Zhejiang New Century Hotel Dispatches Privatization Composite Document – Arabian Post

Independent Financial Advisor and Independent Board Committee Recommend Shareholders to Accept the Offer

HONG KONG SAR – Media OutReach – 19 March 2021 – Zhejiang New Century Hotel Management Co., Ltd. (the “Company”, HKEx stock code: 1158) received a voluntary conditional offer made by Kunpeng Asia Limited (“the Offeror”) to acquire all the issued H Shares and Domestic Shares of the Company (except for the shares held by the shareholders who have undertaken not to accept the offers). The Composite Document concerning the privatization and delisting proposal has been dispatched by the Company today. Pursuant to the document, the consideration for H Share Offer and Domestic Share Offer are HK$18.15 and RMB15.180660 per share, respectively, representing a premium of approximately 24.7% over the H Share closing price of HK$14.56 as quoted on the Stock Exchange on the Last Trading Date (18 Jan 2021).

Amongst other things, the H Share Offer is subject to the approval by independent H shareholders in the H Share Class Meeting and the extraordinary general meeting (the “EGM”), as well as a minimum acceptance rate of the H Share Offer being at least 90% of the H Shares held by Independent H Shareholders. The Domestic Share Offer is conditional upon the H Share Offer becoming unconditional.

In respect of the H Share Offer, independent H shareholders including GreenTree Hospitality Group Ltd., Rongtong Fund Management Co., Ltd, GEM Holdings Ltd., and Rex Top Global Investments Ltd. have entered into the irrevocable undertakings in favour of the Offeror, representing approximately 62.73% of the H Shares held by Independent H Shareholders. Pursuant to such irrevocable undertakings, the relevant independent H Shareholders have irrevocably agreed and undertaken to, among other things, accept the H Share Offer and support the delisting.

The H Share Class Meeting and the EGM will be held on 13 April 2021 to seek for shareholders’ approval on the privatization and delisting proposal. The first closing date of the H Share Offer is 19 April 2021, while the final closing date will be on 17 May 2021 (assuming the Offers have become unconditional in all respects on the first closing date).

Pursuant to the Composite Document, Somerley Capital Limited (“Somerley Capital”), the Independent Financial Advisor (“IFA”), considers that the privatization and the delisting, coupled with the Offers, are fair and reasonable and in the interests of independent shareholders. In arriving at this conclusion, Somerley Capital has taken into consideration various factors including the impact of COVID-19 on the hotel industry, the Offer price’s premium to the current market price of H Shares and Company net assets, that the Offer provides an opportunity for Independent H Shareholders to realize their investments in the Company in light of the Company’s generally low trading volume, as well as relevant precedents and other comparables. The Independent Board Committee, having considered the advice of the IFA, concurs with the recommendation and would recommend the independent H Shareholders to accept the H Share Offer and voting in favour of the resolutions approving the delisting.

Offer Highlights:

About Zhejiang New Century Hotel Management Co., Ltd. (HKEx stock code: 1158)

Zhejiang New Century Hotel Management Co., Ltd. is one of the leading hotel groups in the PRC and principally engages in the operation and management of mid-scale to upscale hotel chains in the PRC. Since its inception in Hangzhou, Zhejiang Province, in 1988, the Group has established the homegrown, widely recognized “New Century (開元)” brand series that principally target the upscale leisure and business travel markets, offering hospitality services of international standards complemented by local Chinese elements.