DQE.L Regulatory News (DQE)

8 January 2016

DQ Entertainment plc ("DQE" or the "Company")

Update regarding senior secured convertible bonds

The Board of DQE, a leading animation, gaming, live action entertainment production and distribution company, announces a number of updates in respect of the senior secured convertible bonds issued by the Company's subsidiaries, DQ Entertainment (Mauritius) Limited ("DQE Mauritius") and DQ Entertainment (Ireland) Limited ("DQE Ireland"), the details of which were announced on 9 December 2014 (the "Bonds"). Pursuant to a transfer on 16 June 2015, the Bonds are currently held by OL Master (Singapore) Pte. Limited (the "Bondholder"), an investment company managed by OCP Asia (Hong Kong) Limited.

Amendments to the terms of the Bonds

On 30 July 2015, the terms of the bond instrument dated 9 December 2014 between DQE Mauritius and the Bondholder (the "DQE Mauritius Bond Instrument") and the bond instrument dated 9 December 2014 between DQE Ireland, DQE Mauritius and the Bondholder (the "DQE Ireland Bond Instrument") were both amended by way of a deed of amendment and restatement (the "Deed of Amendment"). The main terms of the Deed of Amendment were:

1. To provide an extension of the option period during which the Bondholder can provide a second tranche of US$15 million of Bonds to 18 months from the closing date, rather than 12 months, and therefore this option period is extended to 9 June 2016. To date, approximately US$ 35 million has been drawn under the Bonds.

2. In consideration for the extension of the option period as referenced in paragraph 1 above, the Company agreed to include the following new events of default as follows:

a. Tapaas Chakravarti (the Chairman and CEO of DQE) ceasing at any time to be a director or employee of the Company, DQE Mauritius, DQE Ireland or DQ Entertainment (International) Ltd ("DQE India") or being directly involved in the management of such companies.

b. There being a change in the composition of the board of directors of DQE Mauritius, DQE India or DQE Ireland without the prior consent of the majority bondholders (being the holders of two thirds of the Bonds outstanding).

c. There being a change in the majority of the board of directors of the Company without the prior consent of the majority bondholders (being the holders of two thirds of the Bonds outstanding).

Events of Default under the Bonds

The Bondholder has stated that certain events of default have occurred under the DQE Mauritius Bond Instrument and the DQE Ireland Bond Instrument, on grounds which are under consideration by the Company. The Company is discussing with the Bondholder in good faith to resolve the situation and come to a resolution amicably and expeditiously.

The Company will provide a further announcement once it reaches a definitive resolution with the Bondholder.

Enquiries:

- Ends -