首 長 科 技 集 團 有 限 公 司 shougang concord - HKEXnews

首 長 科 技 集 團 有 限 公 司 shougang concord - HKEXnews

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, mak...

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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.

首 長 科 技 集 團 有 限 公 司 SHOUGANG CONCORD TECHNOLOGY HOLDINGS LIMITED (Incorporated in Hong Kong with limited liability) (Stock Code: 521) (1) MAJOR ACQUISITION AND CONNECTED TRANSACTION; (2) POSSIBLE MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE; AND (3) POSSIBLE CONNECTED TRANSACTIONS IN RELATION TO RECEIPT OF FINANCIAL ASSISTANCE

1. THE SPA The Board is pleased to announce that on 17 January 2014, the Company, the Purchaser and the Vendor entered into the SPA, pursuant to which, the Vendor has agreed to sell and the Purchaser has agreed to purchase the Sale Shares, representing the entire issued share capital of the Target Company for a consideration of RMB585.0 million (equivalent to approximately HK$743.1 million), on the terms and subject to the conditions set out in the SPA. The Consideration represents a discount of approximately 15.4% to the proportionate share of the unaudited net assets of Dongguan Hillview by the Target Group as at 30 September 2013, taking into account the preliminary valuation of the Properties performed by an independent valuer as at 30 September 2013. The Purchaser will pay the Consideration to the Vendor by the issuance of Promissory Note which will be due on the 3rd anniversary of the issue date of Promissory Note. Please refer to the paragraph headed “Consideration” in this announcement for further details. As the Vendor is controlled by HNA Hong Kong through its nominees and HNA Hong Kong is a substantial shareholder of the Company, the Vendor is a connected person of the Company as defined under Chapter 14A of the Listing Rules. Therefore, the SPA and the Proposed Acquisition constitute a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios of the Proposed Acquisition under the Listing Rules exceed(s) 25% but are less than 100%, the Proposed Acquisition constitutes both a non-exempt connected transaction and a major transaction, and shall be subject to the reporting, announcement and Independent Shareholders' approval requirements under the Listing Rules.

1

The Directors (excluding the Independent non-executive Directors who will form their view after considering the advice of the independent financial adviser and except for Mr. Li Tongshuang) consider that the terms of the SPA and the Proposed Acquisition have been negotiated on an arm’s length basis and on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole. 2. POSSIBLE MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE Loan Advances Pursuant to a loan agreement entered into between Dongguan Hillview as lender and HNA Huanan as borrower on 30 September 2011, Dongguan Hillview agreed to lend to HNA Huanan an amount up to RMB400 million (equivalent to approximately HK$508.1 million) with an interest rate of 9% per annum payable on a monthly basis for the business operation of HNA Huanan. In addition, Dongguan Hillview as lender has also advanced HNA Huanan an amount of approximately RMB35.7 million (equivalent to approximately HK$45.4 million) which is non-interest bearing for the business operation of HNA Huanan. As at 30 September 2013, the aggregated outstanding Loan Advances amounted to approximately RMB480.7 million (equivalent to approximately HK$610.6 million), whereas the principal amount of interest-bearing Loan Advances is RMB380.0 million (equivalent to approximately HK$482.7 million). The repayment date of the interest-bearing Loan Advances shall be on or before 30 September 2017. The Target Company and Dongguan Hillview also maintained balances with other fellow subsidiaries of HNA Hong Kong from the ordinary course of business which will be settled prior to Completion. Pursuant to the SPA, the Vendor covenanted to the Company and the Purchaser that, until the full settlement of the Loan Advances has been made, it shall procure the repayment of HK$100 million outstanding under the Loan Advances by HNA Huanan to Dongguan Hillview within one month after each time the Company having settled its payment in an aggregated amount of HK$100 million under the Promissory Note. Guarantee Agreement Pursuant to the Guarantee Agreement, Dongguan Hillview as guarantor agreed to provide a corporate guarantee for a fellow subsidiary of HNA Hong Kong for its bank borrowing of up to RMB5.0 million (equivalent to approximately HK$6.4 million) for the period from 6 March 2013 to 6 March 2014. As at 30 September 2013, the outstanding bank borrowing of the fellow subsidiary amounted to RMB5.0 million (equivalent to approximately HK$6.4 million). As HNA Huanan is a fellow subsidiary of HNA Hong Kong and thus an associate of HNA Hong Kong, HNA Huanan is a connected person of the Company as defined under Chapter 14A of the Listing Rules. The Target Company and Dongguan Hillview will become subsidiaries of the Group upon Completion, the continued provision of the Loan Advances and the provision of the corporate guarantee by Dongguan Hillview under the Guarantee Agreement which are incidental to the Completion also constitutes connected transactions on part of the Company for the purpose of the Listing Rules. As one or more of the applicable

2

percentage ratios of the financial assistance provided under the Loan Advances under the Listing Rules exceed(s) 25% but is less than 100%, the Loan Advances therefore constitutes a major transaction. In addition, as the amount of the Loan Advances exceeds 8% under the assets ratio as defined under Rule 14.07(1) of the Listing Rules, the Loan Advances also constitute an advance to entities under Rule 13.13 of the Listing Rules and the details of which are disclosed herein in compliance with Rules 13.13 and 13.15 of the Listing Rules. The Company will also comply with the continuing disclosure obligation under Rule 13.20 of the Listing Rules. Pursuant to Rule 14A.41 of the Listing Rules, such connected transactions under the Loan Advances and the Guarantee Agreement shall be subject to all applicable reporting and disclosure requirement if the Proposed Acquisition materialises, under Chapter 14A of the Listing Rules. The Company will comply in full with all applicable reporting, disclosure of and, if applicable, Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules upon any variation or renewal of such transactions. 3. POSSIBLE CONNECTED TRANSACTIONS IN RELATION TO RECEIPT OF FINANCIAL ASSISTANCE Corporate guarantee on Loan Advances and Guarantee Agreement Pursuant to the SPA, the Vendor shall procure that a corporate guarantee will be given by HNA Hong Kong upon Completion in favour of the Company, the Purchaser and Dongguan Hillview for the due performance of all the obligations of HNA Huanan owed to Dongguan Hillview in relation to the Loan Advances and the fellow subsidiary of HNA Hong Kong in relation to the Guarantee Agreement. Corporate guarantee on bank borrowings of Dongguan Hillview Pursuant to loan and guarantee agreements of Dongguan Hillview dated 22 September 2011, the holding company and a fellow subsidiary of HNA Hong Kong has provided a corporate guarantee for Dongguan Hillview in respect of bank borrowings of Dongguan Hillview of up to RMB400 million (equivalent to approximately HK$508.1 million) for the period from 22 September 2011 to 21 September 2019. As at 30 September 2013, the outstanding bank borrowings of Dongguan Hillview amounted to RMB399.5 million (equivalent to approximately HK$507.5 million). As HNA Hong Kong is a substantial shareholder and connected person of the Company, the provision of the corporate guarantee by HNA Hong Kong to the Company, the Purchaser and Dongguan Hillview, and the provision of the corporate guarantee by the holding company and a fellow subsidiary of HNA Hong Kong in respect of bank borrowings of Dongguan Hillview are connected transactions under Chapter 14A of the Listing Rules. However, pursuant to Rule 14A.65(4) of the Listing Rules, these connected transactions should be exempted from the reporting, announcement and Independent Shareholders’ approval requirements as no security over the assets of the Group is granted in respect of the corporate guarantees.

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4. GENERAL Under the terms of the SPA, the Vendor shall procure that a corporate guarantee will be given by HNA Hong Kong in favour of the Company, the Purchaser and Dongguan Hillview upon Completion, the Directors (excluding the independent non-executive Directors who will form their view after considering the advice of the independent financial adviser and except for Mr. Li Tongshuang) consider that the continued provision of the Loan Advances and corporate guarantee under the Guarantee Agreement are fair and reasonable so far as the Independent Shareholders are concerned. The Directors therefore are also of the view that the Loan Advances are recoverable. Mr. Li Tongshuang, executive Director and managing director of the Company, is currently an assistant president of HNA Hong Kong and therefore considered to have a material interest in the SPA, the Proposed Acquisition and relevant transactions contemplated therein. As such, Mr. Li Tongshuang abstained from voting at the meeting of the Board approving the said transactions accordingly. In addition, HNA Hong Kong and its associates will be required to abstain from voting at the EGM on the resolutions in relation to the SPA, the Proposed Acquisition and the relevant transactions contemplated therein. Save as disclosed above, no other Shareholder will be required to abstain from voting in respect of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein. Independent Board Committee has been formed to consider, and to advise the Independent Shareholders on, the fairness and reasonableness of the terms of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein. An independent financial adviser has been appointed to make recommendations to the Independent Board Committee and the Independent Shareholders in respect of the same. A circular containing, among others, further details of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein, a letter from the Independent Board Committee and a letter from the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the terms of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein, and a notice of the EGM will be despatched to the Shareholders on or before 19 February 2014, as the Company is expected to require more time to prepare the information required for inclusion in the circular. The SPA, the Proposed Acquisition and the relevant transactions contemplated therein are subject to the fulfillment of a number of Conditions Precedent. As such, the SPA, the Proposed Acquisition and the relevant transactions contemplated therein may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

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1. THE SPA Date:

17 January 2014

Parties to the SPA (1)

Leader Well Management Limited (卓領管理有限公司), as vendor, is a company incorporated in Hong Kong with limited liability

(2)

San Tai Investment Company Limited, as purchaser, is a company incorporated in BVI with limited liability. The Purchaser is an indirect wholly-owned subsidiary of the Company which is principally engaged in investment holding

(3)

the Company

The Proposed Acquisition The Board is pleased to announce that on 17 January 2014, the Company, the Purchaser and the Vendor entered into the SPA, pursuant to which, the Vendor has agreed to sell and the Purchaser has agreed to purchase the Sale Shares, representing the entire issued share capital of the Target Company for a consideration of RMB585.0 million (equivalent to approximately HK$743.1 million), on the terms and subject to the conditions set out in the SPA. As at the date of this announcement, the Target Company is wholly-owned by the Vendor. Upon Completion, the Target Company will be wholly-owned by the Company. Information about the Target Company The Target Company is an investment holding company incorporated with limited liability in BVI whose sole investment is in Dongguan Hillview. The Vendor originally purchased the Target Company at a consideration of approximately RMB407.4 million (equivalent to approximately HK$517.5 million) in May 2012. The Target Company owns 65% of the issued and paid share capital of Dongguan Hillview as at the date of this announcement. Dongguan Hillview is a company established with limited liability in the PRC and is owned as to 65% and 35% by the Target Company and HNA Huanan, respectively. As at the date of this announcement, Dongguan Hillview is a joint venture of the Target Company. Upon Completion, Dongguan Hillview will remain as a subsidiary of the Target Company and will become an indirect subsidiary of the Company. Dongguan Hillview is principally engaged in the provision of recreational and tourism services through the ownership and management of Dongguan Hillview Golf Club, Sofitel Dongguan Golf Resort Hotel and other recreational facilities in Dongguan, PRC. Dongguan Hillview also owns the land use right of approximately 1,000,039 sq.m. at Ying Bin Road, Dongcheng District, Dongguan, Guangdong Province, China, on which Dongguan Hillview Golf Club, Sofitel Dongguan Golf Resort Hotel and other recreational facilities are located. The Properties and other fixed assets, had an aggregate unaudited book value of approximately RMB209.6 million (equivalent to approximately HK$266.3 million) which were valued at an aggregate of approximately RMB1,051.1 million net of deferred taxation (equivalent to approximately HK$1,335.2 million) on replacement cost method performed by an independent valuer as at 30 September 2013.

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The key specifications of Dongguan Hillview Golf Club and the Sofitel Dongguan Golf Resort Hotel are as follows: Dongguan Hillview Golf Club Golf courses:

Two separate 18-hole golf courses

Gross floor area:

Approximately 18,273 sq.m.

Covered floor area:

Approximately 10,128 sq.m.

Facilities:

An exercise course, a specialty shop, two restaurants, a multi-function hall, a British bar, a cigar room, two change-rooms , and an exhibition hall

Sofitel Dongguan Golf Resort Hotel No. of guestrooms and suites:

133 spacious rooms and luxury suites

Gross floor area:

Approximately 23,302 sq.m.

Covered floor area:

Approximately 9,808 sq.m.

Facilities:

a Chinese restaurant and a buffet restaurant, a gym, 4 meeting rooms and an outdoor swimming pool

The financial results of the Target Group for the two latest financial years are as follows: For the year ended 31 December 2012 2011 (unaudited) (unaudited) RMB'000 RMB'000 Net profit before tax Net profit after tax

4,845 4,845

1,366 1,366

As Dongguan Hillview will remain as a subsidiary of the Target Company and will become an indirect subsidiary of the Company upon Completion, please find below the financial results of Dongguan Hillview for the two latest financial years as follows: For the year ended 31 December 2012 2011 (unaudited) (unaudited) RMB'000 RMB'000 Net profit before tax Net profit after tax

14,406 7,475

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13,760 7,904

The unaudited net assets of Dongguan Hillview as at 30 September 2013, taking into account the preliminary valuation of the Properties performed by an independent valuer as at 30 September 2013 of approximately RMB1,051.1 million net of deferred taxation (equivalent to approximately HK$1,335.2 million), were approximately RMB1,063.3 million (equivalent to approximately HK$1,350.7 million). Accordingly, the proportionate share of the unaudited net assets of Dongguan Hillview by the Target Group as at 30 September 2013 was approximately RMB691.1 million (equivalent to approximately HK$877.9 million), taking into account the preliminary valuation of the Properties performed by an independent valuer as at 30 September 2013. Consideration The Consideration of the Proposed Acquisition is RMB585.0 million (equivalent to approximately HK$743.1 million) which was determined after arm’s length negotiation between the parties and with reference to, among others, the unaudited net asset value of the Target Group, adjusted with the preliminary valuation of the Properties as at 30 September 2013. The Consideration represents a discount of approximately 15.4% to the proportionate share of the unaudited net assets of Dongguan Hillview by the Target Group as at 30 September 2013, taking into account the preliminary valuation of the Properties performed by an independent valuer as at 30 September 2013. Subject to the satisfaction or waiver of all the Conditions Precedent, the Purchaser will pay the Consideration to the Vendor by the issuance of Promissory Note. The settlement of the Promissory Note is expected to be funded by the internal resources of the Group and through the recoverable of receivables of the Company. The Company is entitled to settle part of the Consideration amounted to HK$130 million by assignment of receivable of the Company on or before the maturity of the Promissory Note and thereafter, the outstanding principal amount of the Promissory Note shall be reduced accordingly. Principal terms and conditions of the Promissory Note Issuer:

the Company

Principal amount:

HK$743.1 million

Maturity date:

the 3rd anniversary of the issue date

Interest:

the Promissory Note does not bear any interest

Early repayment:

the Company has the right at any time and from time to time on giving not less than 14 calendars’ day prepayment notice to prepay the entire outstanding principal amount or any part thereof in multiples of HK$1,000,000 prior to the maturity date of the Promissory Note. The holder of the Promissory Note may waive or consent to a shorter period of prepayment notice.

7

Conditions Precedent Completion shall be conditional upon satisfaction or waiver as applicable of each of the following Conditions Precedent: a)

the passing of resolutions by the Shareholders who are entitled to vote at the EGM in accordance with the Listing Rules by way of poll approving the SPA and the transactions contemplated thereunder, including the purchase of the Sale Shares and the issue of the Promissory Note;

b)

the Stock Exchange not having indicated that it will treat or, as the case may be, ruled the SPA and the transactions contemplated thereunder as a reverse takeover and/or the Company will be deemed as a new listing applicant under the Listing Rules;

c)

the Company and the Purchaser having conducted a due diligence review of and being satisfied with the assets, liabilities, operation, taxation, books and accounts, corporate records and legal matters of the Target Group;

d)

the Vendor having obtained all necessary approvals, authorisations, consents from and completed all necessary registrations and filings (if applicable) with the relevant governmental authorities or regulatory bodies (including but not limited to the governmental authorities or regulatory bodies in PRC), its shareholders or any third parties in respect of the SPA and the transactions contemplated thereunder;

e)

the Company and the Purchaser having obtained a PRC legal opinion issued by qualified PRC legal advisers engaged by them, with respect to any company within the Target Group which is established in PRC, in such substance to the reasonable satisfaction of the Company;

f)

the Company and the Purchaser having obtained a BVI legal opinion or due diligence report issued by qualified BVI legal advisers with respect to the Target Company, in such substance to the reasonable satisfaction of the Company;

g)

the Vendor and HNA Hong Kong having provided to the Company and the Purchaser a deed of indemnity in respect of the Target Group in such substance to the satisfaction of the Company;

h)

since the date of the SPA and up to the Completion Date, (i)

there being no adverse change in the business, assets, financial position and operation of the Target Group which the Purchaser and the Company reasonably consider to be material to the SPA and the transactions contemplated thereunder;

(ii)

there being no on-going or pending investigation, action, arbitration, claim or any other legal proceeding, whether initiated or threatened to be initiated by any court, adjudication board or tribunal or any governmental authority of competent jurisdiction, which the Purchaser and the Company reasonably

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consider to be material to the SPA and the transactions contemplated thereunder; (iii)

there being no event or circumstance which causes any representation, undertaking, covenant or warranty given by the Vendor in the SPA to be materially untrue or inaccurate, which the Purchaser and the Company reasonably considers to be material to the SPA and the transaction contemplated thereunder; and

(iv)

there being no proposed enactment, promulgation or enforcement by any authority of any ordinances, rules, orders, judgments, notices or awards, which prohibits, restricts or materially delays the execution or performance of the SPA and the transactions contemplated thereunder by the Vendor.

i)

the Vendor having provided to the Company and the Purchaser a corporate guarantee given by HNA Hong Kong in favour of the Company, the Purchaser and Dongguan Hillview in respect of the due performance of all the obligations owed by HNA Huanan to Dongguan Hillview in relation to the Loan Advances and the due performance of all obligations by the fellow subsidiary of HNA Hong Kong in relation to its bank borrowing covered by the Guarantee Agreement, and which shall be in such substance to the satisfaction of the Company;

j)

the completion of amendment of relevant memorandum and articles of association of Dongguan Hillview, such that Dongguan Hillview will become a subsidiary of the Target Company under the Hong Kong Financial Reporting Standards; and

k)

the Vendor having terminated the Pledge of Assets.

The Company and the Purchaser may at any time waive in whole or in part all or any of the Condition Precedent (h) by notice in writing to the Vendor. If any of the Conditions Precedent has not been fulfilled or waived (as the case may be) on or before 30 June 2014 or such later date as maybe agreed between the Company, the Purchaser and the Vendor, (except Conditions Precedent (g), (h) and (i) which can take place simultaneously with Completion), the SPA shall automatically be terminated (save and except for clauses relating to confidentiality, notice and governing laws which shall continue to have full force and effect). Neither party shall have any obligations nor liabilities towards each other thereafter save for any antecedent breaches of the terms thereof. Completion Completion shall take place on the Completion Date falling on the fifth Business Day (or such other date as the Company, the Purchaser and the Vendor may agree in writing) after all the Conditions Precedent under the SPA having been fulfilled or waived (as the case may be) by the relevant parties thereto. Indemnity As a Condition Precedent of the SPA, the Vendor and HNA Hong Kong shall execute a deed of indemnity in favour of the Company and the Purchaser, pursuant to which the Vendor and HNA Hong Kong will undertake to indemnify and keep indemnified each of the Target

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Group, the Company and the Purchaser (for itself and as trustee, agent or representative for any member of the Target Group) against losses, liabilities, damages, costs, charges, fees, expenses, penalties and fines which any of them may suffer, sustain or incur (as the case may be) in connection with (including but not limited to) (a) any taxes payable by any member of the Target Group or derived from any incomes, profits, revenues, transactions, employments, events, matters or issues in relation with any of member of the Target Group incurred prior to the Completion Date; (b) the failure of any member of the Target Group to pay for its employees any social insurance, pension fund, housing provident fund or any other social insurance or similar schemes in accordance with the requirements of PRC laws and regulations prior to the Completion Date; (c) any breach or non-compliance of the requirements of the PRC laws and rules on foreign exchange regulation by any member of the Target Group prior to the Completion Date; (d) any breach or non-compliance of the laws of Hong Kong, PRC or BVI by any member of the Target Group prior to the Completion Date; (e) exercising or enforcing their rights or intentions under this deed of indemnity or the SPA; (f) any deficiency or defects of the ownerships and rights of use of the lands and assets currently held or leased by any member of the Target Group; and (g) enforcing the legal rights in connection with the debts or contracts of any members of the Target Group prior to the Completion Date. The above indemnities do not cover any claims or obligations in respect of the following matters: a)

any obligations arising from changes in any relevant laws, regulations or policies after Completion Date;

b)

any obligations prepared, reserved or maintained in the audited accounts of the Target Group pursuant to relevant recognised accounting standards, other than any fraud;

c)

such claims or obligations paid by any other person outside of the Target Group, for which any member of Target Group has no responsibilities to repay to such person; and

d)

the taxes incurred in the ordinary course of the Target Group’s business after 31 December 2012, subject to the payment of taxes incurred in the ordinary course of the Target Group’s business during the period from 31 December 2012 to the Completion Date when fall due and payable.

Reasons for and benefits of entering into the SPA Challenges of the Group The Group is principally engaged in the development and provision of system integration solutions, system design and sale of system hardware. As disclosed in the Company’s 2011 and 2012 annual reports, the Company has been advised by the Southern Media Corporation, a state-owned enterprise in PRC, regarding the reorganisation of the cable digital broadcasting networks of Guangdong Province into one centralised network under one provincial broadcasting network company (the “Reform”) which is led by the Steering Group on the Reform of Guangdong Cultural Structure (廣東省文化體制改革工作領導小組). Upon the completion of the Reform, the cable digital broadcasting networks of Guangdong

10

Province will be ultimately owned and operated by Guangdong Broadcasting Network Co., Ltd. (廣東省廣播網絡有限公司), a state-owned enterprise in PRC. As a result, the Group will no longer be able to operate the digital television technical solution and equivalent business and is required to exit from the existing business. PRC business environment Pursuant to the challenges in the existing businesses of the Group set out above and the interim report of the Group for the six months ended 30 June 2013, the Group is actively exploring new business opportunities for investment and development so as to bring better return to Shareholders in the future. The Board recognises the rapid development of the tourism industry in PRC in recent years, supported by the 12th Five-Year Plan of PRC encouraging and promoting the development of the tourism industry. In addition, according to the “Guidelines of the Plan for the Promotion of Tourism Industry Development” issued by the State Council, the tourism industry is one of the strategic pillar industries in (i) the development of the economy in PRC; and (ii) the improvement of the social well-being of Chinese citizens and therefore deserves increased dedication of resources, particularly to expand the industry in urban areas such as Dongguan. Given the substantial improvement in infrastructural and transportation networks around China as well as the increased dedication to improved urban planning and personnel training, annual revenue of the tourism industry in PRC is projected to grow by approximately 10% from 2011 to 2015, demonstrating PRC’s strong commitment to the industry's development. By 2015, the tourism industry is expected to contribute approximately 4.5% to the national GDP, and tourism spending is expected to reach approximately 10% of total household consumption. Dongguan Hillview is principally engaged in the provision of recreational and tourism services through the ownership and management of Dongguan Hillview Golf Club, Sofitel Dongguan Golf Resort Hotel and other recreational facilities in Dongguan, PRC, and is an attractive acquisition target for the Group as it focuses on the high-net-worth individuals in PRC who are able to afford leisure and recreational travelling. The Board considers that the Proposed Acquisition will benefit the Group from the prime real estate, tourism, and leisure opportunities provided by the Target Group’s ownership of Dongguan Hillview and will strengthen the revenue stream of the Group without an immediate cashflow requirement to settle the Consideration. Furthermore, the Board considers that the Consideration, after taking into account the discount of approximately 15.4% to the proportionate share of the unaudited net assets of Dongguan Hillview as at 30 September 2013 and the preliminary valuation of the Properties performed by an independent valuer as at 30 September 2013, is favourable for the investment opportunity. As part and parcel of the Proposed Acquisition, Dongguan Hillview will extend the Loan Advances to HNA Huanan and a corporate guarantee for a fellow subsidiary of HNA Hong Kong under the Guarantee Agreement, further details of which have been disclosed under the paragraph headed “POSSIBLE MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE”, in relation to which a corporate guarantee will be given by HNA Hong Kong in favour of the Company, the Purchaser and Dongguan Hillview upon Completion. Since the Promissory Note will mature by the 3rd anniversary of the issue date and the Vendor has covenanted to the Company and the Purchaser that, until the full settlement of the Loan Advances has been made, it shall procure the repayment of HK$100 million outstanding under the Loan Advances by HNA

11

Huanan to Dongguan Hillview within one month after each time the Company having settled its payment in an aggregated amount of HK$100 million under the Promissory note. Accordingly, the Proposed Acquisition allows the Group to capture investment opportunities while at the same time provides the Target Group with the benefit of a corporate guarantee for recovering its financial assistances extended to HNA Huanan and a fellow subsidiary of HNA Hong Kong. Listing Rules Implications As the Vendor is controlled by the HNA Hong Kong through its nominees and HNA Hong Kong is a substantial shareholder of the Company, the Vendor is a connected person of the Company as defined under Chapter 14A of the Listing Rules. Therefore, the SPA and the Proposed Acquisition constitute a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios of the Proposed Acquisition under the Listing Rules exceed(s) 25% but is less than 100%, the Proposed Acquisition constitutes both a non-exempt connected transaction and a major transaction, which shall be subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules. The Directors (excluding the Independent non-executive Directors who will form their view after considering the advice of the independent financial adviser and except for Mr. Li Tongshuang) consider that the terms of the SPA and the Proposed Acquisition have been negotiated on an arm’s length basis and on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole. 2. POSSIBLE MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE Loan Advances Pursuant to a loan agreement entered into between Dongguan Hillview as lender and HNA Huanan as borrower on 30 September 2011, Dongguan Hillview agreed to lend to HNA Huanan an amount up to RMB400 million (equivalent to approximately HK$508.1 million) with an interest rate of 9% per annum payable on a monthly basis for the business operation of HNA Huanan. In addition, Dongguan Hillview as lender has also advanced HNA Huanan an amount of approximately RMB35.7 million (equivalent to approximately HK$45.4 million) which is non-interest bearing for the business operation of HNA Huanan. As at 30 September 2013, the outstanding Loan Advances amounted to approximately RMB480.7 million (equivalent to approximately HK$610.6 million), whereas the principal amount of interest-bearing Loan Advances is RMB380.0 million (equivalent to approximately HK$482.7 million). The repayment date of the interest-bearing Loan Advances shall be on or before 30 September 2017. The Target Company and Dongguan Hillview also maintained balances with other fellow subsidiaries of HNA Hong Kong from the ordinary course of business which will be settled prior to Completion. Pursuant to the SPA, the Vendor covenanted to the Company and the Purchaser that, until the full settlement of the Loan Advances has been made, it shall procure the repayment of HK$100 million under the Loan Advances by HNA Huanan to Dongguan Hillview within

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one month after each time the Company having settled its payment in an aggregate amount of HK$100 million under the Promissory Note. Guarantee Agreement Pursuant to the Guarantee Agreement, Dongguan Hillview as guarantor has entered into the Guarantee Agreement with a financial institution dated 6 March 2013, whereas Dongguan Hillview agreed to provide a corporate guarantee for a fellow subsidiary of HNA Hong Kong for its bank borrowing of up to RMB5.0 million (equivalent to approximately HK$6.4 million) for the period from 6 March 2013 to 6 March 2014. As at 30 September 2013, the outstanding bank borrowing of the fellow subsidiary amounts to RMB5.0 million (equivalent to approximately HK$6.4 million). Listing Rules Implications As HNA Huanan is a fellow subsidiary of HNA Hong Kong and thus an associate of HNA Hong Kong, HNA Huanan is a connected person of the Company as defined under Chapter 14A of the Listing Rules. The Target Company and Dongguan Hillview will become subsidiaries of the Group upon Completion, the continued provision of the Loan Advances and the provision of corporate guarantee by Dongguan Hillview under the Guarantee Agreement which are incidental to the Completion also constitutes a connected transactions on part of the Company for the purpose of the Listing Rules. As one or more of the applicable percentage ratios of the financial assistance provided under the Loan Advances under the Listing Rules exceed(s) 25% but is less than 100%, the Loan Advances therefore constitutes a major transaction. In addition, as the amount of the Loan Advances exceeds 8% under the assets ratio as defined under Rule 14.07(1) of the Listing Rules, the Loan Advances also constitute an advance to entities under Rule 13.13 of the Listing Rules and the details of which are disclosed herein in compliance with Rules 13.13 and 13.15 of the Listing Rules. The Company will also comply with the continuing disclosure obligation under Rule 13.20 of the Listing Rules. Pursuant to Rule 14A.41 of the Listing Rules, such connected transactions under the Loan Agreement and the Guarantee Agreement shall be subject to all applicable reporting and disclosure requirement if the Proposed Acquisition materialises, under Chapter 14A of the Listing Rules. The Company will comply in full with all applicable reporting, disclosure of and, if applicable, Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules upon any variation or renewal of such transactions. 3. POSSIBLE CONNECTED TRANSACTIONS IN RELATION TO RECEIPT OF FINANCIAL ASSISTANCE Corporate guarantee on Loan Advances and Guarantee Agreement Pursuant to the SPA, the Vendor shall procure that a corporate guarantee will be given by HNA Hong Kong upon Completion in favour of the Company, the Purchaser and Dongguan Hillview for the due performance of all the obligations of HNA Huanan owed to Dongguan Hillview in relation to the Loan Advances and the fellow subsidiary of HNA Hong Kong in relation to the Guarantee Agreement.

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Corporate guarantee on bank borrowings of Dongguan Hillview Pursuant to loan and guarantee agreements of Dongguan Hillview dated 22 September 2011, the holding company and a fellow subsidiary of HNA Hong Kong has provided a corporate guarantee for Dongguan Hillview in respect of bank borrowings of Dongguan Hillview of up to RMB400 million (equivalent to approximately HK$508.1 million) for the period from 22 September 2011 to 21 September 2019. As at 30 September 2013, the outstanding bank borrowings of Dongguan Hillview amounted to RMB399.5 million (equivalent to approximately HK$507.5 million). Listing Rules Implications As HNA Hong Kong is a substantial shareholder and connected person of the Company, the provision of the corporate guarantee by HNA Hong Kong to the Company, the Purchaser and Dongguan Hillview, and the provision of the corporate guarantee by the holding company and a fellow subsidiary of HNA Hong Kong in respect of bank borrowings of Dongguan Hillview are connected transactions under Chapter 14A of the Listing Rules. However, pursuant to Rule 14A.65(4) of the Listing Rules, these connected transactions should be exempted from the reporting, announcement and Independent Shareholders’ approval requirements as no security over the assets of the Group is granted in respect of the corporate guarantee. GENERAL Under the terms of the SPA , the Vendor shall procure that a corporate guarantee will be given by HNA Hong Kong in favour of the Company, the Purchaser and Dongguan upon Completion, the Directors (excluding the independent non-executive Directors who will form their view after considering the advice of the independent financial adviser and except for Mr. Li Tongshuang) consider that the continued provision of the Loan Advances and corporate guarantee under the Guarantee Agreement are fair and reasonable so far as the Independent Shareholders are concerned. The Directors therefore are also of the view that the Loan Advances are recoverable. Mr. Li Tongshuang, executive Director and managing director of the Company, is currently an assistant president of HNA Hong Kong and therefore considered to have a material interest in the SPA, the Proposed Acquisition and relevant transactions contemplated therein. As such, Mr. Li Tongshuang abstained from voting at the meeting of the Board approving the said transactions accordingly. In addition, HNA Hong Kong and its associates will be required to abstain from voting at the EGM on resolutions in relation to the SPA, the Proposed Acquisition and the relevant transactions contemplated therein. Save as disclosed, no other Shareholder will be required to abstain from voting in respect of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein. The Independent Board Committee comprising all the independent non-executive Directors (namely, Mr. Leung Kai Cheung, Mr. Liem Chi Kit, Kevin and Mr. Lam Kin Fung, Jeffrey) has been established to consider, and to advise the Independent Shareholders on, the fairness and reasonableness of the terms of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein. An independent financial adviser has been appointed to make recommendations to the Independent Board Committee and the Independent Shareholders in respect of the same.

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A circular containing, among others, further details of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein, a letter from the Independent Board Committee and a letter from the independent financial adviser appointed to advise the Independent Board Committee and the independent Shareholders on the terms of the SPA, the Proposed Acquisition and the relevant transactions contemplated therein, and a notice of the EGM is expected to be despatched to the Shareholders on or before 19 February 2014, as the Company will require more time to prepare the information required for inclusion in the circular. The SPA, the Proposed Acquisition and the relevant transactions contemplated therein are subject to the fulfillment of a number of Conditions Precedent. As such, the SPA, the Proposed Acquisition and the relevant transactions contemplated therein may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares. DEFINITIONS In this announcement, the following expressions have the following meanings, unless the context requires otherwise: “associates”

has the meaning ascribed to it under the Listing Rules

“Board”

the board of Directors

“Business Day”

a day on which the Stock Exchange is open for the transactions of business

“BVI”

the British Virgin Islands

“Company”

Shougang Concord Technology Holdings Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board of the Stock Exchange

“Companies Ordinance”

the Companies Ordinance (Chapter 32 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Completion”

Completion of the SPA in accordance with the terms and conditions set out therein

“Completion Date”

the date on which the Completion takes place

“Conditions Precedent”

the respective conditions precedent to the Completion of the SPA as set out in the SPA

“connected person”

has the meaning ascribed to it under the Listing Rules

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“Consideration”

the consideration for the Sale Shares in the aggregate amount of RMB585.0 million (equivalent to approximately HK$743.1 million)

“Directors”

the directors of the Company

“Dongguan Hillview”

Dongguan Hillview Golf Company Limited* 東莞峰景高爾 夫有限公司, a company incorporated with limited liability in PRC which owned and operated Dongguan Hillview Golf Club and the Sofitel Dongguan Golf Resort Hotel. Dongguan Hillview is owned as to 65% and 35% by the Target Company and HNA Huanan, respectively as at the date of this announcement

“Dongguan Hillview Golf Club”

Dongguan Hillview Golf Club 東莞峰景高爾夫球會, a golf club owned and operated by Dongguan Hillview and located in Dongguan, PRC

“EGM”

the extraordinary general meeting of the Company to be convened for the purpose of approving, among others, the SPA, the Proposed Acquisition and the relevant transactions contemplated therein

“Group”

the Company and its subsidiaries

“Guarantee Agreement”

the corporate guarantee agreement entered into by Dongguan Hillview as guarantor with a financial institution dated 6 March 2013, whereas Dongguan Hillview agreed to provide a corporate guarantee for a fellow subsidiary of HNA Hong Kong for its bank borrowing of up to RMB5.0 million (equivalent to approximately HK$ 6.4 million) for the period from 6 March 2013 to 6 March 2014

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“HNA Hong Kong”

HNA Group (International) Company Limited 海航集團(國 際)有限公司 (previously known as HNA Group International Headquarter (Hong Kong) Co., Limited 海航集團國際總部 (香港)有限公司), a company incorporated in Hong Kong with limited liability which own approximately 25.67% of the total issued share capital of the Company and a substantial shareholder of the Company as at the date of this announcement

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“HNA Huanan”

HNA Huanan (Holdings) Group Company Limited* 海航華 南 控 股 集 團 有 限 公 司 (previously known as Guangzhou HNA Industrial Company Limited*廣州海航實業有限公司), a company incorporated in PRC with limited liability

“Independent Board Committee”

the independent committee of the Board comprising all the independent non-executive Directors (namely, Mr. Leung Kai Cheung, Mr. Liem Chi Kit, Kevin and Mr. Lam Kin Fung, Jeffrey) established for the purpose of considering and advising the independent Shareholders in connection with the SPA, the Proposed Acquisition and the relevant transactions contemplated therein

“Independent Shareholders”

Shareholders other than the Vendor and its associates

“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

“Loan Advances”

all the liabilities, indebtedness and obligations (whether actual, contingent or deferred) due from HNA Huanan to Dongguan Hillview (a member of the Target Group) which include a loan agreement entered into between Dongguan Hillview as lender and HNA Huanan as borrower on 30 September 2011 and other advances provided by Dongguan Hillview to HNA Huanan

“Pledge of Assets”

the pledge of assets provided by Dongguan Hillview pursuant to a guarantee agreement of Dongguan Hillview dated 25 May 2012 for the bank borrowings up to RMB300.0 million (equivalent to approximately HK$381.1 million) of a fellow subsidiary of HNA Hong Kong for the period from 22 September 2011 to 21 September 2019

“PRC” or “China”

the People’s Republic of China, which for the purpose of this announcement (unless otherwise indicated) excludes Hong Kong, the Macao Special Administrative Region of the People’s Republic of China and Taiwan

“Promissory Note”

means the promissory note to be issued by the Company in favour of the Vendor or its nominees (if applicable) upon Completion for the purpose of settling the Consideration pursuant to the SPA

“Properties”

the land use right of approximately 1,000,039 sq.m. at Ying Bin Road, Dongcheng District, Dongguan, Guangdong Province, China, Dongguan Hillview Golf Club, Sofitel Dongguan Golf Resort Hotel owned by Dongguan Hillview

“Proposed Acquisition”

the proposed acquisition of the Sale Shares as contemplated under the SPA 17

“Purchaser”

San Tai Investment Company Limited, a company incorporated in BVI with limited liability and an indirect wholly-owned subsidiary of the Company

“RMB”

Renminbi, the lawful currency of the PRC

“Sale Shares”

50,000 ordinary shares with par value of US$1.00 each of the Target Company legally and beneficially owned by the Vendor, representing 100% of the total issued share capital in the Target Company, which have been fully paid or credited as fully paid

“Share(s)”

ordinary share(s) of HK$0.25 each in the share capital of the Company

“Shareholder(s)”

shareholder(s) of the Company

“Sofitel Dongguan Golf Resort Hotel”

Sofitel Dongguan Golf Resort Hotel, 索菲特東莞高爾夫度假 村 酒 店 , a club hotel owned and operated by Dongguan Hillview and located in Dongguan, PRC

“SPA”

the sale and purchase agreement dated 17 January 2014 entered into between the Company, the Purchaser and the Vendor in respect of the Proposed Acquisition

“State Council”

State Council of PRC 中國國務院

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“substantial shareholders”

has the meaning ascribed to it under the Listing Rules

“Target Company”

Hillview Golf Development Company Limited 峰景高爾夫球 發 展 有 限 公 司 * (previously known as Chia Tai Golf Development Company Limited 正大高爾夫球發展有限公 司*), a company incorporated with limited liability in BVI. The Target Company is wholly-owned by the Vendor as at the date of this announcement

“Target Group”

the Target Company and its subsidiaries, if any

“Vendor”

Leader Well Management Limited (卓領管理有限公司), a company incorporated in Hong Kong with limited liability and the vendor to the SPA

“%”

per cent.

“sq.m.”

square metre

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Unless otherwise specified in this announcement, the English names of the PRC entities are translation of their Chinese names, and are included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall prevail. For the purpose of this announcement, the exchange rate of HK$1.00 = RMB0.78721 have been used for currency translation, where applicable. Such exchange rates are for illustrative purposes and do not constitute representations that any amount in HK$ or RMB has been, could have been or may be converted at such a rate.

By Order of the Board Shougang Concord Technology Holdings Limited Mung Kin Keung Co-Chairman

Hong Kong, 17 January 2014 As at the date of this announcement, the Board comprises Mr. Li Shaofeng (Co-Chairman), Mr. Mung Kin Keung (Co-Chairman), Mr. Li Tongshuang (Managing Director), Mr. Mung Bun Man, Alan (Executive Director), Mr. Leung Shun Sang, Tony (Non-executive Director), Mr. Leung Kai Cheung (Independent Non-executive Director), Mr. Liem Chi Kit, Kevin (Independent Non-executive Director) and Mr. Lam Kin Fung, Jeffrey (Independent Nonexecutive Director).

* For identification purpose only

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