Pan Asia Env Protection : (I) VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF 100% EQUITY INTEREST IN JIANGSU KANGMEI NEW MATERIALS TECHNOLOGY COMPANY LIMITED; (II) ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE; AND (III) RESUMPTION OF TRADING

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

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 556)

1. VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF 100% EQUITY INTEREST IN JIANGSU KANGMEI NEW MATERIALS TECHNOLOGY COMPANY LIMITED;
2. ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE; AND
3. RESUMPTION OF TRADING

THE ACQUISITION AGREEMENT

On 16 March 2017, the Company (as the purchaser) and the Vendors entered into the Acquisition Agreement, pursuant to which the Company has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell the Equity Interest for a maximum Consideration of RMB800,000,000 (equivalent to approximately HK$896,000,000), which shall be subject to adjustments in accordance with the terms of the Acquisition Agreement, and will be satisfied by (i) payment in cash; and (ii) allotment and issue of Consideration Shares.

The Consideration Shares will be allotted and issued under the Specific Mandate proposed to be obtained at the EGM.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratio(s) under Rule 14.07 of the Listing Rules in respect of the Acquisition Agreement exceed(s) 100%, the Acquisition constitutes a very substantial acquisition for the Company under Chapter 14 of the Listing Rules and is therefore subject to the approval by the Shareholders at the EGM.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Vendors and their respective associates, and the ultimate beneficial owner(s) of Vendor 1 did not hold any Shares, options or securities convertible into Shares as at the date of this announcement. As such, no Shareholder is required to abstain from voting at the EGM.

Pursuant to the Acquisition Agreement, an independent valuer has to determine the the valuation of the Target Company. Such valuation constitutes a profit forecast under Rule 14.61 of the Listing Rules. As the valuer has not been appointed by the Company, the Company will comply with the requirements under Rules 14.61 and 14.62 of the Listing Rules in the circular to be despatched to the Shareholders.

GENERAL

A circular containing, among other matters, (i) further details of the Acquisition Agreement and the transactions contemplated thereunder; (ii) further information on the Specific Mandate; (iii) financial information of the Target Company; and (iv) a notice of the EGM, is expected to be despatched to the Shareholders on or before 31 May 2017 in order to allow sufficient time for the Company to prepare for the information to be included in the circular.

RESUMPTION OF TRADING

Trading in the Shares on the Stock Exchange has been suspended at the request of the Company with effect from 9:00 a.m. on 16 March 2017 pending release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:00 a.m on 13 April 2017.

As Completion is conditional upon the fulfillment and/or waiver (if applicable) of the conditions precedent set out in the Acquisition Agreement, and is conditional upon, among other things, the Company being satisfied with the results of the due diligence review and the obtaining of the Shareholders' approval for the Acquisition, the Acquisition may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the Shares.

On 16 March 2017, the Company (as the purchaser) and the Vendors entered into the Acquisition Agreement, pursuant to which the Company has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell the Equity Interest for a maximum Consideration of RMB800,000,000 (equivalent to approximately HK$896,000,000), which will be satisfied by (i) payment in cash; and (ii) allotment and issue of Consideration Shares. The principle terms of the Acquisition Agreement are set out below.

THE ACQUISITION AGREEMENT Date: 16 March 2017 Parties:

1. The Company, as the purchaser; and

2. Vendor 1 and Vendor 2, collectively as the Vendors.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, each of Vendor 2, Vendor 1 and its ultimate beneficial owner(s) is an Independent Third Party. Further, to the best of the Directors' knowledge, information and belief, Vendor 2 and Vendor 1 (and its ultimate beneficial owner(s)) are independent from each other.

Subject matter

The Company has conditionally agreed to acquire from the Vendors the Equity Interest.

As at the date of this announcement, the Target Company was owned as to approximately 82.57% by Vendor 1 and as to approximately 17.43% by Vendor 2.

The Target Company is principally engaged in the business of research and development, and production of energy-conserving and eco-friendly building materials in the PRC. Further information on the Target Company is set out in the paragraph headed "Information on the Target Company" below.

Conditions precedent

Completion is conditional upon the following conditions having been fulfilled or waived (as the case may be):

1. the Target Company, the Vendors and the Company having obtained all necessary consents and approvals for the Acquisition, including (but not limited to) all consents and approvals from the Stock Exchange, the SFC and any government and/or regulatory authorities and all consent and approvals as required under the laws of Cayman Islands, or the Stock Exchange (as the case may be) or the SFC (if required) or having granted a waiver concerning compliance with any relevant rules or regulations;

2. the Company being satisfied that no events, facts or circumstances having occurred which constitute or may constitute any serious breach of the Acquisition Agreement or any of the warranties stipulated therein, and the Vendors having fulfilled and complied with all of their respective obligations under the Acquisition Agreement;

3. the Stock Exchange granting the listing of, and the permission to deal in, the Consideration Shares;

4. the passing of resolution(s) at the EGM in accordance with the requirements of the Listing Rules and all other applicable laws and regulations to approve, among other matters, the Acquisition Agreement and the transactions contemplated thereunder and the proposed grant of the Specific Mandate to issue the Consideration Shares;

5. the delivery to the Company of a PRC legal opinion (in form and substance satisfactory to the Company) by a PRC legal adviser appointed by the Company in relation to the Acquisition Agreement and the transactions contemplated thereunder;

6. the legal and financial due diligence results in respect of the Target Company is reasonably satisfactory to the Company; and

7. the delivery to the Company of a valuation report issued by an independent professional valuer appointed by the Company.

Parties to the Acquisition Agreement shall use their best endeavour to satisfy and fulfill all of the above conditions precedent. The Vendors shall assist the Company in providing all information and documents required pursuant to the Listing Rules and other applicable rules, codes and regulations whether in connection with the preparation of the Acquisition Agreement, announcement(s), circular(s) or otherwise to the Stock Exchange, the SFC and other relevant regulatory authorities.

The Company may waive the condition numbered (ii) above at its sole and absolute discretion. Save as disclosed, all other conditions are not waived by either party to the Acquisition Agreement. In the event that the above conditions have not been fulfilled or waived (as the case may be) on or before 30 June 2017, the Acquisition Agreement shall lapse and be of no further effect, the Company and the Vendors shall not have any claim against each other by any means save for any antecedent breaches of the Acquisition Agreement.

As at the date of this announcement, no independent professional valuer has been appointed by the Company. Details of the valuation will be included in the circular to be despatched to the Shareholders. The Directors confirm that as at the date of this announcement, none of the above conditions has been fulfilled and the Company has no intention to waive any of the above conditions.

Consideration

The aggregate amount of the Consideration, which shall be subject to adjustments in accordance with the terms of the Acquisition Agreement, payable by the Company to the Vendors in respect of the Acquisition is RMB800,000,000 (equivalent to approximately HK$896,000,000), which shall be satisfied by (i) payment in cash; and (ii) allotment and issue of Consideration Shares. The transfer of the Equity Interest and the payment of the Consideration shall be settled in three tranches:

1. first tranche - upon (i) completion of the due diligence exercise on the Target Company and the result of which is satisfactory to the Company; and (ii) all of the conditions precedent being satisfied or waived (as the case may be), the Company shall (aa) pay RMB80,000,000 (equivalent to approximately HK$89,600,000) in aggregate to the Vendors in cash; and (bb) allot and issue 135,000,000 Consideration Shares in aggregate at the Issue Price of RMB1.48 (equivalent to approximately HK$1.66) to the Vendors ("First Tranche Consideration Shares") in proportion with their respective Equity Interest in the Target Company as at the date of the Acquisition Agreement. The Vendors shall transfer 51% of the Equity Interest to the Company;