Pacific Basin Shipping Limited — M&A Activity 2016

Aug 19, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this joint 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 joint announcement.

This joint announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of China Smarter Energy Group Holdings Limited.

Gorgeous Investment Group Holding Co., Limited 國之杰投資控股有限公司

(incorporated in the British Virgin Islands with limited liability)

**CHINA SMARTER ENERGY GROUP HOLDINGS LIMITED 中國智慧能源集團控股有限公司 ***

(Incorporated in Bermuda with limited liability) (Stock Code: 1004)

JOINT ANNOUNCEMENT

(1) ACQUISITION OF CONTROLLING INTEREST IN CHINA SMARTER ENERGY GROUP HOLDINGS LIMITED BY GORGEOUS INVESTMENT GROUP HOLDING CO., LIMITED AND

(2) POSSIBLE MANDATORY UNCONDITIONAL CASH OFFER BY HAITONG INTERNATIONAL SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF

GORGEOUS INVESTMENT GROUP HOLDING CO., LIMITED TO ACQUIRE ALL OF THE ISSUED SHARES AND ALL OUTSTANDING CONVERTIBLE BONDS OF

CHINA SMARTER ENERGY GROUP HOLDINGS LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED AND/OR AGREED TO BE ACQUIRED BY GORGEOUS INVESTMENT GROUP HOLDING CO., LIMITED AND/OR PARTIES ACTING IN CONCERT WITH IT)

Financial Adviser to the Offeror

THE SHARE PURCHASE AGREEMENTS

The Board was notified by the Offeror that after trading hours on 19 August 2016, the Offeror and the Vendors entered into the Share Purchase Agreements, pursuant to which the Vendors agreed to sell and the Offeror agreed to acquire an aggregate of 4,041,446,400 Shares at total consideration of HK$1,333,677,312, equivalent to HK$0.33 per Share.

• For identification purpose only

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POSSIBLE MANDATORY UNCONDITIONAL CASH OFFERS

Upon completion of the Share Purchase Agreements, the Offeror and parties acting in concert with it will be interested in 4,041,446,400 Shares in aggregate, representing approximately 51.72% of the existing issued share capital of the Company.

Pursuant to Rule 26.1 of the Takeovers Code, following the completion of the Share Purchase Agreements, the Offeror is required to make a mandatory unconditional cash offer for all the issued Shares not already owned and/or agreed to be acquired by it and/or parties acting in concert with it. The Offeror is also required to make a mandatory unconditional cash offer for all the outstanding Convertible Bonds pursuant to Rule 13.1 of the Takeovers Code.

Subject to the completion of the Share Purchase Agreements, Haitong International Securities will, on behalf of the Offeror, make the Offers in compliance with the Takeovers Code on the following basis:

The Share Offer

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.33 in cash

The Offer Price of HK$0.33 for each Offer Share under the Share Offer is equal to the price for each Sale Share acquired by the Offeror pursuant to the Share Purchase Agreements.

As at the date of this joint announcement, there are 7,814,351,360 Shares in issue. Other than the Convertible Bonds, the Company does not have, and is not expected to issue any securities, options, warrants or derivatives which are convertible into or which confer rights to require the issue of Shares.

The CB Offer

For US$1,000,000 face value of the Convertible Bonds . . . . . . . . . . . . HK$2,357,359.29 in cash

As at the date of this joint announcement, the Company has outstanding Convertible Bonds with an aggregate principal amount of US$50,000,000 convertible into 357,175,650 new Shares.

Haitong International Investment Fund SPC (an associated corporation of Haitong International Securities) holds outstanding Convertible Bonds in the principal amount of US$20,000,000 (equivalent to HK$155,600,000 at the agreed exchange rate of US$1.00 to HK$7.78 under the terms and conditions of the Convertible Bonds), which is convertible into 142,870,259 new Shares at the prevailing conversion price of HK$1.0891.

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CONFIRMATION OF FINANCIAL RESOURCES

Assuming all the outstanding Convertible Bonds are fully converted at the prevailing conversion price, the total number of Shares subject to the Share Offer will be 4,130,080,610 Shares, being the number of Shares not already owned and/or agreed to be acquired by the Offeror and/ or parties acting in concert with it. Based on the Offer Price of HK$0.33 per Offer Share, the maximum cash consideration payable by the Offeror under the Offers would be approximately HK$1,362,926,601.3.

The Offeror intends to finance the total consideration of the Offers by the loan facilities provided by Haitong International Securities. Haitong International Capital, the financial adviser to the Offeror in respect of the Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy the consideration payable by the Offeror on the date of completion of the Share Purchase Agreements and the consideration for the full acceptance of the Offers.

The Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offers.

Further details of the Offers are set out in the section headed “Possible Mandatory Unconditional Cash Offers” of this joint announcement.

DESPATCH OF THE COMPOSITE DOCUMENT

Pursuant to Rule 8.2 of the Takeovers Code, within 21 days after the date of this joint announcement or such later date as the Executive may approve, the Offeror will despatch an offer document in relation to the Offers. The Offeror and the Company intend to combine the offer document and the circular of the Board in a composite offer document to be posted within such period.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee has been established by the Company to advise the Qualifying Shareholders and Bondholders in respect of the Offers pursuant to Rule 2.1 of the Takeovers Code.

An independent financial adviser will be appointed to advise the Independent Board Committee in respect of the Offers and, in particular, as to whether the Offers are fair and reasonable and as to the acceptance of the Offers pursuant to Rule 2.1 of the Takeovers Code. A further announcement will be made by the Company as soon as possible after the appointment of the independent financial adviser. The advice of the independent financial adviser and the recommendation of the Independent Board Committee will be included in the Composite Document to be despatched to the Qualifying Shareholders and Bondholders.

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WARNING

The Offers are possible mandatory unconditional cash offers and will only be made if the completion of the Share Purchase Agreements takes place. Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company, and if they are in any doubt about their position, they should consult their professional advisers. This joint announcement is made in compliance with the Takeovers Code for the purpose of, among other things, informing Shareholders, Bondholders and potential investors of the Company of the Offers to be made. The Directors make no recommendation as to the fairness or reasonableness of the Offers or as to the acceptance of the Offers in this joint announcement.

THE SHARE PURCHASE AGREEMENTS

The Board was notified by the Offeror that after trading hours on 19 August 2016, the Offeror and the Vendors entered into the Share Purchase Agreements, pursuant to which the Vendors agreed to sell and the Offeror agreed to acquire an aggregate of 4,041,446,400 Shares at total consideration of HK$1,333,677,312, equivalent to HK$0.33 per Share.

Details of the Share Purchase Agreements are set out below:

SHARES HELD BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT

Pursuant to the terms of the Creaton Share Purchase Agreement dated 19 August 2016, Creaton Holdings (as vendor) agreed to sell and the Offeror (as purchaser) agreed to acquire the Creaton Shares, being 2,241,446,400 Shares, representing approximately 28.68% of the entire issued share capital of the Company as at the date of this joint announcement. The consideration for the Creaton Shares is HK$739,677,312 (equivalent to HK$0.33 per Share) of which (i) HK$119,719,385.31 will be settled on the date of completion of the Creaton Share Purchase Agreement; and (ii) HK$619,957,926.69 is to be paid within twelve months after completion of the Creaton Share Purchase Agreement (or such later date as agreed in writing by Creaton Holdings and the Offeror).

Creaton Holdings is directly interested in approximately 40.21% of the equity interest in Shanghai Gu Yuan, which in turn holds approximately 75.66% of the equity interest in Shanghai Gorgeous, the sole shareholder of the Offeror. Creaton Holdings is therefore a party acting in concert with the Offeror under the Takeovers Code.

Completion of the Creaton Share Purchase Agreement (i) is to occur on a date to be determined by the Offeror at its sole discretion, which shall be no later than the seventh business day after the date of the Creaton Share Purchase Agreement (unless otherwise determined by the parties); and (ii) is conditional upon completion of the Linkage Share Purchase Agreement and the Cao Share Purchase Agreement. In the event that the sale and purchase of Sale Shares under the Linkage Share Purchase Agreement or the Cao Share Purchase Agreement does not complete, completion of the Creaton Share Purchase Agreement will not take place.

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Prior to the Creaton Share Purchase Agreement, Creaton Holdings acquired the Creaton Shares through the following transactions:

• (i) on 28 April 2016, Creaton Holdings as purchaser, Oriental Day International Limited (a company controlled by Mr. Lai Leong) as vendor and Mr. Lai Leong (an executive Director) as guarantor entered into a share purchase agreement, pursuant to which Creaton Holdings agreed to purchase 1,411,446,400 Shares from Oriental Day International Limited at a consideration of HK$465,777,312 (representing approximately 18.06% of the total issued share capital of the Company as at the date of this joint announcement), equivalent to HK$0.33 per Share. Such acquisition was completed on 13 June 2016 and the consideration thereunder has been fully settled by Creaton Holdings. To the best knowledge of the Offeror, each of Oriental Day International Limited and Mr. Lai Leong is a third party independent of, and not a party acting in concert with, the Offeror; and

• (ii) on 23 May 2016, Creaton Holdings acquired 830,000,000 Shares (representing approximately 10.62% of the total issued share capital of the Company as at the date of this joint announcement) through market block trade. To the best knowledge of the Offeror, the vendors of the 830,000,000 Shares are third parties independent of, and not concert parties of the Offeror.

THE LINKAGE SHARE PURCHASE AGREEMENT

Date: 19 August 2016

Parties: (i) Linkage Group (as vendor); and

(ii) the Offeror (as purchaser)

Pursuant to the terms of the Linkage Share Purchase Agreement, Linkage Group agreed to sell and the Offeror agreed to acquire the Linkage Group Shares, being 1,040,000,000 Shares, representing approximately 13.31% of the entire issued share capital of the Company as at the date of this joint announcement. The consideration for the Linkage Group Shares is HK$343,200,000 (equivalent to HK$0.33 per Share) and will be settled on the date of completion of the Linkage Shares Purchase Agreement.

Completion of the Linkage Share Purchase Agreement (i) is to occur on a date to be determined by the Offeror at its sole discretion, which shall be no later than the seventh business day after the date of the Linkage Share Purchase Agreement (unless otherwise determined by the parties); and (ii) is conditional upon completion of the Creaton Share Purchase Agreement and the Cao Share Purchase Agreement. In the event that the sale and purchase of Sale Shares under the Creaton Share Purchase Agreement or the Cao Share Purchase Agreement does not complete, completion of the Linkage Share Purchase Agreement will not take place.

Each of Linkage Group and Mr. XU David Hua, the sole shareholder of Linkage Group, is a third party independent of, and not a party acting in concert with, the Offeror.

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THE CAO SHARE PURCHASE AGREEMENT

Date: 19 August 2016

Parties: (i) Ms. Cao (as vendor); and

(ii) the Offeror (as purchaser)

Pursuant to the terms of the Cao Shares Purchase Agreement, Ms. Cao agreed to sell and the Offeror agreed to acquire the Cao Shares, being 760,000,000 Shares, representing approximately 9.73% of the entire issued share capital of the Company as at the date of this joint announcement. The consideration for the Cao Shares is HK$250,800,000 (equivalent to HK$0.33 per Share) and will be settled on the date of completion of the Cao Share Purchase Agreement.

Completion of Cao Share Purchase Agreement (i) is to occur on a date to be determined by the Offeror at its sole discretion, which shall be no later than the seventh business day after the date of the Cao Share Purchase Agreement (unless otherwise determined by the parties); and (ii) is conditional upon completion of the Creaton Share Purchase Agreement and the Linkage Share Purchase Agreement. In the event that the sale and purchase of Sale Shares under the Creaton Share Purchase Agreement or the Linkage Share Purchase Agreement does not complete, completion of the Cao Share Purchase Agreement will not take place.

Ms. Cao is a third party independent of, and not party acting in concert with, the Offeror.

It is expected that the completion of the Creaton Share Purchase Agreement, the Linkage Share Purchase Agreement and the Cao Share Purchase Agreement is to occur on the same day.

POSSIBLE MANDATORY UNCONDITIONAL CASH OFFERS

Prior to completion of the Share Purchase Agreements, save for the 2,241,446,400 Shares owned by Creaton Holdings and the HIIF Convertible Bonds held by HIIF, the Offeror and parties acting in concert with it did not have any interest in the securities of the Company. Immediately following completion of the Shares Purchase Agreements, the Offeror and parties acting in concert with it will own in aggregate 4,041,446,400 Shares, representing approximately 51.72% of the existing issued share capital of the Company. Subject to the completion of the Share Purchase Agreements, the Offeror will be required under Rule 26.1 of the Takeovers Code to make a mandatory unconditional cash offer for all the issued Shares not already owned and/or agreed to be acquired by it and/or parties acting in concert with it.

As at the date of this joint announcement, the Company has outstanding Convertible Bonds with an aggregate principal amount of US$50,000,000 convertible into 357,175,650 new Shares. HIIF (an associated corporation of Haitong International Securities) holds the HIIF Convertible Bonds in the principal amount of US$20,000,000. Subject to the completion of the Share Purchase Agreements, the Offeror is also required to make a mandatory unconditional cash offer for all the outstanding Convertible Bonds pursuant to Rule 13.1 of the Takeovers Code.

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Principal terms of the Offers

Subject to the completion of the Share Purchase Agreements, Haitong International Securities will, on behalf of the Offeror, make the Offers on terms to be set out in the Composite Document in compliance with the Takeovers Code on the following basis:

The Share Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.33 in cash

The Offer Price of HK$0.33 for each Share under the Share Offer is equal to the price for each of the Sale Shares acquired by the Offeror pursuant to the Share Purchase Agreements.

As at the date of this joint announcement, there are 7,814,351,360 Shares in issue. Other than the Convertible Bonds, the Company did not, as the date of this joint announcement have, and is not expected to issue any securities, options, warrants or derivatives which are convertible into or which confer rights to require the issue of Shares.

Based on the Offer Price of HK$0.33 per Offer Share, the entire issued share capital of the Company is valued at approximately HK$2,578,735,948.80. Assuming none of the outstanding Convertible Bonds are converted into new Shares, based on 3,772,904,960 Shares (representing the Shares not already owned and/or agreed to be acquired by the Offeror and/or parties acting in concert with it) and the Offer Price of HK$0.33 per Offer Share, the Share Offer is valued at HK$1,245,058,636.80.

The CB Offer

For every US$1,000,000 face value of the Convertible Bonds . . . . . . . . . HK$2,357,359.29 in cash

The Convertible Bonds will be acquired fully paid and free from all liens, charges, options, equities, encumbrances or other third party rights of any nature and together with all rights now or hereafter attaching or accruing to them on or after the date on which the CB Offer is made, that is, the date of the posting of the Composite Document.

The CB Offer will not apply to any Convertible Bonds which are or have been converted into Shares prior to the date on which the Offers close.

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The offer price for the Convertible Bonds is determined in accordance with Practice Note 6 to the Takeovers Code as the “see-through” consideration for the Convertible Bonds, being the maximum number of Shares into which the Convertible Bonds is convertible (being 357,175,650 Shares) multiplied by the Offer Price (of HK$0.33 per Offer Share). As at the date of this joint announcement, HIIF (an associated corporation of Haitong International Securities) holds the HIIF Convertible Bonds in the principal amount of US$20,000,000. Based on the outstanding Convertible Bonds in the principal amount of US$50,000,000, the CB Offer is valued at approximately HK$117,867,964.50.

Offer Price and Comparison of Value

The Offer Price of HK$0.33 per Offer Share represents:

• (a) a discount of approximately 35.29% over the closing price of HK$0.51 per Share as quoted on the Stock Exchange on 18 August 2016, being the Last Trading Day;

• (b) a discount of approximately 36.29% over the average closing price of HK$0.518 per Share as quoted on the Stock Exchange for the five consecutive trading days immediately prior to and including the Last Trading Day;

• (c) a discount of approximately 38.20% over the average closing price of HK$0.534 per Share as quoted on the Stock Exchange for the 10 consecutive trading days immediately prior to and including the Last Trading Day;

• (d) a discount of approximately 42.00% over the average closing price of HK$0.569 per Share as quoted on the Stock Exchange for the 30 consecutive trading days immediately prior to and including the Last Trading Day; and

• (e) a premium of approximately 73.68% over the audited consolidated net assets per Share of approximately HK$0.19 as at 31 March 2016 (being the date to which the latest audited consolidated annual results of the Group were made up), calculated based on the Group’s audited consolidated net assets attributable to the Shareholders of approximately HK$1,518,119,000 as at 31 March 2016 and 7,814,351,360 Shares in issue as at the date of this joint announcement.

Highest and lowest closing prices of the Shares

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the six-month period immediately preceding the commencement of the offer period on 19 August 2016 and including the Last Trading Day (i.e. from 19 February 2016 to 18 August 2016) were HK$0.91 per Share on 19 February 2016 and HK$0.45 per Share on 26 to 28 April 2016 and 10 May 2016, respectively.

Total considerations for the Offers

Assuming the Offers are accepted in full on the basis there is no change in the issued share capital of the Company up to the close of the Offers, a total of 3,772,904,960 issued Shares (representing the Shares not already owned and/or to be acquired by the Offeror and/or parties acting in concert with it) will be subject to the Share Offer and the maximum cash consideration payable by the Offeror under the Share Offer would amount to approximately HK$1,245,058,636.8.

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Assuming the Offers are accepted in full on the basis that (i) all the conversion rights attaching to the Convertible Bonds are exercised in full prior to the close of the Offers; and (ii) there is no other change in the issued share capital of the Company up to the close of the Offers, a total of 4,130,080,610 Shares (representing the Shares not already owned and/or to be acquired by the Offeror and/or parties acting in concert with it) will be subject to the Share Offer and the maximum cash consideration payable by the Offeror for the Offers would amount to approximately HK$1,362,926,601.3.

Confirmation of financial resources

The Offeror intends to finance the total consideration of the Offers by the loan facilities provided by Haitong International Securities. Haitong International Capital, the financial adviser to the Offeror in respect of the Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy the consideration payable by the Offeror on the date of completion of the Share Purchase Agreements and the consideration for the full acceptance of the Offers.

Effect of accepting the Offers

The Offers will be unconditional in all respects. Acceptance of the Offers will be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

Provided that valid acceptance forms and the relevant certificate(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are complete and in good order and have been received by the registrar of the Company, the Qualifying Shareholders will sell their tendered Shares to the Offeror free from all encumbrances and together with all rights attaching thereto, including, without limitation, the rights to receive in full all dividends and other distributions, if any, recommended, declared, made or paid by reference to a record date on or after the date on which the Share Offer is made, that is, the date of the posting of the Composite Document.

Acceptance of the CB Offer by any Bondholders will be deemed to constitute a warranty by such person that all Convertible Bonds sold by such person under the CB Offer are free from all encumbrances whatsoever.

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Payment

Payment in cash in respect of acceptances of the Offers will be made as soon as possible but within seven (7) Business Days of the date of receipt of a duly completed acceptance of the Offers. Relevant documents evidencing title must be received by or on behalf of the Offeror to render such acceptance of the Offers complete and valid.

No fractions of a cent will be payable and the amount of the consideration payable to a Qualifying Shareholder who accepts the Share Offer will be rounded up to the nearest cent.

Overseas Qualifying Shareholders and Overseas Bondholders

The Offeror intends to make the Offers available to all Qualifying Shareholders and all Bondholders, including those who are resident outside Hong Kong.

As the Offers to persons not resident in Hong Kong may be affected by the laws of the relevant jurisdiction in which they are resident, Overseas Qualifying Shareholders or Overseas Bondholders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should observe any applicable legal or regulatory requirements and, where necessary, seek independent legal advice in respect of the Offers. It is the responsibility of Overseas Qualifying Shareholders and Overseas Bondholders who wish to accept the Offers to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offers (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions).

Any acceptance of the Offers by any Overseas Qualifying Shareholder or Overseas Bondholder will be deemed to constitute a representation and warranty from such Overseas Qualifying Shareholder or Overseas Bondholder to the Offeror that the local laws and requirements have been complied with. The Overseas Qualifying Shareholders or Overseas Bondholders should consult their professional advisers if in doubt.

Hong Kong stamp duty

Seller’s ad valorem stamp duty arising in connection with acceptance of the Share Offer will be payable by the Qualifying Shareholders who accept the Share Offer at the rate of 0.1% of the consideration payable by the Offeror for the Shares of such Qualifying Shareholders, or (if higher) the value of the Shares as determined by the Collector of Stamp Revenue under the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong). The relevant amount of stamp duty payable by the Qualifying Shareholders will be deducted from the consideration payable to the accepting Qualifying Shareholders under the Share Offer. The Offeror will bear its own portion of buyer’s ad valorem stamp duty at the rate of 0.1% of the consideration payable in respect of acceptances of the Share Offer and will be responsible to account to the Stamp Office of Hong Kong for all the stamp duty payable for the sale and purchase of the Shares which are validly tendered for acceptance under the Share Offer.

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No stamp duty is payable in connection with the acceptances of the CB Offer.

Taxation Advice

Qualifying Shareholders and Bondholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting or rejecting the Offers. It is emphasised that none of the Company, the Offeror or any of their respective directors, officers or associates or any other person involved in the Offers accepts responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Offers.

OFFEROR’S INTERESTS IN SECURITIES OF THE COMPANY

The Offeror confirms that, save as disclosed herein, as at the date of this joint announcement:

• (a) save for the 2,241,446,400 Shares held by Creaton Holdings (a party acting in concert with the Offeror) and the HIIF Convertible Bonds held by HIIF that is presumed to be a party acting in concert with the Offeror in relation to the Offers, neither the Offeror nor any parties acting in concert with it owned or had control or direction over any voting rights or rights over the Shares or convertible securities, warrants, options of the Company or any derivatives in respect of such securities;

• (b) save for Creaton Holdings’s acquisition of an aggregate of 2,241,446,400 Shares on 23 May 2016 and 13 June 2016 respectively, and the Offeror’s acquisition of the Sale Shares pursuant to the Share Purchase Agreements, neither the Offeror nor any parties acting in concert with it had dealt for value in any Shares, convertible securities, warrants or options of the Company or any derivatives in respect of such securities in the six months prior to the date of this joint announcement (i.e. from 19 February 2016 to 18 August 2016);

• (c) save for (i) the senior secured bonds issued by the Offeror to Haitong International New Energy VIII Limited, an associated corporation of Haitong International Securities, which is secured by 1,800,000,000 Shares to be acquired by the Offeror; (ii) loan facilities provided by Haitong International Securities to the Offeror, which is secured by all the Shares to be acquired by the Offeror pursuant to the Share Purchase Agreements (including the 1,800,000,000 Shares referred to in (i) above) and the Shares to be acquired by the Offeror through the Share Offer, there is no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code in relation to the shares of the Offeror or the Shares and which might be material to the Offers;

• (d) there is no agreement or arrangement to which the Offeror or any person acting in concert with it, is a party which relates to circumstances in which the Offeror may or may not seek to invoke a pre-condition or a condition to the Offers;

• (e) neither the Offeror nor any person acting in concert with it has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company;

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• (f) neither the Offeror nor any person acting in concert with it has received any irrevocable commitment to accept or not accept the Offers; and

• (g) there is no outstanding derivative in respect of the securities in the Company entered into by the Offeror or any parties acting in concert with it.

SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the shareholding structure of the Company (i) as at the date of this joint announcement; (ii) immediately after completion of the Share Purchase Agreements; and (iii) upon completion of Offers assuming all of the rights attaching to the Convertible Bonds are exercised prior to the close of the Offers and no acceptance of the Share Offer:

					Upon completion of the Offers
					assuming (i) all of the rights
					attaching to the Convertible Bonds
					are exercised prior to the close of
	As at the date of		Immediately after completion of		the Offers; and (ii) no acceptance
	this joint announcement		the Share Purchase Agreements		of the Share Offer
	Number of Shares	Approx. %	Number of Shares	Approx. %	Number of Shares Approx. %
The Offeror and parties acting in concert with it	2,241,446,400	28.68	4,041,446,400	51.72	4,184,316,659 51.21
	(Note 1)				(Note 2)
Linkage Group	1,043,478,260	13.35	3,478,260	0.04	3,478,260 0.04
Ms. Cao	960,000,000	12.29	200,000,000	2.56	200,000,000 2.45
Shanghai Electric Hongkong Co. Limited	825,958,700	10.57	825,958,700	10.57	825,958,700 10.11
Other public Shareholders	2,743,468,000	35.11	2,743,468,000	35.11	2,957,773,391 36.19
Total	7,814,351,360	100.00	7,814,351,360	100.00	8,171,527,010 100.00
Notes:

• (1) These Shares are held by Creaton Holdings.

• (2) The total number of Shares to be held by the Offeror and parties acting in concert with it include the new Shares which may be issued upon exercise of the conversion rights attaching to the HIIF Convertible Bonds.

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INFORMATION ON THE GROUP

The Company was incorporated in Bermuda as an exempted company with limited liability. The Group is principally engaged in clean energy business, investment business and fur business.

Financial Information of the Group

The following table is a summary of certain audited consolidated financial information of the Group for the two years ended 31 March 2016 as extracted from the annual report of the Company for the year ended 31 March 2016:

Revenue Gross Profit Loss before tax Loss after tax Consolidated net asset value attributable to the owners of the Company	(audited) Year ended 31 March 2015 2016 HK$’000 HK$’000 (Restated) 202,410 253,157 196,275 249,101 (290,432) (394,761) (128,923) (320,080) 906,607 1,518,119

INFORMATION ON THE OFFEROR

The Offeror is an investment holding company incorporated in the British Virgin Islands with limited liability. It is a direct wholly-owned subsidiary of Shanghai Gorgeous, a company established under the laws of the PRC, which is ultimately controlled by Mr. Ko.

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Shanghai Gorgeous is an investment holding company incorporated in Shanghai, the PRC with limited liability and is held as to approximately 75.66% by Shanghai Gu Yuan, 22.48% by Shanghai Guo Zheng Investment Management Company Limited（上海國正投資管理有限公司） (“ Shanghai Guo Zheng ”), 1.47% by Shanghai Yuan Sheng Investment Management Company Limited（上海沅晟投資管理有限公司）(“ Shanghai Yuan Sheng ”) and 0.39% by Shanghai Xin Kang Run Industrial Company Limited（上海鑫康潤實業有限公司）(“ Shanghai Xin Kang Run ”), respectively. Set out below is the shareholding structure of the Offeror:

==> picture [479 x 182] intentionally omitted <==

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

Mr. Ko Cheng Kwun Fu(鄭冠富) Wang Haisheng(王海生) Zhang Wenjun(張文軍)
99% 1% 64% 36%
Creaton Holdings Rich Crown Sichuan Trust [1] Hainan Jia Mao [2] Chengdu KuiXing [3] Shanghai XinKang Run ShanghaiGu Yuan Zhang Wei (張瑋) (Li Jutao劉巨濤) Shanghai YuanSheng
40.21% 59.79% 39.88% 22.09% 18.41% 10.18% 9.20% 0.12% 0.12%
Shanghai Shanghai
Gu Yuan Guo Zheng
75.66% 22.48% 0.39% 1.47%
Shanghai
Gorgeous
100%
the Offeror
----- End of picture text -----

Notes:

1. “Sichuan Trust” means Sichuan Trust Company Limited*（四川信托有限公司）;

2. “Hainan Jia Mao” means Hainan Jia Mao Industrial Company Limited*（海南佳貿實業有限公司）; and

3. “Chengdu Kui Xing” means Chengdu Kui Xing City Forrest Investment Company Limited*（成都 奎星城市森林投資有限公司）.

Shanghai Gu Yuan is a company incorporated in Shanghai, the PRC with limited liability and is held as to approximately 59.79% by Rich Crown. The remaining approximately 40.21% equity interest in Shanghai Gu Yuan is held by Creaton Holdings. Shanghai Gu Yuan is principally engaged in real estate development.

Rich Crown is an investment holding company incorporated in Hong Kong with limited liability. Each of Rich Crown and Creaton Holdings is held by Mr. Ko as to 99% and Mr. Cheng Kwun Fu, another individual shareholder as to 1%, respectively.

• For identification purpose only

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INTENTIONS OF THE OFFEROR REGARDING THE GROUP

It is the intention of the Offeror that the Group will continue with its existing principal activities after the close of the Offers and will maintain the listing status of the Company on the Stock Exchange. The Offeror will, following the close of the Offers, conduct a review on the business activities and financial position of the Group to formulate business plans and strategies for the future business development of the Group. The Offeror will also consider any suitable acquisition opportunities to expand the Group’s clean energy businesses and broadening its income stream. In view of the above, the Offeror is of the view that the Offers are in its long-term commercial interest. As at the date of this joint announcement, the Offeror has no definitive plans for any acquisition or disposal of assets and/or business of the Group.

Save for the Offeror’s intention regarding the Group as set out above and the proposed nomination of Mr. Ko to the Board as further described below, the Offeror has no intention to (i) discontinue the employment of any employees of the Group; or (ii) redeploy the fixed assets of the Company other than those in its ordinary and usual course of business.

Proposed nomination of Mr. Ko as an executive Director

The Offeror proposes to nominate Mr. Ko as an executive Director with effect from the earliest time permitted under the Takeovers Code or any other later time as it thinks appropriate. Set out below are the biographical details of Mr. Ko, and further details required by Rule 13.51(2) of the Listing Rules will be announced after the appointment takes effect:

Mr. Ko, aged 65, is the chairman of Shanghai Gorgeous. From 1994 to 2001, he served as the vice chairman of Shanghai Gu Yuan. He served as the chief executive officer of Shanghai Gorgeous from 2001 to 2012 and currently is the chairman of Shanghai Gorgeous. He also serves as the director of Creaton Holdings from 1995 and Rich Crown from 1994. As at the date of this joint announcement, Mr. Ko is directly interested in 99% of the equity interest in Creaton Holdings and Rich Crown and is the ultimate controlling shareholder of the Offeror.

Save as disclosed above, Mr. Ko (i) has not served in any public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; (ii) does not hold any other positions in the Company or any of its subsidiaries; and (iii) does not have any relationship with any director, senior management, substantial shareholder or controlling shareholder of the Company.

If, following the appointment of Mr. Ko as an executive Director, the number of independent nonexecutive Directors falls below the minimum requirement under Rule 3.10 of the Listing Rules, the Company will identify and appoint a suitable candidate as an additional independent non-executive Director as soon as practicable and in any event within three months from the appointment of Mr. Ko.

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PUBLIC FLOAT AND MAINTENANCE OF THE LISTING STATUS OF THE COMPANY

The Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offers.

If, at the close of the Offers, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares, are held by the public at all times, or if the Stock Exchange believes that:

• (a) a false market exists or may exist in the trading of the Shares; or

• (b) that there are insufficient Shares in public hands to maintain an orderly market,

then the Stock Exchange may exercise its discretion to suspend dealings in the Shares.

Each of the Offeror and Mr. Ko, being the new Director to be appointed to the Board, will undertake to the Stock Exchange on terms required under the Listing Rules to take appropriate steps to ensure that sufficient public float exists in the Shares.

DESPATCH OF THE COMPOSITE DOCUMENT

Pursuant to Rule 8.2 of the Takeovers Code, within 21 days after the date of this joint announcement or such later date as the Executive may approve, the Offeror will despatch an offer document in relation to the Offers to the Qualifying Shareholders and the Bondholders. The Offeror and the Company intend to combine the offer document and the circular of the Board setting out, among other things, terms of the Offers, the recommendation of the Independent Board Committee to the Qualifying Shareholders and Bondholders, the letter of advice of the independent financial adviser to the Independent Board Committee and the Qualifying Shareholders and Bondholders in respect of the Offers in the Composite Document to be posted within such period. Further announcement(s) regarding despatch of the Composite Document will be made in due course.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising all independent non-executive Directors, namely, Mr. Fok Ho Yin, Thomas, Mr. Tsui Ching Hung and Ms. Cheung Oi Man, Amelia, has been established by the Company pursuant to Rule 2.1 of the Takeovers Code to advise the Qualifying Shareholders and Bondholders in respect of the Offers, as to whether the terms of the Offers are fair and reasonable and as to the acceptance of the Offers.

An independent financial adviser will be appointed pursuant to Rule 2.1 of the Takeovers Code to advise the Independent Board Committee in respect of the Offers and, in particular, as to whether the Offers are fair and reasonable and as to the acceptance of the Offers. A further announcement will be made by the Company as soon as possible after the appointment of the independent financial adviser.

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DISCLOSURE OF DEALINGS

In accordance with Rule 3.8 of the Takeovers Code, associates of the Company or the Offeror (including persons holding 5% or more of a class of relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company or the Offeror, or any person who as a result of any transaction owns or controls 5% or more of any class of securities of the Company and of the Offeror respectively) are reminded to disclose their dealings in the securities of the Company pursuant to the Takeovers Code.

The full text of Note 11 of Rule 22 of the Takeovers Code is reproduced below pursuant to Rule 3.8 of the Takeovers Code:

“ Responsibility of stockbrokers, banks and other intermediaries

Stockbrokers, banks and others who deal in relevant securities on behalf of clients have a general duty to ensure, so far as they are able, that those clients are aware of the disclosure obligations attaching to associates and other persons under Rule 22 and that those clients are willing to comply with them. Principal traders and dealers who deal directly with investors should, in appropriate cases, likewise draw attention to the relevant Rules. However, this does not apply when the total value of dealings (excluding stamp duty and commission) in any relevant security undertaken for a client during any 7 day period is less than HK$1 million.

This dispensation does not alter the obligation of principals, associates and other persons themselves to initiate disclosure of their own dealings, whatever total value is involved.

Intermediaries are expected to co-operate with the Executive in its dealings enquiries. Therefore, those who deal in relevant securities should appreciate that stockbrokers and other intermediaries will supply the Executive with relevant information as to those dealings, including identities of clients, as part of that co-operation.”

WARNING

The Offers are possible mandatory cash offers and will only be made if the completion of the Share Purchase Agreements takes place. Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company, and if they are in any doubt about their position, they should consult their professional advisers. Qualifying Shareholders, Bondholders and potential investors of the Company should note that the Independent Board Committee has yet to consider and evaluate the Offers.

This joint announcement is made in compliance with the Takeovers Code for the purpose of, among other things, informing Qualifying Shareholders and Bondholders and potential investors of the Company of the Offers to be made. The Directors make no recommendation as to the fairness or reasonableness of the Offers or as to the acceptance of the Offers in this joint announcement. Qualifying Shareholders and Bondholders should read the Composite Document, including the recommendations of the Independent Board Committee and the letter of advice from the independent financial adviser, before forming a view on the Offers.

17

DEFINITIONS

In this joint announcement, the following expressions shall have the meanings set out below unless the context requires otherwise.

“acting in concert” has the meaning ascribed thereto under the Takeovers Code “associates” has the meaning ascribed thereto under the Takeovers Code “Board” the board of Directors “Bondholder(s)” the holder(s) of the Convertible Bonds from time to time “Business Day(s)” a day on which the banks are open for business in Hong Kong, other than Saturdays, Sundays and public holidays and/or on which the Stock Exchange is open for the transaction of business

• “Cao Share(s)” the 760,000,000 Shares to be sold by Ms. Cao to the Offeror pursuant to the Cao Share Purchase Agreement

• “Cao Share Purchase the sale and purchase agreement dated 19 August 2016 Agreement” entered into by Ms. Cao as vendor and the Offeror as purchaser in respect of the sale by Ms. Cao of the Cao Shares to the Offeror

• “CB Offer” the possible mandatory unconditional cash offer to be made by Haitong International Securities on behalf of the Offeror in accordance with the Takeovers Code to acquire the Convertible Bonds in accordance with the terms described in this joint announcement

• “Company”

• China Smarter Energy Group Holdings Limited（中國智 慧能源集團控股有限公司）, a company incorporated in Bermuda with limited liability, and the shares of which are listed on the Stock Exchange (Stock Code: 1004)

• “Composite Document”

• the composite offer and response document to be jointly issued by or on behalf of the Offeror and the Company to the Qualifying Shareholders and Bondholders in connection with the Offers in compliance with the Takeovers Code

• “controlling shareholder”

has the meaning ascribed thereto under the Listing Rules

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“Convertible Bonds”	the outstanding 6% coupon secured and guaranteed
	convertible bonds in the aggregate principal amount of
	US$50,000,000 issued by the Company on 30 July 2015
“Creaton Holdings”	Creaton Holdings Limited, a company incorporated in Hong
	Kong, being the indirect shareholder of Shanghai Gorgeous
“Creaton Share(s)”	the 2,241,446,400 Shares to be sold by Creaton Holdings
	to the Offeror pursuant to the Creaton Share Purchase
	Agreement
“Creaton Share Purchase	the sale and purchase agreement dated 19 August 2016
Agreement”	entered into by Creaton Holdings as vendor and the Offeror
	as purchaser in respect of the sale by Creaton Holdings of
	the Creaton Shares to the Offeror
“Director(s)”	director(s) of the Company
“Executive”	the Executive Director of the Corporate Finance Division of
	the SFC or any of his delegates
“Group”	the Company and its subsidiaries
“Haitong International	Haitong International Capital Limited, a corporation licensed
Capital”	by the SFC to carry out Type 6 (advising on corporate
	finance) regulated activities under the SFO and the financial
	adviser to the Offeror in respect of the Offers
“Haitong International	Haitong International Securities Company Limited, a
Securities”	fellow subsidiary of Haitong International Capital, and is a
	corporation licensed by SFC to carry out Type 1 (dealing in
	securities), Type 3 (leveraged foreign exchange trading) and
	Type 4 (advising on securities) regulated activities under the
	SFO
“HIIF”	Haitong International Investment Fund SPC (an associated
	corporation of Haitong International Securities)
“HIIF Convertible Bonds”	Convertible Bonds in the principal amount of US$20,000,000
	held by HIIF
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC

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“Independent Board	the independent board committee of the board of directors
Committee”	of the Company, comprising all independent non-executive
	Directors, namely, Mr. Fok Ho Yin, Thomas, Mr. Tsui
	Ching Hung and Ms. Cheung Oi Man, Amelia, formed for
	the purpose of advising the Qualifying Shareholders and
	Bondholders in respect of the Offers
“Last Trading Day”	18 August 2016, being the day on which Shares last traded
	on the Stock Exchange immediately prior to the date of this
	joint announcement
“Linkage Group”	Linkage Group Limited, a company incorporated in the
	British Virgin Islands
“Linkage Group Share(s)”	the 1,040,000,000 Shares to be sold by Linkage Group to the
	Offeror pursuant to the Linkage Share Purchase Agreement
“Linkage Share Purchase	the sale and purchase agreement dated 19 August 2016
Agreement”	entered into by Linkage Group as vendor and the Offeror
	as purchaser in respect of the sale by Linkage Group of the
	Linkage Group Shares to the Offeror
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mr. Ko”	Mr. Ko Tin Kwok（高天國先生）, the ultimate controlling
	shareholder of the Offeror
“Ms. Cao”	Ms. Cao Zhiying（曹志鶯女士）
“Offer Price”	the cash amount of HK$0.33 payable by the Offeror for each
	Offer Share
“Offer Share(s)”	all the issued Shares (other than those already owned or
	agreed to be acquired by the Offeror and parties acting in
	concert with it)
“Offers”	the Share Offer and the CB Offer
“Offeror”	Gorgeous Investment Group Holding Co., Limited, a
	company incorporated in the British Virgin Islands with
	limited liability and is a wholly-owned subsidiary of
	Shanghai Gorgeous

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“Overseas Bondholder(s)”	Bondholder(s) whose address(es), as shown on the register
	of Convertible Bonds of the Company, is/are outside Hong
	Kong
“Overseas Qualifying	Qualifying Shareholder(s) whose address(es), as shown on
Shareholder(s)”	the register of members of the Company, is/are outside Hong
	Kong
“PRC”	People’s Republic of China
“Qualifying Shareholder(s)”	holder(s) of the Share(s), other than the Offeror and parties
	acting in concert with it
“Rich Crown”	Rich Crown International Industries Limited（富冠國際實
	業有限公司）, a company incorporated in Hong Kong with
	limited liability, owned as to 99% by Mr. Ko and as to 1 %
	by Mr. Cheng Kwun Fu respectively.
“Sale Shares”	collectively, the Creaton Shares, Linkage Group Shares and
	Cao Shares
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shanghai Gorgeous”	Shanghai Gorgeous Investment Development Company
	Limited*（上海國之杰投資發展有限公司）, a company
	established under the laws of the PRC
“Shanghai Gu Yuan”	Shanghai Gu Yuan Property Development Company
	Limited（上海谷元房地產開發有限公司）, a company
	incorporated in the PRC owned as to approximately
	59.79% by Rich Crown and 40.21% by Creaton Holdings,
	respectively
“Share(s)”	ordinary share(s) of HK$0.0025 each in the issued share
	capital of the Company
“Share Offer”	the possible mandatory unconditional cash offer to be made
	by Haitong International Securities, on behalf of the Offeror,
	to acquire all the issued Shares not already owned and/or
	agreed to be acquired by the Offeror and/or parties acting in
	concert with it in accordance with the Takeovers Code

• For identification purpose only

21

“Share Purchase collectively, the Creaton Share Purchase Agreement, the Agreements” Linkage Share Purchase Agreement and the Cao Share Purchase Agreement in relation to the sale and purchase of the Sale Shares

“Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Code on Takeovers and Mergers “US$” US dollars, the lawful currency of the United States of America

“Vendors” collectively, Creaton Holdings, Linkage Group and Ms. Cao

“%”

per cent

By order of the board of By order of the board of Gorgeous Investment Group China Smarter Energy Group Holding Co., Limited Holdings Limited Mr. Ko Tin Kwok Mr. Wang Ho Director of Shanghai Gorgeous Investment Chairman Development Company Limited* (the sole director of Gorgeous Investment Group Holding Co., Limited)

Hong Kong, 19 August 2016

As at the date of this joint announcement, the sole director of the Offeror is Shanghai Gorgeous and the directors of Shanghai Gorgeous are Mr. Ko Tin Kwok, Mr. Shen Jian Hong, Ms. Zhou Li, Mr. Shao Ming An and Ms. Ma Hui Li. The director of the Offeror and the directors of Shanghai Gorgeous jointly and severally accept full responsibility for the accuracy of the information contained in this joint announcement (other than that relating to the Group or their respective director(s)), and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this joint announcement (other than that expressed by the Group or their respective director(s)) have been arrived at after due and careful consideration and there are no other facts not contained in this joint announcement, the omission of which would make any statements in this joint announcement misleading.

As at the date of this joint announcement, the board of directors of the Company comprises six executive Directors, namely, Mr. Wang Hao, Mr. Lai Leong, Mr. Lam Kwan Sing, Mr. Wong Nga Leung, Mr. Hon Ming Sang and Mr. Zhou Chengrong and three independent non-executive Directors, namely, Mr. Fok Ho Yin, Thomas, Mr. Tsui Ching Hung and Ms. Cheung Oi Man, Amelia.

The directors of the Company jointly and severally accept full responsibility for the accuracy of the information contained in this joint announcement (other than that relating to the Offeror and parties acting in concert with it), and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this joint announcement (other than those expressed by the Offeror and parties acting in concert with it) have been arrived at after due and careful consideration and there are no other facts not contained in this joint announcement, the omission of which would make any statements in this joint announcement misleading.

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