CHEUK NANG (HOLDINGS) LIMITED 卓能 ( 集團 ) 有限公司

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1 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 disclaims 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 only and does not constitute an invitation or offer to shareholders or any other persons to acquire, purchase or subscribe for securities of the Company. CHEUK NANG (HOLDINGS) LIMITED 卓能 ( 集團 ) 有限公司 (Incorporated in Hong Kong with limited liability) (Stock Code: 131) PROPOSED BONUS ISSUE OF WARRANTS Proposed Bonus Warrants Issue The Board proposes the Bonus Warrants Issue for the Qualifying Shareholders on the basis of one Warrant for every twenty-seven (27) existing Shares held on the Record Date. An application will be made to the Listing Committee for the listing of and permission to deal in the Warrants and any Shares which may fall to be issued upon the exercise of the subscription rights attaching to the Warrants. The commencement of dealings for the Warrants on the Stock Exchange is expected to be on 22 June PROPOSED BONUS ISSUE OF WARRANTS Basis of issue of the Warrants Subject to the conditions mentioned below, the Board proposes the Bonus Warrants Issue for the Qualifying Shareholders on the basis of one Warrant for every twenty-seven (27) existing Shares held on the Record Date. Number of Warrants to be issued Based on 531,254,617 Shares in issue as at the date of this announcement and assuming no further Shares are issued or repurchased from the date of this announcement up to the Record Date, the total number of Warrants to be issued will be 19,676,096 Warrants, entitling the holders thereof to subscribe for 19,676,096 Shares representing 1

2 approximately 3.70% of the issued share capital of the Company as at the date of this announcement and approximately 3.57% of the issued share capital as enlarged by the Shares to be issued upon full exercise of the subscription rights attached to the Warrants (at the initial subscription price of HK$4.40 per Share). The Company has no outstanding warrant as at the date of this announcement. Subject to the compliance with Rule of the Listing Rules, the Shares to be issued upon exercise of the subscription rights attaching to the Warrants will be issued pursuant to the general mandate granted to the Directors at the annual general meeting of the Company held on 16 November 2016 to issue Shares up to a maximum of 20% of the issued share capital of the Company as at the date of the said annual general meeting. As at the date of this announcement, there are 25,136,773 shares issued since the general mandate granted to the Directors at the annual general meeting held on 16 November The Company confirms that the Shares to be issued upon the exercise of the subscription rights attaching to the Warrants will not exceed twenty percent of the issued shares capital of the Company at the time when the warrants are issued which is in compliance with Rule 15.02(1) of the Listing Rules. As at the date of this announcement, there is no other outstanding subscription rights for equity in the Company. Subscription Period The subscription rights attached to the Warrants will be exercisable at any time between the date of issue of the Warrants (currently expected to be on or about 21 June 2017) until 4:00 p.m. on the first anniversary of issue (if that day is not a business day, the business day immediately preceding such day), both days inclusive. Subscription Price Each Warrant will entitle the holder to subscribe for one new Share at an initial subscription price of HK$4.40 per Share (subject to adjustments) in cash. Such initial subscription price represents a discount of approximately 18.2% to the closing price per Share of HK$5.38 as quoted on the Stock Exchange on the date immediately preceding the date of this announcement and represents a discount of approximately 18.2% to the average closing price per Share of HK$5.38 as quoted on the Stock Exchange for the five trading days up to (but excluding) the date of this announcement. The exercise price for the Warrants was determined with reference to the current market price of the Shares. The Directors consider the terms of the Bonus Warrants Issue, including the exercise price thereof, are fair and reasonable and in the interest of the Group and the Shareholders as a whole. 2

3 Summary provision for adjustments to the subscription price The subscription price of the Warrants shall from time to time be adjusted when the following events happens: (1) Any consolidation or sub-division of the Shares become of a different nominal amount; (2) the Company issue (other than in lieu of a cash dividend) any Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve); (3) the Company shall make any Capital Distribution to holders (in their capacity as such) of Shares (whether on a reduction of capital or otherwise) or shall grant to such holders rights to acquire for cash assets of the Company or any of its subsidiaries; (4) the Company shall offer to holders of Shares new Shares for subscription by way of rights, or shall grant to holders of Shares any options or warrants to subscribe for new Shares, at a price per new Share which is less than 90 per cent. of the market price; (5) the Company or any other company shall issue wholly for cash any securities which are convertible into or exchangeable for or carry rights of subscription for new Shares; (6) the Company shall issue wholly for cash any Shares at a price per Share which is less than 90 per cent. of the market price; (7) the Company shall purchase any Shares or securities convertible into Share or any rights to acquire Shares and the Directors cancel such Shares, securities convertible into Shares or tights to acquire Shares. Board lot The proposed board lot for trading in the Warrants is 5,000, whereas the board lot for trading in the Shares is 1,000 Shares. Closure of Register of Members The Register of Members will be closed from 8 June 2017 to 14 June 2017, both days inclusive, in order to determine entitlements of the Qualifying Shareholders to the Bonus Warrants Issue. No transfer of Shares will be registered during this period. Accordingly, the last day of dealings in Shares cum entitlement to the Bonus Warrants Issue will be 5 June

4 To qualify for the Bonus Warrants Issue, all outstanding transfers of Shares must be lodged with the share registrar of the Company, Computershare Hong Kong Investor Services Limited ( Share Registrar ), situated at Shops , 17th Floor, Hopewell Centre, 183 Queen s Road East, Hong Kong for registration by no later than 4:30 p.m. on 7 June Expected Timetable 2017 Last day of dealings in Shares cum entitlement...monday, 5 June to the Bonus Warrants Issue Commencement of dealings in Shares ex entitlement to...tuesday, 6 June the Bonus Warrants Issue Latest time for lodging transfers of Shares...4:30 p.m., Wednesday, 7 June for entitlement to the Bonus Warrants Issue Closure of Register of Members, both days inclusive...thursday, 8 June to Wednesday, 14 June Record Date... Wednesday, 14 June Despatch of certificates for the Warrants....on or before Wednesday, 21 June Commencement of dealings in the Warrants...9:00 a.m., Thursday, 22 June on the Stock Exchange All times and dates in this announcement refer to Hong Kong local times and dates. Dates or deadlines specified in the expected timetable above are indicative only. Any changes to the expected timetable will be published or notified to Shareholders as and when appropriate. Condition of the proposed Bonus Warrants Issue The Bonus Warrants Issue is not subject to shareholders approval but is conditional upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Warrants and any new Shares which may fall to be issued upon the exercise of the subscription rights attaching to the Warrants. 4

5 Reasons for the proposed Bonus Warrants Issue The Board believes that the proposed Bonus Warrants Issue will provide the Company with additional working capital upon full exercise of the subscription rights attached to the warrants for any future expansion and diversification of business of the Company as the Board deems necessary. The Board is of the view that the Bonus Warrants Issue allows the Qualifying Shareholders, upon fully exercised, to maintain their respective pro rata shareholdings in the Company and participate in the future growth and development of the Group. Hence, the Board is of the view that the Bonus Warrants Issue is beneficial to the Company and the Shareholders as a whole. In addition, on the basis of the number of Warrants to be issued being 19,676,096 an amount of approximately HK$86,075,000 (i.e. net of expenses incidental to the Bonus Warrants Issue in the amount of approximately HK$500,000) will be raised upon full exercise of the subscription rights attached to the Warrants. The Company has not presently planned for any specific use of the proceeds save as to say that it is the present intention of the Board to apply the entire proceeds of the Bonus Warrants Issue to reduce the indebtedness of the Company in general. Funds raised during the past 12 months There is no fund raising activity during the past 12 months except the issue of bonus warrants. The total funds raised on the issue of bonus warrants in the past 12 months immediately preceding the announcement of the proposed Bonus Warrants Issue is HK$60,042,000 and the detail breakdown is as follows:- Date of Date of Involved Amount Stock Code Warrants issue Warrant expire Period Received HK$ April April May 2016 to 60,042, April 2017 Such proceeds are fully utilized in repayment of bank loan and the general working capital of the existing development projects. Ranking of Shares to be issued upon exercise of the Warrants Shares which may fall to be allotted and issued on the exercise of the subscription rights attaching to the Warrants will, subject to the articles of association of the Company, rank for any dividends and other distributions and/or offers of further securities made by the Company, the record date for which is on or after the relevant subscription date and subject thereto, pari passu in all respects with the then existing issued Shares on the relevant subscription date. 5

6 Application for listing An application will be made to the Listing Committee for the listing of and permission to deal in the Warrants and the Shares which may fall to be issued upon the exercise of the subscription rights attaching to the Warrants. No part of the equity or debt securities of the Company is listed on or dealt on any other stock exchange and no such listing of or permission to deal is being or is proposed to be sought. Application will also be made to HKSCC for the admission of the Warrants into the Central Clearing and Settlement System operated by HKSCC. Overseas shareholders The Bonus Warrants Issue will not be registered or filed under any securities legislation in any jurisdiction outside Hong Kong. The Company will make appropriate enquiries pursuant to Rule 13.36(2)(a) of the Listing Rules to determine whether Overseas Shareholders should be entitled to the Bonus Warrants Issue. If the Board is of the view that the grant or issue of the Warrants to the Overseas Shareholders would or might, in the absence of compliance with registration or other special formalities in other territories, be unlawful or impracticable, no grant or issue of the Warrants will be made to the Overseas Shareholders. Arrangements will be made for all those Warrants which would otherwise have been granted to the Non-Qualifying Shareholders to be sold in the market as soon as practicable after dealings in the Warrants commence, if a premium (net of expenses) can be obtained. Any proceeds of such sale, after deduction of expenses will be distributed in Hong Kong dollars to the Non-Qualifying Shareholders at their own risks pro rata to their respective holdings of Shares, unless the amount falling to be distributed to any such Non-Qualifying Shareholders is less than HK$100, in which case such amount will be retained for the benefit of the Company. Fractional entitlements Fractional entitlements to the Warrants (if any) will not be issued but will be aggregated and sold for the benefit of the Company. Certificates for the Warrants Subject to the condition of the Bonus Warrants Issue mentioned above being satisfied, certificates for the Warrants are expected to be despatched to the Qualifying Shareholders by ordinary post at the risks of the Qualifying Shareholders on or before 21 June GENERAL The Company is an investment holding company. The activities of its principal operating subsidiaries include property trading, property development and investment. 6

7 TERMS USED IN THIS ANNOUNCEMENT Board the board of Directors Bonus Warrants Issue Company Director(s) Group Hong Kong HKSCC HK$ Listing Committee Listing Rules Non-Qualifying Shareholders Overseas Shareholders Qualifying Shareholders the conditional bonus issue of Warrants by the Company to the Qualifying Shareholders as described in this announcement Cheuk Nang (Holdings) Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Main Board of the Stock Exchange directors of the Company the Company and its subsidiaries the Hong Kong Special Administrative Region of the People s Republic of China Hong Kong Securities Clearing Company Limited Hong Kong Dollar, the lawful currency of Hong Kong the Listing Committee of the Stock Exchange the Rules Governing the Listing of Securities on the Stock Exchange the Overseas Shareholder(s) whom the Board, after making enquiry, considers it necessary or expedient on account either of legal restrictions under the laws of the relevant overseas places or the requirements of the relevant regulatory bodies or stock exchanges in those places not to issue the Warrants to the Shareholders whose addresses, as shown in the Register of Members at the close of business on the Record Date, are outside Hong Kong the Shareholders, other than the Non-Qualifying Shareholders, whose names appear on the Register of Members as at the close of business on the Record Date 7

8 Record Date Register of Members Share(s) Shareholders Stock Exchange Warrants 14 June 2017, being the record date by reference to which entitlements to the Warrants are determined the register of members of the Company share(s) in the share capital of the Company holders of Shares The Stock Exchange of Hong Kong Limited warrant(s) to be constituted by an instrument by way of deed poll to be executed by the Company and to be issued by the Company under the Bonus Warrants Issue % per cent. Yours faithfully, For and on behalf of the Board Chao Sze Tsung Cecil Chairman Hong Kong, 9 May 2017 As at the date of this announcement, the Executive Directors are Dr. Chao Sze Tsung Cecil (Chairman), Ms. Chao Gigi (Vice Chairman), Mr. Yung Philip and Ms. Ho Sau Fun Connie; the Non-executive Directors are Mr. Chao Howard and Mr. Lee Ding Yue Joseph and the Independent Non-executive Directors are Dr. Sun Ping Hsu Samson, Mr. Ting Woo Shou Kenneth and Mr. Lam Ka Wai Graham. 8