Hevol Services Group Co. Limited — Capital/Financing Update 2021

Jan 14, 2021

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

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

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6093)

PLACING OF NEW SHARES UNDER GENERAL MANDATE

Placing Agent

CLC Securities Limited

PLACING OF NEW SHARES

On 14 January 2021 (after trading hours) the Company entered into the Placing Agreement with the Placing Agent whereby the Company agreed to place, through the Placing Agent, on a best effort basis, a maximum of 80,000,000 new Shares to not less than six Placees at a Placing Price of HK$2.00 per Placing Share.

The maximum of 80,000,000 Placing Shares represents (i) approximately 16.67% of the issued share capital of the Company of 480,000,000 Shares as at the date of this announcement; and (ii) approximately 14.29% of the issued share capital of the Company of 560,000,000 Shares as enlarged by the issue of the 80,000,000 Placing Shares. The aggregate nominal value of the maximum number of Placing Shares under the Placing will be US$800.

The Placing Price of HK$2.00 per Placing Share represents (i) a discount of approximately 10.31% to the closing price of HK$2.23 per Share as quoted on the Stock Exchange on 14 January 2021, being the date of the Placing Agreement; and (ii) a discount of approximately 8.26% to the average of the closing price of HK$2.18 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the date of Placing Agreement.

The Placing Shares will be issued under the General Mandate and therefore the Placing will not be subject to any Shareholders’ approval.

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On the assumption that all Placing Shares are fully placed, the aggregate gross proceeds and the net proceeds (after deduction of the applicable costs and expenses relating to the Placing) from the Placing will be approximately HK$160,000,000 and HK$157,600,000, respectively. The Company intends to apply such net proceeds for the potential future opportunities of acquiring other property management companies.

Shareholders and potential investors should note that completion of the Placing is subject to fulfillment of the conditions under the Placing Agreement. As the Placing may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

PLACING AGREEMENT

Date

14 January 2021 (after trading hours)

Issuer the Company Placing Agent CLC Securities Limited

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons (as defined under the Listing Rules).

Number of Placing Shares

Pursuant to the Placing Agreement, the Placing Agent agreed to procure, on a best effort basis, not less than six Placees to subscribe for a maximum of 80,000,000 Placing Shares at the Placing Price of HK$2.00 per Share. The maximum of 80,000,000 Placing Shares represents (i) approximately 16.67% of the issued share capital of the Company of 480,000,000 Shares as at the date of this announcement; and (ii) approximately 14.29% of the issued share capital of the Company of 560,000,000 Shares as enlarged by the issue of the 80,000,000 Placing Shares. The aggregate nominal value of the maximum number of Placing Shares under the Placing will be US$800.

Ranking of Placing Shares

The Placing Shares, when issued and fully paid, will rank pari passu among themselves and with the Shares in issue at the time of allotment and issue of the Placing Shares.

Placing Price

The Placing Price of HK$2.00 per Placing Share represents (i) a discount of approximately 10.31% to the closing price of HK$2.23 per Share as quoted on the Stock Exchange on 14 January 2021, being the date of the Placing Agreement; and (ii) a discount of approximately 8.26% to the average closing price of HK$2.18 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the date of Placing Agreement.

The net Placing Price (after deduction of the commissions and expenses relating to the Placing) is approximately HK$1.97 per Placing Share.

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The Placing Price was determined after arm’s length negotiations between the Company and the Placing Agent on the date of the Placing Agreement with reference to the prevailing market price of the Shares.

The Directors, including the independent non-executive Directors, consider that the terms of the Placing Agreement (including the Placing Price and placing commission) are on normal commercial terms and are fair and reasonable and that the Placing is in the interests of the Company and the Shareholders as a whole.

Placees

The Placing Shares will be placed to not less than six Placees, who and whose ultimate beneficial owners are independent institutional, professional and/or individual investors, and not connected with any directors, chief executive or substantial Shareholder (if any) of the Company or its subsidiaries and their respective associates. It is expected that none of the Placees and their respective associates will become a substantial Shareholder of the Company as a result of the Placing.

Condition of the Placing Agreement

Completion of the placing by the Placing Agent of the Placing Shares under the Placing Agreement is conditional upon the Listing Committee of the Stock Exchange granting or agreeing to grant a listing of, and permission to deal in, the Placing Shares.

The Placing Agent and the Company shall use its reasonable endeavours to procure the fulfilment of the condition as set out in the Placing Agreement and in the event the condition is not fulfilled by 16 February 2021 (or such later date as may be agreed between the Company and the Placing Agent), the Placing Agreement shall terminate and all rights, obligations and liabilities of the parties thereunder in relation to the Placing shall be null and void and neither the Company nor the Placing Agent shall have any claim against the other for costs, damages, compensation or otherwise.

Termination and force majeure

The Placing Agent may, after consultation with the Company, terminate the Placing Agreement by notice in writing to the Company at any time up to 8:00 a.m. (Hong Kong time) on the Closing Date if there occurs or comes into force:

• (1) there is any change in national, international, financial, exchange control, political, economic conditions in Hong Kong, which in the reasonable opinion of the Placing Agent, is likely to be materially adverse to the success of the Placing, or is likely to make it impracticable or inadvisable or inexpedient to proceed therewith; or

• (2) there is any breach of the warranties, representations and undertakings given by the Company in the Placing Agreement and such breach is considered by the Placing Agent on reasonable grounds to be material in the context of the Placing; or

• (3) there is any material change (whether or not forming part of a series of changes) in market conditions which, in the reasonable opinion of the Placing Agent, is likely to be materially adverse to the success of the Placing, or is likely to make it impracticable or inadvisable or inexpedient to proceed therewith;

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then and in any such case, the Placing Agent may terminate the Placing Agreement without liability to the Company by giving notice in writing to the Company, provided that such notice is received prior to 8:00 a.m. (Hong Kong time) on the Closing Date.

Completion

Completion shall take place at 4:00 p.m. (Hong Kong time) at the office of the Placing Agent on the fourth Business Day after the date on which all the condition as set out in the paragraph headed “Condition” in the Placing Agreement are satisfied or such other date as the Company and the Placing Agent may agree in writing.

Placing commission

The Placing Agent shall receive a placing commission of 1.5% of the aggregate Placing Price of the Placing Shares successfully placed by the Placing Agent on behalf of the Company in pursuance of its obligations in the Placing Agreement. The placing commission was determined after arm’s length negotiations between the Company and the Placing Agent with reference to the market rate.

General Mandate

The maximum of 80,000,000 Placing Shares will be issued under the General Mandate. Accordingly, the issue of the Placing Shares is not subject to the approval of the Shareholders. Under the General Mandate, the Directors were granted authority to issue up to 80,000,000 Shares, representing 20% of the issued share capital of the Company as at the date of passing the resolution with respect to the General Mandate. Up to the date of this announcement, no Share has been issued under the General Mandate.

The Placing Shares will be allotted and issued under the General Mandate which remained unutilised as at the date of this announcement. Since the grant of the General Mandate, the Directors have not exercised their powers to allot and issue any new Shares pursuant to the General Mandate. Accordingly, the issue of the Placing Shares will fall within the limit of the General Mandate and will not be subject to approval by the Shareholders.

Immediately upon the completion of the Placing, approximately 80,000,000 Shares under the General Mandate will be utilised.

Application for Listing

The Company will apply to the Listing Committee of the Stock Exchange for the grant of the listing of, and permission to deal in, the Placing Shares.

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EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY

The existing shareholding structure of the Company and the effect on the shareholding structure of the Company upon completion of the Placing are set out below.

	(i) As at date	(i) As at date	(ii) Immediately	upon completion
	of this announcement		of the	Placing
		Approximate %		Approximate %
	Number of	of total Shares	Number of	of total Shares
	Shares held	in issue	Shares held	in issue
Brilliant Brother Group
Limited (Note)	286,439,934	59.67%	286,439,934	51.15%
The Placees	–	–	80,000,000	14.29%
Other public shareholders	193,560,066	40.33%	193,560,066	34.56%
Total	480,000,000	100.00%	560,000,000	100.00%

Note:

1. The entire issued share capital of Brilliant Brother Group Limited is held by Mr. Liu Jiang, a non-executive Director.

REASONS FOR THE PLACING AND USE OF PROCEEDS

The Directors are of the view that the Placing can raise further capital for potential opportunities of acquiring other property management companies. The Placing also represents a good opportunity to broaden the Shareholders’ base and the capital base of the Company. The Directors consider that the Placing is in the interest of the Company and the Shareholders as a whole.

On the assumption that all Placing Shares are fully placed, the aggregate gross proceeds and the net proceeds (after deduction of the applicable costs and expenses relating to the Placing) from the Placing will be approximately HK$160,000,000 and HK$157,600,000 respectively. The Company intends to fully apply such net proceeds for the acquisition other property management companies.

The Directors believe the continual expansion of management scale is the core development strategy of the Group. The Group intends to acquire property management companies with influential power within the region, create a strategic roadmap, and quickly fill the focal empty spots in the market. The Group will continue to seek merger and acquisition business opportunities with high quality property management companies in order to further enhance the overall competitiveness of the Group.

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EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Apart from the fund raising activities mentioned below, the Company had not conducted any equity fund raising activities in the past twelve months immediately preceding the date of this announcement:

Date of		Fund Raising	Net Proceeds raised	Intended use of
announcement	Completion Date	Activities	(approximately)	proceeds	Actual use of proceeds
15 June 2020	24 June 2020	Placing of new shares	HK$100,864,000	(i) strengthen the	Approximately (i) HK$65.34
		under the general		financial position	million was utilised for
		mandate		of the Group;	acquisition other property
					management companies; (ii)
				(ii) raise further	HK$4.65 million was utilised
				capital for future	for general working capital;
				investment; and	and (iii) HK$30.87 million
					will be used for settlement
				(iii) provide general	of acquisition of Sichuan
				working capital	Wansheng and will be paid
				for the Group.	by 28 February 2021.

GENERAL

The Placing Shares will be issued under the General Mandate and therefore the Placing will not be subject to any Shareholders’ approval.

Shareholders and potential investors should note that completion of the Placing is subject to fulfillment of the conditions under the Placing Agreement. As the Placing may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings when used herein:

“Board” the board of Directors “Business Day” any day (excluding Saturdays, Sundays and public holidays) on which commercial banks generally are open for business in Hong Kong

“Closing Date” the date of completion of the Placing which will take place on the fourth Business Day after the fulfillment of the condition of Placing, or such other date as the Company and the Placing Agent may agree in writing but in any event no later than 16 February 2021

“Company” Hevol Services Group Co. Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed and traded on the Main Board of the Stock Exchange

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“Director(s)” the director(s) of the Company “General Mandate” the general mandate granted to the Board pursuant to the resolution passed by the Shareholders on 19 June 2020 to allot, issue and deal with up to 20% of the issued share capital of the Company (being 80,000,000 Shares) as at the date of passing such resolution “Group” the Company and its subsidiaries, from time to time “Hong Kong” the Hong Kong Special Administrative Region of the PRC “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Main Board” means the Main Board of the Stock Exchange “Placee(s)” any independent institutional, professional and/or individual investors who are not connected with any directors, chief executive or substantial Shareholder(s) (if any) of the Company or its subsidiaries and their respective associates “Placing” the placing of a maximum of 80,000,000 Placing Shares on a best effort basis pursuant to the terms and conditions of the Placing Agreement “Placing Agent” CLC Securities Limited, a licensed corporation to carry on business in Type 1 (dealing in securities), Type 2 (dealing in future contracts), Type 4 (advising on securities) and Type 5 (advising on future contracts) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Placing Agreement” the placing agreement entered into between the Company and the Placing Agent dated 14 January 2021 in respect of the Placing “Placing Price” HK$2.00 per Placing Share (excluding any SFC transaction levy, Stock Exchange trading fee and other fees or levies as may be payable by the Placees) “Placing Share(s)” a maximum of 80,000,000 Shares to be issued pursuant to the Placing Agreement “PRC” the People’s Republic of China, for the purposes of this announcement, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan “Share(s)” ordinary share(s) of US$0.00001 each in the share capital of the Company

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“Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Sichuan Wansheng” Sichuan Wansheng Property Service Co., Ltd.* ( 四川萬晟物業服務有 限公司 ), a company established under the laws of the PRC with limited liability

“US$” United States Dollars, the lawful currency of the United States of America “%” per cent

By order of the Board

Hevol Services Group Co. Limited Wang Wenhao Executive Director

Hong Kong, 14 January 2021

As at the date of this announcement, the Board comprises two executive Directors, namely Ms. Hu Hongfang and Mr. Wang Wenhao, two non-executive Directors, namely Mr. Liu Jiang and Mr. Zhou Wei, and four independent non-executive Directors, namely Dr. Chen Lei, Mr. Fan Chi Chiu, Dr. Li Yongrui and Mr. Qian Hongji.

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