Strawbear Entertainment Group — Capital/Financing Update 2024

Oct 18, 2024

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.

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Strawbear Entertainment Group 稻草熊娛樂集團

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2125)

ANNOUNCEMENT FURTHER CHANGE IN USE OF PROCEEDS

References are made to (i) the prospectus of Strawbear Entertainment Group (the “ Company ”, together with its subsidiaries and consolidated affiliated entities, the “ Group ”) dated December 31, 2020 (the “ Prospectus ”) in relation to the listing of the shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Listing ”), which sets out the intended use of the net proceeds from the global offering (the “ Net Proceeds ”); (ii) the announcement of the Company dated September 15, 2021 in relation to the change in use of proceeds (the “ Previous Announcement ”); and (iii) the interim report of the Company for the six months ended June 30, 2024, in which the use of the Net Proceeds up to June 30, 2024 was disclosed. Unless otherwise defined, capitalised terms used in this announcement shall have the same meanings as those defined in the Prospectus.

PREVIOUS CHANGE IN USE OF PROCEEDS

The Net Proceeds from the Global Offering received by the Company, after deduction of the underwriting fees and commissions and other expenses payable by the Company in connection with the Global Offering, amounted to approximately HK$1,071.1 million. The original intended use of the Net Proceeds was disclosed in the section headed “Future Plans and Use of Proceeds” in the Prospectus.

As disclosed in the Previous Announcement, on September 15, 2021, the Board resolved to reallocate part of the unutilised Net Proceeds of approximately HK$635.7 million (representing approximately 59.4% of the Net Proceeds), of which (i) HK$528.6 million originally intended to be used for funding the production of Hello Baby (《你好寶貝》), My Mr. Cat (《我的貓 先生》), Steal His Heart (《偷走他的心》), The Wind Catcher (《捕風者》) and Two Capitals (《兩京十五日》) was re-allocated to fund the production of Cat & Thief (《鬥賊》), The Swimsuit Saga (《乘風踏浪》), Never Too Late (《我的助理六十歲》) and Thousand Years For You (《請君》); and (ii) HK$107.1 million originally intended to be used for acquiring one premium copyright company which focuses on investment, development, production and distribution of web series was re-allocated to acquire more premium IPs.

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FURTHER CHANGE IN USE OF PROCEEDS

As of June 30, 2024, the Net Proceeds utilised were approximately HK$964.0 million and the remaining Net Proceeds unutilised were approximately HK$107.1 million.

For the reasons set out in the paragraph headed “Reasons for and Benefits of the Change in Use of Proceeds” below, the Board has resolved to change the use of the remaining Net Proceeds of approximately HK$107.1 million (representing approximately 10.0% of the Net Proceeds). The table below sets out the previous allocation of Net Proceeds, the change in use of Net Proceeds (as underlined) and the revised allocation of the unutilised Net Proceeds:

Funding the drama series production of the Group Funding potential investment in, or merger and acquisition of, companies, businesses and assets that may enhance the Group’s market position and ramp up the Group’s drama series development, production and distribution, as well as investment in funds related to content products development, production and distribution and funds focusing on pan-entertainment industry Acquiring more premium IPs to guarantee the stable growth of the Group’s drama series production and distribution Working capital and general corporate purposes Total	Previous allocation of Net Proceeds(1) HK$ in million 749.8 107.1 107.1 107.1 1,071.1	Utilised amount of Net Proceeds as of the date of this announcement HK$ in million 749.8 – 107.1 107.1 964.0	Unutilised amount of Net Proceeds as of the date of this announcement HK$ in million – 107.1 – – 107.1	Revised allocation of Net Proceeds Expected timeline for utilisation(2) HK$ in million 749.8 – 107.1 By the end of 2025 107.1 – 107.1 – 1,071.1

Notes:

• (1) The previous allocation of Net Proceeds refers to the revised allocation made by the Board on September 15, 2021.

• (2) The expected timeline for the usage of the remaining Net Proceeds is made based on the best estimate of the Group’s future market conditions, which is subject to the current and future development of the market conditions.

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As of the date of this announcement, save for the aforementioned changes, there are no other changes in the use of the Net Proceeds and the Company intends to utilise the Net Proceeds in the manner and the proportion set out in the Prospectus, the Previous Announcement and this announcement.

REASONS FOR AND BENEFITS OF THE CHANGE IN USE OF PROCEEDS

The planned use of the Net Proceeds as disclosed in the Prospectus and the Previous Announcement was based on the best estimation made by the Group in relation to the then future market conditions as at the Latest Practicable Date of the Prospectus and the date of the Previous Announcement, while the Net Proceeds were applied in accordance with the actual development of the market from time to time.

As disclosed in the Prospectus and the Previous Announcement, approximately 10.0% of the Net Proceeds is expected to be used to fund potential investment in, or merger and acquisition of, companies that may enhance the Group’s market position and ramp up the Group’s drama series development, production and distribution.

Since the Listing, the Group has been actively exploring investment and acquisition opportunities of suitable companies that have business synergies with the Group. The Company has closely monitored the market trend and conducted market research regarding the preference of audience from time to time, to help select a suitable target that may enhance the Group’s market position and ramp up the Group’s drama series development, production and distribution.

However, no suitable investment or acquisition target has been found due to the combined effect of changes in the market structure and significant differences in the understanding of the value of the potential acquisition target, which is influenced by its asset value, the Group’s expected return on investment and many other factors. Due to the rapid and unforeseen changes in the market and industry environment, the Group intends to change the use of the remaining Net Proceeds as “funding potential investment in, or merger and acquisition of, companies, businesses and assets that may enhance the Group’s market position and ramp up the Group’s drama series development, production and distribution, as well as investment in funds related to content products development, production and distribution and funds focusing on pan-entertainment industry”, so as to better utilise its financial resources, capture more favorable investment opportunities and maintain maximum flexibility in order to adapt to the ever-changing market conditions and industry environment.

The Board confirms that there is no material change in the nature of business of the Group as set out in the Prospectus, and that the change in use of the Net Proceeds as set out above will not have any material adverse impact on the operations of the Group. The Board considers that such change in use of the Net Proceeds will facilitate an effective use of the financial resources of the Group, strengthen the future development of the Group and is therefore in the best interests of the Company and its shareholders as a whole.

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The Board will continuously assess the plans for the use of the Net Proceeds, and may revise or amend such plans where necessary to respond to the changing market conditions and strive for better business performance of the Group.

By order of the Board Strawbear Entertainment Group Liu Xiaofeng Chairman

Nanjing, PRC, October 18, 2024

As of the date of this announcement, the Board comprises Mr. Liu Xiaofeng and Ms. Zhai Fang as executive Directors, Mr. Wang Xiaohui and Ms. Liu Fan as non-executive Directors, and Mr. Zhang Senquan, Mr. Ma Zhongjun and Mr. Chung Chong Sun as independent nonexecutive Directors.

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