Discloseable Transaction - Acquisition of Vessels

24 April 2019

The Board is pleased to announce that, the First Purchaser and the Second Purchaser, both approximately 55.69% indirectly owned subsidiaries of the Company, entered into respective agreements with the First Vendor and the Second Vendor in respect of the acquisition of the First Vessel and the Second Vesselrespectivelyon 23 April 2019.The aggregate purchase priceof the First Vessel and the Second Vesselis US$12,000,000 (approximately HK$93,600,000). The First Vessel will be delivered by the First Vendorto the First Purchaser between 2 May 2019 and 7 June2019. The Second Vessel will be deliveredby the Second Vendorto the Second Purchaser between2 May 2019 and31 May2019.

Under the Listing Rules, the Acquisition of Vessels constitutes a discloseable transaction for the Company.

The Acquisition
The First Purchaserentered into theFirstAgreement with the First Vendoron23April 2019for the acquisitionof the First Vessel at a purchase priceof US$5,750,000 (approximately HK$44,850,000).

The First Vessel will be delivered by theFirstVendor to theFirstPurchaser between2 May 2019 and 7 June 2019.

The Second Purchaserentered into theSecondAgreement with the Second Vendor on 23April 2019 for the acquisition of the Second Vessel at a purchase priceof US$6,250,000 (approximately HK$48,750,000).

The SecondVessel will be delivered by theSecondVendor to theSecond Purchaser between 2 May 2019 and 31 May 2019.

The First Agreement and the Second Agreement are not inter-conditional.

Information on the Group and the purchasers
The principal activity of the Company is investment holding and the principal activities of its subsidiaries are international ship charteringand ship owning.The First Purchaseris a ship owning company and a wholly-owned subsidiary of Jinhui Shipping, which is in turn an approximately 55.69% owned subsidiary of the Company as at date of this announcement.

The principal activities of the First Purchaser are ship owning and chartering.The Second Purchaseris a ship owning company and a wholly-owned subsidiary of Jinhui Shipping, which is in turn an approximately 55.69% owned subsidiary of the Company as at date of this announcement.The principal activities of the Second Purchaser are ship owning and chartering.

Vendors
The First Vendor is ECLAT NAVIGATION S.A., a company incorporated in Liberia and is the registered owner of the First Vessel. Its principal activity is the owning of the vessel for international maritime trade.The Second Vendor is CIMA MARINE CORP., a company incorporated in Liberia and is the registered owner of the Second Vessel. Its principal activity is the owning of the vessel for internationalmaritime trade.

To the best of the Boardís knowledge, information and belief having made all reasonable enquiry, the First Vendor and the Second Vendorand their ultimate beneficial ownersarethird partiesindependent of the Company and its connected persons.

Vessels
The First Vessel is a Supramaxof deadweight 50,354 metric tons, built in year 2001.The Second Vessel is a Supramaxof deadweight 50,220metric tons, built in year 2002.ConsiderationsUnder the First Agreement, the purchase price for the First Vessel is US$5,750,000 (approximately HK$44,850,000) and ispayable by the First Purchaser as follows:

(1) an initial deposit of US$575,000 (approximately HK$4,485,000) will be payable by the FirstPurchaser within three banking days after the datethat (i) the signing of the First Agreement; (ii) the signing of escrow agreement in respect of the initial deposit to be lodged with the escrow agent; and (iii) the confirmation from the escrow agent confirming the account is ready to receive the initial deposit; and

(2) the balance of US$5,175,000 (approximately HK$40,365,000) will be payable by the First Purchaser on the delivery of the First Vessel which will take place between 2 May 2019 and 7 June 2019.

Under the Second Agreement, the purchase price of the Second Vesselis US$6,250,000 (approximately HK$48,750,000) and ispayable by theSecond Purchaser as follows:

(1) an initial deposit of US$625,000(approximately HK$4,875,000)will be payable by the Second Purchaser within three banking days after the datethat (i) the signing of the Second Agreement; (ii) the signing of escrow agreement in respect of the initial deposit to be lodged with the escrow agent; and (iii) the confirmation from the escrow agent confirming the account is ready to receive the initial deposit;and

(2)the balance of US$5,625,000 (approximately HK$43,875,000) will be payable by the Second Purchaser on the delivery of the Second Vessel which will take place between 2 May 2019 and 31 May 2019.

The purchase price for the First Vessel and the Second Vessel will bepayable by cash in United States Dollars.Each of the purchase pricesof the First Vessel and the Second Vessel was determined by reference to market intelligence the Company has gathered from shipbrokers and its own analysis of recently concluded sale and purchase transactions of vessels of comparable size and year of builtin the market, and on the basis ofarmís length negotiationswith the respective vendors. We observe and monitor the sale and purchase market of second hand vessels, including recent market transactions of similar vessels between willing sellers and willing buyers in that prevailing time presuming the vessel free from all registered encumbrances, maritime liens and all debts, free of charter or any contract of employment, for cash payment on normal sale terms at that particular of time. However, as each vessel is never identical, we will take into account the individual specification, maintenance quality and conditions of each individual vessel toconsiderits purchase.The Directors consider that each of the purchase pricesis fair and reasonable and the Acquisitionof Vesselsis in the interests of theCompany and its shareholdersas a whole.

Reasons For Theacquisition
The Groupís principal activities are international ship charteringandship owning. Both the First Vessel and the Second Vessel are grabs fittedSupramaxesfor the transportation of dry bulk commodities. The Directors and senior management have been reviewingthe individual specification, maintenance quality and conditions of each of the vessels and considers the purchase prices of thesevessels are highly attractive. The Acquisition of Vessels will enable the Group to further expand the Groupís overall cargo carrying capacity while minimizing risks of over allocation of capital to additional tonnages due to changes in maritimeregulations going forward. The vessels areexpected to generate steady and recurring stream of income for the Group. The Group currently owns eighteen dry bulk vessels which include two Post-Panamaxes and sixteengrabs fitted Supramaxes. Total carrying capacity will be increased by 100,574 metric tons to 1,186,648 metric tons after the completion of the acquisition of the First Vessel and the Second Vessel.

It is currently expected that approximately 70% of the purchase prices of the First Vessel and the Second Vesselwill be funded by arranged and undrawn loan facilities andremaining 30% will be funded by internal resources of the Grou

Jinhui Shipping and Transportation Limited