PanAsialum : Announcements and Notices - Investment Agreement

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PanAsialum Holdings Company Limited

榮 陽 實 業 集 團 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 2078)

INVESTMENT AGREEMENT

This announcement is made by the Company pursuant to the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and Rule 13.09(2)(a) of the Listing Rules.

On 6 June 2019, PanAsia Aluminium entered into the Investment Agreement ("the Investment Agreement") with the Heshan City Government, pursuant to which the Heshan City Government agrees to carry out an open tender in respect of the land use right of a parcel of land situated in the Heshan City, Jiangmen, Guangdong Province area in the PRC. The Group conditionally agreed and intends to acquire the Land Use Right in three phases through the Open Tender. Pursuant to the Investment Agreement,

the Group intends to establish a new production base at the Heshan Industrial City District A (鶴山工業城A區) for manufacture and production of high performance and

high precision aluminium products including high-end aluminium alloys and moulds, hardware parts, heatsinks and other electronic parts mainly to fulfill the needs of the overseas market.

As the Project may or may not materialise, Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

This announcement is made by the Company pursuant to the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and Rule 13.09(2)(a) of the Listing Rules.

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On 6 June 2019, PanAsia Aluminium entered into the Investment Agreement with the Heshan City Government, pursuant to which the Heshan City Government agrees to carry out an Open Tender in respect of the Land Use Right of a parcel of land situated in the Heshan City, Jiangmen, Guangdong Province area in the PRC. The Group conditionally agreed and intends to acquire the Land Use Right in three phases through the Open Tender. Pursuant to the Investment Agreement, the Group intends to establish

1. new production base at the Heshan Industrial City District A (鶴山工業城A區)* for manufacture and production of high performance and high precision aluminium products including high-end aluminium alloys and moulds, hardware parts, heatsinks and other electronic parts mainly to fulfill the needs of the overseas market.

THE INVESTMENT AGREEMENT

Date

6 June 2019

Parties

1. Heshan City Government; and
2. PanAsia Aluminium.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Heshan City Government, being a PRC local government, is a third party independent of and not connected with the Company or any of its connected persons.

Principal terms

Establishment of a subsidiary

Pursuant to the terms of the Investment Agreement, the Company has established a new wholly owned subsidiary to engage in the manufacture and production of high performance and high precision aluminium products including high-end aluminium alloys and moulds, hardware parts, heatsinks and other electronic parts.

It is estimated that an aggregate of RMB1.05 billion will be invested in Phase 1 to develop the Project. It is expected that the Project will have capacity to produce 70,000 tons of aluminium alloy and aluminium alloy products annually.

The investment cost will encompass the land, construction of the plant, new production equipment and working capital for the Project.

Land

The Subsidiary will purchase land of approximately 200 mu (畝) (approximately 133,000 square meters) for Phase 1 of the Project. The development of Phase 1 is expected to be started by the end of 2019.

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The Company will comply with the requirements of the Listing Rules for notifiable transaction if the acquisition of the Land or assets would constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules.

Within 10 days after the signing of the Investment Agreement, Heshan City Government and PanAsia Aluminium (or its related company) shall open a Joint Account administered by both parties, whereby PanAsia Aluminium (or its related company) shall deposit a sum of RMB5 million into the Joint Account as Deposit for the Project. Upon

1. PanAsia Aluminium's successful bidding of the Project and the signing of the Land Use Right Grant Agreement (《國有土地使用權出讓合同》), or (ii) the unsuccessful bidding of the Project, Heshan City Government shall lift its control over the administration of the Joint Account within one week. In the event that an invite to bid for the Project was provided to PanAsia Aluminium but the latter did not eventually enter a bid, the Deposit shall be forfeited by the Heshan City Government.

The Investment Agreement will be terminated and cease to be of further effect if the Subsidiary is unsuccessful in its tender for the Land. Upon the successful bidding and materialization of the Project, the Company will publish a separate announcement providing further and updated particulars of the Project.

REASONS FOR AND BENEFITS OF THE INVESTMENT AGREEMENT

The Group currently manufactures three categories of products: electronics parts products, branded OPLV products and construction and industrial products.

The Company plans to establish a new aluminium alloy production base at the Heshan Industrial City District A. With the addition of a new production base, the Group can better integrate its existing production facilities and expand its production capacity to meet the overseas market and growing demand for high quality products.

As the Project may or may not materialise, Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions will have the following respective meanings:

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• The English translation of the Chinese name is included for information purpose only, and should not be regarded as the official English name of such Chinese name.

By order of the Board of

PanAsialum Holdings Company Limited

Huang Gang

Chairman

Hong Kong, 6 June 2019

As at the date of this announcement, the executive directors of the Company are Dr. Huang Gang, Mr. Wong Kwok Wai Eddy and Ms. Li Jiewen; and the independent non-executive directors of the Company are Mr. Mar Selwyn, Mr. Leung Ka Tin and Dr. Cheung Wah Keung.

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