Asia Allied Infrastructure : Discloseable Transaction in relation to Acquisition of the Target Assets

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Asia Allied Infrastructure Holdings Limited

(Incorporated in Bermuda with Limited Liability)

(Stock Code: 00711.HK)

DISCLOSEABLE TRANSACTION IN RELATION TO

ACQUISITION OF THE TARGET ASSETS

THE ASSET PURCHASE AGREEMENT

On 30 November 2018 (after trading hours), the Purchaser, an indirect non wholly-owned subsidiary of the Company, and the Vendors entered into the Asset Purchase Agreement, pursuant to which the Purchaser conditionally agreed to purchase, and the Vendors conditionally agreed to sell, the Target Assets at the consideration of HK$175,920,000.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Acquisition exceeds 5% but are less than 25%, the entering into of the Asset Purchase Agreement and the transactions contemplated thereunder constitute a discloseable transaction of 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.

Fortunate Spring is a substantial shareholder holding 40% interest in CW Bus, which is an insignificant subsidiary of the Company under Rule 14A.09(1) of the Listing Rules. Therefore Fortunate Spring, together with its ultimate beneficial owners, being two ultimate beneficial owners of the Vendors, are not regarded as connected persons of the Company pursuant to Rule 14A.09 of the Listing Rules. Therefore the Acquisition does not constitute a connected transaction under Chapter 14A of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 30 November 2018 (after trading hours), the Purchaser, an indirect non wholly-owned subsidiary of the Company, and the Vendors entered into the Asset Purchase Agreement, pursuant to which the Purchaser conditionally agreed to purchase, and the Vendors conditionally agreed to sell, the Target Assets at the consideration of HK$175,920,000.

THE ASSET PURCHASE AGREEMENT

The principal terms of the Asset Purchase Agreement are summarized below:

Date

30 November 2018

Parties

• (i) the Purchaser; and

• (ii) the Vendors.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, the Vendors and its ultimate beneficial owners (two of which, save for being substantial shareholders of an insignificant subsidiary of the Company (i.e. CW Bus)) are third parties independent of the Company and its connected persons.

Assets to be acquired

Pursuant to the Asset Purchase Agreement, the Purchaser has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the Target Assets at the Consideration.

Consideration

The Consideration for the Target Assets is HK$175,920,000, which is payable by the Purchaser to the Vendors in the following manner:

(i) HK$17,592,000, being 10% of the Consideration, shall be payable upon signing of the Asset Purchase Agreement;

(ii) HK$17,592,000, being 10% of the Consideration, shall be payable within 30 days following the signing of the Asset Purchase Agreement; and

(iii) HK$140,736,000, being the remaining balance of the Consideration, shall be paid in tranches within 7 Business Days following delivery and Completion of relevant units of the Target Assets.

The Consideration was determined after arm's length negotiations between the parties taking into account various factors, including but not limited to the types of passenger services provided by the Target Assets, the estimated return expected to be generated from the operation of the Target Assets and the market size of the non-franchised bus services. The Consideration will be satisfied partly by the equity contribution by the Company and the other shareholder of CW Bus and partly by bank financing extended to the Purchaser.

Conditions precedent

Completion in respect of the purchase of each Target Asset is conditional upon the fulfillment or waiver (as the case maybe) of the following conditions:

(i) the Purchaser being satisfied with the results of the due diligence review of the Target

Assets and there being no material adverse change to the conditions of the Target Assets up to Completion;

• (ii) the Purchaser and the Vendors having obtained all necessary consent and approval for the transactions contemplated under the Asset Purchase Agreement, and such consents and approvals remain valid and there being no rules or regulations prohibiting or materially delaying the performance and completion of the Asset Purchase Agreement;

• (iii) the charge in respect of each Target Asset having been released and discharged in full;

• (iv) none of the warranties made by the Vendors under the Asset Purchase Agreement, and other provisions of the Asset Purchase Agreement having been breached in any material respect (or, if capable of being remedied, has not been remedied), or (in respect of any of the aforesaid warranties) is misleading or untrue in any material respect;

• (v) none of the warranties made by the Purchaser under the Asset Purchase Agreement, and other provisions of the Asset Purchase Agreement having been breached in any material respect (or, if capable of being remedied, has not been remedied), or (in respect of any of the aforesaid warranties) is misleading or untrue in any material respect; and

• (vi) service contracts in respect of each Target Asset having been novated from the Vendors to the Purchaser.

INFORMATION OF THE GROUP AND THE PARTIES TO THE ASSET PURCHASE AGREEMENT

The Group

The Group is principally engaged in civil engineering, electrical and mechanical engineering, foundation and building construction work, property development and assets leasing, professional services (including provision of security and facility management solutions) and other activities.

The Vendors

The Vendors are companies incorporated under the laws of Hong Kong with limited liability. The Vendors' principal activities are operating non-franchised bus services.

The Purchaser

The Purchaser is a company incorporated under the laws of Hong Kong with limited liability and an insignificant subsidiary of the Company. The principal business of the Purchaser will be operation of non-franchised bus services.

REASONS FOR AND BENEFITS OF THE ASSET PURCHASE AGREEMENT

As stated in the annual report of the Company for the year ended 31 March 2018, in the year ahead, the Group will continue to broaden its income streams via new business developments. The Group has initiated reviews on the possibilities of diversifying into the non-franchised bus service business in light of the commencement of the operation of the Hong Kong-Zhuhai-Macao Bridge (the "HZM Bridge"). With the increasing number of mainland visitors coming to Hong Kong following the opening of the HZM Bridge, the Group expects that the demand for non-franchised bus services will increase and the Directors are of the view that the Acquisition provides a prime opportunity for the Group to diversify and broaden its business base by entering into non-franchised bus service business, and the Group is expected to be benefited from diversifying its revenue stream which is expected to increase its shareholders' value and benefit the Company and its shareholders as a whole.

On the basis of the foregoing, the Directors are of the view that the Acquisition is on normal commercial terms after arm's length negotiations between the respective parties, and the terms of the Asset Purchase Agreement are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Acquisition exceeds 5% but are less than 25%, the entering into of the Asset Purchase Agreement and the transactions contemplated thereunder constitute a discloseable transaction of 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.

Fortunate Spring is a substantial shareholder holding 40% interest in CW Bus, which is an insignificant subsidiary of the Company under Rule 14A.09(1) of the Listing Rules. Therefore Fortunate Spring, together with its ultimate beneficial owners, being two ultimate beneficial owners of the Vendors, are not regarded as connected persons of the Company pursuant to Rule 14A.09 of the Listing Rules. Therefore the Acquisition does not constitute a connected transaction under Chapter 14A of the Listing Rules.

DEFINITIONS

In this announcement, the following expressions shall (unless the context otherwise requires) have the following meanings:

"Acquisition"	the proposed acquisition of the Target Assets from the
Vendors by the Purchaser pursuant to the terms and
conditions of the Asset Purchase Agreement
"Asset Purchase Agreement"	the bus purchase agreement dated 30 November 2018 entered
into between the Purchaser and the Vendors in respect of the
Acquisition
"Board"	the board of Directors

"Business Day(s)"	a day on which banks in Hong Kong are generally open for
normal banking business (other than a Saturday, Sunday or a
public holiday)
"Chun Kit"	Chun Kit Transportation Services Company Limited, a
company incorporated in Hong Kong with limited liability
"Company"	Asia Allied Infrastructure Holdings 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: 00711)
"Completion"	in respect of the Target Asset, means the completion of the
sale and purchase, and the delivery of that particular Target
Asset
"Consideration"	the aggregate purchase price for the Target Assets, being
HK$175,920,000
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"CW Bus"	Chun Wo Bus Services (BVI) Limited, a company incorporated
in the British Virgin Islands with limited liability and
is owned as to 60% by Plentiful Dynamics and 40% by
Fortunate Spring, and is an insignificant subsidiary of the
Company
"Director(s)"	the director(s) of the Company
"Fortunate Spring"	Fortunate Spring Global Limited, a company incorporated in
the British Virgin Islands with limited liability
"Fu Yi"	Fu Yi Company Limited, a company incorporated in Hong
Kong with limited liability
"Gainway"	Gainway Industries Limited, a company incorporated in
Hong Kong with limited liability
"Group"	the Company and its subsidiaries from time to time
"HK$"	Hong Kong dollar(s), the lawful currency of Hong Kong
"Hong Kong"	the Hong Kong Special Administrative Region of the
People's Republic of China
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
Exchange