Yingde Gases : Announcements and Notices - Update on Court Proceedings in Cayman Islands

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Yingde Gases Group Company Limited

盈德氣體集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 02168) UPDATE ON COURT PROCEEDINGS IN CAYMAN ISLANDS

This announcement is made pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO").

Reference is made to (1) the announcement ("Court Proceedings Announcement") of Yingde Gases Group Company Limited (the "Company") dated 22 December 2016 in relation to, among others, an interim injunction from the Grand Court of the Cayman Islands (the "Court") on 19 December 2016 and a further hearing (the "Hearing") set by the Court; and (2) the announcement ("Holding Announcement") of the Company dated 23 December 2016 in relation to, among others, the trading halt from 10:24 a.m. on 23 December 2016. Unless stated otherwise, the capitalized terms used herein shall have the same meaning as those defined in the Court Proceedings Announcement and the Holding Announcement.

On 29 December 2016 (Cayman time), after the Hearing, the Company was advised that the Court had made an order (the "Order") on the following terms:

1. the Company shall convene a meeting of its board of directors (the "Board") (at a time and date mutually convenient to all directors before 10 January 2017, or if a mutually convenient time and date cannot be agreed, the Company shall convene a meeting of the Board at 9:00 a.m. Hong Kong time on 10 January 2017) to consider and, if thought fit, ratify the resolutions passed on 5 November 2016 and 18 December 2016 without the Court making any determination as to whether such resolutions were or are in any way invalid (the "First Board Meeting");

2. the order (the "Previous Order") made in this matter on 19 December 2016 shall be varied to the extent necessary to permit paragraph 1 above to have effect and shall otherwise remain in force up to and including 11 January 2017.

   (Note: principal terms of the Previous Order are, among others, the Company is restrained from:

3. taking any steps to implement the resolutions passed at the Board meeting on 18 December 2016;

4. holding any Board meeting on less than seven (7) clear days' notice to Bubbly Brooke Holding Company Limited and Baslow Technology Limited (collectively, the "Plaintiffs"); and

5. issuing any additional shares of any class); and

6. Costs reserved.

In light of the Order, the First Board Meeting will be held at 9:00 a.m. on 10 January 2017 to ratify, among others, the change to the composition of the Board as set out in the announcement dated 6 November 2016 and the proposed placing to Originwater as set out in the Company's announcement dated 18 December 2016. The Company will make further update announcement in this regard.

The Company and the Company's Cayman legal advisor have been of the view that the resolutions (the "Resolutions") passed by the Board on 5 November 2016 and 18 December 2016, respectively, are valid. As advised by the Company's Cayman legal advisor, (1) the Court had considered a request from the Plaintiffs to the effect that the Resolutions were invalid, but the Court refused to order that the Resolutions were invalid at the Hearing; (2) the Court ordered the First Board Meeting to be adjourned to 9:00 a.m. on 10 January 2017 (if the parties cannot agree on an earlier time) to consider ratifying the Resolutions; and (3) even if the Plaintiffs' position regarding the proceedings of the relevant board meetings had any merit (which the Company denies), it will be properly addressed by the ratification of the Resolutions if such ratification is approved by the Board on 10 January 2017.

The Order was agreed upon the Company's undertaking ("Undertaking") to, among others, adjourn the meetings of its Board scheduled to be held on 31 December 2016 until such time as the First Board Meeting can be held.

To comply with the Undertaking, the board meeting ("Second Board Meeting") which was originally scheduled on 31 December 2016 as set out in the Holding Announcement is now adjourned to 10 January 2017 to further consider, among others, the First Letter and the Second Letter from Stellars.

At the request of the Company, trading in the Company's shares (stock code: 2168) and the debt securities (the "Debt Securities") issued by the wholly-owned subsidiary of the Company and guaranteed by the Company (stock codes: 5926 and 5793) on the Stock Exchange was halted from 10:24 a.m. on 23 December 2016. Trading in the Company's shares and Debt Securities will remain suspended until further announcement of the Company in respect of, among others, the First Letter and the Second Letter from Stellars.

Hong Kong, 4 January 2017

By order of the Board

Yingde Gases Group Company Limited Zhao Xiangti

Chairman

As at the date of this announcement, the executive directors of the Company are Mr. Zhao Xiangti, Mr. He Yuanping and Mr. Zhang Yunfeng; the non-executive directors of the Company are Mr. Zhongguo Sun, Mr. Trevor Raymond Strutt and Mr. Suo Yaotang; and the independent non-executive directors of the Company are Mr. Zheng Fuya, Dr. Wang Ching and Dr. Feng Ke.