DISCLOSEABLE TRANSACTION IN RESPECT OF FINANCE LEASE AGREEMENTS

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1 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 the Cayman Islands with limited liability) (Stock Code: 8117) DISCLOSEABLE TRANSACTION IN RESPECT OF FINANCE LEASE AGREEMENTS FINANCE LEASE AGREEMENTS On 31 July 2014 (after trading hours), the Lessee, a non wholly-owned subsidiary of the Company, as a lessee, entered in the Finance Lease Agreements with the Lessor, as a lessor, pursuant to which the Lessor agreed to purchase the Leasing Equipment and Transportation Vehicle from suppliers or manufacturers at the request of the Lessee and then the Lessor shall lease the Leasing Equipment and Transportation Vehicle to the Lessee for a period of 36 months commencing from the First Lease Date. GENERAL As the relevant applicable percentage ratio calculated in accordance with the GEM Listing Rules is more than 5% but less than 25%, the transactions contemplated under the Finance Lease Agreements constitute a discloseable transaction on the part of the Company under Chapter 19 of the GEM Listing Rules and is only subject to the reporting and announcement requirements of the GEM Listing Rules. On 31 July 2014 (after trading hours), the Lessee, a non wholly-owned subsidiary of the Company, as a lessee, entered in the Finance Lease Agreements with the Lessor, as a lessor. The principal terms of the Finance Lease Agreements are set out as follows: 1

2 FINANCE LEASE AGREEMENTS Date: 31 July 2014 (after trading hours) Parties: (1) Lessee: Can Guang Petrochemical (Fujian) Co., Ltd.* ( 燦 光 石 化 ( 福 建 ) 有 限 公 司 ), a non whollyowned subsidiary of the Company; and (2) Lessor: CIMC Financing and Leasing Co., Ltd* ( 中 集 融 資 租 賃 有 限 公 司 ). To the best of the Directors knowledge and information, the Lessor is a wholly-owned subsidiary of China International Marine Containers (Group) Co., Ltd., the A shares of which are listed on Shenzhen Stock Exchange (Stock Code: 39) and the H shares of which are listed on the main board of the Stock Exchange (Stock Code: 2039). The Lessor is principally engaged in finance lease business, disposal and maintenance for residual value of leased property and advisory and warranty for leasing transaction. To the best of the knowledge, information and belief of the Directors after having made all reasonable enquiries, each of the Lessor, its ultimate beneficial owner(s), and their respective associates is an Independent Third Party. Principal Terms of the Equipment Finance Lease Agreement Subject matter: The Leasing Equipment comprises 45 machinery and equipment for the supply of LNG. The Lessor has agreed to purchase the Leasing Equipment from suppliers or manufacturers at the request of the Lessee and then the Lessor shall lease the Leasing Equipment to the Lessee subject to the terms and conditions of the Equipment Finance Lease Agreement. To the best of the Directors knowledge, information and belief, the suppliers and/or manufacturers of the Leasing Equipment and if applicable, their ultimate beneficial owner(s) are Independent Third Parties. On 31 July 2014, the supplier(s), the Lessor and the Lessee have entered into equipment purchase agreement pursuant to which the Lessor will purchase the Leasing Equipment for the Equipment Finance Lease Agreement. Lease period: The lease period of the Leasing Equipment is for a period of 36 months commencing from the First Lease Date. The First Lease Date will be the date of delivery the Leasing Equipment to the Lessee. 2

3 Lease payments and other fees: The total lease payments payable under the Equipment Finance Lease Agreement shall be RMB12,920, (equivalent to approximately HK$16,354,607) (subject to adjustments), which is determined with reference to the purchase consideration of the Leasing Equipment and will be paid in 36 equal instalments during the lease period but the said total lease payments are subject to adjustments in the event that the annual benchmark lending rate published by the People s Bank of China changes. If the said annual benchmark lending rates changes, the interest rate under the Equipment Finance Lease Agreement will increase or decrease accordingly to the same extent. Following the change in the amount of the total lease payments, if any, the outstanding instalment payments will be adjusted accordingly. A security deposit in the total amount of RMB2,404,400 will be paid by the Lessee for the due performance under the Equipment Finance Lease Agreement within five working days of the date of the Equipment Finance Lease Agreement and before date of delivery of the relevant Leasing Equipment. The said security deposit will be refunded without interest at the expiration of the lease terms if there is no penalty or compensation resulting from any breach caused by the Lessee. A handling fee in the total amount of RMB360,660 will also be paid by the Lessee to the Lessor within five working days of the date of the Equipment Finance Lease Agreement and before date of delivery of the relevant Leasing Equipment. The payments to be made under the Equipment Finance Lease Agreement were determined after arm s length negotiations between the Lessor and the Lessee with reference to the prevailing market rate for finance leases of comparable equipment and machinery. Ownership: Purchase option: The legal title and all rights of the Leasing Equipment shall vest in the Lessor throughout the lease period. Subject to the Lessee having duly performed all its obligations under, and upon the expiry of the lease period under the Equipment Finance Lease Agreement, the Lessee shall have an option to purchase the relevant Leasing Equipment at an agreed nominal amount of RMB100 for each piece of machinery or equipment. 3

4 Guarantee: The Company shall provide guarantee in favour of the Lessor for, including but not limited to, unpaid deposit, unpaid lease payment, compensation, handling charge, default interest or other payables by the Lessee relating to the Equipment Finance Lease Agreement. Ms. Ma Zheng, an executive Director and the Chairman of the Company, shall provide guarantee in favour of the Lessor for, including but not limited to, unpaid deposit, unpaid lease payment, compensation, handling charge, default interest or other payables by the Lessee relating to the Equipment Finance Lease Agreement. The independent non-executive Directors of the Company have reviewed the terms of the guarantee to be provided by the Company and are of the view that the terms of the guarantee are fair and reasonable, the guarantee is on normal commercial terms or better and in the interests of the Company and its Shareholders as a whole. Principal terms of the Transportation Vehicle Finance Lease Agreement Subject matter: The Leasing Transportation Vehicle comprises one lowtemperature liquid transportation vehicle specializing in transport LNG. The Lessor has agreed to purchase the Leasing Transportation Vehicle from supplier at the request of the Lessee and then the Lessor shall lease the Leasing Transportation Vehicle to the Lessee subject to the terms and conditions of the Transportation Vehicle Finance Lease Agreement. To the best of the Directors knowledge, information and belief, the supplier of the Leasing Transportation Vehicle and its ultimate beneficial owner(s) are Independent Third Parties. On 31 July 2014, the supplier, the Lessor and the Lessee have entered into transportation vehicle purchase agreement pursuant to which the Lessor will purchase the Leasing Transportation Vehicle for the Transportation Vehicle Finance Lease Agreement. Lease period: The lease period of the Leasing Transportation Vehicle is for a period of 36 months commencing from the First Lease Date. 4

5 The First Lease Date will be the date of delivery the Leasing Transportation Vehicle to the Lessee. Lease payments and other fees: The total lease payments payable under the Transportation Vehicle Finance Lease Agreement shall be RMB921, (equivalent to approximately HK$1,165,854) (subject to adjustments), which is determined with reference to the purchase consideration of the Leasing Transportation Vehicle and will be paid in 36 equal installments during the lease period but the said total lease payments are subject to adjustments in the event that the annual benchmark lending rate published by the People s Bank of China changes. If the said annual benchmark lending rates changes, the interest rate under the Transportation Vehicle Finance Lease Agreement will increase or decrease accordingly to the same extent. Following the change in the amount of the total lease payments, if any, the outstanding instalment payments will be adjusted accordingly. A security deposit in the amount of RMB171,400 will be paid by the Lessee for the due performance under the Transportation Vehicle Finance Lease Agreement within five working days of the date of the Transportation Vehicle Finance Lease Agreement. The said security deposit will be refunded without interest at the expiration of the lease terms if there is no penalty or compensation resulting from any breach caused by the Lessee. A handling fee in the amount of RMB25,710 will also be paid by the Lessee to the Lessor within five working days of the date of the Transportation Vehicle Finance Lease Agreement. The payments to be made under the Transportation Vehicle Finance Lease Agreement were determined after arm s length negotiations between the Lessor and the Lessee with reference to the prevailing market rate for finance leases of comparable vehicle. Ownership: The legal title and all rights of the Leasing Transportation Vehicle shall vest in the Lessor throughout the lease period. 5

6 Purchase option: Guarantee: Subject to the Lessee having duly performed all its obligations under, and upon the expiry of the lease period under the Transportation Vehicle Finance Lease Agreement, the Lessee shall have an option to purchase the relevant Leasing Transportation Vehicle at an agreed nominal amount of RMB100 for the Leasing Transportation Vehicle. The Company shall provide guarantee in favour of the Lessor for, including but not limited to, unpaid deposit, unpaid lease payment, compensation, handling charge, default interest or other payables by the Lessee relating to the Transportation Vehicle Finance Lease Agreement. Ms. Ma Zheng, an executive Director and the Chairman of the Company, shall provide guarantee in favour of the Lessor for, including but not limited to, unpaid deposit, unpaid lease payment, compensation, handling charge, default interest or other payables by the Lessee relating to the Transportation Vehicle Finance Lease Agreement. The independent non-executive Directors of the Company have reviewed the terms of the guarantee to be provided by the Company and are of the view that the terms of the guarantee are fair and reasonable, the guarantee is on normal commercial terms or better and in the interests of the Company and its Shareholders as a whole. REASONS AND BENEFITS OF ENTERING INTO THE FINANCE LEASE AGREEMENTS The Company is an investment holding company and the Group is principally engaged in manufacture and sale of polyethylene pipes, sale of composite materials, gas transmission and gas distribution. The Lessee and its subsidiaries are principally engaged in the supply of LNG to the customers for industrial, commercial and household uses through sourcing of LNG from the upstream suppliers including but not limited to state-owned enterprises. The scope of the Lessee s business includes gas transmission and gas distribution. The Leasing Equipment and Transportation Vehicle will be used by the Lessee for the supply of LNG to customers in the PRC. It is expected that the financing under the Finance Lease Agreements would be financed by internal resources of the Group. 6

7 The Directors consider that the entering into of the Finance Lease Agreements would enhance the working capital position of the Lessee by using the Leasing Equipment and Transportation Vehicle, and would allow the Lessee to optimize its asset and debt structure. Moreover, the Leasing Equipment and Transportation Vehicle will be utilised by the Lessee to further develop its business in the supply of LNG. The terms under the Finance Lease Agreements have been agreed after arm s length negotiations between the relevant parties with reference to the prevailing market practice and rate. The Directors consider the terms of the Finance Lease Agreements are fair and reasonable and in the interests of the Company and Shareholders as a whole. Furthermore, in light of the expertise of the Lessor in finance leasing, the Directors believe that the building up of the business relationship between the Group and the Lessor will be helpful for the Group s future financing arrangement and will benefit the Group s future business development. GEM LISTING RULES IMPLICATION As the relevant applicable percentage ratio calculated in accordance with the GEM Listing Rules is more than 5% but less than 25%, the transactions contemplated under the Finance Lease Agreements constitute a discloseable transaction on the part of the Company under Chapter 19 of the GEM Listing Rules and is only subject to the reporting and announcement requirements of the GEM Listing Rules. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: associate Board Company connected person(s) Director(s) has the meaning ascribed to it in the GEM Listing Rules board of the Directors China Primary Resources Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares are listed on GEM (stock code: 8117) has the meaning ascribed to it under the GEM Listing Rules director(s) of the Company 7

8 Equipment Finance Lease Agreement Finance Lease Agreements First Lease Date GEM GEM Listing Rules Group Hong Kong the finance lease agreement dated 31 July 2014 and entered into between the Lessor and the Lessee in relation to the lease of the Leasing Equipment by the Lessee together the Equipment Finance Lease Agreement and the Transportation Vehicle Finance Lease Agreement and each a Finance Lease Agreement the date of delivery of the Leasing Equipment or the Leasing Transportation Vehicle, as the case maybe the Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on GEM the Company together with its subsidiaries Hong Kong Special Administrative Region of the PRC Independent Third Party(ies) any person(s) or company(ies) and their respective ultimate beneficial owner(s), to the best of the Directors knowledge, information and belief having made all reasonable enquiries, are not connected persons of the Company and are third parties independent of the Company and its connected persons in accordance with the GEM Listing Rules Leasing Equipment Leasing Equipment and Transportation Vehicle Leasing Transportation Vehicle Lessee various machinery and equipment in relation to the supply of LNG to be leased by the Lessee under the Equipment Finance Lease Agreement together with the Leasing Equipment and the Leasing Transportation Vehicle one low-temperature liquid transportation vehicle specializing in transport LNG to be leased by the Lessee under the Transportation Vehicle Finance Lease Agreement Can Guang Petrochemical (Fujian) Co., Ltd.* ( 燦 光 石 化 ( 福 建 ) 有 限 公 司 ), a company established under the laws of the PRC and is a non wholly-owned subsidiary of the Company 8

9 Lessor LNG PRC Share(s) Shareholder(s) Stock Exchange Transportation Vehicle Finance Lease Agreement HK$ RMB CIMC Financing and Leasing Co., Ltd.* ( 中 集 融 資 租 賃 有 限 公 司 ), an Independent Third Party liquefied natural gas the People s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan ordinary share(s) of HK$ each in the share capital of the Company holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited the finance lease agreement dated 31 July 2014 and entered into between the Lessor and the Lessee in relation to the lease of the Leasing Transportation Vehicle by the Lessee Hong Kong dollar(s), the lawful currency of Hong Kong Renminbi, the lawful currency of the PRC % per cent. Hong Kong, 31 July 2014 By order of the Board China Primary Resources Holdings Limited Ma Zheng Chairman * the English translation of Chinese names or words in this announcement, where indicated, are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words. 9

10 As at the date of this announcement, the Board comprises Ms. MA Zheng, Mr. WONG Pui Yiu and Mr. PAN Feng who are the executive Directors, and Mr. WAN Tze Fan Terence, Mr. CHUNG Chin Keung and Mr. WANG Xiao Bing who are the independent non-executive Directors. This announcement, for which the Directors collectively and individually accept full responsibilities, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading. This announcement will remain on the Latest Company Announcements page of the website of the Stock Exchange at for at least 7 days from the date of its publication and on the Company s designated website at For ease of reference, sums in HK$ and RMB in this announcement is translated at the rate HK$1 = RMB0.79. This does not mean that HK$ could be converted into RMB, or vice versa, based on such exchange rate. 10