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. GOLDEN EAGLE RETAIL GROUP LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock Code : 3308) CONNECTED TRANSACTION: ACQUISITION OF SALE SHARES IN THE TARGET COMPANY SHARE PURCHASE AGREEMENT The Board is pleased to announce that on 8 December 2017 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, entered into the Share Purchase Agreement with the Vendor in relation to the Acquisition, pursuant to which the Vendor has agreed to sell, and the Purchaser has agreed to purchase, the Sale Shares for the consideration of RMB102,000,000, which shall be settled by cash. LISTING RULES IMPLICATIONS GEICO, through Golden Eagle International Retail Group Limited (one of its wholly-owned subsidiaries), is now indirectly holding approximately 74.49% of the entire issued share capital of the Company and is accordingly a controlling shareholder of the Company. GEICO is in turn wholly-owned by The 2004 RVJD Family Trust, the family trust of Mr. Wang. Ms. Wang is a beneficiary of The 2004 RVJD Family Trust. The Vendor is an indirect wholly-owned subsidiary of GEICO and is accordingly an associate of GEICO and is thus a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the entering into of the Share Purchase Agreement constitutes a connected transaction of the Company. 1
As the applicable percentage ratios as calculated under Rule 14A.76 of the Listing Rules in respect of the Acquisition are more than 0.1% but less than 5%, the Acquisition is subject to the reporting and announcement requirements but is exempt from the circular and independent shareholders approval requirements under Chapter 14A of the Listing Rules. SHARE PURCHASE AGREEMENT DATED 8 DECEMBER 2017 Vendor: Purchaser: (Nanjing Golden Eagle International Group Company Limited), being an indirect wholly-owned subsidiary of GEICO (Golden Eagle International Retail Group (China) Co., Ltd.), being an indirect wholly-owned subsidiary of the Company GEICO, through Golden Eagle International Retail Group Limited (one of its wholly-owned subsidiaries), is now indirectly holding approximately 74.49% of the entire issued share capital of the Company and is accordingly a controlling shareholder of the Company. GEICO is in turn wholly-owned by The 2004 RVJD Family Trust, the family trust of Mr. Wang. Ms. Wang is a beneficiary of The 2004 RVJD Family Trust. The Vendor is indirectly wholly-owned by GEICO and is accordingly an associate of GEICO and a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the entering into of the Share Transfer Agreement constituted a connected transaction of the Company. Assets to be acquired The assets to be acquired by the Group pursuant to the Share Purchase Agreement is the Sale Shares in the Target Company. The initial investment costs of the Target Company incurred by the Vendor was RMB102,000,000. There is no restriction on any subsequent sale of equity interests in the Target Company. 2
Consideration The agreed consideration for the acquisition of the Sale Shares is RMB102,000,000, which shall be paid in lump sum in cash within 7 Business Days after completion of all change of business registration. Such consideration was determined after arm s length negotiations and with reference to (i) the net assets value of the Target Company of RMB192,048,000 as at 31 October 2017 as set out in its management account prepared in accordance with the PRC Generally Accepted Accounting Principles; (ii) the initial preparation works performed by the Target Company for its future development project; and (iii) the initial investment costs incurred by the Vendor. The consideration will be settled by the internal resources of the Group. Conditions precedent The sale and purchase of the Sale Shares is conditional upon all approvals required under the Listing Rules having been obtained. Completion The Vendor shall facilitate the Purchaser to complete all change of business registration in respect of the equity transfer before 31 December 2017. Upon completion, the Target Company will become an indirect 51% owned subsidiary of the Company and its results will be consolidated into the Group s consolidated financial statements. Option to re-sell If, after completion of the Share Purchase Agreement, the Target Company does not succeed in bidding for the parcel of land as mentioned under the paragraph headed The Reason for entering into the Transaction, the Purchaser may, but not obliged to, re-sell the Sale Shares to the Vendor and the Vendor shall be obliged to purchase the same at the agreed consideration as mentioned above. If the option is exercised, further announcement will be made in accordance with the Listing Rules and the Company will comply with all applicable requirements under the Listing Rules. 3
INFORMATION ON THE TARGET COMPANY The Target Company was incorporated in the PRC with limited liability on 10 September 2013 which is principally engaged in property development and operation and retail operation. As at the date of this announcement, the Target Company is owned by the Vendor and an Independent Third Party as to 51% and 49% respectively. According to the audited financial statements of the Target Company for the two financial years ended 31 December 2015 and 31 December 2016 and the unaudited management accounts for the 10 months ended 31 October 2017, which were prepared in accordance with the PRC Generally Accepted Accounting Principles, the net assets and results of operation were as follows: For the year ended/as at 31 December 2015 For the year ended/as at 31 December 2016 For the 10 months ended/as at 31 October 2017 (RMB) (RMB) (RMB) Revenue Net loss 3,146,000 1,700,000 2,425,000 Net assets 196,173,000 194,473,000 192,048,000 THE REASON FOR ENTERING INTO THE TRANSACTION The Target Company intends to bid for a parcel of land located on the east by Wukaihe Main Street ( ), on the south by Lianhua Mountain Lifestyle Tourism Resort East Jilin Main Road ( ), on the north by Lianhuashan Main Road ( ), Changchun City, Jilin Province, the PRC and on the west by the forest land with a total site area of approximately 858,000 square metres through tender, auction or listing-for-sale by the PRC governmental authority. If the Target Company succeeds in such auction, the Target Company intends to develop the land into a large scale low density commercial complex which houses a comprehensive lifestyle center surround by residential units. The land is currently a vacant site. Changchun, the capital city of Jilin Province, is in the northeast region of China. It is designated as a national hub in MOFCOM s development plan (2016-2020) of distributive trade and logistics services. Four highways connect the city with other 4
major cities such as Shenyang, Harbin and Yingkou. The Beijing-Harbin Railway also runs through the city. It is also one of the important industrial cities with a particular focus on the automotive sector. Changchun achieved a GDP of RMB592.8 billion in 2016, representing a rise of 7.8% year-on-year and has ranked 22nd among China s Top 100 cities in 2016 by Wharton Institute of Economic Research. The Group is principally engaged in the lifestyle centre and stylish department store chain development and operation, property development and hotel operation in the PRC and the Group has long been looking for suitable and sizable locations for its long-term development and expansion. After the completion of the Acquisition and the relevant construction works, the Target Company will dispose of the residential units and retain the comprehensive lifestyle center as its self-owned property. It is anticipated that the Group will be able to generate sufficient profits and cash flows to achieve its development strategy of obtaining high-quality premises at prime location at low cost that allows the Group to operate in a long-term cost-effective manner. The Acquisition will not only yield profit for the Group but also will provide a great opportunity for the Group to establish its foothold in the northern part of China for chain retail store development. The Acquisition is in line with the business strategy and expansion plan of the Group. VIEWS OF THE DIRECTORS The Directors (including the independent non-executive Directors) believe that the terms of the Share Purchase Agreement are on normal commercial terms and are fair and reasonable and in the interests of the shareholders as a whole. Mr. Wang and Ms. Wang, the executive Directors, who have material interests in the transactions by virtue of their indirect beneficial interests in the Vendor, have abstained from signing the board resolutions approving the Share Purchase Agreement and the transactions contemplated thereunder. INFORMATION ON THE PARTIES TO THE SHARE PURCHASE AGREEMENT The Vendor is principally engaged in the businesses of property development, property investment and investment holding. The Company was incorporated in the Cayman Islands with limited liability whose shares are listed on the Main Board of the Stock Exchange. The principal activities of the Group are lifestyle center and stylish department store chain development and operation, property development and hotel operation in the PRC. 5
LISTING RULES IMPLICATION As the applicable percentage ratios as calculated under Rule 14A.76 of the Listing Rules in respect of the Acquisition are more than 0.1% but less than 5%, the Acquisition is subject to the reporting and announcement requirements but is exempt from the circular and independent shareholders approval requirements under Chapter 14A of the Listing Rules. Details of the connected transaction of the Company will be disclosed in the Company s published annual report and accounts in accordance with Rule 14A.49 of the Listing Rules. DEFINITIONS Acquisition associate Board Business Day Company connected person Directors GEICO Group the acquisition of the Sale Shares by the Purchaser from the Vendor pursuant to the terms and conditions of the Share Purchase Agreement has the meaning ascribed thereto under the Listing Rules the board of Directors a day (other than Saturday and Sunday) on which banks in the PRC are open for general banking transactions Golden Eagle Retail Group Limited ( ), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange has the meaning ascribed thereto under the Listing Rules the directors of the Company GEICO Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, being the indirect sole shareholder of the Vendor and the indirect controlling shareholder of the Company the Company and its subsidiaries 6
HK$ Hong Kong Independent Third Party Listing Rules Mr. Wang Ms. Wang PRC Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC any person or company and their respective ultimate beneficial owner(s) which, to the best of the Directors knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons (as defined in the Listing Rules) Rules Governing the Listing of Securities on the Stock Exchange Mr. Wang Hung, Roger, the Chairman and an executive Director of the Company Ms. Janice S. Y. Wang, an executive Director of the Company and is the daughter of Mr. Wang the People s Republic of China Purchaser (Golden Eagle International Retail Group (China) Co., Ltd.), a company established in the PRC with limited liability on 12 May 2000, being an indirect wholly-owned subsidiary of the Company RMB Sale Shares Share Purchase Agreement Stock Exchange Renminbi, the lawful currency of the PRC the 51% equity interest in (Jilin Golden Eagle Property Holdings Company Limited) to be transferred by the Vendor to the Purchaser pursuant to the Share Purchase Agreement the share purchase agreement entered into between the Vendor and the Purchaser regarding the transfer of the Sale Shares The Stock Exchange of Hong Kong Limited 7
Target Company (Jilin Golden Eagle Property Holdings Company Limited), a company established in the PRC on 10 September 2013 and an indirect subsidiary of GEICO, being held as to 51% and 49% by the Vendor and an Independent Third Party, respectively Vendor (Nanjing Golden Eagle International Group Co., Ltd.), a company established in the PRC with limited liability on 7 March 1992, which is an indirect wholly-owned subsidiary of GEICO Hong Kong, 11 December 2017 By Order of the Board Golden Eagle Retail Group Limited WANG Hung, Roger Chairman As at the date of this announcement, the Board comprises 2 executive Directors, namely Mr. Wang Hung, Roger and Ms. Wang Janice S. Y. and 3 independent non-executive Directors, namely Mr. Wong Chi Keung, Mr. Lay Danny J and Mr. Wang Sung Yun, Eddie. 8