Hong Kong Resources : Announcements and Notices - Issue of Convertible Bonds under Specific Mandate

Hong Kong Exchange 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 is for information purposes only and does not constitute an invitation or solicitation of an offer to acquire, purchase or subscribe for securities or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to acquire, purchase or subscribe for any securities.

HONG KONG RESOURCES HOLDINGS COMPANY LIMITED

香港資源控股有限公司

(Incorporated in Bermuda with limited liability and

carrying on business in Hong Kong as HKRH China Limited)

(Stock Code: 2882)

ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

On 29 May 2019 (after trading hours), the Company entered into the Subscription Agreement with the Subscriber in relation to the issue of Convertible Bonds.

As at the date of this announcement, the Company has a total of 1,056,716,012 Shares in issue. Assuming there is no change in the issued share capital of the Company, based on the Conversion Price and assuming full conversion of the Convertible Bonds at the Conversion Price, the Convertible Bonds will be convertible into 813,000,000 Conversion Shares, representing approximately 76.94% of the issued share capital of the Company as at the date of this announcement and approximately 43.48% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds, assuming that no other Shares will be issued other than the Conversion Shares.

The gross proceeds from the Subscription are approximately HK$121,950,000 and the net proceeds of approximately HK$121,600,000 are intended to be applied for (i) repayment of indebtedness and (ii) general working capital.

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LISTING RULES IMPLICATIONS

The Conversion Shares will be allotted and issued pursuant to the Specific Mandate upon conversion of the Convertible Bonds.

A special general meeting will be convened for the purpose of considering and, if deemed appropriate, approving, among other things, the grant of the Specific Mandate, the Subscription Agreement and the transactions contemplated thereunder.

A circular containing, among other things, (i) further details of the Subscription Agreement and the Convertible Bonds; and (ii) notice convening the SGM, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules.

As the Subscription Agreement may or may not complete, holders of securities of the Company and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

The Directors are pleased to announce that on 29 May 2019 (after trading hours), the Company entered into the Subscription Agreement with the Subscriber in relation to the issue of Convertible Bonds.

THE SUBSCRIPTION AGREEMENT

Date

29 May 2019

Parties

(i)	Issuer:	the Company
(ii)	Subscriber:	Well Pop Group Limited

Information about the Subscriber

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, each of the Subscriber and its ultimate beneficial owner is an Independent Third Party. The Subscriber is an investment holding company.

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Principal amount of the Convertible Bond

Pursuant to the Subscription Agreement, the Subscriber will subscribe for the Convertible Bonds in the principal amount of HK$121,950,000. Assuming all the conversion rights attaching to the Convertible Bond in the principal amount of HK$121,950,000 are exercised by the Subscriber in full, the Subscriber will be interested in 813,000,000 Shares, representing approximately 76.94% of the issued share capital of the Company as at the date hereof, and approximately 43.48% of the issued share capital of the Company as enlarged by the allotment and issue of the conversion shares upon full exercise of the conversion rights under the Convertible Bond pursuant to the Subscription Agreement, assuming that no other Shares will be issued other than the Conversion Shares.

Condition Precedent

Completion of the Subscription Agreement shall be subject to and conditional upon, among others:

1. the Listing Committee granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in all the Conversion Shares which may be fall to be allotted and issued upon the exercise of the conversion right attaching to the Convertible Bonds;
2. the passing by the Shareholders of ordinary resolution(s) to approve the Subscription Agreement and the transactions contemplated thereunder and the Specific Mandate; and
3. the parties to the Subscription Agreement having obtained all necessary consents and approvals in respect of the Subscription Agreement and the transactions contemplated thereunder.

If any of the condition precedents of the Subscription Agreement is not fulfilled on or before 31 August 2019 (or such later date as may be agreed between the parties thereto), the Subscription Agreement will be terminated and cease to have any effect and none of the parties shall have any claim against the other save for any antecedent breaches of the provisions thereof.

Completion Date

Completion of the Subscription Agreement will take place on the third Business Day after the fulfillment of the conditions referred to above. The Company shall issue the relevant Convertible Bonds to the Subscriber on the Completion Date.

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PRINCIPAL TERMS OF THE CONVERTIBLE BONDS

The principal terms of the Convertible Bonds are summarized below:

Issuer:	The Company
Principal amount:	An aggregate principal amount of HK$121,950,000, provided that
	the Convertible Bonds shall be offered in principal amount of any
	multiple of HK$1,500,000 and the minimum principal amount of each
	Convertible Bond shall not be less than HK$1,500,000.
Maturity Date:	The date falling on the third anniversary of the issue of the Convertible
	Bonds.
Interest:	The Convertible Bonds shall bear interest at rate of 4% per annum and
	payable every anniversary after the Bond Issue Date.
Conversion Price:	HK$0.15 per Conversion Share which, for the avoidance of doubt,
	shall be subject to adjustment provided in the Convertible Bond. The
	Conversion Price represents:
	(a)	a premium of approximately 2.74% to the closing price per
		Share of HK$0.146 as quoted on the Stock Exchange on 29 May
		2019 (being the date of the Subscription Agreement);
	(b)	a premium of approximately 0.27% to the average closing price
		per Share of approximately HK$0.1496 as quoted on the Stock
		Exchange for the last five consecutive trading days immediately
		before 29 May 2019; and
	(c)	a premium of approximately 1.69% to the average closing price
		per Share of approximately HK$0.1475 as quoted on the Stock
		Exchange for the last ten consecutive trading days immediately
		before 29 May 2019.
	The Conversion Price was determined based on arm's length
	negotiations between the parties with reference to the prevailing
	market prices of the Shares as quoted on the Stock Exchange.
Adjustment events:	The Conversion Price shall from time to time be subject to adjustment
	upon occurrence of certain events, including but not limited to the
	consolidation or subdivision of Shares.

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Conversion Shares:	Based on the Conversion Price of HK$0.15, a maximum number of
	813,000,000 Conversion Shares shall be allotted and issued upon
	exercise in full of the conversion rights attaching to the Convertible
	Bonds.
Conversion Period:	The period commencing from the Bond Issue Date and ending on the
	seventh (7th) day prior to the Bond Maturity Date, both inclusive.
Conversion rights:	Each holder of the Convertible Bonds shall have the right, exercisable
	during the Conversion Period by giving not less than 7 days' notice
	(the "Conversion Notice") to the Company, to convert the whole or
	any part (in multiples of HK$1,500,000) of the outstanding principal
	amount of the Convertible Bonds held by such holder of the Convertible
	Bonds into such number of Conversion Shares as will be determined by
	dividing the principal amount of the Convertible Bonds to be converted
	by the Conversion Price in effect on the date of conversion.
	No fraction of a Share shall be issued on conversion and in lieu
	thereof the Company shall pay a cash amount equal to such amount
	of the Convertible Bond that is not converted.
Conversion restrictions:	The Company shall not be required to issue any Conversion Shares, if,
	as a result of the relevant exercise of the conversion rights attached to
	the Convertible Bonds:
	(i) the holder of the Convertible Bonds and parties acting in concert
	with it will trigger a mandatory offer obligation under the
	Takeovers Code;
	(ii) less than 25% or the minimum prescribed percentage as set out
	in the Listing Rules of the Company's issued shares would be
	held by the public immediately after the relevant exercise of
	such conversion rights; or
	(iii) the holder of the Convertible Bonds and its connected person(s)
	shall hold 30% or more of the issued shares of the Company.
Redemption:	Unless previously redeemed, converted or purchased and cancelled, the
	Company shall redeem in cash the Convertible Bonds then outstanding
	at a value equal to the aggregate principal amount then outstanding on
	the Bond Maturity Date.

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