RemeGen Co., Ltd. — Capital/Financing Update 2021

Jul 7, 2021

Hong Kong Exchange 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.

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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

DISCLOSEABLE TRANSACTION INVESTMENT IN SEMK HOLDINGS

THE INVESTMENT

The Board is pleased to announce that on 7 July 2021, City Legend, a wholly-owned subsidiary of the Company, entered into the Investment Agreement with Semk Holdings, the Vendor and Mr. Hui, pursuant to which City Legend has conditionally agreed to subscribe for the New Investor Shares and acquire the Existing Investor Shares of Semk Holdings (representing approximately 9.5% of the issued share capital of Semk Holdings as enlarged by the Investment in aggregate), at the aggregate Consideration of HK$142,500,585.

LISTING RULES IMPLICATIONS

As one or more of the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Investment and the transactions contemplated under the Investment Agreement is/are more than 5% but less than 25%, the Investment and the transactions contemplated under the Investment Agreement constitute a discloseable transaction of the Company for the purpose of the Listing Rules and are subject to the reporting and announcement requirements but is exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

The Board is pleased to announce that on 7 July 2021, City Legend, a wholly-owned subsidiary of the Company, entered into the Investment Agreement with Semk Holdings, the Vendor and Mr. Hui, pursuant to which City Legend has conditionally agreed to subscribe for the New Investor Shares and acquire the Existing Investor Shares (representing approximately 9.5% of the issued share capital of Semk Holdings as enlarged by the Investment in aggregate), at the aggregate Consideration of HK$142,500,585.

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THE INVESTMENT AGREEMENT

The principal terms of the Investment Agreement are set out as follows:

Date

• 7 July 2021

Parties

• (i) City Legend (a wholly owned subsidiary of the Company), as investor;

• (ii) Semk Holdings, as issuer;

• (iii) the Vendor, as vendor of the Existing Investor Shares; and

• (iv) Mr. Hui, as guarantor of Semk Holdings and the Vendor.

The Investment

Pursuant to the Investment Agreement, City Legend has agreed to: (i) subscribe for, and Semk Holdings has agreed to allot and issue to City Legend, the New Investor Shares (representing approximately 3.5% of the issued share capital of Semk Holdings as enlarged by the Investment) at the cash consideration of HK$52,500,825; and (ii) acquire, and the Vendor has agreed to sell to City Legend, the Existing Investor Shares (representing approximately 6.0% of the issued share capital of Semk Holdings as enlarged by the Investment) at the cash consideration of HK$89,999,760.

The subscription of the New Investor Shares and the acquisition of the Existing Investor Shares shall be completed simultaneously. The Group intends to finance the Consideration by internal resources and/or external financing.

The aggregate Consideration for the Investment of HK$142,500,585 is determined after arm’s length negotiation among City Legend, Semk Holdings and the Vendor on normal commercial terms with reference to, among other things, (i) the appraised value of Semk Holdings as of 31 December 2020 of approximately HK$1.5 billion prepared by an independent valuer appointed by the Company; (ii) Semk Holdings’ position in the industry and development prospects; and (iii) the potential synergistic benefits between Semk Holdings and the Company from the Investment. Having regard to the above and the terms of the Investment, the Directors consider the Consideration to be fair and reasonable and in the interest of the Company and the Shareholders as a whole.

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Conditions precedent to the Investment Agreement

The Investor will only be obliged to complete the Investment after, among other things, the following conditions having been satisfied (or in respect of items (a), (e) to (i) below, waived by the Investor) on or before 9 July 2021 (or such earlier or later date as may be agreed among City Legend, Semk Holdings and the Vendor):

• (a) City Legend having completed the due diligence exercise on Semk Holdings (including business, legal and financial due diligence etc.), and is satisfied with the results thereof;

• (b) the Vendor having obtained the final approval from its relevant decision-making body;

• (c) Semk Holdings having obtained the final approval from its relevant decision-making body;

• (d) all necessary governmental and regulatory approvals and consents (if required) having been obtained;

• (e) there being no material breach by the Vendor to any of its undertakings under the Investment Agreement;

• (f) the representations and warranties provided by Semk Holdings, the Vendor and Mr. Hui under the Investment Agreement being (and remaining as of the completion of the Investment) true, accurate, complete and not misleading in all material respects;

• (g) there being no material adverse change to the business, operation, assets, financial or other conditions, or prospect of Semk Holdings or any of its subsidiaries, or to the financial market;

• (h) there being no material breach by Semk Holdings to any of its undertakings under the Investment Agreement; and

• (i) there being no material breach by Mr. Hui to any of his undertakings under the Investment Agreement.

Semk Holdings and the Vendor will only be obliged to complete the Investment after, among other things, the following conditions having been satisfied (or in relation to item (c) below, waived by Semk Holdings and the Vendor) on or before 9 July 2021 (or such later date as may be agreed among City Legend, Semk Holdings and the Vendor):

• (a) City Legend having obtained the final approval from its relevant decision-making body;

• (b) all necessary governmental and regulatory approvals and consents (if required) having been obtained; and

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• (c) all warranties provided by City Legend under the Investment Agreement are (and remaining as of the date of completion) true, accurate, complete, and not misleading in all material respects.

If any of the above conditions set out above have not been satisfied (or waived) by 9 July 2021 (or such other earlier or later date as may be agreed among City Legend, Semk Holdings and the Vendor), the Investment Agreement and all rights and obligations of the parties thereunder shall be terminated (save for rights and obligations already accrued before such termination).

Business cooperation

Semk Holdings agreed to use its reasonable endeavours to establish business cooperation with City Legend and OCT Group on provision of services, including intellectual property licensing, design consultation, etc. subject to all applicable laws and provided that the directors of Semk Holdings will not breach their fiduciary duty. The parties will agree on the terms of cooperation, if appropriate, upon separate discussion.

Buy-back

Semk Holdings shall use its best endeavours to achieve a QIPO. Pursuant to the Investment Agreement, City Legend has the right to request the Vendor, Mr. Hui or any party designated by the Vendor and/or Mr. Hui (which shall not be Semk Holdings or its subsidiaries) to buy-back all or part of the shares of Semk Holdings (or its holding company or subsidiary) held by City Legend in accordance with the terms set out in the Investment Agreement if any one of the following events occur after completion of the Investment:

• (a) Semk Holdings cannot achieve a QIPO by 14 April 2022; or

• (b) there is any violation of relevant laws and regulations, breach of good faith or breach of the Investment Agreement by Mr. Hui, the Vendor or its de facto controller, or any members of Semk Group, which has a material adverse effect on Semk Holdings and renders Semk Holdings (or its holding company or subsidiary) unable to satisfy the conditions for listing on the main board of the Stock Exchange.

The buy-back price shall be the consideration paid by City Legend for the shares of Semk Holdings, plus an annual rate of return of 8% thereon (simple interest) less (i) after tax dividend and (2) cash compensation paid by the Vendor if Semk Holdings fails to achieve its performance targets, received by City Legend (if any).

The above right shall be extinguished on the date of listing of the shares of Semk Holdings (or its subsidiary) pursuant to the terms of the Investment Agreement.

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Performance targets

The Vendor has agreed to procure Semk Holdings to perform certain stipulated targets on the financial results of Semk Holdings, failing which City Legend may request for cash compensation calculated in accordance with the terms of the Investment Agreement.

SHAREHOLDERS’ AGREEMENT

Pursuant to the Investment Agreement, City Legend will enter into the Shareholders’ Agreement with Semk Holdings and other shareholders of Semk Holdings upon completion of the Investment in connection with the management and control of Semk Group and the rights and interests of its shareholders. Set out below is a summary of certain principal terms of the Shareholders’ Agreement with respect to City Legend:

Composition of the board of director

The board of directors of Semk Holdings shall consist of no less than six directors. City Legend will have the right to appoint, remove and replace one director of Semk Holdings.

The Vendor agrees to nominate and vote for a candidate designated by City Legend as a director of Semk Holdings after the consummation of the QIPO to the extent permitted by applicable laws, provided that City Legend has not cumulatively reduced the number of shares it holds by more than 50% of the total number subscribed and acquired (as adjusted in accordance with any change in share capital).

Restriction on transfer

Each of City Legend, Top Plenty Limited, Sky Planner Investments Limited, Wisdom Thinker Limited and Unite Way Investment Holding Limited shall not, among others, transfer or dispose of, or encumber its interests in, its shares of Semk Holdings, at any time during the period commencing from the date of submission of the listing application by Semk Holdings for a QIPO and ending on the expiry of the 6 months immediately following a QIPO.

Right of first refusal

If a shareholder of Semk Holdings proposes to transfer any share in Semk Holdings held by it, then each of the other shareholders of Semk Holdings will have a right of first refusal to purchase all such shares proposed to be transferred at the same price per share, and upon the same terms and conditions as the proposed transfer, in accordance with the terms of the Shareholders’ Agreement.

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Tag-along right

If the Vendor is to sell all or part of its shares of Semk Holdings and such sale, if completed, would result in the Vendor ceasing to hold at least 50% of all the issued shares of Semk Holdings, the Vendor shall procure that the prospective purchaser to make an offer to purchase, and City Legend (among others) has the right to sell, all shares held by it at a price in cash per share that is at least equal to the highest price per share or paid by such prospective purchaser to the Vendor.

Buy-back

The Shareholders’ Agreement will contain buy-back provision with respect to City Legend’s right to request for share buy-back similar to that set out in the Investment Agreement.

Pre-emption right

If Semk Holdings is to issue any share or security or obligation which is by its terms convertible into or exchangeable or exercisable for shares of Semk Holdings (“ Share Equivalent ”) (except for certain exempted issuance in stipulated scenario such as issuance pursuant to a reorganization or share incentive scheme set forth in the Shareholders’ Agreement), City Legend (among others) will have an option to elect to subscribe for all or part of the shares, in proportion to its shareholdings in Semk Holdings at the same price, terms and conditions

Anti-dilution right

If Semk Holdings is to issue any share or Share Equivalent to any third party at a price lower than HK$1,447.50 per share, then the Vendor shall compensate City Legend by way of (i) cash compensation, or (ii) share compensation at nil or minimal consideration transferred from the Vendor (to the extent permitted by relevant laws and regulations) as elected by City Legend in its sole discretion.

Other than (i) the arrangement to nominate and vote for a candidate designated by City Legend as a director of Semk Holdings after the consummation of the QIPO; and (ii) the restriction on transfer or rights stipulated to continue after the QIPO, the above rights shall be extinguished automatically and cease to have any effect immediately upon the consummation of a QIPO of the shares of Semk Holdings pursuant to the terms of the Shareholders’ Agreement.

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INFORMATION ON THE GROUP

The principal business activity of the Company is investment holding. The Group is principally engaged in comprehensive development, equity investment and fund management. Equity investment and fund management involve direct equity investment and private equity fund investment in the primary market. Comprehensive development involves development and sale of residential properties, development and management of commercial properties, and development and operation of tourism projects.

City Legend is a wholly-owned subsidiary of the Company, which was incorporated under the laws of Hong Kong with limited liability. It is principally engaged in investment holding.

INFORMATION ON SEMK HOLDINGS

Semk Holdings is an exempted company incorporated in the Cayman Islands with limited liability. To the best of the Company’s knowledge, the Vendor (which is indirectly wholly-owned by Mr. Hui) is the controlling shareholder of Semk Holdings, holding more than 75% of the issued share capital in Semk Holdings as of the date of this announcement.

Based on the application proof prospectus of Semk Holdings which was published on the website of the Stock Exchange on 4 May 2021, Semk Group is principally engaged in (i) the character licensing business: the creation, design, licensing, brand management and marketing of its self-created B.Duck Family Characters across multi-channels; and (ii) the e-commerce and other business: the design, development, procurement and retail sales of its B.Duck Family Characters-featured products through multi-channels.

Set out below is the audited financial information of Semk Holdings for the two financial years ended 31 December 2019 and 2020 extract from the aforesaid application proof prospectus of Semk Holdings:

	For the year ended	For the year ended
	31 December 2019	31 December 2020
	(HK$’000)	(HK$’000)
Revenue	243,046	233,515
Profit before income tax	36,140	71,928
Profit after income tax	24,102	54,548
	As of 31 December 2019	As of 31 December 2020
	(HK$’000)	(HK$’000)
Total assets	139,498	188,898

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INFORMATION OF THE VENDOR, MR. HUI AND OTHER PARTIES TO THE SHAREHOLDERS’ AGREEMENT

The Vendor is a company incorporated in the British Virgins Islands with limited liability. Based on the aforesaid application proof prospectus of Semk Holdings, the Vendor is indirectly wholly-owned by Mr. Hui, and it is principally engaged in investment holding.

Top Plenty Limited, Sky Planner Investments Limited, Wisdom Thinker Limited and Unite Way Investment Holding Limited are other shareholders of Semk Holdings. To the best of the Company’s knowledge, none of them holds 10% or more shareholdings in Semk Holdings as of the date of this announcement. Based on the application proof prospectus of Semk Holdings:

• (1) Top Plenty Limited is a limited liability company incorporated in Hong Kong and is indirectly and wholly-owned by Wong’s International Holdings Limited, a company listed on the main board of the Stock Exchange which engages in electronic manufacturing, original design and manufacturing and property investment business;

• (2) Sky Planner Investments Limited is a business company incorporated with limited liability in the British Virgin Islands and is wholly-owned as to 50% by Mr. Tsang Kin Chung Terry and as to 50% by Mr. Tsang Kin Ho. It principally engages in investment holding;

• (3) Wisdom Thinker Limited was incorporated under the laws of the British Virgin Islands with limited liability and is an investment holding company wholly-owned by Dr. Lee Ka-kit;

• (4) Unite Way Investment Holding Limited is a business company incorporated with limited liability in the British Virgin Islands and is owned as to 51% by Mr. Lee Yi Kei and as to 49% by Mr. Ho Kin Wan. It principally engages in investment holding.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as of the date of this announcement, Semk Holdings, the Vendor, Mr. Hui, other parties to the Shareholder’ Agreement and their respective ultimate beneficial owners are Independent Third Parties.

REASONS FOR AND BENEFITS OF THE INVESTMENT

Semk Holding is one of the leading domestic character IP (intellectual property) companies in China, with a relatively high brand-recognition; the Group is optimistic about the competitiveness and development prospects of Semk Holdings. The Company expects the Investment to broaden the profit channel of the Company.

Having considered the above, the Directors are of the view that the terms of the Investment Agreement and the Shareholders’ Agreement are on normal commercial terms that are fair and reasonable, and the Investment is in the interests of the Company and the Shareholders as a whole.

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LISTING RULES IMPLICATIONS

As one or more of the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Investment and the transactions contemplated under the Investment Agreement is/are more than 5% but less than 25%, the Investment and the transactions contemplated under the Investment Agreement constitute a discloseable transaction of the Company for the purpose of the Listing Rules and are subject to the reporting and announcement requirements, but exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

To the best of the Directors’ knowledge, information and belief, no Director is required to abstain from voting on the board resolutions in relation to the approval of the Investment and the transactions contemplated under the Investment Agreement.

GENERAL

The Investment is subject to satisfaction of the conditions precedent set out in the Investment Agreement. Shareholders and potential investors of the Company are advised to exercise caution in the dealing in the securities of the Company.

DEFINITIONS

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

• “Board” the board of directors of the Company “City Legend” City Legend International Limited (華昌國際有限公司), a company incorporated in Hong Kong with limited liability and is wholly owned by the Company

• “Company” Overseas Chinese Town (Asia) Holdings Limited (華僑城(亞洲)控 股有限公司), an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange

• “connected person(s)” has the meaning ascribed to it under the Listing Rules “Consideration” the Consideration payable by the Company for the subscription of the New Investor Shares and the acquisition of the Existing Investor Shares

• “controlling shareholder(s)” has the meaning ascribed to it under the Listing Rules

• “Director(s)” the directors of the Company

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“Existing Investor Shares” existing shares of Semk Holdings proposed to be acquired by City Legend from the Vendor pursuant to the Investment Agreement, representing approximately 6.0% of the issued share capital of Semk Holdings as enlarged by the Investment “Group” the Company and its subsidiaries as at the date of this announcement “HK$” the Hong Kong dollar(s), the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Independent Third parties independent of and not connected with the Company and its Party(ies)” connected persons “Investment” the subscription of the New Investor Shares and the acquisition of the Existing Investor Shares by City Legend contemplated under the Investment Agreement “Investment Agreement” the Investment Agreement with respect to the subscription of the New Investor Shares and the sale and purchase of the Existing Investor Shares dated 7 July 2021 entered into among City Legend, Semk Holdings, the Vendor and Mr. Hui “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Mr. Hui” Mr. Hui Ha Lam “New Investor Shares” new shares of Semk Holdings proposed to be issued to and subscribed by City Legend pursuant to the Investment Agreement, representing approximately 3.5% of the issued share capital of Semk Holdings as enlarged by the Investment “OCT Ｇroup” Overseas Chinese Town Group Company Limited or its subsidiaries “QIPO” an initial public offering and listing of the shares by Semk Holdings on the main board of the Stock Exchange by 14 April 2022 (or such later date as may be agreed by parties to the Investment Agreement) in accordance with the terms of the Investment Agreement or Shareholders’ Agreement

“Semk Group” Semk Holdings and its subsidiaries

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“Semk Holdings”

Semk Holdings International Limited (德盈控股國際有限公司), an exempted company incorporated in the Cayman Islands with limited liability

• “Share(s)” the share(s) of the Company “Shareholder(s)” the shareholders of the Company

• “Shareholders’ Agreement” the amended and restated shareholders’ agreement relating to Semk Holdings to be entered into among City Legend, Semk Holdings, the Vendor, Top Plenty Limited, Sky Planner Investments Limited, Wisdom Thinker Limited, and Unite Way Investment Holding Limited

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Vendor” Semk Global Investment Ltd (德盈環球投資有限公司), a company incorporated in the British Virgin Islands with limited liability

• “%” per cent.

By the order of the Board Overseas Chinese Town (Asia) Holdings Limited Zhang Dafan Chairman

Hong Kong, 7 July 2021

As at the date of this announcement, the Board comprises seven Directors, namely: Mr. Zhang Dafan, Ms. Xie Mei and Mr. Lin Kaihua as executive Directors; Mr. Wang Wenjin as non-executive Director; and Ms. Wong Wai Ling, Mr. Lam Sing Kwong Simon and Mr. Chu Wing Yiu as independent non-executive Directors.

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