Red Star Macalline : (1) CONNECTED TRANSACTIONS - DISPOSAL OF TWO SUBSIDIARIES; AND (2) CONTINUING CONNECTED TRANSACTION IN RELATION TO FACTORING CONTRACT UNDER RULE 14A.60 OF THE LISTING RULES

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Red Star Macalline Group Corporation Ltd.

紅星美凱龍家居集團股份有限公司

(A sino-foreign joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1528)

1. 1. CONNECTED TRANSACTIONS - DISPOSAL OF TWO SUBSIDIARIES;
      AND
2. CONTINUING CONNECTED TRANSACTION IN RELATION TO FACTORING CONTRACT

UNDER RULE 14A.60 OF THE LISTING RULES

CONNECTED TRANSACTIONS - DISPOSAL OF TWO SUBSIDIARIES

The Company announced that, on 14 May 2021, the Company and RSM Holding entered into an equity transfer agreement in relation to Red Star Financial Leasing, pursuant to which the Company agreed to dispose of, and RSM Holding agreed to acquire a 100% equity interest in Red Star Financial Leasing; on the same date, the Company and RSM Holding entered into an equity transfer agreement in relation to Red Star Commercial Factoring, pursuant to which the Company agreed to dispose of, and RSM Holding agreed to acquire a 100% equity interest in Red Star Commercial Factoring.

Upon the completion of the Disposals, the Target Companies will no longer be wholly-owned subsidiaries of the Company and their consolidated financial results will not be consolidated into the financial results of the Group.

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LISTING RULES IMPLICATIONS

As the Purchaser is a controlling shareholder of the Company, the Purchaser is a connected person of the Company. Therefore in accordance with Chapter 14A of the Listing Rules, the Disposals between the Purchaser and the Company constitute connected transactions of the Company. As the highest applicable percentage ratio calculated on an aggregated basis in respect of the Disposals on an aggregated basis is more than 0.1% but less than 5% in accordance with Rule 14.07 of the Listing Rules, the above transactions are subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules, but are exempt from the independent shareholders' approval requirement.

CONTINUING CONNECTED TRANSACTIONS UNDER RULE 14A.60 OF THE LISTING RULES

Before the date of this announcement, Red Star Commercial Factoring entered into a commercial factoring contract with Sunan Construction. Accordingly, Red Star Commercial Factoring has provided and will continue to provide Sunan Construction with accounts receivable financing services after the completion of Disposal II.

Immediately following the completion of Disposal II, Red Star Commercial Factoring will become a wholly-owned subsidiary of the controlling shareholder of the Company (RSM Holding). Therefore, Red Star Commercial Factoring will become a connected person of the Company, and the Factoring Contract and the transactions thereunder will become the continuing connected transactions of the Company in accordance with Chapter 14A of the Listing Rules.

In accordance with Rule 14A.60 of the Listing Rules, the Company is required to comply with the applicable annual review and disclosure requirements under Chapter 14A of the Listing Rules regarding such continuing connected transaction, including issuance of announcements and annual reporting. The Company will comply in full with all applicable reporting, disclosure and, if applicable, independent shareholders' approval requirements under Chapter 14A of the Listing Rules upon any variation or renewal of the Factoring Contract.

1. DISPOSAL OF TWO SUBSIDIARIES
   Reference is made to the overseas regulatory announcements issued by the Company on 5 February 2021 and 24 February 2021 in relation to the undertakings of the Company as to its quasi-financial business and the undertakings of RSM Holding as to support for the arrangement to dispose of the quasi-financial business of the Company.
   The Company announced that, on 14 May 2021, the Company and RSM Holding entered into an equity transfer agreement in relation to Red Star Financial Leasing ("Transaction Agreement I"), pursuant to which the Company agreed to dispose of, and RSM Holding agreed to acquire a 100% equity interest in Red Star Financial Leasing ("Disposal I"); on the same date, the Company and RSM Holding entered into an equity transfer agreement in relation to Red Star Commercial Factoring ("Transaction Agreement II"), pursuant to which the Company agreed to dispose of, and RSM Holding agreed to acquire a 100% equity interest in Red Star Commercial Factoring ("Disposal II", and together with Disposal I, "Disposals").

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PRINCIPAL TERMS OF THE EQUITY TRANSFER AGREEMENT IN RELATION TO SHANGHAI RED STAR MACALLINE FINANCIAL LEASING COMPANY LIMITED

Date:	14 May 2021
Parties:	(1)	The Company (as the Seller)
	(2)	RSM Holding (as the Purchaser)
	(3)	Red Star Financial Leasing (as the Target Company)
Subject:	100% equity interest in Red Star Financial Leasing
Consideration:	The	consideration for Disposal I is RMB1,005,574,100
	("Consideration I"), which is arrived at after arm's length
	negotiations between the parties with reference to the appraised
	value of all interests of shareholders of Red Star Financial Leasing
	as of Valuation Reference date being RMB1,005,574,100. The
	evaluation results above have been evaluated and determined by an
	independent valuer based on the asset-based method.
Conditions precedent	The	obligation of the Purchaser to pay the transaction price is
to closing:	conditional upon the satisfaction of each of the following conditions
	or obtaining of a written waiver from the Purchaser at or prior to
	the closing:
	(1)	Disposal I is considered and approved by competent internal
		decision-making bodies of the Purchaser and the Seller;
	(2)	A possible third - party license, approval, consent,
		authorization, filing or waiver is obtained for Disposal I, if
		necessary;
	(3)	Shareholder decisions and/or board resolutions of Red Star
		Financial Leasing are made in relation to the consent to
		Disposal I, the amendments to the articles of association
		of Red Star Financial Leasing according to Disposal I, the
		election or appointment of persons designated by the Purchaser
		as directors, supervisors and senior management members;
	(4)	The Seller and Red Star Financial Leasing shall go through
		handover procedures with the Purchaser, including but not
		limited to the confirmation of the final amount of debts owed

by the Seller to Red Star Financial Leasing, and the delivery of certificates, licenses, financial books, company seals and financial seals of Red Star Financial Leasing to the Purchaser;

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	(5) During the period from the date of signing the Transaction
	Agreement I to the closing date, all representations and
	warranties made by the parties under the Transaction
	Agreement I are true, complete and accurate in all aspects,
	and there is no breach of the Transaction Agreement I by the
	parties;
	(6) The Seller provides the Purchaser with a certificate proving
	that the above closing conditions are satisfied, and issues a
	letter of confirmation that all relevant conditions are satisfied.
Closing method:	(1) The Purchaser has the right to specify as the closing date
	for Disposal I ("Closing Date I"), any date within ten (10)
	working days following the satisfaction of all of the conditions
	precedent to closing or the grant by the Purchaser of a written
	waiver of the conditions precedent to closing, which are not
	satisfied, and notify the Seller of the same;
	(2) The consideration shall be paid as follows:
	A. The Purchaser shall pay the Seller, the first tranche of
	the equity transfer price of RMB854,737,985 ("First-
	Tranche Equity Transfer Price I"), on the closing date,
	which is 85% of the Consideration I;
	B. The Purchaser shall pay the Seller, the remaining equity
	transfer price ("Remaining Equity Transfer Price I")
	of RMB150,836,115, within 10 working days following
	the completion by Red Star Financial Leasing of the
	industrial and commercial registration and filing of
	change.
	(3) The Purchaser will, on the Closing Date I, acquire the claim
	against the Seller transferred by Red Star Financial Leasing,
	and the parties further acknowledge and agree that, on
	each payment date specified in items (1) and (2) above, the
	corresponding equity transfer price payable by the Purchaser to
	the Seller shall be offset by an equivalent amount of the then
	claim of the Purchaser against the Seller ("Offset Amount
	I"), in priority; after the offset, the Purchaser shall be deemed
	to have paid the Seller, the equity transfer price equal to the
	Offset Amount I; if the then claim of the Purchaser against the
	Seller fails to cover the total equity transfer price, the Purchaser
	shall pay the Seller in cash, the corresponding equity transfer
	price which is not offset, on the payment dates specified in
	items (1) and (2) above.

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Liabilities for breach: If any party breaches the Transaction Agreement I, leading to the failure to perform the Transaction Agreement I or inability to sufficiently perform the Transaction Agreement I, the breaching party shall assume the liability arising out of the breach and shall compensate the actual loss of the non-breaching party in full. The liabilities arising out of the breach of the Transaction Agreement I by all the parties shall be assumed by the parties respectively.

If the default of any party leads to the failure to go through the reporting, approval, transfer and closing procedures for the proposed equity interest transfer as specified in the Transaction Agreement I, the defaulting party shall compensate the actual loss of the non- defaulting party in full.

If the failure to transfer the equity interests is due to force majeure and reasons not attributable to any party, the parties are not legally liable to the other parties.

PRINCIPAL TERMS OF THE EQUITY TRANSFER AGREEMENT IN RELATION TO SHANGHAI RED STAR MACALLINE COMMERCIAL FACTORING COMPANY LIMITED

Date:	14 May 2021
Parties:	(1)	The Company (as the Seller)
	(2)	RSM Holding (as the Purchaser)
	(3)	Red Star Commercial Factoring (as the Target Company)
Subject:	100% equity interest in Red Star Commercial Factoring
Consideration:	T h e	c o n s i d e r a t i o n f o r D i s p o s a l I I i s R M B203,534,800
	("Consideration II"), which is arrived at after arm's length
	negotiations between the parties with reference to the appraised
	value of all interests of shareholders of Red Star Commercial
	Factoring as of Valuation Reference Date being RMB203,534,800.
	The evaluation results above have been evaluated and determined by
	an independent valuer based on the asset-based method.
Conditions precedent	The	obligation of the Purchaser to pay the transaction price is
to closing:	conditional upon the satisfaction of each of the following conditions
	or obtaining of a written waiver from the Purchaser at or prior to the
	closing:
	(1)	Disposal II is considered and approved by competent internal
		decision-making bodies of the Purchaser and the Seller;
	(2)	A possible third-party license, approval, consent, authorization,
		filing or waiver is obtained for Disposal II, if necessary;

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