Pearl Oriental will contribute HK$60 million as registered capital of the Joint Venture Company; whereas Citic will contribute HK$40 million as registered capital of the Joint Venture Company. The total registered capital of the Joint Venture Company therefore will be HK$100 million and the Joint Venture Company will become a 60% owned subsidiary of Pearl Oriental upon completion. In addition, pursuant to the Joint Venture and Merger & Acquisition Agreement, the Company will issue 8,000,000 new Shares to the Citic as a one-off marketing and consultation fee for development of the oil exploitation business. The Consideration Shares will be issued and allotted under the Specific Mandate, the grant of which is subject to the Shareholders' approval at the special general meeting.
Global Bay Resources Limited, a shell company established in Hong Kong, will be jointly owned by the Pearl Oriental and Citic.
The registered capital of Global Bay will become HK$100 million comprising 100 million shares of HK$1 per each share. Of the total amount of registered capital, HK$60 million will be contributed by the Company while the remaining HK$40 million will be contributed by the Citic. Accordingly, Global Bay will be owned as to 60% by the Pearl Oriental and 40% by the Citic upon completion. Global Bay will become a 60% owned subsidiary of the Pearl Oriental and its financial accounts will be consolidated into the Group's financial accounts.
The parties to the Joint Venture and Merger & Acquisition Agreement agreed, primarily through the Joint Venture Company, to develop and acquire new oil fields in China, and to expedite potential oil exploitation projects in China and overseas.
The two partners will also strengthen their relationship and cooperation with the major oil conglomerates in China through the existing business connection of Citic with those oil conglomerates. It is expected that the annual oil production of the Joint Venture Company will reach or exceed 500,000 tons (equivalent to approximately 3.65 million barrels) within two years upon completion based on the estimation from the existing oil exploitation projects in which Citic has equity interests and may be injected into the Joint Venture Company.
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