China Fishery : Proposed Disposal Of A Subsidiary Of The Company

CHINA FISHERY GROUP LIMITED

(Incorporated in the Cayman Islands)

PROPOSED DISPOSAL OF A SUBSIDIARY OF THE COMPANY PURSUANT TO A CHAPTER 11

RESTRUCTURING PLAN RELATING TO THE GROUP

Capitalised words which are not defined in this announcement shall carry the same meanings ascribed to them in Schedule 1 below.

1. THE RESTRUCTURING

1.1. Introduction

The board of directors (the "Board") of China Fishery Group Limited (the "Company") and its subsidiaries (the "Group") refer to the announcement released by the Company on 19 March 2021 in respect of a Disclosure Statement and Chapter 11 Plan with respect to CFG Peru Investments Pte. Ltd. ("CFG Peru") and Smart Group Limited (the "Initial Plan") filed in the US Bankruptcy Court by two creditors of the Group, Burlington Loan Management DAC and Monarch Alternative Capital LP (the "Creditor Plan Proponents") and the update announcement subsequently released by the Company on 22 June 2021 (the "Previous Announcement"). The Board wishes to announce that in connection with the Restructuring as outlined in the Creditor Plan Proponents' Chapter 11 Plan for CFG Peru Investments Pte. Ltd. (Singapore) confirmed at a hearing on 10 June 2021 in the US Bankruptcy Court (the "Confirmed Plan"), a copy of which was attached to the Previous Announcement, the following key transaction documents were entered into:

1. the Restructuring Support Agreement dated 2 March 2021 entered into amongst the Initial Consenting Creditors, the Initial Backstop Parties and the Additional Consenting Creditors, as amended and restated on 5 March 2021 and 6 May 2021 (the "Restructuring Support Agreement") which sets out the principal terms of a restructuring of the Club Facility, the Senior Notes, and certain other obligations of CFG Peru and the Peruvian OpCos (the "Restructuring"), including a term sheet (the "Term Sheet") which sets out the principal terms for the Proposed Disposal;
2. the Settlement Agreement and Release Agreement dated 2 June 2021 (the "Global Settlement Agreement") entered into amongst:
3. 1. the Company and its debtor affiliates (other than CFG Peru), as debtors and debtors in possession (collectively, the "Other Debtors"1 and, together with CFG Peru, the "Debtors"2);

• The Other Debtors comprises the Debtors other than CFG Peru.

• The Debtors comprises the Company, Pacific Andes International Holdings Limited (Bermuda), N.S. Hong Investment (BVI) Limited, South Pacific Shipping Agency Limited (BVI), China Fisheries International Limited (Samoa), CFGL (Singapore) Private Limited, Chanery Investment Inc. (BVI), Champion Maritime Limited (BVI), Growing Management Limited (BVI), Target Shipping Limited (HK), Fortress Agents Limited (BVI), Ocean Expert International Limited (BVI), Protein Trading Limited (Samoa) (as applicable), CFG Peru Investments Pte. Limited (Singapore), Smart Group Limited (Cayman), Super Investment Limited, Pacific Andes Resources Development Limited, Nouvelle Foods International Ltd., Golden Target Pacific Limited, Pacific Andes International Holdings (BVI) Limited, Zhonggang Fisheries Limited, Admired Agents Limited, Chiksano Management Limited, Clamford Holding Limited, Excel Concept Limited, Gain Star Management Limited, Grand Success Investment (Singapore) Private Limited, Hill Cosmos International Limited, Loyal Mark Holdings Limited, Metro Island International Limited, Mission Excel International Limited, Natprop Investments Limited, Pioneer Logistics Limited, Sea Capital International Limited, Shine Bright Management Limited, Superb Choice International Limited, and Toyama Holdings Limited (BVI).

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1. the Other Debtors' non-debtor affiliated companies controlled by the Ng Family Members3 (collectively, the "Non-DebtorAffiliates"4);
2. the Ng Family Members; and
3. the Creditor Plan Proponents,

which provides for, among other things, the payment of at least US$20 million (and any amount of the Holdback Amount which may be remaining after the Holdback Deductions, if any) to the Other Debtors which shall be used for distributions to certain remaining creditors of the Group and possibly shareholders of the Company in accordance with the Separate Restructuring Plan, subject to the confirmation of the Separate Restructuring Plan by the US Bankruptcy Court, in consideration for the Other Debtors', the Non-Debtor Affiliates' and the Ng Family Members' support for certain further actions and agreements that may be necessary to implement the terms of the Confirmed Plan and the Global Settlement Agreement; and

1. the Amendment Agreement dated 2 August 2021 entered into between the Debtors, the Non-Debtor Affiliates, the Ng Family Members and the Creditor Plan Proponents (the "Amendment Agreement"), which, amongst other things, further sets out the parties' agreement to pursue and/or support certain further actions and agreements that may be necessary to implement the terms of the Confirmed Plan and the Global Settlement Agreement, a copy of which is annexed hereto as Schedule 2,

pursuant to which, among other things, the Creditor Plan Proponents will be implementing the Restructuring with the support of the Other Debtors, the Non-Debtor Affiliates and the Ng Family Members, including the transactions relating to the transfer and/or disposal of all of CFG Peru's direct and indirect shareholding in CFG Investment S.A.C. ("CFGI") and Copeinca (together, the "Peruvian OpCos"), respectively, to NewCo (the "Proposed Disposal").

The rationale for the Proposed Disposal is further elaborated in paragraph 8 of this announcement.

1. Settlement Effective Date
   Pursuant to the Global Settlement Agreement and the Amendment Agreement (collectively, the "Agreements"), and following the satisfaction of certain deliverables as required under the Agreements, the effective date of the Agreements is 2 August 2021 (the "Settlement Effective Date").

1. INFORMATION ON THE ASSETS SUBJECT TO THE PROPOSED DISPOSAL

1. Assets subject to the Proposed Disposal
   The Group is in the business of fishing, producing fishmeal and fish oil and harvesting of certain seafood. The Peruvian OpCos are the only operating entities of the Group which carry out anchovy fishing and the production of fishmeal and fish oil in Peru.
   CFG Peru is an indirect wholly owned subsidiary of the Company. CFG Peru directly holds 99.99% of the issued shares in the capital of CFGI. CFGI in turn indirectly holds 100% of the issued shares in the capital of Copeinca. The Peruvian OpCos collectively hold the largest fishing

• The Ng Family Members comprise Ng Joo Kwee, Ng Joo Puay Frank, Ng Joo Siang, Ng Joo Thieng and Ng Puay Yee Annie.
  4The CFG Peru Subsidiaries are included as Non-Debtor Affiliates as applicable.

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quota allocated by the Peruvian government in the Northern-Central anchovy fishery in Peru, which is considered to be the largest fishery by volume in the world. Peru is the largest producer and exporter of fishmeal and fish oil in the world. In 2020, the Peruvian OpCos produced 225,315 tonnes of fishmeal, delivering a 21% market share by volume of the Peruvian fishmeal production market. The audited turnover of the Peruvian OpCos for the financial year ended 31 December 2020 was approximately US$306 million (equivalent to approximately S$412.92 million5). The Peruvian OpCos own 50 fishing vessels for anchovy, mackerel, and jack mackerel fishing and currently operate 47 fishing vessels. The Peruvian OpCos operate 9 fishmeal and/or fish oil production facilities along the coast of Peru.

3. PRINCIPAL TERMS OF THE PROPOSED DISPOSAL

The principal terms of the Proposed Disposal are contained in the Term Sheet, a copy of which is annexed hereto as Schedule 3.

1. Overview
   The Proposed Disposal is intended to, amongst other things, achieve a substantial reduction in the liabilities of the Group through the settlement of claims currently held against the Group.
   In connection with the Proposed Disposal which forms an integral part of the Restructuring:
2. 1. in full and final satisfaction of their Claims under the Club Facility Agreement and the Senior Notes, the Club Facility Lenders and Senior Notes Holders will be issued (i) the NewCo Equity and (ii) the New Notes;
   2. pursuant to a settlement agreement between The Hongkong and Shanghai Banking Corporation Limited ("HSBC-HK") and the former Chapter 11 Trustee, HSBC-HK will waive US$25 million of the claims it holds under the Club Facility Agreement;
   3. NewCo will become the 100% owner of the Peruvian OpCos;
   4. in full and final satisfaction of their claims under their allowed SCB Claims, in an amount of approximately US$3.57 million, each holder of an allowed SCB Claim shall receive payment in full in Cash and/or exchanged for non-Cash consideration; and
   5. in full and final satisfaction of their Claims under the BANA Facility, each holder of the BANA-CFG Peru Claim shall receive its pro rata share of US$30,998,083.56 in Cash, which Cash shall be remitted by NewCo or the Peruvian OpCos. This shall come from the working capital of the Peruvian OpCos or from the New Money Facility as described below in paragraph 3.6 of this announcement.
3. NewCo
   The Company understands that the Proposed Disposal shall contemplate that CFG Peru's direct and indirect equity in the Peruvian OpCos would be fully transferred to NewCo, either directly or indirectly through a series of corporate transactions. Pursuant to the Confirmed Plan, "NewCo" refers to either CFGI or, alternatively, a newly incorporated private limited company, which shall be directly or indirectly owned and controlled by the Senior Notes Holders and Club Facility Lenders, in each case, at the sole and exclusive discretion of the Creditor Plan Proponents, and "NewCo Equity" shall comprise fully paid up ordinary/common shares in the issued share capital

• For illustrative purposes, an exchange rate of US$1.00 : S$1.3494 (being the relevant exchange rate as at 4 August 2021) has been applied where a Singapore dollar equivalent amount is stated in this announcement.

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of NewCo or a direct or indirect holding company of NewCo. Following the completion of the Proposed Disposal, the Peruvian OpCos shall cease to be subsidiaries of the Group.

The debt capital of NewCo shall be constituted only by the New Money Facility and New Notes, the latter as apportioned between Club Facility Lenders and Senior Notes Holders in accordance with the applicable Agreed Participation.

1. Senior Notes Holder
   The "Senior Notes Holders" comprise Holders of the 9.75% senior notes due 30 July 2019 (the "Senior Notes") issued pursuant to, and governed by, the indenture dated as of 30 July 2012, by and among CFGI, as issuer, the Company as guarantor, the Senior Notes Trustee, and other guarantors thereto (the "Senior Notes Indenture").
2. Club Facility Lenders
   The "Club Facility Lenders" comprise the lenders under the facility agreement, dated 20 March 2014, by and among CFGI, China Fisheries International Limited ("CFIL"), and Copeinca as borrowers, the Company, CFGI, CFIL, and Copeinca as guarantors, and the agents and lenders party thereto (the "Club Facility Agreement"), in respect of a US$650 million unsecured term loan and revolving credit facilities governed by the Club Facility Agreement (the "Club Facility").
3. New Notes
   Pursuant to the Restructuring Support Agreement, "New Notes" refer to US$300 million principal amount of notes to be issued by NewCo or such other entity determined to be tax-efficient, provided that, if NewCo is not the issuer of the New Notes, NewCo shall guarantee the New Notes.
4. New Money Facility
   Pursuant to the Restructuring Support Agreement, "New Money Facility" refers to a term facility of US$150 million to be provided to NewCo or such other entity as determined to be tax-efficient, provided that, if NewCo is not the issuer of the New Notes, NewCo shall guarantee the New Money Facility.
   The Club Facility Lenders and the Senior Notes Holders shall have the right to participate in the New Money Facility in an amount equal to its (i) Senior Claims as of the Distribution Record Date; divided by (ii) the aggregate of all Senior Claims of all Senior Creditors as of the Distribution Record Date; and multiplied by (iii) US$150 million.
5. BANA-CFGPeru Claim
   A facility letter agreement was entered into on 26 August 2014 by and among CFIL and South Pacific Shipping Agency Limited, as borrowers, the Company, as guarantor, and Bank of America, N.A. ("BANA") as lenders for the provision of unsecured trade facilities (the "BANA Facility").
   The Chapter 11 Trustee and the Other Debtors had on 21 February 2018 agreed to a form of a settlement agreement to "net" certain intercompany claims and filed a joint motion. This was objected to by BANA and the parties subsequently negotiated a resolution, as set out in the Stipulation.

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Pursuant to a stipulation made and entered into on 17 April 2018 between the Chapter 11 Trustee, the Other Debtors and BANA (the "Stipulation"), upon completion of the "Netting of the Netted Intercompany Claims" pursuant to the Intercompany Netting Agreement, CFIL shall transfer to BANA a portion of the resulting Intercompany Claim owed by CFG Peru to CFIL which shall be equal to the principal and contractually due interest as of the date of closing of the sale of the equity interests in CFGI on the BANA Facility (the "BANA-CFGPeru Claim"). The treatment of the BANA-CFG Peru Claim is governed by the Intercompany Netting Agreement, the Intercompany Netting Order, and the Confirmed Plan.

4. RELEVANT TERMS OF THE GLOBAL SETTLEMENT AGREEMENT AND AMENDMENT AGREEMENT

4.1. Settlement Funds

As mentioned in the Previous Announcement, following the execution of the Restructuring Support Agreement, the Global Settlement Agreement was subsequently entered into to secure funding that could, subject to confirmation of the Separate Restructuring Plan by the US Bankruptcy Court, provide for distributions to certain remaining creditors of the Group and possibly shareholders of the Company. Pursuant to the Agreements, amongst other things:

1. one or more of the CFG Peru Subsidiaries or NewCo will, on or in connection with the Restructuring Effective Date, transfer cash in an aggregate amount equal to US$20 million to CFIL. This cash will be held in an escrow account and distributed in the manner set forth in the Agreements. CFIL is a wholly owned indirect subsidiary of the Company; and
2. one or more of the CFG Peru Subsidiaries or NewCo will, on or in connection with the Restructuring Effective Date, transfer cash in an aggregate amount equal to US$5 million minus amounts paid by CFGI to Drew & Napier LLC pursuant to the fee letter entered into between CFGI, CFGL and Drew & Napier LLC on 2 August 2021 as referred to in Section 4.1 of the Amendment Agreement (the "Holdback Amount") to an escrow account less the aggregate amount of Holdback Deductions requested as of the Restructuring Effective Date. Any amount of the Holdback Amount which may be remaining after the Holdback Deductions will be paid to CFIL, and distributed in the manner set forth in the Agreements.

The funds as set out in paragraphs 4.1(a) and 4.1(b) of this announcement, and in accordance with the terms set out in the Global Settlement Agreement, shall collectively be referred to as the "Settlement Funds".

4.2. Distribution of the Settlement Funds

It is contemplated that the Settlement Funds will be distributed, pursuant to a separate restructuring plan to be filed by, amongst others, the Company and subject to approval by the US Bankruptcy Court under the US Bankruptcy Code (the "Separate Restructuring Plan"), to certain remaining creditors of the Group and possibly shareholders of the Company as follows:

1. to the extent not paid in connection with the satisfaction of the Intercompany Netting Agreement, an amount equal to the allowed and unpaid professional fees and administrative Claims against the Other Debtors for the benefit of the holders of such professional fees and administrative Claims;
2. an amount equal to the lesser of (i) the value of allowed Unsecured Claims against Debtor subsidiaries of the Company; and (ii) US$5.1 million for the benefit of holders of allowed Unsecured Claims against Debtor subsidiaries of the Company;

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