Newtree : Announcements and Notices - (i) Business Update - Potential Acquisition; and (ii) Proposed Issue of HK$200,000,000 Guaranteed Convertible Bonds Due 2019

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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.

Newtree Group Holdings Limited

友川集團控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1323)

1. BUSINESS UPDATE - POTENTIAL ACQUISITION; AND
2. PROPOSED ISSUE OF HK$200,000,000 GUARANTEED CONVERTIBLE BONDS DUE 2019

THE POTENTIAL ACQUISITION

The Board would like to inform the Shareholders and potential investors that the Company is in discussion with an Independent Third Party, in relation to the potential acquisition of a group that is principally engaged in the business of manufacturing concrete in the PRC. The Potential Acquisition, if materialises, may constitute a notifiable transaction of the Company under the Listing Rules. As at the date of this announcement, no material terms concerning the Potential Acquisition have been agreed and the Company has not entered into any definitive agreement in relation to the Potential Acquisition. The Board will make further announcement as and when necessary in compliance with the Listing Rules and applicable laws.

The Potential Acquisition may or may not materialise. Shareholders and potential investors are reminded to exercise caution when dealing in the securities of the Company. THE SUBSCRIPTION AGREEMENT

On 4 August 2017 (after trading hours), the Company, the Subscriber and the Guarantor entered into the Subscription Agreement, pursuant to which the Subscriber has conditionally agreed to subscribe for, and the Company has agreed to issue, the Convertible Bonds in the aggregate principal amount of HK$200,000,000. The Conversion Price is HK$0.46 per Share (subject to adjustments).

Assuming the conversion rights attaching to the Convertible Bonds are exercised in full at the Conversion Price, a maximum of 434,782,608 Conversion Shares will be allotted and issued, representing approximately 18.28% of the entire issued share capital of the Company as at the date of this announcement and approximately 15.45% of the entire issued share capital of the Company as enlarged by the issue of the Conversion Shares.

The Conversion Shares, upon issue, shall rank pari passu in all respects with the Shares then in issue. The Company will allot and issue the Conversion Shares under the General Mandate.

USE OF PROCEEDS

The gross and net proceeds from the issue of the Convertible Bonds are HK$200,000,000 and approximately HK$199,700,000 respectively. On such basis, the net price of each Conversion Share is estimated to approximately HK$0.459. The Board intends to use the net proceeds for the Potential Acquisition and as general working capital of the Group. If the Potential Acquisition does not proceed, the Board intends to use such net proceeds which are not used for the Potential Acquisition for expansion of money lending business of the Group and other potential acquisition as identified by the Group from time to time.

Completion of the Subscription Agreement is subject to the satisfaction and/or waiver of the conditions precedent therein respectively. In addition, the Subscription Agreement may be terminated in certain circumstances. As the Subscription Agreement may or may not be completed, the Convertible Bonds may or may not be issued and/or the Conversion Shares may or may not be issued or listed, the Shareholders and investors are advised to exercise caution when dealing in the securities of the Company. THE POTENTIAL ACQUISITION

The Board would like to inform the Shareholders and potential investors that the Company is in discussion with an Independent Third Party, in relation to the potential acquisition of a group that is principally engaged in the business of manufacturing concrete in the PRC. The Potential Acquisition, if materialises, may constitute a notifiable transaction of the Company under the Listing Rules. As at the date of this announcement, no material terms concerning the Potential Acquisition have been agreed and the Company has not entered into any definitive agreement in relation to the Potential Acquisition. The Board will make further announcement as and when necessary in compliance with the Listing Rules and applicable laws.

The Potential Acquisition may or may not materialise. Shareholders and potential investors are reminded to exercise caution when dealing in the securities of the Company. THE SUBSCRIPTION AGREEMENT

On 4 August 2017 (after trading hours), the Company, the Subscriber and the Guarantor entered into the Subscription Agreement, pursuant to which the Subscriber has conditionally agreed to subscribe for, and the Company has agreed to issue, the Convertible Bonds in the aggregate principal amount of HK$200,000,000.

The Subscription is conditional upon satisfaction or (where applicable) waiver of the conditions precedent as set out under the paragraph headed "Conditions Precedent" below.

Assuming the conversion rights attaching to the Convertible Bonds are exercised in full at the Conversion Price, a maximum of 434,782,608 Conversion Shares will be allotted and issued, representing approximately 18.28% of the entire issued share capital of the Company as at the date of this announcement and approximately 15.45% of the entire issued share capital of the Company as enlarged by the issue of the Conversion Shares.

The Conversion Shares, upon issue, shall rank pari passu in all respects with the Shares then in issue. The Company will allot and issue the Conversion Shares under the General Mandate.

Details of the Subscription Agreement are set out below:

Date

4 August 2017 (after trading hours)

Parties

Issuer: the Company;

Subscriber: the Subscriber; and

Guarantor: the Guarantor

The Subscriber is a company incorporated in the British Virgin Islands with limited liability whose principal business is investment holdings.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Subscriber and its ultimate beneficial owner, Mr. Fu, are Independent Third Parties. As at the date of this announcement, Mr. Fu beneficially owns 18,000,000 Shares.

TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS

The terms and conditions of the Convertible Bonds have been negotiated on an arm's length basis and the principal terms and conditions of which are summarised below:

Issuer: The Company

Issue price: 100% of the principal amount

Interest rate: The Convertible Bonds shall bear interest at the rate of 8% per annum payable semi-annually in arrears on 30 June and 31 December in each year on the principal amount outstanding from time to time, accruing on a daily basis and calculated for actual number of days elapsed on a 365-day year.

Maturity Date: The date falling two years from the date of issue of the Convertible Bonds.

Principal amount: HK$200,000,000

Conversion Price: The Conversion Price is HK$0.46 per Share, which is subject to adjustments for, among other matters, subdivision, reclassification or consolidation of Shares, bonus issue, capital distribution, distribution in specie, the issue of new Shares at less than the current market price and the grant, offer or issue of options, rights, warrants or other convertible securities to subscribe for Shares at a price less than the current market price per Share.