China Zhongwang : DISCLOSEABLE TRANSACTION - DEEMED DISPOSAL AND TRANSFER OF EQUITY INTEREST IN LIAONING ZHONGWANG

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.

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 01333)

DISCLOSEABLE TRANSACTION

DEEMED DISPOSAL AND TRANSFER OF EQUITY INTEREST

IN LIAONING ZHONGWANG

1. INTRODUCTION
   The Board is pleased to announce that:
2. 1. Liaoning Zhongwang Superior Fabrication Investment Limited* (''Zhongwang Fabrication''), Liaoning Zhongwang Group Co., Ltd.* (''Liaoning Zhongwang'') and National Civil-Military Integration Industry Investment Fund Co., Ltd.* (''Fund I'') entered into the Capital Contribution Agreement dated 30 October 2019, pursuant to which, among other things, Fund I agreed to contribute RMB1.0 billion in cash to Liaoning Zhongwang;
   2. Zhongwang Fabrication, Liaoning Zhongwang and Jiaxing Liding Changhao Equity Investment Partnership Enterprise (Limited Partnership)* (''Fund II'') entered into the Equity Transfer Agreement I dated 30 October 2019, pursuant to which, among other things, Zhongwang Fabrication agreed to sell, and Fund II agreed to purchase, approximately 3.45% of equity interests in Liaoning Zhongwang at the consideration of RMB1.0 billion; and
   3. Zhongwang Fabrication, Liaoning Zhongwang and Zibo Yingke Baiyao Pioneer Investment Partnership Enterprise (Limited Partnership)* (''Fund III'') entered into the Equity Transfer Agreement II dated 30 October 2019, pursuant to which, among other things, Zhongwang Fabrication agreed to sell, and Fund III agreed to purchase, approximately 3.45% of equity interests in Liaoning Zhongwang at the consideration of RMB1.0 billion.

Zhongwang Fabrication, Fund I, Fund II and Fund III also entered into the Shareholders' Agreement on the same date.

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II. CAPITAL CONTRIBUTION AGREEMENT

The principal terms and conditions of the Capital Contribution Agreement are set out below:

1.	Date:	30 October 2019
2.	Parties:	(a)	Zhongwang Fabrication;
		(b)	Liaoning Zhongwang; and
		(c)	Fund I
		To the best of the Directors' knowledge, information
		and belief having made all reasonable enquiries, as at
		the date of the Capital Contribution Agreement, Fund I
		and its ultimate beneficial owners are third parties
		independent of the Company and its connected persons.
3.	Subject Matter:	Upon the completion of the Capital Contribution, the
		registered capital of Liaoning Zhongwang would be
		increased to USD2,312,750,000 and the shareholding
		percentage of Fund I in Liaoning Zhongwang would be
		approximately 3.45%.
4.	Amount of Capital	RMB1.0 billion. Such amount of the Capital
	Contribution:	Contribution and Fund I's shareholding percentage in
		Liaoning Zhongwang upon the completion of the
		Capital Contribution was determined after arm's length
		negotiation between the parties to the Capital

Contribution Agreement with reference to the valuation (the ''Valuation'') of the 100% equity interest in Liaoning Zhongwang, i.e. RMB28.0 billion, as at 30 June 2019 (the ''Valuation Base Date'').

Fund I shall make the payment of the Capital

Contribution to the bank account designated by

Liaoning Zhongwang pursuant to the Capital

Contribution Agreement on the Closing Date for

Capital Contribution.

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5. Valuation Method and	The Valuation is agreed	by the parties to the Capital
Adjustment:	Contribution	Agreement	with reference to the audited
	net assets of the 100% equity interest in Liaoning
	Zhongwang after netting off the proposed dividend
	distribution (i.e. RMB6.0 billion) to be made to
	Zhongwang	Fabrication	(i.e. RMB27.7 billion, the

''Net Assets Reference'') as at Valuation Base Date, as well as the assumption that the proposed disposal consideration of the Excluded Assets is not less than RMB4.6 billion.

If the disposal of the Excluded Assets is implemented after the completion of the Deemed Disposal and the disposal price is lower than RMB4.6 billion, Zhongwang Fabrication shall compensate Fund I for the shortfall against RMB4.6 billion, in which case:

The compensation amount = (RMB4.6 billion - actual disposal consideration of the Excluded Assets) × Fund I's shareholding percentage in Liaoning Zhongwang upon the completion of the Deemed Disposal × (the Valuation/Net Assets Reference).

		Fund I is entitled to request Liaoning Zhongwang to
		engage an auditor to audit the corresponding net assets
		of the 100% equity interest in Liaoning Zhongwang as
		at the Valuation Base Date. The Guarantors shall assure
		that the audited net assets of 100% equity interest in
		Liaoning Zhongwang (the ''Adjusted Net Assets'') as
		at Valuation Base Date after deduction of a dividend of
		RMB6.0 billion are not less than the Net Assets
		Reference, or otherwise Zhongwang Fabrication agreed
		and undertook to make cash compensation to Liaoning
		Zhongwang of the difference between the above-
		mentioned Adjusted Net Assets and Net Assets
		Reference.
6.	Dividend Distribution	As Liaoning Zhongwang plans to distribute a cash
		dividend of RMB6.0 billion to Zhongwang Fabrication,
		such dividend distribution shall be made in a way not
		to disturb the daily operation of Liaoning Zhongwang
		Group. Such dividend distribution shall be implemented
		in accordance with the receipt progress of the disposal
		consideration of the Excluded Assets.
7.	Closing	The Closing Date for Capital Contribution shall not be
		later than the twentieth (20th) business day from the
		date on which all the conditions precedent are fulfilled
		or waived by Fund I.

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Within ten (10) business days after the Closing Date for Capital Contribution, Liaoning Zhongwang shall obtain the new business license and filing documents of the articles of association in relation to the completion by Liaoning Zhongwang of registration change of the Capital Contribution with the administration for industry and commerce, and shall deliver the copies of the business license and the filing documents to Fund I on the completion date of the registration.

8. Conditions precedent	The	payment of the	Capital Contribution is subject to
	the fulfilment or waiver by Fund I in writing of the
	following conditions:
	(1)		All	parties has	obtained all external and internal
			approvals required for the completion of the
			Capital Contribution, including the approval by
			Liaoning Zhongwang's shareholders of the
			proposed disposal of the Excluded Assets;
	(2)	The	investment committee or its equivalent of
			Fund I has resolved to approve the Capital
			Contribution and the obligations under the
			transaction documents;
	(3)	The	Guarantors shall have signed necessary
			documents (including but not limited to the Capital
			Contribution	Agreement,	the	Shareholders'
			Agreement and articles of association);
	(4)		The articles of association of Liaoning Zhongwang
			with necessary updates for the Capital Contribution
			has been officially approved and signed by
			Zhongwang Fabrication in accordance with
			applicable laws	and the prevailing	and effective

articles of association of Liaoning Zhongwang, and such approval remains legal and valid at the Closing Date for Capital Contribution;

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(5) The employees of Liaoning Zhongwang Group, including key employees, have terminated part- time employment and other labor service relationships, financial aid, incentives or rewards and other relationship of interest with the companies and entities controlled by the Company other than Liaoning Zhongwang Group, and the personnel of Liaoning Zhongwang Group have maintained continuous stability prior to the

		Closing for Capital Contribution;
	(6)	As	of	the	Closing	Date	for	Capital	Contribution,
		none of Liaoning Zhongwang Group, Zhongwang
		Fabrication or their de facto controllers has
		undergone any material adverse changes or been
		materially and adversely affected;
	(7)	As	of	the	Closing	Date	for	Capital	Contribution,
		there are no laws or government orders that impose
		any restriction over or injunction against the
		Capital Contribution; and
	(8) Each Guarantor has signed and delivered the
		confirmation letter in relation to the confirmation
		of the fulfilment of all the conditions precedent of
		the Capital Contribution at the time of the Closing
		for Capital Contribution to Fund I.
9. Undertakings by	The Guarantors undertook to Fund I on the following
Guarantors	matters	after	the Closing	for Capital	Contribution,
	including regulating the internal control of Liaoning
	Zhongwang Group, restricting the competition between
	shareholders of Liaoning Zhongwang and Liaoning
	Zhongwang Group, maintaining the daily operation of
	Liaoning	Zhongwang	Group,	maintaining	the

independence of Liaoning Zhongwang Group, obtaining the certificate of high-tech enterprise, business qualifications, real estate property certificates and intellectual property certificates, complying with laws, regulating the labor and human resources of Liaoning Zhongwang Group, regulating connected transactions of Liaoning Zhongwang Group, disposing of the Excluded Assets, regulating the internal governance of Liaoning Zhongwang Group, meeting the requirements of the Qualified Listing, etc.

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III. EQUITY TRANSFER AGREEMENT I

The principal terms and conditions of the Equity Transfer Agreement I are set out below:

1.	Date:	30 October 2019
2.	Parties:	(a)	Zhongwang Fabrication;
		(b)	Liaoning Zhongwang; and
		(c)	Fund II
		To the best of the Directors' knowledge, information
		and belief having made all reasonable enquiries, as at
		the date of the Equity Transfer Agreement I, Fund II
		and its ultimate beneficial owners are third parties
		independent of the Company and its connected persons.
3.	Subject Matter:	Approximately 3.45% equity interest in Liaoning
		Zhongwang.
4.	Consideration:	RMB1.0 billion. Such amount was determined after
		arm's length negotiation between the parties to the
		Equity Transfer Agreement I with reference to the
		valuation of the 100% equity interest in Liaoning
		Zhongwang, i.e. RMB28.0 billion, as at 30 June 2019.
		Fund II shall make the payment to the bank account
		designated by Zhongwang Fabrication pursuant to the
		Equity Transfer Agreement I on the Closing Date for
		Equity Transfer I.
5.	Valuation Method and	The Valuation is agreed by the parties to the Equity
	Adjustment:	Transfer Agreement I with reference to the audited net
		assets of the 100% equity interest in Liaoning
		Zhongwang after netting off the proposed dividend
		distribution (i.e. RMB6.0 billion) to be made to
		Zhongwang Fabrication (i.e. RMB27.7 billion) as at
		Valuation Base Date, as well as the assumption that the

proposed disposal consideration of the Excluded Assets is not less than RMB4.6 billion.

If the disposal of the Excluded Assets is implemented after the completion of the Equity Transfer I and the disposal price is lower than RMB4.6 billion, Zhongwang Fabrication shall compensate Fund II for the shortfall against RMB4.6 billion, in which case:

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		The compensation amount = (RMB4.6 billion - actual
		disposal consideration of the Excluded Assets) × Fund
		II's shareholding percentage in Liaoning Zhongwang
		upon the completion of the Equity Transfer I × (the
		Valuation/Net Assets Reference)
		Fund II is entitled to request Liaoning Zhongwang to
		engage an auditor to audit the corresponding net assets
		of the 100% equity interest in Liaoning Zhongwang as
		at the Valuation Base Date. The Guarantors shall assure
		that the audited net assets of 100% equity interest in
		Liaoning Zhongwang (the ''Adjusted Net Assets'') as
		at Valuation Base Date after deduction of a dividend of
		RMB6.0 billion are not less than the Net Assets
		Reference, or otherwise Zhongwang Fabrication agreed
		and undertook to make cash compensation to Liaoning
		Zhongwang of the difference between the above-
		mentioned Adjusted Net Assets and Net Assets
		Reference.
6.	Dividend Distribution	As Liaoning Zhongwang plans to distribute a cash
		dividend of RMB6.0 billion to Zhongwang Fabrication,
		such dividend distribution shall be made in a way not
		to disturb the daily operation of Liaoning Zhongwang
		Group. Such dividend distribution shall be implemented
		in accordance with the receipt progress of the disposal
		consideration of the Excluded Assets.
7.	Closing	The Closing Date for Equity Transfer I shall not be
		later than the twentieth (20th) business day from the

date on which all the conditions precedent are fulfilled or waived by Fund II.

Within ten (10) business days after the Closing Date for Equity Transfer I, Liaoning Zhongwang shall obtain the new business license and filing documents of the articles of association in relation to the completion by Liaoning Zhongwang of registration change of the Equity Transfer I with the administration for industry and commerce, and shall deliver the copies of the business license and the filing documents to Fund II on the completion date of the registration.

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8. Conditions precedent	The consideration payment of the Equity Transfer I is
	subject to the fulfilment or waiver by Fund II in writing
	of the following conditions:
	(1)	All parties has obtained all external and internal
		approvals required for the completion of the Equity
		Transfer I, including the approval by Liaoning
		Zhongwang's shareholders of the proposed disposal
		of the Excluded Assets;
	(2) The	investment	committee or	its	equivalent	of
		Fund II has resolved to approve the Equity
		Transfer I and the obligations under the transaction
		documents;
	(3)	All parties shall have signed necessary documents
		(including but not limited to the Equity Transfer
		Agreement I, the Shareholders' Agreement and
		articles of association);
	(4)	The articles of association of Liaoning Zhongwang
		with necessary updates for the Equity Transfer I
		has been officially approved and signed by
		Zhongwang Fabrication in accordance with
		applicable laws and the prevailing and effective
		articles of association of Liaoning Zhongwang, and
		such approval remains legal and valid at the
		Closing Date for Equity Transfer I;
	(5)	As of the Closing Date for Equity Transfer I, none
		of Liaoning Zhongwang Group, Zhongwang
		Fabrication or their de facto controllers has
		undergone any material adverse changes or been
		materially and adversely affected;
	(6)	As of the Closing Date for Equity Transfer I, there
		are no laws or government orders that impose any
		restriction over or injunction against the Equity
		Transfer I; and
	(7) Each	Guarantor	has signed	and	delivered	the
		confirmation letter in relation to the confirmation
		of the fulfilment of all the conditions precedent of

the Equity Transfer I at the time of the Closing for Equity Transfer I to Fund II.

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9. Undertakings by	The Guarantors undertook to Fund II on the following
Guarantors	matters after the Closing for Equity Transfer I,
	including regulating the internal control of Liaoning
	Zhongwang Group, restricting the competition between
	shareholders of Liaoning Zhongwang and Liaoning
	Zhongwang Group, maintaining the daily operation of
	Liaoning Zhongwang Group, maintaining the
	independence of Liaoning Zhongwang Group, obtaining
	the certificate of high-tech enterprise, business
	qualifications, real estate property certificates and
	intellectual property certificates, complying with laws,
	regulating the labor and human resources of Liaoning
	Zhongwang Group, regulating connected transactions of
	Liaoning Zhongwang Group, disposing of the Excluded
	Assets, regulating the internal governance of Liaoning
	Zhongwang Group, meeting the requirements of the
	Qualified Listing, etc.

IV. EQUITY TRANSFER AGREEMENT II

The principal terms and conditions of the Equity Transfer Agreement II are set out below:

1.	Date:	30 October 2019
2.	Parties:	(a)	Zhongwang Fabrication;
		(b)	Liaoning Zhongwang; and
		(c)	Fund III
		To the best of the Directors' knowledge, information
		and belief having made all reasonable enquiries, as at
		the date of the Equity Transfer Agreement II, Fund III
		and its ultimate beneficial owners are third parties
		independent of the Company and its connected persons.
3.	Subject Matter:	Approximately 3.45% equity interest in Liaoning
		Zhongwang.
4.	Consideration:	RMB1.0 billion. Such amount was determined after
		arm's length negotiation between the parties to the

Equity Transfer Agreement II with reference to the valuation of the 100% equity interest in Liaoning Zhongwang, i.e. RMB28.0 billion, as at 30 June 2019.

Fund III shall make the payment to the bank account designated by Zhongwang Fabrication pursuant to the Equity Transfer Agreement II on the Closing Date for Equity Transfer II.

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5.	Valuation Method and	The Valuation is agreed by the parties to the Equity
	Adjustment:	Transfer Agreement II with reference to the audited net
		assets of the 100% equity interest in Liaoning
		Zhongwang after netting off the proposed dividend
		distribution (i.e. RMB6.0 billion) to be made to
		Zhongwang Fabrication (i.e. RMB27.7 billion) as at
		Valuation Base Date, as well as the assumption that the
		proposed disposal consideration of the Excluded Assets
		is not less than RMB4.6 billion.
		If the disposal of the Excluded Assets is implemented
		after the completion of the Equity Transfer II and the
		disposal price is lower than RMB4.6 billion,
		Zhongwang Fabrication shall compensate Fund III for
		the shortfall against RMB4.6 billion, in which case:
		The compensation amount = (RMB4.6 billion - actual
		disposal consideration of the Excluded Assets) × Fund
		III's shareholding percentage in Liaoning Zhongwang
		upon the completion of the Equity Transfer II × (the
		Valuation/Net Assets Reference)
		Fund III is entitled to request Liaoning Zhongwang to
		engage an auditor to audit the corresponding net assets
		of the 100% equity interest in Liaoning Zhongwang as
		at the Valuation Base Date. The Guarantors shall assure
		that the audited net assets of 100% equity interest in
		Liaoning Zhongwang (the ''Adjusted Net Assets'') as
		at Valuation Base Date after deduction of a dividend of
		RMB6.0 billion are not less than the Net Assets
		Reference, or otherwise Zhongwang Fabrication agreed
		and undertook to make cash compensation to Liaoning
		Zhongwang of the difference between the above-
		mentioned Adjusted Net Assets and Net Assets
		Reference.
6.	Dividend Distribution	As Liaoning Zhongwang plans to distribute a cash
		dividend of RMB6.0 billion to Zhongwang Fabrication,
		such dividend shall be made in a way not to disturb the
		daily operation of Liaoning Zhongwang Group. Such
		dividend distribution shall be implemented in
		accordance with the receipt progress of the disposal
		consideration of the Excluded Assets.
7.	Closing	The Closing Date for Equity Transfer II shall not be
		later than the twentieth (20th) business day from the

date on which all the conditions precedent are fulfilled or waived by Fund III.

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Within ten (10) business days after the Closing Date for Equity Transfer II, Liaoning Zhongwang shall obtain the new business license and filing documents of the articles of association in relation to the completion by Liaoning Zhongwang of registration change of the Equity Transfer II with the administration for industry and commerce, and shall deliver the copies of the business license and the filing documents to Fund III on the completion date of the registration.

8. Conditions precedent	The consideration payment of the Equity Transfer II is
	subject to the fulfilment or waiver by Fund III in
	writing of the following conditions:
	(1)	All parties has obtained all external and internal
		approvals required for the completion of the Equity
		Transfer II, including the approval by Liaoning
		Zhongwang's shareholders of the proposed disposal
		of the Excluded Assets;
	(2) The investment committee or its equivalent of
		Fund III has resolved to approve the Equity
		Transfer II and the obligations under the
		transaction documents;
	(3)	All parties shall have signed necessary documents
		(including but not limited to the Equity Transfer
		Agreement II, the Shareholders' Agreement and
		articles of association);
	(4)	The articles of association of Liaoning Zhongwang
		with necessary updates for the Equity Transfer II
		has been officially approved and signed by
		Zhongwang Fabrication in accordance with
		applicable laws and the prevailing and effective
		articles of association of Liaoning Zhongwang, and
		such approval remains legal and valid at the
		Closing Date for Equity Transfer II;
	(5) As of the Closing Date for Equity Transfer II, none
		of Liaoning Zhongwang Group, Zhongwang
		Fabrication or their de facto controllers has
		undergone any material adverse changes or been
		materially and adversely affected;
	(6)	As of the Closing Date for Equity Transfer II,
		there are no laws or government orders that impose

any restriction over or injunction against the Equity Transfer II; and

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	(7) Each Guarantor has signed and delivered the
	confirmation letter in relation to the confirmation
	of the fulfilment of all the conditions precedent of
	the Equity Transfer II at the time of the Closing
	for Equity Transfer II to Fund III.
9. Undertakings by	The Guarantors undertook to Fund III on the following
Guarantors	matters after the Closing for Equity Transfer	II,
	including regulating the internal control of Liaoning
	Zhongwang Group, restricting the competition between
	shareholders of Liaoning Zhongwang and Liaoning
	Zhongwang Group, maintaining the daily operation of
	Liaoning	Zhongwang	Group,	maintaining	the
	independence of Liaoning Zhongwang Group, obtaining
	the certificate of high-tech enterprise, business
	qualifications, real estate	property	certificates	and

intellectual property certificates, complying with laws, regulating the labor and human resources of Liaoning Zhongwang Group, regulating connected transactions of Liaoning Zhongwang Group, disposing of the Excluded Assets, regulating the internal governance of Liaoning Zhongwang Group, meeting the requirements of the Qualified Listing, etc.

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1. SHAREHOLDERS' AGREEMENT

The principal terms and conditions of the Shareholders' Agreement are set out below:

1.	Date:	30 October 2019
2.	Parties:	(a)	Zhongwang Fabrication;
		(b)	Liaoning Zhongwang;
		(c)	Fund I;
		(d)	Fund II; and
		(e)	Fund III
3.	Right of Pre-emption	Prior to the Qualified Listing of Liaoning Zhongwang,
		if Liaoning Zhongwang obtains the approval from the
		general meeting of the registered capital increase, the
		Investors are entitled (but not obliged) to the right of
		pre-emption to subscribe for newly issued equity
		interests in Liaoning Zhongwang under the same
		conditions in proportion to their shareholding
		percentages of Liaoning Zhongwang.
4.	Restriction of Transfer	Without the consent of the Investors, or under the
		circumstance where the Investors do not exercise the
		right of first refusal, Zhongwang Fabrication shall not
		transfer, pledge, sell or in any means dispose the equity
		interests in Liaoning Zhongwang, unless relevant
		documents are provided by Zhongwang Fabrication to
		prove that such transfer or capital increase is made to
		the related parties under the common control by
		Zhongwang Fabrication.
5.	Right of First Refusal	With the consent of the Investors, if Zhongwang
		Fabrication transfers the equity interests in Liaoning

Zhongwang, the Investors have the right of first refusal to purchase all or part of the disposed equity interests in proportion to the shareholding of all Investors under the same terms and conditions according to Zhongwang Fabrication's disposal plan, unless the disposal is for the purpose of the employee incentive plan or shareholding plan previously approved by the board of directors or general meeting of Liaoning Zhongwang or relevant documents are provided by Zhongwang Fabrication to prove that such transfer is made to the related parties under the common control by Zhongwang Fabrication.

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6.	Tag-along	If	the Investors do not exercise or waive the
		abovementioned right of first refusal or only partly
		exercise the right of first refusal, the Investors are
		entitled (but not obliged) to sell the equity interests in
		Liaoning Zhongwang to the transferee together with
		Zhongwang Fabrication under the same terms and
		conditions agreed between Zhongwang Fabrication and
		the transferee for the proposed disposal of the equity
		interests.
7.	Subsequent Financing	If	Liaoning Zhongwang subsequently introduces new
		equity financing or Zhongwang Fabrication transfers its
		equity interests	in	Liaoning	Zhongwang (the
		''Subsequent Financing'', including merger and
		reorganization with the Listco for the purpose of the
		Qualified Listing), the valuation of such Subsequent
		Financing shall not be less than the post-investment
		valuation of the Capital Contribution.
8.	Buyback Right	In case of any of the following conditions, the Investors
		are entitled to require Liaoning Zhongwang and
		Zhongwang Fabrication to buy back the equity interests
		in Liaoning Zhongwang held by the Investors:
		(1)	within three years following the Closing for
			Capital Contribution and the Closing for Transfer,
			Liaoning Zhongwang fails to complete the
			Qualified Listing;
		(2)	Liaoning Zhongwang and Zhongwang Fabrication
			breach	representations,	warranties,	undertakings,
			and obligations as agreed under the transaction
			documents, and fail to remedy the breach within 30
			days upon written request by the Investors;
		(3) change	of	control	over	Liaoning	Zhongwang
			occurs or the proposed change of control over
			Liaoning Zhongwang is announced by itself or is
			reasonably recognized by the Investors;
		(4)	The amount of the assets or goodwill impairment
			of Liaoning Zhongwang Group exceeds 10% of its
			audited net assets as at the Valuation Base Date, or
			liquidation, dissolution, bankruptcy, or takeover of
			Liaoning Zhongwang	or	its	major	subsidiaries

(being subsidiaries of Liaoning Zhongwang which contribute 10% or more of the audited consolidated income from major operations of Liaoning Zhongwang for the latest year) takes place;

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1. Liaoning Zhongwang Group and Zhongwang Fabrication are found to have engaged in falsifying income increase, collecting off-balance-sheet cash income, misappropriating funds by the shareholders, providing external guarantees and other circumstances which violate the internal control and the regulated operation requirements and are imposed to administrative penalties or public censure by the security regulatory authorities, or no rectification or regulation has been carried out within 10 days from the date when Liaoning Zhongwang and Zhongwang Fabrication are aware or should be aware of the circumstances mentioned above; or Liaoning Zhongwang Group, Zhongwang Fabrication and their de facto controllers are found to be engaged in major integrity crisis, broken fund chain and other similar issues in relation to insolvency; or Liaoning Zhongwang Group, Zhongwang Fabrication and their de facto controllers are subject to the investigation, criminal penalties, or material administrative penalties imposed by the administrative authorities of the PRC, or cause actions that materially prejudice the social and public interests, including environmental pollution and material individual injuries; and
2. Liaoning Zhongwang Group, Zhongwang Fabrication, and their de facto controllers have undergone any material adverse changes or been materially and adversely affected.

In connection with the aforesaid conditions of buyback, the buyback price = the amount of the Capital Contribution/the consideration of the Transfer made by the Investors × (1+ time difference × 8%/365), wherein the time difference is the number of calendar days between the Closing Date for Capital Contribution/the Closing Date for Transfer and the date when the payment of the buyback is made.

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	The Guarantors shall unconditionally settle the full
	amount of the buyback payment within 30 days upon
	the notice of buyback served by the Investors in
	writing, where any Guarantor fails to settle the
	buyback payment in whole or in part in favour of the
	Investors, the Investors shall be entitled to claim
	against the Guarantors on a prolonged basis according
	to the laws, and request the Guarantors to pay a default
	penalty equivalent to 0.05% of the overdue payment.
9. Preferential Liquidation	Where Liaoning Zhongwang is to be liquidated,
Rights	acquired, disposed, dissolved or closed, or the control
	of Liaoning Zhongwang is to be changed, in terms of
	the liquidation assets that can be distributed, the
	Investors shall have preferential liquidation rights in
	respect of the their equity interest in Liaoning
	Zhongwang over Zhongwang Fabrication and its related
	parties to the higher of: (1) the full amount of the
	acquisition consideration payable by the third-party
	buyer multiplied by the shareholding percentage of the
	Investors in Liaoning Zhongwang; or (2) the amount of
	the Capital Contribution/the consideration of the
	Transfer made by the Investors × (1 + time difference
	× 8%/365),
	wherein the time difference is the number of calendar
	days between the Closing Date for Capital
	Contribution/the Closing Date for Transfer and the
	closing date for the liquidation.

VI. FINANCIAL INFORMATION OF LIAONING ZHONGWANG GROUP AND FINANCIAL EFFECTS OF THE DEEMED DISPOSAL AND THE TRANSFER

Upon the completion of the Capital Contribution and the Transfer, the registered capital of Liaoning Zhongwang would be increased to USD2,312,750,000 and the shareholding of Zhongwang Fabrication, Fund I, Fund II and Fund III in Liaoning Zhongwang would be approximately 89.65%, 3.45%, 3.45% and 3.45%, respectively. Liaoning Zhongwang will continue to be an indirect subsidiary of the Company.

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Based on its audited consolidated financial statements prepared in accordance with the Accounting Standards for Business Enterprises, the profit before and after taxation for the years ended 31 December 2017 and 2018 of Liaoning Zhongwang Group are set out below:

For the year ended

31 December

2017 2018

RMB'000 RMB'000

Profit	before tax	4,380,628	5,189,222
Profit	after tax	3,664,402	4,429,282

Based on its audited consolidated financial statements prepared in accordance with the Accounting Standards for Business Enterprises, the net asset value attributable to the parent company as of 31 December 2018 of Liaoning Zhongwang Group was approximately RMB32.1 billion. The unaudited net asset value attributable to the parent company as of 30 June 2019 of Liaoning Zhongwang Group was approximately RMB

33.7 billion. As the Deemed Disposal and Transfer will not result in the Company's loss of the control over Liaoning Zhongwang, it will be recognized as equity transactions and will not result in the recognition of any profit or loss in the Company's consolidated statement of profit or loss and other comprehensive income.

VII. REASONS FOR AND BENEFITS OF THE DEEMED DISPOSAL AND THE TRANSFER AND USE OF PROCEEDS

Liaoning Zhongwang intends to introduce domestic well-known funds as strategic investors by ways of capital increase and transfer of existing equity interests (the ''Capital Introduction''). The Capital Introduction will optimize the shareholding structure of Liaoning Zhongwang and bring the synergy effect with the shareholders into play, which will further promote Liaoning Zhongwang Group's business development and improve the profitability and competitiveness of Liaoning Zhongwang Group.

All of our Directors are of the view that the terms of the Capital Contribution Agreement, Equity Transfer Agreement I, Equity Transfer Agreement II and Shareholders' Agreement are on normal commercial terms, fair and reasonable and the Capital Contribution Agreement, Equity Transfer Agreement I, Equity Transfer Agreement II, Shareholders' Agreement and transactions contemplated thereunder are in the interest of the Company and the Shareholders as a whole.

Unless otherwise agreed among the Investors and Liaoning Zhongwang, the net proceeds from the Capital Contribution and the Transfer will be used in the business development and daily operation of the Group.

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VIII. INFORMATION OF THE PARTIES

1. The Company
   The Company is incorporated in Cayman Islands and listed on the Main Board of the Stock Exchange. The Group is principally engaged in the production of high precision, large section and high value-added industrial aluminium extrusion products and aluminium flat rolling products which are widely used in such sectors as transportation, machinery and equipment and electric power engineering etc..
2. Zhongwang Fabrication
   Zhongwang Fabrication is a limited liability company incorporated under the laws of the PRC. As at the date of the announcement, Zhongwang Fabrication is an indirect wholly-owned subsidiary of the Company. Zhongwang Fabrication is principally engaged in investment holding.
3. Liaoning Zhongwang
   Liaoning Zhongwang is a limited liability company incorporated under the laws of the PRC. Liaoning Zhongwang is principally engaged in the production and sale of the aluminium extrusion products. As at the date of the announcement, Liaoning Zhongwang is a direct wholly-owned subsidiary of Zhongwang Fabrication.
4. Fund I
   Fund I is a limited liability company incorporated under the laws of the PRC and is principally engaged in equity investment, investment consultation, project investment and asset management.
5. Fund II
   Fund II is a limited partnership established under the laws of the PRC and is principally engaged in equity investment.
6. Fund III

Fund III is a limited partnership established under the laws of the PRC and is principally engaged in start-up investment, investment consultation and start-up management.

IX. LISTING RULES IMPLICATION

According to Rule 14.22 of the Listing Rules, the Stock Exchange may require listed issuers to aggregate a series of transactions and treat them as if they were one transaction if they are all completed within a 12 month period or are otherwise related. If the Deemed Disposal and the Transfer are treated as if they were one transaction, as one or more of the applicable percentage ratios calculated in respect of the transactions contemplated under the Deemed Disposal and the Transfer are above 5% but less than 25% in aggregate, the Deemed Disposal and the Transfer constitute a discloseable

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transaction of the Company pursuant to the Listing Rules and are subject to the reporting and announcement requirements but exempt from shareholders' approval requirements pursuant to Chapter 14 of the Listing Rules.

Pursuant to the Shareholders' Agreement, among other things, Zhongwang Fabrication and Liaoning Zhongwang have granted the Buyback Right to the Investors. According to Rule 14.04(1) of the Listing Rules, the grant of the Buyback Right would be treated as a transaction. According to Rule14.74(1) of the Listing Rules, on the grant of the Buyback Right, the transaction will be classified as if the Buyback Right had been exercised. As one or more of the applicable percentage ratios calculated in respect of the grant of the Buyback Right are above 5% but less than 25%, the grant of the Buyback Right to the Investors constitutes a discloseable transaction of the Company pursuant to the Listing Rules and is subject to reporting and announcement requirements but exempt from shareholders' approval requirements pursuant to Chapter 14 of the Listing Rules.

1. PROPOSED DISPOSAL OF THE EXCLUDED ASSETS
   One of the conditions precedent of the Closing for Capital Contribution and the Closing for Transfer is the approval by Liaoning Zhongwang's shareholders of the proposed disposal of the Excluded Assets. The Group is currently under negotiation with third parties regarding the proposed disposal of the Excluded Assets, and will make disclosure pursuant to the requirements under the Listing Rules when appropriate.
   The Capital Contribution, the Transfer, the proposed disposal of the Excluded Assets and the Qualified Listing are subject to certain terms and conditions, and may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the securities of the Company.

XI. DEFINITIONS

In this announcement, the following expressions have the following meaning unless the context requires otherwise:

''Board''	the board of Directors of the Company
''Buyback Right''	the right granted pursuant to the Shareholders'
	Agreement to the Investors to request the Guarantors to
	buy back equity interests in Liaoning Zhongwang held
	by the Investors under the circumstances provided in
	the Shareholders' Agreement
''Capital Contribution''	the capital contribution of RMB1.0 billion in cash by
	Fund I to Liaoning Zhongwang pursuant to the Capital
	Contribution Agreement

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''Capital Contribution	the capital contribution agreement entered into among
Agreement''	Zhongwang Fabrication, Liaoning Zhongwang and Fund
	I on 30 October 2019, pursuant to which, among other
	things, Fund I agreed to contribute RMB1.0 billion in
	cash to Liaoning Zhongwang
''Closing Date for Capital	the date of the delivery of documents and the payment
Contribution''	of the Capital Contribution pursuant to the Capital
	Contribution Agreement, after all the conditions
	precedent have been fulfilled or waived
''Closing Date for Equity	the date of the delivery of documents and the payment
Transfer I''	of the consideration for Equity Transfer I pursuant to
	the Equity Transfer Agreement I, after all the
	conditions precedent have been fulfilled or waived
''Closing Date for Equity	the date of the delivery of documents and the payment
Transfer II''	of the consideration for Equity Transfer II pursuant to
	the Equity Transfer Agreement II, after all the
	conditions precedent have been fulfilled or waived
''Closing Date for Transfer''	Closing Date for Equity Transfer I and Closing Date for
	Equity Transfer II
''Closing for Capital	the delivery of documents and the payment of the
Contribution''	Capital Contribution pursuant to the Capital
	Contribution Agreement, after all the conditions
	precedent have been fulfilled or waived
''Closing for Equity Transfer	the delivery of documents and the payment of the
I''	consideration for Equity Transfer I pursuant to the
	Equity Transfer Agreement I, after all the conditions
	precedent have been fulfilled or waived
''Closing for Equity Transfer	the delivery of documents and the payment of the
II''	consideration for Equity Transfer II pursuant to the
	Equity Transfer Agreement II, after all the conditions
	precedent have been fulfilled or waived
''Closing for Transfer''	Closing for Equity Transfer I and Closing for Equity
	Transfer II
''Company''	China Zhongwang Holdings Limited (中國忠旺控股有
	限公司), a company incorporated in the Cayman Islands
	with limited liability and the shares of which are listed
	on the Stock Exchange
''connected person(s)''	has the meaning ascribed thereto under the Listing
	Rules

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''Deemed Disposal''	the deemed disposal through the dilution of interest of
	the Group in Liaoning Zhongwang as a result of the
	Capital Contribution by Fund I pursuant to the Capital
	Contribution Agreement
''Director(s)''	the director(s) of the Company
''Equity Transfer I''	Transfer of approximately 3.45% of equity interest in
	Liaoning Zhongwang by Zhongwang Fabrication to
	Fund II at a consideration of RMB1.0 billion pursuant
	to the Equity Transfer Agreement I
''Equity Transfer II''	Transfer of approximately 3.45% of equity interest in
	Liaoning Zhongwang by Zhongwang Fabrication to
	Fund III at a consideration of RMB1.0 billion pursuant
	to the Equity Transfer Agreement II
''Equity Transfer Agreement	the equity transfer agreement entered into among
I''	Zhongwang Fabrication, Liaoning Zhongwang and
	Fund II on 30 October 2019, pursuant to which, among
	others, Zhongwang Fabrication agreed to sell and Fund
	II agreed to purchase approximately 3.45% of equity
	interest in Liaoning Zhongwang at a consideration of
	RMB1.0 billion
''Equity Transfer Agreement	the equity transfer agreement entered into among
II''	Zhongwang Fabrication, Liaoning Zhongwang and
	Fund III on 30 October 2019, pursuant to which,
	among others, Zhongwang Fabrication agreed to sell
	and Fund III agreed to purchase approximately 3.45%
	of equity interest in Liaoning Zhongwang at a
	consideration of RMB1.0 billion
''Excluded Assets''	the interests in relation to electrolytic aluminium
	business within Liaoning Zhongwang Group
''Fund I''	National Civil-Military Integration Industry Investment
	Fund Co., Ltd.* (國家軍民融合產業投資基金有限責任
	公司), a limited liability company incorporated under
	the laws of the PRC
''Fund II''	Jiaxing Liding Changhao Equity Investment Partnership
	Enterprise (Limited Partnership)* (嘉興力鼎昌浩股權
	投資合夥企業(有限合夥)), a limited partnership
	established under the laws of the PRC
''Fund III''	Zibo Yingke Baiyao Pioneer Investment Partnership
	Enterprise (Limited Partnership)* (淄博盈科百耀創業
	投資合夥企業(有限合夥)), a limited partnership
	established under the laws of the PRC

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''Group''	the Company and its subsidiaries
''Guarantors''	Zhongwang Fabrication and Liaoning Zhongwang
''Hong Kong''	the Hong Kong Special Administrative Region of the
	PRC
''Investors''	Fund I, Fund II and Fund III
''Liaoning Zhongwang''	Liaoning Zhongwang Group Co., Ltd.* (遼寧忠旺集團
	有限公司), a limited liability company incorporated
	under the laws of the PRC, and as at the date of the
	announcement, an indirect wholly-owned subsidiary of
	the Company
''Liaoning Zhongwang	Liaoning Zhongwang and its subsidiaries
Group''
''Listco''	the listed company which participates in the
	securitization of Liaoning Zhongwang to accomplish
	the Qualified Listing and, as the case may be, the
	specific listed company which performs the securitized
	reorganization with Liaoning Zhongwang
''Listing Rules''	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
''PRC''	the People's Republic of China and for the purpose of
	this announcement, excluding Hong Kong, the Macao
	Special Administrative Region and Taiwan
''Qualified Listing''	the initial public offering, reorganization or reverse
	takeover listing, mergers, asset restructuring or other
	securitized transactions, actions or arrangements of the
	equity of Liaoning Zhongwang (or other companies,
	entities or the parent company of Liaoning Zhongwang,
	which are established due to the reorganization of
	Liaoning Zhongwang, and actually control the entire
	business and are entitled to all the economic interests
	held by Liaoning Zhongwang prior to the
	reorganization) on the onshore and offshore stock
	exchanges admitted by the Investors
''RMB''	Renminbi, the lawful currency of the PRC
''Shareholder(s)''	the holder(s) of shares of the Company

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''Shareholders' Agreement''	a shareholders' agreement entered into among
	Zhongwang Fabrication, Fund I, Fund II and Fund III
	on 30 October 2019 as the shareholders of Liaoning
	Zhongwang
''Stock Exchange''	The Stock Exchange of Hong Kong Limited
''Transfer''	Equity Transfer I and Equity Transfer II
''USD''	the U.S. dollar, the lawful currency of the United States
	of the America
''Zhongwang Fabrication''	Liaoning Zhongwang Superior Fabrication Investment
	Limited* (遼寧忠旺精製投資有限公司), a limited
	liability company incorporated under the laws of the
	PRC and an indirect wholly-owned subsidiary of the
	Company
''%''	percentage
	By order of the Board
	China Zhongwang Holdings Limited
	Chairman
	Lu Changqing
Hong Kong, 30 October 2019

As at the date of this announcement, the Board consists of:

Executive Directors

Mr. Lu Changqing and Ms. Ma Qingmei

Non-executive Directors

Mr. Chen Yan, Mr. Lin Jun and Mr. Wei Qiang

Independent Non-executive Directors

Mr. Wong Chun Wa, Mr. Wen Xianjun, Mr. Shi Ketong and Mr. Lo Wa Kei, Roy

• For identification purpose only

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