09:43 CHINA GAS HOLD<00384> - Announcement & Resumption (2) The Yiyang JV, a sino-foreign limited company to be incorporated in the PRC, will be owned as to 20% by Yiyang City Development, 49% by China City Gas and 31% by Shenzhen Natural Gas. Yiyang City Development and its ultimate beneficial owners are not connected persons (as defined in the Listing Rules) of the Company and are independent of and not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules). The Yiyang JV will become a 80% subsidiary of the Company upon its being set up pursuant to the Agreement and be consolidated into the Group's accounts. It is principally engaged in the Natural Gas Project. The registered capital of the Yiyang JV Company will be RMB44,000,000 (equivalent to approximately HK$41,509,433.96) which has yet to be paid up by Yiyang City Development, China City Gas and Shenzhen Natural Gas in proportion to their respective shareholdings in the Yiyang JV (i.e., as to RMB8,800,000 to be contributed by Yiyang City Development in the form of land use rights, with valuation thereof by independent valuer acceptable to Yiyang City Development, China City Gas and Shenzhen Natural Gas, HK$ equivalent to RMB21,560,000 to be contributed by China City Gas and RMB13,640,000 to be contributed by Shenzhen Natural Gas. The Yiyang JV has a tenure of 30 years and it will make a total investment in the sum of RMB110,810,000 (equivalent to approximately HK$104,537,735.85) in the Natural Gas Project (the "Total Yiyang JV Investment Amount"). Pursuant to the Agreement, Yiyang City Development, China City Gas and Shenzhen Natural Gas have agreed that the difference between the Total Yiyang JV Investment Amount and the registered capital of the JV Company for which China City Gas and Shenzhen Natural Gas are responsible will be paid up with funds drawn from the cashflow generated by the Natural Gas Project. The Directors take the view that such cashflow generated by the Gas Project will be sufficient for this purpose. All parties in the Yiyang JV have no obligations to contribute the difference between the Total Yiyang JV Amount Investment and the registered capital of the Yiyang JV. It has been agreed among all the parties that within 5 business days from the date of signing of the Agreement, China City Gas and Shenzhen Natural Gas will contribute a sum of RMB2,000,000, of which RMB1,000,000 will be used as initial operation fees to embark on the Natural Gas Project in Yiyang City, and RMB1,000,000 will be treated as sincerity money for enforcement of the Agreement, which amount will be offset against the total capital contribution in the Yiyang JV to be made by China City Gas and Shenzhen Natural Gas. The parties have agreed that they will procure the issue of the business licence of the Yiyang JV from the local Administration for Industry and Administration within 30 days from the date of signing of the Agreement. Within 10 business days from the date of establishment of the Yiyang JV, China City Gas and Shenzhen Natural Gas will contribute RMB10,000,000 in the Yiyang JV in proportion to their respective shareholdings in the Yiyang JV, which will again be used as the initial operation fees for the National Gas Project. Within 3 months from the date of establishment of the Yiyang JV, China City Gas and Shenzhen Natural Gas will contribute a further RMB10,000,000 in the Yiyang JV in proportion to their respective shareholdings therein. Within 6 months from the date of establishment of the Yiyang JV, China City Gas and Shenzhen Natural Gas will pay up the balance of the registered capital to keep pace with the progress of the Gas Project. Yiyang City Development will contribute RMB8,800,000 in the form of land use rights over certain pieces of land in Yiyang City for the purposes of construction and operation of the pipelines network, with valuation thereof by independent valuer acceptable to Yiyang City Development, China City Gas and Shenzhen Natural Gas. Yiyang City Development will endeavour to complete the transfer of the land use rights to the Yiyang JV by filing the requisite documents with the relevant regulatory authorities and obtaining the relevant land use certificate in favour of the Yiyang JV within 6 months from the date of establishment of the Yiyang JV. In addition to the aforesaid, Yiyang City Development will be responsible to apply to the People's Government of Yiyang City for the grant of a 30 years special licence to operate the Natural Gas Project in Yiyang City and to procure the grant of certain preferential treatment to the Yiyang JV from the People's Government in Yiyang City. That is to say, the Yiyang JV will be the only party allowed to operate, manage and develop the Natural Gas Project in the Yiyang City. It should be noted that the grant of the preferential rights does not constitute a condition to the Agreement and that such grant will be obtained from the People's Government in Yiyang City as soon as practicable.