Lansen Pharmaceutical : CONNECTED AND DISCLOSABLE TRANSACTION IN RELATION TO THE SECOND TRANCHE SUBSCRIPTION IN HAOTIAN HOLDINGS LIMITED AND CONTINUING CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE CROSS GUARANTE

Microsoft Word - 20160624 Lansen combined announcement (draft 8 clean)

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LANSEN PHARMACEUTICAL HOLDINGS LIMITED

朗生醫藥控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 503) CONNECTED AND DISCLOSABLE TRANSACTION IN RELATION TO THE SECOND TRANCHE SUBSCRIPTION IN HAOTIAN HOLDINGS LIMITED AND CONTINUING CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE CROSS GUARANTEE AGREEMENT THE SECOND TRANCHE SUBSCRIPTION

As disclosed in the announcem nt of the Company on 24 March 2016, pursuant to the Subscription Agreement, at any time within 15 months from the First Completion Date, the Subscriber shall have the sole discretion but not the obligation to subscribe for, and Haotian (BVI) shall have the obligation to issue and allot, the Second Tranche Subscription Shares at the Second Tranche Consideration.

Pursuant to the Subscription Agreement, the Subscriber has the right to subscribe for the Second Tranche Subscription Shares by 29 June 2017, being the date within 15 months from the First Completion Date. The Subscriber now intends to elect to subscribe in full for the Second Tranche Subscription Shares pursuant t the Subscription Agreement within six months from the date the Independent Shareholders' approval is obtained. The Board has approved the Second Tranche Subscription, conditional upon the approval by the Independent Shareholders at the SGM.

IMPLICATIONS OF THE SECOND TRANCHE SUBSCRIPTION UNDER THE LISTING RULES

Pursuant to Rule 14.22 of the Listing Rules, the Second Tranche Subscription, if proceeded within 12 months of the First Tranche Subscription, will be aggregated with the First Tranche Subscription. As one or more of the applicable Percentage Ratios in respect of the Subscription exceed 5% but less than 25%, the transaction contemplated under the Subscription Agreement constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As at the date of this announcement, CIH owns 50.56% of the equity interest in the Company, and is therefore a substantial Shareholder of the Company and a connected person of the Company. Each of CI Biotechnology and Haotian (BVI), being an associate of CIH, are both connected persons of the Company. Accordingly, the transaction contemplated under the Subscription Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Based on the applicable Percentage Ratios, the Second Tranche Subscription, in aggregate with the First Tranche Subscription, constitutes a non-exempt connected transaction for the Company and is subject to the reporting, annual review, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

THE CROSS GUARANTEE AGREEMENT

On 24 June 2016, Ningbo Liwah, Jilin Haizi and Lansen BVI entered into the Cross Guarantee Agreement, pursuant to which the parties may, provide or procure its subsidiaries to provide certain guarantees to banks in relation to the bank facilities of each other during the Effective Period.

IMPLICATIONS OF THE CROSS GUARANTEE AGREEMENT UNDER THE LISTING RULES

As one or more of the applicable Percentage Ratios in respect of the Cross Guarantee Agreement exceed 5% but less than 25%, the transaction contemplated under the Cross Guarantee Agreement constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

Jilin Haizi, being an associate of CIH, is a connected person of the Company. Accordingly, the transaction contemplated under the Cross Guarantee Agreement constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

Based on the applicable Percentage Ratios, the transaction contemplated under the Cross Guarantee Agreement constitutes a non-exempt continuing connected transaction for the Company and is subject to the reporting, annual review, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

GENERAL

A SGM will be convened and held, among other things, to seek approval from the Independent Shareholders in relation to (i) the Second Tranche Subscription and (ii) the Cross Guarantee Agreement and the proposed Guarantee Cap in relation to the relevant continuing connected transaction contemplated thereunder.

An Independent Board Committee has been established to advise the Independent Shareholders on the Second Tranche Subscription, the Cross Guarantee Agreement and the transactions respectively contemplated thereunder. Gram Capital has been appointed as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in the same respect.

A circular containing, among other things, further details of (a) the Second Tranche Subscription; (b) the Cross Guarantee Agreement and (c) other information required under the Listing Rules, and the notice of the SGM and the form of proxy, will be despatched to the Shareholders on or before 4 July 2016.

(A) THE SECOND TRANCHE SUBSCRIPTION

Reference is made to the announcement of the Company dated 24 March 2016 in relation to the execution of the Subscription Agreement.

The Subscriber completed subscription of the First Tranche Subscription on 29 March 2016 with the First Tranche Consideration of RMB33 million pursuant to the Subscription Agreement. According to the Subscription Agreement, at any time within 15 months from the First Completion Date, the Subscriber shall have the sole discretion but not the obligation to subscribe for, and Haotian (BVI) shall have the obligation to issue and allot, the Second Tranche Subscription Shares at the Second Tranche Consideration.

Pursuant to the Subscription Agreement, the Subscriber has the right to subscribe for the Second Tranche Subscription Shares by 29 June 2017, being the date within 15 months from the First Completion Date. The Subscriber now intends to elect to subscribe in full for the Second Tranche Subscription Shares pursuant to the Subscription Agreement within six months from the date the Independent Shareholders' approval is obtained. The Board has approved the Second Tranche Subscription, conditional upon the approval by the Independent Shareholders at the SGM.

Condition precedent under the Subscription Agreement

The subscription of the Second Tranche Subscription Shares under the Subscription Agreement is not subject to any conditions.

Amount of Second Tranche Subscription Shares

The Second Tranche Subscription Shares in full represents 13.5% of the total issued share capital of Haotian (BVI) as enlarged by the Second Tranche Subscription.

Upon completion of the subscription of the Second Tranche Subscription Shares in full, the Subscriber will, in aggregate with the First Tranche Subscription Shares, own 30% of the issued share capital of Haotian (BVI) as enlarged by the Second Tranche Subscription.

Second Tranche Consideration

The amount of the Second Tranche Consideration is RMB26.92 million.

As disclosed in the announcement of the Company dated 24 March 2016, the Subscription Consideration was arrived at after arm's length negotiation between the parties, having made reference to an independent valuation of the 100% equity interest of Haotian (BVI) carried out by Ascent Partners, an independent professional valuer in Hong Kong.

The appraised value of the 100% equity interest of Haotian (BVI) set out in the independent valuation report dated 18 March 2016 is US$33,759,000 as at 31 January 2016. The Subscription Consideration was determined based on the valuation of the 100% equity interest of Haotian (BVI) at US$30,000,000 (which represents a discount of approximately 11% to the independent valuation) and taking into account the common goal in developing the plant extract business of Haotian (BVI) and the future potential business synergy to be brought by the Subscriber to Haotian (BVI).

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