HG Semiconductor Limited

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 disclaims 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 the securities of the Company.

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宏光半導體有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6908)

(I) PLACING OF NEW SHARES UNDER GENERAL MANDATE; (II) POSSIBLE ISSUE OF NEW SHARES AND WARRANTS UNDER SPECIFIC MANDATE; AND

(III) RESUMPTION OF TRADING

Placing Agent

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VC Brokerage Limited

(I) THE PLACING

On 4 August 2022 (after the morning trading session but before commencement of the afternoon trading session), the Placing Agent and the Company entered into the Placing Agreement pursuant to which the Company has conditionally agreed to place, through the Placing Agent, on a best effort basis, maximum of 30,000,000 Placing Shares to Placees who and whose ultimate beneficial owners will be third parties independent of the Company and not connected with the Company and its connected persons.

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As at the date of this announcement, the Company has 563,591,000 Shares in issue. The maximum of 30,000,000 Placing Shares represent (i) approximately 5.32% of the existing issued share capital of the Company as at the date of this announcement; (ii) approximately 5.05% of the issued share capital of the Company as enlarged by the allotment and issue of the 30,000,000 Placing Shares; (iii) approximately 4.59% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and the Subscription Shares; and (iv) approximately 4.20% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares, the Subscription Shares and the Warrant Shares. The Placing Shares will be allotted and issued pursuant to the General Mandate and therefore the allotment and issue of the Placing Shares will not be subject to any Shareholders’ approval.

The Placing Price of HK$3.20 represents (i) a discount of approximately 10.86% to the closing price of HK$3.59 per Share as quoted on the Stock Exchange on the last trading day prior to the date of the Placing Agreement; and (ii) a discount of approximately 10.61% to the average closing price of HK$3.58 per Share as quoted on the Stock Exchange for the last five trading days prior to the date of the Placing Agreement.

The maximum gross proceeds from the Placing will be HK$96 million. The maximum net proceeds from the Placing (after deducting the placing commission for the Placing and other relevant expenses) will amount to approximately HK$93.6 million which is intended to be used for the purposes as further disclosed under the section ‘‘USE OF PROCEEDS FROM THE PLACING’’ in this announcement.

The Placing is conditional upon, among other things, the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Placing Shares.

As the completion of the Placing is subject to satisfaction of the conditions in the Placing Agreement, the Placing may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

(II) POSSIBLE ISSUE OF NEW SHARES AND UNLISTED WARRANTS

On 4 August 2022 (after the morning trading session but before commencement of the afternoon trading session), the Company and the Investor entered into the Investment Agreement in relation to the (i) possible issue of new Shares under specific mandate; and (ii) possible issue of unlisted warrants under specific mandate, pursuant to which the Company has conditionally agreed to issue, and the Investor has conditionally agreed to subscribe for, 60,000,000 Subscription Shares and 60,000,000 Warrants.

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In regard to the Shares Subscription and the Warrants Subscription, the Company and the Investor have agreed that the Investor will conduct the DD examinations within 45 days commencing on the date of the Investment Agreement. If the results of the DD examinations is to the satisfaction of the Investor, the Investor (through his designated beneficially owned entity, Profit Act Limited) will participate in the Shares Subscription and the Warrants Subscription.

The Investor and the Company shall enter into the Formal Subscription Agreement thereon according to the Investment Agreement.

In regard to the Shares Subscription and the Warrants Subscription, the Company and the Investor have agreed to use their best endeavours to fulfil all the conditions precedent and complete the Shares Subscription and the Warrants Subscription within 4 months from the date of the Investment Agreement.

Caution

Subject to satisfaction of the DD examinations as mentioned in the Investment Agreement, the Shares Subscription and the Warrants Subscription may or may not materialise. In the event that the Shares Subscription and the Warrants Subscription are materialised, and the Formal Subscription Agreement is entered into between the Company and the Investor, further announcement(s) will be made by the Company in accordance with all applicable requirements of the Listing Rules as and when appropriate. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

(III) RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange has been halted with effect from 1:00 p.m. on 4 August 2022 pending release of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 a.m. on 8 August 2022.

(I) THE PLACING

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THE PLACING AGREEMENT

Date

4 August 2022 (after the morning trading session but before commencement of the afternoon trading session)

Issuer

The Company

Placing Agent and Placing

The Placing Agent has conditionally agreed to place a maximum of 30,000,000 Placing Shares on a best effort basis and will receive a placing commission of 2.5% of the aggregate amount of the Placing Price multiplied by the number of Placing Shares placed by the Placing Agent during the Placing Period. Having considered the Placing Price, the number of Placing Shares, the terms of the Placing and the current market conditions, the Directors are of the view that the placing commission of 2.5% is fair and reasonable.

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.

Placees

The Placing Agent will, on a best effort basis, place the Placing Shares to not fewer than six Placees who and whose ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons.

Number of Placing Shares

As at the date of this announcement, the Company has 563,591,000 Shares in issue. The maximum of 30,000,000 Placing Shares represent (i) approximately 5.32% of the existing issued share capital of the Company as at the date of this announcement; (ii) approximately 5.05% of the issued share capital of the Company as enlarged by the allotment and issue of the 30,000,000 Placing Shares; (iii) approximately 4.59% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and the Subscription Shares; and (iv) approximately 4.20% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares, the Subscription Shares and the Warrant Shares. The aggregate nominal value of the maximum number of Placing Shares under the Placing will be HK$300,000.

Ranking of Placing Shares

The Placing Shares under the Placing will rank, upon issue, pari passu in all respects with the Shares in issue on the date of allotment and issue of the Placing Shares.

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Placing Price

The Placing Price was determined with reference to the prevailing market price of the Shares and was negotiated on an arm’s length basis between the Company and the Placing Agent. The Directors consider that the terms of the Placing Agreement (including the Placing Price) are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

General Mandate

The maximum of 30,000,000 Placing Shares will be allotted and issued under the General Mandate. Accordingly, the allotment and issue of the Placing Shares will not be subject to the approval of the Shareholders. Under the General Mandate, the Directors were granted authority to issue up to 112,718,200 Shares, representing 20% of the issued share capital of the Company as at the date of the AGM. Up to the date of this announcement, the Company has not utilised the General Mandate.

Conditions precedent of the Placing

Completion of the Placing shall be conditional upon the satisfaction or fulfilment of the conditions precedent below:

(a) the Company having complied with, and procured for the compliance with, all law as well as all conditions (if any) imposed by the Stock Exchange or by any other competent authority for issuance and allotment of the Placing Shares as well as the listing of and permission to deal in the Placing Shares and ensure the continued compliance thereof;
(b) the Listing Committee having granted approval for the listing of, and permission to deal in, the Placing Shares, and such approval not having been revoked, suspended, withdrawn or cancelled, or threatened with any revocation, suspension, withdrawal or cancellation at any time prior to the Closing Date; and
(c) the Company’s representations and warranties made pursuant to the Placing Agreement being true and accurate in all material respects and not misleading up to the completion of the Placing.

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The conditions precedent (a) and (b) above cannot be waived by the Company and the Placing Agent. The Placing Agent (but not the Company) may at any time unilaterally waive the condition precedent (c) above. As soon as practicable after the execution of the Placing Agreement and in any event, by the Closing Date, the Company shall use its best endeavours to procure the satisfaction of the conditions precedent (a) and (b) as well as the condition precedent (c) above (in case the condition precedent (c) above has not been waived by the Placing Agent).

If any one or more of the conditions precedent shall not have been satisfied or fulfilled by the Closing Date or any of the event as set out in the section headed ‘‘Termination of the Placing’’ below shall have occurred, subject to the Placing Agreement, all obligations and responsibilities of the Placing Agent and those of the Company thereunder shall cease and determine forthwith and none of the Company and the Placing Agent shall have any claim whatsoever against each other in relation thereto save for any antecedent breach of the Placing Agreement and without prejudice to the accrued rights and liabilities of each of the Company and the Placing Agent.

Termination of the Placing

If at any time between the execution of the Placing Agreement and at 5:00 p.m. on the Business Day immediately prior to the Completion Date, there occurs:

(1) the introduction of any new law or regulation or any change in existing laws or regulations (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the reasonable opinion of the Placing Agent, materially and adversely affect the business or the financial or trading position or prospects of the Company;
(2) the occurrence of any local, national or international event or change occurring after the date of the Placing Agreement of a political, military, financial, economic, currency (including a change in the system under which the value of the Hong Kong currency is linked to the currency of the United States of America) or other nature (whether or not sui generis with any of the foregoing), or in the nature of any local, national, international outbreak or escalation of hostilities or armed conflict, or affecting local securities market or the occurrence of any combination of circumstances which may, in the reasonable opinion of the Placing Agent, materially and adversely affect the business or the financial or trading position or prospects of the Company or adversely prejudices the success of the Placing (such success being the completion of the placing of the Placing Shares to potential investor(s)) or otherwise makes it inexpedient or inadvisable for the Company or the Placing Agent to proceed with the Placing;
(3) any change in market conditions or combination of circumstances in Hong Kong (including without limitation suspension or material restriction on trading in securities) occurs after the date of the Placing Agreement which materially and adversely affects the success of the Placing (such success being the completion of the placing of the Placing Shares to potential investor(s)) or otherwise in the reasonable opinion of the Placing Agent make it inexpedient or inadvisable or inappropriate for the Company or the Placing Agent to proceed with the Placing;

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(4) the Company commits any material breach of or omits or fails to observe any of its obligations or undertakings under the Placing Agreement; or
(5) any of the representations or warranties contained in the Placing Agreement was, when given or deemed to be repeated under the Placing Agreement, untrue or inaccurate in any material respect or would in any material respect be untrue or inaccurate, or if repeated the Placing Agent shall determine in its reasonable opinion that any such untrue representation or warranty represents or is likely to represent a material adverse change in the financial or trading position or prospects of the Company or will otherwise likely to have a material prejudicial effect on the Placing,

then the Placing Agent may upon giving written notice to the Company terminate the Placing Agreement with immediate effect. If the Placing Agreement shall be terminated pursuant to the above, the obligations of the Placing Agent shall cease and determine, and the Company shall not be liable to pay any commission, and the Placing Agreement shall forthwith cease and determine and none of the Company and the Placing Agent shall have any claim against each other for compensation, costs, damages or otherwise.

Completion of the Placing

Completion of the Placing will take place on the Completion Date.

REASONS FOR AND BENEFITS OF THE PLACING

The Directors consider that the Placing represents a good opportunity for the Company to raise additional capital for the Group’s operation and business development. In particular, as further disclosed under the section ‘‘USE OF PROCEEDS FROM THE PLACING’’ in this announcement, it is expected that the proceeds from the Placing will be used to strengthen the Group’s research and development capabilities, in particular, GaN technology and provide general working capital to meet the needs of its business development plan.

The Directors (including all the non-executive Directors and independent non-executive Directors) consider that the terms of the Placing Agreement, which were arrived at after arm’s length negotiations between the Company and the Placing Agent, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

USE OF PROCEEDS FROM THE PLACING

The maximum gross proceeds from the Placing will be HK$96 million. The maximum net proceeds (after deducting the placing commission for the Placing and other relevant expenses) from the Placing will amount to approximately HK$93.6 million. The maximum net price raised per Placing Share upon the completion of the Placing will be approximately HK$3.12 per Placing Share.

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The Group proposes to use the proceeds from the Placing as follows:

(i) as to approximately HK$78 million for strengthening research and development capabilities of LED, Mini LED, fast charging, GaN devices and related semiconductor products, which includes setting up of research and development centers, recruitment of research and development professionals, and the procurement of equipments and materials with an aim to develop and/or capture patent and technology; and
(ii) as to approximately HK$15.6 million for provision of general working capital and improving the financial position of the Group.

(II) POSSIBLE ISSUE OF NEW SHARES AND UNLISTED WARRANTS

On 4 August 2022 (after the morning trading session but before commencement of the afternoon trading session), the Company and the Investor entered into the Investment Agreement in relation to the (i) possible issue of new Shares under specific mandate; and (ii) possible issue of unlisted warrants under specific mandate, pursuant to which the Company has conditionally agreed to allot and issue, and the Investor has conditionally agreed to subscribe for, 60,000,000 Subscription Shares and 60,000,000 Warrants.

In regard to the Shares Subscription and the Warrants Subscription, the Company and the Investor have agreed that the Investor will conduct due diligence examinations on the Company regarding its business, financial, and legal aspects etc. (the ‘‘DD examinations’’) within 45 days commencing on the date of the Investment Agreement. If the results of the DD examinations is to the satisfaction of the Investor, the Investor (through his designated beneficially owned entity, Profit Act Limited) will participate in the Shares Subscription and the Warrants Subscription.

The Investor and the Company shall enter into the Formal Subscription Agreement thereon according to the Investment Agreement.

Caution

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THE INVESTMENT AGREEMENT

(A) Shares Subscription

The principal terms of the Shares Subscription are summarised below:

Date : 4 August 2022 (after the morning trading session but before commencement of the afternoon trading session)
Issuer : the Company

Subscriber : Profit Act Limited, an entity indirect wholly-owned by the Investor

Shares Subscription Price

The Shares Subscription Price of HK$3.00 per Subscription Share represents:

(i) a discount of approximately 16.43% to the closing price of HK$3.59 as quoted on the Stock Exchange on the last trading day prior to the date of the Investment Agreement; and
(ii) a discount of approximately 16.20% to the average closing price of HK$3.58 as quoted on the Stock Exchange for the last five trading days prior to the date of the Investment Agreement.

The Shares Subscription Price was determined with reference to the prevailing market price of the Shares and was negotiated on an arm’s length basis between the Company and the Investor. The Directors consider that the terms of the Shares Subscription Price is fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

Number of Subscription Shares

The 60,000,000 Subscription Shares represent:

(i) approximately 10.65% of the existing issued share capital of the Company as at the date of this announcement;
(ii) approximately 9.62% of the issued share capital of the Company as enlarged by the allotment and issue of the 60,000,000 Subscription Shares;
(iii) approximately 8.78% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and the Warrant Shares; and

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(iv) approximately 8.41% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares, the Warrant Shares and the Placing Shares.

The aggregate nominal value of the number of Subscription Shares will be HK$600,000.

Conditions precedent of the Shares Subscription

(a) the Shareholders having granted approval for the Shares Subscription and the transactions contemplated thereunder and other arrangements (if necessary) at the EGM, including the granting of the Shares Specific Mandate to the Directors to allot and issue the Subscription Shares; and
(b) the Listing Committee having granted approval for the listing of, and permission to deal in, the Subscription Shares, and such approval not having been revoked or withdrawn at any time prior to the completion of the Shares Subscription.

Lock-up period

The Subscription Shares cannot be sold or transferred for 18 months commencing on the date of issuing the Subscription Shares.

Shares Specific Mandate

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

Listing Application

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

(B) Warrants Subscription

The principal terms of the issue of unlisted Warrants are summarised below:

Date : 4 August 2022 (after the morning trading session but before commencement of the afternoon trading session)
Issuer : the Company Subscriber : Profit Act Limited, an entity indirect wholly-owned by the Investor

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Number of Warrants : 60,000,000 Warrants, upon full exercise of the Warrants, a total of to be issued 60,000,000 Warrant Shares will be issued
Exercise price : HK$3.68 per Warrant Share
Exercise period : the Warrants may be exercised during a period of 18 months commencing on 6 months after the date of the issue of the Warrants
Transferability : subject to the lock-up period and the compliance with the Listing Rules and regulatory requirements, the Warrants are transferable to any person provided that, in the case of an intended transfer to a connected person, such transfer shall comply with the requirements of the Listing Rules and/or the requirements (if any) imposed by the Stock Exchange

Warrants Exercise Price

The subscription price of each Warrant Share upon exercise of the Warrants will be HK$3.68. The Warrant Exercise Price represents:

(i) a premium of approximately 2.51% over the closing price of HK$3.59 per Share as quoted on the Stock Exchange on the last trading day prior to the date of the Investment Agreement; and
(ii) a premium of approximately 2.79% over the average closing price of HK$3.58 per Share as quoted on the Stock Exchange for the last five trading days prior to the date of the Investment Agreement.

The Warrants Exercise Price was determined with reference to the prevailing market price of the Shares and was negotiated on an arm’s length basis between the Company and the Investor. The Directors consider that the terms of the Warrants Exercise Price is fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

Number of Warrant Shares

The 60,000,000 Warrants will be exercisable for an aggregate of 60,000,000 Warrant Shares. The Warrant Shares represent:

(i) approximately 10.65% of the existing issued share capital of the Company as at the date of this announcement;
(ii) approximately 9.62% of the issued share capital of the Company as enlarged by the allotment and issue of the 60,000,000 Warrant Shares;

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(iii) approximately 8.78% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and the Warrant Shares; and
(iv) approximately 8.41% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and the Warrant Shares and the Placing Shares.

The aggregate nominal value of the maximum number of Warrant Shares will be HK$600,000.

Conditions precedent of the Warrants Subscription

(a) the Shareholders having granted approval for the Warrants Subscription and the transactions contemplated thereunder and other arrangements (if necessary) at the EGM, including the granting of the Warrants Specific Mandate to the Directors to allot and issue the Warrant Shares; and
(b) the Listing Committee having granted approval for the listing of, and permission to deal in, the Warrant Shares, and such approval not having been revoked or withdrawn at any time prior to the completion of the issue of the Warrant Shares.

Lock-up period

The Warrant Shares cannot be sold or transferred for 18 months commencing on the date of issuing the Warrant Shares.

Warrants Specific Mandate

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

Listing Application

An application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Warrant Shares on the Stock Exchange. No listing of the Warrants will be sought on the Stock Exchange or any other stock exchanges.

REASONS FOR AND BENEFITS OF THE SHARES SUBSCRIPTION AND THE WARRANTS SUBSCRIPTION

Under the impact of the COVID-19 pandemic, there has been a worldwide shortage of semiconductors as economic recovery is hindered by the disruptions to global supply chains and rising inflation, which thus puts the semiconductor industry in the spotlight. The Group believes that the prospects of manufacturing third-generation semiconductors, in particular, the manufacturing and sales of GaN, are promising and positive. Accordingly, the Directors are of the view that the Shares Subscription and the Warrants Subscription represent a good opportunity for the Company to raise additional capital for the Group’s GaN business development so as to maximise the Group’s revenue.

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Furthermore, with the background of the Investor, it is expected that the Investor can (i) coordinate the resources of the new energy industry and form strategic synergy with the Group’s third-generation semiconductors (especially power chips) to form complementary industrial resources; (ii) use his financial resources and business network in the financial system to assist the Group in the rapid development of production capacity and products; (iii) assist the Group to work closely with local governments to improve the policies and supports for the third-generation semiconductor industry; and (iv) use his own experience in operation and management to assist the Group to build up its talents, operations, technology, research and development.

The Directors (including all the non-executive Directors and independent non-executive Directors) consider that the terms of the Investment Agreement, which were arrived at after arm’s length negotiations between the Company and the Investor, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

USE OF PROCEEDS FROM THE SHARES SUBSCRIPTION AND THE WARRANTS SUBSCRIPTION

The gross and net proceeds from the Shares Subscription (after deduction of relevant costs and expenses) will be approximately HK$180 million. The net price raised per Subscription Share upon the completion of the Shares Subscription will be approximately HK$3.0 per Subscription Share.

Assuming full exercising of the subscription rights attaching to the Warrants, the gross proceeds and the net proceeds (after deduction of relevant costs and expenses) are estimated to be approximately HK$220.8 million. The maximum net price raised per Warrant Share upon full exercise of the subscription rights attaching to the Warrants will be approximately HK$3.68 per Warrant Share.

The Group proposes to use the proceeds from the Shares Subscription and the Warrants Subscription for the development of GaN business of the Group.

INFORMATION ON THE GROUP

The Company is an exempt company incorporated in the Cayman Islands. The Group is principally engaged in the design, development, manufacturing, subcontracting service and sales of semiconductor products, including light-emitting diode beads, GaN chips, GaN components and related application products, and fast charging products in the PRC.

INFORMATION ON THE INVESTOR

The Investor, Mr. Zhu Gongshan, aged 64, is the founder and executive director of GCL Technology Holdings Limited, a company listed on the Stock Exchange (stock code:3800). Mr. Zhu was a member of the 12th National Committee of the Chinese People’s Political Consultative Conference (the ‘‘CPPCC’’) and is currently a member of the 12th Jiangsu Province Committee of the CPPCC, the chairman of Global Green Energy Industry Council, the vice chairman of Global Innovation Centre, the chairman of Asian Photovoltaic Industry Association, the deputy director of the Green and Low Carbon Development Promotion Committee of China Enterprise Confederation, the executive vice president of

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the Energy Storage and Electric Vehicle Branch of China Electricity Council. He concurrently serves as the executive chairman of ICC China Environment and Energy Committee, the vice chairman of China Overseas Chinese Entrepreneurs Association, the vice chairman of China Fortune Foundation Limited, the vice chairman of China Industrial Overseas Development & Planning Association, the vice president of Jiangsu Federation of Industry and Commerce, the honorary chairman of Jiangsu Residents Association in Hong Kong, an executive vice chairman of the Federation of HK Jiangsu Community Organisations, the honorary chairman of Suzhou Federation of Industry and Commerce and the chairman of SNEC Hydrogen Energy Industry Alliance Council. Mr. Zhu has been given the ‘‘New China 70th New Energy Industry 10 Outstanding Contributors’’ award and the medals of ‘‘Chinese Enterprise Reform, Figure of Energy Revolution and Leading Energy Entrepreneur of 40 Years Reform and Opening’’. Mr. Zhu graduated from Nanjing Electric Power College* (南京電力專科學校) in July 1981 and obtained a diploma in electrical automation. He is also the chairman of GCL System Integration Technology Co., Ltd., a company with its shares listed on the Shenzhen Stock Exchange (Stock Code: 002506) and a director of GCL Energy Technology Co. Ltd., a company with its shares listed on the Shenzhen Stock Exchange (Stock Code: 002015).

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Investor is a third party independent of the Company and its connected persons (as defined in the Listing Rules) as at the date of this announcement.

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Save as disclosed below, the Company has not conducted any equity fund raising activities in the past twelve months before the date of this announcement.

					Actual use of proceeds
Date of					as at the date of
announcement	Event	Net proceeds raised	Proposed use of proceeds		this announcement
4 November 2021	Placing of 14,346,000 new	Approximately	(i)	as to approximately HK$64.3	Fully utilised as
	Shares at the placing price	HK$86.2 million		million for strengthening research	intended.
	of HK$6.20 pursuant to			and development capabilities of
	the placing agreement			LED, Mini LED, fast charging,
	entered into between the			GaN devices and related
	Company and VC			semiconductor products, which
	Brokerage Limited as			includes setting up of research and
	placing agent dated 4			development centers, recruitment of
	November 2021			research and development
				professionals, and the procurement
				of equipments and materials with
				an aim to develop and/or capture
				patent and technology; and

(ii) as to approximately HK$21.9 million for provision of general working capital and improving the financial position of the Group

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EFFECTS ON SHAREHOLDING STRUCTURE

The shareholding structure of the Company (i) as at the date of this announcement; (ii) upon completion of the Placing but before completion of the Shares Subscription and Warrants Subscription; (iii) upon completion of the Placing and the Shares Subscription but before completion of the Warrants Subscription; and (iv) upon completion of the Placing, the Shares Subscription and the Warrants Subscription are set out below:

Shareholders Director Mr. Lyu Xiangrong Substantial Shareholders Wide Yield Investment Holding Limited (Note 1) First Global Limited (Note 2) Sub-total Placees Investor Public Shareholders Total	(i) As at the date of this announcement Number of Shares Approximate % 834,000 0.15% 100,500,000 17.83% 100,500,000 17.83% 201,000,000 35.66% — — — — 361,757,000 64.19% 563,591,000 100.00%	(ii) Upon completion of the Placing but before completion of the Shares Subscription and Warrants Subscription Number of Shares Approximate % 834,000 0.14% 100,500,000 16.93% 100,500,000 16.93% 201,000,000 33.86% 30,000,000 5.05% — — 361,757,000 60.95% 593,591,000 100.00%	(iii) Upon completion of the Placing and the Shares Subscription but before completion of the Warrants Subscription Number of Shares Approximate % 834,000 0.13% 100,500,000 15.38% 100,500,000 15.38% 201,000,000 30.75% 30,000,000 4.59% 60,000,000 9.18% 361,757,000 55.35% 653,591,000 100.00%	(iv) Upon completion of the Placing, the Shares Subscription and the Warrants Subscription Number of Shares Approximate % 834,000 0.12% 100,500,000 14.08% 100,500,000 14.08% 201,000,000 28.17% 30,000,000 4.20% 120,000,000 16.82% 361,757,000 50.69% 713,591,000 100.00%	(iv) Upon completion of the Placing, the Shares Subscription and the Warrants Subscription Number of Shares Approximate % 834,000 0.12% 100,500,000 14.08% 100,500,000 14.08% 201,000,000 28.17% 30,000,000 4.20% 120,000,000 16.82% 361,757,000 50.69% 713,591,000 100.00%
					28.17% 4.20% 16.82% 50.69%
					100.00%

Notes:

Wide Yield Investment Holding Limited is wholly owned by Ms. Qin Anqi, and therefore Ms. Qin Anqi is deemed to be interested in the 100,500,000 Shares held by Wide Yield Investment Holding Limited under the SFO.
First Global Limited is wholly owned by Mr. Zhao Yi Wen who is the chairman of the Board, the chief executive officer of the Company and an executive Director, and therefore Mr. Zhao Yi Wen and his spouse Ms. Zhuang Chan Ling are deemed to be interested in the 100,500,000 Shares held by First Global Limited under the SFO.

(III)RESUMPTION OF TRADING

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TERMS AND DEFINITIONS

‘‘AGM’’ the annual general meeting of the Company held on 17 May 2022 ‘‘associate(s)’’ has the meaning ascribed thereto under the Listing Rules ‘‘Board’’ the board of Directors ‘‘Business Day(s)’’ any day (excluding Saturdays, Sundays, public holidays and days on which a tropical cyclone warning No. 8 or above or a ‘‘black rainstorm warning signal’’ is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on which licensed banks generally are open for general banking business in Hong Kong
‘‘Closing Date’’ any Business Day not later than 30 August 2022, being the date on which all the conditions precedent to the Placing Agreement have been satisfied or fulfilled or a subsequent Business Day the Company and the Placing Agent agree to postpone
‘‘Company’’ HG Semiconductor Limited (formerly known as HongGuang Lighting Holdings Company Limited), a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on the Stock Exchange
‘‘Completion Date’’ the date of completion of the Placing, which shall be any Business Day falling within three Business Days after the Closing Date
‘‘connected person(s)’’ the meaning ascribed thereto under the Listing Rules ‘‘Director(s)’’ director(s) of the Company ‘‘EGM’’ the extraordinary general meeting of the Company to be convened for the purpose of considering, among other things, and if thought fit, approving the Formal Subscription Agreement and the transactions contemplated thereunder and the grant of the Shares Specific Mandate and the Warrants Specific Mandate to the Directors
‘‘Formal Subscription the conditional formal subscription agreement to be entered into Agreement’’ between the Company and the Investor in relation to the Shares Subscription and the Warrants Subscription, subject to the satisfaction of the DD examinations as mentioned in the Investment Agreement
‘‘GaN’’ Gallium Nitride

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‘‘General Mandate’’	the general mandate granted to the Directors by the Shareholders at the
	AGM to allot, issue and deal with the Shares with up to 112,718,200
	new ordinary shares to be issued and allotted by the Company
‘‘HK$’’	Hong Kong dollars, the lawful currency of Hong Kong
‘‘Hong Kong’’	Hong Kong Special Administrative Region of the PRC
‘‘Investment Agreement’’	the conditional investment agreement entered into between the
	Company and the Investor dated 4 August 2022 in relation to (i) issue
	of new Shares under specific mandate; and (ii) issue of unlisted
	warrants under specific mandate
‘‘Investor’’	Mr. Zhu Gongshan
‘‘Listing Committee’’	the listing committee appointed by the Stock Exchange for considering
	applications for listing and approving the listing of and dealing with
	securities on the Stock Exchange
‘‘Listing Rules’’	the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Placee(s)’	any individuals, corporate, institutional or other investor(s) procured by
	the Placing Agent to subscribe for any of the Placing Shares pursuant
	to the Placing Agreement
‘‘Placing’’	the placing of up to 30,000,000 new Shares pursuant to the terms of
	the Placing Agreement
‘‘Placing Agent’’	VC Brokerage Limited, a licensed corporation to carry on business in
	Type 1 (dealing in securities) and Type 4 (advising on securities)
	regulated activities under the SFO
‘‘Placing Agreement’’	the conditional placing agreement entered into between the Company
	and the Placing Agent dated 4 August 2022 in relation to the Placing
‘‘Placing Period’’	the period commencing forthwith upon the execution of the Placing
	Agreement and expiring at 5:00 p.m. on 23 August 2022, or on such
	later date as the Company and the Placing Agent may agree in writing
‘‘Placing Price’’	HK$3.20 per Placing Share

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‘‘Placing Share(s)’’	a maximum of 30,000,000 new Shares to be placed pursuant to the
	Placing Agreement
‘‘PRC’’	the People’s Republic of China, for the purpose of this announcement,
	excluding Hong Kong, Macau Special Administrative Region and
	Taiwan
‘‘SFO’’	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
‘‘Share(s)’’	ordinary share(s) of HK$0.01 each in the share capital of the Company
‘‘Shareholder(s)’’	holder(s) of the Share(s)
‘‘Shares Specific Mandate’’	the specific mandate to be sought from the Shareholders at the EGM
	for the allotment and issuance of the Subscription Shares
‘‘Shares Subscription’’	the subscription of the Subscription Shares pursuant to the Formal
	Subscription Agreement under the Shares Specific Mandate
‘‘Shares Subscription Price’’	HK$3.00 per Subscription Share
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Subscription Share(s)’’	the 60,000,000 new Shares to be allotted and issued by the Company
	pursuant to the Formal Subscription Agreement under the Shares
	Specific Mandate
‘‘substantial shareholder(s)’’	has the meaning ascribed thereto under the Listing Rules
‘‘Warrants’’	the 60,000,000 unlisted warrants to be issued by the Company pursuant
	to the Formal Subscription Agreement under the Warrants Specific
	Mandate
‘‘Warrants Exercise Price’’	HK$3.68 per Warrant Share
‘‘Warrant Share(s)’’	up to 60,000,000 new Shares to be allotted and issued by the Company
	upon exercise of the subscription rights attaching to the Warrants in
	full
‘‘Warrants Specific Mandate’’	the specific mandate to be sought from the Shareholders at the EGM
	for the allotment and issuance of the Warrants and the Warrant Shares

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‘‘Warrants Subscription’’

the subscription of the Warrants pursuant to the Formal Subscription Agreement under the Warrants Specific Mandate

‘‘%’’

per cent

By order of the Board