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.

Lopal

龙蟠科技

Jiangsu Lopal Tech. Co., Ltd.

江蘇龍蟠科技股份有限公司

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 2465)

MAJOR TRANSACTION

IN RELATION TO DEEMED DISPOSAL

DEEMED DISPOSAL OF EQUITY INTEREST IN A NON WHOLLY-OWNED SUBSIDIARY

The Board is pleased to announce that on December 20, 2024 (after trading hours), the Company, the Target Company, the Existing Shareholder, and the Investors entered into the Subscription Agreement, pursuant to which INA and Aisis have conditionally agreed to subscribe for, and the Target Company has conditionally agreed to allot and issue to INA and Aisis, the Subscription Shares, representing approximately $34.01\%$ and $11.34\%$ of the enlarged share capital of the Target Company upon Competition, at the Subscription Price of USD150,000,000 and USD50,000,000, respectively.

LIQUIDITY OPTIONS AND CALL OPTION

On December 20, 2024, the Company, the Target Company, the Existing Shareholder, and the Investors have entered into the Shareholders' Agreement, which will take effect on and from the Completion. Pursuant to the Shareholders' Agreement, the Liquidity Options have been granted to each of the Investors separately whereby, if Qualifying IPO is not achieved within 6 years from the Completion, each of the Investors shall be entitled to liquidate its equity interest in the Target Company on the terms and conditions of the Shareholders' Agreement.

Furthermore, pursuant to the Shareholders' Agreement, the Call Option has been granted to the Target Company whereby, if none of the Liquidity Options has been consummated, then following the ninth (9th) anniversary of the Completion, the Target Company shall be entitled to require the Investors to sell all or part of their Target Shares to the Target Company on the terms and conditions of the Shareholders' Agreement.

LISTING RULES IMPLICATIONS

Target Company is a non wholly-owned subsidiary of the Company as at the date of this announcement. It is contemplated that, upon Completion, the Company will hold approximately 64.03% of the equity interest in the Existing Shareholder, which, in turn, will hold 54.65% of the equity interest (compared to 100.00% of the equity interest prior to Completion) in the Target Company. Upon Completion, the Target Company will remain as a subsidiary of the Company and the financial results of the Target Group will continue to be consolidated with the Group. The Subscription, if materialized, will constitute a deemed disposal by the Company under Rule 14.29 of the Listing Rules.

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Subscription exceeds 5% but less than 25%, the Subscription constitute a discloseable transactions of the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirements but is exempted from the Shareholders' approval requirement under the Listing Rules.

Even if the Liquidity Options may not materialize in the future, they are treated as if they had been exercised upon the execution of the Shareholders' Agreement as the exercise of the Liquidity Options is not at the Company's discretion. The Liquidity Options, if materialized, will constitute an acquisition of the equity interest of the Target Company by the Company under the Chapter 14 of the Listing Rules. The materialization of the Liquidity Options is subject to the circumstance that the Qualifying IPO is not achieved within six (6) years from the Completion. As at the date of this announcement, none of the Liquidity Options has been exercised.

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Liquidity Options exceeds 25% but less than 100%, the Liquidity Options constitute a major transaction of the Company under the Chapter 14 of the Listing Rules and is subject to the reporting, announcement, circular and Shareholders' approval requirements under the Listing Rules.

Since the exercise of the Call Option is at the discretion of the Company, only the premium of the Call Option (if any) will be taken into consideration for the purpose of the classification of a notifiable transaction under Chapter 14 of the Listing Rules. As nil premium is payable by the Company for the Call Option, the grant of the Call Option does not constitute a notifiable transaction under Chapter 14 of the Listing Rules. The Company will make further announcement(s) as and when necessary in accordance with the Listing Rules to keep the Shareholders and its investors informed.

Furthermore, pursuant to the Subscription Agreement, the Existing Shareholder and/or its Affiliate(s) undertake, among others, to make the Subsequent Investment (as defined below). If the Subsequent Investment materialises in full, it will constitute an acquisition of the equity interest in the Target Company by the Group under the Chapter 14 of the Listing Rules. As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Subsequent Investment does not exceed 5% on a standalone basis, the Subsequent Investment will not constitute a notifiable transaction of the Company under the Chapter 14 of the Listing Rules.

THE EGM

The EGM will be convened for the Shareholders to consider and, if thought fit, to approve, among other things, the Subscription Agreement, the Shareholders’ Agreement and the transactions contemplated thereunder.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, no Shareholders is required to abstain from voting on the resolution in respect of the Subscription Agreement, the Shareholders’ Agreement and the transactions contemplated thereunder at the EGM.

DESPATCH OF CIRCULAR

A circular in relation to, among other things, the Subscription Agreement, the Shareholders Agreement and the transactions contemplated thereunder, the notice of EGM, and other information required to be included therein under the Listing Rules, is expected to be despatched to the Shareholders on or before January 24, 2025, as additional time is needed for the preparation and finalisation of certain information for inclusion in the circular.

The Completion is subject to the satisfaction and/or waiver of the Conditions Precedent therein. In addition, the Subscription Agreement and the Shareholders’ Agreement may be terminated in certain circumstances. Shareholders and investors are advised to exercise caution when dealing in the securities of the Company.

THE SUBSCRIPTION AGREEMENT

The Board is pleased to announce that on December 20, 2024 (after trading hours), the Company, the Target Company, the Existing Shareholder, and the Investors entered into the Subscription Agreement, pursuant to which INA and Aisis have conditionally agreed to subscribe for, and the Target Company has conditionally agreed to allot and issue to INA and Aisis, the Subscription Shares, representing approximately 34.01% and 11.34% of the enlarged share capital of the Target Company upon Competition, at the subscription price (the “Subscription Price”) of USD150,000,000 and USD50,000,000, respectively.

Principal Terms of the Subscription Agreement

The principal terms of the Subscription Agreement are set out below:

Date

December 20, 2024 (after trading hours)

Parties

(1) the Company
(2) the Target Company
(3) the Existing Shareholder
(4) the Investors

(Collectively referred to as the “Parties”, and each, a “Party”)

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, each of the Investors and their respective ultimate beneficial owner(s) are Independent Third Parties as at the date of this announcement.

Subscription

Subject to and upon the terms and conditions of the Subscription Agreement, INA and Aisis have conditionally agreed to subscribe for, and the Target Company has conditionally agreed to allot and issue to INA and Aisis, the Subscription Shares, representing approximately 34.01% and 11.34% of the enlarged share capital of the Target Company upon Competition, at the Subscription Price of USD150,000,000 and USD50,000,000, respectively.

It is contemplated that, upon Completion, the Company will hold approximately 64.03% of the equity interest in the Existing Shareholder, which, in turn, will hold 54.65% of the equity interest (compared to 100.00% of the equity interest prior to Completion) in the Target Company. Upon Completion, the Target Company will remain as subsidiaries of the Company and the financial results of the Target Group will continue to be consolidated with the Group.

Subscription Price

The total subscription price of USD200,000,000 shall be paid by the Investors to the Target Company on the date of Completion in cash, and was determined based on arm's length negotiations between the Parties on normal commercial terms with reference to the estimated worth of the Target Company at USD225,000,000 (the "Initial Estimated Worth"), which has been estimated after taking into account the total actual capital expenditure incurred during the implementation of the Indonesia Phase 1 Plant, the total value of signed production contracts and a certain premium, and based on the following assumptions:

(1) the Existing Shareholder and/or its Affiliate(s) shall subscribe for such number of Target Shares with an aggregate value of USD30,000,000 (the "Subsequent Investment") where the Subsequent Investment includes (a) first injection of capital equivalent to USD16,000,000 from the Existing Shareholder to the Target Company for 5,310,959 Target Shares, which has been made and is pending completion of registration as of the date of this announcement (the "First Subsequent Investment"); and (b) a subsequent injection of capital from the Existing Shareholder and/or its Affiliates to the Target Company within nine (9) months from the Completion; and

(2) the Target Company owns either:

(i) 100% of the issued and paid-up shares in LBM Indonesia and the Indonesian company owning and operating Indonesia Phase 2 Plant, or
(ii) if Potential Investor (but, for the avoidance of doubt, no other party) holds shares in LBM Indonesia, not less than 80% of the issued and paid-up shares in LBM Indonesia.

The Initial Estimated Worth shall be subject to an adjustment mechanism to account for certain conditions not being met within nine (9) months from the Completion as follows:

(1) if the Subsequent Investment did not occur, the Initial Estimated Worth shall be adjusted down by USD30,000,000;
(2) if Subsequent Investment occurred but the invested amount is less than USD30,000,000, the Initial Estimated Worth shall be adjusted down by the difference between USD30,000,000 and the Existing Shareholder's actual invested amount.

(either case being "Adjustment"). The Initial Estimated Worth following the Adjustment being the "Adjusted Worth".

Within ten (10) Business Days following nine (9) months from Completion, the Target Company will issue to the Investors, with no obligation on the Investors to make any further payment to the Company, such additional Series A Shares as may be necessary, in accordance with the shareholding proportion as between the Investors in the Target Company (and, for the avoidance of doubt, excluding the shareholding proportion of the Existing Shareholder and/or their Affiliate(s) in the Target Company), so that the total number of Target Shares held by the Investors in the Target Company reflects the total subscription price paid by the Investors calculated on the basis of the Adjusted Worth (the "Additional Issue"). For the avoidance of doubt, the Adjusted Worth can be same as the Initial Estimated Worth if no Adjustment occurs. In the event of any Additional Issue, the Group will ensure that the Target Company will remain as a subsidiary of the Company and the financial results of the Target Company will be consolidated into the financial results of the Company upon completion of any Additional Issue.

The Directors are of the view that the Initial Estimated Worth and the aforesaid adjustment mechanism are fair and reasonable, and in the interest of the Company and the Shareholders as a whole.

Use of Proceeds

The Target Company shall apply the proceeds of the subscription by the Investors for the Subscription Shares for (i) the capital and operational expenses for the development of the Indonesia Phase 2 Plant; (ii) the operational expenses for the ordinary course of business of the Indonesia Phase 1 Plant; and/or (iii) the operational expenses for the ordinary course of business of the Target Company, provided that:

(i) the applications of proceeds for (ii) and (iii) shall not cause any delay to the development of the Indonesia Phase 2 Plant progress; and
(ii) the Target Company shall keep the Investors informed of the use of proceeds for operational expenses and repayment for the Indonesia Phase 1 Plant, prior to the payments being made.

Conditions Precedent

The Completion is conditional upon fulfilment, or waiver as the case may be, of the following conditions to the satisfaction of each of the Investors:

(1) the Investors having received a confirmation letter from the Warrantors regarding business developments of the Target Group in the form and substance satisfactory to the Investors;

(2) all consents and approvals necessary for the transactions contemplated under the Subscription Agreement having been obtained and remaining valid and effective up till and including the Completion, and where the necessary consents and approvals are subject to conditions, such conditions being satisfactory to the Investors in their reasonable discretion and being fulfilled;

(3) the allotment, issuance and subscription of the relevant Subscription Shares not having been prohibited by any statute, order, rule, regulation or directive promulgated or issued after the date of the Subscription Agreement by any government authority of Singapore or elsewhere which is applicable to the Target Company or the Investors;

(4) no party to the Subscription Agreement having received notice of any claim, injunction, order or notice restraining or prohibiting the entering into or the consummation of the transactions contemplated by the Subscription Agreement or seeking damages or other recourse in respect thereof, or notice that any of the foregoing is pending or threatened;

(5) the representations and warranties of the Warrantors contained in Subscription Agreement being true, correct, accurate and complete as at the date of Subscription Agreement and as of the Completion Date;

(6) the Warrantors having performed and complied with all undertakings and obligations under the Transaction Documents; and

(7) each of the Investors having approved the form of the written resolutions of the board of directors and shareholders of the Target Company approving the relevant matters in relation to the Subscription Agreement.

Unless specifically waived by both Investors in writing, if any of the Conditions Precedent are not satisfied on or before the Long Stop Date, the Subscription Agreement (save for certain surviving clauses as set out in the Subscription Agreement) shall cease and the Target Company shall have no claims against any of the Investors for costs, damages, compensation or otherwise, save for any rights, claims or remedies available or already accrued to the Investors prior to such termination.

Pre-Completion Undertakings

The Warrantors undertake to the Investors to procure, among others, the following, save as with the prior written approval of the Investors or otherwise permitted under the Subscription Agreement, between the date of the Subscription Agreement and the Completion:

(1) each member of the Target Group shall carry on its business in the ordinary course as carried on at the date of the Subscription Agreement and consistent with past practices, and maintain all necessary permits, licenses and compliance with the Applicable Laws;

(2) the Target Group shall not take certain corporate actions or enter into significant transactions as set out in the Subscription Agreement, without the prior written consent of the Investors;

(3) the Target Company will own (or continue to own, as relevant) 100% of the issued and paid-up shares in LBM Indonesia and the Indonesian company owning and operating Indonesia Phase 2 Plant and no other party will hold shares in LBM Indonesia and the Indonesian company owning and operating Indonesia Phase 2 Plant, except for the potential investment in LBM Indonesia by Potential Investor;

(4) no third-party investments in the Target Company’s subsidiaries are accepted on terms more favourable than those granted to the Investors, with breaches of the aforesaid deemed to cause Losses to the Investors for which the Warrantors are jointly and severally liable; and

(5) the Target Group shall not form any subsidiary, acquire shares in any company, or cause any change in any partnership or joint venture, except to enable Potential Investor’s 20% investment in Indonesia Phase 1 Plant.

Completion

The Completion shall take place within ten (10) Business Days after the date of fulfilment or waiver of the last outstanding Conditions Precedent, or such other date as the Target Company and the Investors may agree in writing. Upon Completion, the Target Company will remain as subsidiaries of the Company and the financial results of the Target Group will continue to be consolidated with the Group.

Post-Completion Undertakings

Each of the following parties shall and the Warrantors undertake to procure that each of those parties shall complete all post-Completion undertakings. The post-Completion undertakings are as follows:

Subscription Agreement Undertakings

(1) within nine (9) months from the Completion, the Existing Shareholder and/or its Affiliate(s) shall either make the Subsequent Investment or to make the Additional Issue to the Investors. In the event that the Subsequent Investment materialises, the Subsequent Investment will be funded by the internal resources of the Existing Shareholder. Immediately after the Subsequent Investment, the Target Company will be owned as to 56.04% by the Existing Shareholder, which is owned as to approximately 64.03% by the Company;

(2) the Target Company, the Company, and the Existing Shareholder shall take all reasonable actions or shall refrain themselves from doing certain actions, as required by the Investors, for the purpose of protecting the Target Company's rights in intellectual property and/or other property and assets, as set out in the Subscription Agreement;

(3) immediately after the Indonesia Phase 1 Plant is able to supply the relevant customer, the Company and the Existing Shareholder shall novate and transfer to the Target Company or include the Target Company as a co-supplier in the Interim Supply Export Contracts, and provide all the necessary support to ensure that the Target Company is successfully registered as the customer's supplier as soon as practicable;

(4) the Company and the Existing Shareholder will ensure that the Target Company and its subsidiaries have the first right to develop customers outside of Greater China (the "Relevant Territories") and enter into contracts as the principal contracting party in the Relevant Territories. Additionally, exports from China by the Existing Shareholder or its affiliates will be restricted to existing contracts unless specifically requested by customers with proper justification;

(5) the Existing Shareholder shall ensure the Target Company reaches certain utilization rate except for occasions arising from customers' China onshore orders which request additional Chinese factories to be built;

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Side Letter Undertakings

(6) Each of the Warrantors undertakes to notify the Investors in writing of any material inaccuracy in, breach of, or failure to comply with representations, warranties, or obligations under the Transaction Documents ("Material Breach") and to rectify such Material Breach to the Investors' satisfaction within a pre-agreed period. If the Material Breach is not rectified within the pre-agreed period, the Investors may, at their discretion, either (a) require the Warrantors to jointly and severally pay a penalty equal to 15% of each Investor's respective consideration for the Subscription in a manner as set out in the Side Letter, or (b) require the Target Company to complete a Redemption (as defined below) within 90 days, failing which the Existing Shareholder and/or the Company must carry out an Acquisition (as defined below), in either case at the Liquidation Option Preference.

Indemnification under the Side Letter

The Warrantors shall jointly and severally indemnify and hold harmless each of the Investors from and against any Losses incurred by each of the Investors that directly or indirectly arise out of, result from, are based upon or relate to any failure by the Warrantors to perform the covenants, obligations or agreements required to be performed by any of them under the Side Letter and the Applicable Laws.

In the event of any investment made by any Potential Investor, except if expressly permitted by the Subscription Agreement and/or the Shareholders' Agreement or with the prior written consent of the Investors, into LBM Indonesia and/or the Indonesian company owning and operating the Indonesia Phase 2 Plant, the Target Company shall be deemed to cause Losses to the Investors, for which the Target Company, the Existing Shareholder and the Company shall jointly and severally indemnify, hold harmless and covenant to pay the Investors on demand against any and all such Losses. For the avoidance of doubt, the Warrantors shall not be deemed to be in a Material Breach provided that the Warrantors pay the Investors on demand against any and all such Losses.

SHAREHOLDING STRUCTURE OF THE TARGET COMPANY

Set out below is the shareholding structure of the Target Company immediately before and after the Completion and after the Subsequent Investment:

Shareholders	As of the date of the Subscription Agreement^{1}		Immediately after the Completion^{2}		Immediately after the Subsequent Investment^{3}
	Number of Target Shares	Approximately shareholding percentage (%)	Number of Target Shares	Approximately shareholding percentage (%)	Number of Target Shares	Approximately shareholding percentage (%)
Existing Shareholder	74,685,367	100.00%	79,996,326	54.65%	84,643,415	56.04%
INA	—	—	49,790,244	34.01%	49,790,244	32.97%
Aisis	—	—	16,596,748	11.34%	16,596,748	10.99%
Total	74,685,367	100.00%	146,383,318	100%	151,030,407	100.00%

Notes:

without taking into account the First Subsequent Investment which is pending registration as of the date of the Subscription Agreement.
taking into account the First Subsequent Investment.
assuming the Subsequent Investment has been made in full.

SHAREHOLDERS' AGREEMENT

In connection with the Subscription Agreement, on December 20, 2024, the Company, the Target Company, the Existing Shareholder, and the Investors have entered into the Shareholders' Agreement, which will take effect on and from the Completion. The principal terms of the Shareholders' Agreement are set out below:

Date

December 20, 2024 (after trading hours)

Parties to the Shareholders' Agreement

(1) the Company
(2) the Target Company
(3) the Existing Shareholder
(4) the Investors

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Shareholders' Rights and Obligations

The Shareholders' Agreement sets out the rights and obligations of the Parties thereto in relation to the management and operations of Target Company and shall take effect upon the Completion Date. In particular, it contains the following key provisions in relation to the Investors' rights and obligations as shareholders of Target Company:

Research and Development

The Target Company shall establish a dedicated research and development ("R&D") centre. The primary purpose of the R&D centre will be to conduct research and develop innovative technologies aimed at advancing and/or expanding the Business such that the Target Company is able to carry out R&D activities independently as soon as practicable before the Target Company is no longer under the control of and/or financially consolidated with the Existing Shareholder. Any technologies jointly developed through the R&D efforts of the Target Company and the Existing Shareholder in relation to the Business shall be jointly owned by the Target Company and the Existing Shareholder subject to compliance with the Applicable Laws.

Right of Appointment and Removal

The board of directors of the Target Company (the "Target Board") shall, as of the Completion Date, initially consist of seven (7) members. Subject to the further adjustment if any Investor no longer holds enough Target Shares, the Existing Shareholder, the INA and Aisis shall have the right to appoint, maintain and remove four (4) directors, two (2) directors and one (1) director to the Target Board.

Potential Investor Contract

The Company and the Existing Shareholder undertake to indemnify and hold harmless the Target Company, LBM Indonesia, the Investors and their respective directors, officers, employees, and representatives from and against all costs, expenses, losses, and damages incurred by them arising directly or indirectly from:

(1) any shortfall and/or any defects or quality issues of iron phosphate supplied by the Existing Shareholder and/or its Affiliates other than a member of the Target Group to LBM Indonesia to the fullest extent permissible by Applicable Laws, and the Company and the Existing Shareholder shall bear full responsibilities for all associated liabilities; and

(2) any breach of, or liabilities under, the Potential Investor Contract or any purchase agreement as defined in the Potential Investor Contract (including any breach of representations, warranties, covenants, agreements or other obligations) by the Existing Shareholder and/or its Affiliates other than a member of the Target Group in China.

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Funding of Indonesia Phase 1 Plant and Indonesia Phase 2 Plant and Capital Expenditure of Indonesia Phase 2 Plant

The Company and the Existing Shareholder undertakes to the Investors that the Indonesia Phase 1 Plant will be fully funded by the Company and/or the Existing Shareholder, and the total actual capital expenditure will not significantly exceed the capital expenditure budget of Indonesia Phase 2 Plant.

Pre-emptive right, right of first refusal and tag-along rights

The Investors shall enjoy the pre-emptive right, right of first refusal, tag-along right and drag-along right that are customary and not subordinated to other shareholders of the Target Company.

Liquidity Options

It is the Parties’ intention to effect a Qualifying IPO as soon as practicable and in any event within five (5) years from the Completion, with the Target Company having the right to defer it by up to two years (subject to Investors’ consent for the second year).

If a Qualifying IPO is not achieved within six (6) years from the Completion, each Investor shall have the right to transfer all or part of its Target Shares to any third party (the “Third-Party Sale”) or exercise drag-along right in accordance with the Shareholders’ Agreement. If the consideration (whether in cash or otherwise) from such Third-Party Sale, or the exercise of a tag-along or drag-along right is lower than the amount to which each Investor would be entitled pursuant to its Liquidity Option Preference (such deficiency, a “Liquidity Option Shortfall”), the Investors may by written notice require the Target Company and the Company to contribute sufficient funds to cover the Liquidity Option Shortfall to ensure that each Investor will receive a return equal to its Liquidity Option Preference.

If no Third-Party Sale or drag-along has been consummated, then following the seventh (7th) anniversary of the Completion, each Investor has an option in writing to request either: (i) the Target Company to redeem or repurchase all or any of the Target Shares held by such Investor (the “Redemption”), or (ii) if the Target Company fails to complete the Redemption within three (3) months following receipt of such request for Redemption, the Company and the Existing Shareholder to purchase all or any of the Target Shares held by such Investor (the “Acquisition”), in either case at the Liquidity Option Preference.

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Liquidity Option Preference

For the purposes of Liquidity Options, the Liquidity Option Preference means if no Qualifying IPO occurs before the sixth (6th) anniversary of the Completion:

(1) an amount that would enable the Investors to achieve a USD IRR of 9.5%, inclusive of all paid Series A Preferred Distribution or other distribution of profits of the Target Company to date; or

(2) in the event that the Target Company, the Existing Shareholder or the Company chooses to defer the payment of all or part of any payment that must be made by the them beyond six (6) months but no later than twelve (12) months from the date of the relevant notice from the Investor to the Target Company, the Existing Shareholder or the Company (as applicable), an amount that would enable the Investors to achieve a USD IRR of 11%, inclusive of all paid Series A Preferred Distribution or other distribution of profits of the Target Company to date.

Call Option

If none of the Liquidity Options has been consummated, then following the ninth (9th) anniversary of the Completion, the Target Company shall be entitled to require the Investors to sell all of their Target Shares to the Target Company at the higher of (i) the fair market value of such Target Shares; or (ii) a price that would deliver at least a USD IRR of 16% (inclusive of all paid Series A Preferred Distribution or other distribution of profits of the Target Company to date) to each of the Investors.

The Target Company, the Existing Shareholder, and the Company shall use their respective best effort to ensure that the Target Group maintains compliance with the Applicable Laws. In the event of non-compliance with such Applicable Laws, necessary actions shall be taken to ensure the Target Group's compliance with the Applicable Laws.

The Company would comply with the applicable requirements under Chapter 14 of the Listing Rules upon exercise of any right under as set out in the Shareholders' Agreement and the above.

The Directors are also of the view that the Liquidity Options and Call Option and their basis of determination are fair and reasonable, and in the interest of the Company and its shareholders as a whole.

INFORMATION OF THE COMPANY AND THE PARTIES

The Company and the Group

The Company is a joint stock company established in the PRC, the A shares of which are listed on the Shanghai Stock Exchange (SSE: 603906) and the H shares of which are listed on the Main Board of the Stock Exchange (HKEX: 2465). The Group is principally engaged in the production and sale of LFP cathode materials and automotive specialty chemicals.

The Target Company

The Target Company is a private company limited by shares incorporated in Singapore and an indirect non-wholly owned subsidiary of the Company which is wholly-owned by Existing Shareholder. The Target Company is principally engaged in investment, asset management and import and export trading.

Set out below is the financial information extracted from the audited financial statements of the Target Group for the years ended December, 31 2022 and 2023, and for the ten months ended October 31, 2024:

	Year ended December 31,		Ten months ended October 31,
	2022 RMB'000 (audited)	2023 RMB'000 (audited)	2024 RMB'000 (audited)
Total assets	2,308.9	499,891.8	814,221.0
Total liabilities	32.4	126,902.6	301,153.4
Revenue	1,998.6	225.2	—
Profit/(loss) before taxation	(2,822.3)	5,915.1	(6,214.2)
Profit/(loss) after taxation	(2,822.3)	6,775.8	(5,538.0)

The audited consolidated net assets of the Target Group as at October 31, 2024 amounted to approximately RMB513.07 million.

The Existing Shareholder

The Existing Shareholder is a limited liability company established in the PRC and a direct non-wholly owned subsidiary of the Company, which is owned as to approximately $64.03\%$ by the Company. In addition to the Company, the remaining equity interests in the Existing Shareholder are held by nine other shareholders, with none of them individually holding more than $6.5\%$ of the equity interests. The Existing Shareholder is principally engaged in the production and sales of LFP cathode materials.

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INA

INA is a limited liability company established in the Republic of Indonesia and is principally engaged in other management consulting activities. INA is 99% owned by the Indonesia Investment Authority, Indonesia's sovereign wealth fund established by the government of the Republic of Indonesia.

Aisis

Aisis is an exempted limited partnership established in the Cayman Islands and is principally engaged in investment holding. The general partner of Aisis is Aisis Alliance GP, L.P.

FINANCIAL EFFECTS OF THE SUBSCRIPTION

As the Subscription will not result in the Company's loss of control over the Target Group, the Subscription would be accounted for as an equity transaction and will not result in the recognition of any gain or loss in the Company's consolidated statement of profit or loss and other comprehensive income.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION

The Directors are of the view that the Subscription will strengthen the Group's overall capabilities in research and development, market expansion, and mass production of lithium iron phosphate cathode materials within the industry. The Subscription will also enhance the Group's international presence and comprehensive competitive edge, which will further improve the Group's brand value and increase its profitability potential. Therefore, the Subscription aligns with the Group's overall strategic development plan and long-term interests, carrying positive strategic significance for the Group's future development. Based on the above, the Directors are of the view that the Subscription and the transactions contemplated thereunder (including the grant of the Liquidity Options) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

The Target Company is a non wholly-owned subsidiary of the Company as at the date of this announcement. It is contemplated that, upon Completion, the Company will hold approximately 64.03% of the equity interest in the Existing Shareholder, which, in turn, will hold 54.65% of the equity interest (compared to 100.00% of the equity interest prior to Completion) in the Target Company. Upon Completion, the Target Company will remain as subsidiaries of the Company and the financial results of the Target Group will continue to be consolidated with the Group. The Subscription, if materialized, will constitute a deemed disposal by the Company under Rule 14.29 of the Listing Rules.

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Liquidity Options exceeds 25% but less than 100%, the Liquidity Options constitute a major transaction of the Company under the Chapter 14 of the Listing Rules and is subject to subject to the reporting, announcement, circular and Shareholders' approval requirements under the Listing Rules.

Since the exercise of the Call Option is at the discretion of the Group, only the premium of the Call Option (if any) will be taken into consideration for the purpose of the classification of a notifiable transaction under Chapter 14 of the Listing Rules. As of the date of this Announcement, as nil premium is payable by the Group, the Call Option, before being exercised, does not constitute a notifiable transaction under Chapter 14 of the Listing Rules. The Company will make further announcement(s) as and when necessary in accordance with the Listing Rules to keep the Shareholders and its investors informed.

Furthermore, pursuant to the Subscription Agreement, the Existing Shareholder and/or its Affiliate(s) undertake, among others, to make the Subsequent Investment. If the Subsequent Investment materialises in full, it will constitute an acquisition of the equity interest in the Target Company by the Group under the Chapter 14 of the Listing Rules. As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Subsequent Investment does not exceed 5% on a standalone basis, the Subsequent Investment will not constitute a notifiable transaction of the Company under the Chapter 14 of the Listing Rules.

THE EGM

The EGM will be convened for the Shareholders to consider and, if thought fit, to approve, among other things, the Subscription Agreement, the Shareholders' Agreement and the transactions contemplated thereunder.

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To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, no Shareholders is required to abstain from voting on the resolution in respect of the Subscription Agreement, the Shareholders' Agreement and the transactions contemplated thereunder at the EGM.

DESPATCH OF CIRCULAR

The Completion is subject to the satisfaction and/or waiver of the Conditions Precedent therein. In addition, the Subscription Agreement and the Shareholders' Agreement may be terminated in certain circumstances. Shareholders and investors are advised to exercise caution when dealing in the securities of the Company.

DEFINITIONS

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

"Affiliate"

with respect to any specified person, any other person who, directly or indirectly, controls, is controlled by, or is under common control with such person, including without limitation any general partner, limited partner, shareholder, managing member, investment adviser, officer, director or trustee of such person, or any venture capital fund or investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment adviser of, or shares the same management company or investment adviser with, such person

"Aisis"

Aisis Alliance L.P., an exempted limited partnership established in the Cayman Islands

"Applicable Law"

(i) any applicable laws, statutes, ordinances, regulations, rules, notice requirements, agency guidelines, principles of law and legal requirements of any governmental authority and (ii) any judgment, decision, consent decree, injunction, arbitration award, ruling or order of any government authority or arbitrator that is binding on or with respect to any Party, its Affiliates or their property

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“Board” the board of Directors

“Business” manufacturing and sale of lithium iron phosphate (LFP) or lithium manganese iron phosphate (LMFP) products or related precursor material and such other activities as set out in the articles of association of each member of the Target Group

“Business Day” a day on which banks are open for business in Singapore, Indonesia, Korea and Mainland China (excluding Saturdays, Sundays or public holidays)

“Call Option” has the meaning ascribed to it under “Shareholders’ Agreement — Shareholders’ Rights and Obligations — Call Option” in this announcement

“Company” Jiangsu Lopal Tech. Co., Ltd. (江蘇龍蟠科技股份有限公司), a joint stock company established in the PRC, the A shares of which are listed on the Shanghai Stock Exchange (SSE: 603906) and the H shares of which are listed on the Main Board of the Stock Exchange (HKEX: 2465)

“Completion” completion of the Subscription pursuant to the terms of the Subscription Agreement

“Completion Date” the date of the Completion

“Conditions Precedent” has the meaning ascribed to it under “The Subscription Agreement — Conditions Precedent” in this announcement

“Director(s)” the director(s) of the Company

“EGM” the extraordinary general meeting of the Company to be convened for the Shareholders to consider and, if thought fit, to approve, among other things, the Subscription Agreement, the Shareholders’ Agreement and the transactions contemplated thereunder

“Existing Potential Investor Contract” an LFP cathode supply contract as signed by and between the Existing Shareholder and the Potential Investor or as may be further defined in writing by the Parties

“Existing Shareholder” Changzhou Liyuan New Energy Technology Co., Ltd. (常州鋰源新能源科技有限公司), a limited liability company established in the PRC and a direct non-wholly owned subsidiary of the Company

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“Greater China” the People’s Republic of China, for the purpose of this announcement, including Mainland China, Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan

“Group” the Company and its subsidiaries as at the date of this announcement

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“INA” PT Akasya Investasi Indonesia, a limited liability company established in the Republic of Indonesia

“Independent Third Party(ies)” third party(ies) independent of the Company and its connected persons (having the meaning ascribed to it under the Listing Rules)

“Indonesia Phase 1 Plant” the initial phase of the business of LBM Indonesia, which shall consist of (i) the construction, operation and maintenance of a manufacturing facility for the process improvement and production of the cathode active materials (the “Products”) for use in electric vehicle batteries, energy storage system, and other lithium battery products, (ii) the materials development and procurement, sale, distribution and otherwise commercialization of the Products, (iii) any other activities and businesses as mutually agreed to between the shareholders of LBM Indonesia and (iv) other activities related and/or ancillary to the foregoing

“Indonesia Phase 2 Plant” the additional manufacturing facility to manufacture the Products in Indonesia with 90,000 tons of LFP cathode production capacity

“Interim Supply Export Contract” a supply contract in which, the Existing Shareholder or any of its Affiliates in China is a party, for the purpose of the customer’s supplier registration (if required by the relevant customer) with an interim supply to a customer

“Investors” collectively, INA and Aisis

“IRR” the internal rate of return

“LBM Indonesia” PT LBM Energi Baru Indonesia, a foreign investment company established incorporated under the laws of the Republic of Indonesia, an indirect non-wholly owned subsidiary of the Company which is directly wholly-owned by the Target Company

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"Liquidity Option" has the meaning ascribed to it under "Shareholders' Agreement — Shareholders' Rights and Obligations — Liquidity Option" in this announcement

"Liquidity Option Preference" has the meaning ascribed to it under "Shareholders' Agreement — Shareholders' Rights and Obligations — Liquidity Option Preference" in this announcement

"Listing Rules" the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

"Long Stop Date" the date falling 120 days from the date of the Subscription Agreement, or such other date as may be notified in writing to the Target Company by the Investors

"Losses" all losses, liabilities, fees and costs (including reasonable legal fees and experts' and consultants' fees), charges, expenses, actions, proceedings, claims and demands

"Potential Investor" a potential investor of any subsidiaries of the Target Company or as may be further agreed in writing by the Parties

"Potential Investor Contract" Existing Potential Investor Contract and the Potential Investor Contract in Discussion

"Potential Investor Contract in Discussion" an amendment to the Existing Potential Investor Contract or as may be further agreed in writing by the Parties

"PRC" the People's Republic of China which, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the People's Republic of China and Taiwan

"Qualifying IPO" the closing of a firmly underwritten public offering of shares of the Target Company for the purpose of and in connection with the admission of the Target Company to the Official List of the Singapore Exchange Securities Trading Limited or any other agreed securities exchange, which meets the criteria as set out in the Shareholders' Agreement

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“Series A Preferred Distribution” from the second (2nd) anniversary of the Completion, a cumulative fixed preferential dividend payable in cash equal to 5% of the initial subscription price per share (as appropriately adjusted for any subdivisions, consolidations, share dividends or similar recapitalisations) per annum for each Series A Share held by such holder

“Series A Share(s)” series A preference share(s) in the capital of the Target Company from time to time having the rights set out in the constitution of the Target Company, including the terms and conditions set out in Shareholders’ Agreement

“Shareholder(s)” the shareholder(s) of the Company

“Shareholders’ Agreement” the shareholders’ agreement in relation to the Target Company entered into among the Company, the Target Company, the Existing Shareholder and the Investors on December 20, which will take effect on and from the Completion

“Side Letter” the side letter signed by the Warrantors and the Investors dated as of the date of the Subscription Agreement

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Subscription” the allotment and issuance of Subscription Shares by the Target Company to Investors in accordance with the terms and conditions of the Subscription Agreement

“Subscription Agreement” the subscription agreement dated December 20, 2024 entered into among the Company, the Target Company, the Existing Shareholder and the Investors in connection with the subscription of Subscription Shares by the Investors

“Subscription Shares” the Series A Shares to be subscribed for by the Investors and to be issued by the Target Company to the Investors pursuant to the Subscription Agreement

“Target Company” LBM New Energy (AP) Pte. Ltd. (formerly known as Lopal Tech Singapore Pte. Ltd.), a private company limited by shares incorporated in Singapore and an indirect non-wholly owned subsidiary of the Company which is wholly-owned by Existing Shareholder

“Target Group” the Target Company and its subsidiaries

“Target Share(s)” the share(s) of the Target Company

"Transaction Documents"
collectively, the Subscription Agreement, the Shareholders' Agreement and the Side Letter

"U.S."
the United States of America

"USD"
United States dollars, the lawful currency of the U.S.

"Warrantor(s)"
individually or collectively, the Company, the Target Company and the Existing Shareholder

By order of the Board
Jiangsu Lopal Tech. Co., Ltd.
SHI Junfeng
Chairman

Nanjing, PRC
December 20, 2024

As at the date of this announcement, the Board comprises Mr. SHI Junfeng, Mr. LU Zhenya, Mr. QIN Jian, Mr. SHEN Zhiyong and Mr. ZHANG Yi as executive directors; Ms. ZHU Xianglan as non-executive director; and Mr. LI Qingwen, Mr. YE Xin, Ms. GENG Chengxuan and Mr. HONG Kam Le as independent non-executive directors.

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AI assistant

Jiangsu Lopal Tech. Group Co., Ltd. Capital/Financing Update 2024

50611_rns_2024-12-20_4c05f07a-51f3-4b1b-be06-a1bf301d5ca3.pdf

LISTING RULES IMPLICATIONS

THE EGM

DESPATCH OF CIRCULAR

THE SUBSCRIPTION AGREEMENT

Subscription Price

Use of Proceeds

Conditions Precedent

Pre-Completion Undertakings

Completion

Side Letter Undertakings

Indemnification under the Side Letter

Shareholders' Rights and Obligations

Research and Development

Right of Appointment and Removal

Potential Investor Contract

Funding of Indonesia Phase 1 Plant and Indonesia Phase 2 Plant and Capital Expenditure of Indonesia Phase 2 Plant

Pre-emptive right, right of first refusal and tag-along rights

Liquidity Options

Liquidity Option Preference

Call Option

INFORMATION OF THE COMPANY AND THE PARTIES

The Company and the Group

The Target Company

The Existing Shareholder

INA

Aisis

FINANCIAL EFFECTS OF THE SUBSCRIPTION

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION

LISTING RULES IMPLICATIONS

DESPATCH OF CIRCULAR

DEFINITIONS

AI assistant

Jiangsu Lopal Tech. Group Co., Ltd. — Capital/Financing Update 2024

50611_rns_2024-12-20_4c05f07a-51f3-4b1b-be06-a1bf301d5ca3.pdf

LISTING RULES IMPLICATIONS

THE EGM

DESPATCH OF CIRCULAR

THE SUBSCRIPTION AGREEMENT

Subscription Price

Use of Proceeds

Conditions Precedent

Pre-Completion Undertakings

Completion

Side Letter Undertakings

Indemnification under the Side Letter

Shareholders' Rights and Obligations

Research and Development

Right of Appointment and Removal

Potential Investor Contract

Funding of Indonesia Phase 1 Plant and Indonesia Phase 2 Plant and Capital Expenditure of Indonesia Phase 2 Plant

Pre-emptive right, right of first refusal and tag-along rights

Liquidity Options

Liquidity Option Preference

Call Option

INFORMATION OF THE COMPANY AND THE PARTIES

The Company and the Group

The Target Company

The Existing Shareholder

INA

Aisis

FINANCIAL EFFECTS OF THE SUBSCRIPTION

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION

LISTING RULES IMPLICATIONS

DESPATCH OF CIRCULAR

DEFINITIONS

More from Jiangsu Lopal Tech. Group Co., Ltd.

Jiangsu Lopal Tech. Group Co., Ltd. Capital/Financing Update 2024