Christine International : MAJOR TRANSACTION SPECIFIC MANDATE FOR PROPOSED DISPOSAL OF A PROPERTY

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CHRISTINE INTERNATIONAL HOLDINGS LIMITED

克莉絲汀國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1210)

MAJOR TRANSACTION

SPECIFIC MANDATE FOR PROPOSED DISPOSAL OF A PROPERTY

THE SPECIFIC DISPOSAL MANDATE

The Company proposes to seek approval for the Specific Disposal Mandate from the Shareholders at the EGM in advance to allow Shanghai Christine (the Company's indirect wholly-owned subsidiary which is owner of Property) to enter into a Formal Sale and Purchase Agreement with the Purchasers (independent third party) to sell the Property for a consideration of RMB80,000,000.

THE LISTING RULES IMPLICATIONS

As one of the applicable percentages (as defined in Rule 14.07 of the Listing Rules) in respect of the Disposal at a consideration of RMB80,000,000 is more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company and is therefore subject to the reporting, announcement and Shareholders' approval requirements under Chapter 14 of the Listing Rules.

GENERAL

An EGM will be convened and held for the Shareholders to consider and, if thought fit, approve the Specific Disposal Mandate. A circular containing, among others, (i) further details of the Specific Disposal Mandate and the Disposal; (ii) other information as required under the Listing Rules; and (iii) notice of the EGM will be despatched to the Shareholders as soon as practicable, which is expected to be on or before 30 September 2020 since more time is required to prepare the information for the circular.

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INTRODUCTION

On 22 June 2020, the handling officers of the Company, prior to obtaining the Board approval, agreed on a sale and purchase agreement (the "Initial Agreement") which contained essential terms such as pricing with the Purchasers for disposal of the Property for a consideration of RMB80,000,000. On the date of this announcement, the Board approved the Disposal of the Property at a consideration of RMB80,000,000 and propose to seek shareholders approval for entering into the Formal Sale and Purchase Agreement.

To the Directors' knowledge and belief and based on the PRC legal advice, the Initial Agreement is unlikely to be legally binding upon the Company or Shanghai Christine and the Purchasers, and under PRC laws, a Formal Sale and Purchase Agreement between Purchasers and Shanghai Christine is mandatorily required for completing the transfer of the Property. The Formal Sale and Purchase Agreement has not been executed as of present, and thus Shanghai Christine has remained as the registered owner of the Property.

However, as the Purchasers in the Initial Agreement had insisted that the Initial Agreement was of full legal effect and legally binding, and Shanghai Christine just received a court summons against it on 17 August 2020 to (i) enforce the sale and purchase of the Property; (ii) claim economic compensation and interest for delay in completion of the sale and purchase of the Property; and

1. costs incurred as a result of the legal actions, the Company considered that it is not practicable for the Purchasers to agree to enter into the Formal Sale and Purchase Agreement setting out a condition precedent that the Disposal shall be conditional upon the obtaining of the Shareholders' approval at the EGM. It also came to the Company's attention that the Purchasers had obtained a litigation preservation order on the Property.

As such, the Company would like to proceed with the Disposal on the basis of the Specific Disposal Mandate.

Upon obtaining the Specific Disposal Mandate, Shanghai Christine (the Company's wholly-owned subsidiary which is the owner of the Property) shall enter into the Formal Sale and Purchase Agreement to effectuate the Disposal. As at the date of this announcement, the Purchasers have paid RMB80,000,000 to the Group which held such amount as deposit.

For avoidance of doubt, the Board, after taking into account the PRC legal advice and the legal action taken by the Purchasers, is of the view that:

1. the Initial Agreement is not legally binding and therefore shareholders' approval is required for Shanghai Christine to enter into a Formal Sale and Purchase Agreement for the Disposal and complete the Disposal of the Property.

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1. If the Shareholders' approval is obtained, then given that the Consideration of RMB80,000,000 is fair and reasonable, and the Group's financial need, Shanghai Christine shall complete the sale and purchase of the Property.
2. If the Shareholders' approval is not obtained, then the Company will return the deposit of RMB80,000,000 to the Purchasers and Shanghai Christine will defend the current claim and/or any further claim brought by the Purchasers.

THE SPECIFIC DISPOSAL MANDATE

The principal terms of the Specific Disposal Mandate are set out below:

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The Consideration of RMB80,000,000 was determined after arm's length negotiation with reference to the recent transactions of similar types of properties in the market.

Proposed Terms of Payment : Full amount of Consideration shall be paid to the Vendor upon Completion.

As at the date of this announcement, Shanghai Christine has already received RMB80,000,000 from the Purchasers which Shanghai Christine held as deposit for the sale and purchase of the Property.

FINANCIAL EFFECT OF THE DISPOSAL AND USE OF PROCEEDS

Assuming that the Formal Sale and Purchase Agreement is entered into based on the terms as stated above, the net proceeds arising from the Disposal will be RMB78,400,000 (after deducting tax and other expenses such as commission payable to the real estate agent who introduced the Purchasers in relation to the Disposal), which will be used as general working capital of the Group.

Based on, inter alia, the Consideration, the unaudited carrying value of the Properties being approximately RMB66,963,000 as at 30 June 2020, and the related expenses for the Disposal, the Group currently expects to record a gain on disposal of approximately RMB11,000,000 upon Completion.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Property is currently occupied by the Group as its commercial office. The Group acquired the Property at the consideration of RMB66,963,000 (inclusive of tax and other expenses on acquiring it) in December 2012. The unaudited carrying value of the Property was RMB66,963,000 as at 30 June 2020.

As disclosed on page 84 of the 2019 annual report of the Company (which was published on 28 May 2020), the consolidated financial statements of the Company for the year ended 31 December 2019 was prepared on a going concern basis, the validity of which was dependent on the outcomes of these measures, which were subject to significant uncertainties, including, among others, whether the Group is able to dispose of its land use right and buildings located in Nanjing, i.e. the Property. The Board is implementing measures to remove the audit modifications on the financial statements of the Company for the year ended 31 December 2019 in the forthcoming auditors' reports for the year ending 31 December 2020, one of which would involve the Group to implement the sale of the Property to generate cashflow for the year ending 31 December 2020.

The Directors believe that the Disposal represents a good opportunity for the Company to realise the value of the Property at a reasonable price and the proceeds from the Disposal will improve the financial position, improve the cashflow and increase the general working capital of the Group.

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After considering (1) the Group's need for working capital and also the need to remove audit modifications in the auditors' report for the year ended 31 December 2019, and (2) the Consideration of RMB80 million represents a premium over the Group's initial acquisition price as well as the market value based on the preliminary draft valuation provided by the Property Valuer, the Directors, including the independent non-executive Directors, consider that the proposed terms of the Sale and Purchase Agreement under the Specific Disposal Mandate are on normal commercial terms, fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole.

INFORMATION OF THE GROUP AND THE PURCHASERS

The Company is an investment holding company, and the Group is a leading bakery chain operator in the PRC, principally engaged in the operation of retail chain selling bakery products.

To the knowledge of the Directors, the Purchasers are residents of the PRC which are independent third parties.

THE LISTING RULES IMPLICATIONS

As one of the applicable percentages (as defined in Rule 14.07 of the Listing Rules) in respect of the Disposal at a consideration of RMB80,000,000 is more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company and is therefore subject to the reporting, announcement and Shareholders' approval requirements under Chapter 14 of the Listing Rules.

GENERAL

An EGM will be convened and held for the Shareholders to consider and, if thought fit, approve the Specific Disposal Mandate. A circular containing, among others, (i) further details of the Specific Disposal Mandate and the Disposal; (ii) other information as required under the Listing Rules; and (iii) notice of the EGM will be despatched to the Shareholders as soon as practicable, which is expected to be on or before 30 September 2020 since more time is required to prepare the information for the circular.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

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By Order of the Board

Christine International Holdings Limited

Chun Bin Xu

Chairman

Shanghai, the PRC, 21 August 2020

As at the date of this announcement, the executive Directors are Mr. Chun Bin Xu (Chairman), Mr. Yong Ning Zhu, Mr. Ming-Tien Lin, Mr. I-Sheng Chan and Mr. Chien-Li Tseng; the non- executive Directors are Mr. Dun-Ching Hung, Mr. Chi-Ming Chou; and the independent non- executive Directors are Dr. Yong Jun Tang, Mr. Hang Sheng Ye, Ms. Hong Xue and Ms. Xiao Yan Xu.

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