Ko Yo Chemical : Circular

CONTENTS

Page

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . .

31

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . .

33

APPENDIX I - GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .

55

NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64

"acting in concert"

has the meaning ascribed to it under the Takeover Code;

"Announcement"

the announcement dated 10 July 2019 of the Company in

relation to, among others, the Subscription Agreement

and the transactions contemplated thereunder (including

but not limited to the Specific Mandate for the issue and

allotment of the Conversion Shares) and the proposed

increase in the authorised share capital of the Company;

"associate"

has the meaning ascribed to it under the Listing Rules;

"Board"

the board of Directors;

"Business Day(s)"

means a day (other than Saturdays, Sundays and on which

a tropical cyclone warning No. 8 or above or a "black

rainstorm warning signal" is hoisted in Hong Kong at any

time between 9:00 a.m. and 5:00 p.m.) on which licensed

banks in Hong Kong are open for general banking

business;

"Closing"

completion of the Subscription for the Convertible Bonds

in accordance with the terms of the Subscription

Agreement;

"Closing Date"

the date of the Closing;

"Company"

Ko Yo Chemical (Group) Limited (Stock Code: 827), a

company incorporated in the Cayman Islands with

limited liability, the Shares of which are listed on the

Main Board of the Stock Exchange;

"Conditions Precedent"

the conditions precedent required for the completion of

the Subscription Agreement to take place as set out in the

section headed "Conditions Precedent" in this circular;

"connected person(s)"

has the meaning ascribed thereto under the Listing Rules;

"Conversion Shares(s)"

the Share(s) which may fall to be issued and allotted upon

exercise of the conversion rights attaching to the

Convertible Bond(s);

DEFINITIONS

"Convertible Bond(s)"

convertible bonds issued pursuant to the Subscription

Agreement;

"Convertible Bonds Certificate"

a certificate issued to each Convertible Bonds holder in

respect of its registered holding of Convertible Bonds;

"Directors"

the directors of the Company;

"Distribution"

(i)

any distribution of assets in specie by the Company

for any financial period whenever paid or made, on

a per Share basis, and however described (and for

these purposes a distribution of assets in specie

includes without limitation an issue of Shares or

other securities credited as fully or partly paid

(other than Shares credited as fully-paid) by way of

capitalization of reserves); and

(ii)

any cash dividend or distribution including, without

limitation, the relevant cash amount of a Scrip

Dividend of any kind by the Company for any

financial period (whenever paid and however

described) unless it comprises a purchase or

redemption of Shares by or on behalf of the

Company (or a purchase of Shares by or on behalf

DEFINITIONS

"EGM"

the extraordinary general meeting of the Company to be

held at 3:00 p.m. on Friday, 8 November 2019 to approve,

among others, the Subscription Agreement and the

transactions contemplated thereunder (including but not

limited to the Specific Mandate for the issue and

allotment of the Conversion Shares) and the proposed

increase in the authorised share capital of the Company;

"Existing Bonds"

the outstanding convertible bonds issued on: (a) 13

November 2014 with a conversion price of HK$0.32

amounted to HK$320,856,000 which can convert into

1,002,675,000 Shares; and (b) 31 January 2019 and 15

March 2019 with a conversion price of HK$0.108

amounted to HK$237,600,000 which can convert into

2,200,000,000 Shares;

"Existing Shares"

existing ordinary shares of HK$0.10 each in the share

capital of the Company;

"Group"

the Company and its subsidiaries;

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong;

"Hong Kong"

the Hong Kong Special Administrative Region of the

PRC;

"Independent Board Committee"

the independent committee of the Board comprising all

the independent non-executive Directors formed for the

purpose of advising the Independent Shareholders in

respect of the Subscription Agreement and the

transactions contemplated thereunder;

"Independent Financial Adviser"

TC Capital International Limited, a corporation licensed

to carry out Type 1 (dealing in securities) and Type 6

(advising on corporate finance) regulated activities under

the SFO, being the independent financial adviser to the

Independent Board Committee and the Independent

Shareholders in respect of the Subscription Agreement

(together with the transactions contemplated therein,

including the issue and allotment of the Conversion

Shares under the Specific Mandate);

"Independent Shareholders"

Shareholders other than the Subscriber and his associates

who are involved or interested in the Subscription;