China Huarong Energy : Completion of the Issue of the Convertible Bonds and Adjustment to the Conversion Price of the 2018 Convertible Bonds

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CHINA HUARONG ENERGY COMPANY LIMITED

中 國 華 榮 能 源 股 份 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01101)

COMPLETION OF THE ISSUE OF THE CONVERTIBLE BONDS AND ADJUSTMENT TO THE CONVERSION PRICE OF THE 2018 CONVERTIBLE BONDS

Reference is made to the announcements of China Huarong Energy Company Limited (the "Company") dated 16 January 2017 and 16 March 2017 and the circular of the Company dated 29 April 2017 in relation to the proposed issue of up to HK$751,000,000 7.0% convertible bonds due 2019 (the "Circular"). Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the Circular.

COMPLETION OF THE ISSUE OF THE CONVERTIBLE BONDS

The Board is pleased to announce that all the conditions precedent to the issue of the Convertible Bonds under the Subscription Agreements in relation to the Subscriber, Action Phoenix Limited, have been fulfilled and/or waived and the completion of the issue of the Convertible Bonds took place on 19 May 2017. The Convertible Bonds with an aggregate principal amount of HK$745,060,000 (the "2019 Convertible Bonds") have been issued by the Company to the Subscriber and its nominee in accordance with the terms and conditions of the Subscription Agreements.

For illustrative purpose only, the table below sets out a summary of the shareholdings in the Company (i) as at the date of this announcement; (ii) immediately following the full conversion of the 2019 Convertible Bonds at the initial Conversion Price of HK$0.50 each (assuming no conversion of the 2018 Convertible Bonds and no exercise of the Share Options); and (iii) immediately following the full conversion of the 2019 Convertible Bonds at the initial Conversion Price of HK$0.50 each (assuming full conversion of the 2018 Convertible Bonds and full exercise of the Share Options):

Shareholders	As at the date of this announcement			Immediately following the full conversion of the 2019 Convertible Bonds at the initial Conversion Price of HK$0.50 each (assuming no conversion of the 2018 Convertible Bonds and no exercise of the Share Options) (Note g)				Immediately following the full conversion of the 2019 Convertible Bonds at the initial Conversion Price of HK$0.50 each (assuming full conversion of the 2018 Convertible Bonds and full exercise of the Share Options) (Note h)
Number of Shares	% (approx.)	Number of Shares	% (approx.)	Number of Shares	% (approx.)
Mr. Zhang (Note a)	409,181,031	18.84	409,181,031	11.17	409,181,031	10.48
Chen Qiang (Note b)	209,200,000	9.63	209,200,000	5.71	223,200,000	5.72
Gallop Sun Limited (Note c)	160,000,000	7.37	160,000,000	4.37	160,000,000	4.10
Other Directors (holders of Share Options)	-	-	-	-	6,801,000	0.17
Subscriber and its nominee (Note d)	-	-	1,490,120,000	40.70	1,490,120,000	38.16
Holder of 2018 Convertible Bonds (Note e)	135,100	0.01	135,100	0.00	207,135,000	5.30
Other public Shareholders (Note f)	1,393,075,376	64.15	1,393,075,376	38.05	1,408,498,376	36.07
Total	2,171,591,507	100.00	3,661,711,507	100.00	3,904,935,507	100.00

Notes:

1. Among 409,181,031 Shares, 387,436,231 Shares are directly held by Fine Profit Enterprises Limited and 21,744,800 Shares were directly held by Wealth Consult Limited, which is a wholly-owned subsidiary of Fine Profit Enterprises Limited. Both Fine Profit Enterprises Limited and Wealth Consult Limited are 100% directly or indirectly beneficially owned by Mr. Zhang.

2. Among 209,200,000 Shares, 27,200,000, 84,000,000 and 98,000,000 Shares are directly held by Boom Will Limited, Leader World Investments Limited and Outspace Limited, respectively. Boom Will Limited, Leader World Investments Limited and Outspace Limited are 100%, 38.33% and 100% directly beneficially owned by Mr. Chen Qiang, respectively. In addition, Mr. Chen Qiang is also holder of Share Options which entitle him to subscribe for 14,000,000 Shares.

3. Gallop Sun Limited is 100% directly and beneficially owned by Mr. Zhang De Huang, the father of Mr. Zhang.

4. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, both the Subscriber and its nominee (as the holders of the 2019 Convertible Bonds) are wholly-owned subsidiaries of VMS Holdings Limited and each of them is a third party independent of the Company and its connected persons.

5. The Company has ascertained the shareholding of the holder of the 2018 Convertible Bonds as at the date of this announcement. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the holder of the 2018 Convertible Bonds is a third party independent of the Company and its connected persons.

6. Other public shareholders include certain employees of the Group, who are also holders of certain Share Options which entitle them to subscribe for 15,423,000 Shares.

7. It is assumed that (i) the Conversion Price will not be adjusted as a result of any dilutive event; (ii) the 2019 Convertible Bonds will be converted in full at the Conversion Price of HK$0.50 per Conversion Share; (iii) there will be no redemption, purchase or cancellation of the 2019 Convertible Bonds pursuant to the terms and conditions of the 2019 Convertible Bonds; and (iv) there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Conversion Shares.

8. It is assumed that (i) the Conversion Price will not be adjusted as a result of any dilutive event; (ii) the 2019 Convertible Bonds will be converted in full at the Conversion Price of HK$0.50 per Conversion Share; (iii) the 2018 CB Original Conversion Price of HK$1.05 per Share is adjusted to the 2018 CB New Conversion Price of HK$0.50 per Share upon the completion of the Subscription Agreements pursuant to the terms and conditions of the 2018 Convertible Bonds; (iv) there will be no redemption, purchase or cancellation of the 2019 Convertible Bonds and the 2018 Convertible Bonds pursuant to their respective terms and conditions; (v) the outstanding Share Options will be exercised in full; and (vi) there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Conversion Shares, Shares pursuant to the exercise of the conversion rights attaching to the 2018 Convertible Bonds and the exercise of the Share Options as at the date of this announcement.

ADJUSTMENT TO THE CONVERSION PRICE OF THE 2018 CONVERTIBLE BONDS

On 19 May 2017, upon completion of the issue of the 2019 Convertible Bonds, Credit Suisse (Hong Kong) Limited (as the holder of the 2018 Convertible Bonds), Mr. Zhang (as the guarantor of the 2018 Convertible Bonds) and the Company executed the Amendment and Restatement Agreement to acknowledge the adjustment to the conversion price of the 2018 Convertible Bonds by making the relevant modifications to the terms and conditions of the 2018 Convertible Bonds.

Pursuant to the terms and conditions of the 2018 Convertible Bonds and the Amendment and Restatement Agreement, the conversion price of the 2018 Convertible Bonds in an aggregate principal amount of HK$103,500,000 will be adjusted from HK$1.05 per Share to HK$0.50 per Share, with effect from 19 May 2017 (being the date of issue of the 2019 Convertible Bonds).

Save for the abovementioned adjustment to the conversion price of the 2018 Convertible Bonds, all other terms and conditions of the 2018 Convertible Bonds will remain unchanged.

By Order of the Board

China Huarong Energy Company Limited LEE Man Yee

Company Secretary

Hong Kong, 19 May 2017

As at the date of this announcement, the directors of the Company are: Executive directors:

Mr. CHEN Qiang (Chairman), Mr. HONG Liang, Mr. WANG Tao, Ms. ZHU Wen Hua and Mr. ZHANG Ming;

Independent non-executive directors:

Mr. WANG Jin Lian, Ms. ZHOU Zhan and Mr. LAM Cheung Mau.