MAJOR AND CONNECTED TRANSACTION: ACQUISITION OF THE REMAINING EQUITY INTERESTS IN CHONGQING DIGITAL CHINA HUICONG MICRO-CREDIT CO., LTD. AND DIGITAL CHINA’S SUBSCRIPTION OF THE COMPANY’S NEW SHARES UNDER A 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 purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

慧聰網有限公司*

(incorporated in the Cayman Islands with limited liability)

Reference is made to the announcement of the Company dated 17 August 2016.

The Board is pleased to announce that on 24 April 2017 (after trading hours), Digital China and the Company entered into the Framework Agreement, pursuant to which the Company has conditionally agreed to purchase through the Purchaser, and Digital China has conditionally agreed to procure the Vendor to sell, the Sale Shares for a consideration of HK$1,227,000,000, which will be settled by the Purchaser in cash within six months from the date of the Formal SPA. Digital China has undertaken that upon the Purchaser transferring any part of the Consideration to the Vendor in the PRC, Digital China will immediately pay, or immediately procure its subsidiary to pay, a sum equal to the said part of the Consideration to the Company in Hong Kong to subscribe for New Shares at the issue price of HK$7.0 per Share. Upon the Purchaser paying the whole Consideration, a total of 175,285,714 New Shares shall have been subscribed by Digital China or its designated subsidiary.

* For identification purposes only

The Sale Shares will be transferred to the Purchaser in one batch or in stages proportionate to the payment schedule of the Consideration. Therefore, Chongqing Micro-Credit would become a subsidiary of the Company upon the Company obtaining control through the percentage of shares owned. Upon Completion, Chongqing Micro-Credit will become an indirect wholly-owned subsidiary of the Company.

The New Shares shall be issued and allotted to Digital China or its designated subsidiary under the Specific Mandate proposed to be sought at an EGM. The 175,285,714 New Shares represent approximately 17.56% of the existing issued share capital of the Company and approximately 14.94% of the issued share capital of the Company as enlarged by the issue and allotment of the New Shares. The Company will apply for the listing of, and permission to deal in, the New Shares on the Stock Exchange.

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceed(s) 25% but is/are less than 100%, the Acquisition constitutes a major transaction of the Company under the Listing Rules and is subject to the reporting, announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules.

Furthermore, as Digital China is a substantial Shareholder of the Company, it is a connected person of the Company. The Acquisition and the Subscription therefore constitute connected transactions of the Company which is subject to the reporting, announcement, circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The New Shares will be issued under a Specific Mandate subject to the approval by the Independent Shareholders.

An EGM will be held for the Independent Shareholders to consider, and if thought fit, approve the Acquisition, the Subscription, and the transactions contemplated thereunder and the Specific Mandate. The Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders as to whether the terms of the Acquisition, the Subscription, and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole. An independent financial adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

A circular containing, among other things, (i) further details of the Acquisition, the Subscription, and the transactions contemplated thereunder and the Specific Mandate; (ii) a letter from the Independent Board Committee containing its opinion and recommendations to the Independent Shareholders in respect of the Acquisition; (iii) a letter of advice from the independent financial adviser to the Independent Board Committee in respect of the Acquisition; (iv) other information required to be disclosed under the Listing Rules; and

(v) a notice of the EGM, is expected to be despatched to the Shareholders on or before 31 May 2017 as additional time is required for the preparation of the relevant information to be included in the circular.

Reference is made to the announcement of the Company dated 17 August 2016.

The Board is pleased to announce that on 24 April 2017 (after trading hours), Digital China and the Company entered into the Framework Agreement, pursuant to which the Company has conditionally agreed to purchase through the Purchaser, and Digital China has conditionally agreed to procure the Vendor to sell, the Sale Shares.

The principal terms of the Framework Agreement are as follows:-

Pursuant to the Framework Agreement, the Company has conditionally agreed to purchase through the Purchaser, and Digital China has conditionally agreed to procure the Vendor to sell, the Sale Shares. The Sale Shares will be transferred to the Purchaser in one batch or in stages proportionate to the payment schedule of the Consideration. Therefore, Chongqing Micro-Credit would become a subsidiary upon the Company obtaining control through the percentage of shares owned. Upon completion of the Acquisition, Chongqing Micro-Credit will become an indirect wholly-owned subsidiary of the Company.

The Consideration for the Acquisition is preliminarily agreed to be HK$1,227,000,000, which shall be financed by the internal resources and/or bank loans of the Group.

The Consideration is to be settled by the Purchaser in RMB to be calculated with the Exchange Rate in cash within six months from the date of the Formal SPA. Digital China has undertaken that upon the Purchaser transferring any part of the Consideration to the Vendor in the PRC, Digital China will immediately pay, or immediately procure its subsidiary to pay, a sum equal to the said part of the Consideration to the Company in HK to subscribe for New Shares at the issue price of HK$7.0 per Share. Upon the Purchaser paying the whole Consideration, a total of 175,285,714 News Shares shall have been subscribed by Digital China or its designated subsidiary.

The Consideration was arrived at after arm's length negotiations between the Company and Digital China. In determining the Consideration, the Directors considered, among other factors, (i) the growth potential and prospect of Chongqing Micro-Credit and its business operation; and (ii) the preliminary valuation of Chongqing Micro-Credit.

The issue price of HK$7.0 per New Share represents:

1. a premium of approximately 0.72% to the closing price of HK$6.95 per Share as quoted on the Stock Exchange on 24 April 2017, being the date of the Framework Agreement;

2. a premium of approximately 0.20% to the average closing price of approximately HK$6.986 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the Framework Agreement; and

3. a discount of approximately 0.01% to the average closing price of approximately HK$7.001 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the date of the Framework Agreement.

Such issue price was determined after arm's length negotiation between the Purchaser and the Vendor with reference to, among other things, the market price of the Shares. The Directors consider the issue price fair and reasonable and in the interest of the Company and the Shareholders as a whole.