Synagistics Limited — Capital/Financing Update 2017

Nov 16, 2017

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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OP FINANCIAL INVESTMENTS LIMITED 東英金融投資有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1140)

ISSUE AND ALLOTMENT OF NEW SHARES FOR SUBSCRIPTION UNDER SPECIFIC MANDATE

SUBSCRIPTION AGREEMENTS

The Board is pleased to announce that on 16 November 2017 (after trading hours), the Company entered into four Subscription Agreements with four Subscribers, pursuant to which the Subscribers have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 740,000,000 new Shares at the Subscription Price of HK$2.10 per Subscription Share to the Subscribers. The Subscription is subject to various conditions set out below under the paragraphs headed “Conditions precedent to the Subscription” in this announcement.

Completion of the Subscription under each of the Subscription Agreements is not interconditional with each other.

The Subscription Shares represent (i) approximately 39.00% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 28.06% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares, subject to completion of the Subscription (assuming that there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares).

• For identification purpose only

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The Subscription Price is fixed at HK$2.10 per Subscription Share, which represents: (i) a discount of approximately 4.55% to the closing price of HK$2.20 per Share as quoted on the Stock Exchange on the Last Trading Day; (ii) a discount of approximately 3.93% to the average closing price of approximately HK$2.186 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day; and (iii) a discount of approximately 4.28% to the average closing price of approximately HK$2.194 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day.

The gross proceeds from the Subscription are expected to be approximately HK$1.554 billion. After deducting related professional fees and all related expenses of approximately HK$1 million to be borne by the Company under the Subscription, the net proceeds of the Subscription will amount to approximately HK$1.553 billion. The net proceeds from the Subscription will be used for (1) pursuing investment in undervalued companies listed on A-Share and H-Share markets; (2) pursuing investment in and merger and acquisition of targets in emerging industries, such as artificial intelligence, medical care for the elderly, environmental protection, public hygiene and new energy vehicles; (3) pursuing investment in internet platforms and/or tools which strategically sorts out and re-invent the operation of traditional industries; (4) increasing the Company’s investment in its existing private equity investment projects; and (5) general working capital of the Company. Further particulars of the intended use of proceeds are set out in the paragraphs headed “Use of proceeds” in this announcement.

GENERAL

The Subscription is subject to Shareholders’ approval. The Subscription Shares will be allotted and issued under the specific mandate to allot, issue and deal with Shares by ordinary resolutions to be proposed for approval by the Shareholders at the EGM.

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

Completion of the Subscription is subject to fulfillment of the conditions precedent in the Subscription Agreements and the Subscription may or not may proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

EGM

The EGM will be convened for the purpose of considering and, if deemed appropriate, approving, among other things, the grant of the specific mandate, the Subscription and the transactions contemplated thereunder.

A Circular containing, among other things, (i) further details of the Subscription; and (ii) a notice convening the EGM, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules. It is expected that the Circular will be despatched to the Shareholders on or around 4 December 2017.

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SUBSCRIPTION AGREEMENTS

The Board is pleased to announce that on 16 November 2017 (after trading hours), the Company entered into four Subscription Agreements with four Subscribers, for the conditional subscription of new Subscription Shares on and subject to the terms and conditions of each of the Subscription Agreements. The principal terms of each Subscription Agreement are substantially the same. Set out below are the key terms of the Subscription Agreements.

Date

16 November 2017 (after trading hours)

Parties

Subscription Agreement I:	(1)	the Company (as issuer)
	(2)	Wah Hing Global Investment Limited (as subscriber)
Subscription Agreement II:	(1)	the Company (as issuer)
	(2)	The People’s Insurance Company (Group) of China
		Limited (as subscriber)
Subscription Agreement III:	(1)	the Company (as issuer)
	(2)	Full House Investment Limited (as subscriber)
Subscription Agreement IV:	(1)	the Company (as issuer)
	(2)	CMBI SPC – Special Opportunities Fund Segregated
		Portfolio (as subscriber)

The Subscriber I has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 350,000,000 new Shares at the Subscription Price of HK$2.10 per Subscription Share to the Subscriber I.

The Subscriber II has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 25,000,000 new Shares at the Subscription Price of HK$2.10 per Subscription Share to the Subscriber II.

The Subscriber III has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 350,000,000 new Shares at the Subscription Price of HK$2.10 per Subscription Share to the Subscriber III.

The Subscriber IV has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue an aggregate of 15,000,000 new Shares at the Subscription Price of HK$2.10 per Subscription Share to the Subscriber IV.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, each of the Subscribers and its ultimate beneficial owner(s) are third parties independent of the Company and its connected persons (within the meaning of the Listing Rules).

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The Subscription Shares

The Subscription Shares I represent (i) approximately 18.45% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 13.27% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares in aggregate, subject to completion of the Subscription. Accordingly, Subscriber I will become a substantial shareholder (within the meaning of the Listing Rules) of the Company immediately upon completion of the Subscription (assuming that there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares).

The Subscription Shares II represent (i) approximately 1.32% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 0.95% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares in aggregate, subject to completion of the Subscription (assuming that there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares).

The Subscription Shares III represent (i) approximately 18.45% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 13.27% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares in aggregate, subject to completion of the Subscription (assuming that there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares). Accordingly, Subscriber III will become a substantial shareholder (within the meaning of the Listing Rules) of the Company immediately upon completion of the Subscription.

The Subscription Shares IV represent (i) approximately 0.79% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 0.57% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares in aggregate, subject to completion of the Subscription (assuming that there will not be any changes in the issued share capital of the Company save for the allotment and issue of the Subscription Shares).

The Subscription Shares have an aggregate nominal value of HK$74,000,000 and the market value of the Subscription Shares is approximately HK$1.58 billion based on the closing price of HK$2.14 per Share as quoted on the Stock Exchange on the date of signing of the Subscription Agreements.

Conditions precedent to and completion of the Subscription

Completion of the Subscription under each of the Subscription Agreements is conditional upon fulfillment of the following conditions:

• (a) the approval for the listing of and permission to deal in all the Subscription Shares I, or (as the case may be) the Subscription Shares II, or (as the case may be) the Subscription Shares III or (as the case may be) the Subscription Shares IV being granted by the Listing Committee of the Stock Exchange (and such permission and listing not subsequently being revoked prior to the delivery of definitive share certificate(s) representing the relevant Subscription Shares);

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• (b) the approval for the Subscription and the related transactions contemplated thereunder by the Shareholders at the EGM; and

• (c) all representations and warranties in the relevant Subscription Agreement remain true, accurate and not misleading in all material aspects upon the date of completion of the Subscription.

If the above conditions are not fulfilled on or prior to the Long Stop Date, the Subscription Agreements shall terminate and neither of the parties will have any claim against the other for costs, damages, compensation or otherwise save for any antecedent breach of the Subscription Agreements.

Completion of the Subscription under each of the Subscription Agreements is not interconditional with each other.

Completion of the Subscription will take place on the fifth business day immediately after all the conditions of the Subscription are fulfilled or waived (or such other date as may be agreed between the Company and the relevant Subscriber in writing).

Completion of the Subscription is subject to fulfillment of the conditions precedent in the Subscription Agreements and the Subscription may or not may proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

Restrictions on disposals of Subscription Shares by the Subscribers

Each of the Subscribers is not subject to any restrictions on disposals of the Subscription Shares under the Subscription Agreements.

Ranking of the Subscription Shares

The Subscription Shares, when allotted and issued, will rank pari passu in all respects among themselves free from all liens, charges, guarantee, adverse interests and adverse claims, and with the Shares in issue on the date of allotment and issue of the Subscription Shares including all dividends declared or payable or distributions made or proposed on or after the date of completion of the Subscription.

Subscription Price

The Subscription Price is fixed at HK$2.10 per Subscription Share, respectively, which represents:

• (i) a discount of approximately 4.55% to the closing price of HK$2.20 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 3.93% to the average closing price of approximately HK$2.186 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day; and

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• (iii) a discount of approximately 4.28% to the average closing price of approximately HK$2.194 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day.

Taking into account the expenses of the Subscription in the amount of approximately HK$1 million, the net price to the Company of each Subscription Share is approximately HK$2.099 per Subscription Share. The Subscription Price was arrived at after arm’s length negotiations between the Company and the Subscribers with reference to the recent market prices of the Shares and current market conditions.

GENERAL

Mandate for the issue of the Subscription Shares

The Subscription is subject to Shareholders’ approval. The Subscription Shares will be allotted and issued under the specific mandate to allot, issue and deal with Shares by ordinary resolutions to be proposed for approval by the Shareholders at the EGM.

Application for listing

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

Information on the Group

The Group is principally engaged in investment in a diversified portfolio of global investments in listed and unlisted enterprises thereby to achieve earnings in the form of medium to long term capital appreciation.

EGM

The EGM will be convened for the purpose of considering and, if deemed appropriate, approving, among other things, the grant of the specific mandate, the Subscription and the transactions contemplated thereunder.

To the best of the knowledge, information and belief of the Directors, no Shareholder has a material interest in the transactions contemplated under the Subscription Agreements and will be required to abstain from voting on the resolution(s) to approve the Subscription Agreements and the transactions contemplated thereunder at the EGM.

A Circular containing, among other things, (i) further details of the Subscription; and (ii) a notice convening the EGM, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules. It is expected that the Circular will be despatched to the Shareholders on or around 4 December 2017.

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REASONS FOR THE SUBSCRIPTION

As a Hong Kong-based investment company, the Company has long been focusing on investments in Hong Kong, mainland China and cross-border investments, through which it has accumulated rich experience and established professional network. As such, the Company has brought substantial returns for its Shareholders. In light of, among others, continuous recovery and growth of the global economy (including mainland China), the reform of supply management and state-owned enterprises in the PRC, prosperous development of new economy represented by BAT (i.e. Baidu, Alibaba and Tencent) and progress of the implementation of the Belt and Road Initiatives of the PRC, the Company is exposed to a rising number of potential investment opportunities. Despite the above, the Company’s ability to make further investment is restricted for the following reasons:

Firstly, as an investment company listed on the Stock Exchange under Chapter 21 of the Listing Rules, under the prevailing Listing Rules, the Company is required to maintain a reasonable spread of investments and the value of its holding of investments issued by any one company or body shall not exceed twenty per cent. of its net asset value at the time when such investment is made. As set out in the announcement of the Company dated 15 November 2017, the unaudited net asset value per Share was approximately HK$1.58 as at 31 October 2017. Accordingly, the Company had net assets value of around HK$3.00 billion as at 31 October 2017, thus limiting the Company’s capability to invest in projects with one company or body for investment amount over HK$600 million, which constitutes considerable constrains on the amount of the Company’s investment in a company or entity. It is expected that by increasing the capital of the Company through the Subscription, the Company is at a better position to capture the market opportunities.

Secondly, during the year ending 31 March 2017, the Company has invested in a number of investment projects by phases such that its cash balance has dropped to a relatively low level which is insufficient to satisfy its need for future investments. As the majority of the Company’s investment projects are equity investments and it is the strategy of the Company to hold such investments for long term gain, the Company can only maximize the return to its Shareholders by enlarging its investment portfolio.

More importantly, the Subscription can enlarge the capital of the Company. Having the four Subscribers as shareholders of the Company after the completion of the Subscription and leveraging their strengths and substantial capital, the Company may be at a better position to capture market opportunities and enjoy even more cooperative resources.

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The Directors consider that the Subscription will allow the Company to capture investment opportunities in a timely manner, expand its revenue basis and create more returns to its Shareholders. The Directors (including independent non-executive Directors) consider that the terms of the Subscription Agreements to be fair and reasonable and in the best interest of the Company and Shareholders as a whole.

USE OF PROCEEDS

It is expected that the gross proceeds from the Subscription will be approximately HK$1.554 billion. After deducting related professional fees and all related expenses of approximately HK$1 million to be borne by the Company under the Subscription, the net proceeds from the Subscription will amount to approximately HK$1.553 billion. The Company intends to use the net proceeds in the manner set out below:

• 1) approximately HK$700 million for pursuing investment in undervalued companies listed on A-Share and H-Share markets;

• 2) approximately HK$600 million for pursuing investment in and merger and acquisition of targets in emerging industries, such as artificial intelligence, medical care for the elderly, environmental protection, public hygiene and new energy vehicles;

• 3) approximately HK$100 million for pursuing investment in internet platforms and/or tools which strategically sort out and re-invent the operation of traditional industries;

• 4) approximately HK$100 million for increasing the Company’s investment in its existing private equity investment projects; and

• 5) the remaining for the general working capital of the Company.

As at the date of this announcement, the Company had not identified any investment target.

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FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

The following is the equity fund raising activity conducted by the Group in the past twelve (12) months immediately preceding the date of this announcement:

				Actual use of the
				net proceeds as
Date of	Fund raising		Proposed use of	of the date of this
announcement	activity	Net proceeds	the net proceeds	announcement
12 December 2016	Placing of 56,000,000	Approximately	The net proceeds	Used as intended.
	new shares under	HK$107 million	would be used as
	general mandate		the general working
			capital of the
			Company and for
			future investment
			pursuant to the
			investment objectives
			of the Company.
13 January 2017	Issue of unlisted	Assuming the	The net proceeds	As of the date of this
	warrants to subscribe	full exercise of	would be used as	announcement, none
	for an aggregate of	the subscription	the general working	of the subscription
	202,553,560 new	rights attaching to	capital of the	rights attaching
	shares under specific	such warrants at	Company and for	to such warrants
	mandate	the subscription	future investment	has been exercised
		price of HK$2.20	pursuant to the	and therefore the
		(subject to	investment objectives	Company has
		adjustment), it	of the Company.	not received any
		is expected that		proceeds yet.
		the net proceeds
		(after deduction
		of all related
		expenses) would
		be approximately
		HK$446 million

Save as disclosed above, the Company has not raised fund on any issue of equity securities in the past 12 months immediately before the date of this announcement.

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CHANGES TO THE SHAREHOLDING AS A RESULT OF THE SUBSCRIPTION

As at the date of this announcement, the Company has 1,897,396,000 Shares in issue. Set out below is a table showing the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after completion of the Subscription and assuming that there being no other change to the share capital and shareholding structure of the Company from the date of this announcement:

Name of Shareholder Connected persons or substantial Shareholders Oriental Patron Financial Group Limited (“OPFGL”)(Note 1) Dr. Liu Zhiwei_(Note 2)_ Subscriber I Subscriber III Sub-total: Public Subscriber II Subscriber IV Other public Shareholders Sub-total: Total	As at the date of this announcement No. of Shares Approximate % 359,800,000 18.96 195,510,000 10.30 – – – – 555,310,000 29.27 – – – – 1,342,086,000 70.73 1,342,086,000 70.73 1,897,396,000 100.00	Immediately after completion of the Subscription No. of Shares Approximate % 359,800,000 13.64 195,510,000 7.41 350,000,000 13.27 350,000,000 13.27 1,255,310,000 47.60 25,000,000 0.95 15,000,000 0.57 1,342,086,000 50.89 1,382,086,000 52.40 2,637,396,000 100.00	Immediately after completion of the Subscription No. of Shares Approximate % 359,800,000 13.64 195,510,000 7.41 350,000,000 13.27 350,000,000 13.27 1,255,310,000 47.60 25,000,000 0.95 15,000,000 0.57 1,342,086,000 50.89 1,382,086,000 52.40 2,637,396,000 100.00
			100.00

Notes:

1. These 359,800,000 Shares represented an aggregate of 330,000,000 Shares held by Ottness Investments Limited (“OIL”) and 29,800,000 Shares held by Oriental Patron Financial Services Group Limited (“OPFSGL”). OIL is a wholly owned subsidiary of OPFGL, while 95% of the issued share capital of OPFSGL is owned by OPFGL. The issued share capital of OPFGL is beneficially owned as to 51% by Mr. Zhang Zhi Ping and 49% by Mr. Zhang Gaobo. By virtue of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), each of Mr. Zhang Zhi Ping and Mr. Zhang Gaobo is deemed to be interested in the Shares and underlying Shares of the Company held by OIL and OPFSGL.

2. Dr. Liu Zhiwei is a connected person of the Company by virtue of him being an executive Director.

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DEFINITIONS

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

“Board”	the board of Directors
“Circular”	a circular to be issued and published by the Company
	together with the notice of the EGM in relation to the
	Subscription
“Company”	OP Financial Investments Limited, a company incorporated
	in the Cayman Islands with limited liability, the Shares of
	which are listed on the Stock Exchange
“connected person(s)”	has the meaning as ascribed to it under the Listing Rules
“Director(s)”	the director(s) of the Company
“EGM”	an extraordinary general meeting of the Company to be
	convened for the purpose of considering, and if thought fit,
	approving, among other things, the Subscription and the
	respective transactions contemplated thereunder
“Group”	collectively, the Company and its subsidiaries from time to
	time
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Last Trading Day”	15 November 2017, being the last day of trading of the
	Shares on the Stock Exchange immediately before the date
	of the Subscription Agreements
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Long Stop Date”	4:00 p.m. (Hong Kong time) on 29 December 2017, or
	such other time and date as the respective parties to the
	Subscription Agreements may agree in writing
“PRC”	the People’s Republic of China which, for the purposes of
	this announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the
	Company

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“Shareholder(s)” holder(s) of the Shares

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

• “Subscribers” collectively, Subscriber I, Subscriber II, Subscriber III and Subscriber IV

• “Subscriber I” Wah Hing Global Investment Limited, a company incorporated in British Virgin Islands with limited liability and the subscriber of 350,000,000 Subscription Shares under the Subscription Agreement I

• “Subscriber II” The People’s Insurance Company (Group) of China Limited, a joint stock company incorporated in the People’s Republic of China with limited liability whose shares are listed on the Main Board of the Stock Exchange (stock code: 1339) and the subscriber of 25,000,000 Subscription Shares under the Subscription Agreement II

• “Subscriber III” Full House Investment Limited, a company incorporated in the British Virgin Islands with limited liability and the subscriber of 350,000,000 Subscription Shares under the Subscription Agreement III

• “Subscriber IV” CMBI SPC – Special Opportunities Fund Segregated Portfolio, a segregated portfolio of CMBI SPC (a segregated portfolio company in Cayman Islands) and the subscriber of 15,000,000 Subscription Shares under the Subscription Agreement IV

• “Subscription” subscription of Subscription Shares by the Subscribers at the Subscription Price pursuant to the Subscription Agreements

• “Subscription Agreement I”

• the subscription agreement dated 16 November 2017 entered into between the Company and the Subscriber I in respect of the Subscription

• “Subscription Agreement II”

• the subscription agreement dated 16 November 2017 entered into between the Company and the Subscriber II in respect of the Subscription

• “Subscription Agreement III”

• the subscription agreement dated 16 November 2017 entered into between the Company and the Subscriber III in respect of the Subscription

• “Subscription Agreement IV” the subscription agreement dated 16 November 2017 entered into between the Company and the Subscriber IV in respect of the Subscription

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• “Subscription Agreements” collectively, the Subscription Agreement I, the Subscription Agreement II, the Subscription Agreement III and the Subscription Agreement IV

• “Subscription Price”

the subscription price of HK$2.10 per Subscription Share

• “Subscription Shares” collectively, the Subscription Shares I, the Subscription Shares II, the Subscription Shares III and the Subscription Shares IV

• “Subscription Shares I” a total of 350,000,000 new Shares to be allotted and issued by the Company to Subscriber I under the Subscription Agreement I

• “Subscription Shares II” a total of 25,000,000 new Shares to be allotted and issued by the Company to Subscriber II under the Subscription Agreement II

• “Subscription Shares III” a total of 350,000,000 new Shares to be allotted and issued by the Company to Subscriber III under the Subscription Agreement III

• “Subscription Shares IV” a total of 15,000,000 new Shares to be allotted and issued by the Company to Subscriber IV under the Subscription Agreement IV

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

• “%”

per cent.

By Order of the Board of OP Financial Investments Limited Zhang Gaobao Executive Director and Chief Executive Officer

Hong Kong, 16 November 2017

As at the date of this announcement, the Board comprises four executive Directors, namely, Mr. Zhang Zhi Ping, Mr. Zhang Gaobo, Dr. Liu Zhiwei and Mr. Zhang Weidong; one nonexecutive Director, namely, Dr. Wu Zhong and three independent non-executive Directors, namely, Mr. Kwong Che Keung, Gordon, Professor He Jia and Mr. Wang Xiaojun.

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