GRAND MING (01271) intends to sell its data center development project.

GRAND MING (01271) announces that on 18 September 2026, the vendors (being two indirect wholly-owned subsidiaries of the Company) entered into the agreements with the purchaser, pursuant to which the vendors have conditionally agreed to sell, and the purchaser has conditionally agreed to purchase, the properties at a minimum aggregate consideration of HK$2,179 million, plus a potential further additional amount of up to HK$266 million, with a maximum aggregate consideration of HK$2,445 million. The properties are a data centre development project held for leasing purposes. The first two phases of Property 1 were delivered to the purchaser (as the current occupier) in December 2025 and have commenced generating rental income; the remaining development and fitting-out works are still in progress. Property 2 is under construction and is intended to be used as a data centre, and currently does not generate any rental income. The Board is currently adopting all feasible strategies to reduce the leverage of the Group's balance sheet, increase its working capital and consolidate long-term financial stability. The Disposal provides an opportunity for the Group to sell both properties as a whole to a single purchaser and realise substantial cash proceeds, thereby strengthening the Group's financial position while reducing its overall debt and lowering its financing costs and the risks of developing the properties, subject to the continuing obligations under the agreements. The Group has since June 2025 sought potential disposal transactions and entered into various non-binding processes with different parties, but no formal agreement was reached. The purchaser has now agreed to acquire the properties under the agreements. Although the two deliveries are not conditional upon each other, transacting with a single purchaser reduces the time required to identify and negotiate with different purchasers, execution risks and duplicated costs, and allows for coordination of due diligence, lender consents, repayment and release of security. The payment structure allows each property to be transferred and the minimum aggregate consideration to be paid upon its delivery, while the consideration attributable to specific remaining works is payable only upon satisfaction of post-delivery conditions. Accordingly, this structure enables the disposal to proceed before completion of such works, and the Board does not need to rely on receipt of the further additional amount when assessing the merits of the Disposal. The Board has considered selling the properties separately or bundling the disposal with the Company's other two properties, but having considered that both properties are located in close proximity and are technically designed to operate jointly; and that the purchaser is the current occupier of Property 1 (whose consent is required for a sale of Property 1 to a third party), it considers that the terms, timing and execution certainty under this structure are more suitable and feasible to meet the Group's funding needs. The Board has assessed the Disposal on the assumption that no further additional amount will be received, including a discount of approximately 19.0% of the minimum aggregate consideration against the preliminary valuation on a completed basis, and an expected accounting loss of HK$1,088 million. Such loss primarily reflects that the disposal proceeds are lower than the historical carrying value, and is not in itself a standalone cash payment at the time of delivery. The Board has weighed this loss against the immediate application of the net cash proceeds to reduce debt, the financing costs and execution risks of a delayed sale, and the costs and risks of continuing to own the properties. The expected annual financing cost savings from the planned repayment is approximately HK$136 million; the Group's remaining works, transition arrangements and other obligations mainly comprise the specified fitting-out works under the agreements. The estimated total costs of the specified fitting-out works and specified construction works under the agreements are approximately HK$118 million, of which approximately HK$72.5 million remains payable by the Group to complete such works and fulfil the relevant post-completion conditions. The relevant estimated total costs are determined by reference to the remaining amounts payable under the relevant subcontracting agreements entered into for the completion of the specified fitting-out works under the agreements. Having considered the above, the outcome of the purchaser identification process, the available alternatives and the financing and security release arrangements described above, the Board considers that even without receipt of the further additional amount, the benefits of the Disposal outweigh the expected accounting loss and the retained obligations.