Putian Communication Group Limited — Capital/Financing Update 2018

Jan 4, 2018

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.

Putian Communication Group Limited 普天通信集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1720)

DISCLOSEABLE TRANSACTION ACQUISITION OF OPTICAL FIBER DRAWING TOWERS AND OPTICAL FIBER PRODUCTION LINES

INTRODUCTION

Reference is made to the Prospectus of the Company. In the section headed “Future Plans and Proposed Use of Proceeds – Use of Proceeds” in the Prospectus, the Company intends to allocate part of the proceeds from the share offer for the upstream vertical expansion to optical fiber production.

The Board is pleased to announce that on 3 January 2018, the Group entered into the Equipment Acquisition Contract with the Manufacturer pursuant to which the Manufacturer agreed to sell and the Group agreed to purchase the Optical Fiber Production Facilities at a total consideration of approximately RMB45.1 million.

LISTING RULES IMPLICATIONS

As one of the applicable ratios set out in Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Equipment Acquisition Contract is more than 5% and all of such ratios are below 25%, the entering into of the Equipment Acquisition Contract constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

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INTRODUCTION

Reference is made to the prospectus (the “ Prospectus ”) of Putian Communication Group Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) dated 27 October 2017. In the section headed “Future Plans and Proposed Use of Proceeds – Use of Proceeds” in the Prospectus, it was mentioned that the Company intends to use approximately 46% of the net proceeds from the share offer (equivalent to approximately RMB57.3 million, based on the final offer price of the shares in the Company (the “ Shares ”) under the share offer of HK$0.66) for the upstream vertical expansion by acquisition of two sets of optical fiber drawing towers and setting up of four optical fiber production lines.

The board (the “ Board ”) of directors (the “ Directors ”) of the Company is pleased to announce that on 3 January 2018, the Group entered into an equipment acquisition contract (the “ Equipment Acquisition Contract ”) with a PRC optical fiber manufacturer (the “ Manufacturer ”) pursuant to which the Manufacturer agreed to sell and the Group agreed to purchase two sets of optical fiber drawing towers and other system, machines and equipment for setting up of four optical fiber production lines (collectively, “ Optical Fiber Production Facilities ”) at a total consideration of approximately RMB45.1 million.

THE EQUIPMENT ACQUISITION CONTRACT

The principal terms of the Equipment Acquisition Contract are set forth below:

• Date : 3 January 2018

Parties

• : (i) Putian Cable Group Co., Ltd* (普天線纜集團有限公 司) (“ Putian Cable ”), a wholly-owned subsidiary of the Company; and

  • (ii) the Manufacturer.

Supply of the Optical Fiber Production Facilities

• : The Manufacturer will supply Putian Cable the Optical Fiber Production Facilities. The consideration (the “ Consideration ”) for the Optical Fiber Production Facilities is approximately RMB45.1 million.

The Consideration was determined after arm’s length negotiations between the Group and the Manufacturer with reference to, among others, the market price of the Optical Fiber Production Facilities. The Consideration will be financed by the net proceeds from the share offer.

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Payment terms

• : The Consideration will be paid in accordance with the following schedule:

  • (i) 60% of the Consideration (i.e. approximately RMB27.1 million) will be paid not later than 25 January 2018;

  • (ii) 30% of the Consideration (i.e. approximately RMB13.5 million) will be paid within 20 working days after the delivery of the Optical Fiber Production Facilities; and

  • (iii) 10% of the Consideration (i.e. approximately RMB4.5 million) will be paid within 10 days after the testing and acceptance of the Optical Fiber Production Facilities by the Group.

• Installment and testing : The Manufacturer will commence to install and test the Optical Fiber Production Facilities within 3 days upon receipt of 90% of the Consideration.

REASONS FOR AND BENEFITS OF THE ENTERING INTO OF THE EQUIPMENT ACQUISITION CONTRACT

The Board believes the upstream vertical expansion to optical fiber production will put the Group in a better position to secure steady supplies of optical fibers for its production of optical fiber cables and enable the Group to further increase its profit margin and enhance its competitiveness in the bidding or tendering processes, thus enabling it to capture more value in the optical fiber cable production value chain.

Based on the above, the Board is of the view that the entering into of the Equipment Acquisition Contract is in the best interest of the Group and its shareholders as a whole.

Upon listing of the Shares in November 2017 on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”), the Group’s corporate profile and credibility are enhanced by its listing status which enables the Group to obtain financing at a lower cost. The Board also expects that the market demand for optical fiber cables in the PRC will continue to increase as a result of the favourable government policy. The Company is in the process of negotiating with the Manufacturer to further expand its optical fiber production capacity. The Company will make announcement(s) in respect of such expansion as and when appropriate and necessary.

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INFORMATION OF THE GROUP AND PUTIAN CABLE

The Group is a well-established and fast growing communication cable manufacturer and structured cabling system product provider based in Jiangxi Province, the PRC.

Putian Cable is one of the wholly-owned subsidiaries of the Company. Since its incorporation, Putian Cable has been principally engaged in the production and sales of communication copper cables, optical fiber cables and structured cabling system products.

INFORMATION OF THE MANUFACTURER

The Manufacturer is a company established in the PRC with limited liability and is an optical fiber manufacturer in the PRC. To the best knowledge, information and belief of the Directors, the Manufacturer is a party independent of the Company and its connected person(s) (as defined in the Rules Governing the Listing of Securities on the Stock Exchange (“ Listing Rules ”)) and their respective associates.

LISTING RULES IMPLICATIONS

As one of the applicable ratios set out in Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Equipment Acquisition Contract is more than 5% and all of such ratios are below 25%, the entering into of the Equipment Acquisition Contract constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

By order of the Board Putian Communication Group Limited WANG Qiuping Chairlady

The PRC, 4 January 2018

As at the date of this announcement, the Board comprises Ms. Wang Qiuping, Mr. Zhao Xiaobao and Ms. Zhao Moge as executive Directors; and Ms. Cheng Shing Yan, Mr. Liu Guodong and Mr. Xie Haidong as independent non-executive Directors.

• For identification purpose only

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