China 3d Digital Entertainment : Proposed Capital Reorganisation

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This announcement appears for information purpose only and does not constitute an invitation or offer to acquire, purchase, or subscribe for securities.

中國 3D 數碼娛樂有限公司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 8078)

The Board proposes to implement the Capital Reorganisation which involves, among other things, the Share Consolidation, the Capital Reduction and the Share Sub-division. Details and effect of the Capital Reorganisation are included in this announcement.
The Capital Reorganisation is conditional upon, among other things, the passing of the special resolution to approve the Capital Reorganisation by the Shareholders at the SGM. An application will be made by the Company to the GEM Listing Committee for the listing of, and permission to deal in, the Adjusted Shares.

The SGM will be convened and held for the Shareholders to consider and, if thought fit, approve the special resolution in relation to the Capital Reorganisation. In compliance with the GEM Listing Rules, such resolution will be voted on by way of poll at the SGM. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no Shareholders are required to abstain from voting on the special resolution to be proposed at the SGM.
The Circular containing, among other things, details of the Capital Reorganisation and a notice convening the SGM will be despatched to the Shareholders on or before 22
May 2015.

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The Board proposes to implement the Capital Reorganisation which involves, among other things, the Share Consolidation, the Capital Reduction and the Share Sub-division, the details of which are as follows:

The consolidation of every five (5) issued and unissued Shares of par value of HK$0.01 each in the share capital of the Company into one (1) Consolidated Share of par value of HK$0.05 each.

Immediately upon the Share Consolidation becoming effective, the Board proposes to effect the Capital Reduction, pursuant to which the issued share capital of the Company will be reduced by cancelling the paid up capital of the Company to the extent of HK$0.04 on each of the issued Consolidated Shares such that the par value of each issued Consolidated Share will be reduced from HK$0.05 to HK$0.01 and to round down the total number of issued Consolidated Shares to a whole number by eliminating any fraction of a Consolidated Share in the issued share capital of the Company following the Share Consolidation.

Each of the authorised but unissued Consolidated Shares of HK$0.05 each (including those arising from the Capital Reduction) will be sub-divided into five (5) Adjusted Shares of HK$0.01 each.

The credit arising in the books of the Company from the Capital Reduction (being approximately HK$6,327,582) will be credited to the contributed surplus account of the Company and the Directors will be authorised to apply any credit balance in the contributed surplus account of the Company in accordance with the bye-laws of the Company and all applicable laws (including the application of such credit balance to set off against the accumulated losses of the Company).

The Capital Reorganisation is conditional upon:
(i) the passing of the special resolution to approve the Capital Reorganisation by the
Shareholders at the SGM;
(ii) the GEM Listing Committee of the Stock Exchange granting approval to the listing of, and permission to deal in, the Adjusted Shares in issue following completion of the Capital Reorganisation; and
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(iii) the compliance with the relevant procedures and requirements under the Companies Act and the GEM Listing Rules to effect the Capital Reduction, including (a) publication of a notice in relation to the Capital Reduction in an appointed newspaper in Bermuda on a date not more than 30 days and not less than 15 days before the date on which the Capital Reduction is to take effect; and (b) that on the date on which the Capital Reduction is to be effected, there are no reasonable grounds for believing that the Company is, or after the Capital Reduction would be, unable to pay its liabilities as they become due.
The Capital Reorganisation will become effective on the next Business Day immediately following the fulfillment of the above conditions. The legal advisers to the Company as to Bermuda laws have confirmed that, subject to the conditions of the Capital Reorganisation as set out above being satisfied, the Capital Reorganisation will be in compliance with the laws of Bermuda.

As at the date of this announcement, the authorised share capital of the Company is HK$200,000,000 divided into 20,000,000,000 Shares of par value of HK$0.01 each, of which 790,947,782 Shares have been issued and are fully paid or credited as fully paid. Assuming that no new Shares are issued and/or repurchased between the date of this announcement and the date of the SGM, the effect of the Capital Reorganisation is summarised below:

As at 31 December 2014, the amount standing to the credit of the contributed surplus account of the Company was approximately HK$102,180,000. Assuming that no new Shares are issued from the date of this announcement until the effective date of the Capital Reorganisation, a total credit of approximately HK$6,327,582 will arise as a result of the Capital Reduction and such amount will be credited to the contributed surplus account of the Company upon the Capital Reorganisation becoming effective.
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Upon the Capital Reorganisation becoming effective, the Adjusted Shares will rank pari passu in all respects with each other. Fractional Adjusted Shares will not be issued by the Company to the Shareholders. Any fractional entitlements of the Adjusted Shares will be aggregated, sold and retained for the benefit of the Company.
Other than the relevant expenses, including but not limited to professional fees and printing charges incurred, the implementation of the Capital Reorganisation will have no effect on the consolidated net asset value of the Group, nor will it alter the underlying assets, business, operations, management or financial position of the Company or the interest of the Shareholders, save for any fractional Adjusted Shares to which Shareholders may be entitled. The Directors believe that the Capital Reorganisation will not have any material adverse effect on the financial position of the Group.

The board lot size for trading will remain unchanged at 20,000 shares for the Adjusted Shares, which is the same board lot size for trading in the existing Shares on the Stock Exchange. Based on the closing price of HK$0.212 per Share (equivalent to HK$1.060 per Adjusted Share assuming the Capital Reorganisation becoming effective) on the Last Trading Day, the value of each board lot of 20,000 Adjusted Shares would be HK$21,200.

The Share Consolidation will increase the trading price per board lot of the Adjusted Shares, which will reduce the overall transaction costs of dealings in the Adjusted Shares. In addition. the Board considers that the Capital Reduction will give greater flexibility to the Company to raise funds through the issue of new shares of the Company in the future since the Company is not permitted to issue new shares below par value under the laws of Bermuda and its bye-laws. As such, the Board also believes that the Capital Reorganisation may attract more investors and extend the Shareholders' base of the Company.
As at the date of this announcement, the Company has no agreement, arrangement, intention or negotiation about any fund raising activities.
In view of the above, the Board considers that the Capital Reorganisation is in the interests of the Company and the Shareholders as a whole.

Subject to the Capital Reorganisation becoming effective, which is expected to be on Thursday, 18 June 2015, Shareholders may, during a period to be specified in the Circular, submit share certificates for the existing Shares to the Registrar to exchange, at the expense of the Company, for new certificates of the Adjusted Shares. Thereafter, each share certificate for the existing Shares will be accepted for exchange only on
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payment of a fee of HK$2.50 (or such higher amount as may be from time to time be specified by the Stock Exchange) for each new share certificate issued for the Adjusted Shares or each share certificate for the existing Shares submitted for cancellation, whichever the number of certificates issued or cancelled is higher. Nevertheless, the share certificates for the existing Shares will continue to be good evidence of legal title and may be exchanged for new share certificates for the Adjusted Shares at any time but are not accepted for trading, settlement and registration upon completion of the Capital Reorganisation.

In order to facilitate the trading of odd lots (if any) of the Adjusted Shares, the Company will appoint an agent to provide matching services for sale and purchase of odd lots of the Adjusted Shares at the relevant market price per Adjusted Share for the Shareholders, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Adjusted Shares to make up a full board lot, or to dispose of their holding of odd lots of the Adjusted Shares. Details of the odd lots matching arrangement will be set out in the Circular. Holders of odd lots of the Adjusted Shares should note that successful matching of the sale and purchase of odd lots of the Adjusted Shares are not warranted. Any Shareholder who is in any doubt about the odd lots arrangement is recommended to consult his/her/its own professional advisers.
As at the date of this announcement, the Company does not have any outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares.

The expected timetable for the Capital Reorganisation is set out below:

2015

Expected date of despatch of the Circular, notice . . . . . . not later than Friday, 22 May and proxy form of the SGM
Latest time for return of proxy form of the SGM . . . . . . 11:00 a.m. on Monday, 15 June
(not less than 48 hours prior to time of the SGM)
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:00 a.m. on Wednesday, 17 June Announcement of results of the SGM . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 17 June Effective date of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . Thursday, 18 June Commencement of dealings . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Thursday, 18 June
in the Adjusted Shares
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Original counter for trading in board lots of . . . . . . . . . 9:00 a.m. on Thursday, 18 June
20,000 Shares (in the form of existing share certificates) closes
Temporary counter for trading in Adjusted Shares . . . . . . 9:00 a.m. on Thursday, 18 June in board lots of 4,000 Adjusted Shares
(in the form of existing share certificates) opens
First day for free exchange of existing share . . . . . . . . . . . . . . . . . . . Thursday, 18 June certificates for new share certificates
for Adjusted Shares
Designated broker starts to stand in the market . . . . . . . . . . 9:00 a.m. on Friday, 3 July to provide matching services for the sale
and purchase of odd lots of Adjusted Shares
Original counter for trading in Adjusted Shares . . . . . . . . . . 9:00 a.m. on Friday, 3 July in board lots of 20,000 Adjusted Shares
(in the form of new share certificates) re-opens
Parallel trading in Adjusted Shares . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 3 July
(in the form of new and existing share certificates) begins
Designated broker ceases to stand in . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 23 July the market to provide matching
services for the sale and purchase of odd lots of Adjusted Shares
Temporary counter for trading . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 23 July in board lots of 4,000 Adjusted Shares
(in the form of existing share certificates) closes
Parallel trading in Adjusted Shares . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 23 July
(in the form of new and existing certificates) ends
Last day for free exchange of existing . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 27 July certificates for new certificates for Adjusted Shares

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 and may be extended or varied by the Company. Any changes to the expected timetable will be published or notified to the Shareholders as and when appropriate.

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An application will be made by the Company to the GEM Listing Committee of the
Stock Exchange for the listing of, and the permission to deal in, the Adjusted Shares.
Subject to the granting of the listing of, and permission to deal in, the Adjusted Shares on the Stock Exchange, the Adjusted Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Adjusted Shares on the Stock Exchange or, under contingent situation, such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

The SGM will be convened and held for the Shareholders to consider and, if thought fit, approve the special resolution in relation to the Capital Reorganisation. In compliance with the GEM Listing Rules, such resolution will be voted on by way of poll at the SGM. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no Shareholders are required to abstain from voting on the special resolution to be proposed at the SGM.
The Circular containing, among other things, details of the Capital Reorganisation and a notice convening the SGM will be despatched to the Shareholders on or before 22 May
2015.

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:
"Adjusted Share(s)" share(s) of HK$0.01 each in the share capital of the Company immediately upon the Capital Reorganisation becoming effective
"Board" the board of Directors
"Business Day" a day (other than a Saturday and Sunday) on which licensed banks are generally open for business in Hong Kong
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"Capital Reduction" the proposed reduction of the issued share capital of the Company by cancelling the paid up capital of the Company to the extent of HK$0.04 on each of the issued Consolidated Share such that the par value of each issued Consolidated Share will be reduced from HK$0.05 to HK$0.01 and to round down the total number of issued Consolidated Shares to a whole number by eliminating any fraction of a Consolidated Share in the issued share capital of the Company following the Share Consolidation
"Capital Reorganisation" the proposed reorganisation of the share capital of the Company involving the Share Consolidation, the Capital Reduction and the Share Sub-division
"CCASS" the Central Clearing and Settlement System established and operated by HKSCC
"Circular" the circular to be issued by the Company in relation to the Capital Reorganisation
"Companies Act" the Companies Act 1981 of Bermuda (as amended, modified or supplemented from time to time)
"Company" China 3D Digital Entertainment Limited (stock code:
8078), an exempted company incorporated in Bermuda with limited liability, the shares of which are listed on GEM
"Consolidated Share(s)" share(s) of par value of HK$0.05 each in the share capital of the Company upon the Share Consolidation becoming effective
"Director(s)" director(s) of the Company
"GEM" the Growth Enterprise Market of the Stock Exchange
"GEM Listing Rules" the Rules Governing the Listing of Securities on GEM "Group" the Company and its subsidiaries
"HK$" Hong Kong dollar, the lawful currency of Hong Kong
"HKSCC" Hong Kong Securities Clearing Company Limited
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"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China
"Last Trading Day" 30 April 2015, being the last trading day immediately before the publication of this announcement
"Registrar" the branch share registrar of the Company in Hong Kong, being Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong
"SGM" the special general meeting of the Company to be convened to consider and, if thought fit, approve the Capital Reorganisation
"Share Consolidation" the proposed consolidation of every five (5) Shares of par value of HK$0.01 each into one (1) Consolidated Share of par value of HK$0.05
"Share(s)" ordinary share(s) in the issued and unissued capital of the Company, the par value of which being HK$0.01 each, prior to the Capital Reorganisation
"Share Sub-division" the proposed sub-division of each authorised but unissued Consolidated Share (including those arising from the Capital Reduction) into five (5) Adjusted Shares
"Shareholder(s)" holder(s) of Shares, Consolidated Shares or Adjusted
Shares, as the case may be
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"%" or "per cent." percentage or per centum
By order of the Board of

Chairman

Hong Kong, 30 April 2015
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As at the date of this announcement, the Board comprises Mr. Shiu Stephen Junior (Chairman), Mr. Sun Lap Key, Christopher and Mr. Lee Wing Ho, Albert as executive Directors; Mr. Chan Chi Ho, Mr. Kam Tik Lun and Mr. Tam Kwok Ming, Banny as independent non-executive Directors.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the Company's website at www.china3d8078.com and the "Latest Company Announcements" page of the GEM website at http://www.hkgem. com for at least seven days from the date of its posting.

* For identification purposes only

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