Differ Group Auto Limited — Capital/Financing Update 2017

Feb 14, 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.

DIFFER GROUP HOLDING COMPANY LIMITED 鼎豐集團控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 6878)

(A) ALTERATION TO THE TERMS OF THE CONVERTIBLE BONDS AND

(B) ENTERING INTO LOAN AGREEMENT

References are made to announcements of the Company dated 6 May 2016 (the “ Announcement ”) and 18 May 2016 respectively in relation to, among other matters, the issue of the Convertible Bonds due in 2017 by the Company to Cinda Subscriber and Huarong Subscriber in the principal amount of US$30,000,000. Unless otherwise defined herein, capitalised terms used in this letter shall have the same meanings as those defined in the Announcement.

(A) ALTERATION TO THE TERMS OF THE CONVERTIBLE BONDS

On 14 February 2017 (after trading hours of the Stock Exchange), with the written consent of all Bondholders, the Company executed the deed of modification (the “ Deed of Amendment ”) pursuant to which the terms and conditions of the Convertible Bonds are amended and modified (the “ Alteration of Terms ”) as follows:

1. the Company will have the right to redeem or repurchase all or part of the outstanding Convertible Bonds before the Maturity Date at a price equal to the sum of the principal amount of Convertible Bonds redeemed or repurchased, accrued and unpaid interests thereon, and such amount as would result in an internal rate of return of 4% per annum on all the principal amount of Convertible Bonds so redeemed or repurchased together with administration fee accrued thereon; provided that any amount redeemed or repurchased is to be in the multiples of US$1,000,000 save that if all outstanding principal amount of Convertible Bonds is less than US$1,000,000, all (but not part only) of the outstanding principal amount of the Convertible Bonds will be redeemed or repurchased; and

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1. the Convertible Bonds will be secured by, the GreatShine Cultural Share Charge, the Kaizer Cultural Share Charge and a guarantee to be given by Mr. Ng Chi Chung (an executive director of the Company), Mr. Hong, Mr. Cai, Expert Corporate and Ever Ultimate) (as opposed to the GreatShine Cultural Share Charge, the Kaizer Cultural Share Charge, the Greatshine Differ Tours Share Charge, the Kaizer Differ Tours Share Charge and the Guarantee under the original terms and conditions).

Apart from the Alteration of Terms above, all other major terms and conditions of the Convertible Bonds remain intact and unchanged.

REASONS FOR THE ALTERATION OF TERMS

The Alteration of Terms is to facilitate the early redemption or repurchase proposed by the Company of the whole or part of the Convertible Bonds. The Company intends to repurchase the entire Huarong Series A Bonds in the sum of US$20,000,000, as the Company has secured the offer of another funding source with better terms (i.e. lower interest rate). Accordingly, the Board believes that Alteration of Terms is in the interest of the Company and the Shareholders as a whole.

As at the date of this announcement, none of the conversion rights attached to the Convertible Bonds has been exercised by the Bondholder and no Conversion Shares were issued by the Company to the Bondholders.

The Company has sought the approval from the Stock Exchange on the Alteration of Terms pursuant to Rule 28.05 of the Listing Rules.

(B) ENTERING INTO LOAN AGREEMENT AND PLEDGE OF SHARES BY CONTROLLING SHAREHOLDER

The Board would like to announce that on 14 February 2017, the Company as borrower and Jianda Value Investment Fund L.P., being Cinda Subscriber as the lender entered into a loan agreement (the “ Loan Agreement ”), pursuant to which Cinda Subscriber agreed to grant the loan (the “ Loan ”) to the Company of US$10,000,000 for a term of 10 months from the date of drawing down the Loan.

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The principal terms of the Loan Agreement are summarised as follows:

THE LOAN AGREEMENT

Date:	14 February 2017
Lender:	Jianda Value Investment Fund L.P., being Cinda Subscriber
Borrower:	the Company
Security:	The Loan is to be secured by an account charge to executed
	by Ever Ultimate Limited within 60 days from the date of
	the Loan Agreement.
	Cinda Subscriber shall have the right from time to time to
	demand the Company provide additional collaterals to
	secure the Company’s repayment obligation under the Loan
Principal amount of the	US$10,000,000
loan:
Maturity date:	10 months from the date of the drawing down of the Loan
Interest:	7% per annum
Guaranteed Internal Rate	no less than 4% per annum on the outstanding principal
of Return:	amount of the Loan.
Default interest:	20% per annum
Interest payment date:	the interest shall be payable on 23 June 2017 (for the
	interest accrued from the Drawndown Date up to 30 June
	2017, both days inclusive) and on the maturity date
Repayment:	the Company shall repay the entire Loan together with all
	other amounts accrued or outstanding in full on the maturity
	date
Prepayment:	no voluntary prepayment of the Company in the whole or in
	part of the loan shall be permitted

The Board opines that the terms of the loan agreement are arrived at after arm’s length negotiation and are on normal commercial terms. The interest rate contemplated under the Loan Agreement is better than the secured loan to be obtained by the Company. The Board intends to use the Loan for further business development of the Group.

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Pursuant to the Loan Agreement, within 60 days from the date of the Loan agreement, the Company shall procure Ever Ultimate Limited (“ Ever Ultimate ”), to execute a charge (the “ Account Charge ”) in favour of Cinda Subscriber. Pursuant to the Account Charge, Ever Ultimate has to charge the all the securities and assets in the securities account opened by Ever Ultimate with Cinda International Securities Limited as a security for the performance and repayment obligation of the Company under the Loan.

Ever Ultimate is regarded as one of the controlling shareholders of the Company. Ever Ultimate is wholly-owned by Mr. Cai Huatan, an executive Director and Ever Ultimate is the beneficial owner of 1,115,800,000 representing approximately 26.34% of the total issued share capital of the Company. Ever Ultimate and Expert Corporate Limited are the two founder shareholders of the Company and they are in aggregate holding approximately 70.82% the total issued share capital of the Company as at the date of this announcement. Hence Ever Ultimate is one of the controlling shareholders (as defined in the Listing Rules) and as disclosed in the prospectus of the Company dated 3 December 2013.

Hence, the execution of the Account Charge shall invoke the disclosure requirement under Rule 13.17 of the Listing Rules. The Company will make further announcement when Ever Ultimate duly execute the Account Charge.

By order of the board of Differ Group Holding Company Limited HONG Mingxian Chairman and executive Director

Hong Kong, 14 February 2017

As at the date of this announcement, the executive Directors are Mr. HONG Mingxian, Mr. NG Chi Chung and Mr. CAI Huatan; the non-executive Directors are Mr. CAI Jianfeng and Mr. WU Qinghan; and the independent non-executive Directors are Mr. CHAN Sing Nun, Mr. TSANG Hin Man Terence and Mr. ZENG Haisheng

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