Hong Kong Resources : Announcements and Notices - Subscription of New Shares under General 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)

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

On 29 May 2019 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement under which the Company agreed to issue and allot and the Subscriber agreed to subscribe 210,000,000 Subscription Shares at the Subscription Price of HK$0.12 per Subscription Share on the terms and conditions provided in the Subscription Agreement.

The gross proceeds from the Subscription are HK$25,200,000 and the net proceeds of approximately HK$25,100,000 are intended to be applied for (i) repayment of indebtedness and (ii) general working capital.

The total number of Subscription Shares represent approximately 19.87% of the existing issued share capital of the Company and approximately 16.58% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares, assuming no other Shares will be issued other than the Subscription Shares. The Subscription Shares will be issued under the General Mandate.

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.

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SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

The Board is pleased to announce that on 29 May 2019 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Company agrees to issue and the Subscriber agrees to subscribe the Subscription Shares at the Subscription Price on the terms and conditions provided in the Subscription Agreement.

THE SUBSCRIPTION AGREEMENT

Date

29 May 2019 (after trading hours)

Parties

(i)	Issuer:	the Company
(ii)	Subscriber:	Eminent Rise Holdings 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.

Subscription Shares

210,000,000 Subscription Shares representing approximately 19.87% of the total issued share capital of the Company as at the date of this announcement and approximately 16.58% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares, assuming no other Shares will be issued other than the Subscription Shares. The aggregate nominal value of the Subscription Shares is HK$8,400,000.

Subscription Price

The Subscription Price of HK$0.12 per Subscription Share represents:-

1. a discount of approximately 17.81% to the closing price of HK$0.1460 per Share as quoted on the Stock Exchange on 29 May 2019 (being the date of the Subscription Agreement); and
2. a discount of approximately 19.79% to the average closing price of HK$0.1496 per Share as quoted on the Stock Exchange for the last five trading days immediately before 29 May 2019; and
3. a discount of approximately 18.64% 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.

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After deducting the relevant expenses of the Subscription, the net Subscription Price per Subscription Share is approximately HK$0.1195.

The Subscription Price was determined with reference to the prevailing market price of the Shares and after arm's length negotiation between the Company and the Subscriber. The Board considers that the terms of the Subscription Agreement (including the Subscription Price) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

General Mandate

The Subscription Shares will be allotted and issued under the General Mandate granted to the Directors at the annual general meeting of the Company held on 28 November 2018. The Company was authorised to issue and allot 211,343,202 Shares, being 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the AGM. Since the date of the AGM and up to the date of this announcement, no Shares have been allotted and issued by the Company under the General Mandate. After completion of the Subscription, such general mandate will be utilized as to approximately 99.36%. The issue of Subscription Share is not subject to the approval of the Shareholders.

Ranking of the Subscription Shares

The Subscription Shares will be issued free from all encumbrances together with all rights attaching to them, including the right to receive all dividends declared and will rank pari passu with all other issued Shares in all respects as at the date of issue.

Conditions of the Subscription Agreement

Completion of the Subscription is conditional on, among others:

1. the Listing Committee having granted (either unconditionally or subject only to conditions to which neither the Company nor the Subscriber objects) listing of and permission to deal in the Subscription Shares and the permission not being revoked or withdrawn by the Stock Exchange;
2. the parties the Subscription Agreement having obtained all necessary consents, approvals and permissions (if applicable) from the relevant organizations regulatory bodies, government authorities (including the Stock Exchange) as may be required to be obtained in respect of the Subscription and the transactions contemplated under the Subscription Agreement; and
3. the warranties given by the Subscriber under the Subscription Agreement remaining true, accurate, complete and correct in all respects and not misleading in any respect up to and including the Share Completion Date.

The Company will apply to the Listing Committee for listing of and permission to deal in the Subscription Shares. The Company may waive any of the conditions (other than those set out in (a) and (b) above at its absolute discretion at or before 12:00 noon (Hong Kong time) on 14 June 2019 (the "Long Stop Date").

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If any of the above conditions is not satisfied on or before the Long Stop Date, the Subscription Agreement will lapse and neither party to the Subscription Agreement may have any claim against each other save for antecedent breaches.

Subscription Completion

Subscription Completion of the Subscription is expected to take place within three Business Days after the date upon which the last condition to be satisfied has been so satisfied, or if applicable, waived by the Subscriber (or such other time and/or date as the Company and Subscriber may agree in writing).

Since the Subscription is subject to the conditions set out in the Subscription Agreement, the Subscription may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

REASONS FOR THE ISSUE OF SUBSCRIPTION SHARES AND USE OF PROCEEDS

The Group is principally engaged in trademark licensing and retailing of gold and jewellery products in Hong Kong, Macau and Mainland China and wholesaling and processing of gold and jewellery products in Mainland China.

The aggregate gross proceeds from the issue of the Subscription Shares will be HK$25,200,000. The aggregate net proceeds from the issue of the Subscription Shares of approximately HK$25,100,000 are intended to be applied for (i) repayment of part of the indebtedness and (ii) general working capital. The net price for each Conversion Share is approximately HK$0.1195. As at the date of this announcement, the Group (excluding China Gold Silver Group Company Limited, a subsidiary of the Company) has a short term indebtedness of approximately HK$121 million, which includes (i) an outstanding principal amount of convertible bonds of approximately HK$57 million which will be due on 6 June 2019; (ii) borrowings of approximately HK$39 million; and (iii) other indebtedness of approximately HK$25 million.

The Directors consider that the issue of the Subscription Shares represents a good opportunity to raise additional funds for the Company to improve its indebtedness position and will enlarge and strengthen its capital base. It is noted that upon the Subscription Completion, the shareholding interest of the Shareholders (other than the Subscriber) would be diluted, details of which are included in "Effects on shareholding structure of the Company" section of this announcement.

The Directors consider that the terms of the Subscription Agreement which were arrived at after arm's length negotiations between the Company and the Subscriber, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

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EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

The shareholding structure of the Company (i) as at the date of this announcement, (ii) immediately after the issue of the Subscription Shares; and there is no further allotment of Shares from the date of this announcement are as follows:

							Immediately after the issue
		As at the date of this announcement	of the Subscription Shares
			Shares	Approximate	Shares	Approximate
					mate %			mate %
Weltrade Group
	Limited (Note 1)	251,055,619		23.76		251,055,619		19.82
Mr. Wen Jialong	1,415,489	0.13	1,415,489	0.11
Mr. Lam Kwok Hing, Wilfred (Note 2)	2,360,000	0.22	2,360,000	0.19
The Subscriber		-	-	210,000,000	16.58
Other public
	Shareholders	801,884,904	75.89	801,884,904	63.30
Total	1,056,716,012		100.00		1,266,716,012	100.00

Notes:

1. Weltrade Group Limited is a company wholly-owned by Kerui Jinrong Company Limited. Kerui Jinrong Company Limited is in turn owned by Hallow King Global Investment Limited, Mr. Xiang Hong and Mr. Zheng Yue Wen as to 40%, 20% and 40% respectively. Hallow King Global Investment Limited is an entity wholly-owned by Mr. Wen Jialong.
2. Mr. Lam Kwok Hing, Wilfred, an executive Director, is personally interested in 2,220,000 Shares and his spouse is interested in 140,000 Shares.

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