WH Group Limited - Capital/Financing Update 2015

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REX Global Entertainment Holdings Limited 御濠娛樂控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

(1) MAJOR TRANSACTION

AND

(2) RESUMPTION OF TRADING

SALE AND PURCHASE AGREEMENT

On 23 December 2015, the Company and the Seller entered into the Deed of Amendment to amend the terms of the Original Sale and Purchase Agreement pursuant to which, among other things, the Company conditionally agreed to acquire (or procure its nominee to acquire) and the Seller conditionally agreed to sell, 30% of the issued share capital of the Target Company. Pursuant to the terms of the Sale and Purchase Agreement, subject to Completion and the entering into of a patent and trademark licence agreement, the Target Group shall grant the Rex Nominee Licence in relation to the exclusive use by Rex Nominee, the Company and other subsidiaries of the Company of the Rex Nominee IPR as necessary to market and sell “YOTAPHONE” in the Greater China region for 7 years.

TERMINATION OF OPTION AGREEMENTS

On 23 December 2015, simultaneous with the execution of the Deed of Amendment:

(1) the Company and Yota Holding entered into a termination agreement to terminate the First Option Agreement with effect from the date of the termination agreement; and
(2) the Company and MTH entered into a termination agreement to terminate the Second Option Agreement with effect from the date of the termination agreement.

LISTING RULES IMPLICATIONS

The SGM will be convened at which ordinary resolution(s) will be proposed for the Shareholders to consider, and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholders or any of their respective associates have any material interest in the transactions contemplated under the Sale and Purchase Agreement. As such, no Shareholder is required to abstain from voting under the Listing Rules on the resolution(s) to be proposed at the SGM.

DESPATCH OF CIRCULAR

A circular containing, among other things, (i) further information on the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) financial information and other information of the Target Group; (iii) the pro forma financial information of the Group (assuming Completion); and (iv) other information as required under the Listing Rules together with a notice of the SGM and a form of proxy will be despatched to the Shareholders on or before 24 February 2016 so as to allow sufficient time for the preparation of the relevant information for inclusion in the circular.

As Completion is subject to the fulfillment of a number of conditions precedent set out in the Sale and Purchase Agreement, the Sale and Purchase Agreement may or may not be completed and the transactions contemplated under the Sale and Purchase Agreement including the grant of the Rex Nominee Licence to the Group may or may not materialize. Shareholders and potential investors should exercise caution when dealing in the Shares.

RESUMPTION OF TRADING

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 December 2015, pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:00 a.m. on 31 December 2015.

BACKGROUND

References are made to the announcements of the Company dated 5 August 2015, 8 October 2015, 19 October 2015 and 27 November 2015 in relation to, among other things, the potential investment by the Company in the Target Company.

As set out in the previous announcements, the Company and the Seller entered into the Original Sale and Purchase Agreement pursuant to which the Company conditionally agreed to acquire (or procure its nominee to acquire) and the Seller conditionally agreed to sell, 64.9% of the issued share capital of the Target Company. After consultation with the Stock Exchange, the Listing Department of the Stock Exchange informed the Company that it had made a decision that the transactions contemplated under the Original Sale and Purchase Agreement would constitute a reverse takeover under Rule 14.06(6) of the Listing Rules. Therefore, the Original Sale and Purchase Agreement would not be able to proceed on its original terms.

After further negotiations between the Company and the Seller, the Board is pleased to announce that the Company and the Seller entered into Deed of Amendment to amend the Original Sale and Purchase Agreement pursuant to which, among other things, the Company conditionally agreed to acquire (or procure its nominee to acquire) and the Seller conditionally agreed to sell, 30% of the issued share capital of the Target Company. Pursuant to the terms of the Sale and Purchase Agreement, subject to Completion and the entering into of a patent and trademark licence agreement, the Target Group shall grant the Rex Nominee Licence in relation to the exclusive use by Rex Nominee, the Company and other subsidiaries of the Company of the Rex Nominee IPR as necessary to market and sell “YOTAPHONE” in the Greater China region for 7 years.

Details of the Original Sale and Purchase Agreement as amended by the Deed of Amendment are set out below.

SALE AND PURCHASE AGREEMENT

Date

8 October 2015 (Original Sale and Purchase Agreement)

23 December 2015 (Deed of Amendment)

Parties

Seller: the Seller Buyer: the Company

The Seller is a limited partnership incorporated and existing under the laws of the Cayman Islands. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Seller and its general partner are independent of the Company and connected persons of the Company.

Assets to be acquired

(1) the Sale Shares which represent 30% of the issued share capital of the Target Company as at the date of this announcement; and
(2) all rights to repayment of all debts owed by Yota (Cyprus) to the Seller under the Bridge Loan Agreement (details of which are set out in the paragraph headed “Financing by the Company” below).

Further information about the Target Company is set out in the paragraph headed “Information on the Target Company” below.

Consideration for the Sale Shares

The consideration for the Sale Shares is USD46,225,000 in cash, which was arrived at after arm’s length negotiations between the Company and the Seller and was determined after taking into account, among other things, (i) the future prospects of the smartphone industry; and (ii) the growth potential and future development of the Target Company’s “YOTAPHONE” brand.

The Consideration is subject to adjustment as a result of any liability arising under any representation, warranty or undertaking given by the Seller under the Sale and Purchase Agreement.

The Company shall deposit the Consideration before Completion to the Escrow Account pursuant to the Sale and Purchase Agreement and the Escrow Agreement. The portion of the Consideration in the amount of USD41,625,000 shall be released from the Escrow Account to the Seller upon Completion. The Company and the Seller shall instruct the Escrow Agent to release to the Company such amount as equal to any claim which the Company may have under the Sale and Purchase Agreement (if any) and shall instruct the Escrow Agent to release to the Seller the balance of the Retention Amount after deduction of such claim, together with interest accrued, in accordance with the Escrow Agreement on the first anniversary of the Completion Date.

Conditions precedent

Completion of the Sale and Purchase Agreement is conditional upon the following having been fulfilled or waived in accordance with the terms of the Sale and Purchase Agreement:

(a) the passing at a general meeting of the Shareholders of a resolution approving the sale and purchase of the Sale Shares in accordance with the Sale and Purchase Agreement and all the transactions contemplated thereby;
(b) the Seller having delivered to the Escrow Agent the duly signed Hi-P Escrow Assignment Agreement;
(c) (i) the Company having deposited to the Escrow Account at or before Completion (A) the amount equal to any outstanding amount owed by Yota (Cyprus) under the Bridge Loan Agreement as of the date of such deposit (subject to a maximum of USD15,000,000 to be transferred to the Seller at Completion) plus (B) USD27,000,000, which is the first tranche owed by Yota (BVI) to the Seller under the Senior Seller Debt, to be released in accordance with the terms of the Sale and Purchase Agreement; (ii) the Seller having delivered to the Escrow Agent the duly signed Bridge Loan Assignment Agreement and the Yota BVI Loan Agreement; and (iii) the Company having delivered to the Escrow Agent the duly signed Subordination Deed;
(d) the Company having deposited the Consideration before Completion to the Escrow Account pursuant to the Sale and Purchase Agreement and the Escrow Agreement;
(e) the Seller, the Company, Yota Holding, and MTH having executed the Shareholders Agreement;
(f) the waiver by the existing shareholders of the Target Company of pre-emption or similar right (if any) with respect to the transfer of the Sale Shares as contemplated under the Sale and Purchase Agreement having been obtained;
(g) subject to the fulfillment of each of the Conditions set out in paragraphs (a), (c)(i), (c) (iii), (d), (e), (i), (m) and (n) (or waiver), conversion of certain debt into equity of the Target Company (except the Senior Seller Debt) without issuance of any new shares pursuant to the terms of the Sale and Purchase Agreement having been completed;

(h) Udentu Investments Inc. (as licensor) and Yota (BVI) (as licensee) having executed a trademark licence agreement(s) in respect of “YOTA” trademarks providing for an irrevocable (except in case of uncured material breach), no royalty other than oneoff USD100, sub-licensable licence(s) for a maximum term permitted by applicable regulations for certain exclusive and non-exclusive uses;
(i) the competent regulatory authorities, including merger control authorities, having granted their unconditional consent, approval, clearance, confirmation or licence in respect of the sale and purchase of the Sale Shares in accordance with the Sale and Purchase Agreement and all the transactions contemplated thereby as provided for by the applicable laws, or where such approval or consent is given subject to conditions, on such conditions as are reasonably acceptable to the Company;
(j) the warranties (other than specified ones) remaining true and accurate in all respects as of the date of the Sale and Purchase Agreement and as of the Completion Date by reference to the facts and circumstances subsisting as at the Completion Date;
(k) each of the specified key employees remains to be employed by the relevant member of the Target Group on terms and conditions existing as at the date of the Sale and Purchase Agreement;
(l) subject to satisfaction of the Condition in paragraph (h), Yota (BVI) (as licensor) and the Seller (as licensee) having executed a trademark licence agreement(s) in respect of “YOTA” and “NUF logo” trademarks providing for an irrevocable (except in case of uncured material breach), no royalty other than one-off USD100, sub-licensable licence(s) for a maximum term permitted by applicable regulations for exclusive use of products which are not products within the core business of any member of the Target Group as at the date of the Sale and Purchase Agreement such as all kinds of telephones, tablets etc.;
(m) Yota (BVI), Yota (Cyprus), the Target Company and Rex Nominee having entered into a patent and trademark licence agreement according to which Yota (BVI) and Yota (Cyprus) (where applicable) shall, and the Target Company shall procure that Yota (BVI) and Yota (Cyprus) (where applicable) will, grant to Rex Nominee a licence for use by Rex Nominee, the Company and other subsidiaries of the Company of the Rex Nominee IPR (including “YOTA”) as necessary to market and sell any connectivity devices and ancillary products, the key terms of which licence are further set out in the section headed “The Rex Nominee Licence” below; and

(n) YH Russia, the Target Company, Yota (BVI) and Yota (Cyprus) having entered into a patent and trademark co-ownership agreement, in form to the reasonable satisfaction of the Company, according to which Yota (BVI) and Yota (Cyprus) shall, and the Target Company shall procure that Yota (BVI) and Yota (Cyprus) will, grant to YH Russia coownership rights in Russia and other countries being members of the Commonwealth of Independent States in respect of certain intellectual property rights set out in the Sale and Purchase Agreement (including “YOTA”), as well as developed or otherwise acquired by Yota (BVI) and Yota (Cyprus) after the date of the Sale and Purchase Agreement, necessary for marketing, selling, otherwise supplying and distributing products developed by the Target Company or any of its subsidiaries for unlimited duration and on other terms set out in the Sale and Purchase Agreement.

The Conditions set out in paragraphs (g), (h), (j) and (k) may be waived by the Company (in whole or in part), provided that the Condition set out in paragraph (g) may not be waived before all of the Conditions set out in paragraphs (a), (c)(i), (c)(iii), (d) and (i) have been satisfied or waived. The Conditions set out in paragraphs (c)(i), (c)(iii), (e) and (l) may be waived by the Seller (in whole or in part).

If any of the Conditions (other than the Conditions which are to be fulfilled on the Completion Date) is not fulfilled (or waived, if applicable) on or before 31 March 2016 (or such later date as the Company and the Seller may agree in writing), the Sale and Purchase Agreement shall automatically terminate (other than certain survival provisions). In such event, no party (nor any of its affiliates) shall have any claim under the Sale and Purchase Agreement and other transaction documents of any nature whatsoever against the other party (or any of its affiliates) except in respect of any rights and liabilities which have accrued before termination or under any of the surviving provisions.

Completion

Completion will take place on the third Business Day after the first Business Day on or by which all the Conditions have been fulfilled or waived, or on such other date as may be agreed by the Company and the Seller in writing.

Financing by the Company

Subject to the terms of the Sale and Purchase Agreement, the Company will provide funding to the Target Group by entering into (1) the Bridge Loan Assignment Agreement and (2) the Yota BVI Loan Agreement, and the Company’s claim under such agreements will be subordinated to claims of the Seller under the Senior Seller Debt in accordance with the Subordination Deed.

Bridge Loan Assignment Agreement

Pursuant to the Bridge Loan Agreement dated 3 July 2015 between the Seller (as creditor) and Yota (Cyprus) (as borrower), the Seller granted a loan to Yota (Cyprus) for financing of its working capital in the total amount as at the date of the Sale and Purchase Agreement and as at the date of this announcement of USD7,000,000. Pursuant to the terms of the Sale and Purchase Agreement, the Seller may increase the principal amount under the Bridge Loan Agreement up to USD15,000,000 unless the Company approved a higher amount.

Pursuant to the Bridge Loan Assignment Agreement to be entered into between the Company and the Seller, the Seller will assign to the Company all rights to claim the repayment of all debts owed by Yota (Cyprus) under the Bridge Loan Agreement for a consideration equal to the outstanding amount under the Bridge Loan Agreement of up to USD15,000,000 at Completion.

Yota BVI Loan Agreement

Pursuant to the terms of the Sale and Purchase Agreement, before Completion, Yota (BVI) (as the debtor) and the Seller (as the lender) will enter into a loan agreement in relation to the Senior Seller Debt in the amount of USD53,775,000, which represents the shareholder’s loan provided by the Seller to Yota (BVI). The Senior Seller Debt will be senior to all other claims against Yota (BVI) or the Target Company except for claims of creditors of Yota (BVI) and creditors of the Target Company in their ordinary course of business in the aggregate amount of up to USD1,000,000. The Senior Seller Debt will bear interest at the rate of 8% per annum from the date falling 3 months plus 3 Business Days from Completion and, subject to the terms of the Sale and Purchase Agreement and the Shareholders Agreement, will be repayable in full by 31 December 2017. The maturity date may be extended if Yota (BVI) has no sufficient funds to repay the Senior Seller Debt in full, provided that royalties have been

paid by Rex Nominee to Yota (BVI) in compliance with the Rex Nominee Licence and the Company has not interfered with repayment by Yota (BVI) of all or any part of the Senior Seller Debt.

Pursuant to the Yota BVI Loan Agreement to be entered into between the Company and Yota (BVI), the Company will grant a loan in the principal amount of USD27,000,000 in order to repay a portion of the Senior Seller Debt owed by Yota (BVI) to the Seller.

Pursuant to the terms of the Sale and Purchase Agreement, the Company shall deposit USD27,000,000 before Completion to the Escrow Account.

The Company and the Seller shall procure that the Escrow Agent releases the portion of the Senior Seller Debt equal to USD27,000,000 plus any interest accrued in favor of the relevant party under the Escrow Agreement as follows:

(a) (i) USD24,300,000 to the Seller and (ii) USD2,700,000 to the Escrow Agent to be held as the Retention Amount, on the date falling not later than 3 months plus 3 Business Days from Completion, if on the date falling 3 months from Completion the Seller continues to hold shares of the Target Company (and the amounts so repaid by the Escrow Agent shall be deemed to be repaid by Yota (BVI) in satisfaction of its obligations under the Senior Seller Debt); or
(b) to the Company, on the date falling not later than 3 months plus 3 Business Days from Completion if on the date falling 3 months from Completion the Seller no longer holds shares of the Target Company, in which case no loan will have been granted by the Company under the Yota BVI Loan Agreement.

Pursuant to the terms of the Shareholders Agreement set out in the Sale and Purchase Agreement, the parties to the Shareholders Agreement shall procure that if such release does not occur and the Senior Seller Debt is not otherwise repaid or deemed to be repaid earlier, the Senior Seller Debt shall be paid by Yota (BVI) on the maturity date in full. The parties to the Shareholders Agreement shall procure that the remainder of the Senior Seller Debt be repaid by Yota (BVI) using royalties received under the Rex Nominee Licence. In any event, upon sale of the remaining shares in the Target Company held by the Seller, any Senior Seller Debt outstanding shall be waived by the Seller.

The Company intends to fund the Consideration, the consideration under the Bridge Loan Assignment Agreement and the loan under the Yota BVI Loan Agreement through external equity and/or debt financings including but not limited to open offer, rights issue and/ or placing of new Shares to independent individual, corporate and/or institutional and professional investors, depending on the then prevailing circumstances.

Transfer of shares in the Target Company after Completion

After Completion, in case the Company sells shares in the Target Company, the Company shall repay the Senior Seller Debt which is outstanding prior to such sale (except that the Company may drag the Seller out if the price received by the Seller for the sale of its remaining shares in the Target Company is at least equal to the amount of the outstanding debt (including interest accrued) under the Senior Seller Debt in which case the Company will not be required to repay the Senior Seller Debt which is outstanding prior to the sale of its shares in the Target Company). The Seller may not sell its remaining shares in the Target Company up to 31 December 2016 unless to a buyer that is approved by the Company or is an affiliate of the Seller. The Seller may sell its remaining shares in the Target Company to third parties after 31 December 2016 subject to the Company’s right of first refusal, provided that immediately after such sale, the Seller shall repay to the Company the amount of the Senior Seller Debt received from Yota (BVI) prior to such sale and waive any and all Senior Seller Debt outstanding and provided that following such sale the Rex Nominee Licence shall be converted into a perpetual, irrevocable and royalty free licence. As at the date of this announcement, the Company does not have any other side arrangement with any existing or potential shareholders of the Target Company as to acquisition of further equity interest or other investments in the Target Company and has no intention to acquire further equity interest in the Target Company in the period of 12 months from the Completion Date.

The Rex Nominee Licence

Pursuant to the terms of the Sale and Purchase Agreement, prior to Completion, Yota (BVI), Yota (Cyprus), the Target Company and Rex Nominee shall enter into a patent and trademark licence agreement according to which Yota (BVI) and Yota (Cyprus) (where applicable) shall, and the Target Company shall procure that Yota (BVI) and Yota (Cyprus) (where applicable) will, grant to Rex Nominee an exclusive licence for use by Rex Nominee, the Company and other subsidiaries of the Company of the Rex Nominee IPR as necessary to market and sell any connectivity devices and ancillary products on the following key terms:

Territory: The People’s Republic of China, which for the avoidance of doubt, includes Hong Kong and the Macau Special Administrative Region of the People’s Republic of China and Taiwan, the Republic of China
Duration: 7 years from the date of the grant of the Rex Nominee Licence and, subject to paragraph headed “Revocability” below, is irrevocable
Scope: Include but not limited to: (1) exploitation of the Rex Nominee IPR, improvement of it and development of new intellectual property rights and other patents and trademarks of Yota (BVI) or Yota (Cyprus) necessary for marketing, selling, otherwise supplying and distributing products on the territory set out above developed by the Target Company or any of its subsidiaries (including improvements and new products by the Company and/or any of its subsidiaries); and (2) placing by Rex Nominee of orders for manufacturing of the above products by ODMs selected by the Target Company under manufacturing agreements concluded between the Target Company and the relevant ODMs; for the avoidance of doubt any intellectual property rights resulting from development or improvement by Rex Nominee of the Rex Nominee IPR shall be the property of Yota (BVI)

Royalty:

(i) Starting from 1 January 2017, an annual flat fee of USD6,000,000 which shall be increased by USD1,000,000 on 1 January of each year after 31 December 2017 until 31 December 2020; plus (ii) starting from the moment Rex Nominee Licence becomes effective a performance fee equal to 10% of the gross manufacturing price of devices attributable to units in respect of which the ownership title has been transferred from the ODM to the Rex Nominee or a third party purchaser nominated by the Rex Nominee, but not less than USD25 per each unit of such device.

In no event the amount of royalties (including flat fees, performance fees and otherwise) payable under the Rex Nominee Licence shall exceed USD70,000,000 for the whole period of the Rex Nominee Licence, and if such cap is reached, Rex Nominee shall no longer be required to pay any royalty under the Rex Nominee Licence.

The flat fee shall be paid quarterly within 15 days following the end of the quarter of each year in equal instalments.

The performance fee shall be paid for with 90 days credit after closing of a given quarter plus 15 calendar days.

The default rate in case of a delay in payment of royalties is 12% per annum.

Research & Any research and development activities, whether internal or with Development: ODMs, shall be run and coordinated by the Target Company and its subsidiaries and any intellectual property so created shall be owned by the Target Company and its subsidiaries.

Revocability: The Rex Nominee Licence may be revoked only in case where (i) for the performance fee, the ownership title has been transferred from an ODM to the Rex Nominee or a third party purchaser nominated by Rex Nominee and Rex Nominee delays payment for 180 calendar days or more or (ii) for the flat fee, Rex Nominee delays payment for 180 calendar days or more.

Change of control:
In case of a change of control in respect of Rex Nominee (which means that the Company is no longer able to effectively exercise 51% or more of votes in respect of the Rex Nominee and no longer able to hold effectively 51% of economic interest in respect of the Rex Nominee) the Rex Nominee shall immediately pay to the licensor the amount of royalty equal to the amount of the outstanding Senior Seller Debt.
Sub-licensing:
Rex Nominee may issue a sub-licence in respect of Rex Nominee IPR to the Company and any subsidiary of the Company provided that the Company has control over each sub-licensee (and control shall mean an ability of the Company to effectively exercise 51% or more of votes in respect of the sub-licensee); the performance fee when calculated shall take into account all licences and sub-licences in respect of Rex Nominee IPR in total.

Following either repayment of the Senior Seller Debt in full, or the purchase by a third party of the remaining shares in the Target Company held by the Seller for an amount at least equal to the outstanding portion of the Senior Seller Debt, including all interest accrued (and the Seller may, with the prior consent of the Company, convert such outstanding portion of the Senior Seller Debt into equity immediately prior to such purchase if so agreed with the third party purchaser), the Rex Nominee Licence shall automatically convert into perpetual, irrevocable and royalty free licence.

TERMINATION OF OPTION AGREEMENTS

As set out in the announcements of the Company dated 19 October 2015 and 27 November 2015, the Company entered into the First Option Agreement with Yota Holding on 8 October 2015 and the Company entered into the Second Option Agreement with MTH on 9 October 2015.

Pursuant to the First Option Agreement, the Company conditionally agreed to grant Yota Holding a put option whereby Yota Holding could request the Company to acquire all (but not only a portion) of the First Option Shares, and Yota Holding conditionally agreed to grant the Company a call option whereby the Company could request Yota Holding to sell to the Company all (but not only a portion) of the First Option Shares.

Pursuant to the Second Option Agreement, the Company conditionally agreed to grant MTH a put option whereby MTH could request the Company to acquire all (but not only a portion) of the Second Option Shares, and MTH conditionally agreed to grant the Company a call option whereby the Company could request MTH to sell to the Company all (but not only a portion) of the Second Option Shares.

Following the execution of the Deed of Amendment, the Company will no longer acquire a majority stake in the Target Company and the Target Company will not become a subsidiary of the Company after Completion. As such, on 23 December 2015 and simultaneous with the execution of the Deed of Amendment:

(1) the Company and Yota Holding entered into a termination agreement to terminate the First Option Agreement with effect from the date of the termination agreement; and
(2) the Company and MTH entered into a termination agreement to terminate the Second Option Agreement with effect from the date of the termination agreement.

The Board considers that the termination of the First Option Agreement and the Second Option Agreement by the entering into of the respective termination agreements has no material adverse impact on the existing business operation or the financial position of the Group as a whole.

INFORMATION ON THE SELLER

To the best knowledge of the Directors, the Seller is a limited partnership incorporated and existing under the laws of the Cayman Islands. The principal business of the Seller is investment holding.

INFORMATION ON THE TARGET COMPANY

The Target Company commenced its operations in 2011 and is principally engaged in the design, research and development, production and marketing and sales of high-tech consumer LTE electronics such as phablets and routers. Its main products are smartphones under the brand “YOTAPHONE” and other connectivity devices such as modems. In 2013, the Target Company’s first smartphone product, “YotaPhone 1”, was launched. Its current major product and brand is its second generation smartphone, “Yotaphone 2”. Headquartered in Russia, the Target Company has offices and operations in Europe, Asia and the Middle East. The Target Company employs leading developers from the information technology industry and its research and development team comprises Nokia veterans.

Set out below is the audited financial information of the Target Group for the latest two financial years ended 31 December 2013 and 2014 prepared in accordance with International Financial Reporting Standards:

	For the year ended 31 December	For the year ended 31 December
	2014	2013
	USD’000	USD’000
Loss before taxation	42,652	20,034
Loss after taxation	42,331	19,998
Net liability	65,243	24,309

Further financial information and other information of the Target Group will be presented in the circular to be despatched to the Shareholders.

INFORMATION ON THE GROUP AND REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREUNDER

The principal business activity of the Company is investment holding. The Group is principally engaged in the entertainment business which includes a cruise ship management business and gamma ray irradiation service. The Company intends to continue with the entertainment business, and the Group has also been actively looking for new investments and business opportunities in order to diversify its existing business with a view to achieving better growth potential and enhancing Shareholders’ return in the long run. In this regard, the Directors consider that the transactions contemplated under the Sale and Purchase Agreement present a good investment opportunity for the Group to participate in the smartphone development industry.

Pursuant to the terms of the Sale and Purchase Agreement, subject to Completion and the entering into of a patent and trademark licence agreement, Rex Nominee will be granted the Rex Nominee Licence in relation to the exclusive use by Rex Nominee, the Company and other subsidiaries of the Company of the Rex Nominee IPR (including “Yotaphone”) as necessary to market and sell any connectivity devices and ancillary products in the Greater China region for 7 years. With the expertise and experience of the key employees of the Target Group who will stay with the Target Group after Completion, it is expected that the Group will be able to enter the smartphone industry in the Greater China region.

Upon Completion, the Target Company will be accounted for as an associated company whose results, assets and liabilities will be equity-accounted for by the Company.

The Board considers that the terms of the Sale and Purchase Agreement (including the terms of the Rex Nominee Licence) are fair and reasonable and the transactions contemplated therein are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more applicable percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the transactions contemplated under the Sale and Purchase Agreement are above 25% and all of such ratios are less than 100%, the transactions contemplated under the Sale and Purchase Agreement constitute a major transaction for the Company and are therefore subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules. If the Company subsequently acquires further interest in the Target Company, the Stock Exchange will aggregate these further acquisition(s) with the acquisition contemplated under the Sale and Purchase Agreement and assess whether these further acquisition(s) would constitute a reverse takeover under Rule 14.06(6) of the Listing Rules.

DESPATCH OF CIRCULAR

GENERAL

RESUMPTION OF TRADING

DEFINITIONS

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

“associates” has the meaning ascribed to it under the Listing Rules;

“Board” the board of Directors;

“Bridge Loan the loan agreement dated 3 July 2015 between the Seller (as Agreement” creditor) and Yota (Cyprus) (as borrower) pursuant to which the creditor granted a loan to the borrower for financing of its working capital in the total amount as at the date of the Sale and Purchase Agreement of USD7,000,000, as may be increased before Completion to up to USD15,000,000 in accordance with the terms of the Sale and Purchase Agreement;

“Bridge Loan the assignment agreement to be entered into between the Assignment Seller and the Company pursuant to which the Seller will Agreement” assign to the Company all rights to claim the repayment of all debts owed by Yota (Cyprus) under the Bridge Loan Agreement;

“Business Day”

a day other than a Saturday or Sunday or public holiday in the Cayman Islands and the Swiss Confederation on which banks are open in Georgetown and Bern for general commercial business;
“BVI”
“Company”
the British Virgin Islands; REX Global Entertainment Holdings Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange;
“Completion”
“Completion Date”
completion of the Sale and Purchase Agreement; the date of Completion;
“Condition(s)”
the condition(s) precedent to Completion;
“connected person(s)”
“Consideration”
has the meaning ascribed to it under the Listing Rules; the consideration for the acquisition of 30% of the issued share capital of the Target Company by the Company under the Sale and Purchase Agreement;
“Deed of Amendment” the deed of amendment dated 23 December 2015 between the Company and the Seller to amend the Original Sale and Purchase Agreement;

“Deed of Guarantee”
“Director(s)”
“Escrow Account”
“Escrow Agent”
“Escrow Agreement”
“Existing Debt Agreements”
“First Option Agreement”
the deed of guarantee dated October 2014 between Yota (Cyprus) and the Seller pursuant to which Yota (Cyprus) shall repay to the Seller the Hi-P Escrow Amount together with the interest accrued thereon in the relevant escrow account and any amounts paid by the Seller to meet any payment obligations of Yota (Cyprus) under the Hi-P Escrow Agreement;
the director(s) of the Company;
the cash account opened and maintained by the Escrow Agent pursuant to the Escrow Agreement;
the escrow agent to be appointed by the Company and the Seller pursuant to the Sale and Purchase Agreement;
the agreement to be entered into between the Company, the Seller and the Escrow Agent pursuant to which the Escrow Agent shall open the Escrow Account and which provides for the mechanics of the deposit and payment of the Consideration by the Company under the Sale and Purchase Agreement and the amount set out in the Condition in paragraph (c) in the paragraph headed “Conditions Precedent” under the section headed “Sale and Purchase Agreement” in this announcement;
certain loan agreements and service agreements entered into by certain members of the Target Group as borrower or customer (as the case may be) in the amount of USD53,775,000;
the option agreement dated 8 October 2015 between Yota Holding and the Company;

“First Option Shares” at any given time, the shares in the Target Company held by Yota Holding;

“Greater China” the People’s Republic of China, which for the avoidance of doubt, includes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan, the Republic of China;

“Group”

the Company and its subsidiaries;

“Hi-P Escrow the escrow agreement dated 16 September 2014 between Agreement” Yota (Cyprus), Hi-P Electronics Pte. Ltd and Veritas Law Corporation;

“Hi-P Escrow Amount” the sum of USD15,000,000, which has been paid by the Seller on the request of Yota (Cyprus) to the escrow account opened pursuant to the Hi-P Escrow Agreement;

“Hi-P Escrow the assignment agreement to be entered between the Seller Assignment and the Company pursuant to which the Seller will assign to Agreement” the Company all rights to claim the repayment of all debts owed by Yota (Cyprus) to the Seller pursuant to the Hi-P Escrow Agreement, including the Hi-P Escrow Amount and any right under the Deed of Guarantee;

“HK$”

Hong Kong dollar, the lawful currency of Hong Kong;

“Hong Kong”

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

“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange;

“MTH”

“ODM”
“Original Sale and Purchase Agreement”
“Retention Amount”
“Rex Nominee”
“Rex Nominee IPR”
“Rex Nominee Licence”

MTH Limited, a company incorporated in the Cayman Islands with limited liability and which is holder of 10% of the issued share capital of the Target Company as at the date of this announcement;

original design manufacturer;
the original sale and purchase agreement dated 8 October 2015 between the Company and the Seller in relation to the sale and purchase of certain equity interest in the Target Company;
an amount equal to, initially USD4,600,000, which will increase by USD2,700,000 upon the release to the Seller of USD 27,000,000 in accordance with the terms of the Sale and Purchase Agreement;
a company to be set up by the Company, being a subsidiary of the Company and designated as “Rex Nominee” by the Company;
certain intellectual property rights set out in the Sale and Purchase Agreement, as well as developed or otherwise acquired by Yota (BVI) and Yota (Cyprus) after the date of the Sale and Purchase Agreement;
a licence to be granted by Yota (BVI) and Yota (Cyprus) (where applicable) to Rex Nominee for the exclusive use by Rex Nominee, the Company and other subsidiaries of the Company of the Rex Nominee IPR as necessary to market and sell any connectivity devices and ancillary products in the Greater China region;

“Sale and Purchase the Original Sale and Purchase Agreement (as amended by Agreement” the Deed of Amendment and as may be amended from time to time); “Sale Shares” 300 shares in the Target Company held by the Seller, constituting 30% of the issued share capital of the Target Company as at the date of this announcement; “Second Option the option agreement dated 9 October 2015 between MTH Agreement” and the Company; “Second Option Shares” at any given time, the shares in the Target Company held by MTH; “Seller” Telconet Capital Limited Partnership, a partnership incorporated and existing under the laws of the Cayman Islands; “Senior Seller Debt” the consolidation of the indebtedness under the Existing Debt Agreements in the amount of USD53,775,000 under the single loan agreement between Yota (BVI) (as the debtor) and the Seller (as the lender); “SGM” the special general meeting of the Company to be convened to approve, among other things, the Sale and Purchase Agreement and the transactions contemplated thereunder;

“Shareholders a shareholders’ agreement relating to the governance and Agreement” operation of the Target Company to be entered into among the Company, the Seller, Yota Holding, MTH and the Target Company substantially on the terms set out in the Sale and Purchase Agreement;
“Shareholders”

holders of the Shares;

“Shares” ordinary shares of HK$0.01 each in the share capital of the Company; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Subordination Deed” a deed of subordination, in form and substance agreed between the Company and the Seller, in respect of the debt under the Yota BVI Loan Agreement and the debt under the Bridge Loan Assignment Agreement;

“Target Company” Yota, a company incorporated in the Cayman Islands with limited liability which is held as to 64.9% by the Seller, 25.1% by Yota Holding and 10% by MTH as at the date of this announcement;

“Target Group” the Target Company and its subsidiaries;

“USD” United States dollar, the lawful currency of the United States of America;

“YH Russia” a company to be set up in Russia as a joint venture between Yota Holding and the Seller; “Yota (BVI)” YOTA DEVICES IPR LTD, a company limited by shares incorporated in the BVI and a wholly-owned subsidiary of the Target Company;

“Yota BVI Loan t h e l o a n a g r e e m e n t f o r a p r i n c i p a l a m o u n t o f Agreement” USD27,000,000 to be entered into between the Company and Yota (BVI), which provides that the Company grants the loan by way of transferring the loan amount to the Seller in order to repay a portion of the Senior Seller Debt owed by Yota (BVI) to the Seller;

“Yota (Cyprus)” YOTA DEVICES LTD, a private company limited by shares incorporated in the BVI and a wholly-owned subsidiary of the Target Company;

“Yota Holding”

Yota Holding Limited, a company incorporated in the BVI with limited liability and which is holder of 25.1% of the issued share capital of the Target Company as at the date of this announcement; and

“%”

per cent.

By order of the Board REX Global Entertainment Holdings Limited Yeung Chun Wai, Anthony Executive Director

Hong Kong, 30 December 2015

As at the date of this announcement, the executive Directors are Mr. Yeung Chun Wai, Anthony, Ms. Chu Wei Ning, Mr. Chen Domingo and Mr. Wong King Shiu, Daniel; and the independent non-executive Directors are Mr. Wong Hoi Kuen, Mr. Chan Chi Yuen and Mr. Lee Chi Ming.

AI assistant

WH Group Limited Capital/Financing Update 2015

49096_rns_2015-12-31_533b80eb-d3a5-432a-b0e5-0034121f05b2.pdf

REX Global Entertainment Holdings Limited 御濠娛樂控股有限公司

(1) MAJOR TRANSACTION

AND

(2) RESUMPTION OF TRADING

SALE AND PURCHASE AGREEMENT

TERMINATION OF OPTION AGREEMENTS

LISTING RULES IMPLICATIONS

DESPATCH OF CIRCULAR

RESUMPTION OF TRADING

BACKGROUND

SALE AND PURCHASE AGREEMENT

Date

Parties

Assets to be acquired

Consideration for the Sale Shares

Conditions precedent

Completion

Financing by the Company

Bridge Loan Assignment Agreement

Yota BVI Loan Agreement

Transfer of shares in the Target Company after Completion

The Rex Nominee Licence

Royalty:

TERMINATION OF OPTION AGREEMENTS

INFORMATION ON THE SELLER

INFORMATION ON THE TARGET COMPANY

INFORMATION ON THE GROUP AND REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREUNDER

LISTING RULES IMPLICATIONS

DESPATCH OF CIRCULAR

GENERAL

RESUMPTION OF TRADING

DEFINITIONS

“MTH”

By order of the Board REX Global Entertainment Holdings Limited Yeung Chun Wai, Anthony Executive Director

AI assistant

WH Group Limited — Capital/Financing Update 2015

49096_rns_2015-12-31_533b80eb-d3a5-432a-b0e5-0034121f05b2.pdf

REX Global Entertainment Holdings Limited 御濠娛樂控股有限公司

(1) MAJOR TRANSACTION

AND

(2) RESUMPTION OF TRADING

SALE AND PURCHASE AGREEMENT

TERMINATION OF OPTION AGREEMENTS

LISTING RULES IMPLICATIONS

DESPATCH OF CIRCULAR

RESUMPTION OF TRADING

BACKGROUND

SALE AND PURCHASE AGREEMENT

Date

Parties

Assets to be acquired

Consideration for the Sale Shares

Conditions precedent

Completion

Financing by the Company

Bridge Loan Assignment Agreement

Yota BVI Loan Agreement

Transfer of shares in the Target Company after Completion

The Rex Nominee Licence

Royalty:

TERMINATION OF OPTION AGREEMENTS

INFORMATION ON THE SELLER

INFORMATION ON THE TARGET COMPANY

INFORMATION ON THE GROUP AND REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREUNDER

LISTING RULES IMPLICATIONS

DESPATCH OF CIRCULAR

GENERAL

RESUMPTION OF TRADING

DEFINITIONS

“MTH”

By order of the Board REX Global Entertainment Holdings Limited Yeung Chun Wai, Anthony Executive Director

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