China Leon Inspection : PROPOSED ISSUE OF CONVERTIBLE BONDS

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

CHINA LEON INSPECTION HOLDING LIMITED

中 國 力 鴻 檢 驗 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1586)

PROPOSED ISSUE OF CONVERTIBLE BONDS

On 12 May 2021 (after trading hours), the Company entered into the conditional CB Subscription Agreement with the Subscriber, pursuant to which the Subscriber has conditionally agreed to subscribe for and the Company has conditionally agreed to issue the Convertible Bonds.

The initial Conversion Price represents (i) a premium of approximately 5.16% over the closing price of HK$1.550 per Share as quoted on the Stock Exchange on 12 May 2021, being the date of the CB Subscription Agreement; and (ii) a premium of approximately 7.66% over the average of the closing prices of HK$1.514 per Share as quoted on the Stock Exchange for the last five

1. consecutive trading days immediately preceding 12 May 2021, being the date of the CB Subscription Agreement. The Conversion Price was arrived at after arm's length negotiations between the Company and the Subscriber, taking into account of, among others, the recent trading performance of the Shares. The Directors consider that the Conversion Price and the terms and conditions of the CB Subscription Agreement and the Convertible Bonds are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

On the assumption that the Convertible Bonds would be converted into Conversion Shares in full at the initial Conversion Price, the 30,674,846 Conversion Shares represent approximately 7.67% of the existing issued share capital of the Company and approximately 7.12% of the issued share capital of the Company as to be enlarged by the allotment and issue of the Conversion Shares.

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CB SUBSCRIPTION AGREEMENT

On 12 May 2021 (after trading hours), the Company entered into the conditional CB Subscription Agreement with the Subscriber, pursuant to which the Subscriber has conditionally agreed to subscribe for and the Company has conditionally agreed to issue the Convertible Bonds.

Date:

12 May 2021 (after trading hours)

Parties:

1. The Company as issuer
2. The Subscriber as subscriber

The Subscriber

The Subscriber is an open-end investment company incorporated in the Cayman Islands with limited liability. It is managed by RAYS Capital Partners Limited, an Independent Third Party, licensed to carry out Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the Subscriber and its ultimate beneficial owner(s) are Independent Third Parties.

Principal Terms of the Convertible Bonds

Issuer:	The Company
Status:	The Convertible Bonds constitute general and unsecured obligations
	of the Company and rank equally among themselves and pari passu
	with all other present and future unsecured and unsubordinated
	obligations of the Company.
Principal Amount:	HK$50,000,000
Issue Price:	100% of the principal amount of HK$50,000,000 in cash
Coupon:	2% per annum payable in arrears annually
Maturity Date:	The fifth anniversary of the date of issue of the Convertible Bonds

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Conversion Price: The Convertible Bonds shall be converted at the Conversion Price. Upon issue of the Convertible Bonds, the initial Conversion Price will be HK$1.63 per Conversion Share

The Conversion Price shall be adjusted as provided in the Convertible

Bonds instrument in each of the following cases:

1. an alteration of the number of the Shares by reason of any consolidation or subdivision;
2. an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account, contributed surplus account or capital redemption reserve fund); For the avoidance of doubt, the adjustment is applicable to the proposed issue of bonus shares by the Company as announced in its annual results announcement dated 31 March 2021;
3. a capital distribution (as defined in the Convertible Bonds instrument) being made by the Company, whether on a reduction of capital or otherwise, to holders of the Shares in their capacity as such;
4. an offer or grant being made by the Company to holders of Shares by way of rights or of options or warrants to subscribe for new Shares at a price which is less than 95 per cent. of the market price;
5. an issue wholly for cash or for reduction of liabilities being made by the Company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total effective consideration per Share (as defined in the Convertible Bonds instrument) initially receivable (or in the case of reduction in liabilities, the amount of liabilities to be reduced) for such securities is less than 95 per cent. of the market price, or the terms of any such rights of conversion or exchange or subscription attached to any such securities being modified so that the said total effective consideration per Share initially receivable for such securities is less than 95 per cent. of the market price;

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1. an issue being made by the Company wholly for cash or for reduction of liabilities of Shares at a price per Share less than 95 per cent. of the market price;
2. an issue being made by the Company of Shares for the acquisition of asset at a total effective consideration per Share (as defined in the Convertible Bonds instrument) less than 95 per cent. of the market price; and
3. an issue wholly made by the Company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares for the acquisition of asset, if in any case the total effective consideration per Share (as defined in the Convertible
   Bonds instrument) initially receivable for such securities is less than 95 per cent. of the market price.

Conversion Rights: The holder of the Convertible Bonds shall have the right to convert their Convertible Bonds at the principal amount into Shares during the Conversion Period at the Conversion Price in effect on the Conversion Date, provided that (i) any conversion of the Convertible Bonds does not result in the holders of the Convertible Bonds and/or the parties acting in concert with any of them and/or their respective associates being interested in such percentage as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer obligation under Rule 26 of the Takeovers Code on the part of the holder of the Convertible Bonds which exercised the conversion rights); and (ii) any conversion of the Convertible Bonds does not result in the public float of the Shares being less than 25% (or any given percentage as required by the Listing Rules) of the issued Shares of the Company

Conversion Period: The holder of the Convertible Bonds will have the right to convert the whole or part of the principal amount of the Convertible Bonds into Conversion Shares from the date falling six months of the date of issue of the Convertible Bonds to up to and including the date which is 3 days prior to the Maturity Date (or if the Maturity Date is not a Business Day, the Business Day immediately preceding the Maturity Date) (the "Conversion Period")

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Redemption Amount: The Company shall, on the Maturity Date, redeem the then outstanding Convertible Bonds, at 130% of the then outstanding principal amount of those Convertible Bonds or any part thereof together with outstanding interest accrued thereon

Bondholder's early

The Bondholder(s) shall have the right at its option, to require the

• redemption rights: Company to redeem all or part of the Convertible Bonds together with any then outstanding unpaid interest by giving the Company a notice of redemption in accordance with the terms of the Convertible Bonds on the dates, including third anniversary, the day falling three years and six months, the fourth anniversary and the day falling four years and six months of the issue date of the Convertible Bonds with redemption price at 118%, 121%, 124% and 127% of the outstanding principal amount of the Convertible Bonds respectively.

Voting:	The Bondholder shall not be entitled to attend or vote at any meetings
	of the Company by reason only of it being a holder of the Convertible
	Bonds
Listing:	No application will be made for the listing of the Convertible Bonds
	on the Stock Exchange or any other stock exchange.
	Application will be made to the Stock Exchange for the listing of and
	permission to deal in the Conversion Shares to be allotted and issued
	upon exercise of the conversion rights attached to the Convertible
	Bonds.
Transferability:	The Convertible Bonds may be assigned or transferred to any
	transferee subject to prior notification to the Company. The
	Convertible Bonds may not be assigned or transferred to any
	connected person of the Company (as defined under the Listing
	Rules) without prior written consent of the Company.

Based on the initial Conversion Price of HK$1.63 per Conversion Share, a maximum number of 30,674,846 Conversion Shares will be allotted and issued upon exercise of the conversion rights attached to the Convertible Bonds in full, which represent: (i) approximately 7.67% of the issued share capital of the Company as at the date of this announcement; and (ii) approximately 7.12% of the issued share capital of the Company as to be enlarged by the allotment and issue of the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Bonds in full.

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