NATURAL DAIRY (NZ) HOLDINGS LIMITED (In Provisional

NATURAL DAIRY (NZ) HOLDINGS LIMITED(In Provisional Liquidation)

天然乳品（新西蘭）控股有限公司（臨時清盤中）(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 0462)

Joint Provisional Liquidators:Mr. Simon ConwayMr. Yat Kit Jong

Executive Directors:Mr. Liu Nanguang (Chairman)Mr. Chan WaiMr. Lin BinDr. Chew Chee Wah

Independent Non-executive Directors:Mr. Zhang Jian HongMs. Fu Zhi FanMr. Tam Tsz Ming

Registered office:PwC Corporate Finance &Recovery (Cayman) Limited18 Forum LaneCamana Bay, Cayman Islands

Principal place of business in Hong Kong:22/F, Prince’s Building10 Chater RoadCentralHong Kong

[REDACTED]

To the Shareholders

Dear Sir or Madam,

PROPOSED RESTRUCTURING INVOLVING, INTER ALIA,

(1) CAPITAL REORGANISATION;

(2) VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

IN RELATION TO THE ACQUISITION OF THE TARGET COMPANY;

(3) REVERSE TAKEOVER INVOLVING A [REDACTED];

(4) [REDACTED] ON THE BASIS OF [REDACTED]

FOR EVERY [REDACTED] HELD ON THE [REDACTED];

(5) CREDITORS’ SCHEMES;

(6) APPLICATION FOR [REDACTED] AND [REDACTED];

(7) PLACING TO RESTORE PUBLIC FLOAT;

(8) ADOPTION OF THE NEW ARTICLES OF ASSOCIATION;

(9) APPOINTMENT OF PROPOSED DIRECTORS;

(10) CHANGE OF COMPANY NAME; AND

(11) NOTICE OF EXTRAORDINARY GENERAL MEETING

LETTER FROM THE JOINT PROVISIONAL LIQUIDATORS

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE

INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED ‘‘WARNING’’ ON

THE COVER OF THIS DOCUMENT.

INTRODUCTION

References are made to the announcements of the Company dated 1 August 2018, 2

November 2018, 24 December 2018, 1 February 2019, 30 April 2019, 31 July 2019, 31

October 2019, 7 February 2020, 29 April 2020, 9 July 2020, 31 July 2020, 30 October 2020,

29 January 2021, 10 February 2021, 10 March 2021, 30 April 2021 and 30 July 2021

respectively in relation to, inter alia, the entering into of the Restructuring Agreement (as

amended and restated by the Amended and Restated Restructuring Agreement and the

Second Amended and Restated Restructuring Agreement), the Resumption Proposal and

the decision from the Listing Committee to allow the Company to submit a [REDACTED]

relating to the Resumption Proposal (but not any other proposal) on or before 28 June 2019

(which was extended to 31 August 2021).

The purpose of this circular is to provide you with, among others, further information

in respect of (i) the Capital Reorganisation; (ii) the Acquisition, including information

about the business of the Target Group; (iii) the [REDACTED]; (iv) the [REDACTED]; (v)

the [REDACTED]; (vi) the Creditors’ Schemes; (vii) the adoption of the Articles of

Association; (viii) the appointment of the Proposed Directors; (ix) the change of the

Company’s name; (x) a letter of advice from the Independent Financial Adviser to the

Independent Shareholders in relation to the terms of the Acquisition, the [REDACTED]

and the Creditors’ Schemes contemplated under the Restructuring Agreement (as amended

and restated by the Amended and Restated Restructuring Agreement and the Second

Amended and Restated Restructuring Agreement), the [REDACTED] and the

[REDACTED]; and (xi) a notice of the EGM.

Suspension of trading in Shares and the Resumption status

Trading in the Shares on the Stock Exchange has been suspended with effect from 9 : 33

a.m. on 7 September 2010.

On 10 August 2016, the Stock Exchange placed the Company in the first delisting stage

under Practice Note 17 to the Listing Rules as the Stock Exchange considered, inter alia,

that the Company was unable to maintain a sufficient level of operations or assets required

under Rule 13.24 of the Listing Rules to support a continued listing.

On 16 November 2016, Xiamen Hengxing Group Co., Limited, as a contributory of the

Company, presented a winding-up petition to the Grand Court for the winding-up of the

Company on the basis that (1) it has lost all trust and confidence in the Company’s

management as a result of alleged historical and continuing persistent misconduct,

mismanagement, and/or wilful defaults; and (2) the Company had been unable to achieve

its objective for which the investors were induced to invest in it as a result of the Company’s

failure to acquire certain assets that were fundamental to its operation and performance of

the objective and fraud perpetrated by former and current management. On 22 December

2016, the Grand Court appointed Messrs. Simon Conway and Yat Kit Jong of

PricewaterhouseCoopers as the Joint Provisional Liquidators of the Company. The

hearing for the winding-up petition of the Company has been adjourned until further

notice. Subsequent to the order made by the Grand Court, the Grand Court has extended

the power of the Joint Provisional Liquidators to full power.


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As no resumption proposal was submitted before the expiry date of the first delisting

stage, the Stock Exchange placed the Company into the second delisting stage which

commenced on 22 May 2017 and expired on 21 November 2017.

No resumption proposal was submitted again before the expiry date of the second

delisting stage, the Stock Exchange placed the Company into the third delisting stage which

commenced on 13 December 2017 and expired on 12 June 2018.

The Company was required to submit a viable resumption proposal to the Stock

Exchange to address the following issues (the ‘‘Resumption Conditions’’):

(i) demonstrate sufficient operations or assets as required under Rule 13.24 of the

Listing Rules;

(ii) publish all outstanding financial results under the Listing Rules and address any

audit qualifications;

(iii) have the winding up petitions against the Company (and its subsidiaries), where

applicable, withdrawn or dismissed and the Joint Provisional Liquidators

discharged;

(iv) demonstrate that the Company has put in place adequate financial reporting

procedures and internal control systems to meet its Listing Rule obligations; and

(v) inform the market of all material information for the Shareholders and the

investors to appraise the Group’s position.

On 12 June 2018, the Company submitted the Resumption Proposal to the Stock

Exchange in support of the Resumption. The foundation of the Resumption Proposal is the

Restructuring Agreement (as amended and restated by the Amended and Restated

Restructuring Agreement and the Second Amended and Restated Restructuring

Agreement) which includes the proposed Acquisition by the Company of the Target

Group. The Acquisition constitutes a very substantial acquisition and a reverse takeover

involving a [REDACTED] of the Company under the Listing Rules.

The Resumption Proposal also set out detailed plans on satisfying the Resumption

Conditions, including:

(i) the proposed Acquisition of the Target Company which would satisfy Rule 13.24

of the Listing Rules. Rule 13.24 of the Listing Rules requires an issuer to carry out

directly or indirectly a business with a sufficient level of operations and assets of

sufficient value to support its operation to warrant the continued listing of the

issuer’s securities. On the Resumption Date, the Company will meet the

requirements of Rule 13.24 of the Listing Rules as to operations (proven by the

track record profits) and assets (proven by the net assets and their nature);


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(ii) an internal control consultant will be appointed to review the internal control

procedures of the Company and the Target Group, which will become the only

operating subsidiaries of the Company upon completion of the Acquisition;

(iii) on approval from the Creditors of the Creditors’ Schemes and completion of all

the transactions contemplated in the Resumption Proposal, the Joint Provisional

Liquidators will apply to the Grand Court and High Court for the winding up

petitions against the Company and its subsidiaries to be withdrawn or dismissed

and the Joint Provisional Liquidators be discharged before the Resumption; and

(iv) all the existing Directors will resign prior to the Resumption, and new directors

(details of whom are set out in the section headed ‘‘Proposed Directors and Senior

Management of the Enlarged Group’’ in this circular) who are intended to meet

the requirements under the Listing Rules will be appointed.

On 21 December 2018, the Stock Exchange agreed to allow the Company to submit a

[REDACTED] relating to the Resumption Proposal (but not any other proposal) on or

before 28 June 2019 (which was extended to 31 August 2021).

On 4 June 2019, Shangshui Yuansheng and its professional advisers submitted a pre-

[REDACTED] enquiry (the ‘‘Pre-[REDACTED] Enquiry’’) in order to seek the Stock

Exchange’s confirmation that certain matters concerning Shangshui Yuansheng will be able

to satisfy the relevant requirements of the Listing Rules.

On 23 October 2019, the Company received a letter from the Stock Exchange regarding

the Pre-[REDACTED] Enquiry. In the letter, the Stock Exchange stated that after reviewing

the Pre-[REDACTED] Enquiry and additional information provided by Shangshui

Yuansheng and its professional advisers, the Stock Exchange considered that Shangshui

Yuansheng will not be able to satisfy the relevant requirements of the Listing Rules.

On 20 January 2020, the Listing Department informed the Company that it would

recommend the Listing Committee to cancel the listing of the Company on 23 January 2020

under Practice Note 17 to the Listing Rules, and on 30 January 2020, the Listing Committee

had decided to cancel the Company’s listing (‘‘Listing Committee’s Decision’’).

On 6 February 2020, the Company made a formal request to the Stock Exchange for a

review of the Listing Committee’s Decision to cancel the Company’s listing by the Listing

(Review) Committee (the ‘‘Review Hearing’’).

The Review Hearing was held on 27 May 2020. On 26 June 2020, the Company was

informed by the Listing (Review) Committee that it had decided to uphold the Listing

Committee’s Decision (the ‘‘Listing (Review) Committee’s Decision’’).

On 8 July 2020, the Company made a formal request to review of the Listing (Review)

Committee’s Decision by the Listing Appeals Committee under Chapter 2B of the Listing

Rules (the ‘‘Appeal Hearing’’).


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The Appeal Hearing was held on 8 January 2021. Having considered all the

submissions (both written and oral) presented by the Company and the Listing

Department, the Listing Appeals Committee decided to overturn the Listing (Review)

Committee’s Decision, allowing the Company to submit a [REDACTED] relating to the

Resumption Proposal (but not any other proposal).

This circular provides additional information on the Group and the Target Group as

required under the Listing Rules in connection with the [REDACTED].

PROPOSED RESTRUCTURING


Restructuring Agreement and the Second Amended and Restated Restructuring Agreement)

On 29 May 2018, the Company, the Joint Provisional Liquidators and Mr. Yang

entered into the Restructuring Agreement in respect of the Proposed Restructuring. On 25

June 2018, the Company entered into the Amended and Restated Restructuring Agreement

with the Joint Provisional Liquidators, Mr. Yang, Mr. Zhang, Ronghui Group and

Shangshui Yuansheng, which carried substantially the same terms as the Restructuring

Agreement. On 27 August 2021, the Company entered into the Second Amended and

Restated Restructuring Agreement with the Joint Provisional Liquidators, the Sellers, Mr.

Yang, Mr. Zhang, Mr. Lam Kei, Shangshui Yuanshang and Ronghui Group, which carried

substantially the same terms as contained in the Restructuring Agreement and the Amended

and Restated Restructuring Agreement.

Pursuant to the Restructuring Agreement (as amended and restated by the Amended

and Restated Restructuring Agreement and the Second Amended and Restated

Restructuring Agreement), the Company agreed to, subject to the satisfaction of the

conditions precedent thereunder, implement the Proposed Restructuring, which includes,

among others, (i) the Capital Reorganisation; (ii) the Acquisition; (iii) the [REDACTED];

(iv) the [REDACTED]; (v) the [REDACTED]; (vi) the Creditors’ Schemes; and (vii) the

Placing.

Conditions Precedent

Completion is conditional on, among others:

(i) the Listing Committee granting or agreeing to grant (subject to allotment) and not

having withdrawn or revoked the [REDACTED] of and permission to deal in (i)

the Consideration Shares; (ii) the [REDACTED]; and (iii) the Creditors Shares;

(ii) the passing of the necessary resolution(s) by the Independent Shareholders at the

EGM to be convened and held to approve:

(a) the Restructuring Agreement (as amended and restated by the Amended and

Restated Restructuring Agreement and the Second Amended and Restated

Restructuring Agreement) and the transactions contemplated thereunder;


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(b) the Capital Reorganisation;

(c) the Acquisition and the allotment and issue of the Consideration Shares;

(d) the [REDACTED] and the [REDACTED]; and

(e) the [REDACTED] and the allotment and issue of the [REDACTED];

(iii) the Stock Exchange having approved in principle of the Resumption;

(iv) the [REDACTED] having been granted by the [REDACTED] and such

[REDACTED] not having been subsequently revoked or withdrawn;

(v) [REDACTED]; and

(vi) the Creditors’ Schemes having been approved by the Creditors and sanctioned by

the High Court and the Grand Court.

As at the Latest Practicable Date, none of the conditions precedent has been fulfilled.

None of the conditions precedent may be waived. If any condition precedent is not

satisfied, the Restructuring Agreement (as amended and restated by the Amended and

Restated Restructuring Agreement and the Second Amended and Restated Restructuring

Agreement) shall automatically terminate.

Completion

Completion shall take place upon the fulfillment of the conditions precedent to the



Agreement).

I. CAPITAL REORGANISATION

As at the Latest Practicable Date, the authorised share capital of the Company is

HK$800,000,000 divided into 8,000,000,000 Shares of HK$0.10 each, and the issued share

capital of the Company is HK$270,878,222.80 divided into 2,708,782,228 Shares of

HK$0.10 each. In order to facilitate the issue of the Consideration Shares, the Creditors

Shares and the [REDACTED], the Company will undergo the Capital Reorganisation as

follows:

(i) Capital Reduction

The nominal value of each issued and authorised but unissued Share will be

reduced from HK$0.10 to HK$0.01 by reducing HK$0.09 of the paid-up capital of

each issued Share. The total credit of HK$243,790,400.52 arising from the Capital

Reduction will be credited to a distributable reserve.


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(ii) Share Consolidation

Immediately upon the Capital Reduction becoming effective, every ten (10) issued

Shares of HK$0.01 each as altered by the Capital Reduction will be consolidated into

one (1) New Share. As a result, 2,708,782,228 Shares of HK$0.01 each will be

consolidated into 270,878,221 New Shares of HK$0.10 each.

Upon completion of the Capital Reorganisation, a total credit of

HK$243,790,400.52 will arise in the books of the Company from the Capital

Reduction. It is proposed that the entire amount standing to the credit of the share

premium account of the Company (including the amount arising from the allotment

and issue of the Consideration Shares and the [REDACTED]) will be cancelled and

transferred to the contributed surplus account of the Company and applied towards

eliminating the accumulated losses of the Company and/or in any other manner

permitted by the Cayman Islands Companies Act.

Effects of the Capital Reorganisation

The following table illustrates the share capital structure of the Company as at the

Latest Practicable Date and immediately after the Capital Reorganisation.

As at the Latest

Practicable Date

Immediately

after the Capital

Reorganisation

Authorized Shares 8,000,000,000 8,000,000,000

Authorized share capital HK$800,000,000 HK$800,000,000

Par value HK$0.10 HK$0.10

Issued Shares 2,708,782,228 270,878,221

Issued share capital HK$270,878,222.80 HK$27,087,822.10

Unissued Shares 5,291,217,772 7,729,121,779

Unissued share Capital HK$529,121,777.20 HK$772,912,177.90

Other than the expenses incurred in the Capital Reorganisation, the

implementation of the Capital Reorganisation will not alter the underlying assets,

business operation or financial position of the Company, or the relative rights of the

Shareholders.

Status of the New Shares

The New Shares resulting from the Capital Reorganisation will be identical and

rank pari passu in all respects with each other. Fractional New Shares will not be issued

by the Company to the Shareholders. Any fractional entitlements to the New Shares

will be aggregated and sold if possible, and any net proceeds will be retained for the

benefit of the Company.


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Conditions of the Capital Reorganisation

The Capital Reorganisation will be conditional upon, inter alia, the following

having been fulfilled:

(i) the approval of Shareholders by way of a special resolution at the EGM;

(ii) the Grand Court granting an order to approve the Capital Reorganisation;

(iii) publication of a notice in relation to the Capital Reorganisation in

compliance with the Cayman Islands Companies Act (if required);

(iv) the Listing Committee granting the [REDACTED] of, and permission to deal

in, the New Shares upon the Share Consolidation becoming effective;

(v) [REDACTED]

(vi) [REDACTED]

The Capital Reorganisation will become effective on the next business day after

the conditions mentioned above are fulfilled. After the approval by the Independent

Shareholders of the Capital Reorganisation at the EGM, the legal advisers to the

Company (as to the Cayman Islands Law) will apply to the Grand Court to confirm

the Capital Reduction and further announcements will be made to inform the

Shareholders of the progress of the matter as and when appropriate.

Application for [REDACTED] of the New Shares

Application will be made by the Company to the Listing Committee for the

[REDACTED] of, and the permission to deal in, the New Shares. All necessary

arrangements will be made for the New Shares to be admitted into [REDACTED].

Subject to the granting of the [REDACTED] of, and permission to deal in, the

New Shares on the Stock Exchange, the New Shares will be accepted as [REDACTED]

with effect from the commencement date of [REDACTED] in the New Shares on the

Stock Exchange or such other date as determined by [REDACTED]. Settlement of

transactions between participants of the Stock Exchange on any trading day is required

to take place in CCASS on the second settlement day thereafter. All activities under

CCASS are subject to the General Rules of CCASS and CCASS Operational

Procedures in effect from time to time.

None of the New Shares are [REDACTED] or dealt in any other stock exchange

other than the Stock Exchange, and at the time the Capital Reorganisation becoming

effective, the New Shares in issue will not be [REDACTED] or dealt in on any stock

exchange other than the Stock Exchange, and no such [REDACTED] or permission to

deal is being or is proposed to be sought.


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Reason for the Capital Reorganisation

The Company considers that the Capital Reorganisation will provide greater

flexibility to the Company to raise funds through the issuance of New Shares in the

future. In addition, the credit arising from the Capital Reduction will be used to offset

the accumulated losses of the Company as mentioned under ‘‘I. CAPITAL

REORGANISATION — (ii) Share Consolidation’’ above.

The Capital Reorganisation is subject to the approval of the Independent

Shareholders at the EGM and the Capital Reorganisation becoming effective is one of

the conditions precedent under the Restructuring Agreement (as amended and restated

by the Amended and Restated Restructuring Agreement and the Second Amended and

Restated Restructuring Agreement).

The Company believes that the Capital Reorganisation will not have any

[REDACTED] effect on the financial position of the Company as it will not involve

any [REDACTED] of liability in respect of any unpaid capital of the Company or the

repayment to the Shareholders of any paid-up capital of the Company nor will it result

in any change in the relative rights of the Shareholders. Accordingly, the Joint

Provisional Liquidators are of the view that the implementation of the Capital

Reorganisation is in the best interests of the Company and the Shareholders as a

whole.

II. THE ACQUISITION

Pursuant to the Restructuring Agreement (as amended and restated by the Amended


Restructuring Agreement), the Company will acquire and the Sellers will sell the entire

issued share capital of the Target Company to the Company, free from encumbrances,

together with all rights and benefits attaching or accruing to the shares on or after the date

of Completion (including the right to receive all dividends and other distributions declared,

made or paid on or after the date of Completion).

Asset to be acquired

Shangshui Yuansheng (an indirect wholly-owned subsidiary of the Target

Company immediately following the Reorganisation) is a property developer

incorporated in the PRC with limited liability and it is principally engaged in the

development of residential and mixed-use properties in Shangshui county, Zhoukou

city, Henan province, PRC.

Upon completion of the Acquisition, the subsidiaries of the Target Group will

become wholly-owned subsidiaries of the Company.


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Acquisition Consideration

The Consideration for the Acquisition will be equal to the latest audited aggregate

net asset value of the Target Group as stated in this circular as adjusted by the Target

Group’s latest (i) market value of completed projects, projects under development,

projects held for future development, investment properties and properties held for

self-use; and (ii) deferred tax liabilities. It will be settled by the Company by the

allotment and issue to the Sellers an aggregate of [REDACTED] Consideration Shares

at the [REDACTED]. The number of the Consideration Shares is fixed but the

[REDACTED] will depend on the net asset value of the Target Group.

For reference, based on the audited financial statements of the Target Group for

the year ended 30 April 2021 and (i) market value of the Target Group’s completed

projects, projects under development, projects held for future development, investment

properties and properties held for self-use; and (ii) deferred tax liabilities of the Target

Group as at 31 May 2021, the adjusted net asset value of the Target Group was

approximately HK$[REDACTED] billion and on this basis the [REDACTED] would

be HK$[REDACTED] per Consideration Share.

The Consideration Shares, when allotted and issued, shall rank pari passu in all

respects inter se and with all the other New Shares in issue as at the date of allotment

and issue of the Consideration Shares including the right to all dividends, distributions

and other payments made or to be made, the record date for which falls on or after the

date of such allotment and issue.

The Consideration was determined after arm’s length negotiations between the

parties to the Restructuring Agreement (as amended and restated by the Amended and


Restructuring Agreement) with reference to, among others, the net asset value of the

Target Group as at 30 April 2021 and adjusted based on (i) market value of the Target

Group’s completed projects, projects under development, projects held for future

development, investment properties and properties held for self-use; and (ii) deferred

tax liabilities of the Target Group as at 31 May 2021. The Company considers that the

Consideration is fair and reasonable and in the interests of the Company and the

Shareholders as a whole.

Information on the Target Company and the Sellers

The Target Company is owned as to approximately 54.4%, 44.5% and 1.1% by

Pleasant Bright, Honor Creation and Eminent Rise, respectively. As at the Latest

Practicable Date, to the best of the Joint Provisional Liquidators’ knowledge,

information and belief, having made all reasonable enquiries, the Sellers and parties

acting in concert with it are Independent Third Parties to the Company and its current

connected person.


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Pleasant Bright is wholly-owned by Mr. Yang, who has been serving as the

director of Shangshui Yuansheng since June 2012. Mr. Yang was also appointed as the

Honorary President of Fujian Chamber of Commerce in Zhoukou, the President of

Fujian Chamber of Commerce in Xianning, the Honorary President of Fuzhou

Chamber of Commerce in Wuhan, the Honorary President of Fuqing Chamber of

Commerce in Wuhan and the Honorary President of Fujian Chamber of Commerce for

Private Enterprises.

Honor Creation is wholly-owned by Mr. Zhang, who served as the deputy general

manager and the supervisor of Shangshui Yuansheng from September 2010 to June

2021. He is currently a director and the general manager of Shangshui Yuansheng. He

is responsible for overseeing the operation and business development of Shangshui

Yuansheng.

Eminent Rise is wholly-owned by Mr. Lam Kei. Mr. Lam Kei has over ten years

of managerial experience in the business of production and sales of decorative

materials used in building construction and home renovation. Eminent Rise invested in

the Target Group through the Pre-[REDACTED] Investment, as Mr. Lam Kei

appreciates the prospects and potential growth of the Target Group.

As Mr. Yang and Mr. Zhang will become the Controlling Shareholders and are

the Proposed Directors upon completion of the Acquisition, the Acquisition also

constitutes a connected transaction for the Company pursuant to Rule 14A.28 of the

Listing Rules.

Business of the Target Group

Established on 8 August 2006 in the PRC with limited liability, Shangshui

Yuansheng is indirect wholly-owned subsidiary of the Target Company, principally

engaged in property development of residential properties and mixed-use properties in

the PRC.

The Target Group’s business operations consist of two principal business

segments: (i) the development and sales of residential properties and its ancillary

commercial and mixed used properties; and (ii) leasing of investment properties

developed and acquired.

Property development

The Target Group focuses on the development of residential and mixed-use

properties in the Shangshui county of the Zhoukou city of the Henan province. During

the Track Record Period, the Target Group primarily focused on the development and

sales of residential properties, which were accompanied by ancillary commercial and

mixed-use properties integrated with or in the vicinity of its residential properties such

as schools, clubhouses, gyms, pools, supermarkets, clinics, hospital, shopping arcade,

entertainment complex, banks, restaurants and convenient stores to fulfil the daily and

lifestyle needs of the purchasers of its residential properties.


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The Target Group primarily acquires land through participating in public tenders,

auctions and listings-for-sale processes from the PRC Government in accordance with

relevant PRC laws and regulations.

As at 31 May 2021, the property portfolio of the Target Group comprised eight

property development projects, among which four were completed projects, two were

projects under development, and two were projects held for future development. As at

31 May 2021, the Target Group had an aggregate GFA of approximately 537,716 sq.m.

for property development projects, comprising (i) GFA available for sale of

approximately 87,682 sq.m., (ii) planned GFA under development of approximately

190,939 sq.m., and (iii) estimated GFA for future development of approximately

259,095 sq.m.. In particular, as at 31 May 2021, the Target Group had an aggregate

GFA of approximately 55,811 sq.m. for investment properties, comprising (i) leasable

GFA of approximately 47,016 sq.m. for property development projects developed by

the Target Group; and (ii) leasable GFA of approximately 8,795 sq.m. for property

acquired by the Target Group in the Henan province and the Hubei province.

Property investment

The Target Group retained certain properties of its property development projects

and selectively acquired certain properties, such as retail units and offices, for lease. As

the Target Group intends to hold these properties for long-term investment purposes in

order to diversify its revenue model, they are treated as investment properties. As at 31

May 2021, The Target Group held an aggregate of approximately 55,811 sq.m. as

investment properties.

The Target Group engages third party property management service providers to

provide property management services for its investment properties. The Target Group

strives to provide tenants with quality services, so as to achieve its financial targets and

to continue to enhance the operating results and market competitiveness of its

investment properties.

Generally, the rental fees are determined with reference to location, average

market price and the vacancy rates.

Please refer to the section headed ‘‘Business of the Target Group’’ in this circular

for further details on the Target Group’s business.


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Financial information on the Target Group

Key financials of the Target Group pursuant to the unaudited account for the

Track Record Period are as follows:

For the year ended

31 December

For the four months ended

30 April

2018 2019 2020 2020 2021

(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

(unaudited)

Revenue 181,678 482,753 485,495 22,736 193,728

Profit before tax 60,403 115,879 158,451 3,389 43,027

Profit after tax 28,815 60,204 96,159 1,556 26,689

As at 31 December

As at

30 April

20212018 2019 2020

(RMB’000) (RMB’000) (RMB’000) (RMB’000)

Total asset 1,646,220 1,650,829 1,451,983 1,486,851

Total liabilities 1,517,423 1,372,328 1,077,323 965,002

Net asset 128,797 278,501 374,660 521,849

Future plans of the Company for the Enlarged Group

The Company intends that the Enlarged Group will continue to focus on

residential and mixed-use property development in the Shangshui county of the

Zhoukou city of the Henan province, expand its operation and property portfolio, and

seek sustainable growth by implementing strategies including but not limited to (i)

capitalise on the urbanisation and resulting increase in demand for properties in the

Henan province, (ii) promote and strengthen the awareness of its brand of ‘‘Ronghui’’

(‘‘融輝’’), enhance its organisational management, improve its product and service

qualities, expand its brand and business scope, and steadily increase its scale of

business and profitability, (iii) further optimise its customer-oriented product design

and offerings to optimise the environment of the community and amplify its brand

value, enhance its competitiveness and increase customer loyalty, (iv) continue to

solidify its position in the property market in the Shangshui county of the Zhoukou

city of the Henan province and seek to expand into strategically selected new markets

with high, sustainable future growth potential when opportunities arise, and (v)

continue to deliver quality property development projects by adhering to its

standardised development procedures and construction management manual in order

to achieve operational efficiency and sustainable growth.


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Reasons for the Acquisition

Prior to the suspension of trading of the Shares, the Group was principally

engaged in the trading, manufacturing of beverages and dairy related products and

sales of milk, milk powder, juices and Chinese traditional foods. Its milk products

include UHT colostrum milk, strawberry milk, blueberry milk, chocolate milk and

infant formula. Other products under the Company include Noni juice, fruit wine, rice

glue congee, peanuts milk, etc.

The Acquisition forms a vital part of the Resumption Proposal. To the best of the

Joint Provisional Liquidators’ knowledge, information and belief having made all

reasonable enquiries, all of the subsidiaries of the Company have ceased operation as

at the Latest Practicable Date.

The Target Group is engaged in the property development business in the PRC

with a proven track record. It is expected that upon Completion, the Enlarged Group

will have a sufficient level of operations while the implementation of the Creditors’

Schemes will discharge all existing liabilities of and claims against the Company.

Taking into account of (i) the Consideration which was arrived at an arm’s length

negotiation between the Company and the Sellers; (ii) the prospects of the Target

Group; (iii) the prolonged suspension of trading in the Shares; (iv) the Resumption

Proposal being the only proposal that the Stock Exchange has approved for the

purpose of resumption of trading of the Shares; and (v) the Company will be delisted if

the Resumption Proposal failed to proceed, the Company is of the view that the

Acquisition is in the interests of the Company and the Shareholders as a whole and the

terms of the Restructuring Agreement (as amended and restated by the Amended and


Restructuring Agreement) are fair and reasonable.

III CREDITORS’ SCHEMES

As part of the Proposed Restructuring, the Company proposes to present to its

Creditors the Creditors’ Schemes to fully discharge the Company from all claims of and

liabilities owed to the Creditors when the Creditors’ Schemes become effective. Based on the

information available to the Company, as at the Latest Practicable Date, the estimated

liabilities of the Company amounted to HK$793.4 million, of which HK$576.2 million

represents the unconverted portion of the aforementioned convertible notes issued to Flying

Max Limited. It is intended that the Creditors’ Schemes will be implemented as follows:

(i) The Creditors shall receive an aggregate of HK$[REDACTED] million in cash by

way of pari passu distribution and the Creditors Shares corresponding to a

monetary value of HK$[REDACTED] million as the full and final settlement of all

the valid claims against the Company by the Creditors. The Creditors Shares will

be allotted/transferred to the Scheme Company, who will distribute the same to

the Creditors, by way of dividend, upon the finalisation of the adjudication of the

claims;


– 46 –




The aggregate number of the Creditors Shares will be calculated in accordance to

the formula below:

Aggregate Creditors Shares =HK$[REDACTED]

[REDACTED]

(ii) the Company will (for a cash consideration of HK$1) transfer or assign, all

existing assets, rights, claims and interests of the Company, including the entire

equity interests in the subsidiaries of the Company, to the Scheme Company.

After such transfer or assignment, any dividend distributed by the subsidiaries of

the Company to the Company or any recovery from the subsidiaries of the

Company will be distributed to the Creditors subject to adjudication;

(iii) liability for any outstanding claims made or to be made by the Creditors in respect

of transactions or events incurred up to the date on which the Creditors’ Schemes

become effective shall be assigned or transferred to the Scheme Company for

settlement; and

(iv) all the Indebtedness as at the date on which the Creditors’ Schemes become

effective shall be compromised and discharged.

Assuming the [REDACTED] is HK$[REDACTED], an aggregate of [REDACTED]

Creditors Shares will be issued to the Creditors.

Holders of the Creditors Shares will be subject to a lock-up period of 6 months after

the Resumption Date.

Establishment of Scheme Company

The Scheme Company will be established to hold the Creditors Shares and implement

the Creditors’ Schemes. The Scheme Company will be managed by the Scheme

Administrators who will appoint their nominees as directors of the Scheme Company.

In addition to the proceeds, all costs, charges, expenses and disbursement properly

incurred after the effective date of the Creditors’ Schemes in connection with the

administration and implementation of the Creditors’ Schemes (including the fees and

remuneration of the Joint Provisional Liquidators and the Scheme Administrators) will also

be settled from the assets available in the Creditors’ Schemes, in priority to distribution to

the Creditors according to the terms of the Creditors’ Schemes.


– 47 –




Conditions of the Creditors’ Schemes

The Creditors’ Schemes will be conditional upon, inter alia, the fulfillment of following

conditions:

(i) approval by the requisite majority of the Creditors under Hong Kong and

Cayman Islands law;

(ii) sanction with or without modification (but subject to any modification being

acceptable to the Joint Provisional Liquidators and in accordance with the terms

of the Creditors’ Schemes) by the High Court;

(iii) sanction with or without modification (but subject to any modification being

acceptable to the Joint Provisional Liquidators and in accordance with the terms

of the Creditors’ Schemes) by the Grand Court;

(iv) Shareholders’ approval, and completion, of the transactions contemplated under

the Resumption Proposal;

(v) all necessary approvals which are required, including the approval from the Stock

Exchange;

(vi) [REDACTED]

(vii) [REDACTED]

Reasons for the Creditors’ Schemes

The Joint Provisional Liquidators consider that the Creditors’ Schemes are the only

viable way to compromise, discharge and settle all claims against the Company by the

Creditors and are of the view that the terms of the Creditors’ Schemes are fair and

reasonable and in the interests of the Company, the Shareholders and the Creditors as a

whole.

Shareholders should be aware that until the scheme documents have been sanctioned

by the High Court and the Grand Court, the terms of the Creditors’ Schemes may be subject

to amendment.

The Joint Provisional Liquidators will collate information on the claims and will call

for proofs of debt at a later stage, which will be used to adjudicate claims against the

Company after the Creditors’ Schemes become effective.

Upon the Creditors’ Schemes taking effect, all the claims against, and liabilities of, the

Company as at the effective date will be discharged and compromised in full.


– 48 –




IV THE [REDACTED]

Subject to completion of the Capital Reorganisation, the Company proposes to carry

out the [REDACTED] to offer [REDACTED] (subject to verification of shareholding by the

Joint Provisional Liquidators) a right to apply for the [REDACTED] on an [REDACTED]

basis at the [REDACTED] to allow their participation in the restructuring of the Company.

The Company proposes to raise approximately HK$[REDACTED] million, before

expenses, by way of the [REDACTED] of [REDACTED] on the basis of an

[REDACTED] of [REDACTED] for every [REDACTED] held on the [REDACTED].

The Sellers and parties acting in concert with them and Creditors who are not an

Interested Creditor do not hold any Shares as at the Latest Practicable Date and do not

expect to be Shareholders as at the [REDACTED]. Accordingly, the Sellers and parties

acting in concert with them and Creditors who are not an Interested Creditor will not be

entitled to apply for any [REDACTED]. Further, the shareholding of the [REDACTED] will

be subject to verification by the Joint Provisional Liquidators.

In addition, holders of the Creditors Shares will not be entitled to participate in the

[REDACTED].

The [REDACTED] will be fully [REDACTED] by an Independent Third Party licensed

under the SFO for Type 1 regulated activity and the ordinary course of business of which

includes [REDACTED] of securities that is not a connected person of the Company.

[REDACTED] will not be placed by the [REDACTED] to any connected persons of the

Target Group.

The [REDACTED] will be subject to the [REDACTED] having become unconditional

and not being terminated.

Issue statistics of the [REDACTED]

Basis of the [REDACTED] [REDACTED] of [REDACTED] for every

[REDACTED] held on the [REDACTED]

[REDACTED] the [REDACTED] (subject to adjustment) payable in

full upon application

Number of Shares in issue as at

the Latest Practicable Date

2,708,782,228 Shares

Number of New Shares in issue

upon completion of the

Capital Reorganisation

270,878,221 New Shares

Number of [REDACTED] [REDACTED]


– 49 –




Upon completion of the Capital Reorganisation, the issued share capital of the

Company will comprise 270,878,221 New Share. Save for the Consideration Shares, the

[REDACTED] and the Creditors Shares, the Company will not have any arrangement for

Shares to be issued, nor options, warrants or convertible securities in issue.

The [REDACTED]

The total number of [REDACTED] represents approximately [REDACTED]% of the

Company’s issued share capital as enlarged by the allotment and issue of the Consideration

Shares, the Creditors Shares and the [REDACTED].

The [REDACTED]

The [REDACTED] is subject to adjustment and will be [REDACTED]. The basis of

determination of the total Consideration for the Acquisition and the [REDACTED] is set

out in the sub-section headed, ‘‘II THE ACQUISITION — Acquisition Consideration’’

above.

For reference purpose, an [REDACTED] of HK$[REDACTED] per [REDACTED]

represents:

(i) a [REDACTED] of approximately [REDACTED]% to the theoretical closing price

of HK$22.00 per New Share as adjusted for the effect of the Capital

Reorganisation based on the closing price of HK$2.20 per Share as quoted on

the Stock Exchange on the Last Trading Day;

(ii) a [REDACTED] of [REDACTED]% to the average theoretical closing price of

HK$23.0 per New Share as adjusted for the effect of the Capital Reorganisation

based on the average of the closing price of HK$2.30 per Share as quoted on the

Stock Exchange for the five trading days up to and including the Last Trading

Day;

(iii) a [REDACTED] of approximately [REDACTED]% to the average theoretical

closing price of HK$19.70 per New Share as adjusted for the effect of the Capital

Reorganisation based on the average of the closing price of HK$1.97 per Share as

quoted on the Stock Exchange for the 10 trading days up to and including the

Last Trading Day; and

(iv) a [REDACTED] of approximately HK$[REDACTED] over the Group’s audited

consolidated net deficit per New Share of approximately HK$2.63 as at 31 May

2021.

The [REDACTED] is [REDACTED] and was determined by the Company after taking

into account the prevailing financial position of the Company and the amount of funds

required to be raised by the Company. It is considered to be fair to each of the Sellers and

the Shareholders only if the [REDACTED]. The [REDACTED] and the Acquisition are

inter-conditional.


– 50 –




Status of the [REDACTED]

The [REDACTED], when allotted, issued and fully paid, will rank pari passu in all

respects with the then existing New Shares in issue on the date of allotment and issue of the

[REDACTED]. Holders of such [REDACTED] (to be verified by the Joint Provisional

Liquidators) will be entitled to receive all future dividends and distributions which are

declared after the date of allotment and issue of the [REDACTED].

[REDACTED]

The [REDACTED] will be available only to the [REDACTED] (to be verified by the

Joint Provisional Liquidators). To qualify for the [REDACTED], a Shareholder must, at the

close of business on the [REDACTED] Date: (i) be registered as a member of the Company

on the register of members of the Company; and (ii) not be an [REDACTED]. The Joint

Provisional Liquidators reserve the right to admit or reject the [REDACTED] to participate

in the [REDACTED].

As at the Latest Practicable Date, the Company had not procured any undertaking and

had not received any undertaking from any Shareholder to apply for his/her/its entitlement

under the [REDACTED] or entered into any arrangement that may have an effect on the

[REDACTED].

[REDACTED]

The documents to be issued in connection with the [REDACTED] will not be registered

under the applicable securities legislation of any jurisdiction other than Hong Kong. The

Joint Provisional Liquidators will make enquiries as to whether the extension of the

[REDACTED] to the Overseas Shareholders may contravene the applicable securities

legislation of the relevant overseas places or the requirements of the relevant regulatory

body or stock exchange and details and results of such enquiries will be included in the

documents. If, after making such enquiry, the Joint Provisional Liquidators are of the

opinion that it would be necessary or expedient, on account either of the legal restrictions

under the laws of the relevant place or any requirement of the relevant regulatory body or

stock exchange in that place, not to offer the [REDACTED] to such Overseas Shareholders,

the [REDACTED] will not be extended to such Overseas Shareholders. The Company will

send the documents to the [REDACTED] for their information only, but will not send the

[REDACTED] for the [REDACTED] to the [REDACTED].

Excess application for the [REDACTED]

In order to comply with Rule 7.26A of the Listing Rules, the Company will make

arrangement either for excess applications or for disposal of the [REDACTED] not validly

applied for and to ensure that the minimum public float requirement under Rule 8.08 of the

Listing Rules is satisfied upon completion of the [REDACTED].


– 51 –




No transfer of nil-paid entitlements

The invitation to apply for the [REDACTED] to be made to the [REDACTED] (subject

to verification by the Joint Provisional Liquidators) will not be transferable. There will not

be any trading in nil-paid entitlements on the Stock Exchange.

Application for [REDACTED]

The Company will apply to the Listing Committee for the [REDACTED] of, and

permission to deal in, the New Shares including the [REDACTED]. Subject to the granting

of the approval for the [REDACTED] of, and permission to deal in, the New Shares on the

Stock Exchange, the New Shares will be accepted as [REDACTED] with effect from the

respective commencement date of [REDACTED] in the New Shares on the Stock Exchange

or such other date as determined by [REDACTED]. Settlement of transactions between

participants of the Stock Exchange on any trading day is required to take place in CCASS

on the second trading day thereafter. All activities under CCASS are subject to the General

Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Dealings in the New Shares, which are registered in the branch register of members of

the Company in Hong Kong will be subject to the payment of stamp duty, Stock Exchange

trading fee, transaction levy, investor compensation levy and any other applicable fees and

charges in Hong Kong.

No part of the share capital of the Company is listed or dealt in, and no listing or

permission to deal is being or is proposed to be sought, on any other stock exchange other

than the Stock Exchange.

Share certificates for the [REDACTED]

Subject to the fulfillment of the conditions of the [REDACTED], share certificates for

all the fully-paid [REDACTED] shall be posted to those [REDACTED] (subject to

verification by the Joint Provisional Liquidators) who validly applied and paid for the

[REDACTED] by ordinary post at their own risks.

Further announcement(s) will be made to inform the Shareholders of the progress of

the matter, including the proposed timetable, odd lots arrangement and the arrangements of

the posting of the share certificates for the [REDACTED], as and when appropriate.

Reasons for the [REDACTED]

The gross proceeds from the [REDACTED] are estimated to be approximately

HK$[REDACTED] million. The Company intends to utilise the net proceeds from the

[REDACTED] as to (i) approximately HK$[REDACTED] million to settle part of the

Creditors’ Schemes; (ii) approximately HK$[REDACTED] million for the payment of

professional fees incurred for the Proposed Restructuring, including the [REDACTED]; and

(iii) the remaining approximately HK$[REDACTED] million for general working capital.


– 52 –




The Joint Provisional Liquidators consider that the [REDACTED] will [REDACTED]

the capital base and [REDACTED] the financial position of the Company so as to facilitate

the Enlarged Group’s long term development. The Joint Provisional Liquidators are of the

view that it is in the interest of the Company to raise additional capital by way of the

[REDACTED] under which all the [REDACTED] (subject to verification by the Joint

Provisional Liquidators) are given an equal opportunity to participate in the enlargement of

capital base of the Company as well as enabling the [REDACTED] (subject to verification

by the Joint Provisional Liquidators) to continue to participate in the future development

of the Enlarged Group upon completion of all the transactions under the Resumption

Proposal.

The [REDACTED] is subject to the approval by the Independent Shareholders

pursuant to Rule 7.24A of the Listing Rules. The Acquisition and the [REDACTED] are

inter-conditional to each other.

Rule 7.27B Implications

Under Rule 7.27B of the Listing Rules, a listed issuer may not undertake a rights issue,

open offer or specific mandate placing that would result in a theoretical dilution effect of

25% or more, unless the issuer can satisfy the Stock Exchange that there are exceptional

circumstances.

Based on the average of closing price of HK$2.30 for the five trading days immediately

prior to suspension of trading of the Shares, the theoretical closing price per Share upon

completion of the Capital Reorganisation will be HK$23.00. Assuming the [REDACTED]

takes place before the issue of the Consideration Shares and the [REDACTED] is

HK$[REDACTED], the theoretical ex-price per [REDACTED] will be approximately

HK$[REDACTED] and the theoretical value dilution is approximately [REDACTED]%.

Given that (i) trading in the Shares has been suspended since 7 September 2010, and

the Company currently has no operation based on the Joint Provisional Liquidators’

understanding; (ii) the Company had estimated liabilities of approximately HK$793.4

million as at the Latest Practicable Date; and (iii) a winding up petition was served against

the Company on 16 November 2016 and the Joint Provisional Liquidators were

subsequently appointed on 22 December 2016, there is no doubt that the Company is in

serious financial distress and insolvent. The Joint Provisional Liquidators are of the view

that the Company is under exceptional circumstances and in financial difficulties and the

proposed [REDACTED] is fair and reasonable.

[REDACTED]

The Company intends to enter into the [REDACTED] with the [REDACTED] the issue

of the documents. It is contemplated that the [REDACTED] will contain terms to the

following effect.


– 53 –




[REDACTED]


– 54 –




[REDACTED]


– 55 –




[REDACTED]

PLACING TO RESTORE PUBLIC FLOAT

In order to restore the public float of the Company required by Rule 8.08 of the Listing

Rules upon completion of the Capital Reorganisation, the Acquisition, the Creditors’

Schemes and the [REDACTED], if the shareholding of the Sellers exceeds 75% of the

enlarged issued share capital of the Company, the Sellers will enter into the Placing with a

third party broker or agent to place down Shares to independent placees to restore

sufficient public float of the Company.

ADOPTION OF NEW ARTICLES OF ASSOCIATION

The existing memorandum and articles of association of the Company have not been

amended since 2009. In order to bring the constitution of the Company in line with

amendments made to the relevant laws of the Cayman Islands and the Listing Rules since

then and to incorporate certain housekeeping amendments, a special resolution will be

proposed at the EGM for the Company to adopt the Memorandum and the Articles of

Association in replacement of the existing memorandum and articles of association of the

Company.

A summary of the principal provisions of the Memorandum and the Articles of

Association is set out in Appendix VII to this circular.

The proposed adoption of the Memorandum and the Articles of Association will be

subject to the approval by the Shareholders by way of a special resolution at the EGM.

Shareholders are advised that the Memorandum and the Articles of Association are written

in English only and there is no official Chinese translation. The Chinese translation of the

Memorandum and the Articles of Association is for reference purpose only. In case of any

inconsistency, the English version shall prevail.


– 56 –




APPOINTMENT OF PROPOSED DIRECTORS

As at the Latest Practicable Date, the Board comprised four executive Directors, being

Mr. Liu Nanguang (Chairman), Mr. Chan Wai, Mr. Lin Bin and Dr. Chew Chee Wah, and

three independent non-executive Directors, being Mr. Zhang Jian Hong, Ms. Fu Zhi Fan

and Mr. Tam Tsz Ming. All the existing executive Directors and independent non-executive

Directors will resign or be removed before the Resumption.

The Company intends to appoint Mr. Zhang, Mr. Yang Kun and Ms. Zhang Meilan as

executive Directors and Mr. Yang as non-executive Director immediately following the

completion of the Acquisition, and Mr. Law Chee Hui, Mr. Chan Kar Yeung and Mr. Lam

Ting Yu as independent non-executive Directors immediately following the Resumption.

The appointment of the Proposed Directors will be subject to (i) the approval of the

Shareholders by way of ordinary resolutions in the EGM in which the voting will be taken

by way of poll; and (ii) completion of the Acquisition and the [REDACTED].

For further details of the Proposed Directors and biographical and other information

relating to any Proposed Directors, please refer to the section headed ‘‘Proposed Directors

and Senior Management of the Enlarged Group’’ in this circular.

CHANGE OF COMPANY NAME

The Joint Provisional Liquidators propose to change the English name of the

Company from ‘‘Natural Dairy (NZ) Holdings Limited’’ to ‘‘Yuansheng Property Limited’’

and to adopt and register the Chinese name ‘‘源盛地產有限公司’’ as the dual foreign name

of the Company to replace the existing Chinese name ‘‘天然乳品（新西蘭）控股有限公司’’

which has been used for identification purposes only.

Reasons for the Change of Company Name

The Joint Provisional Liquidators consider that the change of the Company name

would symbolise a fresh start of the Company following Resumption to reflect the actual

business operation of the Enlarged Group and enhance corporate image and identity of the

Company after the Resumption. Accordingly, the Joint Provisional Liquidators are of the

view that the change of the Company name is in the interest of the Company and the

Shareholders as a whole.

Conditions of the Change of Company Name

The change of the Company name will be subject to the following conditions:

1. the passing of a special resolution by the Shareholders approving the change of

the Company name at the EGM; and

2. the Registrar of Companies in the Cayman Islands granting approval for the

change of the Company name.


– 57 –




Subject to the satisfaction of the conditions set out above, the change of the Company

name will take effect upon the date on which the new English name and the new dual

foreign name of the Company are entered on the register of companies maintained by the

Registrar of Companies in the Cayman Islands. The Company will then carry out the

necessary filing procedures with the Companies Registry in Hong Kong.

Effects of the Change of the Company Name

The change of the Company name, if approved and after becoming effective, will not in

any way affect any of the rights of any Shareholders and all existing share certificates of the

Company in issue bearing the present name of the Company will, even after the change of

Company name has become effective, continue to be effective as documents of title to the

Shares and will be valid for trading, settlement and registration purposes.

Should the change of the Company name become effective, the Company will make

arrangement for free exchange of existing share certificates (in [‧] colour), within a specific

period of time, for new share certificates (in [‧] colour) under the new English and Chinese

names of the Company. Any issue of share certificates thereafter will bear the new name of

the Company and the securities of the Company will be traded on the Stock Exchange under

the new name.

In addition, subject to the confirmation of the Stock Exchange, the English and

Chinese stock short names of the Company for trading of the Shares on the Stock Exchange

will also be changed after the change of Company name becoming effective. Further

announcements will be made by the Company to inform the Shareholders of, among other

things, the results of the EGM, the effective date of the change of Company name and the

new English and Chinese stock short names of the Company as and when appropriate.

INFORMATION ON THE GROUP

Prior to the suspension of trading of the Shares, the Group was principally engaged in

the trading, manufacturing of beverages and dairy related products and sales of milk, milk

powder, juices and Chinese traditional foods. Its milk products include UHT colostrum

milk, strawberry milk, blueberry milk, chocolate milk and infant formula. Other products

under the Company include Noni juice, fruit wine, rice glue congee, peanuts milk, etc.

As at the Latest Practicable Date, save for the 2,708,782,228 Shares in issue and

outstanding convertible bonds in the principal amount of HK$576,218,430.5 (convertible

into 276,821,772 Shares), the Company has no other outstanding relevant securities (as

defined in Note 4 to Rule 22 of the Takeovers Code).


– 58 –




LITIGATION

Since the appointment of the Joint provisional Liquidators, the following proceedings

have come to their attention:

(i) In 2011, prior to the Joint Provisional Liquidators’ appointment, the Company

was sued by Schenker International (H.K.) Limited in the High Court for unpaid

invoices. The trial of the action was heard in November 2016 but the Judgment of

Deputy High Court Judge Cooney SC was handed down in February 2017, after

the Joint Provisional Liquidators’ appointment. On 3 February 2017, the High

Court ordered that the Company pay the Plaintiff (Schenker International (H.K.)

Limited the sum of HK$4,360,948.38 with interest and costs. The Company,

acting through the Joint Provisional Liquidators, later reached an agreement with

the Plaintiff on the amount of costs payable and this is set out in the order of

Master S.P. Yip dated 27 March 2020. Such claim will be compromised and

discharged in full by way of the Creditors’ Schemes following completion of the

proposed restructuring of the Group.

(ii) In 2017, two former employees claimed in the Labour Tribunal against the

Company for their outstanding salaries and employee entitlements (‘‘Employment

Claims’’). The Labour Tribunal ruled in favour of the Company and the two

former employees appealed the Labour Tribunal decisions to the High Court. The

High Court handed down two judgments on 17 August 2020 and 18 February

2021 respectively for each of the two former employees and ordered the Company

to pay the two employees the respective sums of HK$976,553.68 and

HK$2,261,547.79 (with additional interest and costs). The Employment Claims

will be compromised and discharged in full by way of the Creditors’ Schemes

following completion of the proposed restructuring of the Group.

(iii) On 22 September 2017, the Company, acting through the Joint Provisional

Liquidators, issued legal proceedings in the High Court against a former director

of the Company and his related parties, including his wife and business associates

(‘‘Hong Kong Action’’). The Hong Kong Action relates to an acquisition

agreement entered into by the Company in 2009, prior to its provisional

liquidation. The Hong Kong Action is presently ongoing and no trial date has

been fixed.

(iv) As part of the Hong Kong Action, the Company sought a proprietary injunction

and a Mareva injunction against the Defendants in the action. On 7 October 2020,

the Court of First Instance granted (i) a proprietary injunction against the former

director and other Defendants in the Hong Kong Action over certain assets held

by the Defendants as well as (ii) a worldwide Mareva injunction against the same

Defendants. The former director (and his wife) made an application for leave to

appeal against the injunction on 21 October 2020, which was dismissed by the

Court of First Instance on 1 April 2021. The former director (and his wife) made a


– 59 –




further application to the Court of Appeal for leave to appeal on 14 April 2021.

The Company has responded to this application and the parties are waiting for the

Court of Appeal’s determination of this application.

(v) In April 2021, the Company, again acting through the Joint Provisional

Liquidators, made an application to the High Court of New Zealand Auckland

Registry for an injunction against the former director (and related parties) in

respect of certain assets located in New Zealand. This injunction sought is

ancillary to the Hong Kong Action and the injunction obtained by the Company

in Hong Kong. The application is scheduled to be heard on 17 September 2021.

All indebtedness and potential liabilities of the Company owed to the Creditors will be

transferred to the Scheme Company under the Creditors’ Schemes.

REASONS FOR PROPOSED RESTRUCTURING

The Capital Reorganisation, the Acquisition, the [REDACTED] and the Creditors’

Schemes form part of the Proposed Restructuring under the Restructuring Agreement (as

amended and restated by the Amended and Restated Restructuring Agreement and the

Second Amended and Restated Restructuring Agreement).

The Company is in severe financial difficulties. To the best of the Joint Provisional

Liquidators’ knowledge, having made all reasonable enquiries, the Company has 17 direct

or indirect subsidiaries, of which 2 are incorporated in the BVI, 3 are incorporated in Hong

Kong, 8 are established in the PRC and 4 are incorporated in New Zealand. All of these

subsidiaries of the Company have ceased operation as at the Latest Practicable Date. The

Company is unable to settle its outstanding indebtedness and currently does not have

sufficient assets/operations to support its listing status.

As part of the Proposed Restructuring, the Target Group, which satisfies the new

listing requirements under the Listing Rules will be injected into the Company. The

Enlarged Group will have a sufficient level of operations for maintaining its listing status

on the Stock Exchange, while the proceeds from the [REDACTED] will [REDACTED] the

financial and liquidity position of the Enlarged Group.

The Creditors’ Schemes will compromise all indebtedness of the Company owed to the

Creditors and all the subsidiaries of the Company will be transferred to the Scheme

Company under the Creditors’ Schemes. Their financial results will be [REDACTED] from

the financial statements of the Enlarged Group. Further, these subsidiaries of the Company

are likely ultimately to be disposed of or placed into formal liquidation by the Scheme

Administrators and any creditor of those subsidiaries will be required to prove for its debt

against the relevant subsidiary on the basis of ordinary liquidation principles.

The Joint Provisional Liquidators are of the view that the terms of the Restructuring

Agreement (as amended and restated by the Amended and Restated Restructuring

Agreement and the Second Amended and Restated Restructuring Agreement) are fair

and reasonable and in the interests of the Company and the Shareholders as a whole.


– 60 –




Fund raising alternative available to the Group

Having considered the net deficit financial position and the liquidation status of the

Group as well as the Shares being in prolonged suspension, there are no fund raising

alternatives available to the Group. In particular, the Group could not obtain any bank

facilities or borrowings in its existing position and rights issue is considered to be

impracticable when the Shares are suspended. Even if the liquidity of the Group could be

improved by alternative fund raising method, the Acquisition is necessary for the Group to

satisfy the sufficient operation and asset requirements under Rule 13.24 of the Listing Rules

as a condition for the Resumption. The Acquisition and the [REDACTED] form part of the

Proposed Restructuring, which will fulfill the conditions of the Resumption with

distribution to the Creditors, which also represent the best offer received by the Joint

Provisional Liquidators since their appointment.

FINANCIAL EFFECTS OF THE PROPOSED RESTRUCTURING

Immediately following completion of the Acquisition, the Target Company will

become a wholly-owned subsidiary of the Company and the financial results of the Target

Group will be consolidated into the accounts of the Company.

Assets and liabilities

As set out in the section headed ‘‘[REDACTED] Financial Information of the Enlarged

Group’’ in Appendix VI to this circular, assuming completion of the Proposed

Restructuring including, inter alia, (i) the Capital Reorganisation; (ii) the Restructuring


Agreement and the Second Amended and Restated Restructuring Agreement) and the

transactions contemplated thereunder; (iii) the Acquisition; (iv) the Creditors’ Schemes; (v)

the [REDACTED]; (vi) the [REDACTED]; (vii) the [REDACTED]; and (viii) the

appointment of the Proposed Directors took place on 31 May 2021, the pro forma total

assets and total liabilities of the Enlarged Group as at 31 May 2021 would be approximately

HK$[REDACTED] and HK$[REDACTED], respectively.

Earnings

As set out in the section headed ‘‘[REDACTED] financial information of the Enlarged

Group’’ in Appendix VI to this circular, assuming completion of the restructuring of the

Company including, inter alia, (i) the Capital Reorganisation; (ii) the Restructuring



transactions contemplated thereunder; (iii) the Acquisition; (iv) the Creditors’ Schemes; (v)

the [REDACTED]; (vi) the [REDACTED]; (vii) the [REDACTED]; and (viii) the

appointment of the Proposed Directors took place on 1 June 2020, [REDACTED] loss

for the year ended 31 May 2021 of the Enlarged Group would be approximately

HK$[REDACTED], which was primarily caused by the [REDACTED] and professional

fees and expenses relating to the Proposed Restructuring.


– 61 –




For further details in relation to the [REDACTED] financial information of the

Enlarged Group, please refer to Appendix VI to this circular.

It should be noted that the above financial effects are for illustrative purpose only and

do not purport to represent the audited financial position of the Enlarged Group upon

Completion.

FUTURE INTENTIONS OF THE SELLERS REGARDING THE ENLARGED GROUP

The Sellers do not intend to continue or resume the existing businesses of the Group.

After Completion, the Enlarged Group will focus on the Target Group’s property

development business in the PRC. Save as disclosed, the Sellers do not intend to

introduce any major change to the business of the Enlarged Group. It is expected that all

the existing Directors will resign or be removed and the Proposed Directors will be

appointed prior to the Resumption. The proposed resignation or removal of existing

Directors and appointment of the Proposed Directors will be subject to compliance with the

Takeovers Code.

The Sellers have confirmed that they have no intention or plan to dispose of their

controlling interests in the Company within 12 months after the Resumption Date, which is

in line with [REDACTED]. The Sellers also confirm that they do not have any intention or

plan, and are not a party to any agreement or arrangement and/or do not involve in any

negotiation to dispose of, downsize or terminate the existing business operations of the

Target Group within 12 months after the Resumption.


– 62 –




CHANGES IN SHAREHOLDING STRUCTURE

For illustrative purposes only, set out below are the shareholding structure of the

Company (i) as at the Latest Practicable Date; (ii) immediately after completion of the

Capital Reorganisation; (iii) immediately after completion of the Acquisition; (iv) after the

implement of the Creditors’ Schemes; (v) after placing down by the Sellers, assuming (A) all

the Independent Shareholders take up all the [REDACTED]; and (B) none of the

Independent Shareholders take up the [REDACTED]. The shareholding of the existing

shareholders of the Company is subject to verification by the Joint Provisional Liquidators.

As at the

Latest Practicable Date

Upon completion of the



Acquisition

Shareholders Shares % Shares % Shares %

The Sellers and parties acting in concert with each of them

Pleasant Bright (Note 1) — — — — [REDACTED] [REDACTED]%

Honor Creation (Note 2) — — — — [REDACTED] [REDACTED]%

Eminent Rise (Note 3) — — — — [REDACTED] [REDACTED]%

Subtotal — — — — [REDACTED] [REDACTED]%

Creditors — — — — [REDACTED] [REDACTED]

[REDACTED] — — — — [REDACTED] [REDACTED]

Placees — — — — [REDACTED] [REDACTED]

Existing Shareholders

Flying Max Limited (Note 4) 536,219,029 19.80% 53,621,902 19.80% [REDACTED] [REDACTED]%

UBNZ Trustee Ltd. (Note 5) 323,509,199 11.94% 32,350,919 11.94% [REDACTED] [REDACTED]%

Xiamen Hengxing Group Co.,

Ltd. (Note 6) 300,000,000 11.08% 30,000,000 11.08% [REDACTED] [REDACTED]%

Earn Cheers Ltd. (Note 7) 240,000,000 8.86% 24,000,000 8.86% [REDACTED] [REDACTED]%

High Excellent Limited (Note 8) 171,000,000 6.31% 17,100,000 6.31% [REDACTED] [REDACTED]%

Other Public Shareholders 1,138,054,000 42.01% 113,805,400 42.01% [REDACTED] [REDACTED]%

2,708,782,228 100.00% 270,878,221 100.00% [REDACTED] [REDACTED]%

Public Shareholders 2,708,782,228 100.00% 270,878,221 100.00% [REDACTED] [REDACTED]%

Total 2,708,782,228 100% 270,878,221 100% [REDACTED] [REDACTED]%


– 63 –




Scenario A: Assuming all the Independent Shareholders take up the [REDACTED]


[REDACTED]

Upon issue of the

Creditors Shares

Upon the Placing

and the Resumption

Shareholders Shares % Shares % Shares %


Pleasant Bright (Note 1)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Honor Creation (Note 2)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Eminent Rise (Note 3)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Subtotal [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Creditors [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

[REDACTED] [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Placees [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%


Flying Max Limited (Note 4)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

UBNZ Trustee Ltd. (Note 5)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%


Ltd. (Note 6)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Earn Cheers Ltd. (Note 7)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

High Excellent Limited (Note 8)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Other Public Shareholders [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Public Shareholders [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Total [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%


– 64 –




Scenario B: Assuming none of the Independent Shareholders take up the [REDACTED]


[REDACTED]

Upon issue of the

Creditors Shares

Upon the Placing

and the Resumption

Shareholders Shares % Shares %


Pleasant Bright (Note 1)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Honor Creation (Note 2)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Eminent Rise (Note 3)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Subtotal [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Creditors [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

[REDACTED] [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Placees [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%


Flying Max Limited (Note 4)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

UBNZ Trustee Ltd. (Note 5)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%


Ltd. (Note 6)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Earn Cheers Ltd. (Note 7)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

High Excellent Limited (Note 8)[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Other Public Shareholders [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

[REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Public Shareholders [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Total [REDACTED] [REDACTED]% [REDACTED] [REDACTED]% [REDACTED] [REDACTED]%

Notes:

1. Pleasant Bright is directly wholly-owned by Mr. Yang.

2. Honor Creation is directly wholly-owned by Mr. Zhang.

3. Eminent Rise is directly wholly-owned by Mr. Lam Kei.

4. Flying Max Limited is 100% owned by Ms. Xu Min Mei who is deemed to be interested in the shares

held by Flying Max Ltd. of which is deemed to own 19.8% of the issued Shares of the Company.

According to the Company records, Flying Max Ltd. owns certain convertible notes, of which was

converted into 276,821,772 Shares of the Company under certain conditions. The shareholding is

subject to verification by the Joint Provisional Liquidators.


– 65 –




5. UBNZ Trustee Ltd. is 100% owned by Ms. Wang May Yan on behalf of the Trustee of UBNZ

Trust, of which is deemed to own 11.9% of the issued Shares of the Company. Per the Company

announcement dated 2 February 2011, the trustee of UBNZ Trust was changed from UBNZ Trustee

Ltd. to NZ Dairy Trustee Ltd. The shareholding is subject to verification by the Joint Provisional

Liquidators.

6. Xiamen Hengxing Group Co., Ltd. is 99.3% owned by Mr. Ke Xiping and his spouse is Ms. Liu

Haiying. Mr. Ke Xiping and Ms. Liu Haiying are deemed to be interested in the Shares and

underlying Shares owned by Xiamen Hengxing Group Co., Ltd. The shareholding is subject to

verification by the Joint Provisional Liquidators.

7. Earn Cheer Ltd. is 100% owned by Mr. Zhu Fuding who is deemed to be interest in Shares held by

Earn Cheer Ltd. of which is deemed to own 8.9% of the issued Shares of the Company. The

shareholding is subject to verification by the Joint Provisional Liquidators.

8. High Excellent Limited is 100% owned by Mr. Hu Haiwen, who is deemed to be interest in the

Shares held by High Excellent Limited. The shareholding is subject to verification by the Joint

Provisional Liquidators.

FUND RAISING ACTIVITIES INVOLVING ISSUE OF SECURITIES IN THE PAST

TWELVE MONTHS

The Company has not conducted any equity fund raising activities involving issue of

securities in the past 12 months before the Latest Practicable Date.

THE AUDIT QUALIFICATIONS

As set out in Appendix IV to this circular, the auditors of the Company have given

disclaimers of opinion on the consolidated financial statements of the Group for each of the

three years ended 31 May 2019, 2020 and 2021. The basis for the disclaimers of opinion for

each of the three years ended 31 May 2019, 2020 and 2021 is also set out in Appendix IV to

this circular.

Although there have been disclaimers of opinion in respect of the consolidated

financial statements of the Group for each of the three years ended 31 May 2019, 2020 and

2021, the Joint Provisional Liquidators are of the view that as a result of the Creditors’

Schemes coming into effect, completion of the Acquisition, the [REDACTED] and the

Resumption, matters relating to the existing basis for the disclaimer of opinion and the

material uncertainty relating to the going concern basis will be resolved.

In addition, as a result of the Creditors’ Schemes taking into effect, the amounts due to

the Creditors will be compromised and discharged in full by way of the Creditors’ Schemes.

The net asset position of the Company will be [REDACTED] upon the completion of the

Acquisition and the [REDACTED]. Details of the [REDACTED] consolidated statement of

financial position of the Enlarged Group are set out in Appendix VI to this circular.


– 66 –




Having considered the above, upon the Completion, and in the absence of any

unforeseen circumstances, the Joint Provisional Liquidators consider that the above audit

qualifications should not materially affect the Enlarged Group’s financial position and

operations.

IMPLICATIONS UNDER THE LISTING RULES


The Capital Reorganisation will be conditional upon, among others, the passing of

special resolutions by the Independent Shareholders at the EGM.

The Acquisition

As one or more of the applicable percentage ratios of the Acquisition under Rule 14.07

of the Listing Rules exceed 100%, the Acquisition constitutes a very substantial acquisition

for the Company under Rule 14.06(5) of the Listing Rules. As Mr. Yang and Mr. Zhang will

become the Controlling Shareholders and Proposed Directors upon completion of the

Acquisition, the Acquisition also constitutes a connected transaction for the Company

pursuant to Rule 14A.28 of the Listing Rules. Accordingly, the Acquisition (including the



Agreement) and the allotment and issue of the Consideration Shares) is subject to the

reporting, announcement and the Independent Shareholders’ approval requirements

pursuant to the Listing Rules.

In addition, the Acquisition constitutes a reverse takeover for the Company under

Rule 14.06(B) of the Listing Rules on the basis that the Acquisition (1) is a very substantial

acquisition for the Company under Chapter 14 of the Listing Rules; and (2) is regarded as

resulting in a change in control of the Company to the Sellers, which falls within the bright

line tests of Rule 14.06(B) of the Listing Rules. Accordingly, the Company will be treated as

if it were a [REDACTED] under Rule 14.54 of the Listing Rules and the Acquisition is

therefore subject to the approval by the Listing Committee of the [REDACTED] to be made

by the Company. The Enlarged Group or the Target Group must be able to meet the

requirements under Rule 8.05 of the Listing Rules and the Enlarged Group must be able to

meet all the other basic conditions set out in Chapter 8 of the Listing Rules.

The Consideration Shares will be allotted and issued pursuant to a specific mandate to

be obtained at the EGM.

The [REDACTED]

Pursuant to Rule 7.24A(1) of the Listing Rules, a proposed [REDACTED] must be

made conditional on minority shareholders’ approval unless the securities will be issued by

the listed issuer under the authority of a general mandate granted to them by shareholders

in accordance with Rules 13.36(2)(b) and 13.36(5) of the Listing Rules.


– 67 –




Since the [REDACTED] would be issued under a specific mandate, the [REDACTED]

will be subject to the Independent Shareholders’ approval at the EGM.

Others

The Acquisition, the Creditors’ Schemes and the [REDACTED] are conditional, among

others, the passing of ordinary resolution by the Independent Shareholders on the EGM.

To the best of the Joint Provisional Liquidators’ knowledge, information and belief,

and having made all reasonable enquiries, as at the Latest Practicable Date, save for the

Interested Creditors, no Shareholder is required to abstain from voting on the resolutions

approving the Capital Reorganisation, the Acquisition, the [REDACTED], the Creditors’

Schemes, the [REDACTED] and the [REDACTED].

The Company will apply to the Stock Exchange for the [REDACTED] of, and

permission to deal in the Consideration Shares, the Creditors Shares and the [REDACTED].

[REDACTED]


– 68 –




[REDACTED]

[REDACTED]


– 69 –




[REDACTED]

EGM

A notice convening the EGM to be held at [REDACTED] on [REDACTED] at

[REDACTED] is set out on pages EGM-1 to EGM-8 in this circular for the purpose of

considering and, if thought fit, approving the Capital Reorganisation, the Restructuring



transactions contemplated thereunder, the Acquisition, the Creditors’ Schemes, the

[REDACTED], the [REDACTED], the [REDACTED] and the appointment of the

Proposed Directors. Voting on the resolutions at the EGM will be taken by poll.

Save as disclosed above, to the best of the Joint Provisional Liquidators’ knowledge,

information and belief, and having made all reasonable enquiries, save for the Interested

Creditors, no Shareholder is required to abstain from voting on any resolutions to be

proposed at the EGM. For the avoidance of doubt, save for the Interested Creditors, no

Shareholder is required to abstain from voting on the resolutions in relation to the Capital

Reorganisation, the Restructuring Agreement (as amended and restated by the Amended


Restructuring Agreement) and the transactions contemplated thereunder, the Acquisition,

the Creditors’ Schemes, the [REDACTED], the [REDACTED], the [REDACTED] and the

appointment of the Proposed Directors.


– 70 –




A form of proxy for use at the EGM is enclosed. If you are unable to attend the EGM

in person, you are requested to complete and return the form of proxy to Hong Kong

branch share registrar of the Company, [REDACTED], at [REDACTED] as soon as possible

and in any event not less than 48 hours before the time appointed for the holding of the

EGM or any adjournment thereof (as the case may be). Completion and return of the form

of proxy will not preclude you from attending and voting at the EGM or any adjourned

meeting thereof (as the case may be) should you so wish.

GENERAL

It should be noted that the Resumption Proposal including the [REDACTED] is

subject to a number of conditions to be fulfilled, including third party and regulatory

approvals, which may or may not be satisfied and Completion may or may not take place.

Shareholders and potential investors are advised to exercise caution when dealing in the

Shares.

WARNING OF THE RISKS OF DEALING IN THE SHARES

The transactions contemplated under the Proposed Restructuring are subject to the

satisfaction of applicable conditions and may or may not proceed.

Resumption of trading in the Shares of the Company is subject to a number of

conditions and may or may not take place.

Trading in the Shares of the Company will remain suspended until further notice. The

release of this circular is not an indication that the Proposed Restructuring will be

successfully implemented and does not necessarily indicate that the trading in the Shares of

the Company will be resumed and that the [REDACTED] approval for the New Shares, the

Consideration Shares, the Creditors Shares and the [REDACTED] will be granted.

Shareholders and potential investors of the Company should exercise caution when

dealing in the Shares of the Company.

RECOMMENDATIONS

The Joint Provisional Liquidators are of the view that the terms of the Capital

Reorganisation, the Restructuring Agreement (as amended and restated by the Amended


Restructuring Agreement) and the transactions contemplated thereunder, the Acquisition,

the Creditors’ Schemes, the [REDACTED], the [REDACTED], the [REDACTED] and the

appointment of the Proposed Directors are fair and reasonable and in the interests of the

Company and the Shareholders as a whole. Accordingly, the Joint Provisional Liquidators

recommend the Shareholders to vote in favour to them at the EGM.


– 71 –




Since the date of appointment of the Joint Provisional Liquidators and up to the Latest

Practicable Date, the the power of the directors of the Company have been suspended

pursuant to the order of the Grand Court. As such, no independent board committee has

been established to make recommendations to the Independent Shareholders in this regard

and Dakin Capital Limited has been appointed as the Independent Financial Adviser to

advise the Independent Shareholders in this regard.

You are advised to read carefully the letter from the Independent Financial Adviser as

set out on pages 73 to 116 in this circular. The Independent Financial Adviser considers that

the terms of the Restructuring Agreement (as amended and restated by the Amended and

Restated Restructuring Agreement and the Second Amended and Restated Restructuring

Agreement) and the transactions contemplated thereunder, the Acquisition, the

[REDACTED], the Creditors’ Schemes, the [REDACTED] and the [REDACTED] are on

normal commercial terms and fair and reasonable so far as the Independent Shareholders

are concerned and the transactions contemplated thereunder are in the interests of the

Company and the Shareholders (including the Independent Shareholders) as a whole.

Accordingly, the Independent Financial Adviser recommends the Shareholders to vote in

favour of the proposed resolution(s) approving the Acquisition, the [REDACTED] and the

Creditors’ Schemes contemplated under the Restructuring Agreement (as amended and

restated by the Amended and Restated Restructuring Agreement and the Second Amended

and Restated Restructuring Agreement), the [REDACTED] and the [REDACTED] at the

EGM.

The issuance of this circular does not mean that trading in the Shares will be resumed

and [REDACTED] of the Consideration Shares, the Creditors Shares and the

[REDACTED], if applicable, will be approved by the Stock Exchange.

FURTHER INFORMATION

Your attention is drawn to other sections of and appendices to this circular, which

contain further information on the Target Group and other information required to be

disclosed under the Takeovers Code and the Listing Rules.

Yours sincerely,

Natural Dairy (NZ) Holdings Limited

(In Provisional Liquidation)

Yat Kit Jong

Simon Conway

Joint and Several Liquidators

Acting as agents without personal liability


– 72 –




Documents

NATURAL DAIRY (NZ) HOLDINGS LIMITED (In Provisional