CMPort signed the Land Restructuring Agreement to cooperate
with the Qianhai Land Development Project

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Number:155

Release time:2018-12-24

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CMPort signed the Land Restructuring Agreement to cooperate with the Qianhai Land Development Project

On 24 December 2018, China Merchants Port Holdings Company Limited (“CMPort” or “the Group” , HKSE Code: 00144) is pleased to announce that, as part of an urban planning initiative driven by Shenzhen People’s Government, China Merchants Port Holdings Company Limited (“CMPort” or “the Group”) entered into the Land Restructuring Agreement with Shenzhen Urban Planning, Land and Resources Commission (“SZPL”), Shenzhen Qianhai Shenzhen-Hong Kong Modern Services Commission (“QHSH”), China Merchants Group Limited (“CMG”), Shenzhen Qianhai Pingfangyuanqu Development Company Limited (“QHPF”), China Merchants Shekou Industrial Zone Holdings Company Limited (“CMSK”) and its subsidiaries, Shenzhen China Merchants Shekou Asset Management Company Limited (“CMSA”), and Shenzhen China Merchants Qianhai Chidi Asset Company Limited (“A2 Company”) to further coordinate and manage the various interest in land in Shenzhen Qianhai, for the purpose of developing the Qianhai-Shekou Free Trade Zone with affiliates of QHSH through the establishment of another joint venture company. With reference to the announcement made by the Group on 28 July 2016, CMPort indirectly holds 14% of the A2 Company with the remaining interest indirectly by CMSK and CMSA.

Pursuant to the Land Restructuring Agreement, among others, CMPort, CMSA and CMSK (collectively the “Land Holding Companies”) agreed the various land in Qianhai with an aggregate industrial land area of 2.9 million square meters (“Aggregate CM Land”), in which CMPort holds an aggregate land area of 965,958.41 square meters (“CMP Land”), to be resumed by QHSH and be reclassified for commercial usage for the purpose of future development by the A2 Company and affiliates of QHSH. In consideration of the resumption of the Aggregate CM Land, the parties have agreed the following compensations shall be payable to the Land Holding Companies:

1.    a piece of land located in Dachan Bay Port Phase II with the same area and corresponding coastal length equivalent to 55% of the area of the CMP Land (“Exchange Land”) to be transferred to the Group.

2.    the parties agreed that the new land (“New Land”) of approximately 425,300 square meters and a value of approximately RMB43.21 billion will be granted by the QHSH to the A2 Company for commercial usage. The valuation of RMB43.21 billion is mainly calculated based on the entitlement of 40% of the land appreciation value on the Aggregate CM Land (excluding Exchange Land) granted to the Land Holding Companies and 5% mandatory deduction to the appreciation value for the government expenses.

On 24 December 2018, A2 Company entered into the Debt Confirmation Letter pursuant to which A2 Company agrees that it will pay to each of the Land Holding Companies an amount that is equal to the value of the New Land multiply by the corresponding proportion of land interest each Land Holding Company holds under the Aggregate CM Land.

As the Group has certain interest in land in the Qianhai-Shekou Free Trade Zone, the participation of the Group in the overall development in such area will benefit the long-term development of the Group. Currently, the existing CMP Land are not generating revenue for the Group and the Group is of the view that the transactions contemplated under the Land Restructuring Agreement will allow the Group to own interest in the Dachan Bay Land and to enjoy economic benefits from the Reclassification which together contribute value that is significantly higher than the current value of the CMP Land. At the same time, the Dachan Bay Port land is favourable to the development of the Group's core business in Shenzhen homebase port, and hence further consolidates the Group's leading position in port business in Southern China.

Upon the Land Restructuring Agreement becoming effective, the Group no longer has any interest in the CMP Land. The Group is expected to realise a gain (after tax and attributable to shareholders) from the disposal of the CMP Land of approximately RMB3.15 billion on a consolidated basis, but the Group will not record any gain from the receipt of the Dachan Bay Land. The final amount of the expected gain from the disposal is subject to the final calculation as determined by the value consultation reports.

The Land Restructuring Agreement is conditional on the satisfaction of, among others, the obtaining of the necessary authority approvals and shareholders’ approvals as required by the relevant laws and listing rules within six months from the date of the Land Restructuring Agreement.

Please refer to the announcement of the Group for further details.