GBA Holdings Limited - Proxy Solicitation & Information Statement 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of 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 securities in CCT Land Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s), the transferee(s) or to the bank, licensed securities dealer or registered institution in securities, or other agent through whom the sale or transfer was effected for onward transmission to the purchaser(s) or the transferee(s).

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.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 00261)

CONNECTED TRANSACTION

(1) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE IN SETTLEMENT OF PROMISSORY NOTES PAYABLE

(2) INCREASE IN AUTHORISED SHARE CAPITAL

Financial adviser to the Company

VC Capital Limited

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

普頓資本有限公司 PROTON CAPITAL LIMITED

A letter from the Board is set out on pages 8 to 25 of this circular.

A letter from the Independent Board Committee is set out on pages 26 to 27 of this circular.

A letter from Proton Capital Limited containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 28 to 49 of this circular.

A notice convening the SGM to be held at 31/F., Fortis Tower, 77–79 Gloucester Road, Hong Kong on Friday, 4 December 2015 at 10:30 a.m. is set out on pages 57 to 59 of this circular. A form of proxy for use by the Independent Shareholders at the SGM is enclosed with this circular. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event, not later than 48 hours before the time appointed for holding the SGM. Such form of proxy for use at the SGM is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cctland.com/eng/investor/statutory.php). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

17 November 2015

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Letter from	Proton Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Appendix I	— General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		57

– i –

DEFINITIONS

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

‘‘Affiliate(s)’’
any other person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified person;
‘‘Agreement’’ the conditional agreement dated 27 October 2015 (as amended or supplemented from time to time) entered into by and among Jade Assets, CCT Securities, CCT Fortis, Glory Merit and the Company in respect of the Transactions;
‘‘Announcements’’ joint announcements of the Company and CCT Fortis dated 27 October 2015 and 10 November 2015 in which has disclosed the entering of the Agreement as amended by the Supplemental Agreement in relation to the issue of the C o n v e r t i b l e B o n d s w i t h p r i n c i p a l am o un t o f HK$1,095,671,000 by the Company in settlement of the Promissory Notes, of which Convertible Bonds of principal amount of HK$795,671,000 will be issued to CCT Securities, and Convertible Bonds of principal amount of HK$300,000,000 will be issued to Glory Merit;
‘‘associate(s)’’
has the same meaning as ascribed to it under the Listing Rules;
‘‘Board’’ the board of Directors;
‘‘Bondholder(s)’’ the holder(s) of the Convertible Bonds(s);
‘‘Business Day(s)’’
a day (other than Saturdays, Sundays and on which a tropical cyclone warning No. 8 or above or a ‘‘black rainstorm warning signal’’ is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on which licensed banks in Hong Kong are open for general banking business;
‘‘CAML’’
CCT Assets Management Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of CCT Fortis;
‘‘CB Certificate’’
the certificate of the Convertible Bonds issued to each Bondholder evidencing its holding of the Convertible Bonds;
‘‘CB Conditions’’
the terms and conditions of the Convertible Bonds set out in Agreement as amended by the Supplemental Agreement;

– 1 –

DEFINITIONS

‘‘CCT Fortis’’
CCT Fortis Holdings Limited, a company incorporated in the Cayman Islands and continued in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange;
‘‘CCT Fortis Group’’
CCT Fortis and its subsidiaries, from time to time;
‘‘CCT Securities’’
CCT Telecom Securities Limited, a company incorporated in Hong Kong and an indirect wholly-owned subsidiary of CCT Fortis, which is principally engaged in the trading of securities;
‘‘Companies Ordinance’’ the Companies Ordinance (Chapter 622 of the laws Hong Kong);
‘‘Company’’ CCT Land Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange;
‘‘Completion’’
completion of the Transactions pursuant to the Agreement as amended by the Supplemental Agreement;
‘‘Completion Date’’
on or before the third Business Day following the date of fulfillment of the Conditions Precedent or such later date as the parties to the Agreement may agree in writing;
‘‘Conditions Precedent’’
has the meaning given to it in the sub-section headed ‘‘Conditions precedent to the Agreement as amended by the Supplemental Agreement’’ under the section headed ‘‘The Agreement as amended by the Supplemental Agreement and the Transactions’’ of this circular;
‘‘connected person(s)’’
has the same meaning as ascribed to it under the Listing Rules;
‘‘Control’’

means in relation to an undertaking:

(a) the power to direct the exercise of a majority of the voting rights capable of being exercised at a general meeting of that undertaking;
(b) the right to appoint or remove a majority of the board of directors (or corresponding officers) of that undertaking; or
(c) the right to exercise a dominant influence over that undertaking by virtue of provisions contained in its constitutional documents or under a control contract or otherwise.

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DEFINITIONS

in each case either directly or indirectly ‘‘Controlling’’ and ‘‘Controlled’’ shall be construed accordingly;

‘‘Conversion Price’’ the price at which the Conversion Shares will be issued upon conversion and initially be HK$0.01 per Conversion Share (subject to adjustments pursuant to the CB Conditions);
‘‘Conversion Rights’’ the rights attached to the Convertible Bonds to convert the principal amount thereof into the Conversion Shares;
‘‘Conversion Share(s)’’
the Shares falling to be allotted and issued by the Company upon exercise by the Bondholder of the Conversion Rights, pursuant to the terms of the CB Conditions;
‘‘Convertible Bonds’’
the zero coupon Convertible Bonds in the aggregate principal amount of HK$1,095,671,000 to be issued by the Company to CCT Securities and Glory Merit as full settlement of the Promissory Notes pursuant to the terms and conditions of the Agreement as amended by the Supplemental Agreement;
‘‘Director(s)’’
the director(s) of the Company, from time to time;
‘‘Expert Success’’
‘‘Financial Adviser’’
Expert Success International Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of CCT Fortis; VC Capital Limited, a corporation licensed to carry on Type 6 (advising on corporate finance) regulated activity under the SFO;
‘‘First Convertible Bonds’’
the Convertible Bonds in the aggregate principal amount of HK$795,671,000, to be issued by the Company to CCT Securities at the First Issue Price, under the terms and conditions of the Agreement as amended by the Supplemental Agreement;
‘‘First Issue Price’’
the total issue price of the First Convertible Bonds of HK$795,671,000, which shall be 100% of the principal amount of the First Convertible Bonds;

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DEFINITIONS

‘‘First Promissory Note’’
‘‘First Settlement’’
‘‘First Subscription’’
‘‘Glory Merit’’
‘‘Group’’
‘‘HK$’’
‘‘Hong Kong’’
‘‘Increase in Authorised Share Capital’’
‘‘Independent Board Committee’’
‘‘Independent Shareholder(s)’’
the promissory note of outstanding principal amount of HK$795,671,000 due by the Company to Jade Assets, details of which have been disclosed in the sub-section headed ‘‘Subject matter of the Agreement as amended by the Supplemental Agreement’’ under the section headed ‘‘The Agreement as amended by the Supplemental Agreement and the Transactions’’ of this circular;
the settlement of all outstanding principal and accrued interest (if any) of the First Promissory Note due by the Company to Jade Assets by way of the First Subscription, under the terms and conditions of the Agreement as amended by the Supplemental Agreement;
the subscription of the First Convertible Bonds at the First Issue Price by CCT Securities, which will be satisfied as full settlement of all the outstanding principal and accrued interest (if any) of the First Promissory Note, under the terms and conditions of the Agreement as amended by the Supplemental Agreement;
Glory Merit International Investment Limited, a company incorporated in the British Virgin Islands with limited liability;
the Company and its subsidiaries from time to time;
Hong Kong dollar(s), the lawful currency of Hong Kong;
the Hong Kong Special Administrative Region of the PRC;
the proposed increase in authorised share capital of the Company from HK$1,200,000,000 divided into 120,000,000,000 Shares to HK$3,000,000,000 divided into 300,000,000,000 Shares;
the independent board committee of the Company comprising Mr. Lau Ho Kit, Ivan and Mr. William Robert Majcher, both being the independent non-executive directors of the Company not having material interest in the Agreement, the Supplemental Agreement and the Transactions, formed for the purpose of advising the Independent Shareholders on the Transactions;
Shareholder(s) other than CCT Fortis and its associates;

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DEFINITIONS

‘‘Jade Assets’’
Jade Assets Company Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of CCT Fortis;
‘‘Latest Practicable Date’’ 13 November 2015, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein;
‘‘Listing Committee’’
the listing committee of the Stock Exchange for considering applications for listing and the granting of listing;
‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock Exchange;
‘‘Long Stop Date’’
31 December 2015, or such other date as the parties to the Agreement may agree in writing;
‘‘Mr. Mak’’
Mr. Mak Shiu Tong, Clement, the chairman, the chief executive officer, an executive director and a substantial shareholder of CCT Fortis and the chairman, the chief executive officer, and an executive director of the Company;
‘‘p.a.’’ per annum;
‘‘PRC’’ or ‘‘China’’ the People’s Republic of China;
‘‘Promissory Notes’’
the First Promissory Note and the Second Promissory Notes of total outstanding principal amount of HK$1,095,671,000 due by the Company to Jade Assets and Glory Merit as at the Latest Practicable Date;
‘‘Proton Capital’’
Proton Capital Limited, a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Agreement as amended by the Supplemental Agreement and the Transactions;
‘‘Second Convertible Bonds’’
the Convertible Bonds in the aggregate principal amount of HK$300,000,000, to be issued by the Company to Glory Merit at the Second Issue Price, under the terms and conditions of the Agreement as amended by the Supplemental Agreement;

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DEFINITIONS

‘‘Second Issue Price’’

the total issue price of the Second Convertible Bonds of HK$300,000,000, which will be 100% of the principal amount of the Second Convertible Bonds;

‘‘Second Promissory Notes’’ the promissory notes of outstanding principal amount of HK$300,000,000, in aggregate, due by the Company to Glory Merit, details of which have been disclosed in the sub-section headed ‘‘Subject matter of the Agreement as amended by the Supplemental Agreement’’ under the section headed ‘‘The Agreement as amended by the Supplemental Agreement and the Transactions’’ of this circular;
‘‘Second Settlement’’ the settlement of all outstanding principal and accrued interest of the Second Promissory Notes due by the Company to Glory Merit by way of the Second Subscription, under the terms and conditions of the Agreement as amended by the Supplemental Agreement;
‘‘Second Subscription’’
the subscription of the Second Convertible Bonds at the Second Issue Price by Glory Merit, which will be satisfied as full settlement of all the outstanding principal and accrued interest of the Second Promissory Notes, under the terms and conditions of the Agreement as amended by the Supplemental Agreement;
‘‘Settlement’’
the First Settlement and the Second Settlement;
‘‘SFO’’
Securities and Futures Ordinance under Cap. 571 of the Laws of Hong Kong;
‘‘SGM’’
the special general meeting of the Shareholders to be convened to consider and, if thought fit, inter alia, approve the Transactions and any other transactions to be contemplated under the Agreement as amended by the Supplemental Agreement, and the proposed Increase in Authorised Share Capital;
‘‘Share(s) the share(s) of HK$0.01 each in the capital of the Company;
‘‘Shareholder(s)’’ the holder(s) of the issued Share(s);
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited;
‘‘Subscription’’ the First Subscription and the Second Subscription;

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DEFINITIONS

‘‘subsidiaries’’
‘‘Supplemental Agreement’’
‘‘Takeovers Code’’
‘‘Transactions’’
‘‘Transfer Agreement’’
‘‘Transfer Consideration’’
‘‘%’’
has the meaning ascribed to it under the Companies Ordinance;
the supplemental agreement dated 10 November 2015 entered into among the parties to the Agreement, under which the parties to the Agreement have agreed to amend certain provisions in the CB Conditions with the effect that the Company will not have any liability or obligations of payment or repayment (whether in cash or otherwise) in respect of the Convertible Bonds under any circumstances, irrespective of whether or not the Convertible Bonds are converted into the Conversion Shares during the Conversion Period or on the maturity date of the Convertible Bonds;
the Codes on Takeovers and Mergers issued by the SFC as amended from time to time;
the Subscription and the Settlement and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement including but not limited to the allotment and issue of the Conversion Shares upon exercise of the Conversion Rights;
the agreement dated 25 September 2015 entered into amongst Jade Assets, CCT Fortis and Glory Merit under which Jade Assets transferred the interest-free Promissory Note of principal amount of HK$104,329,000 to Glory Merit at a consideration of HK$104,329,000 and CCT Fortis transferred eight Promissory Notes of total principal amount of HK$195,671,000 to Glory Merit at a total consideration of HK$195,671,000, in aggregate, representing the Second Promissory Notes of HK$300,000,000;
HK$300,000,000, the total consideration for the transfer of the relevant Promissory Notes by Jade Assets and CCT Fortis to Glory Merit under the terms and conditions of the Transfer Agreement, of which HK$104,329,000 is due to Jade Assets and HK$195,671,000 is due to CCT Fortis, which shall be payable by Glory Merit in cash on or before 30 June 2016; and

per cent.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 00261)

Executive Directors: Mak Shiu Tong, Clement Cheng Yuk Ching, Flora Tam Ngai Hung, Terry Ong Ban Poh, Michael Huanfei Guan Lai Mei Kwan

Independent non-executive Directors: Chow Siu Ngor Lau Ho Kit, Ivan William Robert Majcher

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head office and principal place of business in Hong Kong: 31/F., Fortis Tower 77–79 Gloucester Road Hong Kong

17 November 2015

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

(1) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE IN SETTLEMENT OF PROMISSORY NOTES PAYABLE

(2) INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

Reference is made to the Announcements.

It was announced that on 27 October 2015, the Agreement was entered into by and among Jade Assets, CCT Securities, CCT Fortis, Glory Merit and the Company under which it was agreed that, subject to the terms and conditions of the Agreement, (i) the Company will issue and CCT Securities will subscribe for the First Convertible Bonds at the First Issue Price which will be satisfied as full settlement of the outstanding principal and accrued interest (if

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LETTER FROM THE BOARD

any) of the First Promissory Note due by the Company to Jade Assets upon Completion; and (ii) the Company will issue and Glory Merit will subscribe for the Second Convertible Bonds at the Second Issue Price to be satisfied as full settlement of all the outstanding principal and accrued interest of the Second Promissory Notes due by the Company to Glory Merit upon Completion. The implementation of the Agreement, the Subscription and the Settlement are subject to fulfillment of the Conditions Precedent.

The Conversion Shares will be allotted and issued under a specific mandate of the Company to be approved by the Independent Shareholders at the SGM by ordinary resolution.

The Supplemental Agreement dated 10 November 2015 was entered into among the parties to the Agreement, under which the parties to the Agreement have agreed to amend certain provisions in the CB Conditions with the effect that the Company will not have any liability or obligations of payment or repayment (whether in cash or otherwise) in respect of the Convertible Bonds under any circumstances, irrespective of whether or not the Convertible Bonds are converted into the Conversion Shares during the Conversion Period or on the maturity date of the Convertible Bonds.

In order to allow the Company to have sufficient unissued Shares for the issue of the Conversion Shares upon the exercise of the Conversion Rights of the Convertible Bonds and the flexibility to issue new Shares for future development, the Company proposes to increase the authorised share capital from HK$1,200,000,000 divided into 120,000,000,000 Shares to HK$3,000,000,000 divided into 300,000,000,000 Shares by the creation of an additional 180,000,000,000 Shares of HK$0.01 each which will rank pari passu with all existing Shares.

The proposed Increase in Authorised Share Capital is conditional upon the approval of the Shareholders at the SGM by way of an ordinary resolution.

As Mr. Mak is the chairman, an executive director, and chief executive officer of the Company, he is a connected person of the Company under the Listing Rules. As Mr. Mak held approximately 54.79% of the existing issued share capital of CCT Fortis as at the Latest Practicable Date, CCT Fortis is an associate of Mr. Mak and is therefore also a connected person of the Company under the Listing Rules. The First Subscription and the First Settlement therefore constitute a connected transaction for the Company under the Listing Rules. As the First Subscription, the Second Subscription, the First Settlement and the Second Settlement will be completed simultaneously and each of these transactions will not be completed separately to the exclusion of the others, the Transactions will be subject to announcement, circular and approval by the Independent Shareholders under Chapter 14A of the Listing Rules.

The SGM will be convened to consider and if, thought fit, approve the Transactions and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement, and the proposed Increase in Authorised Share Capital. The Transactions are subject to approval of the Independent Shareholders by way of poll at the SGM. CCT Fortis and its associates (which include CCT Securities) will abstain from voting in respect of resolution(s) to approve the Transactions at the SGM. To the best of the knowledge, information belief having made all reasonable enquiry, none of the Shareholders has any

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LETTER FROM THE BOARD

material interest in the proposed Increase in Authorised Share Capital and as such, no Shareholder is required to abstain from voting at the SGM to approve the proposed Increase in Authorised Share Capital.

The Independent Board Committee comprising Mr. Lau Ho Kit, Ivan and William Robert Majcher have been formed to advise the Independent Shareholders as to whether or not the terms of the Agreement as amended by the Supplemental Agreement is fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

An independent financial adviser, Proton Capital, has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether or not the Transactions are fair and reasonable, on normal commercial terms and are the interests of the Company and its Shareholders as a whole.

The purpose of this circular is to:

(i) provide the Shareholders with further details of the Agreement as amended by the Supplemental Agreement and the Transactions;
(ii) set out the opinion of Proton Capital to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Transactions;
(iii) set out the recommendation of the Independent Board Committee to the Independent Shareholders in respect of the terms of the Transactions; and
(iv) give the Shareholders the notice of the SGM to consider and, if thought fit, to approve the Transactions.

THE AGREEMENT AS AMENDED BY THE SUPPLEMENTAL AGREEMENT AND THE TRANSACTIONS

The Agreement and the Supplemental Agreement

Date of 27 October 2015 (after trading hours of the Stock Exchange) Agreement:

Date of 10 November 2015 (after trading hours of the Stock Exchange) Supplemental Agreement:

Parties: (i) Jade Assets : Jade Assets Company Limited (ii) CCT Securities : CCT Telecom Securities Limited (iii) CCT Fortis : CCT Fortis Holdings Limited (iv) Glory Merit : Glory Merit International Investment Limited (v) the Company : CCT Land Holdings Limited

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LETTER FROM THE BOARD

To the best of the knowledge, information and belief and having made all reasonable enquiries by the Directors, Glory Merit and its ultimate beneficial owner(s) is a third party independent of the Company and its connected persons.

Subject matter of the Agreement as amended by the Supplemental Agreement

(A) The First Promissory Note due to Jade Assets

	Original Date				Outstanding
	of Issue	Term, Maturity	Date of issue*	Interest	Principal
1.	15 July 2013	3 years,	29 September 2015	Interest-free	$795,671,000
		15 July 2016
The	Second Promissory Notes due to		Glory Merit
	Original Date				Outstanding
	of Issue	Term, Maturity	Date of issue*	Interest	Principal
1.	15 July 2013	3 years,	29 September 2015	interest-free	$104,329,000
		15 July 2016
2.	28 March 2012	5 years,	29 September 2015	3% p.a.	$67,471,000
		28 March 2017
3.	6 March 2014	3 years,	29 September 2015	3% p.a.	$33,200,000
		6 March 2017
4.	9 June 2014	3 years,	29 September 2015	3% p.a.	$12,500,000
		9 June 2017
5.	4 September 2014	3 years,	29 September 2015	3% p.a.	$7,500,000
		4 September 2017

(B) The Second Promissory Notes due to Glory Merit

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LETTER FROM THE BOARD

Original Date of Issue Term, Maturity Date of issue* Interest 6. 2 January 2015 3 years, 2 January 2018 29 September 2015 3% p.a. 7. 12 May 2015 3 years, 12 May 2018 29 September 2015 3% p.a. 8. 8 June 2015 3 years, 8 June 2018 29 September 2015 3% p.a. 9. 3 July 2015 3 years, 3 July 2018 29 September 2015 3% p.a. Total Second Promissory Notes Total Promissory Notes	Outstanding Principal $20,000,000 $25,000,000 $10,000,000 $20,000,000
	$300,000,000
	$1,095,671,000

The Second Promissory Notes were transferred by Jade Assets and CCT Fortis to Glory Merit on 29 September 2015 and new certificates were issued on that date for all the Promissory Notes (including the First Promissory Note).

The Second Promissory Notes were transferred by Jade Assets and CCT Fortis to Glory Merit under the Transfer Agreement at the Transfer Consideration of HK$300,000,000, which is payable by Glory Merit to Jade Assets and CCT Fortis on or before 30 June 2016. None of the Transfer Consideration has been paid as at the Latest Practicable Date. Details of the Transfer Agreement have been disclosed in the announcement dated 25 September 2015 and the circular dated 20 October 2015 of CCT Fortis.

Pursuant to the Agreement as amended by the Supplemental Agreement, the Company has agreed to settle the outstanding principal and accrued interest (if any) of all the Promissory Notes by issue of the Convertible Bonds. It was agreed by the parties to the Agreement as amended by the Supplemental Agreement that, subject to the terms and conditions of the Agreement as amended by the Supplemental Agreement, (i) the Company will issue and CCT Securities will subscribe for the First Convertible Bonds at the First Issue Price, which will be satisfied as full settlement of the outstanding principal and accrued interest (if any) of the First Promissory Note due by the Company to Jade Assets upon Completion; and (ii) the Company will issue and Glory Merit will subscribe for the Second Convertible Bonds at the Second Issue Price which will be satisfied as full settlement of all the outstanding principal and accrued interest of the Second Promissory Notes due by the Company to Glory Merit upon Completion. Jade Assets has agreed to satisfy the First Issue Price by way of the First Settlement and will discharge the Company from all the payments, obligations and liabilities under the First Promissory Note upon issue of the First Convertible Bonds to CCT Securities at Completion. Glory Merit has agreed to satisfy the Second Issue Price by way of the Second Settlement and will discharge the Company from all the payments, obligations and liabilities under the Second Promissory Notes upon issue of the Second Convertible Bonds to Glory Merit at Completion.

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LETTER FROM THE BOARD

Principal terms of the Convertible Bonds

The principal terms of the Convertible Bonds set out in the Agreement as amended by the Supplemental Agreement are as follows:

Issuer: the Company Principal amount: HK$1,095,671,000 of which HK$795,671,000 will be issued to CCT Securities and HK$300,000,000 will be issued to Glory Merit Issue Price: 100% of the principal amount of the Convertible Bonds Issue date: Completion Date Interest: The Convertible Bonds will not bear any interest. Maturity Date: The third anniversary of the date of issue of the Convertible Bonds (which must be a Business Day, and if not, the Business Day immediately following). All the outstanding principal amounts of the Convertible Bonds will be automatically converted into Conversion Shares on the Maturity Date. In the event that any outstanding principal amount of the Convertible Bonds are not converted into Conversion Shares on the Maturity Date for any reasons, the outstanding Convertible Bonds shall be cancelled on the Maturity Date without any payment or repayment (in cash or otherwise), liability or obligation on the Company in respect of the Convertible Bonds and their cancellation.

Redemption: The Convertible Bond will not be redeemed (in whole or in part) at the option of the Company commencing from the Issue Date up to and including the day immediately prior to the Maturity Date.
Status: The obligations of the Company arising under the Convertible Bonds constitute general, unconditional, unsecured, unsubordinated obligations of the Company, and rank equally among themselves and pari passu with all other present and future unsecured obligations and unsubordinated of the Company except for obligations accorded preference by mandatory provisions of applicable law.
Conversion Price:

HK$0.01 per Conversion Share (subject to adjustments).

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LETTER FROM THE BOARD

Conversion Shares:

Transferability:

Conversion Period:

Bondholder’s Conversion Right:
Takeovers Code and public float restriction:
Up to a maximum of 109,567,100,000 new Shares (subject to adjustments of the Conversion Price), representing (i) approximately 147.51% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 59.60% of the issued capital of the Company as enlarged by the allotment and issue of the Conversion Shares.
The Convertible Bonds will be freely transferable and shall be transferable in whole or in any part(s) in multiples of HK$3,000,000 provided that unless with the prior written consent of the Company and in full compliance of the Listing Rules and other requirements of the Stock Exchange, none of the Convertible Bonds may be transferred to a connected person of the Company.
The period commencing on the date of issue of the Convertible Bonds and expiring on the Maturity Date (the ‘‘Conversion Period’’).
The Bondholder has the right on any Business Day during the Conversion Period to convert in whole or in part the outstanding principal amount of the Convertible Bonds in whole or in integral multiples of HK$3,000,000 into Conversion Shares, subject to and upon compliance with the CB Conditions.
The Conversion Rights shall not be exercised by the Bondholder, or if exercised by virtue of a conversion notice having been given, the Company will not be obliged to issue any Conversion Shares but may treat the conversion notice as invalid, if it comes to the notice of the Company that immediately following such conversion:
(a) the Company will be unable to meet the public float requirement under the Listing Rules; or
(b) the Bondholder will as a result of the issue of the relevant Conversion Shares trigger any mandatory offer obligation under Rule 26 of the Takeovers Code on the part of the Bondholder which exercised the Conversion Rights, representing 30% or more (or such other percentage as stated in Rule 26 of the Takeovers Code in effect from time to time) of the then issued share capital of the Company or otherwise pursuant to other provisions of the Takeovers Code.

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LETTER FROM THE BOARD

Adjustments to Conversion Price:

The Conversion Price is subject to adjustments upon the occurrence of the following events:

(i) an alteration to the aggregate number of the Shares in issue as a result of consolidation, subdivision, reclassification or otherwise; and
(ii) an issue by the Company of any Shares credited as fully paid to Shareholders by way of capitalization of profits or reserves, other than Shares issued in lieu (in whole or in part) of a cash dividend, being a dividend which the Shareholders concerned would or could otherwise have received.

Each adjustment made to the Conversion Price pursuant to the adjustment event(s) would be certified in writing by the Company, independent reputable accounting firms, merchant banks or other reputable financial institutions selected and appointed by the Company.

Voting rights:

The Bondholder will not be entitled to vote at any meetings of the Company by reason only of it being the holder of the Convertible Bonds.

Listing:

The Convertible Bonds will not be listed on the Stock Exchange or any other stock exchange. An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

Conditions precedent to the Agreement as amended by the Supplemental Agreement

Completion of the Agreement (as amended by the Supplemental Agreement) is conditional upon:

(i) the passing by the Independent Shareholders at the SGM of all resolutions required under the Listing Rules, in respect of, among other things, the Transactions and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement, including but not limited to the specific mandate for the allotment and issue of the Conversion Shares;
(ii) the Listing Committee granting or agreeing to grant (subject to allotment) listing of and permission to deal in all the Conversion Shares which may fall to be allotted and issued upon the exercise of the conversion rights attached to the Convertible Bonds; and
(iii) each of Jade Assets, CCT Securities, Glory Merit and the Company having obtained all necessary consents and approvals (if any) in respect of the Agreement as amended by the Supplemental Agreement and the transactions contemplated thereunder.

– 15 –

LETTER FROM THE BOARD

None of the above conditions precedent can be waived. None of the above conditions has been fulfilled as at the Latest Practicable Date.

If any of the above conditions to the Agreement as amended by the Supplemental Agreement has not been fulfilled by the Long Stop Date, the Agreement as amended by the Supplemental Agreement will be automatically terminated and become null and void, and none of the parties thereto will have any claim against the other in respect of the Agreement as amended by the Supplemental Agreement, save for any liability arising out of any antecedent breaches of the Agreement as amended by the Supplemental Agreement.

Completion of the Agreement (as amended by the Supplemental Agreement)

Completion of the Agreement (as amended by the Supplemental Agreement) will take place on the Completion Date. The First Subscription, the Second Subscription, the First Settlement and the Second Settlement will be completed simultaneously and each of these transactions will not completed separately to the exclusion of the others.

Conversion Price

The Conversion Price of HK$0.01 per Conversion Share, subject to adjustments as set out and in accordance with the terms and conditions of the Convertible Bonds represents:

(i) a discount of approximately 47.37% to the closing price of HK$0.019 per Share as quoted on the Stock Exchange on 27 October 2015, being the date of the Agreement;
(ii) a discount of approximately 47.92% to the average of the closing prices as quoted on the Stock Exchange of approximately HK$0.0192 per Share for the last five (5) consecutive trading days immediately prior to the date of the Agreement;
(iii) a discount of approximately 49.49% to the average of the closing prices as quoted on the Stock Exchange of approximately HK$0.0198 per Share for the last ten (10) consecutive trading days immediately prior to the date of the Agreement;
(iv) a discount of approximately 47.37% to the closing price of HK$0.019 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(v) a premium of approximately of 49.3% over the unaudited consolidated net asset value attributable to owners of the Company per Share of approximately HK$0.0067, based on the latest unaudited net asset value attributable to owners of the Company of approximately HK$495 million as at 30 June 2015 and the existing total number of Shares in issue of 74,278,993,990 Shares; and
(vi) a premium of approximately of 14.9% over the estimated fully diluted unaudited consolidated net asset value attributable to owners of the Company per Share of approximately HK$0.0087, based on the estimated unaudited net asset value attributable to owners of the Company as adjusted by full settlement of the

– 16 –

LETTER FROM THE BOARD

Promissory Notes upon Completion of approximately HK$1,590.7 million and the maximum number of Shares in issue following full conversion of the Convertible Bonds of 183,846,093,990 Shares.

The Conversion Price was arrived at after arm’s length negotiations between Jade Assets, CCT Securities, Glory Merit and the Company, with reference to, among other things, (i) the settlement of significant liabilities of the Promissory Notes of the Group, the significant improvement in financial position of the Company and other benefits to be derived by the Group from the Transactions as discussed in the section headed ‘‘Reasons for and benefits of the Transactions’’ of this circular; (ii) the prevailing market price of the Shares; and (iii) the existing unaudited net asset value per Share and estimated fully diluted unaudited net asset value per Share following full conversion of the Convertible Bonds.

The Directors noted that the closing prices of the Shares as quoted on the Stock Exchange during the period from 1 October 2014 up to and including the Latest Practicable Date (the ‘‘Review Period’’) ranged from the lowest of HK$0.010 in the period from October 2014 to mid-November 2014 to the highest of HK$0.074 on 28 May 2015. It is noted that the closing prices of the Shares rose abruptly in May 2015. Thereafter, the closing prices of the Shares fluctuated and fell gradually and hovered around HK$0.019 recently. The Directors noted that the changes in closing prices of the Shares were not supported by the financial performance of the Group in view of the fact that the Group continued to record losses during the Review Period. The Directors were aware that Jade Assets, CCT Securities and Glory Merit would not have agreed to enter into the Agreement had the Conversion Price not been set at par value as the Bondholders would bear the risk of price fluctuation especially under the current volatile market situation and the unsatisfactory performance of the Group. As such, the Conversion Price of HK$0.010, which is within the range of the closing market prices of the Shares in the Review Period, is considered to be fair and reasonable. Furthermore, the Directors noted that the Conversion Price represented a significant premium of approximately 49.3% to the existing unaudited consolidated net asset value per Share and a substantial premium of approximately 14.9% to the estimated fully diluted unaudited net asset value per Share. Based on the above analysis and comparison and taking into consideration of the financial benefits to be derived by the Group from the Transactions, the Directors consider that the Conversion Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Conversion Shares

The Conversion Shares will be allotted and issued under a specific mandate of the Company to be approved by the Independent Shareholders at the SGM by ordinary resolution.

(1) The maximum of 79,567,100,000 Conversion Shares to be issued upon full conversion of the First Convertible Bonds at the initial Conversion Price of HK$0.01 represent:
(i) approximately 107.12% of the existing issued share capital of the Company; and
(ii) approximately 43.28% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds.

– 17 –

LETTER FROM THE BOARD

(2) The maximum of 30,000,000,000 Conversion Shares to be issued upon full conversion of the Second Convertible Bonds at the initial Conversion Price of HK$0.01 represent:
(i) approximately 40.39% of the existing issued share capital of the Company; and
(ii) approximately 16.32% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds.
(3) The maximum of 109,567,100,000 Conversion Shares to be issued upon full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 represent:
(i) approximately 147.51% of the existing issued share capital of the Company; and
(ii) approximately 59.60% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds.

The Conversion Shares shall rank pari passu in all respects with the Shares then in issue on the date of allotment and issue thereof.

The Conversion Shares upon conversion of the Convertible Bonds will be allotted and issued under a specific mandate to be sought for approval from the Independent Shareholders at the SGM.

Application for listing

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

– 18 –

LETTER FROM THE BOARD

Movements of Shares held by the CCT Fortis Group for the 12-month period up to the Latest Practicable Date

From 13 November 2014 to 5 December 2014 1. Placing under the placing agreement dated 5 December 2014 entered into by Jade Assets, under which 6,500,000,000 Shares were placed at HK$0.015 a share: Dates of completion of placing: — 18 December 2014 — 23 December 2014 Transfer of Shares to CCT Securities As at 31 December 2014 2. Placing under the placing agreement dated 23 January 2015 entered into by CCT Securities, under which 6,380,000,000 Shares were placed at HK$0.018 a share: Period of completion of placing: 14 April 2015 to 20 April 2015 3. On-market disposal of Shares by CCT Securities at average price of HK$0.018, which was completed on 14 April 2015 4. Placing under the placing agreement dated 6 May 2015 entered into by CCT Securities, under which 3,252,391,124 Shares were placed at HK$0.022 a share: Date of completion of placing: 8 May 2015 As at 8 May 2015 5. Disposals by Jade Assets through stock market at average price of HK$0.0261, which were completed during the period from 13 July 2015 to 16 July 2015 6. Placing under the placing agreement dated 21 July 2015 entered into by Jade Assets, under which 3,500,000,000 Shares were placed at HK$0.028 a share, which was completed on 23 July 2015 7. Further disposals by Jade Assets through stock market at average price of HK$0.03, which were completed during the period from 24 July 2015 to 27 July 2015 As at 31 August 2015 Transfer of Shares to CCT Securities on 1 September 2015 As at the Latest Practicable Date	Shares held by Jade Assets, CAML and Expert Success No. of Shares 33,026,391,124 (3,250,000,000) (3,250,000,000) (9,726,391,124) 16,800,000,000 0 0 0 16,800,000,000 (6,106,000,000) (3,500,000,000) (768,000,000) 6,426,000,000 (6,426,000,000) 0	Shares held by CCT Securities classified as financial assets at fair value through profit or loss No. of Shares 0 9,726,391,124 9,726,391,124 (6,380,000,000) (94,000,000) (3,252,391,124) 0 6,426,000,000 6,426,000,000	Total Shares held by the CCT Fortis Group No. of Shares 33,026,391,124 (3,250,000,000 (3,250,000,000 0
			26,526,391,124 (6,380,000,000 (94,000,000 (3,252,391,124
			16,800,000,000 (6,106,000,000 (3,500,000,000 (768,000,000
			6,426,000,000 0
			6,426,000,000

– 19 –

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

To the best knowledge of the Directors and the Company, assuming that no other Shares will be issued, the shareholding structure of the Company (i) as at the Latest Practicable Date, and (ii) immediately after Completion and full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 per Conversion Share, shall be as follows:

Shareholders CCT Securities Director: Tam Ngai Hung, Terry Glory Merit Public Shareholders Total	As at the Latest Practicable Date No. of Shares % 6,426,000,000 8.65% 10,000,000 0.01% 0 0.00% 67,842,993,990 91.34% 74,278,993,990 100.00%	Immediately after Completion and full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 per Conversion Share No. of Shares % 85,993,100,000 46.77% 10,000,000 0.01% 30,000,000,000 16.32% 67,842,993,990 36.90% 183,846,093,990 100.00%	Immediately after Completion and full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 per Conversion Share No. of Shares % 85,993,100,000 46.77% 10,000,000 0.01% 30,000,000,000 16.32% 67,842,993,990 36.90% 183,846,093,990 100.00%
			100.00%

Note: The above table is prepared for illustration purpose only as the conversion of the Convertible Bonds by the Bondholder(s) will be subject to certain restrictions as set out in the CB Conditions, including but not limited to the restriction of conversion of the Convertible Bonds which will result in the Bondholders triggering any mandatory offer obligation under Rule 26 of the Takeovers Code.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The Group is principally engaged in the manufacturing and sale of telecom, electronic and child products and development and sale of residential and commercial properties in Anshan, Liaoning Province, the PRC. The performance of the manufacturing business has been adversely affected by the sluggish recovery of its major markets, rising labour costs in China due to shortage of labour and severe competition. As for the mainland property business, this business was affected by previously tightened housing policies by the Central Government, the previously tightened liquidity and credit in China, and the price-cutting strategy adopted by local developers. Although mainland housing policies have been relaxed and market liquidity has improved in 2015, the local property market has only rebound slowly and property price in Anshan is still weak. The Directors expect that the operating environment of the principal businesses of the Group will remain uncertain and difficult going forward and they expect that their performance will continue to be impacted by the existing difficulties and challenges.

– 20 –

LETTER FROM THE BOARD

The Directors (including the independent non-executive Directors) have reviewed the financial position of the Group and consider that the Promissory Notes of the total principal amount of HK$1,095,671,000 represent the most significant liabilities and heavy financial burden of the Group, especially as the Promissory Notes of principal amount of HK$900,000,000 will be due on 15 July 2016. In view of the above, the Company has appointed the Financial Adviser to review and advise the Company with financial proposals to settle the Promissory Notes. Various alternatives have been explored by the Company with the Financial Adviser, which include funds raising from capital markets (such as placing of new shares) and bank borrowings. It is considered that placing of new shares to raise huge amount of money in order to repay approximately HK$1.1 billion Promissory Notes would not be feasible under the current share market condition. Raising bank borrowings of such a huge amount is not possible either as the financial performance of the Group is not satisfactory in the past few years. Furthermore, bank borrowings will not improve the financial position of the Company and on the other hand, will incur large amount of interest cost each year. Based on the advice of the Financial Adviser, the Company decided to issue the Convertible Bonds to settle the Promissory Notes and discussed with CCT Fortis and Glory Merit about the proposal and the discussions led to the entering of the Agreement.

The Directors consider that the Agreement as amended by the Supplemental Agreement, the Subscription and the Settlement is the only feasible way of settling the Promissory Notes once and for all. The Directors consider that the Transactions will result in the following benefits to the Group:

all the Promissory Notes which represent huge liabilities and heavy financial burden of the Group will be fully settled upon Completion without requiring any cash outflow and the financial position of the Group will be greatly improved as a result;
as the Convertible Bonds do not bear any interest and any outstanding Convertible Bonds will be automatically converted into Conversion Shares on the maturity date of the Convertible Bonds and there will not be any liability and obligations on the Company for payment or repayment (whether in cash or otherwise) in respect of the Convertible Bonds under any circumstances, the Convertible Bonds will not give rise to any new liability or financial burden to the Group and will be accounted for as equity attributable to owner of the Company;
the capital base of the Company will be significantly enlarged by the issue of the Conversion Shares upon conversion of the Convertible Bonds; and
the net assets of the Group will be significantly increased by the full settlement of all the Promissory Notes upon Completion and its fully diluted net asset value per Share will also be improved correspondingly.

In light of the benefits above, the Directors (including the independent non-executive directors of the Company) is of the view that the terms of Agreement as amended by the Supplemental Agreement are on normal commercial terms and the Transactions are fair and reasonable, and in the interests of the Company and its shareholders as a whole.

– 21 –

LETTER FROM THE BOARD

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL OF THE COMPANY

As at the Latest Practicable Date, the authorised share capital of the Company is HK$1,200,000,000 divided into 120,000,000,000 Shares, of which 74,278,993,990 Shares have been issued and allotted as fully paid or credited as fully paid. In order to allow the Company to have sufficient unissued Shares for the issue of the Conversion Shares and the flexibility to issue new Shares for future development, the Company proposes to increase the authorised share capital from HK$1,200,000,000 divided into 120,000,000,000 Shares to HK$3,000,000,000 divided into 300,000,000,000 Shares by the creation of an additional 180,000,000,000 Shares of HK$0.01 each which will rank pari passu with all existing Shares.

The proposed Increase in Authorised Share Capital is conditional upon the passing of an ordinary resolution by the Shareholders at the SGM.

INFORMATION ON THE COMPANY AND THE GROUP

The Company is the holding company of the Group. The Group is principally engaged in: (i) design and development, manufacturing and sale of telecom, electronic, and child products; and (ii) development and sale of residential and commercial properties in the PRC; and (iii) trading and sale of child products.

INFORMATION ON JADE ASSETS, CCT SECURITIES, CCT FORTIS AND GLORY MERIT

Jade Assets is an indirect wholly-owned subsidiary of CCT Fortis and its principal activity is investment holding. CCT Securities is an indirect wholly-owned subsidiary of CCT Fortis and its principal activity is trading of securities. As at the Latest Practicable Date, CCT Securities holds 6,426,000,000 Shares, representing approximately 8.65% of the total number of issued shares of the Company and those Shares are held for trading purpose.

CCT Fortis is the holding company of the CCT Fortis Group, which is principally engaged in the following activities as at the Latest Practicable Date:

(a) property development and property trading in Hong Kong;
(b) property investment and holding;
(c) manufacture and sale of plastic components;
(d) the securities business;
(e) investment in classic cars;
(f) sale and trading of classic cars; and
(g) automotive service business.

To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, Glory Merit is engaged in investment holding.

– 22 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As Mr. Mak is the chairman, an executive director, and chief executive officer of the Company, he is a connected person of the Company under the Listing Rules. As Mr. Mak held approximately 54.79% of the total issued share capital of CCT Fortis as at the Latest Practicable Date, CCT Fortis is an associate of Mr. Mak and is therefore also a connected person of the Company under the Listing Rules. The First Subscription and the First Settlement therefore constitute a connected transaction for the Company under the Listing Rules. As the First Subscription, the Second Subscription, the First Settlement and the Second Settlement will be completed simultaneously and each of these transactions will not be completed separately to the exclusion of the others, the Transactions will be subject to announcement, circular and approval by the Shareholders under Chapter 14A of the Listing Rules. CCT Fortis and its associates will abstain from voting in respect of the resolution(s) to approve the Transactions and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement.

Mr. Mak Shiu Tong, Clement, who is the chairman, an executive director, and the chief executive officer of each of the Company and CCT Fortis and he is also a controlling Shareholder of CCT Fortis, is deemed to have a material interest in the Transactions. As such, he was required to abstain and he did abstain from voting at the meeting of the Board to consider and approve the Transactions by not being present at the relevant meeting of the Board. Save as aforesaid, none of the other Directors has any material interest in the Transactions, and therefore none of them had abstained from voting on the resolution(s) of the Board approving the Transactions.

An independent board committee of the Company comprising Mr. Lau Ho Kit, Ivan and Mr. William Robert Majcher, who are independent non-executive directors of the Company and who have no interest in the Transactions, has been formed pursuant to the requirements of the Listing Rules to advise the Independent Shareholders on terms of the Agreement as amended by the Supplemental Agreement and the Transactions. Mr. Chow Siu Ngor, an independent non-executive director of the Company, is not a member of the Independent Board Committee because he is also an independent non-executive director of CCT Fortis and as such, he is not suitable to act as a member of the Independent Board Committee in respect of the Transactions. Proton Capital has been appointed as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders for the Transactions.

To the best of the knowledge, information belief having made all reasonable enquiry, none of the Shareholders has any material interest in the proposed Increase in Authorised Share Capital and as such, no Shareholder is required to abstain from voting in respect of the resolution(s) to approve the proposed Increase in Authorised Share Capital at the SGM.

SGM

A notice convening the SGM to be held at 31/F., Fortis Tower, 77–79 Gloucester Road, Hong Kong on Friday, 4 December 2015 at 10:30 a.m. is set out on pages 57 to 59 of this circular. At the SGM, an ordinary resolution(s) will be proposed and, if thought fit, passed to approve the Transactions.

– 23 –

LETTER FROM THE BOARD

A form of proxy for use by the Independent Shareholders at the SGM is enclosed herein. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event, not later than 48 hours before the time appointed for holding the SGM or at any adjournment thereof (as the case may be). Such form of proxy for use at the SGM is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cctland.com/eng/investor/statutory.php). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, voting at the SGM will be conducted by way of poll. The chairman of the SGM will therefore demand a poll on the resolution put forward at the SGM pursuant to bye-law 70 of the bye-laws of the Company. As at the Latest Practicable Date, CCT Fortis which held indirectly 6,426,000,000 Shares (representing approximately 8.65% of the existing total number of issued shares of the Company) through which CCT Fortis controlled the voting rights of those Shares, together with their respective associates will abstain from voting in respect of resolution(s) to approve the Transactions and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement at the SGM. As none of the Shareholders has any material interest in the proposed Increase in Authorised Share Capital and as such, no Shareholder is required to abstain from voting in respect of the resolution(s) to approve the proposed Increase in Authorised Share Capital. An announcement on the poll results of the SGM will be published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cctland.com/eng/investor/ statutory.php) after the SGM.

RECOMMENDATION

Your attention is drawn to (i) the letter from the Independent Board Committee as set out on pages 26 to 27 of this circular which contains its recommendation to the Independent Shareholders on the terms of the Transactions ; and (ii) the letter of advice from Proton Capital as set out on pages 28 to 49 of this circular which contains, amongst other matters, its advice to the Independent Board Committee and the Independent Shareholders in relation to the terms of the Transactions and the principal factors and reasons considered by it in concluding its advice.

Having considered the factors mentioned above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Transactions are on normal commercial terms, and are fair and reasonable so far as the Independent Shareholders are concerned, and are in the interest of the Shareholders and the Company as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the SGM to approve the Transactions. The Directors also recommend the Shareholders to vote in favour of the resolution(s) to be proposed at the SGM to approve the proposed Increase in Authorised Share Capital of the Company.

– 24 –

LETTER FROM THE BOARD

OTHER INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice of the SGM.

Yours faithfully,

For and on behalf of the Board of CCT LAND HOLDINGS LIMITED Tam Ngai Hung, Terry Director

– 25 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [309 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 00261)

The Independent Board Committee: Lau Ho Kit, Ivan William Robert Majcher

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head office and principal place of business in Hong Kong: 31/F., Fortis Tower, 77–79 Gloucester Road, Hong Kong

17 November 2015

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

We refer to the circular of the Company to the Shareholders dated 17 November 2015 (the ‘‘Circular’’), in which this letter forms part. Unless the context requires otherwise, capitalised terms used in this letter will have the same meanings as given to them in the section headed ‘‘Definitions’’ of the Circular.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the terms of the Transactions are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole. Proton Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Transactions.

We wish to draw your attention to the letter of advice from the independent financial adviser, Proton Capital, as set out on pages 28 to 49 of the Circular and the letter from the Board as set out on pages 8 to 25 of the Circular.

– 26 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered, amongst other matters, the factors and reasons considered by, and the opinion of Proton Capital as stated in its letter of advice, we consider that the terms of the Transactions are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution(s) to approve the Transactions (including but not limited to the specific mandate for the allotment and issue of the Conversion Shares upon exercise of the Conversion Rights) to be proposed at the SGM.

Yours faithfully, Yours faithfully, The Independent Board Committee of The Independent Board Committee of CCT LAND HOLDINGS LIMITED CCT LAND HOLDINGS LIMITED William Robert Majcher Lau Ho Kit, Ivan Independent non-executive Director Independent non-executive Director

– 27 –

LETTER FROM PROTON CAPITAL

Set out below is the text of a letter received from Proton Capital Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders for inclusion in the Circular.

==> picture [32 x 35] intentionally omitted <==

普頓資本有限公司 PROTON CAPITAL LIMITED

Unit 1001, 10th Floor, Chuang’s Tower, 30–32 Connaught Road Central, Hong Kong

17 November 2015

To: The Independent Board Committee and the Independent Shareholders of CCT Land Holdings Limited

Dear Sirs,

CONNECTED TRANSACTION ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE IN SETTLEMENT OF PROMISSORY NOTES PAYABLE

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transactions, details of which are set out in the letter from the Board (the ‘‘Board’s Letter’’) contained in the circular of the Company (the ‘‘Circular’’) to the Shareholders dated 17 November 2015, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

On 27 October 2015, the Agreement was entered into by and among Jade Assets, CCT Securities, CCT Fortis, Glory Merit and the Company under which it was agreed that, subject to the terms and conditions of the Agreement, (i) the Company will issue and CCT Securities will subscribe for the First Convertible Bonds at the First Issue Price which will be satisfied as full settlement of the outstanding principal and accrued interest (if any) of the First Promissory Note due by the Company to Jade Assets upon Completion; and (ii) the Company will issue and Glory Merit will subscribe for the Second Convertible Bonds at the Second Issue Price to be satisfied as full settlement of all the outstanding principal and accrued interest of the Second Promissory Notes due by the Company to Glory Merit upon Completion. The implementation of the Agreement, the Subscription and the Settlement are subject to fulfillment of the Conditions Precedent.

On 10 November 2015, the Supplemental Agreement was entered into among the parties to the Agreement, under which the parties to the Agreement have agreed to amend certain provisions in the CB Conditions with the effect that the Company will not have any liability or obligations of payment or repayment (whether in cash or otherwise) in respect of the Convertible Bonds under any circumstances, irrespective of whether or not the Convertible Bonds are converted into the Conversion Shares during the Conversion Period or on the maturity date of the Convertible Bonds.

– 28 –

LETTER FROM PROTON CAPITAL

As Mr. Mak is the chairman, an executive director, and chief executive officer of the Company, he is a connected person of the Company under the Listing Rules. As Mr. Mak held approximately 54.79% of the existing total number of issued shares of CCT Fortis as at the Latest Practicable Date, CCT Fortis is an associate of Mr. Mak and is therefore also a connected person of the Company under the Listing Rules. The First Subscription and the First Settlement therefore constitute a connected transaction for the Company under the Listing Rules. As the First Subscription, the Second Subscription, the First Settlement and the Second Settlement will be completed simultaneously and each of these transactions will not be completed separately to the exclusion of the others, the Transactions will be subject to announcement, circular and approval by the Independent Shareholders under Chapter 14A of the Listing Rules.

Independent Board Committee comprising Mr. Lau Ho Kit, Ivan and Mr. William Robert Majcher, who are independent non-executive directors of the Company and have no material interest in the Agreement, Supplemental Agreement and the Transactions, has been formed pursuant to the requirements of the Listing Rules to advise the Independent Shareholders on terms of the Agreement as amended by the Supplemental Agreement and the Transactions. Mr. Chow Siu Ngor, an independent non-executive director of the Company, is not a member of the Independent Board Committee because he is also an independent non-executive director of CCT Fortis and as such, he is not suitable to act as a member of the Independent Board Committee in respect of the Transactions.

We, Proton Capital, have been appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in this regard. Proton Capital is not connected with the directors, chief executive and substantial shareholders of the Company or the parties to the Agreement (as amended by the Supplemental Agreement) or any of their respective subsidiaries or their respective associates. During the last two years, we were engaged as an independent financial adviser (the ‘‘Previous Engagement’’) in respect of the Company’s connected transaction involving provision of share charge and guarantees, the details of which were set out in the circular dated 17 June 2015. Under the Previous Engagement, we were required to express our opinion on and give recommendation to the independent board committee and the independent shareholders of the Company in respect of the aforesaid transaction. Apart from normal professional fees paid/payable to us by the Company in connection with the Previous Engagement and this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company or the directors, chief executive and substantial shareholders of the Company or any of their subsidiaries or their respective associates. Accordingly, we are qualified to give independent advice in respect of the Transactions.

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our recommendation 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 provided by the Directors and the management of the Company, for which they are solely and wholly responsible, are true, accurate and complete in all material respects and not misleading

– 29 –

LETTER FROM PROTON CAPITAL

or deceptive at the time when they were provided or made and will continue to be so up to the date of despatch of the Circular. 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 enquires and careful considerations by the Directors and there are no other facts not contained in the Circular the omission of which would make any such statement contained in the Circular misleading.

We have no reason to suspect that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company, nor have we conducted any independent investigation into the business, financial conditions and affairs of the Group or its future prospect.

The Directors accept full responsibility for the accuracy of the information contained in the Circular and confirm having made all reasonable enquiries, that to the best of their knowledge and belief, the information contained in the Circular is accurate and complete in all material aspects and not misleading or deceptive, and there are no other matters the omission of which would make any statement in 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 on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any facts or circumstances which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided by the Directors, nor have we conducted an independent investigation into the business and affairs or the prospects of the Company, the Group, the CCT Fortis Group or any of their respective associates. Our opinion is necessarily based on the financial, economic, market and other condition 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 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. Nothing contained in this letter should be constructed as a recommendation to hold, sell or buy any shares or any other securities of the Company. Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Proton Capital is to ensure that such information has been correctly and fairly extracted and presented from the relevant sources.

This letter is issued to the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Transactions, and, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose without our prior written consent.

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LETTER FROM PROTON CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

1. Background of and reasons for the Transactions

Business review of the Group

Set out below is the financial information of the Group as extracted from the Company’s annual reports for the three years ended 31 December 2014 (‘‘Annual Reports’’) and interim report for the six months ended 30 June 2015 (the ‘‘2015 Interim Report’’):

				For the
				six months
				ended
	For the year	ended 31	December	30 June
	2012	2013	2014	2015
	HK$	HK$	HK$	HK$
	million	million	million	million
	(audited)	(audited)	(audited)	(unaudited)
Revenue	1,342	1,193	1,034	437
Gross profit	45	66	43	27
(Loss) for the year/period
attributable to owners of
the Company	(58)	(31)	(53)	(35)

As depicted by the above table, there is a continuing decline in the Company’s revenue. Compared with a revenue of approximately HK$1,342 million in the year ended 31 December 2012, the Company’s revenue dropped by approximately 11.10% to approximately HK$1,193 million in the year ended 31 December 2013 and further decreased by approximately 13.33% to approximately HK$1,034 million in the year ended 31 December 2014. Revenue of the Company was approximately HK$437 million for the six months ended 30 June 2015. The Group had continued to incur net losses since the 2007 financial year. We noted from the Annual Reports and the 2015 Interim Report that the Company’s sales of products have been affected by the sluggish economic growth of its major markets in Europe and intensifying competition in the cordless phone section. The significant devaluation of euro against US dollar has also dampened consumer demand or telecom and electronic products in the European markets. In addition, shortage of labour and the continuing

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LETTER FROM PROTON CAPITAL

rise in wage level in the Guangdong Province, the PRC remained one of the biggest challenges to the Group’s product manufacturing and sales. Regarding the Mainland Property Business, though there was improvement in the revenue in the first half of 2015, as local property prices remained weak and revenue from property sales remained at a relatively low level, this business segment still recorded an operating loss.

Net losses attributable to equity holders of the Company for the three years ended 31 December 2012, 2013 and 2014 and six months ended 30 June 2015 were approximately HK$58 million, approximately HK$31 million, approximately HK$53 million and approximately HK$35 million, respectively. We noted that the reduction of the net loss in the year ended 31 December 2013 to approximately HK$31 million was attributable to the inclusion of an unrealised fair value gain of $45 million arising on revaluation of the Shenzhen office properties rather than improvement in the performance of the businesses of the Group.

Set out below is a summary of certain data relating to the financial position of the Group as at 31 December 2012, 2013 and 2014 and 30 June 2015:

				As at
	As at 31 December			30 June
	2012	2013	2014	2015
	HK$	HK$	HK$	HK$
	million	million	million	million
	(audited)	(audited)	(audited)	(unaudited)
Cash and cash equivalents	263	346	208	230
Total assets	1,470	2,655	2,607	2,570
Total liabilities	(979)	(2,184)	(2,187)	(2,075)
Net assets	491	471	420	495
Gearing ratio (total
liabilities over total assets)	66.60%	82.30%	83.89%	80.74%

As for the assets and liabilities position of the Group, we noted from the above table that the available level of cash and cash equivalents is not enough to repay the total outstanding principal amount of the Promissory Notes of HK$1,095,671,000 due by the Company to Jade Assets and Glory Merit as at the Latest Practicable Date. The Company needs to find means to settle the Promissory Notes. From 31 December 2012 to 30 June 2015, the Group’s gearing ratio (calculated as total liabilities over total assets) expanded significantly from approximately 66.60% to 80.74%.

Financing alternatives available to the Group

For our due diligence purpose, we have enquired and were informed by Directors that the Company has considered other financing alternatives, including bank borrowings and equity financing. We understand from the Directors that

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LETTER FROM PROTON CAPITAL

borrowings are not possible as the financial performance of the Group is not satisfactory in the past few years. We have reviewed the 2015 Interim Report and noted that as at 30 June 2015, (i) the Group had bank borrowings of approximately HK$503 million, in aggregate; (ii) significant amount of the Group’s assets which included certain assets of the Group with a net book value of approximately HK$1,163 million, net assets of a subsidiary having a book value of approximately HK$288 million and time deposits of approximately HK$219 million had already been pledged to secure general banking facilities granted to the Group to finance operations and to secure arrangements for hedging RMB exposure; and (iii) the gearing ratio of the Group was at a high level of 80.74%. Also, as advised by the Directors, notwithstanding members of the Group had ceased to be accounted for as subsidiaries of the CCT Fortis Group since 18 December 2014, the bank providing trade finance facilities to the Group continues to request the provision of corporate guarantees by CCT Fortis as one of the conditions for the bank to continue to grant the trade finance facilities to the Group due to the fact that the Group remains in a loss position and the CCT Fortis has a stronger financial position than the Group. As such, we consider that it is very unlikely for the Group to finance the repayment of the Promissory Notes by bank borrowings in the absence of sufficient collaterals. Furthermore, the Directors are of the view that it is not beneficial to the Company to refinance the Promissory Notes by means of bank or borrowings as this alternative will not improve the gearing ratio or the financial position of the Group on one hand and on the other hand, bank borrowings will impose significant burden on the Group to service the interest payments and principal repayment and will incur large amount of financial costs each year, which will further negatively impact the Group’s financial performance. Therefore, the Directors are of the opinion that raising funds from borrowings from banks or other lenders to repay the Promissory Notes is neither feasible nor in the interest of the Company.

With regard to equity financing, the Directors advised us that although both open offer and rights issue might allow Shareholders to maintain their respective prorata shareholdings in the Company and at the same time to strengthen the capital base of the Company, such fund raising exercises require the Company to procure commercial underwriting. The Directors, after discussing with the Financial Adviser, found that procurement of commercial underwriting would be difficult given the material fluctuations in the market prices of the Company and the volatile market conditions in Hong Kong stock market in the past few months.

Although the Company successfully completed a placement of new Shares in May 2015 and raised net proceeds of approximately HK$104 million for general working capital and business development and investment, we concur with the view of the Directors that it is unlikely for the Company to raise approximately HK$1,096 million by placing of new shares as investors would not be interested in investing huge amount of money into Company for the purpose of repayment of the existing liabilities represented by the Promissory Notes rather than for future development of Group.

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LETTER FROM PROTON CAPITAL

Based on the aforesaid, we concur with the Directors’ view that the Subscription and the Settlement would be an optimal financing alternative of the Company to settlement the Promissory Notes.

Reasons for and benefits of the Transactions

As at the Latest Practicable Date, the Company is indebted to Jade Assets the First Promissory Note of outstanding principal amount of HK$795,671,000 and the Company is indebted to Glory Merit the Second Promissory Notes of outstanding principal amount of HK$300,000,000 in aggregate. Of the HK$1,095,671,000 Promissory Notes, the Promissory Notes of HK$900,000,000 are interest-free and the balance of HK$195,671,000 carry interest 3% per annum. The maturity dates of the Promissory Notes range from 15 July 2016 to 3 July 2018. Further details of the Promissory Notes were set out in the Board’s Letter under the sub-section headed ‘‘Subject matter of the Agreement as amended by the Supplemental Agreement’’.

According to the Board’s Letter, the Group is principally engaged in the manufacturing and sale of telecom, electronic and child products and development and sale of residential and commercial properties in Anshan, Liaoning Province, the PRC. The performance of the manufacturing business has been adversely affected by the sluggish recovery of its major markets, rising labour costs in China due to shortage of labour and severe competition. As for the Mainland Property Business, this business was affected by previously tightened housing policies by the Central Government, the previously tightened liquidity and credit in China, and the pricecutting strategy adopted by local developers. Although mainland housing policies have been relaxed and market liquidity has improved in 2015, the local property market has only rebound slowly and property price in Anshan is still weak. The Directors expect that the operating environment of the principal businesses of the Group will remain uncertain and difficult going forward and they expect that their performance will continue to be impacted by the existing difficulties and challenges.

The Directors (including the independent non-executive Directors) have reviewed the financial position of the Group and consider that the Promissory Notes of the total principal amount of HK$1,095,671,000 represent the most significant liabilities and heavy financial burden of the Group, especially as the Promissory Notes of principal amount of HK$900,000,000 will be due on 15 July 2016. In view of the above, the Company has appointed the Financial Adviser to review and advise the Company with financial proposals to settle the Promissory Notes. Various alternatives have been explored by the Company with the Financial Adviser, which include funds raising from capital markets (such as placing of new shares) and borrowings from banks or other lenders. It is considered that placing of new shares to raise huge amount of money in order to repay approximately HK$1.1 billion Promissory Notes would not be feasible under the current share market condition. The Directors considered that it is unlikely that investors or shareholders would be interested in investing funds in the Company for repayment of the Promissory Notes. Raising bank or other borrowings of such a huge amount is not possible either as the financial performance of the Group is not satisfactory in the past few years and no

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LETTER FROM PROTON CAPITAL

bank or lender would be willing to lend a large amount of money to the Company to refinance the Promissory Notes. Furthermore, bank borrowings will not improve the financial position of the Company and on the other hand, will incur large amount of interest cost each year. Based on the advice of the Financial Adviser, the Company decided to issue the Convertible Bonds to settle the Promissory Notes and discussed with CCT Fortis and Glory Merit about the proposal and the discussions led to the entering of the Agreement.

all the Promissory Notes which represent huge liabilities and heavy financial burden of the Group will be fully settled upon Completion without requiring any cash outflow and the financial position of the Group will be greatly improved as a result;
as the Convertible Bonds do not bear any interest and any outstanding Convertible Bonds will be automatically converted into Conversion Shares on the maturity date of the Convertible Bonds and there will not be any liability and obligations on the Company for payment or repayment (whether in cash or otherwise) in respect of the Convertible Bonds under any circumstances, the Convertible Bonds will not give rise to any new liability or financial burden to the Group and will be accounted for as equity attributable to owner of the Company;
the capital base of the Company will be significantly enlarged by the issue of the Conversion Shares upon conversion of the Convertible Bonds; and
the net assets of the Group will be significantly increased by full settlement of all the Promissory Notes upon Completion and its fully diluted net asset value per Share will also be improved correspondingly.

In light of the benefits above, the Directors (including the independent nonexecutive directors of the Company) is of the view that the terms of Agreement as amended by the Supplemental Agreement are on normal commercial terms and the Transactions are fair and reasonable, and in the interests of the Company and its shareholders as a whole.

Based on the foregoing reasons for and expected benefits of the Subscription and the Settlement and having considered (i) the unsatisfactory financial performance of the Group in the past few years; (ii) the high gearing ratio of the Group; (iii) Promissory Notes of principal amount of HK$900,000,000 will be due on 15 July 2016 but the Group’s cash level is not enough to settle all the Promissory Notes and funds raising from the capital market and borrowings to repay the Promissory Notes is not considered feasible; and (iv) the financial benefits that will be derived by the

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LETTER FROM PROTON CAPITAL

Group from the Transactions as stated in the above paragraphs, we consider that the Subscription and the Settlement are in the interests of the Company and the Shareholders as a whole.

The Agreement as amended by the Supplemental Agreement and the Transactions

The Agreement and the Supplemental Agreement

Date of the 27 October 2015 (after trading hours of the Stock Exchange) Agreement:

Date of the 10 November 2015 (after trading hours of the Stock Exchange) Supplemental Agreement:

Parties:

(i) Jade Assets : Jade Assets Company Limited (ii) CCT Securities : CCT Telecom Securities Limited (iii) CCT Fortis : CCT Fortis Holdings Limited (iv) Glory Merit : Glory Merit International Investment Limited (v) the Company : CCT Land Holdings Limited

Each of Jade Assets and CCT Securities is an indirect wholly-owned subsidiary of CCT Fortis. As at the Latest Practicable Date, CCT Fortis holds indirectly through CCT Securities a total of 6,426,000,000 Shares, representing approximately 8.65% of the existing total number of issued shares of the Company. Details on the movements of the Shares held by the CCT Fortis Group for the 12-month up the Latest Practicable Date were set out in the Board’s Letter under the section headed ‘‘Movements of the Shares held by the CCT Fortis Group for the 12-month up the Latest Practicable Date’’. As Mr. Mak is the chairman, an executive director, and chief executive officer of the Company, he is a connected person of the Company under the Listing Rules. As Mr. Mak holds approximately 54.79% of the existing total number of issued shares of CCT Fortis as at the Latest Practicable Date, CCT Fortis is an associate of Mr. Mak and is therefore also a connected person of the Company under the Listing Rules.

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LETTER FROM PROTON CAPITAL

Further terms and conditions of the Agreement as amended by the Supplemental Agreement are set out in the Board’s Letter under the section headed ‘‘The Agreement as amended by the Supplemental Agreement and the Transactions’’.

Principal terms of the Convertible Bonds

The principal terms of the Convertible Bonds set out in the Agreement as amended by the Supplemental Agreement are as follows:

Issuer:	the Company
Principal amount:	HK$1,095,671,000 of which HK$795,671,000 will be
	issued to CCT Securities and HK$300,000,000 will be
	issued to Glory Merit
Issue Price	100% of the principal amount of the Convertible
	Bonds
Issue date:	Completion Date
Interest:	The Convertible Bonds will not bear any interest.

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LETTER FROM PROTON CAPITAL

Maturity Date:

The third anniversary of the date of issue of the Convertible Bonds (which must be a Business Day, and if not, the Business Day immediately following). All the outstanding principal amounts of the Convertible Bonds will be automatically converted into Conversion Shares on the Maturity Date. In the event that any outstanding principal amount of the Convertible Bonds are not converted into Conversion Shares on the Maturity Date for any reasons, the outstanding Convertible Bonds shall be cancelled on the Maturity Date without any payment or repayment (in cash or otherwise), liability or obligation on the Company in respect of the Convertible Bonds and their cancellation.
Redemption:
The Convertible Bond will not be redeemed (in whole or in part) at the option of the Company commencing from the Issue Date up to and including the day immediately prior to the Maturity Date.
Status:
The obligations of the Company arising under the Convertible Bonds constitute general, unconditional, unsecured, unsubordinated obligations of the Company, and rank equally among themselves and pari passu with all other present and future unsecured obligations and unsubordinated of the Company except for obligations accorded preference by mandatory provisions of applicable law.
Conversion Price:
HK$0.01 per Conversion Share (subject to adjustments)
Conversion Shares: Up to a maximum of 109,567,100,000 new Shares (subject to adjustments of the Conversion Price), representing (i) approximately 147.51% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 59.60% of the issued capital of the Company as enlarged by the allotment and issue of the Conversion Shares.

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LETTER FROM PROTON CAPITAL

Transferability:

Conversion Period:

Bondholder’s Conversion Right:
Takeovers Code and public float restriction:

The Convertible Bonds will be freely transferable and shall be transferable in whole or in any part(s) in multiples of HK$3,000,000 provided that unless with the prior written consent of the Company and in full compliance of the Listing Rules and other requirements of the Stock Exchange, none of the Convertible Bonds may be transferred to a connected person of the Company.

The period commencing on the date of issue of the Convertible Bonds and expiring on the Maturity Date (the ‘‘Conversion Period’’)

The Bondholder has the right on any Business Day during the Conversion Period to convert in whole or in part the outstanding principal amount of the Convertible Bonds in whole or in integral multiples of HK$3,000,000 into Conversion Shares, subject to and upon compliance with the CB Conditions.

The Conversion Rights shall not be exercised by the Bondholder, or if exercised by virtue of a conversion notice having been given, the Company will not be obliged to issue any Conversion Shares but may treat the conversion notice as invalid, if it comes to the notice of the Company that immediately following such conversion:

(a) the Company will be unable to meet the public float requirement under the Listing Rules; or
(b) the Bondholder will as a result of the issue of the relevant Conversion Shares trigger any mandatory offer obligation under Rule 26 of the Takeovers Code on the part of the Bondholder which exercised the Conversion Rights, representing 30% or more (or such other percentage as stated in Rule 26 of the Takeovers Code in effect from time to time) of the then issued share capital of the Company or otherwise pursuant to other provisions of the Takeovers Code.

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LETTER FROM PROTON CAPITAL

Adjustments to Conversion Price:

The Conversion Price is subject to adjustments upon the occurrence of the following events:

(i) an alteration to the aggregate number of the Shares in issue as a result of consolidation, subdivision, reclassification or otherwise; and
(ii) an issue by the Company of any Shares credited as fully paid to Shareholders by way of capitalization of profits or reserves, other than Shares issued in lieu (in whole or in part) of a cash dividend, being a dividend which the Shareholders concerned would or could otherwise have received.

Further terms of the Convertible Bonds are set out in the Board’s Letter under the sub-section headed ‘‘Principal terms of the Bonds’’.

The Conversion Price

The Conversion Price of HK$0.01 per Conversion Share, subject to adjustments as set out and in accordance with the terms and conditions of the Convertible Bonds, represents:

(i) a discount of approximately 47.37% to the closing price of HK$0.019 per Share (‘‘LTD Discount’’) as quoted on the Stock Exchange on 27 October 2015, being the date of the Agreement (the ‘‘Last Trading Day’’);
(ii) a discount of approximately 47.92% to the average of the closing prices as quoted on the Stock Exchange of approximately HK$0.0192 per Share for the last five (5) consecutive trading days immediately prior to the date of the Agreement;
(iii) a discount of approximately 49.49% to the average of the closing prices as quoted on the Stock Exchange of approximately HK$0.0198 per Share for the last ten (10) consecutive trading days immediately prior to the date of the Agreement;
(iv) a discount of approximately 47.37% to the closing price of HK$0.019 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

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LETTER FROM PROTON CAPITAL

(v) a premium of approximately of 49.3% over the unaudited consolidated net asset value attributable to owners of the Company per Share of approximately HK$0.0067, based on the latest unaudited net asset value attributable to owners of the Company of approximately HK$495 million as at 30 June 2015 and the existing total number of Shares in issue of 74,278,993,990 Shares; and
(vi) a premium of approximately of 14.9% over the estimated fully diluted unaudited consolidated net asset value attributable to owners of the Company per Share of approximately HK$0.0087, based on the estimated unaudited net asset value attributable to owners of the Company as adjusted by full settlement of the Promissory Notes upon Completion of approximately HK$1,590.7 million and the maximum number of Shares in issue following full conversion of the Convertible Bonds of 183,846,093,990 Shares.

According to the Board’s Letter, the Conversion Price was arrived at after arm’s length negotiations between Jade Assets, CCT Securities, Glory Merit and the Company, with reference to, among other things, (i) the settlement of significant liabilities of the Promissory Notes of the Group, the significant improvement in financial position of the Company and other benefits to be derived by the Group from the Transactions as discussed in the section headed ‘‘Reasons for and benefits of the Transactions’’ of the Circular; (ii) the prevailing market price of the Shares; and (iii) the existing unaudited net asset value per Share and estimated fully diluted unaudited net asset value per Share following full conversion of the Convertible Bonds.

The Board’s Letter also disclosed that the Directors noted that the closing prices of the Shares as quoted on the Stock Exchange during the period from 1 October 2014 up to and including the Latest Practicable Date (the ‘‘Review Period’’) ranged from the lowest of HK$0.010 in the period from October 2014 to mid-November 2014 to the highest of HK$0.074 on 28 May 2015. It is noted that the closing prices of the Shares rose abruptly in May 2015. Thereafter, the closing prices of the Shares fluctuated and fell gradually and hovered around HK$0.019 recently. The Directors noted that the changes in closing prices of the Shares were not supported by the financial performance of the Group in view of the fact that the Group continued to record losses during the Review Period. The Directors were aware that Jade Assets, CCT Securities and Glory Merit would not have agreed to enter into the Agreement had the Conversion Price not been set at par value as the Bondholders would bear the risk of price fluctuation especially under the current volatile market situation and the unsatisfactory performance of the Group. As such, the Conversion Price of HK$0.010, which is within the range of the closing market prices of the Shares in the Review Period, is considered to be fair and reasonable. Furthermore, the Directors noted that the Conversion Price represented a significant premium of approximately 49.3% to the existing unaudited consolidated net asset value per Share and a substantial premium of approximately 14.9% to the estimated fully diluted unaudited net asset value per Share. Based on the above analysis and comparison and

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LETTER FROM PROTON CAPITAL

taking into consideration of the financial benefits to be derived by the Group from the Transactions, the Directors consider that the Conversion Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(i) Historical Share price performance

In order to assess the fairness and reasonableness of the Conversation Price, we have reviewed the daily closing price of the Shares as quoted on the Stock Exchange for the Review Period, being a period of approximately one year prior to the Subscription Agreement and up the Latest Practicable Date. The comparison of daily closing prices of the Shares and the Conversion Price is illustrated as follows:

==> picture [398 x 293] intentionally omitted <==

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

0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0.00
Closing price per Share Conversion Price
Closing price per Share (HK$)
3/10/2014 3/11/2014 1/12/2014 2/1/2015 2/2/2015 2/3/2015 1/4/2015 4/5/2015 1/6/2015 2/7/2015 3/8/2015 1/9/2015 2/10/2015 2/11/2015
----- End of picture text -----

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

Notes:

Trading in the Shares was halted from 2:33 pm on 18 November 2014.
Trading in the Shares was halted from 1:35 pm on 9 April 2015.
Trading in the Shares was suspended from 27 April 2015 to 5 May 2015.

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LETTER FROM PROTON CAPITAL

The following table shows the highest and lowest closing prices and the average daily closing price of the Shares as quoted on the Stock Exchange in each month during the Review Period.

			Average
	Highest	Lowest	daily
Month	closing price	closing price	closing price
	(HK$)	(HK$)	(HK$)
2014
October	0.0110	0.0100	0.0100
November (Note 1)	0.0270	0.0100	0.0145
December	0.0270	0.0100	0.0140
2015
January	0.0170	0.0150	0.0159
February	0.0160	0.0150	0.0160
March	0.0160	0.0130	0.0141
April (Notes 2 and 3)	0.0200	0.0130	0.0178
May (Note 3)	0.0740	0.0260	0.0385
June	0.0730	0.0410	0.0526
July	0.0420	0.0420	0.0420
August	0.0260	0.0160	0.0222
September	0.0220	0.0170	0.0195
October	0.0210	0.0180	0.0194
November (Up to and
including the Latest
Practicable Date)	0.0200	0.0180	0.0190

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

Notes:

Trading in the Shares was halted from 2:33 pm on 18 November 2014.
Trading in the Shares was halted from 1:35 pm on 9 April 2015.
Trading in the Shares was suspended from 27 April 2015 to 5 May 2015.

As shown in the above table, the closing prices of the Shares ranged from the lowest of HK$0.010 in the period from October 2014 up to mid November 2014 to the highest of HK$0.074 on 28 May 2015 during the Review Period. The Conversion Price is within the range of the closing market prices of the Shares at the Review Period. At last May 2015, there were abrupt rises in the closing prices of the Shares. Thereafter, the closing prices of the Shares fluctuated and fell gradually. We noted that the changes in closing prices of the Shares were not supported by the financial performance of the Group in view that the Group continued to record losses during the Review Period.

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LETTER FROM PROTON CAPITAL

(ii) Comparison with the net assets of the Company

In comparison with the net assets of the Company, we noted that the Conversion Price of HK$0.01 per Share is at a material premium of approximately 49.3% over the unaudited consolidated net asset value attributable to owners of the Company per Share (‘‘Unaudited NAV per Share’’) of approximately HK$0.0067, based on the latest unaudited net asset value attributable to owners of the Company of approximately HK$495 million as at 30 June 2015 and the total number of Shares in issue as at the Latest Practicable Date of 74,278,993,990 Shares. We also noted that the Conversion Price represents a premium of approximately of 14.9% over the estimated fully diluted unaudited consolidated net asset value attributable to owners of the Company per Share of approximately HK$0.0087, based on the estimated unaudited net asset value attributable to owners of the Company as adjusted by full settlement of the Promissory Notes upon Completion of approximately HK$1,590.7 million and the maximum number of Shares in issue following full conversion of the Convertible Bonds of 183,846,093,990 Shares.

(iii) Comparison with other issue/subscription of convertible bonds/notes exercises

To further assess the fairness and reasonableness of the Conversion Price, we have further identified those issue/subscription of convertible bonds/notes exercises under specific mandate which were announced by companies listed on the Stock Exchange from 1 May 2015 up to the Last Trading Day (the ‘‘Comparables’’), being a period of approximately six months prior to and including the Last Trading Day. To the best of our knowledge and as far as we are aware of, we found 17 transactions which met the said criteria and we considered the sample size to be fair and representative as the Comparables can reflect the latest market practice prior to the Last Trading Day. We consider that the aforesaid sampling period is adequate and appropriate given that such period is sufficiently recent to demonstrate the prevailing market practices prior to the Last Trading Day. Shareholders should note that the businesses, operations, financial position, performance, results and prospects of the Company are not the same as the Comparables.

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LETTER FROM PROTON CAPITAL

				Premium/(Discount)
				of the issue price
				over/(to) closing price
				per share on the last
				trading day prior to/
				on the date of
				announcement/
				agreement in relation
				to the respective
				issue/subscription of
			Date of	convertible bonds/
Company name		Stock code	announcement	notes
				%
1.	Energy International Investments	353	18 May 2015	(9.20)
	Holdings Limited
2.	Loudong General Nice Resources	988	18 May 2015	(74.90)
	(China) Holdings Limited
3.	Sunrise (China) Technology Group	8226	21 May 2015	(70.31)
	Limited
4.	Asia Resources Holdings Limited	899	21 May 2015	10.77
5.	Focus Media Network Limited	8112	3 June 2015	(85.22)
6.	SinoCom Software Group Limited	299	5 June 2015	(41.04)
7.	China All Access (Holdings)	633	9 June 2015	(22.26)
	Limited
8.	China Investment Fund Company	612	23 June 2015	(27.50)
	Limited
9.	China Finance Investment	875	30 June 2015	(1.15)
	Holdings Limited (formerly
	known as Cypress Jade
	Agricultural Holdings Limited)
10.	China Agri-Products Exchange	149	7 July 2015 &	3.39
	Limited		16 July 2015
11.	Cheung Wo International	9	12 August 2015	(8.40)
	Holdings Limited
12.	Loudong General Nice Resources	988	24 August 2015	(58.20)
	(China) Holdings Limited
13.	Theme International Holdings	990	28 August 2015	(71.43)
	Limited
14.	Code Agriculture (Holdings)	8153	28 August 2015	(58.85)
	Limited
15.	Global Bio-Chem Technology	809	30 August 2015	(33.33)
	Group Company Limited
16.	FiNet Group Limited	8317	8 September 2015	(34.00)
17.	Link Holdings Limited	8237	8 October 2015	(65.63)
Maximum				10.77
Minimum				(85.27)
Average (among all the Comparables)				(36.99)
Average (among those Comparables				(46.59)
which issue convertible bonds/notes
with conversion price at a discount)
The	Company			(47.37)

– 45 –

LETTER FROM PROTON CAPITAL

We noted from the above table that the conversion prices of the convertible bonds/notes of the Comparables ranged from a discount of approximately 85.27% to a premium of approximately 10.77% to/over (‘‘Comparable Discount/Premium’’) the respective closing prices of their shares on the last trading day prior to the release of announcement/date of agreement in relation to the respective issue/ subscription of convertible notes/bonds exercises (the ‘‘Market Range’’) with an average discount of 36.99%. We further noted that majority of the Comparables, i.e. 14 out of the 17 Comparables (approximately 82%), set the conversion price of their respective convertible bonds/notes at a discount to the respective closing prices of their shares on the last trading day prior to the release of announcement/date of agreement. Among those 14 Comparables’ issue of convertible bonds/notes with conversion price at a discount, (i) the average Comparable Discounts is approximately 46.59%; and (ii) the Comparable Discounts of 7 Comparables (i.e. 50%) is higher than the LTD Discount of the Convertible Bonds of 47.37%.

In view that the LTD Discount of the Convertible Bonds of approximately 47.37% is:

(i) within the Market Range;
(ii) in line with the market practice of issuing convertible bonds/notes at a discount in view that majority of the Comparables, i.e. 14 out of the 17 Comparables (approximately 82%), set the conversion price of their respective convertible bonds/notes at a significant discount to the respective closing prices of their shares on the last trading day prior to the release of announcement/date of agreement;
(iii) close/comparable to the average Comparable Discounts of approximately 46.59% of those 14 Comparables issue convertible bonds/notes with conversion price at a discount; and
(iv) lower than the Comparable Discounts of 7 out of the 14 Comparables which issue convertible bonds/notes at a discount.

we consider that the Conversion Price is fair and reasonable.

On the basis of the aforesaid and that (i) the significant expected financial benefits to be derived by the Company from the Transactions as discussed in section 2 of this letter; (ii) the Conversion Price represents a material premium over the Unaudited NAV per Share; (iii) the Conversion Price is within the range of the closing market prices of the Shares during the Review Period; and (iv) the Group had continued to incur losses since 2007, there was no improvement in the Group’s financial performance in the Review Period and thus the fluctuation in the closing market prices of the Shares was not supported by the financial performance of the Group, we consider the Conversion Price is fair and reasonable and the Subscription is in the interest of the Company and the Independent Shareholders as a whole.

– 46 –

LETTER FROM PROTON CAPITAL

3. Financial effects of the Transactions

(a) Positive impact on the financial position and net assets value

We noted that the Promissory Notes will be settled by the issue of the Convertible Bonds upon Completion. We further noted that according to the terms of the Convertible Bonds (as amended by the Supplemental Agreement), the Convertible Bonds will not bear any interest and any outstanding Convertible Bonds will be automatically converted into Conversion Shares on the maturity date of the Convertible Bonds. Any outstanding Convertible Bonds which are not converted into Conversion Shares during the Conversion Period or on the Maturity Date will be cancelled without any liability, obligations or payment or repayment on the Company. Therefore, the financial position of the Group is expected to be significantly improved and strengthened as a result of the Transactions.

(b) Positive impacts on liquidity and working capital

All the Promissory Notes will be fully settled upon Completion without any cash outflow of the Group. As the Promissory Notes carry interests ranging from nil to 3% per annum and their principal amounts are due for repayment upon maturity, the Subscription and the Settlement will have significant positive impacts on the liquidity and working capital of the Group as the Company will not have any liability or obligations of principal repayment or interest payment under the Convertible Bonds.

(c) Positive impact on the Company’s gearing ratio

As discussed in the section headed ‘‘Information on the Company’’ in this letter, Group’s gearing ratio (calculated as total liabilities over total assets) as at 30 June 2015 amounted to approximately 80.74%, in which the Promissory Notes represented over 50% of the liabilities of the Group. The Directors expected that upon Completion, the estimated unaudited consolidated total liabilities of the Group would be reduced by the outstanding principal amount of the Promissory Notes. Assuming there is no change in the other liabilities of the Group since 30 June 2015, the gearing ratio of the Group would be significantly improved. The Directors expect that such improvement in gearing ratio and financial position of the Group as a result of the Transactions will be viewed positively by the existing bank lenders and creditors of the Group.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Company will be upon Completion or upon conversion of the Convertible Bonds.

– 47 –

LETTER FROM PROTON CAPITAL

4. Dilution effect on the shareholding interests of the existing public Shareholders

The maximum of 109,567,100,000 Conversion Shares to be issued upon full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 represent (i) approximately 147.51% of the existing issued share capital of the Company; and (ii) approximately 59.60% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds.

According to the Board’s Letter, to the best knowledge of the Directors and the Company, assuming that no other Shares will be issued, the shareholding structure of the Company (i) as at the Latest Practicable Date, and (ii) immediately after Completion and full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 per Conversion Share, shall be as follows:

Shareholders CCT Securities Director: Tam Ngai Hung, Terry Glory Merit Public Shareholders Total	As at the Latest Practicable Date No. of Shares % 6,426,000,000 8.65% 10,000,000 0.01% 0 0.00% 67,842,993,990 91.34% 74,278,993,990 100.00%	Immediately after Completion and full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 per Conversion Share No. of Shares % 85,993,100,000 46.77% 10,000,000 0.01% 30,000,000,000 16.32% 67,842,993,990 36.90% 183,846,093,990 100.00%	Immediately after Completion and full conversion of the Convertible Bonds at the initial Conversion Price of HK$0.01 per Conversion Share No. of Shares % 85,993,100,000 46.77% 10,000,000 0.01% 30,000,000,000 16.32% 67,842,993,990 36.90% 183,846,093,990 100.00%
			100.00%

The table above illustrates that the aggregate shareholdings of the existing public Shareholders would decrease from approximately 91.34% as at the Latest Practicable Date to approximately 36.90% upon full conversion of the Convertible Bonds. Such potential dilution to the shareholdings of the public Shareholders represents a dilution of approximately 54.44 percent point.

– 48 –

LETTER FROM PROTON CAPITAL

After taking into account (i) the Promissory Notes of principal amount of HK$900,000,000 will be due on 15 July 2016 but the Group’s cash level is not enough to settle all the Promissory Notes and funds raising from the capital market and borrowings to repay the Promissory Notes is not considered feasible especially taking into account of the high gearing ratio and the continuing loss making position of the Group since 2007; (ii) the fact that the Subscription and the Settlement will enable the Company to settle and capitalise the Promissory Notes owed by the Company into equity capital without any cash outlay immediately and in the future (according to the terms of Convertible Bonds, in the event that any outstanding principal amount of the Convertible Bonds are not converted into Conversion Shares on the Maturity Date for any reasons, the outstanding Convertible Bonds shall be cancelled on the Maturity Date without any payment or repayment (in cash or otherwise), liability or obligation on the Company in respect of the Convertible Bonds and their cancellation); (iii) the Board’s reasons for and benefits of the Transactions as discussed in earlier part of this letter; (iv) the possible financial benefits of the Subscription and the Settlement to the Group in terms of enlargement in capital position, enhancement of net asset value of the Group and net asset value per Share, reduced gearing level and improvement in the working capital position of the Group as discussed in the section headed ‘‘Financial effects of the Transactions’’ in this letter, we are of the view that the dilution in the shareholding interests of the public Shareholders as mentioned above is not prejudicial to their interests and thus is acceptable.

RECOMMENDATION

Having considered the aforesaid principal factors, we are of the view that the terms of the Agreement as amended by the Supplemental Agreement and the transactions contemplated are on normal commercial terms and are fair and reasonable and the entering into the Agreement as amended by the Supplemental Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, we would recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the proposed resolution(s) to approve the Agreement as amended by the Supplemental Agreement and the transactions contemplated thereunder at the forthcoming SGM.

Yours faithfully, For and on behalf of Proton Capital Limited Josephine Lau Director — Corporate Finance

Note: Ms. Josephine Lau has been a responsible officer of Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities since 2012 and 2007, respectively. Ms. Lau has more than 14 years of experience in corporate finance and investment banking and has participated in and completed various advisory transactions of listed companies in Hong Kong.

– 49 –

GENERAL INFORMATION

APPENDIX I

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. DISCLOSURE OF INTERESTS

Directors’ interests and short positions in the shares and the underlying shares of the Company and its associated corporations (if any)

As at the Latest Practicable Date, the Directors and chief executive of the Company and/or any of their respective associates had the following interests and short positions in the shares, underlying shares and debentures of the Company and/or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or which were required, pursuant to Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

Interests and short positions in the Shares and the underlying Shares of the Company as at the Latest Practicable Date

(i) Long positions in the Shares:

				Approximate
				percentage of
	Number of the Shares			the total issued
	interested and nature			share capital
	of interest			of the
Name of the Directors	Personal	Corporate	Total	Company
				(%)
Mr. Mak (Note)	—	6,426,000,000	6,426,000,000	8.65
Tam Ngai Hung, Terry	10,000,000	—	10,000,000	0.01

Note: The interest disclosed represented 6,426,000,000 Shares held by CCT Fortis through its indirect wholly-owned subsidiary. Mr. Mak is deemed to be interested in such Shares under the SFO as he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of CCT Fortis through his interest in the shareholding of approximately 54.79% of the total issued share capital in CCT Fortis as at the Latest Practicable Date.

– 50 –

GENERAL INFORMATION

APPENDIX I

(ii) Long positions in the underlying Shares of the share options granted under the share option scheme of the Company:

						Approximate
						percentage of
				Number of	Number of	the total
	Date of grant	Exercise		the share	the total	issued share
Name of the	of the share	period of the	Exercise price	options	underlying	capital of the
Directors	options	share options	per Share	outstanding	Shares	Company
			HK$			(%)
Chow Siu Ngor	17/1/2014	17/1/2014 —	0.01	5,000,000	5,000,000	Below 0.01
		16/1/2024
Lau Ho Kit, Ivan	17/1/2014	17/1/2014 —	0.01	5,000,000	5,000,000	Below 0.01
		16/1/2024

(iii) Long positions in the underlying Shares of the Convertible Bonds to be issued by the Company:

				Approximate
				percentage of
				the existing
	Number of the underlying			total issued
	Shares interested and			share capital
Name of the	nature of interest			of the
Directors	Personal	Corporate	Total	Company
				(%)
Mr. Mak (Note)	—	79,567,100,000	79,567,100,000	107.12

Note: The interest disclosed represented 79,567,100,000 underlying Shares in respect of the Convertible Bonds to be issued by the Company to CCT Securities pursuant to the terms and conditions of the Agreement as amended by the Supplemental Agreement. Mr. Mak is deemed to be interested in such underlying Shares under the SFO as he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of CCT Fortis through his interest in the shareholding of approximately 54.79% of the total issued share capital in CCT Fortis as at the Latest Practicable Date.

Save as disclosed above, none of the Directors and chief executive of the Company and/or any of their respective associates had any interest and short position in the shares, underlying shares and debentures of the Company and/or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or were required, pursuant to Part XV of the SFO or the Model Code for Securities Transactions by the Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

– 51 –

GENERAL INFORMATION

APPENDIX I

Interests of substantial shareholders

As at the Latest Practicable Date, so far as was known to, or could be ascertained after reasonable enquiries by, the Directors, the following persons (other than the Directors or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Interests and short positions in the Shares and the underlying Shares of the Company as at the Latest Practicable Date

(i) Long positions in the Shares:

		Approximate
		percentage of
		the total issued
	Number of	share capital of
Name of the Shareholders	Shares held	the Company
		(%)
CCT Fortis (Note 1)	6,426,000,000	8.65
CCT Capital International Holdings Limited
(Note 1)	6,426,000,000	8.65
CCT Securities (Note 1)	6,426,000,000	8.65
Dynasty East Limited (Note 2)	4,000,000,000	5.39
Li Yunsheng (Note 2)	4,000,000,000	5.39

Notes:

The interest disclosed represented 6,426,000,000 Shares held directly by CCT Securities which is a direct wholly-owned subsidiary of CCT Capital International Holdings Limited, which in turn is a direct wholly-owned subsidiary of CCT Fortis.
The interest disclosed represented 4,000,000,000 Shares held directly by Dynasty East Limited, whose entire shareholding is wholly-owned by Mr. Li Yunsheng.

– 52 –

GENERAL INFORMATION

APPENDIX I

(ii) Long positions in the underlying Shares of the Convertible Bonds to be issued by the Company:

		Approximate
		percentage of
		the existing
	Number of the	total issued
	underlying	share capital of
Name of the Shareholders	Shares held	the Company
		(%)
CCT Fortis (Note 1)	79,567,100,000	107.12
CCT Capital International Holdings
Limited (Note 1)	79,567,100,000	107.12
CCT Securities (Note 1)	79,567,100,000	107.12
Glory Merit (Note 2)	30,000,000,000	40.39
Xing Wei Ping (Note 2)	30,000,000,000	40.39

Notes:

The interest disclosed represented 79,567,100,000 underlying Shares in respect of the Convertible Bonds to be issued by the Company to CCT Securities pursuant to the terms and conditions of the Agreement as amended by the Supplemental Agreement. CCT Securities is a direct wholly-owned subsidiary of CCT Capital International Holdings Limited, which in turn is a direct wholly-owned subsidiary of CCT Fortis.
The interest disclosed represented 30,000,000,000 underlying Shares in respect of the Convertible Bonds to be issued by the Company to Glory Merit pursuant to the terms and conditions of the Agreement as amended by the Supplemental Agreement. Ms. Xing Wei Ping is deemed to be interested in such underlying Shares under the SFO as she is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of Glory Merit through her interest in the shareholding of approximately 70% of the total issued share capital in Glory Merit as at the Latest Practicable Date.

Save for Mr. Mak, Ms. Cheng Yuk Ching, Flora and Mr. Tam Ngai Hung, Terry who are also directors of CCT Fortis, CCT Capital International Holdings Limited and CCT Securities and Mr. Chow Siu Ngor who is also a director of CCT Fortis, no other Director or proposed Director is a director or employee of the above substantial shareholders which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

Save as disclosed above, so far as was known to the Directors, as at the Latest Practicable Date, there was no other person (other than the Directors or chief executive of the Company) who had any interests or short positions in the Shares and the underlying Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO, or were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

– 53 –

GENERAL INFORMATION

APPENDIX I

Interests in contract or arrangement

As at the Latest Practicable Date, none of the Directors is materially interested in contract or arrangement subsisting and which is significant in relation to the business of the Group.

Interests in assets

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 31 December 2014, being the date to which the latest published audited accounts of the Company were made up, 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.

Service contracts

There is no existing or proposed service contract between any member of the Group and any Director (excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation)).

Competing interests

Each of the Directors has confirmed that so far as they are aware of, none of the Directors nor any proposed Director or his/her respective close associates has any interest in a business, apart from the Group’s business, which competes or is likely to compete, either directly or indirectly, with the Group’s business.

3. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or claims of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any member of the Group.

4. QUALIFICATION AND CONSENT OF EXPERT

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

Name

Qualification

Proton Capital A licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporation finance) regulated activities as defined under the SFO

(i) Proton Capital did not have any shareholding, directly or indirectly, in the Company or any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Company or any member of the Group as at the Latest Practicable Date;

– 54 –

GENERAL INFORMATION

APPENDIX I

(ii) Proton Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and reference to its name in the form and context in which they are included; and
(iii) Proton Capital did not have any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to the Company or any members of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2014, the date to which the latest published audited financial statements of the Group were made up.

5. MATERIAL ADVERSE CHANGE

As disclosed in the 2014 annual report of the Group, the operating environment of the manufacturing business of telecom, electronic and child products engaged by the Group was difficult and its performance has been adversely affected by the sluggish economic recovery in its major markets, intensifying competition which exerted significant pressure on price reduction, and rising input costs (especially labour wages due to shortage of labour in the Guangdong Province). Furthermore, the significant devaluation of euro has dampened consumer demand of telecom and electronic products in the region. The mainland property development business in the PRC engaged by the Group also faced difficult operating environment caused mainly by tightened housing policies previously imposed by the Chinese Central Government and previously tightened liquidity and credit, coupled with low-price or price-cutting strategies adopted by local developers. As a result, the performance of the mainland property development business was also affected. These unfavourable operating factors continue to affect the Group’s principal business since 31 December 2014. Save for the above, the Directors have confirmed that there has been no material adverse change in the financial or trading position or prospects of the Group since 31 December 2014, being the date to which the latest published audited financial statements of the Group were made up, up to the Latest Practicable Date.

6. MISCELLANEOUS

(a) The registered office of the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda and the head office and the principal place of business of the Company in Hong Kong is located at 31/F., Fortis Tower, 77–79 Gloucester Road, Hong Kong.
(b) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(c) The company secretary of the Company is Mr. Tam Ngai Hung, Terry, who is a fellow of the Association of Chartered Certified Accountants and an associate of both the Hong Kong Institute of Certified Public Accountants and the Institute of Chartered Secretaries and Administrators.
(d) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

– 55 –

GENERAL INFORMATION

APPENDIX I

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the head office and the principal place of business of the Company in Hong Kong at 31/F., Fortis Tower, 77–79 Gloucester Road, Hong Kong during normal business hours on any business day from the date of this circular up to 14 days thereafter:

(a) the memorandum of association and the bye-laws of the Company;
(b) the letter from the Board to the Shareholders, the text of which is set out on pages 8 to 25 of this circular;
(c) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 26 to 27 of this circular;
(d) the letter of advice from Proton Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 28 to 49 of this circular;
(e) the written consent from Proton Capital referred to in the section headed ‘‘Qualification and consent of Expert’’ in this appendix;
(f) the annual reports of the Company for the three financial years ended 31 December 2014;
(g) the interim report of the Company for the six months ended 30 June 2015;
(h) the Agreement;
(i) the Supplemental Agreement;
(j) the Transfer Agreement; and
(k) this circular.

– 56 –

NOTICE OF THE SGM

==> picture [309 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock Code: 00261)

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘SGM’’) of the shareholders of CCT Land Holdings Limited (the ‘‘Company’’) will be held at 31/F., Fortis Tower, 77–79 Gloucester Road, Hong Kong on Friday, 4 December 2015 at 10:30 a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. ‘‘THAT:

(a) the conditional agreement dated 27 October 2015 (the ‘‘Agreement’’) and the supplemental agreement dated 10 November 2015 (the ‘‘Supplemental Agreement’’) entered into by and among the Company, CCT Fortis Holdings Limited (‘‘CCT Fortis’’, a company incorporated in the Cayman Islands and continued in Bermuda with limited liability and the shares of which are listed on the main board of The Stock Exchange of Hong Kong Limited), Jade Assets Company Limited (‘‘Jade Assets’’, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of CCT Fortis), CCT Telecom Securities Limited (‘‘CCT Securities’’, a company incorporated in Hong Kong with limited liability and an indirectly whollyowned subsidiary of CCT Fortis) and Glory Merit International Investment Limited (‘‘Glory Merit’’, a company incorporated in the British Virgin Islands with limited liability and an independent third party to the Company), under which it was agreed that, subject to the terms and conditions of the Agreement as amended by the Supplemental Agreement, (i) the Company will issue and CCT Securities will subscribe (the ‘‘First Subscription’’) for the convertible bonds (the ‘‘Convertible Bonds’’) in the aggregate principal amount of HK$795,671,000 (the ‘‘First Convertible Bonds’’) at the total issue price of HK$795,671,000 which will be satisfied as full settlement (the ‘‘First Settlement’’) of the outstanding principal and accrued interest (if any) of the promissory note due by the Company to Jade Assets; and (ii) the Company will issue and Glory Merit will subscribe (the ‘‘Second Subscription’’) for the convertible bonds in the aggregate principal amount of HK$300,000,000 (the ‘‘Second Convertible Bonds’’) at the total issue price of HK$300,000,000 which will be satisfied as full settlement (the ‘‘Second Settlement’’) of all the outstanding principal and accrued interest of the promissory notes due by the

– 57 –

NOTICE OF THE SGM

Company to Glory Merit (a copy of which is tabled at the meeting and marked ‘‘A’’ and initialled by the chairman of the meeting (the ‘‘Chairman’’) for identification purpose) (the First Subscription, the Second Subscription, the First Settlement, the Second Settlement and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement including but not limited to the allotment and issue of new shares (the ‘‘Conversion Shares’’) of the Company upon exercise of the conversion rights attached to the convertible bonds referred to hereinafter as the ‘‘Transactions’’), and details of the Transactions have been set out in the circular of the Company dated 17 November 2015, a copy of which is tabled at the meeting and marked ‘‘B’’ and initialled by the Chairman for identification purpose (the ‘‘Circular’’), and the entering into and execution of the Agreement and the Supplemental Agreement by the Company be and is hereby approved, ratified and confirmed;

(b) the Transactions and any other transactions contemplated under the Agreement as amended by the Supplemental Agreement be and are hereby approved;
(c) the creation and issue (the ‘‘CB Issue’’) by the Company of the First Convertible Bonds to CCT Securities and the Second Convertible Bonds to Glory Merit in accordance with the terms and conditions as set out in the Agreement as amended by the Supplemental Agreement and the instrument constituting the Convertible Bonds be and are hereby approved;
(d) subject to the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the maximum of 109,567,100,000 Conversion Shares to be issued upon full conversion of the First Convertible Bonds and the Second Convertible Bonds at the initial conversion price of HK$0.01 per Conversion Share (subject to adjustment in accordance with the terms and conditions of the Convertible Bonds), the directors of the Company be and are hereby granted a specific mandate to exercise the powers of the Company to allot and issue the Conversion Shares up to a maximum of 109,567,100,000 new shares of the Company; and
(e) any one director of the Company, or any two directors of the Company if the affixation of the common seal is necessary, be and is/are hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements and to do all such acts or things deemed by him/her/them to be incidental to, ancillary to or in connection with the matters contemplated in and completion of the Agreement as amended by the Supplemental Agreement, the CB Issue and the Transactions.’’

– 58 –

NOTICE OF THE SGM

2. ‘‘THAT:

the authorised share capital of the Company be and is hereby increased from HK$1,200,000,000 divided into 120,000,000,000 shares to HK$3,000,000,000 divided into 300,000,000,000 shares by the creation of an additional 180,000,000,000 shares of HK$0.01 each which will rank pari passu with all the existing shares, and any director of the Company be and is hereby authorised to execute and deliver on behalf of the Company any documents whatsoever, and to do any and all other things whatsoever, as such director shall in his or her absolute discretion deem or determine appropriate in connection with the foregoing.’’

By Order of the Board of CCT LAND HOLDINGS LIMITED Tam Ngai Hung, Terry Director

Hong Kong, 17 November 2015

Head office and principal place of business

in Hong Kong:

31/F., Fortis Tower

77–79 Gloucester Road

Hong Kong

Notes:

A form of proxy for use at the SGM is enclosed herewith.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either executed under its common seal or under the hand of any officer, attorney or other person duly authorised to sign the same.
Any shareholder entitled to attend and vote at the SGM or at any adjourned meeting thereof (as the case may be) is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder who is the holder of two or more shares may appoint not more than two proxies (who must be an individual or individuals) to attend and vote instead of him/her on the same occasion. A proxy need not be a shareholder of the Company but must attend the SGM in person to represent him/her.
In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 48 hours before the time appointed for holding the SGM or any adjourned meeting thereof (as the case may be). Such prescribed form of proxy for use at the SGM is also published on the websites of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk and the Company at www.cctland.com/eng/investor/statutory.php.
Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the SGM or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.
Where there are joint registered holders of any share(s), any one of such joint holders may attend and vote at the SGM or at any adjourned meeting thereof (as the case may be), either in person or by proxy, in respect of such share(s) as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the SGM or at any adjourned meeting thereof (as the case may be), the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

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AI assistant

GBA Holdings Limited — Proxy Solicitation & Information Statement 2015

49077_rns_2015-11-16_b3029fb6-6092-46a4-8b62-bd404004c849.pdf

CONNECTED TRANSACTION

(1) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE IN SETTLEMENT OF PROMISSORY NOTES PAYABLE

(2) INCREASE IN AUTHORISED SHARE CAPITAL

VC Capital Limited

CONTENTS

DEFINITIONS

(Stock Code: 00261)

CONNECTED TRANSACTION

(1) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE IN SETTLEMENT OF PROMISSORY NOTES PAYABLE

(2) INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

LETTER FROM THE BOARD

THE AGREEMENT AS AMENDED BY THE SUPPLEMENTAL AGREEMENT AND THE TRANSACTIONS

The Agreement and the Supplemental Agreement

LETTER FROM THE BOARD

Subject matter of the Agreement as amended by the Supplemental Agreement

(A) The First Promissory Note due to Jade Assets

Principal terms of the Convertible Bonds

Conditions precedent to the Agreement as amended by the Supplemental Agreement

Completion of the Agreement (as amended by the Supplemental Agreement)

Conversion Price

The Conversion Shares

Application for listing

Movements of Shares held by the CCT Fortis Group for the 12-month period up to the Latest Practicable Date

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

LETTER FROM THE BOARD

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL OF THE COMPANY

INFORMATION ON THE COMPANY AND THE GROUP

INFORMATION ON JADE ASSETS, CCT SECURITIES, CCT FORTIS AND GLORY MERIT

LISTING RULES IMPLICATIONS

SGM

LETTER FROM THE BOARD

RECOMMENDATION

OTHER INFORMATION

(Stock Code: 00261)

CONNECTED TRANSACTION

CONNECTED TRANSACTION ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE IN SETTLEMENT OF PROMISSORY NOTES PAYABLE

INTRODUCTION

BASIS OF OUR OPINION AND RECOMMENDATION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of and reasons for the Transactions

Business review of the Group

Financing alternatives available to the Group

Reasons for and benefits of the Transactions

LETTER FROM PROTON CAPITAL

The Agreement and the Supplemental Agreement

Principal terms of the Convertible Bonds

The Conversion Price

(i) Historical Share price performance

LETTER FROM PROTON CAPITAL

(ii) Comparison with the net assets of the Company

(iii) Comparison with other issue/subscription of convertible bonds/notes exercises

LETTER FROM PROTON CAPITAL

3. Financial effects of the Transactions

(a) Positive impact on the financial position and net assets value

(b) Positive impacts on liquidity and working capital

(c) Positive impact on the Company’s gearing ratio

4. Dilution effect on the shareholding interests of the existing public Shareholders

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

Directors’ interests and short positions in the shares and the underlying shares of the Company and its associated corporations (if any)

Interests of substantial shareholders

Interests in contract or arrangement

Interests in assets

Service contracts

Competing interests

3. LITIGATION

4. QUALIFICATION AND CONSENT OF EXPERT

Name

Qualification

5. MATERIAL ADVERSE CHANGE

6. MISCELLANEOUS

7. DOCUMENTS AVAILABLE FOR INSPECTION

ORDINARY RESOLUTIONS

GBA Holdings Limited Proxy Solicitation & Information Statement 2015