Led International Holdings Regulatory News (LED)

LED International Holdings Limited

("LED" or the "Company")

Update on proposed acquisition of

Shenzhen Ruihetai Industry Co. Limited,

formation of joint venture

and

restoration of trading in LED's shares

The board of directors of LED (the "Board") is pleased to announce an update in relation to its proposed acquisition of Shenzhen Ruihetai Industry Co. Limited ("RHT"), further details of which are contained in the announcement on 22 December 2014 (the "Acquisition"). The Acquisition constitutes a reverse takeover under the AIM Rules and, accordingly, the ordinary shares of the Company were temporarily suspended pending, amongst other things, the approval of the Acquisition by the Company's shareholders and the publication of an AIM admission document.

Proposed acquisition update

The Company has received a legal opinion from its People's Republic of China ("PRC") lawyers advising on the structure of the Acquisition, which, as announced on 22 December 2014, is to be determined and is subject to the local laws and regulations governing foreign investments in PRC companies. Since that announcement, the Board has been in discussion with the vendors of RHT, Ms. Li Sai Ying and Mr. Lin Zhong (together the "Vendors"), and has consulted its PRC lawyers regarding the appropriate structure of the Acquisition.

The PRC lawyers have advised that the industry area in which RHT operates falls under the category of "restricted foreign investment industries". Under the current Foreign Investment Laws, foreign investors cannot invest directly in Chinese companies that operate in sensitive industries prohibited or restricted to foreign investments. However, foreign investors can take effective control of the restricted foreign investment industries through the use of variable interest entity ("VIE") arrangements. The current proposed structure of the Acquisition is that it would be effected through the use of a VIE arrangement. VIE arrangements have been used for certain companies operating in the PRC for the last 10 years in order to enable foreign investments into certain restricted industries within the PRC.

However, subsequent to the Company entering into terms relating to the Acquisition, on 19 January 2015 the PRC Ministry of Commerce announced a review of VIE arrangements and published a draft of a new Foreign Investment Law to define foreign investment in terms of the "actual controller" of a PRC company. There is no proposed grandfathering provision for the existing foreign controlled VIE arrangements in the restricted industries. Therefore, if enacted, the new Foreign Investment Law would increase the risks for the Company in proceeding with the Acquisition by way of a VIE arrangement since it may retrospectively invalidate the structure of the Acquisition.

Having considered the legal and regulatory implications of various options of the structure of the Acquisition, the Board has decided not to proceed with the Acquisition but instead to form a new joint venture with the Vendors (the "Joint Venture"), as set out below.

Formation of new joint venture

The Joint Venture will seek to establish a new distribution business, in part by utilising the Vendor¡¦s network of long established relationships with business partners in Northeast China, Hunan, Hubei, Jiangxi, Jiangsu and Guangxi as well as internationally in Thailand, gained through their operation of RHT, and through the establishment of new relationships. The Joint Venture will primarily distribute rice and other food substances and will look to establish counters in major shopping malls, supermarkets and chain stores in residential areas throughout the PRC. The Company envisages that through the Joint Venture LED will be able to leverage the distribution network to market its "Green Pearl" green products.

The principal terms of the Joint Venture are as follows:

Further announcements in relation to the Joint Venture will be made at the appropriate time.

Restoration of trading

On the basis that the Acquisition is no longer proceeding, the temporary suspension to trading in the Company's ordinary shares will be lifted with effect from 7:30am today and trading in the Company's ordinary shares will resume.

**Ends**

For further information:

Notes to Editors:

LED International Holdings Limited and its subsidiaries specialize in the provision of EMC contracts under which the Group installs energy saving products in its customers¡¦ premises, including lighting and reactance filtering equipment supplied by the Group, and the subsequent savings made by the customers in their electricity charges are then shared between the Group and the customers thereby enabling the Group to generate recurring revenue rather than one-off sales revenue. Historically, the Group¡¦s business has been the development, manufacture and sale of low-powered light-emitting diode (¡§LED¡¨) display screens and modules.

Under EMC contracts, the Group provides energy efficiency solutions, including LED lighting, reactance filtering energy saving and other energy efficiency solutions.Specifically, the Group overhauls its customers¡¦ existing lighting and power consumption systems (which are based on traditional lighting technology and power generation equipment) with proprietary LED lighting products, reactance filtering equipment and other solutions provided by the Group. These energy efficiency products are installed in customers¡¦ premises. The Group bears all the upfront costs associated with the supply and installation of the energy efficiency solutions and these costs are then recouped by sharing in the monthly energy savings generated by the customers¡¦ use of the energy efficiency solutions over the period of the contracts. The Group receives revenue from customers on several different payment terms including on a pre-payment, monthly or quarterly basis.

The Company¡¦s wholly-owned direct subsidiary, Green Pearl Leasing (China) Co. Ltd. operates a lease financing business having been granted a highly sought after leasing finance licence to enable the Group to provide lease financing to customers.

For more information, please visit: http://www.led-intl.com