Grand Baoxin Auto : Announcements and Notices - Continuing Connected Transactions Property ...

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GRAND BAOXIN AUTO GROUP LIMITED

廣 匯 寶 信 汽 車 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1293)

CONTINUING CONNECTED TRANSACTIONS

PROPERTY LEASING FRAMEWORK AGREEMENTS

BAOXIN PROPERTY LEASING FRAMEWORK AGREEMENT

The Board is pleased to announce that on 30 April 2019 (after trading hours), the Company and CGA entered into the Baoxin Property Leasing Framework Agreement, pursuant to which the Group shall lease certain Baoxin Properties to the CGA Group.

CGA PROPERTY LEASING FRAMEWORK AGREEMENT

The Board is pleased to announce that on 30 April 2019 (after trading hours), the Company and CGA entered into the CGA Property Leasing Framework Agreement, pursuant to which the CGA Group shall lease certain CGA Properties to the Group.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, CGA, through its indirect wholly-owned subsidiary China Grand Auto, holds approximately 67.71% of the shares in the Company, and it is therefore a controlling shareholder and connected person of the Company under the Listing Rules. Accordingly, the transactions contemplated under the Baoxin Property Leasing Framework Agreement and CGA Property Leasing Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios for each of the Baoxin Property Leasing Framework Agreement and CGA Property Leasing Framework Agreement are more than 0.1% but less than 5%, the transactions contemplated under each of the Baoxin Property Leasing Framework Agreement and CGA Property Leasing Framework Agreement are subject to the reporting and announcement requirements, but are exempt from the circular and the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

BAOXIN PROPERTY LEASING FRAMEWORK AGREEMENT

The key terms of the Baoxin Property Leasing Framework Agreement are summarised as follows:

Date

30 April 2019

Parties

(1)the Company; and

(2)CGA

Subject Matter

Pursuant to the Baoxin Property Leasing Agreement, the Group shall lease certain Baoxin Properties to the CGA Group for the establishment of affiliates or branches, the sale, repair and maintenance of motor vehicles and related services, and office use, amongst others.

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In compliance with the terms of the Baoxin Property Leasing Framework Agreement, members of the Group may enter into separate implementation agreements with members of the CGA Group in relation to specific Baoxin Properties from time to time. Each implementation agreement will set out the specifications for the particular transactions and the Baoxin Properties to be leased.

Pricing and Payment Terms

The rent of the Baoxin Properties leased by the Group to CGA under the Baoxin Property Leasing Framework Agreement shall be determined principally by arm's length commercial negotiations according to the principles of fairness and reasonableness between the relevant parties. In general, the rent shall be determined based on the actual conditions of the properties with reference to the market prices and the comparable prices in similar areas. In particular, the rent shall not be lower than the amount of rent payable by an independent third party for similar properties. The payment and settlement terms shall be no less favourable to the Group than those of similar property leases offered by an independent third party.

The transactions contemplated under the Baoxin Property Leasing Framework Agreement will be conducted in the ordinary and usual course of business of the Group on normal commercial terms or better.

Payments for the transactions under the Baoxin Property Leasing Framework Agreement shall be shall be settled in cash or by other means as agreed by the signing parties of the implementation agreements and shall be settled monthly.

Term and Termination

The term of the Baoxin Property Leasing Framework Agreement shall be from 1 January 2019 to 31 December 2021. The term of each individual implementation agreement shall not exceed three years and in any event shall not exceed 31 December 2021.

Pursuant to the Baoxin Property Leasing Framework Agreement, an implementation agreement may be terminated by the lessor if any of the following situations occurs: (1) in occupying the Baoxin Property, the lessee contravenes any applicable laws and regulations, or creates serious safety hazards on the Baoxin Property; (2) the usage of the Baoxin Property by the lessee is not in line with the permitted usage as set out in the relevant implementation agreement; (3) the lessee assigns or subleases the Baoxin Property, or pledges the Baoxin Property, or the facilities and appliances thereon, to third parties without the consent of the lessor; and (4) the lessee renovates, expands or refurbishes the Baoxin Property without the written consent of the lessor.

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Proposed Annual caps

Set out below is a summary of the proposed annual caps for the rent and related fees payable by the CGA Group to the Group under the Baoxin Property Leasing Framework Agreement for each of the financial years ending 31 December 2019, 2020 and 2021.

	Total
	Unit: RMB
2019	7,000,000
2020	8,000,000
2021	9,000,000

The proposed annual caps were determined by the Company after taking into account, amongst others, (i) the estimated demand for leased properties of the parties and the expected increase in such demand; (ii) the prevailing market rent charged for similar properties in the area; (iii) the estimated fluctuations in the prevailing market rate in the next three years; and (iv) the buffer for possible rent adjustments.

CGA PROPERTY LEASING FRAMEWORK AGREEMENT

The key terms of the CGA Property Leasing Framework Agreement are summarised as follows:

Date

30 April 2019

Parties

(1)CGA; and

(2)the Company

Subject Matter

Pursuant to the CGA Property Leasing Agreement, the CGA Group shall lease certain CGA Properties to the Group for the establishment of affiliates or branches, the sale, repair and maintenance of motor vehicles and related services, and office use, amongst others.

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In compliance with the terms of the CGA Property Leasing Framework Agreement, members of the CGA Group may enter into separate implementation agreements with members of the Group in relation to specific CGA Properties from time to time. Each implementation agreement will set out the specifications for the particular transactions and the CGA Properties to be leased.

Pricing and Payment Terms

The rent of the CGA Properties leased by the CGA Group to the Group under the CGA Property Leasing Framework Agreement shall be determined principally by arm's length commercial negotiations according to the principles of fairness and reasonableness between the relevant parties. In general, the rent shall be determined based on the actual conditions of the properties with reference to the market prices and the comparable prices in similar areas. In particular, the rent shall not be higher than the amount of rent payable by an independent third party for similar properties. The payment and settlement terms shall be more favourable to the Group than those of similar property leases offered to an independent third party.

The transactions contemplated under the CGA Property Leasing Framework Agreement will be conducted in the ordinary and usual course of business of the Group on normal commercial terms or better.

Payments for the transactions under the CGA Property Leasing Framework Agreement shall be shall be settled in cash or by other means as agreed by the signing parties of the implementation agreements and shall be settled monthly.

Term and Termination

The term of the CGA Property Leasing Framework Agreement shall be from 1 January 2019 to 31 December 2021. The term of each individual implementation agreement shall not exceed three years and in any event shall not exceed 31 December 2021.

Pursuant to the CGA Property Leasing Framework Agreement, an implementation agreement may be terminated by the lessor if any of the following situations occurs: (1) in occupying the CGA Property, the lessee contravenes any applicable laws and regulations, or creates serious safety hazards on the CGA Property; (2) the usage of the CGA Property by the lessee is not in line with the permitted usage as set out in the relevant implementation agreement; (3) the lessee assigns or subleases the CGA Property, or pledges the CGA Property, or the facilities and appliances thereon, to third parties without the consent of the lessor; and (4) the lessee renovates, expands or refurbishes the CGA Property without the written consent of the lessor.

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