Innovative Pharmaceutical Biotech : AMENDMENT TO THE TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS

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 securities.

INNOVATIVE PHARMACEUTICAL BIOTECH LIMITED

領航醫藥及生物科技有限公司

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 399)

AMENDMENT TO THE TERMS AND CONDITIONS OF

THE CONVERTIBLE BONDS

SECOND DEED OF AMENDMENT

On 12 May 2021 (after trading hours of the Stock Exchange), the Company and the Bondholder entered into the Second Deed of Amendment pursuant to which the Company and the Bondholder have conditionally agreed to amend the terms of the Convertible Bonds (as amended by the Amendment Deed) to the effect that: (i) the Maturity Date shall be extended from the Original Maturity Date to 28 July 2023; and (ii) the interest payment date of the Convertible Bonds shall be further amended, details of which are set out in the paragraph headed "Principal terms of the Second Amendment" in this announcement.

SECOND DEED OF WAIVER

On 12 May 2021 (after trading hours of the Stock Exchange), the Company and the Bondholder entered into the Second Deed of Waiver pursuant to which the Bondholder granted to the Company a waiver in respect of the obligation of the Company to pay the Upcoming Principal Payment, the Upcoming Interest Payment and the Additional Interest on the Original Maturity Date.

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LISTING RULES IMPLICATIONS

According to Rule 28.05 of the Listing Rules, any alterations in the terms of convertible debt securities after issue must be approved by the Stock Exchange, except where the alterations take effect automatically under the existing terms of such convertible debt securities. The Company will apply to the Stock Exchange for approval for the Second Amendment contemplated by the Second Deed of Amendment pursuant to Rule 28.05 of the Listing Rules.

GENERAL

The SGM will be held and convened for the purpose of considering and, if thought fit, approving the Second Deed of Amendment and the transactions contemplated thereunder.

A circular containing, amongst other things, (i) further details of the Second Deed of Amendment and the transactions contemplated thereunder; and (ii) a notice of the SGM is expected to be despatched to the Shareholders on or before 3 June 2021 in accordance with the Listing Rules.

Shareholders and potential investors should note that the Second Deed of Amendment is conditional upon fulfilment of all conditions precedent therein. The transactions contemplated under the Second Deed of Amendment may or may not materialize. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

BACKGROUND

Reference is made to (i) the 2014 Announcements and the circular of the Company dated 26 June 2014 in relation to the Acquisition Agreement and issue of the Convertible Bonds by the Company to the Bondholder; and (ii) the 2019 Announcements and the circular of the Company dated 13 September 2019 in relation to the amendment to the terms and conditions of the Convertible Bonds. Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as those defined in the Announcements.

On 17 March 2014, Clear Rich, being a wholly-owned subsidiary of the Company, as the purchaser, and Extrawell BVI, being a wholly-owned subsidiary of the Bondholder, as the vendor, entered into the Acquisition Agreement in relation to the sale and purchase of 51% interest in the share capital of Smart Ascent. On 28 July 2014, the Company issued the Convertible Bonds in the principal amount of HK$715,000,000 to the Bondholder as part of the consideration of the acquisition of Smart Ascent. The Convertible Bonds was issued at an interest rate of 3.5% per annum and the Original Maturity Date falls on 28 July 2021.

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On 26 July 2019, the Company and the Bondholder entered into the Amendment Deed pursuant to which the Company and the Bondholder agreed to amend the interest payment terms of the Convertible Bonds to the effect that: (i) the interest payment due dates were amended from payment of interest in arrears annually to payment of interest for the Interest Payment Year 2018, Interest Payment Year 2019 and Interest Payment Year 2020 on or before the Original Maturity Date; and (ii) the Company was required to pay the Bondholder the Additional Interest in the amount of HK$11,261,250 on the Original Maturity Date.

As at the date of this announcement, none of the conversion rights attached to the Convertible Bonds has been exercised by the Bondholder and the outstanding principal amount of the Convertible Bonds is HK$715,000,000.

On 12 May 2021 (after trading hours of the Stock Exchange), the Company and the Bondholder entered into the Second Deed of Amendment pursuant to which the Company and the Bondholder have conditionally agreed to amend certain terms and conditions of the Convertible Bonds (as amended by the Amendment Deed). Details of the principal terms of the Second Deed of Amendment are set out below:

SECOND DEED OF AMENDMENT

Parties: (1) the Company, as the issuer

1. Extrawell Pharmaceutical Holdings Limited, as the bondholder

The Bondholder is a company incorporated in Bermuda with limited liability and the issued shares of which are listed on the main board of the Stock Exchange (stock code: 858). According to the public information, the Bondholder is an investment company and its subsidiaries are principally engaged in (i) the development, manufacture and sales of pharmaceutical products; (ii) the marketing and distribution of imported pharmaceutical products; and (iii) the commercial exploitation and development of genome related technologies.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, (i) Dr. Mao Yumin, being a substantial shareholder (as defined in the Listing Rules) of the Company holding approximately 25.33% of the issued Shares, is a director of certain subsidiaries of the Bondholder and also holds approximately 7.94% of the issued shares of the Bondholder; and (ii) each of Dr. Xie Yi, Mr. Cheng Yong and Dr. Lou Yi holds less than 1% of the issued Shares and is an executive director of the Bondholder. Save as disclosed above, the Bondholder and their ultimate beneficial owners are Independent Third Parties.

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Principal terms of the Second Amendment

The Company and the Bondholder have conditionally agreed to amend the terms of the Convertible Bonds (as amended by the Amendment Deed) to the effect that:

1. the Maturity Date shall be extended from the Original Maturity Date to 28 July 2023;
2. the interest payment date of the Convertible Bonds shall be further amended and superseded as follows:
3. 1. the Convertible Bonds shall bear interest on the principal amount thereof in accordance with the following interest rate and payment schedule:

1. the Company shall pay the Bondholder a sum of additional interest in the amount of HK$3,753,750 on 28 July 2023 (representing 15% per annum on the annual interest payment under the Convertible Bonds), being the additional interest for one-year extension for payment of interest for Interest Payment Year 2021; and

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1. in addition to (ii) above, the Company shall pay the Bondholder a sum of additional interest in the amount of HK$25,900,875 on 28 July 2023 (representing 15% per annum on the aggregate amount of interest and the Additional Interest of HK$86,336,250 multiplied by two). The Company and the Bondholder agreed that the said amount of HK$25,900,875 is the additional interest for two-year further extension for payment of (a) the interest in the aggregate amount of HK$75,075,000 for Interest Payment Year 2018, Interest Payment Year 2019, Interest Payment Year 2020; and (b) the Additional Interest mentioned in the Amendment Deed in the amount of HK$11,261,250.

Save for the Second Amendment, the terms and conditions of the Convertible Bonds remain intact and unchanged.

An application will be made by the Company to the Stock Exchange for the approval of the Second Amendment pursuant to Rule 28.05 of the Listing Rules.

Conditions precedent

The Second Amendment shall be conditional upon and subject to:

1. the approval having been obtained from the Stock Exchange in respect of the Second Amendment;
2. all necessary consents and approvals required to be obtained on the part of the Company and the Bondholder in respect of the Second Amendment having been obtained and remained in full force and effect;
3. the passing of the necessary resolution(s) by the shareholders of each of the Company and the Bondholder at a special general meeting of each of the Company and the Bondholder to be convened and held to approve the Second Deed of Amendment and the transactions contemplated thereunder; and
4. the Bondholder having passed a written resolution of the bondholder meeting to approve the Second Deed of Amendment and the transactions contemplated thereunder.

The Second Amendment shall take effect on the next Business Day when all the conditions above are fulfilled (the "Second Amendment Effective Date"). None of the above conditions can be waived. If any of the above conditions is not fulfilled on or before 12 November 2021 (or such other date as the Company and the Bondholder may agree) (the "Second Amendment Long Stop Date"), the Second Deed of Amendment shall automatically lapse and be of no further effect and the Company and the Bondholder shall be released from all obligations thereunder.

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