Allied Properties H K : Discloseable and Connected Transaction - Disposal of a Subsidiary (in PDF)

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ALLIED PROPERTIES (H.K.) LIMITED

（聯合地產（香港）有限公司）

(Incorporated in Hong Kong with limited liability)

(Stock Code: 56)

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF A SUBSIDIARY

THE DISPOSAL

On 18th October, 2019, the Company (as vendor) and the Purchaser (an indirect wholly-owned subsidiary of AGL) entered into the Sale and Purchase Agreement, pursuant to which the Purchaser has conditionally agreed to acquire and the Company has conditionally agreed to sell the Sale Shares at the Consideration of HK$260,000,000.

LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5% but is below 25%, the Disposal constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

The Purchaser is an indirect wholly-owned subsidiary of AGL, the controlling shareholder of the Company which is beneficially interested in approximately 74.99% of the total number of shares in issue of the Company as at the date of this announcement, and hence is a connected person of the Company. As such, the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5%, the Disposal is, in addition to the reporting and announcement requirements, subject to the circular and the Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

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Messrs. Alan Stephen Jones and David Craig Bartlett, being independent non-executive Directors, are also independent non-executive directors of AGL. They were not appointed as members of the Independent Board Committee and have voluntarily abstained from voting on the relevant board resolutions of the Company although they were not considered by the Board to be materially interested in the Sale and Purchase Agreement and the transactions contemplated thereunder.

Mr. Lee Seng Hui (being the chief executive and an executive Director of the Company) is also the chief executive and an executive director of AGL and also one of the trustees of Lee and Lee Trust, being a discretionary trust which, together with his personal interest, controls approximately 74.95% interest in the total number of shares in issue of AGL. AGL is directly and indirectly interested in an aggregate of approximately 74.99% of the total number of shares in issue of the Company. As such, Mr. Lee Seng Hui is deemed to be interested in the Sale and Purchase Agreement and has abstained from voting on the relevant board resolutions of the Company.

None of the Directors, except for Mr. Lee Seng Hui as disclosed above, has any material interest in the Sale and Purchase Agreement and is required to abstain from voting on the board resolutions approving the Sale and Purchase Agreement and the transactions contemplated thereunder.

The Independent Board Committee, comprising Mr. Steven Samuel Zoellner, being the remaining independent non-executive Director, has been established to advise the Independent Shareholders in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder. In addition, the Independent Financial Adviser has also been appointed to advise the Independent Board Committee and the Independent Shareholders in the same regard.

The Directors (excluding Messrs. Alan Stephen Jones, David Craig Bartlett and Lee Seng Hui who have abstained from voting on the relevant board resolutions and Mr. Steven Samuel Zoellner, being the remaining independent non-executive Director whose opinion will be provided after reviewing the advice of the Independent Financial Adviser) are of the view that the terms of the Sale and Purchase Agreement were entered into after arm's length negotiations and reflect normal commercial terms and that the terms of the Sale and Purchase Agreement are fair and reasonable so far as the Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

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GENERAL

The EGM will be convened by the Company for the Independent Shareholders to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

To the best of the knowledge and belief of the Directors having made all reasonable enquiries, save as and except for AGL and its associates (including the Purchaser), no other shareholder of the Company has a material interest in the transactions contemplated under the Sale and Purchase Agreement such that he or she or it shall abstain from voting at the EGM on the resolution to approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

A circular containing, among other things, (i) further information on the Disposal; (ii) the advice and recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders; and (iv) a notice of the EGM, is expected to be despatched to the Shareholders on or before 8th November, 2019.

Completion is subject to a number of Conditions being satisfied, including but not limited to the necessary approval of the Disposal having been obtained from the Independent Shareholders. As such, the Disposal may or may not materialise. Shareholders and potential investors of the Company should exercise caution when dealing in the shares of the Company.

THE DISPOSAL

On 18th October, 2019, the Company (as vendor) and the Purchaser (an indirect wholly-owned subsidiary of AGL) entered into the Sale and Purchase Agreement in respect of the Disposal.

The Sale and Purchase Agreement

Date

18th October, 2019

Parties

1. The Company (as vendor)
2. The Purchaser (an indirect wholly-owned subsidiary of AGL)

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Subject matter

Pursuant to the Sale and Purchase Agreement, the Purchaser has conditionally agreed to acquire and the Company has conditionally agreed to sell the Sale Shares. The Sale Shares, representing the entire issued share capital of the Target Company, will be sold free from all encumbrances together with all rights to any dividend or other distribution declared, made or paid on or after the Completion Date.

Consideration

The Consideration for the sale and purchase of the Sale Shares shall be HK$260,000,000, and shall be payable by the Purchaser to the Company in cash upon Completion.

The Consideration was determined based on arm's length negotiations between the Company and the Purchaser on normal commercial terms with reference to the preliminary valuation of the Target Group amounting to HK$260,000,000 as at 31st August, 2019 prepared by the Valuer using the income approach.

Conditions

Completion is conditional upon the satisfaction or, where applicable, waiver by the Purchaser or the Company (as the case may be), of the following Conditions:

1. the passing by the Independent Shareholders at the EGM of resolutions approving the Sale and Purchase Agreement and the transactions contemplated thereunder in accordance with the Listing Rules;
2. all other necessary governmental and regulatory approvals, consents, waivers, authorisation, registrations, filings and compliance with all the requirements under the Listing Rules and other applicable laws and regulations in connection with the transactions contemplated under the Sale and Purchase Agreement having been obtained and not revoked prior to Completion;
3. all necessary consents, waivers and/or authorisations from any relevant third parties (where applicable) in connection with the transactions contemplated under the Sale and Purchase Agreement having been obtained and not revoked prior to Completion;

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1. the representations, warranties and undertakings given or made by the Company in the Sale and Purchase Agreement remaining true and accurate and not misleading in any material respect as if repeated at Completion and at all times between the date of the Sale and Purchase Agreement and the Completion Date; and
2. the representations, warranties and undertakings given or made by the Purchaser in the Sale and Purchase Agreement remaining true and accurate and not misleading in any material respect as if repeated at Completion and at all times between the date of the Sale and Purchase Agreement and the Completion Date.

The Conditions set out in (i), (ii) and (iii) cannot be waived by the Company and the Purchaser. The Purchaser may in its absolute discretion at any time waive Condition (iv), while the Company may in its absolute discretion at any time waive Condition (v).

If any of the Conditions is not satisfied or waived by the Purchaser or the Company (as the case maybe) by the Long Stop Date, (i) the Sale and Purchase Agreement will be terminated immediately; (ii) all the rights, obligations and liabilities of the Company and the Purchaser will cease and determine save for any antecedent rights and obligations already accrued before the termination; and (iii) none of the Company and the Purchaser shall have any claim against each other, except in respect of claims arising out of any antecedent breach of the Sale and Purchase Agreement.

As at the date of this announcement, none of the Conditions have been fulfilled.

Completion

Completion shall take place on the fifth Business Day after fulfillment (or waiver where applicable) of all Conditions, or such later date as may be agreed by the Company and the Purchaser in writing.

FINANCIAL INFORMATION OF THE TARGET GROUP

Set out below are summaries of certain financial information of the Target Group for the years ended 31st December, 2017 and 2018. Certain subsidiaries and an associate of the Target Group were acquired by the Target Company in 2019. Therefore, the financial information provided below represents the unaudited pro forma consolidated financial information of the Target Group for the years ended 31st December, 2017 and 2018 as if all the subsidiaries and associates of the Target Group had been acquired by the Target Company before 1st January, 2017.

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