Kingwell Group Limited — Capital/Financing Update 2014

Mar 14, 2014

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 purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

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GUOCANG GROUP LIMITED 國 藏 集 團 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock code: 559)

ISSUE OF BONDS

TO BE UNCONDITIONALLY AND IRREVOCABLY GUARANTEED BY THE COMPANY

Placing Agent

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AMTD Financial Planning Limited

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

On 14 March 2014 (after trading hours), Castle Stream, a direct wholly-owned subsidiary of the Company, as the issuer, the Company as the guarantor and AMTD as the placing agent entered into a Placing Agreement pursuant to which the Placing Agent agreed to act as placing agent for the purposes of arranging the Placees on a best effort basis for the issue of the Bonds with an aggregate principal amount of up to HK$200,000,000. The Bonds will be issued by Castle Stream and guaranteed by the Company.

This announcement is made pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

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THE PLACING AGREEMENT

Date : 14 March 2014 (after trading hours) Parties Issuer : Castle Stream Limited Placing Agent : AMTD Financial Planning Limited Guarantor : the Company

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owner(s) are Independent Third Parties.

Placing of Bonds

Pursuant to the Placing Agreement, the Placing Agent agreed to act as a placing agent for the purposes of arranging Placees on a best effort basis for the issue of the Bonds with an aggregate principal amount of up to HK$200,000,000.

Placees

The Bonds will be placed to Placees which will be independent institutional or private investors, and who and whose ultimate beneficial owners are Independent Third Parties.

Placing commission

In consideration of the services of the Placing Agent in connection with the Placing of Bonds, Castle Stream shall pay the Placing Agent a placing commission of 5% of the total principal amount of the Bonds actually placed by the Placing Agent under the Placing Agreement.

The placing commission was negotiated on an arm’s length basis between Castle Stream and the Placing Agent and determined with reference to, among other things, the market rate.

The Directors consider that the placing commission is fair and reasonable based on the current market conditions.

Placing Period

The period commencing from the date of the Placing Agreement and ending on the three months from the date of the Placing Agreement, or such other period as may be agreed between Castle Stream and the Placing Agent in writing.

Conditions of the Placing Agreement

The Placing Agreement is unconditional.

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FIRST BONDS

The principal terms of the First Bonds are summarised below:

Issuer: Castle Stream Principal amount: up to HK$200,000,000 (including the principal amount of the Second Bonds) Issue Price: 100% of the principal amount of the First Bonds Maturity date: on the date falling on the third anniversary of the date of issue of the First Bonds (or, if that is not a Business Day, the first Business Day thereafter) Interest rate: 10% per annum, calculated on the actual number of days elapsed and on the basis a 365-day year payable semiannually in arrears Form and Denomination: in registered form and in denomination of HK$500,000 each Status: The First Bonds constitute direct, unconditional, unsubordinated and unsecured obligations of Castle Stream and shall at all times rank pari passu and without any preference among themselves. The payment obligations of Castle Stream under the First Bonds shall, save for such exceptions as may be provided by applicable legislation, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations. The payment obligations of Castle Stream under the First Bonds shall be guaranteed by the Company. No application will be made for the listing of the First Bonds. Transferability: The First Bonds may be transferrable in whole multiples of HK$500,000 (or such lesser amount as may represent the entire principal amount thereof) and may be transferred to any person. Save with the consent of the Stock Exchange, none of the First Bonds may be transferred to a connected person of the Company.

Early redemption:

The Company may, at any time falling on the first and the second anniversary of the issue date of the First Bonds, redeem the First Bonds (in whole) at 100% of the total principal amount of such First Bonds together with payment of interests accrued up to the date of such early redemption by serving at least thirty (30) calendar days written notice.

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SECOND BONDS

The principal terms of the Second Bonds are summarised below:

Issuer: Castle Stream Principal amount: up to HK$200,000,000 (including the principal amount of the First Bonds) Issue Price: 100% of the principal amount of the Second Bonds Maturity date: on the date falling on the third anniversary of the date of first issue of the Second Bonds (or, if that is not a Business Day, the first Business Day thereafter) Interest rate: 8% per annum, calculated on the actual number of days of elapsed and on the basis a 365-day year payable in advance on the date of issue Form and Denomination: in registered form and in denomination of HK$500,000 each Status: The Second Bonds constitute direct, unconditional, unsubordinated and unsecured obligations of Castle Stream and shall at all times rank pari passu and without any preference among themselves. The payment obligations of Castle Stream under the Second Bonds shall, save for such exceptions as may be provided by applicable legislation, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations. The payment obligations of Castle Stream under the Second Bonds shall be guaranteed by the Company. No application will be made for the listing of the Second Bonds. Transferability: The Second Bonds may be transferrable in whole multiples of HK$500,000 (or such lesser amount as may represent the entire principal amount thereof) and may be transferred to any person. Save with the consent of the Stock Exchange, none of the Second Bonds may be transferred to a connected person of the Company. Early redemption: The Company may, at any time falling on the first and the second anniversary of the issue date of the Second Bonds, redeem the Second Bonds (in whole) at 100% of the total principal amount of such Second Bonds deducting the amount of the interest paid in advance by Castle Stream to the bondholder of the Second Bonds which is not accrued as at the date of such early redemption by serving at least thirty (30) calendar days written notice.

The terms of the Bonds were determined after arm’s length negotiations between the Company and the Placing Agent with reference to the prevailing market conditions.

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REASONS FOR THE PLACING OF BONDS AND USE OF PROCEEDS

The Group is principally engaged in the businesses of (i) trading and distribution of liquor and wine; (ii) investments in listed securities; (iii) manufacture and trading of copper rods; and (iv) manufacture and trading of cable and wires.

The Board has considered various ways of raising funds to develop its businesses and consider that the Placing of Bonds represents a suitable opportunity to raise capital for the Group. In addition, the Placing of Bonds will not result in any dilution effect on the shareholding of the existing Shareholders.

In view of the above, the Directors are of the view that the Placing of Bonds provides a good opportunity to strengthen the Company’s financial position and the terms of the Placing of Bonds are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The gross and net proceeds of the Placing of Bonds will be HK$200,000,000 and approximately HK$189 million respectively (assuming the Bonds are placed in full). The Directors intend to apply the net proceeds of the Placing of Bonds as general working capital of the Group.

FUND RAISING EXERCISE BY THE COMPANY IN THE PAST TWELVE MONTHS

The Company has not conducted any equity fund raising activities involving the issue of its securities in the past twelve months immediately preceding the date of this announcement.

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
‘‘Bonds’’	the First Bonds and/or the Second Bonds
‘‘Business Day’’	a day on which the Stock Exchange is open for trading		in
	Hong Kong
‘‘Castle Stream’’	Castle Stream Limited, a direct wholly-owned subsidiary		of
	the Company
‘‘Company’’	Guocang Group Limited, a company	incorporated	in
	Bermuda with limited liability, the Shares of which		are
	listed on the main board of the Stock	Exchange (Stock
	Code: 559)
‘‘connected person(s)’’	has the meaning ascribed to it under the Listing Rules
‘‘Director(s)’’	director(s) of the Company

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• ‘‘First Bonds’’ the three-year 10% coupon unlisted straight guaranteed bonds with an aggregate principal amount of up to HK$200,000,000 (including the principal amount of the Second Bonds) to be placed pursuant to the Placing Agreement, the repayment of which is guaranteed by the Guarantor

• ‘‘Guarantor’’ the Company, the guarantor of the payment obligations of Castle Stream under the Placing Agreement and the Instruments

• ‘‘Group’’ the Company and its subsidiaries ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC ‘‘Independent Third any person(s) or company(ies) and their respective ultimate Party(ies)’’ beneficial owner(s) whom, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and connected persons of the Company

• ‘‘Instruments’’ the bond instruments of the First Bonds and/or the bond instruments of the Second Bonds

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Placees’’ any independent institutional or private investors selected and procured by the Placing Agent to subscribe for the Bonds pursuant to the Placing Agreement

• ‘‘Placing Agent’’ or AMTD Financial Planning Limited, acting as the placing ‘‘AMTD’’ agent of the Bonds under the Placing Agreement

• ‘‘Placing Agreement’’ the placing agreement dated 14 March 2014 and entered into between Castle Stream, the Placing Agent and the Guarantor in relation to the Placing of Bonds

• ‘‘Placing of Bonds’’ the placing of the Bonds pursuant to the terms of the Placing Agreement

• ‘‘PRC’’ the People’s Republic of China, for the purposes of this announcement, excluding Hong Kong, the Macao Special Administrative Region of the PRC and Taiwan

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‘‘Second Bonds’’ the three-year 8% coupon straight unlisted guaranteed bonds with an aggregate principal amount of up to HK$200,000,000 (including the principal amount of the First Bonds) to be placed pursuant to the Placing Agreement, the repayment of which is guaranteed by the Guarantor

‘‘Share(s)’’ ordinary share(s) of HK$0.05 each in the share capital of the Company

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

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘%’’ per cent.

By order of the Board Guocang Group Limited Wong Hin Shek Chairman and Executive Director

Hong Kong, 14 March 2014

As at the date of this announcement, the executive Directors are Mr. Wong Hin Shek and Mr. Chi Chi Hung, Kenneth; and the independent non-executive Directors are Mr. Chiu Wai On, Mr. Man Kwok Leung and Dr. Wong Yun Kuen.

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