Gelonghui, December 23 | Kangda Environmental Protection (06136.HK) announced that in August 2017, the seller signed a franchise agreement with the Housing and Urban-Rural Development Bureau of Dongsheng Town, Zhongshan City. According to this, the seller set up a target company to take over, operate and maintain the sewage treatment plant. The franchise period is 30 years. On December 23, 2024, the seller (Chongqing Kangda Environmental Protection Industry (Group) Co., Ltd., an indirect wholly-owned subsidiary of the company) entered into an equity transfer agreement with the buyer (Zhongshan Xiaolan Water Co., Ltd., ultimately beneficially owned by the Zhongshan Xiaolan Town Public Asset Affairs Center). Based on this, the seller agreed to sell and the buyer agreed to buy the capital to be sold (equivalent to 100% of the target company's shares), at a total cost of RMB 96.0509 million.
The target company (i.e. Zhongshan Kangda Water Co., Ltd.) is an indirect wholly-owned subsidiary of the company, which is mainly engaged in the operation of sewage treatment plants. After considering (i) the current operating conditions and future operating costs of the sewage treatment plant; (ii) the potential capital expenses for the long-term upgrading and expansion of sewage treatment plant facilities and equipment; and (iii) the sewage treatment fee balance owed by the Xiaolan Government, the Board believes that the sale will save the Group a large amount of operating expenses and potential capital expenses of the sewage treatment plant, obtain immediate cash inflow and reduce liabilities through the sale, and allocate time and resources to other more profitable franchise projects.
