China Mengniu Dairy : Announcements and Notices - SUBSCRIPTION OF FINANCIAL PRODUCTS BY EMPLOYEES UNDER THE RELEVANT SCHEME, PROPOSED PLACING UNDER SPECIFIC MANDATE OF UP TO HK$ EQUIVALENT OF RMB4,000,000,000 FIXED RATE 5-YEAR CONVERTIBLE BONDS, POTENTIAL CONNECTED TRANSACTIONS

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.

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

This announcement is not for distribution, directly or indirectly, in or into the United States. This announcement and the information contained in this announcement do not constitute or form part of an offer to sell securities in the United States. Securities may not be offered or sold in the United States unless registered pursuant to the U.S. Securities Act of 1933, as amended (the ''Securities Act''), or pursuant to an applicable exemption from such registration requirement. Any public offering of securities to be made in the United States will be made by means of a prospectus that will contain detailed information about the Company and management, as well as financial statements. The securities referred to in this announcement have not been and will not be registered under the Securities Act and no public offering of securities will be made in the United States. No money, securities or other consideration is being solicited by this announcement or the information contained in this announcement and, if sent in response to this announcement or the information contained in this announcement, will not be accepted.

CHINA MENGNIU DAIRY COMPANY LIMITED

中 國 蒙 牛 乳 業 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2319)

SUBSCRIPTION OF FINANCIAL PRODUCTS BY

EMPLOYEES UNDER THE RELEVANT SCHEME

PROPOSED PLACING UNDER SPECIFIC MANDATE OF UP TO

HK$ EQUIVALENT OF RMB4,000,000,000 FIXED RATE

5-YEAR CONVERTIBLE BONDS

POTENTIAL CONNECTED TRANSACTIONS

Sole Placing Agent

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INTRODUCTION

Subscription of Financial Products by Employees under the Relevant Scheme

The Board is pleased to announce that, subject to certain conditions being satisfied, certain Financial Products will be made available for subscription by the Selected Participants under the Relevant Scheme to be adopted by the Company, pursuant to which the Selected Participants are entitled to receive the Incentives. It is expected that the Selected Participants will, through investing in the Contractual Funds (directly or through certain special purpose vehicles), subscribe for the Financial Products from the FP Writers. The Incentives to be received by the Selected Participants from time to time will be based on returns on the Financial Products derived from the performance of the Convertible Bonds and the Company's share price.

Inner Mongolia Mengniu will provide the Guarantee in favour of the FP Writers to guarantee the potential liabilities of the Contractual Funds under the Purchase Agreements.

Convertible Bonds

As part and for the purpose of the establishment of the Relevant Scheme, on January 24, 2021, the Company has entered into the Placing Agreement with the Placing Agent pursuant to which the Placing Agent has agreed to procure, on a best effort basis, placees to subscribe for the Convertible Bonds subject to and in accordance with the terms and conditions as set out in the Placing Agreement. The Convertible Bonds will not be offered to the public in Hong Kong. The Convertible Bonds may be converted into the Conversion Shares.

Based on the Initial Conversion Price and assuming full conversion of the Convertible Bonds, the Convertible Bonds will be convertible into up to 138,164,697 Conversion Shares at the Initial Conversion Price, representing approximately 3.50% of the aggregated number of issued Shares as at the date of this announcement and approximately 3.37% of the aggregated number of issued Shares as enlarged by the issue of such Conversion Shares (assuming exercise of all outstanding Share Options in full and that there is no other change to the issued share capital of the Company between the date of this announcement and the full conversion of the Convertible Bonds).

Based on the Floor Conversion Price and assuming full conversion of the Convertible Bonds, the Convertible Bonds will be convertible into up to 146,294,488 Conversion Shares, representing approximately 3.71% of the aggregated number of issued Shares as at the date of this announcement and approximately 3.56% of the aggregated number of issued Shares as enlarged by the issue of such Conversion Shares (assuming exercise of all outstanding Share Options in full and that there is no other change to the issued share capital of the Company between the date of this announcement and the full conversion of the Convertible Bonds).

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LISTING RULES IMPLICATIONS

The proposed Relevant Scheme does not constitute a share option scheme pursuant to Chapter 17 of the Listing Rules and is a discretionary scheme of the Company. The Convertible Bonds are issued to the Placees upon completion of the Placing. Neither the Selected Participants (by themselves or through certain special purpose vehicles), the Contractual Funds, nor the Group will own any Convertible Bonds, Conversion Shares, nor enjoy voting rights or allotment rights over the Conversion Shares.

The Selected Participants are expected to include the Directors and the directors of members of the Group, who are connected persons of the Company. Accordingly, (1) the issuance of the Convertible Bonds (including the terms and conditions of the Convertible Bonds) whose returns (if any) will be linked to the returns to be provided to such connected persons through the Financial Products; and (2) the Guarantee, which guarantees the potential liabilities of the Contractual Funds under the Purchase Agreements and which such connected persons may become beneficiaries, may constitute connected transactions for the purpose of Chapter 14A of the Listing Rules. As the highest of the applicable percentage ratio (as defined under the Listing Rules) (other than the profits ratio) in respect of the Guarantee exceeds 1% but is less than 5% for the Company, the Guarantee is subject to the reporting and announcement requirements but is exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Further, as the Initial Conversion Price of the Convertible Bonds may be subject to a downward adjustment on or prior to the date of their issuance, the Conversion Shares to be issued upon conversion of the Convertible Bonds are to be issued under the Specific Mandate. The issuance of the Convertible Bonds (including the terms and conditions of the Convertible Bonds) and the Conversion Shares are therefore subject to the approval of the Shareholders.

The Company will apply to the Stock Exchange for the listing of the Convertible Bonds by way of debt issues to professional investors (as defined in Chapter 37 of the Listing Rules and in the SFO) only and for the listing of and permission to deal in the Conversion Shares.

GENERAL

The EGM will be convened for the purpose of considering and, if thought fit, approving the Transactions, including the grant of the Specific Mandate and the Placing.

In accordance with the Listing Rules, any potential Selected Participants who hold the Shares and their respective associates will be required to abstain from voting on the resolution(s) in respect of the above.

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The Circular is expected to be despatched to the Shareholders on or before March 31, 2021 in compliance with the Listing Rules.

Shareholders and potential investors of the Company should note that completion of the Transactions are subject to the fulfilment of the conditions precedent set forth under the relevant Transaction Documents. As the Transactions may or may not proceed, Shareholders and potential investors of the Company are reminded to exercise caution when dealing in the securities of the Company.

BACKGROUND

The Board is pleased to announce that, subject to certain conditions being satisfied, certain Financial Products will be made available for subscription by the Selected Participants under the Relevant Scheme to be adopted by the Company, pursuant to which the Selected Participants are entitled to receive the Incentives. It is expected that the Selected Participants will, through investing in the Contractual Funds (directly or through certain special purpose vehicles), subscribe for the Financial Products from the FP Writers. The Incentives to be received by the Selected Participants from time to time will be based on returns on the Financial Products derived from the performance of the Convertible Bonds and the Company's share price.

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