China Aoyuan Property : DISCLOSEABLE TRANSACTION - ACQUISITION O...

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.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3883)

DISCLOSEABLE TRANSACTION

ACQUISITION OF 60% EQUITY INTEREST OF ZHUHAI LAILI TECHNOLOGY CO., LTD.*

THE ACQUISITION

The Board wishes to announce that on 13 January 2017 (after trading hours), the Vendor, the Purchaser and the Target Company entered into the Co-operation Framework Agreement, pursuant to which the Purchaser has conditionally agreed to acquire 60% equity interest in the Target Company from the Vendor at the Consideration of RMB630,000,000 in cash. Upon Completion, the Purchaser will own 60% equity interest in the Target Company, which enables the Purchaser to develop and engage in Land A.

The Purchaser has further agreed to provide a shareholder's loan of RMB200,000,000 to the Target Company for the sole purpose of making supplemental payment to the land administration department for the value of Land A.

The Completion is subject to the terms and conditions under the Co-operation Framework Agreement as more particularly set out in the section headed ''Completion''.

Following Completion, the Target Company will be owned as to 60% by the Purchaser and 40% by the Vendor. The Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results will be consolidated by the Group.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Acquisition exceed 5%, but are all less than 25%, the Acquisition constitutes a discloseable transaction for the Company under the Listing Rules and is therefore subject to reporting and announcement requirements pursuant to Chapter 14 of the Listing Rules.

As Completion is subject to the terms and conditions under the Co-operation Framework Agreement, the Acquisition may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the securities of the Company.

INTRODUCTION

The Board wishes to announce that on 13 January 2017 (after trading hours), the Vendor, the Purchaser and the Target Company entered into the Co-operation Framework Agreement, pursuant to which the Purchaser has conditionally agreed to acquire 60% equity interest in the Target Company from the Vendor at the Consideration of RMB630,000,000 in cash.

THE CO-OPERATION FRAMEWORK AGREEMENT

Summarised below are the principal terms of the Co-operation Framework Agreement: Date: 13 January 2017 (after trading hours)

Parties: (a) the Purchaser;

1. the Vendor; and

2. the Target Company.

To the best of the Director's knowledge, information and belief, and having made all reasonable enquiries, the Vendor, the Target Company and their ultimate beneficial owners are Independent Third Parties.

Nature of the transaction and assets to be acquired

Pursuant to the Co-operation Framework Agreement, the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to sell 60% equity interest in the Target Company. Upon Completion, (a) the Purchaser will own 60% equity interest in the Target Company, which enables the Purchaser to develop and engage in Land A; and (b) the Target Company will become an indirect non- wholly owned subsidiary of the Company and its financial results will be consolidated by the Group.

The Purchaser has further agreed to provide a shareholder's loan of RMB200,000,000 to the Target Company for making supplemental payment to the land administration department for the value of Land A. For details, please refer to the section headed ''Supplemental payment for the value of Land A'' below.

Payments

The Consideration payable by the Company is RMB630,000,000 and the facility of RMB200,000,000 to be advanced to the Target Company which shall be satisfied in the following manners and conditions:

1. The first payment: the first payment of RMB82,430,000 shall be paid to the Vendor within three working days upon the date that the following conditions are fulfilled:

2. the representations and warranties given by the Vendor in the Co-operation Framework Agreement shall be true, accurate and not misleading;

3. the Planning Permits for Construction Land (建設用地規劃許可證) of the Lands having been obtained, with information regarding the planning conditions of the Lands being consistent with those set out in the Co-operation Framework Agreement, such that application for construction and split sales in respect of the Lands will be allowed under relevant rules and regulations governing real estate development of commercial land in Zhuhai, the PRC;

4. the Target Company having entered into a supplemental agreement with the land administration department for the transfer and alteration of land use rights in relation to the Lands;

5. the land administration department having issued a notice to the Target Company for making supplemental payment for the value of the Lands;

6. the Purchaser having entered into a loan agreement with the Target Company for making supplemental payment for the value of Land A;

7. the documents in relation to the transfer of 51% equity interest in the Target Company having been duly executed, and update and registration with the industry and commerce administration bureau regarding the aforesaid transfer having been completed (subject to receipt of the new business license);

8. The second payment: the second payment of RMB410,000,000 shall be paid to the Vendor within three working days upon the date the Approvals for Construction Land (建設用地批准書) of the

   Lands having been obtained by the Target Company, with information regarding the planning conditions and usages of the Lands being consistent with those set out in the Co-operation Framework Agreement. It was further agreed that part of the proceeds under the second payment shall be used to settle the debts of the Target Company.

9. The third payment: the third payment of RMB137,570,000 shall be paid to the Vendor within three working days upon the date the following condition is fulfilled:

10. the Target Company does not have any bank borrowing, payables or contingent liabilities;

11. there is no violation of the representations and warranties given by the Vendor in respect of the Target Company and the Lands which will have material adverse impact on the Purchaser;

12. the Planning Permits for Construction Land (建設用地規劃許可證), the Approvals for Construction Land (建設用地批准書) and the Real Estate Ownership Certificate (不動產權證)

    of the Lands having been obtained, with information regarding the planning conditions and usages of the Lands being consistent with those set out in the Co-operation Framework Agreement;

13. the construction plans of the Lands having been reviewed and approved by the planning department; and

14. the documents in relation to the transfer of further 9% equity interest in the Target Company having been duly executed, and update and registration with the industry and commerce administration bureau regarding the aforesaid transfer having been completed (subject to receipt of the new business license).

Basis of Consideration

The Consideration was arrived at after arm's length negotiations between the parties to the Co- operation Framework Agreement and was determined with reference to (a) the paid-up registered capital of the Target Company; (b) the net asset value of the Target Company as at 30 November 2016;

(c) the land costs paid by the Target Company; and (d) other factors as set out in the paragraph headed

''Reasons for and Benefits of the Acquisition'' below.

Based on the foregoing, the Directors are of the view that the Consideration is fair and reasonable. The Consideration shall be funded by the Group's internal resources and/or financing through bank borrowing as the Directors may deem appropriate.

Supplemental payment for the value of Land A

It was agreed among the parties to the Co-operation Framework Agreement that the amount of supplemental payment for the value of Land A borne by the Purchaser, through provision of shareholder's loan, shall not exceed RMB200,000,000, and any amount in excess of RMB200,000,000 shall be borne by the Vendor. If the Purchaser fails to arrange the said supplemental payment according to the instructions of the land administration department after the completion of the transfer of 51% equity interest in the Target Company, the Purchaser shall be solely responsible for the amount in excess of RMB200,000,000.