Chinese Food and Beverage : VOLUNTARY ANNOUNCEMENT - MEMORANDUM OF UNDERSTANDING IN RELATION TO POSSIBLE DISPOSAL

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.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8272) VOLUNTARY ANNOUNCEMENT MEMORANDUM OF UNDERSTANDING IN RELATION TO POSSIBLE DISPOSAL

This announcement is made by the Company on a voluntary basis.

The Board announces that on 12 July 2017 (after trading hours), Rich Paragon, Coqueen and the Company entered into the MOU in relation to, among other things, the Possible Disposal under which Rich Paragon, an indirect wholly-owned subsidiary of the Company, contemplates to, and the Company contemplates to procure Rich Paragon to, sell and assign the Sale Shares, representing 30% of the issued shares in the SPV together with all rights and interest attached thereto, to Coqueen.

Pursuant to the MOU, the Company and Rich Paragon shall apply and utilize the proceeds of sale of the Sale Shares to repay and discharge the Outstanding Indebtedness, and in case any surplus exits after such repayment, such surplus shall be used for working capital of the Company.

The Possible Disposal, if materialised, may constitute a notifiable and connected transaction of the Company under the GEM Listing Rules. Further details of the Possible Disposal shall be subject to the Formal Agreements to be entered into by the Parties and further announcement(s) will be made upon execution of the Formal Agreements as and when appropriate, and in accordance with the GEM Listing Rules.

Since the Possible Disposal is subject to the entering into of the Formal Agreements, the Possible Disposal may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the Shares.

This announcement is made by the Company on a voluntary basis.

BACKGROUND

References are made to (i) the announcements of the Company dated 7 June 2013, 26 November 2013, 27 January 2014, 1 April 2014, 30 April 2015 and 3 February 2016, and the circular of the Company dated 2 September 2014 in relation to, among other things, the Convertible Bonds; and (ii) the announcements of the Company dated 19 August 2016, the circular of the Company dated 26 October 2016 and the prospectus of the Company dated 24 November 2016, in relation to, among other things, the rights issue of the Company which had been completed on 21 December 2016.

On 18 December 2014, the Convertible Bonds in the aggregate amount of US$37,500,000 (equivalent to approximately HK$291,165,000) were issued to the Bondholders. Pursuant to the bond instrument of the Convertible Bonds, each Bondholder has the right to, among other things, require the Company to redeem some or all of such holder's Convertible Bonds if a put exercise notice is served on the Company at any time during the 10-business day period commencing on the twelfth month anniversary of the issue date of the Convertible Bonds (i.e. 18 December 2014).

As disclosed in the announcement of the Company dated 3 February 2016, the Bondholders had requested the Company to redeem the Convertible Bonds. Following the subsequent repayment of a substantial amount of redemption money to the Bondholders, as at the date of this announcement, US$10,552,756 in the principal amount of the Convertible Bonds remains outstanding (the "Outstanding Principal Amount").

To repay and discharge the Outstanding Principal Amount and all interest accrued and to be accrued thereon (the "Outstanding Indebtedness"), Rich Paragon, an indirect wholly-owned subsidiary of the Company, contemplates to, and the Company contemplates to procure Rich Paragon to, sell and assign the Sale Shares, representing 30% of the issued shares in the SPV together with all rights and interest attached thereto, to Coqueen on such tentative terms and conditions as set out in the MOU.

MEMORANDUM OF UNDERSTANDING

The Board announces that on 12 July 2017 (after trading hours), Rich Paragon, Coqueen and the Company entered into the MOU in relation to, among other things, the Possible Disposal.

Date 12 July 2017 (after trading hours) Parties

1. Rich Paragon Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of the Company, as the possible vendor;

2. Coqueen Company Limited, a company incorporated in Hong Kong with limited liability, as the possible purchaser; and

3. the Company.

(collectively, the "Parties")

As at the date of this announcement, SPV is owned as to (i) 50% by Rich Paragon and (ii) 50% by Coqueen. Coqueen is an investment holding company incorporated in Hong Kong with limited liability and is owned as to 69%, 29%, 1% and 1% by CPK, Mrs. Chui, CTK and Ms. Chui, respectively as at the date of this announcement.

As Coqueen is a substantial shareholder of the SPV and the SPV is a non wholly-owned subsidiary of the Company under Rule 1.01 of the GEM Listing Rules, each of Coqueen and its ultimate beneficial owners, namely CPK, Mrs. Chui, CTK, Ms. Chui are connected persons of the Company at the subsidiary level. Further, based on the latest disclosure of interest notice filed on 24 June 2013, CPK is deemed to be interested in 43,000,000 Shares, representing approximately 1.63% of the entire issued share capital of the Company as at the date of this announcement.

Save for the abovementioned, to the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, Coqueen and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the GEM Listing Rules).

The Possible Disposal

Pursuant to the MOU, to repay and discharge the Outstanding Indebtedness, Rich Paragon contemplates to, and the Company contemplates to procure Rich Paragon to, sell and assign the Sale Shares, representing 30% of the issued shares in the SPV together with all rights and interest attached thereto, to Coqueen on the tentative terms and conditions as follows:

Principal Terms of the Possible Disposal:

1. Rich Paragon shall, in accordance with such terms and conditions as set out in the Formal Agreements, sell and transfer the Sale Shares free from any encumbrances or third party rights of any kind to Coqueen at such sale price to be determined and set out in the Formal Agreements;

2. The Company shall irrevocably guarantee Rich Paragon's performance of duties and discharge of responsibilities under the Formal Agreements as primary obligor and not as mere surety;

3. Shareholders of Coqueen shall jointly, severally and irrevocably guarantee Coqueen's performance of duties and discharge of responsibilities under the Formal Agreements as primary obligor and not as mere surety;

4. The Company and Rich Paragon shall apply and utilize the proceeds of sale of the Sale Shares to repay and discharge the Outstanding Indebtedness, and in case any surplus exits after such repayment, such surplus shall be used for working capital of the Company;

5. The Parties shall execute the sale and purchase agreement, (revised) shareholders' cum management agreement, corporate guarantee, and other requisite agreements or instruments for the Possible Disposal on or before 31 August 2017;