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.

  1. CONNECTED TRANSACTION - ESTABLISHMENT OF

PARTNERSHIP AND SUBSCRIPTION OF INTEREST IN THE

  1. PARTNERSHIP

  2. CONTINUING CONNECTED TRANSACTIONS - PROVISION OF EXECUTIVE PARTNERSHIP SERVICES

ESTABLISHMENT OF PARTNERSHIP AND SUBSCRIPTION OF INTEREST IN THE PARTNERSHIP

The Board is pleased to announce that on 31 December 2021, Beijing Heshou, a non- wholly-owned subsidiary of the Company, as General Partner and Executive Partner, entered into the Partnership Agreement with Shougang Fund and China Life Investment, each as a Limited Partner, for the establishment of the Partnership in the form of limited partnership. Pursuant to the Partnership Agreement, Beijing Heshou agreed to participate in the Partnership as a General Partner and Executive Partner and subscribe for interest in the Partnership with a capital commitment of RMB45 million. The total capital commitment of the Partnership shall be RMB4.5 billion. The Partnership will focus on the infrastructure projects supported by the PRC national policies.

PROVISION OF EXECUTIVE PARTNERSHIP SERVICES UNDER THE PARTNERSHIP AGREEMENT

Pursuant to the Partnership Agreement, Beijing Heshou, as Executive Partner, shall provide Executive Partnership Services to the Partnership during the Initial Term of the Partnership, in return for the Executive Partnership Fee.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Shougang Group indirectly holds approximately 34.91% of the issued Shares and therefore is a substantial Shareholder and a connected person of the Company. Shougang Fund is a wholly-owned subsidiary of Shougang Group and indirectly holds approximately 12.60% of the issued Shares, and therefore is a substantial Shareholder and a connected person of the Company.

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Accordingly, the entering into of the Partnership Agreement and the transactions contemplated thereunder constitute a connected transaction of the Company, and the provision of Executive Partnership Services constitutes continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the Company's capital commitment under the Partnership Agreement are more than 0.1% but all are less than 5%, the establishment of the Partnership and the subscription of interest in the Partnership are subject to reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the annual caps on the Executive Partnership Fee for the provision of Executive Partnership Services under the Partnership Agreement are more than 0.1% but are all less than 5%, such transactions are subject to reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.52 of the Listing Rules, the term of an agreement for a continuing connected transaction of a listed issuer must not exceed three years except in special circumstances where the nature of the transaction requires a longer period. As the Initial Term (being a fixed period of eight (8) years) of the provision of Executive Partnership Services exceeds three years, the Company has appointed the Independent Financial Adviser to explain why the provision of Executive Partnership Services requires a term longer than three years and to confirm that it is normal business practice for provision of service of such type to be of such duration. The opinion of the Independent Financial Adviser has been set out in the section headed "OPINIONS FROM THE INDEPENDENT FINANCIAL ADVISER" in this announcement.

THE PARTNERSHIP AGREEMENT

The Board is pleased to announce that on 31 December 2021, Beijing Heshou, a non- wholly-owned subsidiary of the Company, as the General Partner and Executive Partner, entered into the Partnership Agreement with Shougang Fund and China Life Investment, each as a Limited Partner, for the establishment of the Partnership in the form of limited partnership.

Principal terms of the Partnership Agreement are set out below:

Date

:

31 December 2021

Parties

:

(i)

Beijing Heshou, as General Partner and Executive Partner

(ii)

China Life Investment (Note), as Limited Partner

(iii)

Shougang Fund, as Limited Partner

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Note:

China Life Investment shall enter into the Partnership Agreement for and on behalf of an equity investment plan in which China Life Investment acts as a trustee.

(1) CONNECTED TRANSACTION - ESTABLISHMENT OF PARTNERSHIP AND SUBSCRIPTION OF INTEREST IN THE PARTNERSHIP

Purpose and investment scope of the Partnership

The purpose of the Partnership is to engage in investment management services with the view to realising the capital appreciation and the investment return of the Partnership and achieving return for the Partners pursuant to the terms of the Partnership Agreement. The Partnership will principally invest in infrastructure projects supported by the PRC national policies with a specific focus on projects related to green environmental infrastructures such as municipal solid waste treatment and recycling as well as sewage treatment and recycling.

Term of the Partnership

The life of the Partnership shall be twenty (20) years commencing on the date on which the Partnership is first granted its business license.

The term of the Partnership (the "Term") as a private equity investment fund has an initial term of eight (8) years commencing on the Initial Closing Date (the "Initial Term"). The first five (5) years of the Initial Term shall be the investment period (the "Investment Period") and the subsequent three (3) years shall be the exit period (the "Exit Period"). Upon obtaining unanimous consent of the Executive Partner and the Manager, and to the extent permitted by the relevant laws and regulations, the Initial Term may be extended by one (1) year (the "Extended Period"). Upon the expiration of the Extended Period, upon the unanimous proposal of the Executive Partner and the Manager and the passing at the Partners' Meeting, the Extended Period can be further extended for such period approved at the Partners' Meeting (the "Further Extended Period").

Capital Commitment

The total capital commitment of the Partnership is RMB4.5 billion, which shall be contributed by the Partners in cash as follows:

Capital

Percentage interest

Commitment

in the Partnership

General Partner

RMB'000

(approximate)

Beijing Heshou

45,000

1%

Limited Partners

China Life Investment

3,000,000

66.67%

Shougang Fund

1,455,000

32.33%

Total

4,500,000

100%

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The capital commitment shall be made by each Partner in instalments. Each Partner shall, upon receipt of a capital contribution payment notice issued jointly by the Executive Partner and the Manager, contribute the amount of unpaid capital commitment set out therein.

Within the first twenty-four (24) months from the Initial Closing Date, the Executive Partner and the Manager may, in accordance with the Partnership's business needs and the modulation and arrangement of the Partners' interests in the Partnership, unanimously decide to accept new Limited Partner(s)' capital contribution to the Partnership and/or accept the existing Limited Partner(s)' increase in its/their capital commitment.

The amount of capital commitment of each Partner was arrived at after arm's length negotiations among the Partners, having taken into account the expected capital requirements of the Partnership. It is contemplated that the capital commitment payable by Beijing Heshou will be funded by internal resources of Beijing Heshou.

Management of the Partnership

The Executive Partner

The Executive Partner has the right to invest, manage, apply and dispose of the property of the Partnership in accordance with the Partnership Agreement and is subject to the supervision of the Limited Partners. Unless otherwise agreed in the Partnership Agreement, for the purpose of executing the Partnership's affairs, the Executive Partner shall:

  1. have exclusive authority over the operation of the Partnership, the management and control of the Partnership's investment business and other matters; and
  2. for the achievement of the Partnership's purposes and the performance of the Partnership Agreement, have full power and authority to enter into contracts and enter into other agreements and undertakings for and on behalf of the Partnership, to manage and dispose of the property of the Partnership, and to perform all other actions necessary.
    (Collectively, the "Executive Partnership Services".)

The Manager

The Manager shall provide services for the daily operation and management of the Partnership.

The Investment Decision Committee

The Investment Decision Committee shall comprise five (5) committee members, two

  1. of whom shall be nominated and designated by the Manager and the rest by the Executive Partner. The Investment Decision Committee shall have the power to resolve on significant matters in relation to the investments made by the Partnership.
    • 4 -

Management Fee

The Partnership shall pay an annual management fee to the Manager which shall be calculated as 0.5% per annum of each Limited Partner's Remaining Paid-in Capital Contribution and shall be borne by each Limited Partner during the Term of the Partnership. "Each Limited Partner's Remaining Paid-in Capital Contribution" means the difference between the total paid-incapital contribution of such Limited Partner less the corresponding investment cost of the Partnership from the exited investment projects. For the avoidance of doubt, the corresponding investment cost of the Partnership from the exited investment projects shall be ascertained by the Partnership's distribution to such Limited Partner.

Executive Partnership Fee

The Partnership shall also pay an annual Executive Partnership Fee which shall be calculated as 0.5% per annum of each Limited Partner's Remaining Paid-inCapital Contribution and shall be borne by each Limited Partner during the Term of the Partnership.

Distribution Policy

Distributable income shall be distributed to the Partners in proportion to their interests in the Partnership firstly up to their respective paid-in capital contributions; then to the Partners up to a prescribed annualized internal rate of return. If there is further distributable income remained after the aforementioned distributions, then 80% of which shall be distributed to the Limited Partners in proportion to their interests in the Partnership and the remaining 20% to the General Partner in accordance with the terms under the Partnership Agreement.

Transfer of interests in the Partnership

Unless otherwise with the prior unanimous consent of the General Partner and the Manager, no Limited Partner shall dispose of all or part of its interests in the Partnership (the "Selling Interests"), save for transfer to its affiliates. In the event of transfer of Selling Interests by any Limited Partner to non-affiliates or exit from the Partnership in any other way, upon unanimous consent of the General Partner and the Manager, other Partners shall have pre-emptive rights over the Selling Interests. If two (2) or more Limited Partners exercise the pre-emptive rights over the Selling Interests, the exercise of pre-emptive rights shall be in proportion to their paid-in capital contributions. For the avoidance of doubt, if the transferee is an affiliate of the Limited Partner, all other Partners shall unconditionally agree and cooperate in completing the relevant procedures.

Unless otherwise with the approval at the Partners' Meeting, the General Partner shall not directly or indirectly transfer, or in any other way dispose of, all or part of its interests in the Partnership, save for transfer to its affiliates. For the avoidance of doubt, if the transferee is an affiliate of the General Partner, all other Partners shall unconditionally agree and cooperate in completing the relevant procedures.

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Shoucheng Holdings Ltd. published this content on 31 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 December 2021 10:16:06 UTC.