Chiho Tiande : 【Documents available for inspection 007】Letter from the Board

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Chihc-Tiande Group Limited

( Incorporated in Cayman Islands with limited liability)

25 January 2016

To Independent Shareholders, Convertible Bondholders and Optionholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY GENERAL CASH OFFERS BY CHINA GALAXY INTERNATIONAL SECURITIES (HONG KONG) CO., LIMITED ON BEHALF OF THE OFFEROR TO ACQUIRE ALL OF THE ISSUED SHARES, ALL OUTSTANDING CONVERTIBLE BONDS AND IN EXCHANGE FOR CASH TO CANCEL ALL OUTSTANDING SHARE OPTIONS OF CHIHO-TIANDE GROUP LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND ITS CONCERT PARTIES)

1. INTRODUCTION

   
   

   Reference is made to the Joint Announcement pursuant to which the Offeror and the Company jointly announced on 4 January 2016 that China Galaxy would, on behalf of the Offeror, make the unconditional mandatory general cash offers to acquire: (i) all of the issued Shares; (ii) all outstanding Convertible Bonds and (iii) in exchange for cash to cancel all outstanding Share Options, of the Company (other than those already owned or agreed to be acquired by the Offeror and its Concert Parties).

   
   

   The purpose of this Composite Document is to provide you with, among other things:

   (i) information relating to the Group, the Offeror and the Offers; (ii) a letter from China Galaxy containing, among other things, details of the Offers; (iii) a letter from the Independent Board Committee containing its recommendation and advice to the Independent Shareholders, Convertible Bondholders and Optionholders in relation to the Offers; and (iv) a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee in relation to the Offers.

   
   

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   Chiho-Tiande Group Limited

   ( Incorporated in Cayman Islands with limited liability )

   
   

2. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

   
   

   The Independent Board Committee of the Company comprising all of the independent non-executive Directors, has been established by the Board to make recommendations to the Independent Shareholders as to whether the Share Offer is, or is not, fair and reasonable and as to acceptance of the Share Offer, and to the Convertible Bondholders and Optionholders as to its views on the Convertible Bond Offer and Option Offer, respectively. As at the date of this letter, the independent non-executive Directors are Dr. Loke Yu, Ms. Zhang Jingdong and Mr. Zhu Dajian; the executive Directors are Mr. Tu Jianhua, Mr. Fang Ankong, Mr. Zhang Mingjie and Mr. Meng Yi (the "Executive Directors"). In forming the Independent Board Committee, the Company wishes to ensure that the Independent Shareholders will be advised by a committee of independent Directors.

   
   

   In addition, Somerley Capital, with the approval of the Independent Board Committee, has been appointed as the Independent Financial Adviser, to advise the Independent Board Committee as to the fairness and reasonableness of the Offers and as to acceptance of the Offers.

   
   

3. SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) upon completion of the Offers assuming none of the Share Options or the rights attaching to the Convertible Bonds have been exercised prior to the close of the Offers and

(x) there is no acceptance of the Offers; and (y) the Offers are accepted in full; and (iii) upon completion of the Offers assuming exercise in full of the Share Options and the rights attaching to the Convertible Bonds prior to the close of the Offers and (xx) there is no acceptance of the Offers; and (yy) the Offers are accepted in full:

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Upon completion of the Offers assuming none of the Upon completion of the Offers assuming all the Share Options or the rights attaching to the Share Options and the rights attaching to the

Convertible Bonds are exercised prior to the close of Convertible Bonds are exercised in full prior to the

the Offers and: close of the Offers and:

As at the Latest	No acceptance of the	Full acceptance of the	No acceptance of the	Full acceptance of the
Shareholders	Practicable Date	Offers	Offers	Offers		Offers

Total 899,287,256	% 56.61%	Total 899,287,256	% 56.61%	Total 1,358,208,716	% 85.50%	Total 899,287,256	% 54.37%	Total 1,423,763,383	% 86.08%
108 000	0.01%	108,000	0.01%	108,000	0.01%	108,000	0.01%	108,000	0.01%
899,395,256	56.62%	899,395,256	56.62%	1,358,316,716	85.51%	899,395,256	54.38%	1,423,871,383	86.09%
120,000,000	7.55%	120,000,000	7.55%	120,000,000	7.55%	120,000,000	7.25%	120,000,000	7.25%
II0,197,990	6.94%	110,197,990	6.94%	110,197,990	6.94%	110,197,990	6.66%	l 10, 197,990	6.66%
230,197,990	14.49%	230,197,990	14.49%	230,197,990	14.49%	230,197,990	13.91%	230,197 ,990	13.91%
458,921,460	28.89%	458,92L460	28.89%		524.476.127	31.71%

The Offeror and its Concert Parties

-USUM Investment Group Hong Kong Limited

- Mr. Meng (II

Subtotal

Good Union Hong Kong Investment Limited 121

Tai Security Holding Limited 121

Subtotal

Public Shareholders

Subtotal 458,921,460 28.89% 458,921,460 28.89% 524,476,127 31.71% - - Total 115881514;706 100.00% 1158815141706 100.00% 11588151906 100.00% 1165410691373 100.00% 1165410691373 100.00%

Notes:

1. Mr. Meng is also a director of USUM Group and is considered a Concert Party of the Offeror for the purpose of the Offers.

   
   

2. Both Good Union Hong Kong Investment Limited and Tai Security Holding Limited are wholly-owned by Mr. Zhang.

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Chiho-Tiande Group Limited

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1. THE OFFERS

   
   

   The following information about the Offers is based on the "Letter from China Galaxy" contained in this Composite Document. Please refer to the "Letter from China Galaxy" contained in this Composite Document for full details on the Offers.

   
   

   The Offers are made by China Galaxy on behalf of the Offeror on the terms and conditions set out in this Composite Document and in the accompanying Forms of Acceptance on the following basis:

   
   

2. THE SHARE OFFER

   
   

   The Share Offer is made by China Galaxy on behalf of the Offeror on the following basis:

   
   

   Principal terms of the Share Offer

   
   

   For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$3.50 in cash

   
   

   The Share Offer is unconditional in all respects and is extended to all Independent Shareholders in accordance with the Code. By accepting the Share Offer, Independent Shareholders are deemed to have warranted to the Offeror that the Shares to be acquired under the Share Offer are fully paid and are acquired by the Offeror or its nominee(s) free from all liens, charges, encumbrances, rights of pre­ emption and any other third party rights of any nature and together with all rights, benefits and entitlements attaching to them as at the date of the Composite Document or subsequently becoming attached to them, including the right to receive in full all dividends and other distributions, if any, declared, made or paid on or after the date of the Composite Document.

   
   

   The Share Offer Price is the same as the price per Share paid by the Offeror for the Option Shares and represents the highest price paid by the Offeror and its Concert Parties for Shares within six months prior to the date of the Holding Announcement.

   
   

3. THE CONVERTIBLE BOND OFFER




The Convertible Bond Offer is made by China Galaxy on behalf of the Offeror on the following basis:




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