China Overseas Grand Oceans : MAJOR AND CONNECTED TRANSACTION IN RELATION TO FORMATION OF JOINT VENTURE

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.

(incorporated in Hong Kong with limited liability)

(Stock Code: 81)

MAJOR AND CONNECTED TRANSACTION IN RELATION TO

FORMATION OF JOINT VENTURE

The Board is pleased to announce that on 11 August 2020, the Company, COLI and the JV Company (being an indirect wholly-owned subsidiary of the Company as at the date of this announcement) entered into the JV Agreement, pursuant to which the Company agreed to procure the COGO Nominee and COLI agreed to procure the COLI Nominee to subscribe for fifty (50) additional JV Shares and forty nine (49) JV Shares, respectively, at a subscription price of USD1.00 per JV Share.

Upon Completion, the JV Group shall be principally engaged in the acquisition or sale of any land and properties in the PRC, the acquisition, holding or sale of the holding companies of such land and properties, and the construction, completion and disposal of or dealing with the property developments on such land. The total commitment (which comprises the Current Shareholders' Loans) of the Group (other than the JV Group) and the COLI Group provided to the JV Group shall not exceed HK$20 billion (approximately RMB18.2 billion).

The JV Company currently has one (1) fully-paid up share owned by the COGO Nominee. Following Completion, the JV Company will be owned as to 51% and 49% by the Company (through the COGO Nominee) and COLI (through the COLI Nominee), respectively, and the JV Company will be accounted for as a subsidiary of the Company and its accounts will be consolidated with those of the Group.

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As at the date of this announcement, COLI is the controlling shareholder of the Company by virtue of being interested in approximately 38.32% of the issued share capital of the Company, and accordingly, COLI is a connected person of the Company under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio in respect of the JV Agreement and the transactions contemplated thereunder exceeds 25% but is less than 100%, the JV Agreement and the transactions contemplated thereunder constitute a major and connected transaction for the Company and are subject to reporting, announcement and Independent Shareholders' approval requirements under Chapters 14 and 14A of the Listing Rules.

An Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders in respect of the JV Agreement and the transactions contemplated thereunder. Maxa Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this connection.

A GM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the JV Agreement and the transactions contemplated thereunder. Voting at the GM will be conducted by poll and COLI and its associates will abstain from voting at the GM.

A circular containing, among other things, further details of the JV Agreement, the recommendation of the Independent Board Committee, a letter from the independent financial adviser to the Independent Board Committee and the Independent Shareholders and a notice convening the GM will be despatched to the Shareholders on or before 25 August 2020.

The Board is pleased to announce that on 11 August 2020, the Company, COLI and the JV Company (being an indirect wholly-owned subsidiary of the Company as at the date of this announcement) entered into the JV Agreement, pursuant to which the Company agreed to procure the COGO Nominee and COLI agreed to procure the COLI Nominee to subscribe for fifty (50) additional JV Shares and forty nine (49) JV Shares, respectively, at a subscription price of USD1.00 per JV Share.

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THE JV AGREEMENT

Date

11 August 2020

Parties

1. the Company;
2. COLI; and
3. the JV Company.

As at the date of this announcement, the JV Company is directly wholly-owned by the COGO Nominee, which is in turn directly wholly-owned by the Company.

As at the date of this announcement, COLI is the controlling shareholder of the Company by virtue of it being interest in approximately 38.32% of the issued share capital of the Company. CSCEC is the ultimate holding company of COLI by virtue of it being interested in approximately 55.99% of the issued share capital of COLI.

Subscription of JV Shares

The Company shall procure the COGO Nominee to subscribe for fifty (50) additional JV Shares at the aggregate subscription price of USD50.00.

COLI shall procure the COLI Nominee to subscribe for forty nine (49) JV Shares at the aggregate subscription price of USD49.00.

The respective subscription monies shall be paid by the Company (or the COGO Nominee) and COLI (or the COLI Nominee) at Completion. The subscription monies to be paid by the Company (or the COGO Nominee) will be financed by the internal resources of the Company. The respective subscription price was determined based on the amount paid up or regarded as paid up.

The JV Company currently has one (1) fully-paid up share owned by the COGO Nominee. Following Completion, (i) the JV Company will be owned as to 51% and 49% by the Company (through the COGO Nominee) and COLI (through the COLI Nominee), respectively; (ii) the Company and COLI shall be entitled to the rights and liabilities of the JV Company accrued on or after 1 July 2020 in the proportion of 51% and 49%; and (iii) the JV Company will be accounted for as a subsidiary of the Company and its accounts will be consolidated with those of the Group.

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Advancement of loan to the JV Company

As at 30 June 2020, certain members of the Group (other than the JV Group) have advanced inter-company loan in the principal aggregate amount of RMB377,267,637 (the "Inter-companyLoan") to the JV Company, for investing in property development projects in the PRC. The Inter-company Loan is repayable on demand and has an interest rate of 3.1% per annum commencing from 1 July 2020.

Within seven days from the date of Completion, COLI shall pay, or procure its nominee(s) to pay, to the Company at the direction of the JV Company, as a shareholder's loan, a sum equivalent to 49% of the Inter-company Loan (i.e. RMB184,861,142 or an equivalent amount in HK$ converted at the Interbank FX Market CNY Central Parity Rate of RMB against HK$ as published by the China Foreign Exchange Trade System as authorised by the People's Bank of China on the payment date) plus interest accrued thereon from 1 July 2020 up to the payment date (the "COLI Loan"), as partial settlement of the Inter-company Loan plus interest accrued thereon.

The COLI Loan and the remaining balance of the Inter-company Loan plus interest accrued thereon from 1 July 2020 up to the payment date shall be regarded as shareholders' loans of the JV Company upon payment (collectively, the "Current Shareholders' Loans").

As a result, following payment of the COLI Loan, the JV Company shall become indebted to the Group (other than the JV Group) and the COLI Group in the proportion of 51% and 49%, which corresponds to the Company's and COLI's respective equity interests in the JV Company. The Company, COLI and the JV Company shall further agree upon the interest rate applicable to the Current Shareholders' Loans as from the payment date of the COLI Loan.

Condition precedent

Completion shall be conditional upon the Company having obtained the approval of the Independent Shareholders at the GM by way of poll in relation to the JV Agreement and the transactions contemplated thereunder in accordance with the Listing Rules.

Completion

Completion shall take place within seven days after fulfilment of the condition precedent set out in the paragraph above (or such other date as may be agreed by the Company and COLI in writing).

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Business of the JV Group

Unless otherwise unanimously agreed between the JV Shareholders, the principal business of the JV Group upon Completion shall be the acquisition or sale of any land and properties in the PRC, the acquisition, holding or sale of the holding companies of such land and properties and the construction, completion and disposal of or dealing with the property developments on such land (the "Business").

Future funding

Working capital requirements of the JV Group in relation to the Business shall be financed by the Group and the COLI Group (whether by way of subscription of new JV Shares, provision of shareholder's loan(s) or otherwise) in proportion to the Company's and COLI's respective 51% and 49% equity interests in the JV Company. The total commitment of the Group and the COLI Group provided to the JV Company for meeting the working capital requirements of the JV Group (which comprises the Current Shareholders' Loans) shall not exceed HK$20 billion (approximately RMB18.2 billion), and the JV Group shall seek to meet its working capital requirements which exceed such limit from other financing sources.

Management

The board of directors of the JV Company will consist of five (5) directors, three (3) of whom will be appointed by the Company, and the remaining two (2) directors will be appointed by COLI. The quorum of a meeting of the board of directors of the JV Company shall be as set out in the memorandum and articles of association of the JV Company.

The board of directors of the JV Company shall be responsible for making decisions relating to the Business from time to time. All matters to be determined by the board of directors of the JV Company shall be by majority decision.

Restrictions on equity transfers

Each JV Shareholder shall have a right of first offer to acquire the equity interests in the JV Company to be sold by the other JV Shareholder.

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INFORMATION ABOUT THE JV GROUP

General information

The JV Company was established under the laws of the British Virgin Islands in September 2013 by the COGO Nominee. As at the date of this announcement, the JV Company has one (1) JV Share in issue held by the COGO Nominee, which is in turn directly wholly-owned by the Company.

The JV Group owns 498 car parking spaces (of which 254 are non-air raid shelter car parking spaces and 244 are air-raid shelter car parking spaces) and 49 car parking zones with a total gross floor area of 949.64 square meters, which are situated at Yancheng, the PRC and being property assets remaining from legacy projects of the JV Group.

Financial information of the JV Group

Based on the unaudited consolidated financial statements of the JV Group, the net asset value of the JV Group as at 30 June 2020 was approximately RMB7.12, and the net loss (before and after taxation) of the JV Group for the years ended 31 December

2018 and 31 December 2019 are set out below:

	For the year ended 31 December
	2018	2019
	(RMB'000)	(RMB'000)
Net loss before taxation	10,101	20,562
Net loss after taxation	10,101	19,862

The book value of the total assets of the JV Group as at 30 June 2020 was approximately RMB402,412,882.

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FINANCIAL IMPACT ON THE COMPANY

The subscription of JV Shares by the COLI Nominee and the assumption of the COLI Loan constitute a deemed disposal by the Company of 49% equity interest in the JV Company. The consideration payable by COLI in respect of 49% of the issued share capital in the JV Company and the assumption of the COLI Loan were determined with reference to the par value of such shares and the book value of such loan, respectively.

Upon Completion, the JV Company will remain as an indirect subsidiary of the Company. As such, the JV Group and its operating results, assets and liabilities will continue to be consolidated in the financial statements of the Group. As the subscription of JV Shares is an equity transaction, no gain/loss will be reported in the Company's consolidated statement of profit or loss.

The proceeds from the subscription of JV Shares and the assumption of the COLI Loan will be used as working capital of the JV Company and the Company, respectively.

REASONS AND BENEFITS OF THE TRANSACTION

The Group is principally engaged in property investment and development, property leasing and investment holding.

The COLI Group is principally engaged in property development and investment, and other operations. CSCEC (the ultimate holding company of COLI), together with its subsidiaries (excluding those listed on any stock exchange), is a conglomerate principally engaged in building construction, international contracting, real estate development and investment, infrastructure construction and investment and design prospecting.

There are currently numerous large-scale real estate investment opportunities in certain major operating cities of the Company. Leveraging on COLI's property development and investment track record and the brand and network of both COLI and the Company, the formation of an investment cooperation platform with COLI can support the Company's strategy to participate in larger-scale investment projects in such cities.

The Directors (excluding the independent non-executive Directors whose views will be contained in the circular after considering the advice from the independent financial adviser) consider that the terms of the JV Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, COLI is the controlling shareholder of the Company by virtue of being interested in approximately 38.32% of the issued share capital of the Company and accordingly, COLI is a connected person of the Company under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio in respect of the JV Agreement and the transactions contemplated thereunder exceeds 25% but is less than 100%, the JV Agreement and the transactions contemplated thereunder constitute a major and connected transaction for the Company and are subject to reporting, announcement and Independent Shareholders' approval requirements under Chapters 14 and 14A of the Listing Rules.

Following Completion, the Company's interests in the JV Company will be reduced from 100% to 51%. As such, the subscription of JV Shares by the COLI Nominee and the assumption of the COLI Loan constitute a deemed disposal for the Company under Rule 14.29 of the Listing Rules. As all applicable percentage ratios in respect of such deemed disposal are less than 5%, such deemed disposal does not constitute a notifiable transaction for the Company under Chapter 14 and only constitutes a de minimis connected transaction under Chapter 14A of the Listing Rules and is subject to reporting and announcement requirements but is exempt from the Independent Shareholders' approval requirement under Chapters 14 and 14A of the Listing Rules.

None of the Directors has a material interest in the JV Agreement and the transactions contemplated thereunder. However, Mr. Yan Jianguo (being a non-executive director of the Company, the chairman and executive director of COLI, and chairman and president of COHL) and Mr. Zhuang Yong (being the chairman and executive director of the Company, a vice chairman and non-executive director of COLI and a director of COHL) have voluntarily abstained from voting on the board resolution(s) approving the entering into of the JV Agreement and the transactions contemplated thereunder.

An Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders in respect of the JV Agreement and the transactions contemplated thereunder. Maxa Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this connection.

A GM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the JV Agreement and the transactions contemplated thereunder. Voting at the GM will be conducted by poll and COLI and its associates will abstain from voting at the GM.

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A circular containing, among other things, further details of the JV Agreement and the transactions contemplated thereunder, the recommendation of the Independent Board Committee, a letter from the independent financial adviser to the Independent Board Committee and the Independent Shareholders and a notice convening the GM will be despatched to the Shareholders on or before 25 August 2020.

DEFINITIONS

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

"associate(s)",	each shall have the meaning ascribed to it under the
"connected person",	Listing Rules;
"controlling shareholder",
"percentage ratio(s)" and
"subsidiary(ies)"
"Board"	the board of Directors;
"Business"	has the meaning given to it under the section
	headed "THE JV AGREEMENT - Business of the
	JV Group" of this announcement;
"COGO Nominee"	China Overseas Grand Oceans Investments
	Limited, a company incorporated in Hong Kong
	with limited liability and a direct wholly-owned
	subsidiary of the Company;
"COHL"	China Overseas Holdings Limited, a company
	incorporated in Hong Kong with limited liability
	and the controlling shareholder of the Company
	and COLI;
"COLI"	China Overseas Land & Investment Limited, a
	company incorporated in Hong Kong with limited
	liability, whose shares are listed on the Main Board
	of the Stock Exchange (stock code: 688) and the
	controlling shareholder of the Company;
"COLI Group"	COLI	and	its	subsidiaries	(excluding
	subsidiary(ies) listed on any stock exchange) from
	time to time;
"COLI Loan"	has the meaning given to it under the section
	headed "THE JV AGREEMENT - Advancement
	of loan to the JV Company" of this announcement;

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"COLI Nominee"	Ling Feng Limited (領澧有限公司), a company
	incorporated under the laws of the British Virgin
	Islands with limited liability, an indirect
	wholly-owned subsidiary of COLI;
"Company"	China Overseas Grand Oceans Group Limited, a
	company incorporated in Hong Kong with limited
	liability and whose shares are listed on the Main
	Board of the Stock Exchange (stock code: 81);
"Completion"	completion of the subscription of fifty (50)
	additional JV Shares by the COGO Nominee and
	the subscription of forty nine (49) JV Shares by the
	COLI Nominee pursuant to the JV Agreement;
"CSCEC"	中國建築集團有限公司 (China State Construction
	Engineering Corporation*), a state-owned
	enterprise organised and existing under the laws of
	PRC, and the ultimate holding company of COHL
	and COLI;
"Current Shareholders'	has the meaning given to it under the section
Loans"	headed "THE JV AGREEMENT - Advancement
	of loan to the JV Company" of this announcement;
"Directors"	directors of the Company;
"GM"	a general meeting of the Company to be convened
	and held for the Independent Shareholders to
	consider and, if thought fit, approve the JV
	Agreement and the transactions contemplated
	thereunder;
"Group"	the Company and its subsidiaries from time to
	time;
"HK$"	Hong Kong dollars, the lawful currency of Hong
	Kong;
"Hong Kong"	the Hong Kong Special Administrative Region of
	the PRC;
"Independent Board	the independent board committee of the Company
Committee"	comprising all independent non-executive
	Directors to advise the Independent Shareholders
	in respect of the JV Agreement and the transactions
	contemplated thereunder;

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"Independent Shareholders"	Shareholders who are not required to abstain from
	voting at the GM to approve the JV Agreement and
	the transactions contemplated thereunder;
"Inter-company Loan"	has the meaning given to it under the section
	headed "THE JV AGREEMENT - Advancement
	of loan to the JV Company" of this announcement;
"JV Agreement"	the joint venture agreement dated 11 August 2020
	entered into between the Company, COLI and the
	JV Company in relation to formation of joint
	venture in respect of the JV Company by the
	Company (through the COGO Nominee) and COLI
	(through the COLI Nominee) on a 51:49 basis upon
	Completion;
"JV Company"	Ocean Continent Investments Limited, a company
	incorporated under the laws of the British Virgin
	Islands with limited liability and an indirect
	wholly-owned subsidiary of the Company as at the
	date of this announcement;
"JV Group"	the JV Company and its subsidiaries;
"JV Share(s)"	ordinary share(s) of USD1.00 each in the share
	capital of the JV Company;
"JV Shareholder(s)"	holder(s) of the JV Shares;
"Listing Rules"	the Rules Governing the Listing of Securities on
	the Stock Exchange as amended from time to time;
"Maxa Capital"	Maxa Capital Limited, a licensed corporation to
	carry out Type 1 (dealing in securities), and Type 6
	(advising on corporate finance) regulated activities
	under the Securities and Futures Ordinance
	(Chapter 571 of the Laws of Hong Kong), being the
	independent financial adviser appointed by the
	Company to advise the Independent Board
	Committee and the Independent Shareholders in
	respect of the JV Agreement and the transactions
	contemplated thereunder;
"PRC"	the People's Republic of China (for the purpose of
	this announcement, excluding Hong Kong, the
	Macao Special Administrative Region of the PRC
	and Taiwan);

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"RMB"	Renminbi, the lawful currency of the PRC;
"Share(s)"	ordinary share(s) of the Company;
"Shareholder(s)"	holder(s) of the Shares;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"USD"	United States dollar(s), the lawful currency of the
	United States of America; and
"%"	per cent.

For the purpose of this announcement and for illustrative purpose only, RMB is converted into HK$ at the exchange rate of RMB0.91 to HK$1.00. No representative is made that any amounts in RMB or HK$ has been or could be converted at the above rates or at any other rates.

By order of the Board

CHINA OVERSEAS GRAND OCEANS

GROUP LIMITED

Zhuang Yong

Chairman and Executive Director

Hong Kong, 11 August 2020

* For identification purpose only

As at the date of this announcement, the Board comprises eight directors, of which three are executive directors, namely Mr. Zhuang Yong, Mr. Yang Lin and Mr. Paul Wang Man Kwan; two non-executive directors, namely Mr. Yan Jianguo and Mr. Billy Yung Kwok Kee, and three independent non-executive directors, namely Dr. Timpson Chung Shui Ming, Mr. Jeffrey Lam Kin Fung and Mr. Dantes Lo Yiu Ching.

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