Greentech Technology International Limited - Proxy Solicitation & Information Statement 2017

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, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in L’sea Resources International Holdings Limited (the ‘‘Company’’), you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of L’sea Resources International Holdings Limited.

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED

利海資源國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00195)

(1) LOAN CAPITALISATION AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

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

A letter from the board of directors of the Company is set out on pages 4 to 15 of this circular. A letter from the Independent Board Committee is set out on pages 16 to 17 of this circular. A letter from Gram Capital to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 29 of this circular. A notice convening the extraordinary general meeting (the ‘‘EGM’’) of the Company to be held at Fuchsia and Ocher Room, 3/F, Gateway Hotel, 13 Canton Road, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong on Tuesday, 6 June 2017 at 9:00 a.m. is set out on pages 32 to 34 of this circular.

Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

22 May 2017

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from Gram Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix I — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

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DEFINITIONS

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

‘‘Announcement’’ the announcement of the Company dated 29 March 2017 in relation to the Supplemental Agreement and the Loan Capitalisation
‘‘Board’’ the board of Directors
‘‘Capitalisation Agreement’’ the capitalisation agreement entered into between the Company and Cybernaut on 29 March 2017 in respect of the Loan Capitalisation
‘‘Capitalisation Price’’ the price of HK$0.08 per Capitalisation Share to be allotted and issued to Cybernaut under the Capitalisation Agreement
‘‘Capitalisation Shares’’ an aggregate number of 1,700,000,000 new Shares to be allotted and issued to Cybernaut upon Completion
‘‘Company’’ L’sea Resources International Holdings Limited (利海資源國際控股有限公司), a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange
‘‘Completion’’ the completion of the Loan Capitalisation in accordance with the terms of the Capitalisation Agreement
‘‘Conditions’’ the conditions precedent to Completion
‘‘Cybernaut’’ Cybernaut Greentech Investment Holding (HK) Limited (賽伯樂綠科投資控股(香港)有限公司), a company incorporated in Hong Kong
‘‘Delay in Despatch the announcement of the Company dated 21 April 2017 in Announcement’’ relation to the delay in despatch of this circular
‘‘Director(s)’’ director(s) of the Company
‘‘EGM’’
an extraordinary general meeting of the Company to be held at Fuchsia and Ocher Room, 3/F, Gateway Hotel, 13 Canton Road, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong on Tuesday, 6 June 2017 at 9:00 a.m. for the purpose of approving the Loan Capitalisation and the grant of the Specific Mandate
‘‘Group’’ the Company and its subsidiaries

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DEFINITIONS

‘‘Hong Kong’’
Hong Kong Special Administrative Region of the People’s Republic of China
‘‘Independent Board Committee’’
the independent board committee of the Company formed by all the independent non-executive Directors to advise the Independent Shareholders on the terms of the Capitalisation Agreement and the transactions contemplated thereunder
‘‘Independent Financial Adviser’’ or ‘‘Gram Capital’’
Gram Capital Limited, a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Loan Capitalisation and the transactions contemplated thereunder
‘‘Independent Shareholders’’
Shareholders other than Mr. Xie Haiyu and his associates
‘‘Latest Practicable Date’’
18 May 2017, being the latest practicable date prior to the printing of this circular for inclusion of certain information herein
‘‘Lender’’ Power Investment Holding Limited (泊爾投資控股有限公司), a company incorporated in Hong Kong
‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Loan’’
a loan in the principal sum of HK$176,400,000 with maturity date on 31 March 2017 granted by the Lender to the Company pursuant to the Loan Agreement
‘‘Loan Agreement’’ the loan agreement dated 16 March 2016 entered into between the Company as the borrower and the Lender as the lender for the Loan
‘‘Loan Capitalisation’’ the allotment and issue of a total of 1,700,000,000 Capitalisation Shares at HK$0.08 per Capitalisation Share to Cybernaut by capitalising HK$136,000,000 of the principal sum of the Loan owing to Cybernaut pursuant to the Capitalisation Agreement
‘‘SFO’’

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

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DEFINITIONS

‘‘Share(s)’’ ordinary share(s) of HK$0.005 each in the share capital of the Company

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

‘‘Specific Mandate’’ a specific mandate to authorise the Directors to allot and issue the Capitalisation Shares pursuant to the Capitalisation Agreement ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

‘‘Supplemental Agreement’’ the supplemental agreement to the Loan Agreement entered into between the Company, Mr. Xie Haiyu and Cybernaut on 29 March 2017 to amend and restate the terms of the Loan Agreement primarily to extend the maturity date of the Loan

‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘%’’ per cent.
The English translation is for identification purpose only

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LETTER FROM THE BOARD

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利海資源國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00195)

Executive Directors:

Mr. NIE Dong Mr. CHEUNG Wai Kuen Mr. WANG Chuanhu Dr. SHI Simon Hao

Independent Non-Executive Directors:

Mr. CHI Chi Hung, Kenneth Mr. DENG Shichuan Mr. James MUNN

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

Principal place of business in Hong Kong:

Suite No. 1B on 9/F, Tower 1 China Hong Kong City 33 Canton Road Tsim Sha Tsui, Kowloon Hong Kong

22 May 2017

To the Shareholders

Dear Sir/Madam,

(1) LOAN CAPITALISATION AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

Reference is made to the Announcement and the Delay in Despatch Announcement.

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LETTER FROM THE BOARD

The purpose of this circular is to provide the Shareholders with information on (i) the Loan Capitalisation and (ii) a notice to convene the EGM for the purpose of considering and, if thought fit, approving the Loan Capitalisation and the grant of the Specific Mandate.

2. BACKGROUND TO THE ENTERING INTO OF THE CAPITALISATION AGREEMENT

Reference is made to: (a) the Company’s announcement dated 29 April 2015 in relation to the memorandum of understanding (the ‘‘Memorandum of Understanding’’) dated 29 April 2015 entered into between the Company and 北京賽伯樂綠科投資管理有限公司 (Beijing Cybernaut Green-Tech Investment Management Limited*) (the ‘‘Initial Proposed Subscriber’’) in respect of, among others, the possible subscription of new Shares (the ‘‘Possible Subscription’’); (b) the Company’s announcement dated 18 March 2016 regarding updates on the Possible Subscription and the Loan Agreement; and (c) the Company’s announcement dated 6 December 2016 in relation to termination of the Memorandum of Understanding and lapse of the Possible Subscription.

Possible Subscription

On 29 April 2015, the Company and the Initial Proposed Subscriber entered into the nonbinding Memorandum of Understanding setting out the preliminary understandings of the parties in relation to the Possible Subscription of not less than 6,000,000,000 new Shares at a tentative price of HK$0.25 per Share or convertible bonds of equivalent value by the Initial Proposed Subscriber (or such other investment company which is owned by and/or affiliated with the Initial Proposed Subscriber as designated by it). During the course of negotiation of the terms of the Possible Subscription, the Lender was designated by the Initial Proposed Subscriber as the vehicle for entering into the subscription agreement, if the Possible Subscription materialised. Subsequently, the parties negotiated the terms and conditions of the subscription agreement on the basis of a new structure of the Possible Subscription with a suggested subscription price of HK$0.08 per Share.

The Lender had attempted to seek offshore financing for the Possible Subscription and possible mandatory general offer resulting from the Possible Subscription since the entering into of the Loan Agreement in March 2016. However, the Lender was unable to secure sufficient offshore funding after several months of effort. Therefore, the Company was informed by the Lender on 6 December 2016 that the Lender decided not to proceed with the Possible Subscription. As such, the parties to the Memorandum of Understanding ceased negotiations regarding the Possible Subscription and the Memorandum of Understanding lapsed and is of no further effect.

Loan Agreement

As at 31 December 2015, the Company has outstanding convertible bonds (‘‘Convertible Bonds’’) with the principal amount of HK$176,400,000 with the maturity date on 3 March 2016 (the ‘‘Maturity Date of the Convertible Bonds’’).

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LETTER FROM THE BOARD

On the Maturity Date of the Convertible Bonds, at the request of the Company, the holder of the Convertible Bonds agreed in writing to defer the due date for payment of the redemption amount of the Convertible Bonds of HK$176,400,000 to 17 March 2016.

In view of the fact that the Group did not have sufficient capital to repay the Convertible Bonds on the Maturity Date of the Convertible Bonds, on 16 March 2016, the Company as the borrower, the Lender as the lender, and Mr. Xie Haiyu (who is a substantial shareholder of the Company) as the guarantor, entered into the Loan Agreement pursuant to which the Lender has agreed to grant the Loan in the principal sum of HK$176,400,000 to the Company for the sole purpose of settling the principal amount upon the redemption of the Convertible Bonds. Pursuant to the Loan Agreement, in the event that the parties entered into a legally binding subscription agreement for the Possible Subscription and completion of which took place on or before 17 June 2016 (or such other date as the parties might agree) (the ‘‘Long Stop Date’’), the Loan would automatically be deemed as partial payment of the subscription monies payable by the Lender under the Possible Subscription and the Company would not be obliged to repay the Loan. In case the Possible Subscription did not proceed to completion before the Long Stop Date, the Loan would be repayable on 31 March 2017 and interest would accrue at rate of 8% per annum from the date on which the Company and the Lender confirming not to proceed with the Possible Subscription or from 17 June 2016 (whichever is earlier). However, as the Possible Subscription did not proceed, the Loan became repayable in full on 31 March 2017 with fixed interest of 8% per annum.

On 17 March 2016, the Convertible Bonds had been fully redeemed by the Company by using the entire proceeds of the Loan.

Supplemental Agreement to Loan Agreement

On 29 March 2017, the Lender has, with the consent from the Company and Mr. Xie Haiyu, assigned all its rights and obligations under the Loan Agreement to Cybernaut. Cybernaut is 100% owned by 上海港美信息科技中心(有限合夥) (Shanghai Gangmei Information Technology Center (Limited Partner)), which in turn is 99% owned by 新餘銘沃投資管理中心(有限合夥) (Xinyu Mingwo Investment Management Center (Limited Partner)). The general partner of 新餘銘沃投資管理中心(有限合夥) is 賽伯樂綠科(深圳)投資管理有限公司 (Cybernaut Greentech (Shenzhen) Investment Management Co., Limited*) which in turn is 95% owned by the Initial Proposed Subscriber. The Lender is 20% owned by Ms. Xu Yuqing and 80% owned by Oriental Financial Holding Corporation, which in turn is 100% owned by Ms. Xu Yuqing. Although the Initial Proposed Subscriber does not have any shareholding interest in the Lender, the Initial Proposed Subscriber controlled the Lender through a power of attorney (‘‘POA’’). Pursuant to the POA, all the rights (including but not limited to decision-making rights, voting rights and director appoint rights) had been delegated to Cybernaut with effect from 16 March 2016. Based on the above, Cybernaut and the Lender are members of a group of companies under the control of the Initial Proposed Subscriber. The ultimate beneficial owners of the Initial Proposed Subscriber are Mr. Zhu Min (朱敏), Mr. Yang Shenghao (楊生浩), Mr. Li Dong (李冬) and Mr. Xu Dongping (徐東平), with effective

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LETTER FROM THE BOARD

interest of approximately 67.7%, 12.5%, 12.5% and 7.3% respectively. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Initial Proposed Subscriber and its ultimate beneficial owners are third parties independent of and not connected with the Company and the connected persons (as defined under the Listing Rules) of the Company.

On 29 March 2017 (after trading hours and subsequent to the assignment of the Lender’s rights under the Loan Agreement), Cybernaut, the Company and Mr. Xie Haiyu (as guarantor of the Company’s obligations under the Loan Agreement) entered into the Supplemental Agreement to amend and restate the terms of the Loan Agreement primarily to extend the maturity date of the Loan.

Under the amended and restated Loan Agreement, should the Loan Capitalisation take place on or before 30 June 2017 (or such other date as may be agreed by the parties), the remaining outstanding principal amount of the Loan of HK$40,400,000, together with interests accrued thereon up to repayment (which is expected to be in the amount of HK$2,426,214) and the interest accrued on the total principal amount of the Loan up to Completion (which is expected to be in the amount of HK$18,210,279), shall be repayable on 31 March 2018. If the Loan Capitalisation is not completed by 30 June 2017 (or such other date as may be agreed by the parties), the Loan in the entire principal amount of HK$176,400,000 together with interests accrued thereon will be repayable on 30 September 2017. The Lender has a right to demand early repayment of the Loan and interest accrued thereon upon occurrence of any of the events of default set out in the amended and restated Loan Agreement (which include, among others, prolonged suspension of trading of Shares, breach of the terms of the Loan Agreement, insolvency of the Company or any of its subsidiaries and change of control of the Company).

As at the Latest Practicable Date, the entire principal amount of the Loan, being HK$176,400,000, is outstanding.

3. CAPITALISATION AGREEMENT

On 29 March 2017 (after trading hours), the Company also entered into the conditional Capitalisation Agreement with Cybernaut in respect of the Loan Capitalisation whereby the Company will issue 1,700,000,000 Capitalisation Shares at a price of HK$0.08 per Capitalisation Share and the consideration for the issue of such Capitalisation Shares will be set off against HK$136,000,000 of the outstanding principal amount of the Loan. The total nominal value of the Capitalisation Shares is HK$8,500,000.

Cybernaut is principally engaged in equity investment and management of investment portfolio. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Cybernaut and its ultimate beneficial owners are third parties independent of and not connected with the Company and the connected persons (as defined under the Listing Rules) of the Company.

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LETTER FROM THE BOARD

Capitalisation Shares

Assuming that there will be no change in the issued share capital of the Company between the Latest Practicable Date and Completion, the 1,700,000,000 Capitalisation Shares to be allotted and issued under the Capitalisation Agreement represent approximately 33.14% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 24.89% of the entire issued share capital as enlarged by the allotment and issue of the Capitalisation Shares.

Capitalisation Price

The Capitalisation Price of HK$0.08 per Capitalisation Share represents:

(i) a discount of approximately 15.8% to the closing price of HK$0.095 per Share as quoted on the Stock Exchange as at the Latest Practicable Date;
(ii) a discount of approximately 24.5% to the closing price of HK$0.106 per Share as quoted on the Stock Exchange as at the date of the Announcement;
(iii) a discount of approximately 26.6% to the average of the closing prices per Share of approximately HK$0.109 for the last five consecutive trading days prior to the date of the Announcement;
(iv) a discount of approximately 26.5% to the average of the closing prices per Share of approximately HK$0.1089 for the last ten consecutive trading days prior to the date of the Announcement; and
(v) a premium of 33.33% over the audited equity attributable to the owners of the Company per Share of approximately HK$0.06 as at 31 December 2016.

The Capitalisation Price of HK$0.08 per Capitalisation Share was determined after arm’s length negotiations between the Company and Cybernaut having regards to the market price of the Shares, the net asset value of the Company and the financial performance and prospects of the Company.

For the period from 1 March 2016 to 29 March 2017 (the date of the Capitalisation Agreement), the closing prices of the Shares showed a general downward trend, where the highest closing price was HK$0.248 and the lowest closing price was HK$0.096. The Capitalisation Price is below the lowest closing price of the Share during that period. The average daily trading volume in the Shares had been thin (being below 1% of the total number of issued Shares held by the public as at the date of the Capitalisation Agreement) during that period. In light of the thin liquidity of the Shares, it is justifiable for setting the Capitalisation Price at discount to the then market prices of the Shares prior to the date of the Capitalisation Agreement in order to encourage Cybernaut to proceed with the Loan Capitalisation.

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LETTER FROM THE BOARD

The unaudited consolidated net asset value per Share as at 30 June 2016 and the audited consolidated net asset value per Share of the Company as at 31 December 2016 were approximately HK$0.05 and HK$0.06 respectively. Thus the Capitalisation Price, though representing a significant discount of approximately 24.5% to the closing price per Share as at the date of the Announcement, still represents a substantial premium of 60% or 33.33% of such net asset value of the Company as at 30 June 2016 and 31 December 2016 respectively.

The Group’s revenue increased by approximately 9.62% from approximately HK$344.50 million for the year ended 31 December 2015 (‘‘FY2015’’) to approximately HK$377.63 million for the year ended 31 December 2016 (‘‘FY2016’’). The Group also recorded gross profit of approximately HK$44.87 million in FY2016 as compared to gross loss of approximately HK$11.71 million in FY2015. Such improvements were mainly attributable to the significant increase in tin price during FY2016. Such improvements, together with the reversal of impairment loss recognised on property, plant, equipment, exploration and evaluation assets of approximately HK$170.42 million (FY2015: Impairment loss of approximately HK$145.65 million) in aggregate, led to the Group making profit of approximately HK$109.12 million for FY2016. However, such reversal of impairment loss was one-off in nature and if taking no account of such reversal, the Group would have recorded a net loss of HK$10,171,610 for FY2016. Due to substantial amount of other payables and accruals and other borrowing, the Group recorded net current liabilities of approximately HK$75.36 million as at 31 December 2016 (FY2015: net current liabilities of approximately HK$91.96 million). Such net current liabilities indicated the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.

The Group’s results of operation are largely dependent on the market price of tin and such price is subject to fluctuation from time to time.

Having considered the above as a whole, the Directors (including the independent nonexecutive Directors) consider that the Capitalisation Price and the terms and conditions of the Capitalisation Agreement are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

The net Capitalisation Price per Capitalisation Share, after deduction of relevant expenses (including but not limited to professional expenses and disbursements), is estimated to be approximately HK$0.0798.

Conditions of the Capitalisation Agreement

Completion of the Capitalisation Agreement is conditional upon and subject to the satisfaction of the following Conditions:

(i) the passing by the Shareholders (other than those who may be required to abstain from voting) at the EGM of resolutions approving the Capitalisation Agreement and the transactions contemplated thereunder including the granting of a specific mandate to the Directors to allot and issue the Capitalisation Shares;

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LETTER FROM THE BOARD

(ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Capitalisation Shares and such approval and permission not having been revoked prior to Completion;
(iii) all approvals and consents which are required for the entering into of the Capitalisation Agreement and the implementation of the transactions contemplated thereunder having been obtained; and
(iv) no notice having been issued by Cybernaut to require early repayment of the Loan pursuant to the amended and restated Loan Agreement by reason of the occurrence of an event of default.

If any of the Conditions is not fulfilled on or before 21 June 2017 (or such other date as agreed by the Company and Cybernaut), the rights and obligations of the Company and Cybernaut under the Capitalisation Agreement shall terminate and cease to have any effect. In such circumstances, the obligations of the Company and Cybernaut under the Capitalisation Agreement shall be discharged but rights and remedies arising from any antecedent breach shall not be prejudiced or affected.

Completion

Completion of the Loan Capitalisation shall take place on the seventh business day (or such other date as agreed by the Company and Cybernaut) after the satisfaction of all the Conditions above.

Ranking of the Capitalisation Shares

The Capitalisation Shares, when allotted and issued, will rank equally in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Capitalisation Shares.

Specific Mandate to issue the Capitalisation Shares

The Capitalisation Shares will be allotted and issued under the Specific Mandate proposed to be sought from the Shareholders at the EGM.

Listing

An application will be made by the Company to the Listing Committee of the Stock Exchange for the grant of the listing of, and permission to deal in, the Capitalisation Shares.

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LETTER FROM THE BOARD

Lock-up Undertaking

Pursuant to the Capitalisation Agreement, Cybernaut undertakes to the Company that it will not, unless with the consent of the Company, for a period commencing on the date of Completion and ending on a date which is six months after the date of Completion, provide, lend, sell, contract to sell, pledge, grant any option in respect of or dispose of the Capitalisation Shares, or carry out transactions (including derivatives transactions) with the economic effect of selling the Capitalisation Shares, or enter into any exchange agreement or similar agreement for transferring all or part of the economic risks of ownership of the Capitalisation Shares (the ‘‘Lock-up Undertaking’’).

4. REASONS FOR THE LOAN CAPITALISATION

The principal reason for the Loan Capitalisation is to alleviate some of the Company’s debts and improve the Company’s financial position and gearing level. According to the Company’s latest published audited annual results for the year ended 31 December 2016, it recorded net current liabilities of approximately HK$75.36 million, of which the Loan formed part. The Loan Capitalisation enables the Company to settle its existing material current liabilities without immediate cash outflows. It also improves the Company’s financial position by reducing the gearing level, broadening the capital base and strengthening the net assets value. In addition, it enables the Company to reserve its available cash for business development.

Based on the existing financial position of the Company and in the absence of the Loan Capitalisation, the Loan is unlikely to be settled in short term without further debt or equity fund raising exercises. However, the Board considers the implementation of any such fund raising exercises to be difficult or infeasible. For loan financing, it would increase the Company’s indebtedness and therefore worsen its gearing level. For equity financing, the Company would have to incur commission in engaging a placing agent or an underwriter for the exercise. Also, in light of the net current liabilities position and recent performance of the Shares, it might be difficult to identify any willing lenders, placing agents or underwriters (for equity financing in placing, rights issue or open offer) with terms (such as loan interest rate and placing/underwriting commission) that are affordable and acceptable to the Company. In this regard, the Company had approached three banks in Hong Kong for loan financing but either did not receive any reply from them or only received a reply that such bank would not consider providing such loan financing after initial discussions. The Company had also approached a securities brokerage firm to explore the possibility of placing and rights issue or open offer. As the securities brokerage firm did not show interest in acting as placing agent and could not find any underwriter for open offer or rights issue, the said equity financing alternatives could not proceed further. Accordingly, the Board is of the view that the above fund raising exercises are not practical in light of the Company’s current financial status and the current market conditions.

The Board is also aware that the Loan Capitalisation will dilute the existing Shareholders’ interest in the Company. However, in light of the practical difficulties in the implementation of other fund raising exercises and the preferable outcomes of the Loan Capitalisation to the Company as detailed above, the Board is of the view that the dilution is justifiable.

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LETTER FROM THE BOARD

Having considered (i) the dilution impact of the issue of the Capitalisation Shares; (ii) the justified discount of the Capitalisation Price of approximately 24.5% to the closing price of the Shares on the date of the Announcement; (iii) the reasons and benefits of the Loan Capitalisation; (iv) the difficulty of the Company in conducting other kinds of fund raising exercise and (v) the Lock-up Undertaking limiting the negative impact of the issue of the Capitalisation Shares on the market price of the Shares as mentioned above, the Directors consider that the Capitalisation Agreement is entered into upon normal commercial terms after arm’s length negotiations between the Company and Cybernaut and that the terms and conditions of the Capitalisation Agreement are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

The Company and the Board confirm that they have no intention, arrangement, agreement, understanding, negotiation (concluded or otherwise) on:

(a) any potential transaction which would involve (a) disposal or termination or scalingdown of the Company’s existing businesses and/or (b) injection of any new business to the Company; and
(b) any change in the composition of the Board and shareholding structure of the Company other than the Loan Capitalisation.

After the publication of the Announcement, the Company has been approached by certain parties showing interest to talk to the management of the Company to explore other potential funding options. However, as the Company has entered into the Capitalisation Agreement after arm’s length negotiation and the terms and conditions of the Capitalisation Agreement are considered by the Directors to be fair and reasonable and in the interests of the Company and its Shareholders as a whole for the reasons stated above, the Directors will only explore the possibility of other funding options again if the Loan Capitalisation is not approved by the Independent Shareholders.

5. EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any fund raising activities in the past twelve months immediately before the Latest Practicable Date.

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LETTER FROM THE BOARD

6. EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company (a) as at the Latest Practicable Date; and (b) immediately after Completion (assuming there will be no other change in the share capital of the Company other than the allotment and issue of the Capitalisation Shares):

Cybernaut Mr. Xie Haiyu Mr. Koo Yuen Kim Other Shareholders Total	As at the Latest Practicable Date Number of Shares held Approximate % — — 606,117,360 11.82 849,710,000 16.56 3,674,172,640 71.62 5,130,000,000 100.00	Immediately after Completion (assuming there will be no other change in the share capital of the Company other than the allotment and issue of the Capitalisation Shares) Number of Shares held Approximate % 1,700,000,000 24.89 606,117,360 8.87 849,710,000 12.44 3,674,172,640 53.80 6,830,000,000 100.00	Immediately after Completion (assuming there will be no other change in the share capital of the Company other than the allotment and issue of the Capitalisation Shares) Number of Shares held Approximate % 1,700,000,000 24.89 606,117,360 8.87 849,710,000 12.44 3,674,172,640 53.80 6,830,000,000 100.00
			100.00

7. GENERAL INFORMATION OF THE GROUP

The Group was in the past an established insulation and heat-resistance solution provider in the southern PRC specialised in the production, design and sales of insulation and heat resistance materials. The Group was also engaged in the trading of copper and silicon rubber with its trading customers.

Since March 2011, the principal business activities of the Group are exploration of nonferrous metal resources, including mining and sale of tin resources.

8. GENERAL INFORMATION OF CYBERNAUT

Cybernaut is principally engaged in equity investment and management of investment portfolio.

9. LISTING RULES REQUIREMENT

Mr. Xie Haiyu, being the guarantor of the Company’s obligations under the Loan Agreement, has material interest in the Loan Capitalisation. Mr. Xie Haiyu is a substantial Shareholder and a connected person of the Company. Accordingly, the Loan Capitalisation constitutes a connected transaction and is subject to the announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

10. EGM

The EGM will be convened and held for the purpose of considering and, if thought fit, approving the Loan Capitalisation and the grant of the Specific Mandate for the allotment and issue of the Capitalisation Shares.

The notice convening the EGM is set out on pages 32 to 34 of this circular. A form of proxy for the EGM is also enclosed with this circular and such form of proxy is also published on the designated website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.lsea-resources.com). Whether or not you intend to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

Pursuant to article 66 of the articles of association of the Company, a resolution put to the vote of a meeting shall be decided by way of a poll if voting by way of poll is required by the rules of the Stock Exchange or a poll is otherwise demanded in accordance with that article 66.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands.

Accordingly, all the ordinary resolution(s) set out in the notice of the EGM will be put to vote by way of poll at the EGM.

The Loan Capitalisation is conditional upon Independent Shareholders’ approval. Mr. Xie Haiyu, the registered holder of 606,117,360 Shares, which represent approximately 11.82% of the total issued share capital of the Company as at the Latest Practicable Date, is the guarantor in the Loan Agreement (as supplemented by the Supplemental Agreement) and guarantees the obligations of the Company under the Loan Agreement (as supplemented by the Supplemental Agreement). Should the Loan Capitalisation be completed in accordance with the terms of the Capitalisation Agreement, HK$136,000,000 of the outstanding principal amount of the Loan shall be deemed repaid and thus the liabilities guaranteed by Mr. Xie will be reduced accordingly. Given Mr. Xie’s interest in the Loan Capitalisation, he will abstain from voting at the EGM in respect of all 606,117,360 Shares.

None of the Directors have any material interest in the Loan Capitalisation and none of them abstained from voting in the relevant board resolution for approving the Loan Capitalisation.

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LETTER FROM THE BOARD

11. RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on pages 16 to 17 of this circular which contains its recommendation to the Independent Shareholders in relation to the Loan Capitalisation. Your attention is also drawn to the letter of advice from Gram Capital as set out on pages 18 to 29 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Loan Capitalisation and the principal factors and reasons taken into account in arriving at its recommendation.

The Independent Board Committee, having taken into account the advice of Gram Capital, considers that the terms of the Capitalisation Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and the entering into of the Capitalisation Agreement is in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Capitalisation Agreement and the transactions contemplated thereunder.

The Directors believe that the Loan Capitalisation and the grant of the Specific Mandate are in the best interests of the Company and its Shareholders as a whole. The Directors recommend all Shareholders to vote in favour of the ordinary resolution(s) as set out in the notice of the EGM.

Your attention is also drawn to the additional information set out in Appendix I to this circular.

Yours faithfully, For and on behalf of the Board L’sea Resources International Holdings Limited NIE Dong

Executive Director and Chief Executive Officer

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利海資源國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00195)

22 May 2017

To the Independent Shareholders

Dear Sir or Madam,

LOAN CAPITALISATION

We refer to the circular from the Company to the Shareholders dated 22 May 2017 (the ‘‘Circular’’) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the terms of the Loan Capitalisation and to advise the Independent Shareholders whether the terms of the Loan Capitalisation are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and whether the Loan Capitalisation is in the interests of the Company and its Shareholders as a whole. Gram Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Loan Capitalisation.

We wish to draw your attention to the letter from the Board set out on pages 4 to 15 of the Circular which contains, among others, information on the Loan Capitalisation. We wish to draw your attention to the letter from Gram Capital set out on pages 18 to 29 of the Circular which contain, among other things, its advice and recommendations regarding the Loan Capitalisation and the principal factors and reasons taken into consideration for its advice and recommendations.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of Gram Capital, we consider that the terms of the Loan Capitalisation are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and the entering into of the Capitalisation Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Capitalisation Agreement and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee Mr. Chi Chi Hung, Kenneth Mr. Deng Shichuan Mr. James Munn Independent Non-executive Independent Non-executive Independent Non-executive Director Director Director

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LETTER FROM GRAM CAPITAL

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

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

22 May 2017

To: The independent board committee and the independent shareholders of L’sea Resources International Holdings Limited

Dear Sirs,

LOAN CAPITALISATION

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Loan Capitalisation, details of which are set out in the letter from the Board (the ‘‘Board Letter’’) contained in the circular dated 22 May 2017 issued by the Company to the Shareholders (the ‘‘Circular’’), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 29 March 2017 (the ‘‘Agreement Date’’) (after trading hours), the Company entered into the conditional Capitalisation Agreement with Cybernaut in respect of the Loan Capitalisation whereby the Company will issue 1,700,000,000 Capitalisation Shares at a price of HK$0.08 per Capitalisation Share and the consideration for the issue of such Capitalisation Shares will be set off against HK$136,000,000 of the outstanding principal amount of the Loan.

With reference to the Board Letter, Mr. Xie Haiyu, being the guarantor of the Company’s obligations under the Loan Agreement (the ‘‘Guarantor’’), has material interest in the Loan Capitalisation. Mr. Xie Haiyu is a substantial Shareholder and a connected person of the Company. Accordingly, the Loan Capitalisation constitutes a connected transaction and is subject to the announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising Mr. Chi Chi Hung, Kenneth, Mr. Deng Shichuan and Mr. James Munn (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Capitalisation

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LETTER FROM GRAM CAPITAL

Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Loan Capitalisation is in the interests of the Company and the Shareholders as a whole and are conducted in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Capitalisation Agreement and the transactions contemplated thereunder at the EGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

INDEPENDENCE

As at the Latest Practicable Date, we were not aware of any relationships or interests between Gram Capital and the Company during the past two years immediately preceding the Latest Practicable Date, or any other parties that could be reasonably regarded as hindrance to Gram Capital’s independence to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders.

BASIS OF OUR OPINION

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

The 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 the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement therein or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

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LETTER FROM GRAM CAPITAL

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

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

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

1. Background and reasons for the Loan Capitalisation

Information of the Group

With reference to the Board Letter, the Group is principally engaged in exploration, development and mining of tin and copper bearing ores in Australia.

Set out below is a summary of the audited consolidated financial information on the two years ended 31 December 2016 as extracted from the Company’s annual report for the year ended 31 December 2016 (the ‘‘2016 Annual Report’’):

	For the year	For the year
	ended	ended
	31 December	31 December	Year on year
	2016	2015	change
	HK$’000	HK$’000	%
Revenue	377,628	344,497	9.62
Gross profit/(loss)	44,865	(11,712)	N/A
Profit/(Loss) for the year	109,122	(174,525)	N/A

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LETTER FROM GRAM CAPITAL

	As at	As at
	31 December	31 December	Year on year
	2016	2015	change
	HK$’000	HK$’000	%
Bank balances and cash	160,499	163,965	(2.11)
Other payables and accruals	95,264	84,522	12.71
Other borrowing	184,055	—	N/A
Current assets	242,552	208,660	16.24
Current liabilities	317,907	300,616	5.75
Net current liabilities	(75,355)	(91,956)	(18.05)
Total equity	310,282	207,081	49.84

As depicted from the above table, the Group’s revenue increased by approximately 9.62% from approximately HK$344.50 million for the year ended 31 December 2015 (‘‘FY2015’’) to approximately HK$377.63 million for the year ended 31 December 2016 (‘‘FY2016’’). The Group also recorded gross profit of approximately HK$44.87 million in FY2016 as compared to gross loss of approximately HK$11.71 million. With reference to the 2016 Annual Report, the aforesaid improvements were mainly attributable to the significant increase in tin price during FY2016.

The aforesaid improvements, together with the reversal of impairment loss recognised on property, plant, equipment, exploration and evaluation assets which amounted to approximately HK$170.42 million (FY2015: Impairment loss of approximately HK$145.65 million) in aggregate, led to the Group’s turnaround in its loss-making position for FY2015. The Group made profit of approximately HK$109.12 million for FY2016.

As at 31 December 2016, due to substantial amount of other payables and accruals and other borrowing, the Group recorded net current liabilities of approximately HK$75.36 million. With reference to the independent auditor’s report as contained in the 2016 Annual Report, the Company’s current liabilities exceeded its current assets by approximately HK$75,355,000 and this event or condition, along with other matters, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern (the ‘‘Going Concern Uncertainty’’).

Information on Cybernaut and the Lender

Cybernaut was incorporated in Hong Kong with limited liability. It is principally engaged in equity investment and management of investment portfolio.

The Lender is an investment holding company incorporated in Hong Kong with limited liability.

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LETTER FROM GRAM CAPITAL

Reasons for and benefits of the Loan Capitalisation

With reference to the Board Letter, the principal reason for the Loan Capitalisation is to alleviate some of the Company’s debts and improve the Company’s financial position and gearing level. The Loan would be repayable on 31 March 2017 and thus was recorded as a current liability of the Company. The Loan Capitalisation enables the Company to settle its existing material current liabilities without immediate cash outflows. It also improves the Company’s financial position by reducing the gearing level, broadening the capital base and strengthening the net assets value. In addition, it enables the Company to reserve its available cash for business development.

As aforementioned, the Group recorded net current liabilities of approximately HK$75.36 million as at 31 December 2016. The Group’s bank balances and cash only amounted to HK$160.50 million as at 31 December 2016. The independent auditor’s report as contained in the 2016 Annual Report also stated the Going Concern Uncertainty.

We have enquired into the Directors and were informed by the Directors that the Group has considered various methods, such as placing/subscription of new Shares, open offer and rights issue, to finance the repayment of the Loan. Nevertheless, given the unsatisfactory financial position of the Group (as demonstrated under the section headed ‘‘Information of the Group’’ above) and the Going Concern Uncertainty, the Directors are of the view that it would be difficult for the Company to seek for investors for subscription of new Shares, placing agents for placing of new Shares or underwriters for open offer/rights issue. The Directors are hence of the opinion that the Loan Capitalisation is a more preferable method for the settlement of part of the Loan.

With reference to the Board Letter, the Company had approached three banks in Hong Kong for loan financing but either did not receive any reply from them or only received a reply that such bank would not consider providing such loan financing after initial discussions. The Company had also approached a securities brokerage firm to explore the possibility of placing and rights issue or open offer. As the securities brokerage firm did not show interest in acting as placing agent and could not find any underwriter for open offer or rights issue, the said equity financing alternatives could not proceed further.

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LETTER FROM GRAM CAPITAL

Having considered the above, in particular, the difficulty for the Company to seek for investors, placing agents or underwriters and that the Company failed to proceed with other loan financing and equity financing alternatives, we are of the view that the Loan Capitalisation is in the interest of the Company and the Shareholders as a whole.

2. Principal terms of the Capitalisation Agreement

On 29 March 2017 (after trading hours), the Company entered into the conditional Capitalisation Agreement with Cybernaut in respect of the Loan Capitalisation whereby the Company will issue 1,700,000,000 Capitalisation Shares at a price of HK$0.08 per Capitalisation Share and the consideration for the issue of such Capitalisation Shares will be set off against HK$136,000,000 of the outstanding principal amount of the Loan.

Pursuant to the Capitalisation Agreement, assuming that there will be no change in the issued share capital of the Company between the Latest Practicable Date and Completion, the 1,700,000,000 Capitalisation Shares to be allotted and issued under the Capitalisation Agreement represent approximately 33.14% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 24.89% of the entire issued share capital as enlarged by the allotment and issue of the Capitalisation Shares.

The Capitalisation Price

The Capitalisation Price of HK$0.08 per Capitalisation Share represents:

(i) a discount of approximately 15.8% to the closing price of HK$0.095 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 24.5% to the closing price of HK$0.106 per Share as quoted on the Stock Exchange as at the Agreement Date (the ‘‘Agreement Date Discount’’);
(iii) a discount of approximately 26.6% to the average of the closing prices of approximately HK$0.109 per Share for the five consecutive trading days of the Shares immediately preceding the Agreement Date;
(iv) a discount of approximately 26.5% to the average of the closing prices of approximately HK$0.1089 per Share for the ten consecutive trading days of the Shares immediately preceding the Agreement Date; and
(v) a premium of 33.3% over the audited consolidated equity attributable to the owners of the Company per Share of approximately HK$0.06 as at 31 December 2016.

With reference to the Board Letter, the Capitalisation Price of HK$0.08 per Capitalisation Share was arrived after arm’s length negotiations between the Company and Cybernaut having regards to the market price of the Shares, the net asset value of the

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LETTER FROM GRAM CAPITAL

Company and the financial performance and prospects of the Company. With reference to the Board Letter, the Group’s results of operation are largely dependent on the market price of tin and such price is subject to fluctuation from time to time. We noted from the London Metal Exchange (LME) that although there was surge in tin price in 2016 (LME tin spot prices were US$14,550, US$17,051.5 and US$21,086.5 as at 4 January 2016, 30 June 2016 and 30 December 2016 respectively), the tin price retreated in the beginning of 2017 (LME tin spot price was US$19,186.5 as at 1 March 2017). As such, there is uncertainty in the Group’s future operating results.

Historical price of the Shares

In order to assess the fairness and reasonableness of the Capitalisation Price, we have reviewed the daily closing price of the Shares as quoted on the Stock Exchange from 1 March 2016 up to and including 29 March 2017 (the ‘‘Review Period’’), being approximately one year up to the Agreement Date, which is commonly used for analysis purpose. The comparison of daily closing prices of the Shares and the Capitalisation Price is illustrated as follows:

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

0.3
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Source: the Stock Exchange’s website

Note: Trading in the Shares was halted (i) from 17 March 2016 to 20 March 2016 (both days inclusive); and (ii) during the afternoon session on 6 December 2016.

During the Review Period, the closing prices of the Shares showed a general downward trend. The highest and lowest closing prices of the Shares as quoted on the Stock Exchange were HK$0.248 recorded on 3 March 2016 and HK$0.096 recorded on 22 December 2016 respectively during the Review Period. The Capitalisation Price is below the closing prices of the Shares as quoted on the Stock Exchange during the entire Review Period.

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LETTER FROM GRAM CAPITAL

Historical trading liquidity of the Shares

The number of trading days, the average daily number of the Shares traded per month, and the respective percentages of the Shares’ monthly trading volume during the Review Period as compared to (i) the total number of issued Shares held by the public as at the Agreement Date; and (ii) the total number of issued Shares as at the Agreement Date, are tabulated as below:

			% of the
			Average	% of the
			Volume to total	Average
		Average daily	number of	Volume to total
		trading	issued Shares	number of
	No. of	volume (the	held by the	issued Shares
	trading days	‘‘Average	public as at the	as at the
	in each	Volume’’)	Agreement	Agreement
Month	month	(Note 1)	Date (Note 2)	Date (Note 3)
		Number of
		Shares	%	%
2016
March	21	20,915,979	0.57	0.41
April	20	7,265,000	0.20	0.14
May	21	6,650,000	0.18	0.13
June	21	3,758,500	0.10	0.07
July	20	3,103,000	0.08	0.06
August	22	7,994,545	0.22	0.16
September	21	2,911,429	0.08	0.06
October	19	3,707,895	0.10	0.07
November	22	2,571,364	0.07	0.05
December	20	5,765,500	0.16	0.11
2017
January	19	20,651,998	0.56	0.40
February	17	8,524,500	0.23	0.17
March (up to and
including the
Agreement
Date)	21	5,384,286	0.15	0.10

Source: the Stock Exchange’s website

Notes:

Trading in the Shares was halted (i) from 17 March 2016 to 20 March 2016 (both days inclusive); and (ii) during the afternoon session on 6 December 2016.

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LETTER FROM GRAM CAPITAL

Based on 3,674,172,640 Shares held by the public as at the Agreement Date.
Based on 5,130,000,000 Shares in issue as at the Agreement Date.

We noted from the above table that the average daily trading volume in the Shares had been thin (below 1% of the total number of issued Shares held by the public as at the Agreement Date) during the Review Period. In light of the thin liquidity of the Shares, it is justifiable for setting the Capitalisation Price at discount to the then market prices of the Shares prior to the Agreement Date in order to encourage Cybernaut to conduct the Loan Capitalisation.

Comparables analysis

As part of our analysis, we have also searched for loan capitalisation by way of new shares issue during the period from 3 January 2017 up to 29 March 2017, being the Agreement Date, as announced by companies listed on the Stock Exchange. However, to our best endeavour and as far as we are aware of, we could not identify any transaction which met the said criteria.

For this reason, we have alternatively identified transactions regarding subscription of new shares under specific mandate during the period from 3 January 2017 up to the date of the Capitalisation Agreement as announced by companies listed on the Stock Exchange (the ‘‘Subscription Comparables’’). We consider that a sampling period of approximately three months is adequate and appropriate given that (i) such period is sufficiently recent to demonstrate the prevailing market practices prior to and including the Agreement Date; and (ii) we were able to identify sufficient samples for comparison with such period. To the best of our knowledge and as far as we are aware of, we found 12 transactions which met the said criteria. Although the transaction sizes of the Loan Capitalisation and the Subscription Comparables vary, the Loan Capitalisation and the Subscription Comparables may still subject to certain common pricing factors such as financial performance/position of the subject company and historical trading prices of the subject shares. Accordingly, we consider the Subscription Comparables to be fair and representative samples. Shareholders should note that the businesses, operations and prospects of the Company are not the same as the subject companies of the Subscription Comparables and thus the Subscription Comparables are only used to provide a general

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LETTER FROM GRAM CAPITAL

reference for the recent common market practice of Hong Kong listed companies in the subscription of new shares under specific mandate. Summarised below is our relevant findings:

						Premium/
						(Discount) of the
					Dilution impact	subscription price
					of the existing	over/(to) closing
					public	price per share
					shareholders (as	on the last
					illustrated by the	trading day prior
					change in	to announcement/
			Connected		approximate	the date of
			transaction/		percentage of	agreement in
			Involved		shareholding held	relation to the
			subscription		by the existing	respective
		Date of	by connected		public	subscription of
Company name	Stock code	announcement	person	Gross proceed	shareholders)	shares
				Approximate		%
				HK$ million
China Oil Gangran Energy	8132	4 January	Yes	70.70	From 99.82% to	(12.17)
Group Holdings Ltd.		2017			88.14%
Addchance Holdings Ltd.	3344	6 January	No	200.00 to	From 99.10% to	(91.70)
		2017		364.00	15.55%
Ground International	989	9 January	No	565.74	From 26.09% to	(20.00)
Development Ltd.		2017			21.65%
Huarong Investment Stock	2277	12 January	Yes	232.00	From 55.82% to	(73.15)
Corporation Ltd.		2017			37.99%
National Arts Entertainment	8228	20 January	Yes	25.00	From 65.74% to	0.90
and Culture Group Ltd.		2017			58.42%
SMI Culture & Travel Group	2366	24 January	Yes	250.00	From 35.42% to	(12.50)
Holdings Ltd.		2017			25.04%
Runway Global Holdings	1520	15 February	No	204.68	From 58.51% to	(70.25)
Company Limited		2017			28.74%
C Cheng Holdings Limited	1486	24 February	No	158.20	From 28.60% to	(36.83)
		2017			20.35%
Skyway Securities Group	1141	8 March 2017	No	862.40	From 63.88% to	(89.84)
Limited					25.43%
Jinchuan Group International	2362	20 March 2017	No	386.40	From 25.00% to	(31.62)
Resources Co. Ltd.					22.50%
Flyke International Holdings	1998	20 March 2017	No	25.00	Undeterminable as	(74.08)
Ltd.					the transaction is
					associated with
					certain
					transactions with
					dilution impact
Jutal Offshore Oil Services	3303	21 March 2017	No	964.00	From 48.91% to	(40.00)
Limited					24.40%
Maximum						0.90
Minimum						(91.70)
Average						(45.94)
Median						(38.42)
The Loan Capitalisation		29 March	Yes	136.00 (Note)	From 71.62% to	(24.50)
		2017			53.80%

Source: the Stock Exchange’s website

Note: The transaction size of the Loan Capitalisation is HK$136 million. There will not be any cash proceed generated from the Loan Capitalisation.

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LETTER FROM GRAM CAPITAL

As shown by the above table, the subscription prices of the Subscription Comparables ranged from a discount of approximately 91.70% to a premium of approximately 0.90% to the respective closing prices of their shares on the last trading days prior to/on the date of the announcements/agreement in relation to the relevant share subscription (the ‘‘Market Range’’), with an average of a discount of approximately 45.94% and a median of a discount of approximately 38.42%. The Agreement Date Discount of approximately 24.5% is thus within the Market Range and lower than the average discount and the median discount of the Subscription Comparables.

Although the Capitalisation Price is below the closing prices of the Shares as quoted on the Stock Exchange during the entire Review Period, having taken into account,

(i) that the Agreement Date Discount of Capitalisation Price is within the Market Range and lower than the average discount of the Subscription Comparables;
(ii) that in light of the thin liquidity of the Shares, it is justifiable for setting the Capitalisation Price at discount to the then market prices of the Shares prior to the Agreement Date in order to encourage Cybernaut to conduct the Loan Capitalisation; and
(iii) the Going Concern Uncertainty,

we consider that the Capitalisation Price is fair and reasonable so far as the Independent Shareholders are concerned.

The lock-up undertaking

The Directors are of the view that the lock-up undertaking would limit the negative impact of the issuance of Capitalisation Shares on the existing market price of the Shares.

Having considered the above, we are of the view that the terms of the Capitalisation Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM GRAM CAPITAL

Effect on the shareholding structure of the Company

As depicted by the shareholding table under the section headed ‘‘6. EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY’’ of the Board Letter, upon Completion, the shareholding interests of the existing public Shareholders would be diluted by approximately 17.82 percent point. Nonetheless, in view of (i) the reasons for and the possible benefits of the Loan Capitalisation (including the improvement of the financial position of the Group as demonstrated under the section headed ‘‘Possible financial effects of the Loan Capitalisation’’ below); and (ii) the terms of the Capitalisation Agreement being fair and reasonable, we are of the view that the aforementioned levels of dilution to the shareholding interests of the existing public Shareholders are acceptable.

Possible financial effects of the Loan Capitalisation

Based on the 2016 Annual Report, (i) the audited consolidated net asset value (‘‘NAV’’) of the Group was approximately HK$310.28 million as at 31 December 2016; and (ii) the gearing ratio of the Group (calculated as a ratio of total liabilities to total assets) was approximately 57% as at 31 December 2016.

As confirmed by the Directors, given that there will not be any cash proceed generated from the Loan Capitalisation, the Group’s total assets will not be materially affected and the Group’s total liabilities will decrease as a result of the Loan Capitalisation. Hence, the NAV of the Group will increase and the gearing ratio of the Group will reduce as a result of the Loan Capitalisation.

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

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that, although the Loan Capitalisation is not conducted in the Company’s ordinary and usual course of business, (i) the terms of the Capitalisation Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Loan Capitalisation is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM to approve the Capitalisation Agreement and the transactions contemplated thereunder and we recommend the Independent Shareholders to vote in favour of the resolution(s) in this regard.

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

Note: Mr. Graham Lam is a licensed person registered with the Securities and Futures Commission and a responsible officer of Gram Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. He has over 20 years of experience in investment banking industry.

– 29 –

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 facts the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interest or short position in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (i) 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 the interests and short positions, if any, which they were taken or deemed to have under such provisions of the SFO); (ii) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to in such provisions of the SFO; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules to be notified to the Company and the Stock Exchange.

3. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, none of the Directors and their respective close associates were considered to have interests in businesses apart from the Group’s businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

4. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

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

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 2016 (being the date to which the latest published audited accounts of the Group were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation (other than statutory compensation).

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GENERAL INFORMATION

APPENDIX I

6. EXPERT AND CONSENT

(a) The following is the qualification of Gram Capital to the Independent Board Committee and the Independent Shareholders and the opinion or advice given by Gram Capital is contained in this circular:

Name

Qualification

Gram Capital Limited

a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO

(b) As at the Latest Practicable Date, Gram Capital does not have any shareholding, direct or indirect, in any member of the Company and its subsidiaries or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Company and its subsidiaries.
(c) As at the Latest Practicable Date, Gram Capital was not interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2016, being the date to which the latest published audited accounts of the Company were made up.
(d) Gram Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated 22 May 2017 and references to its name in the form and context in which they appear.

7. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2016, being the date to which the latest published audited accounts of the Company were made up.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Suite No. 1B on 9/F, Tower 1, China Hong Kong City, 33 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong from the date of this circular up to and including the date of the EGM:

(i) the Capitalisation Agreement;
(ii) the Loan Agreement;
(iii) the Supplemental Agreement; and
(iv) the amended and restated Loan Agreement.

– 31 –

NOTICE OF EGM

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利海資源國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00195)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (‘‘EGM’’) of L’sea Resources International Holdings Limited (the ‘‘Company’’) will be held at Fuchsia and Ocher Room, 3/F, Gateway Hotel, 13 Canton Road, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong on Tuesday, 6 June 2017 at 9:00 a.m. for the purpose of considering and, if thought fit, passing, with or without amendments, the following resolution as an ordinary resolution of the Company.

ORDINARY RESOLUTION

‘‘THAT

(i) the conditional capitalisation agreement (the ‘‘Capitalisation Agreement’’) dated 29 March 2017 and entered into between the Company and Cybernaut Greentech Investment Holding (HK) Limited (‘‘Cybernaut’’) in relation to the capitalisation of an outstanding principal sum of a loan in the amount of HK$136,000,000 owed by the Company to Cybernaut by way of allotment and issue of 1,700,000,000 new shares of the Company (the ‘‘Capitalisation Shares’’) to Cybernaut at the capitalisation price of HK$0.08 per Capitalisation Share (copy of which is produced to the Meeting marked ‘‘A’’ and signed by the Chairman of the Meeting for the purpose of identification), and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(ii) subject to the satisfaction of the conditions precedent set out in the Capitalisation Agreement, the allotment and issue of the Capitalisation Shares in accordance with the terms and conditions of the Capitalisation Agreement be and are hereby approved;
(iii) the directors of the Company (the ‘‘Directors’’) be and are hereby granted a specific mandate (the ‘‘Specific Mandate’’) to exercise the powers of the Company to allot and issue the Capitalisation Shares to Cybernaut in accordance with the terms and conditions of the Capitalisation Agreement, where such Capitalisation Shares shall rank equally in all respects among themselves and with all fully paid ordinary shares of the Company in issue as at the date of allotment and issue. The Specific Mandate is in addition to, and

– 32 –

NOTICE OF EGM

shall not prejudice nor revoke any general or specific mandate(s) which has/have been granted or may from time to time be granted to the Directors prior to the passing of this resolution; and

(iv) any Director be and is hereby authorised to do such acts and things, to sign and execute all such further documents (in case of execution of documents under seal, to do so by any two Directors or any Director together with the secretary of the Company) and to take such steps as he may consider necessary, appropriate, desirable or expedient to give effect to or in connection with the Capitalisation Agreement or any transactions contemplated thereunder and all other matters incidental thereto or in connection therewith, and to agree to and make such variations, amendments or waivers of any of the matters relating thereto or in connection therewith.’’

By Order of the board of Directors of L’sea Resources International Holdings Limited NIE Dong Executive Director and Chief Executive Officer

Hong Kong, 22 May 2017

As at the date of this notice, the board of Directors comprises the following:

Executive Directors:

Mr. NIE Dong Mr. CHEUNG Wai Kuen Mr. WANG Chuanhu Dr. SHI Simon Hao

Independent Non-Executive Directors:

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

Mr. CHI Chi Hung, Kenneth

Mr. DENG Shichuan

Mr. James MUNN

Principal place of business in Hong Kong: Suite No. 1B on 9/F, Tower 1 China Hong Kong City 33 Canton Road Tsim Sha Tsui, Kowloon Hong Kong

Notes:

(1) A member of the Company entitled to attend and vote at the aforesaid meeting is entitled to appoint one or (if holding two or more shares) more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

– 33 –

NOTICE OF EGM

(2) Where there are joint holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at the meeting the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
(3) To be valid, the form of proxy together with any power of attorney or other authority under which it is signed or a certified copy of that power of attorney or authority must be deposited with the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 48 hours before the time fixed for holding the meeting or any adjournment thereof.
(4) Pursuant to the articles of association of the Company, the Chairman of the meeting will demand a poll on the resolution(s) set out in this notice put to the vote at the meeting.
(5) For the purpose of determining the entitlement of the members to attend and vote at the extraordinary general meeting, the register of members of the Company will be closed from Thursday, 1 June to Tuesday, 6 June 2017, both days inclusive, during which period no transfer of shares of the Company will be registered. Members whose names appear on the register of members of the Company at the close of business on Wednesday, 31 May 2017 will be entitled to attend and vote at the extraordinary general meeting. All transfers of shares accompanied by the relevant share certificates and the appropriate transfer forms must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, for registration not later than 4:30 pm on Wednesday, 31 May 2017.

– 34 –

AI assistant

Greentech Technology International Limited — Proxy Solicitation & Information Statement 2017

49024_rns_2017-05-21_068ac2cf-0e73-4f7e-a6c5-216bf23bacf7.pdf

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED

利 海 資 源 國 際 控 股 有 限 公 司

(1) LOAN CAPITALISATION AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利 海 資 源 國 際 控 股 有 限 公 司

Independent Non-Executive Directors:

Principal place of business in Hong Kong:

To the Shareholders

(1) LOAN CAPITALISATION AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

2. BACKGROUND TO THE ENTERING INTO OF THE CAPITALISATION AGREEMENT

Possible Subscription

Loan Agreement

Supplemental Agreement to Loan Agreement

3. CAPITALISATION AGREEMENT

Capitalisation Shares

Capitalisation Price

Conditions of the Capitalisation Agreement

Completion

Ranking of the Capitalisation Shares

Specific Mandate to issue the Capitalisation Shares

Listing

Lock-up Undertaking

4. REASONS FOR THE LOAN CAPITALISATION

LETTER FROM THE BOARD

5. EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

6. EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

7. GENERAL INFORMATION OF THE GROUP

8. GENERAL INFORMATION OF CYBERNAUT

9. LISTING RULES REQUIREMENT

10. EGM

11. RECOMMENDATION

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利 海 資 源 國 際 控 股 有 限 公 司

LOAN CAPITALISATION

Yours faithfully,

LOAN CAPITALISATION

INTRODUCTION

LETTER FROM GRAM CAPITAL

INDEPENDENCE

BASIS OF OUR OPINION

LETTER FROM GRAM CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background and reasons for the Loan Capitalisation

Information of the Group

LETTER FROM GRAM CAPITAL

Information on Cybernaut and the Lender

Reasons for and benefits of the Loan Capitalisation

2. Principal terms of the Capitalisation Agreement

The Capitalisation Price

Historical price of the Shares

LETTER FROM GRAM CAPITAL

Historical trading liquidity of the Shares

Comparables analysis

LETTER FROM GRAM CAPITAL

LETTER FROM GRAM CAPITAL

The lock-up undertaking

Effect on the shareholding structure of the Company

Possible financial effects of the Loan Capitalisation

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

3. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

4. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

5. DIRECTORS’ SERVICE CONTRACTS

6. EXPERT AND CONSENT

Name

Qualification

7. MATERIAL ADVERSE CHANGE

8. DOCUMENTS AVAILABLE FOR INSPECTION

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利 海 資 源 國 際 控 股 有 限 公 司

ORDINARY RESOLUTION

‘‘THAT

By Order of the board of Directors of L’sea Resources International Holdings Limited NIE Dong Executive Director and Chief Executive Officer

Greentech Technology International Limited Proxy Solicitation & Information Statement 2017

利海資源國際控股有限公司

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利海資源國際控股有限公司

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利海資源國際控股有限公司

L’SEA RESOURCES INTERNATIONAL HOLDINGS LIMITED 利海資源國際控股有限公司