PROXY AND CONSENT SOLICITATION STATEMENT OF THE COMPANY

Exhibit (a)-(1)​

December 2, 2021​

Shareholders and Warrantholders of New Frontier Health Corporation

Re: Notice of Extraordinary General Meeting of Shareholders and Notice of Consent Solicitation for Warrantholders

Dear Shareholders and Warrantholders:

On August 4, 2021, New Frontier Health Corporation (the “Company”) entered into an agreement and plan of merger (the “Merger Agreement”) with Unicorn II Holdings Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“HoldCo”), Unicorn II Parent Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly-owned subsidiary of HoldCo (“Parent”), and Unicorn II Merger Sub Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and cease to exist, with the Company continuing as the surviving company (the “Surviving Company”) and becoming a wholly-owned subsidiary of Parent. As a condition to the consummation of the Merger, certain amendment to the warrant agreement dated as of June 27, 2018 between the Company and Continental Stock Transfer & Trust Company (the “Warrant Agreement”) is required to be made to give effect to the treatment of the Warrants (as defined below) in accordance with the Merger Agreement (the “Warrant Amendment”).

In connection with the Merger and the other matters described herein, shareholders of the Company are cordially invited to attend an extraordinary general meeting of shareholders of the Company to be held on January 7, 2022, at 10:00 a.m. (Beijing time), at the principal office of the Company located at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China. At the extraordinary general meeting, shareholders of the Company will be asked to consider and vote upon a proposal to authorize and approve the Merger Agreement, the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands in connection with the Merger (the “Plan of Merger”), and the transactions contemplated by the Merger Agreement and the Plan of Merger, including the Merger (the “Transactions”). Copies of the Merger Agreement and the Plan of Merger are attached as Annex A and Annex B, respectively, to the accompanying proxy and consent solicitation statement (the “proxy statement”).

In connection with the Warrant Amendment and the other matters described herein, warrantholders of the Company are requested to sign, date and return to the Company the consent to the Warrant Amendment included as Annex H to the accompanying proxy statement. A copy of the substantive text of the Warrant Amendment is attached as Annex C to the accompanying proxy statement.

Each of HoldCo, Parent and Merger Sub has been formed solely for the purposes of the Merger. At the effective time of the Merger (“Effective Time”), HoldCo will be beneficially owned by:

(a)

New Frontier Public Holding Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands (“NFPH”);

​

(b)

New Frontier Capital II Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(c)

New Frontier Group International Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

 

i

 

(d)

NF Founder Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(e)

Strategic Healthcare Holding Ltd., a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(f)

HMJ Holdings Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands;

​

(g)

HMJ Holdings II Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands;

​

(h)

HMJ Holdings III Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands;

​

(i)

Unicorn Holding Partners LP, an exempted limited partnership formed under the laws of the Cayman Islands;

​

(j)

Unicorn Holding Partners II LP, an exempted limited partnership formed under the laws of the Cayman Islands;

​

(k)

Unicorn Holding Partners III LP, an exempted limited partnership formed under the laws of the Cayman Islands;

​

(l)

Unicorn Holding Partners IV LP, an exempted limited partnership formed under the laws of the Cayman Islands;

​

(m)

New Frontier Investment Management Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands;

​

(n)

New Frontier Investment Management II Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands;

​

(o)

New Frontier Investment Management III Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands;

​

(p)

New Frontier Investment Management IV Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands;

​

(q)

Kam Chung Leung, the chairman of the board of directors of the Company;

​

(r)

Carl Wu, the president of the Company;

​

(s)

Ying Zeng, the chief operating officer of the Company;

​

(t)

Carnival Investments Limited, a company affiliated with Kam Chung Leung and incorporated with limited liability under the laws of the British Virgin Islands;

​

(u)

Max Rising International Limited, a company affiliated with Carl Wu and incorporated with limited liability under the laws of the British Virgin Islands;

​

(v)

Vivo Capital Fund IX (Cayman), L.P., an exempted limited partnership organized under the laws of the Cayman Islands;

​

(w)

Vivo Capital Fund IX (Cayman), LLC, a limited liability company incorporated and existing under the laws of the Cayman Islands;

​

(x)

Calcite Gem Investments Group Ltd, an exempted company with limited liability incorporated and existing under the laws of the Cayman Islands;

​

(y)

Warburg Pincus (Callisto) Global Growth (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(z)

Warburg Pincus (Europa) Global Growth (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

 

ii

 

(aa)

Warburg Pincus Global Growth-B (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(bb)

Warburg Pincus Global Growth-E (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(cc)

Warburg Pincus Global Growth Partners (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(dd)

WP Global Growth Partners (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(ee)

Warburg Pincus China-Southeast Asia II (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(ff)

Warburg Pincus China-Southeast Asia II-E (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(gg)

WP China-Southeast Asia II Partners (Cayman), L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(hh)

Warburg Pincus China-Southeast Asia II Partners, L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(ii)

WSCP VIII EMP Onshore Investments, L.P., a limited partnership formed under the laws of the State of Delaware;

​

(jj)

WSCP VIII EMP Offshore Investments, L.P., an exempted limited partnership formed under the laws of the Cayman Islands;

​

(kk)

West Street Capital Partners VIII, L.P., a limited partnership formed under the laws of the State of Delaware;

​

(ll)

West Street Capital Partners VIII — Parallel, L.P., a limited partnership formed under the laws of the State of Delware;

​

(mm)

WSCP VIII Offshore Investments, SLP, a special limited partnership formed under the laws of Luxembourg;

​

(nn)

Goldman Sachs Asia Strategic II Pte. Ltd., a limited liability company incorporated under the laws of Singapore;

​

(oo)

West Street Private Markets 2021, L.P., a limited partnership formed under the laws of the State of Delaware;

​

(pp)

Fosun Industrial Co., Limited, a company incorporated with limited liability under the laws of Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”);

​

(qq)

Shanghai Fosun Pharmaceutical (Group) Co., Ltd., a corporation organized under the laws of the People’s Republic of China (the “PRC”);

​

(rr)

Advance Data Services Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(ss)

Ma Huateng, a citizen of the PRC;

​

(tt)

Aspex Master Fund, a company incorporated with limited liability under the laws of the Cayman Islands;

​

(uu)

AMF-7 Holdings Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

 

iii

 

(vv)

Ho Kei Li, a citizen of Hong Kong;

​

(ww)

Roberta Lipson, a national of the United States, Benjamin Lipson Plafker Trust, Daniel Lipson Plafker Trust, Johnathan Lipson Plafker Trust, Ariel Benjamin Lee Trust and Lipson 2021 GRAT;

​

(xx)

Yi Fang Da Sirius Inv. Limited, a company incorporated under the laws of the British Virgin Islands;

​

(yy)

Zhong Yang Securities Limited, a company incorporated and existing under the laws of Hong Kong;

​

(zz)

E Fund Management (Hong Kong) Co., Limited, a company incorporated and existing under the laws of Hong Kong;

​

(aaa)

Gaorong Partners Fund V, L.P., a limited partnership established under the laws of the Cayman Islands;

​

(bbb)

Gaorong Partners Fund V-A, L.P., a limited partnership established under the laws of the Cayman Islands;

​

(ccc)

Gaorong Partners V Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands;

​

(ddd)

Smart Scene Investment Limited, a company incorporated with limited liability under the laws of Hong Kong;

​

(eee)

Rosy Step Holdings Limited, a company incorporated with limited libaility under the laws of the British Virgin Islands;

​

(fff)

Hysan Development Company Limited, a company incorporated and existing under the laws of Hong Kong;

​

(ggg)

LY Holding Co., Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(hhh)

NF SPAC Holding Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(iii)

Sun Hing Associates Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(jjj)

Nan Fung Group Holdings Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(kkk)

Pioneer Link Investments Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(lll)

Nan Fung Life Sciences Holdings Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(mmm)

NF Investment Holdings Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(nnn)

NewQuest Asia Fund IV (Singapore) Pte. Ltd., a company incorporated under the laws of Singapore;

​

(ooo)

Pleiad Asia Master Fund, a company incorporated under the laws of the Cayman Islands;

​

(ppp)

Pleiad Asia Equity Master Fund, a company incorporated under the laws of the Cayman Islands;

​

(qqq)

Pleiad Investment Advisors Limited, a company incorporated under the laws of Hong Kong;

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iv

 

(rrr)

PSSF Unicorn II Ltd, a company incorporated and existing under the laws of the Cayman Islands;

​

(sss)

PSSF Unicorn I Ltd, a company incorporated and existing under the laws of the Cayman Islands;

​

(ttt)

Proprium Real Estate Special Situations Fund, LP, a limited partnership formed under the laws of the Cayman Islands;

​

(uuu)

Proprium Real Estate Special Situations Fund GP, LP, a limited partnership formed under the laws of the Cayman Islands;

​

(vvv)

Proprium Real Estate Special Situations Fund GP, Ltd, a company incorporated and existing under the laws of the Cayman Islands;

​

(www)

Proprium Capital Partners, L.P., a limited partnership formed under the laws of the State of Delaware;

​

(xxx)

Brave Peak Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(yyy)

Cherish Navigation Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(zzz)

Shimao Group Holdings Limited, a company incorporated and existing under the laws of the Cayman Islands;

​

(aaaa)

Smart Will Investments Limited, a company incorporated with limited liability under the laws of the British Virgin Islands;

​

(bbbb)

MY Asian Opportunities Master Fund, L.P., a hedge fund incorporated with limited liability under the laws of the Cayman Islands;

​

(cccc)

MY.Alpha Management HK Advisors Limited, an asset management firm incorporated in Hong Kong;

​

(dddd)

Masahiko Yamaguchi, a Japanese citizen;

​

(eeee)

Yunqi China Special Investment A, a company incorporated with limited liability under the laws of the Cayman Islands;

​

(ffff)

Yunqi Capital Limited, a company incorporated in Hong Kong;

​

(gggg)

HS Group Master Fund II Ltd., a company incorporated with limited liability under the laws of the Cayman Islands;

​

(hhhh)

Yunqi Capital Cayman Limited, a company incorporated with limited liability under the laws of the Cayman Islands;

​

(iiii)

HS Group (Hong Kong) Limited, a company incorporated in Hong Kong;

​

(jjjj)

Star Advantage Global Limited, a company incorporated and existing under the laws of the British Virgin Islands;

​

(kkkk)

Han Min, a citizen of Hong Kong;

​

(llll)

Apex Strategic Ventures Limited, a company incorporated and existing under the laws of the British Virgin Islands;

​

(mmmm)

Shi Yufeng, a citizen of Hong Kong;

​

(nnnn)

Golden Majestic Investments Limited, a company incorporated and exisitng under the laws of the British Virgin Islands;

​

 

v

 

(oooo)

Luo Xiaohong, a citizen of the PRC;

​

(pppp)

Junson Development International Limited, a company incorporated and existing under the laws of the British Virgin Islands;

​

(qqqq)

Silverland Assets Limited, a limited company incorporated and existing under the laws of the British Virgin Islands;

​

(rrrr)

The Cai Family Trust, a trust established under and governing by the laws of the Cayman Islands; and

​

(ssss)

Kui Cai, a citizen of Hong Kong.

​

The persons set forth in the foregoing (a), (e), (s) through (v), (pp), (rr), (tt), (ww), (ddd), (ggg) through (jjj), (xxx), (aaaa), (bbbb), (eeee), (jjjj), (llll), (nnnn) and (pppp) are collectively referred to herein as the “Supporting Securityholders.” HoldCo, Parent, Merger Sub, Aspex Management (HK) Limited and the persons set forth in the foregoing (a) through (ssss) are collectively referred to herein as the “Buyer Group.”

As of the date of this proxy statement, the Supporting Securityholders collectively beneficially own (a) 77,039,971 ordinary shares, par value US$0.0001 per share of the Company (the “Ordinary Shares”), which represent approximately 58.43% of the total issued and outstanding Ordinary Shares, (b) 2,200,000 Public Warrants and 2,985,000 Forward Purchase Warrants, which collectively represent approximately 27.11% of the total number of Public Warrants and Forward Purchase Warrants outstanding, and (c) all of the outstanding 7,750,000 Private Placement Warrants, in each case, disregarding the Ordinary Shares or Warrants that the Supporting Securityholders may hold a power to vote but do not hold dispositive power. In addition, NFPH holds a power to vote granted by certain shareholders of the Company (not including any shareholder who is already a Supporting Securityholder) in respect of 10,237,559 Ordinary Shares, representing approximately 7.76% of the total issued and outstanding Ordinary Shares. Pursuant to the terms of the support agreement (the “Support Agreement”) dated as of August 4, 2021, by and among HoldCo and the Supporting Securityholders, each Supporting Securityholder agreed, among other things, (a) to vote in favor of the approval, adoption and authorization of the Merger Agreement and the approval of the Merger and any other transactions contemplated by the Merger Agreement, (b) to vote in favor of the approval of the Warrant Amendment, and (c) the Rollover Shares (as defined in the Support Agreement) and the Rollover Warrants (as defined in the Support Agreement) will be cancelled at the closing of the Merger in consideration for HoldCo shares to be subscribed for by such Supporting Securityholder or their affiliates. Furthermore, pursuant to the terms of the management rollover agreement (the “Management Rollover Agreement”) dated as of October 5, 2021, 43 shareholders of the Company who are current or former employees of the Company and, to the best knowledge of the Company, who collectively hold 953,102 Ordinary Shares (representing approximately 0.72% of the total issued and outstanding Ordinary Shares) (the “Management Rollover Securityholders”) agreed, among other things, that their Rollover Shares (as defined in the Management Rollover Agreement) will be cancelled at the closing of the Merger in consideration for HoldCo shares to be subscribed for by a designated entity. Pursuant to the terms of the rollover agreements dated as of October 5, 2021 and December 2, 2021 (collectively, the “Rollover Agreements”), 16 shareholders of the Company, to the best knowledge of the Company, who collectively hold 5,421,725 Ordinary Shares (representing approximately 4.11% of the total issued and outstanding Ordinary Shares) (the “Other Rollover Securityholders”, together with Supporting Securityholders and Management Rollover Securityholders, the “Rollover Securityholders”) agreed, among other things, that their Rollover Shares (as defined in the Rollover Agreements) will be cancelled at the closing of the Merger in consideration for HoldCo shares to be subscribed for by a designated entity. If the Merger is completed, the Company will continue its operations as a privately held company and, as a result of the Merger, the Ordinary Shares and Warrants will no longer be listed on the New York Stock Exchange.

Under the terms of the Merger Agreement, if the Merger is completed, at the Effective Time, each Ordinary Share issued and outstanding immediately prior to the Effective Time will be cancelled and cease to exist in exchange for the right to receive US$12.00 per share in cash without interest, except for (a) Ordinary Shares held by HoldCo, Parent, Merger Sub, the Company or any of their direct or indirect subsidiaries, which will be cancelled and cease to exist without payment of any consideration or distribution therefor, (b) certain Ordinary Shares held by the Rollover Securityholders, which will be cancelled and cease to exist in

 

vi

 

exchange for the right of each such holder or its designated entities to receive a corresponding amount of equity securities of HoldCo (Ordinary Shares described under the foregoing clauses (a) and (b) are collectively referred to as the “Excluded Shares”), and (c) Ordinary Shares owned by holders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the Merger pursuant to Section 238 of the Cayman Islands Companies Act (the “Dissenting Shares”), which will be cancelled and cease to exist and each holder thereof will be entitled to receive only the payment of fair value of such Dissenting Shares determined in accordance with Section 238 of the Cayman Islands Companies Act.

Under the terms of the Merger Agreement and pursuant to the Warrant Agreement as amended by the Warrant Amendment, at the Effective Time, each Warrant that is issued and outstanding immediately prior to the Effective Time (other than the Warrants held by NFPH) will be cancelled in exchange for the right to receive US$2.70 per Warrant in cash without interest. In addition, in respect of each Warrant (other than the Warrants held by NFPH) for which the holder thereof has timely provided consent to the Warrant Amendment and has not revoked such consent prior to the deadline established by the Company for warrantholders to submit consents, the holder of such Warrant will have the right to receive, for each such Warrant, a consent fee of US$0.30 in cash without interest.

In addition, at the Effective Time, (a) each option to purchase Ordinary Shares (each, a “Company Option”) granted by the Company pursuant to the Company’s 2019 Omnibus Incentive Plan (the “Company Equity Plan”), whether vested or unvested, that is outstanding prior to the Effective Time will be cancelled in exchange for the right to receive, as soon as practicable after the Effective Time and in accordance with an equity incentive plan to be established by HoldCo (the “HoldCo Share Plan”), an option to purchase the same number of shares of HoldCo as the total number of the Ordinary Shares subject to such Company Option immediately prior to the Effective Time, at a per share exercise price equal to the applicable exercise price underlying the Company Option immediately prior to the Effective Time, subject to and in accordance with the terms of the Company Equity Plan and the relevant Company Option agreement in effect immediately prior to the Effective Time (with continuation of the applicable vesting terms); and (b) each restricted share unit granted under the Company Equity Plan (each, a “Company RSU Award”), whether vested or unvested, that is outstanding prior to the Effective Time will be cancelled in exchange for the right to receive, as soon as practicable after the Effective Time and in accordance with the HoldCo Share Plan, one restricted stock unit to acquire the same number of shares of HoldCo as the total number of Ordinary Shares subject to such Company RSU Award immediately prior to the Effective Time, subject to and in accordance with the terms of the Company Equity Plan and the relevant Company RSU Award agreement in effect immediately prior to the Effective Time (with continuation of the applicable vesting terms).

A special committee (the “Special Committee”) of the board of directors of the Company (the “Board”), composed solely of directors who are unaffiliated with any member of the Buyer Group or any member of the management the Company, reviewed and considered the terms and conditions of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger. On August 4, 2021, the Special Committee unanimously (a) determined that the Merger Agreement and the Plan of Merger are fair to and in the best interests of the Company and its shareholders (other than the holders of Excluded Shares), (b) declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger, (c) recommended that the Board authorize and approve the execution, delivery and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger, and (d) recommended that the Board submit the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the variation of the authorized share capital of the Company (the “Variation of Share Capital”) and the amendment and restatement of the memorandum and articles of association of the Company (as the Surviving Company) in the form attached to the Plan of Merger (the “Amendment of the M&A”), to the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A.

On August 4, 2021, the Board, after carefully considering all relevant factors, including the determination and recommendation of the Special Committee, (a) determined that the Merger Agreement and the Plan of

 

vii

 

Merger are fair to and in the best interests of the Company and its shareholders (other than the holders of Excluded Shares), (b) declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger, (c) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger, and (d) resolved to direct that the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A.

After careful consideration and upon the unanimous recommendation of the Special Committee composed solely of directors unaffiliated with any member of the Buyer Group or any member of the management the Company, the Board authorized and approved the Merger Agreement and the Plan of Merger and recommends that the shareholders of the Company vote FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transaction, including (a) the Merger and (b) upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, FOR the proposal to authorize each of the directors and officers of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

The accompanying proxy statement provides detailed information about the Merger, the extraordinary general meeting and the Warrant Amendment. We encourage you to read the entire document and all of the attachments and other documents referred to or incorporated by reference therein carefully. You may also obtain more information about the Company from documents the Company has filed with the United States Securities and Exchange Commission (the “SEC”), which are available for free at the SEC’s website http://www.sec.gov.

Regardless of the number of Ordinary Shares and/or Warrants you own, your vote and/or consent is very important. In order for the Merger to be completed, the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, must be authorized and approved by a special resolution (as defined in the Cayman Islands Companies Act) of the Company’s shareholders, which requires the affirmative vote of shareholders representing at least two-thirds of the voting power of the Ordinary Shares present and voting in person or by proxy as a single class at the extraordinary general meeting. In addition, the Warrant Amendment must be approved by the affirmative vote or written consent of the holders of (a) at least 50% of the number of the outstanding Public Warrants and Forward Purchase Warrants (each as defined in the Warrant Agreement) and (b) at least 50% of the number of the outstanding Private Placement Warrants (as defined in the Warrant Agreement).

In considering the recommendation of the Special Committee and the Board, you should be aware that some of the Company’s directors or executive officers have interests in the Merger that are different from, or in addition to, the interests of the shareholders generally. As of the date of this proxy statement, the Buyer Group collectively beneficially own approximately 58.43% of the issued and outstanding Ordinary Shares, disregarding the Ordinary Shares that the Buyer Group may hold a power to vote but do not hold dispositive power. Whether or not you plan to attend the extraordinary general meeting, please complete the enclosed proxy card, in accordance with the instructions set forth on your proxy card, as promptly as possible. The deadline to lodge your proxy card is January 6, 2022 at 10:00 a.m. (Beijing time). Each shareholder has one vote for each Ordinary Share held as of the close of business in the Cayman Islands on December 6, 2021. Warrantholders please complete the enclosed consent included as Annex H to this proxy statement, in accordance with the instructions set forth thereon, as promptly as possible. The deadline to lodge your consent is January 6, 2022 at 10:00 a.m. (Beijing time). Each warrantholder has one vote for each Warrant held as of the close of business in the Cayman Islands on December 6, 2021.

 

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Voting at the extraordinary general meeting will take place by poll voting, as the chairman of the meeting has undertaken to demand poll voting at the meeting.

Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Ordinary Shares in person. Please note, however, that if your Ordinary Shares are held of record by a broker, bank or other nominee and you wish to vote at the extraordinary general meeting in person, you must obtain from the registered holder a proxy issued in your name. If you submit a signed proxy card without indicating how you wish to vote, the Ordinary Shares represented by your proxy card will be voted FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, FOR the proposal to authorize each of the directors and officers of the Company to do all things necessary to give effect to Merger Agreement, the Plan of Merger, and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as your proxy, in which case the Ordinary Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines.

Shareholders who dissent from the Merger will have the right to receive payment of the fair value of their Ordinary Shares in accordance with Section 238 of the Cayman Islands Companies Act if the Merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Act for the exercise of dissenters’ rights, a copy of which is attached as Annex E to the accompanying proxy statement. The fair value of your Ordinary Shares as determined under the Cayman Islands Companies Act could be more than, the same as, or less than the merger consideration you would receive pursuant to the Merger Agreement if you do not exercise dissenters’ rights with respect to your Ordinary Shares.

Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this letter or in the accompanying notice of the extraordinary general meeting, notice of consent solicitation or proxy statement. Any representation to the contrary is a criminal offense.

If you have any questions or need assistance voting your Ordinary Shares or submitting consent with respect to your Warrants, please contact Morrow Sodali LLC, the proxy solicitor, at (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America), or by email at NFH@info.morrowsodali.com.

Thank you for your cooperation and continued support.

The accompanying proxy statement is dated December 2, 2021, and is first being mailed to the Company’s shareholders and warrantholders on or about December 10, 2021.

 

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NEW FRONTIER HEALTH CORPORATION
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON
January 7, 2022

Dear Shareholder:

Notice is hereby given that an extraordinary general meeting of the shareholders of New Frontier Health Corporation (referred to herein alternately as “the Company,” “us,” “we” or other terms correlative thereto), will be held on January 7, 2022 at 10:00 a.m. (Beijing time) at the principal office of the Company located at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China.

Only registered holders of ordinary shares of the Company, par value US$0.0001 per share (each, an “Ordinary Share”), at the close of business in the Cayman Islands on December 6, 2021 (the “Shareholder Record Date”) or their proxy holders are entitled to vote at this extraordinary general meeting or any adjournment thereof.

Under Cayman Islands law, all shareholders of the Company, including holders of preference shares or shares of any other class of the Company, as at the Shareholder Record Date are entitled to attend and vote at the extraordinary general meeting. However, as at the date of this proxy statement, there are no preference shares or shares of any other class (other than the Ordinary Shares) issued or outstanding, and the Company will not issue any preference shares or shares of any other class (other than the Ordinary Shares) prior to the Shareholder Record Date, so that as a practical matter only holders of Ordinary Shares will be entitled to attend and vote at the extraordinary general meeting. This notice and the attached proxy statement, and all statements and disclosures made herein and therein, are given on the basis that only Ordinary Shares, and no shares of any other class, will be issued and outstanding at all relevant times.

At the extraordinary general meeting, you will be asked to consider and vote upon the following resolutions:

•

as special resolutions:

​

THAT the agreement and plan of merger, dated as of August 4, 2021(the “Merger Agreement”), among Unicorn II Holdings Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“HoldCo”), Unicorn II Parent Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly-owned subsidiary of HoldCo (“Parent”), Unicorn II Merger Sub Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Merger Sub”) and the Company (such Merger Agreement being in the form attached as Annex A to the accompanying proxy and consent solicitation statement (the “proxy statement”) and to be produced and made available for inspection at the extraordinary general meeting), the plan of merger required to be registered with the Registrar of Companies in the Cayman Islands (the “Plan of Merger”, being in the form attached as Annex B to the accompanying proxy statement and to be produced and made available for inspection at the extraordinary general meeting) in order to give effect to the merger of Merger Sub with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”), and any and all transactions contemplated by the Merger Agreement (the “Transactions”), including (a) the Merger, (b) upon the Merger becoming effective, the variation of the authorized share capital of the Company at the effective time of the Merger from US$50,000 divided into (i) 490,000,000 ordinary shares of a par value of US$0.0001 each, and (ii) 10,000,000 preference shares of a par value of US$0.0001 each to US$50,000 divided into 500,000,000 ordinary shares of US$0.0001 each (the “Variation of Share Capital”), and (c) upon the Merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company by their deletion in their entirety and the substitution in their place of the new memorandum and articles of association of the Company (as the Surviving Company) in the form attached to the Plan of Merger (the “Amendment of the M&A”), be authorized and approved; and

THAT each of the directors and officers of the Company be authorized to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A; and

 

x

 

•

if necessary, as an ordinary resolution:

​

THAT the extraordinary general meeting be adjourned in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

Please refer to the accompanying proxy statement, which is attached to and made a part of this notice. A list of the Company’s shareholders will be available at its principal executive office at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China, during ordinary business hours for the two business days immediately prior to the extraordinary general meeting.

After careful consideration and upon the unanimous recommendation of a special committee (the “Special Committee”) of the board of directors (the “Board”) of the Company, composed solely of directors who are unaffiliated with any member of the Buyer Group or any member of the management the Company, the Board (a) determined that the Merger Agreement and the Plan of Merger are fair to and in the best interests of the Company and its shareholders (other than the holders of Excluded Shares), and declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger, (b) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger, and (c) resolved to direct that the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A. The Board recommends that you vote FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, FOR the proposal to authorize each of the directors and officers of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

In order for the Merger to be completed, the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, must be authorized and approved by a special resolution (as defined in the Cayman Islands Companies Act) of the Company’s shareholders, which requires the affirmative vote of holders of Ordinary Shares representing two-thirds or more of the voting power of Ordinary Shares present and voting in person or by proxy as a single class at the extraordinary general meeting.

New Frontier Public Holding Ltd. (“NFPH”), Strategic Healthcare Holding Ltd., Max Rising International Limited, Mr. Ying Zeng, Carnival Investments Limited, Vivo Capital Fund IX (Cayman), L.P., NF SPAC Holding Limited, Sun Hing Associates Limited, Nan Fung Group Holdings Limited, Brave Peak Limited, Aspex Master Fund, Ms. Roberta Lipson, Benjamin Lipson Plafker Trust, Daniel Lipson Plafker Trust, Johnathan Lipson Plafker Trust, Ariel Benjamin Lee Trust and Lipson 2021 GRAT, Advance Data Services Limited, Yunqi China Special Investment A, Smart Scene Investment Limited, MY Asian Opportunities Master Fund, L.P., Smart Will Investments Limited, LY Holding Co., Limited, Fosun Industrial Co., Limited, Star Advantage Global Limited, Apex Strategic Ventures Limited, Golden Majestic Investments Limited and Junson Development International Limited (collectively, the “Supporting Securityholders”) have entered into a support agreement, dated as of August 4, 2021, with HoldCo (the “Support Agreement”), pursuant to which each of the Supporting Securityholders has agreed to, subject to the terms and conditions set forth therein and among other obligations, vote in favor of the authorization and approval of the Merger Agreement and the Transactions, including the Merger. As of the date of this proxy statement, the Supporting Securityholders collectively beneficially own 77,039,971 Ordinary Shares, which represent approximately 58.43% of the total issued and outstanding Ordinary Shares, disregarding

 

xi

 

the Ordinary Shares that the Supporting Securityholders may hold a power to vote but do not hold dispositive power. In addition, NFPH holds a power to vote granted by certain shareholders of the Company (not including any shareholder who is already a Supporting Securityholder) in respect of 10,237,559 Ordinary Shares, representing approximately 7.76% of the total issued and outstanding Ordinary Shares.

Even if you plan to attend the extraordinary general meeting in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card, which is attached as Annex G to the accompanying proxy statement, as promptly as possible. To be valid, your proxy card must be completed, signed and returned to the Company’s offices to the attention of: Judy Wang at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China no later than January 6, 2022 at 10:00 a.m. (Beijing time). The proxy card is the “instrument of proxy” and the “instrument appointing a proxy” as referred to in the Company’s articles of association. Voting at the extraordinary general meeting will take place by poll voting as the chairman of the meeting has undertaken to demand poll voting at the meeting. Each shareholder has one vote for each Ordinary Share held as of the close of business in the Cayman Islands on the Shareholder Record Date. If you receive more than one proxy card because you own Ordinary Shares that are registered in different names, please vote all of your Ordinary Shares shown on each of your proxy cards in accordance with the instructions set forth on the proxy card.

Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Ordinary Shares in person. Please note, however, that if your Ordinary Shares are registered in the name of a broker, bank or other nominee and you wish to vote at the extraordinary general meeting in person, you must obtain from the record holder a proxy issued in your name.

If you abstain from voting, fail to cast your vote in person, fail to complete and return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to your broker, bank or other nominee, your vote will not be counted.

When proxies are properly dated, executed and returned by holders of Ordinary Shares, the Ordinary Shares they represent will be voted at the extraordinary general meeting in accordance with the instructions of the shareholders. If no specific instructions are given by such shareholders, such Ordinary Shares will be voted “FOR” the proposals as described above, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Ordinary Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines.

Shareholders who dissent from the Merger will have the right to receive payment of the fair value of their Ordinary Shares in accordance with Section 238 of the Cayman Islands Companies Act if the Merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Act for the exercise of dissenters’ rights, a copy of which is attached as Annex E to the accompanying proxy statement. The fair value of their Ordinary Shares as determined under the Cayman Islands Companies Act could be more than, the same as, or less than the merger consideration they would receive pursuant to the Merger Agreement if they do not exercise dissenters’ rights with respect to their Ordinary Shares.

PLEASE DO NOT SEND YOUR SHARE CERTIFICATES AT THIS TIME. IF THE MERGER IS COMPLETED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR SHARE CERTIFICATES.

If you have any questions or need assistance voting your Ordinary Shares, please contact Morrow Sodali LLC, the proxy solicitor, at (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America), or by email at NFH@info.morrowsodali.com.

The Merger Agreement, the Plan of Merger and the Transactions, including the Merger are described in the accompanying proxy statement. Copies of the Merger Agreement and the Plan of Merger are included as Annex A and Annex B, respectively, to the accompanying proxy statement. We urge you to read the entire accompanying proxy statement carefully.

 

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Notes:

1.

Where there are joint holders of any Ordinary Share, any one of such joint holders may vote, either in person or by proxy, in respect of such Ordinary Share as if he or she were solely entitled thereto, but if more than one of such joint holders are present at any meeting, the vote of the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the joint holders. For this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

​

2.

The instrument appointing a proxy must be in writing under the hand of the appointor or of his or her attorney duly authorized in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney or other person duly authorized.

​

3.

A proxy need not be a member (registered shareholder) of the Company.

​

4.

The chairman of the extraordinary general meeting may at his or her discretion direct that a proxy card will be deemed to have been duly deposited where sent by email or telefax upon receipt of email or telefax confirmation that the signed original thereof has been sent. A proxy card that is not deposited in the manner permitted will be invalid.

​

5.

Votes given in accordance with the terms of a proxy card will be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Ordinary Share or Ordinary Shares in respect of which the proxy is given, unless notice in writing of such death, insanity, revocation or transfer is received by the Company at the Company’s offices at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China, Attention: Judy Wang, at least two hours before the commencement of the extraordinary general meeting, or adjourned meeting at which such proxy is used.

​

BY ORDER OF THE BOARD OF DIRECTORS,​​

/s/ Kam Chung Leung

Kam Chung Leung
Chairman of the Board
December 2, 2021

 

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NEW FRONTIER HEALTH CORPORATION
NOTICE OF CONSENT SOLICITATION FOR WARRANTHOLDERS

Dear Warrantholders,

Attached hereto is a proxy and consent solicitation statement (this “proxy statement”) which solicits the consent of the registered holders of the Public Warrants, Private Placement Warrants and Forward Purchase Warrants (each as defined in the Warrant Agreement and collectively, the “Warrants”) of New Frontier Health Corporation (the “Company”), to amend the warrant agreement, dated as of June 27, 2018, between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”).

The Company is party to that certain agreement and plan of merger, dated as of August 4, 2021 (the “Merger Agreement”), by and among the Company, Unicorn II Holdings Limited, a Cayman Islands exempted company (“HoldCo”), Unicorn II Parent Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of HoldCo (“Parent”), Unicorn II Merger Sub Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Parent (“Merger Sub”), pursuant to which the Company, HoldCo, Parent and Merger Sub have agreed to the terms and conditions of a merger between the Company and Merger Sub (the “Merger”), with the Company being the surviving company of the Merger and becoming a wholly-owned subsidiary of Parent.

Consistent with the Company’s obligations under the Merger Agreement, the proposed amendment to the Warrant Agreement (the “Warrant Amendment”) will give effect to the provisions of the Merger Agreement such that at the effective time of the Merger, (a) each Warrant that is issued and outstanding immediately prior to the effective time of the Merger (other than the Warrants held by New Frontier Public Holding Ltd. (the “Excluded Warrants”)) will be cancelled in exchange for the right to receive US$2.70 per Warrant in cash without interest; and (b) in addition, in respect of each Warrant (other than the Excluded Warrants) for which the holder thereof has timely provided consent to the Warrant Amendment and has not revoked such consent prior to the deadline established by the Company for the warrantholders to submit consents, the holder of such Warrant will have the right to receive, for each such Warrant, a consent fee of US$0.30 in cash without interest. In addition, the Warrant Amendment will provide for the automatic termination (without liabilities to any party thereto) of the Warrant Agreement on the date falling six months after the effective time of the Merger.

The Warrant Amendment requires the approval of the holders of (i) at least 50% of the number of the outstanding Public Warrants and Forward Purchase Warrants and (ii) at least 50% of the number of the outstanding Private Placement Warrants. Only registered holders of Warrants as of the close of business in the Cayman Islands on December 6, 2021 are entitled to consent to the Warrant Amendment.

The board of directors of the Company requests that you sign, date and return the consent included as Annex H to this proxy statement in the enclosed envelope by 10:00 a.m. (Beijign time) on January 6, 2022 (the “Warrantholder Consent Deadline”).

If you have any questions or need assistance submitting consent with respect to your Warrants, please contact Morrow Sodali LLC, the proxy solicitor, at (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America), or by email at NFH@info.morrowsodali.com.

The Merger Agreement and the transactions contemplated thereby, including the Merger and the Warrant Amendment are described in the accompanying proxy statement. Copies of the Merger Agreement, the Plan of Merger and the substantive text of the Warrant Amendment are included as Annex A, Annex B and Annex C, respectively, to the accompanying proxy statement. We urge you to read the entire accompanying proxy statement carefully.

BY ORDER OF THE BOARD OF DIRECTORS,​​

/s/ Kam Chung Leung

Kam Chung Leung
Chairman of the Board
Decmeber 2, 2021

 

xiv

 

PROXY AND CONSENT SOLICITATION STATEMENT

Dated December 2, 2021

SUMMARY VOTING INSTRUCTIONS FOR SHAREHOLDERS

Ensure that your shares of New Frontier Health Corporation can be voted at the extraordinary general meeting by submitting your proxy card or by contacting your broker, bank or other nominee.

If your shares are registered in the name of a broker, bank or other nominee:   check the voting instruction card forwarded by your broker, bank or other nominee to see which voting options are available or contact your broker, bank or other nominee in order to obtain directions as to how to ensure that your shares are voted at the extraordinary general meeting.

If your shares are registered in your name:   submit your proxy as soon as possible by signing, dating and returning the accompanying proxy card in the enclosed postage-paid envelope, so that your shares can be voted at the extraordinary general meeting in accordance with your instructions.

If you submit your signed proxy card without indicating how you wish to vote, the shares represented by your proxy will be voted in favor of the resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as proxy, in which case the shares represented by your proxy will be voted (or not submitted for voting) as your proxy determines.

SUMMARY CONSENTING INSTRUCTIONS FOR WARRANTHOLDERS

Ensure that consent with respect to your warrants of New Frontier Health Corporation can be received by the Company by submitting your consent or by contacting your broker, bank or other nominee.

If your warrants are registered in the name of a broker, bank or other nominee:   check the instruction card forwarded by your broker, bank or other nominee to see which options are available or contact your broker, bank or other nominee in order to obtain directions as to how to give or withhold consent.

If your warrants are registered in your name:   submit your consent as soon as possible by signing, dating and returning the accompanying consent in the enclosed postage-paid envelope, so that consent with respect to your warrants can be received by the Company.

If you have any questions, require assistance with voting your proxy card or submitting consent with respect to your warrants, or need additional copies of proxy materials, please contact Morrow Sodali LLC, the proxy solicitor, at (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America), or by email at NFH@info.morrowsodali.com.

 

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TABLE OF CONTENTS

 

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3

 

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5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

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17

 

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18

 

19

 

20

 

21

 

QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER

The following questions and answers briefly address some questions you may have regarding the extraordinary general meeting and the Merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Q:

Why am I receiving this proxy statement?

​

A:

On August 4, 2021, the Company entered into the Merger Agreement with HoldCo, Parent and Merger Sub. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, at an extraordinary general meeting or at any adjournment of such extraordinary general meeting.

​

Q:

When and where will the extraordinary general meeting be held?

​

A:

The extraordinary general meeting will take place on January 7, 2022, at 10:00 a.m. (Beijing time) at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China.

​

Q:

What am I being asked to vote on?

​

A:

You will be asked to consider and vote on the following proposals:

​

•

as a special resolution, to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A;

​

•

as a special resolution, to authorize each of the directors and officers of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A; and

​

•

if necessary, as an ordinary resolution, to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

​

Q:

What is the Merger?

​

A:

The Merger is a going-private transaction pursuant to which Merger Sub will merge with and into the Company and cease to exist. Once the Merger Agreement is authorized and approved by the shareholders of the Company and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will merge with and into the Company, with the Company continuing as the Surviving Company after the Merger. If the Merger is completed, the Company will be a privately held company beneficially owned by certain members of the Buyer Group, and as a result of the Merger, the Ordinary Shares and Warrants will no longer be listed on the NYSE, and the Company will cease to be a publicly traded company.

​

Q:

What will I receive in the Merger if I own Ordinary Shares (that are not Excluded Shares)?

​

A:

If you own Ordinary Shares and the Merger is completed, you will be entitled to receive US$12.00 in cash for each Ordinary Share (other than the Excluded Shares) you own as of the Effective Time (unless you validly exercise and have not effectively withdrawn or lost your dissenters’ rights under Section 238 of the Cayman Islands Companies Act with respect to the Merger, in which event you will be entitled to the fair value of each Ordinary Share determined in accordance with Section 238 of the Cayman Islands Companies Act).

​

 

22

 

Please see “Special Factors — Material U.S. Federal Income Tax Consequences,” “Special Factors — Material PRC Income Tax Consequences” and “Special Factors — Material Cayman Islands Tax Consequences” beginning on page 73 for a more detailed description of the tax consequences of the Merger. You should consult with your own tax advisor for a full understanding of how the Merger will affect your U.S. federal, state, local, non-U.S. and other taxes.

Q:

How will the Company’s options and restricted share units be treated in the Merger?

​

A:

At the Effective Time, (a) each Company Option, whether vested or unvested, that is outstanding prior to the Effective Time will be cancelled in exchange for the right to receive, as soon as practicable after the Effective Time and in accordance with the HoldCo Share Plan, an option to purchase the same number of shares of HoldCo as the total number of the Ordinary Shares subject to such Company Option immediately prior to the Effective Time, at a per share exercise price equal to the applicable exercise price underlying the Company Option immediately prior to the Effective Time, subject to and in accordance with the terms of the Company Equity Plan and the relevant Company Option agreement in effect immediately prior to the Effective Time (with continuation of the applicable vesting terms); and (b) each Company RSU Award, whether vested or unvested, that is outstanding prior to the Effective Time will be cancelled in exchange for the right to receive, as soon as practicable after the Effective Time and in accordance with the HoldCo Share Plan, one restricted stock unit to acquire the same number of shares of HoldCo as the total number of Ordinary Shares subject to such Company RSU Award immediately prior to the Effective Time, subject to and in accordance with the terms of the Company Equity Plan and the relevant Company RSU Award agreement in effect immediately prior to the Effective Time (with continuation of the applicable vesting terms).

​

Q:

What effects will the Merger have on the Company?

​

A:

As a result of the Merger, the Company will cease to be a publicly-traded company and will be beneficially owned by certain members of the Buyer Group. Your Ordinary Shares in the Company will be cancelled and cease to exist, and you will no longer have any interest in the Company’s future earnings or growth. Following consummation of the Merger, the registration of the Ordinary Shares and Warrants and the Company’s reporting obligations with respect to the Ordinary Shares and Warrants under the Exchange Act will be terminated upon application to the SEC. In addition, upon completion of the Merger, the Ordinary Shares and Warrants will no longer be listed or traded on any stock exchange, including the NYSE.

​

Q:

When do you expect the Merger to be consummated?

​

A:

We are working towards completing the Merger as quickly as possible and currently expect the Merger to close during January 2022. In order to complete the Merger, we must obtain the Shareholder Approval at the extraordinary general meeting and the other closing conditions under the Merger Agreement must be satisfied or waived in accordance with the Merger Agreement.

​

Q:

What happens if the Merger is not consummated?

​

A:

If the Company’s shareholders do not authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, or if the Merger is not completed for any other reason, the Company’s shareholders will not receive any payment for their Ordinary Shares pursuant to the Merger Agreement, nor will the warrantholders of the Company receive any payment for their Warrants pursuant to the Merger Agreement. In addition, the Company will remain a publicly traded company and the Ordinary Shares and Warrants will continue to be listed and traded on the NYSE, provided that the Company continues to meet the NYSE’s listing requirements. In addition, the Company will remain subject to SEC reporting obligations. Therefore, the Company’s shareholders and warrantholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of the Ordinary Shares and Warrants.

​

Under specified circumstances in which the Merger Agreement is terminated, the Company may be required to pay HoldCo a termination fee, or HoldCo may be required to pay the Company a termination fee, in each case, as described under the caption “The Merger Agreement and Plan of Merger — Termination Fees” beginning on page 101.

 

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Q:

After the Merger is consummated, how will I receive the merger consideration for my Ordinary Shares?

​

A:

If you are a registered holder of Ordinary Shares, promptly after the Effective Time, a paying agent appointed by HoldCo will mail you (a) a letter of transmittal specifying how the delivery of the merger consideration to you will be effected and (b) instructions for effecting the surrender of share certificates in exchange for the applicable merger consideration. You will receive cash for your Ordinary Shares from the paying agent after you comply with these instructions. Upon surrender of your share certificates or a declaration of loss through making an affidavit, you will receive an amount equal to the number of your Ordinary Shares multiplied by US$12.00 in cash without interest, in exchange for the cancellation of your Ordinary Shares. The Per Share Merger Consideration may be subject to U.S. backup withholding if the paying agent has not received from you a properly completed and signed U.S. Internal Revenue Service Form W-8 or W-9.

​

If your Ordinary Shares are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee on how to surrender your Ordinary Shares and receive the merger consideration for those Ordinary Shares.

Q:

What vote of the Company’s shareholders is required to authorize and approve the Merger Agreement and the Plan of Merger?

​

A:

In order for the Merger to be consummated, the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, must be authorized and approved by a special resolution (as defined in the Cayman Islands Companies Act) of the Company’s shareholders, which requires an affirmative vote of holders of Ordinary Shares representing two-thirds or more of the voting power of Ordinary Shares present and voting in person or by proxy as a single class at the extraordinary general meeting.

​

Under Cayman Islands law, all shareholders of the Company, including holders of preference shares or shares of any other class of the Company, as at the Shareholder Record Date are entitled to attend and vote at the extraordinary general meeting. However, as at the date of this proxy statement, there are no preference shares or shares of any other class (other than the Ordinary Shares) issued or outstanding, and the Company will not issue any preference shares or shares of any other class (other than the Ordinary Shares) prior to the Shareholder Record Date, so that as a practical matter only holders of Ordinary Shares will be entitled to attend and vote at the extraordinary general meeting.

At the close of business in the Cayman Islands on December 6, 2021, the Shareholder Record Date for the extraordinary general meeting, 131,847,694 Ordinary Shares are expected to be issued and outstanding and entitled to vote at the extraordinary general meeting and no preference shares or shares of any other class are expected to be issued or outstanding.

Pursuant to the Support Agreement, among other things, the Supporting Securityholders have agreed to vote in favor of the approval, adoption and authorization of the Merger Agreement and the approval of the Merger and any other transactions contemplated by the Merger Agreement. As of the date of this proxy statement, the Supporting Securityholders collectively beneficially own 77,039,971 Ordinary Shares, which represent approximately 58.43% of the total issued and outstanding Ordinary Shares, disregarding the Ordinary Shares that the Supporting Securityholders may hold a power to vote but do not hold dispositive power. In addition, NFPH holds a power to vote granted by certain shareholders of the Company (not including any shareholder who is already a Supporting Securityholder) in respect of 10,237,559 Ordinary Shares, representing approximately 7.76% of the total issued and outstanding Ordinary Shares.

Q:

What vote of the Company’s shareholders is required to approve the proposal to adjourn the extraordinary general meeting, if necessary, to solicit additional proxies?

​

A:

The proposal to adjourn the extraordinary general meeting, if necessary, to solicit additional proxies must be authorized and approved by an affirmative vote of holders of Ordinary Shares representing a majority of the voting power of the Ordinary Shares present and voting in person or by proxy as a single class at the extraordinary general meeting.

​

 

24

 

Q:

How does the Board recommend that I vote on the proposals?

​

A:

After careful consideration and upon the unanimous recommendation of the Special Committee, the Board recommends that the shareholders of the Company vote:

​

•

FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A;

​

•

FOR the proposal to authorize each of the directors and officers of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A; and

​

•

FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

​

You should read “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 38 for a discussion of the factors that the Special Committee and the Board considered in deciding to recommend the approval of the Merger Agreement. In addition, in considering the recommendation of the Special Committee and the Board with respect to the Merger Agreement, you should be aware that some of the Company’s directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of the Company’s shareholders generally. See “Special Factors — Interests of Certain Persons in the Merger” beginning on page 69.

Q:

Who is entitled to vote at the extraordinary general meeting?

​

A:

The Shareholder Record Date is December 6, 2021. Only shareholders entered in the register of members of the Company at the close of business in the Cayman Islands on the Shareholder Record Date or their proxy holders are entitled to vote at the extraordinary general meeting or any adjournment thereof.

​

Q:

What constitutes a quorum for the extraordinary general meeting?

​

A:

Shareholders present in person or by proxy representing at least a majority of the issued and outstanding Ordinary Shares on the Shareholder Record Date will constitute a quorum for the extraordinary general meeting.

​

Q:

How will our directors and executive officers vote on the proposal to authorize and approve the Merger Agreement?

​

A:

Pursuant to the Support Agreement, certain Supporting Securityholders have agreed to vote in favor of the approval, adoption and authorization of the Merger Agreement and the approval of the Merger and any other transactions contemplated by the Merger Agreement. As of the date of this proxy statement, the Supporting Securityholders collectively beneficially own 77,039,971 Ordinary Shares, which represent approximately 58.43% of the total issued and outstanding Ordinary Shares, disregarding the Ordinary Shares that the Supporting Securityholders may hold a power to vote but do not hold dispositive power. In addition, NFPH holds a power to vote granted by certain shareholders of the Company (not including any shareholder who is already a Supporting Securityholder) in respect of 10,237,559 Ordinary Shares, representing approximately 7.76% of the total issued and outstanding Ordinary Shares. As of the date of this proxy statement, our directors and executive officers who are not Supporting Securityholders beneficially own, in the aggregate, less than 1% of the voting power of the total issued and outstanding Ordinary Shares. These directors and executive officers have informed us that they intend, as of the date of this proxy statement, to vote all their Ordinary Shares in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger. See “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 109 for additional information.

​

 

25

 

Q:

Do any of the Company’s directors or executive officers have interests in the Merger that may differ from those of other shareholders?

​

A:

Yes. Some of the Company’s directors or executive officers have interests in the Merger that may differ from those of other shareholders. See “Special Factors — Interests of Certain Persons in the Merger” beginning on page 69 for a more detailed discussion of how some of the Company’s directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of the Company’s shareholders generally.

​

Q:

How do I vote if my Ordinary Shares are registered in my name?

​

A:

If Ordinary Shares are registered in your name (that is, you do not hold through a bank or broker) as of the Shareholder Record Date, you should simply indicate on your proxy card how you want to vote, and sign and mail your proxy card in the accompanying return envelope as soon as possible so that it is received by the Company no later than January 6, 2022 at 10:00 a.m. (Beijing time), the deadline to lodge your proxy card, so that your Ordinary Shares may be represented and voted at the extraordinary general meeting.

​

Alternatively, you can attend the extraordinary general meeting and vote in person. To attend the extraordinary general meeting, you must present certain documents to verify your identities, such as your identification card or passport and your share certificate. If you decide to sign and send in your proxy card, and do not indicate how you want to vote, Ordinary Shares represented by your proxy will be voted FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, FOR the proposal to authorize each of the directors and officers of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as proxy, in which case Ordinary Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. If your Ordinary Shares are held by your broker, bank or other nominee, please see below for additional information.

Q:

If my Ordinary Shares are held in a brokerage, bank or other nominee account, will my broker, bank or other nominee vote my Ordinary Shares on my behalf?

​

A:

Your broker, bank or other nominee will only vote your Ordinary Shares on your behalf or give voting instructions with respect to your Ordinary Shares if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your broker, bank or other nominee regarding how to instruct it to vote your Ordinary Shares. If you do not instruct your broker, bank or other nominee how to vote your Ordinary Shares that it holds, those Ordinary Shares may not be voted.

​

Q:

What will happen if I abstain from voting or fail to vote on the proposal to authorize and approve the Merger Agreement?

​

A:

If you abstain from voting, fail to cast your vote in person, fail to return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to your broker, bank, or other nominee, your vote will not be counted; provided that if you are a holder of Ordinary Shares and submit a signed proxy card without indicating how you wish to vote, the Ordinary Shares represented by your proxy card will be voted FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, FOR the proposal to authorize each of the directors and officers of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit

​

 

26

 

additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Ordinary Shares represented by your proxy will be voted (or not submitted for voting) as your proxy determines.

Q:

May I change my vote?

​

A:

Yes. If you are a holder of Ordinary Shares, you may change your vote in one of the following three ways:

​

•

First, you may revoke a proxy by written notice of revocation given to the chairman of the extraordinary general meeting at least two hours before the commencement of the extraordinary general meeting. Any written notice revoking a proxy should also be sent to the Company’s offices at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China, Attention: Judy Wang, at least two hours before the commencement of the extraordinary general meeting.

​

•

Second, you may complete, date and submit a new proxy card bearing a later date than the proxy card sought to be revoked to the Company so that it is received by the Company no later than 10:00 a.m. (Beijing time) on January 6, 2022, which is the deadline to lodge your proxy card.

​

•

Third, you may attend the extraordinary general meeting and vote in person. Attendance, by itself, will not revoke a proxy. It will only be revoked if the shareholder actually votes at the extraordinary general meeting.

​

If you hold Ordinary Shares through a broker, bank or other nominee and have instructed the broker, bank or other nominee to vote your Ordinary Shares, you must follow directions received from the broker, bank or other nominee to change your instructions.

Q:

What should I do if I receive more than one set of voting materials?

​

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if you hold your Ordinary Shares in more than one brokerage, bank or other nominee account, you will receive a separate voting instruction card for each brokerage, bank or other nominee account in which you hold Ordinary Shares. If you are a holder of record and your Ordinary Shares are registered in more than one name, you will receive more than one proxy or voting instruction card. Please submit each proxy card that you receive.

​

Q:

If I am a holder of certificated shares, should I send in my share certificates now?

​

A:

No. After the Merger is consummated, you will be sent a form of letter of transmittal with detailed written instructions for exchanging your share certificates for the merger consideration. Please do not send in your share certificates now.

​

All holders of uncertificated shares (i.e., holders whose Ordinary Shares are held in book entry) will automatically receive their merger consideration (net of applicable fees and taxes) shortly after the Merger is consummated without any further action required on the part of such holders.

If your Ordinary Shares are held in “street name” by your broker, bank or other nominee you will receive instructions from your broker, bank or other nominee as to how to effect the surrender of your share certificates in exchange for the merger consideration.

Q:

What happens if I sell my Ordinary Shares before the extraordinary general meeting?

​

A:

The Shareholder Record Date for voting at the extraordinary general meeting is earlier than the date of the extraordinary general meeting and the date that the Merger is expected to be consummated. If you transfer your Ordinary Shares after the Shareholder Record Date for voting but before the extraordinary general meeting, you will retain your right to vote at the extraordinary general meeting unless you have given, and not revoked, a valid proxy to the person to whom you transfer your Ordinary

​

 

27

 

Shares, but will transfer the right to receive the merger consideration in cash without interest to such person, so long as such person is registered as the owner of such Ordinary Shares when the Merger is consummated.

Q:

Am I entitled to dissenters’ rights?

​

A:

Shareholders who dissent from the Merger will have the right to receive payment of the fair value of their Ordinary Shares in accordance with Section 238 of the Cayman Islands Companies Act if the Merger is consummated, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Act for the exercise of dissenters’ rights, a copy of which is attached as Annex E to this proxy statement. The fair value of each of their Ordinary Shares as determined under the Cayman Islands Companies Act could be more than, the same as, or less than the Per Share Merger Consideration they would receive pursuant to the Merger Agreement if they do not exercise dissenters’ rights with respect to their Ordinary Shares.

​

We encourage you to read the section of this proxy statement entitled “Dissenters’ Rights” beginning on page 104 as well as “Annex E — Cayman Islands Companies Act Cap. 22 (Law 3 of 1961, as consolidated and revised) — Section 238” to this proxy statement carefully and to consult your own Cayman Islands legal counsel if you desire to exercise your dissenters’ rights.

Q:

What do I need to do now?

​

A:

We urge you to read this proxy statement carefully, including its annexes, exhibits, attachments and the other documents referred to or incorporated by reference herein and to consider how the Merger affects you as a shareholder. After you have done so, please vote as soon as possible.

​

Q:

Will any proxy solicitor be used in connection with the extraordinary general meeting?

​

A:

Yes. To assist in the solicitation of proxies, the Company has engaged Morrow Sodali LLC as its proxy solicitor.

​

Q:

Who can help answer my questions?

​

A:

If you have any questions about the Merger or if you need additional copies of this proxy statement or the accompanying proxy card, you should contact Morrow Sodali LLC, the proxy solicitor, at (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America), or by email at NFH@info.morrowsodali.com.

​

In order for you to receive timely delivery of any additional copy of this proxy statement or the accompanying proxy card in advance of the extraordinary general meeting, you must make your request no later than ten days prior to the date of the extraordinary general meeting.

 

28

 

QUESTIONS AND ANSWERS ABOUT THE WARRANT AMENDMENT

The following questions and answers briefly address some questions you may have regarding the Warrant Amendment. These questions and answers may not address all questions that may be important to you as a warrantholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Q:

Why am I receiving this proxy statement?

​

A:

You are receiving this proxy statement as a warrantholder, in connection with the solicitation of consent by the Board in favor of the Warrant Amendment.

​

Q:

What is the Warrant Amendment?

​

A:

The Warrant Amendment will provide, among other things, that, subject to the consummation of the Merger, (a) at the Effective Time, (i) each Warrant that is issued and outstanding immediately prior to the Effective Time (other than the Excluded Warrants) will be cancelled and converted solely into the right to receive the Per Warrant Merger Consideration of US$2.70 in cash without interest, (ii) in addition, in respect of each Warrant (other than the Excluded Warrants) for which the holder thereof has timely provided consent to the Warrant Amendment, and has not revoked such consent, prior to the Warrantholder Consent Deadline, the holder of such Warrant will receive a Per Warrant Consent Fee of US$0.30 in cash without interest, and (iii) each Excluded Warrant will be cancelled without payment of any consideration; and (b) the Warrant Agreement will be automatically terminated on the date falling six months after the Effective Time.

​

Q:

What will I receive in the Merger if I own Warrants?

​

A:

If you own Warrants and the Merger is completed, you will be entitled to receive US$2.70 in cash for each Warrant (other than the Excluded Warrants) you own as of the Effective Time. In addition to the above, if you have timely provided consent to the Warrant Amendment and has not revoked such consent prior to the Warrantholder Consent Deadline, you will be entitled to receive, for each such Warrant, a Per Warrant Consent Fee of US$0.30 in cash without interest.

​

Please see “Special Factors — Material U.S. Federal Income Tax Consequences,” “Special Factors — Material PRC Income Tax Consequences” and “Special Factors — Material Cayman Islands Tax Consequences” beginning on page 73 for a more detailed description of the tax consequences of the Merger. You should consult with your own tax advisor for a full understanding of how the Merger will affect your U.S. federal, state, local, non-U.S. and other taxes.

Q:

What happens if the Warrant Amendment is not approved?

​

A:

It is a condition to the obligations of HoldCo, Parent, Merger Sub and the Company to complete the Merger that the Warrantholder Consent is obtained and the Warrant Amendment takes effect no later than the closing of the Merger. Unless such condition is duly waived by the parties to the Merger Agreement, the Merger will not be completed without the approval of the Warrant Amendment. If the Merger fails to consummate, none of the Company’s shareholders and warrantholders will receive any payment pursuant to the Merger Agreement. In addition, the Company will remain a publicly traded company and the Ordinary Shares and Warrants will continue to be listed and traded on the NYSE, provided that the Company continues to meet the NYSE’s listing requirements. In addition, the Company will remain subject to SEC reporting obligations. Therefore, the Company’s shareholders and warrantholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of the Ordinary Shares and Warrants.

​

Q:

After the Merger is consummated, how will I receive the merger consideration for my Warrants?

​

A:

If you are a registered holder of Warrants, promptly after the Effective Time, a paying agent appointed by HoldCo will mail you (a) a letter of transmittal specifying how the delivery of the merger consideration to you will be effected and (b) instructions for effecting the surrender of warrant certificates in exchange for the applicable merger consideration. You will receive cash for your Warrants

​

 

29

 

from the paying agent after you comply with these instructions. Upon surrender of your warrant certificates or a declaration of loss through making an affidavit, you will receive an amount equal to the number of your Warrants multiplied by the Per Warrant Merger Consideration of US$2.70 in cash without interest, in exchange for the cancellation of your Warrants. In addition, in respect of each Warrant for which you have timely provided consent to the Warrant Amendment and have not revoked such consent prior to the Warrantholder Consent Deadline, you will have the right to receive, for each such Warrant, a Per Warrant Consent Fee of US$0.30 in cash without interest. The Per Warrant Merger Consideration and the Per Warrant Consent Fee may be subject to U.S. backup withholding if the paying agent has not received from you a properly completed and signed U.S. Internal Revenue Service Form W-8 or W-9.

If your Warrants are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee on how to surrender your Warrants and receive the merger consideration for those Warrants.

Q:

What is the required vote to approve the Warrant Amendment?

​

A:

The Warrant Amendment requires the affirmative vote or written consent of the holders of (i) at least 50% of the number of the outstanding Public Warrants and Forward Purchase Warrants and (ii) at least 50% of the number of the outstanding Private Placement Warrants.

​

Q:

Who is entitled to consent to Warrant Amendment?

​

A:

All holders of record of the Warrants as of the close of business on December 6, 2021 (the “Warrantholder Record Date”) are entitled to consent to the Warrant Amendment.

​

Q:

How do I give consent to the Warrant Amendment if my Warrants are registered in my name?

​

A:

If Warrants are registered in your name (that is, you do not hold through a bank or broker) as of the Warrantholder Record Date, you should simply sign, date and return the accompanying consent included as Annex H to this proxy statement as soon as possible so that it is received by the Company no later than the Warrantholder Consent Deadline.

​

Q:

If my Warrants are held in a brokerage, bank or other nominee account, will my broker, bank or other nominee give consent to the Warrant Amendment on my behalf?

​

A:

Your broker, bank or other nominee will only give consent to the Warrant Amendment on your behalf if you instruct it to do so. Therefore, it is important that you promptly follow the directions provided by your broker, bank or other nominee regarding whether to consent or withhold consent to the Warrant Amendment.

​

Q:

What if I do not return the written consent to the Warrant Amendment?

​

A:

Because the Warrant Amendment requires the affirmative vote or written consent of the holders of (i) at least 50% of the number of the outstanding Public Warrants and Forward Purchase Warrants and (ii) at least 50% of the number of the outstanding Private Placement Warrants, your failure to respond will have the same effect as a withheld consent. If the Company receives a sufficient number of written consents to effect the Warrant Amendment, even if you have withheld your consent, you and other non-consenting holders of the Warrants will nevertheless be bound by the Warrant Amendment but will not receive any consent fee.

​

Q:

Can I vote against the Warrant Amendment?

​

A:

Yes, simply not delivering an executed written consent in favor of the Warrant Amendment will have the same effect as a vote against the Warrant Amendment.

​

Q:

Can I revoke my consent after I have delivered it?

​

A:

You may revoke your written consent at any time prior to the earlier of (a) the Warrantholder Consent Deadline and (b) the time that we receive the Warrantholder Consent and execute the Warrant Amendment with Continental Stock Transfer & Trust Company, the warrant agent. A revocation may

​

 

30

 

be in any written form validly signed and dated by you, as long as it clearly states that the consent previously given is no longer effective. The revocation should be sent to us at 10 Jiuxianqiao Road, Hengtong Business Park, B7 Building, 1/F, Chaoyang District, 100015, Beijing, China, Attention: Judy Wang. You will not receive the consent fee of US$0.30 per Warrant if you revoke the written consent prior to the Warrantholder Consent Deadline.

Q:

By when must we receive a sufficient number of consents to the Warrant Amendment?

​

A:

We are requesting that you send us your written consent by 10:00 a.m. (Beijing time) on January 6, 2022, the Warrantholder Consent Deadline. The Board may extend the deadline to receive written consents in its sole discretion.

​

Q:

When will the Warrant Amendment take effect?

​

A:

The Company will execute the Warrant Amendment with Continental Stock Transfer & Trust Company, the warrant agent, promptly upon obtaining the Warrantholder Consent, which may be prior to the Warrantholder Consent Deadline. Warrantholders who validly consented after such effective time but before the Warrantholder Consent Deadline (if applicable) and have not validly revoked their consent prior to the Warrantholder Consent Deadline, will still receive the consent fee of US$0.30 per Warrant.

​

Q:

What happens if I sell my Warrants before the Warrantholder Consent Deadline?

​

A:

The Warrantholder Record Date for giving consent to the Warrant Amendment is earlier than the Warrantholder Consent Deadline and the date that the Merger is expected to be consummated. If you transfer your Warrants after the Warrantholder Record Date but before the Warrantholder Consent Deadline, you retain your right to consent to the Warrant Amendment but will transfer the right to receive the merger consideration in cash without interest to such person, so long as such person is registered as the owner of such Warrants when the Merger is consummated.

​

Q:

Am I entitled to dissenters’ rights?

​

A:

Appraisal rights or dissenters’ rights are not available to the warrantholders of the Company in connection with the Warrant Amendment or the Merger.

​

Q:

What do I need to do now?

​

A:

We urge you to read this proxy statement carefully, including its annexes, exhibits, attachments and the other documents referred to or incorporated by reference herein and to consider how the Warrant Amendment and Merger affect you as a warrantholder. After you have done so, you may consent to the Warrant Amendment by signing and dating the accompanying consent included as Annex H to this proxy statement and returning it in the enclosed envelope as soon as possible.

​

Q:

Will any consent solicitor be used in connection with the Warrant Amendment?

​

A:

Yes. To assist in the solicitation of consents from warrantholders, the Company has engaged Morrow Sodali LLC as its consent solicitor.

​

Q:

Who can help answer my questions?

​

A:

If you have any questions about the Warrant Amendment or Merger or if you need additional copies of this proxy statement or the accompanying consent included as Annex H to this proxy statement, you should contact Morrow Sodali LLC, the proxy solicitor, at (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America), or by email at NFH@info.morrowsodali.com.

​

In order for you to receive timely delivery of any additional copy of this proxy statement or the accompanying consent included as Annex H to this proxy statement prior to the Warrantholder Consent Deadline, you must make your request no later than ten days prior to the Warrantholder Consent Deadline.

 

31

 

SPECIAL FACTORS

Background of the Merger

All dates and times referenced in this Background of the Merger refer to China Standard Time.

The Board and senior management of the Company periodically review the Company’s long-term strategic plans with the goal of maximizing shareholder value. As part of this ongoing process, the Board and Company management also have, from time to time, considered strategic alternatives that may be available to the Company with the objective of increasing shareholder value, including potential commercial and strategic business partnerships, acquisition transactions, new business lines, and capital market events.

In late 2020, NFPH began to consider the possibility of a potential going-private transaction with respect to the Company and discussed their preliminary thoughts on such potential transaction with attorneys at Simpson Thacher & Bartlett LLP (“Simpson Thacher”), which later served as the U.S. legal counsel to NFPH and the Buyer Group in connection with the Proposed Transaction (as defined below).

At various times in December 2020 and January 2021, NFPH held preliminary discussions with certain existing shareholders of the Company to explore the possibility of a potential going-private transaction. On February 9, 2021, NFPH and certain existing shareholders of the Company entered into a consortium agreement regarding the cooperation and participation in the evaluation, negotiation and consummation of an acquisition transaction with respect to the Company.

On the same day, NFPH, on behalf of then members of the Buyer Group, submitted a preliminary, non-binding proposal (the “Proposal”) to the Board to acquire all outstanding Ordinary Shares not already beneficially owned by such members of the Buyer Group or their affiliates in a going-private transaction for US$12.00 per share in cash, which was supplemented by a clarification on the same day from representatives of then members of the Buyer Group indicating that the Buyer Group also proposed to acquire all outstanding Warrants not already beneficially owned by such members of the Buyer Group or their affiliates in connection with the going-private transaction (collectively, the “Proposed Transaction”). The Proposal stated that the price set forth in the Proposal represented a premium of approximately 27.9% to the closing trading price of the Ordinary Shares on February 8, 2021 and a premium of 36.8% to the volume-weighted average closing price during the 30 trading days through February 8, 2021.

On February 10, 2021, the Board held a telephonic meeting to discuss the Proposal. At the meeting, the Board authorized immediate public announcement of the Company’s receipt of the Proposal and indicated its intention to form a special committee to formally review and assess the Proposal. After the Board meeting, on the same day, the Company issued a press release announcing its receipt of the Proposal.

On February 16, 2021, then members of the Buyer Group jointly filed a Schedule 13D (the “Original Schedule 13D”) with the SEC as a “group” with respect to the submission of the Proposal.

On February 25, 2021, the Board held a telephonic meeting to further discuss the Proposal and resolved to establish the Special Committee, consisting of three independent directors, Dr. Edward Leong Che-hung, Professor Frederick Ma Si-hang and Mr. Lawrence Chia, with Mr. Chia to serve as the chairman of the Special Committee, to consider and negotiate the Proposed Transaction and other alternatives available to the Company, including the option to take no action. The Board delegated to the Special Committee the full power and authority of the Board to, among other things: (a) review and evaluate the terms and conditions, and determine the advisability, of the Proposal and any alternatives thereto and whether in the judgment of the Special Committee the Proposal or any alternatives thereto is in the best interests of the Company, (b) negotiate with any party the Special Committee deems appropriate with respect to the terms and conditions of the Proposal or any alternatives thereto and, if the Special Committee deems appropriate, but subject to any prior approval by the Board required by the articles of association of the Company, approve the execution and delivery on behalf of the Company of any definitive transaction documents to effect the Proposal or any alternatives thereto; (c) determine whether the Proposal or any alternatives thereto is beneficial to the Company and on arm’s length terms and conditions; (d) assist in the preparation of any public filings as may be required with respect to matters relating to the Proposal or any alternatives thereto; (e) recommend to the Board what actions, if any, should be taken with respect to the Proposal and any alternatives thereto, including to approve or elect not to pursue the Proposal and any alternatives thereto;

 

32

 

(f) retain such legal counsel, financial advisors and other professionals, consultants and agents, each to perform such services and render such advice or opinions, as the Special Committee may deem necessary, desirable or convenient to assist it in connection with the discharge of its duties; (g) establish the procedures for the conduct of the Special Committee’s business as it from time to time deems necessary, desirable or convenient; and (h) do all other acts as may, in the Special Committee’s judgment, be necessary, desirable or convenient to carry out its duties.

Following its formation, the Special Committee interviewed law firms and financial advisory firms and after evaluating the candidates’ credentials, experience and independence, the Special Committee engaged Davis Polk & Wardwell LLP (“Davis Polk”) as its legal counsel on March 11, 2021 and Duff & Phelps as its financial advisor on March 13, 2021.

On March 12, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. At the meeting, representatives of Duff & Phelps discussed its role as the financial advisor to the Special Committee and the financial analyses it would conduct. Representatives of Davis Polk introduced the legal considerations with respect to the review and evaluation of the Proposal and possible alternative transactions, including the fiduciary duties of the directors, the relationship between the Special Committee and the Board, and considerations for a fair process.

On March 15, 2021, Davis Polk and Simpson Thacher had a telephonic meeting and discussed certain preliminary matters regarding the Proposal and the Proposed Transaction, including financing plan of then members of the Buyer Group, the proposed treatment of outstanding Warrants and the due diligence process.

On March 17, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps to discuss, among other things, the form of confidentiality agreement (the “Confidentiality Agreement”) to be used with then members of the Buyer Group in furtherance of its due diligence review of the Company. At the meeting, representatives of Duff & Phelps also reported to the Special Committee that Duff & Phelps had reached out to the management of the Company and requested to conduct financial due diligence review of the Company.

Between March 17, 2021 and March 25, 2021, Davis Polk exchanged drafts of the Confidentiality Agreement with Simpson Thacher and discussed with the Special Committee the terms of the Confidentiality Agreement. On March 25, 2021, with the approval of the Special Committee, the Company entered into the Confidentiality Agreement with NFPH. The Confidentiality Agreement contains customary provisions restricting disclosure and use of confidential information by then members of the Buyer Group relating to the Company or the Proposed Transaction and a 12-month “standstill” provision restricting such members of the Buyer Group from acquiring additional securities of the Company without the Special Committee’s consent.

On March 18, 2021, the Company issued a press release announcing the formation of the Special Committee and the engagement of Davis Polk and Duff & Phelps by the Special Committee as its legal counsel and financial advisor, respectively.

On March 24, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk, Duff & Phelps and Maples and Calder (Hong Kong) LLP (“Maples”), Cayman Islands legal counsel to the Special Committee. During the meeting, Maples reviewed with the Special Committee the authority and fiduciary duties of the Board and the Special Committee in considering the Proposed Transaction.

On March 25, 2021, NFPH commenced its efforts to engage potential equity investors in connection with the Proposed Transaction. Between March 25, 2021 and August 3, 2021, NFPH and its advisors discussed the terms of the Proposed Transaction with potential equity investors, negotiated the terms of the Interim Investors Agreement with then members of the Buyer Group (including new equity investors) and solicited input from then members of the Buyer Group on the form of Equity Commitment Letter and Limited Guarantee.

On March 29, 2021, NFPH and its advisors (including PricewaterhouseCoopers, Simpson Thacher and Global Law Firm) commenced legal, tax and financial due diligence for the Proposed Transaction.

 

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Between late March and early May of 2021, the Buyer Group and its advisors conducted due diligence on the Company. During this time, the Buyer Group and its financing legal advisor, Kirkland & Ellis LLP (“Kirkland”) also commenced discussion of potential debt financing arrangements with SPDB and CMB.

On April 21, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps, during which representatives of Duff & Phelps reported the status of its financial due diligence review on the Company.

On May 14, 2021, on behalf of the Buyer Group, Simpson Thacher provided Davis Polk with the initial draft of the Merger Agreement.

On May 19, 2021, representatives of Simpson Thacher and Davis Polk convened a telephonic meeting to discuss the treatment of Warrants and relevant provisions of the Merger Agreement.

On May 26, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. At the meeting, representatives of Davis Polk reviewed with the Special Committee the key issues contained in the initial draft of the Merger Agreement, including, among other things: (a) treatment of the outstanding Warrants, including the proposal to pay the warrantholders a fixed cash price per Warrant at the closing of the Merger and the amendment of the Warrant Agreement in connection therewith; (b) treatment of Company Options and Company RSU Awards; (c) the representations and warranties of the Company, on the one hand, and of HoldCo, Parent and Merger Sub, on the other hand; (d) the composition of the financing package, including debt financing, equity financing and rollover of Ordinary Shares and Warrants; (e) the interim covenants of the Company; (f) the “no-shop” covenant, including the absence of any “go-shop” right; (g) the requirement that the Company still hold a shareholders meeting to vote on the Proposed Transaction even if the Board no longer recommends for it; (h) the closing conditions, including the absence of a “majority of the minority vote” requirement, and a condition relating to the maximum percentage of Dissenting Shares; and (i) the amounts of and triggers for the payment of termination fees, including the requirement that the Company pay a termination fee if the Merger Agreement is terminated under certain circumstances and the Company enters into or consummates a competing transaction within 12 months of such termination. After discussing these issues with Davis Polk and Duff & Phelps, the Special Committee instructed Davis Polk to revise the Merger Agreement by, among other things: (i) removing from the closing conditions the receipt of sufficient warrantholders’ consents for the Warrant Amendment; (ii) deleting the requirement to hold a shareholders’ meeting in the event the Board changed its recommendation for the Proposed Transaction; (iii) including a “majority of the minority vote” requirement as a closing condition; (iv) deleting the closing condition relating to the Dissenting Shares; (v) rejecting the tail period termination fee trigger; and (vi) narrowing the scope of the representations and warranties to be provided by the Company and the interim covenants of the Company. The Special Committee decided not to request a “go-shop” right after considering that (x) the Proposal had been disclosed to the public several months ago and the Company had not received any indication of interests from any third party regarding an alternative proposal, (y) the Buyer Group owned a significant stake in the Company and would likely be able to block a competing proposal, and (z) the go-shop process could potentially cause significant disruption to the operations of the Company and increased risk of leaking confidential information concerning the Company. For the same reasons, the Special Committee decided not to conduct a pre-signing market check.

On June 3, 2021, Davis Polk provided Simpson Thacher with a revised draft of the Merger Agreement, which reflected the Special Committee’s instructions and the feedback from the Company management with respect to the representations, warranties and interim operating covenants of the Company.

Also on June 3, 2021, a representative of the Company management provided Duff & Phelps with a copy of the financial projections prepared by the management, which Duff & Phelps sent to the Special Committee for review.

On June 8, 2021, Davis Polk and Simpson Thacher had a telephonic meeting to discuss the positions and reasoning of certain major issues in the revised draft of the Merger Agreement circulated by Davis Polk on June 3, 2021.

On June 9, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. At the meeting, Duff & Phelps reviewed with the Special Committee the financial

 

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projections provided by the management of the Company. The Special Committee noted that they would further review the Company’s financial projection in details.

On June 15, 2021, Simpson Thacher provided Davis Polk with a revised draft of the Merger Agreement. The revised draft of the Merger Agreement accepted certain changes requested by the Special Committee, including the scope of certain representations and warranties and certain interim covenants of the Company, provisions on permitted discussions on competing proposals, the Buyer Group’s obligation to deliver certain ancillary documents to the Company prior to signing and the amounts of termination fees. On the other hand, the revised draft rejected the Special Committee’s positions on certain other issues, including: (a) deleting the “majority of the minority vote” requirement as a closing condition; (b) reinstating the closing condition on requisite warrantholders’ consent; (c) reinstating the requirement to hold a shareholders’ meeting in the event the Board changed its recommendation for the Proposed Transaction; (d) reinstating the closing condition relating to the Dissenting Shares; and (e) reinstating the tail period termination fee trigger.

On June 16, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. At the meeting, Davis Polk reviewed with the Special Committee certain key outstanding issues contained in the revised draft of the Merger Agreement sent by Simpson Thacher on June 15, 2021. In addition, the Special Committee discussed the financial projections prepared by Company management with representatives of Duff & Phelps. Duff & Phelps walked through the key items and assumptions of the financial projections with the Special Committee and summarized the discussions between Duff & Phelps and Company management during which Company management had answered Duff & Phelps queries on the management projections. After discussions, the Special Committee resolved to approve the use of such financial projections by Duff & Phelps for its financial analysis of the Company and the distribution of such financial projections to the Buyer Group. Please see “Special Factors — Certain Financial Projections” beginning on page 47 for a summary of these financial projections. At the meeting, the Special Committee also decided to request the Buyer Group to increase its proposed merger price and instructed Duff & Phelps to prepare a draft request.

Also on June 16, 2021, Simpson Thacher provided a draft of the CMB Debt Commitment Letter to Davis Polk for review.

Between June 21, 2021 and June 23, 2021, Davis Polk, Simpson Thacher and Kirkland held several discussions and agreed on the final version of the CMB Debt Commitment Letter.

On June 21, 2021, Simpson Thacher sent to Davis Polk the initial drafts of the form of the Limited Guarantees and the form of the Equity Commitment Letters.

On June 22, 2021, a representative of Duff & Phelps sent an email on behalf of the Special Committee to Simpson Thacher, requesting the Buyer Group to submit an improved offer with an increased merger price. In response, the Buyer Group later requested a meeting with the Special Committee to present the Buyer Group’s view of the Proposed Transaction, which was scheduled to June 30, 2021.

Also on June 22, 2021, Simpson Thacher sent to Davis Polk the draft of the Interim Investors Agreement for review.

On June 24, 2021, representatives of Davis Polk and Simpson Thacher discussed key outstanding issues in the Merger Agreement over a call.

On June 25, 2021, Davis Polk provided Simpson Thacher with a further revised draft of the Merger Agreement, reflecting the positions of the Special Committee, including, among other things, (a) removing the closing condition on requisite warrantholders’ consent; (b) accepting the requirement to hold a shareholders’ meeting in the event the Board changed its recommendation for the Proposed Transaction; (c) reinstating the “majority of the minority vote” requirement as a closing condition; (d) removing the closing condition relating to the Dissenting Shares; and (e) removing the tail period termination fee trigger.

On June 25, 2021, Kirkland sent to Davis Polk an executed copy of the CMB Debt Commitment Letter dated the same day, pursuant to which CMB agreed to make available to Merger Sub a senior term loan facility.

 

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On June 29, 2021, Simpson Thacher provided Davis Polk with a further revised draft of the Merger Agreement, which rejected the positions of the Special Committee regarding the major outstanding issues as set forth in the draft circulated by Davis Polk on June 25, 2021.

On June 30, 2021, the Special Committee held a telephonic meeting with representatives of the Buyer Group, with representatives of Davis Polk and Duff & Phelps present. At the meeting, Mr. Carl Wu, as representative of the Buyer Group, gave a presentation on the Buyer Group’s view of the Proposed Transaction. Mr. Carl Wu discussed, among other things, (a) the key terms of the Proposed Transaction, (b) the high premium represented by the US$12.00 per share price offered by the Buyer Group, (c) uncertainties regarding the Company’s business growth and (d) attractive opportunity for the Company’s shareholders to be cashed out in the Proposed Transaction. Following Mr. Carl Wu’s presentation, the Special Committee members asked questions to Mr. Carl Wu, including the rollover arrangement, the projection of the Company’s business, the pricing of the Warrants in the Proposed Transaction, and whether any regulatory approval would be required for the Proposed Transaction. Following the discussions between the Special Committee and representatives of the Buyer Group, the representatives of the Buyer Group left the meeting. Davis Polk continued to brief the Special Committee on the key outstanding issues in the latest draft of the Merger Agreement, and Duff & Phelps reported that it was continuing its financial analysis of the Company.

Between July 6, 2021 and July 13, 2021, Davis Polk and Simpson Thacher negotiated and exchanged drafts of the Merger Agreement and the forms of the Limited Guarantees and Equity Commitment Letters.

On July 13, 2021, Kirkland provided to Davis Polk a draft of the SPDB Debt Commitment Letter, which was in substantially the same form as the CMB Debt Commitment Letter.

On July 14, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps and discussed the major outstanding issues in the latest draft of the Merger Agreement. The Special Committee decided to further evaluate the remaining major issues after the Buyer Group provided its finalized financing package details, including the exact amounts of equity commitments, debt commitments and rollover arrangements, so that the Special Committee could assess all relevant terms and conditions on a more holistic basis.

On July 19, 2021, Simpson Thacher provided Davis Polk with the initial draft of the Support Agreement, as well as the further revised form of the Equity Commitment Letters and the form of the Limited Guarantees.

Between July 19, 2021 and August 2, 2021, Davis Polk and Simpson Thacher engaged in various discussions regarding the Support Agreement and the forms of Limited Guarantees and Equity Commitment Letters, exchanged multiple drafts and agreed on the final forms of these documents.

On July 21, 2021, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. At the meeting, Davis Polk summarized the latest negotiations of the terms of the various transaction documents with Simpson Thacher, and Duff & Phelps briefed the Special Committee on its financial analysis of the Company and introduced the main factors considered in such analysis.

On July 29, 2021, Simpson Thacher provided Davis Polk with the substantially finalized breakdown of the Buyer Group’s financing package, with details of the rollover arrangements, the debt financing amount, the equity financing amount and allocation thereof among the Buyer Group members.

Between July 30, 2021 and August 2, 2021, Davis Polk discussed such financing package with the Special Committee and the Company, including assessing the sufficiency of the aggregate financing amount to pay the aggregate merger consideration and the creditworthiness of the parties providing the equity commitments and limited guarantees. The Special Committee also revisited the outstanding issues in the Merger Agreement. The Special Committee decided to no longer require the closing condition of “majority of the minority vote” after considering that such requirement was neither required under Cayman Islands laws nor the prevailing market practice for going-private transactions involving companies organized under the laws of the Cayman Islands and that the Special Committee had obtained a number of favorable terms in the draft Merger Agreement that protected the Unaffiliated Security Holders, such as the ability of the Board and the Special Committee to change their recommendation under certain circumstances and the ability of the Company to terminate the Merger Agreement upon a Superior Proposal or an Intervening

 

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Event. The Special Committee also determined to accept a mutual closing condition of obtaining the requisite warrantholders consent to the Warrant Amendment, noting that the risk of not being able to obtain the warrantholders consent would be low given the Buyer Group’s holdings in the Warrants. In addition, the Special Committee considered it acceptable to include a Dissenting Shares closing condition but the threshold should be set at 10% rather than 5% as proposed by the Buyer Group.

On August 2, 2021, Davis Polk sent a revised draft of the Merger Agreement to Simpson Thacher, reflecting the positions of the Special Committee on the outstanding items.

On August 3, 2021, Simpson Thacher provided Davis Polk with a further revised Merger Agreement, accepting the 10% threshold in the Dissenting Shares closing condition. After further negotiations on certain other terms, Davis Polk and Simpson Thacher agreed on the final form of the Merger Agreement.

Also on August 3, 2021, Simpson Thacher and Kirkland provided Davis Polk with an executed copy of the SPDB Debt Commitment Letter dated July 28, 2021, pursuant to which SPDB agreed to make available to Merger Sub a senior term loan facility.

On August 4, 2021, the Special Committee held a telephonic meeting in the morning, together with representatives of Davis Polk, Maples and Duff & Phelps. At the invitation of the Special Committee, Maples made a recap of the directors’ fiduciary duties with respect to the review and evaluation of the Proposed Transaction and any alternative transactions. Davis Polk then provided an update on the status of the negotiations of the Proposed Transaction and described the key terms of the Merger Agreement and the other transaction documents. Duff & Phelps made a presentation on its valuation analyses of the Company and the merger consideration proposed by the Buyer Group, including a discussion of the valuation methodologies employed by Duff & Phelps in its analysis, responded to questions from the Special Committee, and orally delivered its opinion that, as of August 4, 2021 and subject to the limitations and assumptions set forth in its written opinion, the consideration of US$12.00 per share to be paid to the shareholders of the Company (other than the Excluded Shares and the Dissenting Shares) pursuant to the Merger Agreement is fair, from a financial point of view, to such shareholders. Duff & Phelps indicated that following the meeting, Duff & Phelps would deliver to the Special Committee a letter executed by Duff & Phelps confirming this opinion. After considering the proposed terms of the Merger Agreement and the other transaction agreements and the various presentations of Davis Polk and Duff & Phelps, including receipt of Duff & Phelps’s oral opinion, and taking into account the other factors described below under the section entitled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board,” the Special Committee then unanimously (a) determined that the Merger Agreement and the Plan of Merger are fair to, and in the best interests of, the Company and its shareholders (other than the holders of Excluded Shares); (b) declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger; (c) recommended that the Board authorize and approve the execution, delivery and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger; and (d) recommended that the Board submit the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, to the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A.

Following the meeting of the Special Committee, the Board held a meeting in the morning of August 4, 2021, together with representatives of Company management and representatives of Davis Polk, Maples and Duff & Phelps. At the Board meeting, the Special Committee presented its recommendation, described above, to the Board. After considering the proposed terms of the Merger Agreement and the other transaction agreements and Duff & Phelps’ opinion provided to the Special Committee as to the fairness, from a financial point of view, of the merger consideration to be received by the holders of Ordinary Shares (other than the holders of Excluded Shares), and taking into account the other factors described below under the section entitled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board,” the Board: (a) determined that the Merger Agreement and the Plan of Merger

 

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are fair to and in the best interests of the Company and its shareholders (other than the holders of Excluded Shares); (b) declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger; (c) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger; and (d) resolved to direct that the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A. Each of Mr. Leung, Mr. Qiyu Chen, Ms. Roberta Lipson, Mr. Wu, Mr. Zeng and Mr. Shan Fu abstained from the voting in light of their affiliation with the Buyer Group.

After the Board meeting, on August 4, 2021, the Company, HoldCo, Parent and Merger Sub executed the Merger Agreement. Other transaction documents, including the Support Agreement, the Interim Investors Agreement, the Equity Commitment Letters and the Limited Guarantees were executed at the same time.

In the evening of August 4, 2021, the Company issued a press release announcing the execution of the Merger Agreement.

On August 6, 2021, certain members of the Buyer Group filed with the SEC an amendment to the Original Schedule 13D as a “group” in light of the execution of the Merger Agreement, the Equity Commitment Letters, the Limited Guarantees, the Support Agreement and certain other transaction documents.

Reasons for the Merger and Recommendation of the Special Committee and the Board

At a meeting on August 4, 2021, the Special Committee, after consultation with its financial advisor and legal counsel, unanimously (a) determined that the Merger Agreement and the Plan of Merger are fair to and in the best interests of the Company and its shareholders (other than the holders of Excluded Shares), (b) declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger, (c) recommended that the Board authorize and approve the execution, deliver and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger, and (d) recommended that the Board submit the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, to the shareholders of the Company for authorization and approval at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A.

At a meeting on August 4, 2021, the Board, acting upon the unanimous recommendation of the Special Committee, and after each director duly disclosed his or her interests in the Transactions, including the Merger, as required by the memorandum and articles of associations of the Company as amended to date and the Cayman Islands Companies Act, (a) determined that the Merger Agreement and the Plan of Merger are fair to and in the best interests of the Company and its shareholders (other than the holders of Excluded Shares), (b) declared it advisable and in the Company’s commercial interests that the Company should approve and enter into the Merger Agreement and the Plan of Merger, and to consummate the Transactions, including the Merger, (c) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger, and (d) resolved to direct that the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company, with the recommendation of the Board that the shareholders of the Company authorize and approve the Merger Agreement, the Plan of Merger

 

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and the Transactions, including the Merger and, upon the Merger becoming effective, the Variation of Share Capital and the Amendment of the M&A.

In the course of reaching their respective determinations, the Special Committee and the Board considered the following substantive factors and potential benefits of the Merger, which are not listed in any relative order of importance:

•

the business pressures faced by the Company, including, among other things:

​

•

the adverse impact of the COVID-19 outbreak and uncertainty regarding the potential further impact of COVID-19 and of measures implemented by the Chinese government to control its spread, including travel restrictions, quarantines, and temporary shutdowns of businesses, on the global and China economy as well as the Company’s business, financial condition and results of operation;

​

•

ongoing regulatory uncertainties regarding the healthcare service industry in China at both the national and local government levels, particularly changes in healthcare reform policies;

​

•

uncertainties regarding the Company’s business growth, which in part depends on the growth of the availability and development of the commercial medical insurance among the Chinese population and heightened international relation with certain countries that impacts the expatriate patient base;

​

•

challenges in caused by continuously decling birth rates in China, which might negatively impact many of our major departments’ business;

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•

increased competition from varies various healthcare providers, including, private hospitals and clinics, as well as the “VIP” ward in public hospitals in the markets of Beijing, Shanghai, Tianjin, Qingdao and Guangzhou; and

​

•

opening of new hospitals, including potential delays and challenges in the Company’s capability to integrate these newly opened hospitals portfolio into the existing platform, which could result in fluctuations in our short-term financial performance;

​

•

the current and historical market prices of Ordinary Shares, and the fact that the Per Share Merger Consideration of US$12.00 represents a premium of 27.9% over the closing price of US$9.38 per Ordinary Share on February 8, 2021, the last trading day prior to the date on which the Company received the going-private proposal from NFPH and certain members of the Buyer Group, and a premium of 36.8% over the volume-weighted average closing price of the Ordinary Shares during the 30 trading days through February 8, 2021, and that the highest closing price of the Ordinary Shares had never reached the Per Share Merger Consideration of US$12.00;

​

•

the fact that the merger consideration will be all cash, which will provide immediate liquidity to the Unaffiliated Security Holders and allow them to avoid post-merger risks and uncertainties relating to the prospects of the Company;

​

•

the possible alternatives to the Merger (including the possibility of continuing to operate the Company as an independent publicly-traded company and the possibility of a sale of the Company to another buyer), the perceived potential benefits and risks of the possible alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, and the assessment by the Special Committee that none of these alternatives was reasonably likely to present superior opportunities for the Company or to create greater value for its shareholders than the Merger, taking into account (a) the likelihood of consummation, given the size of and required funding for any potential alternative transaction, the percentage ownership held by the Buyer Group and their expressed unwillingness to sell their shares in any other transaction involving the Company, (b) the business, financial, competitive, industry and market risks, and (c) the absence of any proposal for an alternative transaction from any third party since the announcement of the proposed transaction on February 9, 2021;

​

•

the negotiations with respect to the Per Share Merger Consideration, including the Special Committee’s request to the Buyer Group that the merger consideration be increased and the Buyer

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Group’s refusal to raise the price, and the Special Committee’s belief that, following negotiations with the Buyer Group, US$12.00 per Ordinary Share was the highest price that the Buyer Group would agree to pay;

•

the financial analysis reviewed and discussed with the Special Committee by representatives of Duff & Phelps, and the opinion rendered by Duff & Phelps to the Special Committee on August 4, 2021 to the effect that, as of August 4, 2021, subject to the limitations and assumptions set forth in Duff & Phelps’ written opinion, the Per Share Merger Consideration of US$12.00 to be paid to the holders of the Ordinary Shares (other than the Excluded Shares and the Dissenting Shares) pursuant to the Merger Agreement is fair from a financial point of view to such holders (see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 49 for additional information);

​

•

the likelihood that the Merger would be completed based on, among other things:

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•

the fact that HoldCo, Parent and Merger Sub had obtained equity and debt financing commitments for the Merger;

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•

the absence of any condition in the Merger Agreement in respect of obtaining financing from any third party;

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•

the likelihood and anticipated timing of completing the Merger in light of the scope of the conditions to completion, including the absence of significant required regulatory approvals; and

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•

the Company’s ability, as set out in the Merger Agreement and the Equity Commitment Letters, to seek specific performance to prevent breaches of such agreements and to enforce specifically the terms of such agreements;

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•

the fact that the Merger Agreement provides that, in the event of a failure of the Merger to be completed under certain circumstances, HoldCo will pay the Company a termination fee of US$63,000,000, and the guarantee of such payment obligation by members of the Buyer Group pursuant to the Limited Guarantees;

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•

the costs of regulatory compliance for public companies, including accounting, legal and other expenses incurred in connection with the public reporting requirements under the U.S. federal securities laws, including the Exchange Act and the Sarbanes-Oxley Act of 2002, of approximately US$3.3 million per year on a recurring basis, and the significant amount of time that the Company’s management must devote to SEC reporting and compliance;

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•

the possibility that China-based U.S.-listed public companies such as the Company could be delisted from U.S. stock exchanges, or be subject to other burdensome restrictions, by reason of the Holding Foreign Companies Accountable Act enacted on December 18, 2020, which purports to address perceived risks to investors in U.S. financial markets from the PRC government’s purported failure to allow audit firms, such as the Company’s independent auditor, that audit U.S.-listed companies based in China to be adequately examined by the U.S. Public Company Accounting Oversight Board pursuant to U.S. securities law; and

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•

the recognition that, as an SEC-reporting company, the Company is required to disclose a considerable amount of business information to the public, some of which would otherwise be considered competitively sensitive and would not be disclosed by a non-reporting company, and which potentially may help its actual or potential competitors, customers, clients or suppliers compete against the Company or make it more difficult for the Company to negotiate favorable terms with them, as the case may be.

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In addition, the Special Committee and the Board believed that sufficient procedural safeguards were and are present to ensure that the Merger is procedurally fair to the Unaffiliated Security Holders and to permit the Special Committee and the Board to represent effectively the interests of such shareholders. These procedural safeguards include the following, which are not listed in any relative order of importance:

•

the consideration and negotiation of the Merger Agreement was conducted entirely under the control and supervision of the Special Committee, which consists of three independent directors,

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and the Board delegated to the Special Committee plenary authority to negotiate the transaction and attend to all related matters and processes;

•

in considering the Merger, the Special Committee acted solely to represent the interests of the Unaffiliated Security Holders;

​

•

all of the members of the Special Committee during the entire process were and are independent directors and free from any affiliation with the Buyer Group; in addition, none of the members of the Special Committee has any financial interest in the Merger that is different from that of the Unaffiliated Security Holders other than (a) their receipt of Board compensation in the ordinary course and Special Committee compensation in connection with its evaluation of the Merger (none of which is contingent upon the completion of the Merger or the Special Committee’s or the Board’s recommendation of the Merger) and (b) their indemnification and liability insurance rights under the Merger Agreement;

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•

the Special Committee was assisted by its financial and legal advisors in the negotiation with the Buyer Group and the evaluation of the Merger;

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•

the Special Committee was empowered to consider, attend to and take any and all actions in connection with the Proposal and the Transactions from the date the Special Committee was established, and no evaluation, negotiation, or response regarding the transaction or any documentation in connection therewith from that date forward was considered by the Board for authorization and approval until the Special Committee had recommended such action to the Board;

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•

the terms and conditions of the Merger Agreement were the product of extensive negotiations between the Special Committee and its advisors, on the one hand, and the Buyer Group and its advisors, on the other hand;

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•

the Special Committee regularly held meetings to consider and review the terms of the Merger Agreement and the Merger;

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•

the Special Committee had no obligation to recommend the authorization and approval of the Merger or any other transaction;

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•

under the terms of the Merger Agreement, the Company has the ability to consider any proposal regarding a Competing Proposal reasonably likely to lead to a Superior Proposal until the date on which the shareholders of the Company vote upon and authorize and approve the Merger Agreement;

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•

the Board and the Special Committee have the ability, under certain circumstances, to change, withhold, withdraw, qualify or modify the recommendation of the Board and the Special Committee that the Company’s shareholders vote to authorize and approve the Merger Agreement and the Merger;

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•

the Company has the ability to terminate the Merger Agreement in connection with a Superior Proposal, subject to compliance with the terms and conditions of the Merger Agreement; and

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the availability of dissenters’ rights to the shareholders who comply with all of the required procedures under the Cayman Islands Companies Act for exercising dissenters’ rights, which allow such holders to receive the fair value of their Ordinary Shares as determined by the Grand Court of the Cayman Islands.

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The Special Committee and the Board also considered a variety of potentially negative factors concerning the Merger Agreement and the Merger, including the following, which are not listed in any relative order of importance:

•

the fact that the Merger Agreement is not subject to any additional approval by the Unaffiliated Security Holders;

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•

the fact that the Supporting Securityholders and certain other directors and executive officers of the Company have interests in the Merger that are different from, or in addition to, those of the Unaffiliated Security Holders (see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 69 for additional information);

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•

the fact that the Unaffiliated Security Holders will have no ongoing equity participation in the Company following the Merger, and that they will cease to participate in the Company’s future earnings or growth, if any, or to benefit from increases, if any, in the value of the Ordinary Shares, and will not participate in any potential future sale of the Company to a third party or any potential recapitalization of the Company, which could include a dividend to shareholders;

​

•

the restrictions on the conduct of the Company’s business prior to the completion of the Merger, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company pending the completion of the Merger;

​

•

the risks and costs to the Company if the Merger does not consummate, including the diversion of management and employee attention, potential employee attrition and the potential disruptive effect on the Company’s business and customer relationships;

​

•

the Company may be required, under certain circumstances, to pay HoldCo a termination fee of US$31,500,000 in connection with the termination of the Merger Agreement;

​

•

the fact that the Company’s monetary remedy in the event of breach of the Merger Agreement by HoldCo, Parent or Merger Sub is limited, under certain circumstances, to the receipt from HoldCo of a termination fee of US$63,000,000, and that the Company may not be entitled to such remedy at all if, among other things, the Company’s shareholders do not approve the Merger Agreement at the extraordinary general meeting (see “The Merger Agreement and Plan of Merger — Termination of the Merger Agreement” beginning on page 100 and “The Merger Agreement and Plan of Merger — Termination Fees” beginning on page 101 for additional information);

​

•

the Buyer Group’s right to not consummate the Merger in the event that 10% or more of the outstanding Ordinary Shares dissent from the Merger;

​

•

the possibility that the Merger might not be completed and the negative impact of such a public announcement on the Company’s operating results, and the Company’s ability to attract and retain key management, marketing and technical personnel; and

​

•

the taxability of an all-cash transaction to the Unaffiliated Security Holders who are U.S. Holders for U.S. federal income tax purposes.

​

The foregoing discussion of information and factors considered by the Special Committee and the Board is not intended to be exhaustive, but includes the material factors considered by the Special Committee and the Board. In view of the wide variety of factors considered by the Special Committee and the Board, neither the Special Committee nor the Board found it practicable to quantify or otherwise assign relative weights to the foregoing factors in reaching its conclusions. In addition, individual members of the Special Committee and the Board may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Special Committee unanimously recommended that the Board authorize and approve, and the Board authorized and approved, the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, based upon the totality of the information presented to and considered by it.

In reaching its conclusion regarding the fairness of the Merger to the Company’s shareholders, including the Unaffiliated Security Holders, and its decision to recommend the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, the Special Committee considered the opinion and related financial analyses presented by Duff & Phelps, among other factors. All of the material analyses as presented to the Special Committee on August 4, 2021 are summarized below under the caption “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 49. The Special Committee expressly adopted these analyses and the opinion of Duff & Phelps, among other factors considered, in reaching its determination as to the fairness of the Transactions, including the Merger.

Neither the Special Committee nor the Board considered the liquidation value of the Company’s assets because each considers the Company to be a viable going-concern business where value is derived from cash flows generated from its continuing operations. Each of the Special Committee and the Board believes the

 

42

 

analyses and additional factors it reviewed provided an indication of the Company’s going-concern value. Each of the Special Committee and the Board also considered the historical market prices of the Ordinary Shares as described under the caption “Market Price of the Ordinary Shares, Dividends and Other Matters — Market Price of the Ordinary Shares” beginning on page 78. Neither the Special Committee nor the Board, however, considered the Company’s net book value, which is defined as total assets minus total liabilities, attributable to the shareholders of the Company, as a factor. The Special Committee and the Board believe that net book value is not a material indicator of the value of the Company as a going concern, as it does not take into account the future prospects of the Company, market conditions, trends in the industry or the business risks inherent in competing with larger companies in the Company’s industry. The Company is not aware of any firm offers made by any unaffiliated person, other than the Buyer Group, during the past two years for (a) the merger or consolidation of the Company with or into another company, (b) the sale of all or a substantial part of the Company’s assets or (c) the purchase of the Company’s voting securities that would enable the holder to exercise control over the Company.

In reaching its determination that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, are fair to and in the best interests of the Company and its shareholders, including the Unaffiliated Security Holders, and its decision to authorize and approve, and recommend the authorization and approval by the shareholders of, the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, the Board, on behalf of the Company, considered the analysis and recommendation of the Special Committee and the factors examined by the Special Committee as described above under this section and under the caption “Special Factors — Background of the Merger,” and adopted such recommendations and analysis. During its consideration of the Merger Agreement and the Transactions, including the Merger, the Board was also aware that some of the Company’s directors and shareholders have interests with respect to the Merger that are, or may be, different from, and/or in addition to those of the Unaffiliated Security Holders generally, as described under the caption “Special Factors — Interests of Certain Persons in the Merger” beginning on page 69.

Except as discussed in “Special Factors — Background of the Merger,” “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board,” and “Special Factors — Opinion of the Special Committee’s Financial Advisor,” no director who is not an employee of the Company has retained an unaffiliated representative to act solely on behalf of the Unaffiliated Security Holders for purposes of negotiating the terms of the Transactions and/or preparing a report concerning the fairness of the Transactions.

For the foregoing reasons, each of the Special Committee and the Board believes that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, are substantively and procedurally fair to, and in the best interests of, the Company and its shareholders, including the Unaffiliated Security Holders.

Position of the Buyer Group as to the Fairness of the Merger

Under SEC rules governing going-private transactions, each member of the Buyer Group is required to express its belief as to the fairness of the Merger to the Unaffiliated Security Holders. Each member of the Buyer Group is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Buyer Group as to the fairness of the Merger are not intended to be and should not be construed as a recommendation to any shareholder of the Company as to how that shareholder should vote on the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions, including the Merger. Members of the Buyer Group which are shareholders of the Company have interests in the Merger that are different from, and/or in addition to, those of the other shareholders of the Company by virtue of their continuing interests in the Surviving Company after the completion of the Merger. These interests are described under “Special Factors — Interests of Certain Persons in the Merger  —  Interests of the Members of the Buyer Group” beginning on page 69.

The Buyer Group believes that the interests of the Unaffiliated Security Holders were represented by the Special Committee, which negotiated the terms and conditions of the Merger Agreement with the assistance of its independent legal and financial advisors. The Buyer Group attempted to negotiate a transaction that would be most favorable to them, and not to the Unaffiliated Security Holders and,

 

43

 

accordingly, did not negotiate the Merger Agreement with a goal of obtaining terms that were substantively or procedurally fair to the Unaffiliated Security Holders. The Buyer Group did not participate in the deliberations of the Special Committee regarding, and did not receive any advice from the Special Committee’s independent legal or financial advisors as to, the fairness of the Merger to the Unaffiliated Security Holders. Furthermore, the Buyer Group did not itself undertake a formal evaluation of the fairness of the Merger. No financial advisor provided the Buyer Group with any analysis or opinion with respect to the fairness of the Per Share Merger Consideration to the Unaffiliated Security Holders.

Based on their knowledge and analysis of available information regarding the Company, as well as discussions with the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Special Committee and the Board discussed under the section entitled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 38, the Buyer Group believes that the Merger is substantively fair to Unaffiliated Security Holders based on the following factors, which are not listed in any relative order of importance:

•

the Per Share Merger Consideration of US$12.00 represents a 27.9% premium to the closing price of US$9.38 per Ordinary Share as quoted by the NYSE on February 8, 2021, the last trading day before the Proposal was made to the Board on February 9, 2021, and a premium of 36.8% to the volume-weighted average closing price of the Ordinary Shares during the last 30 trading days through February 8, 2021;

​

•

the Per Warrant Merger Consideration of US$2.70 represents a premium to the trading price of the Warrants before the Proposal was made to the Board on February 9, 2021, and is more than five times of the implied value of US$0.50 per Warrant assuming an exercise price of US$12.00;

​

•

the Ordinary Shares traded as low as US$7.00 per Ordinary Share during the 52-week period prior to the receipt of the Proposal;

​

•

the members of the Special Committee are not officers or employees of the Company, are not affiliated with any member of the Buyer Group and do not have any interests in the Merger different from, or in addition to, those of the Unaffiliated Security Holders, other than the members’ receipt of Board compensation and Special Committee compensation (which are not contingent upon the completion of the Merger or the Special Committee’s or the Board’s recommendation and/or authorization and approval of the Merger) and their indemnification and liability insurance rights under their respective indemnification agreement entered into with the Company and the Merger Agreement;

​

•

notwithstanding that the Buyer Group may not rely upon the opinion provided by Duff & Phelps to the Special Committee on August 4, 2021, the Special Committee received an opinion from Duff & Phelps stating that, as of the date of such opinion, and based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Duff & Phelps in preparing its opinion, the Per Share Merger Consideration to be received by the holders of Ordinary Shares (other than the Excluded Shares and the Dissenting Shares) in the Merger was fair to them, from a financial point of view;

​

•

the Special Committee and, upon the unanimous recommendation of the Special Committee, the Board determined that the Merger Agreement, the Plan of Merger and the Transactions, including the Merger, are fair to and in the best interests of the Unaffiliated Security Holders;

​

•

the Company has the ability, under certain circumstances, to seek specific performance to prevent breaches of the Merger Agreement and to specifically enforce the terms of the Merger Agreement;

​

•

the Merger is not conditioned on any financing being obtained by HoldCo, Parent or Merger Sub, thus increasing the likelihood that the Merger will be consummated and the Merger consideration will be paid to the Unaffiliated Security Holders;

​

•

the consideration to be paid to the Unaffiliated Security Holders in the Merger is all cash, allowing the Unaffiliated Security Holders to immediately realize a certain and fair value for all of their Ordinary Shares, without incurring brokerage and other costs typically associated with market sales;

​

 

44

 

•

the potential adverse effects on the Company’s business, financial condition and results of operations caused by the recent economic slowdown in the PRC and globally and challenges in the macroeconomic environment;

​

•

the increased competition in China’s premium healthcare services industries;

​

•

the possibility that PRC-based U.S.-listed public companies would be subject to additional costs and burden of regulatory compliance by reason of any newly enacted law or regulation similar in substance to the Holding Foreign Companies Accountable Act;

​

•

the availability of dissenters’ rights to the Unaffiliated Security Holders who hold their Ordinary Shares in their own names and comply with all of the required procedures under the Cayman Islands Companies Act for exercising dissenters’ rights, which allow registered shareholders to receive payment of the fair value of their Ordinary Shares as determined by the Grand Court of the Cayman Islands; and

​

•

the Merger Agreement requires HoldCo to pay a reverse termination fee of US$63,000,000, which is twice the amount of the termination fee payable by the Company to HoldCo if the Merger Agreement is terminated under certain circumstances.

​

The Buyer Group did not consider the liquidation value of the Company because the Buyer Group considers the Company to be a viable going concern and views the trading history of the Ordinary Shares as an indication of the Company’s going concern value, and, accordingly, did not believe liquidation value to be relevant to a determination as to the fairness of the Merger.

The Buyer Group did not consider net book value, which is an accounting concept, as a factor because it believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and therefore not a relevant measure in the determination as to the fairness of the Merger. The Buyer Group notes, however, that the Per Share Merger Consideration of US$12.00 is substantially higher than the net book value per Ordinary Share as of December 31, 2020 of US$8.74 (based on 131,356,980 issued and outstanding Ordinary Shares as of that date and the Renminbi to U.S. dollars exchange rate of RMB6.5 to US$1.00). See “Where You Can Find More Information” beginning on page 114 for a description of how to obtain a copy of our Annual Report.

The Buyer Group did not establish, and did not consider, a going concern value for the Company as a public company to determine the fairness of the Merger consideration to Unaffiliated Security Holders because, following the Merger, the Company will have a significantly different capital structure. However, to the extent the pre-Merger going concern value was reflected in the pre-announcement price of the Ordinary Shares, the Per Share Merger Consideration of US$12.00 represents a premium to the going concern value of the Company.

The Buyer Group is not aware of, and thus did not consider, any offers or proposals made by any unaffiliated person during the past two years for (a) a Merger or consolidation of the Company with another company, (b) the sale or transfer of all or substantially all of the Company’s assets or (c) the purchase of all or a substantial portion of the Ordinary Shares that would enable such person to exercise control of or significant influence over the Company.

The Buyer Group did not perform or receive any independent reports, opinions or appraisals from any third party related to the Merger, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the Merger to Unaffiliated Security Holders.

The Buyer Group believes that the Merger is procedurally fair to the Unaffiliated Security Holders based on the following factors, which are not listed in any relative order of importance:

•

the consideration and negotiation of the Merger Agreement were conducted entirely under the control and supervision of the Special Committee, which consists of three independent directors, as defined under applicable NYSE rules, each of whom is an outside, non-employee director, and that no limitations were placed on the Special Committee’s authority;

​

•

in considering the transaction with the Buyer Group, the Special Committee acted solely to represent the interests of the Unaffiliated Security Holders, and the Special Committee had independent

​

 

45

 

control of the extensive negotiations with the members of the Buyer Group and their respective advisors on behalf of the Unaffiliated Security Holders;

•

all of the members of the Special Committee during the entire process were and are independent directors and free from any affiliation with the Buyer Group; in addition, none of the members of the Special Committee has any financial interest in the Merger that is different from that of the Unaffiliated Security Holders other than (a) their receipt of Board compensation in the ordinary course and Special Committee compensation in connection with its evaluation of the Merger (none of which is contingent upon the completion of the Merger or the Special Committee’s or the Board’s recommendation of the Merger) and (b) their indemnification and liability insurance rights under the Merger Agreement;

​

•

the Special Committee retained independent financial advisors and legal counsels to assist it in negotiations with the Buyer Group and in its evaluation of the Merger;

​

•

the Special Committee was empowered to consider, attend to and take any and all actions in connection with the written proposal from the Buyer Group and in connection with the Transactions from the date the Special Committee was established, and no evaluation, negotiation or response regarding the Transactions in connection therewith from that date forward was considered by the Board for approval unless the Special Committee had recommended such action to the Board;

​

•

the terms and conditions of the Merger Agreement were the product of extensive negotiations between the Special Committee and its advisors, on the one hand, and the Buyer Group and its advisors, on the other hand;

​

•

the Special Committee was empowered to exercise the full power and authority of the Board in connection with the Transactions and related process;

​

•

since the announcement of the receipt of the Proposal on February 9, 2021 and prior to the execution of the Merger Agreement, no party other than the members of the Buyer Group had contacted the Company or the Special Committee expressing an interest in exploring an alternative transaction with the Company;

​

•

the Special Committee met regularly to consider and review the terms of the Merger Agreement, the Plan of Merger and the Transactions, including the Merger;

​

•

the recognition by the Special Committee and the Board that it had no obligation to recommend the Transactions;

​

•

the recognition by the Special Committee and the Board that, under the terms of the Merger Agreement, it has the ability to consider a bona fide written proposal or offer with respect to a Competing Proposal (as defined in the section entitled “The Merger Agreement and Plan of Merger — No Solicitation; Adverse Recommendation Change” beginning on page 93) that constitutes a Superior Proposal until the Company’s shareholders vote upon and authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions;

​

•

the Buyer Group did not participate in or have any influence over the deliberative process of, or the conclusions reached by, the Special Committee or the negotiating positions of the Special Committee;

​

•

the Company’s ability, subject to compliance with the terms and conditions of the Merger Agreement, to terminate the Merger Agreement prior to the receipt of the Shareholder Approval in order to accept an alternative transaction proposed by a third party that is a Superior Proposal;

​

•

the availability of dissenters’ rights to the Unaffiliated Security Holders who comply with all of the required procedures under the Cayman Islands Companies Act for exercising dissenters’ rights, which allow such shareholders to receive payment of the fair value of their Ordinary Shares as determined by the Grand Court of the Cayman Islands; and

​

•

the fact that, in certain circumstances under the terms of the Merger Agreement, the Special Committee and the Board are able to change, withhold, withdraw, qualify or modify their recommendation of the Merger.

​

 

46

 

The foregoing is a summary of the information and factors considered and given weight by the Buyer Group in connection with its evaluation of the fairness of the Merger to the Unaffiliated Security Holders, which is not intended to be exhaustive, but is believed by the Buyer Group to include all material factors considered by it. The Buyer Group did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching its conclusion as to the fairness of the Merger to the Unaffiliated Security Holders. Rather, its fairness determination was made after consideration of all of the foregoing factors as a whole.

Certain Financial Projections

The Company’s management does not, as a matter of course, make available to the public future financial projections. However, the Company’s management provided the prospective financial information set forth below for the fiscal year ended December 31, 2021 through the fiscal year ending December 31, 2030 (the “Company Projections”) to the Special Committee and Duff & Phelps, as the financial advisor to the Special Committee, who was authorized by the Special Committee to use and rely upon the Company Projections, including for purposes of its financial analyses of the Per Share Merger Consideration to be paid to the holders of the Ordinary Shares (other than holders of Excluded Shares or Dissenting Shares) in the Transactions. The Company Projections, which had been prepared based on management’s projection of the Company’s future financial performance and management’s collective best estimates and judgments as of the date provided, were prepared by the Company’s management for internal use and were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC regarding forward-looking information or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or the international financial reporting standards as promulgated by the international accounting standards board (“IFRS”).

The projections included in the Company Projections are not a guarantee of performance. They involve significant risks, uncertainties and assumptions. In compiling the projections, management took into account the Company’s historical performance, combined with estimates regarding net revenues, operating expenses and capital expenditures. Although the Company Projections are presented with numerical specificity, they were based on numerous assumptions and estimates as to future events made by management that management believed were reasonable at the time the projections were prepared. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results. In addition, factors such as industry performance, the market for the Company’s services, the competitive environment, and general business, economic, regulatory, market and financial conditions, all of which are difficult to predict and beyond the control of management, may cause actual future results to differ materially from the results forecasted in these financial projections. The main assumptions underlying the Company Projections are (in no particular order):

•

China’s overall economy will remain stable with continued recovery from COVID-19;

​

•

there will be no major changes in existing political, legal, fiscal and economic conditions in China;

​

•

there will be no material changes to government policies and regulations relating to the Company’s business and industry;

​

•

the growth of the healthcare service industry in China, and the overall supply and demand of private healthcare services in the Company’s addressable markets, will continue in line with management’s expectations;

​

•

there will be no significant changes in the competitive landscape that may adversely affect the Company;

​

•

the Company’s management will be able to successfully implement its strategic initiatives on continued vertical, geographic and industry expansion to generate growth;

​

•

the Company will be successfully ramping up its major new facilities in tier-1 cities including Beijing, Shanghai and Guangzhou;

​

•

the Company will continue successfully developing its various specialties (including OB/GYN, pediatrics, internal medicine, surgery, orthopedics, emergency room, family medicine, dental, ENT, dermatology and ophthalmology) for both outpatient and inpatient procedures;

​

 

47

 

•

total operating expenses as a percentage of net revenue will decrease due to economies of scale as the Company continues to grow;

​

•

capital expenditures would increase in line with management’s expectations due to maintenance of existing facilities and investments in technology and equipment; and

​

•

the Company will maintain a stable net working capital level.

​

The Company Projections do not take into account any circumstances or events occurring after the date that they were prepared. For instance, the projections do not give effect to completion of the Merger or any changes to the Company’s operations or strategy that may be implemented after the time the projections were prepared. As a result, there can be no assurance that the projections will be realized, and actual results may be significantly different from those contained in the Company Projections.

Neither the Company’s independent registered public accounting firm, Ernst & Young Hua Ming LLP, nor any other independent accountants have examined, compiled or performed any procedures with respect to the Company Projections or any amounts derived therefrom or built thereupon and, accordingly, they have not expressed any opinion or given any form of assurance on the Company Projections or their achievability. The financial projections included in this proxy statement are included solely to give shareholders access to certain information that was made available to the Special Committee and to the Special Committee’s financial advisor and are not included for the purpose of influencing any shareholder to make any investment decision with respect to the Merger, including whether or not to vote in favor of approval of the Merger Agreement or whether or not to exercise dissenters’ rights pursuant to Section 238 of the Cayman Islands Companies Act in respect of his, her or its Ordinary Shares.

The following table summarizes the Company Projections, which were also provided to the Buyer Group and its financial advisor:

The Special Committee’s financial advisor reviewed certain financial analyses that were based, in part, on the Company Projections; for additional information regarding such analyses, see “Discussion Materials prepared by Duff & Phelps, A Kroll Business operating as Kroll, LLC for discussion with the Special

 

48

 

Committee of the board of directors of the Company, dated August 4, 2021” filed as Exhibit (c)-(2) to the Company’s transaction statement on Schedule 13E-3 and “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 49.

The financial projections and forecasts included in this proxy statement should not be considered in isolation or in lieu of the Company’s operating and other financial information determined in accordance with IFRS. See “Financial Information — Selected Historical Financial Information” beginning on page 106.

The financial projections and forecasts included in this proxy statement are forward-looking statements. For information on factors that may cause the Company’s future financial results to materially vary, see “Cautionary Note Regarding Forward-Looking Statements” beginning on page 112 and “Item 3. Key Information — D. Risk Factors” included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2020, incorporated by reference into this proxy statement.

For the foregoing reasons, as well as the bases and assumptions on which the financial projections and forecasts were compiled, the inclusion of specific portions of the financial projections and forecasts in this proxy statement should not be regarded as an indication that the Company, the Special Committee (or its financial advisor) or the Board considers such financial projections or forecasts to be an accurate prediction of future events, and the projections and forecasts should not be relied on as such an indication. No one has made or is making any representation to any shareholders of the Company or anyone else regarding the information included in the financial projections and forecasts discussed above.

NONE OF THE COMPANY OR ITS AFFILIATES, ADVISORS, OFFICERS, DIRECTORS OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY SHAREHOLDER OR OTHER PERSON REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE COMPANY PROJECTIONS OR THAT PROJECTED RESULTS WILL BE ACHIEVED.

BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS FINANCIAL PROJECTIONS AND FORECASTS INCLUDED IN THE COMPANY PROJECTIONS, THE COMPANY UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE PROJECTIONS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE SHOWN TO BE IN ERROR OR CHANGE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAW.

Opinion of the Special Committee’s Financial Advisor

In connection with its opinion, Duff & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation in general, and with respect to similar transactions in particular. Duff & Phelps’ procedures, investigations and financial analyses with respect to the preparation of its opinion included, but were not limited to, the items summarized below:

1.

Reviewed the following documents:

​

a.

the Company’s annual reports and audited financial statements on (i) Form 10-K filed with the SEC for the year ended December 31, 2018 and (ii) Form 20-F filed with the SEC for the years ended December 31, 2019 and December 31, 2020;

​

b.

the Company’s unaudited interim financial statements on (i) Form 8-K filed with the SEC for the three months ended March 31, 2019 and (ii) Form 6-K filed with the SEC for the three months ended March 31, 2020;

​

c.

the Company’s unaudited interim financial statements for the three months ended March 31, 2021, provided by the management of the Company;

​

 

49

 

d.

certain unaudited and segment financial information for the Company for the years ended December 31, 2018 through December 31, 2020 and for the three months ended March 31, 2019, March 31, 2020 and March 31, 2021, each provided by the management of the Company;

​

e.

the Company Projections, which is a detailed financial projection model for the Company for the years ending December 31, 2021 through December 31, 2030, prepared and provided to Duff & Phelps by the management of the Company, upon which Duff & Phelps has relied, with the Company’s and the Special Committee’s consent, in performing its analysis;

​

f.

other internal documents relating to the history, current operations, and probable future outlook of the Company, provided to Duff & Phelps by the management of the Company;

​

g.

a letter dated July 30, 2021 from the management of the Company, which made certain representations as to historical financial information for the Company, the Company Projections and the underlying assumptions of such projections (the “Management Representation Letter”);

​

h.

a draft of the Merger Agreement dated as of August 3, 2021;

​

i.

a draft of the Interim Investors Agreement dated as of August 3, 2021; and

​

j.

a draft of the Support Agreement dated as of August 3, 2021.

​

(the documents listed in items (h)-(j) above, collectively, the “Transaction Documents”).

2.

Discussed the information referred to above and the background and other elements of the Merger with the management of the Company;

​

3.

Discussed with the management of the Company its plans and intentions with respect to the management and operation of the Company’s business;

​

4.

Reviewed the historical trading price and trading volume of the Ordinary Shares and the publicly traded securities of certain other companies that Duff & Phelps deemed relevant;

​

5.

Performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques including a discounted cash flow analysis, an analysis of selected public companies that Duff & Phelps deemed relevant, and an analysis of selected transactions that Duff & Phelps deemed relevant; and

​

6.

Conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.

​

In performing its analyses and rendering its opinion with respect to the Merger, Duff & Phelps, with the Company’s and the Special Committee’s consent:

1.

Relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including the management of the Company, and did not independently verify such information;

​

2.

Relied upon the fact that the Special Committee, the Board and the Company have been advised by counsel as to all legal matters with respect to the Merger, including whether all procedures required by law to be taken in connection with the Merger have been duly, validly and timely taken;

​

3.

Assumed that any estimates, evaluations, forecasts and projections furnished to Duff & Phelps, including, without limitation, the Company Projections, were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same, and Duff & Phelps expresses no opinion with respect to such estimates, evaluations, forecasts or projections or the underlying assumptions thereof;

​

4.

Assumed that information supplied and representations made by the management of the Company are substantially accurate regarding the Company and the Merger;

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50

 

5.

Assumed that the representations and warranties made in the Transaction Documents and the Management Representation Letter are substantially accurate;

​

6.

Assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conform in all material respects to the drafts reviewed;

​

7.

Assumed that there has been no material change in the assets, liabilities (contingent or otherwise), financial condition, results of operations, business, or prospects of the Company since the date of the most recent financial statements and other information made available to Duff & Phelps, and that there is no information or facts that would make the information reviewed by Duff & Phelps incomplete or misleading;

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8.

Assumed that all of the conditions required to implement the Merger will be satisfied and that the Merger will be completed in accordance with the Transaction Documents without any amendments thereto or any waivers of any terms or conditions thereof; and

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9.

Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company or the contemplated benefits expected to be derived in the Merger.

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To the extent that any of the foregoing assumptions or any of the facts on which the opinion is based proves to be untrue in any material respect, Duff & Phelps’ opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of its opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Merger.

Duff & Phelps prepared its opinion effective as of the date thereof. Its opinion was necessarily based upon market, economic, financial and other conditions as they existed and can be evaluated as of the date thereof, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion which may come or be brought to the attention of Duff & Phelps after the date thereof. The credit, financial and stock markets have been experiencing unusual volatility and Duff & Phelps expresses no opinion or view as to any potential effects of such volatility on the Company or the Merger.

Duff & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Duff & Phelps has not been requested to, and did not, (a) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Merger, the assets, businesses or operations of the Company, or any alternatives to the Merger, (b) negotiate the terms of the Merger, and therefore, Duff & Phelps has assumed that such terms are the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be negotiated among the parties to the Merger Agreement and the Merger, or (c) advise the Special Committee or any other party with respect to alternatives to the Merger. Duff & Phelps did not undertake an independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company is or may be a party or is or may be subject.

Duff & Phelps is not expressing any opinion as to the market price or value of the Ordinary Shares (or anything else) after the announcement or the consummation of the Merger. Duff & Phelps’ opinion should not be construed as a valuation opinion, a credit rating, a solvency opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

In rendering its opinion, Duff & Phelps was not expressing any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the merger consideration, or with respect to the fairness of any such compensation.

Duff & Phelps’ opinion was furnished for the use and benefit of the Special Committee in connection with its consideration of the Merger and is not intended to, and does not, confer any rights or remedies

 

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upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, without Duff & Phelps’ express consent. Duff & Phelps’ opinion (a) does not address the merits of the underlying business decision to enter into the Merger versus any alternative strategy or transaction; (b) does not address any transaction related to the Merger; (c) is not a recommendation as to how the Special Committee, the Board or any other person (including security holders of the Company) should vote or act with respect to any matters relating to the Merger, or whether to proceed with the Merger or any related transaction; (d) does not indicate that the merger consideration is the best possibly attainable under any circumstances; instead, it merely states whether the merger consideration is within a range suggested by certain financial analyses, and (e) does not address the fairness of the consideration to be received by holders of Warrants in the Merger. The decision as to whether to proceed with the Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which the opinion is based. Duff & Phelps’ opinion should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.

Duff & Phelps’ opinion is solely that of Duff & Phelps, and Duff & Phelps’ liability in connection with the opinion shall be limited in accordance with the terms set forth in the Engagement Letter among Duff & Phelps, Duff & Phelps Securities, LLC, the Company and the Special Committee dated March 13, 2021. Duff & Phelps’ opinion is confidential, and its use and disclosure is strictly limited in accordance with the terms set forth in the Engagement Letter.

Summary of Financial Analysis

Set forth below is a summary of the material analyses performed by Duff & Phelps in connection with the delivery of its opinion to the Special Committee. This summary is qualified in its entirety by reference to the full text of the opinion, attached hereto as Annex D. While this summary describes the analyses and factors that Duff & Phelps deemed material in its presentation to the Special Committee, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis. In arriving at its opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it in rendering the fairness opinion without considering all analyses and factors could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken as a whole, and also on the application of Duff & Phelps’ own experience and judgment.

The financial analyses summarized below include information presented in tabular format. In order for Duff & Phelps’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Duff & Phelps’ financial analyses.

Discounted Cash Flow Analysis

Duff & Phelps performed a discounted cash flow analysis of the estimated future unlevered free cash flows attributable to the Company for the fiscal years ending December 31, 2021 through December 31, 2030, with unlevered “free cash flow” defined as cash that is available either to reinvest or to distribute to security holders. The discounted cash flow analysis was used to determine the net present value of estimated future free cash flows utilizing a weighted average cost of capital as the applicable discount rate. For the purposes of its discounted cash flow analysis, Duff & Phelps utilized and relied upon the Company Projections, which are described in this proxy statement in the section entitled “Special Factors — Certain Financial Projections” beginning on page 47. The costs associated with the Company being a publicly listed company, as provided by the management of the Company, were excluded from the financial projections because such costs would likely be eliminated as a result of the Merger.

 

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Duff & Phelps estimated the net present value of all cash flows attributable to the Company after fiscal year 2030 (the “Terminal Value”) using a perpetuity growth formula assuming a 5.00% terminal growth rate, which took into consideration an estimate of the expected long-term growth rate of the Chinese economy and the Company’s business. Duff & Phelps used discount rates ranging from 9.50% to 10.50%, reflecting Duff & Phelps’ estimate of the Company’s weighted average cost of capital, to discount the projected free cash flows and the Terminal Value. Duff & Phelps estimated the Company’s weighted average cost of capital by estimating the weighted average of the Company’s cost of equity (derived using the capital asset pricing model) and the Company’s after-tax cost of debt. Duff & Phelps believes that this range of discount rates is consistent with the rate of return that security holders could expect to realize on alternative investment opportunities with similar risk profiles.

Based on these assumptions, Duff & Phelps’ discounted cash flow analysis resulted in an estimated enterprise value for the Company of RMB9,570.00 million to RMB12,220.00 million.

Selected Public Companies and Merger and Acquisition Transactions Analyses

Duff & Phelps analyzed selected public companies and selected merger and acquisition transactions for purposes of estimating valuation multiples with which to calculate a range of implied enterprise values of the Company. This collective analysis was based on publicly available information and is described in more detail in the sections that follow.

The companies utilized for comparative purposes in the following analysis were not directly comparable to the Company, and the transactions utilized for comparative purposes in the following analysis were not directly comparable to the Merger. Duff & Phelps does not have access to non-public information of any of the companies used for comparative purposes. Accordingly, a complete valuation analysis of the Company and the Merger cannot rely solely upon a quantitative review of the selected public companies and selected transactions, but involves complex considerations and judgments concerning differences in financial and operating characteristics of such companies and targets, as well as other factors that could affect their value relative to that of the Company. Therefore, the selected public companies and selected merger and acquisition transactions analysis is subject to certain limitations.

Selected Public Companies Analysis.   Duff & Phelps compared certain financial information of the Company to corresponding data and ratios from publicly traded companies in recruitment industry that Duff & Phelps deemed relevant to its analysis. For purposes of its analysis, Duff & Phelps used certain publicly available historical financial data and consensus equity analyst estimates for the selected publicly traded companies. The ten companies included in the selected public company analysis in the healthcare service industry were:

Asia Healthcare Service Companies

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IHH Healthcare Berhad

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•

Bangkok Dusit Medical Services Public Co. Ltd.

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•

Jinxin Fertility Group Limited

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•

Hygeia Healthcare Holdings Co., Limited

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•

Bumrungrad Hospital Public Co. Ltd.

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•

Raffles Medical Group Ltd

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Ex-Asia Healthcare Service Companies

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HCA Healthcare, Inc.

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•

Select Medical Holdings Corporation

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•

Mediclinic International plc

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•

Life Healthcare Group Holdings Limited

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Duff & Phelps selected these companies for its analysis based on their relative similarity, primarily in terms of business model, to that of the Company.

 

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The tables below summarize certain observed trading multiples and historical and projected financial performance, on an aggregate basis, of the selected public companies. The estimates for 2021, 2022 and 2023 in the tables below with respect to the selected public companies were derived based on information for the 12-month periods ending closest to the Company’s fiscal year ends for which information was available. Data related to the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) were adjusted for purposes of this analysis to eliminate public company costs and non-recurring income (expenses) and include share-based compensation.