Clarification Announcement: Alternation of the Terms of the Convertible Bonds

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

BEAUTIFUL CHINA HOLDINGS COMPANY LIMITED

美麗中國控股有限公司

(incorporated in Bermuda with limited liability) (Stock code: 706)

CLARIFICATION ANNOUNCEMENT: ALTERNATION OF THE TERMS OF THE CONVERTIBLE BONDS

Reference is made to the Company's announcements (the "Announcements") dated 17 March 2015, 9 April 2015, 8 April 2016 and 11 April 2017 in relation to the issue of the Convertible Bonds.

BACKGROUND

The Board refers to the Announcements in which it was stated that pursuant to the terms of the Convertible Bonds, on 11 April 2017, the Bondholders elected to and the Board resolved to extend the Maturity Date of the Convertible Bonds by one year, from 8 April 2017 to 8 April 2018, to effect the Further Extension. It is also agreed that the interest payment shall be extended by one year, from 8 April 2017 to 8 April 2018. Save as the aforesaid, no other terms and conditions of the Convertible Bonds have been amended.

ALTERNATION OF THE TERMS OF THE CONVERTIBLE BONDS AND LISTING RULES IMPLICATIONS

The Board wishes to clarify that the Further Extension involve an alternation of the existing terms of the Convertible Bonds (the "Amendment") and an application will be made to the Stock Exchange for approval of the Amendment in accordance with Rule 28.05 of the Listing Rules. Application will also be made by the Company to the Listing Committee of the Stock Exchange for the grant of the listing of, and permission to deal in, the Conversion Shares. The Further Extension will only be effective upon (i) the Stock Exchange having approved the Amendment pursuant to the Listing Rules; and (ii) the Listing Committee, having granted (either unconditionally or subject to conditions acceptable to the Company) the listing of, and permission to deal in, the Conversion Shares to be issued as a result of the exercise of the conversion rights attaching to the Convertible Bonds.

The existing principal terms and conditions of the Convertible Bonds are summarised below for ease of reference:

Principal amount: As disclosed in the Company's announcement of 9 April 2015, Convertible Bonds in the principal amount of HK$152,000,000 have been placed.

Maturity Date: The Convertible Bonds will mature on the day being the last day of the twelfth month of the date of issue of the Convertible Bonds, the Maturity Date can be extended by the Bondholder(s) to a further 12 months. In the event that the Bondholder(s) intends to extend the Maturity Date, the Bondholder(s) shall give notice in writing directly to the Company at least 20 Business Days before the last day of the twelfth month of the date of issue of the Convertible Bonds.

Maturity date of the Convertible Bonds has been extended to 8 April 2017 pursuant to the terms of the Convertible Bonds.

Interest: 5% per annum and payment to be payable by the Company on:

1. the day being the last day of the twelfth month of the date of issue of the Convertible Bonds (total of one interest payment), if the Bondholder(s) does not renew the Convertible Bonds for another 12 months; or

2. the day being the last day of the twelfth month and the twenty-fourth month of the date of issue of the Convertible Bonds (total of two interest payments), if the Bondholder(s) renews the Convertible Bonds for another 12 months.

In the event that the Bondholder has converted part of or whole of the principal amount of the Convertible Bonds during the Conversion Period, the Bondholder shall not be entitled to any interest in respect of such part or whole.

Initial Conversion Price: HK$0.20 per Conversion Share, subject to the adjustments upon the occurrence of, among others, subdivision or consolidation of Shares, capital distribution, capitalisation of profits or reserves and rights issue.

Conversion Period: The period commencing on the date of issue of the Convertible Bonds and up to and including the Maturity Date.

Conversion rights: The Bondholder may at any time during the Conversion Period require the Company to convert the whole or any part of the principal amount outstanding (in minimum amount of HK$4,000,000 or whole multiple thereof) under the Convertible Bond into Shares.

Conversion restrictions: No conversion rights attaching to the Convertible Bonds shall be exercised if upon exercise of the conversion rights attaching to the Convertible Bond,

1. the Bondholders and their respective associates, together with parties acting in concert (as defined in the Takeovers Code) with them, will trigger a mandatory offer obligation under Rule 26 of the Takeovers Code;

2. the Company will not be unable to meet the public float requirements under the Listing Rules;

3. the Bondholders and their respective associates will become the substantial Shareholders of the Company (as defined in the Listing Rules); or

4. no conversion rights may be exercised by any person who is a restricted holder (where a Bondholder who is a resident or national of any jurisdiction other than Hong Kong under the laws and regulations of which an exercise of the conversion rights by such holder or the performance by the Company of the obligations expressed to be assumed by it under the conditions or the allotment and issue and holding of the Conversion Shares cannot be carried out lawfully or cannot be carried out lawfully without the Company first having to take certain actions in such jurisdiction.), and the exercise of any conversion rights by the Bondholder shall constitute a confirmation, representation and warranty by it to the Company that it is not a restricted holder and that all necessary governmental, regulatory or other consents or approvals and all formalities have been obtained and observed by it to enable it to exercise legally and validly the relevant conversion rights, to hold the Conversion Shares allotted and issued upon exercise of the conversion rights, and the Company to legally and validly allot and issue the Conversion Shares.

Redemption: The Convertible Bonds shall not be redeemed (in whole or in part) at the option of the Company prior to the Maturity Date.

Any principal amount of the Convertible Bonds which has not been converted in accordance with the terms and conditions of the Convertible Bond instrument by the Maturity Date shall be redeemed by the Company on the Maturity Date at a redemption amount equal to 100% of the principal amount of the outstanding Convertible Bonds and the interest accrued thereon.

Ranking: Conversion Shares issued upon exercise of conversion rights attaching to the Convertible Bonds shall rank pari passu in all respects with all other existing Shares outstanding at the date of the Conversion Notice and all Conversion Shares shall include rights to participate in all dividends and other distributions the record date of which falls on or after the date of the Conversion Notice.

Transferability: The Convertible Bonds are assignable and transferable provided that any assignment or transfer of the Convertible Bonds must be made with the prior written consent of the Board and (if required) of the Stock Exchange and subject to the applicable laws and regulations, and the Listing Rules, provided that no Convertible Bond shall be transferred to a connected person of the Company or any associate of connected persons of the Company.