Hong Kong Exchanges and Clearing : PLACING OF NEW SHARES UNDER GENERAL MANDATE

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

PLACING OF NEW SHARES UNDER GENERAL MANDATE

Placing Agent

PLACING OF NEW SHARES UNDER GENERAL MANDATE

On 19 July 2019 (after trading hours), the Company entered into the Placing Agreement with the Placing Agent pursuant to which the Placing Agent has conditionally agreed, as agent of the Company, to procure on a best effort basis to not less than six Placees who and whose ultimate beneficial owners shall be Independent Third Parties to subscribe for up to 662,539,000 Placing Shares at the Placing Price of HK$0.120 per Placing Share.

The maximum of 662,539,000 Placing Shares represent (i) approximately 20.00% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 16.67% of the issued share capital of the Company as enlarged by the allotment and issue of all the Placing Shares. The Placing Price of HK$0.120 per Placing Share represents (i) a discount of approximately 20% to the closing price of HK$0.150 per Share as quoted on the Stock Exchange on the Last Trading Day; and

1. a discount of approximately 21% to the average of the closing prices per Share of approximately HK$0.152 as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the Last Trading Day.

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The Placing Shares will be allotted and issued pursuant to the General Mandate and is not subject to further Shareholders' approval. An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

Assuming all the Placing Shares are fully placed, the gross proceeds from the Placing will be approximately HK$79.5 million. The net proceeds, after deduction of all relevant expenses (including but not limited to placing commission, legal expenses and disbursements) incidental to the Placing, are estimated to be approximately HK$76.3 million. The net proceeds from the Placing are intended to be used as the general working capital, for any possible business development or investment of the Group when appropriate opportunities arise and for settlement of Shareholders' loan.

Shareholders and potential investors of the Company should note that completion of the Placing is subject to the fulfilment of the conditions set out in the Placing Agreement. The Placing may or may not proceed. Shareholders and potential investors of the Company are therefore urged to exercise caution when dealing in the Shares and other securities of the Company.

PLACING OF NEW SHARES UNDER GENERAL MANDATE

On 19 July 2019 (after trading hours), the Company entered into the Placing Agreement with the Placing Agent pursuant to which the Placing Agent has conditionally agreed, as agent of the Company, to procure on a best effort basis to not less than six Placees who and whose ultimate beneficial owners shall be Independent Third Parties to subscribe for up to 662,539,000 Placing Shares at the Placing Price of HK$0.120 per Placing Share.

Details of the Placing Agreement are set out below:

THE PLACING AGREEMENT

The principal terms of the Placing Agreement are summarised below:

Date

19 July 2019

Parties

1. the Company; and
2. the Placing Agent

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, each of the Placing Agent and its ultimate beneficial owner(s) is an Independent Third Party.

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Number of Placing Shares

The Placing Agent has conditionally agreed to place, in aggregate, up to 662,539,000 Placing Shares at the Placing Price of HK$0.120 per Placing Share on a best effort basis, to not less than six Placees. Such maximum number of Placing Shares represents (i) approximately 20.00% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 16.67% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares (assuming the maximum number of the Placing Shares are placed).

Ranking of Placing Shares

The Placing Shares, when issued and fully paid up, will rank pari passu in all respects with other Shares in issue as at the date of allotment and issue of the Placing Shares.

Placees

The Placing Shares will be placed to not less than six Placees, who and whose ultimate beneficial owners are Independent Third Parties. The Placing Agent has represented, warranted and undertaken to the Company that none of the Placees will become a substantial shareholder (within the meaning of the Listing Rules) of the Company upon Completion.

Placing Price

The Placing Price is HK$0.120 per Placing Share, which represents:

1. a discount of approximately 20% to the closing price of HK$0.150 per Share as quoted on the Stock Exchange on the Last Trading Day; and
2. a discount of approximately 21% to the average closing price of HK$0.152 per Share as quoted on the Stock Exchange for the last five trading days immediately preceding the Last Trading Day.

The Placing Price was arrived at, after arm's length negotiation between the Company and the Placing Agent with reference to the recent trading price of the Shares on the Stock Exchange. The Directors (including the independent non-executive Directors) consider that the Placing Price are fair and reasonable, and in the interests of the Company and the Shareholders as a whole.

Placing commission

The Placing Agent will receive a placing commission of 4% of the aggregate Placing Price of the Placing Shares successfully placed in accordance with the Placing Agreement. The placing commission was arrived at after arm's length negotiations between the Company and the Placing Agent under normal commercial terms and with reference to the prevailing commission rates charged by other placing agents and the current market conditions.

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Conditions Precedent

The Placing is conditional upon the following conditions being fulfilled on or before the Long Stop Date:

1. the Stock Exchange having granted or agreeing to grant the listing of, and permission to deal in, the Placing Shares; and
2. the Placing Agreement not having been terminated in accordance with its terms.

Each of the Company and the Placing Agent shall use their respective best endeavours to procure the satisfaction of the condition set out the Placing Agreement by the Long Stop Date. If any of the conditions pursuant to the Placing Agreement is not fulfilled on or before the Long Stop Date, all obligations of the Placing Agent and of the Company thereto shall cease and determine and none of the parties shall have any claim against the other in relation thereto save in respect of any antecedent breach of any obligation under the Placing Agreement.

Completion

Completion shall take place on the fourth Business Day after the fulfillment of the conditions set out in the Placing Agreement (or such other date as the Company and the Placing Agent may agree in writing).

Termination

The Placing Agent may, in its reasonable opinion, after consultation with the Company, terminate the Placing Agreement by notice in writing to the Company at any time up to 8:00 a.m. on the Completion Date if:

1. the success of the Placing would be materially and adversely affected by any force majeure events (as defined below). For this purpose, a "force majeure event" refers to:
2. 1. the introduction of any new laws or regulations or any change in existing laws or regulations (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the absolute opinion of the Placing Agent, materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
   2. the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before and/or after the date of the Placing Agreement) of a political, military, financial, economic, currency (including a change in the system under which the value of the Hong Kong currency is linked to the currency of the United States of America) or other nature (whether or not sui generis with any of the foregoing), or in the nature of any local, national, international outbreak or

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escalation of hostilities or armed conflict, or affecting local securities market or the occurrence of any combination of circumstances which may, in the absolute opinion of the Placing Agent, materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or adversely prejudices the success of the Placing of the Shares by potential investor(s) or otherwise makes it inexpedient or inadvisable for the Company or the Placing Agent to proceed with the Placing; or

1. 1. any change in market conditions or combination of circumstances in Hong Kong (including without limitation suspension or material restriction or trading in securities) occurs which affect the success of the Placing (such success being the placing of the Shares to potential investor(s)) or otherwise in the absolute opinion of the Placing Agent makes it inexpedient or inadvisable or inappropriate for the Company or the Placing Agent to proceed with the Placing.
2. there is any breach of the warranties, representations and undertakings given by the Company in the Placing Agreement and such breach is considered by the Placing Agent on reasonable grounds to be material in the context of the Placing; or
3. any statement contained in the announcements, circulars, interim and annual reports issued by the Company to the Stock Exchange and/or the shareholders of the Company since the publication of the announcement of the Company relating to the annual results of the Company for the year ended 31 December 2018 has become or been discovered to be untrue, incorrect or misleading in any material respect which in the opinion of the Placing Agent would be materially adverse in the consummation of the Placing.

The Company may, in its reasonable opinion, after consultation with the Placing Agent, terminate the Placing Agreement by notice in writing to the Placing Agent at any time up to 8:00 a.m. on the Completion Date if there is a breach of the warranties, representations and undertakings given by the Placing Agent in the Placing Agreement and such breach is considered by the Company on reasonable grounds to be material.

Upon termination of the Placing Agreement pursuant to the above, all liabilities of the Company and the Placing Agent under the Placing Agreement shall cease and determine and no party shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Placing Agreement save in respect of any antecedent breach of any obligation under the Placing Agreement.

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