Taizhou Water Group Co., Ltd. (Taizhou Water, 01542) has approved a multi-step restructuring anchored by the proposed launch of a Quasi-REIT on the Shanghai Stock Exchange (SSE) in or after June 2026, aiming to unlock up to RMB3.20 billion for debt reduction and working-capital support.

Key Transactions 1. Binhai Water Acquisition: Taizhou Water will purchase the remaining 49% stake in subsidiary Binhai Water from 82%-owned Taizhou City Water for RMB147.49 million (effective consideration: RMB26.55 million for an additional 8.82% economic interest). Post-deal, Binhai Water becomes a wholly owned unit of Taizhou Water.

2. Quasi-REITs Issuance: • Size: up to RMB3.20 billion, classified as “fixed-income category” ABS – Quasi-REIT on the SSE Fixed-Income Information Platform. • Underlying Assets: Taizhou Water Diversion Project Phase III (appraised at RMB3.12 billion) held by Binhai Water. • Tenor: 18 years (3+3+3+3+3+3) with triennial extension options decided by a three-member Investment Management Committee where Taizhou Water controls two seats. • Tranches: priority (≥ 60% of issue; AA+; expected 2.0%-3.0% yield) and subordinated (≤ 40%; fully subscribed by Taizhou Water at up to RMB1.28 billion).

3. Disposal to Quasi-REITs: Taizhou Water will sell 100% of Binhai Water to the Quasi-REITs for RMB301 million. The REIT will simultaneously inject a shareholder loan of up to RMB2.60 billion and a capital increase of about RMB300 million into Binhai Water. Taizhou Water will retain control through its 40% subordinated interest and majority voting rights on the Investment Management Committee; 60% of Binhai Water’s results will be attributed to non-controlling interests.

Use of Proceeds • RMB301 million to acquire Binhai Water from Taizhou Water. • RMB2.57 billion to repay Binhai Water’s existing bank and shareholder loans (including RMB0.92 billion owed to Taizhou Water and RMB1.65 billion to commercial banks). • Up to RMB0.33 billion for Binhai Water’s working capital.

Financial Impact (pro-forma 31 Dec 2025) • Consolidated asset-liability ratio expected to fall from 77 % to about 45 %. • Net cash inflow estimated at RMB0.32 billion after transactions, reflecting priority-tranche proceeds minus debt repayment and temporary bank borrowing for the subordinated subscription. • Annual finance cost savings projected at roughly RMB0.05 billion, lifting profitability.

Regulatory Classification • Binhai Water Acquisition: Discloseable transaction (≥ 5 % but < 25 %). • RMB1.28 billion Subscription: Very substantial acquisition (> 100 %). • RMB301 million Disposal of Binhai Water: Very substantial disposal (> 75 %). Shareholder approval at an upcoming EGM and SSE clearance are required; all steps are inter-conditional.

Risk Reminder Management cautions that the acquisition, Quasi-REITs issuance, subscription and disposal remain subject to multiple conditions and may not proceed. Investors should exercise caution when dealing in Taizhou Water shares.