Southwest Securities International Securities : INSIDE INFORMATION - UPDATE ON ADVANCE TO AN ENTITY

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SOUTHWEST SECURITIES INTERNATIONAL SECURITIES LIMITED

西 證 國 際 證 券 股 份 有 限 公 司*

(Incorporated in Bermuda with limited liability)

(STOCK CODE: 812)

INSIDE INFORMATION

UPDATE ON ADVANCE TO AN ENTITY

This announcement is made by Southwest Securities International Securities Limited (the ''Company'', together with its subsidiaries, collectively the ''Group'') pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules'') and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, the Laws of Hong Kong) (the ''SFO'').

Reference is made to the 2018 February Announcement, the 2019 February Announcement and the 2019 October Announcement.

Unless otherwise defined, terms undefined herein shall have the meaning ascribed to them in the 2018 February Announcement, the 2019 February Announcement and/or the 2019 October Announcement.

As disclosed in the 2018 February Announcement, on 13 February 2018, the Lender (an indirect wholly-owned subsidiary of the Company), the Borrower and Mr. Chen (as guarantor of the Borrower) entered into the Facility Agreement pursuant to which the Lender has agreed to grant the Loan of up to HK$270 million to the Borrower. The Loan is secured by the Share Charge and guaranteed by Mr. Chen in relation to the due and punctual performance and the payment obligations of the Borrower under the Facility Agreement.

As disclosed in the 2019 February Announcement, on 13 February 2019, the Lender, the Borrower and Mr. Chen entered into the Amendment Deed to extend the repayment date of the outstanding principal amount of the Loan of HK$255 million from 13 February 2019 to 28 April 2019.

As disclosed in the 2019 October Announcement, on 16 October 2019, the Lender entered into the Restructuring Deed with the Borrower and the Guarantors to, amongst others, extend the repayment date of the outstanding amounts under the Facility Agreement.

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The Board wishes to inform the Shareholders and potential investors that:

1. the Borrower defaulted in the repayment of the outstanding principal amount of the Loan and the unpaid interest accrued thereon since 16 November 2019;
2. the Lender's solicitors sent to the Borrower a demand letter dated 9 December 2019 for the repayment of the due and payable principal amount of the Loan and the unpaid interest accrued on the Loan. Thereafter the Lender and the Borrower have been in negotiation regarding the repayment of the outstanding principal amount of the Loan and the unpaid interest accrued thereon and/or provision of additional securities for the Loan;
3. as at 30 June 2020, the Group assessed the credit risk of the Loan and provided adequate allowance for expected credit losses at a rate of approximately 94% of the carrying amount of the Loan (as reflected in the profits warning announcement of the Company dated 31 July 2020). Based on information currently available to the Company as at the date of this announcement, a further impairment of the Loan has no material impact to the financial position of the Group;
4. the trading in the shares of Yi Hua on the Stock Exchange has been suspended since 3:33 p.m. on 18 August 2020. According to a winding-up search report procured from the Official Receiver's Office on 26 August 2020, a winding-up order was made against Yi Hua on 18 August 2020.

As at 31 July 2020, the total outstanding amount of the Loan and interest is around HK$312 million. As at the date of this announcement, 588,720,412 shares of Yi Hua (representing approximately 58.69% of the total issued shares of Yi Hua as at the date of this announcement) were charged by the Borrower in favour of the Lender as security for the repayment of the Loan and the interest accrued thereon under the Share Charge and pursuant to the Restructuring Deed.

The Company will continue to assess the recoverability of the Loan and the unpaid interest accrued thereon, explore different ways to maximise such recovery, and assess whether any further impairment loss or provision will need to be made in respect of the Loan in the financial statements of the Company. Further announcement(s) will be made by the Company to update the progress of the matter as and when appropriate.

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

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the meanings as set out below:

''2018 February	the announcement of the Company dated 14 February 2018
Announcement''	in respect of, among others, the Facility Agreement
''2019 February	the announcement of the Company dated 13 February 2019
Announcement''	in respect of, among others, the Amendment Deed
''2019 October	the announcement of the Company dated 16 October 2019 in
Announcement''	respect of, among others, the Restructuring Deed
''Amendment Deed''	the amendment deed dated 13 February 2019 entered into
	amongst the Lender, the Borrower and Mr. Chen to amend
	certain terms and conditions of the Facility Agreement
''Board''	the board of Directors
''Borrower''	Jaguar Asian Limited, a company incorporated under the
	laws of the British Virgin Islands with limited liability
''Directors''	the directors of the Company
''Facility Agreement''	the facility agreement dated 13 February 2018 entered into
	amongst the Lender, the Borrower and Mr. Chen as
	guarantor in relation to the advance of the Loan
''Guarantors''	(i) Mr. Chen, (ii) Jiangmen Jinhui Century Plaza Property
	Management Company Limited* (江門市金滙世紀廣場物業
	管理有限公司), a company incorporated in the PRC with
	limited liability; and (iii) Zhaoqing Jiazhou New City Real
	Estate Industry Development Company Limited* (肇慶市加
	洲新城房地產實業開發有限公司), a company incorporated
	in the PRC with limited liability
''Lender''	Southwest Securities (HK) Brokerage Limited (西證(香港)
	證券經紀有限公司), a corporation licensed to carry out
	business in type 1 (dealing in securities) and type 4
	(advising on securities) regulated activities under the
	Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong) and an indirect wholly-owned subsidiary of
	the Company
''Loan''	a secured security margin loan facility of up to HK$270
	million granted by the Lender to the Borrower pursuant to
	the Facility Agreement
''Mr. Chen''	Mr. Chen Da Ren (陳達仁), the ultimate beneficial owner
	and sole director of the Borrower

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''PRC''	the People's Republic of China
''Restructuring Deed''	the deed of restructuring dated 16 October 2019 entered into
	amongst the Lender, the Borrower and the Guarantors to
	further amend certain terms and conditions of the Facility
	Agreement (as amended and supplemented by the
	Amendment Deed)
''Share Charge''	the deed of mortgage and assignment dated 13 February
	2018 entered into by the Borrower in favour of the Lender
	in respect of a charge over the Target Shares
''Shareholders''	the shareholders of the Company
''Stock Exchange''	The Stock Exchange of Hong Kong Limited
''Target Shares''	ordinary shares in the issued share capital of Yi Hua which
	are beneficially owned by the Borrower from time to time
''Yi Hua''	Yi Hua Holdings Limited, a company incorporated in the
	Cayman Islands with limited liability, the issued shares of
	which are listed on the Main Board of the Stock Exchange
	(stock code: 2213)
	By order of the Board
	Southwest Securities International Securities Limited
	Wu Jian
	Chairman
Hong Kong, 28 August 2020

As at the date of this announcement, the executive directors of the Company are Mr. Wu Jian (Chairman), Mr. Pu Rui (Chief Executive Officer) and Dr. Zhao Mingxun; and the independent non-executive directors of the Company are Mr. Meng Gaoyuan, Dr. Guan Wenwei and Mr. Liang Jilin.

• For identification purposes only

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