KANGDA ENV (06136) intends to transfer the franchise operation right of the sewage treatment plant, the sewage treatment plant, and corresponding facilities to Jieyuan in Wugang City.

KANGDA ENV (06136) announces that on November 18, 2024, its indirect wholly-owned subsidiaries Chongqing Kangda and Pingdingshan Kangda (as transferor), and Wugang Jieyuan (as transferee) entered into an asset transfer agreement with the Wugang municipal government. The transferor agrees to sell and Wugang Jieyuan agrees to purchase the relevant assets for a consideration of RMB 57 million. According to the terms and conditions of the asset transfer agreement, the transferor agrees to sell and Wugang Jieyuan (as transferee) agrees to purchase, including but not limited to: the franchising rights related to the sewage treatment plant; the sewage treatment plant and its corresponding facilities; the overdue sewage treatment fees owed by the Wugang municipal government to Pingdingshan Kangda (including overdue interest and fees); and all rights and obligations enjoyed by the transferor under the franchise agreement (collectively referred to as the "relevant assets"). Considering the current operating conditions and future operating costs of the sewage treatment plant; the potential capital expenditures for upgrading and renovating the plant facilities and equipment; and the age of the accounts receivable for the sewage treatment fees owed by the Wugang municipal government, the board of directors believes that the asset transfer will allow the group to save a significant amount of operating expenses and potential capital expenditures for the sewage treatment plant, generate immediate cash flow by monetizing the relevant assets, and allocate time and resources to other more profitable franchise projects. Furthermore, the asset transfer is in line with the Wugang municipal government's acquisition of municipal assets, including the relevant assets. The transferee of the asset transfer is a company designated by the Wugang municipal government and is wholly owned by the Wugang municipal state-owned assets supervision and administration bureau. Although the consideration is lower than the book value of the relevant assets, considering the financial and capital needs for the continued operation of the sewage treatment plant and the age of the overdue fees owed by the Wugang municipal government, the board of directors believes the consideration is fair and reasonable.