Sapphire Corporation has, on Aug 9, entered into a covered guarantee agreement with Shandong Hi-Speed Road & Bridge Group, where Sapphire’s 97.99%-owned subsidiary Chengdu Kai Qi Rui Business Management Co (Chengdu KQR) will provide a covered guarantee to the latter on the terms of the agreement.
The agreement was signed by Chengdu KQR and Ranken Railway Construction Group, an associated company of Sapphire Corporation, on Aug 9.
The agreement will cover the principal loan amount, interests, penalties, liquidated damages, compensations, as well as other payable costs and expenses of not more than RMB146.5 million ($30.6 million).
See also: Sapphire shares surge 81.8% as it divests 43.87% equity stake of Ranken Railway for $55.3 mil
The limit of the covered-guarantee is RMB294.0 million, which is the quantum of the principal guarantee multiplied by the capital contribution percentage of Chengdu KQR in Ranken Railway.
Sapphire Corporation says it intends to seek shareholders’ approval for the proposed transaction, which was said to have been foreshadowed.
During the dilution of Sapphire Corp’s equity interest in Ranken Railway in October 2020, it was said that the latter may require capital support from Chengdu KQR given the scale of its operations.
The proposed transaction has to be completed quickly given that RMB72 million of Ranken Railway’s existing loans will expire in the first half of August.
Shares in Sapphire closed flat at 9.7 cents on Aug 6.
