China Metal Resources Utilization Limited — Capital/Financing Update 2021

Oct 13, 2021

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 any securities.

==> picture [57 x 41] intentionally omitted <==

CHINA METAL RESOURCES UTILIZATION LIMITED 中國金屬資源利用有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 1636)

PROPOSED ISSUE OF NEW SHARES UNDER GENERAL MANDATE

The Directors are pleased to announce that, on 13 October 2021, the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Company has conditionally agreed to issue and the Subscriber has conditionally agreed to subscribe for 172,043,011 Subscription Shares at the Subscription Price of HK$0.465 per Subscription Share.

The 172,043,011 Subscription Shares to be allotted and issued to the Subscriber represent (i) approximately 5.24% of the existing issued share capital of the Company of 3,283,977,056 Shares as at the date of this announcement; and (ii) approximately 4.98% of the Company’s issued share capital of 3,456,020,067 Shares as enlarged by the issue and allotment of the Subscription Shares (assuming there will be no other changes in the issued share capital of the Company between the date of this announcement and the Completion save for the allotment of the Subscription Shares).

The Subscription Price of HK$0.465 per Subscription Share was determined after arm’s length negotiations between the Company and the Subscriber with reference to the recent trading price of the Shares. The Subscription Price represents (i) a premium of approximately 121.4% to the closing price of HK$0.210 per Share as quoted on the Stock Exchange on 12 October 2021, being the last trading day immediately prior to the date of the Subscription Agreement; (ii) a premium of approximately 121.4% to the average closing price of HK$0.210 per Share as quoted on the Stock Exchange for the five consecutive trading days immediately prior to the date of the Subscription Agreement; and (iii) a premium of approximately 121.4% to the average closing price of HK$0.210 per Share as quoted on the Stock Exchange for the ten consecutive trading days immediately prior to the date of the Subscription Agreement.

– 1 –

The Subscription Consideration of HK$80,000,000 payable by the Subscriber to the Company shall be set off against the equivalent amount of the Outstanding Liabilities on a dollar-for-dollar basis upon Completion. Accordingly, no cash proceeds will be received by the Company from the Subscription.

The Subscription Shares will be allotted and issued pursuant to the General Mandate granted to the Directors by a resolution of the Shareholders passed at the AGM. As the Subscription Shares will be issued under the General Mandate, the allotment and issue of the Subscription Shares are not subject to Shareholders’ approval.

Shareholders and potential investors should note that Completion is subject to the fulfilment of conditions under the Subscription Agreement and may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

The Directors are pleased to announce that, on 13 October 2021, the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Company has conditionally agreed to issue and the Subscriber has conditionally agreed to subscribe for 172,043,011 Subscription Shares at a Subscription Price of HK$0.465 per Subscription Share.

THE SUBSCRIPTION AGREEMENT

Date

13 October 2021

Parties

• (a) The Company, as issuer; and

• (b) the Subscriber, as subscriber.

As at the date of the Subscription Agreement, the Subscriber does not hold any Shares. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the Subscriber is an Independent Third Party.

Number of Subscription Shares

The 172,043,011 Subscription Shares to be allotted and issued to the Subscriber represent (i) approximately 5.24% of the existing issued share capital of the Company of 3,283,977,056 Shares as at the date of this announcement; and (ii) approximately 4.98% of the Company’s issued share capital of 3,456,020,067 Shares as enlarged by the issue and allotment of the Subscription Shares (assuming that there will be no change in the issued share capital of the Company between the date of this announcement and the Completion save for the allotment of the Subscription Shares).

– 2 –

Subscription Price

The Subscription Price of HK$0.465 per Subscription Share represents:

• (i) a premium of approximately 121.4% to the closing price of HK$0.210 per Share as quoted on the Stock Exchange on 12 October 2021, being the last trading day immediately prior to the date of the Subscription Agreement;

• (ii) a premium of approximately 121.4% to the average closing price of HK$0.210 per Share as quoted on the Stock Exchange for the five consecutive trading days immediately prior to the date of the Subscription Agreement; and

• (iii) a premium of approximately 121.4% to the average closing price of HK$0.210 per Share as quoted on the Stock Exchange for the ten consecutive trading days immediately prior to the date of the Subscription Agreement.

The Subscription Price was determined after arm’s length negotiations between the Company and the Subscriber with reference to the recent trading price of the Shares. The Directors consider that the terms and conditions of the Subscription Agreement (including the Subscription Price) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

On Completion, the Company and the Subscriber will enter into a deed of set-off, pursuant to which the Subscription Consideration in the sum of HK$80,000,000 payable by the Subscriber to the Company shall be set off against the equivalent amount of the Outstanding Liabilities on a dollar-for-dollar basis. Accordingly, no cash proceeds will be received by the Company from the Subscription.

Ranking of the Subscription Shares

The Subscription Shares, when allotted and issued, will be fully paid and rank pari passu in all respects among themselves and with the Shares in issue as at the date of allotment and issue of such Subscription Shares.

Conditions Precedent

Completion shall be subject to the following conditions being satisfied:

• (1) the listing of the Shares not having been revoked and the Shares continuing to be listed and traded on the Stock Exchange before Completion (save for any temporary suspension in trading pending the release of an announcement in connection with the Subscription Agreement), and neither the Stock Exchange nor the Securities and Futures Commission having expressed that it will raise any objection against the listing status of the Shares due to the transactions contemplated under the Subscription Agreement or any reasons in connection with such transactions;

• (2) the Stock Exchange having granted the approval for the listing of and permission to deal in the Subscription Shares, and such approval not having been revoked before Completion;

– 3 –

• (3) the Company obtaining all approvals and/or consents required to complete the Subscription, including but not limited to shareholders’ approval in general meeting for the Subscription (including any specific mandates) (if applicable), and the Subscription and the transactions contemplated thereunder are in compliant with the relevant laws and regulations (including but not limited to the Listing Rules and the relevant laws and regulations of the Cayman Islands and Hong Kong), and such approvals and/or consents remain in full force and effect up to and include the date of Completion, and the relevant authorities have not implemented any rules or regulations that would prohibit or substantially delay the performance of the Subscription Agreement or the Completion; and

• (4) the Subscriber having obtained all required consents and approvals for the transactions contemplated under the Subscription Agreement.

The Company shall use its reasonable endeavours to procure the fulfilment of conditions (1) to (3) above as soon as possible. None of the above conditions may be waived by any party to the Subscription Agreement. In the event that all the conditions have not been fulfilled by the Long Stop Date or such other date as the parties to the Subscription Agreement may agree, the Subscription Agreement will be terminated and lapse, and the obligations of the parties under the Subscription Agreement will be released, except for certain specified provisions and legal responsibilities arising from antecedent breach.

Completion

Completion shall take place no later than two Business Days following the fulfillment of the conditions above or such other date as agreed by the Company and the Subscriber.

GENERAL MANDATE

The Subscription Shares will be allotted and issued pursuant to the General Mandate granted to the Directors by a resolution of the Shareholders passed at the AGM, under which the Directors are authorized to issue Shares up to a maximum of 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the AGM, which is equivalent to a maximum issue of additional 656,795,411 Shares.

As at the date of the Subscription Agreement, the General Mandate has not been utilized and the Directors are allowed to issue up to 656,795,411 new Shares under the General Mandate. As the Subscription Shares will be issued under the General Mandate, the allotment and issue of the Subscription Shares are not subject to Shareholders’ approval.

APPLICATION FOR LISTING

The Company will apply to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares on the Stock Exchange.

– 4 –

REASONS FOR THE ISSUE OF THE SUBSCRIPTION SHARES AND USE OF PROCEEDS

The Relevant Note carries interest at 12% per annum and its principal amount and accrued interest would be due for repayment in full by 13 April 2022. As at the date of this announcement, the Outstanding Liabilities amounted to HK$108,568,320. It is expected that the Company will incur additional finance cost of approximately HK$5,908,480 from the date of this announcement if the principal amount of the Relevant Note (together with interest accrued) were to be repaid in full upon maturity. The repayment upon maturity will reduce the amount of available cash and capital resources of the Group. The Directors consider that the Group’s business would be better financed by equity rather than short-term debts that will adversely affect the profit margin of the Group. Accordingly, the Directors believe that it will be beneficial to the Group to implement the Subscription and the set-off arrangement of part of the Outstanding Liabilities thereunder with a view to alleviating the impact on the Company’s cash flow position upon repayment of the Relevant Note in full upon maturity.

In view of the foregoing, the Directors (including the independent non-executive Directors) consider that the terms of the Subscription (including the Subscription Consideration and the set-off arrangement thereunder) are on normal commercial terms and fair and reasonable, and the Subscription is in the interests of the Company and the Shareholders as a whole.

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the date of this announcement, the Company has 3,283,977,056 Shares in issue. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the shareholding structure of the Company (i) as at the date of this announcement;

– 5 –

and (ii) immediately after Completion (assuming that there will be no change in the issued share capital and shareholding structure of the Company between the date of this announcement and Completion) is as follows:

As at the date of this

	As at the date of this
Shareholders Mr. Yu Jianqiu and Epoch Keen Limited (note 1) First Harvest Global Limited, Gold Wide Enterprises Limited and Ocean Through Limited (note 2) Mr. Kwong Wai Sun Wilson (note 3) Mianyang Fule Investment Co., Ltd.* (綿陽富樂投資有限公司) (note 4) Quaestus Capital Pte. Ltd. (note 5) The Subscriber (note 6) Public Shareholders	announcement Number of Shares directly or indirectly held Approximate percentage of the issued share capital of the Company 538,998,400 16.41% 310,317,000 9.45% 3,272,600 0.10% 717,994,566 21.86% 280,312,902 8.54% 0 0.00% 1,433,081,588 43.64% 3,283,977,056 100.00%	Immediately after Completion Number of Shares directly or indirectly held Approximate percentage of the issued share capital of the Company 538,998,400 15.60% 310,317,000 8.98% 3,272,600 0.09% 717,994,566 20.78% 280,312,902 8.11% 172,043,011 4.98% 1,433,081,588 41.46% 3,456,020,067 100.00%
			100.00%

Notes:

1. The Shares are held by Mr. Yu Jianqiu, chairman and an executive Director of the Company, together with Epoch Keen Limited, a company wholly-owned by Mr. Yu Jianqiu.

2. First Harvest Global Limited, Gold Wide Enterprises Limited and Ocean Through Limited are companies wholly-owned by Mr. Huang Weiping, an executive Director.

3. Mr. Kwong Wai Sun Wilson is an executive Director.

4. Mianyang Fule Investment Co., Ltd. (綿陽富 樂投資 有限公司) is 100% controlled by State Owned Assets Supervision and Administration Office of Youxian District Mianyang City (綿陽市 游仙 區 國 有 資 產監督管 理辦 公室).

5. Quaestus Capital Pte Ltd is 80% controlled by Kwek Steven Poh Song.

6. Peaceful Wealth International Limited is wholly-owned by Ms. Shen Xiaoman, an Independent Third Party.

– 6 –

INFORMATION ON THE PARTIES

The Group is a fast-growing manufacturer of recycled copper products (also known as copper semis), communication cables and power transmission and distribution cables in Southwest China. The Group processes recycled scrap copper and, to a lesser extent, electrolytic copper, to manufacture a range of copper products, including copper wire rods, copper wires, copper plates, copper granules, communication cables and power transmission and distribution cables. Since 2015, the Group has also extended its product range to aluminium products and has entered into trading activities in relation to electrolytic copper.

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the Subscriber is a company incorporated in the British Virgin Islands with limited liability and its ultimate beneficial owner is Ms. Shen Xiaoman, an Independent Third Party. Its principal business is investment holding.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Date of	Fund raising		Intended use of proceeds	Actual use of
announcement	activity	Net proceeds	as announced	proceeds
4 January 2021	Issuance of new	Approximately	The aggregate subscription	Set-off of
	ordinary Shares	HK$287,598,113	price for all 618,490,566	outstanding
	of 618,490,566		subscription Shares was	liabilities
	Shares		settled by Mianyang Fule
			Investment Co., Ltd. by
			way of set-off against the
			outstanding liabilities
			owed by the Group to
			Mianyang

Save for the above, the Company has not carried out any other capital fund raising activities in the 12 months period immediately before the date of this announcement.

Shareholders and potential investors should note that Completion is subject to the fulfilment of conditions under the Subscription Agreement and may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

DEFINITIONS

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

‘‘AGM’’	the annual general meeting of the Company held on 18 June
	2021;
‘‘associate(s)’’	has the same meaning ascribed thereto under the Listing
	Rules;
‘‘Board’’	the board of Directors;

– 7 –

• ‘‘Business Day’’

• a day (excluding Saturday, Sunday, a Hong Kong public holiday or a day on which typhoon signal no. 8 or above or a ‘‘black’’ rainstorm warning is hoisted in Hong Kong between 9:00 a.m. and 5: 00 p.m.) on which banks in Hong Kong are generally open for business;

• ‘‘Company’’

• China Metal Resources Utilization Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 1636);

• ‘‘Completion’’ completion of the Subscription;

• ‘‘connected person(s)’’

• has the same meaning ascribed thereto under the Listing Rules;

• ‘‘Director(s)’’ the director(s) of the Company;

• ‘‘General Mandate’’ the general mandate granted to the Directors by the resolution of the Shareholders passed at the AGM to allot, issue and deal with Shares and to make or grant offers, agreements and options which may require Shares to be issued, allotted or dealt with, which is subject to the limit of 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the AGM;

• ‘‘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 People’s Republic of China;

• ‘‘Independent Third Party’’ person(s) who is/are independent of the Company and its connected persons and their respective associates;

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

• ‘‘Long Stop Date’’ 15 November 2021;

• ‘‘Outstanding Liabilities’’ The outstanding amount of the Relevant Note (together with interest accrued) as at the date of this announcement, being HK$108,568,320;

• ‘‘Relevant Note’’ The note subscribed by the Subscriber from the Company on 13 April 2020 in the principal amount of HK$92,320,000;

• ‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of the Company;

– 8 –

‘‘Shareholder(s)’’ holder(s) of Shares;

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited;

‘‘Subscriber’’ PEACEFUL WEALTH INTERNATIONAL LIMITED (富康 國 際有限公司), a company incorporated in the British Virgin Islands with limited liability;

• ‘‘Subscription’’ the subscription by the Subscriber of the Subscription Shares pursuant to the Subscription Agreement;

• ‘‘Subscription Agreement’’ the subscription agreement dated 13 October 2021 between the Company and the Subscriber in respect of the Subscription;

• ‘‘Subscription Consideration’’ HK$80,000,000, being the aggregate consideration of the Subscription;

• ‘‘Subscription Price’’ HK$0.465 per Subscription Share;

• ‘‘Subscription Shares’’ new Share(s) to be allotted and issued to the Subscriber pursuant to the Subscription Agreement, comprising a total of 172,043,011 Shares;

‘‘%’’ per cent.

By order of the Board

China Metal Resources Utilization Limited Mr. YU Jianqiu Chairman

Hong Kong, 13 October 2021

As at the date of this announcement, the Board comprises four executive Directors, namely, Mr. Yu Jianqiu (Chairman), Mr. Kwong Wai Sun Wilson, Mr. Huang Weiping and Ms. Zhu Yufen; and three independent non-executive Directors, namely, Mr. Lee Ting Bun Denny, Mr. Pan Liansheng and Ms. Ren Ruxian.

• For identification purposes

– 9 –