China Jinmao (00817) announced on November 24, 2021, that Shanghai Congmao and the company's indirectly wholly-owned subsidiary, Jinmao Group, have signed 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 Backed 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 signed a preferential purchase agreement with Huafu Securities, granting Jinmao Group the right to exercise priority purchase of asset-backed securities or underlying assets under the special plan.
On July 5, 2024, in accordance with the terms of the preferential purchase agreement, Jinmao Group issued an exercise notice to Huafu Securities, stating its principle to exercise the preferential 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 exercise target is determined to be underlying assets, the exercise price should also be evaluated and filed by the state-owned assets supervision and administration department.
Asset-backed securities represent the corresponding shares of the special plan rights and interests, which are a kind of benefit certificate issued by Huafu Securities to investors based on underlying assets, with 69.95% of all limited partnership interests of Shanghai Congmao as underlying assets.
The announcement stated that due to the special plan's first 3-year end of the survival period on October 31, 2024, it faced the demand of special plan holders for exit. After exercising the preferential purchase right, the repurchased securities can be resold in the market according to Jinmao Group's resale demand to achieve the continuation of the special plan or be cancelled and liquidated, ending the survival of the special plan. Therefore, exercising the preferential purchase right can achieve the continuation of the special plan for the group or provide convenience for subsequent financing methods to consolidate the group's financial situation and expand its capital base, promoting future development.