Transmit Entertainment Limited — M&A Activity 2017

Oct 25, 2017

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this joint 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 joint announcement.

This joint announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of Pegasus Entertainment Holdings Limited.

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Nice Rich Group Limited

(Incorporated in the British Virgin Islands with limited liability)

Pegasus Entertainment Holdings Limited 天 馬 影 視 文 化 控 股 有 限 公 司 (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1326)

JOINT ANNOUNCEMENT

(1) ACQUISITION OF THE SALE SHARES IN PEGASUS ENTERTAINMENT HOLDINGS LIMITED BY NICE RICH GROUP LIMITED

• (2) POSSIBLE MANDATORY UNCONDITIONAL CASH OFFER BY

FOR AND ON BEHALF OF NICE RICH GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF PEGASUS ENTERTAINMENT HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY NICE RICH GROUP LIMITED) AND

(3) RESUMPTION OF TRADING IN THE SHARES OF PEGASUS ENTERTAINMENT HOLDINGS LIMITED

Financial adviser to the Offeror

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THE SALE AND PURCHASE AGREEMENT

The Company was informed by the Vendors that on 22 October 2017, the Offeror, the Vendors and the Warrantor entered into the Sale and Purchase Agreement, pursuant to which the Offeror has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the Sale Shares. The Sale Shares represent approximately 58.71% of the entire issued share capital of the Company as at the date of this joint announcement. The aggregate consideration for the Sale Shares pursuant to the Sale and Purchase Agreement is HK$486,094,752, equivalent to HK$0.319 per Sale Share.

Completion of the Sale and Purchase Agreement is conditional upon the Conditions being fulfilled or waived.

POSSIBLE MANDATORY UNCONDITIONAL GENERAL OFFER

As of the date of this joint announcement, none of the Offeror, Mr. Zhang and parties acting in concert with any of them own any Shares or any other convertible securities, options, warrants or derivatives in the Company. Immediately following the Completion, the Offeror will own in aggregate 1,523,808,000 Shares representing approximately 58.71% of the entire issued share capital of the Company.

Pursuant to Rule 26.1 of the Takeovers Code, upon Completion, the Offeror will be required to make a mandatory unconditional general offer in cash for all the issued Shares other than those already owned and/or agreed to be acquired by the Offeror and/or parties acting in concert with it.

Subject to and upon Completion, Kingston Securities will make the Offer, for and on behalf of the Offeror, in compliance with the Takeovers Code on the following basis:

The Offer Price

For every Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HK$0.319 in cash

The Offer Price of HK$0.319 per Offer Share under the Offer is equal to the purchase price per Sale Share payable by the Offeror under the Sale and Purchase Agreement.

As at the date of this joint announcement, there are 2,595,613,733 Shares in issue and the Company does not have any outstanding option, warrant or derivative or convertible right affecting the Shares.

The principal terms of the Offer are set out in the section headed ‘‘POSSIBLE MANDATORY UNCONDITIONAL GENERAL OFFER’’ of this joint announcement.

Confirmation of financial resources of the Offeror

The Offeror intends to finance the consideration payable for the acquisition of the Sale Shares and under the Offer with its internal resources of HK$389 million and the Loan Facility of not less than HK$429 million. Kingston Corporate Finance, the financial adviser to the Offeror in respect of the Offer, is satisfied that sufficient financial resources are available to the Offeror to satisfy the Consideration and the full acceptance of the Offer.

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GENERAL

Independent Board Committee

The Independent Board Committee comprising all three independent non-executive Directors, namely Mr. Lam Kam Tong, Mr. Lo Eric Tien-cheuk and Mr. Tang Kai Kui Terence, who have no direct or indirect interest in the Offer, has been established by the Company to make recommendations to the Independent Shareholders as to whether the Offer is fair and reasonable and as to the acceptance of the Offer.

Independent financial adviser

An independent financial adviser will be appointed by the Company (with the approval of the Independent Board Committee) to advise the Independent Board Committee in respect of the Offer. Further announcement(s) will be made by the Company as soon as possible after the independent financial adviser to the Independent Board Committee is appointed.

Despatch of the Composite Offer Document

It is the intention of the Offeror and the Company to combine the offer document with the offeree response document in the Composite Offer Document. Pursuant to Rule 8.2 of the Takeovers Code, the Composite Offer Document containing, among other things, (i) details of the Offer (including the expected timetable); (ii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Offer; (iii) the letter of advice from the independent financial adviser to the Independent Board Committee in relation to the Offer; and (iv) the relevant forms of acceptance, is required to be despatched to the Shareholders as soon as possible but in any event within 21 days after the date of this joint announcement unless the Executive grants a consent for extension.

The Independent Shareholders are encouraged to read the Composite Offer Document carefully, including the advice of the independent financial adviser to the Independent Board Committee and the recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Offer, before deciding whether or not to accept the Offer.

WARNING: THE OFFER IS A POSSIBILITY AND IT WILL ONLY BE MADE IF COMPLETION TAKES PLACE AND COMPLETION IS CONDITIONAL UPON THE FULFILLMENT OR WAIVER (WHERE APPLICABLE) OF THE CONDITIONS. ACCORDINGLY, THE TRANSACTIONS CONTEMPLATED UNDER THE SALE AND PURCHASE AGREEMENT MAY OR MAY NOT COMPLETE AND THE OFFER MAY OR MAY NOT PROCEED. THE SHAREHOLDERS AND POTENTIAL INVESTORS ARE THEREFORE URGED TO EXERCISE CAUTION WHEN DEALING IN THE SECURITIES OF THE COMPANY.

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RESUMPTION OF TRADING IN THE SHARES

At the request of the Company, trading in the Shares on the Stock Exchange was suspended with effect from 9:00 a.m. on 23 October 2017 pending the release of this joint announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in Shares on the Stock Exchange with effect from 9:00 a.m. on 26 October 2017.

INTRODUCTION

Reference is made to Rule 3.7 Announcement and the announcement of the Company dated 23 October 2017 in relation to trading suspension of the Shares.

The Company was informed by the Vendors that on 22 October 2017, the Offeror, the Vendors and the Warrantor entered into the Sale and Purchase Agreement in relation to the sale and purchase of the Sale Shares.

THE SALE AND PURCHASE AGREEMENT

Date: 22 October 2017

Parties:

Vendors: (i) Honour Grace (ii) Mr. Wong (iii) Ms. Wong Purchaser: the Offeror Warrantor: Mr. Wong

To the best of the Directors’ knowledge, the Offeror and its ultimate beneficial owner are third parties independent of, and not connected with, either the Company or any of its connected persons, save for that the Offeror will become a controlling Shareholder immediately following the Completion. Further information of the Offeror is set out in the section headed ‘‘INFORMATION OF THE OFFEROR’’ in this joint announcement.

Sale Shares and the Consideration

Pursuant to the Sale and Purchase Agreement, the Offeror has conditionally agreed to purchase and the Vendors have conditionally agreed to sell the Sale Shares, free and clear from all Encumbrances and together with all rights attaching to them, including all rights to any dividend or other distribution declared, made or paid, the record date of which is on or after the Completion Date.

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For the avoidance of doubt, the Vendors shall not be entitled to any right attaching to, or distribution declared, made or paid to, any of the Shares, where the record date of such right or distribution (whether or not in form of cash) is on or after the Completion Date. The Sale Shares represent approximately 58.71% of the entire issued share capital of the Company as at the date of this joint announcement.

The aggregate consideration for the Sale Shares pursuant to the Sale and Purchase Agreement is HK$486,094,752, equivalent to HK$0.319 per Sale Share. The consideration was determined following arm’s length negotiations between the Offeror and the Vendors after taking into consideration (i) the prevailing market prices of the Shares as further described in the paragraph headed ‘‘The Offer Price’’ under the section headed ‘‘POSSIBLE MANDATORY UNCONDITIONAL GENERAL OFFER’’ below; (ii) financial position of the Group; and (iii) the fact that the Offeror can obtain a controlling interest in the Company after Completion.

Conditions

The Completion is conditional upon:

• (i) this joint announcement in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder and Rule 3.5 of the Takeovers Code being uploaded to the website of the Stock Exchange;

• (ii) the trading in the Shares on the Stock Exchange not having been suspended for more than 15 trading days, except any temporary suspension required by the relevant regulatory body in relation to the transaction contemplated under the Sale and Purchase Agreement or its related matters; and

• (iii) the listing position of the Shares not having been cancelled or withdrawn, and no indication from the Stock Exchange or the SFC to suspend, cancel or withdraw the trading of Share(s) on the Stock Exchange or oppose the Share(s) to continue to be listed on the Stock Exchange after Completion.

The Offeror may at any time waive any Condition, except Condition (i) as set out above.

If the Conditions set out above have not been fully fulfilled or, where applicable, effectively waived on or before the Long Stop Date, the Sale and Purchase Agreement shall cease to be effective, except certain terms as otherwise provided for in the Sale and Purchase Agreement including confidentiality, notice requirement and governing jurisdiction.

Representations, warranties and indemnities

Each of the Vendors and the Warrantor agreed to give certain customary warranties, representations and/or indemnities in respect of, amongst other things, his/her/its authority to execute the Sale and Purchase Agreement his/her/its title to the relevant Sale Shares and the legality of executing the Sale and Purchase Agreement by the Vendors and the Warrantor.

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Warrantor ’ s warranties

Subject to the terms and conditions in the Sale and Purchase Agreement, the Warrantor irrevocably and unconditionally guaranteed to the Offeror as primary obligor the due and punctual performance of the obligations, duties and warranties by Honour Grace, as one of the Vendors, under the Sale and Purchase Agreement and any document contemplated thereunder.

Completion

Completion of the Sale and Purchase Agreement shall take place on the Completion Date, being the seventh Business Day after the fulfilment (or waiver in accordance with the Sale and Purchase Agreement) of all the Conditions or such other date as all parties to the Sale and Purchase Agreement may agree in writing.

POSSIBLE MANDATORY UNCONDITIONAL GENERAL OFFER

As of the date of this joint announcement, none of the Offeror, Mr. Zhang and parties acting in concert with any of them own any Shares or any other convertible securities, options, warrants or derivatives in the Company. Immediately following the Completion, the Offeror and parties acting in concert with it will own an aggregate 1,523,808,000 Shares representing approximately 58.71% of the entire issued share capital of the Company. Pursuant to Rule 26.1 of the Takeovers Code, upon Completion, the Offeror will be required to make a mandatory unconditional general offer in cash for all the issued Shares other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it.

As at the date of this joint announcement, the Company has 2,595,613,733 Shares in issue and the Company has no other outstanding warrants, derivatives, options, convertibles or other securities in issue which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into Shares.

Warning: The Offer is a possibility only. The Offer will only be made if the transactions contemplated under the Sale and Purchase Agreement are completed. Its completion is conditional upon the fulfillment (or, where applicable, waiver) of the Conditions. Accordingly, the Offer may or may not be made. Shareholders and potential investors are advised to exercise caution in dealing in the securities of the Company.

The Offer, if made, will be on the terms mentioned below.

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Principal terms of the Offer

Subject to and upon Completion, Kingston Securities will make the Offer, which will be unconditional, for and on behalf of the Offeror, in compliance with the Takeovers Code on the following basis:

The Offer Price

For every Offer Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.319 in cash

The Offer Price of HK$0.319 under the Offer is equal to the price per Sale Share payable by the Offeror under the Sale and Purchase Agreement.

The Offer will be extended to all Independent Shareholders in accordance with the Takeovers Code. The Offer Shares to be acquired under the Offer shall be fully paid and free from all Encumbrances and together with all rights and benefits attaching to them as at the date of the Composite Offer Document or subsequently becoming attached to them, including without limitation the right to receive all dividends, distributions and any return of capital, which may be paid, made or declared or agreed to be made or paid thereon or in respect thereof on or after the date on which the Offer is made, being the date of the Composite Offer Document.

Comparison of value

The Offer Price of HK$0.319 per Share represents:

• (i) a premium of 16.00% over the closing price of HK$0.275 per Share as quoted on the Stock Exchange on the last trading day immediately preceding the date of the Rule 3.7 Announcement;

• (ii) a premium of approximately 13.93% over the closing price of HK$0.28 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a premium of approximately 22.98% over the average closing price of HK$0.2594 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day; and

• (iv) a premium of approximately 165.83% over the audited consolidated net asset value per Share of approximately HK$0.12 as at 30 June 2017 (being the date of which the latest audited consolidated annual results of the Group were made up), calculated based on the Group’s audited consolidated net assets of approximately HK$307 million as at 30 June 2017 and 2,595,613,733 Shares in issue as at the date of this joint announcement.

Highest and lowest Share prices

During the six-month period preceding the commencement of the offer period (i.e. the date of the Rule 3.7 Announcement) and up to the Last Trading Day, the highest closing price of the Shares as quoted on the Stock Exchange was HK$0.28 on 18 October 2017 and 20 October 2017 (i.e. the Last Trading Day), and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.172 on 9 October 2017.

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Value of the Offer and confirmation of financial resources available for the Offer

Immediately upon the Completion, the Offeror will hold 1,523,808,000 Shares. Based on the Offer Price of HK$0.319 per Offer Share and the 1,071,805,733 Shares subject to the Offer, the total value of the Offer will be approximately HK$342 million.

The consideration of the Sale Shares is approximately HK$486 million, of which HK$10 million had been paid by the Offeror as deposit and the remaining balance of HK$476 million (the ‘‘Consideration’’) will be paid by the Offeror upon Completion. The Offeror intends to finance the Consideration with its internal resources of HK$389 million and approximately HK$87 million from the Loan Facility of HK$443 million. The consideration under the Offer of approximately HK$342 million will be financed by the remaining Loan Facility.

The Offeror confirms that the repayment of the interest on, repayment of or security for any liability (contingent or otherwise) of the Loan Facility will not depend on any significant extent on the business of the Company. The Pledged Shares would not result in the transfer of voting rights.

Kingston Corporate Finance, the financial adviser to the Offeror in respect of the Offer, is satisfied that sufficient financial resources are available to the Offeror to satisfy the Consideration and the full acceptance of the Offer.

Effects of accepting the Offer

The Offer, subject to the Completion taking place, will be unconditional in all respects.

By accepting the Offer, the Independent Shareholders will sell their Shares free from all Encumbrances and together with all rights accruing or attaching to them, including, without limitation, the right to receive all dividends and distributions which may be recommended, declared, made or paid, if any, at any time on or after the date on which the Offer is made, being the date of posting of the Composite Offer Document. Acceptance of the Offer by any Independent Shareholder will be deemed to constitute a warranty by such person that all Shares sold by such person under the Offer are free from all Encumbrances and together with all rights accruing or attaching to them, including, without limitation, the right to receive all dividends and distributions which may be recommended, declared, made or paid, if any, at any time on or after the date on which the Offer is made.

Acceptances of the Offer shall be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

Hong Kong stamp duty

Seller’s Hong Kong ad valorem stamp duty arising in connection with acceptance of the Offer amounting to 0.1% of the amount payable in respect of relevant acceptances by the Independent Shareholders, or if higher, the market value of the Shares as determined by the Collector of Stamp Revenue under the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong), will be deducted from the cash amount payable to the Independent Shareholders who accept the Offer. The Offeror will arrange for payment of the seller’s ad

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valorem stamp duty on behalf of the relevant Independent Shareholders accepting the Offer and will pay the buyer’s Hong Kong ad valorem stamp duty in connection with the acceptance of the Offer.

Payment

Payment in cash in respect of acceptances of the Offer will be made as soon as possible but in any event within seven (7) business days (as defined under the Takeovers Code) of the date on which the duly completed acceptances of the Offer and the relevant documents of title of the Shares in respect of such acceptances are received by the Offeror to render each such acceptance complete and valid.

No fractions of a cent will be payable and the amount of cash consideration payable to an Independent Shareholder who accepts the Offer will be rounded up to the nearest cent.

Taxation advice

The Independent Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting or rejecting the Offer. None of the Offeror, parties acting in concert with it, the Company, and their respective ultimate beneficial owners, directors, officers, agents or associates or any other person involved in the Offer accepts responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Offer.

Dealings in the Company ’ s securities

Save for the acquisition of the Sale Shares under the Sale and Purchase Agreement and the Pledged Shares, none of the Offeror, Mr. Zhang and parties acting in concert with any of them had dealt in the Shares or other options, derivatives, warrants or other securities convertible into Shares during the six-month period prior to the date of this joint announcement.

Overseas Shareholders

To the extent practicable and permissible under applicable laws and regulations, the Offeror intends to make available the Offer to all Independent Shareholders, including those who are resident outside Hong Kong. The making of the Offer to persons not resident in Hong Kong may be affected by the laws and regulations of the relevant jurisdiction in which they are resident. Overseas Shareholders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should observe any applicable legal or regulatory requirements and, where necessary, seek legal advice in respect of the Offer.

It is the sole responsibility of Overseas Shareholders who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offer (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions).

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In the event that the receipt of the Composite Offer Document by Overseas Shareholders is prohibited by any applicable laws and regulations or may only be effected after compliance with conditions or requirement that the directors of the Offeror regard as unduly onerous or burdensome (or otherwise not in the best interests of the Offeror), the Composite Offer Document will not be despatched to such Overseas Shareholders. For that purpose, the Offeror may apply for a waiver pursuant to Note 3 to Rule 8 of the Takeovers Code at such time. Any such waiver will only be granted if the Executive is satisfied that it would be unduly burdensome to despatch the Composite Offer Document to such Overseas Shareholders. In granting the waiver, the Executive will be concerned to see that all material information in the Composite Offer Document is made available to such Overseas Shareholders. If any such waiver is granted by the Executive, the Offeror reserves the right to make arrangements in respect of the Overseas Shareholders not resident in Hong Kong in relation to the terms of the Offer. Such arrangements may include notifying any matter in connection with the Offer to the Overseas Shareholders having a registered overseas address by announcement or by advertisement in a newspaper which may or may not be circulated in the jurisdiction within which such persons are resident. The notice will be deemed to have been sufficiently given despite any failure by such Overseas Shareholders to receive or see that notice.

Any acceptance by any Overseas Shareholder will be deemed to constitute a representation and warranty from such Overseas Shareholder to the Offeror that the local laws and requirements have been complied with. The Overseas Shareholders should consult their professional advisers if in doubt.

Other arrangements or agreements

As at the date of this joint announcement:

• (a) save for the Sale Shares and the Pledged Shares, the Offeror, Mr. Zhang and parties acting in concert with any of them (including Kingston Securities) did not own, control or have direction over any voting rights in any Shares nor own, control or have direction over any other rights or interests in the issued share capital or voting rights of the Company;

• (b) the Offeror, Mr. Zhang and parties acting in concert with any of them have not received any irrevocable commitment to accept or reject the Offer;

• (c) save for the acquisition of Sale Shares and the Pledged Shares, the Offeror, Mr. Zhang and parties acting in concert with any of them have no other outstanding Shares, warrants, options, derivative or other securities that are convertible or exchangeable into Shares or other types of equity interest in the Company;

• (d) there is no outstanding derivatives in respect of the securities in the Company which is entered into by the Offeror, Mr. Zhang or parties acting in concert with any of them;

• (e) save for the Sale and Purchase Agreement and the Loan Facility, there is no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code in relation to the shares of the Offeror or the Company and which might be material to the Offer;

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• (f) save for the Sale and Purchase Agreement, there is no agreement or arrangement to which the Offeror is a party which relates to circumstances in which the Offeror may or may not invoke or seek to invoke a pre-condition or a condition to the Offer;

• (g) there are no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which the Offeror, Mr. Zhang and parties acting in concert with any of them have borrowed or lent;

• (h) other than the consideration to be paid under the Sale and Purchase Agreement, each of the Vendors or their respective concert parties has not received and will not receive any other consideration or benefits in whatever form from the Offeror, its ultimate beneficial owner (i.e. Mr. Zhang) or their respective concert parties; and

• (i) there is no special deal (as defined under Rule 25 of the Takeovers Code) between the Offeror and parties acting in concert with it on one hand and the Vendors and parties acting in concert with each of them on the other hand.

Independent Shareholders are reminded to read the recommendations of the Independent Board Committee and the advice of the independent financial adviser in respect of the Offer and as to acceptance that will be included in the Composite Offer Document before deciding whether or not to accept the Offer.

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SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company (i) as at the date of this joint announcement; and (ii) immediately upon the Completion (assuming no other changes to the shareholding structure of the Company from the date of this joint announcement to the Completion Date).

The Offeror and parties acting in concert with it Offeror Sub-total Vendors and parties acting in concert with them Honour Grace Mr. Wong Ms. Wong Sub-total Other Shareholders Total	As at the date of this joint announcement Number of Shares % — 0.00 — 0.00 1,200,000,000 46.23 125,816,000 4.85 206,320,000 7.95 1,532,136,000 59.03 1,063,477,733 40.97 2,595,613,733 100.00	Immediately upon the Completion Number of Shares % 1,523,808,000 58.71 1,523,808,000 58.71 — 0.00 — 0.00 8,328,000 0.32 8,328,000 0.32 1,063,477,733 40.97 2,595,613,733 100.00	Immediately upon the Completion Number of Shares % 1,523,808,000 58.71 1,523,808,000 58.71 — 0.00 — 0.00 8,328,000 0.32 8,328,000 0.32 1,063,477,733 40.97 2,595,613,733 100.00
			58.71 0.00 0.00 0.32
			0.32 40.97
			100.00

INFORMATION OF THE OFFEROR

The Offeror is a company incorporated in the British Virgin Islands on 8 October 2013 with limited liability and is wholly owned by Mr. Zhang. Mr. Zhang, aged 36, is an entrepreneur in various industries, including real estate and energy etc. Mr. Zhang has more than 6 years of experience in the energy sector. He is a controlling shareholder and an executive director of Kinetic Mines and Energy Limited, a company listed on the main board of the Stock Exchange (stock code: 1277) which principally engages in coal production and coal trading. Mr. Zhang also has more than 8 years of experience in the real estate sector. He is a director of Seedland Construction Holdings Limited, a company incorporated in Hong Kong on 15 July 2008 with limited liability which, through its subsidiaries, principally engaged in real estate business. Mr. Zhang is a third party independent of, and not connected with, either the Company or any of its connected persons, save that the Offeror will become a controlling shareholder of the Company following Completion.

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INFORMATION OF THE COMPANY

The Company was listed on the Growth Enterprise Market of the Stock Exchange (Stock Code: 8039) on 31 October 2012, and then transferred to the Main Board of the Stock Exchange (Stock Code: 1326) on 9 January 2015. On 21 July 2015, the Shareholders approved the Board’s proposal to subdivide each of the then existing issued and unissued share of HK$0.01 each in the share capital of the Company into four Shares of HK$0.0025 each. The subdivision of share took effect on 22 July 2015, and thereafter the board lot size was changed from 4,000 to 8,000 Shares.

The Group is principally engaged in films and television series production, distribution and licensing of film rights, film exhibition, post-production, as well as advertising, marketing and publication.

The following table sets out a summary of certain audited financial information of the Group for the three years ended 30 June 2015, 2016 and 2017:

	Year ended	Year ended	Year ended
	30 June	30 June	30 June
	2015	2016	2017
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Revenue	155,240	446,381	225,631
Gross profit	46,821	186,829	116,261
Loss before tax for the year	(226,621)	(73,809)	(39,914)
Loss for the year attributable to owners of the
Company	(215,258)	(72,591)	(39,984)
Total comprehensive expense for the year
attributable to owners of the Company	(215,256)	(73,544)	(41,233)
	As at	As at	As at
	30 June	30 June	30 June
	2015	2016	2017
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Net assets attributable to owners
of the Company	357,190	334,027	311,214

Further financial information of the Group will be set out in the Composite Offer Document to be despatched to the Shareholders.

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THE OFFEROR ’ S INTENTION IN RELATION TO THE COMPANY

It is the intention of the Offeror that the Group will continue with its existing principal activities after the close of the Offer. The Offeror will, following the close of the Offer, conduct a review on the business activities and financial position of the Group to formulate business plans and strategies for the future business development of the Group. As at the date of this joint announcement, the Offeror has no definitive plans for any acquisition or disposal of assets and/or business of the Group.

Save as in connection with the Offeror’s intention regarding the Group as set out above, the Offeror has no intention to (i) discontinue the employment of any employees of the Group; or (ii) redeploy the fixed assets of the Company other than those in its ordinary and usual course of business. Should there be any change to the Board composition, it will be made in compliance with the Takeovers Code and the Listing Rules. Further announcements will be made upon any appointment of new Directors in accordance with the Listing Rules.

MAINTAINING THE LISTING STATUS OF THE COMPANY

The Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offer.

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares, are held by the public at all times, or if the Stock Exchange believes that:

• (a) a false market exists or may exist in the trading of the Shares; or

• (b) there are insufficient Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend dealings in the Shares.

The sole director of the Offeror will undertake to the Stock Exchange that the Offeror would take appropriate steps to ensure that sufficient public float exists in the Shares.

GENERAL

Independent Board Committee

The Independent Board Committee comprising all three independent non-executive Directors, namely Mr. Lam Kam Tong, Mr. Lo Eric Tien-cheuk and Mr. Tang Kai Kui, Terence, has been established by the Company to make recommendation to the Independent Shareholders as to whether the Offer is fair and reasonable and as to the acceptance of the Offer. The board of Director considers that the members of the Independent Board Committee are independent and able to consider the terms of the Offer and make recommendation to the Independent Shareholders.

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Independent financial adviser

An independent financial adviser will be appointed by the Company (with the approval of the Independent Board Committee) to advise the Independent Board Committee in respect of the Offer. Further announcement(s) will be made by the Company as soon as possible after the independent financial adviser to the Independent Board Committee is appointed.

Despatch of the Composite Offer Document

It is the intention of the Offeror and the Company to combine the offer document with the offeree response document in the Composite Offer Document. Pursuant to Rule 8.2 of the Takeovers Code, the Composite Offer Document containing, among other things, (i) details of the Offer (including the expected timetable); (ii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Offer; (iii) the letter of advice from the independent financial adviser to the Independent Board Committee in relation to the Offer; and (iv) the relevant form of acceptance, is required to be despatched to the Shareholders as soon as practicable but in any event within 21 days after the date of this joint announcement unless the Executive grants a consent for extension.

Disclosure of dealings in the Shares

In accordance with Rule 3.8 of the Takeovers Code, associates (as defined under the Takeovers Code) of the Offeror and the Company (including persons who own or control 5% or more of any class of relevant securities issued by the Company or the Offeror) are hereby reminded to disclose their dealings in the securities of the Company pursuant to the Takeovers Code.

In accordance with Rule 3.8 of the Takeovers Code, the full text of Note 11 to Rule 22 of the Takeovers Code is reproduced below:

‘‘Responsibilities of stockbrokers, banks and other intermediaries

Stockbrokers, banks and others who deal in relevant securities on behalf of clients have a general duty to ensure, so far as they are able, that those clients are aware of the disclosure obligations attaching to associates and other persons under Rule 22 and that those clients are willing to comply with them. Principal traders and dealers who deal directly with investors should, in appropriate cases, likewise draw attention to the relevant Rules. However, this does not apply when the total value of dealings (excluding stamp duty and commission) in any relevant security undertaken for a client during any 7 day period is less than $1 million.

This dispensation does not alter the obligation of principals, associates and other persons themselves to initiate disclosure of their own dealings, whatever total value is involved.

Intermediaries are expected to co-operate with the Executive in its dealings enquiries. Therefore, those who deal in relevant securities should appreciate that stockbrokers and other intermediaries will supply the Executive with relevant information as to those dealings, including identities of clients, as part of that co-operation. ’’

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WARNING: THE OFFER IS A POSSIBILITY AND IT WILL ONLY BE MADE IF COMPLETION TAKES PLACE AND COMPLETION IS CONDITIONAL UPON THE FULFILLMENT OR WAIVER (WHERE APPLICABLE) OF THE CONDITIONS. ACCORDINGLY, THE TRANSACTIONS CONTEMPLATED UNDER THE SALE AND PURCHASE AGREEMENT MAY OR MAY NOT COMPLETE AND THE OFFER MAY OR MAY NOT PROCEED. THE SHAREHOLDERS AND POTENTIAL INVESTORS ARE THEREFORE URGED TO EXERCISE CAUTION WHEN DEALING IN THE SECURITIES OF THE COMPANY.

RESUMPTION OF TRADING IN THE SHARES

At the request of the Company, trading in the Shares on the Stock Exchange was suspended with effect from 9:00 a.m. on 23 October 2017 pending the release of this joint announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in Shares on the Stock Exchange with effect from 9:00 a.m. on 26 October 2017.

DEFINITIONS

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

• ‘‘acting in concert’’ has the meaning ascribed thereto under the Takeovers Code ‘‘associate(s)’’ has the meaning ascribed thereto under the Takeovers Code ‘‘Board’’ the board of Directors

‘‘Business Day(s)’’ a day on which licensed banks are generally open for business in Hong Kong (excluding (i) Saturday; (ii) any day on which a tropical cyclone warning signal no. 8 or above is hoisted or remains hoisted in Hong Kong at any time between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon; or (iii) any day on which a ‘‘black’’ rainstorm warning signal is hoisted or remains hoisted before 12:00 noon and is not discontinued at or before 12:00 noon)

• ‘‘Closing Date’’ the date to be stated in the Composite Offer Document as the closing date of the Offer or any subsequent closing date as may be announced by the Offeror and approved by the Executive

‘‘Conditions’’ the conditions precedent to Completion as described in the paragraph headed ‘‘conditions’’ under the section headed ‘‘THE SALE AND PURCHASE AGREEMENT’’ of this joint announcement

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• ‘‘Company’’

• Pegasus Entertainment Holdings Limited (stock code: 1326), a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on the Main Board of the Stock Exchange

• ‘‘Completion’’

• the completion of the sale and purchase of the Sale Shares in accordance with the Sale and Purchase Agreement

• ‘‘Completion Date’’

• the seventh Business Day after the fulfilment (or waiver in accordance with the Sale and Purchase Agreement) of all the Conditions or such other date as all parties to the Sale and Purchase Agreement may agree in writing

• ‘‘Composite Offer Document’’

• the composite offer and response document to be issued jointly by the Offeror and the Company in relation to the Offer in accordance with the Takeovers Code containing, amongst other things, details of the Offer (including the expected timetable), the recommendation from the Independent Board Committee to the Independent Shareholders and the advice from the independent financial adviser to the Independent Board Committee in respect of the Offer

• ‘‘controlling shareholder’’

• has the meaning ascribed to it under the Listing Rules

• ‘‘Director(s)’’

• the director(s) of the Company

• ‘‘Encumbrance(s)’’

• any claim, charge, mortgage, security, lien, pledge, option, equity, power of sale, hypothecation or other third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind, and ‘‘Encumber’’ shall be construed accordingly

• ‘‘Executive’’

• the Executive Director of the Corporate Finance Division of the SFC or any of his delegates

• ‘‘Group’’ the Company and its subsidiaries from time to time

• ‘‘HK$’’

• Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘Hong Kong’’

• Hong Kong Special Administrative Region of the PRC

• ‘‘Honour Grace’’

• Honour Grace Limited, a company incorporated in the British Virgin Islands with limited liability, being one of the Vendors, the issued share capital of which is held as to 60% by Mr. Wong, 20% by Ms. Wong Yee Kwan Alvina an executive Director and the daughter of Mr. Wong, and 20% by Mr. Wong Chi Woon Edmond, an executive Director and the son of Mr. Wong

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• ‘‘Independent Board Committee’’

• the independent committee of the Board comprising all three independent non-executive Directors, namely Mr. Lam Kam Tong, Mr. Lo Eric Tien-cheuk and Mr. Tang Kai Kui, Terence, established to give a recommendation to the Independent Shareholders regarding the terms of the Offer

• ‘‘Independent Shareholder(s)’’

• Shareholder(s), other than the Offeror, the Vendors and parties acting in concert with any of them

• ‘‘Kingston Corporate Finance’’

• Kingston Corporate Finance Limited, a licensed corporation to carry on Type 6 (advising on corporate finance) regulated activity under the SFO and being the financial adviser to the Offeror in respect of the Offer

• ‘‘Kingston Securities’’ Kingston Securities Limited, a licensed corporation to carry on Type 1 (dealing in securities) regulated activity under the SFO and being the agent to make the Offer for and on behalf of the Offeror

• ‘‘Last Trading Day’’ 20 October 2017, being the last trading day on which the Shares were traded on the Stock Exchange prior to the issue and publication of this joint announcement

• ‘‘Listing Rules’’

• the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• ‘‘Loan Facility’’

• the loan facility of HK$443 million granted by Kingston Securities to the Offeror for financing the consideration payable under the acquisition of Sale Shares and the Offer

• ‘‘Long Stop Date’’

• 30 November 2017 at 5 p.m. (Hong Kong time) (or such other time and date as the Offeror and the Vendors may agree in writing), being the date by which the Conditions must be fulfilled or waived (where applicable)

• ‘‘Mr. Wong’’ or ‘‘Warrantor’’

• Mr. Wong Pak Ming, an executive Director and chairman of the Board and a controlling Shareholder (prior to Completion), being one of the Vendors, and the brother of Ms. Wong

• ‘‘Ms. Wong’’

• Ms. Wong Kit Fong, a Shareholder and the sister of Mr. Wong, being one of the Vendors

• ‘‘Mr. Zhang’’

• Mr. Zhang Liang Johnson, the sole shareholder and the sole director of the Offeror

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• ‘‘Offer’’ the possible mandatory unconditional cash general offer to be made by Kingston Securities for and on behalf of the Offeror to acquire all the issued Shares not already owned or agreed to be acquired by the Offeror or parties acting in concert with it in accordance with the Takeovers Code

• ‘‘Offer Price’’ the price at which the Offer will be made, being HK$0.319 per Share

• ‘‘Offer Share(s)’’

• all the issued Shares other than those already owned or agreed to be acquired by the Offeror when the Offer is made

• ‘‘Offeror’’

• Nice Rich Group Limited, a company incorporated in the British Virgin Islands with limited liability

• ‘‘Overseas Shareholders’’

• Independent Shareholders whose addresses, as shown on the register of members of the Company, are outside Hong Kong

• ‘‘Pledged Shares’’ Sale Shares and the Offer Shares (as the case may be) to be deposited with Kingston Securities as collaterals for the Loan Facility

• ‘‘PRC’’ the People’s Republic of China which, for the purpose of this joint announcement, shall exclude Hong Kong, the Macao Special Administrative Region of the People’s Republic of China and Taiwan

• ‘‘Rule 3.7 Announcement’’

• the announcement of the Company dated 18 October 2017 pursuant to Rule 3.7 of the Takeovers Code

• ‘‘Sale and Purchase the conditional sale and purchase agreement dated 22 Agreement’’ October 2017 and entered into among the Vendors, the Offeror and the Warrantor in relation to the sale and purchase of the Sale Shares

• ‘‘Sale Share(s)’’

• an aggregate of 1,523,808,000 Shares, comprising 1,200,000,000 Shares, 125,816,000 Shares and 197,992,000 Shares beneficially owned by Honour Grace, Mr. Wong and Ms. Wong, respectively, immediately prior to Completion, representing approximately 58.71% of the issued share capital of the Company as at the date of this joint announcement

• ‘‘SFC’’

• the Securities and Futures Commission of Hong Kong

• ‘‘SFO’’

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

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‘‘Share(s)’’ the ordinary share(s) of HK$0.0025 each in the issued share capital of the Company

‘‘Shareholder(s)’’ holder(s) of Shares

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Takeovers Code’’ the Codes on Takeovers and and

the Codes on Takeovers and Mergers and Share Buy-backs

‘‘Vendors’’

(i) Honour Grace, (ii) Mr. Wong and (iii) Ms. Wong, being the vendors of the Sale Shares under the Sale and Purchase Agreement

‘‘%’’ per cent.

By Order of the board of directors of Nice Rich Group Limited ZHANG Liang Johnson Director

By Order of the Board Pegasus Entertainment Holdings Limited WONG Pak Ming Chairman

Hong Kong, 25 October 2017

As at the date of this joint announcement, the sole director of the Offeror is Mr. Zhang Liang Johnson.

As at the date of this joint announcement, the executive Directors are Mr. Wong Pak Ming, Ms. Wong Yee Kwan Alvina and Mr. Wong Chi Woon Edmond; and the independent nonexecutive Directors are Mr. Lam Kam Tong, Mr. Lo Eric Tien-cheuk and Mr. Tang Kai Kui Terence.

The sole director of the Offeror accepts full responsibility for the accuracy of the information contained in this joint announcement (other than the information relating to the Group and the Vendors), and confirms, having made all reasonable enquires, that to the best of his knowledge, opinions expressed in this joint announcement (other than those expressed by the Group) have been arrived at after due and careful consideration and there are no other facts not contained in this joint announcement, the omission of which would make any statement contained in this joint announcement misleading.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this joint announcement (other than the information relating to the Offeror and parties acting in concert with it) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed (other than those expressed by the Offeror and parties acting in concert with it) in this joint announcement have been arrived at after due and careful consideration and there are no other facts not contained in this joint announcement the omission of which would make any statements in this joint announcement misleading.

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