HONG KONG, CHINA - Media OutReach - 20 August 2019 - OrangeSky Golden Harvest Entertainment (Holdings) Limited ("Orange Sky GoldenHarvest" or the ''Company'', together with the subsidiaries collectively as the"Group", SEHK stock code: 1132) today issued a circular about the majortransaction, connected transaction and continuing connected transaction inrelation to the Cinema Lease Agreement and the Hotel Lease agreement.
On 28 June 2019,Jiangyin Orange Sky Golden Harvest Liuliu Enterprise Management Co., Ltd* (江陰橙天嘉禾六六企業管理有限公司), an indirectwholly-owned subsidiary of the Company (the "Tenant") entered into the CinemaLease Agreement and the Hotel Lease Agreement with Jiangyin OrangeLand Cinema Development Management Co., Ltd.* (江陰橙地影院開發管理有限公司), a connectedperson of the Company, (the "Landlord") in respect of leasing the CinemaPremises and the Hotel Premises with a term of 15 years commencing from thedate following the Cinema Delivery Date and the Hotel Delivery Date for cinemaand hotel operations.
The two Premisesare situated in a complex located at Wuxing Road, Xiagang Street, Jiangyin, thePRC (中國江陰市夏港街道五星路). The complex is amixed-use development including a 13-storey hotel building and a9-storey commercial arcade with a cinema, erected on a parcel of land with asite area of 23,334 square meters. The Cinema Premises are on the 5th,6th and 7th Floors of the commercial arcade with a totalgross floor area of approximately 17,124.49 square meters. The Hotel Premises are located at a hotel building (Orange Sky Land SquareOne) (L1--L11 & Roof) with a total gross floor area of 14,188.57 square metersin the complex.
The Group isprincipally engaged in theatrical exhibition, cinema operation, film, video andtelevision production, distribution and entertainment businesses in Hong Kong,the PRC, Taiwan and Singapore. As a non-compete undertaking about not to engagein the investment in and the operation of the cinema business in the PRC of theGroup has expired, the Group intends to develop a new form of multifunctionalcinema business in the PRC to operate cinemas which enable customers to notonly watch movies shown at the cinemas, but also to enjoy other facilities atthe cinema, including entertainment rooms, game centres and virtual reality(VR) and augmented reality (AR) experience facilities. As such, the operationof a cinema at the Cinema Premises and the entering into of the Cinema LeaseAgreement facilitates the Group's development of cinema business with a newdirection.
In order tocapitalise the goodwill and brand equity of the Group, to leverage its resources,innovation and experience of its management team in the entertainment industry,and to commercialise its intellectual properties, the Company intends to operatea movie-themed hotel and to attract local residents and tourists withmultifunctional movie theatres, virtual reality (VR) and augmented reality (AR)experiencing facilities, game centres and themed restaurants. It is alsoanticipated that the operation of the movie-themed hotel at the Hotel Premiseswill help to widen the customer base and provide a steady customer flow to the cinemaat the Cinema Premises. The operation of the multifunctional cinema andmovie-themed hotel is expected to commence in the second half of 2020, whichcoincides with the opening of the rest of the entertainment complex.
The Company is ofthe view that Jiangyin, being one of the top-ranked city amongst the top 100economically developed cities in the PRC, is a rapidly developing city withhigh consumption power and is a popular place for domestic tourists to visit.The complex benefits from its excellent location as there are several high-end residentialestates nearby and local residents around the area are generally well-off withsufficient leisure time to visit the cinema and the movie-themed hotel to beoperated by the Group. The Company is of the view that there is strong marketpotential to operate a cinema and the movie-themed hotel at the complex.
The terms of the abovetwo lease agreements were determined after arm's length negotiations betweenthe parties having taken into consideration of the historical property markettrend, the current property environment and future prospects of cinema andhotel market.
According to thecircular, the Group's independent directors and independentfinancial advisor both consider that the above two Lease Agreements and thetransactions contemplated thereunder are on normal commercial terms and arefair and reasonable so far as the Independent Shareholders are concerned. Theyfurther consider that the entering into of the above two Lease Agreements is inthe ordinary and usual course of the business of the Group, interests of theCompany and the Shareholders as a whole. The transactions are pending forindependent shareholders' approval in the coming special general meeting to beheld on 5 September 2019.