China South City : INSIDE INFORMATION - SIGNING OF SHARE TRANSFER AGREEMENT BETWEEN MR. CHENG CHUNG HING AND CENTRALCON HOLDING

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(Incorporated in Hong Kong with limited liability) (Stock Code: 1668)

INSIDE INFORMATION SIGNING OF SHARE TRANSFER AGREEMENT BETWEEN MR. CHENG CHUNG HING AND CENTRALCON HOLDING THE SALE AND PURCHASE AGREEMENT

The Board wishes to announce that it has been informed by Mr. Cheng that on 11 January 2017, a share transfer agreement in relation to the Transaction was entered into among Mr. Cheng, Accurate Gain, Best Wisdom and Centralcon Holding, in relation to the proposed share transfer by Mr. Cheng of an aggregate of 1,857,196,831 shares in the Company, representing approximately 23.20% of the total issued share capital of the Company. Upon completion of the Transaction, Centralcon Holding will own 1,857,196,831 shares in the Company (representing approximately 23.20% of the total issued share capital of the Company) and will become the single largest shareholder and a substantial shareholder of the Company.

Pursuant to the Sale and Purchase Agreement, the parties agreed that the consideration of the Sale Shares shall be HK$2.05 per Sale Share, representing a premium of approximately 25% to the closing price of HK$1.64 per share of the Company as quoted on the Stock Exchange today.

Completion of the Sale and Purchase Agreement is conditional upon the fulfilment or waiver (as the case may be) of, among others, approval from shareholders of Centralcon Holding in connection with the Sale and Purchase Agreement and the transactions contemplated under the Sale and Purchase Agreement having been obtained and all necessary third party, governmental and regulatory authorisations, consents, permissions, agreements and approvals in connection with the transactions contemplated under the Sale and Purchase Agreement having been obtained by Centralcon Holding and remaining entirely valid, including but not limited to the filings made to the NDRC and Ministry of Commerce in the PRC in accordance with the laws and regulations of the PRC.

Completion of the Sale and Purchase Agreement shall take place within ten business days after fulfilment (or waiver where applicable) of all Conditions Precedents or such later date as may be agreed by the parties.

To promote the Company's business development, Best Wisdom will appoint Mr. Cheng as its General Manager at the time of completion of the Sale and Purchase Agreement. By leveraging on Mr. Cheng's experience and his knowledge of the industry and the Company, Mr. Cheng will be responsible for formulating the overall planning, execution, performance and monitoring of operations management, business development strategies and commercial and investment proposals of Best Wisdom and the Company. Mr. Cheng, and each of Centralcon Holding and Best Wisdom agreed that Mr. Cheng will remain as Co-Chairman and Executive Director of the Company for at least three years after completion of the Sale and Purchase Agreement and eligible to be re-elected as Director of the Company by rotation according to the articles of association of the Company. After the completion of the Sale and Purchase Agreement, Best Wisdom will nominate two persons to be appointed to the Board of the Company (one being an executive director of the Company).

IMPLICATIONS UNDER THE US$350,000,000 6.75% SENIOR NOTES DUE 2021 AND THE US$400,000,000 8.25% SENIOR NOTES DUE 2019

As Mr. Cheng will be appointed as the General Manager of Best Wisdom and will direct or cause the direction of the management and policies of Best Wisdom, Best Wisdom would constitute an "Affiliate" of Mr. Cheng and a "Permitted Holder" under the Indentures for the Company's US$350,000,000 6.75% Senior Notes due 2021 and US$400,000,000 8.25% Senior Notes due 2019. As such, the relevant requirements under the Indentures in relation to the "Permitted Holders" will continue to be complied with. Mr. Cheng will continue to lead and manage the Company as he did prior to the Transaction. The Company is being advised by Linklaters on the Transaction and its compliance with the Indentures.

As disclosed in the Previous Announcement, upon completion of the Transaction, with the introduction of Centralcon Holding as a substantial stakeholder in the Company, by leveraging on the respective strength of Centralcon Holding and the Company in the residential development and the integrated logistics and trade centers business as well as their resources as listed companies in both PRC and Hong Kong, it shall generate synergies among the two companies and strengthen the competitiveness of each other, while maintaining the overall direction of the Company's business.

In addition, Mr. Cheng is also actively looking into investment opportunities in Centralcon Holding in order to become an important shareholder of Centralcon Holding (including, without limitation, participating in the issuance of A share of Centralcon Holding), subject to compliance with applicable laws and regulations.

This announcement is made by the Company pursuant to Rule 13.09(2) of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Reference is made to the announcement published by the Company on 27 October 2016 (the "Previous Announcement") regarding the proposed share transfer of an aggregate of 1,857,196,831 shares in the Company, representing approximately 23.20% of the total issued share capital of the Company from Mr. Cheng Chung Hing ("Mr. Cheng"), Co-Chairman and Executive Director of the Company, to Centralcon Holding, a company incorporated in the People's Republic of China and the shares of which are listed on the Shenzhen Stock Exchange (stock code: 000042).

THE SALE AND PURCHASE AGREEMENT

The Board wishes to announce that it has been informed by Mr. Cheng that on 11 January 2017, a share transfer agreement in relation to the Transaction was entered into among Mr. Cheng, Accurate Gain, Best Wisdom and Centralcon Holding (the "Sale and Purchase Agreement").

KEY TERMS OF THE SALE AND PURCHASE AGREEMENT

As informed by Mr. Cheng, the key terms of the Sale and Purchase Agreement, among others, include the following:

Date: 11 January 2017 Parties

1. Mr. Cheng

2. Accurate Gain (a wholly-owned company of Mr. Cheng, together with Mr. Cheng, as sellers)

3. Best Wisdom (a wholly-owned subsidiary of Centralcon Holding) as purchaser

4. Centralcon Holding as purchaser guarantor

   Sale Shares

   1,857,196,831 shares of the Company legally and beneficially held by the Sellers (representing approximately 23.2% of the total issued share capital of the Company as at the date of the Sale and Purchase Agreement) and all other shares of the Company legally and beneficially held by Mr. Cheng on the date of Completion due to share consolidation, share split or other similar corporate actions ("Sale Shares").

   Consideration

   HK$2.05 per Sale Share, representing a premium of approximately 25% to the closing price of HK$1.64 per share of the Company as quoted on the Stock Exchange today

   Conditions Precedent

   Completion of the Sale and Purchase Agreement is conditional upon the fulfilment or waiver (as the case may be) of, among others, the following conditions precedents:

5. approval from shareholders of Centralcon Holding in connection with the Sale and Purchase Agreement and the transactions contemplated under the Sale and Purchase Agreement having been obtained; and

6. all necessary third party, governmental and regulatory authorisations, consents, permissions, agreements and approvals in connection with the transactions contemplated under the Sale and Purchase Agreement having been obtained by Centralcon Holding, and remaining entirely valid, including but not limited to the filings made to the NDRC and Ministry of Commerce in the PRC in accordance with the laws and regulations of the PRC.

Completion

Completion of the Sale and Purchase Agreement shall take place within ten business days after fulfilment (or waiver where applicable) of all Conditions Precedents or such later date as may be agreed by the parties.

If any of the Conditions Precedents have not been satisfied (or waived where applicable) on or before 30 April 2017 (or another date as may be agreed by the parties), the Sale and Purchase Agreement will terminate immediately and be of no further effect.

Upon completion of the Sale and Purchase Agreement, Centralcon Holding will own 1,857,196,831 shares in the Company (representing approximately 23.20% of the total issued share capital of the Company) and will become the single largest shareholder and a substantial shareholder of the Company.

Management of the Company

To promote the Company's business development, Best Wisdom will appoint Mr. Cheng as its General Manager at the time of completion of the Sale and Purchase Agreement. By leveraging on Mr. Cheng's experience and his knowledge of the industry and the Company, Mr. Cheng will be responsible for the overall planning, execution, performance and monitoring of operations management, business development strategies and commercial and investment proposals of Best Wisdom and the Company. Mr. Cheng and each of Centralcon Holding and Best Wisdom agreed that, Mr. Cheng will remain as Executive Director and Co-Chairman of the Company for at least three years after completion of the Sale and Purchase Agreement and eligible to be re- elected as director by rotation according to the articles of association of the Company. After the completion of the Sale and Purchase Agreement, two persons as nominated by Best Wisdom will be appointed to the Board of the Company (one being an executive director of the Company).

In addition, as mentioned in the Previous Announcement, Mr. Cheng is also actively looking into investment opportunities in Centralcon Holding in order to become an important shareholder of Centralcon Holding (including, without limitation, participating in the issuance of A share of Centralcon Holding), subject to compliance with applicable laws and regulations.

IMPLICATIONS UNDER THE US$350,000,000 6.75% SENIOR NOTES DUE 2021 AND THE US$400,000,000 8.25% SENIOR NOTES DUE 2019

As Mr. Cheng will be appointed as the General Manager of Best Wisdom and will direct or cause the direction of the management and policies of Best Wisdom, Best Wisdom would constitute an "Affiliate" of Mr. Cheng and a "Permitted Holder" under the Indentures for the Company's US$350,000,000 6.75% Senior Notes due 2021 and US$400,000,000 8.25% Senior Notes due 2019 (the "Indentures"). As such, the relevant requirements under the Indentures in relation to the "Permitted Holders" will continue to be complied with. Mr. Cheng will continue to lead and manage the Company as he did prior to the Transaction. The Company is being advised by Linklaters on the Transaction and its compliance with the Indentures.

TERMINATION OF SHAREHOLDERS' ALLIANCE AGREEMENT

Reference is made to the announcement of the Company dated 28 December 2015 in respect of a revised alliance agreement dated 28 December 2015 entered into among Mr. Cheng, Mr. Cheng Tai Po and Mr. Leung Moon Lam (together, the "Alliance Shareholders", each an