Binhai Investment : Announcements and Notices - Inside Information Application for Arbitration

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(Incorporated in Bermuda with limited liability)

(Stock Code: 2886)

INSIDE INFORMATION APPLICATION FOR ARBITRATION

This announcement is made by Binhai Investment Company Limited (the "Company", together with its subsidiaries, the "Group") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

Tianjin TEDA Binhai Clean Energy Group Co., Ltd.*€˂ݵइ༺Ᏽऎ૶ᆎঐ๕ණྠϞࠢʮ̡ ("Tianjin Clean Energy"), a wholly-owned subsidiary of the Company, has filed an application for arbitration proceedings at Tianjin Arbitration Commission ("Arbitration Commission") to claim against Tianjin Steel Pipe Manufacturing Co., Ltd*€˂ݵ፻၍ႡிϞࠢʮ̡("Tianjin Steel Pipe"), an indirect subsidiary of Tianjin TEDA Investment Holding Co., Ltd.*€˂ݵइ༺ҳ༟છٰ Ϟࠢʮ̡which is the controlling shareholder of the Company, for failing to honour its contractual obligation to pay the transaction amounts under an agreement for sale of natural gas (the "Sale of Gas Agreement"). The Arbitration Commission issued a notice of acceptance of the application for arbitration on 19 November 2018.

Tianjin Clean Energy had been selling natural gas to Tianjin Steel Pipe from time to time since October 2010. Since January 2016, Tianjin Steel Pipe has defaulted in making payment to Tianjin Clean Energy, and Tianjin Clean Energy already ceased supplying natural gas to Tianjin Steel Pipe in October 2017. As at 30 September 2018, the transaction amounts under the Sale of Gas Agreement owing to Tianjin Clean Energy were approximately RMB104.68 million in aggregate.

Despite various written demands by the management of the Group to Tianjin Steel Pipe since 2016,

Tianjin Steel Pipe has not yet paid the outstanding amount due under the Sale of Gas Agreement.

Repayment schedules proposed by Tianjin Steel Pipe to Tianjin Clean Energy to settle such outstanding amount were not carried out by Tianjin Steel Pipe.

To secure the recovery of the above outstanding amount due from Tianjin Steel Pipe and to reduce the risk of corresponding impairment loss of the Group, the board of directors of the Company decided that it would be in the best interests of the Company and its shareholders to commence arbitration proceedings against Tianjin Steel Pipe pursuant to the Sale of Gas Agreement. The Company has already made a bad debt provision of approximately RMB64.33 million for accounts receivable from Tianjin Steel Pipe. If the outstanding amount can be claimed, the bad debt provision can be reverted and the net profit of the Company can be increased. If the outstanding amount cannot be claimed, there will be a risk of the Company having to make a further bad debt provision of approximately RMB40.35 million and the net profit of the Company will be reduced.

As advised by the Group's counsel as to the laws of the People's Republic of China in connection with the above arbitration proceedings, the Arbitration Commission will elect arbitrators to form the arbitral tribunal and fix the hearing date of the above case. The Company will make further announcement(s) to update the shareholders of the Company and the public as and when appropriate.

There is no assurance that the amounts claimed by the Group under the abovementioned arbitration application will be successfully awarded or eventually recovered. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

By Order of the Board

BINHAI INVESTMENT COMPANY LIMITED

Gao Liang

Executive Director

Hong Kong, 20 November 2018

As at the date of this announcement, the Board comprises two executive Directors, namely, Mr. Zhang Bing Jun and Mr. Gao Liang, four non-executive Directors, namely, Mr. Shen Xiao Lin, Mr. Zhang Jun, Mr. Wang Gang and Mr. Yu Ke Xiang, and four independent non-executive Directors, namely, Mr. Ip Shing Hing, J.P., Professor Japhet Sebastian Law, Mr. Tse Tak Yin and Mr. Lau Siu Ki, Kevin.

*

For identification purposes only