TIDMAGP
RNS Number : 8086H
Asian Growth Properties Limited
22 August 2016
22 August 2016
Asian Growth Properties Limited
("AGP" or the "Company")
Disposal of Property Development Project in Chengdu, Sichuan
Province, the PRC
The Company is pleased to announce that the Vendor (a direct
wholly-owned subsidiary of AGP) has entered into the Sale Agreement
with the Purchaser in relation to the conditional Disposal to the
Purchaser of the Target Group, which owns the Land under
development in Chengdu, Sichuan Province, the PRC, for the
Consideration (for the Sale Share and the Shareholder's Loan) of
HK$890 million (approximately GBP87.7 million) in cash.
The Target Group to be acquired by the Purchaser comprises
Healthy Time (an indirect wholly-owned subsidiary of the Company)
and its wholly-owned subsidiaries which are the registered and
beneficial owners of the Land comprising three land parcels located
at Longquanyi District, Chengdu, Sichuan Province, the PRC. The
Land has an aggregate site area of approximately 506,000 sq.m. and
its permitted usage is residential and/or commercial.
The Target Group is currently undertaking a development project
known as "Chengdu Nova City" on the Land. The commercial basement
works have been completed.
The carrying value of the Land as at 30 June 2016 was
approximately HK$709.9 million (approximately GBP69.9 million). The
consolidated net liabilities of the Target Group as at 30 June 2016
was HK$180.3 million (approximately GBP17.8 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$890 million
(approximately GBP87.7 million), equating to a net cash amount of
HK$886.7 million (approximately GBP87.4 million), before deducting
transaction costs and expenses. The gain from the Disposal before
transaction costs and expenses is expected to be approximately
HK$126.1 million (approximately GBP12.4 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 property
portfolio are set out in the Company's 2016 interim results
announcement published on 19 August 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 Land. The Land is located at
Longquanyi District, Chengdu, Sichuan Province, the PRC, with an
aggregate site area of approximately 506,000 sq.m.. The commercial
basement works have been completed. The carrying value of the Land
as at 30 June 2016 was approximately HK$709.9 million
(approximately GBP69.9 million).
Given the development cycle of the Chengdu project is relatively
long and 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 Land 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
gain (before transaction costs and expenses) of approximately
HK$126.1 million (approximately GBP12.4 million) and to realise a
net cash amount of approximately HK$886.7 million (approximately
GBP87.4 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 property portfolio are set out
in the Company's 2016 interim results announcement published on 19
August 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
Land. Taking into account of the prospect of the property market in
Longquanyi District, Chengdu and the carrying value of the Land,
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 and its 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$890 million (approximately GBP87.7 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 2016
interim results announcement published on 19 August 2016.
Taking into account the Consideration (for the Sale Share and
the Shareholder's Loan), the gain arising from the Disposal to be
recognised by the AGP Group in its consolidated income statement is
estimated at approximately HK$126.1 million (approximately GBP12.4
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$890 million (approximately GBP87.7
million).
The Consideration shall be satisfied and paid by the Purchaser
in cash in the following manner:
(i) 50% of the Consideration, equivalent to an amount of HK$445
million (approximately GBP43.85 million) will be paid on the
Completion Date; and
(ii) the balance of the Consideration of HK$445 million
(approximately GBP43.85 million) shall be paid within 12 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 necessary consents
by the Purchaser from third parties, if applicable; (iv) completion
of the due diligence by the Purchaser and the result of such due
diligence showing that there is no material discrepancy between the
information disclosed by the Vendor under the Sale Agreement and
the information found by the Purchaser; and (v) a guarantee to the
satisfaction of the Vendor (the "Guarantor") has signed a deed of
guarantee (the "Deed of Guarantee") on the execution date of the
Sale Agreement to guarantee the responsibilities and obligations
performed by the Purchaser to the Vendor 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 or before 19 November 2016
(or such other date to be agreed between the Vendor and the
Purchaser), the Sale Agreement will terminate.
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.
Summary of the DEED OF GUARANTEE
On 22 August 2016, the Guarantor has signed the Deed of
Guarantee in favour of the Vendor to guarantee the responsibilities
and obligations performed by the Purchaser to the Vendor under the
Sale Agreement.
Pursuant to the Deed of Guarantee, the Guarantor undertakes to
the Vendor that, among others, it shall:
(i) guarantee the due performance of the Purchaser under the Sale Agreement;
(ii) perform the obligations of the Purchaser under the Sale
Agreement shall the Purchaser fails to do so; and
(iii) indemnify the Vendor of all costs or claims, arising from
the breach of warranties by the Purchaser under the Sale
Agreement.
The Guarantor is a Hong Kong resident and his occupation is a
merchant. The Directors have confirmed that the Guarantor is
independent of the Company and not a "related party" as defined in
the AIM Rules.
Information on the Target Group AND THE Land
Healthy Time 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 Healthy
Time are the registered and beneficial owners of the Land located
at Longquanyi District, Chengdu, Sichuan Province, the PRC. The
Land has an aggregate site area of approximately 506,000 sq.m. and
its permitted usage is residential and/or commercial. The term of
the land use rights of Lot A1 and A2 of the Land is 70 years until
10 September 2080 for residential use and 40 years until 10
September 2050 for commercial use. The term of the land use rights
of Lot B of the Land is 70 years until 3 December 2072 for
residential use and 40 years until 3 December 2042 for commercial
use.
The Target Group is currently undertaking a development project
known as "Chengdu Nova City" on the Land. The commercial basement
works have been completed.
The consolidated carrying value of the assets of the Target
Group as at 30 June 2016 was HK$837.4 million (approximately
GBP82.5 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, there is no revenue generated from the
Target Group for the year ended 31 December 2015 (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$54.8 million (approximately GBP5.4 million)
and HK$54.8 million (approximately GBP5.4 million) respectively
(Year ended 31 December 2014: HK$47.5 million (approximately GBP4.7
million) and HK$47.5 million (approximately GBP4.7 million)
respectively).
Based on the unaudited consolidated management accounts of the
Target Group for the period ended 30 June 2016, the consolidated
net liabilities of the Target Group as at 30 June 2016 was
approximately HK$180.3 million (approximately GBP17.8 million).
For the purpose of this announcement, an exchange rate of GBP1 =
HK$10.15 is used.
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
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" 3rd 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$890 million (approximately
GBP87.7 million) payable to the
Vendor for the acquisition of
the Sale Share and assignment
of the Shareholder's Loan from
the Vendor under the Sale Agreement;
----------------------- -----------------------------------------
"Director(s)" the director(s) of the Company;
----------------------- -----------------------------------------
"Disposal" the Disposal of the Sale Share
and the assignment of the Shareholder's
Loan by the Vendor;
----------------------- -----------------------------------------
"Healthy Time" Healthy Time International Limited,
a company incorporated in the
British Virgin Islands with limited
liability and is a direct wholly-owned
subsidiary of the Vendor;
----------------------- -----------------------------------------
"HK$" 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 3 parcels of land
comprising Land Lot A1 and A2,
Land Lot B which are located
at Longquanyi District, Chengdu,
Sichuan Province, the PRC with
an aggregate site area of approximately
506,000 sq.m.;
----------------------- -----------------------------------------
"PRC" The People's Republic of China;
----------------------- -----------------------------------------
"Purchaser" Creative Charm Investments Limited,
a company incorporated in the
British Virgin Islands with limited
liability and its principal business
activity is investment;
----------------------- -----------------------------------------
"Sale Agreement" the agreement relating to the
Disposal entered into between
the Vendor and the Purchaser
on 22 August 2016;
----------------------- -----------------------------------------
"Sale Share" 1 ordinary share of US$1 in the
capital of Healthy Time, being
the entire issued share capital
of Healthy Time;
----------------------- -----------------------------------------
"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 Healthy
Time 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$945 million
(approximately GBP93.1 million));
----------------------- -----------------------------------------
"sq. m." square metres;
----------------------- -----------------------------------------
"Target Group" Healthy Time 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
DISBDGDILGDBGLD
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August 22, 2016 08:09 ET (12:09 GMT)
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