China Jinmao’s US$314.09 Million Acquisition of 29.9% Existing Shares and Convertible Bonds in China VAST Industrial Urban Development Company

Slaughter and May advised China International Capital Corporation Hong Kong Securities Limited on the deal while O’Melveny & Myers LLP represented China VAST Industrial Urban Development Company Limited and its major shareholder, Profit East Limited.

CICC acted as as financial adviser to China Jinmao Holdings Group Limited (China Jinmao) on the acquisition of 29.9% existing shares and convertible bonds in China VAST Industrial Urban Development Company Limited (China VAST), a company listed on the Hong Kong Stock Exchange (stock code: 6166). The aggregate consideration for the acquisition of issued shares and convertible bonds is approximately HK$2.438 billion (US$314.09 million). The transaction was announced on 28 June 2021.

China Jinmao is a company listed on the Hong Kong Stock Exchange (stock code: 817). The transaction constitutes a discloseable transaction of China Jinmao under the Hong Kong Listing Rules.

Immediately following completion of the share acquisition from the controlling shareholders of China VAST, China Jinmao will become the second largest shareholder of China VAST, holding 29.9% of the issued shares in China VAST, and the controlling shareholders (holding 44.08% of the issued shares in aggregate) will remain unchanged.

Based on the initial conversion price, upon full conversion of the convertible bonds, China Jinmao will receive new shares representing approximately 19.00% of the existing shares in China VAST, which would result in its holding, together with the above stake, an aggregate of approximately 38.91% of the enlarged total shares (based on certain assumptions) in China VAST.

The net proceeds from the issuance of the convertible bonds will be applied by China VAST for the purpose of financing the repayment of its existing outstanding indebtedness, refinancing its existing indebtedness, meeting the current capital commitments of its investment projects, distribution of dividends and general working capital.

China Jinmao is a large-scale developer and operator of quality real estate projects in the PRC, and the platform enterprise of Sinochem Group Co., Ltd. in the development of real estate business. China Jinmao is currently principally engaged in city operations, property development, commercial leasing, retail operations, hotel operations and technology and services.

China VAST is principally engaged in the business of planning, development and operation of large-scale industrial towns, property development and property leasing in the PRC.

Slaughter and May’s team included Benita Yu (Picture), Partner, Caroline Lin, Associate and Xiaolu Yin, Trainee Solicitor.

The O’Melveny team for the China VAST share sale and convertible bond transaction was led by Hong Kong corporate partner Edwin Kwok, and included counsel Lillian Cheung, associate Hilda Leung, and trainee solicitors Dave Chan and Jeffrey Hang. In addition to this team, others who have assisted Kwok on the notes repurchase and redemption and various projects for China VAST have included Winnie Chan, Ella Ge, and Edward Poon.

Involved fees earner: Winnie Chan – O’Melveny & Myers LLP; Lillian Cheung – O’Melveny & Myers LLP; Ella Ge – O’Melveny & Myers LLP; Edwin Kwok – O’Melveny & Myers LLP; Hilda Leung – O’Melveny & Myers LLP; Edward Poon – O’Melveny & Myers LLP; Caroline Lin – Slaughter and May; Benita Yu – Slaughter and May;

Law Firms: O’Melveny & Myers LLP; Slaughter and May;

Clients: China International Capital Corporation Limited (CICC); China VAST Industrial Urban Development Company Limited;

Author: Sonia Carcano