HC International : DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF HUIJIA YUANTIAN LIMITED INVOLVING ISSUE OF CONVERTIBLE BONDS

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This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

HC INTERNATIONAL, INC.

慧聰網有限公司*

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 02280) DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF HUIJIA YUANTIAN LIMITED INVOLVING ISSUE OF CONVERTIBLE BONDS THE SALE AND PURCHASE AGREEMENT

Reference is made to the announcement of the Company dated 8 December 2016 in relation to, among others, the entering into of the Letter of Intent for the acquisition of the entire equity interest of Tianjin Huijia.

The Board is pleased to announce that on 13 January 2017 (after trading hours), the Vendors, the Company and the Vendor Guarantors entered into the Sale and Purchase Agreement, pursuant to which the Vendors have conditionally agreed to sell, and the Company has conditionally agreed to acquire the Sale Shares, representing the entire issued share capital of the Target Company for an aggregate consideration of HK$409,090,909 (subject to downward adjustments), to be settled at Completion by way of (i) cash; and (ii) issuance and allotment of the Convertible Bonds (subject to downward adjustments).

Completion is conditional upon the satisfaction of the Conditions Precedent as more particularly set out in the section headed "Conditions Precedent" below.

• For identification purposes only

  LISTING RULES IMPLICATIONS

  As one or more of the applicable percentage ratios in respect of the Acquisition calculated in accordance with Rule 14.07 of the Listing Rules are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements. Not more than 30,000,000 Conversion Shares will be issued under the General Mandate upon full conversion of the Convertible Bonds.

  INTRODUCTION

  Reference is made to the announcement of the Company dated 8 December 2016 in relation to the entering into of the Letter of Intent for the acquisition of the entire equity interest in Tianjin Huijia.

  The Board is pleased to announce that on 13 January 2017 (after trading hours), the Vendors, the Company and the Vendor Guarantors entered into the Sale and Purchase Agreement, pursuant to which the Vendors have conditionally agreed to sell, and the Company has conditionally agreed to acquire the Sale Shares, representing the entire issued share capital of the Target Company for an aggregate consideration of HK$409,090,909 (subject to downward adjustments), to be settled at Completion by way of (i) cash; and (ii) issuance and allotment of the Convertible Bonds (subject to downward adjustments). The principal terms and conditions of the Sale and Purchase Agreement are as follows:

  THE SALE AND PURCHASE AGREEMENT

  Date: 13 January 2017

  Parties: (i) Mu Hao, Hong Rui, Chance Technology and Vanguard Technology as the vendors;

• the Company as the purchaser; and

• Mr. Zou, Mr. Hong, Ms. Wang and Mr. Sun as the Vendor Guarantors

As at the date of this announcement, each of Mu Hao, Hong Rui, Chance Technology and Vanguard Technology is wholly-owned by Mr. Zou, Mr. Hong, Ms. Wang and Mr. Sun respectively. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, each of the Vendors and the Vendor Guarantors is an Independent Third Party.

Subject matter of the Sale and Purchase Agreement

Pursuant to the Sale and Purchase Agreement, the Vendors have conditionally agreed to sell, and the Company has conditionally agreed to acquire the Sale Shares, representing the entire issued share capital of the Target Company.

As at the date of this announcement, each of Mu Hao, Hong Rui, Chance Technology and Vanguard Technology is holding 20%, 45%, 20% and 15% of the issued share capital in the Target Company respectively. The Target Company holds the entire issued share capital in Huijia HK, which in turn holds the entire equity interest in Beijing Huijia. Beijing Huijia then holds the entire equity interest in Tianjin Huijia which in turn holds the entire equity interest in Beijing Yimao and 60% equity interest in Shanghai Huiyin.

Upon Completion, Mu Hao, Hong Rui, Chance Technology and Vanguard Technology will transfer their respective interest in the Target Company to the Company and the Target Company will become a direct wholly-owned subsidiary of the Company, Huijia HK, Beijing Huijia, Tianjin Huijia and Beijing Yimao will become indirect wholly-owned subsidiaries of the Company and Shanghai Huiyin will become an indirect non-wholly owned subsidiary of the Company.

Consideration

The Consideration is HK$409,090,909 (subject to downward adjustments). The Consideration was determined after arm's length negotiations between the Company and the Vendors after taking into account, among others, (i) the Performance Targets; (ii) the latest unaudited net asset value of Beijing Huijia; (iii) the operating performance of the Target Group; (iv) the business prospect of the Target Group; (v) the payment terms of the Consideration; and (vi) the opportunity for the Company to widen its customer base and business network as a result of the Acquisition.

The Consideration shall be payable by the Company at Completion in the following manner:

1. HK$36,818,182 shall be payable by the Company in cash to Mu Hao;

2. HK$82,840,909 shall be payable by the Company in cash to Hong Rui;

3. HK$36,818,182 shall be payable by the Company in cash to Chance Technology;

4. HK$27,613,636 shall be payable by the Company in cash to Vanguard Technology;

5. a sum of HK$45,000,000 (subject to downward adjustments) shall be paid to Mu Hao by way of allotment and issue of the Convertible Bond;

6. a sum of HK$101,250,000 (subject to downward adjustments) shall be paid to Hong Rui by way of allotment and issue of the Convertible Bond;

7. a sum of HK$45,000,000 (subject to downward adjustments) shall be paid to Chance Technology by way of allotment and issue of the Convertible Bond; and

8. a sum of HK$33,750,000 (subject to downward adjustments) shall be paid to Vanguard Technology by way of allotment and issue of the Convertible Bond.

The part of the Consideration which is payable by cash by the Company (i.e. HK$184,090,909) to the Vendors shall be financed by the internal resources of the Company.

Performance Targets and adjustment mechanism

The part of the Consideration which is payable to the Vendors by the allotment and issuance of the aggregate principal amount of the Convertible Bonds (i.e. HK$225,000,000) is subject to downward adjustments on the basis of the Performance Targets. Assuming that the Performance Targets are achieved in each of the Performance Undertaking Years, the following principal amounts of the Convertible Bonds will be allotted and issued to each of the Vendors:

Vendors Relevant Percentage Principal amount of the Convertible Bonds to be allotted and issued to the relevant Vendors Number of Conversion Shares (subject to downward adjustments) to be allotted and issued to the relevant Vendors

Mu Hao 20% HK$45,000,000 6,000,000

Hong Rui 45% HK$101,250,000 13,500,000

Chance Technology 20% HK$45,000,000 6,000,000

Vanguard Technology 15% HK$33,750,000 4,500,000

Pursuant to the Sale and Purchase Agreement, the Vendor Guarantors jointly, severally and irrevocably covenant and undertake to the Company that the audited consolidated profit attributable to equity holders of Beijing Huijia shall achieve the following Performance Targets for the relevant Performance Undertaking Years:

Financial year Performance Targets

Year ending 31 December 2017

("First Performance Undertaking Year") RMB20,000,000 Year ending 31 December 2018

("Second Performance Undertaking Year") RMB26,000,000 Year ending 31 December 2019

("Third Performance Undertaking Year") RMB33,800,000