SINO GRANDNESS FOOD INDUSTRY GROUP LIMITED (Company Registration Number H) (Incorporated in the Republic of Singapore)

Transcription

1 SINO GRANDNESS FOOD INDUSTRY GROUP LIMITED (Company Registration Number H) (Incorporated in the Republic of Singapore) PROPOSED ISSUE OF UP TO RMB 270,000,000 CONVERTIBLE BONDS AT ZERO COUPON RATE DUE 2015 BY GARDEN FRESH (HK) FRUIT & VEGETABLE BEVERAGE CO., LIMITED, A WHOLLY- OWNED SUBSIDIARY OF SINO GRANDNESS FOOD INDUSTRY GROUP LIMITED (THE PROPOSED ISSUE OF THE CONVERTIBLE BONDS ) Unless otherwise defined, capitalised terms used in this announcement, shall have the meaning ascribed to them in Annex A. 1. INTRODUCTION 1.1 The Board of Directors of Sino Grandness Food Industry Group Limited (the Company ) wishes to announce that its indirect wholly-owned subsidiary, Garden Fresh (HK) Fruit & Vegetable Beverage Co., Limited ( 鮮綠園 ( 香港 ) 果蔬飲料有限公司 ), a company incorporated in Hong Kong (the HK Issuer ), had today entered into a conditional subscription agreement (the Subscription Agreement ) for issue of the Convertible Bonds with (among others) the Company as a guarantor, Grandness (HK) Industry Co., Limited (the HK Holding Company ), and Goldman Sachs Investments Holdings (Asia) Limited (the GSIHAL ) as an investor. The HK Issuer is wholly-owned by the Company through the HK Holding Company, a direct wholly-owned subsidiary of the Company. The Convertible Bonds are convertible at the option of the holders of the Convertible Bonds (the Bondholders ) into fully paid ordinary shares in the capital of the HK Issuer (the Conversion Shares ) at any time before the maturity date, subject to the terms and conditions set out in the Subscription Agreement. 1.2 Under the Subscription Agreement, the HK Issuer has agreed to issue the Convertible Bonds in the following manner: (ii) GSIHAL will subscribe for such number of the Convertible Bonds in the aggregate principal amount of RMB225,000,000 (or approximately S$44.6 million) at a subscription price representing 90% of the aforesaid principal amount (i.e. RMB202,500,000) less any deductions for reimbursement of expenses pursuant to the Subscription Agreement; and GSIHAL will have an option (with the approval of the HK Issuer) to designate a coinvestor (the Co-Investor and together with GSIHAL the Investors ) who will subscribe for the remaining Convertible Bonds in the aggregate principal amount of RMB45,000,000 (or approximately S$8.9 million) at a subscription price representing 90% of the aforesaid principal amount (i.e. RMB40,500,000). The Co-Investor will be designated by GSIHAL before the Closing Date who shall become a party to the Subscription Agreement by executing a joinder agreement. However, if the Co-Investor is not designated by GSIHAL or approved by the HK Issuer before the Closing Date or the Co-Investor fails to execute the joinder agreement by Closing, then all rights and obligations of the Co-Investor under the Subscription Agreement will become void. In that case, the Closing will take place only in respect of GSIHAL s portion of the Convertible Bonds provided in paragraph 1.2 above. GSIHAL will not be obliged to subscribe for the remaining Convertible Bonds. 1.3 In connection with the Proposed Issue of the Convertible Bonds, the parties intend to enter into (among others) the following documents, which will be delivered by relevant parties before or at the Closing: 1

2 (ii) (iii) (iv) the Deed of Guarantee; the Investor Rights Agreement; the Share Charges; and the Non-competition Agreement. Please refer to paragraph 2 of this announcement for further information on the Transaction Documents. 1.4 The Convertible Bonds will be issued pursuant to the Terms and Conditions. 1.5 Shareholders should note that, on 19 October 2011, the HK Issuer issued another series of zero coupon rate RMB100,000,000 convertible bond due 2014 pursuant to a subscription agreement dated 28 September 2011 and entered into among the HK Issuer, the Company and Sun Hung Kai Investment Services Limited (the 2011 Bonds ). Please refer to the announcement made by the Company on 28 September 2011 for details of the 2011 Bonds. 2. PRINCIPAL TERMS OF TRANSACTION DOCUMENTS 2.1 The Subscription Agreement Closing: The Closing shall take place at 10:00 am (Hong Kong Time) at the office of the GSIHAL s counsels (or such other place as may be agreed to between the parties) on the Closing Date. The Convertible Bonds will not be listed or quoted on any securities exchange Conditions Precedent: Subscription of the Convertible Bonds by the Investors will be subject to the satisfaction and/or waiver of the conditions precedent set out in the Subscription Agreement, including, inter alia: (ii) (iii) (iv) (v) Shareholder Approval: The Company shall have received all approvals and consents from the Shareholders required by laws, rules and regulations of any applicable securities exchange to enter into the Transaction Documents, to perform its obligations thereunder, and to consummate the transactions contemplated thereby. Approval of holders of the 2011 Bonds: All approvals or consents required by the 2011 Bonds documents shall have been given by the holders of the 2011 Bonds, including approvals and consents for the amendment of the HK Issuer s restated memorandum and articles. Other Permits and Consents: All other permits and consents necessary for the relevant parties to consummate or enforce the transactions contemplated by the Subscription Agreement at the Closing Date shall have remained in full force and effect. Financial Assistance Whitewash: The Company, the HK Holding Company and the HK Issuer shall have undertaken all necessary actions to ensure that the requirements of the relevant financial assistance whitewash procedure have been complied with in accordance with the applicable laws. Issuer Board: The HK Issuer shall have taken all actions to appoint the director nominated by GSIHAL to its board of directors. 2

3 (vi) (vii) Listing: The Company shall have maintained its listing on the SGX-ST and no action has been taken which would be reasonably expected to result in the delisting or suspension of the trading of the ordinary shares of the Company on the SGX-ST. Financing: GSIHAL shall have received the funds from its affiliates at or prior to the Closing. If any of the conditions precedent is not satisfied at the Closing, each of the Investors shall be released and discharged from its obligations relating to the Convertible Bonds Termination: The Investors have the right the terminate the Subscription Agreement before the Long Stop Date on the happening of specified events provided in the Subscription Agreement such as an Event of Default. However, after the Long Stop Date, the Investors have the right (but not the obligation) to terminate their obligations to subscribe for the Convertible Bonds for any reason Governing Law: The Subscription Agreement is governed by and shall be construed in accordance with the laws of Hong Kong. 2.2 Investor Rights Agreement Pursuant to the Investor Rights Agreement, each of the Company, the HK Holding Company, the HK Issuer and the WFOEs will agree to carry out their business in the manner provided in the Investor Rights Agreement, including, inter alia : (ii) none of them will take any action to approve, engage in, or facilitate any business transaction, directly or indirectly, with any country, government, entity or individual that would place any Investor or any of the HK Issuer and its subsidiaries in violation of any economic sanctions program administered by the OFAC or that involves entering into, or agreeing to enter into, any transaction with a person on the prohibited list of the OFAC; and no asset of the HK Issuer and the WFOEs shall be used for the benefit of any other parties to the Investor Rights Agreement or any of their affiliates (other than themselves) unless specifically approved in advance in writing by GSIHAL Further, the Investor Rights Agreement provides that: (ii) (iii) none of the HK Issuer and the WFOEs will offer, allot or issue any security unless, inter alia, it gives 30 days notice to the Investors of the proposed offering, describing the security and the terms of the offering in reasonable detail, and irrevocably offers each Investor the opportunity to subscribe for or purchase its ratable share of the offered securities on the same terms and conditions offered to all other subscribers. Each Investor s ratable share of the offered securities equals its interest divided by the total interest of all holders of securities in the HK Issuer; the HK Holding Company shall not transfer any of the shares in the HK Issuer or any right, title or interest therein or thereto, except in accordance with the Investor Rights Agreement and other relevant transaction documents; and each of Company, the HK Holding Company and the HK Issuer will use its best efforts to ensure that the relevant IPO process is completed, on or prior to a date falling one month prior to the Target QIPO Date, which shall be based on independent advice of a reputable investment bank(s) (approved by the Investors) and structured to maximise valuation of the HK Issuer. 3

4 The Investor Rights Agreement will be governed by and shall be construed in accordance with the laws of Hong Kong. 2.3 The Deed of Guarantee Pursuant to the Deed of Guarantee by the Company, it will unconditionally and irrevocably guarantee the due and punctual payments of all sums expressed to be payable by the HK Holding Company, the HK Issuer and the WFOEs and Mr. Huang Yupeng under the relevant transaction documents in relation to the Convertible Bonds. The Deed of Guarantee will be governed by and shall be construed in accordance with the laws of Hong Kong. 2.4 The Share Charges Pursuant to the Share Charge by the HK Holding Company, it will agree to charge its shares in the HK Issuer to secure the due and punctual payments of all sums expressed to be payable by (among others) the Company, the HK Holding Company, the HK Issuer, the WFOEs and Mr. Huang Yupeng under the relevant transaction documents in relation to the Convertible Bonds and the 2011 Bonds. Pursuant to the Share Charges by the HK Issuer, it will agree to charge its shares in the WFOEs to secure the due and punctual payments of all sums expressed to be payable by the HK Issuer under the relevant transaction documents in relation to the Convertible Bonds and the 2011 Bonds. The Share Charges in respect of the shares of the HK Issuer will be governed by and shall be construed in accordance with the laws of Hong Kong. The Share Charges in respect of the shares of the WFOEs will be governed by and shall be construed in accordance with the laws of the People s Republic of China. 2.5 The Non-competition Agreement Pursuant to the Non-competition Agreement, subject to certain allowed exceptions, each of the Company, the HK Holding Company and Mr. Huang Yupeng will unconditionally, irrevocably and severally undertake to, and for the benefit of, the Investors that, during the Restricted Period, they shall not, and shall procure that all members of the Grandness group consisting of the Company, the HK Holding Company and their associates, and Mr. Huang Yupeng and his associates respectively, shall not (except through the HK Issuer and the WFOEs) directly or indirectly, engage in any Beverage Business in the Restricted Zone, or (ii) invest in the debt or equity securities of or provide financial support or other financial assistance to any person which engages in any Beverage Business in the Restricted Zone. The Non-competition Agreement will be governed by and shall be construed in accordance with the laws of Hong Kong. 3. TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS Details of the terms and conditions of the Convertible Bonds are more particularly set out in Annex B to this announcement. 4. THE HK ISSUER 4.1 The HK Issuer was incorporated on 3 January 2011 in Hong Kong as an investment holding company. The HK Issuer and its subsidiaries are mainly engaged in the business activities of brand building, production, sales, marketing and distribution of beverage products such as vegetable and fruit juices. 4

5 As at the date of this announcement, the HK Issuer has a registered and paid-up share capital of HK$10,000 comprising 10,000 ordinary shares with a nominal value of HK$1.00 each. All of the paid-up share capital of the HK Issuer is legally held by Grandness (HK) Industry Co., Limited ( 振鹏达 ( 香港 ) 实业有限公司 ), which is in turn directly wholly-owned by the Company Financial performance benchmarks and Undertakings to complete an IPO process. Under the Terms and Conditions, conversion of the Convertible Bonds into new shares in the capital of the HK issuer will be at the election of the Investors. The conversion formula applicable will depend on, inter alia, the extent that the HK Issuer will have achieved its financial performance for the financial years commencing 1 January 2012 and 1 January Further, the HK Issuer has undertaken to use its best endeavours to ensure that all necessary actions for the purposes of a submission for approval by an Approved Exchange of the listing of its shares will be completed on or prior to a date falling one month prior to the Target QIPO Date Issue of the Conversion Shares and its Dilutive Effect The actual number of the Conversion Shares to be issued pursuant to a conversion at the election of the Investors, is dependent on the future financial performance of the HK Issuer. Accordingly, the actual number of the Conversion Shares, the actual applicable conversion price and hence, the actual dilutive effect to the Company s shareholding in the HK Issuer are not determinable with certainty as at the date of this announcement. Based on the Terms and Conditions, the maximum number of the Conversion Shares arising from the conversion of the Convertible Bonds will represent 30% of the enlarged issued share capital of the HK Issuer, and hence, the Company s effective shareholding interests in the issued and paid-up share capital of the HK Issuer would be diluted substantially from 100% to 70%. Further, on the assumptions that: (ii) the Convertible Bonds are fully converted and the maximum number of the Conversion Shares are issued as a result of such conversion; and the 2011 Bonds are fully converted in accordance with its terms and the maximum number of conversion shares are issued as a result of such conversion, the Company s effective shareholding interests in the HK Issuer will be diluted from 100% to 50.1%. This dilution represents a material dilution under Rule 805(2)(b) of the Listing Manual and as such the Proposed Issue of the Convertible Bonds is subject to the approval of the Shareholders at a general meeting. Please refer to paragraph 5 of this announcement for further information. 5. SHAREHOLDERS APPROVAL 5.1 Pursuant to Rule 805(2)(b) of the Listing Manual, the Company is required to seek approval from its Shareholders in a general meeting in the event that there is a percentage dilution of 20% or more of the Company s shareholding in the HK Issuer. As the conversion of the Convertible Bonds may result in dilution of up to 30% of the Company s interest in the HK Issuer, the Proposed Issue of the Convertible Bonds is subject to the approval of the Shareholders at an EGM to be convened. The Company intends to convene the EGM towards the end of June 2012 to seek the approval of the Shareholders for the Proposed Issue of the Convertible Bonds, and the Company s entry into the Transaction Documents to which it is a party. A circular containing, amongst others, further information on the Proposed Issue of the Convertible Bonds together with the notice of the EGM will be dispatched to the Shareholders in due course. 5.2 To facilitate the Proposed Issue of the Convertible Bonds, Mr. Huang Yupeng, who is a director and controlling shareholder of the Company holding 117,748,280 shares representing 44.4% of the 5

6 entire issued and paid-up share capital of the Company, has provided an irrevocable undertaking to vote all his shareholdings in the Company in favour of any resolution approving the Proposed Issue of the Convertible Bonds at the EGM. 6. FINANCIAL EFFECTS 6.1 Purpose and basis As at the date of this announcement, the Company is unable to determine with certainty the financial effects of the Proposed Issue of the Convertible Bonds on the Group, which effects will only be ascertained after the Bondholders have exercised all of their conversion rights in respect of the Convertible Bonds, and after the actual number of the Conversion Shares and the actual applicable conversion price have been determined. However, assuming, solely for the purpose of illustration, the Company s equity interest in the HK Issuer has been diluted by 30% as a result of the conversion of the Convertible Bonds, the pro-forma financial effects of such conversion, based on audited consolidated financial statements of the Group for the financial year ended 31 December 2011 ( FY2011 ) are set out below. The pro-forma financial effects are presented for illustration purposes only, and are not intended to reflect the actual future financial situation after completion of the issue of the Convertible Bonds. For the avoidance of doubt, nothing in this announcement may be treated as a representation by the Company as to the trading price of the shares of the Company on the SGX-ST during the term of the Convertible Bonds or for any other period of time. 6.2 Effect on earnings per share of the Group ( EPS ) Assuming that the Convertible Bonds have been fully converted into shares of the HK Issuer and resulting in a maximum dilution of 30% of the Company s equity interest in the HK Issuer on 1 January 2011, the effect of the Convertible Bonds on the Group s EPS for FY2011 would have been: Before Conversion of the Convertible Bonds (RMB cents) After Conversion of the Convertible Bonds (RMB cents) Earnings per share Note: The above computation is based on the weighted average number of shares of the Company of 265,172,414 for FY Net tangible assets ( NTA ) per share of the Group Assuming that the Convertible Bonds have been fully converted into shares of the HK Issuer and resulting in a maximum dilution of 30% of the Company s equity interest in the HK Issuer as at 31 December 2011, the effect of the Convertible Bonds on the Group s N T A for FY2011 would have been: Before Conversion of the Convertible Bonds (RMB cents) After Conversion of the Convertible Bonds (RMB cents) NTA per share

7 Note: The above computation is based on 265,172,414 shares of the Company as at 31 December USE OF PROCEEDS The HK Issuer will receive gross proceeds of: (ii) approximately RMB243,000,000 (or approximately S$48.1 million) from the issue of the Convertible Bonds, if all the Convertible Bonds are fully subscribed by the Investors at the Closing in accordance with the Subscription Agreement; or approximately RMB202,500,000 (or approximately S$40.1 million) from the issue of the Convertible Bonds, if a Co-Investor does not become a party to the Subscription Agreement in accordance with its terms and only GSIHAL s portion of the Convertible Bonds is fully subscribed by GSIHAL. The fees payable by the HK Issuer to the professional parties amount to approximately RMB7,000,000 (or approximately S$1.4 million). The HK Issuer intends to allocate the entire net proceeds from the issue of the Convertible Bonds to finance the Group's beverage business activities in the People s Republic of China, including working capital, capital expenditure, expansion by merger and acquisition and operating expenses. 8. ABOUT GSIHAL GSIHAL is a company incorporated in Mauritius, and it is an indirect wholly-owned subsidiary of The Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world. 9. SHAREHOLDING UNDERTAKING 9.1 Under the Terms and Conditions, the Company has undertaken with the Investors that it will procure that the Company s controlling shareholder holds directly or indirectly at all times not less than a 35% equity interest in the issued share capital of the Company. As at the date of this announcement, Mr. Huang Yupeng is the only controlling shareholder of the Company, holding 117,748,280 shares representing 44.4% of the entire issued and paid-up share capital of the Company. 9.2 Pursuant to Rule 728 of the Listing Manual, Mr. Huang Yupeng has given an undertaking to the Company that he will notify the Company, as soon as he becomes aware, of any share pledging arrangements relating to his shares in the Company and of any event which may result in a breach of the Company s loan provisions. 10. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS Save as disclosed herein, none of the Directors has any interests, direct or indirect, in the Proposed Issue of the Convertible Bonds other than through their respective shareholdings in the Company, if any. To the best knowledge of the Directors, none of the controlling shareholders of the Company has any interests, direct or indirect, in the Proposed Issue of the Convertible Bonds other than through their respective shareholdings in the Company, if any. 7

8 By Order of the Board Huang Yupeng Chairman and Chief Executive Officer SINO GRANDNESS FOOD INDUSTRY GROUP LIMITED 10 May 2012 Note: All S$ denominated amounts or figures stated in this announcement are computed based on the exchange rates of S$1: RMB5.0474, as published on Bloomberg News as at the date of this announcement, being 10 May

9 DEFINITIONS ANNEX A In this announcement, the following terms shall have the meaning given hereunder: Approved Exchange means the Stock Exchange of Hong Kong Limited, the Taiwan Stock Exchange Corp. or any other international stock exchange which has been approved by an Extraordinary Resolution. Beverage Business means the manufacturing, marketing and/or distribution of beverage products, and businesses directly associated with or ancillary or complementary to such businesses. Closing means the closing of the issue of the Convertible Bonds. Closing Date means the date of the Closing, which shall be no later than second business day following the day on which the relevant conditions precedent to the issue of the Convertible Bonds are satisfied or waived. Convertible Bonds means up to RMB270,000,000 convertible bonds at zero coupon rate due 2015 to be issued by the HK Issuer. Deed of Guarantee means the deed of guarantee to be provided by the Company in favour of the Bondholders to guarantee, inter alia, the repayment obligations of the HK Issuer in respect of the Convertible Bonds. EGM means the extraordinary general meeting of the Company to approve, inter alia, the Proposed Issue of the Convertible Bonds. Event of Default has the meaning ascribed to it in paragraph 14 of Annex B. Extraordinary Resolution means a resolution passed at a meeting duly convened and held in accordance with the schedule titled Provisions for Meetings of Bondholders as provided in the Terms and Conditions, by a majority of at least 70 per cent of the votes cast. Financial Indebtedness means any present or future indebtedness in respect of moneys borrowed or raised including (but not limited to): (a) (b) (c) (d) (e) (f) (g) (h) moneys borrowed and debit balances at banks and other financial institutions; any debenture, note, bond, loan stock or other security; receivables sold or discounted with recourse; acquisition costs of any asset; finance leases; net amount owing under any currency or interest swap, cap or collar arrangements or any other derivative or hedging instrument; any acceptance credit; amounts raised under any other transaction having the commercial effect of a borrowing or raising of money; or any guarantee, indemnity or similar assurance against financial loss in respect of any items falling within paragraphs (a) to (h) above. Garden Hubei means Garden Fresh (Hubei) Food and Beverage Co., Limited. Garden Shenzhen means Garden Fresh (Shenzhen) Fruit & Vegetable Beverage Co., Limited. Group means the Company and its subsidiaries. HK Group means collectively the HK Issuer and its subsidiaries. 9

10 IPO means initial public offering of shares. Investor Rights Agreement means an investor rights agreement to be entered into among, inter alia, the HK Issuer, the Company, the HK Holding Company and the Investors in relation to the Convertible Bonds. Listing Manual means the listing manual of the SGX-ST. Long Stop Date means the date that is 90 days after the date of the Subscription Agreement. Net Profit means, with respect to a financial quarter or a financial year of the HK Issuer, the consolidated net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial quarter or year, as applicable, as confirmed by the audited accounts of the HK Issuer. Non-competition Agreement means a non-compete agreement to be entered into between the Company, the HK Holding Company, Mr. Huang Yupeng, who is a director and controlling shareholder of the Company and GSIHAL. OFAC means the Office of Foreign Assets Control of the U.S. Department of Treasury. Principal Amount means the amount in Renminbi equal to the outstanding principal amount of the Convertible Bonds from time to time (excluding any other sums due but unpaid thereon). QIPO means an initial public offering on an Approved Exchange, (ii) in which the Investors have a right to participate to sell such shares (converted from the Convertible Bonds) in an amount to be determined between the HK Issuer and the Investors, and (iii) in which the Investors have a veto right over the choice of initial public offering underwriters. QIPO Date means the date of the admission to trading of the shares of the HK Issuer on the Approved Exchange pursuant to a QIPO. Restricted Period means the period commencing on the date of the Non-competition Agreement and ending on the earlier of the QIPO Date; or (ii) the date on which all of the Convertible Bonds have been redeemed and/or converted upon the terms and subject to the Terms and Conditions. Restricted Zone includes the People s Republic of China, Hong Kong, Macau and Taiwan. RMB or Renminbi means the lawful currency of the People s Republic of China. S$ means the lawful currency of the Republic of Singapore. Share Charges means the share charges by the HK Holding Company and the HK Issuer in favour of the Investors over the shares of the HK Issuer and the WFOEs respectively for securing, inter alia, the repayment obligations of the HK Issuer in respect of the Convertible Bonds. SGX-ST means Singapore Exchange Securities Trading Limited. Shareholders means the shareholders of the Company. Target QIPO Date means the later of: (a) October 19, 2014 or (b) if the holders of the 2011 Bonds exercise their extension right under the terms of the 2011 Bonds, then the earlier of such extended maturity date, or (ii) June 30, Terms and Conditions means the terms and conditions of the Convertible Bonds as set out in the Subscription Agreement. Transaction Documents means collectively the Subscription Agreement, the Terms and Conditions, the 10

11 Deed of Guarantee, the Share Charges and the Non-competition Agreement. WFOEs means Garden Hubei and Garden Shenzhen. 11

12 SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS 1. Issuer: Garden Fresh (HK) Fruit & Vegetable Beverage Co., Limited. 12 ANNEX B 2. Description of Issue and Maturity Date: The Convertible Bonds due on the maturity date, which are convertible into the Conversion Shares at any time and from time to time at the election of the Investors. The maturity date means a date which will be three years from the Closing Date. For the avoidance of doubt, the maturity date will be no earlier than June 30, 2015 but no later than three years after the Long Stop Date. 3. Issue Date: The date of issue of the Convertible Bonds will be determined after all the conditions precedent prescribed in the Subscription Agreement have been satisfied or waived. 4. Issue Size: The aggregate principal amount of the Convertible Bonds will be up to RMB270,000,000 (or approximately S$53.5 million) and will be settled in Chinese Renminbi. 5. Interest: The Convertible Bonds do not bear any interest. 6. Form and Domination: The Convertible Bonds will be issued in registered form without coupons attached. A bond certificate will be issued to each Bondholder in respect of its registered holding of bonds. 7. Title: The title to the Convertible Bonds passes only by transfer and registration in the register of Bondholders as described in the Terms and Conditions. The holder of any Convertible Bond shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it, any writing on it or its theft or loss) and no person will be liable for so treating the holder. Bondholder and (in relation to a Convertible Bond) holder means the person in whose name a Convertible Bond is registered. 8. Guarantee: The Company will unconditionally and irrevocably guarantee the due and punctual payment of all sums expressed to be payable by the HK Issuer under the Convertible Bonds as and when the same shall become due and payable and the performance of all of the obligations of the HK Issuer in respect of the Convertible Bonds and (among others) the Company, the HK Holding Company and Mr. Huang Yupeng under the Investor Rights Agreement and the relevant security documents. 9. Negative Pledge: So long as any Convertible Bond remains outstanding (and subject to the Terms and Conditions), neither the HK Issuer nor any of its subsidiaries, save with the approval of an Extraordinary Resolution of the Bondholders, will create, incur or assume any indebtedness with any other financial institutions, except for indebtedness in the ordinary course of their business and inter-company loans among themselves. 10. Transferability: Subject to the Terms and Conditions, a Convertible Bond may be transferred by delivery of the bond certificate issued in respect of that Convertible Bond, with the form of transfer on the back duly completed and signed by the holder or his attorney duly authorised in writing, to the specified office of the Registrar. No transfer of a Convertible Bond will be valid unless and until entered on the register of Bondholders. 11. Conversion Right: The Bondholders conversion right may only be exercised in respect of one or more Convertible Bonds. If more than one Convertible Bond held by the same holder is converted at any one time by the same holder, the number of the Conversion Shares to be issued upon such conversion will be determined on the basis of the aggregate Principal Amount, as applicable, of the Convertible Bonds to be converted. The conversion formula applicable will depend on, inter alia,

13 the extent that the HK Issuer will have achieved its financial performance for the financial years commencing 1 January 2012 and 1 January Undertaking: The Company, the HK Holding Company and the HK issuer have given certain undertakings to the Bondholders substantially similar to those given under the 2011 Bonds. Please refer to Annex A of the announcement made by the Company on 28 September 2011 for a summary of the terms and conditions of the 2011 Bonds. 13. Redemption: The Bondholders rights to redemption of the Convertible Bonds are substantially similar to the terms of redemption of the 2011 Bonds. Please refer to Annex A of the announcement made by the Company on 28 September 2011 for a summary of the terms and conditions of the 2011 Bonds. 14. Event of Default: 14.1 If any of the following events (each an Event of Default ) occurs and is continuing, at the option of the Bondholders and upon written notice pursuant to an Extraordinary Resolution of the Bondholders, the HK Issuer shall on the date such written notice is received by the HK Issuer (unless prior to such date, the HK Issuer shall have cured the Event of Default), redeem the Convertible Bonds: (a) (b) (c) (d) (e) Non Payment: the HK Issuer or the Company fails to pay any sum due in respect of any of the Convertible Bonds, when due and payable and such failure continues for a period of 30 days; or Breach of Other Obligations: the HK Issuer, the HK Holding Company or the Company does not perform or comply with any one or more of its other obligations under the Convertible Bonds, the Deed of Guarantee, Investor Rights Agreement or the other relevant security documents which default is incapable of remedy or, if capable of remedy, such default continues for more than 30 days after written notice requiring such default to be remedied shall have been given to the HK Issuer, the HK Holding Company or the Company at the specified office of the Registrar by any Bondholder; or Cross Default: if any Financial Indebtedness of the HK Issuer or the Company becomes (or becomes capable of being declared) due and repayable prematurely by reason of default or non-performance (howsoever described) or (ii) the HK Issuer, the HK Holding Company or the Company fails to make any payment in respect of any Financial Indebtedness on the due date for payment as extended by any applicable grace period or (iii) any security given by the HK Issuer, the HK Holding Company or the Company for any Financial Indebtedness becomes enforceable and steps are taken to enforce the same; or Enforcement Proceedings: if an encumbrancer takes possession or a receiver, administrative receiver, administrator or other similar official shall be appointed in relation to the HK Issuer, the HK Holding Company or the Company or in relation to the whole or any substantial part of the undertaking or assets of the HK Issuer, the HK Holding Company or the Company, or a distress, attachment, sequestration, execution or other legal process is levied, enforced upon or sued on or against any part of the property, assets or revenues of the HK Issuer, the HK Holding Company or the Company and is not discharged or stayed within 30 days; or Security Enforced: any security interest created or assumed by the HK Issuer over a part of the property, assets or revenues of the HK Issuer becomes enforceable and any step is taken to enforce it (including the taking of possession or the appointment of a receiver, manager or other similar person); where security 13

14 interest means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or other preferential arrangement or any other agreement or arrangement having the effect of conferring security, but excludes for the avoidance of doubt but without limitation any rights of set-off arising under common law, in equity or under statute or regulation; or (f) (g) (h) (j) (k) (l) Insolvency: the HK Issuer, the HK Holding Company or the Company is insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of (or of a particular type of) its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all of (or all of a particular type of) its debts (or of any part of which it will or might otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of the HK Issuer, the HK Holding Company or the Company; an administrator or liquidator of the HK Issuer, the HK Holding Company or the Company or the whole or any part of the assets and turnover of the HK Issuer, the HK Holding Company or the Company is appointed (or application for any such appointment is made); or Winding-up: an order is made by a competent court or an effective resolution is passed for the winding-up or dissolution of the HK Issuer, the HK Holding Company or the Company except for the purposes of reorganisation on terms which have previously been approved by an Extraordinary Resolution of the Bondholders; or Illegality: it is or will become unlawful for the HK Issuer, the HK Holding Company or the Company to perform or comply with any one or more of its obligations under the Convertible Bonds or the Deed of Guarantee; or Guarantee: the Deed of Guarantee ceases to be, or is claimed by the Company not to be in full force and effect; or Failure to Deliver Shares: any failure by the HK Issuer to deliver any shares as and when the shares are required to be delivered following conversion of the Convertible Bonds; or Nationalisation: any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or any part of the assets of the HK Issuer, the HK Holding Company or the Company; or Necessary Actions: any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (a) to enable the HK Issuer, the HK Holding Company and the Company lawfully to exercise their rights and perform and comply with their obligations under the Convertible Bonds and the Deed of Guarantee; (b) to ensure that those obligations are legally binding and enforceable against the HK Issuer, the HK Holding Company and the Company; and (c) to make the Convertible Bonds and the Deed of Guarantee, admissible in evidence in the courts of Hong Kong or Singapore is not taken, fulfilled or done; or (m) Net Profit: the Net Profit in respect of the financial year ended 31 December 2012 is less than RMB80,000,000; or (n) Misrepresentation: any representations and warranties made or deemed to have been made by the HK Issuer, the HK Holding Company or the Company in the 14

15 Subscription Agreement or in any other document delivered by or on behalf of the HK Issuer, the HK Holding Company or the Company in connection with the Convertible Bonds is or proves to have been incorrect or misleading; or (o) Analogous Events: any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in paragraphs (d), (e), (f) and (g). 15. Governing Law: the Convertible Bonds and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, laws of Hong Kong. 15