Television Broadcasts Limited — Capital/Financing Update 2018

Dec 13, 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.

This announcement appears for information purposes only and does not constitute an invitation or an offer to sell or the solicitation of an offer to buy any securities and neither this announcement nor anything herein forms the basis for any contract or commitment whatsoever.

==> picture [73 x 73] intentionally omitted <==

China Fortune Financial Group Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 290) Website: http://www.290.com.hk

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

The Board is pleased to announce that on 13 December 2018 (after trading hours), the Company entered into the Subscription Agreements with the Subscribers pursuant to which the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, a total of 1,417,000,000 Subscription Shares at the Subscription Price of HK$0.07 per Subscription Share.

The Subscription Shares under the Subscription Agreements represent approximately 20.00% of the existing issued share capital of the Company of 7,086,078,859 Shares as at the date of this announcement and approximately 16.66% of the issued share capital of the Company of 8,503,078,859 Shares as enlarged by the allotment and issue of the Subscription Shares.

The Subscription Price is HK$0.07 and represents:

• (i) a discount of approximately 5.41% to the closing price of HK$0.074 per Share as quoted on the Stock Exchange on 13 December 2018, being the date of which the Subscription Agreements were entered into; and

• (ii) a discount of approximately 1.96% to the average closing price of approximately HK$0.0714 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days immediately prior to 13 December 2018, being the date on which the Subscription Agreements were entered into.

– 1 –

The net proceeds raised from the Subscriptions will be approximately HK$98.89 million, which are intended to be used for capital injection to Fortune Asset Management (Shenzhen), the indirect wholly-owned subsidiary of the Company in Shenzhen, the PRC, the capital call of which is expected to be due on April 2019. The remaining proceeds will be used as general working capital of the Group.

The Subscription Shares will be allotted and issued under the General Mandate. The Company will apply to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Subscription Shares.

Shareholders and potential investors should note that Completion is subject to fulfilment of the conditions precedents under the Subscription Agreements. As the Subscriptions may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

Introduction

The Board is pleased to announce that on 13 December 2018 (after trading hours of the Stock Exchange), the Company entered into the Subscription Agreements with the Subscribers pursuant to which the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, a total of 1,417,000,000 Subscription Shares at the Subscription Price of HK$0.07 per Subscription Share.

The Subscription Agreement I

Date: 13 December 2018 (after trading hours) Parties: (i) The Company as the issuer; and (ii) the Subscriber I as the subscriber

Subscription Shares: 700,000,000 Shares

Subscription Price: HK$0.07 per Share

Based on the information provided by the Subscriber I, Subscriber I is an experienced investor having investments in both Hong Kong and China. Immediately prior to the Subscription, Subscriber I is beneficially interested in 1,392,000 Shares, representing approximately 0.02% of the issued share capital of the Company as at the date of this announcement.

– 2 –

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Subscriber I (i) is an Independent Third Party of and not connected with the Company and its connected persons and associates; and (ii) saved as disclosed above, was not interested in any Shares or convertible securities of the Company at the time when the Subscription Agreement I was entered into. The Subscriber I had confirmed to the Company that she was not acting in concert (as defined in the Takeovers Code) with any connected persons of the Company.

The Subscription Agreement II

Date: 13 December 2018 (after trading hours) Parties: (i) The Company as the issuer; and (ii) the Subscriber II as the subscriber

Subscription Shares: 717,000,000 Shares

Subscription Price: HK$0.07 per Share

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the ultimate beneficial owner of the Subscriber II is Mr. Cheng. Based on the information provided by Mr. Cheng, Mr. Cheng is an experienced investor having investments in both Hong Kong and China. Immediately prior to the Subscription, Mr. Cheng is beneficially interested in 1,500,000 Shares, representing approximately 0.02% of the issued share capital of the Company as at the date of this announcement.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Subscriber II and Mr. Cheng (i) is an Independent Third Party of and not connected with the Company and its connected persons and associates; and (ii) saved as disclosed above, was not interested in any Shares or convertible securities of the Company at the time when the Subscription Agreement II was entered into. Mr. Cheng and the Subscriber II had confirmed to the Company that they were not acting in concert (as defined in the Takeovers Code) with any connected persons of the Company.

The Subscription Shares

Pursuant to the Subscription Agreements, the Subscriber I and the Subscriber II have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue 700,000,000 and 717,000,000 new Shares, respectively at the Subscription Price of HK$0.07 per Subscription Share. The Subscription Shares under the Subscription Agreements represent approximately 20.00% of the existing issued share capital of the Company of 7,086,078,859 Shares as at the date of this announcement and approximately 16.66% of the issued share capital of the Company of 8,503,078,859 Shares as enlarged by the allotment and issue of the Subscription Shares. The aggregate nominal value of the Subscription Shares (with a par value of HK$0.01 per Share) is HK$14,170,000.

– 3 –

Subscription Price

The Subscription Price is HK$0.07 per Subscription Share, which was arrived at after arm’s length negotiation between the Company and the Subscribers with reference to the market conditions and the prevailing market price of the Shares. The Directors are of the opinion that the Subscription Price is fair and reasonable and is in the best interests of the Company and the Shareholders as a whole.

The Subscription Price represents:

• (i) a discount of approximately 5.41% to the closing price of HK$0.074 per Share as quoted on the Stock Exchange on 13 December 2018, being the date of which the Subscription Agreements were entered into; and

• (ii) a discount of approximately 1.96% to the average closing price of approximately HK$0.0714 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days immediately prior to 13 December 2018, being the date on which the Subscription Agreements were entered into.

The Directors (including independent non-executive Directors) considered that the terms of the Subscription Agreements and the Subscription Price are on normal commercial terms determined after arm’s length negotiation between the Company and the Subscribers, and are fair and reasonable based on the current market conditions and in the best interests of the Company and Shareholders as a whole.

General Mandate to issue the Subscription Shares

The Subscription Shares will be allotted and issued under the General Mandate granted to the Directors by a resolution of the Shareholders passed at the 2018 AGM to allot, issue and otherwise deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of the 2018 AGM. Under the General Mandate, the Company is authorised to allot, issue or otherwise deal with up to 1,417,215,771 Shares.

As at the date of this announcement, no Share has been issued under the General Mandate. The General Mandate is sufficient for the allotment and issue of the Subscription Shares and the allotment and issue of the Subscription Shares is not subject to Shareholders’ approval. The 1,417,000,000 Subscription Shares constitute approximately 99.98% of the General Mandate.

Ranking of the Subscription Shares

The Subscription Shares shall be allotted and issued as fully paid and free from all third party rights and shall rank pari passu in all respects among themselves and all other existing Shares in issue on the date of allotment and issue and with all rights then attaching to them including the right to receive all distributions and dividends declared, paid or made in respect of the Subscription Shares on and after the Completion.

– 4 –

Application for Listing

The Company will apply to the Listing Department of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

Conditions Precedent

Completion shall be subject to the satisfaction or waiver of, among other things, following conditions:

• (1) The Listing Committee of the Stock Exchange having granted the approval for the listing of, and permission to deal in, all the Subscription Shares; and

• (2) all regulatory consents and authorisations of any governmental or regulatory body which are necessary and required for the purpose of implementing and completing the Subscription Agreements having been obtained and remaining in full force and effect pursuant to the applicable laws.

Completion

Completion is expected to take place on or before the fifth (5th) Business Day after all the conditions precedent of the Subscription Agreements having been fulfilled or waived (or such other date as the parties to the Subscription Agreements may mutually agree in writing).

In the event that the conditions of the Subscriptions are not fulfilled on or before 31 March 2019 or such other date as may be agreed between the parties to the corresponding Subscription Agreements, the Subscription Agreements shall cease and determine and neither the Company nor the Subscribers shall have any obligations and liabilities under the Subscription Agreements save for any accrued rights and obligations of the parties under the Subscription Agreements.

The Subscription Agreements are independent of and not inter-conditional upon each other.

– 5 –

Effects of the Subscriptions

Assuming there is no change in the share capital of the Company from the date of the announcement up to Completion, the existing shareholding structure of the Company and the effect on the shareholding structure of the Company upon Completion of the Subscriptions are set out below:

Shareholders Substantial Shareholders Jadehero Limited (Note 1) Mankind Investment Limited (Note 2) Riverhead Capital (International) Management Co., Ltd. (Note 3) Value Convergence Holdings Limited (Note 4) Public Shareholders Subscriber I Subscriber II Other public Shareholders Total	As at the date of this announcement Number of Shares % 800,000,000 11.29 1,416,430,000 19.99 2,094,350,000 29.56 131,492,000 1.86 1,392,000 0.02 1,500,000 0.02 2,640,914,859 37.27 7,086,078,859 100.00	Immediately upon Completion Number of Shares % 800,000,000 9.41 1,416,430,000 16.66 2,094,350,000 24.63 131,492,000 1.55 701,392,000 8.25 718,500,000 8.45 2,640,914,859 31.06 8,503,078,859 100.00	Upon Completion and full conversion of Existing Convertible Bonds (without adjustment) (Note 5) Number of Shares % 800,000,000 5.73 2,307,330,000 16.54 4,094,350,000 29.34 2,691,242,000 19.29 701,392,000 5.03 718,500,000 5.15 2,640,914,859 18.93 13,953,728,859 100.00	Upon Completion and full conversion of Existing Convertible Bonds (without adjustment) (Note 5) Number of Shares % 800,000,000 5.73 2,307,330,000 16.54 4,094,350,000 29.34 2,691,242,000 19.29 701,392,000 5.03 718,500,000 5.15 2,640,914,859 18.93 13,953,728,859 100.00
				100.00

Notes:

• (1) Jadehero Limited is owned as to 80% by Southlead Limited, a company incorporated in the British Virgin Islands with limited liability. Southlead Limited is wholly-owned by Wahen Investments Limited, a company incorporated in the British Virgin Islands with limited liability, which in turn is wholly-owned by Mr. Zhao Xu Guang.

• (2) Mankind Investment Limited is wholly-owned by China Cinda (HK) Asset Management Co., Limited, a company incorporated in Hong Kong with limited liability, which in turn is wholly-owned by China Cinda (HK) Holdings Company Limited, a company incorporated in Hong Kong with limited liability. China Cinda (HK) Holdings Company Limited is wholly-owned by China Cinda Asset Management Co., Limited, a company incorporated in the PRC with limited liability.

• (3) Riverhead Capital (International) Management Co., Ltd. is owned as to 80% by Mr. XIE Zhichun (the executive Director and Chairman of the Company) who is also the sole director of Riverhead Capital (International) Management Co., Ltd..

– 6 –

• (4) As at the date of this announcement, Value Convergence Holdings Limited beneficially held 131,492,000 Shares and 2,559,750,000 underlying shares of the Company which may be issued by the Company upon the exercise of the conversion rights attaching to the convertible bonds in the principal amount of HK$153,585,000 (at the conversion price of HK$0.06 per conversion share) held by Value Convergence Holdings Limited.

• (5) The number of Shares shown upon the Completion and full conversion of Existing Convertible Bonds has not taken into account of the adjustment(s) to the number of underlying Shares under the adjustment mechanism in the respective convertible bond instruments of the Existing Convertible Bonds.

• (6) The above percentage figures are subject to rounding adjustments. Accordingly, figures shown as total may not be an arithmetic aggregation of the figures preceding it.

Reasons for the Subscriptions and Use of Proceeds

The Group is principally engaged in (i) brokerage and margin financing; (ii) proprietary trading; (iii) corporate finance; (iv) asset management; (v) money lending and factoring; (vi) consultancy and insurance brokerage; and (vii) investment holding.

The gross proceeds raised from the Subscriptions will be approximately HK$99.19 million and the net proceeds will be approximately HK$98.89 million after deducting the relevant expenses for the Subscriptions. The net Subscription Price will be about HK$0.0698 per Share.

The Company intends to use such net proceeds as the funds for capital injection to Fortune Asset Management (Shenzhen), the indirect wholly-owned subsidiary of the Company, which principally engages in provision of establishment of equity investment enterprise, asset management and equity investment advisory services, the capital call of RMB80 million (equivalent to approximately HK$90.91 million) of which will be due on April 2019 under the relevant requirement from the Office of Financial Development Service, the People’s Government of Shenzhen Municipality (深圳市人民政 府金融發展服務辦公室). The funds for capital injection is expected to utilise approximately 91.93% of the net proceeds from the Subscriptions. The remaining proceeds will be used as general working capital of the Group.

The Company intends to effect the capital injection in or before April 2019 and upon completion of the capital injection, the registered and paid-up capital of Fortune Asset Management (Shenzhen) will be increased to RMB100 million and will meet the relevant regulatory requirements as to minimum registered and paid-up capital for foreign owned private equity fund management enterprises (外商投資 股權投資管理企業) operating in Shenzhen. Through the operation of Fortune Asset Management (Shenzhen), the Company is able to develop the business opportunities in asset management and equity investment in the PRC and diversify the business portfolio of the Group.

The Directors have considered various fund raising methods and believe that under the prevailing market conditions, the Subscriptions represent the most efficient method for the Group to raise extra funding without incurring extra interest cost, given the recent interest hike and the increasing borrowing cost in the general Hong Kong market.

– 7 –

Fund Raising Activities in the Past Twelve Months

As disclosed in the announcements made by the Company dated 21 September 2016, 22 November 2016, 30 March 2017 and 5 July 2018 and the circulars dated 7 October 2016 and 13 December 2016, the completion of the subscription as to the tranche 3 convertible bonds in principal amount of HK$60,000,000 (the ‘‘Completion of the Tranche 3 Convertible Bonds Subscription’’) took place on 5 July 2018 in accordance with the terms and conditions of the subscription agreement dated 22 November 2016 entered into between the Company as the issuer and Riverhead Capital (International) Management Co., Ltd. as the subscriber. Immediately upon the Completion of the Tranche 3 Convertible Bonds Subscription, convertible bonds in principal amount of HK$60,000,000 were issued to Riverhead Capital (International) Management Co., Ltd. by the Company.

Save as disclosed above, the Company has not conducted any fund raising activities in the past twelve months immediately preceding the date of this announcement.

GENERAL

Shareholders and potential investors should note that Completion is subject to fulfilment of the conditions under the respective Subscription Agreements. As the Subscriptions may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

DEFINITIONS

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

• ‘‘2018 AGM’’ the annual general meeting of the Company held on 30 August 2018

• ‘‘Board’’ the board of Directors of the Company

• ‘‘Business Day’’ a day on which licensed banks are open for business in Hong Kong (other than a Saturday, Sunday or a public holiday or a day on which a tropical cyclone warning No. 8 or above or a ‘‘black rainstorm warning signal’’ is hoisted or remains hoisted in Hong Kong at any time between 9:00 am and 5:00 pm)

• ‘‘Company’’ China Fortune Financial Group Limited (中國富強金融集團有限公司), a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange (stock code: 290)

• ‘‘Completion’’ the completion of the Subscriptions

• ‘‘Consent(s)’’ including any license, consent, approval, authorization, permission, waiver, order and/or exemption

– 8 –

‘‘Director(s)’’	director(s) of the Company
‘‘Existing Convertible	Convertible bonds issued by the Company which are currently
Bonds’’	outstanding and convertible into Shares according	to the respective
	terms and conditions of the convertible bond instruments
‘‘Fortune Asset Management	Fortune Asset Management (Shenzhen) Equity	Investment Fund
(Shenzhen)’’	Management Co., Ltd.* (富強資管(深圳)股權投資基金管理有限公司),
	a limited liability company incorporated in the	PRC, an indirect
	wholly-owned subsidiary of the Company
‘‘General Mandate’’	the general mandate granted to the Directors by	the Shareholders
	pursuant to an ordinary resolution passed at the 2018 AGM to allot,
	issue and otherwise deal with Shares of the Company not exceeding
	20% of the issued share capital of the Company as	at the date of the
	2018 AGM
‘‘Group’’	the Company and its subsidiaries
‘‘Hong Kong’’	the Hong Kong Special Administrative Region of the	People’s Republic
	of China
‘‘Independent Third	person(s) who or company(ies) together with	its/their ultimate
Party(ies)’’	beneficial owner(s) which, to the best of the Directors’ knowledge,
	information and belief having made all reasonable enquiries, is/are
	third party(ies) independent of the Company and the	connected persons
	of the Company (as defined in the Listing Rules)
‘‘Listing Rules’’	the Rules Governing the Listing of Securities on the Stock Exchange,
	as amended from time to time
‘‘Mr. Cheng’’	Cheng Liquan Richard, the ultimate beneficial owner of the entire
	issued share capital of the Subscriber II
‘‘PRC’’	the People’s Republic of China, which for the	purpose of this
	announcement, excludes Hong Kong, the	Macau Special
	Administrative Region of the PRC and Taiwan
‘‘RMB’’	Renminbi, the lawful currency in the PRC
‘‘SFC’’	the Securities and Futures Commission
‘‘Shareholder(s)’’	holder(s) of the Share(s)
‘‘Share(s)’’	ordinary share(s) of HK$0.01 each in the share capital of the Company

– 9 –

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Subscriber I’’ Madam Sit Lai Hei

• ‘‘Subscriber II’’ Eastasia Power Holding Ltd., a company incorporated in the British Virgin Islands with limited liability, the entire issued share capital of which is wholly and beneficially owned by Mr. Cheng

• ‘‘Subscribers’’ collectively, Subscriber I and Subscriber II

• ‘‘Subscription Agreement I’’ the conditional subscription agreement dated 13 December 2018 entered into between the Company as issuer and the Subscriber I as the subscriber for the subscription of 700,000,000 Shares at the Subscription Price

• ‘‘Subscription Agreement II’’ the conditional subscription agreement dated 13 December 2018 entered into between the Company as issuer and the Subscriber II as the subscriber for the subscription of 717,000,000 Shares at the Subscription Price

• ‘‘Subscription Agreements’’ Subscription Agreement I and Subscription Agreement II

• ‘‘Subscriptions’’ the subscriptions for the Subscription Shares by the Subscribers pursuant to the Subscription Agreements

• ‘‘Subscription Shares’’ an aggregate of 1,417,000,000 Shares to be subscribed by the Subscribers pursuant to the Subscription Agreements

• ‘‘Subscription Price’’ The subscription price of HK$0.07 per Subscription Share

• ‘‘Takeovers Code’’ The Codes on Takeovers and Mergers and Share Buy-backs, as amended from time to time

• ‘‘Trading Day’’ a day on which the Stock Exchange is open for business

– 10 –

‘‘HK$’’

Hong Kong dollars, the lawful currency of Hong Kong

‘‘%’’

per cent

In this announcement for the purpose of illustration only, amounts quoted in RMB are converted into HK$ at the rate of HK$1.00 to RMB0.88.

• Unofficial name and for reference only.

By Order of the Board China Fortune Financial Group Limited HUA Yang Chief Executive Officer and Executive Director

Hong Kong, 13 December 2018

As at the date of this announcement, the Board comprises of three executive Directors, namely Mr. XIE Zhichun (Chairman), Mr. HUA Yang and Mr. ZHU Yi; three non-executive Directors, namely, Mr. HAN Hanting, Mr. CHEN Zhiwei and Mr. WU Ling; and four independent non-executive Directors, Mr. CHAN Kin Sang, Mr. NG Kay Kwok, Mr. CHIU Kung Chik and Mr. LI Gaofeng.

– 11 –