Tianneng Power International : CONNECTED TRANSACTION IN RELATION TO CAPITAL INCREASE ARRANGEMENTS OF JOINT VENTURE COMPANIES

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.

TIANNENG POWER INTERNATIONAL LIMITED ˂ঐਗɢ਷ყϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00819)

CONNECTED TRANSACTION

IN RELATION TO

CAPITAL INCREASE ARRANGEMENTS OF JOINT VENTURE COMPANIES

BACKGROUND

Reference is made to the December 2019 Announcement and January 2020 Announcement, in which it was disclosed that (i) Tianneng Holding (an indirect wholly-owned subsidiary of the Company) and Tianchang Holding (a connected person of the Company) entered into the Tianneng Factoring JV Arrangement in respect of the formation of a joint venture company, namely Tianneng Factoring; and (ii) Tianneng Holding, Tianneng Financial (an indirect wholly-owned subsidiary of the Company) and Prime Leader (a connected person of the Company) entered into a joint venture arrangement in respect of the formation of a joint venture company, namely Tianneng Finance Leases.

As at the date of this announcement, the registered capital of Tianneng Factoring is RMB50.0 million and Tianneng Factoring is held as to 60% and 40% by Tianneng Holding and Tianchang Holding, respectively, whereas the registered capital of Tianneng Finance Leases is RMB170.0 million and Tianneng Finance Leases is held as to 50%, 25% and 25% by Tianneng Holding, Tianneng Financial and Prime Leader, respectively.

CAPITAL INCREASE ARRANGEMENTS OF JOINT VENTURE COMPANIES

The Board is pleased to announce that, on 26 February 2021, Tianneng Holding and Tianchang Holding entered into the Capital Increase Arrangement (Factoring), pursuant to which the parties agreed to make additional capital contributions to Tianneng Factoring in proportion to their respective equity interests in Tianneng Factoring, whereas Tianneng Holding, Tianneng Financial and Prime Leader also entered into the Capital Increase Arrangement (Finance Leases), pursuant to which the parties agreed to make additional capital contributions to Tianneng Finance Leases in proportion to their respective equity interests in Tianneng Finance Leases.

Upon completion of the Capital Increase Arrangements, the registered capital of Tianneng Factoring shall increase from RMB50.0 million to RMB100.0 million, and the proportion of equity interests of each of Tianneng Holding and Tianchang Holding in Tianneng Factoring will remain unchanged, whereas the registered capital of Tianneng Finance Leases shall increase from RMB170.0 million to RMB300.0 million, and the proportion of equity interests of each of Tianneng Holding, Tianneng Financial and Prime Leader in Tianneng Finance Leases will remain unchanged.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Tianchang Holding's equity interest is owned as to 98% and 2% by Dr. Zhang and Mr. Zhang, respectively, whereas Prime Leader is wholly-owned by Dr. Zhang. Dr. Zhang is a controlling shareholder and an executive Director of the Company and Mr. Zhang is a son of Dr. Zhang. Accordingly, each of Tianchang Holding and Prime Leader is an associate of Dr. Zhang and a connected person of the Company pursuant to the Listing Rules. As a result, the entering into of the Capital Increase Arrangements constitutes connected transactions of the Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.76(2) of the Listing Rules, as all of the applicable percentage ratios in respect of the Capital Increase Arrangements on an aggregated basis exceed 0.1% but are less than 5%, the Capital Increase Arrangements will be subject to the reporting and announcement requirements but exempt from the circular and independent Shareholders' approval requirements as set out in Chapter 14A of the Listing Rules.

When aggregating the connected transactions under the Capital Increase Arrangements and the Tianneng Factoring JV Arrangement (which was completed within the last 12 months) in accordance with Rule 14A.81 of the Listing Rules, all of the applicable percentage ratios in respect of the above aggregated connected transactions (whether on a standalone basis or an aggregated basis) exceed 0.1% but are less than 5%. Accordingly, all such connected transactions are exempt from the circular and independent Shareholders' approval requirements under Rule 14A.76(2) of the Listing Rules.

BACKGROUND

Reference is made to the December 2019 Announcement and January 2020 Announcement, in which it was disclosed that (i) Tianneng Holding (an indirect wholly-owned subsidiary of the Company) and Tianchang Holding (a connected person of the Company) entered into the Tianneng Factoring JV Arrangement in respect of the formation of a joint venture company, namely Tianneng Factoring; and (ii) Tianneng Holding, Tianneng Financial (an indirect wholly-owned subsidiary of the Company) and Prime Leader (a connected person of the Company) entered into a joint venture arrangement in respect of the formation of a joint venture company, namely Tianneng Finance Leases.

As at the date of this announcement, the registered capital of Tianneng Factoring is RMB50.0 million and Tianneng Factoring is held as to 60% and 40% by Tianneng Holding and Tianchang Holding, respectively, whereas the registered capital of Tianneng Finance Leases is RMB170.0 million and Tianneng Finance Leases is held as to 50%, 25% and 25% by Tianneng Holding, Tianneng Financial and Prime Leader, respectively.

CAPITAL INCREASE ARRANGEMENTS OF JOINT VENTURE COMPANIES

The Board is pleased to announce that, on 26 February 2021, Tianneng Holding and Tianchang Holding entered into the Capital Increase Arrangement (Factoring), pursuant to which the parties agreed to make additional capital contributions to Tianneng Factoring in proportion to their respective equity interests in Tianneng Factoring, whereas Tianneng Holding, Tianneng Financial and Prime Leader also entered into the Capital Increase Arrangement (Finance Leases), pursuant to which the parties agreed to make additional capital contributions to Tianneng Finance Leases in proportion to their respective equity interests in Tianneng Finance Leases.

The principal terms of the Capital Increase Arrangement (Factoring) are as follows:

Date

:

26 February 2021

PartiesIncrease in registered capital and capital contribution

:

• (i) Tianneng Holding; and

• (ii) Tianchang Holding

:

Tianneng Holding and Tianchang Holding agreed that the registered capital of Tianneng Factoring shall be increased from RMB50.0 million to RMB100.0 million. Each of Tianneng Holding and Tianchang Holding agreed to make additional capital contributions to Tianneng Factoring in the amount of RMB30.0 million and RMB20.0 million, respectively.

The additional capital contributions shall be paid in proportion to their respective equity interests in Tianneng Factoring by each of Tianneng Holding and Tianchang Holding in cash upon the terms set out therein.

The table below sets forth the shareholding structure of Tianneng Factoring and capital contribution of each of Tianneng Holding and Tianchang Holding to Tianneng Factoring (i) as at the date of this announcement; and (ii) immediately after the completion of the additional capital contributions in accordance with the Capital Increase Arrangement (Factoring):

Total

Upon completion of the additional capital contributions to Tianneng Factoring pursuant to the Capital Increase Arrangement (Factoring), the registered capital of Tianneng Factoring shall increase from RMB50.0 million to RMB100.0 million and the proportion of equity interests of each of Tianneng Holding and Tianchang Holding in Tianneng Factoring will remain unchanged. No other change to the terms of the Tianneng Factoring JV Arrangement as announced by the Company in the December 2019 Announcement is contemplated.

It is expected that the additional capital contributions to Tianneng Factoring will be completed by 15 March 2021.

The principal terms of the Capital Increase Arrangement (Finance Leases) are as follows:

Date

:

26 February 2021

Parties

:

(i)Tianneng Holding;

• (ii) Tianneng Financial; and

(iii)Prime Leader

Increase in registered capital and capital contribution

:

Tianneng Holding, Tianneng Financial and Prime Leader agreed that the registered capital of Tianneng Finance Leases shall be increased from RMB170.0 million to RMB300.0 million. Each of Tianneng Holding, Tianneng Financial and Prime Leader agreed to make additional capital contributions to Tianneng Finance Leases in the amount of RMB65.0 million, RMB32.5 million and RMB32.5 million, respectively.

The additional capital contributions shall be paid in proportion to their respective equity interests in Tianneng Finance Leases by each of Tianneng Holding , Tianneng Financial and Prime Leader in cash upon the terms set out therein.

The table below sets forth the shareholding structure of Tianneng Finance Leases and capital contribution of each of Tianneng Holding, Tianneng Financial and Prime Leader to Tianneng Finance Leases (i) as at the date of this announcement; and (ii) immediately after the completion of the additional capital contributions in accordance with the Capital Increase Arrangement (Finance Leases):

Total

Upon completion of the additional capital contributions to Tianneng Finance Leases pursuant to the Capital Increase Arrangement (Finance Leases), the registered capital of Tianneng Finance Leases shall increase from RMB170.0 million to RMB300.0 million and the proportion of equity interests of each of Tianneng Holding, Tianneng Financial and Prime Leader in Tianneng Finance Leases will remain unchanged. No other change to the terms of the joint venture arrangement as announced by the Company in the January 2020 Announcement is contemplated.

It is expected that the additional capital contributions to Tianneng Finance Leases will be completed by 15 March 2021.

The Capital Increase Arrangements were determined upon arm's length negotiations between the parties on normal commercial terms after taking into account the potential capital needs of the Joint Venture Companies. The payments of the Group's share of the additional capital contributions will be funded by the internal resources of the Group.

REASONS FOR ENTERING INTO THE CAPITAL INCREASE ARRANGEMENTS

With a view to complying with the regulatory requirements for leverage ratio for the finance leasing industry in the PRC set down by the China Banking and Insurance Regulatory Commission

(ʕ਷ვБڭᎈ္ຖ၍ଣ։ࡰึ) from time to time and meeting the capital requirements for finance leasing companies' loan applications required by financial institutions in the PRC in general, the Board believes that the additional capital contributions to Tianneng Finance Leases will provide additional financial resources to supplement Tianneng Finance Leases' general working capital for its sustainable development, which is beneficial to its shareholders (including the Company) in the long run and is in line with the Group's long-term corporate investment strategy.

The additional capital contributions to Tianneng Factoring will enhance the financial conditions of and allow the Group to further increase its support for the business development of Tianneng

Factoring, which is beneficial to the development of the Group in the long run.

The Board (including the independent non-executive Directors but excluding Dr. Zhang) believes that the terms of the Capital Increase Arrangements are fair and reasonable, are on normal commercial terms and in the ordinary and usual course of business of the Group and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board has approved the entering into of the Capital Increase Arrangements. Except for Dr. Zhang, a controlling shareholder and an executive Director of the Company who owns 98% equity interest of Tianchang Holding and who wholly-owns Prime Leader as at the date of this announcement, none of the Directors has any material interest in the Capital Increase Arrangements or was required to abstain from voting on the relevant resolutions of the Board.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Tianchang Holding's equity interest is owned as to 98% and 2% by Dr. Zhang and Mr. Zhang, respectively, whereas Prime Leader is wholly-owned by Dr.

Zhang. Dr. Zhang is a controlling shareholder and an executive Director of the Company and Mr.

Zhang is a son of Dr. Zhang. Accordingly, each of Tianchang Holding and Prime Leader is an associate of Dr. Zhang and a connected person of the Company pursuant to the Listing Rules. As a result, the entering into of the Capital Increase Arrangements constitutes connected transactions of the Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.76(2) of the Listing Rules, as all of the applicable percentage ratios in respect of the Capital Increase Arrangements on an aggregated basis exceed 0.1% but are less than 5%, the Capital Increase Arrangements will be subject to the reporting and announcement requirements but exempt from the circular and independent Shareholders' approval requirements as set out in Chapter 14A of the Listing Rules.

When aggregating the connected transactions under the Capital Increase Arrangements and the Tianneng Factoring JV Arrangement (which was completed within the last 12 months) in accordance with Rule 14A.81 of the Listing Rules, all of the applicable percentage ratios in respect of the above aggregated connected transactions (whether on a standalone basis or an aggregated basis) exceed 0.1% but are less than 5%. Accordingly, all such connected transactions are exempt from the circular and independent Shareholders' approval requirements under Rule 14A.76(2) of the Listing Rules.

GENERAL INFORMATION ON THE PARTIES

Prime Leader

Prime Leader is a company incorporated in the BVI with limited liability which is wholly-owned by Dr. Zhang as at the date of this announcement. Prime Leader is a connected person of the Company for the reasons set out in the paragraph headed "Implications under the Listing Rules" above. Prime Leader is an investment holding company of Dr. Zhang and does not carry out any business activity.

The Company and the Group

The Company is a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 00819) and is principally engaged in investment holding business. The Group focuses primarily on research and development, production and sales of high-end eco-friendly batteries, new energy batteries, green renewable materials and their related products.

Tianchang Holding

Tianchang Holding is a company established under the laws of the PRC with limited liability, and a connected person of the Company for the reasons set out in the paragraph headed "Implications under the Listing Rules" above. The principal activities of Tianchang Holding are assets and equity investments, provision of enterprise management advisory services and related businesses.

Tianneng Financial

Tianneng Financial is a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company. Its scope of business includes, among other things, the provision of financial services (subject to the approval by the relevant regulatory authorities).

Tianneng Holding

Tianneng Holding is a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company. It is principally engaged in investment holding, provision of investment management, enterprise management consulting and investment advisory services, and sales of metal materials, construction materials, metal appliances, batteries production equipment and related products.

INFORMATION ON TIANNENG FACTORING

Tianneng Factoring principally engages in the provision of commercial factoring services to members of the Group as well as to both upstream and downstream business partners of the Group.

INFORMATION ON TIANNENG FINANCE LEASES

Tianneng Finance Leases principally engages in the provision of leasing and financial leasing services, sourcing assets for leasing, repairing leased assets and managing their residual value.

DEFINITIONS

In this announcement, the following terms and expressions shall, unless the context requires otherwise, have the following meanings:

"Capital Increase Arrangement

(Factoring)"

the capital increase arrangement entered into between Tianneng Holding and Tianchang Holding in respect of the increase in the registered capital of Tianneng Factoring

"Capital Increase Arrangement

(Finance Leases)"

the capital increase arrangement entered into between Tianneng Holding, Tianneng Financial and Prime Leader in respect of the increase in the registered capital of Tianneng Finance Leases

"Capital Increase Arrangements"

Capital Increase Arrangement (Factoring) and Capital Increase Arrangement (Finance Leases)

"Company"

Tianneng Power International Limited (˂ঐਗɢ਷ყϞ ࠢʮ̡), a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 00819)

"connected person(s)"

has the meaning ascribed to it under the Listing Rules

"controlling shareholder(s)"

has the meaning ascribed to it under the Listing Rules

"December 2019 Announcement"

the announcement of the Company dated 31 December 2019 in respect of the entering into of the Tianneng Factoring JV Arrangement

"Director(s)"

the director(s) of the Company

"Dr. Zhang"

Dr. Zhang Tianren (ੵ˂΂), the chairman of the Board, and a controlling shareholder and an executive Director of the Company

"Group"

the Company and its subsidiaries, and "member of the Group" means any one of them

"Tianchang Holding"

"Tianneng Factoring"

"Tianneng Factoring

JV Arrangement"

Tianchang Holding Co., Ltd.* (˂࿫છٰϞࠢʮ̡), a limited company established under the laws of the PRC, and as at the date of this announcement whose equity interest is owned as to 98% and 2% by Dr. Zhang and Mr.

Zhang, respectively

Tianneng (Tianjin) Commercial Factoring Co., Ltd.*

( ˂ঐ( ˂ݵ) ਠุڭଣϞࠢʮ̡), a limited company established under the laws of the PRC, and as at the date of this announcement whose equity interest is owned as to 60% and 40% by Tianneng Holding and Tianchang Holding, respectively

the joint venture arrangement entered into between Tianneng Holding and Tianchang Holding in respect of the formation of a joint venture company, namely Tianneng Factoring, as announced by the Company in the December 2019 Announcement

"Tianneng Finance Leases"

Tianneng Finance Leases (Tianjin) Co., Ltd.* (˂ঐፄ ༟ॡ༣(˂ݵ)Ϟࠢʮ̡), a limited company established under the laws of the PRC, and as at the date of this announcement whose equity interest is owned as to 50%, 25% and 25% by Tianneng Holding, Tianneng Financial and Prime Leader, respectively

"Tianneng Financial"

Zhejiang Changxing Tianneng Financial Holding Co.,

Ltd.* (एϪڗጳ˂ঐږፄછٰϞࠢʮ̡), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

"Tianneng Holding"

Hong Kong, 26 February 2021

Tianneng Holding Group Co., Ltd.* (˂ঐછٰණྠϞ ࠢʮ̡), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

By Order of the Board

TIANNENG POWER INTERNATIONAL LIMITED

ZHANG Tianren

Chairman

As at the date of this announcement, the executive Directors of the Company are Dr. ZHANG Tianren, Mr. ZHANG Aogen, Mr. ZHANG Kaihong, Mr. SHI Borong and Mr. ZHOU Jianzhong; and the independent non-executive Directors of the Company are Mr. HUANG Dongliang, Mr.

WU Feng and Mr. ZHANG Yong.

*for identification purpose only