[Caihua Social News] Bojun Education (01758.HK) announced that on December 8, 2021, the company, Sichuan Shimao, Chengdu Bomao, Shenzhen Hongyuan, Sichuan Zhengzhuo, Target Company A (Sichuan Zhengzhuo Education Investment Co., Ltd.) and Chengdu Bojun entered into an equity transfer agreement A, according to which Sichuan Shimao and Chengdu Bomao conditionally agreed to buy 26.5% and 24.5% of the shares in the target company A. The total consideration is about RMB 283 million (that is, consideration A) Of this amount, approximately RMB 136 million (i.e. approximately 48.04% of consideration A) will be allotted and paid through the company to Sichuan Zhengzhuo (or its nominee) 195371993 consideration shares An at the issue price of HK $0.85 per share; and
The company, Sichuan Shimao, Chengdu Bomao, Shenzhen Hongyuan, Sichuan Zhengzhuo and target company B (Sichuan higher Education Investment Co., Ltd.) entered into an equity transfer agreement B. accordingly, Sichuan Shimao and Chengdu Bomao conditionally agreed to buy 25.5% of the shares of target company B at a total consideration of about RMB 26.01 million (that is, consideration B).
As at the date of this announcement, (I) Target Company An is owned by 51% by Shenzhen Hongyuan and 49% by Sichuan Zhengzhuo; and (ii) Target Company B is owned by 50% by Shenzhen Hongyuan and 50% by Sichuan Zhengzhuo. Upon completion, Sichuan Shimao will hold 51% of the registered capital of each target company.
Chengdu Bomao will enter into a new structure contract with the member companies of the Target Group and Sichuan Shimao, after which the Group will gain control over the Target Group and economic benefits from the Target Group and Sichuan Shimao, and its member companies will become integrated affiliated entities. The financial results of the Target Group and Sichuan Shimao will be consolidated into the Group's accounts.
According to the announcement, the Dayi campus of Sichuan Wenxuan Vocational College (a wholly owned subsidiary of target company A) (I) entered into a loan agreement with target company B on October 19, 2021, under which the vocational college agreed to provide a loan of about RMB 237 million to target company B from October 19, 2021 to October 18, 2024. For a period of three years (i.e. financial assistance I) and (ii) entered into a loan agreement II with Shenzhen Hongyuan dated 28 July 2020, under which the vocational college agreed to provide a loan of RMB 30 million to Shenzhen Hongyuan for a period of two years (i.e. financial assistance II) from 29 July 2020 to 28 July 2022.
The vocational college and target company B entered into a cooperation agreement on January 11, 2021, according to which the parties agreed to operate the training base of higher vocational education from the autumn of 2021. Under the Cooperation Agreement, the Vocational College will provide training services to students in the properties and facilities owned by Target Company B for a period of three years from September 1, 2021 to August 31, 2024, while Target Company B will provide management and maintenance services in the properties concerned.
Upon completion, Shenzhen Hongyuan and Sichuan Zhengzhuo will become major shareholders of the two integrated associated entities (i.e. the target company) and are therefore related persons at the subsidiary level of the company. Following the completion and allotment of consideration shares to Sichuan Zhengzhuo (or its nominee), Sichuan Zhengzhuo will become a connected person at the issuer level and therefore, under Rule 14A.16 (1) of the listing rules, Target Company B and the Vocational College will become connected subsidiaries of the Company.
In view of the demand for policies to encourage senior high school graduates to pursue further studies in vocational education institutions and to promote vocational education, the directors are of the view that the development of the private vocational education industry will enter a golden era. Coupled with the prosperity of vocational education development in the province, the directors expect that more students of the relevant age group will choose to complete their studies in Sichuan Province in the future, and in view of the well-developed vocational education institutions owned by the target company in Chengdu, the acquisition provides a good opportunity for the Group to invest in the vocational education industry in Sichuan Province. Financial assistance I will contribute to the effective allocation of intra-group financial resources expanded by the acquisition, rather than additional financial costs arising from external financing obtained by target company B.
Trading in the Company's shares will be suspended on the Stock Exchange from 09:00 on 30 November 2021, pending the announcement of the Company's annual results for the year ended 31 August 2021 and information which may constitute inside information on the Company.