TIDMAGP
RNS Number : 6776V
Asian Growth Properties Limited
19 April 2016
19 April 2016
Asian Growth Properties Limited
("AGP" or the "Company")
Disposal of Property Development Project in Kaifeng, Henan
Province, the PRC
The Company is pleased to announce that the Vendor (a direct
wholly-owned subsidiary of AGP) entered into the Sale Agreement
with the Purchaser and the Purchaser's Guarantor in relation to the
conditional Disposal to the Purchaser of the Target Group, which
owns the Properties under development in Kaifeng, Henan Province,
the PRC, for the Consideration (for the Sale Share and the
Shareholder's Loan) of HK$900 million (approximately GBP81.4
million) in cash.
The Target Group to be acquired by the Purchaser comprises New
Insight (an indirect wholly-owned subsidiary of the Company) and
its wholly-owned subsidiaries which are the registered and
beneficial owners of the Properties comprising 10 land parcels
located at Zheng Kai Da Road, Kaifeng, Henan Province, the PRC and
the buildings erected on the Land. The Land has an aggregate lot
size and gross floor area of approximately 736,000 sq.m. and
2,657,000 sq.m., respectively and its permitted usage is
residential and/or commercial.
The Target Group is currently undertaking a development project
known as "Kaifeng Nova City" on the Land, which envisages a
shopping mall, premium offices, exhibition hall, hotel, serviced
apartments and residential towers. The construction works of phase
IA (residential) are completed and the superstructure works for
phase IB (residential) are in progress.
The carrying value of the Properties as at 31 December 2015 was
approximately HK$1,074.8 million (approximately GBP97.2 million).
The consolidated net liabilities of the Target Group as at 31
December 2015 was HK$203.1 million (approximately GBP18.4 million),
after deduction of the Shareholder's Loan.
Completion of the Disposal is subject to various conditions,
more particularly set out below. Upon Completion, the AGP Group
will receive a total gross cash consideration for the Sale Share
and the assignment of the Shareholder's Loan of HK$900 million
(approximately GBP81.4 million), equating to a net cash amount of
HK$900 million (approximately GBP81.4 million), before deducting
transaction costs and expenses. The loss from the Disposal before
transaction costs and expenses is expected to be approximately
HK$90 million (approximately GBP8.1 million).
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 results
announcement for the year ended 31 December 2015 published on 18
March 2016.
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 its Shareholders.
The Vendor, through its indirect wholly-owned subsidiaries,
holds the AGP Group's interests in the Properties. The Land is
located at Zheng Kai Da Road, Kaifeng, Henan Province, the PRC,
with an aggregate lot size and gross floor area of approximately
736,000 sq.m. and 2,657,000 sq.m., respectively. The development
project for the Land envisages a shopping mall, premium offices,
exhibition hall, hotel, serviced apartments and residential towers.
The construction works of phase IA (residential) are completed and
the superstructure works for phase IB (residential) are in
progress. The carrying value of the Properties as at 31 December
2015 was approximately HK$1,074.8 million (approximately GBP97.2
million).
The development cycle of the Kaifeng project is relatively long.
Having regard to the increasingly challenging business environment
and the uncertainties of the prospects of the property market in
the PRC (except for some cities like Shenzhen, Beijing and
Shanghai), the Board considers that the Disposal will enable the
AGP Group to realise its investment in the Properties at fair value
as part of the AGP Group's strategic plan for its property
portfolio, reduce its operational risk, and for better utilization
of the AGP Group's resources.
Following completion of the Disposal, based on receipt of the
Consideration (for the Sale Share and the Shareholder's Loan), the
AGP Group expects to record in its consolidated income statement a
loss (before transaction costs and expenses) of approximately HK$90
million (approximately GBP8.1 million) and to realise a net cash
amount of approximately HK$900 million (approximately GBP81.4
million) which will be available for future investment into its
other development and investment projects and other potential real
estate projects and as general working capital for the AGP
Group.
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 result announcement for the year ended
31 December 2015 published on 18 March 2016.
The Consideration for the Disposal was determined after arm's
length negotiations between the AGP Group and the Purchaser with
reference to, among others, the prevailing market prices of similar
properties in the adjacent location and the carrying value of the
Properties. Taking into account of the prospect of the property
market in Kaifeng city and the carrying value of the Properties,
the Directors consider that the terms of the Sale Agreement and the
Disposal are fair and reasonable and in the interest of the Company
and its Shareholders taken as a whole.
The Directors have confirmed that the Purchaser, the Purchaser's
Guarantor 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 aggregate net cash proceeds of the
Disposal receivable by the Vendor on Completion will be
approximately HK$900 million (approximately GBP81.4 million),
before deducting transaction costs and expenses.
The Company intends to apply the net proceeds from the Disposal
for future investment into its other development and investment
projects and other potential real estate projects 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 results
announcement for the year ended 31 December 2015 published on 18
March 2016.
Taking into account the Consideration (for the Sale Share and
the Shareholder's Loan), the loss arising from the Disposal to be
recognised by the AGP Group in its consolidated income statement is
estimated at approximately HK$90 million (approximately GBP8.1
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 and 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 Sale Agreement
Under the Sale Agreement, the Vendor agreed to sell to the
Purchaser the Sale Share and the Shareholder's Loan for the
Consideration of HK$900 million (approximately GBP81.4
million).
The Consideration shall be satisfied and paid by the Purchaser
in cash in the following manner:
(i) an amount of HK$200 million (approximately GBP18.1 million)
was paid upon the execution of the Sale Agreement (the "First
Payment"), of which HK$90 million (approximately GBP8.1 million)
(which is equivalent to 10% of the Consideration) represents the
deposit paid by the Purchaser to the Vendor (the "Deposit");
(ii) an amount of HK$500 million (approximately GBP45.2 million)
shall be paid on the Completion Date; and
(iii) the balance of the Consideration of HK$200 million
(approximately GBP18.1 million) shall be paid within 3 months from
the Completion Date.
Completion is conditional upon: (i) compliance by SEA with the
necessary requirements under the HK Listing Rules, if required;
(ii) compliance by AGP with the necessary requirements under the
AIM Rules, if required; (iii) obtaining of all consents by the
Vendor and the Purchaser from government or regulatory authorities
or third parties, if applicable; and (vi) no material breach by the
Vendor and the Purchaser of their respective obligations,
undertakings, representations and warranties under the Sale
Agreement (together the "Conditions").
If the Conditions are not fulfilled (or waived in accordance
with the terms of the Sale Agreement) on 19 July 2016 (or such
other date to be agreed between the Vendor and the Purchaser), the
Sale Agreement will terminate, the Vendor shall return the First
Payment to the Purchaser and the parties shall have no further
claims against each other under the Sale Agreement for costs,
damages compensation or otherwise, save in respect of antecedent
breaches and claims.
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 09:16 ET (13:16 GMT)
If the Purchaser fails to complete the purchase of the Sale
Share and the assignment of Shareholder's Loan (other than as a
result of the Vendor's default) after the Conditions are satisfied,
the Vendor is entitled to keep the Deposit and it must return the
balance of the First Payment (less the Deposit) to the Purchaser.
If the Vendor fails to complete the sale of the Sale Share and the
assignment of the Shareholder's Loan (other than as a result of the
Purchaser's default) after the Conditions have been satisfied, it
must return the First Payment to the Purchaser.
Upon Completion, the Vendor shall cease to hold any interest in
the Target Group and the Target Group will cease to be subsidiaries
of the AGP Group.
The Purchaser's Guarantor has agreed to guarantee the
performance by the Purchaser of all its obligations under the Sale
Agreement.
Information on the Target Group, THE Land and the properties
New Insight is an investment holding company, and an indirect
wholly-owned subsidiary of the Company. As at the date of this
announcement, the indirect wholly-owned subsidiaries of New Insight
are the registered and beneficial owners of the Properties
comprising the Land located at Zheng Kai Da Road, Kaifeng, Henan
Province, the PRC and the buildings erected on the Land. The Land
has an aggregate lot size and gross floor area of approximately
736,000 sq.m. and 2,657,000 sq.m., respectively and its permitted
usage is residential and/or commercial. The term of the land use
rights of the Land is 70 years until 2 March 2081 for residential
use and 40 years until 2 March 2051 for commercial use.
The Target Group is currently undertaking a development project
known as "Kaifeng Nova City" on the Land, which envisages a
shopping mall, premium offices, exhibition hall, hotel, serviced
apartments and residential towers. The construction works of phase
IA (residential) are completed and the superstructure works for
phase IB (residential) are in progress.
The consolidated carrying value of the assets of the Target
Group as at 31 December 2015 was HK$1,395.3 million (approximately
GBP126.2 million). Based on the unaudited consolidated management
accounts of the Target Group for the year ended 31 December 2015
and 31 December 2014, which was prepared based on the audited
accounts of the subsidiaries incorporated in Hong Kong and in the
PRC for the same period, the revenue of the Target Group for the
year ended 31 December 2015 was approximately HK$93.6 million
(approximately GBP8.5 million) (Year ended 31 December 2014: Nil).
The net loss before taxation and after taxation of the Target Group
for the year ended 31 December 2015 was approximately HK$47.7
million (approximately GBP4.3 million) and HK$49.7 million
(approximately GBP4.5 million) respectively (Year ended 31 December
2014: HK$64.8 million (approximately GBP5.9 million) and HK$64.8
million (approximately GBP5.9 million) respectively).
Based on the unaudited consolidated management accounts of the
Target Group for the year ended 31 December 2015, the consolidated
net liabilities of the Target Group as at 31 December 2015 was
approximately HK$203.1 million (approximately GBP18.4 million).
For the purpose of this announcement, an exchange rate of GBP1 =
HK$11.0572 is used.
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 market
of The London Stock Exchange
plc (Stock code: AGP);
----------------------- -----------------------------------------
"AGP Group" AGP and its subsidiaries;
----------------------- -----------------------------------------
"AIM Rules" the AIM Rules for Companies published
by The London Stock Exchange
plc;
----------------------- -----------------------------------------
"Board" the board of Directors;
----------------------- -----------------------------------------
"Business Day" a day, on which banks are open
for business in Hong Kong (other
than a Saturday);
----------------------- -----------------------------------------
"Completion" completion of the sale and purchase
of the Sale Share and the assignment
of the Shareholder's Loan pursuant
to the Sale Agreement;
----------------------- -----------------------------------------
"Completion Date" 5th Business Day after (but excluding)
the day on which all the Conditions
are fulfilled or waived (as the
case may be), or such other date
as the Vendor and the Purchaser
may agree;
----------------------- -----------------------------------------
"Consideration" the sum of HK$900 million (approximately
GBP81.4 million) payable to the
Vendor for the acquisition of
the Sale Share and assignment
of the Shareholder's Loan from
the Vendor under the Sale Agreement;
----------------------- -----------------------------------------
"Director(s)" the director(s) of the Company;
----------------------- -----------------------------------------
"Disposal" the Disposal of the Sale Share
and the assignment of the Shareholder's
Loan by the Vendor;
----------------------- -----------------------------------------
"HK$" the lawful currency of Hong Kong
for the time being;
----------------------- -----------------------------------------
"Hong Kong" the Hong Kong Special Administrative
Region of the People's Republic
of China;
----------------------- -----------------------------------------
"HK Listing Rules" The Rules Governing the Listing
of Securities on HKSE;
----------------------- -----------------------------------------
"HKSE" The Stock Exchange of Hong Kong
Limited;
----------------------- -----------------------------------------
" Land" a total of 10 parcels of land
comprising Land Parcel A, Land
Parcel B, Land Parcel C, Land
Parcel D, Land Parcel E, Land
Parcel F, Land Parcel G, Land
Parcel H, Land Parcel A-1 and
Land Parcel B-1 which are located
at Zheng Kai Da Road, Kaifeng,
Henan Province, the PRC with
an aggregate lot size of approximately
736,000 sq.m. and gross floor
area of approximately 2,657,000
sq.m.;
----------------------- -----------------------------------------
"New Insight" New Insight Holdings Limited,
a company incorporated in the
British Virgin Islands with limited
liability and is a direct wholly-owned
subsidiary of the Vendor;
----------------------- -----------------------------------------
"Properties" the Land and the buildings and
tenements erected thereon;
----------------------- -----------------------------------------
"PRC" The People's Republic of China;
----------------------- -----------------------------------------
"Purchaser" Blackbird BB Limited, a company
incorporated in the British Virgin
Islands with limited liability
and is a wholly-owned subsidiary
of the Purchaser's Guarantor;
----------------------- -----------------------------------------
"Purchaser Guarantor" HEC Capital Limited, a company
incorporated in the Cayman Islands
with limited liability;
----------------------- -----------------------------------------
"Sale Agreement" the agreement relating to the
Disposal entered into between
the Vendor, the Purchaser and
the Purchaser's Guarantor on
19 April 2016;
----------------------- -----------------------------------------
"Sale Share" 1 ordinary share of US$1 in the
capital of New Insight, being
the entire issued share of New
Insight;
----------------------- -----------------------------------------
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 09:16 ET (13:16 GMT)
"SEA" S E A Holdings Limited, an exempted
company incorporated in Bermuda
with limited liability, the shares
of which are listed and traded
on the Main Board of HKSE (Stock
code: 251);
----------------------- -----------------------------------------
"Shareholders" holders of the entire issued
share capital of the Company;
----------------------- -----------------------------------------
"Shareholder's all outstanding indebtedness
Loan" or liabilities due from New Insight
to the Vendor as at the Completion
Date (as at the date of this
announcement, the outstanding
amount of the Shareholder's Loan
is approximately HK$1,200 million
(approximately GBP108.5 million));
----------------------- -----------------------------------------
"sq. m." square metres;
----------------------- -----------------------------------------
"Target Group" New Insight and its wholly-owned
subsidiaries;
----------------------- -----------------------------------------
"Vendor" Benefit Strong Group Limited,
a company incorporated in the
British Virgin Islands with limited
liability and is a direct wholly-owned
subsidiary of AGP;
----------------------- -----------------------------------------
"GBP" Pounds sterling, the lawful currency
of the United Kingdom; and
----------------------- -----------------------------------------
"%" per cent.
----------------------- -----------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
DISBXGDSUBBBGLC
(END) Dow Jones Newswires
April 19, 2016 09:16 ET (13:16 GMT)
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