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Latham & Watkins Advises China Jinmao on Proposed Privatization of Jinmao Hotel and Jinmao (China) Hotel Investments and Management Limited

June 17, 2020
Firm advises on precedent-setting, first-ever privatization of a Hong Kong listed business trust.

China Jinmao Holdings Group Limited (China Jinmao), Jinmao Hotel and Jinmao (China) Hotel Investments and Management Limited (Jinmao Hotel Cayman Company, together with Jinmao Hotel, jointly constituting the Business Trust) jointly announced that China Jinmao, as the offeror, requested the boards of the Business Trust to put forward a proposal for privatization of the Business Trust by way of a scheme or arrangement under the Cayman Islands Companies Act and the trust deed constituting Jinmao Hotel.

Latham is representing China Jinmao in this ground-breaking transaction. As a business trust, the shares of Jinmao Hotel Cayman Company are stapled to, linked with and listed along with the units of Jinmao Hotel on The Stock Exchange of Hong Kong Limited (the Stock Exchange) as a stapled security (the Share Stapled Units). Jinmao Hotel is one of the very few business trusts listed on the Stock Exchange and the first business trust to be privatized. China Jinmao, also a Stock Exchange-listed company, is the platform enterprise of Sinochem Group Co., Ltd in real estate development business. If the privatization proposal becomes effective, China Jinmao will pay HK$4.80 for each Share Stapled Units cancelled and extinguished. The total amount of cash payable by China Jinmao is approximately HK$3,190.5 million.

The deal is precedent-setting and the first-ever proposed privatization of a business trust listed on the Stock Exchange. The Latham team worked seamlessly with China Jinmao and other advisers to map out a practical way to privatize the Share Stapled Units, which needs to comply with Cayman Islands Companies Act, the constitutional documents of Jinmao Hotel and Jinmao Hotel Cayman Company, the Codes on Takeovers and Mergers (the Takeovers Code) and the Rules Governing the Listing of Securities on the Stock Exchange. The Latham team also took the lead to liaise with the Securities and Futures Commission to demonstrate that the unprecedented approach to privatize the Share Stapled Units complies with the requirements and spirit of the Takeovers Code.

The Latham & Watkins team is led by Hong Kong partners Cathy Yeung, Terris Tang, and Simon Cooke, with Beijing associate Ning Li and Hong Kong associates George Zheng and Alex Lai.