Pcg Entertainment Plc Regulatory News (PCGE)

ANNOUNCEMENT TO BE MADE BY THE AIM APPLICANT PRIOR TO ADMISSION IN ACCORDANCE WITH RULE 2 OF THE AIM RULES FOR COMPANIES ("AIM RULES")

COMPANY NAME:

PCG Entertainment PLC (the "Company" or "PCG Entertainment" or "PCGE" or "the Group")

COMPANY REGISTERED OFFICE ADDRESS AND IF DIFFERENT, COMPANY TRADING ADDRESS (INCLUDING POSTCODES) :

Registered Office & Head Office

G1 Haven Court

5 Library Ramp

Gibraltar

COUNTRY OF INCORPORATION:

Gibraltar

COMPANY WEBSITE ADDRESS CONTAINING ALL INFORMATION REQUIRED BY AIM RULE 26:

www.pcge.com

COMPANY BUSINESS (INCLUDING MAIN COUNTRY OF OPERATION) OR, IN THE CASE OF AN INVESTING COMPANY, DETAILS OF ITS INVESTING POLICY). IF THE ADMISSION IS SOUGHT AS A RESULT OF A REVERSE TAKE-OVER UNDER RULE 14, THIS SHOULD BE STATED:

The acquisition of Center Point Development Corp ("CPDC") by PCG Entertainment will result in a reverse takeover under the AIM Rules.

PCGE is a Gibraltar incorporated holding company which, through the PCGE group of companies (the "PCGE Group"), via a wholly foreign owned enterprise structure ("WFOE") and variable interest entity arrangements ("VIE")1 over a PRC subsidiary, Sihai Geju, holds four licences (the "Licenses") relating to the operation of online games based in the People's Republic of China ("PRC"). In addition, following completion of the acquisition and readmission to trading on AIM, the Company will wholly own CPDC which is a profitable distributor of gaming software and ancillary services in Asia. The acquisition of CPDC is complementary to the Group's existing interests, in particular HLC which is an authorised sports lottery reseller and HPC which offers poker tournaments on the Chinese mainland, in both of which the Group has options to acquire minority stakes.

The PCGE Group

The PCGE Group is seeking PRC governmental and local authority approval to utilise the Licences in partnership with two Hainanese firms, Hainan Huan'ao Culture Media Co., Ltd. ("HPC") and Hainan Huan'ao Sports Industry Co., Ltd. ("HLC"), to hold online poker tournaments and create national lottery products including lottery games. The Group also intends to exploit the Licences to expand the Group's business into premium rate telephony, virtual currencies and the distribution of games and other media through the internet and other channels. These channels may include broadcast, print and mobile and other areas where the Directors believe that there are opportunities to grow shareholder value.

The Directors have between them many years of business experience in the areas of acquisitions, accounting and corporate and financial management as well as experience of media, gaming and marketing gained in Europe, the Middle East and the Asia Pacific region. Accordingly, the Board believes that it is well placed to leverage the Licences and this experience to achieve its goal of becoming one of the top online gaming companies in the PRC.

Sihai Geju holds the Licences relating to the internet operation of online games and has given notice to exercise options to acquire 10 per cent. of each of HLC and HPC. HPC operates poker tournaments in Hainan Province in China and HLC is licensed by the Hainan Sports Lottery Management Centre to be a sales agent for sports lottery products. The sale of all lottery products in China is currently under review and the Board believes that this will lead to a clearer and simpler regulatory regime in future. In addition, the Group will seek to roll out its business strategy in partnership with HPC and HLC.

Following completion of the acquisition of 10 per cent. of each of HLC and HPC, the Group will be entitled to receive its pro rata proportion of dividends payable by HPC and HLC and subject to the obtaining of all licences and permits required by the applicable law for the operation of online poker games, any gross revenue generated from the online poker game business shall be allocated between Sihai Geju and HPC in the proportion of 10:90 (i.e. 10% allocated to Sihai Geju and 90% allocated to HPC).

CPDC

CPDC was incorporated in Belize on 23 December 2008 by Amber Nominees Limited for Heng Jui Lin, a significant shareholder in the Company and brother of Kung Min Lin, Non-Executive Chairman of the Company. CPDC's business was subsequently established and commenced trading in 2013 (having entered into a usage rights agreement with Kenmore Venture Limited ("Kenmore") in August 2012) distributing third party gaming products and customer relationship management services to agents in Asia. Heng Jui Lin has been the sole director of CPDC since incorporation and, with assistance from Kung Min Lin, has been responsible for the relationships with all of CPDC's contracted agents.

CPDC currently acts as agent, distributing and offering for sale via a Usage Rights Agreement: (i) a multi-level agency system supplied by Kenmore, which allows the gaming platform operator to manage cash flows and accounts; and (ii) a portfolio of e-games which are also supplied by Kenmore, via its brand name Total e-Games, their agent for the Asian market. The agency system and the e-games can be supplied together to the gaming platform operator or (subject to relevant permissions being obtained when appropriate from Kenmore) can be integrated with alternative gaming solutions. Accordingly, CPDC also provides assistance with integration as well as providing technical support.

CPDC is a profitable distributor of gaming software and ancillary services in Asia. The acquisition of CPDC is complementary to the Group's existing interests, in particular HLC which is an authorised sports lottery reseller and HPC which offers poker tournaments on the Chinese mainland, in both of which the Group has options to acquire minority stakes.

The Directors believe that the Acquisition provides additional strategic size across the PCGE Group's existing businesses' target markets and is expected to enable the leveraging and augmentation of the networks and relationships of the Directors. In addition, the Directors consider that the cash flow expected to be generated by CPDC should be transformative to the Group, bringing anticipated substantial free cash for utilisation across the Group.

The Enlarged Group's main country of operation is the PRC.

1. VIEs are investment vehicles used by foreign invested entities in the PRC to control an operating company through a series of contractual arrangements, rather than through equity ownership. Under the VIE structure, the foreign investor establishes an offshore vehicle with a domestic partner to directly or indirectly own a WFOE in the PRC. The domestic partner establishes a subsidiary operating company to apply for all the relevant operating licenses and permits. Through these contractual arrangements, the WFOE controls the operating company, allowing the foreign investor to obtain the operating company's economic benefits, as well as permitting the offshore vehicle to consolidate the WFOE's and operating company's financial statements.

On 19 January 2015, the Ministry of Commerce (the "MOFCOM") published the new draft of the Foreign Investment Law (the "Draft New Law") for public comment. The Draft New Law was accompanied by the MOFCOM's notes (the "Notes") on, among others, the background, guidelines and principle, and main content of the Draft New Law and elaboration on several issues including the treatment of existing contractual arrangements, or "VIE structures", which have been established before the effectiveness of the Draft New Law. MOFCOM proposed three possible ways to deal with an existing VIE structure, if the business in which the company is involved still belongs to restricted or prohibited foreign-entry areas according to the then effective Foreign Investment Industrial Guidance Catalogue when the Draft New Law comes into effectiveness:

(i) reporting: the structure being permitted to continue following reporting to MOFCOM of the VIE structure being ultimately controlled by a PRC investor;

(ii) verification: the structure being permitted to continue following confirmation, on the application of the foreign investor, by MOFCOM of the VIE structure being ultimately controlled by a PRC investor; and

(iii) approval: the VIE structure being permitted to continue following approval by MOFCOM.

There are no implementation rules for the verification and approval procedures of the VIE structure under the Draft New Law.

According to the Notes, the Group's VIE Arrangements may fall within the approval process if the business of Sihai Geju, HLC or HPC is identified as restricted or prohibited foreign-entry areas according to the then effective Foreign Investment Industrial Guidance Catalogue when the Draft New Law comes into effect. If such approval cannot be obtained, and/or if the contractual arrangements of the Group in relation to Sihai Geju are found to be in violation of any existing or future PRC laws, rules or regulations, the results of the Group could be materially adversely affected. As the Draft New Law is currently in the consultation stage for public comment, it is possible that there may be amendments to the Draft New Law and the Notes before its formal promulgation and implementation. In addition, such public consultation in the PRC will not be the same as it would be in the United Kingdom, and as such, it is not possible to know what the impact may be on the Group.

DETAILS OF SECURITIES TO BE ADMITTED INCLUDING ANY RESTRICTIONS AS TO TRANSFER OF THE SECURITIES (i.e. where known, number and type of shares, nominal value and issue price to which it seeks admission and the number and type to be held as treasury shares):

Admission: 1,180,438,344 new ordinary shares with a nominal value of 0.1p each

No restrictions on the transfer of securities

CAPITAL TO BE RAISED ON ADMISSION (IF APPLICABLE) AND ANTICIPATED MARKET CAPITALISATION ON ADMISSION:

New capital to be raised on Admission to AIM: n/a

Anticipated market capitalisation, approximately £61 million

PERCENTAGE OF AIM SECURITIES NOT IN PUBLIC HANDS AT ADMISSION:

38.75 per cent.

DETAILS OF ANY OTHER EXCHANGE OR TRADING PLATFORM TO WHICH THE AIM COMPANY HAS APPLIED OR AGREED TO HAVE ANY OF ITS SECURITIES (INCLUDING ITS AIM SECURITIES) ADMITTED OR TRADED:

None

FULL NAMES AND FUNCTIONS OF DIRECTORS AND PROPOSED DIRECTORS (underlining the first name by which each is known or including any other name by which each is known):

Kung Min Lin (Non-executive Chairman)

Richard O'Dell Poulden (Non-executive Deputy Chairman)

Nicholas Jonathan Michael Bryant (Chief Executive Officer)

Clive Mark Hyman (Chief Financial Officer)

Professor Michael Raymond Mainelli (Non-executive Director)

Alan David Gravett (Non-executive Director)

FULL NAMES AND HOLDINGS OF SIGNIFICANT SHAREHOLDERS EXPRESSED AS A PERCENTAGE OF THE ISSUED SHARE CAPITAL, BEFORE AND AFTER ADMISSION (underlining the first name by which each is known or including any other name by which each is known):

1. Heng Jui Lin is deemed to be interested in the 98,858,209 Ordinary Shares (or depositary interests in respect thereof) referred to above as follows:

a. 37,500,000 Ordinary Shares (or depositary interests in respect thereof) held in his own name;

b. 61,106,787 Ordinary Shares held by Kolarmy Technology Inc., a company owned and controlled by Heng Jui Lin; and

c. 251,422 Ordinary Shares held by Kolarmy Ventures Inc., a company owned and controlled by Heng Jui Lin.

Heng Jui Lin will be deemed to be interested in an additional 59,294,329 Ordinary Shares (or depositary interests in respect thereof)on Admission, referred to above, as follows:

a. 3,145,643 Ordinary Shares to be issued to Kolarmy Technology Inc., in respect of the conversion of the principal amount of US$300,000 of loan notes; and

b. 56,148,686 Ordinary Shares to be issued to Kolarmy Technology Inc., as one of the vendors of CPDC.

2. Richard Poulden is deemed to be interested in the 137,282,026 Ordinary Shares (or depositary interests in respect thereof) referred to above as follows (all of such Ordinary Shares, via depositary interests, are registered in the name of Ashton Nominees Inc other than the 1 Ordinary Share registered in the name of Black Swan FZE, the 1 Ordinary Share registered in Richard Poulden's own name and the 15,000,001 Ordinary Shares registered in the name of Black Swan Plc as referred to below):

a. 1 Ordinary Share belongs to Richard Poulden;

b. 1 Ordinary Share belongs to Black Swan FZE which is a wholly owned subsidiary of Black Swan Plc of which Richard Poulden is the chairman and controls a majority of the shares;

c. 15,000,001 Ordinary Shares belong to Black Swan Plc of which Richard Poulden is the chairman and controls a majority of the shares;

d. 15,000,000 Ordinary Shares belong to Richard Poulden's wife and infant children;

e. 97,282,023 Ordinary Shares belong to the Malvern Trust, a trust in respect of which Richard Poulden's family can be beneficiaries; and

f. 10,000,000 Ordinary Shares belong to the John Edward Poulden Settlement Trust, a trust for the benefit of Richard Poulden's children.

3. Kung Min Lin holds 138,654,654 Ordinary Shares through Forbidden City Ltd, a company in which Kung Min Lin owns a majority of the shares. Kung-Min Lin's wife, Yu-Ting Lin, is interested in 12,000,000 Ordinary Shares.

NAMES OF ALL PERSONS TO BE DISCLOSED IN ACCORDANCE WITH SCHEDULE 2, PARAGRAPH (H) OF THE AIM RULES:

None

(i) ANTICIPATED ACCOUNTING REFERENCE DATE

(ii) DATE TO WHICH THE MAIN FINANCIAL INFORMATION IN THE ADMISSION DOCUMENT HAS BEEN PREPARED (this may be represented by unaudited interim financial information)

(iii) DATES BY WHICH IT MUST PUBLISH ITS FIRST THREE REPORTS PURSUANT TO AIM RULES 18 AND 19:

i. 31 December

ii. 31 December 2014

iii. 30 September 2015, 30 June 2016; 30 September 2016

EXPECTED ADMISSION DATE:

28 August 2015

NAME AND ADDRESS OF NOMINATED ADVISER:

Sanlam Securities UK Ltd

10 King William Street

London

EC4N 7TW

NAME AND ADDRESS OF BROKER:

Beaufort Securities Limited

131 Finsbury Pavement

London

EC2A 1NT

OTHER THAN IN THE CASE OF A QUOTED APPLICANT, DETAILS OF WHERE (POSTAL OR INTERNET ADDRESS) THE ADMISSION DOCUMENT WILL BE AVAILABLE FROM, WITH A STATEMENT THAT THIS WILL CONTAIN FULL DETAILS ABOUT THE APPLICANT AND THE ADMISSION OF ITS SECURITIES:

The admission document containing full details regarding the applicant and the admission of its securities will be available from the Company's website www.pcge.com with effect from admission.

DATE OF NOTIFICATION:

11 August 2015

NEW/ UPDATE:

UPDATE