Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Jinxin Fertility Group Limited
錦 欣 生 殖 醫 療 集 團 有 限 公 司 *
(Incorporated under the laws of the Cayman Islands with limited liability)
(Stock Code: 1951)
TERMINATION OF CONTINUING CONNECTED TRANSACTIONS
AND
CONNECTED TRANSACTION IN RELATION TO
NEW HRC CLINIC LEASE AGREEMENT
TERMINATION OF CONTINUING CONNECTED TRANSACTIONS
Reference is made to the Prospectus in relation to, among other things, the HRC Clinic Lease Agreement entered into between HRC Management (an indirect subsidiary of the Company) and the Lessors in relation to the leasing of the HRC Clinic Premises and provision of management services such as office maintenance services.
On August 20 2020, HRC Management and the Lessors, after friendly negotiation, have mutually agreed to an early termination of the HRC Clinic Lease Agreement with effect from December 31, 2020.
CONNECTED TRANSACTION IN RELATION TO NEW HRC CLINIC LEASE AGREEMENT
On August 20, 2020, HRC Management, as lessee, entered into the New HRC Clinic Lease Agreement with the Lessors, as lessors, pursuant to which the Lessors agreed to lease the second floor of the three story office building located at the HRC Clinic Premises to HRC Management, for a term of 10 years commencing from January 1, 2021 to December 31, 2030.
LISTING RULES IMPLICATIONS
The Lessors are wholly-owned by some of the Physician Shareholders, namely, Dr. Robert Boostanfar, Dr. Bradford A. Kolb, Dr. John G. Wilcox and Dr. Michael A. Feinman, respectively. Pursuant to Rule 14.07 of the Listing Rules, each of the Lessors is an associate of the Physician Shareholders, which are the substantial shareholders of the Company and hence a connected person of the Company.
In accordance with IFRS 16 applicable to the Company, the transaction contemplated under the New HRC Clinic Lease Agreement will be recognized as an acquisition of right-of-use assets which will constitute a one-off connected transaction of the Company under Chapter 14A of the Listing Rules.
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As the applicable percentage ratios (as defined in the Listing Rules) in respect of the value of the right-of-use assets to be recognized by the Company in connection with the New HRC Clinic Lease Agreement exceed 0.1% but are less than 5%, the New HRC Clinic Lease Agreement is subject to reporting and announcement requirements but is exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.
Reference is made to the Prospectus in relation to, among other things, the HRC Clinic Lease Agreement entered into between HRC Management (an indirect subsidiary of the Company) and the Lessors in relation to the leasing of the HRC Clinic Premises and provision of management services such as office maintenance services.
TERMINATION OF CONTINUING CONNECTED TRANSACTIONS
On August 20, 2020, HRC Management and the Lessors, after friendly negotiation, have mutually agreed to an early termination of the HRC Clinic Lease Agreement with effect from December 31, 2020. The parties also confirmed that none of them shall have any claim against the other parties arising from such early termination.
CONNECTED TRANSACTION IN RELATION TO NEW HRC CLINIC LEASE AGREEMENT
On August 20, 2020, HRC Management, as lessee, entered into the New HRC Clinic Lease Agreement with the Lessors, as lessors, pursuant to which the Lessors have agreed to lease the second floor of the three story office building of the HRC Clinic Premises to HRC Management, for a term of 10 years commencing from January 1, 2021 to December 31, 2030.
The principal terms of the New HRC Clinic Lease Agreement are summarized as follows:
Date: | August 20, 2020 |
Parties: | HRC Management (as lessee) |
The Lessors (as lessors) | |
Term: | A term of 10 years from January 1, 2021 to December 31, 2030 |
Premises: | Approximately 9,658 rentable sq. ft. on the second floor of a three-story |
office building located at 333 South Arroyo Parkway, Pasadena, California, | |
the Unites States | |
Rent: | US$35,555.17 per month, which is determined after arm's length negotiation |
with reference to the prevailing market rent of properties of comparable size | |
and quality situated in the same locality which is available and is expected to | |
be satisfied by the internal resources of the Group | |
Payment Terms: | The rent shall be payable on the first day of each month commencing from |
January 1, 2021 |
The value of the right-of-use assets to be recognized by the Company under the New HRC Clinic Lease Agreement amounted to approximately US$4,673,000, which represents the present value of aggregated lease payments to be made under the New HRC Clinic Lease Agreement in accordance with IFRS 16.
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REASONS FOR TERMINATION OF CONTINUING CONNECTED TRANSACTIONS AND ENTERING INTO OF NEW HRC CLINIC LEASE AGREEMENT
In view of the Group's growing business needs and continuous business expansion in the United States, the Company considers that the current office space for the clinical operations may not be sufficient to satisfy the Group's customer demands in the near future. As such, with an aim to further enhancing the quality of its medical services and facilities as well as attracting more high- end customers, the Group intends to obtain lease from Independent Third Parties for a new office space with a more prominent location, larger capacity and more advanced design and will move its entire clinical operations from HRC Clinical Premises to such new premises. On the other hand, the second floor of the HRC Clinic Premises will be retained for the purpose of laboratory experimentation with a larger area. Not only will such enlarged capacity allow the Group to provide more testing services to its customers, wider variety of services including acupuncture, emotional therapy and other administrative services will also be introduced, thereby generate more revenue to the Group.
In light of the above, the Directors (including the independent non-executive Directors) are of the view that the transactions contemplated under the Termination Agreement and the New HRC Clinic Lease Agreement are on normal commercial terms, which are fair and reasonable, and in the interests of the Company and its Shareholders as a whole. Also, the Directors consider that the early termination of the HRC Clinic Lease Agreement will not have any material adverse impact to the Group's business and operational activities.
INFORMATION ON THE PARTIES
The Group
The Group is principally engaged in provision of assisted reproductive services in clinics and hospitals in China and the United States.
HRC Management
HRC Management is an indirect wholly-owned subsidiary of the Company and a limited liability company established under the laws of Delaware, the United States. It is a management services organization that provides management and ancillary services to HRC Medical, which is a California medical service corporation that renders medical services and treatment related to advanced fertility treatments.
The Lessors
The Lessors are collectively, HRC Properties LLC, 333 Arroyo Parkway LLC, JGWilcox Capital Building LLC and Michael Feinman Real Estate LLC, each of which is wholly owned by Dr. Robert Boostanfar, Dr. Bradford A. Kolb, Dr. John G. Wilcox and Dr. Michael A. Feinman, respectively. Therefore, the Lessors are the connected persons of the Company. Each of the Lessors is a limited liability company established under the laws of California, the United States, and principally engaged in holding the ownership of the HRC Clinic Premises.
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LISTING RULES IMPLICATIONS
The Lessors are wholly-owned by some of the Physician Shareholders, namely, Dr. Robert Boostanfar, Dr. Bradford A. Kolb, Dr. John G. Wilcox and Dr. Michael A. Feinman, respectively. Pursuant to Rule 14.07 of the Listing Rules, each of the Lessors is an associate of the Physician Shareholders, which are the substantial shareholders of the Company and hence a connected person of the Company.
In accordance with IFRS 16 applicable to the Company, the transaction contemplated under the New HRC Clinic Lease Agreement will be recognized as an acquisition of right-of-use assets which will constitute a one-off connected transaction of the Company under Chapter 14A of the Listing Rules.
As the applicable percentage ratios (as defined in the Listing Rules) in respect of the value of the right-of-use assets to be recognized by the Company in connection with the New HRC Clinic Lease Agreement exceed 0.1% but are less than 5%, the New HRC Clinic Lease Agreement is subject to reporting and announcement requirements but is exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.
Dr. John G. Wilcox, an executive Director, is interested in the transactions contemplated under the Termination Agreement and the New HRC Clinic Lease Agreement as manager of HRC Management and has abstained from voting on the relevant board resolutions of the Company in relation to the above transactions. Save as the aforementioned, none of the Directors has any material interest in the above transactions or is otherwise required to abstain from voting on the board resolutions of the Company approving the above transactions.
DEFINITIONS
In this announcement, unless context otherwise requires, the following expressions have the following meanings:
"associate"
"Board"
"Company"
has the meaning ascribed to it in the Listing Rules
the board of Directors of the Company
Jinxin Fertility Group Limited (錦欣生殖醫療集團有限公司*), a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the Stock Exchange
"connected person(s)" | has the meaning ascribed to it in the Listing Rules |
"Director(s)" | the director(s) of the Company |
"Group" | the Company and its subsidiaries |
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"Hong Kong" | the Hong Kong Special Administrative Region of the People's |
Republic of China | |
"HRC Clinic Lease | the lease agreement dated October 25, 2018 entered into between |
Agreement" | HRC Management and the Lessors |
"HRC Clinic Premises" | certain premises of approximately 22,163 sq. ft. located at 333 |
South Arroyo Parkway, Pasadena, California, the Unites States | |
"HRC Management" | HRC Fertility Management, LLC, a limited liability company |
established under the laws of Delaware, the United States on | |
November 3, 2015, an indirect subsidiary of the Company | |
"HRC Medical" | Huntington Reproductive Center Medical Group, a professional |
corporation established under the laws of California, the United | |
States on January 1, 1995 | |
"IFRS" | International Financial Reporting Standards issued by |
International Accounting Standards Board | |
"Independent Third | person(s) who is(are) third party(ies) independent of the Company |
Party(ies)" | and its connected persons |
"Lessors" | collectively, HRC Properties LLC, 333 Arroyo Parkway LLC, |
JGWilcox Capital Building LLC and Michael Feinman Real | |
Estate LLC, which together own the HRC Clinic Premises | |
"Listing Rules" | the Rules Governing the Listing of Securities on the Stock |
Exchange, as amended or supplemented from time to time | |
"New HRC Clinic | the new lease agreement dated August 20, 2020 entered into |
Lease Agreement" | between HRC Management and the Lessors |
"Physician Shareholders" | collectively, Dr. Michael A. Feinman, Dr. Daniel A. Potter, |
Dr. Jane L. Frederick, Dr. David Tourgeman, Dr. Bradford A. | |
Kolb, Dr. John G. Wilcox, Dr. Jeffrey Nelson and Dr. Robert | |
Boostanfar, each a certified physician in California, the United | |
States | |
"Prospectus" | the prospectus issued by the Company dated June 13, 2019 |
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"Shareholders"
"sq. ft."
"Stock Exchange"
"substantial shareholder"
"Termination Agreement"
"US$"
"%"
Hong Kong, August 24, 2020
shareholders of the Company
square feet
The Stock Exchange of Hong Kong Limited
has the meaning ascribed to it in the Listing Rules
the agreement dated August 20, 2020 entered into between HRC Management and the Lessors in relation to the early termination of the HRC Clinic Lease Agreement
United States dollar(s), the lawful currency of the United States of America
per cent
By order of the Board
Jinxin Fertility Group Limited
Wang Bin
Chairman
As at the date of this announcement, the Board of Directors of the Company comprises Mr. Zhong Ying, Dr. John G. Wilcox, Mr. Zhong Yong and Mr. Dong Yang, as executive Directors; Mr. Wang Bin, Mr. Fang Min and Ms. Hu Zhe, as non-executive Directors; and Dr. Chong Yat Keung, Mr. Lim Haw Kuang, Mr. Wang Xiaobo and Mr. Ye Changqing, as independent non-executive Directors.
- For identification purpose only
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Jinxin Fertility Group Ltd. published this content on 24 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 August 2020 00:10:10 UTC