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DONGJIANG ENVIRONMENTAL COMPANY LIMITED*東江環保股份有限公司
(a joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 00895) DISCLOSEABLE TRANSACTION IN RELATION TO THE BOT CONCESSION RIGHT PROJECT FOR TREATMENT AND DISPOSAL OF HAZARDOUS WASTE IN JIANGXI PROVINCE
The Board is pleased to announce that on 18 September 2014, the Department, Jiangxi Environmental and the Company entered into the Concession Right Agreement pursuant to which the Concession Right has been granted by the Department and Jiangxi Environmental to the Company through the Project Company to invest in, design, construct, operate and maintain the Disposal Center in Jiangxi Province, the PRC subject to the terms and conditions of the Concession Right Agreement.
As one of the applicable percentage ratios is more than 5% but less than 25%, the Concession Right Agreement and the transactions contemplated thereunder constitute a discloseable transaction under Chapter 14 of the Listing Rules.
Reference is made to the announcement of the Company dated 20 August 2014 in relation to the announcement published at Jiangxi Province Tender Website regarding the ranking of the bidders of the Project. On 25 August 2014, the Company received the award of the Project from the Department and Jiangxi Environmental. The Board is pleased to announce that on 18 September
2014, the Department, Jiangxi Environmental and the Company entered into the Concession Right Agreement pursuant to which the Concession Right has been granted by the Department and Jiangxi Environmental to the Company through the Project Company to invest in, design, construct, operate and maintain the Disposal Center in Jiangxi Province, the PRC subject to the terms and conditions of the Concession Right Agreement.
The principal terms of the Concession Right Agreement are set out below :-
Date: | 18 September 2014 |
Parties: | (1) Environmental Protection Department of Jiangxi Province (2) Jiangxi Environmental Protection Company Ltd. (3) the Company |
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Grant of the Concession Right: | Pursuant to the Concession Right Agreement, the Concession Right has been granted by the Department and Jiangxi Environmental to the Company through the Project Company to invest in, design, construct, operate and maintain the Disposal Center in Jiangxi Province, the PRC. In return, the Project Company will receive the fees for the collection, treatment and disposal of the hazardous waste during the term of the Concession Right. After formation of the Project Company, the Company will transfer all rights and obligations of the Company under the Concession Right Agreement to the Project Company. The Concession Right is exclusive to the Project Company unless there is any integrated planning made by the national and provincial government or any termination of the Concession Right Agreement as a result of any material breach made by the Project Company. |
Term of the Concession Right: | 25 years from the date on which the Project commences commercial operation (i.e. the completion date of the construction of the Disposal Center) subject to the terms and conditions of the Concession Right Agreement. Upon the expiry of the term of the Concession Right, in the event that the Department and Jiangxi Environmental intend to continue the Concession Right in relation to the Project, the Project Company has the pre-emptive right to operate the Project on the same terms and conditions. |
Estimated total investment amount of the Project: | The Directors estimate that the total investment amount of the Project will be approximately RMB358,000,000 (equivalent to approximately HK$451,080,000). In the event that the total investment amount of the Project is expected to exceed the said estimated amount, the Company will comply with the relevant requirements under the Listing Rules. The Company intends to fund the total investment amount of the Project by its own fundraising. |
Formation of Project Company | Under the Concession Right Agreement, the Project Company will be formed and owned as to not less than 60% by the Company and the Company will have full control over the management and operations of the Project Company. The registered capital of the Project Company will be not less than RMB50,000,000(equivalent to approximately HK$63,000,000). The scope of business of the Project Company will be the investment, construction, operation and management of safe landfill sites of hazardous waste, incineration of hazardous waste and comprehensive utilization (subject to the approval from the Industry and Commerce |
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Bureau). The Company is required to obtain the approval from the Department and Jiangxi Environmental before any disposal of the equity interest in the Project Company during the term of the Concession Right.
Timetable for construction of the Disposal Center
The construction of the Disposal Center will be commenced after signing of the Concession Right Agreement, completion of the preliminary works and fulfilment of the requirements to commence constructions works.
The expected completion date of the construction of the Disposal Center will be two years from the commencement date of the construction of the Disposal Center.
Performance bond:
Project expansion:
In order to secure the performance by the Project Company of its obligations under the Concession Right Agreement, the Company is required to provide a performance bond of the amount of RMB5,000,000 (equivalent to approximately HK$6,300,000) in favour of the Department and Jiangxi Environmental. The Department and Jiangxi Environmental are entitled to deduct the amount of the performance bond from the expenses or loss suffered by them as a result of any breach by the Project Company during the construction of the Disposal Center. The Company is required to top-up the amount of the performance bond to RMB5,000,000 within 30 days after the Department and Jiangxi Environmental have deducted the required amount from the performance bond.
The Department and Jiangxi Environmental agree that if there is any need to expand the Disposal Centre according to its actual needs, the Project Company is entitled to carry out the expansion works after obtaining the consent from the Department and Jiangxi Environmental and the required approvals without the necessity to go through the tendering procedures.
Transfer of assets upon expiry of the term of the Concession Right:
Within 3 months before the expiry of the term of the Concession Right, each of the Department, Jiangxi Environmental and the Project Company will appoint representatives to form a transfer committee to be responsible for the transfer and handover of the assets. The composition of the transfer committee is subject to negotiation among the parties. The handover date of the assets will be the expiry date of the term of the Concession Right. On the handover date, the Project Company will transfer all rights, ownership and benefits of and in the Disposal Center, including but not limited to all facilities, buildings, erections, machineries, equipments and all documents relating to the technical, production, design and other information of the Project, etc. to the Department and Jiangxi Environmental free from all
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encumbrances and without additional consideration.
FURTHER INFORMATION OF THE PROJECT AND THE PROJECT COMPANY
The scale of the treatment and disposal of hazardous waste is 81,000 tons per year. The facilities include, but not limited to, incineration units, stabilization and solidification units, physiochemical units, utilization units, integrated warehouse, temporary storage for Type A(B) of waste, safe landfill sites, sewage treatment units and other auxiliary facilities. The planned location of the Project will be at Fengcheng Circular Economic Park, Fengcheng, Jiangxi Province, the PRC. The land of the Project would be appropriated to the Project Company
without any consideration. The Project Company is proposed to be named as 江西省東江環保工
業廢物處置有限公司(Jiangxi Province Dongjiang Environmental Protection Industrial Waste
Disposal Company Ltd.*) (subject to the approval from the Industry and Commerce Bureau).
Pursuant to the relevant requirements of the Concession Right Agreement and tender documents, the Project Company will be established and wholly-owned by the Company with a registered capital of RMB50,000,000(equivalent to approximately HK$63,000,000), representing 100% of its registered capital, to be contributed by the Company and funded from its internal resources.
The investment by the Company in the Disposal Center fulfills the national requirements of building energy-saving and environmental friendly society and economic cycle, which will be beneficiary to the expansion of the waste detoxification business of the Company, and bring a positive effect to the transformation and enhancement of the Company's business. In the long run, the Disposal Center, as a provincial-level hazardous waste disposal project, through centralized disposal of industrial and social hazardous waste for the whole Jiangxi province under the exclusive right, not only help the Company to accumulate more valuable experience in the area of detoxification of the industrial solid waste, but also bring positive economic efficiency to the Company while enabling the Company to further strengthen its presence in eastern China, and lay a solid foundation and strengthen comprehensive competitiveness of the Company. Meanwhile, BOT model adopted in the Project can fully demonstrate the ability of the Company in the integration of project design, construction and operation, such that investment saving and appropriate operating costs control can be achieved at the same time, which enhancing comprehensive return of the Project, and bring a positive impact on the Company's continuously improving operating results.
Having considered the above, the Board (including the independent non-executive Directors) is of the view that the Concession Right Agreement has been entered into on normal commercial terms, the terms of which are fair and reasonable and in the interests of the Company and its shareholders as a whole.
The Group is principally engaged in (i) treatment and disposal of wastes; (ii) the production and sales of recycled products and renewable energy; (iii) the construction and provision of environmental systems and services; (iv) renewable energy utilisation; and (v) trading of chemical products and others.
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The Department is the PRC's government authority in charge of and responsible for the implementation of the Project. Jiangxi Environmental is the current legal person of the Project.
To the best of the Company's knowledge, information and belief and having made all reasonable enquiries, each of the Department, Jiangxi Environmental and their respective beneficial owners is an Independent Third Party as at the date of this announcement. The Company or the Group did not have prior transaction or relationship with the Department or Jiangxi Environmental.
As one of the applicable percentage ratios is more than 5% but less than 25%, the Concession Right Agreement and the transactions contemplated thereunder constitute a discloseable transaction under Chapter 14 of the Listing Rules.
DEFINITION
In this announcement, unless context otherwise defined, the following expressions have the following meanings:-
"Board" the board of Directors
"Company" 東江環保股份有限公司 (Dongjiang Environmental Company Limited*), a joint stock limited company incorporated in the PRC, whose H shares and A shares are listed on the Stock Exchange and on the Shenzhen Stock Exchange, respectively
"Concession Right" the concession right granted by the Department and Jiangxi Environmental to the Company through the Project Company to invest in, and to design, construct, operate and maintain the Disposal Center exclusively during the term and to transfer the facilities of the Disposal Center upon the expiry of the term, and the rights to collect, treat and dispose the hazardous waste within the administrative area of Jiangxi Province, the PRC subject to the terms and conditions of the Concession Right Agreement
"Concession Right
Agreement"
the formal concession right agreement dated 18
September 2014 entered into among the Department, Jiangxi Environmental and the Company, pursuant to which the Concession Right has been obtained by the Company from the Department and Jiangxi Environmental
"Department" 江 西 省 環 境 保 護 廳 (Environmental Protection
Department of Jiangxi Province*)
"Directors" the directors of the Company
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"Disposal Center" detoxification of the industrial solid waste disposal center in Jiangxi Province, the PRC to be constructed, operated and maintained by the Project Company pursuant to the Concession Right Agreement
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China
"Independent Third Party" a party which is a third party independent of the Company and its connected persons (as defined under the Listing Rules)
"Jiangxi Environmental" 江西環保股份有限 公司 (Jiangxi Environmental Protection Company Ltd.*), a company established in the PRC
"Listing Rules" the Rules Governing the Listing of Securities on the
Stock Exchange
"PRC" the People's Republic of China (and for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan)
"Project"
"Project Company"
"RMB"
the BOT concession right project of the detoxification of the industrial solid waste disposal center in Jiangxi Province, the PRC (i.e. treatment and disposal of hazardous waste in Jiangxi Province) in respect of which the Concession Right has been granted pursuant to the Concession Right Agreement
a company to be established in Jiangxi Province, the PRC by the Company pursuant to the Concession Right Agreement, and will be the legal entity to invest in, and to design, construct, operate and maintain the Disposal Center
Renminbi, the lawful currency of the PRC
"Stock Exchange" The Stock Exchange of Hong Kong Limited
In this announcement, if there is any inconsistency between the Chinese names of the entities or enterprises established in the PRC and their English translations, the Chinese names shall prevail. The English translation of names or any descriptions in Chinese which are marked with
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"*" is for identification purpose only.
Unless otherwise specified in this announcement and for the purpose of illustration only, RMB is translated into HK$ at the rate of RMB1 = HK$1.26. No representation has been made by the Company that any amount expressed in foreign currency in this announcement has been, could have been or could be converted at any rates at all.
By order of the Board
Dongjiang Environmental Company Limited * Zhang Wei YangChairman
Shenzhen, the PRC, 18 September 2014
As at the date of this announcement, the Board comprises three executive Directors, being Mr. Zhang Wei Yang, Mr. Chen Shu Sheng and Mr. Li Yong Peng; two non-executive Directors, being Mr. Feng Tao and Ms. Sun Ji Ping; and three independent non-executive Directors, being Mr. Wong Hin Wing, Mr. Qu Jiu Hui and Mr. Wang Ji De.
* For identification purpose only
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