New Focus Auto Announces US$97.37 Million Landmark Investments from CDH and a Proposed Placement of up to US$40.9 Million by Morgan Stanley

HONG KONG, SHANGHAI and TAIPEI, June 27, 2013 /PRNewswire/ -- New Focus Auto Tech Holdings Ltd.( http://www.nfa360.com ) ("NFA" or the "Company," HKEX 0360, TWSE 9106) announced today that it has entered into definitive agreements with CDH Fast Two Limited ("CDH") relating to a total of US$97.37 million investments from CDH in the Company. Pursuant to the terms and subject to the conditions of the definitive agreements, the Company has agreed to issue and CDH has agreed to subscribe for 1,262,564,333 ordinary shares of the Company (the "Shares") at HK$0.30 per Share for an aggregate consideration of US$48,685,000, together with zero coupon convertible bonds of the Company (the "Convertible Bonds") in the aggregate principal amount of US$48,685,000 for a consideration equal to the principal amount of such Convertible Bonds. The aggregate proceeds that will be received by the Company from CDH in respect of the new Shares and Convertible Bonds are US$97,370,000, which will be settled in US dollars.

As further disclosed in the Company's announcement dated June 26, 2013 (the "Announcement"), the completion of CDH's investment is subject to the satisfaction of various conditions, including the approval by the Company's shareholders to increase the Company's share capital and issue the new Shares contemplated by the proposed transactions, CDH to obtain whitewash waiver from the Executive Director of the Corporate Finance Division of the Securities and Futures Commission of Hong Kong (or any delegate of the Executive Director) and the redemption by the Company of all of the redeemable convertible bonds in the principal amount of US$38,201,001 issued by the Company in December 2011 as previously announced in the Company's announcement dated December 5, 2011 (the "Existing Convertible Bonds").

In connection with the CDH investments, the Company has also entered into a placing agreement with Morgan Stanley & Co. International plc ("Morgan Stanley") pursuant to which Morgan Stanley has agreed to procure placees, on a best effort basis, to subscribe for up to 1,060,673,334 new Shares at HK$0.30 per share ("Placing") in accordance with the terms of the placing agreement, which are summarised in the Announcement.

In addition to the proposed placing and the CDH investments, the Company has also entered into a subscription agreement with Mr. Raymond N. Chang ("Mr. Chang"), an Executive Director and the Chief Executive Officer of the Company, pursuant to which Mr. Chang has agreed to subscribe for 51,866,667 new Shares at the price of HK$0.30 per Share ("Management Subscription"), which subscription will occur concurrently with the Placing. The Company will use the proceeds of the Placing and the Management Subscription by Mr. Chang to redeem all of the Existing Convertible Bonds and to fund any costs and expenses incurred or to be incurred by the Company in connection therewith.

With the injection of new funding from CDH, the Company hopes to significantly improve its liquidity position and overall financial strength, and also intends to leverage CDH's reputation, local knowledge and network in China to carry out its business plans and bring strategic value to its shareholders. Proceeds from the CDH investments are designed to provide the Company with sufficient capital to carry out its expansion strategies through potential acquisitions and opening of new stores. The Company also expects that the partnership with CDH will also allow the Company to bolster its position as a market leader in China's fast growing automobile after-sales service industry. Upon making the investments, CDH will become the single largest shareholder of the Company and will have the right to nominate 7 directors of the Company as well as the right to appoint the Company's Chief Financial Officer.

As part of and subject to the consummation of the CDH investments, the following new directors will be appointed to the Company's board of directors:

-- Mr. Wang Zhenyu: Managing Director of CDH Investments

-- Mr. Ying Wei: Operating Partner of CDH Investments

-- Mr. Zhang Jianxing: Operating Managing Director of CDH Investments

-- Mr. Du Jinglei: Executive Director of CDH Investments

-- Mr. Zhang Jie: Chairman of China Hi-Tech Group Corporation

-- Mr. Lin Lei: Co-President & Joint CEO of Sinotrust

-- Mr. Hu Yuming: Professor at Jinan University, Ph. D supervisor

The Company believes that these directors will bring with them their considerable experience to the Company, thereby enhancing the Company's ability to develop and execute its business strategy.

Set out below is a summary of the four "Key Agreements" entered into by NFA:

Agreements Highlights

CDH Investment Agreement CDH agreed to subscribe for US$48,685,000 of new Shares at HK$ 0.30 per Share

- Upon the share subscription, CDH's shareholding in the Company will be approximately 42.8%

In addition, NFA will issue to CDH five-year zero-coupon Convertible Bonds in the aggregate principal amount of US$48,685,000. The conversion price of the CDH Convertible Bonds is HK$0.2328 per Share

- Assuming full conversion of the Convertible Bonds at the conversion price of HK$0.2328 per Share, CDH's shareholding in the Company will be further increased to approximately 63.2% in aggregate

CDH has agreed not to transfer any of its Convertible Bonds for a period of three years from the issue date

In connection with its investment in the Company, CDH will have various governance and information rights (which is further summarized in the Announcement), including the right to appoint 7 directors, 3 of whom shall be qualified as independent non-Executive Directors

Placing Agreement Morgan Stanley & Co. International plc will act as the placing agent to procure placees, on a best-effort basis, to subscribe for up to US$40.9 million of new Shares

Management Subscription Agreement As a condition to CDH's investment, Mr. Chang, the Company's Executive Director and Chief Executive Officer, agreed to subscribe for US$2 million in new Shares at HK$0.30 per Share concurrently with the Placing

Amendment to Existing Convertible Bonds and Redemption NFA and holders of the Existing Convertible Bonds agreed to amend certain terms of the Existing Convertible Bonds to provide for all of the US$38,201,001 aggregate principal amount of the Existing Convertible Bonds to be redeemed by the Company subject to the completion of the Placing for a total of US$40 million. Redemption of the Existing Convertible Bonds will be funded by proceeds from the Placing and, if necessary, the Management Subscription

According to Mr. Chang, the Company's Executive Director and Chief Executive Officer, "I believe the CDH investment is a very significant affirmation of the strategic changes we have been making at NFA over the last 12 months. We look forward to working with CDH to build a leading company in China's automobile after-sales service market."

Mr. Wang Zheng Yu, the Managing Director of CDH Investments also shared Mr. Chang's enthusiasm about the CDH investment, stating that "NFA is an experienced sector leader in Greater China region and a great platform to consolidate other automobile after-sales service players. We'd like to build a global leading player in this sector."

Completion of the transactions described in this press release is subject to NFA shareholders' approval as well as other conditions summarized in the Announcement. Assuming satisfaction (or, to the extent legally permissible, waiver) of all of the conditions precedent to the transactions described, the Company expects completion to occur in the third quarter of 2013. However, there can be no assurance that these transactions will be approved or consummated.

In connection with the transactions described in this press release, the Company will seek necessary approval from its shareholders in an extraordinary general meeting and a circular (the "Circular") will be despatched to its shareholders containing details of the transaction in accordance with applicable regulatory requirements.

AS THE TRANSACTIONS DESCRIBED IN THIS PRESS RELEASE MAY OR MAY NOT PROCEED, POTENTIAL INVESTORS AND SHAREHOLDERS ARE ADVISED TO EXERCISE CAUTION WHEN DEALING IN THE SHARES OF THE COMPANY, AND ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE ANNOUNCEMENT AND THE CIRCULAR WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE TRANSACTIONS DESCRIBED IN THIS PRESS RELEASE.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES AND DOES NOT CONSTITUTE OR FORM A PART OF ANY OFFER OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE COMPANY'S SHARES MENTIONED IN THIS PRESS RELEASE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. PUBLIC OFFERINGS OF SECURITIES IN THE UNITED STATES MUST BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER OR THE SELLING SECURITY HOLDER AND THAT CONTAINS DETAILED INFORMATION ABOUT THE COMPANY AND ITS MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS. NO PUBLIC OFFERING OF THE COMPANY'S SHARES WILL BE MADE IN THE UNITED STATES.

About NFA Group

NFA Group focuses on the operation of auto chain services network in the Greater China region. With around 90 stores under its direct ownership, NFA Group currently controls the largest independent auto after-market services network in the Greater China region. In addition, NFA Group develops, manufactures, and distributes a wide range of auto accessory products in both overseas and the domestic China market.

About CDH Investments

Founded in 2002, CDH Investments is an international alternative asset fund manager focusing on investments in private equity, venture capital, real estate and public equity markets. CDH Investments manages over US$10 billion from more than 100 international and domestic institutional investors, including sovereign wealth funds, China's National Social Security, international pension funds, endowments, family offices and fund of funds. It also manages investments from both domestic and international high net worth individuals. CDH Investments has more than 70 investment and other professionals operating in offices in Hong Kong, Beijing, Shanghai, Singapore, Shenzhen, Jakarta and Ho Chi Minh City. It ranked 1st in the "Best Chinese PE Investment Institutions" league table according to Forbes China in 2012.

For further details, please refer to the announcement of the Company as published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) or the Taiwan Stock Exchange Corporation (www.twse.com.tw).

SOURCE New Focus Auto Tech Holdings Ltd.