Directel : A) SUPPLEMENTAL AGREEMENT IN RELATION TO THE DISCLOSEABLE TRANSACTION INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER GENERAL MANDATE IN RELATION TO THE ACQUISITION OF 100% ISSUED SHARE CAPITAL IN THE TARGET; AND B) CLARIFICATION ANNOUNCEMENT ?PDF file?

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.

DIRECTEL HOLDINGS LIMITED

直 通 電 訊 控 股 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 8337)

1. SUPPLEMENTAL AGREEMENT IN RELATION TO THE DISCLOSEABLE TRANSACTION INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER GENERAL MANDATE IN RELATION TO THE ACQUISITION OF 100% ISSUED SHARE CAPITAL IN THE TARGET; AND
2. CLARIFICATION ANNOUNCEMENT

Reference is made to the announcement made by the Company on 18 July 2017 (the "Announcement") in relation to a discloseable transaction involving the acquisition of 100% issued share capital in the Target. Terms used herein shall have the same meanings as defined in the Announcement unless otherwise specified.

1. SUPPLEMENTAL AGREEMENT

   On 5 September 2017, after trading hours, the Vendor and the Purchaser entered into a supplemental agreement to the Sale and Purchase Agreement (the "Supplemental Agreement"), pursuant to which the following terms of the Sale and Purchase Agreement have been amended:
2. The consideration and adjustment for the consideration of the Acquisition

   The Vendor and the Purchaser have agreed to revise the total consideration of the Acquisition to HK$50,000,000 (subject to adjustment as discussed below),

   which is to be satisfied by (i) a cash payment of HK$10,000,000 at the Completion; and (ii) the Purchaser procuring the Company to allot and issue not more than 300,300,300 shares of HK$0.01 each in the Company (the "Consideration Shares") credited as fully paid at the Issue Price to the Vendor in the following manner, subject to the Company receiving the listing approval from the Listing Committee for the listing of, and permission to deal in, the Consideration Shares:-

   In the event where the Revenue Guarantee is fully fulfilled within the period from the Completion to 31 December 2020 ("Scenario 1")

   The Purchaser shall procure the Company to allot and issue 300,300,300 Consideration Shares at the Issue Price to the Vendor within 60 Business Days immediately following the issue of the audited consolidated financial statements of the Target for the relevant financial year in which the Revenue Guarantee is fulfilled, in accordance with the terms and conditions stipulated under the Sale and Purchase Agreement.

   In the event where the aggregated audited consolidated revenue arising from the ordinary course of business (excluding non-operating income and extraordinary income) of the Target for the period from the Completion to 31 December 2020 is less than the Revenue Guarantee ("Scenario 2")

   The Consideration shall be adjusted in the following manner (the "Adjustment"):-

   - the Purchaser shall procure the Company to allot and issue to the Vendor such number of Consideration Shares at the Issue Price within 60 days following the date when the audited consolidated financial statements of the Target for the financial year ending 31 December 2020 is issued in accordance with the following formula:

   A = HK$50,000,000 X (

   B

   RMB 200,000,000

   ) -HK$10,000,000

   Where:

   A = the monetary amount of the Consideration Shares, in Hong Kong Dollars, to be allotted and issued by the Company, which, for the avoidance of doubt, shall not be more than HK$40,000,000

   B = the aggregated audited consolidated revenue of the Target from the Completion to 31 December 2020

   The number of Consideration Shares to be allotted and issued shall equal to A divided by the Issue Price.

   - in the event that A is of negative value, the Vendor shall repay the absolute amount of A to the Purchaser in Hong Kong Dollars within 30 days following the date when the audited consolidated financial statements of the Target for the year ending 31 December 2020 is issued. For the avoidance of doubt, such absolute amount shall not exceed HK$10,000,000

   If the Company fails to obtain the listing approval for the Consideration Shares, the Purchaser shall settle the outstanding amount of the Consideration (subject to Adjustment) by cash within 30 business days upon receiving notification that the listing approval is not granted no matter under Scenario 1 or Scenario 2.

   In any event, the total number of Consideration Shares to be allotted and issued to the Vendor shall not exceed 300,300,300 Shares. Assuming there is no Adjustment and the Company receiving the listing approval from the Listing Committee for the Consideration Shares, the maximum number of Consideration Shares comprising 300,300,300 Shares represents (i) approximately 9.65% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 8.80% of the issued share capital of the Company as enlarged by the allotment and issue of all the Consideration Shares.

   For the basis of determination of the consideration, kindly refer to the paragraph headed "B) Clarification - (3) Basis of determination of the consideration" below.

3. Conditions Precedents

   Pursuant to the Supplemental Agreement, it is no longer a conditions precedent to Completion for the Company to receive the listing approval from the Listing Committee for the listing of, and permission to deal in, the Consideration Shares.

   The Company will issue the Consideration Shares subject to such listing approval. As at the date of this announcement, the Company has not made an application for, and the Listing Committee has not granted, the listing approval for the Consideration Shares.

4. Long Stop Date

In light of the entering into of the Supplemental Agreement, the Vendor and the Purchaser agreed to extend the Long Stop Date to 18 October 2017.

Save for the aforementioned, all other terms and conditions of the Sale and Purchase Agreement remain unchanged.

5. CLARIFICATION

The Company would like to clarify the following matters so as to give further information to the Shareholders and potential investors of the Shares:

1. Business model of the Target Group and further details of CEPA qualification obtained by the Group

   Since 2003, the Target Group has been engaged in the distribution of post-paid telecommunications products (including fixed line and mobile telecommunications products) supplied by a major PRC telecommunications operator ("Telco") and received commission as income. The Company is given to understand that the Target Group has decided recently to change its business model by gradually stepping out of the declining post-paid telecommunications market and focusing on the pre-paid telecommunications business. Noticing the strong demand for local and roaming telecommunications services from inbound and outbound travelers in the PRC respectively, the Target Group strategically sets inbound and outbound travelers as its target end users for its pre-paid telecommunications products. Besides, the Target Group is diversifying its business to distribution of mobile phones by leveraging on its established distribution network. The business license of GZDT, a wholly-owned subsidiary of the Target, allows GZDT to sell local and roaming pre-paid products and mobile phones in the PRC.

   As part of the Group's business plan to expand its business geographically into the PRC, a wholly-owned subsidiary of the Company has been recently qualified as a Hong Kong Service Supplier to supply (i) value-added telecommunications services and (ii) telecommunications services - calling card under its CEPA qualification. Under CEPA, the value-added telecommunications services that can be provided by a Hong Kong Service Supplier include for example, internet data center services, store and forward services, online data processing and transaction processing services, while qualification to supply telecommunications services - calling card allows the supplier to distribute fixed and/or mobile telephone service cards.

2. Background of the Acquisition

As the Group intends to expand its business geographically into the PRC by distributing its products through local distributors similar to its business model in Hong Kong, the Group began to look for telecommunications products distributors in Guangdong province as acquisition targets in September 2016 and eventually considered the Target as a suitable acquisition target.