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. Yongsheng Advanced Materials Company Limited (Incorporated in the Cayman Islands with limited liability) (Stock Code: 3608) CLARIFICATION ANNOUNCEMENT ADVANCES TO AN ENTITY DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE EXTENSION OF REPAYMENT DATE EXTENSION OF REPAYMENT DATE Reference is made to the announcement of the Company dated 28 December 2015 in relation to the extension of the repayment date of the Existing Loan, and the circular of the Company dated 8 July 2015 in relation to the Disposals. Unless otherwise stated, capitalised terms used herein shall bear the same meanings as those defined in the Circular. As disclosed in the Circular, the Existing Loan shall be repaid on or before 31 December 2015. As disclosed in the Announcement, on 28 December 2015 (after trading hours), Yongsheng Dyeing and Hangzhou Yongsheng Trading agreed to extend the repayment date of the remaining balance of the Existing Loan from 31 December 2015 to 30 June 2016. 1
CLARIFICATION OF THE ANNOUNCEMENT In respect of the Announcement, the Company wishes to clarify that the extension of the repayment date of the Existing Loan constitutes a discloseable and connected transaction of the Company under Chapter 14 and 14A of the Listing Rules respectively and is subject to the reporting, announcement and Independent Shareholders approval requirements. The Board announces that, on 13 January 2016 (after trading hours), Yongsheng Dyeing, Hangzhou Yongsheng Trading and Yongsheng Group has entered into the Confirmation Deed to set out the terms and conditions of the extension of the repayment date of the Existing Loan. IMPLICATIONS UNDER THE LISTING RULES As the applicable percentage ratios for the Confirmation Deed and the transaction contemplated thereunder are more than 5% but all of them are less than 25%, the transaction contemplated under the Confirmation Deed constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements. As the assets ratio as defined under Rule 14.07(1) of the Listing Rules in respect of the Confirmation Deed exceeds 8%, the Confirmation Deed is subject to the general disclosure obligations pursuant to Rule 13.13 of the Listing Rules. The information required to be disclosed pursuant to Rule 13.13 of the Listing Rules in respect of the Confirmation Deed is disclosed in this announcement. In addition, Mr. Li (being an Executive Director, Chairman and controlling shareholder of the Company) owns 90% equity interest of Yongsheng Holdings, which in turn owns 100% equity interest of Yongsheng Group. Yongsheng Group owns 100% equity interest of Hangzhou Yongsheng Trading. Accordingly, Hangzhou Yongsheng Trading is an associate of Mr. Li and a connected person of the Company. The transaction contemplated under the Confirmation Deed constitutes a connected transaction of the Company and is subject to the reporting, announcement and the Independent Shareholders approval requirements under Chapter 14A of the Listing Rules. 2
A circular containing, amongst other matters, (i) further information in relation to the Confirmation Deed; (ii) a letter from the independent board committee to the Independent Shareholders; (iii) a letter from the independent financial adviser; (iv) the notice of the extraordinary general meeting; and (v) such other information as required under the Listing Rules is expected to be despatched to the Shareholders within 15 Business Days after the publication of this announcement. THE EXTENSION OF REPAYMENT DATE Reference is made to the announcement of the Company dated 28 December 2015 (the Announcement ) in relation to the extension of the repayment date of the Existing Loan, and the circular of the Company dated 8 July 2015 (the Circular ) in relation to the Disposals. Unless otherwise stated, capitalised terms used herein shall bear the same meanings as those defined in the Circular. As disclosed in the Circular, the Disposal Group had borrowed funds from other subsidiaries of the Company (the Existing Loan ) and the Existing Loan shall be repaid on or before 31 December 2015. As disclosed in the Announcement, on 28 December 2015 (after trading hours), Yongsheng Dyeing and Hangzhou Yongsheng Trading agreed to extend the repayment date of the remaining balance of the Existing Loan, being RMB48,088,033.39, from 31 December 2015 to 30 June 2016. CLARIFICATION OF THE ANNOUNCEMENT In respect of the Announcement, the Company wishes to clarify that the extension of the repayment date of the Existing Loan constitutes a discloseable and connected transaction of the Company under Chapter 14 and 14A of the Listing Rules respectively and is subject to the reporting, announcement and Independent Shareholders approval requirements. The Board announces that, on 13 January 2016 (after trading hours), Yongsheng Dyeing, Hangzhou Yongsheng Trading and Yongsheng Group has entered into a confirmation deed (the Confirmation Deed ) to set out the terms and conditions of the extension of the repayment date of the Existing Loan. 3
THE CONFIRMATION DEED Summarised below are the principal terms of the Confirmation Deed. Date: 13 January 2016 Parties: (1) Yongsheng Dyeing, as creditor; and (2) Hangzhou Yongsheng Trading, as debtor; and (3) Yongsheng Group, as warrantor. Principal amount: RMB48,088,033.39, which is equivalent to approximately HK$56,744,000.00. Interest rate: 3.1% per annum. Conditions: The Confirmation Deed is conditional upon the fulfillment of the following conditions: (a) the Company having obtained the relevant consent, approval, permit or waiver (if necessary) in accordance with the requirements under the Listing Rules, the applicable laws and regulations and/or the requirements of relevant regulatory authorities and the publication of the announcement and circular in relation to the Confirmation Deed and the transaction contemplated thereunder; (b) the Board and the Independent Shareholders having approved the Confirmation Deed and the transaction contemplated thereunder; (c) the board of directors of Hangzhou Yongsheng Trading having approved the Confirmation Deed and the transactions contemplated thereunder; 4
(d) the board of directors of Yongsheng Group having approved the Confirmation Deed and the transactions contemplated thereunder; (e) the Stock Exchange having approved the publication of the circular in relation to, among others, the Confirmation Deed; and (f) all parties to the Confirmation Deed having obtained all other approval, consent and authorization in relation to the entering into of the Confirmation Deed and the transactions contemplated thereunder (if necessary). Repayment Date: The repayment date of the outstanding balance of the Existing Loan shall be extended for a further term of 6 months from 31 December 2015 to 30 June 2016, or any other date as agreed by the parties. Collateral: The Existing Loan is unsecured. REASONS FOR AND BENEFITS OF THE EXTENSION OF REPAYMENT DATE The terms of the Confirmation Deed were negotiated after arm s length negotiations between Yongsheng Dyeing and Hangzhou Yongsheng Trading. The Directors consider that the extension of the repayment date of the Existing Loan can bring additional interest income to the Group. In addition, the extension of the repayment date was due to the delays in banking administrative arrangements to refinance the Existing Loan by Hangzhou Yongsheng Trading. As the Group has sufficient working capital, the extension of the repayment date of the Existing Loan will not have material impact on the financial position of the Group. In view of the above, the Directors (excluding the independent non-executive Directors, who shall provide their recommendation after taking into account the advice of the independent financial adviser to be engaged) consider that the Confirmation Deed was negotiated after arm s length negotiations on normal commercial terms, the terms of which are fair and reasonable and in the interests of the Company and the Shareholders as a whole. 5
INFORMATION OF THE GROUP The Group is principally engaged in the developing and manufacturing of polyester filament yarns, the provision of dyeing services of differentiated polyester filament fabric and trading of polyester filament yarn products in the PRC. Yongsheng Dyeing is a company established in the PRC with limited liability and is principally engaged in the dyeing and processing of differentiated polyester filament fabrics and investment holdings. As at the date of this announcement, Yongsheng Dyeing is an indirect wholly-owned subsidiary of the Company. INFORMATION OF HANGZHOU YONGSHENG TRADING Hangzhou Yongsheng Trading is a company established in the PRC with limited liability and is principally engaged in the trading of textile-related raw materials, excluding polyester filament yarns and fabrics. As at the date of this announcement, the entire equity interest of Hangzhou Yongsheng Trading is owned by Yongsheng Group. INFORMATION OF YONGSHENG GROUP Yongsheng Group is a company established in the PRC with limited liability on 13 November 1997, whose registered capital is, as at the date of this announcement, owned as to approximately 100% by Yongsheng Holdings which in turn is owned as to 90% by Mr. Li. Yongsheng Group is principally engaged in the trading of metals and investment holdings. IMPLICATIONS UNDER THE LISTING RULES As the applicable percentage ratios for the Confirmation Deed and the transaction contemplated thereunder are more than 5% but all of them are less than 25%, the transaction contemplated under the Confirmation Deed constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements. 6
As the assets ratio as defined under Rule 14.07(1) of the Listing Rules in respect of the Confirmation Deed exceeds 8%, the Confirmation Deed is subject to the general disclosure obligations pursuant to Rule 13.13 of the Listing Rules. The information required to be disclosed pursuant to Rule 13.13 of the Listing Rules in respect of the Confirmation Deed is disclosed in this announcement. In addition, Mr. Li (being an Executive Director, Chairman and controlling shareholder of the Company) owns 90% equity interest of Yongsheng Holdings, which in turn owns 100% equity interest of Yongsheng Group. Yongsheng Group owns 100% equity interest of Hangzhou Yongsheng Trading. Accordingly, Hangzhou Yongsheng Trading is an associate of Mr. Li and a connected person of the Company. The transaction contemplated under the Confirmation Deed constitutes a connected transaction of the Company and is subject to the reporting, announcement and the Independent Shareholders approval requirements under Chapter 14A of the Listing Rules. A circular containing, amongst other matters, (i) further information in relation to the Confirmation Deed; (ii) a letter from the independent board committee to the Independent Shareholders; (iii) a letter from the independent financial adviser; (iv) the notice of the extraordinary general meeting; and (v) such other information as required under the Listing Rules is expected to be despatched to the Shareholders within 15 Business Days after the publication of this announcement. By Order of the Board Yongsheng Advanced Materials Company Limited Li Cheng Chairman and Executive Director Hong Kong, 13 January 2016 As at the date of this announcement, the executive Directors are Mr. Li Cheng, Mr. Zhao Jidong, Mr. Li Conghua and Mr. Ma Qinghai; and the independent non-executive Directors are Ms. Wong Wai Ling, Mr. Shiping James Wang and Dr. Wang Huaping. For the purpose of this announcement, all amounts in RMB are translated into HK$ at an exchange rate of RMB1.00 = HK$1.18. No representation has been made by the Company that any amount have been, could have been or could be converted at the above rate or at any other rates or at all. 7