PDF《东明润昌化工有限公司》

1 SINOSTAR PEC HOLDINGS LIMITED (Company Registration No.

200609833N) A. PROPOSED ACQUISITION OF THE SALE ASSETS (AS DEFINED HEREIN) FROM DONGMING RUNCHANG PETROCHEMICAL CO., LTD. ( 东东东东明 明明明润 润润润昌化工有限公司 昌化工有限公司 昌化工有限公司 昌化工有限公司) ( DONGMING RUNCHANG );

AND B. PROPOSED DISPOSAL OF 51% OF THE EQUITY INTEREST AND REGISTERED CAPITAL OF DONGMING RUNCHANG TO HEZE LONG DING INVESTMENT LIMITED (菏菏菏菏泽龙 泽龙 泽龙 泽龙鼎投 鼎投 鼎投 鼎投资 资资资有限公司 有限公司 有限公司 有限公司) ( HLDIL ). A. INTRODUCTION I. The board of directors (the Board ) of Sinostar PEC Holdings Limited (the Company , together with its subsidiaries, referred to as the Group ) wishes to announce that Dongming Hengchang Petrochemical Co., Ltd (东明恒昌化工有限公司) ( Dongming Hengchang ), a wholly owned subsidiary of the Company, has on

19 March

2014 entered into a conditional sale and purchase agreement (the Asset Sale Agreement ) with Dongming Runchang to acquire certain gas fractionation processing installation and related assets used by Dongming Runchang in its business of the downstream production and supply of petrochemical products, in particular, processed liquefied petroleum gas ( LPG ) and propylene (the Petrochemical Business ) (the Proposed Acquisition ). The assets proposed to be acquired from Dongming Runchang (collectively, the Sale Assets ) comprise inter alia the gas fractionation processing installation and assets, equipment, storage tanks and other chattels in relation to the Petrochemical Business and the goodwill of Dongming Runchang in connection with the Petrochemical Business. The Proposed Acquisition is an interested person transaction under Chapter

9 of the listing manual (the Listing Manual ) of the Singapore Exchange Securities Trading Limited (the SGX-ST ), which requires approval of the independent shareholders of the Company under Rule

906 of the Listing Manual. The Proposed Acquisition also constitutes a major transaction under Rule

1014 of the Listing Manual which requires approval of the shareholders of the Company. II. In addition, Dongming Hengchang has on

19 March

2014 also entered into a conditional sale and purchase agreement (the Share Sale Agreement ) with HLDIL, a company incorporated in the People'

s Republic of China (the PRC ), for the sale and disposal by Dongming Hengchang of its entire legal and beneficial ownership of 51% of the equity interest and registered capital in Dongming Runchang (the Sale Equity ), free from all charges, liens and other encumbrances to HLDIL and the assignment to HLDIL of an outstanding entrusted loan which had been extended by Dongming Hengchang to Dongming Runchang (the Proposed Disposal ). The Proposed Disposal constitutes a major transaction under Rule

1014 of the Listing Manual which requires approval of the shareholders of the Company.

2 B. BACKGROUND INFORMATION ON DONGMING RUNCHANG As at the date hereof, Dongming Runchang is a 51% subsidiary of the Group incorporated in the PRC, with Dongming Hengchang being the legal and beneficial owner of 51% of its equity interest and registered capital. The other 49% of the equity interest and registered capital of Dongming Runchang is legally and beneficially held by Dongming Runbang Petrochemical Co., Ltd (东明润邦化工有限公司) ( Dongming Runbang ). Dongming Runchang carries on the Petrochemical Business and the business of upstream refining, processing and selling of other oil derivatives such as gasoline, diesel, naphtha and asphalt (the Other Oil Derivatives Business ). ` Li Xiang Ping ( Mr Li ), a director and the non-executive chairman of the Company, is also a controlling shareholder of the Company. Mr Li has a deemed interest in all the 329,996,000 issued shares in the capital of the Company (representing 51.56% of the issued shares in the Company) held by the Company'

s parent company, Intelligent People Holdings Limited ( Intelligent People ), by virtue of his 87.03% shareholding interest in Intelligent People. Further, Mr Li has a deemed interest in all the shares in Dongming Runchang by virtue of Dongming Hengchang, a wholly-owned subsidiary of the Company. Fan Deng Chao ( Mr Fan ), the chief executive director of the Company, is the holder of the remaining 12.97% shareholding interest in Intelligent People. Apart from their indirect equity interests in Dongming Runchang held through the Company, Mr Li and Mr Fan respectively also hold indirect equity interests of 4.42% and 0.83% in Dongming Runbang, and 2.17% and 0.41% in Dongming Runchang, through various intermediary companies. A diagram setting out the shareholding interests of Mr Li and Mr Fan in Dongming Runchang is set out in Appendix A to this Announcement. In addition, Mr Li is the legal representative and board chairman of Shandong Dongming Petrochem Group Co., Ltd (山东东明石化集团有限公司) ( Dongming Petrochem ), the 100% immediate holding company of Dongming Runbang. Accordingly, Dongming Runchang would, for the purposes of Chapter

9 of the Listing Manual and the Proposed Acquisition, be regarded as an interested person of the Company. An outstanding entrusted loan has been extended by Dongming Hengchang to Dongming Runchang which as at

31 December

2013 (including accrued interests up to

31 December 2013) amounted to RMB300,813,333 (the Outstanding Loan ). C. VALUATION OF THE SALE ASSETS AND THE SALE EQUITY In connection with the Proposed Acquisition and the Proposed Disposal, the Company engaged an independent valuer, Jones Lang LaSalle Corporate Appraisal and Advisory Limited (the Valuer ), to assess and determine the market value of the Sale Assets and the market value of the identifiable tangible assets and liabilities of Dongming Runchang, assuming disposal of the Sale Assets pursuant to the Proposed Acquisition.

3 Based on valuation reports dated

17 February

2014 (the Sale Assets Valuation Report ) and

4 March

2014 (the Sale Equity Valuation Report ) issued by the Valuer, the market value of the Sale Assets as at

31 October

2013 was RMB89,581,000 and the market value of the identifiable tangible assets and liabilities of Dongming Runchang, assuming disposal of the Sale Assets pursuant to the Proposed Acquisition as at

31 October

2013 was RMB227,586,000. The Sale Assets Valuation Report was prepared in accordance with the International Valuation Standards issued by the International Valuation Standards Committee and the Uniform Standards of Professional Appraisal Practice issued by the Appraisal Standard Board (USA). The Sale Equity Valuation Report was prepared in accordance with the International Valuation Standards issued by the International Valuation Standards Council. D. THE PROPOSED ACQUISITION 1. SALIENT TERMS OF THE ASSET SALE AGREEMENT 1.1 Conditions Precedent The Proposed Acquisition is conditional on inter alia the following: (a) Dongming Hengchang having received the requisite approval from its board of directors and its shareholder and the shareholders of the Company, at an extraordinary general meeting to be convened by the Company for the proposed disposal of the Sale Equity and acceptance of the assignment of the outstanding entrusted loan to HLDIL pursuant to the Share Sale Agreement (the Proposed Transaction );

(b) Dongming Hengchang having received the requisite approval(s) (where required) from its board of directors and its shareholder and the independent shareholders of the Company under Chapters

9 and

10 of the Listing Manual, at an extraordinary general meeting ( EGM ) to be convened by the Company for the Proposed Acquisition;

(c) all requisite regulatory approvals and corporate approvals, if necessary, for the transactions contemplated under the Asset Sale Agreement being obtained, and not withdrawn, suspended, amended or revoked, on or before the date of completion of the Proposed Acquisition (the Proposed Acquisition Completion Date ), and if such consents or approvals are granted or obtained subject to any conditions, such conditions being reasonably acceptable to Dongming Hengchang;

(d) no person having commenced or threatened to commence any proceedings or investigation for the purpose of prohibiting or otherwise challenging or interfering with the proposed disposal by Dongming Runchang;

4 (e) all representations, warranties and undertakings provided by Dongming Runchang under the Asset Sale Agreement being complied with, true, accurate and correct as at the date of the Asset Sale Agreement and each day up to and including the Proposed Acquisition Completion Date;

(f) no material adverse change (as determined by Dongming Hengchang in its reasonable discretion) in the prospects, operations or financial conditions of Dongming Runchang occurring on or before the Proposed Acquisition Completion Date;

(g) Dongming Runchang having at its expense applied to the relevant authorities for and procured the transfer of all the licences and approvals necessary for Dongming Hengchang to carry on the Petrochemical Business;

(h) the approval from the relevant bank facilitating the Outstanding Loan being obtained for the setting off of the Assets Purchase Consideration against an equivalent amount of the Outstanding Loan;

(i) all accrued interest in respect of the entrusted loan extended by Dongming Hengchang to Dongming Runchang for the period from

1 January

2014 up to the Proposed Acquisition Completion Date (both dates inclusive) having been fully paid and settled by Dongming Runchang;

and (j) the completion of the Proposed Acquisition being effected simultaneously with the completion of the Proposed Disposal. If any of the conditions above are not fulfilled or not waived by Dongming Hengchang by

30 June 2014, the Asset Sale Agreement shall ipso facto cease and determine and none of the parties shall have any claim against the other for costs, damages, compensation or otherwise. 1.2 Assets Purchase Consideration The purchase consideration payable by Dongming Hengchang for the Sale Assets shall be the sum of RMB89,581,000 (the Assets Purchase Consideration ) being an amount representing the value of the Sale Assets as disclosed in the Sale Assets Valuation Report. The Assets Purchase Consideration shall be satisfied and deemed fully paid by Dongming Hengchang instructing the relevant bank facilitating the Outstanding Loan that the Assets Purchase Consideration has been set off against an equivalent amount of the Outstanding Loan owed to Dongming Hengchang, thereby reducing the Outstanding Loan by such amount. No further payment will be required to be made by Dongming Hengchang for the Sale Assets. 1.3 Relevant Employees Dongming Runchang shall by notice in writing terminate the employment of such of its employees involved in the Petrochemical Business as are notified by Dongming Runchang to Dongming Hengchang in writing within

14 business days from the date of the Asset Sale

5 Agreement (or such other date that Dongming Runchang and Dongming Hengchang may mutually agree) (the Relevant Employees ), with effect from the close of business on the Proposed Acquisition Completion Date. Dongming Hengchang shall make a written offer of employment to the Relevant Employees, on such terms and conditions not different from the Relevant Employees'

terms of employment with Dongming Runchang. Dongming Runchang shall use its best endeavours to persuade the Relevant E........