(Hong Kong, 12 October 2016) China Overseas Grand Oceans Group Limited (“COGO” or the “Company”; Stock Code: 00081.HK) announced that, the Company has reached an agreement with China Overseas Land & Investment Limited (“COLI”), that COGO will acquire the COLI target group, which property portfolio mainly comprises residential property development projects located in emerging third tier cities in the PRC. Upon completion, the target group will become an indirect wholly-owned subsidiary of the Company and the financial results of the target group will be consolidated into the financial statements of the Company.
The initial consideration of the acquisition is RMB3,516 million (equivalent to HK$4,103 million), which shall be adjusted to the final consideration provided that its amount is not more than 105% of the initial consideration and not less than 95% of the initial consideration. The final consideration shall be payable in cash by the Company to COLI at completion, and is to be satisfied with internal resources of the Company and/or external debt financing. In addition, the repayment loans owing by the relevant member(s) of the target group to the relevant lender(s) in the COLI Group, which is expected to be approximately RMB7,653 million (equivalent to approximately HK$8,930 million) as at the date of completion, will continue to be owing by the relevant member(s) of the target group to the relevant lender(s) in the COLI group after completion.
The COLI target group, which COGO is acquiring from COLI, mainly comprises residential property development projects, with a total GFA of approximately 9.52 million sq. m., located in emerging third tier cities in the PRC (including Yangzhou, Huizhou, Huangshan, Weifang, Zibo, Jiujiang and Shantou). Based on the land bank stated in the 2016 interim report of the Company, this transaction, upon completion, will almost double the Company’s land bank.
The sizable property portfolio held by the target group comprises certain properties for sale at various development stages, which when completed are expected to contribute to the profit of the Company. The acquisition is a strategic expansion that fuels COGO’s business growth over the next few years. The preliminary market valuation of the property portfolio owned by the target group as at 30 September 2016 as estimated by both the Company and COLI was approximately RMB20 billion.
This transaction, upon completion, will reinforce the Company’s position as the leading property developer in third tier cities with leading investment value and growth potential in the PRC, bringing about a significant increase in the Company’s land reserves and entry into emerging new third tier cities with leading investment value and growth potential in the PRC in one single transaction. This transaction dovetails the Company’s strategy to stay focused on the emerging cities with best investment value and growth potentials. The acquisition carries strategic significance and synergies to both the Company and COLI.
Through this transaction, COLI will remain interested in approximately 37.98% of the total issued shares of the Company and the controlling shareholder of the Company. COLI will continue to benefit from the growth of the property market in PRC.
Going forward, COGO will continue to focus on the emerging cities with best investment value and growth potentials, the Company will develop a wide range of tailored and high graded housing products, to suit specific needs of different local markets and customers.
Note:Details of the COLI target group’s property portfolio are based on information provided by the COLI seller and has not been independently verified by the Company.
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