WH Group Limited — Capital/Financing Update 2013

Sep 22, 2013

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

China Gamma Group Limited 中國伽瑪集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE BY WAY OF CAPITALISATION OF LOAN

On 19 September 2013 (after trading hours), the Company, the Borrower and the Subscriber entered into the Subscription Agreement, pursuant to which the Company conditionally agreed to issue and allot, and the Subscriber conditionally agreed to subscribe for 500,000,000 Subscription Shares at the Subscription Price of HK$0.10 per Subscription Share. The Consideration is HK$50,000,000, which shall be settled by way of capitalisation of the Relevant Loan.

The Subscription Price of HK$0.10 per Subscription Share is determined after arm’s length negotiation between the Parties with reference to the current market price of the Shares, and represents:

• (i) a discount of approximately 2.91% to the closing price of the Shares of HK$0.1030 as quoted on the Stock Exchange on 19 September 2013, being the last trading day in the Shares on the Stock Exchange prior to the publication of this announcement;

• (ii) a discount of approximately 3.10% to the average closing price of the Shares of approximately HK$0.1032 as quoted on the Stock Exchange for the 5 consecutive trading days prior to the publication of this announcement; and

1

• (iii) a discount of approximately 3.10% to the average closing price of the Shares of approximately HK$0.1032 as quoted on the Stock Exchange for the 10 consecutive trading days prior to the publication of this announcement.

The Subscription Shares represent approximately 13.16% of the existing issued share capital of the Company as at the date of this announcement and approximately 11.63% of the issued share capital of the Company as enlarged by the Subscription Shares to be issued pursuant to the Subscription Agreement, assuming that no Shares will be repurchased and no further new Shares (other than the Subscription Shares) will be issued before completion of the Subscription.

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

BACKGROUND

On 19 September 2013 (after trading hours), the Company, the Borrower and the Subscriber entered into the Subscription Agreement, pursuant to which the Company conditionally agreed to issue and allot, and the Subscriber conditionally agreed to subscribe for 500,000,000 Subscription Shares at the Subscription Price of HK$0.10 per Subscription Share. The Consideration is HK$50,000,000, which shall be settled by way of capitalisation of the Relevant Loan. The principal terms of the Subscription Agreement are set out below.

THE SUBSCRIPTION AGREEMENT

Date: 19 September 2013 (after trading hours)

Parties: (a) The Company, as the issuer;

(b) The Borrower; and

(c) Hondex Investments Limited, as the Subscriber.

2

The Subscriber, a company incorporated in the British Virgin Islands with limited liability and which is beneficially wholly-owned by Mr. Li, is principally engaged in the business of investment holding. To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquires, the Subscriber and its ultimate beneficial owner are Independent Third Parties. As at the date of the Subscription Agreement, Mr. Li is interested in 100,000,000 Shares, representing approximately 2.63% of the issued share capital of the Company.

Subscription Price

The Subscription Price of HK$0.10 per Subscription Share is determined after arm’s length negotiation between the Parties with reference to the current market price of the Shares. The net price of each Subscription Share is approximately HK$0.0994. The Subscription Price of HK$0.10 represents:

• (i) a discount of approximately 2.91% to the closing price of the Shares of HK$0.1030 as quoted on the Stock Exchange on 19 September 2013, being the last trading day in the Shares on the Stock Exchange prior to the publication of this announcement;

• (ii) a discount of approximately 3.10% to the average closing price of the Shares of approximately HK$0.1032 as quoted on the Stock Exchange for the 5 consecutive trading days prior to the publication of this announcement; and

• (iii) a discount of approximately 3.10% to the average closing price of the Shares of approximately HK$0.1032 as quoted on the Stock Exchange for the 10 consecutive trading days prior to the publication of this announcement.

Subscription Shares

The Company conditionally agreed to allot and issue, and the Subscriber conditionally agreed to subscribe for 500,000,000 Subscription Shares, representing approximately 13.16% of the existing issued share capital of the Company as at the date of this announcement and approximately 11.63% of the issued share capital of the Company as enlarged by the Subscription Shares to be issued pursuant to the Subscription Agreement, assuming that no Shares will be repurchased and no further new Shares (other than the Subscription Shares) will be issued before completion of the Subscription. The aggregate nominal value of the Subscription Shares will be HK$5,000,000.

3

Consideration

The Consideration is HK$50,000,000, which shall be settled by way of capitalisation of the Relevant Loan, being the amount of HK$50,000,000 as part of the outstanding principal amount under the Loan owed by the Borrower to the Subscriber.

Conditions of the Subscription

The Subscription is conditional upon:

• (a) the listing of and permission to deal in all of the Subscription Shares having been granted by the Stock Exchange;

• (b) none of the warranties given by the Subscriber and the Company under the Subscription Agreement having been breached in any material respect (or, if capable of being remedied, has not been remedied), or is misleading or untrue in any material respect; and

• (c) any other waivers, consents, authorizations, clearances and approvals which are required from the relevant courts, governmental or regulatory authorities in Hong Kong and Bermuda, and any confirmations, declarations and certificates of any kind, for the Subscription Agreement and the transactions contemplated therein having been granted, fulfilled or given (as applicable).

If any of the conditions precedent above has not been fulfilled on or before 3 October 2013 (or such other date as may be agreed in writing between the Company and the Subscriber), the Subscription Agreement will lapse and become null and void and the Parties will be released from all obligations thereunder, save for liabilities for any antecedent breaches thereof.

As the Subscription is subject to the fulfillment of the above conditions, the Subscription may or may not proceed to completion. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

Completion of the Subscription

Subject to the fulfilment of the conditions precedent, completion of the Subscription shall take place on the first Business Day following the date on which all the conditions precedent are fulfilled (or such other date as may be agreed in writing between the Parties).

4

Ranking of the Subscription Shares

The Subscription Shares, when issued, will rank equally in all respects among themselves and with the existing Shares in issue as at the Completion Date having, without limitations, the rights to all dividends and other distributions the record date of which falls on a date on or after the Completion Date.

GENERAL MANDATE TO ISSUE THE SUBSCRIPTION SHARES

The Subscription Shares are to be issued under the General Mandate. As a result, the issue of the Subscription Shares is not subject to further approval of the Shareholders. Pursuant to the General Mandate, the maximum number of new Shares that the Company is authorised to allot and issue is 759,736,298 Shares (being up to 20% of the then issued share capital of 3,798,681,490 as at the date of the Company’s annual general meeting held on 3 September 2013). Since the date of grant of the General Mandate on 3 September 2013 and up to the date of this announcement, no new Shares have been allotted and issued by the Company under the General Mandate.

REASONS FOR THE SUBSCRIPTION

The Group is principally engaged in property business, gamma ray irradiation services and resources business. As discussed in the 2013 Annual Report of the Company, currently the demand and price of rare earth products still remain low and the prospects of the rare earth market is uncertain. In view of this, the Group started to rationalize the resources business by considering the possibilities of restructuring the rare earth refinery and processing business, and made a plan to sell a group of subsidiaries that engaged in that business if the assets value would be better reflected by such a sale transaction rather than through continuing use. The Group is actively seeking buyers for the said business. As such, the rare earth refinery and processing business was reclassified in the Group’s consolidated financial statements as assets and liabilities held for sale. Preliminary discussions with potential buyers were on going and negotiations for the sale were still in progress. Agreement for the sale of the said business may or may not be reached. In order to further improve the Group’s liquidity and to increase its working capital, the Company is considering different fund raising options so as to strengthen the Group’s financial base.

5

The Borrower is a wholly-owned subsidiary of the Company. As at the date of the Subscription Agreement, the Loan (including the outstanding loan principal amount and accrued interests) owed by the Borrower to the Subscriber amounted to RMB218,552,332 (equivalent to approximately HK$274,908,594). The Directors believe that it is in the interests of the Company to partially capitalise the Loan into issued share capital of the Company which could alleviate the interest and loan repayments pressure of the Company. The Directors also consider that the Subscription will enlarge the capital base of the Company and will reduce the gearing level of the Group thereby strengthening the financial position of the Group for its continuous development of its business. The Directors (including the independent non-executive Directors) consider that the terms of the Subscription Agreement (including the Subscription Price) are fair and reasonable and that the Subscription is in the interests of the Company and the Shareholders as a whole.

EFFECTS ON SHAREHOLDING STRUCTURE

The table below sets out the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after completion of the Subscription, assuming in both cases that there being no further issue (other than the issue of the Subscription Shares) or repurchase of Shares between the date of this announcement and the Completion Date:

Mr. Chan How Chung, Victor (Note) The Subscriber and Mr. Li Other public Shareholders Total	As at the date of this announcement Number of Shares Approximate % of shareholding 918,147,585 24.17 100,000,000 2.63 2,780,533,905 73.20 3,798,681,490 100.00	Immediately after completion of the Subscription Number of Shares Approximate % of shareholding 918,147,585 21.36 600,000,000 13.96 2,780,533,905 64.68 4,298,681,490 100.00	Immediately after completion of the Subscription Number of Shares Approximate % of shareholding 918,147,585 21.36 600,000,000 13.96 2,780,533,905 64.68 4,298,681,490 100.00
			100.00

Note:

Mr. Chan How Chung, Victor (“Mr. Chan”) has a personal interest in 157,550,000 Shares, and is taken to be interested in (i) 665,097,585 Shares held by Mega Market Assets Limited (“Mega Market”); and (ii) 95,500,000 Shares held by Kingly Profits Corporation. Both Mega Market and Kingly Profits Corporation are beneficially wholly-owned by Mr. Chan. Mega Market is also interested in 433,526,011 underlying shares of the Company derived from the convertible note in the principal amount of HK$105,000,000 issued by the Company at the current conversion price of HK$0.2422 per Share.

6

GENERAL

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

The Company will make a further announcement upon completion of the Subscription.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The following table summarises the fund raising activities by issue of equity securities of the Company in the twelve months period immediately preceding 19 September 2013, being the last trading day before the publication of this announcement:

Date of		Net proceeds raised	Intended use of	Actual use of
announcement	Event	(approximately)	net proceeds	net proceeds
13 March 2013	Placing of existing	HK$40,075,000	for general working	for general working
	Shares and top-up		capital	capital
	subscription of new
	Shares

DEFINITIONS

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

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Board” the board of Directors

“Borrower” Jumbo Wealth International Limited, a company incorporated in the British Virgin Islands with limited liability which is beneficially wholly-owned by the Company

7

“Business Day”

• “Company”

• “Completion Date”

• “Consideration”

• “Director(s)”

• “General Mandate”

• “Group”

• “HK$”

• “Hong Kong”

• a day (other than a Saturday and a Sunday and a day on which a tropical cyclone warning number 8 or above or a “black rainstorm warning signal” is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on which licensed banks are open for general banking business in Hong Kong throughout their normal business hours

• China Gamma Group Limited, a company incorporated in the Bermuda and the issued Shares of which are listed on the Stock Exchange

• the date of completion of the Subscription, which is currently expected to be the first Business Day following the date on which all the conditions precedent are fulfilled (or such other date as may be agreed in writing between the Parties)

• the aggregate subscription price of HK$50,000,000 for all the Subscription Shares, which shall be satisfied by capitalising the Relevant Loan in full

• director(s) of the Company

• the mandate granted to the Directors by a Shareholders’ resolution of the Company passed at the annual general meeting of the Company held on 3 September 2013 to, among other things, allot, issue and deal with up to 20% of the then issued share capital of the Company

• the Company and its subsidiaries

• Hong Kong dollar(s), the lawful currency of Hong Kong

The Hong Kong Special Administrative Region of the People’s Republic of China

8

“Independent Third	third parties independent of and not connected with the
Parties”	Company, the directors, chief executive and substantial
	shareholders of the Company, any of its subsidiaries or their
	respective associates
“Listing Rules”	Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Loan”	the total sum of RMB218,552,332 (equivalent to
	approximately HK$274,908,594) (comprising the principal
	amount and accrued interests) due by the Borrower to the
	Subscriber as at the date of the Subscription Agreement
“Mr. Li”	Mr. Li Wing Sang
“Parties”	the Company, the Borrower and the Subscriber and
	their respective successors, permitted assigns and legal
	representatives
“Relevant Loan”	HK$50,000,000, being part of the outstanding loan principal
	under the Loan
“RMB”	Renminbi, the lawful currency of the People’s Republic of
	China
“Share(s)”	the ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Shareholder(s)”	the holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscriber”	Hondex Investments Limited, a company incorporated in
	the British Virgin Islands with limited liability and which is
	beneficially wholly-owned by Mr. Li

9

“Subscription” the subscription by the Subscriber for the Subscription Shares pursuant to the terms and conditions of the Subscription Agreement

“Subscription Agreement” the conditional agreement dated 19 September 2013 entered into between the Company, the Borrower and the Subscriber in relation to the Subscription

“Subscription Price” HK$0.10 per Subscription Share

“Subscription Share(s)” 500,000,000 new Shares to be subscribed by the Subscriber pursuant to the Subscription Agreement

“substantial shareholder”

has the meaning ascribed to it under the Listing Rules

“%”

per cent.

By order of the Board China Gamma Group Limited Wong King Shiu, Daniel Executive Director

Hong Kong, 19 September 2013

As at the date of this announcement, the executive director of the Company is Mr. Wong King Shiu, Daniel; the non-executive directors of the Company are Mr. Ma Kwok Hung, Warren and Mr. Chow Siu Ngor; and the independent non-executive directors of the Company are Mr. Wong Hoi Kuen, Mr. Chan Chi Yuen and Mr. Hung Hing Man.

10