Lee Pharmaceutical : CONNECTED TRANSACTION - PROVISION OF FINANCIAL ASSISTANCE

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.

Lee's Pharmaceutical Holdings Limited ҽˤɽᖹᅀછٰϞࠢʮ̡*

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 950)

CONNECTED TRANSACTION

PROVISION OF FINANCIAL ASSISTANCE

CONNECTED TRANSACTION

On 29 November 2018, Lee's International, a wholly owned subsidiary of the Company, and PPI entered into the Shareholder Loan Agreement, pursuant to which Lee's International agrees to advance the Shareholder Loan in the principal amount of HK$4,000,000 to PPI at an interest rate of 4% per annum. The term of the Shareholder Loan shall be one year commencing from the Advance Date.

LISTING RULES IMPLICATIONS

GL Partners is a substantial shareholder of the Company and therefore, a connected person of the Company under the Listing Rules as at the date this announcement.

Lee's International and GL Partners are both shareholders of PPI at the same time, while GL Partners, being a connected person of the Company, is entitled to exercise or control the exercise of 10% or more of the voting power at any general meeting of PPI. Therefore PPI is a commonly held entity falling within the meaning of Rule 14A.27 of the Listing Rules.

The Shareholder Loan made by Lee's International to PPI under the Shareholder Loan Agreement constitutes a connected transaction of the Company pursuant to Rule 14A.26 of the Listing Rules.

The highest applicable percentage ratio under the Listing Rules for the provision of the Shareholder Loan by Lee's International and Previous Financial Assistance made by the Company (by itself or through Lee's International), on a standalone and on an aggregated basis, does not exceed 5%. Therefore, in accordance with Rule 14A.76(2) of the Listing Rules, the provision of the Shareholder Loan by Lee's International is only subject to the reporting and announcement requirements and is exempt from the circular (including independent financial advice) and shareholders' approval requirements of the Listing Rules.

SHAREHOLDER LOAN AGREEMENT Date

29 November 2018

Parties

• (1) Lee's International, a wholly owned subsidiary of the Company, as lender; and

• (2) PPI, as borrower.

PPI is a commonly held entity falling within the meaning of Rule 14A.27 of the Listing Rules.

Subject matter

Pursuant to the Shareholder Loan Agreement, Lee's International agrees to advance the Shareholder Loan in the principal amount of HK$4,000,000 to PPI at an interest rate of 4% per annum. The term of the Shareholder Loan shall be one year commencing from the Advance Date.

Principal amount of the Shareholder Loan

HK$4,000,000

Interest rate

The rate of interest applicable to the Shareholder Loan shall be 4% per annum, which is determined with reference to the prevailing interest rate in the market.

Interest shall be accrued and calculated for the period commencing from the Advance Date up to (but excluding) the Repayment Date.

Drawdown

The Shareholder Loan shall be drawn on the Advance Date by serving not less than two business days' prior written notice by PPI to Lee's International.

Term

Subject to the early repayment as provided under the Shareholder Loan Agreement, the term of the Shareholder Loan shall be one year commencing from the Advance Date.

Repayment schedule

PPI shall repay the Shareholder Loan together with the interest accrued on the Repayment Date.

PPI shall have the right to make early repayment of the Shareholder Loan, together with the interest accrued at any time during the Term by giving the Written Notice to Lee's International. PPI shall specify in the Written Notice the date when the early repayment of the Shareholder Loan shall be made.

REASONS FOR AND BENEFITS OF THE SHAREHOLDER LOAN

PPI is in the course of expanding its business operation in producing, developing and in promoting the sale of medical devices. To ensure such steady growth will be backed by ample financial resources, PPI would need additional cash flow. Therefore, after arm's length negotiation between PPI and Lee's International (being a shareholder of PPI), Lee's International agrees to further advance the Shareholder Loan at a market interest rate to PPI.

The Directors (including the independent non-executive Directors) considered that the terms of the Shareholder Loan Agreement, which has been entered into after arm's length negotiation between Lee's International and PPI, are not in the ordinary and usual course of business of the Group but are on normal commercial terms and the terms therein are fair and reasonable and in the interest of the Company and the Shareholders as a whole. Dr. Li Xiaoyi, an executive Director and a substantial shareholder of the Company, is directly and indirectly (through Swift Power) interested in the issued share capital of PPI, and in view of such interests, he is considered to have an interest in the transactions contemplated under the Shareholder Loan Agreement, and is required to abstain, or has abstained, from voting on the relevant Board resolutions to approve the Shareholder Loan Agreement. Save for the above, no Director has a material interest in the transactions contemplated under the Shareholder Loan Agreement, and none of them is required to abstain or has abstained from, voting on the relevant Board Resolutions to approve the Shareholder Loan Agreement.

INFORMATION OF PPI

PPI was incorporated in the British Virgin Islands on 6 August 2009, and is currently carrying on the business of, inter alia, producing, developing and sale of Zingo and the platform together with the accompanying powder intra-dermal injection system, and other medical devices.

GENERAL INFORMATION OF THE GROUP

The Group is a research-driven and market-oriented biopharmaceutical company focused on the PRC market. Through its operating subsidiary in the PRC, the Group develops, manufactures and markets proprietary pharmaceutical products in the PRC. It has established a sale and distribution network for pharmaceuticals covering most provinces and cities in the PRC, marketing both self-developed products and licensed products from abroad. The principal business activity of Lee's International is investment holding.

LISTING RULES IMPLICATIONS

GL Partners is a substantial shareholder of the Company and therefore, a connected person of the Company under the Listing Rules as at the date this announcement.

Lee's International and GL Partners are both shareholders of PPI at the same time, while GL Partners, being a connected person of the Company, is entitled to exercise or control the exercise of 10% or more of the voting power at any general meeting of PPI. Therefore PPI is a commonly held entity falling within the meaning of Rule 14A.27 of the Listing Rules.

The Shareholder Loan made by Lee's International to PPI under the Shareholder Loan Agreement constitutes a connected transaction of the Company pursuant to Rule 14A.26 of the Listing Rules.

The highest applicable percentage ratio under the Listing Rules for the provision of the Shareholder Loan by Lee's International and Previous Financial Assistance made by the Company (by itself or through Lee's International), on a standalone and on an aggregated basis, does not exceed 5%. Therefore, in accordance with Rule 14A.76(2) of the Listing Rules, the provision of the Shareholder Loan by Lee's International is only subject to the reporting and announcement requirements and is exempt from the circular (including independent financial advice) and shareholders' approval requirements of the Listing Rules.

DEFINITIONS

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

"Advance Date"	the date when the Shareholder Loan is drawn down by PPI
within the Availability Period
"Availability Period"	a period of one month commencing from the date of the
Shareholder Loan Agreement
"Board"	board of Directors
4

"Company"

Lee's Pharmaceutical Holdings Limited, a company incorporated in the Cayman Islands with limited liability with its issued shares listed on the Main Board of the Stock Exchange

"connected person"

"connected transaction"

"Director(s)"

has the meaning ascribed to it under the Listing Rules has the meaning ascribed to it under the Listing Rules director(s) of the Company

"GL Partners"

"Group"

GL Partners Capital Management Limited the Company and its subsidiaries

"Guarantee"

the guarantee (with the guaranteed amount of HK$8,000,000) given by the Company in favour of Nanyang Commercial Bank, Limited in respect of the revolving loan facility of up to HK$8,000,000 and overdraft facility of up to HK$2,000,000 pursuant to the terms of the facility letter issued by Nanyang Commercial Bank, Limited to PPI dated 14 June 2017, which was agreed and accepted by PPI (as borrower) and the Company (as guarantor) on 21 July 2017, provided that the total outstanding balance of the facilities shall not at any time exceed HK$8,000,000

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong"

Hong Kong Special Administrative Region of the PRC

"Lee's International"

Lee's Pharmaceutical International Limited, a company with limited liability and incorporated under the laws of the British Virgin Islands, and a wholly owned subsidiary of the Company

"Listing Rules"

Rules Governing the Listing of Securities on the Stock Exchange

"PPI"

Powder Pharmaceuticals Incorporated, a company with limited liability and incorporated under the laws of the British Virgin Islands