China Merchants Port : DISCLOSEABLE AND CONNECTED TRANSACTIONS - (1) DEBT CONFIRMATION AGREEMENT - (2) DEBT ASSIGNMENT AGREEMENT - (3...

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(Incorporated in Hong Kong with limited liability under the Companies Ordinance)

(Stock Code: 00144)

DISCLOSEABLE AND CONNECTED TRANSACTIONS

(1) DEBT CONFIRMATION AGREEMENT

(2) DEBT ASSIGNMENT AGREEMENT

(3) CAPITAL INCREASE AGREEMENT IN A1 COMPANY

DEBT CONFIRMATION AGREEMENT, DEBT ASSIGNMENT AGREEMENT AND CAPITAL INCREASE AGREEMENT

Reference is made to the announcement made by the Company on 24 December 2018 in relation to the Land Restructuring Agreement with SZPL, QHSH, CMG, QHPF, CMSK, CMSA, the CMSK Subsidiaries and A2 Company and the Debt Confirmation Letter entered into between the Land Holding Companies and A2 Company to coordinate and manage the various interest in land in Qianhai, Shenzhen, the PRC currently held by the CMG Group for the purpose of developing the Qianhai-Shekou Free Trade Zone with affiliates of QHSH through the establishment of another joint venture company.

Pursuant to the Land Restructuring Agreement and the Debt Confirmation Letter, the Aggregate CM Land held by the Land Holding Companies will be resumed by QHSH in exchange for, among others, the New Land to be granted to A2 Company. The Group understands from the CMG Group that QHSH has established B1 Company in the PRC which will in turn establish B2 Company to hold the QH Land, being a portion of the Aggregate CM Land after the Reclassification which does not form the New Land. It is proposed that A1 Company and B1 Company will jointly form C1 Joint Venture Company in the PRC for the purpose of developing the Qianhai-Shekou Free Trade Zone. The registered capital of C1 Joint Venture Company will be contributed by A1 Company and B1 Company on a 50:50 basis, of which the capital contribution by A1 Company will comprise 100% of the equity interest of A2 Company and up to RMB15 billion (equivalent to approximately HK$17.1 billion) in cash and the capital contribution by B1 Company will be 100% of the equity interest of B2 Company. Although C1 Joint Venture Company will be held by A1 Company and B1 Company on a 50:50 basis, it will be consolidated into A1 Company.

In order to facilitate the transactions, as well as to align the shareholdings with the debt structure in A1 Company, the holding company of A2 Company, to be held by the Land Holding Companies which will correspond to the proportion of land interest each Land Holding Company holds under the Aggregate CM Land, on 11 January 2019, Ansujie and Antongjie (both being indirect wholly-owned subsidiaries of the Company) entered into (i) the Debt Confirmation Agreement with CMSA, CMSK and the CMSK Subsidiaries as creditors and A2 Company as debtor; (ii) the Debt Assignment Agreement with CMSA as the assignor and A2 Company as debtor; and (iii) the Capital Increase Agreement with the other Land Holding Companies and A1 Company in relation to the First Capital Increase and the Second Capital Increase in A1 Company.

LISTING RULE IMPLICATIONS

As CMSA, CMSK, CMSK Subsidiaries, A1 Company and A2 Company are subsidiaries of CMG, the ultimate holding company of the Company, they are therefore connected persons of the Company and the Debt Confirmation Agreement, the Debt Assignment Agreement and the Capital Increase Agreement constitute connected transactions of the Company under the Listing Rules.

The transactions contemplated under the Debt Confirmation Agreement are related to the Disposal arising from the Land Restructuring Agreement and the Debt Confirmation Letter disclosed in the announcement made by the Company on 24 December 2018 and therefore are treated as one transaction with the Disposal. Since the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the Disposal are more than 5% but less than 25%, the Disposal constitutes a discloseable and connected transaction of the Company, and is subject to (1) the notification and announcement requirements under Chapter 14 of the Listing Rules and (2) the announcement, shareholders' approval, circular and annual reporting requirements under Chapter 14A of the Listing Rules.

The transactions contemplated under the Debt Assignment Agreement and the Capital Increase Agreement are related, as a result they will be aggregated as if they were one transaction. Since the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the said transactions as aggregated are more than 5% but less than 25%, the said transactions constitute a discloseable and connected transaction of the Company, and are subject to (1) the notification and announcement requirements under Chapter 14 of the Listing Rules and (2) the announcement, shareholders' approval, circular and annual reporting requirements under Chapter 14A of the Listing Rules.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee has been established to advise the Independent Shareholders and the Independent Financial Adviser has been engaged to advise the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Debt Confirmation Agreement, the Debt Assignment Agreement and the Capital Increase Agreement.

EGM

The EGM will be convened to consider, and if thought fit, to approve, in addition to the Disposal as disclosed in the announcement made by the Company on 24 December 2018, the transactions under the Debt Confirmation Agreement, the Debt Assignment Agreement and the Capital Increase Agreement.

In accordance with the Listing Rules, CMG which is interested in approximately 62% shares in the Company as at the date of this announcement, and its associates are required to abstain from voting on the ordinary resolutions approving the Debt Confirmation Agreement, Debt Assignment Agreement and the Capital Increase Agreement at the EGM.

DESPATCH OF CIRCULAR

A circular containing, among other things, (1) further information regarding the details of the Debt Confirmation Agreement; (2) further information regarding the details of the Debt Assignment Agreement; (3) further information regarding the details of the Capital Increase Agreement; (4) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; (5) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (6) a valuation report from the Independent Property Valuer; and (7) a notice of the EGM and other information as required under the Listing Rules will be sent to the Shareholders. The circular is expected be dispatched to the Shareholders on or before 1 February 2019.

1. BACKGROUND

Reference is made to the announcement made by the Company on 24 December 2018 in relation to the Land Restructuring Agreement with SZPL, QHSH, CMG, QHPF, CMSK, CMSA, the CMSK Subsidiaries and A2 Company and the Debt Confirmation Letter entered into between the Land Holding Companies and A2 Company to coordinate and manage the various interest in land in Qianhai, Shenzhen, the PRC currently held by the CMG Group for the purpose of developing the Qianhai-Shekou Free Trade Zone with affiliates of QHSH through the establishment of another joint venture company.

Pursuant to the Land Restructuring Agreement and the Debt Confirmation Letter, the Aggregate CM Land held by the Land Holding Companies will be resumed by QHSH in exchange for, among others, the New Land to be granted to A2 Company. The Group understands from the CMG Group that QHSH has established B1 Company in the PRC which will in turn establish B2 Company to hold the QH Land, being a portion of the Aggregate CM Land after the Reclassification which does not form the New Land. It is proposed that A1 Company and B1 Company will jointly form C1 Joint Venture Company in the PRC for the purpose of developing the Qianhai-Shekou Free Trade Zone. The registered capital of C1 Joint Venture Company will be contributed by A1 Company and B1 Company on a 50:50 basis, of which the capital contribution by A1 Company will comprise 100% of the equity interest of A2 Company and up to RMB15 billion (equivalent to approximately HK$17.1 billion) in cash and the capital contribution by B1 Company will be 100% of the equity interest of B2 Company. Although C1 Joint Venture Company will be held by A1 Company and B1 Company on a 50:50 basis, it will be consolidated into A1 Company.

In order to facilitate the transactions, as well as to align the shareholdings with the debt structure in A1 Company, the holding company of A2 Company, to be held by the Land Holding Companies which will correspond to the proportion of land interest each Land Holding Company holds under the Aggregate CM Land, on 11 January 2019, Ansujie and Antongjie (both being indirect wholly-owned subsidiaries of the Company) entered into (i) the Debt Confirmation Agreement with CMSA, CMSK and the CMSK Subsidiaries as creditors and A2 Company as debtor; (ii) the Debt Assignment Agreement with CMSA as the assignor and A2 Company as debtor; and (iii) the Capital Increase Agreement with the other Land Holding Companies and A1 Company in relation to the First Capital Increase and the Second Capital Increase in A1 Company.

2. THE DEBT CONFIRMATION AGREEMENT

Background

Reference is made to the Land Restructuring Agreement and the Debt Confirmation Letter dated 24 December 2018. Pursuant to the Land Restructuring Agreement, the Aggregate CM Land held by the Land Holding Companies will be resumed by QHSH in exchange for, among others, the New Land to be granted to A2 Company. Furthermore, pursuant to the Debt Confirmation Letter, A2 Company agrees that it will pay to each of the Land Holding Companies an amount equivalent to the value of the New Land multiplied by the corresponding proportion of land interest each Land Holding Company holds under the Aggregate CM Land.

The amounts payable to each Land Holding Company will be subject to the valuation of the corresponding proportion of land interest each Land Holding Company holds as determined by the Valuation Consultation Report. Accordingly, on 11 January 2019, the Land Holding Companies (including Antongjie, Ansujie, CMSK, CMSA and CMSK Subsidiaries) as creditors entered into the Debt Confirmation Agreement with A2 Company as debtor to confirm the debt payable to each Land Holding Company.

Subject matter

Pursuant to the Debt Confirmation Agreement, the parties agree that A2 Company owes the Land Holding Companies a total amount of approximately RMB43.21 billion (equivalent to approximately HK$49.3 billion). With reference to the Valuation Consultation Report, the parties agree that the value of the corresponding proportion of land interest Antongjie and Ansujie holds (including an interest in land with an area of 36,202.90 square meters which Antongjie has previously acquired from CMSK but has yet to obtain the relevant land use right certificate) under the Aggregate CM Land is 10.4894% and 2.6864% of the value of the New Land, respectively.

Accordingly, the parties agree that A2 Company owes Antongjie and Ansujie debt amounts of RMB4,532,489,509 (equivalent to approximately HK$5,174,074,782) and RMB1,160,811,062 (equivalent to approximately HK$1,325,126,783), respectively.

A2 Company agrees to repay each of the Land Holding Companies the respective debt amount within 120 business days after all the conditions precedent are satisfied.

Conditions Precedent

The completion of the Debt Confirmation Agreement is conditional on the satisfaction of, among others, the following:

• (1) the obtaining of necessary authorisations and approvals; and

• (2) the signing and entering into force of the land transfer agreement between A2 Company and QHSH pursuant to which QHSH agrees to grant the New Land to A2 Company after the Reclassification.

3. THE DEBT ASSIGNMENT AGREEMENT

Background

Pursuant to the Debt Confirmation Agreement, A2 Company owes the Land Holding Companies a total amount of approximately RMB43.21 billion (equivalent to approximately HK$49.3 billion). As determined by the Valuation Consultation Report, A2 Company owes Antongjie and Ansujie an aggregate of 13.1758% of the said debt.