Directel : DISCLOSEABLE TRANSACTION INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER GENERAL MANDATE IN RELATION TO THE ACQUISITION OF 100% ISSUED SHARE CAPITAL IN THE TARGET 【PDF file】

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the company.

直 通 電 訊 控 股 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

On 18 July 2017 (after trading hours), the Purchaser entered into the Sale and Purchase Agreement with the Vendor, pursuant to which the Purchaser has conditionally agreed to purchase and the Vendor has conditionally agreed to sell, the Sale Shares at a total consideration of HK$60,000,000 (subject to Adjustment), which is to be satisfied by (i) the payment of Cash Consideration at Completion; and (ii) the Purchaser procuring the Company allotting and issuing not more than 375,375,375 Shares of HK$0.01 each in the Company at the Issue Price per Consideration Share in three tranches.

The Acquisition is subject to fulfillment of the conditions precedent as detailed in the paragraph headed "Conditions Precedent" in this announcement. Upon Completion, the Target will become a direct wholly-owned subsidiary of the Purchaser and an indirect wholly-owned subsidiary of the Company.

As one or more of the applicable percentage ratios (as defined under Rule 19.04(9) of the GEM Listing Rules) in relation to the transactions contemplated under the Sale and Purchase Agreement exceed 5% but below 25%, the transaction contemplated thereunder constitutes a discloseable transaction of the Company under Chapter 19 of the GEM Listing Rules.

Date: 18 July 2017 (after trading hours)

Parties: (i) the Purchaser; and

(ii) the Vendor

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, the Vendor and her associates are Independent Third Parties.

Subject matter of the Sale and Purchase Agreement

Pursuant to the Sale and Purchase Agreement, the Purchaser has conditionally agreed to purchase and the Vendor has conditionally agreed to sell the Sale Shares. The Target is an investment holding company and is wholly owned by the Vendor. Upon Completion, the Target will become a direct wholly-owned subsidiary of the Purchaser and an indirect wholly-owned subsidiary of the Company.

The Consideration

The total consideration of the Acquisition is HK$60,000,000 (subject to Adjustment) which is to be satisfied by (i) the payment of the Cash Consideration of HK$10,000,000 at Completion; and (ii) the Purchaser procuring the Company allotting and issuing not more than 375,375,375 Shares of HK$0.01 each in the Company at the Issue Price per Consideration Share credited as fully paid to the Vendor for the remaining HK$50,000,000, in three tranches in the following manner:

1. allot and issue such number of Consideration Shares to the Vendor within 60 Business Days immediately following the issue of the audited consolidated financial statements of the Target for the year ending 31 December 2018

   ("First Tranche Allotment") by reference to the first formula as set out in the sub-paragraph headed "Revenue guarantee and adjustments for the consideration of the Acquisition" in this announcement;

2. allot and issue such number of Consideration Shares to the Vendor within 60 Business Days immediately following the issue of the audited consolidated financial statements of the Target for the year ending 31 December 2019 ("Second Tranche Allotment") by reference to the second formula as set out in the sub-paragraph headed "Revenue guarantee and adjustments for the consideration of the Acquisition" in this announcement; and

3. allot and issue such number of Consideration Shares to the Vendor within 60 Business Days immediately following the issue of the audited consolidated financial statements of the Target for the year ending 31 December 2020 ("Third Tranche Allotment") by reference to the third formula as set out in the sub-paragraph headed "Revenue guarantee and adjustments for the consideration of the Acquisition" in this announcement.

Assuming there is no Adjustment, the Consideration Shares comprise 375,375,375 Shares, representing (a) approximately 12.06% of the existing issued share capital of the Company as at the date of this announcement; and (b) approximately 10.76% of the issued share capital of the Company as enlarged by the allotment and issue of all the Consideration Shares.

The consideration has been determined after arm's length negotiations between the Purchaser and the Vendor with reference to various factors, including but not limited to, (a) the customer base of the Target Group; (b) the growth potential and prospect of the Target Group; (c) the Revenue Guarantee; and (d) the anticipated synergy to be created for the Group's existing business after Completion.

Revenue guarantee and adjustments for the consideration of the Acquisition

Pursuant to the Sale and Purchase Agreement, the Vendor undertakes to the Purchaser that the aggregate audited consolidated revenue arising from its ordinary course of business (excluding non-operating income and extraordinary income) of the Target shall not be less than RMB200,000,000 ("Revenue Guarantee") for the period from the Completion Date to 31 December 2020.

Pursuant to the Sale and Purchase Agreement, the number of Consideration Shares to be allotted and issued on the First Tranche Allotment (or as the case may be, the Second Tranche Allotment and the Third Tranche Allotment) shall be calculated as follows:

1. Consideration Shares to be allotted and issued at the First Tranche Allotment

   A = HK$60,000,000 x X - HK$10,000,000

   RMB 200,000,000

   Where:

   A = the monetary amount, in HK$, of the Consideration Shares to be allotted and issued by the Company at the First Tranche Allotment

   X = the audited consolidated revenue of the Target for the First Relevant Financial Years

   The number of Consideration Shares to be allotted and issued at the First Tranche Allotment shall equal to A divided by the Issue Price. If the value of A is equal to or less than zero, no Consideration Share shall be issued at the First Tranche Allotment. If the value of X is equal to or more than RMB200,000,000, all Consideration Shares will be issued at the First Tranche Allotment and no further allotment will take place at the Second Tranche Allotment and Third Tranche Allotment.

2. Consideration Shares to be allotted and issued at the Second Tranche Allotment

B = HK$60,000,000 x X + Y - (A + HK$10,000,000) RMB 200,000,000

Where:

A = the monetary amount, in HK$, of the Consideration Shares allotted and issued by the Company at the First Tranche Allotment

B = the monetary amount, in HK$, of the Consideration Shares to be allotted and issued by the Company at the Second Tranche Allotment

X = the audited consolidated revenue of the Target for the First Relevant Financial Years