CM Energy Tech Co., Ltd. - Proxy Solicitation & Information Statement 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in TSC Group Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or the transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase, or subscribe for securities of the Company.

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TSC Group Holdings Limited (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 206)

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board of the Company is set out from pages 5 to 12 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on page 13 of this circular. A letter from Gram Capital containing its advice to the Independent Board Committee and the Independent Shareholders is set out from pages 14 to 25 of this circular.

A notice convening the EGM to be held at 2/F, Pacific Room, Island Pacific Hotel, 152 Connaught Road West, Hong Kong on Friday, 5 December 2014 at 10:00 a.m. or any adjournment is set out from pages 34 to 35 of this circular. A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying form of proxy to the Company’s principal place of business in Hong Kong at Unit 910, 9/F, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM. Completion and return of the form of proxy shall not preclude you from attending and voting at the EGM should you so wish.

This circular will remain on the “Latest Listed Company Information” page of the website of the Stock Exchange at http://www.hkexnews.hk and the Company’s website at http://www.tsc-holdings.com/ for at least seven days from the date of its posting.

13 November 2014

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from	Gram Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		34

– i –

DEFINITIONS

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

“Agreement” a share purchase agreement dated 23 October 2014 entered into among the Purchaser, the Vendor and the Guarantor pursuant to which the Purchaser has conditionally agreed to purchase from the Vendor the Sale Shares
“Announcement” the announcement of the Company dated 23 October 2014 in relation to the Agreement
“Board” the board of Directors
“Business Day” a day (other than Saturday and Sunday and a day on which a tropical cyclone warning No. 8 or above or a “black rainstorm warning signal” is hoisted in Hong Kong at 10:00 a.m.) on which banks are open in Hong Kong for general banking
“Company”
TSC Group Holdings Limited (stock code: 206), a company incorporated in the Cayman Islands with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange
“Completion” completion of the Transaction pursuant to the terms of the Agreement
“Completion Date” the 10th Business Day after all conditions precedent have been satisfied (or such other date as the parties may agree), which is expected to be on or around 31 December 2014
“Consideration”
HK$33,613,000 payable by the Purchaser for the Sale Shares pursuant to the Agreement
“Consideration Shares”
8,404,000 new Shares to be allotted and issued by the Company to the Vendor at the Issue Price pursuant to the terms of the Agreement
“Director(s)”
director(s) of the Company
“Dongying Shengli”
東營勝利鑽採技術服務有限公司 (Dongying Shengli Drilling Technology services Co., Ltd*), a company established in the PRC and which is wholly-owned by NN Petroleum

For identification purpose only

– 1 –

DEFINITIONS

“EGM”

an extraordinary general meeting of the Company to be convened on 5 December 2014 and held for the purposes of consideration and, if thought fit, approving, among other things, the Transaction and the allotment and issuance of the Consideration Shares
“Gram Capital” or “Independent Financial Adviser”
Gram Capital Limited, a licensed corporation to carry out Type 6 (Advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), the independent financial adviser to the Independent Board Committee and Independent Shareholders regarding the Agreement
“Group”
the Company and its subsidiaries
“Guarantor”
Mr. Li Yong Hu, the sole legal and beneficial owner of the Vendor
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”
an independent committee of the Board comprising all independent non-executive Directors, namely, Mr. Chan Ngai Sang, Kenny, Mr. Bian Junjiang, Mr. Guan Zhichuan and Mr. Robert William Fogal Jr.
“Independent Shareholders”
Shareholders who are not required to abstain from voting on the resolutions to be proposed at the EGM to approve the Transaction, which constitutes a connected transaction for the Company, under the Agreement
“Issue Price”
the issue price of HK$4 per Consideration Share
“Last Trading Day”
23 October 2014, being the last full trading day for the Shares before the date of the Announcement
“Latest Practicable Date”
10 November 2014, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

– 2 –

DEFINITIONS

“Listing Rules”
“NN Petroleum”
“Percentage Ratio(s)”
“PRC”
“Purchaser”
“Sale Shares”
“SFO”
“Shandong Cruiser”
“Share(s)”
“Shareholders”
“Stock Exchange”
“Target Company”
“Target Group”
the Rules Governing the Listing of Securities on the Stock Exchange
NN Petroleum Engineering (HK) Co., Ltd. (南南石油工程（香港）有限公司), a company incorporated under the laws of Hong Kong which is wholly-owned by the Target Company
the percentage ratio(s) as set out in Rule 14.07 of the Listing Rules to be applied for determining the classification of a transaction
the People’s Republic of China, which for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
Petro Equip Leaders Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company
2,562 shares with par value of US$1.00 each of the Target Company, representing approximately 28% of the issued share capital of the Target Company as at the date of the Announcement
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
山東科魯斯頂驅裝備有限公司 (Cruiser Top Driver Equipment Co., Ltd.*), a company established in the PRC with limited liability and is owned as to 71% by Dongying Shengli and 29% by NN Petroleum
ordinary share(s) of HK$0.10 in the share capital of the Company
the holders of Shares of the Company
The Stock Exchange of Hong Kong Limited
Jurun Limited, a company incorporated in the British Virgin Islands with limited liability
the Target Company, NN Petroleum, Dongying Shengli, Shandong Cruiser and Tianjin Shengli
For identification purpose only

– 3 –

DEFINITIONS

“Tianjin Shengli” 天津勝利石油裝備有限公司 (Tianjin Shengli Petroleum Equipment Co., Ltd.*), a company established in the PRC with limited liability which is held as to 57% by NN Petroleum and 43% by Dongying Shengli “Transaction” the acquisition of an approximately 28% interest in the Target Company by the Purchaser from the Vendor pursuant to the Agreement

“Vendor” Xingbo Limited (星博有限公司), a company incorporated under the laws of the British Virgin Islands and which is wholly-owned by the Guarantor
“US$” United States dollar, the lawful currency of the United States of America
“%” per cent.

Unless the context requires otherwise, the translations of US$ into HK$ in this circular are based on the rate of HK$7.76 = US$1.0.

In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

For identification purpose only

– 4 –

LETTER FROM THE BOARD

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TSC Group Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 206)

Executive Directors: Mr. Jiang Bing Hua (Executive Chairman) Mr. Zhang Menggui, Morgan (Chief Executive Officer)

Non-executive Directors: Mr. Jiang Longsheng Mr. Brian Chang Mr. Yu Yuqun

Independent non-executive Directors: Mr. Chan Ngai Sang, Kenny Mr. Bian Junjiang Mr. Guan Zhichuan Mr. Robert William Fogal Jr.

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal place of business in Hong Kong: Unit 910, 9/F. China Merchants Tower Shun Tak Centre 200 Connaught Road Central Hong Kong

13 November 2014

To the Shareholders

Dear Sir or Madam,

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

INTRODUCTION

Reference is made to the Announcement regarding the Agreement.

On 23 October 2014, the Purchaser (a wholly-owned subsidiary of the Company) entered into the Agreement with the Vendor and the Guarantor pursuant to which the Purchaser conditionally agreed to acquire for, and the Vendor has conditionally agreed to dispose of, the Sale Shares at the Consideration of HK$33,613,000 which will be satisfied in full by the allotment and issue of the Consideration Shares to the Vendor at the Issue Price.

– 5 –

LETTER FROM THE BOARD

The Sale Shares represents approximately 28% of the issued share capital of the Target Company. As at the Latest Practicable Date, the Target Company is owned as to approximately 51% by the Purchaser (and as such is a subsidiary of the Group) and approximately 49% by the Vendor. Immediately after the Completion, the Target Company will be owned as to approximately 79% by the Purchaser and approximately 21% by the Vendor.

The purpose of this circular is to provide you with information regarding, among other things, (i) further details of the Agreement; (ii) the recommendation from the Independent Board Committee in respect of the Agreement; and (iii) the advice from Gram Capital to the Independent Board Committee and the Independent Shareholders regarding the Agreement.

THE AGREEMENT

The material terms of the Agreement are summarised below:

Date

23 October 2014

Parties

Purchaser:
Petro Equip Leaders Limited, which is a wholly-owned subsidiary of the Company and an investment holding company;
Vendor: Xingbo Limited, which is wholly and beneficially owned by the Guarantor and an investment holding company; and
Guarantor:
Mr. Li Yong Hu, who is the sole beneficial shareholder of the Vendor and who will provide guarantee for the due and punctual performance of the obligations of the Vendor under the Agreement.

The Sale Shares and the Target Company

The Purchaser agreed to purchase from the Vendor the Sale Shares, representing approximately 28% of the issued share capital of the Target Company as at the Latest Practicable Date, at the Consideration.

The Target Group is principally engaged in the provision of petroleum engineering services, equipment rental, repair and maintenance services and trading of spare parts in various locations all over the world.

– 6 –

LETTER FROM THE BOARD

The group structure of the Target Company is set out below:

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----- Start of picture text -----

The Target Company
100%
NN Petroleum
100% 57%
43%
29%
Dongying Shengli Tianjin Shengli
71%
Shandong Cruiser
----- End of picture text -----

The net assets of the Target Group as of 30 June 2014 were HK$66,415,000. The net profit (before taxation) of the Target Group for the two financial years ended 31 December 2013 and 31 December 2012 based on unaudited management accounts were HK$17,256,000 and HK$15,950,000 respectively. The net profits (after taxation) of the Target Group for the two financial years ended 31 December 2013 and 31 December 2012 based on unaudited management accounts were HK$17,105,000 and HK$15,704,000 respectively.

Consideration and the Consideration Shares

The Consideration is HK$33,613,000 which will be satisfied in full by the allotment and issue of the Consideration Shares to the Vendor at the Issue Price.

The Consideration was determined among the Vendor, the Guarantor, the Purchaser after arm’s length negotiation with reference to the Target Group’s future business development prospects and financial performance, and on normal commercial terms.

The Consideration Shares at the Issue Price of HK$4 per Consideration Shares will be issued and allotted by the Company to the Vendor on the Completion Date.

Reference is made to the announcement of the Company dated 1 September 2010 with regard to the original investment cost to the Company of the 51% of the Target Group being HK$46,670,000.

– 7 –

LETTER FROM THE BOARD

The Issue Price represents:

(a) a premium of approximately 51.52% over the closing price of HK$2.64 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(b) a premium of approximately 27.80% over the closing price of HK$3.13 per Share as quoted on the Stock Exchange on the Last Trading Day;
(c) a premium of approximately 24.22% over the average of the closing price of HK$3.22 per Share for the last five consecutive trading days up to and including the Last Trading Day;
(d) a premium of approximately 18.69% over the average of the closing price of HK$3.37 per Share for the last ten consecutive trading days up to and including the Last Trading Day; and
(e) a premium of approximately 75% to the audited consolidated net asset value of the Company per Share of approximately HK$2.28 as at 31 December 2013 (based on the audited consolidated net asset value of the Company of approximately US$204,244,000 (equivalent to approximately HK$1,584,933,440) as at 31 December 2013 and 696,511,204 issued Shares as at the date of the Agreement).

The Issue Price was determined after arm’s length negotiations among the parties to the Agreement after taken into account (i) the recent trading performance of the Shares; and (ii) current market conditions. In the last two years, the Target Group gradually builds up its international service presence in Latin America and North Africa, such as Columbia, Venezuela and Algeria. Several major contracts are in negotiation stages. With the Company’s foot-print in other regions, controlling more than 75% of the company will enable the Target Group to leverage the Company’s strength. Also, the further integration of the Target Group will give the Company more advantages in competition in the business of offshore drilling rigs services and shale oil/gas rigs services.

The Consideration Shares represent approximately 1.21% of the existing total issued share capital of the Company, and 1.19% of the total issued share capital of the Company as enlarged by the issue of the Consideration Shares upon Completion.

The Consideration Shares will be issued under the specific mandate to be sought at the EGM and will rank equally in all respects with the Shares in issue on the date of allotment and issuance, including all rights to dividends, distributions and other payments made or to be made for which the record date falls on or after the date of such allotment and issuance.

Application will be made to the Stock Exchange for the listing of, and the permission to deal in, the Consideration Shares.

– 8 –

LETTER FROM THE BOARD

75% of the Consideration Shares shall be subject to a lock-up period of 3 years, commencing from the Completion Date. At the end of each year, during the 3-year lock-up period, 25% of the Consideration Shares will be released from the lock-up and may be disposed of by the Vendor, so that the Vendor may dispose of all the Consideration Shares at the end of the lock-up period.

Conditions precedent

The Completion is subject to the satisfactory fulfilment and/or waiver by the Purchaser of the following conditions:

(a) the shareholder(s) and board of directors of each of the Purchaser and the Vendors having approved the transactions contemplated under the Agreement;
(b) the Vendor’s warranties being true, accurate and complete in all material respects;
(c) each of the Vendor and Purchaser having duly complied with its undertakings and obligation and there is no breach of the Agreement;
(d) the Agreement not having been terminated;
(e) there being no material adverse effect on the business, assets or financial conditions of the Target Group;
(f) any and all authorizations, approvals, consents or permits of any competent authority or of any third party that are required to be obtained by the Target Group in connection with the transactions contemplated by the Agreement having been obtained; and
(g) listing of and permission to deal in all of the Consideration Shares being granted by the Listing Committee of the Stock Exchange having been obtained.

The conditions precedent cannot be waived. If any of the conditions precedent has not been satisfied by 31 December 2014, the Agreement will be terminated automatically and the Purchaser shall not be obligated to purchase the Sale Shares.

As at the Latest Practicable Date, none of the above conditions had been fulfilled.

Completion

Completion shall take place on the Completion Date, being the 10th Business Day after all conditions precedent have been satisfied (or such other date as the parties may agree).

Completion is expected to take place on or around 31 December 2014.

– 9 –

LETTER FROM THE BOARD

Other

Upon Completion, the parties will enter into a shareholders agreement to govern the rights and obligations of the Purchaser and Vendor as shareholders of the Target Company.

EFFECT OF THE TRANSACTION ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

For illustrative purpose only, set out below is a summary of the shareholdings in the Company as a result of the issue of the Consideration Shares:

Name of Shareholder Global Energy Investors, LLC.(Note 1) Mr. Zhang Menggui_(Note 1) Mr. Jiang Bing Hua(Note 1) Mr. Brian Chang(Note 2) China International Marine Containers (Group) Company Limited(Note 3) Harmony Master Fund(Note 4)_ The Vendor Other Public Shareholders	As at the Latest Practicable Date No. of Shares % 111,507,200 16.01 4,656,000 0.67 4,656,000 0.67 66,072,800 9.48 92,800,000 13.32 55,767,800 8.01 – – 361,051,404 51.84 696,511,204 100	Immediately after the issue of the Consideration Shares No. of Shares % 111,507,200 15.82 4,656,000 0.66 4,656,000 0.66 66,072,800 9.38 92,800,000 13.16 55,767,800 7.91 8,404,000 1.19 361,051,404 51.22 704,915,204 100	Immediately after the issue of the Consideration Shares No. of Shares % 111,507,200 15.82 4,656,000 0.66 4,656,000 0.66 66,072,800 9.38 92,800,000 13.16 55,767,800 7.91 8,404,000 1.19 361,051,404 51.22 704,915,204 100
			100

Notes:

Global Energy Investors, LLC. is the beneficial owner of 111,507,200 Shares. The entire share capital of Global Energy Investors, LLC. is beneficially owned as to 50% each by Mr. Zhang Menggui and Mr. Jiang Bing Hua, both are the executive Directors.
Mr. Brian Chang indirectly holds 66,072,800 Shares through Windmere International Limited which is his wholly-owned company. Accordingly, he is deemed to be interested in the Shares held by Windmere International Limited under Part XV of the SFO. Mr. Brian Chang is the non-executive Director.
China International Marine Containers (Hong Kong) Limited (“ CIMC HK ”) is the beneficial owner of 92,800,000 Shares. CIMC HK is a wholly-owned subsidiary of China International Marine Containers (Group) Company Limited (“ CIMC Group ”). Therefore, CIMC Group is deemed to be interested in the 92,800,000 Shares held by CIMC HK under Part XV of the SFO.
Harmony Master Fund (“ Harmony Fund ”) is a long-only equity fund registered in the Cayman Islands. Harmony Fund is managed by DM Fund Management Limited, a company registered in the Cayman Islands and a subsidiary of DM Capital Limited, a company incorporated in the British Virgin Islands. Harmony Fund primarily holds long equity positions in small capitalization stocks that derive a majority of their revenues within the Greater China region.

– 10 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Target Company mainly engages in the repair and maintenance of Top Drive, the rental of Top Drive and the provision of Top Drive consumables. The Target Company has accumulated experience and practical knowledge in Top Drive technologies for over a decade. It also established comprehensive API Quality Management System and HSE Management System. The services provided by the Target Company basically cover all Top Drive brands, which provide its customers a full range of solutions for the usage and management of the services. The Target Company has established five repair bases worldwide, including Saudi Arabia, Ecuador, Indonesia, and Shandong and Tianjin, the PRC, which are able to provide technical assistance and material support for customers around the world. The brand name Cruiser is one of the largest Top Drive service brands in the PRC. It offers all types of Top Drive services, except Top Drive manufacturing and trading, and is able to provide exceptional quality of management and construction services. The two future business directions of the Target Company are (1) to establish an integrated overseas service network of drilling rigs while working with the Group on the basis of its core Top Drive services; (2) to work with Lanpec Technologies Limited in the research and development of self-proprietary Top Drive products, in order to expand the Top Drive rental business of the Target Company and gradually develop Top Drive manufacturing and trading services.

The Board considers that terms of the Agreement are fair and reasonable and on normal commercial terms and that the Transaction is in the interests of the Company and the Shareholders as a whole. As none of the Directors has any material interest in the Agreement, no Director had abstained from voting on the Board resolution on approving the Agreement.

INFORMATION ON THE GROUP

The Group is principally engaged in development, manufacture, marketing, installation and service of a comprehensive line of products for onshore and offshore drilling industries.

INFORMATION ON THE VENDOR AND THE GUARANTOR

The Vendor is an investment holding company and owned approximately 49% interest in the Target Company as at the Latest Practicable Date. The Vendor is not a Shareholder and does not have any interest in the existing total issued share capital of the Company as at the Latest Practicable Date.

The Guarantor is the sole beneficial owner of the Vendor.

IMPLICATIONS OF THE TRANSACTION UNDER THE LISTING RULES

As at the Latest Practicable Date, given that the Target Company was a subsidiary of the Group and the Vendor is a substantial shareholder of the Target Company, the Vendor and the Guarantor (who is an associate of the Vendor) are connected persons of the Company pursuant to Chapter 14A of the Listing Rules.

– 11 –

LETTER FROM THE BOARD

As each of the applicable Percentage Ratios is less than 5% and the Transaction involves the allotment and issue of Consideration Shares, the Transaction constitutes a share transaction and connected transaction for the Company and is subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14 and 14A of the Listing Rules.

The EGM will be convened at which resolution(s) will be proposed to seek the Independent Shareholders’ approval of the Agreement and the transactions contemplated thereunder. As none of the Shareholders has any material interest in the Agreement, no Shareholder will abstain from voting on the relevant resolution(s) to approve the Agreement at the EGM.

EGM

RECOMMENDATION

The Directors consider that the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and that the transactions contemplated under the Agreement are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve the Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee, the letter from Gram Capital and the additional information set out in the appendix to this circular.

By order of the Board TSC GROUP HOLDINGS LIMITED Jiang Bing Hua Executive Chairman

– 12 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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TSC Group Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 206)

To the Independent Shareholders

Dear Sir or Madam,

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

We refer to the circular dated 13 November 2014 (the “ Circular ”) of the Company of which this letter forms part. Terms used in this letter shall have the meanings as defined in the Circular unless the context requires otherwise.

We, being the independent non-executive Directors, have been appointed to form the Independent Board Committee to advise you as to whether the terms of the Agreement are fair and reasonable so far as the Independent Shareholders are concerned and whether the Agreement is in the interests of the Company and the Shareholders as a whole.

Gram Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the Agreement.

We wish to draw your attention to the letter from the Board as set out from pages 5 to 12 of the Circular and the letter from Gram Capital as set out from pages 14 to 25 of the Circular which contain, among other things, their advice, recommendations to us regarding the Agreement and the principal factors and reasons taken into consideration for their advice and recommendations.

Having taken into account the advice and recommendations of Gram Capital and the principal factors and reasons taken into consideration by them in arriving at their opinion, we consider that the terms of the Agreement are on normal commercial terms, fair and reasonable as far as the Independent Shareholders are concerned and the Acquisition is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM to approve the Agreement and the transactions contemplated thereunder.

Yours faithfully,

Mr. Chan Ngai Sang, Mr. Bian Junjiang Mr. Guan Zhichuan Mr. Robert William Kenny Fogal Jr. Independent Board Committee

– 13 –

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transaction for the purpose of inclusion in this circular.

Room 1209, 12/F. Nan Fung Tower 173 Des Voeux Road Central Hong Kong

13 November 2014

To: The independent board committee and the independent shareholders of TSC Group Holdings Limited

Dear Sirs,

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Transaction, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 13 November 2014 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 23 October 2014, the Purchaser, being a wholly-owned subsidiary of the Company, entered into the Agreement with the Vendor and the Guarantor, pursuant to which the Purchaser conditionally agreed to acquire for, and the Vendor conditionally agreed to dispose of, the Sale Shares at the Consideration of HK$33,613,000 which will be satisfied in full by the allotment and issue of 8,404,000 Consideration Shares to the Vendor at the Issue Price of HK$4.0.

With reference to the Board Letter, the Transaction constitutes a share transaction and connected transaction for the Company under Chapters 14 and 14A of the Listing Rules respectively. As such, the Transaction is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

The Independent Board Committee comprising Mr. Chan Ngai Sang, Kenny, Mr. Bian Junjiang, Mr. Guan Zhichuan and Mr. Robert William Fogal Jr. (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Transaction is in the interests of the Company and the Shareholders as a whole and is

– 14 –

LETTER FROM GRAM CAPITAL

conducted in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Agreement and the transactions contemplated thereunder at the EGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Transaction. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, that the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement in the Circular or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the Purchaser, the Vendor, the Guarantor or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Agreement. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

– 15 –

LETTER FROM GRAM CAPITAL

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly extracted from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Transaction, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Transaction

Business overview of the Group

As referred to in the Board Letter, the Group is principally engaged in development, manufacture, marketing, installation and service of a comprehensive line of products for onshore and offshore drilling industries.

Set out below are the consolidated financial results of the Group for the six months ended 30 June 2014 and the two years ended 31 December 2013, as extracted from the Company’s interim report for the six months ended 30 June 2014 and its annual report for the year ended 31 December 2013 (the “ 2013 Annual Report ”), respectively:

		For the	For the	For the
	six months ended		year ended	year ended	Year on
		30 June 2014	31 December 2013	31 December 2012	year change
		US$’000	US$’000	US$’000		%
		(unaudited)	(audited)	(audited)
Turnover		108,153	201,928	183,742		9.9
– Capital
equipment
and packages		74,105	138,252	131,744		4.9
– Oilfield
expendables
and supplies		23,109	44,924	31,289		43.6
– Engineering
services		10,939	18,752	20,709		(9.4)
Profit for the
period/year		10,467	15,299	8,180		87.0

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LETTER FROM GRAM CAPITAL

As depicted by the above table, the Group recorded an increase in turnover of approximately 9.9% from approximately US$183.7 million for the year ended 31 December 2012 to approximately US$201.9 million for the year ended 31 December 2013. In particular, the oilfield expendables and supplies segment which comprises the provision of maintenance, repair and operations spares for land and offshore rigs increased substantially by approximately 43.6% as compared to the prior year. According to the 2013 Annual Report, such increase was primarily attributable to the continuing expansion of the Group’s distribution network with established drilling contractors and the development of products for original equipment manufacturers. With regard to the profitability of the Group, we noted that there had been a substantial increase of approximately 87.0% in the Group’s net profit from 2012 to 2013. As referred to in the 2013 Annual Report, the substantial increase was mainly due to improvements in the overall operational efficiency and the cost reduction measures adopted by the Group.

Going forward, we were advised by the Directors that they expect that the demand for rig solutions and equipment will continue to grow with the sustained oil price and increasing demand for oil, especially in the PRC. For this reason, the Group will continue to focus on its core strengths of providing world class drilling equipment and total solution services to customers around the globe and to extend its manufacturing capacity, broaden its range of solutions and to deepen market penetration by forming strategic alliances with key partners, suppliers and strategic customers.

Information on the Target Group

As extracted from the Board Letter, the Target Group is principally engaged in the provision of petroleum engineering services, equipment rental, repair and maintenance services and trading of spare parts in various locations all over the world, and the Target Company mainly engages in the repair and maintenance of Top Drive, the rental of Top Drive and the provision of Top Drive consumables.

The Sale Shares represent approximately 28% of the issued share capital of the Target Company. As at the Latest Practicable Date, the Target Company was owned as to approximately 51% by the Purchaser (and as such was a subsidiary of the Group) and approximately 49% by the Vendor. Immediately upon Completion, the Target Company will be owned as to approximately 79% by the Purchaser and approximately 21% by the Vendor. The group structure of the Target Group is included in the sub-section headed “The Sale Shares and the Target Company” of the Board Letter.

– 17 –

LETTER FROM GRAM CAPITAL

Set out below is the unaudited financial information of the Target Group for the six months ended 30 June 2014 and the two years ended 31 December 2013 as provided to us by the Company:

	For the	For the	For the
	six months ended	year ended	year ended
	30 June 2014	31 December 2013	31 December 2012
	HK$’000	HK$’000	HK$’000
Turnover	51,761	106,572	83,942
Profit after tax	4,631	17,105	15,704
	As at	As at	As at
	30 June 2014	31 December 2013	31 December 2012
	HK$’000	HK$’000	HK$’000
Net assets	66,415	79,285	77,585

As depicted by the above table, the Target Group recorded moderate growth in profitability for the two years ended 31 December 2013 and had continued to record profit for the six months ended 30 June 2014.

Reasons for the Transaction

As aforementioned, the Group is principally engaged in development, manufacture, marketing, installation and service of a comprehensive line of products for onshore and offshore drilling industries. With reference to the Board Letter, the Target Company has accumulated experience and practical knowledge in Top Drive technologies for over a decade. It also established comprehensive API Quality Management System and HSE Management System. The services provided by the Target Company basically cover all Top Drive brands, which provide its customers a full range of solutions for the usage and management of the services. The Target Company has established five repair bases worldwide, including Saudi Arabia, Ecuador, Indonesia, and Shandong and Tianjin, the PRC, which are able to provide technical assistance and material support for customers around the world. The brand name Cruiser is one of the largest Top Drive service brands in the PRC. It offers all types of Top Drive services, except for Top Drive manufacturing and trading, and is able to provide exceptional quality of management and construction services. As further advised by the Directors, the two future business directions of the Target Company are (i) to establish an integrated overseas service network of drilling rigs while working with the Group on the basis of its core Top Drive services; and (ii) to work with Lanpec Technologies Limited in the research and development of self-proprietary Top Drive products in order to expand the Top Drive rental business of the Target Company and gradually develop the Top Drive manufacturing and trading services.

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LETTER FROM GRAM CAPITAL

For our due diligence purpose, we have also researched independently over the internet for information regarding Top Drives. In this respect, we understand that Top Drives are used in drilling operations to rotate the drill string to facilitate the process of drilling a borehole. According to TESCO Corporation, one of the global providers of Top Drives, the demand for Top Drive products and services depends primarily on capital spending of drilling contractors and oil and natural gas companies and the level of drilling activity. Approximately 60% of land drilling rigs were currently equipped with Top Drive systems and approximately 95% of offshore rigs were equipped with Top Drives. Besides that, in accordance with the statistics released by the Statistical Review of World Energy 2014 published by BP plc, an international oil and gas company, in June 2014, the world oil consumption reached approximately 4,185.1 million tonnes in 2013, representing an increase of approximately 1.4% as compared to 2012. Moreover, 2013 was the third consecutive year with the Brent crude oil average price being above US$100 per barrel as compared to an average of US$79.50 per barrel in 2010. In this regard, we were also advised by the Directors that they are optimistic about the prospects of the Target Group with the provision of petroleum engineering services and equipment related services as driven by the possible persistent demand for oil.

In view of the foregoing reasons for and potential benefits of the Transaction, we concur with the Directors that the Transaction is in the interests of the Company and the Shareholders as a whole and is conducted in the ordinary and usual course of business of the Group.

2. Principal terms of the Agreement

On 23 October 2014, the Purchaser, being a wholly-owned subsidiary of the Company, entered into the Agreement with the Vendor and the Guarantor, pursuant to which the Purchaser conditionally agreed to acquire for, and the Vendor conditionally agreed to dispose of, the Sale Shares at the Consideration of HK$33,613,000 which will be satisfied in full by the allotment and issue of the Consideration Shares to the Vendor at the Issue Price.

The Consideration

The Consideration is HK$33,613,000 which will be satisfied in full by the allotment and issue of the Consideration Shares to the Vendor at the Issue Price. The Consideration Shares will be issued and allotted by the Company to the Vendor on the Completion Date.

As confirmed by the Directors, the Consideration was determined among the Vendor, the Guarantor and the Purchaser after arm’s length negotiations with reference to the Target Group’s future business development prospects and financial performance, and are on normal commercial terms.

Pursuant to the Agreement, 75% of the Consideration Shares shall be subject to a lock-up period of three years, commencing from the Completion Date. At the end of each year, during the three-year lock-up period, 25% of the Consideration Shares will be released from the lock-up and may be disposed of by the Vendor so that the Vendor may dispose of all the Consideration Shares at the end of the lock-up period.

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LETTER FROM GRAM CAPITAL

Trading multiples analysis

For the purpose of assessing the fairness and reasonableness of the Consideration, we have performed a trading multiples analysis which includes the price to earnings ratio (“ PER ”) and the price to book ratio (“ PBR ”). We have searched for companies listed in Hong Kong which are engaged in similar lines of business as the Target Group, being the provision of petroleum engineering services and equipment related services, and derive a majority of their turnover from such business based on their respective latest published financial information (the “ Market Comparables ”) for comparison. To the best of our knowledge and endeavor, we found seven Hong Kong listed companies which met the said criteria and the Market Comparables are exhaustive as far as we are aware of. It should be noted that the operations and prospects etc. of the Target Group are not exactly the same as the Market Comparables and we have not conducted any in-depth investigation into the businesses and operations of the Market Comparables. Nonetheless, we consider that the Market Comparables are fair and representative to illustrate the general PER and PBR ranges of Hong Kong listed companies which are engaged in the provision of petroleum engineering services and equipment related services as at the date of the Agreement.

Set out below are the PERs and PBRs of the Market Comparables based on their closing prices as at 23 October 2014, being the date of the Agreement, and their latest published financial information:

Company name
(stock code)	Principal business	PER	PBR
		(times)	(times)
		(Note 1)	(Note 1)
Honghua Group	Research, design, manufacture, setting and	7.1	0.8
Limited (196)	sale of land rigs and related parts and
	components, design and manufacture of
	the offshore drilling module, provides
	technical support services and drilling
	engineering service for clients.
Shandong Molong	Design, manufacture and sale of oil well	N/A	1.0
Petroleum	pumping machines, oil well sucker rods,	(Note 2)
Machinery	oil well pumps, oil well pipes, casing and
Company	other petroleum drilling and extraction
Limited (568)	machinery accessories.
SPT Energy Group	Provision of oilfield services including	10.5	1.8
Inc. (1251)	drilling, well completion, reservoir, with
	ancillary activities in trading and
	manufacturing of oil field services related
	products.
Hilong Holding	Manufacturing and distribution of oil and	9.4	1.2
Limited (1623)	gas drilling equipment and coating
	materials, and provision of coating and
	oilfield services.

– 20 –

LETTER FROM GRAM CAPITAL

Company name
(stock code)	Principal business	PER	PBR
		(times)	(times)
		(Note 1)	(Note 1)
Petro-king Oilfield	Provision of oilfield technology and oilfield	12.4	1.2
Services Limited	services of an oilfield including drilling,
(2178)	well completion and production
	enhancement with ancillary activities in
	trading and manufacturing of oilfield
	services related products.
China Oilfield	Provision of oilfield services including	10.2	1.5
Services Limited	drilling services, well services, marine
(2883)	support and transportation services, and
	geophysical and surveying services.
Anton Oilfield	Provision of oil and gas field development	9.7	1.7
Services Group	technical services, and tubular services
(3337)	covering the entire life cycle of oil and
	gas field development, including drilling,
	completion and production stages.
	Maximum	12.4	1.8
	Minimum	7.1	0.8
	Average	9.9	1.3
The Transaction		7.0	1.8
		(Note 3)	(Note 4)

Notes:

The PERs and PBRs of the Market Comparables were calculated based on their respective latest published annual reports for the year ended 31 December 2013 and their respective latest interim reports for the six months ended 30 June 2014, respectively.
The selected company was loss making during the relevant latest financial year.
The implied PER for the Transaction was calculated based on the Consideration (after adjusted for 100% of the equity interest in the Target Group) and the profit attributable to the Target Group for the year ended 31 December 2013.
The implied PBR for the Transaction was calculated based on the Consideration (after adjusted for 100% of the equity interest in the Target Group) and the unaudited net asset value of the Target Group as at 30 June 2014.

We noticed from the above table that the PERs of the Market Comparables ranged from approximately 7.1 times to 12.4 times, with an average of approximately 9.9 times. Given that the implied PER of the Consideration is approximately 7.0 times, the implied PER for the Transaction is lower than the minimum PER of the Market Comparables.

As for the PBRs of the Market Comparables, we noticed that they ranged from approximately 0.8 times to 1.8 times, with an average of approximately 1.3 times. Given that the implied PBR of the Consideration is approximately 1.8 times, the implied PBR for the Transaction is within the said PBR range of the Market Comparables.

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LETTER FROM GRAM CAPITAL

As the implied PER for the Transaction is lower than the minimum PER of the Market Comparables and the implied PBR for the Transaction is within the PBR range of the Market Comparables, we are of the view that the Consideration is fair and reasonable based on market comparison.

Issue of the Consideration Shares

As confirmed by the Directors, the Issue Price of HK$4.0 per Consideration Share was determined after arm’s length negotiations among the parties to the Agreement after taken into account (i) the recent trading performance of the Shares; and (ii) current market conditions, and represents:

(i) a premium of approximately 51.52% over the closing price of HK$2.64 per Share as quoted on the Latest Practicable Date;
(ii) a premium of approximately 27.80% over the closing price of HK$3.13 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 24.22% over the average of the closing prices of approximately HK$3.22 per Share for the last five consecutive trading days up to and including the Last Trading Day;
(iv) a premium of approximately 18.69% over the average of the closing prices of approximately HK$3.37 per Share for the last ten consecutive trading days up to and including the Last Trading Day; and
(v) a premium of approximately 75% over the consolidated net asset value of the Company per Share of approximately HK$2.28 as at 31 December 2013 (based on the audited consolidated net asset value of the Company of approximately US$204,244,000 (equivalent to approximately HK$1,584,933,440) as at 31 December 2013 and 696,511,204 issued Shares as at the date of the Agreement).

The Consideration Shares will be issued under a specific mandate to be sought at the EGM and will rank equally in all respects with the Shares in issue on the date of allotment and issuance, including all rights to dividends, distributions and other payments made or to be made for which the record date falls on or after the date of such allotment and issuance.

– 22 –

LETTER FROM GRAM CAPITAL

We have further performed the below historical Share price movement analysis to assess the fairness and reasonableness of the Issue Price:

Analysis on historical Share price movement

Set out below is a chart showing the movement of the daily closing prices of the Shares as quoted on the Stock Exchange from 2 October 2013 up to and including the Last Trading Day (the “ Review Period ”):

==> picture [369 x 201] intentionally omitted <==

----- Start of picture text -----

HK$
5
4.5
4
3.5
3
2.5
2
Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jul-14 Aug-14 Sep-14 Oct-14
Daily closing price of the Shares I ssue Price
----- End of picture text -----

Source: the Stock Exchange’s website (www.hkex.com.hk)

We noted that the daily closing prices of the Shares ranged from HK$2.31 per Share to HK$4.59 per Share during the Review Period. Out of the total 262 trading days in the Review Period, the Issue Price had been above or equal to the closing prices of the Shares in a majority of 242 trading days. Furthermore, the closing prices of the Shares had fluctuated but overall showing a gradual decreasing trend up to the Last Trading Day since reaching its peak in early May 2014.

In light of that (i) the Issue Price represents premium over the recent market prices of the Shares; (ii) the Issue Price had been above or equal to the closing prices of the Shares during a majority of the trading days in the Review Period; and (iii) the Share price had been showing an overall gradual decreasing trend in the second half of 2014 up to the Last Trading Day, we are of the view that the Issue Price is fair and reasonable so far as the Independent Shareholders are concerned.

Having considered all of the foregoing principal terms of the Agreement, we are of the opinion that the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

– 23 –

LETTER FROM GRAM CAPITAL

Possible dilution effect on the shareholding interests of the public Shareholders

Based on the 696,511,204 Shares in issue as at the Latest Practicable Date, the Consideration Shares represent (i) approximately 1.21% of the existing total issued share capital of the Company; and (ii) approximately 1.19% of the total issued share capital of the Company as enlarged by the issue of the Consideration Shares upon Completion.

The table below demonstrates the possible shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after Completion and including the issue of the Consideration Shares (assuming that there is no change in the issued share capital of, and the shareholding in, the Company from the Latest Practicable Date and up to the Completion):

Global Energy Investors, LLC. (Note 1) Mr. Zhang Menggui (Note 1) Mr. Jiang Bing Hua (Note 1) Mr. Brian Chang (Note 2) China International Marine Containers (Group) Company Limited (Note 3) Harmony Master Fund (Note 4) The Vendor Other public Shareholders Total	As at the Latest Practicable Date Number of Shares % 111,507,200 16.01 4,656,000 0.67 4,656,000 0.67 66,072,800 9.48 92,800,000 13.32 55,767,800 8.01 – – 361,051,404 51.84 696,511,204 100	Immediately after Completion and including the issue of the Consideration Shares Number of Shares % 111,507,200 15.82 4,656,000 0.66 4,656,000 0.66 66,072,800 9.38 92,800,000 13.16 55,767,800 7.91 8,404,000 1.19 361,051,404 51.22 704,915,204 100	Immediately after Completion and including the issue of the Consideration Shares Number of Shares % 111,507,200 15.82 4,656,000 0.66 4,656,000 0.66 66,072,800 9.38 92,800,000 13.16 55,767,800 7.91 8,404,000 1.19 361,051,404 51.22 704,915,204 100
			100

Notes:

Global Energy Investors, LLC. is the beneficial owner of 111,507,200 Shares. The entire share capital of Global Energy Investors, LLC. is beneficially owned as to 50% each by Mr. Zhang Menggui and Mr. Jiang Bing Hua, both being the executive Directors.
Mr. Brian Chang indirectly holds 66,072,800 Shares through Windmere International Limited which is his wholly-owned company. Accordingly, he is deemed to be interested in the Shares held by Windmere International Limited under Part XV of the SFO. Mr. Brian Chang is a non-executive Director.
China International Marine Containers (Hong Kong) Limited (“ CIMC HK ”) is the beneficial owner of 92,800,000 Shares. CIMC HK is a wholly-owned subsidiary of China International Marine Containers (Group) Company Limited (“ CIMC Group ”). Therefore, CIMC Group is deemed to be interested in the 92,800,000 Shares held by CIMC HK under Part XV of the SFO.
Harmony Master Fund (“ Harmony Fund ”) is a long-only equity fund registered in the Cayman Islands. Harmony Fund is managed by DM Fund Management Limited, a company registered in the Cayman Islands and a subsidiary of DM Capital Limited, a company incorporated in the British Virgin Islands. Harmony Fund primarily holds long equity positions in small capitalisation stocks that derive a majority of their revenues within the Greater China region.

– 24 –

LETTER FROM GRAM CAPITAL

As demonstrated by the above table, the shareholding interests of the public Shareholders in the Company would be diluted by a minimal of approximately 0.62 percent point as a result of the issue of the Consideration Shares. In this regard, taking into account of (i) the reasons for and potential benefits of the Transaction to the Group; and (ii) the terms of the Agreement being fair and reasonable, we are of the view that the said minimal level of dilution to the shareholding interests of the public Shareholders as a result of the issue of the Consideration Shares is acceptable.

3. Possible financial effects of the Transaction

Upon Completion, the Group’s interest in the Target Company will increase from approximately 51% to approximately 79% and the non-controlling interest of the Target Group will decrease from approximately 49% to approximately 21%. As advised by the Directors, the financial statements of the Target Group shall continue to be accounted for in the Group’s consolidated financial statements with non-controlling interest of approximately 21% held by the Vendor.

Effect on net asset value and gearing

As the Company has already consolidated 100% of the accounts of all members of the Target Group in the consolidated financial statements of the Group, the Directors advised us that the Completion would have limited immediate impact on the Group’s net asset value and gearing (represented as the total liabilities to equity shareholders’ funds) position.

Effect on liquidity

The Directors confirmed that given that the Transaction does not involve any cash consideration and the total expenses associated with the entering into of the Agreement are immaterial, the Transaction would not lead to any immediate material change in the Group’s liquidity position.

It should be noted that the aforementioned analyses are for illustrative purposes only and do not purport to represent how the financial position of the Group will be upon Completion.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Transaction is in the interests of the Company and the Shareholders as a whole and is conducted in the ordinary and usual course of business of the Group. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM to approve the Agreement and the transactions contemplated thereunder and we recommend the Independent Shareholders to vote in favour of the resolution(s) in this regard.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Managing Director

– 25 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and following the Completion were and are expected to be as follows:

Authorised: 2,000,000,000 Shares Issued and fully paid: 696,511,204 Shares as at the Latest Practicable Date 8,404,000 Consideration Shares Total (for illustrative purpose) 704,915,204 Shares	HK$ 200,000,000

	69,651,120 840,400 70,491,520

All of the Shares in issue and to be issued rank and will rank equally in all respects with the Shares in issue on the date of allotment and issuance, including all rights to dividends, distributions and other payments made or to be made for which the record date falls on or after the date of such allotment and issuance.

3. DISCLOSURE OF INTERESTS

(a) Interests of the Directors, and chief executive of the Company

As at the Latest Practicable Date, the interests or short position of the Directors and the chief executive of the Company and each of their respective associates, in the Shares, underlying Shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which are required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions in which they are deemed or taken to have under such provisions of the SFO); or (b) pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in the Listing Rules to be notified to the Company and the Stock Exchange, were as follows:

– 26 –

APPENDIX

GENERAL INFORMATION

Number of	underlying	Shares (in	respect of	share	options Approximate	granted percentage	under the of the	refreshment Company’s	of the issued	Personal Family Corporate Other Post-IPO share	Name of the Director(s) interests interests interests interests Total Scheme) capital	(Note 3)	Mr. Zhang Menggui (Note 1) 4,656,000 – 111,507,200 – 116,163,200 – 16.68%	Mr. Jiang Bing Hua (Note 1) 4,656,000 – 111,507,200 – 116,163,200 – 16.68%	Mr. Jiang Longsheng – – – – – 400,000 0.06%	Mr. Brian Chang (Note 2) – – 66,072,800 – 66,072,800 – 9.49%	Mr. Chan Ngai Sang, Kenny – – – – – 500,000 0.07%	Mr. Bian Junjiang – – – – – 350,000 0.05%	Mr. Guan Zhichuan 240,000 – – – 240,000 60,000 0.04%	Notes:	1. Global Energy Investors, LLC. is the beneficial owner of 111,507,200 Shares. The entire share capital of Global Energy Investors, LLC. is beneficially	owned as to 50% each by Mr. Zhang Menggui and Mr. Jiang Bing Hua, both are the executive Directors. Accordingly, both Mr. Zhang Menggui and Mr.	Jiang Bing Hua are deemed to be interested in the 111,507,200 Shares beneficially owned by Global Energy Investors, LLC. under Part XV of the SFO.	2. Mr. Brian Chang indirectly holds 66,072,800 Shares through Windmere International Limited which is his wholly-owned company. Accordingly, he is

– 27 –

APPENDIX

GENERAL INFORMATION

(ii) Long positions in the issued share capital of a subsidiary of the Company:

	Name of
	substantial	Percentage of
Name	shareholder	shareholding
Jurun Limited	Xingbo Limited	49%
TSC Manufacturing and	Independence	40%
Supply De Colombia S.A.S.	Drilling S.A.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interest or short position in the Shares, underlying shares or debentures of the Company or any of its associated corporations as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code contained in the Listing Rules.

(b) Substantial shareholders

As at the Latest Practicable Date, the register of substantial shareholders maintained under Section 336 of the SFO shown that the Company has been notified of the following interests, being 5% or more of the Company’s issued share capital. These interests are in addition to those disclosed above in respect of the Directors and the chief executive of the Company.

– 28 –

APPENDIX

GENERAL INFORMATION

			Approximate
			percentage
		Number of	of the
	Capacity	Shares/	Company’s
	and nature	underlying	issued share
Name	of interest	Shares held	capital
Madam Chen Fengying	Interest of	116,163,200	16.68%
(Note 1)	the spouse
Madam Zhang Jiuli (Note 2)	Interest of	116,163,200	16.68%
	the spouse
Global Energy Investors,	Corporate	111,507,200	16.01%
LLC. (Note 3)
Windmere International	Corporate	66,072,800	9.49%
Limited (Note 4)
China International Marine	Corporate	92,800,000	13.32%
Containers (Group)
Company Limited
(Note 5)
China International Marine	Corporate	92,800,000	13.32%
Containers (Hong Kong)
Limited (Note 5)
Harmony Master Fund	Corporate	55,767,800	8.01%
(Note 6)

Notes:

These interests represent the same block of Shares and share options held by Mr. Zhang Menggui. Since Madam Chen Fengying is the spouse of Mr. Zhang Menggui, she is deemed to be interested in the Shares and share options held by him under Part XV of the SFO.
These interests represent the same block of Shares and share options held by Mr. Jiang Bing Hua. Since Madam Zhang Jiuli is the spouse of Mr. Jiang Bing Hua, she is deemed to be interested in the Shares and share options held by him under Part XV of the SFO.
This interest represents the same block of corporate interest held by Mr. Zhang Menggui and Mr. Jiang Bing Hua.
Mr. Brian Chang indirectly holds 66,072,800 Shares through Windmere International Limited which is his wholly-owned company. Accordingly, he is deemed to be interested in the Shares held by Windmere International Limited under Part XV of the SFO.

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APPENDIX

GENERAL INFORMATION

China International Marine Containers (Hong Kong) Limited (“ CIMC HK ”) is the beneficial owner of 92,800,000 Shares. CIMC HK is a wholly-owned subsidiary of China International Marine Containers (Group) Company Limited (“ CIMC Group ”). Therefore, CIMC Group is deemed to be interested in the 92,800,000 Shares of the Company held by CIMC HK under Part XV of the SFO.
Harmony Master Fund (“ Harmony Fund ”) is a long-only equity fund registered in the Cayman Islands. Harmony Fund is managed by DM Fund Management Limited, a company registered in the Cayman Islands and a subsidiary of DM Capital Limited, a company incorporated in the British Virgin Islands. Harmony Fund primarily holds long equity positions in small capitalization stocks that derive a majority of their revenues within the Greater China region.

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any person (other than a Director or the chief executive of the Company) who had any other interests or short positions in the Shares or underlying shares and debentures of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO.

4. SERVICE CONTRACTS

Directors’ Service Contracts

Each of the executive Directors have entered into a service contract with the Company for a term of three years commencing from 28 November 2005 and expiring on 27 November 2008, renewable automatically for successive terms of three years from 28 November 2008 and 28 November 2011 respectively unless terminated by giving either party to the other not less than three months’ prior written notice.

Each of the independent non-executive Directors (except Mr. Robert William Fogal Jr.) have entered into a service contract with the Company for a term of three years commencing from 20 October 2005 and expiring on 19 October 2008, renewable automatically for successive terms of three years from 20 October 2008, 20 October 2011 and 20 October 2014 respectively unless terminated by giving either party to the other not less than three months’ prior written notice. Mr. Robert William Fogal Jr. has entered into a letter of appointment with the Company for a term of three years commencing from 10 July 2009 and expiring on 9 July 2012, renewable automatically for successive terms of three years from 10 July 2012 unless terminated by giving either party to the other not less than three months’ prior written notice, but he is subject to the retirement by rotation and re-election in accordance with the Articles.

The non-executive Directors: Mr. Jiang Longsheng has entered into a service contract with the Company for a term of three years commencing from 1 May 2006 and expiring on 30 April 2009, renewable automatically for successive terms of three years from 1 May 2009 and 1 May 2012 respectively unless terminated by giving either party to the other not less than three months’ prior written notice. Mr. Brian Chang has entered into a letter of appointment with the Company for a term of three

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APPENDIX

GENERAL INFORMATION

years commencing from 10 July 2009 and expiring on 9 July 2012, renewable automatically for successive terms of three years from 10 July 2012 unless terminated by giving either party to the other not less than three months’ prior written notice, but he is subject to the retirement by rotation and re-election in accordance with the Articles. Mr. Yu Yuqun has entered into a letter of appointment with the Company for a term of three years commencing from 15 March 2011 and expiring on 14 March 2014, renewable automatically for successive terms of three years from 15 March 2014 unless terminated by giving either party to the other not less than three months’ prior written notice, but he is subject to the retirement by rotation and re-election in accordance with the Articles.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or proposed Directors had any existing service contract or proposed service contract with any member of the Group which will not expire or is not determinable by the Company within one year without payment of compensation (other than statutory compensation).

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their respective associates had any interest in a business which competes or may compete with the businesses of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them was a controlling shareholder of the Company).

6. MATERIAL INTERESTS

As at the Latest Practicable Date, none of the Directors had any assets which have, since 31 December 2013 (being the date to which the latest published audited consolidated accounts of the Group were made up), been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

7. MATERIAL CONTRACTS

As at the Latest Practicable Date, there was no other material contract or arrangement subsisting in which any Director was materially interested and which was significant in relation to the business of the Group.

8. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, save as disclosed above, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2013 (being the date to which the latest published audited consolidated accounts of the Group were made up).

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APPENDIX

GENERAL INFORMATION

9. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has given its opinion or advice which are contained in this circular:

Name Qualification Gram Capital Limited a licensed corporation to carry out type 6 (advising on corporate finance) regulated activity under the SFO

Gram Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letters, reports and/or opinion, as the case may be, and references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, Gram Capital did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Gram Capital did not have, directly or indirectly, any interest in any assets which had since 31 December 2013 (being the date to which the latest published audited consolidated accounts of the Group were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

10. GENERAL

The English text of this circular shall prevail over the Chinese text in the event of inconsistency.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at Unit 910, 9/F, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong during normal business hours on any business day from the date of this circular up to and including the date of the EGM:

(a) the Agreement;
(b) the service contracts as disclosed under the paragraph headed “Service contracts” in this appendix;
(c) the material contracts as disclosed under the paragraph headed “Material contracts” in this appendix;

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APPENDIX

GENERAL INFORMATION

(d) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 13 of this circular;
(e) the letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out from pages 14 to 25 of this circular;
(f) the consent letter from Gram Capital referred to in the paragraph headed “Qualification and consent of expert” in this appendix; and
(g) this circular.

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NOTICE OF EGM

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TSC Group Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 206)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ Meeting ”) of TSC Group Holdings Limited (the “ Company ”) will be held at 2/F, Pacific Room, Island Pacific Hotel, 152 Connaught Road West, Hong Kong on Friday, 5 December 2014 at 10:00 a.m., for the purpose of considering and, if thought fit, passing, with or without modification, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

(a) the conditional share purchase agreement dated 23 October 2014 (the “ Agreement ”) (a copy of which is marked “ A ” now produced to the meeting and initialled by the chairman of the meeting for the purpose of identification) entered into between Petro Equip Leaders Limited (the “ Purchaser ”) (a wholly-owned subsidiary of the Company) with Xingbo Limited (the “ Vendor ”) and Mr. Li Yong Hu (the “ Guarantor ”) pursuant to which the Purchase conditionally agreed to acquire for, and the Vendor has conditionally agreed to dispose of, 2,562 shares (the “ Sale Shares ”) at the consideration of HK$33,613,000 (the “ Consideration ”) which will be satisfied in full by the allotment and issue of 8,404,000 new Shares (the “ Consideration Shares ”) to the Vendor at issue price of HK$4 per Consideration Share (the “ Issue Price ”), and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(b) subject to fulfilment of the conditions precedent set out in the Agreement, the allotment and issue of the Consideration Shares in accordance with the terms and conditions of the Agreement be and is hereby approved;
(c) the directors of the Company (the “ Directors ”) be and are hereby granted a specific mandate (“ Specific Mandate ”) to exercise the powers of the Company to allot and issue the Consideration Shares pursuant to the terms and conditions of the Agreement, such Consideration Shares shall rank equally in all respects among themselves and with all fully paid ordinary shares of the Company in issue as at the date of allotment and issue. The specific mandate is in addition to, and shall not prejudice nor revoke any general or special mandate(s) which has/have been granted or may from time to time be granted to the Directors prior to the passing of this resolution;

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NOTICE OF EGM

(d) any one or more of the Directors be and are hereby authorised to do all such other acts and take all such other actions on behalf of the Company, including but not limited to the signing or execution of all such other documents under seal (where applicable) as he/she/they may consider necessary, expedient or desirable for the purpose of or in connection with the implementation of or giving effect to the Agreement and the transactions contemplated thereunder, including but not limited to the exercise or enforcement of any of the Company’s rights under the Agreement and to make and agree to such variation of the terms of the Agreement as any such Director(s) may consider to be appropriate and in the interests of the Company and the Shareholders as a whole.”

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

Hong Kong, 13 November 2014

Notes:

Any member of the Company entitled to attend and vote at the Meeting is entitled to appoint another person as his proxy to attend and vote in his stead. A member who is the holder of two or more shares may appoint more than one proxy to attend and vote on his behalf. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed. A proxy need not be a member of the Company, but must attend the Meeting in person to represent you.
To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be deposited at the principal place of business of the Company in Hong Kong at Unit 910, 9/F., China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong not less than 48 hours before the time appointed for the holding of the Meeting or any adjourned meeting.
Completion and delivery of the form of proxy will not preclude a member from attending and voting in person at the Meeting if the member so desires and in such event, the instrument appointing a proxy shall be deemed to be revoked.
Where there are joint holders of any share, any one of such persons may vote at any meeting, either in person or by proxy, in respect of such share as if he was solely entitled thereto; but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.
Shareholders are advised to read the circular to the shareholders of the Company dated 13 November 2014 which contains information concerning the resolution(s) to be proposed in this notice.

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AI assistant

CM Energy Tech Co., Ltd. — Proxy Solicitation & Information Statement 2014

49033_rns_2014-11-12_b57d3c68-463c-4ba7-a5d3-28eaa5d0b36c.pdf

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

DEFINITIONS

DEFINITIONS

TSC Group Holdings Limited

(Stock Code: 206)

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

INTRODUCTION

LETTER FROM THE BOARD

THE AGREEMENT

Date

Parties

The Sale Shares and the Target Company

Consideration and the Consideration Shares

Conditions precedent

Completion

Other

EFFECT OF THE TRANSACTION ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

REASONS FOR AND BENEFITS OF THE TRANSACTION

INFORMATION ON THE GROUP

INFORMATION ON THE VENDOR AND THE GUARANTOR

IMPLICATIONS OF THE TRANSACTION UNDER THE LISTING RULES

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

TSC Group Holdings Limited

(Stock Code: 206)

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

Yours faithfully,

SHARE TRANSACTION AND CONNECTED TRANSACTION ACQUISITION OF 28% EQUITY INTEREST IN JURUN LIMITED

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

Business overview of the Group

Information on the Target Group

Reasons for the Transaction

2. Principal terms of the Agreement

The Consideration

Trading multiples analysis

Issue of the Consideration Shares

Analysis on historical Share price movement

Possible dilution effect on the shareholding interests of the public Shareholders

3. Possible financial effects of the Transaction

Effect on net asset value and gearing

Effect on liquidity

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. SHARE CAPITAL

3. DISCLOSURE OF INTERESTS

(a) Interests of the Directors, and chief executive of the Company

GENERAL INFORMATION

(b) Substantial shareholders

4. SERVICE CONTRACTS

Directors’ Service Contracts

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

6. MATERIAL INTERESTS

7. MATERIAL CONTRACTS

8. MATERIAL ADVERSE CHANGE

9. QUALIFICATION AND CONSENT OF EXPERT

10. GENERAL

11. DOCUMENTS AVAILABLE FOR INSPECTION

TSC Group Holdings Limited

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTION

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

Hong Kong, 13 November 2014

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CM Energy Tech Co., Ltd. Proxy Solicitation & Information Statement 2014