Investment in HSL China Metropolitan Fund I L.P.

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.
NANYANG HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
(Stock Code: 212)
ANNOUNCEMENT
IN RELATION TO
DISCLOSEABLE TRANSACTION – INVESTMENT IN HSL CHINA
METROPOLITAN FUND I L.P.
The Board announces that, on 6 November 2014, the Company (through its wholly-owned
subsidiary, Nanyang Industrial (China)) entered into a conditional agreement, pursuant to
which it is proposed that Nanyang Industrial (China) subscribes for a limited partnership
interest with a total capital commitment of RMB60,000,000 (equivalent to approximately
HK$76,060,000) in the HSL China Metropolitan Fund.
As one of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules
exceeds 5% but is less than 25%, the Investment constitutes a discloseable transaction for
the Company and is subject to the reporting and announcement requirements but exempt
from the shareholders’ approval requirement under chapter 14 of the Listing Rules.
INTRODUCTION
The Board announces that, on 6 November 2014, Nanyang Industrial (China) entered
into a conditional agreement, pursuant to which it is proposed that Nanyang Industrial
(China) subscribes for a limited partnership interest with a total capital commitment of
RMB60,000,000 (equivalent to approximately HK$76,060,000) in the HSL China Metropolitan
Fund, which is a limited partnership established for the purpose of acquiring and developing
the Shanghai Property, being a residential property in the nature of a hotel apartment located
in Shanghai, PRC. Nanyang Industrial (China) will be one of the Limited Partners in the
HSL China Metropolitan Fund upon completion of the transactions contemplated under the
Subscription Agreement and the Limited Partnership Agreement.
–1–
14.58(1)
LETTER AGREEMENT
Date
6 November 2014
14.58(3)
Parties
The parties are (i) Nanyang Industrial (China); (ii) the General Partner; and (iii) the Manager.
To the best of the Directors’ knowledge, information and belief having made all reasonable
enquiries, the General Partner, the Manager and their respective ultimate beneficial owners are
third parties independent of the Company and its connected persons.
Conditions Precedent
Pursuant to the Letter Agreement, Nanyang Industrial (China)’s investment pursuant to the
Fund Agreements is conditional upon the following conditions:
(a) the following having occurred: (i) the other Limited Partners (whose aggregate
capital contributions shall be no less than RMB300,000,000) having signed the
Fund Agreements; (ii) such Limited Partners being accepted as Limited Partners
by the General Partner; and (iii) 50% of the aggregate capital contributions of such
Limited Partners having been paid to the General Partner on behalf of the HSL China
Metropolitan Fund (to be used to fund the deposit payable to the seller of the Shanghai
Property); and
(b) the General Partner (or its affiliate) having submitted its application as bidder in respect
of the Shanghai Property on behalf of the HSL China Metropolitan Fund, which bid shall
not exceed a specified maximum price (the “Total Purchase Price”), and the General
Partner (or its affiliate) being accepted as qualified to participate in the auction in
respect of the Shanghai Property
(together the “Conditions Precedent”).
Escrow Arrangements
Following entry into the Letter Agreement, Nanyang Industrial (China) will advance 50%
of its Investment, being RMB30,000,000 (equivalent to approximately HK$38,030,000), to
the General Partner to be held in escrow pending satisfaction of the Conditions Precedent. If
the Conditions Precedent have not been satisfied by 14 November 2014, such funds will be
returned to Nanyang Industrial (China) and the Investment will not go ahead.
–2–
SUBSCRIPTION AGREEMENT
Date
On or around 7 November 2014
14.58(3)
Parties
The parties are (i) Nanyang Industrial (China); and (ii) the General Partner. To the best of
the Directors’ knowledge, information and belief having made all reasonable enquiries,
the General Partner and its ultimate beneficial owners are third parties independent of the
Company and its connected persons.
Subscription of limited partnership interest
Nanyang Industrial (China) has agreed to subscribe for a limited partnership interest in the
HSL China Metropolitan Fund with a capital commitment of RMB60,000,000 (equivalent to
approximately HK$76,060,000).
Pursuant to the Letter Agreement, Nanyang Industrial (China)’s subscription pursuant to the
Subscription Agreement is conditional on the Conditions Precedent.
The amount of capital commitment to be made by Nanyang Industrial (China) was determined
with reference to the value of the assets that are expected to be acquired by the HSL China
Metropolitan Fund and the economic interest of Nanyang Industrial (China) in the HSL China
Metropolitan Fund relative to the other Limited Partners. Nanyang Industrial (China) will
meet its capital commitment from internal resources.
14.58(5)
14.58(4)
LIMITED PARTNERSHIP AGREEMENT
Date
On or around 7 November 2014
14.58(3)
Parties
The parties are (i) Nanyang Industrial (China); (ii) the General Partner; and (iii) the other
Limited Partners. To the best of the Directors’ knowledge, information and belief having
made all reasonable enquiries, the General Partner, the Limited Partners and their respective
ultimate beneficial owners are third parties independent of the Company and its connected
persons.
–3–
Pursuant to the Limited Partnership Agreement, the General Partner has the exclusive
responsibility for the operation and management of the HSL China Metropolitan Fund (some
of which it may delegate to the Manager), subject to certain actions which require the approval
of the Strategic Committee or Investment Committee (each comprising representatives of the
General Partner and Limited Partners). The Limited Partners (including Nanyang Industrial
(China)) will not take part in the conduct or management of the HSL China Metropolitan Fund
and will have no right or authority to act for the HSL China Metropolitan Fund or interfere in
the conduct or management of the HSL China Metropolitan Fund. The Limited Partners will
be provided with reasonable access to books and records and financial information of the HSL
China Metropolitan Fund.
Nanyang Industrial (China) will have one seat on both the Strategic Committee and the
Investment Committee of the HSL China Metropolitan Fund (which are responsible for
approving certain matters such as admitting further Limited Partners (or increasing the
commitments of existing Limited Partners), acquisitions, disposals, capital expenditures above
RMB10,000,000 and debt financing).
Distributions
Distributions from the HSL China Metropolitan Fund (including the proceeds upon sale of the
Shanghai Property) will be applied as follows:
(a) return of capital and costs plus preferred return: 100% of distributions will be made
to the Limited Partners until the amount distributed equals their capital contributions
together with an amount that represents an internal rate of return equal to 8% per annum,
cumulative and compounded, on their capital contributions; and
(b) thereafter, 20% of distributions will be made to the General Partner as “carried interest”
and 80% to the Limited Partners.
Redemption
If requested by Nanyang Industrial (China), the HSL China Metropolitan Fund will redeem its
limited partnership interest at cost if:
(a) the HSL China Metropolitan Fund does not obtain financing for the purposes of
financing the acquisition of the Shanghai Property from Shanghai Commercial Bank
Ltd.; and/or
(b) the HSL China Metropolitan Fund does not complete the acquisition of the Shanghai
Property by 31 March 2015 (or the bid does not proceed such that the acquisition will
not be completed by such date) or such acquisition is completed for a total cost that
exceeds the Total Purchase Price.
–4–
Transfers of interests by Limited Partners
The interests in the HSL China Metropolitan Fund may not be transferred by any Limited
Partner except with the prior written consent of the General Partner (not to be unreasonably
withheld or delayed). In addition, Limited Partners have a right of first refusal in relation to
the transfer of partnership interests.
Term of the HSL China Metropolitan Fund
The HSL China Metropolitan Fund has an initial term of four years, which may be extended
by the General Partner by up to two consecutive one-year periods.
Use of investment proceeds by the HSL China Metropolitan Fund
The investment proceeds to be raised by the HSL China Metropolitan Fund from Nanyang
Industrial (China) and other Limited Partners will be used by the HSL China Metropolitan
Fund for the purposes of funding the acquisition and development of the Shanghai Property.
Further funding
If the HSL China Metropolitan Fund requires further funding during its term, the General
Partner may receive such funding by admitting new Limited Partners or raising funds from
existing Limited Partners. In either case, the existing Limited Partners have a right of first
refusal to participate in such fundraising.
INFORMATION RELATING TO THE HSL CHINA METROPOLITAN FUND
The HSL China Metropolitan Fund is an exempted limited partnership established for the sole
purpose of investing in the Shanghai Property. The General Partner is an exempted company
with limited liability incorporated under the laws of the Cayman Islands.
The HSL China Metropolitan Fund does not currently have any assets as it is a newly
established vehicle. The HSL China Metropolitan Fund will use the proceeds obtained from
the Limited Partners to acquire and develop the Shanghai Property.
REASONS FOR THE INVESTMENT
Pursuant to the terms of the Fund Agreements, Nanyang Industrial (China) shall subscribe
for a limited partnership interest in the HSL China Metropolitan Fund which in turn will use
the subscription moneys raised from the Limited Partners to invest in the Shanghai Property.
Accordingly, the Investment provides the Company with exposure to the Shanghai serviced
apartment and residential market, diversifying the Company’s investment portfolio.
14.58(8)
The Directors of the Company believe the terms of the transaction are fair and reasonable and
in the interests of the Shareholders as a whole.
INFORMATION ON THE COMPANY
The Company is an investment holding company which holds investment properties and a
portfolio of investment assets.
–5–
14.58(2)
GENERAL
The Investment constitutes a discloseable transaction of the Company under the Listing Rules.
DEFINITIONS
“Company”
Nanyang Holdings Limited, a company incorporated in
Bermuda, whose shares are listed on the main board of The
Stock Exchange of Hong Kong Limited
“Fund Agreements”
the Subscription Agreement and the Limited Partnership
Agreement
“General Partner”
the general partner of the HSL China Metropolitan Fund from
time to time, which is currently HSL China Metropolitan Fund
I (GP) Ltd, a Cayman Islands exempted company with limited
liability
“HSL China Metropolitan
Fund”
HSL China Metropolitan Fund I L.P., which is an exempted
limited partnership formed under the laws of the Cayman Islands
established for the purposes of investing in the Shanghai
Property
“Investment”
the subscription of a limited partnership interest in HSL China
Metropolitan Fund by Nanyang Industrial (China) pursuant to
the terms of the Fund Agreements and the Letter Agreement
“Investment Committee”
a committee comprising representatives of the Limited Partners
and General Partner for the purposes of considering certain key
decisions in relation to the HSL China Metropolitan Fund
“Letter Agreement”
the letter agreement dated 6 November 2014 entered into
between Nanyang Industrial (China), the General Partner and
the Manager in relation to the Fund Agreements
“Limited Partners”
the limited partners of the HSL China Metropolitan Fund
“Limited Partnership
Agreement”
the Amended and Restated Limited Partnership Agreement
of the HSL China Metropolitan Fund dated on or around 7
November 2014 entered into between Nanyang Industrial
(China), the General Partner and the other Limited Partners
“Listing Rules”
Rules Governing the Listing of Securities on the Stock
Exchange
“Manager”
the manager of the HSL China Metropolitan Fund, being
Hongkong & Shanghai Land Corporation
–6–
“Nanyang Industrial
(China)”
Nanyang Industrial (China) Limited, a company incorporated in
Hong Kong, a wholly-owned subsidiary of the Company
“PRC”
the People’s Republic of China, excluding Hong Kong, Macau
Special Administrative Region of the PRC and Taiwan for the
purposes of this announcement
“Shanghai Property”
a residential property in the nature of a hotel apartment located
in Shanghai, PRC
“Shareholders”
shareholders of the Company
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Strategic Committee”
a committee comprising representatives of the Limited Partners
and General Partner for the purposes of considering certain key
decisions in relation to the HSL China Metropolitan Fund
“Subscription Agreement”
the subscription application in relation to Nanyang Industrial
(China)’s Investment dated on or around 7 November 2014
entered into between Nanyang Industrial (China) and the
General Partner
“HK$”
Hong Kong dollar(s), the currency of Hong Kong
“RMB”
Renminbi, the currency of the PRC
For illustration purposes, amounts in RMB in this announcement have been translated into
HK$ at RMB1.00 = HKD1.26774.
By Order of the Board
Nanyang Holdings Limited
Rudolf Bischof
Chairman
Hong Kong, 6 November 2014
As at the date of this announcement, the Board comprises seven Directors as follows:
Executive Directors:
Hung Ching Yung, JP (Managing Director)
Lincoln C. K. Yung, JP, FHKIB
(Deputy Managing Director)
Jennie Chen (Financial Controller)
Independent Non-Executive Directors:
Rudolf Bischof (Chairman)
James J. Bertram
Robert T. T. Sze
Non-Executive Director:
John Con-sing Yung
–7–
2.14

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