Selected deal experience
Shimao Services — 2022 continuing connected transactions
Worked on the Oriental Patron deal team supporting a Chapter 14A continuing-connected-transactions exercise covering nine master agreements.
- Geography
- Hong Kong and Mainland China
- Employer
- Oriental Patron Asia Limited
- My role
- Deal team member at Oriental Patron Asia Limited, financial adviser to Shimao Services Holdings Limited.
Context
Shimao Services Holdings Limited (Hong Kong stock code: 873) entered into nine master agreements with Shimao Group Holdings Limited on 6 December 2022 to continue arrangements that were due to expire at the end of that year. Shimao Group Holdings, which indirectly held approximately 63% of Shimao Services, was its controlling shareholder; the arrangements were therefore continuing connected transactions under Chapter 14A of the Hong Kong Listing Rules.
The agreements covered property leasing, sales-office operations, IoT services, engineering services, property-management services, carpark sales agency services, value-added services to non-property owners, information-technology services, and procurement and supply. They established pricing bases, annual caps, credit terms and monitoring controls for the relevant service relationships through 31 December 2025.
The leasing and carpark-sales-agency agreements fell within an exemption from independent-shareholder approval. The other seven agreements had applicable percentage ratios exceeding 5% and were subject to reporting, announcement, annual review and independent-shareholder approval requirements.
The process also required additional disclosure concerning Shimao Group’s liquidity position and the related credit risk. A January 2023 supplemental announcement recorded general credit terms of 60 days, additional due-diligence procedures and strengthened internal controls. The March 2023 circular reported approximately RMB771.4 million of unaudited receivables owed by Shimao Group to Shimao Services at 31 December 2022.
My contribution
I worked on the Oriental Patron deal team supporting the Company through the Chapter 14A process for the 2022 continuing connected transactions. The assignment covered the structure and published terms of the master agreements, their annual caps, the related disclosures and the independent-shareholder approval process.
Published structure
Seven non-exempt agreements were presented for independent-shareholder approval: sales-office operations, IoT services, engineering services, property-management services, value-added services to non-property owners, information-technology services, and procurement and supply. In March 2023, their terms were revised to run from the date on which the relevant shareholder-approval condition was satisfied until 31 December 2025.