CM Energy Tech Co., Ltd. — Capital/Financing Update 2017

Nov 1, 2017

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.

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TSC Group Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 206)

DISCLOSEABLE TRANSACTION: DISPOSAL OF NHR PLANT IN HOUSTON, USA

The Board announces that, on 31 October 2017 (US time) (after the close of trading hours of the Stock Exchange), the Vendor, an indirect wholly-owned subsidiary of the Company, entered into a Contract with the Purchaser, an Independent Third Party to the Group, pursuant to which the Vendor has agreed to sell and the Purchaser has agreed to acquire the NHR Plant at the Consideration of US$6.5 million (equivalent to approximately HK$50.6 million).

As the highest applicable percentage ratios as defined under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5% but is less than 25%, the Disposal under the Contract constitutes a discloseable transaction for the Company and is subject to the notification and announcement requirements, but the circular, shareholders’ approval and accountants’ report requirements are not required under Chapter 14 of the Listing Rules.

The Board announces that, on 31 October 2017 (US time) (after the close of trading hours of the Stock Exchange), the Vendor, an indirect wholly-owned subsidiary of the Company, entered into a Contract with the Purchaser, an Independent Third Party to the Group, pursuant to which the Vendor has agreed to sell and the Purchaser has agreed to acquire the NHR Plant at the Consideration of US$6.5 million (equivalent to approximately HK$50.6 million).

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THE CONTRACT

Date

31 October 2017 (US time) (after trading hours)

Parties

• (a) the Vendor, an indirect wholly-owned subsidiary of the Company;

• (b) the Purchaser, an investment holding company. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquires, the Purchaser and its ultimate beneficial owners are Independent Third Parties.

Subject matter

The NHR Plant in Houston, USA, comprising the Property together with all buildings, improvements and fixtures and all rights, privileges and appurtenances pertaining to the Property.

Consideration

The consideration for the Disposal is US$6.5 million (equivalent to approximately HK$50.6 million), of which US$65,000 earnest money shall be payable by the Purchaser in cash within 3 days after the date of the Contract. The balance of the Consideration shall be paid in cash within 90 days subject to completion of various conveyancing and registration procedures to be completed after the date of the Contract.

The Consideration for the Disposal was arrived at arm’s length negotiations between the Purchaser and the Vendor after taking into consideration the prevailing market price of similar properties in the same district in which the Property is located and three other proposals from different property agents.

Closing of the Disposal

At the closing, the Purchaser shall pay the outstanding amount of the Consideration in good funds acceptable to the Vendor. And upon receipt of the full sum of the Consideration, the Vendor shall deliver to the Purchaser among others, the Property.

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INFORMATION ABOUT THE NHR PLANT AND THE PROPERTY

The NHR Plant in Houston, USA, is owned by the Vendor before closing of the Disposal. The Property of the NHR Plant is situated in Harris County, Texas at 12550 North Houston Rossyln Road, Houston, the USA. The Property has a site area of 37,751 sq.m, a store building for commercial use with gross floor area of approximately 56,493 sq.m.

Based on Consideration and after deduction of the currently estimated taxes, brokerage fees, professional fees and other expenses attributable to the Disposal contemplated by the Contract, it is expected that the net proceeds of the Disposal will amount to approximately US$6.1 million. It is intended that out of the net proceeds, (i) approximately US$3.9 million will be used as repayment of bank loans of the Vendor; and (ii) approximately US$2.2 million will be used as repayment of the loans due to other members of the Group and as part of the general working capital of the Group.

An estimated loss of approximately US$2.2 million (equivalent to approximately HK$17.3 million), representing the difference between the net proceeds of the Disposal and the unaudited carrying amount of the NHR Plant as disclosed in the latest unaudited interim report of the Company for the six months ended 30 June 2017 of approximately US$8.3 million (equivalent to approximately HK$64.8 million) will be accrued to the income statement of the Company pursuant to the applicable accounting principles.

REASONS FOR AND BENEFITS OF THE DISPOSAL

Since early-2017, it has been the strategy of the Group to reduce its investment and management involvement in various non-core businesses which are not aligned with the expertise or development focus of the Group. The NHR Plant was acquired in December 2015 for the manufacture of the TSC designed PDQ Fast Moving Land Rigs which was favourably received in the market at that time. However, the market for this product line has since turned unfavourable with the drop in oil price and the NHR Plant is now one of the non-core assets of the Group. The Disposal can enable the Group to save the maintenance cost of the Property of the NHR Plant and to settle the relevant outstanding bank loans so as to strengthen the cash flow of the Vendor for the year of 2018, and to devote its financial and management resources to other potential projects which are in line with the Group’s long-term goal and to capture the vast growth opportunities in other business units.

The terms of the Contract have been determined after arm’s length negotiation s between the parties thereto.

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In view of the above, the Director (including the independent non-executive Directors) considered that the Contract was entered into in the ordinary and usual course of the business of the Group, and the terms of the Contract to be fair and reasonable, and on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

None of the Directors have any material interest in the Contract and the Disposal contemplated thereunder and accordingly.

INFORMATION OF THE PARTIES

The Company is an investment holding company. The subsidiaries of the Company are principally engaged in manufacturing and trading of rig equipment and oilfield expendables.

The Vendor is TSC Manufacturing & Supply, LLC, a company incorporated in USA and an indirect wholly-owned subsidiary of the Company.

The Purchaser is S.E.T. Industries, L.C., located in Texas, a company established in USA,and is an investment holding company, which is in principally engaged in commercial real estate investment. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquires, the Purchaser and its ultimate beneficial owner are Independent Third Parties.

LISTING RULES IMPLICATION

As the highest applicable percentage ratios as defined under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5% but is less than 25%, the Disposal under the Contract constitutes a discloseable transaction for the Company and is subject to the notification and announcement requirements, but the circular, shareholders’ approval and accountants’ report requirements are not required under Chapter 14 of the Listing Rules.

DEFINITIONS

Unless the context otherwise requires, the terms used in this announcement shall have the following meanings:

“Board” the board of directors of the Company “Company” TSC Group Holdings Limited, a company incorporated in Cayman Islands with limited liability and the shares of which are listed on the main board of the Stock Exchange (stock code: 206)

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“Consideration” US$6.5 million (equivalent to approximately HK$50.6 million), being the total consideration payable by the Purchaser to the Vendor in respect of the Disposal “connected person(s)” has the meaning ascribed thereto under the Listing Rules “Contract” the commercial contract of improved property dated 31 October 2017 (US time) entered into between the Vendor and the Purchaser in respect of the Disposal “Director(s)” the director(s) of the Company “Disposal” the disposal of the NHR Plant by the Vendor to the Purchaser pursuant to the terms and conditions of the Contract “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Third party(ies) who are third parties independent of the Company Party(ies)” and its connected persons (as defined in the Listing Rules) “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “NHR Plant” the assets owned by the Vendor, including the Property together with all buildings, improvements and fixtures and all rights, privileges and appurtenances pertaining to the Property

“Property” the assets of the NHR Plant to be disposed of under the Contract, details of which are set out in the paragraph headed “Information about the NHR Plant and the Property” in this announcement “Purchaser” S.E.T. Industries, L.C., a company established in USA and an Independent Third Party

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“Shareholders”	shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	TSC Manufacturing & Supply, LLC, a company incorporated
	in USA and an indirect wholly-owned subsidiary of the
	Company
“USA” or “US”	The United States of America
“US$”	US dollars, the lawful currency of USA
“%”	percentage
“sq.m.”	Square meter

For the purpose of this announcement and for illustrative purpose only, US$ is converted into HK$ at the rate of US$1:HK$7.78. Such conversion should not be construed as a representation that any amount has been, could have been or may be converted at the above rate or at all.

By order of the Board TSC Group Holdings Limited Jiang Bing Hua Executive Chairman

Hong Kong, 1 November 2017

As of the date of this announcement, the Board comprises 3 executive Directors, namely Mr. Jiang Bing Hua, Mr. Zhang Menggui and Mr. Wang Yong; 3 non-executive Directors, namely, Mr. Jiang Longsheng, Mr. Brian Chang and Mr. Wang Jianzhong; and 3 independent non-executive Directors, namely Mr. Chan Ngai Sang, Kenny, Mr. Guan Zhichuan and Dr. Lu Xiaoming.

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