Connected Transaction In Relation To The Issue Of Convertible Bonds Under Specific Mandate

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

ETS GROUP LIMITED

易 通 訊 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8031)

CONNECTED TRANSACTION

IN RELATION TO

THE ISSUE OF CONVERTIBLE BONDS UNDER

SPECIFIC MANDATE

Financial Adviser

Trinity Corporate Finance Limited

THE ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

The Board is pleased to announce that on 10 May 2021 (after trading hours of the Stock Exchange), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, the Convertible Bonds in the principal amount of HK$9.5 million.

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Assuming full conversion of the Convertible Bonds at the Conversion Price of HK$0.608 per Conversion Share (subject to adjustments), a maximum number of 15,625,000 Conversion Shares will be allotted and issued, representing approximately 5.58% of the issued share capital of the Company as at the date of this announcement and approximately 5.29% of the issued share capital of the Company as enlarged by the allotment and issue of the Conversion Shares (assuming that there will be no change in the issued share capital of the Company from the date of this announcement and up to conversion of the Convertible Bonds in full at the initial Conversion Price).

The initial Conversion Price of HK$0.608 per Conversion Share represents a premium of approximately 102.67% over (i) the closing price of HK$0.30 per Share as quoted on the Stock Exchange on the date of the Subscription Agreement; (ii) the average closing price of approximately HK$0.30 per Share as quoted on the Stock Exchange for the five consecutive trading days immediately prior to the date of the Subscription Agreement; and (iii) the average closing price of approximately HK$0.30 per Share as quoted on the Stock Exchange for the 10 consecutive trading days immediately prior to the date of the Subscription Agreement.

Subject to completion of the Subscription, the gross proceeds and net proceeds (after deducting all the relevant costs and expenses) from the issue of the Convertible Bonds will be approximately HK$9,500,000 and approximately HK$8,700,000, respectively. The Company intends to use such net proceeds for expansion of the financial services business of the Group, if and when opportunities arise, and for working capital purposes of the Group.

GEM LISTING RULES IMPLICATIONS

As at the date of this announcement, the Subscriber is an indirect wholly-owned subsidiary of Pine Care Group, and Mr. YS Tang, who is an executive Director, is also an executive director and a controlling shareholder of Pine Care Group. Accordingly, the Subscriber is a connected person of the Company under the GEM Listing Rules. The Subscription therefore constitutes a connected transaction on the part of the Company and is subject to reporting, announcement and Independent Shareholders' approval requirements under Chapter 20 of the GEM Listing Rules.

The Conversion Shares will be allotted and issued under the Specific Mandate. No application will be made for the listing of the Convertible Bonds on the Stock Exchange or any other stock exchange. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

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Save for Mr. Tang, being a non-executive Director and the father of Mr. YS Tang, and Mr. YS Tang and Mr. Yeung Ka Wing, each being an executive Director and also an executive director of Pine Care Group, who have abstained from voting on the relevant resolutions of the Board, none of the Directors has material interest in the Subscription Agreement and the transactions contemplated thereunder and is required to abstain from voting on the relevant resolutions of the Board.

GENERAL

The EGM will be convened and held for the Independent Shareholders to consider, and if thought fit, approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

The Independent Board Committee comprising Mr. Wong Sik Kei, Mr. Cheung Kong Ting and Mr. Wong Kam Tai, being all the independent non-executive Directors, will be established to give a recommendation to the Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate). The Independent Financial Adviser will be appointed to provide advice and recommendation to the Independent Board Committee and the Independent Shareholders in this regard.

The voting in respect of the Subscription Agreement and the transactions contemplated thereunder will be conducted by way of poll. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, save for Million Top Enterprises and its associates, who will abstain from voting on the relevant resolutions at the EGM, no Shareholder has a material interest in the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) and is required to abstain from voting on the relevant resolutions at the EGM.

A circular containing, among other matters, (i) further details of the Subscription Agreement and the transactions contemplated thereunder; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in the same regard; and (iv) a notice of the EGM, is expected to be despatched to the Shareholders on or before 31 May 2021 as additional time is required for the preparation of the relevant information to be included in the circular.

Completion of the Subscription is subject to fulfillment of the conditions precedent under the Subscription Agreement. Accordingly, the Subscription may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

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INTRODUCTION

The Board is pleased to announce that on 10 May 2021 (after trading hours of the Stock Exchange), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, the Convertible Bonds in the principal amount of HK$9.5 million.

SUBSCRIPTION AGREEMENT

The principal terms of the Subscription Agreement are set out below.

Subscription

The Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, the Convertible Bonds in the principal amount of HK$9.5 million.

Conditions precedent

The obligations of the Company and the Subscriber to effect Completion is conditional upon:

1. all necessary consents and approvals required to be obtained on the part of the Company in respect of the Subscription Agreement and the transactions contemplated thereunder, including but not limited to the issue of the Convertible Bonds and the allotment and issue of the Conversion Shares upon exercise of the Conversion Rights under the Specific Mandate, having been obtained;
2. all necessary consents and approvals required to be obtained on the part of the Subscriber in respect of the Subscription Agreement and the transactions contemplated thereunder having been obtained;
3. the passing of an ordinary resolution by the Independent Shareholders at an extraordinary general meeting of the Company to approve the Subscription Agreement and the transactions contemplated thereunder, including but not limited to the issue of the Convertible Bonds and the allotment and issue of the Conversion Shares upon exercise of the Conversion Rights under the Specific Mandate;

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1. the GEM Listing Committee of the Stock Exchange granting listing of and permission to deal in the Conversion Shares to be allotted and issued upon exercise of the Conversion Rights attached to the Convertible Bonds;
2. none of the warranties given by the Company under the Subscription Agreement having been breached in any material respect (or, if capable of being remedied, has not been remedied), or is misleading or untrue in any material respect;
3. none of the warranties given by the Subscriber under the Subscription Agreement having been breached in any material respect (or, if capable of being remedied, has not been remedied), or is misleading or untrue in any material respect; and
4. as at the date of the Subscription Agreement and up to the date of Completion, there shall have been no occurrence of any circumstances or events which individually or together, is or is likely to have a Material Adverse Effect or a prolonged suspension or material limitation of trading in the Shares on GEM.

The conditions set out in (i), (ii), (iii) and (iv) above are incapable of being waived. If the conditions above are not fulfilled (or waived, as the case may be) on or before 9 September 2021 or such later date as may be agreed by the Company and the Subscriber in writing, the Subscription Agreement shall cease and determine and no party shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Subscription Agreement save in respect of any antecedent breach of any obligation thereof.

Completion

Completion shall take place on a date falling on the third Business Day (or such other date as the Company and the Subscriber may agree) after fulfilment (or waiver, as the case may be) of all conditions precedent set out above.

ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

The principal terms of the Convertible Bonds to be issued under the Subscription Agreement are set out as follows:

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