Starrise Media : EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS; AND ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE CONSTITUTING CONNECTED TRANSACTION

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Starrise Media Holdings Limited

星 宏 傳 媒 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1616)

EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS; AND ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE CONSTITUTING CONNECTED TRANSACTION

Reference is made to:

1. the circular of the Company dated 17 January 2017 (the "Initial Circular");
2. the announcements of the Company dated 22 December 2016, 30 December 2016 and 28 February 2017 (the "Initial Announcements"), in relation to, among other things, the issuance of the Bonds in the aggregate principal amount of HK$300,000,000 to Dragon Capital, the corporate guarantee executed by Aim Right and the personal guarantee executed by Mr. Liu in favour of Dragon Capital;
3. the announcements of the Company dated 17 January 2018, 5 February 2018 and 19 January 2021 (the "Price Adjustment Announcements") in relation to, among other things, the adjustments in the conversion price of the Bonds to HK$0.156 per Conversion Share (the "Adjusted Conversion Price");
4. the circular of the Company dated 20 March 2019 (the "1st Extension Circular"), in relation to, among other things, the extension of the maturity date of the Bonds in the aggregated principal amount of HK$180,000,000 held by Dragon Capital and the creation of the 2019 Share Charge by Aim Right over the Aim Right Shares in favour of Dragon Capital;
5. the circular of the Company dated 24 March 2020 (together with the Initial Circular and the 1st Extension Circular, the "Circulars"), in relation to, among other things, the 2nd Extension of the maturity date of the Bonds in the aggregated principal amount of HK$120,000,000 held by Dragon Capital and the entering into of the 1st Deed of Amendment to the 2019 Share Charge in favour of Dragon Capital;

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1. the announcements of the Company dated 23 and 24 April 2020 (the "BeiTai Transfer Announcements") in relation to, among other things, the transfer of the Bonds in the aggregated principal amount of HK$20,000,000 (the "BeiTai Bonds") from Dragon Capital to BeiTai;
2. the announcement of the Company dated 25 February 2021 (together with the BeiTai Transfer Announcements, the "BeiTai Announcements") in relation to the full conversion of the BeiTai Bonds; and
3. the announcements of the Company dated 26 February 2021 and 24 March 2021 (together with the Initial Announcements, the Price Adjustment Announcements and the BeiTai Announcements, the "Announcements") in relation to, inter alia, the potential 3rd Extension of the Maturity Date and the potential Transfer of the Outstanding Bonds in the aggregate principal amount of HK$50,000,000 held by Dragon Capital.

Capitalised terms used herein shall have the same meanings as those defined in the Circulars and the Announcements unless stated otherwise.

EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS

On 12 April 2021, the Company redeemed the Bonds in the aggregate principal amount of HK$50,000,000 held by Dragon Capital (the "Partial Redemption"). The Partial Redemption was funded by the net proceeds of approximately HK$15.73 million raised from completion of the placing of Shares under general mandate in January 2021 (which was utilised as intended) and other internal resources of the Group. After completion of the Partial Redemption, the Bonds in aggregate principal amount of HK$50,000,000 remain outstanding, all of which are the Bonds held by Dragon Capital.

The Board is pleased to announce that on 7 May 2021 (after trading hours), the Company and Dragon Capital entered into the 3rd Extension Agreement, pursuant to which the Company and Dragon Capital conditionally agreed that the Maturity Date of the Outstanding Bonds shall be further extended to 30 June 2021.

A summary of the principal terms of the 3rd Extension Agreement is set out below.

The 3rd Extension Agreement

Date:	7 May 2021 (after trading hours)
Parties:	(1)	The Company (as the issuer); and
	(2)	Dragon Capital (as the holder of the Outstanding Bonds)

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Pursuant to the terms of the 3rd Extension Agreement, the Company and Dragon Capital conditionally agreed to further extend the Maturity Date of the Outstanding Bonds to 30 June 2021 on the Terms of 3rd Extension set out below:

1. at any time during the 3rd Extended Period, the Company may, at its sole and absolute discretion, redeem all or part of the Outstanding Bonds at the Base Redemption Amount together with any accrued and unpaid amounts owing to the Bondholder(s) in connection with the then outstanding Bonds by serving a notice to the Bondholder(s);
2. at any time during the 3rd Extended Period, the Bondholder(s) may, by giving notice to the Company, require the Company to redeem all of the then outstanding Bonds at the Base Redemption Amount together with any accrued and unpaid amounts owing to the Bondholder(s) in connection with the outstanding Bonds; and
3. the Maturity Date may be extended up to the fifth anniversary of the issue date of the Bonds if agreed between the Company and the holder(s) of the Bonds provided that, at the time of each extension, the Company has sufficient mandate, on the basis of (i) the then effective general mandate granted by the Shareholders at the then most recent annual general meeting of the Company or (ii) the specific mandate granted by the Shareholders at the general meeting, to issue such number of new Shares to cover the exercise of all of the then outstanding Conversion Rights.

Save for the 3rd Extension and the Terms of 3rd Extension, all other terms and conditions of the Outstanding Bonds as set out in the Circulars shall remain unchanged. The Company will apply to the Stock Exchange for its approval of the 3rd Extension pursuant to Rule 28.05 of the Listing Rules.

Conditions Precedent

The 3rd Extension will become effective subject to the fulfilment of, inter alia, the following conditions:

1. the Stock Exchange having approved the 3rd Extension in accordance with the Listing Rules;
2. Aim Right having executed a deed of amendment to the 2019 Share Charge (as amended and supplemented by the 1st Deed of Amendment), in form and substance satisfactory to Dragon Capital, in favour of Dragon Capital pursuant to which Aim Right shall continue to provide a charge over the Aim Right Shares as security for the due performance of the Company's obligations under the conditions of the Outstanding Bonds during the 3rd Extended Period until Dragon Capital ceases to hold any of the Outstanding Bonds;
3. all necessary consents and approvals required to be obtained on the part of the Company in respect of the 3rd Extension having been obtained;

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1. the Company having complied with all applicable requirements under the Listing Rules (including the obtaining of the approval of shareholders of the Company at a general meeting held in respect of the grant of a new Extension Specific Mandate regarding the 3rd Extension), and/or having completed, obtained and fulfilled all necessary approvals, notices and clearances of any relevant regulatory authorities or other relevant third parties as required in respect of the 3rd Extension, if applicable; and
2. Dragon Capital having obtained a legal opinion addressed to Dragon Capital on the 3rd Extension, in such form and substance satisfactory to Dragon Capital.

Each of the conditions set out in (a) to (e) above is not waivable under any circumstances.

The Share Charge and the Guarantees

As disclosed in the Circulars, the Dragon Capital Corporate Guarantee and the Dragon Capital Personal Guarantee (collectively, the "Dragon Capital Guarantees") were executed by Aim Right and Mr. Liu, respectively, in favour of Dragon Capital on the Issue Date. The Dragon Capital Corporate Guarantee and the Dragon Capital Personal Guarantee shall remain effective and unchanged during the 3rd Extended Period notwithstanding the 3rd Extension.

As a condition precedent to the 3rd Extension, the 2nd Deed of Amendment to the 2019 Share Charge (as amended and supplemented by the 1st Deed of Amendment) shall be executed by Aim Right over all of the Aim Right Shares as security for the due performance of the Company's obligations under the conditions of the Outstanding Bonds during the 3rd Extended Period until Dragon Capital ceases to hold any of the Outstanding Bonds.

As at the date of this announcement, Aim Right is an investment holding company incorporated in the British Virgin Islands with limited liability and is wholly-owned by Mr. Liu.

Reasons and benefits of the 3rd Extension

As mentioned above, the Outstanding Bonds matured on 28 February 2021. As disclosed in the Company's announcements dated 26 February 2021 and 24 March 2021, the Company had been engaging in negotiations with Dragon Capital on, inter alia, the potential extension of the Maturity Date of the Outstanding Bond which leads to Dragon Capital issuing a notice to the Company confirming the 3rd Extension on terms subject to the entering into of a legally binding agreement between the relevant parties. Pursuant to the terms of the 3rd Extension Agreement, the 3rd Extension would allow the Company to arrange for repayment of its debts under the Outstanding Bonds on essentially the same terms but on a much later date, and would therefore effectively provide the Group with flexibility in relation to the Group's deployment of its financial resources to fund its operation and development as well as the planning of its working capital requirements.

Without the 3rd Extension, the Company would have to apply substantial cash resources for the redemption of the Outstanding Bonds on maturity. Save for the 3rd Extension and the Terms of 3rd Extension, no other term or condition of the Bonds would be amended further to the 2nd Extension, which was been approved by ordinary resolution(s) duly passed by the Shareholders at an extraordinary general meeting held on 9 April 2020. Accordingly, the Directors (including the independent non-executive Directors) consider that the 3rd Extension is fair and reasonable, and is in the interests of the Company and its Shareholders as a whole.

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ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

The Board wishes to announce that on 7 May 2021 (after trading hours), the Company, Dragon Capital and Aim Right entered into the Transfer Agreement in relation to the Transfer of the Outstanding Bonds held by Dragon Capital to Aim Right.

A summary of the principal terms of the Transfer Agreement is set out below.

The Transfer Agreement

Date:	7 May 2021 (after trading hours)
Parties:	(1)	Dragon Capital (as the vendor);
	(2)	Aim Right (as the purchaser); and
	(3)	The Company (as the issuer)

Under the terms of the Transfer Agreement, Dragon Capital as vendor conditionally agreed sell, and Aim Right as purchaser conditionally agreed to purchase, the Outstanding Bonds for the consideration of HK$50,000,000.

Pursuant to the terms of the Bonds, prior written consent from the Company is required where the holder of the Bonds proposed to assign any of its rights or transfer by novation any of its rights and obligations of the Bonds (or any part thereof) to any person (except its Affiliates).

Conditions Precedent

The Transfer will become effective subject to the fulfilment of, inter alia, the following conditions:

1. each party having obtained all necessary consents, approvals authorisations required for the execution of, and performance of its respective obligations, under the Transfer Agreement;
2. the 3rd Extension becoming effective;
3. the Company having consented to, and complied with all applicable requirements under the Listing Rules (including the obtaining of the approval of shareholders of the Company at a general meeting held in respect of the grant of new specific mandate regarding the 3rd Extension and the issuance of the Aim Right Bonds to Aim Right), and obtained all necessary consents, approvals and authorisations in relation to, the transactions contemplated under the Transfer Agreement; and
4. all other necessary consents, approvals, licenses, permits and authorisations from any governmental and regulatory bodies in Hong Kong, China and other relevant jurisdictions in relation to the transactions contemplated under the Transfer Agreement having been obtained and made.

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