The9 Limited Announces Potential Share Exchange Transaction Valued @~$76.5M

- The9 Limited (NASDAQ: NCTY), today announced that it hasentered into a memorandum of understanding ("MOU") with L&A InternationalHolding Limited, a Cayman Islands company with shares listed on the GrowthEnterprise Market of the Stock Exchange of Hong Kong Limited under stock code8195 ("L&A"), and certain other shareholders of Red 5, to exchange approximately30.6% equity interest (the "Swapped Red 5 Interest") that it owns in itssubsidiary Red 5 Studios, Inc. ("Red 5") for such number of newly issued sharesof L&A which has the same value as the Swapped Red 5 Shares. The Companycurrently owns approximately 72.8% equity interest in Red 5. The otherparticipating shareholders of Red 5 will exchange an aggregate of approximately14.4% equity interest in Red 5 in the transaction on the same terms. The totalconsideration for the transaction for all the participating shareholders,including the Company, is expected to be approximately US$76.5 million, subjectto adjustments by not more than 15% based on the result of the due diligenceexercises to be conducted by the Company on L&A and by L&A on Red 5. Thecompletion of the transaction is subject to the parties' execution of definitiveagreements and customary closing conditions to be stipulated therein. Except forcertain provisions relating to exclusivity, confidentiality, expenses, governinglaw and dispute resolution, the MOU does not constitute legally bindingobligation on the parties to consummate the transaction.Red 5 is an online game developer based in the United States. Red 5 is developing Firefall, a MMOFPS game, for which the Company has conducted alimited commercial release in China in November 2015 and expect to have alarge-scale commercial launch in China in the second half of 2016. Red 5 haslicensed Firefall to System Link for publishing and operating Firefall for afive-year term in China.