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Monday, 3 November 2014, 08:00 HKT/SGT
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FDG to Restructure Hangzhou Electric Vehicle Project

HONG KONG, Nov 3, 2014 - (ACN Newswire) - FDG Electric Vehicles Limited ("FDG Electric Vehicles", "FDG" or the "Company", with its subsidiaries together as the "Group", stock code: 00729.HK) is pleased to announce that FDG is planning to restructure its Hangzhou electric vehicle project as follows:

1. FDG's acquisition of CIAM
The Group plans to acquire all the issued shares of CIAM Group Limited ("CIAM", stock code: 00378.HK) in exchange for convertible bonds issued by FDG. Each convertible bond with the principal amount of HK$1.7 will be offered for every CIAM share tendered. The total maximum principal value of the convertible bonds that will be issued is approximately HK$1.6 billion. Such convertible bonds have zero coupon and can be converted into FDG Shares at a conversion price of HK$0.50 per share at any time during the three year period starting from the date of commencement of the offer. FDG may redeem the convertible bonds at any time two years after the commencement of the offer. Assuming all the convertible bonds are converted into FDG Shares, a maximum number of approximately 3.2 billion new FDG Shares will be issued. The Group has received irrevocable undertakings from shareholders of CIAM representing a 53.66% stake to accept the offer, including CITIC International Assets Management Limited, the largest shareholder and Mr. Cao Zhong, the second largest shareholder. CIAM Group Limited is an investment company which primarily invests in energy conservation, environmental protection and clean energy sectors. The acquisition is subject to the approval of FDG's independent shareholders.

2. Acquisition of 41.5% stake of Agnita held by CIAM
Immediately following the approval of FDG's independent shareholders in respect of the above acquisition, the Group will acquire CIAM's 41.5% stake in Agnita, its loan of HK$150 million to Agnita, and cancel its call option of 8.5% stake in Agnita. The Group currently holds 58.5% stake in Agnita, which has an electric vehicle project in Hangzhou. Both FDG and CIAM have agreed on a consideration of HK$520 million for the transaction, which will be settled by HK$150 million in cash and HK$370 million in bond with a 8% coupon rate per annum and a tenor of three years. Upon completion of this transaction, the Group's control in Agnita will increase to 100%.

3. Placing of new shares
The Group has entered into a placing agreement with a placing agent, VMS Securities Limited ("VMS"), to raise funds for the development of electric vehicle project of Agnita. VMS will place up to 1 billion placing shares to independent third parties on a best effort basis. Since the placing is subject to the completion of above-mentioned first transaction, it is expected to take place at least one month from now, thus the placing price per share is set to be no more than 15% discount to the average closing prices of FDG shares for the five consecutive trading days immediately prior to the date of placement but no less than HK$0.50. Assuming the maximum number of placing shares are successfully placed and issued at the price of HK$0.50 per share, the total proceeds from the placing are estimated to be approximately HK$500 million. The placing is subject to the approval of FDG's shareholders.

* The Company's announcement shall prevail over the information of the three transactions described above. For details, please refer to the announcement published on the website of the Company and the website of Hong Kong Stock Exchange.

Since the completion of FDG's acquisition of 58.5% stake in Agnita, Agnita has already commenced construction of manufacturing facilities in Hangzhou as planned, and received positive responses for the validation reviews for the mid-size buses and commercial vehicles. FDG's battery engineers have been working closely with the technicians of Agnita to customize the battery pack designs for the two electric vehicle models to be launched in the first half of next year. Considering that a factory with an annual production capacity of a hundred thousand electric vehicles will be built for the Hangzhou electric vehicle project in April next year, the directors of FDG consider that it is in the interest of the shareholders of the Company to restructure the electric vehicle project. This restructuring will enable the project to be more effectively managed on a day to day basis in terms of meeting the financing requirements of Agnita and carrying out future planning. It will also cement the ongoing support of the management team of Agnita in FDG's other electric vehicle business.

The electric vehicle manufacturing business is capital intensive in nature and Agnita is currently at the development stage. Since Agnita will either be wholly owned by FDG or 58.5%-50% directly owned and 41.5%-50% owned through a non-wholly owned subsidiary upon the restructuring, the FDG Group will need to raise additional capital to meet 100% of the capital expenditure requirement. According to the unaudited consolidated management accounts, the Group had approximately HK$710 million of funds available as of 30 September 2014, and the current estimation of the capital expenditure of the electric vehicle project of Agnita for the next twelve months is approximately HK$1.3 billion. In order to effectively raise funds for the development of Agnita as well as maintain a healthy cash flow for the Group, the Group has entered into a placing agreement with VMS and expects to raise funds for over HK$5 million from the placing. The directors of FDG consider that the placing represents an opportunity to strengthen the capital base, improve the financial position and broaden the shareholder base of the Group.

Mr. Cao Zhong, the Chairman and Chief Executive Officer of FDG Electric Vehicles Limited said, "Upon completion of the restructuring, Agnita's electric vehicle project (i.e. the Hangzhou electric vehicle project) will be consolidated into one platform, which will help realize the synergies of combining the electric vehicle business of Agnita and the battery manufacturing business of the Group. This collaboration will further strengthen the Group's vertical integration business model, which comprises of electric vehicles manufacturing, electric vehicles leasing and battery manufacturing businesses, enabling the Group to secure a closer grip on the total production cost and obtain a competitive edge over its competitors in the ever-changing electric vehicle industry. The Group's Yunnan electric vehicle project will commence production in no time with an annual production capacity of ten thousand electric buses/ public transportation vehicles. In addition, Agnita's electric vehicle project (i.e. the Hangzhou electric vehicle project) is expected to have an annual production capacity of a hundred thousand electric vehicles in the first half of next year. Production of mid-size bus and commercial vehicles designed by the Group will also commence. The Group welcomes CIAM's shareholders to join our Group and continue to share the above-mentioned success of the electric vehicle projects." Mr. Cao Zhong also said, "Adhering to its development objective, the Group will continue to enhance its competitive edges in the electric vehicle industry with an aim to become a leading integrated electric vehicle manufacturer in China."


* The calculation is based on the acquisition of 100% equity in CIAM, the conversion of all convertible bonds into FDG Shares in the acquisition and the placing of 1 billion FDG Shares.

# CITIC International Assets Management Limited

** The Group will place down shares of CIAM as required by HKEx (if required) so that its shareholding will not exceed 75% in accordance to the public float requirement by HKEx



Nov 3, 2014 08:00 HKT/SGT
Topic: Press release summary
Sectors: Daily Finance, Automotive, Daily News
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