CLSA Limited: China Boqi Environmental : Document on Display-Letter from CLSA Limited

LETTER FROM CLSA LIMITED CLSA LIMITED 18/F One Pacific Place 88 Queensway Hong Kong 29 November 2024 To the Shareholders: Dear Sir or Madam, CONDITIONAL VOLUNTARY CASH OFFER BY CLSA LIMITED ON BEHALF OF THE COMPANY TO BUY-BACK UP TO 150,858,120 SHARES AT A PRICE OF HK$1.20 PER SHARE APPLICATION FOR WHITEWASH WAIVER AND NOTICE OF EGM INTRODUCTION On 23 October 2024, the Board announced that a conditional voluntary cash offer would be made by CLSA Limited on behalf of the Company to buy-back, subject to fulfilment of the Conditions, up to the Maximum Number, being 150,858,120 Shares, representing approximately 15.00% of the issued share capital of the Company as at the Latest Practicable Date at a cash consideration of HK$1.20 per Share. The Shares to be bought-back by the Company will not exceed the Maximum Number and subject to the Minimum Number, being 100,572,079 Shares. If the Offer is fully accepted, it will result in the Company paying HK$181,029,744 in aggregate to the Accepting Shareholders, which will be paid in cash. This letter sets out details of the terms of the Offer. Further details of the terms and conditions of the Offer are set out in Appendix I to this Offer Document and the accompanying Form of Acceptance. Your attention is drawn to the "Letter from the Board" as set out on pages 8 to 22 of this Offer Document. You are also strongly advised to read the "Letter from the Independent Board Committee" as set out on pages 36 to 37 of this Offer Document which contains its recommendation to the Independent Shareholders in respect of the Offer and the Whitewash Waiver, and the "Letter from Gram Capital" as set out on pages 38 to 58 of this Offer Document containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the Offer and the Whitewash Waiver. - 1 - LETTER FROM CLSA LIMITED TERMS OF THE OFFER The Offer is being made by CLSA Limited on behalf of the Company subject to fulfilment of the Conditions to buy-back the Shares on the following basis up to the Maximum Number, being 150,858,120 Shares. For every Share HK$1.20 in cash All Shareholders are entitled to accept the Offer by submitting the Forms of Acceptance for the sale of any number of their Shares to the Company. The principal terms of the Offer are as follows: CLSA Limited will make the Offer to the Shareholders on behalf of the Company to buy-back up to the Maximum Number of Shares at the Offer Price; the Shareholders may accept the Offer in respect of any number of their Shares at the Offer Price up to their entire shareholding (subject to the procedures for scaling down as described under the section headed "Other Terms of the Offer" below); the Offer is conditional upon valid acceptances being received (and not, where permitted, withdrawn) in respect of the Minimum Number (i.e. 100,572,079 Shares) at or before 4:00 p.m. (Hong Kong time) on the First Closing Date, provided that the Company shall buy-back Shares tendered by the Shareholders up to the Maximum Number (i.e. 150,858,120 Shares) subject to the fulfillment of the other Conditions; all Shares validly tendered will be bought-back to the extent that the aggregate number of Shares repurchased pursuant to the Offer will not thereby exceed the Maximum Number. If the number of Shares validly tendered exceeds the Maximum Number, the number of Shares to be bought-back from each Accepting Shareholder will be reduced proportionally so that the number of Shares bought-back by the Company in aggregate is equal to the Maximum Number. Further details of the procedures for scaling down are described under the section headed "Other Terms of the Offer" below; Form of Acceptance duly received by or on behalf of the Company will become irrevocable and cannot be withdrawn unless in accordance with the Takeovers Code; Shares will be bought-back for cash, free of commission, levies and dealings charges, save that the amount of stamp duty due on the Shares bought-back attributable to the seller will be deducted from the amount payable to the Accepting Shareholders and will be paid by the Company on behalf of the Accepting Shareholders; - 2 - LETTER FROM CLSA LIMITED Shares bought-back will be cancelled and will not be entitled to any dividend declared for any record date set subsequent to the date of their cancellation. Accordingly, the issued share capital of the Company will be diminished by the nominal value of the Shares being bought-back in the event of cancellation of Shares bought-back; and Shares will be bought-back free from all liens, charges, encumbrances, equitable interests, rights of pre-emption or other third party rights of any nature. Accordingly, the submission of a Form of Acceptance by an Accepting Shareholder will be deemed to constitute a warranty by that Accepting Shareholder to CLSA Limited, CITICS HK and the Company that the Shares are being sold free from all liens, charges, encumbrances, equitable interests, rights of pre-emption or other third party rights of any nature. In accordance with the Share Buy-backs Code, the Offer will be subject to the approval by the Independent Shareholders in a general meeting by a majority of votes by way of poll and will also be subject to the satisfaction of the other Conditions. If the Offer is declared unconditional, the Shareholders will be able to tender their Shares for acceptance under the Offer for a period of 14 days thereafter. THE OFFER PRICE The Offer Price of HK$1.20 values the entire issued share capital of the Company as at the Latest Practicable Date (being 1,005,720,799 Shares) at approximately HK$1,206.86 million: The Offer Price of HK$1.20 in cash per Share represents: a premium of approximately 16.50% over the closing price of HK$1.03 per Share as quoted on the Stock Exchange on 4 October 2024 (being the Last Trading Day); a premium of approximately 37.30% over HK$0.87 which is the average closing price per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day; a premium of approximately 52.67% over HK$0.79 which is the average closing price per Share as quoted on the Stock Exchange for the 10 consecutive trading days up to and including the Last Trading Day; a premium of approximately 66.82% over HK$0.72 which is the average closing price per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day; - 3 - LETTER FROM CLSA LIMITED a premium of approximately 69.97% over HK$0.71 which is the average closing price per Share as quoted on the Stock Exchange for the 60 consecutive trading days up to and including the Last Trading Day; a premium of approximately 71.28% over HK$0.70 which is the average closing price per Share as quoted on the Stock Exchange for the 90 consecutive trading days up to and including the Last Trading Day; a premium of approximately 36.36% over the closing price of HK$0.88 per Share as quoted on the Stock Exchange on 26 November 2024 (being the Latest Practicable Date); a premium of approximately 36.67% over HK$0.88 which is the average closing price per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Latest Practicable Date; a premium of approximately 37.30% over HK$0.87 which is the average closing price per Share as quoted on the Stock Exchange for the 10 consecutive trading days up to and including the Latest Practicable Date; a premium of approximately 34.03% over HK$0.90 which is the average closing price per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Latest Practicable Date; a premium of approximately 51.20% over HK$0.79 which is the average closing price per Share as quoted on the Stock Exchange for the 60 consecutive trading days up to and including the Latest Practicable Date; a premium of approximately 59.08% over HK$0.75 which is the average closing price per Share as quoted on the Stock Exchange for the 90 consecutive trading days up to and including the Latest Practicable Date; a discount of approximately 65.01% to the consolidated and unaudited net asset value attributable to the owners of the parent of the Company as at 30 June 2024 of approximately RMB3.14 per Share (equivalent to approximately HK$3.43 per Share based on the exchange rate of HK$1:RMB0.9166) pursuant to the latest consolidated and unaudited financial statements of the Company. The Offer Price was determined after taking into account, among other things, the historical prices of the Shares traded on the Stock Exchange, historical financial information of the Group and the prevailing market conditions and sentiments, and with reference to the share buy-back transactions of companies listed on the Main Board of the Stock Exchange in recent years. - 4 - LETTER FROM CLSA LIMITED HIGHEST AND LOWEST SHARE PRICES During the Relevant Period, the highest closing price of the Shares as quoted on the Stock Exchange was HK$1.03 on 3 October 2024 and 4 October 2024, and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.61 on 2 July 2024 and 5 July 2024. CONFIRMATION OF FINANCIAL RESOURCES The consideration for the Offer, being (a) a minimum of HK$120,686,494.8 assuming only the Minimum Number of Shares has been tendered for acceptance; or (b) a maximum of HK$181,029,744 assuming the Maximum Number of Shares has been tendered for acceptance, will be paid in cash and will be funded by internal resources of the Group. CITICS HK, being the financial adviser to the Company, is satisfied that sufficient financial resources are available to the Company to satisfy the consideration for the full acceptance of the Offer as described above. CONDITIONS OF THE OFFER The Offer is conditional upon fulfilment of all of the following conditions on or before the Long Stop Date: valid acceptances being received (and not, where permitted, withdrawn) in respe