On November 24, 2021, Shanghai Congmao and the company's indirect wholly-owned subsidiary Jinmao Group, respectively, entered into a partnership agreement and asset-backed securities subscription agreement with Huafu Securities to prepare for the establishment of an asset-backed securities plan called Jinmao Huafu - Jinmao Hotel Xin Xuan No. 1 Asset Support Special Plan, in order to securitize the relevant properties held by the group and raise funds for the group's operation and business development. On the same day, Jinmao Group also entered into a priority purchase agreement with Huafu Securities, under which Jinmao Group has the right to purchase the asset-backed securities or underlying assets under the special plan on a priority basis. The "relevant properties" refer to Chongming Jinmao Hyatt Hotel (held in full by Lilon (Shanghai) Hotel Management Co., Ltd, an indirect wholly-owned subsidiary of Jinmao Group, through Hainan Jinmao) and Lijiang Jinmao Hotel (held in full by Jinmao (Lijiang) Hotel Investment Co., Ltd, an indirect wholly-owned subsidiary of Hainan Jinmao through Jinmao Group).
On July 5, 2024, in accordance with the terms of the priority purchase agreement, Jinmao Group issued an exercise notice to Huafu Securities, which relates to the exercise of the priority purchase right at a price of RMB 0.966 billion yuan (i.e. the face value of all repurchased asset-backed securities). However, if the underlying asset is finally determined as the subject of exercise, the exercise price shall also be evaluated and filed by the State-owned Assets Supervision and Administration Commission.
As the special plan will enter the first three-year term of its existence on October 31, 2024, it will face the exit demand of the special plan holders. After exercising the priority purchase right, the repurchased securities can be resold in the market according to Jinmao Group's resale demand to realize the continuation of the special plan, or they can be cancelled and all the securities will be extinguished to end the existence of the special plan. Therefore, exercising the priority purchase right can help the group realize the continuation of the special plan or provide convenience for other financing methods in the future, consolidate the group's financial situation and expand its capital foundation, and promote future development.