CK Life Sciences 'I Hldgs : Discloseable and Connected Transactions – Proposed Acquisition of Equity Interest in Dominion Salt Limited and Proposed Disposal of Equity Interest in Salpak Proprietary Limited and Cerebos-Skellerup Limited

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.

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 0775)

DISCLOSEABLE AND CONNECTED TRANSACTIONS PROPOSED ACQUISITION OF EQUITY INTEREST IN DOMINION SALT LIMITED AND PROPOSED DISPOSAL OF EQUITY INTEREST IN SALPAK PROPRIETARY LIMITED AND CEREBOS-SKELLERUP LIMITED

The Board announces that on 9 May 2017 (after trading hours of the Stock Exchange), MGL (a wholly-owned subsidiary of the Company), Cerebos Gregg's (a wholly-owned subsidiary of Cerebos Pacific), the Company and Cerebos Australia (also a wholly-owned subsidiary of Cerebos Pacific) entered into the Acquisition Agreement, pursuant to which MGL has conditionally agreed to purchase (or to procure that an entity nominated by the Company purchases) and Cerebos Gregg's has conditionally agreed to sell the DSL Shares, representing approximately 50% of the total issued share capital of DSL, at the consideration of AUD33.5 million (equivalent to approximately HK$193.58 million) (subject to adjustment). The Company has agreed to irrevocably and unconditionally guarantee the performance by MGL of its obligations and liabilities under the Acquisition Agreement. Cerebos Australia has agreed to irrevocably and unconditionally guarantee the performance by Cerebos Gregg's of its obligations and liabilities under the Acquisition Agreement.

On 9 May 2017 (after trading hours of the Stock Exchange), CSL (a wholly-owned subsidiary of the Company), Cerebos Gregg's and the Company entered into the C-Skell Disposal Agreement, pursuant to which CSL has agreed to sell and Cerebos Gregg's has agreed to purchase the C-Skell Shares, representing 49% of the total issued share capital of C-Skell, at the consideration of AUD1.8 million (equivalent to approximately HK$10.4 million) (subject to adjustment). The Company has agreed to irrevocably and unconditionally guarantee the performance by CSL of its obligations and liabilities under the C-Skell Disposal Agreement.

On 9 May 2017 (after trading hours of the Stock Exchange), Cheetham (a wholly-owned subsidiary of the Company), Cerebos Australia and the Company entered into the Salpak Disposal Agreement, pursuant to which Cheetham has agreed to sell and Cerebos Australia has agreed to purchase the Salpak Shares, representing approximately 55.88% of the total issued share capital of Salpak, at the consideration of AUD18.7 million (equivalent to approximately HK$108.06 million) (subject to adjustment). The Company has agreed to irrevocably and unconditionally guarantee the performance by Cheetham of its obligations and liabilities under the Salpak Disposal Agreement.

As at 9 May 2017, the total issued share capital of DSL (including voting and non-voting shares) is owned as to approximately 50% by CSL and as to approximately 50% by Cerebos Gregg's; the total issued share capital of C-Skell is owned as to 49% by CSL and as to 51% by Cerebos Gregg's; and the total issued share capital of Salpak (including voting and non-voting shares) is owned as to approximately 55.88% by Cheetham and as to approximately 44.12% by Cerebos Australia. As at 9 May 2017, each of DSL, Salpak and C-Skell is a joint venture of the Group.

The Transaction involves (i) an acquisition of Cerebos Gregg's interest in DSL by MGL; (ii) a disposal of CSL's interest in C-Skell to Cerebos Gregg's; and (iii) a disposal of Cheetham's interest in Salpak to Cerebos Australia. Pursuant to Rule 14.24 of the Listing Rules, since the Transaction involves both acquisition and disposals, the Transaction is classified by reference to the larger of the Acquisition or the Disposals. As the highest of the applicable percentage ratios in respect of the Acquisition exceeds 5% and is lower than 25% and the highest of the applicable percentage ratios in respect of the Disposals (having aggregated the Salpak Disposal with the C-Skell Disposal) also exceeds 5% and is lower than 25%, the Transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules, and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As at 9 May 2017, Cerebos Australia and Cheetham respectively holds approximately 44.12% and approximately 55.88% of the issued share capital (and 51% and 49% of the voting rights) in Salpak, and Salpak is considered to be an indirect non-wholly owned subsidiary of the Company under the Listing Rules. Accordingly, Cerebos Australia (being a substantial shareholder of Salpak) is a connected person of the Company at the subsidiary level, and Cerebos Gregg's, by virtue of also being a subsidiary of Cerebos Pacific (being the holding company of Cerebos Australia), is an associate of Cerebos Australia and a connected person of the Company at the subsidiary level. As such, the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As (i) the Board has approved the Acquisition Agreement, the Disposal Agreements and the transactions contemplated thereunder; and (ii) the Directors (including all of the independent non-executive Directors) have confirmed that the terms of the Acquisition Agreement and the Disposal Agreements are fair and reasonable, on normal commercial terms and in the interests of the Company and its Shareholders as a whole, pursuant to Rule 14A.101 of the Listing Rules, the Transaction is subject to the reporting and announcement requirements, but is exempt from the circular, independent financial advice and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

As completion of the Acquisition is subject to the fulfilment of certain terms and conditions, and may or may not proceed, Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company.

1. INTRODUCTION

   The Board announces that on 9 May 2017 (after trading hours of the Stock Exchange), MGL (a wholly-owned subsidiary of the Company), Cerebos Gregg's (a wholly-owned subsidiary of Cerebos Pacific), the Company and Cerebos Australia (also a wholly-owned subsidiary of Cerebos Pacific) entered into the Acquisition Agreement, pursuant to which MGL has conditionally agreed to purchase (or to procure that an entity nominated by the Company purchases) and Cerebos Gregg's has conditionally agreed to sell the DSL Shares, representing approximately 50% of the total issued share capital of DSL, at the consideration of AUD33.5 million (equivalent to approximately HK$193.58 million) (subject to adjustment). The Company has agreed to irrevocably and unconditionally guarantee the performance by MGL of its obligations and liabilities under the Acquisition Agreement. Cerebos Australia has agreed to irrevocably and unconditionally guarantee the performance by Cerebos Gregg's of its obligations and liabilities under the Acquisition Agreement.

   On 9 May 2017 (after trading hours of the Stock Exchange), CSL (a wholly-owned subsidiary of the Company), Cerebos Gregg's and the Company entered into the C-Skell Disposal Agreement, pursuant to which CSL has agreed to sell and Cerebos Gregg's has agreed to purchase the C-Skell Shares, representing 49% of the total issued share capital of C-Skell, at the consideration of AUD1.8 million (equivalent to approximately HK$10.4 million) (subject to adjustment). The Company has agreed to irrevocably and unconditionally guarantee the performance by CSL of its obligations and liabilities under the C-Skell Disposal Agreement.

   On 9 May 2017 (after trading hours of the Stock Exchange), Cheetham (a wholly-owned subsidiary of the Company), Cerebos Australia and the Company entered into the Salpak Disposal Agreement, pursuant to which Cheetham has agreed to sell and Cerebos Australia has agreed to purchase the Salpak Shares, representing approximately 55.88% of the total issued share capital of Salpak, at the consideration of AUD18.7 million (equivalent to approximately HK$108.06 million) (subject to adjustment). The Company has agreed to irrevocably and unconditionally guarantee the performance by Cheetham of its obligations and liabilities under the Salpak Disposal Agreement.

   As at 9 May 2017, the total issued share capital of DSL (including voting and non-voting shares) is owned as to approximately 50% by CSL and as to approximately 50% by Cerebos Gregg's; the total issued share capital of C-Skell is owned as to 49% by CSL and as to 51% by Cerebos Gregg's; and the total issued share capital of Salpak (including voting and non-voting shares) is owned as to approximately 55.88% by Cheetham and as to approximately 44.12% by Cerebos Australia. As at 9 May 2017, each of DSL, Salpak and C-Skell is a joint venture of the Group.

2. THE ACQUISITION AGREEMENT

   The principal terms of the Acquisition Agreement are summarised below.
3. Subject matter

   Pursuant to the Acquisition Agreement, MGL has conditionally agreed to purchase (or to procure that an entity nominated by the Company purchases) and Cerebos Gregg's has conditionally agreed to sell the DSL Shares, which represent approximately 50% of the total issued share capital of DSL.

4. Consideration

   The consideration for the Acquisition is AUD33.5 million (equivalent to approximately HK$193.58 million), subject to the following adjustments (save that the maximum amount of any adjustments to be paid by Cerebos Gregg's or MGL (as applicable) to the party receiving the payment of adjustment will not exceed an amount equal to NZD35.8 million (equivalent to approximately HK$193.48 million)) (the "DSL Consideration"):

5. if the amount equal to the working capital of DSL as at completion plus net debt of DSL as at completion of the Acquisition ("DSL Completion Amount") is less than the amount equal to the sum of estimated working capital and estimated net debt of DSL as specified in the Acquisition Agreement ("DSL Estimated Amount"), the consideration will be decreased by 50% of the amount by which DSL Completion Amount is less than DSL Estimated Amount;

6. if DSL Completion Amount exceeds DSL Estimated Amount, the consideration will be increased by 50% of the amount by which DSL Completion Amount exceeds DSL Estimated Amount;

7. if DSL Completion Amount is equal to DSL Estimated Amount, the consideration will not be adjusted.

The adjustment amount will be settled within 5 business days after the date on which DSL Completion Amount is determined in accordance with the terms of the Acquisition Agreement or such other date agreed by the parties.

The DSL Consideration was determined after arm's length negotiations between the parties. The valuation of the DSL Shares as of 28 February 2017 as per valuation report prepared by independent and qualified valuer engaged by the Company, taking into account factors such as market benchmarks, control and marketability, is in the range of AUD31.7 million to AUD34.9 million (equivalent to approximately HK$183.18 million to HK$201.67 million).

The Company intends that MGL will settle the DSL Consideration out of the net proceeds of the Disposals and internal resources of the Group.