Evergreen Products : CONNECTED TRANSACTION ISSUE OF NEW SHARES TO A CONNECTED PERSON UNDER SPECIFIC MANDATE

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 any securities of the Company.

Evergreen Products Group Limited

訓修實業集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1962)

CONNECTED TRANSACTION

ISSUE OF NEW SHARES TO A CONNECTED PERSON

UNDER SPECIFIC MANDATE

The Board is pleased to announce that on 20 September 2019 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for 12,902,000 Subscription Shares at the Subscription Price.

LOCK-UP UNDERTAKING

The Subscriber undertakes that the Subscription Shares are subject to a lock-up period of twelve months from the completion date during which the Subscriber shall not offer, lend, contract to sell, pledge, grant any option to purchase or otherwise dispose of, any of the Subscription Shares.

Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Subscription Shares.

The Subscription Shares represent approximately (i) 2.10% of the issued share capital of the Company as at the date of this announcement; and (ii) 2.05% of the issued share capital of the Company as enlarged by the Subscription Shares. The Subscription Shares will be allotted and issued pursuant to the Specific Mandate.

The gross proceeds from the issue of the Subscription Shares will be approximately HK$20,000,000 and the net proceeds will be approximately HK$19,790,000. The Company intends to use the net proceeds from the issue of the Subscription Shares in settling outstanding liabilities.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, the Subscriber holds approximately 54.78% of the total issued Shares and hence a controlling shareholder of the Company. As such, the Subscriber is a connected person of the Company under Rule 14A.07(1) of the Listing Rules and the Subscription constitute connected transactions for the Company and are subject to the announcement, reporting and Independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

GENERAL

The Subscription Shares will be allotted and issued pursuant to the specific mandates to be sought from the Independent Shareholders at the EGM.

The EGM will be convened to obtain the Independent Shareholders' approval for the Subscription Agreement, and the transaction contemplated thereunder, including the grant of the Specific Mandate to the Directors for the allotment and issue of the Subscription Shares to the Subscriber.

The Directors confirm that, to the best of their knowledge, information and belief after having made all reasonable enquiries, save for the Subscriber and his associates, no Shareholder has a material interest in the Subscription. As such, no Shareholder other than the Subscriber and its respective associates will abstain from voting on the resolution(s) for approving the Subscription to be proposed at the EGM.

The Independent Board Committee comprising all the independent non-executive Directors will be formed to advise the Independent Shareholders on the Subscription Agreement and the transactions contemplated thereunder. An independent financial adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

A circular containing, among other things, further details of the Subscription Agreement and the transactions contemplated thereunder, a letter of advice from the Independent Board Committee to the Independent Shareholders, a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder is expected to be despatched by the Company to the Shareholders on or before 15 October 2019.

The Board is pleased to announce that on 20 September 2019 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for 12,902,000 Subscription Shares at the Subscription Price.

Principal terms of the Subscription Agreement are set out below.

THE SUBSCRIPTION AGREEMENT

Date

20 September 2019 (after trading hours)

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Parties

The Company (as issuer)

Evergreen Enterprise Holdings Limited (as subscriber) (collectively, the "Parties")

Issue of the Subscription Shares to the Subscriber

Pursuant to the Subscription Agreement, the Company will allot and issue, and the Subscriber will subscribe for 12,902,000 Subscription Shares at the Subscription Price.

The Subscription Shares represents (i) 2.10% of the issued share capital of the Company as at the date of this announcement; and (ii) approximately 2.05% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares (i.e. 627,902,000 Shares), assuming no further issue of new Shares or repurchase of Shares by the Company from the date of this announcement up to the dates of the completion of the Subscription Agreement. The aggregate nominal value of the Subscription Shares to be issued to the Subscriber is US$129,020.

The Subscription Shares to be issued to the Subscriber pursuant to the Subscription Agreement, when fully paid, will rank pari passu in all respects with the Shares in issue as at the date of the Subscription Agreement, including the right to rank in full for all distributions declared, made or paid by the Company at any time after the date of the Subscription Agreement.

The Subscription Price

The Subscription Price (i.e. HK$1.55 per Subscription Share) represents:

1. a discount of approximately 14.36% to the closing price of HK$1.81 per Share as quoted on the Stock Exchange on the Last Trading Day; and
2. a discount of approximately 13.41% to the average closing price of approximately HK$1.79 per Share as quoted on the Stock Exchange for the last 5 consecutive trading days up to and including the Last Trading Day.

The Subscription Price was arrived at after arm's length negotiations between the Company and the Subscriber with reference to the Placing Price per Placing Share under the Placing Agreement, details of which were announced by the Company on 20 September 2019. The Directors (other than the independent non-executive Directors who will give their opinion after considering the advice from the independent financial adviser) consider that the Subscription Price is fair and reasonable, having taken into account, the Placing Price of HK$1.55 per Placing Share under the Placing which was determined after arm's length negotiations between the Vendor, the Company and the Placing Agents with reference to the market price of the Shares and is in the interests of the Company and the Shareholders as a whole.

Subscription monies

Based on the Subscription Price and 12,902,000 Subscription Shares to be subscribed by the Subscriber, the total subscription monies payable by the Subscriber to the Company pursuant to the Subscription Agreement amount to HK$20,000,000 which will be settled by cash.

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Conditions precedent to the Subscription Agreement

Completion of the transactions contemplated in the Subscription Agreement is conditional upon fulfilment of the following conditions:

1. the duly passing of the following resolution(s) at the EGM in relation to the Subscription Agreement and the transactions contemplated thereunder:
2. 1. the Specific Mandate for the allotment and issue of the Subscription Shares; and
   2. the Subscription Agreement and the transactions contemplated thereunder;
3. the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Subscription Shares (and such listing and permission not subsequently revoked prior to completion of the Subscription Agreement);
4. the passing of resolution(s) by the Independent Shareholders to approve the Subscription Agreement and the transactions contemplated under the Subscription Agreement;
5. the Company obtaining all necessary written consents and approvals (if any) from the relevant authorities in respect of the transactions contemplated under the Subscription Agreement, if applicable; and
6. the representations and warranties of the Company and the Subscriber being true and accurate and not misleading at all times from the date of the Subscription Agreement up to and including the date of completion of the Subscription Agreement.

In the event that the conditions precedent above are not fulfilled the Long Stop Date, the Subscription Agreement shall cease and terminate and neither of the parties shall have any claim against the other for costs, damages, compensation or otherwise save as the out-of-pocket expenses unless agree otherwise.

Completion

Completion of the Subscription Agreement shall take place at 2:00 p.m. on the Business Day immediately after the date on which the last of the conditions precedent to the Subscription Agreement set out above have been fulfilled or such other time as the parties thereof may agree and in any event not later than the Long Stop Date.

Lock-up Undertaking

The Subscriber undertakes that the Subscription Shares are subject to a lock-up period of twelve months from the completion date during which the Subscriber shall not offer, lend, contract to sell, pledge, grant any option to purchase or otherwise dispose of, any of the Subscription Shares.

APPLICATION FOR LISTING

Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Subscription Shares.

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SPECIFIC MANDATE TO ISSUE THE SUBSCRIPTION SHARES

The Subscription Shares will be issued under the Specific Mandate to be proposed for voting by Independent Shareholders at the EGM. The Specific Mandate, if approved, will be valid until the completion of the Subscription or termination of the Subscription Agreement.

INFORMATION ON THE COMPANY

The Group is principally engaged in the manufacturing and sale of hair goods, including wigs, hairpieces, braids and high-end human hair extensions, with key product markets in the United States, Europe and Asia.

INFORMATION ON THE SUBSCRIBER

The Subscriber is principally engaged in investment holding. The Subscriber holds approximately 54.78% of the total issued Shares and is a controlling shareholder of the Company. It is a direct wholly owned subsidiary of Golden Evergreen. 49% and 51% of the issued share capital of Golden Evergreen are owned by FC Investment (a direct wholly owned subsidiary of FC Management) and CLC Investment (a direct wholly owned subsidiary of CLC Management), respectively. Each of FC Management and CLC Management is directly and wholly owned by HSBC International Trustee Limited, the trustee of the Felix Family Trust and the CLC Family Trust. Mr. Chang Yoe Chong Felix Chang, the Chairman, Chief Executive Officer and Executive Director of the Company, is the settlor of the Felix Family Trust and a beneficiary of the CLC Family Trust.

USE OF PROCEEDS

Assuming the Subscription Agreement is completed, the gross proceeds and net proceeds (after deducting professional fees and other related expenses) to be received by the Company from the issue of the Subscription Shares at the Subscription Price of HK$1.55 per Subscription Share are expected to be HK$20,000,000 and approximately HK$19,790,000, respectively. In such case, the net Subscription Price per Share to be issued under the Subscription Agreement will be approximately HK$1.53. The proceeds from the issue of the Subscription Shares will be used in settling outstanding liabilities of the Group.

REASONS FOR THE SUBSCRIPTION

The Company has been exploring various options to raise capital. In the circumstances, the Company considers that the Subscription from the Subscriber is the most efficient way to raise capital in order to maintain a sufficient cash position of the Group to meet its current liabilities and to enhance the capital base of the Company. Accordingly, the Company is of the view that the Subscription is in the best interest of the Company and its Shareholders as a whole.

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any fund raising activity in the past 12 months immediately preceding the date of this announcement.

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EFFECT ON SHAREHOLDING STRUCTURE

The effects of the Share Subscription on the shareholding structure of the Company are, for illustrative purpose only and assuming no further issue of new Shares or repurchase of Shares by the Company from the date of this announcement up to the dates of the relevant events, set out as follows:

	Approximate shareholding	Approximate shareholding
	immediately prior to the	immediately after the
	completion of the			completion of the
Name of Shareholder	Subscription			Subscription
	Number of			Number of
	Shares	%		Shares	%
Chang Yoe Chong Felix	9,790,600			1.59	9,790,600		1.56
Subscriber	336,903,803		54.78	349,805,803		55.71
Seavi	108,520,197		17.65	108,520,197		17.28
Public Shareholders	159,785,400		25.98	159,785,400		25.45
Total
615,000,000			100%	627,902,000		100%

LISTING RULES IMPLICATIONS

As at the date of this announcement, the Subscriber holds approximately 54.78% of the total issued Shares and hence a controlling shareholder of the Company. As such, the Subscriber is a connected person of the Company under Rule 14A.07(1) of the Listing Rules and the Subscription constitute connected transactions for the Company and are subject to the announcement, reporting and Independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

GENERAL

The Subscription Shares will be allotted and issued pursuant to the specific mandates to be sought from the Independent Shareholders at the EGM.

The EGM will be convened to obtain the Independent Shareholders' approval for the Subscription Agreement, and the transaction contemplated thereunder, including the grant of the Specific Mandate to the Directors for the allotment and issue of the Subscription Shares to the Subscriber.

The Directors confirm that, to the best of their knowledge, information and belief after having made all reasonable enquiries, save for the Subscriber and its associates, no Shareholder has a material interest in the Subscription. As such, no Shareholder other than the Subscriber and their respective associates will abstain from voting on the resolution(s) for approving the Subscription to be proposed at the EGM.

The Independent Board Committee comprising all the independent non-executive Directors will be formed to advise the Independent Shareholders on the Subscription Agreement and the transactions contemplated thereunder. An independent financial adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

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A circular containing, among other things, further details of the Subscription Agreement and the transactions contemplated thereunder, a letter of advice from the Independent Board Committee to the Independent Shareholders, a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder is expected to be despatched by the Company to the Shareholders on or before 15 October 2019.

DEFINITIONS

Unless otherwise specified, the following terms have the following meanings in this announcement:

"Board"

"Business Day"

"BVI"

"CLC Family Trust"

the board of Directors

any day (excluding a Saturday, Sunday and public holiday) on which banks generally are open for business in Hong Kong

British Virgin Islands

a trust established by Mr. Chang Chih Lung as the settlor with HSBC International Trustee Limited acting as the trustee for the benefit of Mr. Chang Yoe Chong Felix and his issue

"CLC Investment" CLC Investment Worldwide Limited, a limited liability company incorporated in BVI which holds 51% of the issued share capital of Golden Evergreen and has been directly and wholly owned by CLC Management

"CLC Management"

"Company"

CLC Management Limited, a limited liability company incorporated in BVI which holds the entire issued share capital of CLC Investment and has been wholly owned by CLC Family Trust through its trustee

Evergreen Products Group Limited 訓修實業集團有限公司, a company incorporated in the Cayman Islands and the issued Shares of which are listed on the Stock Exchange

"connected persons"	has the meaning ascribed to it under the Listing Rules
"controlling	has the meaning ascribed to it under the Listing Rules
shareholders"
"EGM"	the special general meeting of the Company to be convened and
	held for the purpose of considering and, if thought fit, approving by
	the Independent Shareholders the Subscription Agreement, and the
	transactions contemplated thereunder (including the grant of Specific
	Mandate)
"Directors"	The directors of the Company

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"FC Investment"

"FC Management"

"Felix Family Trust"

"Golden Evergreen"

"Group" "HK$" "Hong Kong"

"Independent Board Committee"

"Independent Shareholders"

"Last Trading Date"

"Listing Committee"

"Listing Rules"

FC Investment Worldwide Limited, a company incorporated in BVI with limited liability which holds 49% of the issued share capital of Golden Evergreen and has been directly and wholly owned by FC Management

FC Management Limited, a company incorporated in BVI with limited liability which holds the entire issued share capital of FC Investment and has been wholly owned by Felix Family Trust through its trustee

a trust established by Mr. Chang Yoe Chong Felix as the settlor with HSBC International Trustee Limited acting as the trustee for the benefit of Mr. Chang Chih Lung, Mr. Chang Ka Wai Aidan and Mr. Chang Yoe Chong Felix's issue

Golden Evergreen Limited, a limited liability company incorporated in BVI which holds the entire issued share capital of the Subscriber and is owned by FC Investment as to 49% and CLC Investment as to 51%

the Company and its subsidiaries

Hong Kong dollar(s), the lawful currency of Hong Kong

the Hong Kong Special Administrative Region of the PRC

the independent committee of the Board, comprising all the independent non-executive Directors, namely Mr. Lau Ip Keung Kenneth, Mr. Sin Hendrick, Dr. Yung Bruce Pak Keung, Mr. Szeto Yuk Ting and Mr. Cheung Siu Wa

the shareholders of the Company other than those who are required to abstain under the Listing Rules from voting at the special general meeting of the Company for the resolution(s) approving the Subscription Agreement and the transactions contemplated thereunder

19 September, being the last trading day of the Shares on the Stock Exchange immediately prior to the date of the Subscription Agreement

the listing sub-committee of the board of directors of the Stock Exchange

the Rules Governing the Listing of Securities on the Stock Exchange

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"Long Stop Date"

"Placing"

"Placing Agents"

"Placing Agreement"

"Placing Price"

"Placing Share(s)"

"PRC"

"Seavi"

"Share(s)"

"Shareholders"

"Specific Mandate" "Stock Exchange" "Subscriber"

"Subscription"

"Subscription Agreement"

the date on which 2 months after the date of the Subscription Agreement (or such later date subject to the approval of the Stock Exchange, as may be agreed between the parties thereof)

the placing of 40,000,000 existing Shares pursuant to the terms of the Placing Agreement

collectively, Kingsway Financial Services Group Limited, Guotai Junan Securities (Hong Kong) Limited and SBI China Capital Financial Services Limited

the agreement dated 20 September 2019 entered into between the Vendor, the Company and the Placing Agents in relation to the Placing

HK$1.55 per Placing Share

a maximum of 40,000,000 existing Shares, beneficially owned by the Vendor and to be placed pursuant to the Placing Agreement

the People's Republic of China, which for the purpose of this announcement and unless the context suggests otherwise, shall exclude Hong Kong, the Macau Special Administrative Region and Taiwan

Seavi Advent Investments Limited, a substantial shareholder of the Company

the ordinary share(s) of US$0.01 each in the share capital of the Company

holders of the Shares

the specific mandate to allot and issue the Subscription Shares

The Stock Exchange of Hong Kong Limited

Evergreen Enterprise Holdings Limited, a limited company incorporated in BVI and a controlling shareholder of the Company which holds approximately 54.78% of the total issued Shares as at the date hereof

the proposed issue of the Subscription Shares to the Subscriber

the conditional subscription agreement dated 20 September 2019 entered into between the Company and the Subscriber in relation to the issue of 12,902,000 Subscription Shares to the Subscriber

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"Subscription Price"

"Subscription Shares"

"Substantial Shareholders"

"subsidiary(ies)"

"US$"

"Vendor"

"%"

the subscription price of HK$1.55 per Subscription Share

the new Shares to be allotted and issued to the Subscriber pursuant to the Subscription Agreement

has the meaning ascribed to it under the Listing Rules

has the meaning ascribed thereto in the Listing Rules

United States dollar(s), the lawful currency of the United States of America

Evergreen Enterprise Holdings Limited

per cent

By Order of the Board

Evergreen Products Group Limited

Chang Yoe Chong Felix

Chairman, Chief Executive Officer and

Executive Director

Hong Kong, 20 September 2019

As at the date of this announcement, the executive Directors are Mr. Chang Yoe Chong Felix, Mr. Kwok Yau Lung Anthony, Mr. Chan Kwok Keung, Mr. Hui Wing Ki, Ms. Jia Ziying and Mr. Li Yanbo; the non-executive Directors are Mr. Chan Lau Yui Kevin and Mr. Chan Hoi Sing Harold; and the independent non-executive Directors are Mr. Lau Ip Keung Kenneth, Mr. Sin Hendrick, Dr. Yung Bruce Pak Keung, Mr. Szeto Yuk Ting and Mr. Cheung Siu Wa.

The Directors of the Company jointly and severally accept full responsibility for the accuracy of information contained in this announcement and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

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