China Digital Culture (Group) Limited (SEHK:8175) announced that it has entered into memorandum of understanding with Digital Grid (Hong Kong) Technology Co., Ltd. for private placement of a convertible bonds for gross proceeds of HKD 412,500,000 on January 3, 2017. The bonds will carry coupon rate of 5.5% per annum and will mature on completion of five years from date of issuance. The bonds are convertible into maximum 750,000,000 common shares of the company, representing approximately 39.73% of the existing issued share capital of the company and approximately 28.44% of the issued share capital of the company as enlarged by the allotment and issue of the conversion shares, in multiples of HKD 1,000,000 at an exercise price of HKD 0.55 per share during the period from October 31, 2017 up to maturity date.

The company shall be entitled to redeem the convertible bond in whole or in part at 100% of the principal amount of the convertible bond at any time and from time to time prior to the maturity date. The investor will appoint one director to the board of directors of the company. The convertible notes are transferable in the multiples of HKD 1,000,000.

All the conditions to the agreement will be fulfilled on or before long stop date for the transaction, which is June 30, 2017. The transaction is expected to close with in five days from date of completion of all conditions to the agreement. The transaction is subject to approval of shareholder the company in Special General Meeting scheduled to be held on March 31, 2017.