Peak Sport Products : Joint Announcement - (1) Proposed Privatisation of Peak Sport Products Co., Limited by the Offeror by Way of A Scheme of Arrangement (under Section 86 of the Companies Law) (2) Proposed withdrawal of Listing and (3) Resumption of Trading in Shares

Microsoft Word - E_3 5 Announcement_Peak's Comments_25 Jul 2016 v.6.doc

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 securities of the Offeror or the Company nor is it a solicitation of any vote or approval in any jurisdiction.

XU'S SPORT COMPANY LIMITED

PEAK SPORT PRODUCTS CO., LIMITED

許 氏 體 育 有 限 公 司 匹 克 體 育 用 品 有 限 公 司

(Incorporated in Hong Kong with limited liability) (Incorporated in the Cayman Islands with limited

liability) (Stock Code: 1968)

JOINT ANNOUNCEMENT

1. PROPOSED PRIVATISATION OF PEAK SPORT PRODUCTS CO., LIMITED

   BY THE OFFEROR

   BY WAY OF A SCHEME OF ARRANGEMENT (UNDER SECTION 86 OF THE COMPANIES LAW)

2. PROPOSED WITHDRAWAL OF LISTING AND

3. RESUMPTION OF TRADING IN SHARES

Financial Adviser to the Offeror

PROPOSED SCHEME OF ARRANGEMENT

The respective boards of directors of the Offeror and the Company jointly announce that on 26 July 2016, the Offeror requested the Board to put forward a proposal to the Scheme Shareholders for the privatisation of the Company by way of a scheme of arrangement under Section 86 of the Companies Law.

The Scheme will provide that the Scheme Shares will be cancelled in exchange for HK$2.60 in cash for each Scheme Share. Under the Scheme, the total consideration payable for the cancellation of the Scheme Shares will be payable by the Offeror.

The Cancellation Price will not be increased, and the Offeror does not reserve the right to do so.

The Cancellation Price represents:

• a premium of approximately 35.4% over the closing price of HK$1.92 per Share as quoted on the Stock Exchange on the trading day immediately before the Initial Announcement Date, being the date of the announcement made by the Company pursuant to Rule 3.7 of the Takeovers Code;

• a premium of approximately 29.4% over the average closing price of approximately HK$2.01 per Share based on the daily closing prices as quoted on the Stock Exchange for the 30 trading days immediately before the Initial Announcement Date;

• a premium of approximately 33.3% over the average closing price of approximately HK$1.95 per Share based on the daily closing prices as quoted on the Stock Exchange for the 60 trading days immediately before the Initial Announcement Date;

• a premium of approximately 33.3% over the average closing price of approximately HK$1.95 per Share based on the daily closing prices as quoted on the Stock Exchange for the 90 trading days immediately before the Initial Announcement Date;

• a premium of approximately 27.5% over the average closing price of approximately HK$2.04 per Share based on the daily closing prices as quoted on the Stock Exchange for the 120 trading days immediately before the Initial Announcement Date;

• a premium of approximately 10.6% over the closing price of HK$2.35 per Share as quoted on the Stock Exchange on the Last Trading Day;

• a premium of approximately 15.6% over the average closing price of approximately HK$2.25 per Share based on the daily closing prices as quoted on the Stock Exchange for the 30 trading days up to and including the Last Trading Day;

• a premium of approximately 20.9% over the average closing price of approximately HK$2.15 per Share based on the daily closing prices as quoted on the Stock Exchange for the 60 trading days up to and including the Last Trading Day;

• a premium of approximately 24.4% over the average closing price of approximately HK$2.09 per Share based on the daily closing prices as quoted on the Stock Exchange for the 90 trading days up to and including the Last Trading Day;

• a premiumof approximately 27.5% over the average closing price of approximately HK$2.04 per Share based on the daily closing prices as quoted on the Stock Exchange for the 120 trading days up to and including the Last Trading Day; and

• a premium of approximately 9.7% over the audited consolidated net asset value per Share of approximately HK$2.37 as at 31 December 2015.

The implementation of the Proposal and the Scheme will be conditional upon the fulfilment or waiver, as applicable, of all the Conditions as described in the section headed "Conditions of the Proposal and the Scheme" below. All of the Conditions must be fulfilled or waived, as applicable, on or before the Long Stop Date (or such later date as the Offeror and the Company may agree or, to the extent applicable, as the Executive may consent and the Grand Court may direct), failing which the Proposal and the Scheme will lapse.

As at the date of this announcement, the authorised share capital of the Company is HK$50,000,000 divided into 5,000,000,000 Shares, and the Company has 2,389,150,394 Shares in issue. As at the date of this announcement, the Scheme Shares, comprising 927,326,148 Shares, represent approximately 38.81% of the issued share capital of the Company.

As at the date of this announcement, there are certain outstanding Share Options granted under the Share Option Scheme, pursuant to which up to a maximum of 13,261,000 new Shares may be issued. Among the said Share Options, outstanding Share Options with respect to 10,253,000 new Shares have already vested as at the date of this announcement, and outstanding Share Options with respect to 3,008,000 new Shares are expected to vest on 1 January 2017. The exercise of all the said Share Options in full would result in the issue of 13,261,000 new Shares, representing approximately 0.555% of the issued share capital of the Company as at the date of this announcement and approximately 0.552% of the issued share capital of the Company as enlarged by the issue of such new Shares. The Offeror will make (or procure to be made on its behalf) an appropriate offer to the Optionholders to cancel every vested and unvested Share Option in accordance with Rule 13 of the Takeovers Code. Such Option Offer will be conditional upon the Scheme becoming effective.

FINANCIAL RESOURCES

On the assumption that no outstanding Share Options will be exercised or lapse before the Scheme Record Date, the amount of cash required to satisfy the consideration payable for the cancellation of the Scheme Shares (before taking into account the Option Offer to be made) is approximately HK$2,411,047,985, and the amount of cash required for the Option Offer is approximately HK$8,778,782.

On the assumption that all the outstanding (vested and unvested) Share Options will be exercised before the Scheme Record Date, the amount of cash required to satisfy the consideration payable for the cancellation of the Scheme Shares is approximately HK$2,445,526,585.

The Offeror intends to finance the cash required for the cancellation of the Scheme Shares and the Option Offer from the loan facilities from CMB. Huatai Financial, the financial adviser to the Offeror, is satisfied that sufficient financial resources are available to the Offeror for discharging its obligations in respect of the cancellation of the Scheme Shares and the Option Offer in full.

Under the Scheme, the share capital of the Company will, on the effective date of the Scheme, be reduced by cancelling and extinguishing the Scheme Shares, and forthwith upon such reduction, the share capital of the Company will be increased to its former amount by the issuance to the Offeror at par of the aggregate number of Shares as is equal to the number of Scheme Shares cancelled. The reserve created in the Company's books of account as a result of the capital reduction will be applied in paying up in full at par the new Shares so issued, credited as fully paid to the Offeror.