DISCLOSEABLE TRANSACTION IN RELATION TO THE FORMATION OF JOINT VENTURES

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. DISCLOSEABLE TRANSACTION IN RELATION TO THE FORMATION OF JOINT VENTURES FORMATION OF THE JOINT VENTURES The Board is pleased to announce that on 24 July 2017, BEWG (China) Investment entered into the JV Agreement A with Baotou City Housing in relation to the establishment of Joint Venture A in Baotou city, the PRC for the purpose of comprehensive improvement of urban water ecology PPP projects, including Daqingshan water purification project as well as Xiaobaihe reclaimed water treatment plant works and other water plants in Baotou city. On the same date, BEWG (China) Investment entered into the JV Agreement B with Baotou City Housing in relation to the establishment of Joint Venture B in Baotou city, the PRC for the purpose of comprehensive improvement of urban water ecology PPP projects, including water safety upgrading project, water connected projects, water storage lake project, new water supply pipeline, pressurized pumping station, upgrading water environment projects (including river interception pipe network, the initial rainwater storage pool, pumping stations of Xiaobaihe and ancillary works from Xiaobaihe reclamation water plant to Daqingshan reclaimed water plant), water landscape engineering and other water projects

2 Pursuant to the JV Agreement A, the registered capital of Joint Venture A was RMB180,000,000 (equivalent to approximately HK$206,550,000). BEWG (China) Investment will inject RMB162,000,000 (equivalent to approximately HK$185,895,000), representing 90% of the registered capital of Joint Venture A. Baotou City Housing will inject RMB18,000,000 (equivalent to approximately HK$20,655,000), representing 10% of the registered capital of Joint Venture A. Pursuant to the JV Agreement B, the registered capital of Joint Venture B was RMB4,000,000,000 (equivalent to approximately HK$4,590,000,000). BEWG (China) Investment will inject RMB3,600,000,000 (equivalent to approximately HK$4,131,000,000), representing 90% of the registered capital of Joint Venture B. Baotou City Housing will inject RMB400,000,000 (equivalent to approximately HK$459,000,000), representing 10% of the registered capital of Joint Venture B. IMPLICATIONS UNDER THE LISTING RULES As one or more of the applicable percentage ratios exceeds 5% but is less than 25%, the entering into the JV Agreement A and the JV Agreement B simultaneously constitute discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules. INTRODUCTION The Board is pleased to announce that on 24 July 2017, BEWG (China) Investment entered into the JV Agreement A with Baotou City Housing in relation to the establishment of Joint Venture A in Baotou city, the PRC for the purpose of comprehensive improvement of urban water ecology PPP projects, including Daqingshan water purification project as well as Xiaobaihe reclaimed water treatment plant works and other water plant in Baotou city. On the same date, BEWG (China) Investment entered into the JV Agreement B with Baotou City Housing in relation to the establishment of Joint Venture B in Baotou city, the PRC for the purpose of comprehensive improvement of urban water ecology PPP projects, including water safety upgrading project, water connected projects, water storage lake project, new water supply pipeline, pressurized pumping station, upgrading water environment projects (including river interception pipe network, the initial rainwater storage pool, pumping stations of Xiaobaihe and ancillary works from Xiaobaihe reclamation water plant to Daqingshan reclaimed water plant), water landscape engineering and other water projects

3 THE JV AGREEMENT A Date 24 July 2017 Parties (1) BEWG (China) Investment (in the capacity of holder of 90% equity interest in Joint Venture A) (2) Baotou City Housing (in the capacity of holder of 10% equity interest in Joint Venture A) To the best of the Directors knowledge, information and belief, having made all reasonable enquiries, Baotou City Housing and its ultimate beneficial owner(s) is a third party independent of and not connected with the Company and its connected persons. The principal terms of the JV Agreement A are as follows: (a) Capital contribution BEWG (China) Investment will inject RMB162,000,000 (equivalent to approximately HK$185,895,000), representing 90% of the registered capital of Joint Venture A. Baotou City Housing will inject RMB18,000,000 (equivalent to approximately HK$20,655,000), representing 10% of the registered capital of Joint Venture A. Upon establishment, Joint Venture A is an indirect non-wholly owned subsidiary of the Company. (b) Operative term The operative term of Joint Venture A will be 31 years from the date of the issuance of the business licence of Joint Venture A, subject to the approval of the Industrial and Commercial Registration Authority. (c) Projects The projects under Joint Venture A consist of those urban water ecology PPP projects including Daqingshan water purification project as well as the Xiaobaihe reclaimed water treatment plant works and other water plants in Baotou city, subject to the final approval of the relevant local government authorities

4 (d) Board of directors The board of directors of Joint Venture A comprises 5 directors in which Baotou City Housing shall be entitled to nominate 1 director and BEWG (China) Investment shall be entitled to nominate 4 directors. The chairman of the board of directors of Joint Venture A shall be nominated by BEWG (China) Investment. (e) Profit sharing Unless otherwise decided by the board of directors of Joint Venture A, all the distributable profits after tax are subject to the proportion of the capital contribution by each joint venture partner. (f) Transfer restrictions on the equity interest Without the prior approvals from the board of directors of Joint Venture A and Water Authority of Baotou city, each joint venture partner shall not allow to transfer, mortgage, pledge, gift or otherwise dispose of all or part of its equity interest in Joint Venture A. THE JV AGREEMENT B Date 24 July 2017 Parties (1) BEWG (China) Investment (in the capacity of holder of 90% equity interest in Joint Venture B) (2) Baotou City Housing (in the capacity of holder of 10% equity interest in Joint Venture B) To the best of the Directors knowledge, information and belief, having made all reasonable enquiries, Baotou City Housing and its ultimate beneficial owner(s) is a third party independent of and not connected with the Company and its connected persons

5 The principal terms of the JV Agreement B are as follows: (a) Capital contribution BEWG (China) Investment will inject RMB3,600,000,000 (equivalent to approximately HK$4,131,000,000), representing 90% of the registered capital of Joint Venture B. Baotou City Housing will inject RMB400,000,000 (equivalent to approximately HK$459,000,000), representing 10% of the registered capital of Joint Venture B. Upon establishment, Joint Venture B is an indirect non-wholly owned subsidiary of the Company. (b) Operative term The operative term of Joint Venture B will be 16 years from the date of the issuance of the business license of Joint Venture B, subject to the approval of the Industrial and Commercial Registration Authority. (c) Projects The projects under Joint Venture B consist of those comprehensive improvement of water ecology PPP projects, including water safety upgrading project, water connected projects, water storage lake project, new water supply pipeline, pressurized pumping station, upgrading water environment projects (including river interception pipe network, the initial rainwater storage pool, pumping stations of Xiaobaihe and ancillary works from Xiaobaihe reclamation water plant to Daqingshan reclaimed water plant), water landscape engineering and other water projects, subject to the final approval of the relevant local government authorities. (d) Board of directors The board of directors of Joint Venture B comprises 5 directors in which Baotou City Housing shall be entitled to nominate 1 director and BEWG (China) Investment shall be entitled to nominate 4 directors. The chairman of the board of directors of Joint Venture B shall be nominated by BEWG (China) Investment. (e) Profit sharing Unless otherwise decided by the board of directors of Joint Venture B, Baotou City Housing shall not participate in the profit sharing of Joint Venture B for its initial capital contribution

6 (f) Transfer restrictions on the equity interest Without the prior approvals from the board of directors of Joint Venture B and Water Authority of Baotou city, each joint venture partner shall not allow to transfer, mortgage, pledge, gift or otherwise dispose of all or part of its equity interest in Joint Venture B. INFORMATION OF THE GROUP The Company is an investment company and the holding company of the Group. The Group is principally engaged in construction of sewage and reclaimed water treatment and seawater desalination plants, and provision of construction services for comprehensive renovation projects in the PRC and Republic of Singapore and Malaysia; provision of sewage and reclaimed water treatment services in the PRC, Republic of Singapore and Portuguese Republic; distribution and sale of piped water in the PRC and Portuguese Republic; provision of technical and consultancy services and sale of machineries related to sewage treatment and construction services for comprehensive renovation projects in the PRC; and the licensing of technical know-how related to sewage treatment in the PRC. INFORMATION OF BAOTOU CITY HOUSING Baotou City Housing Development and Construction Group Co., Ltd.* 包頭市住房發展建設集團有限公司 is a company incorporated in the PRC with limited liability and is directly under the management of municipality government. Its principal activities are development, construction and maintenance of subsidising house, reconstruction of shanty towns, equity investment and corporate mergers and acquisitions. REASONS FOR AND THE BENEFITS OF THE JV AGREEMENT A AND THE JV AGREEMENT B Since 2014, PPP project has shown an exponential growth and has started a new era in China. As compared with previous models, the new PPP projects operate in a more standardized manner; it has been ruled that the total annual amounts of PPP projects should be no more than 10% of the fiscal spending every year. Furthermore, the PPP projects require approval to enter the PPP projects pool of the Ministry of Finance. Therefore it will be more secure for investors. Being the largest flagship enterprise in the water sector, the Group is one of the earliest as well as the most competitive groups stepping into the PPP market. The Group has a fast-mover advantage, rich experience and a strong ability of design, construction and operation

7 Baotou Municipal is the largest industrial center in Inner Mongolia, as well as an important industrial base in China. Baotou city has developed rapidly in recent years, and its GDP has grown up to RMB380 billion in 2016 at rate of 7.6% year over year, far higher than the national average. All this proves sound payment ability. Baotou Municipal Water Ecological Improvement Integrated PPP project includes several water affairs and water environment comprehensive treatment projects. This is a large scale PPP project with high yield. It has been included in the PPP projects pool of the Ministry of Finance and in the municipal fiscal budget. This project also has a strict guaranteed repayment mechanism. Since it is clearly stated that the project can be financed by way of setting up a specific water fund alternatively, the Company would negotiate the water fund details with a number of financial institutions. Although this project is multi-faceted and complex, our Group has outstanding design, construction, operation, and management capacity. Therefore, the Board believes that the Group has the strength and confidence to complete the project with high quality. This PPP project is the first integrated municipal-level comprehensive water environment development project. The Group will provide a comprehensive solution of water environment to enhance the overall image of the Baotou city, effectively boosting the municipal's overall competitiveness and opening up room for the future developments. Furthermore, it will promote local economic reform and development. The Group will further consolidate its leading position in the water environmental renovation field and expand its market share in the long run. The Directors consider that it is in the best interests of the Company and the shareholders as a whole to enter into the JV Agreements and the transactions contemplated thereunder. The terms of the JV Agreements and the related documents are fair and reasonable and on normal commercial terms and in the ordinary and usual course of business of the Company, and the transactions contemplated thereunder are in the interests of the Company and the shareholders as a whole. IMPLICATIONS UNDER THE LISTING RULES As one or more of the applicable percentage ratios exceeds 5% but is less than 25%, the entering into the JV Agreements constitute discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules

8 DEFINITIONS In this announcement, unless the context otherwise requires, the following terms have the following meanings: JV Agreements the JV Agreement A and the JV Agreement B; Baotou City Housing Baotou City Housing Development and Construction Group Co., Ltd* 包頭市住房發展建設集團有限公司 ; BEWG (China) Investment Beijing Enterprises Water Group (China) Investment Limited* 北控水務 ( 中國 ) 投資有限公司, a company incorporated in the PRC which is a wholly-owned subsidiary of the Company; Board the board of directors of the Company; Company Beijing Enterprises Water Group Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange (stock code: 371); Directors the directors of the Company; Group the Company and its subsidiaries; HK$ Hong Kong dollars, the lawful currency of Hong Kong; Hong Kong the Hong Kong Special Administrative Region of the PRC; Listing Rules the Rules Governing the Listing of Securities on the Stock Exchange; Joint Venture A the equity joint venture enterprise set up between BEWG (China) Investment and Baotou City Housing pursuant to the JV Agreement A; JV Agreement A the JV Agreement dated 24 July 2017 entered into between BEWG (China) Investment and Baotou City Housing in relation to the formation of Joint Venture A; - 8 -

9 Joint Venture B the equity joint venture enterprise set up between BEWG (China) Investment and Baotou City Housing pursuant to the JV Agreement B ; JV Agreement B the JV Agreement dated 24 July 2017 entered into between BEWG (China) Investment and Baotou City Housing in relation to the formation of Joint Venture B; PPP Public-Private-Partnership; PRC the People s Republic of China (excluding, for the purpose of this announcement, Hong Kong, the Macao Special Administrative Region of the PRC and Taiwan); RMB Renminbi, the lawful currency of the PRC; Stock Exchange The Stock Exchange of Hong Kong Limited; and % percentage. For the purpose of this announcement and for illustrative purpose only, RMB is converted into HK$ at the rate of RMB1: HK$ No representation is made that any amounts in RMB has been or could be converted at the above rates or at any other rates. By order of the Board Beijing Enterprises Water Group Limited Li Yongcheng Chairman Hong Kong, 24 July 2017 As at the date of this announcement, the Board comprises ten executive directors, namely Mr. Li Yongcheng (Chairman), Mr. E Meng (Vice Chairman), Mr. Jiang Xinhao, Mr. Zhou Min (Chief Executive Officer), Mr. Li Haifeng, Mr. Zhang Tiefu, Ms. Qi Xiaohong, Mr. Ke Jian, Mr. Tung Woon Cheung Eric and Mr. Li Li and five independent non-executive directors, namely Mr. Shea Chun Lok Quadrant, Mr. Zhang Gaobo, Mr. Guo Rui, Mr. Wang Kaijun and Dr. Lee Man Chun Raymond. * For identification purpose only - 9 -