Led International Holdings Regulatory News (LED)

22 December 2014

LED International Holdings Limited

("LED" or the "Company")

Proposed acquisition of Shenzhen Ruihetai Industry Co. Limited

Suspension of trading of the Company's shares

Related party transaction

The board of directors of LED (the "Board") is pleased to announce that on 22 December 2014 the Company entered into a conditional agreement under which it or a member of its Group will acquire the majority of the issued share capital of Shenzhen Ruihetai Industry Co. Limited ("RHT") (the "Acquisition") from Ms. Li Sai Ying and Mr. Lin Zhong (together, the "Vendors") at a maximum consideration of RMB11,259,903 (approximately £1,136,000) (the "Consideration"). The Consideration is to be satisfied by issue and allotment of new shares in LED and through a three-year non-interest bearing convertible loan note.

LED's Chief Executive Officer, Stephen Chan, said: "I am delighted to announce this significant acquisition of Shenzhen Ruihetai. Shenzhen Ruihetai has a very strong distribution network through which we will be able to promote our green products and diversify our product offerings. Also, the readiness of the vendors in committing to a profit guarantee is a testament to their confidence in Shenzhen Ruihetai and its future potential."

Background to RHT

RHT is a large-scale grain enterprise incorporated in the People's Republic of China (the "PRC"). It is mainly engaged in the business of rice storage, processing, distribution, and the wholesale and retail sale of rice. It is designated by the Shenzhen Municipal Government as a provider of food supplies in the event of a state of emergency in Shenzhen. RHT has invested heavily in the latest technology and introduced advanced rice processing equipment to ensure the quality and safety of its products.

RHT has long established relationships with business partners in major grain-producing areas in Northeast China, Hunan, Hubei, Jiangxi, Jiangsu, Guangxi as well as internationally in Thailand. RHT has established rice counters in major shopping malls, supermarkets and chain stores in residential areas throughout the PRC and, in doing so, RHT has built a strong and reputable food distribution network in the PRC. For the period from 1 January 2014 to 30 September 2014, RHT generated revenues of RMB59,077,179 (unaudited) (approximately £6,077,000) and a net profit after taxation of RMB50,170 (unaudited) (approximately £5,200).

Reasons for the acquisition

The energy saving and environmental protection industry ranks top among the seven strategic emerging industries outlined in the PRC's Five-Year Plan. In view of rising national power consumption, the Chinese government has introduced initiatives to reduce energy consumption and carbon emissions which will lead to increasing opportunities for providers of energy saving and carbon reduction products, services and solutions within the PRC.

The Company has adopted a conservative but proactive approach towards entering into the growing energy management contract ("EMC") market under the brand name "Green Pearl" for the past three years. In addition to the supply of energy saving solutions, the Company has also been considering the introduction of other carbon reduction solutions to offer a total carbon reduction solution to the PRC. The Board envisages that the Acquisition will enable the Group to take advantage of the operating cash flows generated from RHT and market its "Green Pearl" green products through RHT's distribution network in the PRC.

The Board believes that the acquisition of RHT will give LED immediate access to RHT's extensive distribution network in the PRC through which LED will be able to promote its EMC business.

Summary of the Acquisition

¡P The Company, or a nominated member of its group, shall acquire majority control over RHT, the exact shareholding of which is to be determined and is subject to the local laws and regulations governing foreign investments in PRC companies.

¡P The maximum Consideration to be paid by LED for RHT is the net asset value of RHT as at 30 September 2014 determined by an independent accounting firm in Hong Kong. If LED were to acquire 100 per cent. of RHT, this would amount to RMB11,259,903 (approximately £1,136,000).

¡P The Consideration is to be satisfied by the issue of up to 334,200 new ordinary shares in the Company (the "Shares") at HKD12.49806 per share and the issue of a three year, non-interest bearing convertible loan note (the "Loan Notes") in the amount of up to HKD9,746,009. The Loan notes are convertible into ordinary shares in LED at a price of HK$12.49806. The price per Share represents the closing mid-price of 102 pence on 19 December 2014.

¡P The Company has agreed to provide a working capital loan to RHT in the amount of RMB50 million to support the business development of RHT and the Vendors will continue to assume responsibility for the management and operation of RHT. In order to finance this working capital loan, the Company intends to raise additional funding through equity and/or debt financing.

¡P As part of the Acquisition, the Vendors will provide a profit guarantee that the annual net profit of RHT shall be at least RMB70 million for the three-year period after the completion of the Acquisition, such amount shall exclude the green products introduced by the Company and distributed through RHT within the PRC during the three-year period. In the event that this profit guarantee is not met, the Consideration payable by LED will be reduced.

¡P The Vendors have agreed to enter into a lock-in and orderly market agreement with the Company and its Nominated Adviser, Allenby Capital Limited, under which the Vendors have agreed not to sell or otherwise dispose of any of their Shares during for the three-year period following the completion of the Acquisition.

¡P To comply with the local laws and regulations governing foreign investments in PRC companies, the exact structure and terms of the Acquisition and the Loan Notes are subject to the legal opinion of PRC lawyers.

Reverse takeover and suspension of trading in the Company's shares

By reason of the size of RHT in relation to the Company, the Acquisition is classified as a reverse takeover under the AIM Rules for Companies. The AIM Rules require that completion of the Acquisition is conditional, amongst other things, upon and subject to the approval of the Company's shareholders, which will be sought at a general meeting of the Company, and the publication of an AIM admission document, which will be posted to the Company's shareholders as soon as it is available.

In consequence, trading in the Company's shares will be suspended from 12.00 Noon. today pending the preparation and publication of the AIM admission document and the notice of general meeting setting out the details of the Acquisition and seeking shareholder approval.

Related party transaction

As Mr. Lin Zhong is sole shareholder of Speedy Dragon Holdings Limited, a substantial shareholder of the Company, the acquisition of RHT constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The Company's directors, having consulted with the Company's nominated adviser, Allenby Capital Limited, consider that the terms of the Acquisition are fair and reasonable insofar as the Company's shareholders are concerned.

**Ends**

For further information:

Notes to Editors:

LED International Holdings Limited and its subsidiaries specialise 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.

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