Virscend Education Company Limited

Transcription

1 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. Virscend Education Company Limited (Incorporated in the Cayman Islands with limited liability) (Stock Code: 1565) DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 24.3% ECONOMIC INTEREST IN THE UNIVERSITY SCHOOL SPONSOR S INTEREST ARRANGEMENT AGREEMENT The Board announces that, on 15 November 2016, Sichuan Derui and Xinhua Winshare entered into the School Sponsor s Interest Transfer Agreement, pursuant to which Xinhua Winshare agreed to sell and Sichuan Derui agreed to purchase 24.3% of the school sponsor s interest in the University at cash consideration of RMB million. On 25 November 2016, pursuant to the existing Structured Contracts, Tibet Huatai, Sichuan Derui, the University and the Registered Shareholders entered into the School Sponsor s Interest Arrangement Agreement with respect to the increase in school sponsors interest held by Sichuan Derui, pursuant to which, Tibet Huatai, a wholly-owned subsidiary of the Company, shall pay to Sichuan Derui a sum equals to the total consideration payable by Sichuan Derui to Xinhua Winshare as a result of the transfer under the School Sponsor s Interest Transfer Agreement. LISTING RULES IMPLICATION As one or more of the applicable percentage ratios calculated pursuant to Rule of the Listing Rules exceed 5% but all of the applicable percentage ratios do not exceed 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements as set out in Chapter 14 of the Listing Rules. 1

2 Sichuan Derui is owned as to 69.44% by Mr. Yan Yude, a Director and a Substantial Shareholder of the Company, and therefore, Sichuan Derui is a connected person of the Company under Rule 14A.12(1)(c) of the Listing Rules. Further, three of the Registered Shareholders are the Directors and therefore, the transaction contemplated under the School Sponsor s Interest Arrangement Agreement also constitutes a connected transaction of the Company and is subject to the reporting, announcement and independent shareholders approval requirements under Chapter 14A of the Listing Rules. As disclosed in the Prospectus, the Company has applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with the announcement, circular and Shareholders approval requirements under Chapter 14A of the Listing Rules in respect of the transactions contemplated under the Structured Contracts pursuant to Rule 14A.105 of the Listing Rules. Therefore, the School Sponsor s Interest Arrangement Agreement and the transactions contemplated thereunder are exempted from the announcement, circular and Shareholders approval requirements under Chapter 14A of the Listing Rules. INTRODUCTION The Board announces that, on 15 November 2016, Sichuan Derui and Xinhua Winshare entered into the School Sponsor s Interest Transfer Agreement, pursuant to which Xinhua Winshare agreed to sell and Sichuan Derui agreed to purchase 24.3% of the school sponsor s interest in the University at cash consideration of RMB million. On 25 November 2016, pursuant to the existing Structured Contracts, Tibet Huatai, Sichuan Derui, the University and the Registered Shareholders entered into the School Sponsor s Interest Arrangement Agreement with respect to the increase in school sponsors interest held by Sichuan Derui, pursuant to which, Tibet Huatai, a wholly-owned subsidiary of the Company, shall pay to Sichuan Derui a sum equals to the total consideration payable by Sichuan Derui to Xinhua Winshare as a result of the transfer under the School Sponsor s Interest Transfer Agreement. RELATIONSHIP BETWEEN THE PARTIES Tibet Huatai is a wholly-owned subsidiary of the Company. The University is a consolidated affiliated entity of the Company. Sichuan Derui is owned as to 69.44% by Mr. Yan Yude, a Director and a Substantial Shareholder of the Company, and therefore, Sichuan Derui is a connected person of the Company under Rule 14A.12(1)(c) of the Listing Rules. Three of the Registered Shareholders, namely, Mr. Yan Yude, Ms. Wang Xiaoying and Mr. Ye Jiayu are the Directors. 2

3 Therefore, the transaction contemplated under the School Sponsor s Interest Arrangement Agreement constitutes a connected transaction of the Company. TRANSFER OF THE SCHOOL SPONSOR S INTEREST IN THE UNIVERSITY Pursuant to the School Sponsor s Interest Transfer Agreement, Xinhua Winshare agreed to sell and Sichuan Derui agreed to purchase 24.3% of the school sponsor s interest in the University. The total consideration payable by Sichuan Derui shall be RMB million, which is determined after arm s length negotiation with reference to, among other factors, the total investment originally made by Xinhua Winshare in the University. The principal terms of the School Sponsor s Interest Arrangement Agreement are set out below: Date: 25 November 2016 Parties: (1) Tibet Huatai; (2) The University; (3) Sichuan Derui; and (4) The Registered Shareholders Transaction Arrangement: (1) Tibet Huatai shall pay to Sichuan Derui a sum equals to the total consideration payable by Sichuan Derui to Xinhua Winshare as a result of the transfer under the School Sponsor s Interest Transfer Agreement; (2) The parties to the existing Structured Contracts agreed to enter into new agreements in the same form, content and nature to the existing Structured Contracts, which shall become effective automatically from the date the school sponsor s interest is transferred to Sichuan Derui in accordance with the applicable law; and 3

4 (3) The parties agreed that from 31 December 2015 up to the completion date of the transfer of the school sponsor s interest to Sichuan Derui, the earnings as received by Sichuan Derui shall be payable to Tibet Huatai unconditionally and free of consideration, and Tibet Huatai is not obliged to share the loss in the event Sichuan Derui suffers any loss. It is expected that the consideration shall be financed by the internal resources of the Company. REASONS FOR AND BENEFITS OF THE ACQUISITION As disclosed in the Prospectus, immediately prior to the publication of the Prospectus, Sichuan Derui was in discussion with Xinhua Winshare regarding the proposed acquisition by Sichuan Derui of the school sponsor s interest held by Xinhua Winshare in the University and that if Sichuan Derui repurchases the 24.3% of the school sponsor s interest in the University from Xinhua Winshare, the Group expects to repay Sichuan Derui with an amount equivalent to the purchase price. As disclosed in the Prospectus, the total investment of RMB260 million made by Xinhua Winshare in the University was already accounted for in its entirety as financial liability, and the annual dividend paid to Xinhua Winshare was accounted for as finance cost. The Group will derecognize the financial liability of RMB260 million upon completion of the consideration payment of RMB million to Sichuan Derui, and the difference between the cash consideration of RMB million paid by Tibet Huatai to Sichuan Derui and the total investment of RMB260 million made by Xinhua Winshare in the University, being RMB0.25 million, will be recorded as a loss in the profit and loss account. The Group s cash balance will decrease by RMB million. The Acquisition allows the Group to (i) terminate the payment of the annual dividend to Xinhua Winshare which is equivalent to at least 10% of its investment amount of RMB260 million in the University, (ii) have more control of the University and (iii) receive all the economic benefits derived from the University through the Structured Contracts. The Directors (including the independent non-executive Directors) are of the view that the terms of the School Sponsor s Interest Transfer Agreement and the School Sponsor s Interest Arrangement Agreement are on normal commercial terms and the Acquisition under the School Sponsor s Interest Arrangement Agreement is fair and reasonable, and in the interests of the Company and Shareholders as a whole. Upon completion of the Acquisition by Sichuan Derui under the School Sponsor s Interest Transfer Agreement, the school sponsor s interest in the University will own as to 76.17% by Sichuan Derui and 23.83% by Hongming Property. As disclosed in the Prospectus, Hongming Property has assigned to Sichuan Derui all the rights and 4

5 liabilities attached to the 23.83% interest in the University in 26 March 2011, therefore Sichuan Derui will be entitled to all the economic benefits derived from the University upon completion of the Acquisition and will transfer all such economic benefits to Tibet Huatai through the Structured Contracts. As Mr. Yan Yude, Ms. Wang Xiaoying and Mr. Ye Jiayu have material interest in the transaction under the School Sponsor s Interest Arrangement Agreement, they have abstained from voting on the relevant board resolution approving the School Sponsor s Interest Arrangement Agreement. BACKGROUND INFORMATION OF THE GROUP, TIBET HUATAI, SICHUAN DERUI AND THE UNIVERSITY The Group is principally engaged in the provision of pre-school to grade twelve and university private education services in the PRC. Tibet Huatai is principally engaged in the provision of technical service, management support and consulting services. Sichuan Derui is principally engaged in the investment of education institutes. The University is a university currently offering bachelor degrees diplomas and junior college diplomas in the PRC. LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios calculated pursuant to Rule of the Listing Rules exceed 5% but all of the applicable percentage ratios do not exceed 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements as set out in Chapter 14 of the Listing Rules. Sichuan Derui is owned as to 69.44% by Mr. Yan Yude, a Director and a Substantial Shareholder of the Company, and therefore, Sichuan Derui is a connected person of the Company under Rule 14A.12(1)(c) of the Listing Rules. Three of the Registered Shareholders, namely, Mr. Yan Yude, Ms. Wang Xiaoying and Mr. Ye Jiayu are the Directors and therefore, the transaction contemplated under the School Sponsor s Interest Arrangement Agreement constitutes a connected transaction of the Company and is subject to the reporting, announcement and independent shareholders approval requirements under Chapter 14A of the Listing Rules. As disclosed in the Prospectus, the Company has applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with the announcement, circular and Shareholders approval requirements under Chapter 14A of the Listing Rules in respect of the transactions contemplated under the Structured Contracts 5

6 pursuant to Rule 14A.105 of the Listing Rules. Therefore, the School Sponsor s Interest Arrangement Agreement and the transactions contemplated thereunder are exempted from the announcement, circular and Shareholders approval requirements under Chapter 14A of the Listing Rules. DEFINITIONS Unless the context requires otherwise, the following expressions shall have the following meanings in this announcement: Acquisition Board the payment of consideration by Tibet Huatai to Sichuan Derui under the School Sponsor s Interest Arrangement Agreement for the acquisition of the 24.3% economic interest in the University the board of Directors Company Virscend Education Company Limited, an exempted company incorporated in the Cayman Islands with limited liability on 13 March 2015 and the shares of which are listed on the Stock Exchange connected person Directors Group Hong Kong Hongming Property Listing Rules PRC has the meaning ascribed thereto under the Listing Rules the directors of the Company the Company, its subsidiaries and consolidated affiliated entities the Hong Kong Special Administrative Region of the PRC Sichuan Hongming Property Co., Ltd.* ( ), a limited liability company established under the law of the PRC, which holds 23.83% of the school sponsor s interest in the University the Rules Governing the Listing of Securities of the Stock Exchange the People s Republic of China which, for the purpose of this announcement, excludes Hong Kong, Macau Special Administrative Region of the PRC and Taiwan 6

7 Prospectus Registered Shareholders RMB School Sponsor s Interest Arrangement Agreement School Sponsor s Interest Transfer Agreement Share(s) Shareholder(s) Sichuan Derui Stock Exchange Structured Contracts the prospectus of the Company dated 31 December 2015 the shareholders of Sichuan Derui, namely Mr. Yan Yude, Ms. Yan Hongjia, Ms. Wang Xiaoying, Ms. Ye Jiaqi, Mr. Ye Jiayu, Ms. Yan Bixian, Ms. Yan Birong and Ms. Yan Bihui Renminbi, the lawful currency of PRC the agreement entered into between Sichuan Derui, Tibet Huatai, the University and the Registered Shareholders dated 25 November 2016 the transfer agreement entered into between Sichuan Derui and Xinhua Winshare dated 15 November 2016 ordinary shares of HK$0.01 each in the share capital of the Company holder(s) of the Share(s) Sichuan Derui Enterprise Development Co., Ltd.* ( ) (previously known as Sichuan Province Derui Enterprise Development Company* ( )), a company established under the laws of the PRC on 3 January 1993, which is owned as to 69.44% by Mr. Yan Yude, 18.55% by Ms. Yan Hongjia, 3.00% by Ms. Wang Xiaoying, 2.65% by Ms. Ye Jiaqi, 1.59% by Mr. Ye Jiayu, 1.59% by Ms. Yan Bixian, 1.59% by Ms. Yan Birong and 1.59% by Ms. Yan Bihui The Stock Exchange of Hong Kong Limited the structured contracts executed on 7 September 2015, collectively, the Business Cooperation Agreement, the Exclusive Technical Service and Management Consultancy Agreement, the Exclusive Call Option Agreement, the Equity Pledge Agreement, the School Sponsors and Directors Rights Entrustment Agreement, the School Sponsors Powers of Attorney, the Directors Powers of Attorney, the Loan Agreement and the Spouse Undertakings, further details of which are set out in the Prospectus 7

8 Substantial Shareholder Tibet Huatai University Xinhua Winshare has the meaning ascribed thereto under the Listing Rules Tibet Huatai Education Management Consulting Co., Ltd.* ( ), a wholly foreign-owned enterprise established under the laws of the PRC on 22 August 2015, and a wholly-owned subsidiary of the Company Chengdu Institute Sichuan International Studies University* ( ), a private university established under the laws of the PRC and a consolidated affiliated entity of the Company Xinhua Winshare Publishing and Media Co., Ltd.* ( ) (previously known as Sichuan Xinhua Winshare Chainstore Co., Ltd.* ( ), a joint stock limited company established under the laws of the PRC whose shares are listed on the Stock Exchange (stock code 0811) By order of the Board of Virscend Education Company Limited Wang Xiaoying Chairwoman Sichuan Province, the PRC, 25 November 2016 As at the date of this announcement, the executive Directors are Ms. Wang Xiaoying, Mr. Xu Ming, Mr. Ye Jiayu and Mr. Yan Yude and the independent non-executive Directors are Mr. Sit Chiu Wing, Mr. Chan Kim Sun and Ms. Xu Dayi. * For identification purpose only 8