- Oct 11, 2013
- CDBIH seals the deal to subscribe for approx. 54.32%* enlarged shareholding of the Company
(Hong Kong and Singapore, 10 October 2013) ―China New Town Development Company Limited. (the “Company”; HKSE: 1278.HK; SGX: D4N.SI), a developer specialized in planning and developing new town projects in China, is pleased to announce that, the Company and China Development Bank International Holdings Limited (“CDBIH”) have entered into a subscription agreement (“CDBIH Subscription Agreement”).
Pursuant to the CDBIH Subscription Agreement, CDBIH has agreed to subscribe for 5,347,921,071 newly issued shares of the Company at a price of HK$0.27 per share. The total consideration of such subscription is HK$1,443,938,689.17. Upon completion, CDBIH will hold approximately 54.32%* of the enlarged total issued shares of the Company. The Company will become a strategic subsidiary of China Development Bank Capital Corporation Ltd. (“CDB Capital”). Following to the transaction, SRE Investment Holding Limited (“SREI”), the original controlling shareholder of the Company, will hold approximately 14.91%* of the enlarged total shares, and will continue to be a substantial shareholder of the Company. Upon completion, both CDBIH and SREI will undertake a three-year lock-up period for each of their shares in the Company, with a long-term view towards investment in the Company’s outlook.
Achieving strong synergies as the core listed platform of new town development under CDB Capital
Strong synergies will be attained for the core business of the Company with its new status as the strategic subsidiary of CDB Capital.
The Company will become the core listed platform of new town development under CDB Capital, and its brand name in Hong Kong and Mainland China will therefore be enhanced. The Company expects to gain systematic advantages in its exploration, selection, negotiation, and execution of quality new town development projects throughout the country as a strategic subsidiary of CDB Capital. CDB Capital’s profound brand awareness, abundant industry resources, excellent financing coordination, strong government connections, professional experience in land development investment and nation-wide investment business network are also expected to enhance the Company’s influence in the industry.
The deal will also improve the capital structure as well as the financing capacity of the Company. With the support of CDB Capital, the financing cost of the Company is expected to decrease in the long run.
CDB Capital has extensive experience in new town development, and has invested in the development of over 20 new towns in over 20 cities via funds and direct equity and debt investments. The Company may leverage CDB Capital’s nation-wide business network to introduce outstanding business partners for the business of the Company. Systematic advantages in developing quality projects due to deep connections and strong collaboration in investments and financing with local governments
To assist the Company in further developing into the leading and largest integrated new town developer and operator in China, CDB Capital plans to support the Company to specialize in primary land development and establish business throughout the country, under the condition that the Company continues operating its existing businesses, and will further optimize the Company’s business model, with a view towards enhanced sources of revenues and improved profitability. CBD Capital will also support the Company to explore other business opportunities to provide a stable cash flow and enhance the growth and outlook of the Company’s business.
To facilitate the growth and future development of the Company, CDB Capital plans to strengthen the existing management and its structure, and to make changes and additions to the management structure when appropriate. CDB Capital will also fully capitalize its advantages to provide comprehensive support for the Company on financial services. In addition, CDB Capital will introduce more reliable business partners, suppliers, and customers using its nation-wide business network and will enhance the systematic capability of the Company in selection and negotiation of future projects with its extensive connections with local governments. While CDB Capital has at present no plan, and has not engaged in any discussion or negotiation, with respect to any injection of any assets or businesses into the Company, CDB Capital does not exclude the possibility of future asset injections into the Company and/or joint investments in attractive projects.
The shareholding immediately after the completion of transactions for the subscription by CDBIH is set out below:
As at the date of the subscription agreements The shareholding immediately after the completion of the subscription transaction Number of share Percentage Number of share Shareholding
CDBIH -- 0.00 % 5,347,921,071 54.32 % SREI 1,468,356,862 32.64 % [1,468,356,862] 14.91% Other shareholders 3,029,841,814 67.36 % [3,029,841,814] 30.77 %
*The percentage of the shareholding is based on the assumption that there is no change in the total number of issued Shares other than the issue of the shares to be subscribed by CDBIH between the date of the subscription agreement thereof up to the completion of the subscription therefor.
CDB Capital has committed to promoting the high-speed development of China’s urbanization
CDB Capital is a wholly owned subsidiary of China Development Bank. Its establishment was approved by the State Council. With a registered capital of RMB 47.6 billion, CDB Capital is a unique integrated investment platform covering both domestic and offshore markets. Its investments cover areas including but not limited to equity investments, mezzanine investments, investments in primary land developments, properties, and funds. In the core business of CDB Capital there are four modules namely urban development, industrial investments, overseas investments, and fund management. Investment in land developments in new towns is one of the most focused businesses of CDB Capital. It aims to provide integrated investment and financing services to urban development and management across China.
Disposal of non-core assets, focusing on the core business
The Company and SREI have also entered into a disposal master agreement pursuant to which SREI has agreed to purchase the assets of the Company and its subsidiaries (the “Group”) not relating to the Group’s principal business of planning and development of new town projects in China (“Disposal Assets”) and arrange for the repayment of loans owing from the Disposal Assets in phases within 24 months from the completion date of the subscription under the CDBIH Subscription Agreement for a total consideration of approximately RMB2.07 billion (subject to certain adjustments).
The Company believes that the disposal and the subscription are complementary, improving the Company’s financial position, reducing its gearing ratio, and improving its profitability. At the same time, these transactions help simplify the business model while their proceeds can be deployed in the Group’s core business of new town developments as well as for expansion opportunities in the future.
A collaboration to promote China’s urbanization with a view towards laying a solid foundation for sustained growth
In discussing these successful deals, Mr. Shi Jian, the chairman of the Company expressed that, ‘everyone in the Company is very delighted to witness the deal with CDBIH, introducing CDB Capital. We firmly believe that the core business of the Group will enjoy robust synergies through the introduction of CDB Capital. The Company will enhance its business influence with the vigorous support and the abundant resources of CDB Capital and China Development Bank, and will work closely with them to lay down a solid foundation for the Company’s sustained growth and to contribute to China’s urbanization.”
Mr. Zhang Xuguang, the President of CDB Capital concluded, ’CDB Capital highly emphasizes the enormous investment opportunities brought by high-speed urbanization process. CDB Capital wishes to take the Company as the core investment platform of primary land developments in new towns, and with CDB Capital’s nationwide business network, excellent brand influence, deep-rooted expertise and experience as well as abundant project resources, to position the Company as China’s leading large-scale integrated new town developer and operator, serving China’s urbanization continuously.’
All the above transactions are subject to the resolutions in an extraordinary general meeting and to applicable approvals by government agencies and regulatory bodies. Please refer to the joint announcement by the Company and CDBIH for further details.