HB Entertainment co. ltd. announced that it has entered into an investment agreement with a new investor China Jiuhao Health Industry Corporation Limited for the private placement of 23,334 convertible preferred shares at a price of KRW 601,799.948573 per share for gross proceeds of KRW 14,042,400,000 on March 23, 2016. The shares have a par value of KRW 5,000 each. The agreement shall be completed in two tranches; the first subscription comprising 2,864 shares shall complete on the fifth business day after all the conditions are satisfied and the completion of the second subscription comprising of 20,470 shares shall take place within 12 months after the first subscription closing date. Post the closing of the first subscription and a share purchase agreement, the company will hold 22.22% of the issued share capital of the company and upon completion of the second subscription and full conversion of the shares; the company will hold approximately 30% of the enlarged issued share capital of the company. If the investor fails to subscribe for all the preferred shares within 12 months following the first closing, the company shall have the right, but is not obligated, to issue to any other person the remaining shares in whole or in part at a price not less than KRW 601,799.95 per share.

The first subscription is subject to the fulfillment of certain conditions, including all regulatory approvals required to have been obtained by the company having been obtained on terms reasonably satisfactory to the investor. Immediately upon the issuance of the audit report of the company for the fiscal year 2017, the company shall convert the preference shares into the common shares on the basis of one-for one in accordance with the terms of the agreement. The company shall be entitled to an annual fixed dividend of 1% of the par value per shares. The transaction can be terminated if it is not closed within six months from the date of signing of subscription agreement. The company reported revenue of KRW 29,995,700,000, profit before taxation of KRW 1,920,000,000, and profit after taxation of KRW 1,429,100,000 for the year ending December 31, 2015.