Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Chen Lin Education Group Holdings Limited
辰 林 教 育 集 團 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 1593)
DISCLOSEABLE TRANSACTION
ACQUISITION OF THE TARGET GROUP
THE ACQUISITION
The Board is pleased to announce that, on 27 April 2021 (after trading hours), the Purchaser (a company accounted as a subsidiary of the Company by virtue of the Contractual Arrangements), the Vendor, the Target Company, the Target School, Huang Ping'an (黃平安) and Ye Ruihua (葉瑞華), entered into the Acquisition Agreement, pursuant to which the Vendor has agreed to sell, and the Purchaser has agreed to acquire, the entire equity interest of the Target Company, at a consideration of RMB300 million.
Upon completion of the Acquisition, the Purchaser will own the entire equity interest of the Target Company and will control the entire school sponsor's interest of the Target School. The Target Company and the Target School will be accounted as subsidiaries of the Company by virtue of the Contractual Arrangements.
IMPLICATIONS UNDER THE LISTING RULES
As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceeds 5% but all are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.
INTRODUCTION
The Board is pleased to announce that, on 27 April 2021 (after trading hours), the Purchaser (a company accounted as a subsidiary of the Company by virtue of the Contractual Arrangements), the Vendor, the Target Company, the Target School, Huang Ping'an (黃平 安) and Ye Ruihua (葉瑞華), entered into the Acquisition Agreement, pursuant to which the Vendor has agreed to sell, and the Purchaser has agreed to acquire, the entire equity interest of the Target Company, at a consideration of RMB300 million.
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THE ACQUISITION AGREEMENT
The principal terms of the Acquisition Agreement are set out below.
Date: 27 April 2021
Parties: (1) the Purchaser;
- the Vendor;
- the Target Company;
- the Target School;
- Huang Ping'an; and
- Ye Ruihua.
To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, as of the date of this announcement, the Vendor (include its ultimate beneficial owners namely Huang Ping'an and Ye Ruihua), the Target Company and the Target School are third parties independent from the Company and its connected persons (as defined in the Listing Rules).
Nature of the transaction and assets to be acquired by the Purchaser
Pursuant to the Acquisition Agreement, the Vendor has agreed to sell, and the Purchaser has agreed to acquire, the entire equity interest of Target Company. Upon completion of the Acquisition, (i) the Purchaser will own the entire equity interest of the Target Company; (ii) the Purchaser will control the entire school sponsor's interest of the Target School; and (iii) the Target Company and the Target School will be accounted as subsidiaries of the Company by virtue of the Contractual Arrangements.
Consideration
The consideration of the Acquisition amounted to RMB300 million. Such consideration shall be fully settled within 60 days upon the completion of the Acquisition.
Basis of Consideration
The consideration of the Acquisition was determined after arm's length negotiations between the Vendor and the Purchaser with reference to: (i) the historical turnover and assets, the location and branding, the programs offered, the employment opportunities and the prospect of the graduates, the number of students and enrollments of the Target School; and (ii) a valuation report (the ''Valuation Report'') prepared by an independent professional valuer (the ''Independent Valuer'') on the Target Group; and (iii) other reasons and benefits of the Acquisition as stated under the section headed ''Reasons for and Benefits of the Acquisition'' below.
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Valuation Report
In preparation of the Valuation Report, after considering the characteristics of the Target Group and comparing different valuation methodologies, the Independent Valuer adopted the market approach for the valuation. The market approach considers prices paid for similar assets, with adjustments made to market prices to reflect condition and utility of the appraised assets relative to the market comparative. According to Valuation Report, the preliminary valuation amount of the Target Group is approximately RMB305 million. The Board considers that the Valuation Report provides a general reference in assessing the fairness and reasonableness of the fair value of the Target Group.
Source of funding
The consideration of the Acquisition will be funded by the Group's internal financial resources and bank borrowings.
Conditions Precedent
The completion of the Acquisition is upon the satisfaction (or, as the case may be, waived by the Purchaser) of the following conditions (the ''Conditions Precedent''):
- the Purchaser being satisfied with the results of the due diligence review of the Target School; and
- the Vendor's representations and warranties under the Acquisition Agreement remaining true and accurate in all respects and not misleading in any respect as of the completion of the Acquisition.
Completion
As all of the Conditions Precedents have been satisfied as of the date of the Acquisition Agreement, the Acquisition is completed on the same date.
INFORMATION ON THE VENDOR
The Vendor is a limited liability company established in the PRC. As of the date of this announcement, the Vendor was owned as to 49% to Huang Ping'an and as 51% to Ye Ruihua, both of whom are nature persons of Chinese nationality. In addition, as of the date of this announcement, the Vendor holds the entire equity interest of the Target Company and therefore indirectly controls the entire school sponsor's interest of the Target School. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as of the date of this announcement, the Vendor and its respective beneficial owners, namely Huang Ping'an and Ye Ruihua, are third parties independent from the Company and its connected persons (as defined in the Listing Rules).
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INFORMATION ABOUT THE TARGET GROUP
-
The Target Company
The Target Company is a limited liability company established under the laws of PRC and wholly-owned by the Vendor. The Target Company is a holding company that owns the entire school sponsor's interest of the Target School and has no substantive business operation as of the date of this announcement. - The Target School
The Target School is a secondary vocational college established in May 2015 that specializes in training junior and senior technicians. As of the date of this announcement, the Target School offers over 20 education programs including but not limited to industrial machine technology, machinery design and manufacture, construction engineering management, automobile manufacturing and testing, big data technology, information technology, marketing and sales, business management, tourism management, interior art design and fashion design. The Target School has approximately 7,765 students as of the date of this announcement.
The following table sets out the summary of the audited combined financial information of the Target Group for the two years ended 31 December 2019 and 2020 and as of 31 December 2019 and 2020 prepared in accordance with the Generally Accepted Accounting principles of the PRC:
Year ended | Year ended | ||
31 December | 31 December | ||
2019 | 2020 | ||
(RMB'000) | (RMB'000) | ||
Revenue | 37,283 | 50,418 | |
Profit before income tax | 9,745 | 18,791 | |
As of | As of | ||
31 December | 31 December | ||
2019 | 2020 | ||
(RMB'000) | (RMB'000) | ||
Total assets | 406,117 | 486,739 | |
Total liabilities | 364,026 | 425,857 | |
Net assets | 42,091 | 60,882 | |
Upon the completion of the Acquisition, (i) the Purchaser will own the entire equity interest of the Target Company; (ii) the Purchaser will control the entire school sponsor's interest in the Target School; and (iii) the Target Company and the Target School will be accounted as subsidiaries of the Company by virtue of the Contractual Arrangements.
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REASONS FOR AND BENEFITS OF THE ACQUISITION
The Target School specializes in providing vocational education services in Guizhou Province, PRC. The Acquisition will further expand our school network and coverage, increase the total number of students of the Group, improve profitability, and will also form strong synergy with the Target School and our other schools.
Given the abovementioned reasons, and after considered the terms and conditions of the Acquisition Agreement, our Directors are of the view that the terms of the Acquisition are on normal commercial terms, fair and reasonable. The Acquisition will expand the Group's influence in the region and enhance its reputation, which is in line with the Group's business strategy and in the interests of the Group and the Shareholders as a whole.
IMPLICATIONS UNDER THE LISTING RULES
As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceeds 5% but all are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.
INFORMATION OF THE GROUP
The Group is one of the leading providers of private higher education in Jiangxi Province, China, with years of experience in the private higher education industry. As of 31 December 2020, the Group operated one private university and one full-time vocational college located in Jiangxi Province, namely the Jiangxi University of Applied Science (江西應用科技學院) (the ''JUAS'') and Jiangxi Wenli Jishi College (江西文理技師學院) (''Jishi College'', together with JUAS, collectively referred to as ''Schools''), and offer undergraduate, junior college and vocational programs, as well as diverse education related services. As of 31 December 2020, the Schools had a total number of student enrollment of 21,990, consisting of 8,029 undergraduate students, 8,735 junior college students and 5,226 vocational school students. The Group also provides a variety of education related services including internship management services as well as tutoring and program management services to enterprises and education institutions.
DEFINITIONS
Unless otherwise specified, the following terms have the following meanings in this announcement:
''Acquisition'' | the acquisition of the entire equity interest in the Target |
Company under the Acquisition Agreement; | |
''Acquisition Agreement'' | the acquisition agreement dated 27 April 2021 between the |
Purchaser and the vendor in relation to the Acquisition; | |
''Board'' | the board of directors of the Company; |
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''Company'' | Chen Lin Education Group Holdings Limited (辰林教育集 |
團控股有限公司), an exempted company incorporated in the | |
Cayman Islands with limited liability on 25 May 2018, the | |
share of which are listed on the Main Board of the Stock | |
Exchange (stock code: 1593); |
''Contractual Arrangements'' certain contractual arrangements entered by the Group on 15
September 2018; | |
''Director(s)'' | the directors of the Company; |
''Group'' | the Company, subsidiaries and companies accounted as |
subsidiaries by virtue of the Contractual Arrangements; | |
''Global Offering'' | the global offering of initially up to 250,000,000 shares with |
a nominal value of HK$0.0001 each in the capital of the | |
Company, including a public offering in Hong Kong of | |
31,798,000 shares and an international offering of initially | |
218,202,000 shares to professional, institutional and other | |
investors outside the United States; | |
''JUAS'' | Jiangxi University of Applied Science (江西應用科技學院) |
a private institution operated by the Group which offers | |
both undergraduate and junior college programs; | |
''Jishi College'' | Jiangxi Wenli Jishi College (江西文理技術學院), a full-time |
vocational college established in November 2019, which | |
offers vocational programs; | |
''Listing Rules'' | the Rules Governing the Listing of Securities on the Main |
Board of the Stock Exchange; | |
''PRC'' | the People's Republic of China; |
''Purchaser'' | Nanchang Di Guan Education Consultancy Co., Ltd. (南昌 |
迪冠 教育諮詢有限公司), a company established under the | |
laws of the PRC with limited liability on 17 September 2009 | |
and accounted as a subsidiary of the Company by virtue of | |
the Contractual Arrangements; | |
''RMB'' | Renminbi, the lawful currency of the PRC; |
''Shareholder(s)'' | holder(s) of the share(s) of the Company; |
''Stock Exchange'' | The Stock Exchange of Hong Kong Limited; |
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''Target Company'' | Guizhou Xikai Education Investment Co., Ltd (貴州西凱教 |
育投資有限公司), a company established under the laws of | |
the PRC with limited liability and owns the entire school | |
sponsor's interest of the Target School as of the date of this | |
announcement; | |
''Target Group'' | including the Target Company and the Target School; |
''Target School'' | Guizhou Institute of Industry and Trade (貴州工貿職業學 |
院), a full-time vocational college locates in Guizhou | |
Province, PRC, specialize in training junior and senior | |
technicians; | |
''Vendor'' | Jiangxi Mingda Education Consulting Co., Ltd (江西銘達教 |
育諮詢有限公司), a company established under the laws of | |
the PRC with limited liability; | |
''%'' | Per cent. |
By order of the Board | |
Chen Lin Education Group Holdings Limited | |
Huang Yulin | |
Chairman | |
Hong Kong, 27 April 2021 |
As of the date of this announcement, the executive Directors are Mr. Huang Yulin, Mr. Li Cunyi, Mr. Bau Siu Fung, Mr. Wang Li and Ms. Gan Tian; and the independent non- executive Directors are Mr. Chan Hon Ki, Mr. Chen Wanlong, Mr. Huang Juyun and Mr. Wang Donglin.
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Chen Lin Education Group Holdings Ltd. published this content on 27 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 April 2021 14:54:02 UTC.