China Ruifeng Renewable Energy : CONNECTED TRANSACTION PROPOSED ISSUE OF CONVERTIBLE BONDS UN...

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CHINA RUIFENG RENEWABLE ENERGY HOLDINGS LIMITED ʕ਷๿ࠬอঐ๕છٰϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 527)

CONNECTED TRANSACTION PROPOSED ISSUE OF CONVERTIBLE BONDS

UNDER SPECIFIC MANDATE

Financial adviser to China Ruifeng Renewable Energy Holdings Limited

PROPOSED ISSUE OF CONVERTIBLE BONDS

On 31 December 2018, the Company, Filled Converge and Well Foundation entered into the Subscription Agreement, pursuant to which the Company conditionally agreed to issue and (i) Filled Converge conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$294,183,000 and (ii) Well Foundation conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$19,612,000. The Convertible Bonds will be in aggregation in the amount of HK$313,795,000.

As at the date of this announcement, the Company has a total of 1,799,140,800 Shares in issue. The Convertible Bonds carry the Conversion Rights to convert into the Conversion Shares at the Conversion Price of HK$0.485 per Conversion Share (subject to price adjustment). For illustrative purpose, assuming the Conversion Rights are exercised in full at the Conversion Price upon Completion, 606,562,887 and 40,437,113 new Shares, being the Conversion Shares, will be allotted and issued to Filled Converge and Well Foundation respectively (subject to the Conversion Restrictions), representing approximately 35.96% of the total number of issued Shares as at the date of this announcement and approximately 26.45% of the total number of issued Shares as enlarged by the allotment and issue of the Conversion Shares, assuming that there is no other changes to the total number of Shares from the date of this announcement to the Completion Date. The Conversion Shares will be allotted and issued under the Specific Mandate to be approved by the Independent Shareholders at the EGM.

IMPLICATIONS UNDER THE LISTING RULES

Filled Converge is wholly-owned by Mr. Zhang, who is an executive Director, the chairman of the Board and a substantial Shareholder, therefore Filled Converge is an associate of Mr. Zhang and accordingly a connected person of the Company. As such, the subscription of the Convertible Bonds by Filled Converge constitutes a connected transaction of the Company and is subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

GENERAL

The Independent Board Committee has been established to make recommendation to the Independent Shareholders regarding the Subscription Agreement and the transactions contemplated thereunder (including the issue of the Convertible Bonds and the grant of the Specific Mandate). The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder.

The EGM will be convened and held for the Independent Shareholders to consider, and if thought fit, to approve the Subscription Agreement and the transactions contemplated thereunder (including the issue of the Convertible Bonds and the grant of the Specific Mandate). A circular containing, amongst other things, (i) further information of the Subscription Agreement and the Convertible Bonds; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder; (iii) the advice of the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder; and (iv) a notice convening the EGM, is expected to be despatched to the Shareholders on or before 22 January 2019.

Diamond Era, which is wholly-owned by Mr. Zhang, holds 539,562,325 Shares as at the date of this announcement. Mr. Zhang and his associates will be required to abstain from voting on the resolutions in respect of the Subscription Agreement and the transactions contemplated thereunder at the EGM. To the best of the information, belief and knowledge of the Directors, save for Mr. Zhang and his associates, no other Shareholder has any material interest in the Subscription. Save for Mr. Zhang, none of the Directors has material interest in the Subscription and is required to abstain from voting on the resolutions passed by the Board to approve the Subscription Agreement and the transactions contemplated thereunder.

Completion is subject to the fulfillment and/or waiver (as the case may be) of the conditions precedent set out in the Subscription Agreement and therefore may or may not proceed.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

PROPOSED ISSUE OF CONVERTIBLE BONDS

On 31 December 2018, the Company, Filled Converge and Well Foundation entered into the Subscription Agreement, pursuant to which the Company conditionally agreed to issue and (i) Filled Converge conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$294,183,000; and (ii) Well Foundation conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$19,612,000. The Convertible Bonds will be in aggregation in the amount of HK$313,795,000.

SUBSCRIPTION AGREEMENT

Date:

31 December 2018

Parties:

the Company (as issuer)

Filled Converge (as subscriber); and

Well Foundation (as subscriber)

As at the date of this announcement, Filled Converge is wholly-owned by Mr. Zhang, who is an executive Director, the chairman of the Board and a substantial Shareholder. Filled Converge is an associate of Mr. Zhang and accordingly a connected person of the Company. To the best of the information, belief and knowledge of the Directors, Well Foundation and its ultimate beneficial owners are not connected persons (as defined under the Listing Rules) of the Company.

The rights and obligations of Filled Converge and Well Foundation are several and not joint under the Subscription Agreement.

Subject matter

Pursuant to the Subscription Agreement, the Company conditionally agreed to issue and (i) Filled Converge conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$294,183,000; and (ii) Well Foundation conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$19,612,000.

Conversion price

The Conversion Price of HK$0.485 per Conversion Share, which shall be subject to price adjustment, represents:

• (a) a discount of approximately 13% to the closing price of HK$0.56 per Share as quoted on the Stock Exchange on the date of the Subscription Agreement; and

• (b) a discount of approximately 12% to the average closing price of HK$0.55 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days immediately prior to and including the Last Trading Date.

The Conversion Price was arrived at after arm's length negotiations among the Company, Filled Converge and Well Foundation, taking into account of, among others, the recent market prices of the Shares and the prevailing market conditions. The Directors (other than Mr. Zhang and the independent non-executive Directors who will form an opinion after taken into consideration of the recommendation from the Independent Financial Adviser) consider that the terms of the Subscription Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Based on the estimated net proceeds from the issue of the Convertible Bonds of approximately HK$305,125,425 and a total of 647,000,000 Conversion Shares to be issued at the initial Conversion Price of HK$0.485 each upon exercise of the Conversion Rights in full, the net issue price per Conversion Share is approximately HK$0.472.

Conversion Shares

As at the date of this announcement, the Company has a total of 1,799,140,800 Shares in issue. The Convertible Bonds carry the Conversion Rights to convert into the Conversion Shares at the Conversion Price of HK$0.485 per Conversion Share (subject to price adjustment). For illustrative purpose, assuming the Conversion Rights are exercised in full at the Conversion Price upon Completion, 606,562,887 and 40,437,113 new Shares will be allotted and issued to Filled Converge and Well Foundation respectively (subject to the Conversion Restrictions), representing approximately 35.96% of the total number of issued Shares as at the date of this announcement and approximately 26.45% of the total number of issued Shares as enlarged by the allotment and issue of the Conversion Shares, assuming that there is no other changes to the total number of Shares from the date of this announcement to the Completion Date. The details of the shareholdings of the Company before and after the Completion are set out in the section headed "EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY" below.

The Conversion Shares, when allotted and issued, will be credited as fully paid, free from any security interest and will rank pari passu in all respects with the Shares in issue on the conversion date.

The Conversion Shares will be allotted and issued under the Specific Mandate to be approved by the Independent Shareholders at the EGM. An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares that may be allotted and issued upon conversion of the Convertible Bonds.

Security of the Convertible Bonds

As security for the due and punctual payment of the Convertible Bonds and performance by the Company of its obligations under or arising out of the Subscription Agreement and the instrument constituting the Convertible Bonds, the Company will, through its subsidiaries, execute the share charges on shares of three Hong Kong subsidiaries (the "Share Charges") and the equity pledges on equity interest of three PRC subsidiaries (the "Equity Pledges") as a continuing security for payment and discharge of the outstanding principal amount of the Convertible Bonds and performance by the Company pursuant to the Subscription Agreement.

The Share Charges and the Equity Pledges shall be subject to the approval(s) of relevant governmental or regulatory authority.

Conditions precedent to the Subscription

Completion is conditional upon the following conditions being satisfied or, if applicable, waived:

• (a) Filled Converge and Well Foundation having conducted due diligence exercise (technical, financial and legal) on the Company and satisfied with the results thereof;

• (b) the warranties of the Company being true, accurate, correct and complete in all material respects when made and remaining true, accurate, correct and complete and not misleading as at the Completion Date;

• (c) the Listing Committee having granted (either unconditionally or subject to conditions to which neither the Company, Filled Converge nor Well Foundation objects) listing of and permission to deal in the Conversion Shares falling to be issued and allotted upon the exercise of the Conversion Rights or otherwise pursuant to the Subscription Agreement;

• (d) the passing by the Independent Shareholders at the general meeting to be convened by the Company of the necessary resolution(s) to approve the Subscription Agreement and the instrument constituting Convertible Bonds, the allotment and issue of the Conversion Shares and the transactions contemplated thereunder;

• (e) the compliance by the Company of any other requirements under the Listing Rules or otherwise of the Stock Exchange which requires compliance in relation to the Subscription Agreement and the transactions contemplated thereunder (including but not limited to, the issue of the Convertible Bonds, the execution of the instrument constituting the Convertible Bonds, the allotment and issue of the Conversion Shares);

• (f) (where required) having obtained all necessary approvals and consents from any government or regulatory authority or any person and the completion of all necessary registration and filings with any government or regulatory authority required for the entering into of the Subscription Agreement and/or the performance of its obligations thereunder by the Company (including but not limited to, the issue of the Convertible Bonds, the execution of the instruments constituting the Convertible Bonds, the issue of the certificates for the Convertible Bonds, the allotment and issue of the Conversion Shares and execution of the Share Charges); and

• (g) (where applicable and required) having obtained of all necessary approvals and consents from any government or regulatory authority or any person and the completion of all necessary filings with any government or regulatory authority required for the entering into of the Subscription Agreement and/or the performance of its obligations thereunder by Filled Converge and Well Foundation (including but not limited to the Subscription).