HONG KONG, CHINA -�Media OutReach - 20 August 2019 – Orange
Sky Golden Harvest Entertainment (Holdings) Limited (“Orange Sky Golden
Harvest” or the ”Company”, together with the subsidiaries collectively as the
“Group”, SEHK stock code: 1132) today issued a circular about the major
transaction, connected transaction and continuing connected transaction in
relation to the Cinema Lease Agreement and the Hotel Lease agreement.
On 28 June 2019,
Jiangyin Orange Sky Golden Harvest Liuliu Enterprise Management Co., Ltd* (????????????????), an indirect
wholly-owned subsidiary of the Company (the “Tenant”) entered into the Cinema
Lease Agreement and the Hotel Lease Agreement with Jiangyin Orange
Land Cinema Development Management Co., Ltd.* (??????????????), a connected
person of the Company, (the “Landlord”) in respect of leasing the Cinema
Premises and the Hotel Premises with a term of 15 years commencing from the
date following the Cinema Delivery Date and the Hotel Delivery Date for cinema
and hotel operations.
The two Premises
are situated in a complex located at Wuxing Road, Xiagang Street, Jiangyin, the
PRC (????????????). The complex is a
mixed-use development including a 13-storey hotel building and a
9-storey commercial arcade with a cinema, erected on a parcel of land with a
site area of 23,334 square meters. The Cinema Premises are on the 5th,
6th and 7th Floors of the commercial arcade with a total
gross floor area of approximately 17,124.49 square meters. The Hotel Premises are located at a hotel building (Orange Sky Land Square
One) (L1–L11 & Roof) with a total gross floor area of 14,188.57 square meters
in the complex.
The Group is
principally engaged in theatrical exhibition, cinema operation, film, video and
television production, distribution and entertainment businesses in Hong Kong,
the PRC, Taiwan and Singapore. As a non-compete undertaking about not to engage
in the investment in and the operation of the cinema business in the PRC of the
Group has expired, the Group intends to develop a new form of multifunctional
cinema business in the PRC to operate cinemas which enable customers to not
only watch movies shown at the cinemas, but also to enjoy other facilities at
the cinema, including entertainment rooms, game centres and virtual reality
(VR) and augmented reality (AR) experience facilities. As such, the operation
of a cinema at the Cinema Premises and the entering into of the Cinema Lease
Agreement facilitates the Group’s development of cinema business with a new
direction.
In order to
capitalise 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 operate
a movie-themed hotel and to attract local residents and tourists with
multifunctional movie theatres, virtual reality (VR) and augmented reality (AR)
experiencing facilities, game centres and themed restaurants. It is also
anticipated that the operation of the movie-themed hotel at the Hotel Premises
will help to widen the customer base and provide a steady customer flow to the cinema
at the Cinema Premises. The operation of the multifunctional cinema and
movie-themed hotel is expected to commence in the second half of 2020, which
coincides with the opening of the rest of the entertainment complex.
The Company is of
the view that Jiangyin, being one of the top-ranked city amongst the top 100
economically developed cities in the PRC, is a rapidly developing city with
high 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 residential
estates nearby and local residents around the area are generally well-off with
sufficient leisure time to visit the cinema and the movie-themed hotel to be
operated by the Group. The Company is of the view that there is strong market
potential to operate a cinema and the movie-themed hotel at the complex.
The terms of the above
two lease agreements were determined after arm’s length negotiations between
the parties having taken into consideration of the historical property market
trend, the current property environment and future prospects of cinema and
hotel market.
According to the
circular, the Group’s independent directors and independent
financial advisor both consider that the above two Lease Agreements and the
transactions contemplated thereunder are on normal commercial terms and are
fair and reasonable so far as the Independent Shareholders are concerned. They
further consider that the entering into of the above two Lease Agreements is in
the ordinary and usual course of the business of the Group, interests of the
Company and the Shareholders as a whole. The transactions are pending for
independent shareholders’ approval in the coming special general meeting to be
held on 5 September 2019.
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