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

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- The9 Limited
NCTY
, today announced that it has entered into a memorandum of understanding ("MOU") with L&A International Holding Limited, a Cayman Islands company with shares listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited under stock code 8195 ("L&A"), and certain other shareholders of Red 5, to exchange approximately 30.6% equity interest (the "Swapped Red 5 Interest") that it owns in its subsidiary Red 5 Studios, Inc. ("Red 5") for such number of newly issued shares of L&A which has the same value as the Swapped Red 5 Shares. The Company currently owns approximately 72.8% equity interest in Red 5. The other participating shareholders of Red 5 will exchange an aggregate of approximately 14.4% equity interest in Red 5 in the transaction on the same terms. The total consideration for the transaction for all the participating shareholders, including the Company, is expected to be approximately US$76.5 million, subject to adjustments by not more than 15% based on the result of the due diligence exercises to be conducted by the Company on L&A and by L&A on Red 5. The completion of the transaction is subject to the parties' execution of definitive agreements and customary closing conditions to be stipulated therein. Except for certain provisions relating to exclusivity, confidentiality, expenses, governing law and dispute resolution, the MOU does not constitute legally binding obligation 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 a limited commercial release in China in November 2015 and expect to have a large-scale commercial launch in China in the second half of 2016. Red 5 has licensed Firefall to System Link for publishing and operating Firefall for a five-year term in China.
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