Asia Orient Holdings (00214.HK) / Asia Standard International (00129.HK): Terminates Morgan Stanley TRS; Enters CMBI TRS to Continue Holding Guangzhou R&F and Pearl River Notes

NewTimeSpace News: Asia Orient Holdings Limited (stock code: 214) and Asia Standard International Group Limited (stock code: 129) jointly issued a voluntary announcement on July 22, disclosing the transfer of Pearl River notes and Guangzhou R&F notes.

As disclosed in previous announcements, Asia Orient Group and Asia Standard International Group each entered into Morgan Stanley total return swap arrangements through their respective subsidiaries, whereby each group obtained indirect interests in the relevant notes through their respective subsidiaries. The Morgan Stanley total return swap arrangements have been terminated. Therefore, on July 21, 2026, the investors entered into CMBI total return swap arrangements to replace the Morgan Stanley total return swap arrangements, and pursuant thereto, Asia Orient Group and Asia Standard International Group each continue to hold their same indirect interests in the relevant notes through their respective subsidiaries. The CMBI total return swap arrangements involve a total consideration of RMB 310,688,391 (equivalent to approximately HK$338,898,897). Asia Orient Group and Asia Standard International Group each received proceeds of RMB 310,688,391 (equivalent to approximately HK$338,898,897, and the same amount as the consideration for entering into the CMBI total return swap arrangements) from the termination of the Morgan Stanley total return swap arrangements.

The relevant notes include the following notes issued by Guangzhou R&F and Pearl River:

Guangzhou R&F notes ("Relevant Guangzhou R&F Notes"):

(a) 6.7% Guangzhou R&F notes maturing September 30, 2026, with total face value of RMB 799,100,000 (equivalent to approximately HK$871,600,000), comprising Asia Standard International Investor One RMB 268,700,000, Asia Standard International Investor Two RMB 216,200,000, and Asia Orient Investor RMB 314,200,000.

(b) 7.0% Guangzhou R&F notes maturing September 30, 2026, with total face value of RMB 499,800,000 (equivalent to approximately HK$545,200,000), comprising Asia Standard International Investor One RMB 110,000,000, Asia Standard International Investor Two RMB 259,900,000, and Asia Orient Investor RMB 129,900,000.

Pearl River notes ("Relevant Pearl River Notes"):

(a) 7.5% Pearl River notes maturing October 11, 2024, with total face value of RMB 361,500,000 (equivalent to approximately HK$394,300,000), comprising Asia Standard International Investor One RMB 50,000,000 and Asia Standard International Investor Two RMB 311,500,000.

(b) 7.5% Pearl River notes maturing October 31, 2024, with face value of RMB 90,200,000 (equivalent to approximately HK$98,300,000) held by Asia Standard International Investor Two.

Asia Orient Group and Asia Standard International Group each first invested in the relevant notes through their respective subsidiaries under the Morgan Stanley total return swap arrangements in 2020–2021. After entering into the Morgan Stanley total return swap arrangements, the maturity dates of the relevant notes were extended, but all other terms and details of the relevant notes remain the same as disclosed in previous announcements.

As the relevant notes are issued and listed in China, they are only available for purchase by qualified foreign institutional investors approved by the China Securities Regulatory Commission. Therefore, the investors hold their indirect interests in the relevant notes through the CMBI total return swap arrangements via CMBI, an institution with the relevant quota.

As Asia Orient Group and Asia Standard International Group do not have actual direct ownership or any interest in the relevant notes, neither group has any direct claim against such notes or the issuers, and may only claim against Platinum Sunflower, with the claim amount limited to the net proceeds of the relevant notes and subject to claims by creditors other than the parties to the transaction documents of the notes issued by Platinum Sunflower. After considering (i) the notes issued by Platinum Sunflower being secured by, among other things, a charge over cash accounts opened with the custodian bank, and Platinum Sunflower's rights, ownership, and interests under the CMBI total return swap arrangements and all receivables, monies, securities, or other property; and (ii) CMBI being a subsidiary of a Main Board listed company, the Asia Orient Directors and Asia Standard International Directors believe that the credit risk arising from the CMBI total return swap arrangements related to Platinum Sunflower and CMBI is not high.

Asia Orient Group and Asia Standard International Group each entered into the Morgan Stanley total return swap arrangements in 2020–2021 through their respective subsidiaries as the primary means of holding indirect interests in the relevant notes. The CMBI total return swap arrangements were entered into to replace the Morgan Stanley total return swap arrangements. As the proceeds received from the termination of the Morgan Stanley total return swap arrangements are the same as the amount paid for entering into the CMBI total return swap arrangements, the transfer did not result in any gain or loss. After considering the terms of the CMBI total return swap arrangements (including consideration, interest rate, maturity date, etc.), the Asia Orient Directors and Asia Standard International Directors respectively believe that such terms are fair and reasonable, and that entering into the CMBI total return swap arrangements is in the interests of Asia Orient Group, Asia Standard International Group, and the respective shareholders of Asia Orient and Asia Standard International.

As all applicable percentage ratios for entering into the CMBI total return swap arrangements are below 5% for both Asia Orient and Asia Standard International, entering into the CMBI total return swap arrangements does not constitute a notifiable transaction for Asia Orient or Asia Standard International under Chapter 14 of the Listing Rules. Nevertheless, Asia Orient and Asia Standard International voluntarily issued this joint announcement to inform their respective shareholders and potential investors of their latest business developments.

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