Report of the Directors
Hotel Management Agreement
Under the Hotel Management Agreement, Langham Hotels Shanghai Company Limited (“LHS”), an indirect wholly-owned subsidiary of the Group, was given the exclusive right to manage and operate Hotel 108 for a term of 20 years from the opening of the hotel renewable by LHS for multiple 10-year periods subject to the terms therein. LHS also executed an indemnity (the “Indemnity”) in favour of the Project Company against possible claims from the ex-operator of Hotel 108;
Under the Licence Agreement, Langham Hotels International Limited (“LHL”), an indirect wholly-owned subsidiary of the Group, granted to the Project Company a non-exclusive and non-transferable licence to use the “Langham” and other trademarks for the operation of Hotel 108 during the term of the Hotel Management Agreement; and
Technical Assistance Services Agreement
Under the Technical Assistance Services Agreement, the Project Company appointed LHS exclusively to provide design and technical advice on the layout decoration and fitting out of Hotel 108 for a term until the opening of Hotel 108 or such other date as LHS and the Project Company may agree (but in any event no later than the day before the third anniversary of the date of the Technical Assistance Services Agreement).
The Hotel Management Agreement, Licence Agreement and Technical Assistance Services Agreement are collectively named “Hotel Agreements”. The transactions contemplated under the Sale and Purchase Agreement and Hotel Agreements are collectively named “Transactions”. Details of the Transactions were disclosed in an announcement dated 1 April 2010 and a circular to shareholders dated 20 April 2010.
On 25 March 2010, Champion Global Services Limited, an indirect wholly-owned subsidiary of the Group, also entered into a separate agreement (the “Supply Procurement and Consultancy Services Agreement”) with the Project Company for the provision of procurement and consultancy services.
Mr. Lo Hong Sui, Vincent is a Non-executive Director of the Company and privately beneficially owns the Seller. Accordingly, the Seller is a connected person of the Company. Dr. Lo Ka Shui is the Chairman and Managing Director of the Company. The Acquisition and the Sale and Purchase Agreement therefore constituted connected transactions for the Company under the Listing Rules. As Mr. Lo Hong Sui, Vincent remains to be indirectly beneficially interested in more than 30% interest in the registered capital of the Project Company following the Acquisition, the Project Company is an associate of Mr. Lo Hong Sui, Vincent and a connected person of the Company. Accordingly, the Corporate Guarantee, the Share Mortgage and the Indemnity constituted connected transactions for the Company and the transactions contemplated under each of the Hotel Agreements and the Supply Procurement and Consultancy Services Agreement also constituted continuing connected transactions for the Company under the Listing Rules.
One or more of the applicable percentage ratios as defined under the Listing Rules in relation to the Acquisition and the Indemnity was/were more than 5% but less than 25%. Accordingly, the Acquisition (including the related Sale and Purchase Agreement and the Payment thereunder, the shareholders’ agreement subsequently entered into among the Seller, the Purchaser and MGIL pursuant to the Sale and Purchase Agreement, the Corporate Guarantee and the Share Mortgage) and the Indemnity when taken together constituted discloseable and connected transactions for the Company, and are subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.
Great Eagle Holdings Limited