EMAIL DETAILS

Agree all good.

Lets keep moving.

Regards

From: jbulger123@gmail.com [mailto:jbulger123@gmail.com] On Behalf Of James Bulger
Sent: Wednesday, January 07, 2015 8:48 PM
To: YU, Felix
Cc: zhoubing; ouwenzhi_bgi@bocgroup.com; 徐建新; luchangqi@ample-harvest.com; Lindsay Wright[琳熙]; anthonyfan88@me.com; darcher@rosemontseneca.com; hbiden@rosemontseneca.com; jonathan.li@bohaicapital.com; Xue Ming; 蒋明[Jiang Ming]; Jason Zhu; 夏雨（Yu XIA）
Subject: Re: 中石化项目进展/Progress on Sinopec Deal

Felix
Thank you for the update.
This is great news for BHR, Jonathan and the team in Beijing Keep up the good work
Regards
Jimmy

On Wednesday, January 7, 2015, YU, Felix <felix.yu@bhrpe.com<mailto:felix.yu@bhrpe.com>> wrote:
尊敬的各位董事：
Dear board members,

作为新年礼物，商务部已于2014年12月31日批准中国石化销售有限公司（“中石化销售公司”）本次增资。中石化销售公司目前正在向外汇管理部门办理外汇登记事宜，预计将于本周末或下周初办理完毕该等登记并向投资人发出缴款通知，投资人应在收到中石化销售公司缴款通知之日起的10个工作内向其支付投资款。
As a new year gift, MOFCOM, on December 31, 2014, finally approved the capital increase proposed by Sinopec Marketing Co., Ltd. (“Sinopec”) which is now in the process of filing the proposed capital increase with SAFE. It is expected that the filing with SAFE will be effective later this week or earlier next week and Sinopec will thereafter issue notice to call capital from the investors. As agreed the investors are required to contribute their respective funds to Sinopec within 10 working days of receipt of the notice.

渤海华美作为中石化销售公司本次增资的投资人之一，目前已基本完成参与本次增资的规模为60.5亿元人民币的基金（“专项基金”）的组建，正在与专项基金投资人进行协议签署以及资金缴付事宜。
BHR, as one of the investors, has set up a single-project fund for this deal (the “Fund”) and is now in the process of signing fund agreements with its LPs and calling capital from them.

基于（i）本项目是低风险稳收益且社会知名度高的央企改制项目（ii）我们目前现金流状况及需求，并根据我们与专项基金投资人谈判，就专项基金，我们的收益模式分为以下两种：
Taking into consideration this deal being a high-profile SEO reform deal with low risks and reliable returns, our cash flow needs as well as our negotiations with LPs, we will generate revenue from the Fund by charging or receiving:


• 前段较高管理费，后端较低或无绩效分成；或

either higher up-front management fee with lower or no carried interest;


• 前段较低管理费，后端较高绩效分成。

or lower up-front management fee with higher carried interest.


经初步估算，就专项基金，我们3年的管理费收入在扣除募资代理费后大约为6800万元人民币；但除就大约40亿元人民币规模我们能收取6-10%的绩效分成之外，就剩余规模我们不收取任何绩效分成。
By rough calculation we may charge an aggregate management fee of RMB68m (with all placement agency fee deducted) on the Fund for 3 years. If pre-set hurdle rates with some LPs are met we may receive carried interest of 6-10% on RMB4b out of RMB60.05, the aggregate size of Fund, and we will receive no carried interest on the remainder.

需要指出的是，我们的一位长期合作伙伴储小晗先生通过其关联公司作为劣后方并自行引入民生银行作为优先方向专项基金出资，我们就该等资金可按该等金额的1%/年收取3年较高管理费，但我们需要向储小晗先生支付一次性募资代理费合计500百元人民币，且不收取任何绩效分成。由于储小晗向民生银行支付资金成本高于市场标准，并向民生银行提供个人、配偶及旗下实业公司连带责任保证，经协商一致，民生银行同意在保证其一定优先收益的情况下通过向我们向储小晗先生支付其来自专项基金的在前述优先收益之后收益的20%，但由此产生或导致我们的额外税费（如有）由储小晗承担或补偿。
It should be noted that Mr. Xiaohan Chu, one of our long-standing business partners, will invest in the Fund by creating a structured product with Minsheng Bank (one of the largest commercial banks in China) under which Mr. Chu, through his affiliate, will invest as a subordinate investor and Minsheng Bank will invest as a senior investor. For money from Mr. Chu and Minsheng Bank we will charge a higher annual management fee of 1% for 3 years but will pay Mr. Chu a lump-sum placement agency fee of RMB5m for his service to introduce Minsheng Bank to us and may not receive any carried interest. As Mr. Chu will pay a higher-than-market-standard interest rate to Minsheng Bank and will, together with his spouse and one of his manufacturing companies, provide joint and several personal guarantee in favor of Minsheng Bank, Minsheng Bank agrees that Mr. Chu may, through us, share or be allocated 20% of Minsheng Bank’s proceeds from the Fund when Minsheng Bank is secured the pre-set amount of preferred returns; provided, that Mr. Chu will bear or compensate us any additional tax (if any) thus caused.

如有任何问题，敬请联系我们。
If you have any question please kindly let us know.

Kind regards,
祝好！

Felix


--
James J. Bulger
Chairman
Thornton Group LLC
14 Beacon Street, Suite 804A
Boston, MA 02108
Office tel: 617.248.9440

________________________________
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