China Water Industry Group (01129.HK) announced that on July 26, 2024, the buyer Yichun City Urban Development Co., Ltd. and the seller (the Company's indirect wholly-owned subsidiary) entered into an equity transfer agreement. Accordingly, the seller has conditionally agreed to sell and the buyer has conditionally agreed to purchase the sale shares (i.e. 51% equity interest in Yichun Water Affairs Group Co., Ltd.), for a total consideration of RMB 0.195 billion yuan.
The target company is a limited company established in China. As of the date of this announcement, the seller owns 51% and the buyer owns 49% of the target company. Its main business is to provide water supply and water facilities installation services.
The Board of Directors believes that the sale will enable the Group to realize its investment in the target group, implement its plans, and focus on its core divisions by allocating its resources more effectively. In addition, the net proceeds from the sale will have a positive contribution to the Group's cash flow, and part of the net proceeds are intended to be used to repay the Company's borrowings and accrued interest. Therefore, the Board of Directors believes that the sale will help the Company reduce financing costs and improve the Group's liquidity and overall financial position.
