Huarong Investment Stock : MAJOR TRANSACTION - ENTRUSTED LOAN ARRANGEMENT WITH QINGDAO JIAYAOHUA REAL ESTATE CO., LTD. SECURITY ARRANGEMENT UPDATE

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2277) MAJOR TRANSACTION ENTRUSTED LOAN ARRANGEMENT WITH QINGDAO JIAYAOHUA REAL ESTATE CO., LTD. SECURITY ARRANGEMENT UPDATE

Reference is made to the announcement of the Company dated 24 August 2017 ("Announcement") in relation to the provision of the Entrusted Loan. Unless otherwise defined, terms used in this announcement shall have the same meanings as those defined in the Announcement.

SECURITY ARRANGEMENT UPDATE

On 30 August 2017, the Lender, Chang Fu Hang and Jiabao Nianhua entered into a three-party agreement (the "Side Agreement") pursuant to which the parties agreed to amend certain security arrangements (the "Amendments") under the Entrusted Loan Agreement.

As set out in the Announcement, the provision of not more than RMB300 million (equivalent to approximately HK$348 million) of the Entrusted Loan by the Lender to the Borrower is conditional upon, among others, the Charge and Pledge Documents having been signed and becoming effective. One of the Charge and Pledge Documents was an equity pledge agreement (the "Equity Pledge Agreement") dated 24 August 2017 and entered into between Chang Fu Hang as chargor and the Lender as the chargee pursuant to which Chang Fu Hang charged its 25% equity interests in Duo Li Wei in favour of the Lender as security for, among others, all sums due and payable to the Lender under the Entrusted Loan Agreement.

The Board was informed by Chang Fu Hang that Chang Fu Hang intends to transfer its 25% equity interests in Duo Li Wei to Jiabao Nianhua which held 75% equity interests in Duo Li Wei prior to such transfer.

Based on arm's length negotiation, the Lender, Chang Fu Hang and Jiabao Nianhua entered into the Side Agreement and agreed on the following arrangements:

1. within five business days upon signing of the Side Agreement, Chang Fu Hang and the Lender will enter into an agreement to release the equity pledge under the Equity Pledge Agreement and to arrange for the relevant procedures in relation to the release of equity pledge at the relevant PRC authorities;

2. on the date of completion of step (1) above, Chang Fu Hang and Jiabao Nianhua will arrange for the transfer of 25% equity interests in Duo Li Wei from Chang Fu Hang to Jiabao Nianhua, and to arrange for the relevant procedures in relation to the transfer of equity interests at the relevant PRC authorities; and

3. on the date of completion of step (2) above, Jiabao Nianhua as chargor and the Lender as chargee will enter into an equity pledge agreement pursuant to which Jiabao Nianhua will charge such 25% equity interests in Duo Li Wei in favour of the Lender as security for, among others, all sums due and payable to the Lender under the Entrusted Loan Agreement, and arrange for the relevant procedures in relation to the equity pledge at the relevant PRC authorities.

As disclosed in the Announcement, an equity pledge agreement dated 24 August 2017 was entered into between Jiabao Nianhua as chargor and the Lender as the chargee pursuant to which Jiabao Nianhua charged its 75% equity interests in Duo Li Wei in favour of the Lender as security for, among others, all sums due and payable to the Lender under the Entrusted Loan Agreement. Prior to the entering of the Side Agreement, an aggregate of 100% equity interests in Duo Li Wei has been charged in favour of the Lender as security for, among others, all sums due and payable to the Lender under the Entrusted Loan Agreement. Upon completion of the arrangements under the Side Agreement, an aggregate of 100% equity interests in Duo Li Wei will still be charged in favour of the Lender as security for, among others, all sums due and payable to the Lender under the Entrusted Loan Agreement. As such, the Directors are of the view that the Amendments pursuant to the Side Agreement do not constitute material change to the arrangements in relation to the Entrusted Loan.

Save for the above-mentioned Amendments, all other terms in relation to the Entrusted Loan remain unchanged.

IMPLICATIONS UNDER THE LISTING RULES

As disclosed in the Announcement, as one or more of the applicable percentage ratios in respect of the transactions contemplated under the Entrusted Loan Agreement, on a standalone basis or on an aggregate basis with the Sale and Purchase Agreement, are more than 25% but less than 100%, the transactions contemplated under the Entrusted Loan Agreement (whether on a standalone basis or on an aggregate basis with the Sale and Purchase Agreement) constitute a major transaction for the Company under Chapter 14 of the Listing Rules which is subject to the reporting, announcement and Shareholders' approval requirements pursuant to Chapter 14 of the Listing Rules.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, no Shareholder or any of their respective associates have any material interest in the Acquisition and the provision of the Entrusted Loan, thus no Shareholder is required to abstain from voting if the Company was to convene a general meeting for the approval of the provision of the Entrusted Loan. As disclosed in the Announcement, the Company has obtained a written shareholder's approval from Right Select, the controlling Shareholder holding approximately 50.99% of the total issued shares of the Company as at the date of the Announcement, in lieu of holding a general meeting to approve the provision of the Entrusted Loan in accordance with Rule 14.44 of the Listing Rules. In view of the Amendments under the Side Agreement, the Company has obtained a written shareholder's approval from Right Select confirming its approval as to the Amendments under the Side Agreement, in lieu of holding a general meeting to approve the provision of the Entrusted Loan (including the Amendments) in accordance with Rule 14.44 of the Listing Rules. Accordingly, no extraordinary general meeting of the Company will be convened for the purpose of approving the provision of the Entrusted Loan (including the Amendments).

Hong Kong, 30 August 2017

By order of the Board

Huarong Investment Stock Corporation Limited Qin Ling

Chairman

As at the date of this announcement, the executive Directors are Mr. Qin Ling, Mr. Yeung Chun Wai Anthony, Mr. Xu Xiaowu, Mr. Liu Xiguang, Mr. Kwan Wai Ming and Ms. Lin Changhua; the non-executive Director is Mr. Wu Qinghua; and the independent non-executive Directors are Mr. Chan Kee Huen Michael, Mr. Zhang Xiaoman, Mr. Tse Chi Wai and Mr. Wu Tak Lung.

For the purpose of this announcement, conversion of RMB into HK Dollars is based on the approximate exchange rate of RMB1 to HK$1.16. Such exchange rate is for the purpose of illustration only and does not constitute a representation that any amounts in HK Dollars or RMB have been, could have been or may be converted at such or any other rate or at all.