross consideration of HK$1,400
million (approximately GBP119 million). Further details of the
proposed Disposal are set out below.
The effect of these Agreements is that the AGP Group will be
paid an initial non-refundable Option Fee of HK$280 million
(approximately GBP24 million) by the Option Holder in consideration
for the AGP Group granting the Option Holder the right under the
Option Agreement to nominate an entity to acquire the Target Group
(being entities currently part of the AGP Group) for further
Consideration of HK$1,120 million (approximately GBP95 million),
subject to certain Completion adjustments not exceeding HK$10
million (approximately GBP850,000). An amount of HK$200 million
(approximately GBP17 million) of the Option Fee was received by the
AGP Group from the Option Holder on 30 September 2015 and the
balance of HK$80 million (approximately GBP7 million) is due by no
later than 30 October 2015. The Option Holder exercised its Option
to acquire the Target Group on 30 September 2015.
The Target Group comprises Ever Reality and its wholly owned
subsidiary, AGP (Sha Tin). AGP (Sha Tin) is the registered owner of
the Land situated at Fo Tan, Sha Tin, New Territories Hong Kong,
with an area of approximately 20,000 square metres.
The carrying value of the Land as at 31 August 2015 was
approximately HK$940 million (approximately GBP80 million).
Completion of the Disposal is subject to various conditions,
more particularly set out below. Assuming the Disposal proceeds to
Completion and including the Option Fee, the AGP Group will receive
a gross cash consideration of HK$1,400 million (approximately
GBP119 million), equating to a net cash amount of HK$1,250 million
(approximately GBP106 million) (after repayment of the Bank Loan of
approximately HK$150 million (approximately GBP13 million), before
transaction expenses). The capital gain from the Disposal before
transaction expenses is expected to be approximately HK$460 million
(approximately GBP39 million).
If Completion of the Disposal does not take place because the
Purchaser is unable to obtain all necessary approvals to complete
the Disposal under the Sale Agreement and the Option Holder does
not nominate another entity to purchase the Target Group, the AGP
Group will be entitled to retain the HK$280 million (approximately
GBP24 million) Option Fee paid by the Option Holder.
Under Rule 15 of the AIM Rules the Disposal is deemed to be a
disposal resulting in a fundamental change of business of the
Company, and as such requires the approval, by way of ordinary
resolution, of the Shareholders at the General Meeting. A circular
and notice of General Meeting will be sent to Shareholders
shortly.
The Company's majority shareholder, SEA, has given an
undertaking to vote in favour of the resolutions to approve the
Disposal at the General Meeting in respect of its holdings of
861,278,857 Ordinary Shares, which represent approximately 97.17
per cent. of the issued share capital of the Company.
After Completion, the AGP Group will continue to focus on its
other development and investment projects in Hong Kong and mainland
China. Particulars of the AGP Group's strategy and its remaining
property portfolio are set out in the Company's interim report for
the six months ended 30 June 2015.
Further details of the Disposal are set out below.
Background to and reasons for the Disposal
Since the Company's admission to AIM, the Company has been
focused on developing its property portfolio in Hong Kong and
mainland China. It is the AGP Group's strategy to review and
optimise its property portfolio from time to time with a view to
achieving the greatest value for Shareholders.
AGP (Sha Tin) holds the AGP Group's interests in the Land, which
was acquired by the AGP Group in 2004. The Land is situated in Fo
Tan, Sha Tin, New Territories, Hong Kong, with an aggregate total
site area of approximately 20,000 square metres. The AGP Group's
development project for the Land envisaged, among other facilities,
residential units, car parks, educational facilities and a bus
terminus. The foundation work of the project has been completed and
superstructure design is in progress. The carrying value of the
Land as at 31 August 2015 was approximately HK$940 million
(approximately GBP80 million).
The Board believes that the Disposal provides an attractive
opportunity to realise its investment in the Land at this time,
reducing the time and overall risk and uncertainty of realising the
value of the Land by undertaking the development project itself.
Following Completion of the Disposal, based on receipt of the
Consideration and the Option Fee and taking into account the
carrying value of the Land of HK$940 million (approximately GBP80
million), the AGP Group expects to record in its consolidated
income statement an estimated gain (before expenses) of
approximately HK$460 million (approximately GBP39 million) and to
realise a cash amount of HK$1,250 million (approximately GBP106
million) for future reinvestment.
After the Disposal, the Company will continue with its current
business of property investment and development, hotel operation
and property and asset management in Hong Kong and mainland China.
Further particulars of the Company's remaining property portfolio
are set out in the Company's interim report for the six months
ended 30 June 2015.
The Option Fee and the Consideration for the Disposal was
determined after arm's length negotiations between the AGP Group
and the Option Holder having regard to the value of the Land. The
Directors consider that the Option Fee and the Consideration are
fair and reasonable and in the interest of the Company and its
Shareholders taken as a whole.
The Directors have confirmed that the Option Holder, the
Purchaser and their respective ultimate beneficial owners are
independent of the Company and not a "related party" as defined in
the AIM Rules.
Use of proceeds
It is expected that the net cash proceeds of the Disposal
receivable by the Company and the Seller on Completion after
repayment of the Bank Loan will be HK$1,250 million (approximately
GBP106 million), inclusive of the Option Fee, before transaction
expenses.
The Company intends to use the net proceeds from the Disposal
for future investment and as general working capital for the AGP
Group.
Current trading and prospects
The current trading of the AGP Group is in line with the
expectations of the Directors, as set out in the Company's interim
report for the six months ended 30 June 2015.
Taking into account (i) the Option Fee of HK$280 million
(approximately GBP24 million); (ii) the further Consideration for
the Disposal of approximately HK$1,120 million (approximately GBP95
million); and (iii) the carrying amount of the Land as at 31 August
2015 of approximately HK$940 million (approximately GBP80 million),
the gain arising from the Disposal (before expenses) to be
recognised by the AGP Group in its consolidated income statement
has been estimated at approximately HK$460 million (approximately
GBP39 million).
The above calculation and accounting treatment are subject to
review by the auditors of the AGP Group. The actual financial
impact to the Group arising from the Disposal to be recorded in the
AGP Group's consolidated accounts will be recalculated based on the
net asset value of the Target Group as at the date to which
completion accounts are drawn up.
Upon Completion, the Target Group will cease to be subsidiaries
of the AGP Group. The Disposal upon Completion will therefore
result in the deconsolidation of the assets and liabilities of the
Target Group from the AGP Group's consolidated accounts.
Summary of the Agreements
The Agreements consist of the Option Agreement and the Sale
Agreement.
The Option Agreement
Under the Option Agreement, in consideration of an aggregate
Option Fee of HK$280 million (approximately GBP24 million), the
Seller and AGP agreed to grant to the Option Holder the Option
relating to the purchase of the Sale Share and the assignment of
the benefit of the Sale Loans, exercisable during the Option
Period. Upon exercise of the Option, the Seller, AGP and a
purchaser nominated by the Option Holder (being the Purchaser)
shall enter into the Sale Agreement.
The Option Fee shall be paid in the following manner:
(i) a sum of HK$200 million (approximately GBP17 million) upon
the execution of the Option Agreement; and
(ii) the balance of HK$80 million (approximately GBP7 million)
on or before 30 October 2015, being 30 days after the date of the
Option Agreement.
The Option may be exercised by the Option Holder in respect of
the entirety of the Sale Share and the assignment of the benefit of
the Sale Loans) at any time before expiry of the Option Period.
The Option Holder may exercise the Option no more than two times
before the expiry of the Option Period.
(MORE TO FOLLOW) Dow Jones Newswires
October 01, 2015 04:30 ET (08:30 GMT)
If the Purchaser initially nominated by the Option Holder is
unable to complete the purchase of the Sale Share and the
assignment of the benefit of the Sale Loans under the Sale
Agreement by not later than 3 days prior to the expiry of the
Option Period because it is unable to obtain all necessary
requisite approvals to complete the Disposal under the Sale
Agreement, the Option Holder may nominate another purchaser to
purchase the entirety of the Sale Share and the assignment of the
benefit of the Sale Loans. However, if the Option Holder were to
nominate another purchaser, such purchase of the Sale Share and the
assignment of the benefit of the Sale Loans by the second entity
will not be subject to any conditions.
The Option Agreement also provides that completion of the Sale
Agreement is conditional upon, among others, AGP obtaining the
approval of its Shareholders as required by the AIM Rules. Pursuant
to the Option Agreement, SEA, being the majority shareholder of
AGP, irrevocably undertakes to vote in favour of any resolution
proposed by AGP to approve the Agreements.
Immediately after the execution of the Option Agreement, the
Option Holder gave notice to the Seller and AGP to exercise the
Option and nominated the Purchaser to enter into the Sale
Agreement.
On 30 September 2015, the Seller, AGP and the Purchaser entered
into the Sale Agreement.
The Sale Agreement
Under the Sale Agreement, the Seller agreed to sell to the
Purchaser the Sale Shares and AGP agreed to assign to the Purchaser
the benefit of the Sale Loans, at an aggregate Consideration of
HK$1,120 million (approximately GBP95 million) (subject to
adjustments).
Pursuant to the Sale Agreement, the Consideration of HK$1,120
million (approximately GBP95 million) shall be satisfied and paid
by the Purchaser in cash in the following manner:
(i) a refundable deposit of HK$1 shall be paid by the Purchaser
to the Seller upon execution of the Sale Agreement; and
(ii) the balance of the Consideration (subject to adjustment as
mentioned below) shall be paid by the Purchaser upon
Completion.
The Consideration is subject to the adjustments based on the net
asset value of the Target Group (excluding the Land, Bank Loan and
Sale Loans) as at Completion, subject to a maximum cap of HK$10
million (approximately GBP850,000).
Prior to Completion, the Seller is required to cause the Bank
Loan granted by the Bank to AGP (Sha Tin) to be repaid no later
than upon Completion, equating to approximately HK$150 million
(approximately GBP13 million). If the Bank Loan is to be repaid
upon Completion, it is agreed that the balance of the Consideration
(subject to the adjustment mentioned above) shall be split, upon
Completion, in the following manner:
(i) a sum equivalent to the outstanding amount of the Bank Loan payable to the Bank;
(ii) the price for the assignment of the benefit of the Sale
Loans payable to AGP (being the face value of the total outstanding
amount of the Sale Loans as at Completion); and
(iii) the remaining part of the balance of the Consideration payable to the Seller.
Completion shall be subject to and conditional upon, if
applicable:
(i) the compliance with the requirements under the HK Listing
Rules by SEA in respect of the transactions contemplated
thereunder;
(ii) the compliance with the requirements under the AIM Rules by
AGP in respect of the transactions contemplated thereunder;
(iii) the Purchaser obtaining of all necessary approvals for it
to enter into the Sale Agreement within 42 days from the date of
the Option Agreement; and
(iv) the payment of the balance of the Option Fee (as defined in
the Option Agreement) in the sum of HK$80 million (approximately
GBP7 million) by the Option Holder on or before 30 October
2015.
If the conditions precedent referred to in paragraphs (iii) and
(iv) above have not been fulfilled on or before the specified
period, the Sale Agreement shall terminate and the parties shall
have no liability to each other, save that termination will not
affect any accrued rights and obligations of any party.
Assuming Shareholders approve the Disposal, Completion is
expected to take place on 30 November 2015 or at such other earlier
date as the Seller and the Purchaser may mutually agree in
writing.
Upon Completion, the Seller shall cease to hold any interest in
the Target Group and the Target Group will cease to be subsidiaries
of the AGP Group.
The Company has also agreed to guarantee the performance by the
Seller of all its obligations under the Sale Agreement.
Information on the Target Group
Ever Reality is an investment holding company and its sole
business is the holding of the entire equity interest of AGP (Sha
Tin) which is the registered owner of the Land.
As at the date of this announcement, the Land is legally and
beneficially owned by AGP (Sha Tin). The Land is currently under
development and no income such as rental fee income has been
generated by the Land. As at 31 August 2015, the carrying value of
the Land was approximately HK$940 million (approximately GBP80
million).
The consolidated value of the assets of the Target Group,
including the Land, at 30 June 2015 was HK$940 million
(approximately GBP80 million). The audited net loss before taxation
and after taxation of the Target Group for the year ended 31
December 2014 were both approximately HK$1 million (approximately
GBP85,000) (Year ended 31 December 2013: net loss before taxation
and after taxation were both HK$11 million (approximately GBP1
million).
Based on the unaudited consolidated management accounts of the
Target Group for the eight months ended 31 August 2015, the
consolidated net liabilities of the Target Group as at 31 August
2015 was approximately HK$20 million (approximately GBP2
million).
Circular to Shareholders
As described above, the proposed Disposal is subject to the
satisfaction of certain conditions, including approval of the
Shareholders at the General Meeting. In accordance with AIM Rule
15, a circular will be posted to the Shareholders shortly which
will contain a notice of General Meeting and further details of the
proposed Disposal.
For more information, please contact:
Lu Wing Chi Tel: +852 2828 6363
Executive Director
Asian Growth Properties Limited
Richard Gray Tel: +44 207 886 2500
Andrew Potts
Panmure Gordon (UK) Limited
(Nominated Advisor)
.................................................................................................
The following definitions apply throughout this announcement
unless the context requires otherwise:
"AGP" or the "Company" Asian Growth Properties Limited,
a company incorporated in the
British Virgin Islands whose
shares are traded on AIM (Stock
code: AGP);
----------------------- ----------------------------------------
"AGP Group" AGP and its subsidiaries;
----------------------- ----------------------------------------
"AGP (Sha Tin)" AGP (Sha Tin) Limited, a company
incorporated in Hong Kong with
limited liability and is wholly-owned
subsidiary of Ever Reality;
----------------------- ----------------------------------------
"Agreements" the Option Agreement and the
Sale Agreement;
----------------------- ----------------------------------------
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange
plc;
----------------------- ----------------------------------------
"Bank" Hang Seng Bank Limited;
----------------------- ----------------------------------------
"Bank Loan" a term loan facility of HK$150
million (approximately GBP13
million) granted by the Bank
to AGP (Sha Tin) for the purpose
of financing the acquisition
cost of the Land and the outstanding
amount of the principal sum and
any interest accrued thereon;
----------------------- ----------------------------------------
"Board" the board of Directors;
----------------------- ----------------------------------------
"Business Day" a day, other than a public holiday,
Saturday or Sunday, on which
licensed banks are open in Hong
Kong and the People's Republic
of China to the general public
for business;
----------------------- ----------------------------------------
"Completion" completion of the Disposal pursuant
to the Sale Agreement;
----------------------- ----------------------------------------
"Consideration" the total consideration in the
sum of HK$1,120 million (approximately
GBP95 million) payable by the
Purchaser to the Seller and the
Company for the Disposal under
the Sale Agreement;
----------------------- ----------------------------------------
"Director(s)" the director(s) of the Company;
----------------------- ----------------------------------------
"Disposal" the Disposal of the Sale Share
by the Seller and the assignment
of the benefit of the Sale Loans
(MORE TO FOLLOW) Dow Jones Newswires
October 01, 2015 04:30 ET (08:30 GMT)
Asian Growth Properties (LSE:AGP)
Historical Stock Chart
From Aug 2024 to Sep 2024
Asian Growth Properties (LSE:AGP)
Historical Stock Chart
From Sep 2023 to Sep 2024
