CWT International : Announcements and Notices - Quarterly Announcement, Update on Debt Restructure Plan and Continued Suspension of Trading

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CWT INTERNATIONAL LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 521)

QUARTERLY ANNOUNCEMENT,

UPDATE ON DEBT RESTRUCTURE PLAN

AND CONTINUED SUSPENSION OF TRADING

This announcement is made by CWT International Limited (the "Company", and together with its subsidiaries, the "Group") pursuant to Rule 13.24A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

Reference is made to the announcements of the Company dated 16, 22 and 30 April 2019, 6, 12 and 27 June 2019, 9 and 19 July 2019, and 5 August 2019 (the "Previous Announcements"). Capitalised terms used in this announcement have the same meanings as defined in the Previous Announcements unless the context requires otherwise.

UPDATE ON DEBT RESTRUCTURE PLAN

As mentioned in the Previous Announcements, the Company is undertaking the Debt Restructure Plan so that the Group will be able to continue as a going concern. The following is an update of each item under the Debt Restructure Plan as at the date of this announcement:

1. Extension of the maturity date of the original loan and increase of total commitments under the Facility Agreement
   On 19 July 2019, the Company announced that the Company and the Original Lenders have reached an agreement to enter into the Supplemental Agreement to amend and supplement the Facility Agreement. Pursuant to the Supplemental Agreement, and subject to the satisfaction of the relevant conditions precedent, the Original Lenders have agreed to (i) extend the maturity date of the original loan granted under the Facility Agreement of HK$1,400,000,000 for twelve months from the utilisation date of the additional loan amount (being not more than the increase in the total commitments mentioned in (ii) below) provided for in the Supplemental Agreement; (ii) increase their total commitments under the Facility Agreement to up to HK$1,640,000,000. Pursuant to the Supplemental Agreement, additional securities (including but not limited to corporate guarantees and working capital

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support) have been provided by the immediate shareholders of the Company, and affiliates of the controlling shareholder (as security providers) to secure the performance obligations of the Company under the Facility Agreement (as amended and supplemented by the Supplemental Agreement). Save for the above matters, the terms of the Facility Agreement remained largely the same.

1. Release of enforcement on the Charged Assets and continuation of the Group's operations
   On 5 August 2019, the Company announced that the Loan Extension with respect to the Facility Agreement had become effective, namely the draw down of the additional loan amount of approximately HK$230,000,000 under the supplemental agreement to the Facility Agreement (which has been further amended and supplemented by way of a second supplemental agreement dated 2 August 2019) had occurred on 5 August 2019 and the maturity date of the total loan granted under the Facility Agreement (as amended and supplemented) of approximately HK$1,630,000,000 had been extended to twelve months from 5 August 2019 with interest to be paid quarterly.
   As a result of the Loan Extension taking effect, the enforcement actions (including the appointment of receivers) taken for and on behalf of the Original Lenders have been terminated and released, any property transferred to the security agent (on trust for the Original Lenders) has been returned.
   With respect to the additional securities required under the Supplemental Agreement (as further amended and supplemented), in addition to the securities provided by the immediate shareholders of the Company and affiliates of the controlling shareholder of the Company, the Company has granted a debenture in favour of the Original Lenders over the assets of the Company covering all present and future assets, undertaking, property and rights of the Company, of whatsoever nature and wherever situate, including but not limited to land, investments, plant and machinery, credit balances, book debts, insurances, contracts and receivables, and intellectual property.

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1. Disposal plans of the Group to repay the amounts due under the Facility Agreement (as amended and supplemented)
   The Group intends to dispose of the property investment business in the United Kingdom ("UK") and the United States of America ("USA") and sports and leisure related facilities business in the People's Republic of China to repay the amount due under the Facility Agreement (as amended and supplemented).
   In addition, the Directors are committed to focus on the provision of logistics services to optimise the structure of the Group and keep a stable operation. As a result, the Group also intends to dispose of certain operations engaging in business activities other than those related to logistics services. The Group has received a number of letters of intent or expressions of interest from potential buyers with respect to the disposal of these operations and the Directors have been actively negotiating with such potential buyers.
   The Directors, after taking into account the quotation from potential buyers, are of the view that the net proceeds from the disposal of the aforesaid assets and operations would be sufficient to repay the outstanding principal, interest and fees in relation to the Facility Agreement (as amended and supplemented) in full when they fall due.

Some of the aforesaid assets and operations are located (or are companies located) in the UK and the USA and, due to the recent geopolitical situations affecting these countries (including BREXIT and trade tensions between China and the USA), it has been a challenge identifying interested buyers for these assets and operations. The Group has been searching for interested buyers for quite some time and, in negotiating the terms for undertaking such disposals, the Group would need to take into account the benefit of undertaking the disposals in the short term in view of the continuing, or even growing, uncertainties affecting these markets. The Group believes that, in view of the status of discussions, some of these negotiations have the potential of reaching committed arrangements. The Group will monitor the development and will issue announcement(s) with respect to these potential disposals as and when required under the Listing Rules.

OTHER FINANCING MEASURES

To improve the Group's liquidity position, the Directors have also actively taken other financing measures, including but not limited to maintaining good relationship with the current finance providers so that they will continue providing finance to the Group.

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UPDATES ON BUSINESS OPERATIONS

To the best knowledge of the Directors, as at the date of this announcement, the business operations of the Group are continuing as usual in all material respects.

RESUMPTION GUIDANCE

Under Rule 6.01A(1) of the Listing Rules, the Stock Exchange may cancel the Company's listing if trading in the Company's shares has remained suspended for 18 continuous months. That 18-month period for the Company's current trading suspension will expire on 9 October 2020. If the Company fails to remedy the issues causing its trading suspension and fully comply with the Listing Rules to the Stock Exchange's satisfaction and resume trading in its shares by 9 October 2020, the Listing Department of the Stock Exchange will recommend the Listing Committee to proceed with the cancellation of the Company's listing. This is subject to the Stock Exchange's right to impose a shorter specific remedial period under Rule 6.10 of the Listing Rules where appropriate.

The Stock Exchange has given certain resumption guidance to the Company, namely: (a) the Company must demonstrate a sufficient level of operations or assets under Rule 13.24 of the Listing Rules to warrant the continued listing of the Company's shares; and (b) the Company must announce all material information for shareholders and investors to appraise its position.

The Company is continuing its negotiations to the materialization of the disposal plans of the Group gearing towards the repayment of the amounts due and payable under the Facility Agreement (as amended and supplemented). Upon the materialization, the Company will make submissions to the Stock Exchange for the resumption of the trading of its shares on the Stock Exchange as soon as possible pursuant to the resumption guidance provided by the Stock Exchange to the Company on 29 April 2019. The Company will make additional announcements if and when there are further material developments in relation to the disposal plans.

The Company confirms that, taken into account the relevant requirements and applicable exceptions, it is currently not aware of any inside information that is required to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). The Company will issue further announcement(s) to provide updates on the above matters as and when required pursuant to Rule 13.24A of the Listing Rules and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance.

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CONTINUED SUSPENSION OF TRADING

At the request of the Company, trading in the shares of the Company on the Stock Exchange was halted from 2:32 p.m. on 10 April 2019. The shares of the Company will remain suspended until the materialization of the disposal plans of the Group gearing towards the repayment of the amounts due and payable under the Facility Agreement (as amended and supplemented) and the approval of the resumption proposal of the Company by the Stock Exchange.

By order of the Board

CWT INTERNATIONAL LIMITED

Ding Lei

Executive Director

Hong Kong, 9 October 2019

As at the date of this announcement, the Board comprises Mr. Zhu Weijun (Executive Director and Co-Chairman), Mr. Ding Lei (Executive Director and Co-Chairman), Mr. Li Tongshuang (Executive Director and Chief Executive Officer), Mr. Zhao Quan (Executive Director), Mr. Chen Chao (Executive Director), Mr. Mung Bun Man, Alan (Non-executive Director), Mr. Leung Shun Sang, Tony (Independent Non-executive Director), Mr. Liem Chi Kit, Kevin (Independent Non-executive Director), Mr. Lam Kin Fung, Jeffrey (Independent Non-executive Director) and Ms. Chen Lihua (Independent Non-executive Director).

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