China e-Wallet Payment Group Limited — Capital/Financing Update 2012

Apr 23, 2012

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 is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the Shares or other securities in the Company.

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RCG Holdings Limited

宏 霸 數 碼 集 團（ 控 股 ）有 限 公 司[*] (a company incorporated in Bermuda with limited liability)

(Stock Code: HKSE: 802; AIM: RCG)

DISCLOSEABLE TRANSACTION

IN RELATION TO

ACQUISITION OF 55% EQUITY INTEREST IN

MOST IDEAS LIMITED

The Board is pleased to announce that on 23 April 2012 (after trading hours in Hong Kong), the Purchaser and the Vendor entered into the Sale and Purchase Agreement, pursuant to which, the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to sell, the Sale Shares, representing 55% of the issued share capital of the Target for a total consideration of HK$88,700,000 which will be satisfied by the issue of the Convertible Notes at Completion.

As some of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Acquisition exceeds 5% but is less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The Company will seek a specific mandate from the Shareholders at the SGM for the approval of the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attached to the Convertible Notes. A circular containing details of the Convertible Notes and notice convening the SGM will be despatched to the Shareholders as soon as possible.

THE SALE AND PURCHASE AGREEMENT

The Board is pleased to announce that on 23 April 2012 (after trading hours in Hong Kong), the Purchaser and the Vendor entered into the Sale and Purchase Agreement, pursuant to which the Purchaser conditionally agreed to acquire and the Vendor conditionally agreed to dispose of the Sale Shares, representing 55% of the issued share capital of the Target for a total consideration of HK$88,700,000.

• For purpose of identification only

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Date

23 April 2012 (after trading hours in Hong Kong)

Parties

1. The Purchaser: RCG International Holdings Limited 2. The Vendor: Crossover Global Limited

The Vendor is an investment holding company and is owned as to 45% by Mr. Chan Chun Fai, 29% by Mr. Qin Chuhua and 26% by Mr. Yang Zhijian. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, as at the date of this announcement, the Vendor and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

Assets to be acquired

The Sale Shares represent 55% of the issued share capital of the Target. As at the date of this announcement, the Target is owned 55% by the Vendor and 45% by Golden Matrix Holdings Limited. Upon Completion, the Target will become an indirect non-wholly owned subsidiary of the Company and will be owned 55% by the Purchaser and 45% by Golden Matrix Holdings Limited. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, Golden Matrix Holdings Limited is a third party independent of the Company and its connected persons.

Consideration

Pursuant to the terms of the Sale and Purchase Agreement, the Consideration of HK$88,700,000 will be satisfied by the issue of the Convertible Notes at Completion.

The Consideration has been arrived at after arm’s length negotiations between the Purchaser and the Vendor and was determined with reference to, including but not limited to, the preliminary valuation of the MGIE Group prepared by Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent professional valuer, according to which the fair value of a 100% equity interest of MGIE Group was approximately HK$203 million as at 31 January 2012.

Conditions Precedent

Pursuant to the Sale and Purchase Agreement, Completion shall be conditional upon:

• (a) approval of the grant of the specific mandate to allot and issue the Conversion Shares, by the Shareholders permitted to vote on the relevant resolutions under the Listing Rules and such approval not having been proposed to be revoked;

• (b) the granting by the Listing Committee of the Stock Exchange of a listing of and permission to deal in the Conversion Shares; and

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• (c) the representations, warranties and undertakings given by the Vendor as set out in the Sale and Purchase Agreement remaining true and accurate in all respects and not misleading in any respect as of the date of Completion by reference to the facts and circumstances subsisting as at the date of Completion.

If the aforementioned conditions are not fulfilled on or before 31 August 2012 (or such other date as agreed by the parties thereto), the Sale and Purchase Agreement shall lapse and no party of the Sale and Purchase Agreement shall have any claim against or liability to the other party, save in respect of any antecedent breaches of the Sale and Purchase Agreement.

Completion

Completion shall take place at a place to be agreed by the parties within 5 Business Days immediately following the date of the satisfaction of the conditions precedent as set forth in the Sale and Purchase Agreement.

Upon Completion, the Target will become a non-wholly owned subsidiary of the Company which will be owned as to 55% by the Company and 45% by Golden Matrix Holdings Limited.

Convertible Notes

The principal terms of the Convertible Notes are as follows:

Issuer: The Company Principal amount: HK$88,700,000 Interest: 2% per annum Maturity: The date falling 3 years from the date of issue of the Convertible Notes. Conversion price: HK$0.85 per Conversion Share.

The Conversion Price will be subject to adjustment provisions including among others, share subdivision or consolidation, capitalization of profits or reserves, capital distribution, rights issues of Shares and other securities, options over Shares, other issues at less than market price, modification of rights of conversion and other events, details of which were described in the terms and conditions of the Convertible Notes.

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Conversion rights:

Unless redemption notice shall have been previously given by the Company to the holder(s) of the Convertible Notes, the holder(s) of the Convertible Notes shall have the right to convert the whole or any part of the outstanding principal amount of the Convertible Notes (other than that part of the principal amount of the Convertible Notes to which the relevant redemption notice relates) into Shares at any time following the date of issue of the Convertible Notes until 4: 00 p.m. on the maturity date at the Conversion Price. Any conversion shall be made in the amount of HK$5,000,000 or the multiples thereof and if any time, the outstanding principal amount of the Convertible Notes shall be less than HK$5,000,000, the whole (but not part only) of the outstanding principal amount of the Convertible Notes shall be convertible.

No conversion shall take place if:

• 1) the holder of the Convertible Notes and parties acting in concert with it shall be interested (whether directly or indirectly) in 30% (or such other amount as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer) or more of the then issued share capital of the Company at the date of the relevant exercise; or

• 2) immediately after such conversion, the public float of the Shares falls below the minimum public float requirements stipulated under the Listing Rules or as required by the Stock Exchange.

Conversion Shares:

• Upon full conversion of Convertible Notes at the Conversion Price, an aggregate of 104,352,941 Conversion Shares will be issued, representing approximately 21.16% of the existing issued share capital of the Company and 17.46% of the issued share capital of the Company as enlarged by the issue of Conversion Shares upon full conversion of the Convertible Notes.

• Early Redemption: The Company may, by giving the holder(s) of the Convertible Notes not less than 14 days prior written notice specifying the principal amount of the Convertible Notes to be redeemed and the date of such redemption, at any time after the date of issue of the Convertible Notes redeem the Convertible Notes (or part thereof) at a value equal to the principal amount of the Convertible Notes plus the relevant interest calculated up to the redemption date to be redeemed as specified in the redemption notice. Any such redemption shall be made in amount of not less than a whole multiple of HK$5,000,000.

Repayment:

The outstanding principal amount of the Convertible Notes (together with interests) shall, unless previously redeemed by the Company, or converted into Shares or repaid in accordance with the terms and conditions of the Convertible Notes, may extend the maturity date on the same terms by 3 years at the sole discretion of the Company. The Convertible Notes may not be repaid otherwise than in accordance with the terms and conditions of the Convertible Notes.

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Voting rights:

The Convertible Notes do not confer any voting rights at any meetings of the Company.

Listing:

No application will be made for the listing of the Convertible Notes on the Stock Exchange or any other stock exchange.

Transferability: The Convertible Notes (or any part thereof) are transferable. The Convertible Notes may not be transferred by the holder(s) of the Convertible Notes, without the prior written consent of the Company, to any connected person of the Company.

Conversion price of the Convertible Notes

The Conversion Price of HK$0.85 represents:

• (i) a discount of approximately 5.56% to the closing price of HK$0.90 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 7.61% to the average of the closing prices of approximately HK$0.92 per Share for the 5 consecutive trading days up to and including the Last Trading Day; and

• (iii) a discount of approximately 8.60% to the average of the closing prices of HK$0.93 per Share for the 10 consecutive trading days up to and including the Last Trading Day.

The Conversion Price has been arrived at after arm’s length negotiations between the Company and the Vendor, with reference to, among other things, the recent trend of the Share price performance and the prevailing market price of the Shares.

The maximum of 104,352,941 Conversion Shares to be issued upon full conversion of the Convertible Notes represent approximately:

• (i) 21.16% of the existing issued share capital of the Company; and

• (ii) 17.46% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Notes.

The Conversion Shares shall rank pari passu in all respects with the Shares then in issue on the date of allotment and issue thereof. The Company will seek a specific mandate from the Shareholders at the SGM for the allotment and issue of the Conversion Shares.

Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares. Application will also be made for the Conversion Shares to be admitted to trading on AIM.

INFORMATION ON THE TARGET GROUP

The Target is an investment holding company incorporated in the British Virgin Islands with limited liability on 3 January 2012. The Target has two wholly-owned subsidiaries, namely MGI and MGIE, which were incorporated in Hong Kong on 21 June 2006 and 6 March 2007 respectively. MGI and MGIE are the principal operating companies of the Target Group.

MGI specializes in focusing on Web 2.0 projects and mobile marketing solutions.

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MGIE focuses on developing entertainment applications for various mobile phone platforms such as iOS, Android, etc.

Prior to acquisition by the Target, according to the audited financial statements of MGI and MGIE which have been prepared in accordance with Hong Kong Financial Reporting Standards, set out below is certain financial information on MGI and MGIE for the two years ended 31 December 2011:

MGI	Year ended 31 December	Year ended 31 December
	2011	2010
	HK$’000	HK$’000
Turnover	6,529	5,295
Profits before taxation	1,070	517
Profits after taxation	893	432
Net assets	1,348	455
MGIE	Year ended 31 December
	2011	2010
	HK$’000	HK$’000
Turnover	3,949	1,021
Profits before taxation	3,510	285
Profits after taxation	3,299	285
Net assets/(liabilities)	1,936	(1,363)

Currently, the Target Group consists of the Target, MGI and MGIE.

According to the audited consolidated financial statements of the Target (which have been prepared in accordance with Hong Kong Financial Reporting Standards) from 3 January 2012 (the date of incorporation) to 29 February 2012, the profits before taxation and after taxation of the Target Group were approximately HK$863,000 and HK$721,000 respectively. The consolidated net assets of the Target Group as at 29 February 2012 were approximately HK$3,414,000, including trade and other receivables of approximately HK$6,885,000 and an amount due to a director of approximately HK$3,931,000.

REASONS FOR AND BENEFIT OF THE ACQUISITION

The Company is a holding company and the Group is principally engaged in developing, sourcing and selling biometric and radio frequency identification (RFID) products and solutions services in the Asia Pacific and the Middle East regions.

It is the corporate strategy of the Group to strengthen its existing businesses while concurrently identifying and capitalizing on new opportunities to achieve financial growth for the Group and to maximize Shareholders’ value. In view of growing internet penetration and the explosion of the smartphone market, the Directors consider that there will be a growing popularity of mobile marketing together with a surge in demand for various mobile applications. Having considered the MGIE Group’s specialization in providing advertising solutions and entertainment applications for mobile platforms, the Directors consider the Acquisition a strategically important opportunity for the Group to expand and diversify its business portfolio.

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Upon Completion, the Target will become a 55% indirect non-wholly owned subsidiary of the Company and the financial results of the Target Group will be consolidated into the Group’s financial statements.

The Directors consider that the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

SHAREHOLDING STRUCTURE

Set out below are the shareholding structures of the Company (i) as at the date of this announcement; and (ii) immediately after Completion and assuming full conversion of the Convertible Notes:

Shareholders Vendor Kung Nina (Estate of late Nina Kung also known as Nina T.H. Wang) Veron International Limited (Note 1) Lai Kar Yan, Derek (Note 1) Lo Kin Ching Joseph (Note 1) The Offshore Group Holdings Limited (Note 2) Chan Chun Chuen (Note 2) Tam Miu Ching (Note 2) Public Public Shareholders Total	As at the date of this announcement No. of Shares % — — 65,662,832 13.31 65,662,832 13.31 65,662,832 13.31 65,662,832 13.31 53,515,556 10.85 53,515,556 10.85 53,515,556 10.85 374,045,167 75.84 493,223,555 100.00	Immediately after Completion and assuming full conversion of the Convertible Notes No. of Shares % 104,352,941 17.46 65,662,832 10.99 65,662,832 10.99 65,662,832 10.99 65,662,832 10.99 53,515,556 8.96 53,515,556 8.96 53,515,556 8.96 374,045,167 62.59 597,576,496 100.00	Immediately after Completion and assuming full conversion of the Convertible Notes No. of Shares % 104,352,941 17.46 65,662,832 10.99 65,662,832 10.99 65,662,832 10.99 65,662,832 10.99 53,515,556 8.96 53,515,556 8.96 53,515,556 8.96 374,045,167 62.59 597,576,496 100.00
			100.00

Notes:

1. The beneficial owner of Veron International Limited is the estate of the late Kung Nina (also known as Nina T. H. Wang). Mr. Lai Kar Yan, Derek and Mr. Lo Kin Ching Joseph are Joint and Several Administrators pendente lite of the Estate of Ms. Kung Nina.

2. The entire issued share capital of The Offshore Group Holdings Limited is beneficially owned by an individual, Mr. Chan Chun Chuen. Tam Miu Ching is the wife of Mr. Chan Chun Chuen. Therefore, Mr. Chan Chun Chuen and Tam Miu Ching are deemed to be interested in the 53,515,556 Shares held by The Offshore Group Holdings Limited under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

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GENERAL

As some of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Acquisition exceeds 5% but is less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The Company will seek a specific mandate from the Shareholders at the SGM for the approval of the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attached to the Convertible Notes. A circular containing details of the Convertible Notes and notice convening the SGM will be despatched to the Shareholders as soon as possible.

To the best of the Directors’ knowledge, information and belief after having made all reasonable and necessary enquiries, no Shareholder is required to abstain from voting at the SGM on the resolution granting the Directors the specific mandate to issue and allot the Conversion Shares.

DEFINITIONS

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

• ‘‘Acquisition’’ the proposed acquisition of the Sale Shares pursuant to the Sale and Purchase Agreement

• ‘‘AIM’’ the AIM market operated by the LSE

• ‘‘Board’’ the board of Directors

• ‘‘Business Day’’ a day (other than a Saturday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• ‘‘Company’’ RCG Holdings Limited, a company incorporated in Bermuda with limited liability and the Shares of which are listed on the Stock Exchange and traded on AIM and PLUS

• ‘‘Completion’’ completion of the sale and purchase of the Sale Shares in accordance with the terms and conditions of the Sale and Purchase Agreement

• ‘‘connected has the same meaning ascribed to it in the Listing Rules person(s)’’

• ‘‘Consideration’’ the consideration of HK$88,700,000 payable by the Purchaser for the Sale Shares under the Sale and Purchase Agreement

• ‘‘Convertible Notes’’ the convertible notes in the aggregate principal amount of HK$88,700,000 with interest rate of 2% per annum to be issued by the Company to satisfy the Consideration

• ‘‘Conversion Price’’ the conversion price of the Convertible Notes, being HK$0.85 per Conversion Share

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‘‘Conversion new Shares to be issued by the Company upon exercise of the Share(s)’’ conversion rights attached to the Convertible Notes ‘‘Director(s)’’ director(s) of the Company ‘‘Group’’ the Company and its subsidiaries ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the People’s Republic of China

‘‘HK$’’	Hong Kong dollars, the lawful currency of Hong Kong
‘‘Last Trading Date’’	23 April 2012, being the trading day of the Shares on the Stock
	Exchange on the date of the signing of the Sale and Purchase
	Agreement
‘‘Listing Rules’’	the Rules Governing the Listing of Securities on the Stock Exchange
‘‘LSE’’	London Stock Exchange plc
‘‘MGI’’	MG Interactive Limited, the wholly owned subsidiary of the Target
‘‘MGIE’’	MG Interactive Entertainment Limited, the wholly owned subsidiary
	of the Target
‘‘MGIE Group’’	MGI and MGIE
‘‘PLUS’’	a market operated by PLUS Stock Exchange plc, a subsidiary of
	PLUS Markets Group plc
‘‘Purchaser’’	RCG International Holdings Limited, a company incorporated in the
	British Virgin Islands with limited liability and a wholly owned
	subsidiary of the Company
‘‘Sale and Purchase	the agreement to acquire the Sale Shares entered into between the
Agreement’’	Purchaser and the Vendor dated 23 April 2012
‘‘Sale Shares’’	27,500 ordinary shares of US$1.00 each in the Target representing
	55% of the issued share capital of the Target
‘‘SGM’’	the special general meeting of the Company to be held to consider the
	ordinary resolutions to be proposed to approve, among other things,
	the grant of a specific mandate
‘‘Share(s)’’	ordinary shares with a nominal value of HK$0.01 each in the capital
	of the Company
‘‘Shareholder(s)’’	holder(s) of the Share(s)
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Takeovers Code’’	the Hong Kong Code on Takeovers and Mergers

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‘‘Target’’

Most Ideas Limited, a company incorporated in the British Virgin Islands with limited liability and is owned as to 55% by the Vendor and 45% by Golden Matrix Holdings Limited as at the date of this announcement

‘‘Target Group’’

the Target, MGI and MGIE

‘‘Vendor’’

Crossover Global Limited, a company incorporated in the British Virgin Islands which owns 55% of the issued share capital of the Target as at the date of this announcement

‘‘%’’

per cent

By Order of the Board RCG Holdings Limited Li Jinglong Executive Director

Hong Kong, 23 April 2012

As at the date of this announcement, the Board comprises the following Directors:

Executive Directors:

Li Jinglong Zhang Ligong

Non-executive Directors:

Tan Sri Dato’ Nik Hashim Bin Nik Ab. Rahman Raymond Chu Wai Man

Independent non-executive Directors:

Li Mow Ming, Sonny Liu Kwok Bond Pieter Lambert Diaz Wattimena

• For identification purpose only

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