Insider information - memorandum of understanding in relation to possible sale of equity interest

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CHINA FIRST CAPITAL GROUP LIMITED

中國首控集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1269)

INSIDER INFORMATION

MEMORANDUM OF UNDERSTANDING

IN RELATION TO POSSIBLE SALE OF EQUITY INTEREST

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the SFO.

The Board is pleased to announce that, on 23 September 2020 (after trading hours), the Company and the Purchaser entered into the MOU indicating their intentions to enter into the Definitive Agreement in respect of the possible sale of equity interest in the Target Company of 50% or more during the Exclusivity Period.

The Possible Sale is subject to the entering into of the Definitive Agreement by the Company and the Purchaser and may be conditional upon the fulfilment of conditions precedent to the Definitive Agreement (including obtaining necessary regulatory approval in relation to the change of shareholder of the Target Company). The Possible Sale therefore may or may not proceed. The Company will publish an announcement in compliance with the Listing Rules as when and appropriate. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the SFO.

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THE MOU

The Board is pleased to announce that, on 23 September 2020 (after trading hours), the Company and the Purchaser entered into the MOU indicating their intentions to enter into the Definitive Agreement in respect of the possible sale of equity interest in the Target Company of 50% or more during the Exclusivity Period.

Target Company

The Target Company is an indirect wholly-owned subsidiary of the Company incorporated in Hong Kong with limited liability, and is principally engaged in dealing and underwriting in securities. The Target Company is a licensed corporation to carry out Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities under the SFO. As at the date of this announcement, the entire equity interest in the Target Company is owned solely by FC Financial, which is in turn owned solely by the Company.

Due diligence

Pursuant to the MOU, the Purchaser shall be entitled to have access to the Target Company for the purpose of the due diligence exercise within three months from the date of the MOU.

Consideration

The consideration of the Possible Sale is yet to be agreed between the Company and the Purchaser. Pursuant to the MOU, the consideration will be determined between the parties after the due diligence exercise is completed. The Purchaser may acquire the equity interest in the Target Company of 50% or more by cash or other assets to be agreed between the Company and the Purchaser.

Within three days upon signing of the MOU, the Purchaser shall pay a sum of HK$1 million, being the earnest money of the Possible Sale (the "Earnest Money"), to the Company. In the event that the Definitive Agreement is signed, the Earnest Money would become part payment of the consideration for the Possible Sale. When the Purchaser decides not to proceed with the Possible Sale, the Earnest Money shall be refunded to the Purchaser within 2 Business Days upon the receipt of notification from the Purchaser.

Exclusivity

The parties to the MOU have agreed that, during the Exclusivity Period, the Purchaser is granted an exclusive right to negotiate with the Company on the Possible Sale.

Save for the terms in relation to the Earnest Money, the Exclusivity Period, due diligence exercise, dispute resolution and governing laws contained in the MOU, the MOU is not legally binding or enforceable.

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INFORMATION OF THE PURCHASER

The Purchaser is a company incorporated in Hong Kong with limited liability and a wholly- owned subsidiary of Greatwalle Inc. (stock code: 8315), a company incorporated in the Cayman Islands and the issued shares of which are listed on GEM of the Stock Exchange. Greatwalle Inc. and its subsidiaries are engaged in the provision of security guarding services and asset management services in the PRC and Hong Kong. According to public information, the equity interest in Greatwalle Inc. is ultimately owned as to approximately 55.5% by Shenzhen Great Walle Investment Corp., Ltd.* (深圳長城匯理投資股份有限公司), which is principally engaged in merger and acquisition of assets and fund investment in the PRC and Hong Kong. As at the date of this announcement, Shenzhen Great Walle Investment Corp., Ltd.*, through the private equity funds managed by its subsidiaries, collectively held 262,348,000 Shares, representing approximately 5.22% of the total number of issued Shares.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, save as disclosed herein, the Purchaser and its ultimate beneficial owners are Independent Third Party.

REASONS AND BENEFITS FOR THE POSSIBLE SALE

The Company is an investment holding company. Before 2014, the Group mainly engaged in automotive parts business. Since the end of 2014, the Group has started to set foot in the financial services business, which can provide services such as listing sponsorship, underwriting and placing, dealing in securities, financing consultancy, merger and acquisition agency, financial advisory, asset management, private equity fund management, credit financing, and migration finance. Since 2016, the Group has continued to diversify its business, and established a trinitarians interactive business mode, which capitalises on educational investment and operations as bases and educational management service and educational financial service as cradles with the mission of "Finance Empowers Education, Education Lights Up Future". The Group aspires to become "a globally influential financial services group focusing on education".

The Board considers that the Possible Sale when materialised will enable the Group to improve its liquidity, it may repay part of the convertible bonds and other debts, capture potential business development opportunities and focus its resources on the provision of other financial services business and the education operation business. The Possible Sale is therefore considered in the interest of the Company and the Shareholders as a whole.

GENERAL

The Possible Sale is subject to the entering into of the Definitive Agreement by the Company and the Purchaser and may be conditional upon the fulfilment of conditions precedent to the Definitive Agreement (including obtaining necessary regulatory approval in relation to the change of shareholder of the Target Company). The Possible Sale therefore may or may not proceed. The Company will publish an announcement in compliance with the Listing Rules as when and appropriate. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

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DEFINITIONS

In this announcement the following expressions shall have the following meanings, unless the context otherwise requires:

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By Order of the Board

China First Capital Group Limited

Wilson Sea

Chairman and Executive Director

Hong Kong, 23 September 2020

As at the date of this announcement, the executive Directors are Dr. Wilson Sea, Mr. Zhao Zhijun and Dr. Zhu Huanqiang; and the independent non-executive Directors are Mr. Chu Kin Wang, Peleus, Dr. Du Xiaotang and Mr. Loo Cheng Guan.

• For identification purpose only

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