ROAD KING INFRASTRUCTURE LIMITED (Incorporated in Bermuda with limited liability)

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. ROAD KING INFRASTRUCTURE LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 1098) CONTINUING CONNECTED TRANSACTION FRAMEWORK AGREEMENT On 24 November 2017, the Company and Build King entered into the Framework Agreement in respect of the engagement of member(s) of Build King Group, subject to successful tender, as the main contractor for the construction works of the Group s present and future property development projects in Hong Kong. LISTING RULES IMPLICATIONS As at the date of this announcement, Wai Kee is the substantial shareholder of the Company and Build King is a non-wholly owned subsidiary of Wai Kee. As at the date of this announcement, Wai Kee (through its subsidiaries) was interested in 311,320,428 Shares, representing approximately 41.61% of the Company s issued share capital, and was interested in 690,525,033 shares of Build King, representing approximately 55.60% of Build King s issued share capital. Accordingly, Build King is a connected person of the Company under the Listing Rules and the transactions contemplated under the Framework Agreement constitute continuing connected transaction of the Company under the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the annual caps for the transactions under the Framework Agreement exceed 5%, the Framework Agreement is subject to the reporting, annual review, announcement and Independent Shareholders approval requirements under Chapter 14A of the Listing Rules. 1

2 CIRCULAR A circular which contains, among other things, further details of the transactions contemplated under the Framework Agreement, the letters from the Independent Board Committee and the Independent Financial Adviser together with a notice of the SGM to be convened by the Company to approve the transactions contemplated under the Framework Agreement, is expected to be despatched to the Shareholders on or about 29 November BACKGROUND AND REASONS FOR AND BENEFITS OF THE ENTERING INTO OF THE FRAMEWORK AGREEMENT The Group is principally engaged in investment in, and development, operation and management of, property development in the PRC and more recently in Hong Kong, with a focus in residential developments, and is evaluating increased investment in commercial development properties. The Group also invests in, and manages, through joint ventures expressways in the PRC and possibly elsewhere in South East Asia should suitable opportunities arise. Build King is an investment holding company and its subsidiaries are principally engaged in the undertaking of construction projects in Hong Kong and the PRC and are also engaged in environmental and waste management and marine engineering. The Build King Group is currently (i) registered under the Development Bureau as an approved contractor for all public works with Group C status (i.e. eligible to tender contracts of any values exceeding HK$300 million); and (ii) registered under the Buildings Department as a (a) general building contractor, and (b) specialist contractor under site formation works, foundation works and ventilation works categories. It also possesses other licences such as registered as a fire service installation contractor with the Fire Services Department and registered as an electrical contractor with Electrical and Mechanical Department. With more than 30 years of experience in the construction industry in Hong Kong, members of the Build King Group provide construction, maintenance, and project management related services including provision of services as main contractor, project manager and sub-contractor for a variety of works including superstructure, foundation, civil engineering, infrastructure facilities, structural steels works and other related services in Hong Kong. The Group has been building up its property development portfolio in Hong Kong since 2016, with its acquisition of a residential development site at Yuen Long in August In February 2017, the Group and its joint venture partner jointly acquired the residential development right for Wong Chuk Hang Station Package One Property Development at Wong Chuk Hang. In June 2017, the Group and its joint venture partner jointly acquired the residential development site at Tuen Mun. The Group has started the foundation works at the Yuen Long site and is undergoing planning and design process for the Wong Chuk Hang Station Package One Property Development Project and Tuen Mun site. 2

3 The works required to be undertaken for the construction and fitting out of buildings and facilities at each development site is highly technical and requires specialised knowledge and expertise. Certain works may also be undertaken only by persons licensed to do so. Given the Group s intention to continue to expand, when suitable opportunities arise, its Hong Kong property development portfolio and after considering the resources required for project management and managing project costs, the Board considers that it would be appropriate to appoint a main contractor to be responsible for the main construction work for each of its projects. The main contractor for the construction work of the Group s property development projects in Hong Kong will be selected from time to time through tender process in accordance with the Group s tender procedure policy (see the section headed Tender Procedure Policy of the Group below). As mentioned in the Group s tender procedure policy, the Group will consider potential tenderers relevant experience and track record, company organisation and capability and capacity (such as labour and equipment resources) and invite suitable potential tenderers to participate in tenders. Given the established track record and relevant expertise of the Build King Group in the Hong Kong construction industry as described briefly above, the Company believes that it is likely that Build King Group member(s) may be invited to participate in future tenders. To ensure compliance with Chapter 14A of the Listing Rules, the Directors proposed to enter into the Framework Agreement and seek approval from the Independent Shareholders for the Framework Agreement in order to facilitate the conduct of transactions should new contracts of the Group s Hong Kong development projects be awarded to member(s) of the Build King Group after the robust tender award process. The terms of the Framework Agreement were arrived at after arm s length negotiations between the parties. Member(s) of the Group will enter into separate agreement(s) with the member(s) of Build King Group upon successful bidding or tender for each project. THE FRAMEWORK AGREEMENT The principal terms of the Framework Agreement are set out below: Date : 24 November 2017 Parties : (1) the Company (2) Build King Subject matter : The Group may from time to time invite relevant member(s) of the Build King Group to submit tender to act as the main contractor for the construction works of the Group s present and future property development projects in Hong Kong. Subject to successful tender, the Group will enter into construction contract(s) with the relevant member(s) of the Build King Group, which will be: (a) in writing and in accordance with the terms and conditions set out in the tender; 3

4 (b) determined in the usual and ordinary course of business of the Group and the Build King Group on normal commercial terms (as defined in the Listing Rules); and (c) in compliance with all applicable provisions of the Listing Rules, the Framework Agreement and the respective agreement(s) for the engagement of member(s) of the Build King Group as main contractor(s) in respect of the existing and potential development projects of the Group. Term : An initial term of three years starting from 1 January 2018 (subject to the approval of the Framework Agreement to be granted by resolution of the Independent Shareholders at the SGM), unless terminated earlier in accordance with the terms and conditions thereunder. Subject to re-compliance with the requirements of the applicable Listing Rules and other applicable laws and regulations at the relevant time or, alternatively, any waivers obtained from the strict compliance with such requirements, upon the expiry of the initial term or subsequent renewal term, the Framework Agreement is automatically renewed for a successive period of three (3) years thereafter (or such other period permitted under the Listing Rules) unless a party under the Framework Agreement gives a 30 days prior written notice to the other party to terminate the Framework Agreement. Notwithstanding the above, the Framework Agreement may be terminated at any time by the written agreement of the Company and Build King. Conditions : The Framework Agreement is conditional on: (i) the Independent Shareholders of Build King having approved the transactions contemplated under the Framework Agreement at the special general meeting of Build King in accordance with the Listing Rules; and (ii) the Independent Shareholders having approved the transactions contemplated under the Framework Agreement at the SGM of the Company in accordance with the Listing Rules. 4

5 TENDER PROCEDURE POLICY OF THE GROUP In relation to the Hong Kong property development business, the Board has delegated functions in relation to its daily operations to the Hong Kong Projects Management Committee, comprising three Executive Directors and four members of the senior management comprising Head of Design Department, Head of Land Development Department, Head of Construction and the Project Director. This Committee is set up to provide professional recommendations and solutions relevant to the Hong Kong market and projects. A project team (the Project Team ) comprising the responsible project manager, the project quantity surveyor and other relevant project engineers/architect, who are staff of the Group, is to be established to oversee each development project in Hong Kong. In principle, construction works of projects are to be awarded to one main contractor and the tender for the main contractor will be through private invitation. The Company will follow the following tender procedures to award construction works of property development projects to a main contractor, which generally involves: (a) engagement of external consultants: external quantity surveyors (the External QS ) and external consultants including architects, structural engineers and electrical and mechanical engineers (together with the External QS, collectively referred to as the External Consultants ) will be engaged based on their independence, relevant experience and track record, professional qualification, scope of services and fees; (b) confirmation of potential tenderers list: after considering factors including potential tenderers relevant experience and track record, company organization and capability and capacity (such as labour and equipment resources), the External Consultants will prepare a list of potential tenderers, which should include at least three potential tenderers. The tender committee (the Tender Committee ), chaired by a representative from the finance and audit department (Mr. Keter Fong, an Executive Director), and comprises the project director, and the project managers responsible for Hong Kong projects, will review and confirm the potential tenderers list; (c) expression of interest: letters will be issued to selected potential tenderers requesting their expression of interests to submit tenders and their submission of relevant information such as audited financial statements, job references and safety records for suitability assessment. In the event that the potential tenderers pass the pre-qualification assessment for similar tenders in the preceding three years, such tenderers will only be required to provide updated information since their last submission; (d) initial assessment and confirmation of final tenderer list: a pre-qualification report will be prepared to assess the potential tenderers in both technical and financial aspects. The Tender Committee will confirm the final tenderer list based on pre-qualification report. The External QS will then issue tender documents to them. Generally, at least three eligible tenderers will be included into the final tenderer list, which is in line with the Hong Kong Government s tender process. In the event that there are less than three suitable tenderers, the tenderers will be requested to submit quotations which will be subject to the same review and selection procedures below; 5

6 (e) review of tender and submission of best offers: After submission of tenders, the External Consultants will review the tenders and check if every tender complies with the tender conditions and requirements. Interviews may be arranged and further submissions may be required if there is any tender query. Tenderers may also be requested to submit their best offers as the most competitive price; and (f) tender award: the External Consultants will prepare a tender report, which includes their evaluation of the tenders on technical and financial aspects, compliance of tender submissions and recommendation on a tenderer, for the Project Team s review. The Project Team will then submit its recommendation, based on price and capability of the tenderer, to the Tender Committee and Hong Kong Projects Management Committee for final approval. ANNUAL CAPS The parties acknowledge that if the annual value to be recognised under the contracts entered into between the Group and the Build King Group pursuant to the Framework Agreement in respect of each of the financial years specified below exceed the amounts specified below that year in the row headed Annual Cap, either or both parties may be required to seek additional shareholders approval under the Listing Rules and shall use all reasonable endeavours to seek such approval in a timely manner: Financial year ending 31 December Annual Cap HK$650 million* HK$2,460 million* HK$2,880 million * It includes contract value for advanced works pursuant to the Articles of Agreement dated 14 March 2017 entered into between Power Truth Development Limited, a wholly-owned subsidiary of the Company, and Build King Construction Limited, a wholly-owned subsidiary of Build King (approximately HK$105 million and HK$5 million respectively for the financial years ending 31 December 2018 and 2019 respectively), which is the subject of the Company s announcement dated 14 March The proposed annual caps are determined by the Company having taken into account the following: (i) the gross floor area of each of the Group s two existing projects (namely Yuen Long site and Wong Chuk Hang Station Package One Property Development Project) to be constructed, the type of works to be involved in each project and the estimated total construction costs taking into consideration the prevailing market conditions which in turn affect the development schedule of each project. The estimated total constructions costs of the two existing projects are prepared by the External QS in respect of the potential works incurred during the period from 1 January 2018 to 31 December The type of works to be involved in each project includes but not limited to site formation and foundation works, reinforced concrete construction for buildings and associated building services; 6

7 (ii) estimated schedule for construction works of the two existing projects ((i) one of the projects commenced in 2017, major construction work of which is expected to be carried out in 2019 and is expected to complete in the financial year ending 2020 and (ii) the other one is expected to commence in early 2018, major construction work of which is expected to be carried out in 2019 and 2020 and is expected to complete in the financial year ending 2022); (iii) the estimated construction costs and project span of potential development projects in Hong Kong that the Group may acquire (assuming that they are of comparable scale to the Group s two most recent projects) during the three financial years ending 31 December 2020, based on the available information on upcoming land sale in Hong Kong; and (iv) while each tender is discrete and is awarded independent from other tenders, the Company considers it is more appropriate to assume that all construction contracts are to be awarded to Build King for the purposes of determining annual caps for the Listing Rules compliance purposes. Shareholders should note that the proposed annual caps represent the best estimates by the Group based on the information currently available (including works to be involved in each project, development schedule and prevailing market conditions) and, in particular, the estimated amount of construction contracts for the Group s existing and potential property development projects in Hong Kong and should not be construed as the actual amount of construction projects that the Group may award to member(s) of Build King Group during the three financial years ending 31 December The proposed annual caps have no direct relationship to, nor should be taken to have any direct bearing on, the Group s financial or potential financial performance. The Group may or may not appoint member(s) of the Build King Group as main contractor(s) in relation to the tenders for the Group s development projects in Hong Kong, or if appointed, to take up construction projects up to the level of the proposed annual caps. The payment terms will be set out in the tender documents. Typically for construction projects in Hong Kong, payments are made to the contractor by way of progress payment on a monthly basis with reference to the value of works done. The external quantity surveyor or the external architect appointed by the developer will assess and verify the works done and approve interim payment application made by the contractor. To monitor the annual caps, the External QS will submit a monthly report to the Project Team, based on which the Project Team will prepare and submit monthly financial statement, together with monthly and year-to-date construction costs summary (with the amount incurred by individual connected person) to the finance department of the Group for review and record. If the year-to-date construction costs exceed 60% (and every 10% increase thereafter) of the relevant annual cap, the Project Team will review the construction progress and assess if the annual caps may be exceeded. If the Group estimates (based on projects in fact being undertaken or tendered for) that the relevant annual caps will be exceeded, or where one or more projects duration will extend beyond the term of the Framework Agreement, the Company will take steps as appropriate to ensure compliance with the requirements under the then applicable Listing Rules. 7

8 LISTING RULES IMPLICATIONS As at the date of this announcement, Wai Kee is the substantial shareholder of the Company and Build King is a non-wholly owned subsidiary of Wai Kee. As at the date of this announcement, Wai Kee (through its subsidiaries) was interested in 311,320,428 Shares, representing approximately 41.61% of the Company s issued share capital, and was interested in 690,525,033 shares of Build King, representing approximately 55.60% of Build King s issued share capital. Accordingly, Build King is a connected person of the Company under the Listing Rules and the transactions contemplated under the Framework Agreement constitute continuing connected transaction of the Company under the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the annual caps for the transactions under the Framework Agreement exceed 5%, the Framework Agreement is subject to the reporting, annual review, announcement and Independent Shareholders approval requirements under Chapter 14A of the Listing Rules. Mr. Zen Wei Pao, William ( Mr. William Zen ), the Co-Chairman of the Board and an Executive Director, is also the chairman of the board of directors and an executive director of Wai Kee. Mr. William Zen held 192,381,843 shares in Wai Kee, representing 24.26% of the issued share capital in Wai Kee as at date of the Framework Agreement and as at the date of announcement. Mr. Zen Wei Peu, Derek ( Mr. Derek Zen ), the Co-Chairman of the Board and an Executive Director, is also an executive director of Wai Kee and Build King. Mr. Derek Zen held (i) 18,595,000 Shares of which 1,000,000 Shares held by his spouse, representing 2.49% of the Company s issued share capital; (ii) 123,725,228 shares in Build King, representing 9.96% of Build King s issued share capital; and (iii) 185,557,078 shares in Wai Kee, representing 23.40% of Wai Kee s issued share capital as at date of the Framework Agreement and as at the date of announcement. Accordingly, Mr. William Zen and Mr. Derek Zen have abstained from voting on the Board resolutions approving the terms of and the proposed annual caps in relation to the transactions under the Framework Agreement, as required by the Bye-laws of the Company, on the basis that Mr. William Zen and Mr. Derek Zen, as Directors, are deemed to have a material interest in those transactions under the Bye-laws of the Company. Dr. Chow Ming Kuen, Joseph, the Independent Non-executive Director, is also the independent non-executive director of Build King. In order to avoid potential conflict of interest, he also abstained from voting on the Board resolutions approving the terms of and the proposed annual caps in relation to the transactions under the Framework Agreement. 8

9 INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER An Independent Board Committee comprising the Independent Non-executive Directors, namely Mr. Lau Sai Yung, Mr. Tse Chee On, Raymond, Mr. Wong Wai Ho and Mr. Zhang Yongliang, has been established to advise the Independent Shareholders in relation to the terms of and the proposed annual caps in relation to the transactions under the Framework Agreement. Dr. Chow Ming Kuen, Joseph is not included as a member of the Independent Board Committee as he is also an independent non-executive director of Build King. Altus Capital Limited has also been appointed as the Independent Financial Adviser for the purpose of advising the Independent Board Committee and the Independent Shareholders in respect of the terms of and the proposed annual caps in relation to the transactions contemplated under the Framework Agreement. CIRCULAR A circular which contains, among other things, further details of the transactions contemplated under the Framework Agreement, the letters from the Independent Board Committee and the Independent Financial Adviser together with a notice of the SGM to be convened by the Company to approve the transactions contemplated under the Framework Agreement, is expected to be despatched to the Shareholders on or about 29 November DEFINITIONS In this announcement, the following terms have the meanings set forth opposite them: associates Board Build King Build King Group Company connected person Directors has the meaning ascribed thereto under the Listing Rules the board of Directors Build King Holdings Limited, a company incorporated in Bermuda with limited liability whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 240) and an associate of Wai Kee Build King and its subsidiaries Road King Infrastructure Limited, a company incorporated in Bermuda with limited liability whose Shares are listed on the Main Board of the Stock Exchange has the meaning ascribed thereto under the Listing Rules the directors of the Company 9

10 Framework Agreement Framework Agreement dated 24 November 2017 between the Company and Build King in relation to the engagement of member(s) of Build King Group as main contractor(s) (subject to successful tender) in respect of the existing and potential development projects of the Group in Hong Kong for the three financial years ending 31 December 2020 Group HK$ Hong Kong Independent Board Committee Independent Financial Adviser Independent Shareholders Independent Shareholders of Build King Listing Rules PRC the Company and its subsidiaries Hong Kong dollar(s), the lawful currency of Hong Kong Hong Kong Special Administrative Region of the PRC the independent board committee of the Company comprising Independent Non-executive Directors, namely Mr. Lau Sai Yung, Mr. Tse Chee On, Raymond, Mr. Wong Wai Ho and Mr. Zhang Yongliang, established to make recommendation to the Independent Shareholders in respect of the terms of and the proposed annual caps in relation to the transactions under the Framework Agreement Altus Capital Limited, a licensed corporation which is licensed to carry out type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the terms and proposed annual caps in relation to the transactions under the Framework Agreement the Shareholders other than Wai Kee and its associates (as defined in the Listing Rules) the shareholders of Build King, other than Wai Kee and its associates (as defined in the Listing Rules) the Rules Governing the Listing of Securities on the Stock Exchange the People s Republic of China, which shall for the purposes of this announcement does not include Hong Kong, the Macau Special Administrative Region of the PRC or Taiwan 10

11 SFO SGM Shareholders Shares Stock Exchange substantial shareholder Wai Kee the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong a special general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving the terms of the Framework Agreement and the transactions contemplated thereunder the shareholders of the Company ordinary share(s) of HK$0.10 each in the share capital of the Company The Stock Exchange of Hong Kong Limited has the meaning ascribed to it under the Listing Rules Wai Kee Holdings Limited, a substantial shareholder of the Company incorporated in Bermuda with limited liability whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 610) % per cent. By Order of the Board Road King Infrastructure Limited Zen Wei Pao, William Co-Chairman Hong Kong, 24 November 2017 As at the date of this announcement, the Board comprises Messrs. Zen Wei Pao, William, Zen Wei Peu, Derek, Ko Yuk Bing and Fong Shiu Leung, Keter as Executive Directors, Messrs. Mou Yong and Dong Fang as Non-executive Directors and Mr. Lau Sai Yung, Dr. Chow Ming Kuen, Joseph, Mr. Tse Chee On, Raymond, Mr. Wong Wai Ho and Mr. Zhang Yongliang as Independent Non-executive Directors. 11