Digital Domain : DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 85% ISSUED SHARE CAPITAL OF LUCRATIVE SKILL HOLDINGS LIMITED INVOLVING AN ISSUE OF 87,051,143 SHARES UNDER THE GENERAL MANDATE

Microsoft Word - (Project PO) Announcement (Draft 2)(comment_160121)(Eng)

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 is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

DIGITAL DOMAIN HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 547)

DISCLOSEABLE TRANSACTION IN RELATION TO THE

ACQUISITION OF 85% ISSUED SHARE CAPITAL OF LUCRATIVE SKILL HOLDINGS LIMITED INVOLVING AN ISSUE OF 87,051,143 SHARES UNDER THE GENERAL MANDATE

On 22 January 2016 (after trading hours), the Purchaser (an indirectly wholly-owned

subsidiary of the Company) entered into the following sale and purchase agreements:

(a)

(b)

the Magic Well SPA for the purchase of 60% of the issued share capital of the Target

Company at a consideration of HK$95 million, as to HK$30 million payable in cash and as to HK$65 million by the issuance of the Promissory Note at completion; and the Tse SPA for the purchase 25% of the issued share capital of the Target Company at a consideration of HK$40 million, which is to be satisfied by the allotment and issue of 87,051,143 Consideration Shares at the issue price of HK$0.4595 per Share at completion.

On completion of the Acquisition, the Purchaser and Mr. Tse will own 85% and 15% of the

equity interest in the Target Company respectively, and they will enter into the Shareholders' Agreement to regulate their relationship as shareholders of the Target Company.

The Consideration Shares are to be issued under the General Mandate.

As more than one of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Magic Well SPA and Tse SPA, when aggregated, are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction for the Company under Rule 14.06 of the Listing Rules.

1

INTRODUCTION

On 22 January 2016 (after trading hours), the Purchaser (an indirectly wholly-owned subsidiary of the Company) entered into the Magic Well SPA and the Tse SPA in relation to the Acquisition, on completion of which the Purchaser and Mr. Tse will own 85% and 15% of the equity interest in the Target Company respectively.

Further information on the Magic Well SPA, the Tse SPA and the businesses of the Target Group is set out below.

ACQUISITION

Magic Well SPA

The principal terms of the Magic Well SPA are set out below: Date: 22 January 2016

Parties to the SPA:

1. DDPO (BVI) Company Limited (an indirect wholly-owned subsidiary of the Company) (as purchaser)

   
   

2. The Company, as guarantor of the Purchaser's obligations under the Magic Well SPA

   
   

3. Magic Well Holdings Limited (an indirect wholly-owned subsidiary of See Corporation) (as vendor)

   
   

4. See Corporation, as guarantor of Magic Well's obligations under the Magic Well SPA

   
   

   To the best of the Directors' knowledge, information and belief and having made all reasonable enquires, each of Magic Well and See Corporation are third parties independent of the Company and the connected persons of the Company.

   
   

   Assets being acquired:

   The Magic Well Sale Shares, representing 60% of the issued share capital of the Target Company

   
   

   Consideration: HK$95 million, which is to be satisfied on completion:

   
   

5. as to HK$30 million in cash; and

6. as to HK$65 million by the issue of the Promissory Note by the Company in favour of See Corporation or its nominee(s).




The consideration for the Magic Well Sale Shares was arrived at after arm's length negotiations between the parties to the Magic Well SPA and with reference to the financial prospects and potential of the business of the Target Group discussed in the paragraph headed "Reasons for and benefits of the Acquisition" below.




Conditions precedent:

The obligations of the parties to the Magic Well SPA to effect completion is conditional upon:

1. the approval by the shareholders of See Corporation of the Magic Well SPA and the transactions contemplated thereunder at the general meeting, in compliance with the requirements of the Listing Rules having been obtained;

   
   

2. the waiver in full of all shareholders loan in the amount of HK$36,678,492.60 owed by the Target Company to Magic Well immediately prior to completion;

   
   

3. all necessary third party approvals and consents in respect of entering into the Magic Well SPA having been obtained by See Corporation; and

   
   

4. the warranties given by Magic Well remaining true and accurate in all material respects and to the belief and best knowledge of Magic Well as of the date of completion.




The conditions precedent in (c) and (d) may be waived by the Purchaser in writing, with or without conditions. Magic Well is to use its best endeavours to procure the fulfilment of the conditions precedent (to the extent not waived). If any of the conditions precedent (which is not waived by the Purchaser) is not fulfilled on or before 31 May 2016 (or such other date as Magic Well and the Purchaser may agree in writing), the rights and obligations of the parties to the Magic Well SPA will lapse and be of no further effect except for antecedent breach of any obligations of any parties.




Completion: Completion is to take place on or before the 7th Business Day after the conditions precedent in (a) and (c) have been fulfilled.




Tse SPA




The principal terms of the Tse SPA are set out below: Date: 22 January 2016

Parties to the SPA:

1. DDPO (BVI) Company Limited (an indirect wholly-owned subsidiary of the Company) (as purchaser)

   
   

2. Mr. Tse (as vendor)

   
   

3. Mr. Yeung (a director of certain Target Group companies and the legal representative of the PRC-incorporated subsidiaries of the Target Company, as warrantor to give certain representations, warranties, undertakings and covenants in respect of the business and operations of the Target Group)




To the best of the Directors' knowledge, information and belief and having made all reasonable enquires, each of Mr. Tse and Mr. Yeung are third parties independent of the Company and the connected persons of the Company.

Assets being acquired:

the Tse Sale Shares, representing 25% of the issued share capital of the Target Company




Consideration: HK$40 million, which is to be satisfied on completion by the issue and allotment of 87,051,143 Consideration Shares credited as fully paid at the issue price of HK$0.4595 per Share. The consideration for the Tse Sale Shares was arrived at after arm's length negotiations between the Purchaser and Mr. Tse and with reference to the financial prospects and potential of the business of the Target Group discussed in the paragraph headed "Reasons for and benefits of the Acquisition" below.




The 87,051,143 Consideration Shares represent approximately 0.81% of the total number of Shares in issue, and approximately 0.81% of the total number of Shares in issue as enlarged by the issue of the Consideration Shares. The Consideration Shares, when allotted and issued, will rank pari passu in all respects with the Shares then in issue.




The issue price for the Consideration Shares of HK$0.4595 represents 12.07% premium to the closing price of HK$0.41 per Share as quoted on the Stock Exchange on the date of this announcement; and 8.37% premium to the average closing price of HK$0.424 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days prior to the date of this announcement.




The issue price of the Consideration Shares was arrived at after arm's length negotiations between the Purchaser and Mr. Tse and with reference to the prevailing market price of the Shares.




Lock-up: Mr. Tse has agreed that 39,173,014 Consideration Shares will be subject to a lock-up period of 3 months after completion, and 26,115,343 Consideration Share will be subject to a lock-up period of one year after completion.




Conditions precedent:

The obligations of the parties to the Tse SPA to effect completion is conditional upon:




1. the Listing Committee of the Stock Exchange granting listing of and permission to deal in the Consideration Shares;

   
   

2. the Purchaser being satisfied with the results of the due diligence review of the Target Group (if no notice is served to Mr. Tse within two months from the date of the Tse SPA, it will be deemed that the Purchaser has completed the due diligence review and is satisfied with the results, and that the Purchaser has full knowledge of the actual state and condition of each member of the Target Group as at completion);

   
   

3. there being no Material Adverse Change from 31 December 2015 up to and including the date of completion;

   
   

4. execution of service agreements by Mr. Tse and Mr. Yeung with