SMM Network News: September 15, Zhujiang Oil and Gas Steel Pipe holding Co., Ltd. issued a notice to disclose the sale of land directly collected and stored by Guangzhou Land Development Center.

On September 15, 2020 (after trading hours), Panyu Zhujiang Steel Pipe, an indirect wholly-owned subsidiary of Pearl River Steel Pipe, entered into a land acquisition and storage compensation agreement with Guangzhou Land Development Center. on the other hand, Panyu Pearl River Steel Pipe has agreed to grant land for collection and storage with a compensation of RMB 3.453 billion.

According to the listing rules, the direct acquisition and deposit of land can only be confirmed after the approval of the shareholders at the special general meeting of shareholders. After Guangdong Yuecai Trust and Xingchen received all the respective payables under the Supplemental Agreement for the Sale of Pearl River Steel Pipe in Panyu at the end of October 2020, the previous sale agreement of Pearl River Steel Pipe in Panyu was terminated and the relevant money is expected to be disbursed from the proceeds of the direct acquisition and storage of the land and the transitional loan financing.

It is understood that the land for sale is located on the north side of Yayun Avenue, Dalong Street, Panyu District, Guangzhou City, Guangdong Province, covering an area of about 280197 square meters. The land is currently used for industrial use.

After the direct acquisition and storage of the land, the use of the land is expected to be changed to "integrated", depending on the final planning decision. The land was previously used as a factory and office building by the Pearl River steel pipe, and the main welded pipe production facilities were placed in the Pearl River steel pipe. As at the date of announcement, the production line of Pearl River steel pipe has been relocated to Lianyungang and Zhuhai, so the company's production activities are mainly carried out in the new production bases in Lianyungang and Zhuhai. The removal of buildings and structures on the land has been completed.

On June 30, 2020, the carrying value of the land (for industrial use) in Pearl River Steel Pipe was 48.8 million yuan.

According to the preliminary valuation report, the market value of land for industrial use was $389 million as at 31 August 2020. In addition, according to the preliminary estimate of Wing Lee valuation Consultants Limited, assuming a maximum plot ratio of 2 and a maximum permitted floor area of 560500 square metres, the value of land (residential and commercial) for redevelopment is about $6 billion.

According to the land acquisition and storage compensation agreement, Guangdong Yuecai Trust and Xingchen (as the existing mortgagee of the land) agreed to purchase and store the land directly. In addition, Panyu Pearl River Steel Pipe, Guangdong Yuecai Trust and Xing Chen are required to cancel the registration of land mortgage within three days after the land acquisition and storage compensation agreement comes into effect. Guangdong Yuecai Trust and Xing Chen have priority in settling their debts due to the Pearl River Steel Pipe in Panyu to receive compensation directly from Guangzhou Land Development Center.

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