Connected Transaction Formation of Joint Venture Company in China

Source Press Release
Company Sunshine Oilsands Ltd. 
Tags Corporate Deals, Deals, Refining & Marketing Activities
Date November 09, 2018

The Board of Directors (the “Board”) of Sunshine Oilsands Ltd. (the “Corporation” or “Sunshine”) (HKEX: 2012) wishes to announce the following:

FORMATION OF JOINT VENTURE COMPANY IN CHINA

The Board is pleased to announce that on November 9, 2018 (Hong Kong time), the Board has approved the formation of a joint venture company (the “JV Company”) in China (the “Transaction”) between the Corporation and a company affiliated (the “Affiliate”) with Mr. Kwok Ping Sun (“Mr. Sun”), the Executive Chairman and a Substantial Shareholder (as defined under the Listing Rules) of the Corporation. Sunshine and the Affiliate will own 51% and 49% interest in the JV Company respectively. The parties expect to invest a total of HKD19,000,000 into the JV Company by contributing to its registered capital.

The JV Company is to be set up mainly for selling of oil products into China which is a key initiative of the Corporation.

LISTING RULES IMPLICATIONS

The Affiliate is owned and controlled by Mr. Kwok Ping Sun, being the Executive Chairman and a Substantial Shareholder of the Corporation, and is therefore an associate of Mr. Sun. Hence, the proposed set up of the JV Company constitutes connected transaction for the Corporation under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the JV Company establishment exceed 0.1% but are less than 5%, the Transaction will be subject to the annual review and disclosure requirements but exempt from the independent shareholders’ approval requirements as set out in Chapter 14A of the Listing Rules.

The Board is pleased to announce that on November 9, 2018 (Hong Kong time), the Board has approved the formation of a joint venture company (the “JV Company”) in China (the “Transaction”) between the Corporation and a company affiliated (the “Affiliate”) with Kwok Ping Sun (“Mr. Sun”), the Executive Chairman and a Substantial Shareholder (as defined under the Listing Rules) of the Corporation and Nobao Energy Holding (China) Company Limited (“Nobao”) (a company under the control of Mr. Sun). Mr. Sun has abstained from voting.

Details are as follows:

Joint Venture Parties    The Corporation and the Affiliate - a company affiliated (the “Affiliate”) with Kwok Ping Sun, the Executive Chairman and a Substantial Shareholder (as defined under the Listing Rules) of the Corporation 
First stage capital contribution:    HKD19,000,000 
Purpose:    Sale of oil products into China 


Sunshine and the Affiliate will own 51% and 49% interest in the JV Company respectively. The parties expect to invest a total of HKD19,000,000 into the JV Company by contributing to its registered capital.

The JV Company is to be set up mainly for selling of oil products into China which is a key initiative of the Corporation.

As at the date of this announcement, the JV Company has not yet been established and thus has not commenced any business operations.

REASONS FOR AND BENEFITS OF THE ESTABLISHMENT OF THE JV COMPANY

The establishment of the JV company is primarily for the sale of oil products into China. The JV Company is expected to be able to build up a strong sales and distribution network in China and obtain financing including letter of credit from banks and financial institutions.

The Board (including the independent non-executive Directors) believes that the establishment of the JV Company is in the interests of the Company and its Shareholders as a whole. Given the widening price differential on heavy crude in North America, the Board believes that the sale of oil products into China will help to substantially increase the Corporation’s revenue, netback and operating cashflow.

The Board wishes to emphasize that the aforesaid JV Company establishment may or may not proceed. In the event that any formal agreements are entered into regarding the JV Company may constitute a notifiable transaction under the Listing Rules, the Corporation will make further announcement(s) as and when appropriate.

LISTING RULES IMPLICATIONS

The Affiliate and Nobao are owned and controlled by Mr. Kwok Ping Sun, being the Executive Chairman and a Substantial Shareholder of the Corporation, and are therefore the associates of Mr. Sun. Hence, the proposed set up of the JV Company constitute connected transactions for the Corporation under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the JV Company establishment exceed 0.1% but are less than 5%, the Transaction will be subject to the annual review and disclosure requirements but exempt from the independent shareholders’ approval requirements as set out in Chapter 14A of the Listing Rules.

Shareholders and potential investors are required to exercise caution when dealing in the shares of the Corporation.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd