GLOBAL BIO-CHEM TECHNOLOGY GROUP COMPANY LIMITED 
By 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.
*
(incorporated in the Cayman Islands with limited liability)
(Stock code: 00809) Global Sweeteners Holdings Limited*
(incorporated in the Cayman Islands with limited liability)
(Stock code: 03889) JOINT ANNOUNCEMENT DISCLOSEABLE TRANSACTION RESUMPTION OF LAND
On 30 December 2013 and 31 December 2013, each of the GBT Group and the GSH Group entered into the Compensation Agreements with the Land Reserve Centre pursuant to which (1) the GBT Group has agreed to the resumption of the GBT Land, and (2) the GSH Group has agreed to the resumption of the GSH Land and the buildings and fixtures erected on the GSH Land.
As the relevant applicable percentage ratios are more than 5% but below 25%, the transaction contemplated under the Compensation Agreements constitutes discloseable transaction of GBT under the Listing Rules.
As the relevant applicable percentage ratios are more than 5% but below 25%, the transaction contemplated under the GSH Land Compensation Agreement and the GSH Assets Compensation Agreement constitutes discloseable transaction of GSH under the Listing Rules.
On 30 December 2013, the GBT Group entered into the GBT Land Compensation Agreements with the Land Reserve Centre pursuant to which the GBT Group has agreed to the resumption of the GBT Land. On the same date, the GSH Group entered into the GSH Land Compensation Agreement with the Land Reserve Centre pursuant to which the GSH Group has agreed to the resumption of the GSH Land.
* for identification purpose only
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On 31 December 2013, the GSH Group entered into the GSH Assets Compensation Agreement with the Land Reserve Centre pursuant to which the GSH Group has agreed to the resumption of the buildings and fixtures erected on the GSH Land.
Date of signing: 30 December 2013
Parties: (1) Land Reserve Centre
(2) GBT Group
To the best knowledge, information and belief of the directors of GBT having made all reasonable enquiry, the Land Reserve Centre is a government body and is a third party independent of GBT and its connected persons.
Pursuant to the GBT Land Compensation Agreements, the GBT Group has agreed to the resumption of the GBT Land. Under the GBT Land Compensation Agreements, the GBT Group shall warrant that the GBT Land has no title defect and shall deliver the land use rights certificates in respect of the GBT Land to the Land Reserve Centre within five days of signing of the GBT Land Compensation Agreements, and the Land Reserve Centre shall make a compensation of RMB167,150,000 to the GBT Group within 30 days after completion of the procedure for the transfer of the title of the land.
Date of signing: 30 December 2013
Parties: (1) Land Reserve Centre
(2) GSH Group
To the best knowledge, information and belief of the directors of GSH having made all reasonable enquiry, the Land Reserve Centre is a government body and is a third party independent of GSH and its connected persons.
Pursuant to the GSH Land Compensation Agreement, the GSH Group has agreed to the resumption of the GSH Land. Under the GSH Land Compensation Agreement, the GSH Group shall warrant that the GSH Land has no title defect and shall deliver the land use rights certificate in respect of the GSH Land to the Land Reserve Centre within five days of signing of the GSH Land Compensation Agreement, and the Land Reserve Centre shall make a compensation of RMB35,320,000 to the GSH Group within 30 days after completion of the procedure for the transfer of the title of the land.
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Date of signing: 31 December 2013
Parties: (1) Land Reserve Centre
(2) GSH Group
Pursuant to the GSH Assets Compensation Agreement, the GSH Group has agreed to the resumption of the buildings and fixtures erected on the GSH Land with an aggregate gross floor area of approximately 32,000 square metres. Under the GSH Assets Compensation Agreement, the GSH Group shall warrant that the buildings and fixtures have no title defect and shall demolish such buildings and fixtures in accordance with the requirement of the Land Reserve Centre. The GSH Group and the Land Reserve Centre shall enter into ancillary agreements in relation to the demolition of the buildings and fixtures and handover of the GSH Land. The Land Reserve Centre shall make a compensation of RMB86,480,000 to the GSH Group at such time to be agreed between the parties.
Status of the resumption of the buildings and fixtures erected on the GBT Land
The GBT Group is in the course of negotiation with the Land Reserve Centre in relation to the resumption of the buildings and fixtures erected on the GBT Land and the compensation therefor. As at the date of this announcement, no binding agreement has been entered into between the GBT Group and the Land Reserve Centre regarding such resumption.
BASIS OF DETERMINATION OF THE COMPENSATION
The compensation to be made by the Land Reserve Centre to the GBT Group and the GSH Group under the GBT Land Compensation Agreements and the GSH Land Compensation Agreement were determined based on arm's length negotiations between each of the GBT Group and the GSH Group on one part and the Land Reserve Centre on the other part based on the respective fair values of the GBT Land and the GSH Land as appraised by an independent valuer, which amounted to approximately RMB167 million and approximately RMB35 million as of 17 August 2013, respectively.
The compensation to be made by the Land Reserve Centre to the GSH Group under the GSH Assets Compensation Agreement were determined based on arm's length negotiations between the GSH Group and the Land Reserve Centre based on the fair value of the buildings as appraised by an independent valuer, which amounted to approximately RMB86 million as of 17 August 2013, and the estimated loss to be incurred by the GSH Group as a result of termination of operations and relocation.
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The GBT Group is principally engaged in the manufacture and sale of corn refined products and corn-based biochemical products. The GSH Group is principally engaged in the manufacture and sale of corn refined products and corn-based sweetener products.
In response to the call of the local government to industrial companies to move their factories away from the central districts of the city which has been developed rapidly, the GBT Group and the GSH Group have decided to accept the resumption proposal and enter into the Compensation Agreements. The GBT Board and the GSH Board consider that the terms of the Compensation Agreements are fair and reasonable and in the interests of the respective shareholders of GBT and GSH as a whole.
The production facilities of the GBT Group and the GSH Group currently located on the GBT Land, the GSH Land and the east side of Xihuancheng Road, Changchun, the PRC have and will be relocated to Xinglongshan, Changchun, the PRC. As at the date of this announcement, part of the production facilities of the GBT Group in Xinglongshan, Changchun, the PRC has already commenced commercial production. It is expected that the GSH Group shall commence construction of the production facilities and installation of new equipment in Xinglongshan in the first half of
2014 and commercial production at the new site in Xinglongshan shall commence by the first half of
2015.
GBT is expected to record an estimated gain before tax from the compensation of approximately RMB143 million based on the carrying value of the GBT Land of approximately RMB24 million which is derived from the respective accounting records as at 31 December 2013.
GSH is expected to record an estimated gain before tax from the compensation of approximately RMB15 million and RMB82 million based on the carrying values of the GSH Land and GSH Building of approximately RMB20 million and RMB4 million, respectively, which both are derived from the respective accounting records as at 31 December 2013.
As both GBT and GSH are still undergoing financial statements closing process, whether the recognition of the relevant gains is to be recognised in the respective financial statements of GBT and GSH for the year ended 31 December 2013 and the final amount thereof are subject to (1) the finalisation of the respective financial statements; and (2) the consideration of whether such recognition would meet the requirements as set out in any relevant accounting standards.
The net amount of the compensation receivable by the GBT Group and the GSH Group under the Compensation Agreements will be used as general working capital of the GBT Group and the GSH Group respectively.
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As the relevant applicable percentage ratios are more than 5% but below 25%, the transaction contemplated under the Compensation Agreements constitutes discloseable transaction of GBT under the Listing Rules.
As the relevant applicable percentage ratios are more than 5% but below 25%, the transaction contemplated under the GSH Land Compensation Agreement and the GSH Assets Compensation Agreement constitutes discloseable transaction of GSH under the Listing Rules.
In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings:
"Compensation Agreements" collectively, the GBT Land Compensation Agreements, the GSH Land Compensation Agreement and the GSH Assets Compensation Agreement
"GBT" Global Bio-chem Technology Group Company Limited, a company incorporated in the Cayman Islands and the issued shares of which are listed on the Stock Exchange
"GBT Board" the board of directors of GBT
"GBT Group" GBT and its subsidiaries which, for the purpose of this announcement, excludes the GSH Group
"GBT Land" three pieces of land with an aggregate approximate area of 332,000 square metres located on the west side of Xihuancheng Road, Changchun, the PRC which are owned by the GBT Group
"GBT Land Compensation
Agreements"
three compensation agreements dated as of 10 December 2013 and entered into between the Land Reserve Centre and the GBT Group
on 30 December 2013 relating to the resumption of the GBT Land
"GSH" Global Sweeteners Holdings Limited, a company incorporated in the Cayman Islands and the issued shares of which are listed on the
Stock Exchange
"GSH Assets Compensation
Agreement"
the compensation agreement dated 31 December 2013 and entered into between the Land Reserve Centre and the GSH Group relating
to the resumption of buildings and fixtures erected on the GSH Land
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"GSH Board" the board of directors of GSH
"GSH Land" a piece of land with an approximate area of 70,000 square metres located on the west side of Xihuancheng Road, Changchun, the PRC which is owned by the GSH Group
"GSH Land Compensation
Agreement"
the compensation agreement dated as of 10 December 2013 and entered into between the Land Reserve Centre and the GSH Group
on 30 December 2013 relating to the resumption of the GSH Land
"GSH Group" GSH and its subsidiaries
"Land Reserve Centre" -ff
