SMI Culture & Travel : Announcements and Notices - Joint Announcement Connected Transaction Subscription of New Shares under Specific Mandate and Placing of New Shares 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 joint 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 joint announcement.

This joint announcement appears for information purpose only and does not constitute an invitation or offer to acquire, purchase, or subscribe for any securities of SMI Holdings Group Limited and SMI Culture & Travel Group Holdings Limited.

SMI HOLDINGS GROUP LIMITED SMI Culture & Travel Group Holdings Limited

星美控股集團有限公司 星美文化旅遊集團控股有限公司

(Incorporated in Bermuda with limited liability) (Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 198) (Stock Code: 2366) JOINT ANNOUNCEMENT DISCLOSEABLE AND CONNECTED TRANSACTION CONNECTED TRANSACTION SUBSCRIPTION OF NEW SHARES DEEMED DISPOSAL IN RELATION TO UNDER SPECIFIC MANDATE SUBSCRIPTION AND PLACING OF AND NEW SHARES OF A SUBSIDIARY PLACING OF NEW SHARES UNDER SPECIFIC MANDATE Placing Agent to SMI Culture & Travel Group Holdings Limited THE SUBSCRIPTION

On 24 January 2017 (after trading hours of the Stock Exchange), SMI Culture entered into the Subscription Agreement with the Subscriber pursuant to which the Subscriber, has conditionally agreed to subscribe for and SMI Culture has conditionally agreed to allot and issue a total of 357,145,000 Subscription Shares at the Subscription Price of HK$0.70 per Subscription Share.

The Subscription Shares to be subscribed under the Subscription Agreement will be issued pursuant to the Subscription Specific Mandate to allot, issue and deal with the Subscription Shares to be approved and granted to the SMI Culture Directors by the SMI Culture Independent Shareholders at the SGM.

Completion of the Subscription Agreement is subject to satisfaction of the conditions precedent in the Subscription Agreement.

THE PLACING

On 24 January 2017 (after trading hours of the Stock Exchange), SMI Culture entered into the Placing Agreement with the Placing Agent pursuant to which the Placing Agent has conditionally agreed to place, on a best effort basis, a maximum number of 214,285,000 Placing Shares to Placees at a price of HK$0.70 per Placing Share.

The Placing Shares to be placed under the Placing Agreement will be issued pursuant to the Placing Specific Mandate to allot, issue and deal with the Placing Shares to be approved and granted to the SMI Culture Directors by the SMI Culture Shareholders at the SGM.

Completion of the Placing is subject to the satisfaction of the conditions precedent in the Placing Agreement.

The Subscription and the Placing are not inter-conditional with each other.

The estimated aggregate gross and net proceeds of the Subscription and the Placing will be approximately HK$400 million and HK$395 million respectively, which are intended to be used for repayment of debts, financing any future investment or opportunities to be identified and general working capital of SMI Culture Group.

LISTING RULES IMPLICATIONS SMI Culture

As at the date of this joint announcement, the Subscriber is the chairman of the SMI Culture Board and an executive director of SMI Culture. Therefore, the Subscriber is a connected person of SMI Culture under Chapter 14A of the Listing Rules. Accordingly, the Subscription constitutes a non-exempt connected transaction for SMI Culture under the Listing Rules and is subject to the reporting, announcement and SMI Culture Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

SMI Culture will establish an SMI Culture Independent Board Committee to advise the SMI Culture Independent Shareholders on the Subscription Agreement and the transactions contemplated thereunder. SMI Culture will also appoint an independent financial adviser to advise the SMI Culture Independent Board Committee and the SMI Culture Independent Shareholders on the same.

The Subscription and the Placing will be subject to the approval of the SMI Culture Independent Shareholders and the SMI Culture Shareholders respectively. The SGM will be convened and held for the SMI Culture Independent Shareholders and the SMI Culture Shareholders to consider and, if thought fit, approve the Subscription Agreement and the Placing Agreement and the respective transactions contemplated thereunder (including the grant of the Specific Mandates to allot and issue the Subscription Shares and the Placing Shares) respectively. The Subscriber and its associates, being connected persons of SMI Culture and having material interests in the Subscription, will abstain from voting on the relevant resolution at the SGM.

SMI Holdings

Upon completion of the Subscription and the Placing, the interests of SMI Holdings (through its shareholding interests in SMI Investment) in SMI Culture will be diluted from approximately 64.58% to approximately 38.83% and SMI Culture will cease to be a subsidiary of SMI Holdings. Thus, the Subscription and the Placing will constitute a deemed disposal for the SMI Holdings' interests in SMI Culture under Rule 14.29 of the Listing Rules.

As one or more of the applicable ratios under Rule 14.07 of the Listing Rules in respect of the Deemed Disposal is/are more than 5% but less than 25%, the Subscription and the Placing constitute a discloseable transaction for SMI Holdings under the Listing Rules and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As the Subscriber is a connected person of SMI Holdings at the subsidiary level under Rule 14A.07(1) of the Listing Rules, the Subscription constitutes a connected transaction for SMI Holdings pursuant to Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.101 of the Listing Rules, as the board of directors of SMI Holdings has approved the Subscription and the independent non-executive directors of SMI Holdings have confirmed that the terms of the Subscription are fair and reasonable, the Subscription is on normal commercial terms and in the interests of SMI Holdings and its shareholders as a whole, the Subscription is exempt from the circular, independent financial advice and shareholders' approval requirements under Chapter 14A of the Listing Rules.

GENERAL

The SGM will be convened and held for the SMI Culture Independent Shareholders and the SMI Culture Shareholders to consider and if thought fit to approve the Subscription Agreement and the Placing Agreement and the respective transactions contemplated thereunder (including the grant of the Specific Mandates to allot and issue the Subscription Shares and the Placing Shares) respectively. A circular containing, among other things, (i) further details about the Subscription Agreement and the Placing Agreement; (ii) the recommendation letter of the SMI Culture Independent Board Committee to the SMI Culture Independent Shareholders in respect of the Subscription; (iii) a letter from an independent financial adviser containing its advice to the SMI Culture Independent Board Committee and the SMI Culture Independent Shareholders in respect of the Subscription; and (iv) the notice convening the SGM is expected to be despatched to SMI Culture Shareholders on or before 28 February 2017.

WARNING OF THE RISKS OF DEALING IN THE SHARES Completion of the Subscription and the Placing is subject to the satisfaction and/or waiver (if applicable) of the conditions precedent in the Subscription Agreement and the Placing Agreement and therefore, the Subscription and the Placing may or may not proceed. SMI Culture Shareholders, shareholders of SMI Holdings and potential investors are advised to exercise caution when dealing in the SMI Culture Shares and the shares of SMI Holdings.