WH Group Limited — Capital/Financing Update 2013

Mar 13, 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.

China Gamma Group Limited 中國伽瑪集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

PLACING OF EXISTING SHARES AND TOP-UP SUBSCRIPTION OF NEW SHARES

Placing Agent

Hantec Securities Co., Limited

On 13 March 2013 (after trading hours), the Vendor, the Company and the Placing Agent entered into the Placing Agreement, pursuant to which the Vendor agreed to place, through the Placing Agent, on a best effort basis, a maximum of 420,000,000 existing Shares, to the Placees at the Placing Price of HK$0.097 per Placing Share.

On the same day, the Top-up Subscription Agreement was entered into between the Vendor and the Company, pursuant to which the Vendor conditionally agreed to subscribe for such number of Top-up Subscription Shares equal to the number of the Placing Shares at the Topup Subscription Price of HK$0.097 per Top-up Subscription Share.

The Placing Price (or the Top-up Subscription Price) of HK$0.097 represents a discount of approximately 19.44% to the benchmarked closing price of HK$0.1204 per Share, which is the higher of (i) the closing price of HK$0.120 as quoted on the Stock Exchange on 13 March 2013, being the last trading day before the publication of this announcement; and (ii) the average closing price of HK$0.1204 as quoted on the Stock Exchange for the five consecutive trading days before the publication of this announcement.

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The maximum number of 420,000,000 Placing Shares (or the maximum number of 420,000,000 Top-up Subscription Shares) represents (i) approximately 12.43% of the existing issued share capital of the Company of 3,378,681,490 Shares as at the date of this announcement; and (ii) approximately 11.06% of the issued share capital of the Company of 3,798,681,490 Shares as enlarged by the issue of Top-up Subscription Shares pursuant to the Top-up Subscription Agreement, assuming the Placing Shares are placed in full and no further new Shares will be issued before the completion of the Top-up Subscription.

The Placing is unconditional whereas the Top-up Subscription is conditional upon (i) the Stock Exchange having granted the listing of, and permission to deal in, the Top-up Subscription Shares; and (ii) the completion of the Placing.

The gross proceeds from the Top-up Subscription will be HK$40,740,000. The net proceeds of approximately HK$40,000,000 from the Top-up Subscription are intended to be used as general working capital of the Group.

THE PLACING AGREEMENT

Date: 13 March 2013 (after trading hours)

Parties: (a) the Vendor; (b) the Company; and (c) the Placing Agent.

Placing Agent

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, the Placing Agent and its ultimate beneficial owners are third parties independent of and not connected persons of the Company and its associates.

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Placees

The Placing Agent agreed to, on a best effort basis, place the Placing Shares to those Placees who are institutional or other professional investors and who (and whose ultimate beneficial owners) are (i) third parties independent of and not acting in concert with the Vendor (or any person acting in concert with it) and (ii) independent of and not connected with the Company, the directors, the substantial shareholders and chief executives of each member within the Group and their respective associates. It is expected that none of the Placees will become a substantial shareholder of the Company immediately after the Placing. If any of the Placees becomes a substantial shareholder after completion of the Placing, the Company will make further announcement pursuant to the Listing Rules.

Placing Price

The Placing Price (or the Top-up Subscription Price) of HK$0.097 represents a discount of approximately 19.44% to the benchmarked closing price of HK$0.1204 per Share, which is the higher of (i) the closing price of HK$0.120 as quoted on the Stock Exchange on 13 March 2013, being the last trading day before the publication of this announcement; and (ii) the average closing price of HK$0.1204 as quoted on the Stock Exchange for the five consecutive trading days before the publication of this announcement.

The Placing Price was determined with reference to the prevailing market price of the Shares and was negotiated on an arm’s length basis among the Vendor, the Company and the Placing Agent. The Directors (including the independent non-executive Directors) consider that the terms of the Placing Agreement are fair and reasonable based on the current market conditions and that the Placing is in the interests of the Company and the Shareholders as a whole.

Number of Placing Shares

The maximum number of 420,000,000 Placing Shares (or the maximum number of 420,000,000 Top-up Subscription Shares) represents (i) approximately 12.43% of the existing issued share capital of the Company of 3,378,681,490 Shares as at the date of this announcement; and (ii) approximately 11.06% of the issued share capital of the Company of 3,798,681,490 Shares as enlarged by the issue of Top-up Subscription Shares pursuant to the Top-up Subscription Agreement, assuming the Placing Shares are placed in full and no further new Shares will be issued before the completion of the Top-up Subscription.

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Placing commission

The Placing Agent will receive a placing commission of 1% on the gross proceeds of the Placing Shares being placed, which was arrived at after arm’s length negotiations between the Company and the Placing Agent.

Completion of the Placing

The Placing is unconditional and shall be completed on the second Business Day following the date of the Placing Agreement or such time or date as the parties may agree. It is currently expected that the Placing will be completed on or around 18 March 2013.

Termination

The Placing Agent may after consultation with the Vendor terminate the Placing Agreement if at any time on or prior to 10:00 a.m. on the Placing Completion Date:

• (a) in the reasonable opinion of the Placing Agent, there shall have been, since the date of the Placing Agreement, such a change in national or international financial, political or economic conditions or taxation or exchange controls as would be likely to prejudice materially and adversely the consummation of the Placing; or

• (b) any material breach of any of the representations and warranties set out in the Placing Agreement comes to the knowledge of the Placing Agent or there has been a material breach by the Vendor of any other provisions of the Placing Agreement; or

• (c) any suspension of dealings in the Shares for more than five (5) consecutive trading days (other than as a result of the Placing); or

• (d) any moratorium, suspension or material restriction on trading in shares or securities generally on the Stock Exchange due to exceptional financial circumstances or otherwise at any time prior to the Placing Completion Date.

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In the event that the Placing Agent terminates the Placing Agreement, all obligations of the Vendor, the Company and the Placing Agent under the Placing Agreement, save for, amongst others, the payment of fees, commissions and expenses, shall cease and determine and none of the parties above shall have any claim against the other party in respect of any matter arising out of or in connection with the Placing Agreement except for any antecedent breach.

THE TOP-UP SUBSCRIPTION AGREEMENT

Date: 13 March 2013 (after trading hours)

• Parties: (a) The Vendor as subscriber for the Top-up Subscription Shares; and (b) the Company.

Top-up Subscription Price

The Top-up Subscription Price is HK$0.097 per Top-up Subscription Share. The net price to the Company of each Top-up Subscription Shares is HK$0.0952. The Top-up Subscription Price is the same as the Placing Price and was determined after arm’s length negotiation between the Company and the Vendor with reference to the Placing Price. The Directors (including the independent non-executive Directors) consider that the terms of the Top-up Subscription Agreement are fair and reasonable and that the Top-up Subscription is in the interests of the Company and the Shareholders as a whole.

Number of Top-up Subscription Shares

The Company conditionally agreed to allot and issue, and the Vendor conditionally agreed to subscribe for up to 420,000,000 Top-up Subscription Shares which is equivalent to the number of Placing Shares.

The maximum number of Top-up Subscription Shares represents approximately 11.06% of the issued share capital of the Company of 3,798,681,490 Shares as enlarged by the issue of Top-up Subscription Shares pursuant to the Top-up Subscription Agreement. The aggregate nominal value of the Top-up Subscription Shares will be HK$4,200,000.

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Ranking of Top-up Subscription Shares

The Top-up Subscription Shares, when issued and fully paid, will rank equally in all respects among themselves and with the existing Shares in issue on the completion date of the Top-up Subscription.

General Mandate to issue Top-up Subscription Shares

The Top-up Subscription Shares are to be issued under the General Mandate. As a result, the issue of the Top-up 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 674,736,298 Shares. Since the date of grant of the General Mandate on 4 September 2012 and up to the date of this announcement, no new Shares have been allotted and issued by the Company under the General Mandate.

Conditions of the Top-up Subscription

The Top-up Subscription is conditional upon:

• (a) the Stock Exchange having granted the listing of, and permission to deal in, the Top-up Subscription Shares; and

• (b) the completion of the Placing.

As the Top-up Subscription is subject to the fulfilment of the above conditions, the Top-up Subscription may or may not proceed to complete. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

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Completion of the Top-up Subscription

Under Rule 14A.31(3)(d) of the Listing Rules, the Top-up Subscription must be completed within 14 days from the date of the Top-up Subscription Agreement, that is, on or before 27 March 2013. In the event that the Top-up Subscription is not completed by 27 March 2013, or such later date as may be agreed between the Company and the Vendor, the Company and the Vendor may elect, subject to compliance with all requirements in relation to connected transactions under the Listing Rules (including the Shareholders approval), to postpone completion of the Top-up Subscription to a later date to be agreed between the Company and the Vendor.

REASON FOR THE PLACING AND TOP-UP SUBSCRIPTION AND INTENDED USE OF PROCEEDS

The Group is principally engaged in property business, gamma ray irradiation services and resources business. The gearing ratio of the Group, being the ratio of the sum of total borrowings and convertible note to total equity, as at 30 September 2012 was 265% (31 March 2012: 145%). The liquidity ratio, being the ratio of current assets over current liabilities, was 113% as at 30 September 2012 (31 March 2012: 108%). As mentioned in the Interim Report of the Group for the six months ended 30 September 2012, the increase in gearing ratio was mainly due to lower total equity resulting from an increase in net loss for the period under review. In view of the abrupt change in business environment of the rare earth refinery business, it is uncertain as to whether the performance of this business would improve in the short term and in order to strengthen the Group’s financial base and to improve its liquidity (and to reduce its gearing ratio), the Company is actively considering different fund raising and business restructuring options with a view to safeguarding the interests of the Company and the Shareholders.

The Directors have considered various ways of raising funds and consider that the Placing and the Top-up Subscription represent a good opportunity to raise capital for the Company while broadening the Shareholder base and strengthening the capital base of the Company. Accordingly, the Directors consider the transactions contemplated under the Placing Agreement and the Top-up Subscription Agreement are in the interests of the Company and the Shareholders as a whole. The gross proceeds from the Top-up Subscription will be HK$40,740,000. The net proceeds of approximately HK$40,000,000 from the Top-up Subscription are intended to be used as general working capital of the Group.

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The net proceeds raised per Share upon completion of the Top-up Subscription will be approximately HK$0.0952 per Top-up Subscription Share.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company had not carried out any equity fund raising exercise in the twelve months period immediately preceding 13 March 2013, being the last trading day before the publication of this announcement.

EFFECTS ON SHAREHOLDING STRUCTURE

The table below sets out the changes to the shareholding structure of the Company as a result of the completion of the Placing and the Top-up Subscription, assuming the Placing Shares are placed in full and no other Shares are issued between the date of this announcement and the completion of the Placing and the Top-up Subscription:

Mr. Chan and the Vendor (Note) The Placees Other public Shareholders Total	As at the date of this announcement Number of Shares Approximate % of shareholding 918,147,585 27.17 – – 2,460,533,905 72.83 3,378,681,490 100.00	Immediately after completion of the Placing but before the Top-up Subscription Number of Shares Approximate % of shareholding 498,147,585 14.74 420,000,000 12.43 2,460,533,905 72.83 3,378,681,490 100.00	Immediately after completion of the Placing and the Top-up Subscription Number of Shares Approximate % of shareholding 918,147,585 24.17 420,000,000 11.06 2,460,533,905 64.77 3,798,681,490 100.00	Immediately after completion of the Placing and the Top-up Subscription Number of Shares Approximate % of shareholding 918,147,585 24.17 420,000,000 11.06 2,460,533,905 64.77 3,798,681,490 100.00
				100.00

Note:

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 the Vendor; and (ii) 95,500,000 Shares held by Kingly Profits Corporation. Both the Vendor and Kingly Profits Corporation are beneficially wholly-owned by Mr. Chan. The Vendor is also interested in 388,888,888 underlying shares of the Company derived from the convertible note in the principal amount of HK$105,000,000 issued by the Company at an initial conversion price of HK$0.27 per Share.

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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 Top-up Subscription Shares.

Upon the completion of the Placing and the Top-up Subscription, the Company will make a further announcement.

DEFINITIONS

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

“acting in concert” has the meaning ascribed to it under the Hong Kong Codes on Takeovers and Mergers and Share Repurchases

• “associate(s)”

has the meaning ascribed to it under the Listing Rules

“Board”

the board of Directors

“Business Day” a day (excluding a Saturday and any 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 a.m. and 12:00 noon and is not lowered or discontinued at or before 12:00 noon) on which banks generally are open for business in Hong Kong

“Company”

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

• “connected person(s)”

has the meaning ascribed to it under the Listing Rules

“Director(s)”

director(s) of the Company

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“General Mandate”	the mandate granted to the Directors by a Shareholders’
	resolution of the Company passed at the annual general
	meeting of the Company held on 4 September 2012 to allot,
	issue and deal with up to 20% of the then issued share
	capital of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	The Hong Kong Special Administrative Region of the
	People’s Republic of China
“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange of Hong Kong Limited
“Mr. Chan”	Mr. Chan How Chung, Victor, a substantial Shareholder
“Placee(s)”	any independent institutional or other professional
	investor(s) procured by the Placing Agent to subscribe for
	any of the Placing Shares pursuant to the Placing Agent’s
	obligations under the Placing Agreement
“Placing”	the placing of the Placing Shares by the Placing Agent
	pursuant to the terms of the Placing Agreement
“Placing Agent”	Hantec Securities Co., Limited, a licensed corporation
	to carry on business in type 1 regulated activity (dealing
	in securities) under the Securities and Futures Ordinance
	(Chapter 571 of the Laws of Hong Kong)
“Placing Agreement”	the agreement dated 13 March 2013 entered into among the
	Vendor, the Company and the Placing Agent in relation to
	the Placing

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“Placing Completion Date” two Business Days after signing of the Placing Agreement (and where the time during the day is relevant, at 10:00 a.m. of that day) or such other time or date as the Vendor, the Company and the Placing Agent shall agree on which the Placing shall complete

“Placing Price” HK$0.097 per Placing Share “Placing Share(s)” a maximum of 420,000,000 existing Shares, beneficially owned by the Vendor and to be placed pursuant to the Placing Agreement “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 “substantial shareholder” has the meaning ascribed to it under the Listing Rules “Top-up Subscription” the subscription by the Vendor for the Top-up Subscription Shares pursuant to the terms of the Top-up Subscription Agreement “Top-up Subscription the agreement dated 13 March 2013 entered into between Agreement” the Vendor and the Company in relation to the Top-up Subscription “Top-up Subscription Price” HK$0.097 per Top-up Subscription Share “Top-up Subscription a maximum of 420,000,000 new Shares or such number of Share(s)” new Shares equivalent to the number of the Placing Shares to be subscribed by the Vendor pursuant to the Top-up Subscription Agreement

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“Vendor”

Mega Market Assets Limited, a substantial Shareholder and beneficially wholly-owned by Mr. Chan. As at the date of this announcement, the Vendor holds 665,097,585 Shares, representing 19.69% of the existing issued share capital of the Company

“HK$”

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

“%”

per cent.

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

Hong Kong, 13 March 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.

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