Gelonghui, January 8, 丨 Chenxing Development (02286.HK) announced that on January 8, 2024, the buyer (an indirect wholly-owned subsidiary of the company) signed an equity transfer agreement with the seller. According to the terms of the share transfer agreement, the buyer conditionally agreed to purchase and the seller conditionally agreed to sell Sichuan Chenxing's shares (all 16.1074% shares held by the seller) at a cost of RMB 45 million.
As of the date of this announcement, Sichuan Chenxing is an indirect non-wholly-owned subsidiary of the Company, with the Group and the seller holding 83.8926% and 16.1074% respectively. After the acquisition is completed, the company will hold all of Sichuan Chenxing's shares, and Sichuan Chenxing will become an indirect wholly-owned subsidiary of the company.
On the same day, the seller signed a capital injection agreement with Sichuan Chenxing. According to this, the seller and Sichuan Chenxing will inject RMB 136 million and RMB 154 million into Mianyang Chenxing's registered share capital respectively. According to the share transfer agreement and capital injection agreement, part of the seller's capital injection will be offset by the cost of the acquisition of RMB 45 million. After the capital injection is completed, the seller and Sichuan Chenxing will each hold 40% and 60% of Mianyang Chenxing's shares, while Mianyang Chenxing will continue to be a subsidiary of the company.
Sichuan Chenxing is mainly engaged in property development and sales.
The board of directors believes that the acquisition is a valuable opportunity to acquire Sichuan Chenxing as a wholly-owned subsidiary of the company and can improve the flexibility of dividend distribution and capital management. The acquisition will help the Group to operate independently in Chenxing, Sichuan, and in turn create a flexible business development environment.
The board of directors also believes that capital injections can offset outstanding debts, thereby improving the liquidity and financial stability of Mianyang Chenxing. Specifically, using the proceeds from the acquisition, the capital injection will allow the seller to continue to invest in the Sichuan Chenxing Group and fund Mianyang Chenxing's property development projects after withdrawing from Sichuan Chenxing, because with the exception of Mianyang Chenxing's residential property projects, Sichuan Chenxing has completed all property projects.