Top Spring International : Announcement- Discloseable Transaction in Relation to the Disposal of 50% Shareholdings in Two Subsidiaries Holding the Properties in Shap Pat Heung Road and Tai Tong Road, Yuen Long. New Territories and Major Transaction in relation to Possible Provision

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TOP SPRING INTERNATIONAL HOLDINGS LIMITED

萊 蒙 國 際 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03688)

DISCLOSEABLE TRANSACTION IN RELATION TO

THE DISPOSAL OF 50% SHAREHOLDINGS IN TWO SUBSIDIARIES

HOLDING THE PROPERTIES IN SHAP PAT HEUNG ROAD AND TAI TONG ROAD, YUEN LONG, NEW TERRITORIES AND

MAJOR TRANSACTION IN RELATION TO

POSSIBLE PROVISION OF FINANCIAL ASSISTANCE

THE DISPOSALS

On 5 May 2021, (i) the Seller, the Purchaser A and the Company entered into the Great Billion Agreement, pursuant to which the Seller agreed to sell, and the Purchaser A agreed to purchase from the Seller, the Great Billion Sale Share and assign the Great Billion Sale Loan for the consideration of HK$265,008,197; and (ii) the Seller, the Purchaser B and the Company entered into the Wealth Channel Agreement, pursuant to which the Seller agreed to sell, and the Purchaser B agreed to purchase from the Seller, the Wealth Channel Sale Share and assign the Wealth Channel Sale Loan for the consideration of HK$49,965,061.

Upon the Great Billion Completion and the Wealth Channel Completion, each of Great Billion and Wealth Channel will be held by the Group as to 50% and the Shareholders' Agreements will be entered into between the parties to govern the management and operation of Great Billion and Wealth Channel after completion.

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POSSIBLE PROVISION OF FINANCIAL ASSISTANCE TO GREAT BILLION AND WEALTH CHANNEL

In the Agreements, the parties agreed upon the key terms of the Shareholders' Agreements and will enter into them upon the Great Billion Completion and the Wealth Channel Completion. To cater for the funding requirements of Great Billion and Wealth Channel for development of the Properties (including the payment of land premium and the expected commitments of the development, inter alia, the construction and other project development costs, interest and selling expenses), it is expected that financial assistance of not more than HK$1,640 million will be required to be provided by the Group to Great Billion and Wealth Channel in aggregate. Such financial assistance will be provided mainly in the form of shareholder's loan and/or provision of corporate guarantee for external bank borrowings and in proportion to the Group's shareholding interests in Great Billion and Wealth Channel.

GENERAL

As one or more of the applicable percentage ratios as defined in Rule 14.07 of the Listing Rules in respect of the Disposals exceed(s) 5% but is/are less than 25%, the Disposals in aggregate constitute a discloseable transaction for the Company and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As one or more of the applicable percentage ratios as defined in Rule 14.07 of the Listing Rules in respect of the Possible Financial Assistance exceed(s) 25%, the Possible Financial Assistance constitutes a major transaction for the Company and is therefore subject to the reporting, announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules.

To the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiries, no Shareholder or any of his/her/its respective associates have any material interest in the Agreement, the Disposals, the Possible Financial Assistance and the transactions contemplated thereunder, thus no Shareholder is required to abstain from voting at the EGM to be convened by the Company.

A circular containing, among other things, further details of the Possible Financial Assistance and notice of the EGM will be despatched to the Shareholders on or before 15 June 2021.

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THE DISPOSALS

The Board is pleased to announce that on 5 May 2021, (i) the Seller, the Purchaser A and the Company entered into the Great Billion Agreement, pursuant to which the Seller agreed to sell, and the Purchaser A agreed to purchase from the Seller, the Great Billion Sale Share and assign the Great Billion Sale Loan for the consideration of HK$265,008,197; and (ii) the Seller, the Purchaser B and the Company entered into the Wealth Channel Agreement, pursuant to which the Seller agreed to sell, and the Purchaser B agreed to purchase from the Seller, the Wealth Channel Sale Share and assign the Wealth Channel Sale Loan for the consideration of HK$49,965,061.

Each of the Great Billion Sale Share and the Wealth Channel Sale Share will present 50% of the issued share capital of Great Billion and Wealth Channel upon the Great Billion Completion and the Wealth Channel Completion, respectively. The Company agreed to guarantee the Seller's obligations under each of the Agreements.

THE AGREEMENTS

Set out below are the major terms of the Great Billion Agreement and the Wealth Channel Agreement, which have similar contractual terms except the name and particulars of target company and purchaser, particulars of shareholder's loans and property, consideration and its payment terms.

Date:	5 May 2021
Parties:	(a)	Top Spring International (Hong Kong) Company Limited (the
		Seller) as seller under each of the Great Billion Agreement and the
		Wealth Channel Agreement;
	(b)	Leading Model Limited (the Purchaser A) as purchaser under the
		Great Billion Agreement and Master Best Limited (the Purchaser
		B) as purchaser under the Wealth Channel Agreement; and
	(c)	the Company as the Seller's guarantor under each of the Great
		Billion Agreement and the Wealth Channel Agreement

Subject Matter

Pursuant to the Great Billion Agreement, the Seller shall sell, and the Purchaser A shall purchase from the Seller, the Great Billion Sale Share and assign the Great Billion Sale Loan. The Great Billion Sale Share will represent 50% of the issued share capital of Great Billion upon the Great Billion Completion, and the Great Billion Sale Loan represents 50% of the Great Billion Shareholder's Loan. The Great Billion Sale Loan amounted to approximately HK$98,769,312 as at 31 March 2021.

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Pursuant to the Wealth Channel Agreement, the Seller shall sell, and the Purchaser B shall purchase from the Seller, the Wealth Channel Sale Share and assign the Wealth Channel Sale Loan. The Wealth Channel Sale Share will represent 50% of the issued share capital of Wealth Channel upon the Wealth Channel Completion, and the Wealth Channel Sale Loan represents 50% of the Wealth Channel Shareholder's Loan. The Wealth Channel Sale Loan amounted to approximately HK$6,093,178 as at 31 March 2021.

The principal assets of Great Billion and Wealth Channel are the land use rights of Lot A situated in Shap Pat Heung Road and Lot B situated in Tai Tong Road, Yuen Long, New Territories, respectively.

Consideration

Amount of consideration

The consideration for the sale of the Great Billion Sale Share and the assignment of the Great Billion Sale Loan shall be HK$265,008,197 (subject to adjustment), which shall be apportioned as (a) the consideration for the sale of the Great Billion Sale Share of HK$166,238,885; and (b) the consideration for the assignment of the Great Billion Sale Loan of HK$98,769,312.

The consideration for the sale of the Wealth Channel Sale Share and the assignment of the Wealth Channel Sale Loan shall be HK$49,965,061 (subject to adjustment), which shall be apportioned as (a) the consideration for the sale of the Wealth Channel Sale Share of HK$43,871,883; and (b) the consideration for the assignment of the Wealth Channel Sale Loan of HK$6,093,178.

Adjustment of consideration

The consideration for the Great Billion Disposal shall be adjusted by 50% of the net asset value of Great Billion as at the date of the Great Billion Completion (the "Great Billion Completion NAV").

The Great Billion Completion NAV shall be determined by:

1. adding thereto (i) (if the Seller shall have lent a sum to Great Billion for payment of the land premium under the Lot A Land Exchange Application such that the Great Billion Shareholder's Loan and the Great Billion Sale Loan shall have increased) an amount equals to such sum lent to Great Billion and (ii) an amount equals to all current tangible assets of Great Billion as shown in the completion accounts (other than Lot A, other fixed assets, intangible assets or any deferred tax assets); and
2. deducting an amount equals to all liabilities of Great Billion as shown in the completion accounts (actual, contingent or other liabilities other than the share capital of Great Billion, any deferred tax liability, any subsisting loan for payment of balance of premium under the Lot A Land Exchange Application and the Great Billion Shareholder's Loan),
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and if the Great Billion Completion NAV shall be a positive figure, the consideration for the Great Billion Disposal shall be adjusted upward by a sum equals to 50% of such positive figure, and if the Great Billion Completion NAV shall be a negative figure, the consideration for the Great Billion Disposal shall be adjusted downward by a sum equals to 50% of such negative figure, provided that the adjusted consideration for the Great Billion Disposal and the adjusted consideration for the Wealth Channel Disposal in aggregate shall not exceed HK$450 million.

The consideration for the Wealth Channel Disposal shall be adjusted by 50% of the net asset value of Wealth Channel as at the date of the Wealth Channel Completion (the "Wealth Channel Completion NAV").

The Wealth Channel Completion NAV shall be determined by:

1. adding thereto (i) (if the Seller shall have lent a sum to Wealth Channel for payment of the land premium under the Lot B Land Exchange Application such that the Wealth Channel Shareholder's Loan and the Wealth Channel Sale Loan shall have increased) an amount equals to such sum lent to Wealth Channel and (ii) an amount equals to all current tangible assets of Wealth Channel as shown in the completion accounts (other than Lot B, other fixed assets, intangible assets or any deferred tax assets); and
2. deducting an amount equals to all liabilities of Wealth Channel as shown in the completion accounts (actual, contingent or other liabilities other than the share capital of Wealth Channel, any deferred tax liability and the Wealth Channel Shareholder's Loan),

and if the Wealth Channel Completion NAV shall be a positive figure, the consideration for the Wealth Channel Disposal shall be adjusted upward by a sum equals to 50% of such positive figure, and if the Wealth Channel Completion NAV shall be a negative figure, the consideration for the Wealth Channel Disposal shall be adjusted downward by a sum equals to 50% of such negative figure, provided that the adjusted consideration for the Wealth Channel Disposal and the adjusted consideration for the Great Billion Disposal in aggregate shall not exceed HK$450 million.

Payment

The consideration for the Great Billion Disposal shall be settled in the following manner:

1. upon signing of the Great Billion Agreement, the Purchaser A shall pay to the Seller a sum of HK$56,814,500 as deposit and part payment of the consideration for the Great Billion Disposal, which shall be utilised by the Seller as additional loan to the Company for part payment of the land premium payable under the Lot A Land Exchange Application;

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