Yuzhou Properties : Announcements and Notices - Issuance of US$350 Million 6.00% Senior Notes Due 2022

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 is for information purposes only and does not constitute an invitation or a solicitation of an offer to acquire, purchase or subscribe for securities or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to acquire, purchase or subscribe for any securities.

This announcement is not an offer of securities for sale or the solicitation of an offer to buy securities in the United States or in any country or jurisdiction in which any such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such country or jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the Company and will contain detailed information about the Company and management, as well as financial statements. The Company has not registered and does not intend to register any of the Notes in the United States.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01628) ISSUANCE OF US$350 MILLION 6.00% SENIOR NOTES DUE 2022

On 18 January 2017, the Company and the Subsidiary Guarantors entered into the Purchase Agreement with BOC International, Haitong International, Credit Suisse, Deutsche Bank, Yuzhou Financial, AMTD, China Galaxy International, Citi, HSBC and Zhongtai International in connection with the issue of US$350 million 6.00% senior notes due 2022.

The estimated net proceeds of the Proposed Notes Issue, after deduction of underwriting commissions and other estimated expenses, will amount to approximately US$343,700,000. The Company currently intends to use the proceeds from the Proposed Notes Issue primarily for refinancing its existing indebtedness and, to a lesser extent, for general working capital purposes. The Company may adjust the foregoing plans in response to changing market conditions and, thus, reallocate the use of proceeds from the Proposed Notes Issue.

The Company will seek a listing of the Notes on the Stock Exchange. A confirmation of the eligibility of the listing of the Notes has been received from the Stock Exchange. Listing the Notes to the Stock Exchange is not to be taken as an indication of the merits of the Company or the Notes.

Reference is made to the announcement of the Company dated 18 January 2017 in respect of the Proposed Notes Issue. The Board is pleased to announce that on 18 January 2017, the Company, together with the Subsidiary Guarantors, entered into the Purchase Agreement with BOC International, Haitong International, Credit Suisse, Deutsche Bank, Yuzhou Financial, AMTD, China Galaxy International, Citi, HSBC and Zhongtai International in connection with the issue of the Notes in the aggregate principal amount of US$350 million.

THE PURCHASE AGREEMENT Date

18 January 2017

Parties

1. the Company as the issuer;

2. certain subsidiaries of the Company as the Subsidiary Guarantors of the Company's obligations under the Notes; and

3. BOC International, Haitong International, Credit Suisse, Deutsche Bank, AMTD, China Galaxy International, Citi, HSBC and Zhongtai International as the initial purchasers and Yuzhou Financial.

BOC International, Haitong International, Credit Suisse, Deutsche Bank and Yuzhou Financial are the joint global coordinators and BOC International, Haitong International, Credit Suisse, Deutsche Bank, Yuzhou Financial, AMTD, China Galaxy International, Citi, HSBC and Zhongtai International as the joint bookrunners and joint lead managers in respect of the offer and sale of the Notes. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, each of BOC International, Haitong International, Credit Suisse, Deutsche Bank, AMTD, China Galaxy International, Citi, HSBC and Zhongtai International, as an initial purchaser, is an independent third party and not a connected person of the Company.

Yuzhou Financial is a company owned as to 90% by Ms. Kwok Ying Lan, an executive Director and a controlling shareholder of the Company and the spouse of Mr. Lam Lung On, an executive Director, chairman of the Board and a controlling shareholder of the Company. Therefore, Yuzhou Financial is a connected person of the Company and the appointment of Yuzhou Financial as a joint global coordinator, joint bookrunner and joint lead manager for the Proposed Notes Issue under the Purchase Agreement constitutes a connected transaction of the Company. As the applicable percentage ratios of such connected transaction (on an aggregated basis with the connected transaction with Yuzhou Financial in respect of the 2023 Notes which was disclosed in the announcement of the Company dated 19 October 2016 and which was conducted within a 12-month period) are less than 5% and the consideration amount is less than HK$3,000,000, such connected transaction will be fully exempt from the announcement, reporting and shareholder approval requirements under Chapter 14A of the Listing Rules.

The Notes will be offered outside the United States in compliance with Regulation S under the Securities Act. None of the Notes will be offered to the public in Hong Kong and none of the Notes will be placed to any connected persons of the Company.

Principal terms of the Notes Notes Offered

The Company will issue the Notes in the aggregate principal amount of US$350 million which will mature on 2022, unless earlier redeemed pursuant to the terms thereof.

Offer Price

The offer price of the Notes will be 99.575% of the principal amount of the Notes.

Interest

The Notes will bear interest at a rate of 6.00% per annum, payable semi-annually in arrears on 25 January and 25 July, beginning 25 July 2017.

Ranking of the Notes

The Notes are senior obligations of the Company and, subject to certain limitations, are guaranteed by the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any) on a senior basis. The Notes will (1) rank at least pari passu in right of payment against the Company with respect to the 2019 Notes, the 2019 II Notes, the 2023 Notes and the 2016 Term Loan Facility and all unsecured, unsubordinated indebtedness of the Company (subject to any priority rights of such unsubordinated indebtedness pursuant to applicable law), (2) rank senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the Notes, (3) be effectively subordinated to existing and future secured obligations of the Company, the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any), to the extent of the assets serving as security therefor, and (4) be effectively subordinated to all existing and future obligations of the Non- Guarantor Subsidiaries.

In addition, on the issue date, the Notes will be secured by a pledge of the Collateral and will: (1) be entitled to a first priority lien on the Collateral pledged by the Company and the Subsidiary Guarantor Pledgors shared on a pari passu basis with (i) holders of the 2019 Notes; (ii) holders of the 2019 II Notes; (iii) holders of the 2023 Notes; (iv) lenders to the 2016 Term Loan Facility and

(v) holders of the permitted pari passu secured indebtedness under the Notes (if any) and subject to any permitted liens; (2) rank effectively senior in right of payment to unsecured obligations of the Company with respect to the proceeds from the Collateral pledged by the Company and the Subsidiary Guarantor Pledgors securing the Notes; and (3) rank effectively senior in right of payment to unsecured obligations of the Subsidiary Guarantor Pledgors to the extent of the Collateral charged by each Subsidiary Guarantor Pledgor securing the Notes (subject to priority rights of such unsecured obligations pursuant to applicable law).

Events of Default

The events of default under the Notes include, among others:

1. default in the payment of principal of (or premium, if any, on) the Notes when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise;

2. default in the payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 consecutive days;

3. default in the performance or breach of the provisions of certain covenants or the failure by the Company to create or cause its restricted subsidiaries to create a first priority lien on the Collateral (subject to any permitted liens);