Four Seas Mercantile : DISCLOSEABLE TRANSACTION - PROVISION OF SHAREHOLDER'S LOAN

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FOUR SEAS MERCANTILE HOLDINGS LIMITED

四 洲 集 團 有 限 公 司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 374)

DISCLOSEABLE TRANSACTION

PROVISION OF SHAREHOLDER'S LOAN

PROVISION OF SHAREHOLDER'S LOAN

On 18 December 2019, the Purchaser entered into the Second Loan Agreement with the Borrower, a wholly-owned subsidiary of the Target Company, pursuant to which the Purchaser has agreed to provide an interest-free loan in the amount of JPY900,000,000 (equivalent to approximately HK$64,198,000) to the Borrower.

LISTING RULES IMPLICATIONS

As at least one of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the loans provided under the Loan Agreements is more than 5% but less than 25%, the Loan Agreements constitute discloseable transactions for the Company and are subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

Reference is made to the announcement of the Company of 18 November 2019 (the "November Announcement") in relation to (i) the Share Sale Agreement pursuant to which the Purchaser has acquired 15% of the issued share capital of the Target Company; and (ii) the Loan Agreement pursuant to which the Purchaser has provided an interest-free loan in the amount of JPY800,000,000 (equivalent to approximately HK$57,685,000) to the Borrower (the "First Loan Agreement"). Completion of the Share Sale Agreement took place on 22 November 2019 and the loan under the First Loan Agreement was extended to the Borrower on 15 November 2019 which was the date of entering the Share Sale Agreement. Unless otherwise defined herein, capitalized terms in this announcement shall have the same meaning as defined in the November Announcement.

• For identification purpose only

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THE SECOND LOAN AGREEMENT

On 18 December 2019, the Purchaser entered into a second loan agreement with the Borrower (the "Second Loan Agreement"). Pursuant to the Second Loan Agreement, the Purchaser has agreed to provide an interest - free loan in the amount of JPY900,000,000 (equivalent to approximately HK$64,198,000) to the Borrower (the "Second Loan") for use by the Borrower as general working capital during the festive season of the new year, which is traditionally the peak trading season for the Borrower. The interest-free loan under the Second Shareholder's Loan has been determined after arm's length negotiation between the parties with reference to, among other things, (i) the Share Sale Agreement entered between the Purchaser and the Target Company; and

1. the general working capital requirements of the Borrower. The Second Loan was satisfied by the internal resources of the Group.

The Borrower shall repay in full the outstanding principal amount of the Second Loan together with all other amounts accrued or outstanding on or before 30 November 2020.

The Directors consider that the terms of the Second Loan Agreement were concluded after arm's length negotiations and were normal commercial terms, and the provision of the Second Loan is in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As the loans under the First Loan Agreement and the Second Loan Agreement (together, the "Loan Agreements") are provided to the Borrower within a 12-month period, the loan amounts of the Loan Agreements are aggregated under the requirements of Rule

14.22 of the Listing Rules for the calculation of the applicable percentage ratios. As at least one of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Loan Agreements is more than 5% but less than 25%, the Loan Agreements constitute discloseable transactions for the Company and are subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

For illustration purposes, amounts in JPY in this announcement have been translated into HK$ at JPY100 = HK$7.2107 for the First Loan Agreement and JPY100 = HK$7.1331 for the Second Loan Agreement where such translations do not constitute a representation that any amounts have been, could have been or may be exchanged at these or any other rates.

On behalf of the Board

Four Seas Mercantile Holdings Limited

TAI Tak Fung, Stephen, GBM, GBS, SBS, JP

Chairman

Hong Kong, 18 December 2019

As at the date of this announcement, the executive directors of the Company are Mr . TAI Tak Fung, Stephen, Ms . WU Mei Yung, Quinly, Mr . TAI Chun Kit, Mr. MAN Wing Cheung, Ellis, Mr. WU Wing Biu and Mr. NAM Chi Ming, Gibson and the independent non-executive directors of the Company are Ms. LEUNG Mei Han, Mr. CHAN Yuk Sang, Peter and Mr. Tsunao KIJIMA.

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