PRER14A 1 tv529264-prer14a.htm PRER14A tv529264-prer14a - block - 66.941047s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Amendment No. 1)
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Securities Exchange Act of 1934
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Preliminary Proxy Statement

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Soliciting Material Pursuant to §240.14a-12
NEW FRONTIER CORPORATION
(Name of Registrant as Specified In Its Charter)
   
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION,
DATED OCTOBER 25, 2019
NEW FRONTIER CORPORATION
A Cayman Islands Exempted Company
(Company Number 334925)
23rd Floor, 299 QRC
287-299 Queen’s Road Central
Hong Kong
TO THE SHAREHOLDERS OF NEW FRONTIER CORPORATION:
We cordially invite you to attend an extraordinary general meeting (the “general meeting”) of New Frontier Corporation, a Cayman Islands exempted company, company number 334925 (“NFC,” the “Company,” “we,” “us” or “our”), which will be held at [         ] a.m., Eastern Time, on [         ], 2019, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166.
The board of directors of NFC has unanimously approved the Transaction Agreement, dated as of July 30, 2019, as may be amended from time to time (the “Transaction Agreement”), by and among NFC, NF Unicorn Acquisition L.P., a Cayman Islands exempted limited partnership and wholly owned indirect subsidiary of NFC (“NFC Buyer Sub” and, together with NFC, the “Buyer Parties”), Healthy Harmony Holdings, L.P., a Cayman Islands exempted limited partnership (“Healthy Harmony”), Healthy Harmony GP, Inc., a Cayman Islands exempted company and the sole general partner of Healthy Harmony (“HH GP”) and the sellers named therein (the “Sellers”), pursuant to which NFC will indirectly acquire Healthy Harmony and HH GP for approximately $1.3 billion in the aggregate, subject to adjustment in accordance with the Transaction Agreement (the “Purchase Price”). The business operations of Healthy Harmony are conducted under the brand name “United Family Healthcare” and, together with HH GP, may be referred to collectively herein as “UFH.” The Transaction Agreement provides for the acquisition of all of the issued and outstanding equity interests of HH GP (the “GP Shares”) and approximately 99.37% of the issued and outstanding limited partnership interests in Healthy Harmony (the “LP Interests”).The remaining 0.63% of the issued and outstanding LP Interests are held by certain members of management of UFH (“UFH Management”) and are expected to be acquired by NFC at the Closing on terms and conditions to be agreed between NFC and these holders, which are not expected to impact the expected aggregate consideration of approximately $1.3 billion. The transactions contemplated by the Transaction Agreement are referred to herein as the “business combination.” In connection with the closing of the business combination (the “Closing”), NFC will change its name to “New Frontier Health Corporation,” or “NFH.”
The Purchase Price will be funded from: (1) proceeds available from the trust account established in connection with NFC’s initial public offering (the “trust account”), after giving effect to any redemptions; (2) $190,000,000 of proceeds from the private placement of NFC Class A ordinary shares, par value $0.0001 per share (“NFC Class A ordinary shares”), pursuant to the forward purchase agreements entered into with certain accredited investors (the “anchor investors”) in connection with NFC’s initial public offering (the “Forward Purchase Agreements”); (3) the RMB equivalent of  $300,000,000 of proceeds from a new seven year senior secured credit facility (the “Debt Financing”); (4) up to $711,481,860 of proceeds from private placements of NFC Class A ordinary shares to certain accredited investors (the “PIPE Investors”) pursuant to the subscription agreements (the “Subscription Agreements”) entered into between NFC and each of the PIPE Investors (the “Equity Financing”); and (5) $159,000,000 in the form of re-investments by sellers and management and equity rollovers by management, including proceeds from the reinvestment by certain Sellers of the cash proceeds to be received by them in connection with the business combination in NFH ordinary shares (as defined below) and the re-investments by certain UFH management and rollover of certain equity interest held by them, in each case, in newly issued NFH ordinary shares. Any excess cash available to NFC after payment of the Purchase Price, any amounts owed in respect of redemptions of public shares, and the payment of transaction expenses will be used for general corporate purposes following the Closing, including for working capital, repayment of debt and growth initiatives.
In connection with the entry into the Transaction Agreement, NFC, the Sponsor, Antony Leung, NFC’s Chairman, and Mr. Carl Wu, NFC’s Chief Executive Officer, entered into a letter agreement with Vivo Capital Fund IX (Cayman), L.P. (“Vivo”), pursuant to which each of the Sponsor and Messrs. Leung and Wu agreed not to transfer any ordinary shares held by them unless certain conditions set forth in such letter agreement are met, as further described herein.
Some of the institutions that have invested in our initial public offering, Forward Purchase Agreements or Subscription Agreements include include entities affiliated with Mr. Antony Leung, Mr. Carl Wu, Nan Fung Group, Vivo, certain funds and accounts advised by Capital Research and Management Company, Shimao Group (SSE: 600823.SH; SEHK: 00813), Agricultural Bank of China International which is a wholly subsidiary of Agricultural Bank of China (SSE: 601288; SEHK: 01288), Aspex Management, BosValen Asset Management, China Cinda (HK) Asset Management Co., Ltd. (SEHK: 01359; 00111), China Shandong Hi-Speed Financial Group (SEHK: 00412), CityChamp Group (SEHK: 00256),

Exome Asset Management LLC, HS Group, Hysan Group (SEHK: 00014), Ishana Capital, Juno Capital Management Limited, Junson Capital, Maso Capital, Mason Group (SEHK: 00273), certain funds and accounts advised by Morgan Stanley Investment Management Inc. or Morgan Stanley Asia Limited, Mr. Adrian Cheng, Mr. Jason Jiang Nanchun of Focus Media (SZSE: 002027), Mr. Thomas Lau Luen Hung of Lifestyle International Holdings Ltd. (SEHK: 01212), Ovata Capital, Peterson Group, Shui On Group (SEHK: 00272), Tingyi Group (SEHK: 00322), The Segantii Asia-Pacific Equity Multi-Strategy Fund, Thing On Group (SEHK: 02292), York Capital Management, Yunqi Capital, Yuntai Fund and other institutional and private investors.
As described in this proxy statement, NFC’s shareholders are being asked to consider and vote upon the following proposals:
(a)
Proposal No. 1 — The Business Combination Proposal — a proposal to approve by ordinary resolution and adopt the Transaction Agreement, pursuant to which NFC will indirectly acquire all of the issued and outstanding GP Shares for $50.4928 per GP Share and approximately 99.37% of the issued and outstanding LP Interests for $50.4928 per LP Interest from the Sellers (we refer to this as the “Business Combination Proposal”);
(b)
Proposal No. 2 — The Charter Approval Proposal — a proposal to approve by special resolution the proposed new amended and restated memorandum and articles of association of the post-business combination company, NFH (the “Proposed Charter”) (we refer to this as the “Charter Approval Proposal”);
(c)
The Charter Provisions Proposals — three separate proposals (which we refer to, collectively, as the “Charter Provisions Proposals”) to approve, on a non-binding advisory basis, the following material differences between the current amended and restated memorandum and articles of association of NFC (the “Current Charter”) and the Proposed Charter:
(1)
Proposal No. 3 — Charter Proposal A —  to approve by ordinary resolution, on a non-binding advisory basis, the provision in the Proposed Charter increasing the authorized share capital from $20,100 divided into 180,000,000 NFC Class A ordinary shares, 20,000,000 NFC Class B ordinary shares, par value $0.0001 per share (“NFC Class B ordinary shares”), and 1,000,000 preference shares, par value $0.0001 per share (“preference shares”), to authorized share capital of  $50,000 divided into 490,000,000 ordinary shares, par value $0.0001 per share (“NFH ordinary shares”), and 10,000,000 preference shares by: (i) the redesignation of all issued and unissued NFC Class A ordinary shares and NFC Class B ordinary shares as NFH ordinary shares; (ii) the creation of an additional 290,000,000 NFH ordinary shares, each with the rights set out in the Proposed Charter; (iii) the redesignation of all unissued NFC preference shares as NFH preference shares; and (iv) the creation of an additional 9,000,000 preference shares (we refer to this as “Charter Proposal A”);
(2)
Proposal No. 4 — Charter Proposal B — to approve by ordinary resolution, on a non-binding advisory basis, the provision in the Proposed Charter providing that each member of NFH’s board of directors will be elected annually at each annual general meeting (or extraordinary general meeting in lieu thereof) following the closing of the business combination (the “Closing”) (we refer to this as “Charter Proposal B”);
(3)
Proposal No. 5 — Charter Proposal C — to approve by special resolution, on a non-binding advisory basis, all other material differences between the Current Charter and the Proposed Charter in connection with the Closing, including, among other things, (i) changing the post-business combination corporate name from “New Frontier Corporation” to “New Frontier Health Corporation” and making NFH’s corporate existence perpetual, (ii) granting a waiver regarding corporate opportunities to certain persons, including NFG, Fosun Seller and Vivo and their respective affiliates and representatives, and (iii) removing certain provisions related to NFC’s status as a blank check company that will no longer apply upon consummation of the business combination, all of which NFC’s board of directors believe are necessary to adequately address the needs of the post-business combination company (we refer to this as “Charter Proposal C”).
(d)
Proposal No. 6 — The Share Issuance Proposal — a proposal to approve by ordinary resolution, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable listing rules of The New York Stock Exchange (the “NYSE”), the issuance by NFC of  (i) 19,000,000 NFC Class A ordinary shares to the anchor investors pursuant to the Forward Purchase Agreements, (ii) up to 71,148,186 NFC Class A ordinary shares, subject to adjustment by NFC as discussed herein, to the PIPE Investors pursuant to the Subscription Agreements, (iii) an aggregate of up to approximately 15,528,163 NFH ordinary shares to certain Sellers and members of UFH Management in connection with the business combination (excluding an aggregate of approximately 371,837 of NFH options and NFH RSUs that are expected to be issued to certain members of UFH Management in respect of their outstanding options and RSUs of Healthy Harmony), (iv) an aggregate of 225,000 NFC Class B ordinary shares to an anchor investor and the Sponsor in connection with the increase in NFC’s commitments under the Forward Purchase Agreements from $181,000,000 to $190,000,000 on June 29, 2018 in connection with NFC’s initial public offering, and (v) 4,750,000 forward purchase warrants (as defined in the accompanying proxy statement) to the anchor investors pursuant to the Forward Purchase Agreements (we refer to this as the “Share Issuance Proposal”);

(e)
Proposal No. 7 — The Director Election Proposal — a proposal to approve by ordinary resolution, assuming the Business Combination Proposal is approved and adopted, the election of four directors to serve on NFH’s board of directors for a term of one year expiring at the annual general meeting to be held in 2020 or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal (we refer to this as the “Director Election Proposal”);
(f)
Proposal No. 8 — The Incentive Plan Proposal — a proposal to approve by ordinary resolution, assuming the Business Combination Proposal is approved and adopted, the New Frontier Health Corporation 2019 Omnibus Incentive Plan (we refer to this as the “Incentive Plan Proposal” and, collectively with the Business Combination Proposal, the Share Issuance Proposal and the Director Election Proposal, the “condition precedent proposals”); and
(g)
Proposal No. 9 — The Adjournment Proposal — a proposal to approve by ordinary resolution the adjournment of the general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the general meeting, any of the condition precedent proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Transaction Agreement is not satisfied or waived (we refer to this as the “Adjournment Proposal”).
Each of these proposals is more fully described in the accompanying proxy statement, which you are encouraged to read carefully.
Only holders of record of NFC Class A ordinary shares and NFC Class B ordinary shares (collectively, “NFC ordinary shares”) at the close of business on [         ], 2019 are entitled to notice of and to vote and have their votes counted at the general meeting and any adjournment of the general meeting. In addition, pursuant to the Current Charter, until the Closing, only holders of NFC Class B ordinary shares can elect or remove directors. Therefore, only holders of NFC Class B ordinary shares will vote on the election of directors at the general meeting. The election of directors is done by an ordinary resolution. This means that each director nominee will be elected if such nominee receives more affirmative votes of the holders of NFC Class B ordinary shares than any other nominee for the same position.
NFC’s units, NFC Class A ordinary shares and public warrants are currently listed on the NYSE under the symbols “NFC.U,” “NFC” and “NFC WS,” respectively. Following the Closing, NFH will have one class of ordinary shares. NFC has applied to list the NFH ordinary shares and public warrants, effective upon the Closing, on the NYSE under the proposed symbols “NFH” and “NFH WS,” respectively.
On behalf of our board of directors, I would like to thank you for your support of NFC and look forward to a successful completion of the business combination.
[         ], 2019
 Sincerely,
   
Antony Leung
Chairman
This proxy statement provides you with detailed information about the business combination and other matters to be considered at the general meeting. We urge you to carefully read this entire document. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 37 of this proxy statement.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the general meeting or not, please sign, date and return the proxy card accompanying the proxy statement as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in this proxy statement, passed upon the fairness of either of the Transaction Agreement or the transactions contemplated thereby, or passed upon the adequacy or accuracy of this proxy statement. Any representation to the contrary is a criminal offense.
This proxy statement is dated [         ], 2019, and is first being mailed to NFC’s shareholders on or about [         ], 2019.

NEW FRONTIER CORPORATION
A Cayman Islands Exempted Company
(Company Number 334925)
23rd Floor, 299 QRC
287-299 Queen’s Road Central
Hong Kong
NOTICE OF EXTRAORDINARY GENERAL MEETING
TO BE HELD ON [         ], 2019
TO THE SHAREHOLDERS OF NEW FRONTIER CORPORATION:
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “general meeting”) of New Frontier Corporation, a Cayman Islands exempted company, company number 334925 (“NFC,” the “Company,” “we,” “us” or “our”), will be held at [         ] a.m., Eastern Time, on [         ], 2019, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166. You are cordially invited to attend the meeting, which will be held for the following purposes:
(a)
Proposal No. 1 — The Business Combination Proposal — a proposal to approve by ordinary resolution and adopt the Transaction Agreement, dated as of July 30, 2019, as may be amended from time to time (the “Transaction Agreement”), by and among NFC, NF Unicorn Acquisition L.P., a Cayman Islands exempted limited partnership and wholly owned indirect subsidiary of NFC (“NFC Buyer Sub” and, together with NFC, the “Buyer Parties”), Healthy Harmony Holdings, L.P., a Cayman Islands exempted limited partnership (“Healthy Harmony”), Healthy Harmony GP, Inc., a Cayman Islands exempted company and the sole general partner of Healthy Harmony (“HH GP”) and the sellers named therein (the “Sellers”), pursuant to which NFC will indirectly acquire all of the issued and outstanding equity interests of HH GP (the “GP Shares”) and approximately 99.37% of the equity interests in Healthy Harmony (the “LP Interests”)
(we refer to this as the “Business Combination Proposal”);
(b)
Proposal No. 2 — The Charter Approval Proposal — a proposal to approve by special resolution the proposed new amended and restated memorandum and articles of association of NFH
(the “Proposed Charter”) (we refer to this as the “Charter Approval Proposal”);
(c)
The Charter Provisions Proposals — three separate proposals (which we refer to, collectively, as the “Charter Provisions Proposals”) to approve, on a non-binding advisory basis, the following material differences between the current amended and restated memorandum and articles of association of NFC (the “Current Charter”) and the Proposed Charter:
(1)
Proposal No. 3 — Charter Proposal A — to approve by ordinary resolution, on a non-binding advisory basis, the provision in the Proposed Charter increasing the authorized share capital from $20,100 divided into 180,000,000 NFC Class A ordinary shares, 20,000,000 NFC Class B ordinary shares, par value $0.0001 per share (“NFC Class B ordinary shares”), and 1,000,000 preference shares, par value $0.0001 per share (“preference shares”), to authorized share capital of  $50,000 divided into 490,000,000 ordinary shares, par value $0.0001 per share (“NFH ordinary shares”), and 10,000,000 preference shares by: (i) the redesignation of all issued and unissued NFC Class A ordinary shares and NFC Class B ordinary shares as NFH ordinary shares; (ii) the creation of an additional 290,000,000 NFH ordinary shares, each with the rights set out in the Proposed Charter; (iii) the redesignation of all unissued NFC preference shares as NFH preference shares; and (iv) the creation of an additional 9,000,000 preference shares (we refer to this as “Charter Proposal A”);
(2)
Proposal No. 4 — Charter Proposal B — to approve by ordinary resolution, on a non-binding advisory basis, the provision in the Proposed Charter providing that each member of NFH’s board of directors will be elected annually at each annual general meeting (or extraordinary general meeting in lieu thereof) following the closing of the business combination (the “Closing”) (we refer to this as “Charter Proposal B”);

(3)
Proposal No. 5 — Charter Proposal C —  to approve by special resolution, on a non-binding advisory basis, all other material differences between the Current Charter and the Proposed Charter in connection with the Closing, including, among other things, (i) changing the post-business combination corporate name from “New Frontier Corporation” to “New Frontier Health Corporation” and making NFH’s corporate existence perpetual, (ii) granting a waiver regarding corporate opportunities to NFH’s non-employee directors and (iii) removing certain provisions related to NFC’s status as a blank check company that will no longer apply upon consummation of the business combination, all of which NFC’s board of directors believe are necessary to adequately address the needs of the post-business combination company (we refer to this as “Charter Proposal C”).
(d)
Proposal No. 6 — The Share Issuance Proposal — a proposal to approve by ordinary resolution, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable listing rules of The New York Stock Exchange (the “NYSE”), the issuance by NFC of  (i) 19,000,000 NFC Class A ordinary shares to certain accredited investors (the “anchor investors”) pursuant to forward purchase agreements entered into in connection with NFC’s initial public offering (the “Forward Purchase Agreements”), (ii) up to 71,148,186 NFC Class A ordinary shares, subject to adjustment by NFC as discussed herein, to certain accredited investors (the “PIPE Investors”) pursuant to certain subscription agreements (the “Subscription Agreements”) entered into in connection with the Closing (the “Equity Financing”), (iii) an aggregate of up to approximately 15,528,163 NFH ordinary shares to certain Sellers and members of UFH Management in connection with the business combination (excluding an aggregate of approximately 371,837 of NFH options and NFH RSUs that are expected to be issued to certain members of UFH Management in respect of their outstanding options and RSUs of Healthy Harmony), (iv) an aggregate of 225,000 NFC Class B ordinary shares to an anchor investor and the Sponsor in connection with the increase in NFC’s commitments under the Forward Purchase Agreements from $181,000,000 to $190,000,000 on June 29, 2018 in connection with NFC's initial public offering, and (v) 4,750,000 forward purchase warrants (as defined herein) to the anchor investors pursuant to the Forward Purchase Agreements (we refer to this as the “Share Issuance Proposal”);
(e)
Proposal No. 7 — The Director Election Proposal — a proposal to approve by ordinary resolution, assuming the Business Combination Proposal is approved and adopted, the election of four directors to serve on NFH’s board of directors for a term of one year expiring at the annual general meeting to be held in 2020 or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal (we refer to this as the “Director Election Proposal”);
(f)
Proposal No. 8 — The Incentive Plan Proposal — a proposal to approve by ordinary resolution, assuming the Business Combination Proposal is approved and adopted, the New Frontier Health Corporation 2019 Omnibus Incentive Plan (we refer to this as the “Incentive Plan Proposal” and, collectively with the Business Combination Proposal, the Share Issuance Proposal and the Director Election Proposal, the “condition precedent proposals”); and
(g)
Proposal No. 9 — The Adjournment Proposal — a proposal to approve by ordinary resolution the adjournment of the general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the general meeting, any of the condition precedent proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Transaction Agreement is not satisfied or waived (we refer to this as the “Adjournment Proposal”).
Only holders of record of NFC Class A ordinary shares and NFC Class B ordinary shares (collectively, “NFC ordinary shares”) at the close of business on [         ], 2019 are entitled to notice of and to vote and have their votes counted at the general meeting and any adjournment of the general meeting.
Whether or not you plan to attend the general meeting, we urge you to read the proxy statement carefully. Please pay particular attention to the section entitled “Risk Factors” beginning on page 37 of this proxy statement.

After careful consideration, NFC’s board of directors has determined that each of the condition precedent proposals, the Charter Approval Proposal, each of the Charter Provisions Proposals and the Adjournment Proposal are in the best interests of NFC and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of NFC’s directors and officers may result in a conflict of interest on the part of one or more of the directors and officers between what he or they may believe is in the best interests of NFC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” in the proxy statement for a further discussion.
Unless waived by the parties to the Transaction Agreement, the Closing is conditioned upon the approval of each of the condition precedent proposals. Each of the proposals other than the Business Combination Proposal is conditioned on the approval of the Business Combination Proposal, other than the Adjournment Proposal, which is not conditioned on the approval of any other proposal set forth in this proxy statement.
As of the date hereof, certain NFC shareholders, collectively owning approximately 44.5% of NFC’s outstanding ordinary shares, have agreed to vote any NFC ordinary shares held by them in favor of the business combination at the general meeting. These agreements are as follows: (i) NFC’s directors and executive officers at the time of its initial public offering and New Frontier Public Holding Ltd., a Cayman Islands exempted company (the “Sponsor”), who collectively own 26.2% of the outstanding NFC ordinary shares as of the date hereof, entered into a letter agreement at the time of NFC’s initial public offering pursuant to which they agreed to vote any NFC ordinary shares held by them in favor of the business combination; (ii) the anchor investors, who collectively own 3.4% of NFC’s outstanding ordinary shares as of the date hereof  (excluding shares owned by Messrs. Leung and Wu and those anchor investors who executed Support Agreements), entered into Forward Purchase Agreements pursuant to which they agreed to vote any NFC Class B ordinary shares held by them in favor of the business combination; and (iii) certain NFC shareholders, who collectively own approximately 15.0% of NFC’s outstanding ordinary shares as of the date hereof  (excluding the shares owned by the Sponsor and Messrs. Leung and Wu), entered into support agreements (the “Support Agreements”) with HH GP pursuant to which they have agreed to vote any NFC ordinary shares in favor of the business combination at the general meeting.
Pursuant to the Current Charter, a holder of public shares (“public shareholder”) may request that NFC redeem all or a portion of its public shares for cash in connection with the consummation of its initial business combination. For the purposes of Article 49.4 of the Current Charter and the Companies Law (2018 Revision) of the Cayman Islands, as amended (the “Cayman Islands Law”), the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and references in this proxy statement relating to the redemption should be interpreted accordingly. You will be entitled to receive cash for any public shares to be redeemed only if you:
(i)
(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and
(ii)
prior to [         ] p.m., Eastern Time, on [         ], 2019, (a) submit a written request to Continental Stock Transfer & Trust Company, NFC’s transfer agent (the “transfer agent”), that NFC redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through the Depository Trust Company.
Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If holders hold their units in an account at a brokerage firm or bank, holders must instruct their broker or bank to separate their units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal and may redeem their shares even if they were not

holders of record on the record date. If the business combination is not consummated, the public shares will not be redeemed for cash. If a public shareholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account established in connection with NFC’s initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable), divided by the number of then issued and outstanding public shares. For illustrative purposes, as of June 30, 2019 this would have amounted to approximately $10.22 per public share. If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with our consent, until the Closing. If a holder of a public share delivers its shares in connection with an election to redeem and subsequently decides prior to the deadline for submitting redemption requests not to elect to exercise such rights, it may simply request that NFC instruct its transfer agent to return the shares (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement. See “Extraordinary General Meeting — Redemption Rights” in the proxy statement for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.
As a result of the (i) Equity Financing; (ii) Debt Financing; (iii) Forward Purchase Agreements; and (iv) shareholders holding approximately $90 million of our public shares agreeing not to redeem such shares pursuant to the Support Agreements, even if all of our other public shareholders elect to redeem their shares in connection with the general meeting, we will still have sufficient funds available to consummate the business combination.
In addition, pursuant to the Current Charter, until the Closing, only holders of NFC Class B ordinary shares can elect or remove directors. Therefore, only holders of NFC Class B ordinary shares will vote on the election of directors at the general meeting. The election of directors is decided by an ordinary resolution. This means that each director nominee will be elected if such nominee receives more affirmative votes of the holders of NFC Class B ordinary shares than any other nominee for the same position.
If you have any questions or need assistance voting your ordinary shares, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing [         ].info@morrowsodali.com.
Thank you for your participation. We look forward to your continued support.
[         ], 2019
By Order of the Board of Directors,
Antony Leung
Chairman

TABLE OF CONTENTS
iii
iv
1
14
31
32
33
35
37
72
87
88
CAPITALIZATION 90
91
97
143
145
148
150
152
158
159
170
176
198
INDEBTEDNESS 217
219
225
230
235
253
264
265
265
265
F-1
i

Annex Index:
ii

ABOUT THIS PROXY STATEMENT
Currencies
In this proxy statement, unless otherwise specified or the context otherwise requires:

“$,” “US$” and “U.S. dollar” each refer to the United States dollar; and

“¥,” “RMB,” “renminbi” and “Chinese Yuan” each refer to the Chinese yuan, the official currency of the People’s Republic of China.
Industry and Market Data
In this proxy statement, each of NFC and UFH relies on and refers to information and statistics regarding the markets in which it competes and other industry data. NFC and UFH, as applicable, obtained this information and these statistics from third-party sources, such as government reports and reports by market research firms, which information NFC or UFH, as applicable, has supplemented where necessary with information from various other third party sources and its own internal estimates, taking into account publicly available information about other industry participants and NFC or UFH management’s, as applicable, best view as to information that is not publicly available. Each of NFC and UFH believes that these sources and estimates are reliable, but it has not independently verified the information and statistics obtained from them.
Presentation of Financial Information
This proxy statement contains:

the audited condensed financial statements of NFC as of December 31, 2018 and for the period from March 28 (inception) to December 31, 2018, prepared in accordance with the accounting principles generally accepted in the United States (“GAAP”);

the unaudited condensed financial statements of NFC as of June 30, 2019 and for the three and six-months ended June 30, 2019, prepared in accordance with GAAP;

the audited financial statements of Healthy Harmony as of December 31, 2017 and 2018 and for the fiscal years ended December 31, 2016, 2017 and 2018, prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”); and

the unaudited interim condensed consolidated financial statements of Healthy Harmony as of June 30, 2019 and for the six months ended June 30, 2019 and 2018, prepared in accordance with IFRS.
Although NFC is acquiring each of Healthy Harmony and HH GP in the business combination, this proxy statement includes the financial statements of Healthy Harmony only as HH GP had no material operations as of the date of this proxy statement or during any periods for which financial statements are presented herein.
This proxy statement also contains unaudited pro forma consolidated financial information that has been adjusted to reflect the effect of the transactions on the statement of financial position of Healthy Harmony as of June 30, 2019 as if the transactions had occurred on that date and to reflect the effect of the transactions on the statement of operations of Healthy Harmony for the six months ended June 30, 2019 and the fiscal year ended December 31, 2018 as if the transactions had occurred on January 1, 2018. For purposes of the unaudited pro forma consolidated financial information, the historical consolidated financial information of NFC as of and for the six months ended June 30, 2019 and as of and for the period from March 28, 2018 (inception) to December 31, 2018 has been reconciled to IFRS and has been translated into RMB for purposes of convenience translation at the noon buying rate on June 28, 2019 and December 31, 2018 of US$1.00 to RMB 6.8650 and US$1.00 to RMB 6.87555, respectively, in New York City for cable transfers in U.S. dollars for RMB, provided in the H.10 weekly statistical release of the Federal Reserve Board of the United States as certified for customs purposes by the Federal Reserve Bank of New York. See “Unaudited Pro Forma Consolidated Financial Information” in this proxy statement.
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CERTAIN DEFINED TERMS
anchor investors” means the accredited investors with whom we have entered into Forward Purchase Agreements.
Boyu Seller” means Plenteous Flair Limited, a Cayman Islands company.
business combination” means the transactions contemplated by the Transaction Agreement.
Buyer Parties” means NFC Buyer Sub and NFC.
Cayman Islands Law” means the Companies Law (2018 Revision) of the Cayman Islands, as amended.
Closing” means the closing of the business combination.
Code” means the Internal Revenue Code of 1986, as amended.
Current Charter” means the current amended and restated memorandum and articles of association of the Company.
Debt Financing” means the debt financing incurred or intended to be incurred pursuant to the Senior Loan Commitment Letter.
DTC” means the Depository Trust Company.
Equity Financing” means the private placements of NFC Class A ordinary shares pursuant to the Subscription Agreements.
Exchange Act” means the Securities Exchange Act of 1934, as amended.
Forward Purchase Agreements” means the forward purchase agreements, dated as of June 4, 2018 and June 29, 2018, pursuant to which the anchor investors agreed to purchase an aggregate of 19,000,000 NFC Class A ordinary shares, plus 4,750,000 redeemable warrants, for a purchase price of  $10.00 per NFC Class A ordinary share, or $190,000,000 in the aggregate, which aggregate purchase price includes purchases by entities controlled by our Chairman, Antony Leung, and our Chief Executive Officer, Carl Wu, for an aggregate of up to $21,000,000, in a private placement to close concurrently with the Closing.
forward purchase warrants” means an aggregate of 4,750,000 warrants, each of which will be exercisable to purchase one NFC Class A ordinary share at an exercise price of  $11.50 per share, to be issued to the anchor investors pursuant to the forward purchase agreements.
Fosun Director Nomination Agreement” means the Fosun Director Nomination Agreement to be entered into at the Closing, by and among NFC, the Sponsor and Fosun Seller.
Fosun High Tech Voting Undertaking” means the Fosun High Tech Voting Undertaking, dated as of July 30, 2019, by and among NFC, HH GP and Shanghai Fosun High Technology (Group) Co., Ltd.
Fosun Rollover Agreement” means the Fosun Rollover Agreement, dated as of July 30, 2019, by and between NFC and Fosun Seller.
Fosun Seller” means Fosun Industrial Co., Limited, a company incorporated in Hong Kong.
founder shares” means the 11,712,500 outstanding NFC Class B ordinary shares, of which 9,450,000 are held by the initial shareholders and 2,262,500 are held by the anchor investors.
GAAP” means United States generally accepted accounting principles, consistently applied, as in effect from time to time.
GP Shares” means the issued shares in the share capital of HH GP.
general meeting” means the extraordinary general meeting of NFC, which will be held at [         ] a.m., Eastern Time, on [         ], 2019, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166.
HH GP” means Healthy Harmony GP, Inc., a Cayman Islands exempted company and the sole general partner of Healthy Harmony.
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Healthy Harmony” means Healthy Harmony Holdings, L.P., a Cayman Islands exempted limited partnership.
IFRS” means the International Financial Reporting Standards as issued by the International Accounting Standards Board.
Incentive Plan” means the New Frontier Health Corporation 2019 Omnibus Incentive Plan.
initial public offering” means NFC’s initial public offering, consummated on July 3, 2018, through the sale of 28,750,000 units at $10.00 per unit.
initial shareholders” means the Sponsor and NFC’s officers and directors at the time of its initial public offering.
LP Interests” means the limited partnership interests in Healthy Harmony.
Lipson Parties” means Roberta Lipson, the Benjamin Lipson Plafker Trust, the Daniel Lipson Plafker Trust, the Jonathan Lipson Plafker Trust and the Ariel Benjamin Lee Trust.
Lipson Reinvestment Agreement” means the Founder Reinvestment Agreement, dated as of July 30, 2019, by and between NFC and the Lipson Parties.
Management Reinvestment Agreements” means the Management Reinvestment Agreements (or equivalent documentation providing for the Management Sellers’ reinvestment of the proceeds that they may receive in connection with the business combination) that may be entered into between NFC and the Management Sellers, as may be amended, supplemented, modified and varied from time to time in accordance with the terms therein.
Management Sellers” means certain members of management of UFH who hold LP Interests, other than Roberta Lipson.
Necessary Cash” means the sum of  (a) $1,300,000,000 and (b) certain reimbursable transaction expenses of certain parties to the Transaction Agreement, less (x) the aggregate amount of Leakage (as defined in the Transaction Agreement), (y) the aggregate amount of proceeds agreed to be re-invested in NFH under the Rollover Agreements, and (z) (i) the aggregate number of NFC Shares underlying the NFC Options and NFC RSUs to be issued pursuant to the Transition Agreement, multiplied by the NFC Share Reference Price minus (ii) the aggregate exercise price of the NFC Options to be issued pursuant to the Transaction Agreement.
NFC” means New Frontier Corporation, a Cayman Islands exempted company.
NFC Buyer Sub” means NF Unicorn Acquisition L.P., a Cayman Islands exempted limited partnership and wholly owned indirect subsidiary of NFC.
NFC Class A ordinary shares” means the Class A ordinary shares, par value $0.0001 per share, of NFC.
NFC Class B ordinary shares” means the Class B ordinary shares, par value $0.0001 per share, of NFC.
NFC ordinary shares” means, collectively, the NFC Class A ordinary shares and the NFC Class B ordinary shares.
NFG” means New Frontier Group Ltd., an affiliate of the Company and the Sponsor.
NFC Share Reference Price” means $10.00 per share, as adjusted for share subdivisions, share combinations, share dividends and similar events.
NFH” means the post-business combination company.
NFH Options” means an option to purchase NFH ordinary shares.
NFH ordinary shares” means the ordinary shares, par value $0.0001 per share, of NFH following the Closing.
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NFH RSUs” means a restricted stock unit that will settle in NFH ordinary shares.
NF Unicorn” means NF Unicorn Acquisition Limited, a wholly owned indirect subsidiary of NFC, and a party to the Senior Loan Commitment Letter.
Note” means the promissory note pursuant to which the Sponsor agreed to loan the Company an aggregate of $300,000 to cover expenses related to the initial public offering.
NYSE” means the New York Stock Exchange.
Ordinary Resolution” means, under Cayman Islands Law, the affirmative vote by the holders of a simple majority of NFC ordinary shares present and entitled to vote at the general meeting.
PIPE Investors” means the accredited investors with whom we have entered into Subscription Agreements.
preference shares” means the preferences shares, par value $0.0001 per share, of NFC.
private placement warrants” means 7,750,000 private placement warrants held by the Sponsors that were issued to the Sponsor concurrently with NFC’s initial public offering, each of which is exercisable for one NFC Class A ordinary share, in accordance with its terms. A portion of the proceeds of the sale of the private placement warrants were placed in the trust account upon the closing of NFC’s initial public offering and the rest was used to pay transaction expenses in connection therewith.
Proposed Charter” means the proposed new amended and restated memorandum and articles of association of NFH.
public shareholders” means the holders of NFC’s public shares.
public shares” means the NFC Class A ordinary shares offered as part of the units in NFC’s initial public offering (whether they are purchased in the initial public offering or thereafter in the open market).
public warrants” means the warrants offered as part of the units in the initial public offering (whether they are purchased in the initial public offering or thereafter in the open market), each exercisable for one NFC Class A ordinary share, in accordance with its terms.
Purchase Price” means the cash payable to the Sellers by NFC Buyer Sub for UFH pursuant to the Transaction Agreement before taking into account the Seller Reinvestment and adjustments for leakage, if any.
Reinvestment Sellers” means Roberta Lipson and Fosun Seller.
Rollover Agreements” means, collectively, the Lipson Reinvestment Agreement, the Fosun Rollover Agreement and the Management Reinvestment Agreements.
SEC” means the U.S. Securities and Exchange Commission.
Securities Act” means the Securities Act of 1933, as amended.
Seller Reinvestment” means an aggregate of  $159,000,000 in the form of seller re-investments and equity rollovers, including (i) the reinvestment by Roberta Lipson, pursuant to the Lipson Reinvestment Agreement, of  $53,128,311 of proceeds received by her in connection with the business combination in newly issued NFH ordinary shares at a price of  $10.00 per share, (ii) the reinvestment by Fosun Seller, pursuant to the Fosun Rollover Agreement, of  $94,000,000 of proceeds received by it in connection with the business combination in newly issued NFH ordinary shares at a price of  $10.00 per share, and (iii) the expected re-investments and equity rollover by certain members of UFH Management in an aggregate amount of  $11,871,689, consisting of approximately $8,153,315 in re-investments in newly issued NFH ordinary shares at a price of  $10.00 per share and $3,718,374 in equity rollovers at the same valuation.
Sellers” means Fosun Seller, the Lipson Parties, TPG Seller and Boyu Seller.
Senior Loan Commitment Letter” means the senior loan commitment letter dated June 14, 2019, by and between NF Unicorn and Shanghai Pudong Development Bank Putuo Sub-Branch in connection with the Senior Secured Term Loan.
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Senior Secured Term Loan” means the seven-year senior secured credit facility with an aggregate commitment amount of the RMB equivalent of  $300,000,000 as part of the Debt Financing.
Special Resolution” means, under the Cayman Islands Law, the affirmative vote by the holders of at least two-thirds of the NFC ordinary shares at the general meeting.
Sponsor” means New Frontier Public Holding Ltd., a Cayman Islands exempted company owned by NFG.
Subscription Agreements” means the subscription agreements entered into with the PIPE Investors, pursuant to which NFC has agreed to issue an aggregate of up to 71,148,186 NFC Class A ordinary shares for a purchase price of  $10.00 per NFC Class A ordinary share, or up to $711,481,860 in the aggregate, subject to NFC’s right to reduce the number of NFC Class A ordinary shares to be issued to the PIPE Investors by up to 25%.
TPG Seller” means TPG Healthy, L.P., a Cayman Islands exempted limited partnership.
Target Group Companies” means Healthy Harmony and HH GP and their respective direct or indirect subsidiaries from time to time.
Transaction Agreement” means that certain Transaction Agreement, dated as of July 30, 2019, by and among NFC, NFC Buyer Sub, Healthy Harmony, HH GP and the Sellers.
transfer agent” means Continental Stock Transfer & Trust Company.
trust account” means the trust account of NFC that holds proceeds from its initial public offering and the private placement of the private placement warrants.
UFH” means United Family Healthcare, the brand name under which the business operations of HH GP and Healthy Harmony are conducted.
UFH Management” means the members of management of UFH.
units” means the units of NFC, each consisting of one NFC Class A ordinary share and one-half of one public warrant, whereby each whole public warrant entitles the holder thereof to purchase one NFC Class A ordinary share at a price of  $11.50 per whole share, sold in the initial public offering.
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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
Q:
Why am I receiving this proxy statement?
A:
NFC is proposing to acquire UFH from the Sellers pursuant to the Transaction Agreement and related agreements, the terms of which are described in this proxy statement. A copy of the Transaction Agreement is attached as Annex A, which you are encouraged to read in its entirety, together with the related agreements. The Transaction Agreement, among other things, provides for the indirect acquisition by NFC of all of the issued and outstanding GP Shares for $50.4928 per GP Share and approximately 99.37% of the issued and outstanding LP Interests for $50.4928 per LP Interest (the “purchase price per LP Interest) from the Sellers. The remaining 0.63% of the LP Interests are held by certain members of UFH Management and are expected to be acquired by NFC simultaneously with the Closing on terms and conditions to be agreed between NFC and these holders.
Consummation of the business combination requires the approval by Ordinary Resolution, which means by shareholders holding a simple majority of the ordinary shares voting at NFC’s general meeting.
NFC is also proposing to amend and restate its Current Charter with the Proposed Charter in connection with the business combination. Certain provisions of the Proposed Charter will differ materially from those of the Current Charter. For more information on such material differences, please see “Questions and Answers About the Proposals — What amendments will be made to the Current Charter?” below.
THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT.
Q:
Why is NFC proposing the business combination?
A:
NFC was organized for the purpose of effecting a merger, share exchange, asset acquisition, reorganization or other similar business combination with one or more businesses.
UFH is one of the largest integrated private healthcare providers in China by revenue with a nationwide footprint. UFH offers comprehensive, internationally accredited healthcare services with top-caliber physicians and medical resources.
NFC believes that UFH is an attractive business for its initial business combination because, among other things:

UFH is the leading healthcare operator in China;

The acquisition value of UFH implies substantial value upside if the assets of UFH are valued on a sum of the parts basis;

UFH has the highest brand recognition in high-end healthcare brands in China;

UFH’s management team. including its founder, Roberta Lipson, is among the strongest in the healthcare service industry in China;

UFH utilizes a nationwide hospital and clinic “hub and spoke” network that provides comprehensive healthcare services covering the entire lifecycle of its patients; and

We believe that favorable healthcare reform and attractive industry growth potential in China are likely to create robust growth opportunities in the private healthcare sector in China.
NFC is confident in its ability to add value to the UFH business because, among other things:

Healthcare is a primary focus of NFG, an affiliate of both NFC and the Sponsor, and NFC’s management team has extensive operating and investment experience in the Chinese healthcare service sector; and
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NFC believes it can leverage the existing NFG portfolio and UFH’s well-established service offering to create synergistic value.
See “The Business Combination Proposal — NFC’s Board of Directors’ Reasons for Approval of the Business Combination.”
Q:
What will UFH’s equity holders receive in return for the acquisition of UFH by NFC?
A:
Subject to the terms and conditions of the Transaction Agreement, upon completion of the business combination, NFC will indirectly acquire all of the issued and outstanding GP Shares for $50.4928 per GP Share and approximately 99.37% of the LP Interests from the Sellers for approximately $1.3 billion, subject to adjustment and before taking into account the Seller Reinvestment. The remaining 0.63% of the LP Interests are held by certain members of UFH Management and are expected to be acquired by NFC simultaneously with the Closing on terms and conditions to be agreed between NFC and these holders.
Q:
What equity stake will current NFC shareholders hold in the post-business combination company immediately after the consummation of the business combination?
A:
It is anticipated that, upon completion of the business combination, the ownership interests in NFH will be as set forth in the table below.
Assuming
No Redemptions
of Public Shares
Assuming
Maximum Redemptions
of Public Shares
NFC’s public shareholders(1)
22% 7%
Initial Shareholders(2)
7% 8%
Anchor Investors(2)(3)
16% 17%
PIPE Investors
43% 56%
Fosun Seller and Roberta Lipson
11% 11%
Management Sellers
1% 1%
(1)
Includes 900,000 NFC Class A ordinary shares underlying the public units held by Antony Leung and Carl Wu.
(2)
Assumes that the Sponsor waives its right to have its NFC Class B ordinary shares converted into a greater number of NFC Class A ordinary shares in respect of the issuance of shares in the Equity Offering (which waiver automatically applies to all of the NFC Class B ordinary shares held by the Anchor Investors), which the Sponsor has indicated its intention to do.
(3)
Includes the NFC ordinary shares to be issued to Antony Leung and Carl Wu at Closing in accordance with the Forward Purchase Agreements entered into by each of them.
There are currently outstanding an aggregate of 22,125,000 warrants to acquire NFC Class A ordinary shares, which includes 7,750,000 private placement warrants issued to the Sponsor at the time of the initial public offering and 14,375,000 public warrants. In addition, we expect to issue at the Closing an aggregate of 4,750,000 forward purchase warrants to the anchor investors pursuant to the Forward Purchase Agreements. Therefore, as of the filing date of this proxy statement, if we assume that each outstanding whole warrant is exercised and one NFC Class A ordinary share is issued as a result of such exercise, with payment to NFC of the exercise price of  $11.50 per share for applicable warrants, NFC’s fully-diluted share capital would increase by a total of 26,875,000 shares, with $309,062,500 paid to NFC to exercise the warrants.
Q:
What happens to the funds deposited in the trust account after consummation of the business combination?
A:
As of June 30, 2019, there were investments and cash held in the trust account of  $293,902,478, including $6,912,500 of underwriters’ deferred discount. These funds will be released upon the closing
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of the business combination, at which time the amount remaining after any redemptions will be used to pay a portion of the Purchase Price and transaction expenses, although we may withdraw the interest earned on the funds held in the trust account to pay income taxes, if any.
Q:
What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?
A:
Our public shareholders may vote in favor of the business combination and also exercise their redemption rights. Furthermore, the business combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders. As a result of the (i) Equity Financing; (ii) Debt Financing; (iii) Forward Purchase Agreements; and (iv) shareholders holding approximately $90 million of our public shares agreeing not to redeem such shares pursuant to the Support Agreements, even if all of our other public shareholders elect to redeem their shares in connection with the general meeting, we will still have sufficient funds available to consummate the business combination.
However, the consummation of the business combination is conditioned upon, among other things, NFC having sufficient cash available to pay the Necessary Cash (which is $1,300,000,000 plus certain reimbursable transaction expenses less the amount reinvested in connection with the Seller Reinvestment and certain other expenses), subject to adjustment as provided in the Transaction Agreement, after giving effect to redemptions of public shares, if any, as further described below.
In addition, with fewer public shares and public shareholders, the trading market for NFH ordinary shares may be less liquid than the market for NFC ordinary shares was prior to consummation of the business combination and we may not be able to meet the listing standards for the NYSE or another national securities exchange. In addition, with less funds available from the trust account, the working capital infusion from the trust account into NFH’s business will be reduced.
Q:
What will NFH’s public float be upon the Closing?
A:
Assuming maximum redemptions, NFH will have at least 9,000,000 public shares that are freely tradable upon the Closing. To the extent NFC’s shareholders redeem fewer of their public shares, there will be more NFH ordinary shares freely tradable upon the Closing. As such, assuming no redemptions, NFH will have 28,750,000 public shares that are freely tradable upon the Closing. In addition, following the registration of the forward purchase shares and shares to be issued in the Equity Offering, which is expected to occur within four weeks of the Closing, NFH will have approximately 99,100,000 or 104,200,000 shares that are freely tradable assuming maximum redemptions and no redemptions, respectively.
Q:
Will the Buyer Parties obtain new debt financing in connection with the business combination?
A:
Yes. NF Unicorn Acquisition Limited, a wholly owned indirect subsidiary of NFC (“NF Unicorn”), has entered into a senior loan commitment letter (the “Senior Loan Commitment Letter”) with Shanghai Pudong Development Bank Putuo Sub-Branch (“SPDB”), pursuant to which SPDB has agreed upon the terms and subject to the conditions thereof, to provide a seven-year senior secured credit facility in an aggregate amount of the RMB equivalent of  $300,000,000 (the “Senior Secured Term Loan”). The proceeds of the Senior Secured Term Loan are expected to be used to finance, among others, the Purchase Price and the costs and expenses incurred in connection with the business combination.
The Senior Secured Term Loan is denominated and funded in offshore RMB and is expected to be funded into a free trade non-resident account of the borrower to be opened with SPDB (the transfer of funds in and out of which is not subject to Chinese regulatory approval) or an account in Hong Kong or any other jurisdiction outside of China that can receive funds in RMB. Given that substantially all of UFH’s revenue and expenses are denominated in RMB, the Senior Secured Term Loan is not expected to create currency exposure for the post-business combination company. The Senior Secured Term Loan will be subject to amortization commencing from 12 months after the utilization date of the Senior Secured Term Loan, with an average life of up to 5.78 years. The interest rate for the Senior
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Secured Term Loan is set at 126.53% of the applicable People’s Bank of China (the “PBOC”) benchmark annual interest rate for loans denominated in RMB and with tenors of over five years, subject to annual adjustments to reflect the PBOC benchmark annual interest rate applicable on January 1 each year. As of the date of the Senior Loan Commitment Letter, the interest rate was 6.20%.
China Merchants Bank Shanghai Branch (“CMB”) had previously issued a senior loan commitment letter to NFC, which also contemplated a senior secured credit facility in an aggregate amount of up to $300,000,000 upon the terms and subject to the conditions thereof.
NFC and its wholly owned subsidiaries expect to borrow only up to an aggregate of the RMB equivalent of  $300,000,000 of senior secured term loans to finance the business combination. As such, NFC and/or its wholly owned subsidiaries (including NF Unicorn Chindex Holding Limited) expect to enter into a separate senior loan commitment letter or other definitive agreements after the date hereof with SPDB and/or CMB reflecting this arrangement.
Q:
In addition to the new Debt Financing, are there any other arrangements that NFC has entered into in order to help fund the Purchase Price and transaction expenses?
A:
Yes. NFC entered into the Forward Purchase Agreements pursuant to which the anchor investors agreed to purchase an aggregate of 19,000,000 NFC Class A ordinary shares, plus 4,750,000 redeemable warrants, for a purchase price of  $10.00 per NFC Class A ordinary share, or $190,000,000 in the aggregate in connection with the Closing. In addition, NFC has entered into the Subscription Agreements with the PIPE Investors, pursuant to which NFC has agreed to issue an aggregate of up to 71,148,186 NFC Class A ordinary shares for a purchase price of  $10.00 per NFC Class A ordinary share, or up to $711,481,860 in the aggregate, subject to NFC’s right to reduce the number of NFC Class A ordinary shares to be issued to the PIPE Investors by up to 25%. The PIPE Investors include institutional investors such as Nan Fung Group, Vivo Capital Fund IX (Cayman), L.P. (“Vivo”), certain funds and accounts advised by Capital Research and Management Company, Aspex Management, BosValen Asset Management, CityChamp Group (SEHK: 00256), Exome Asset Management LLC, HS Group, Hysan Group (SEHK: 00014), Ishana Capital, Maso Capital, Mason Group (SEHK: 00273), certain funds and accounts advised by Morgan Stanley Investment Management Inc. or Morgan Stanley Asia Limited, Mr. Adrian Cheng, Mr. Jason Jiang Nanchun of Focus Media (SZSE: 002027), Mr. Thomas Lau Luen Hung of Lifestyle International Holdings Ltd. (SEHK: 01212), Ovata Capital, Peterson Group, Shui On Group (SEHK: 00272), Tingyi Group (SEHK: 00322), The Segantii Asia-Pacific Equity Multi-Strategy Fund, Thing On Group (SEHK: 02292), York Capital Management, Yunqi Capital, Yuntai Fund and other institutional and private investors.
In addition, certain investors who own an aggregate of  $90 million of public shares have entered into Support Agreements, pursuant to which they agreed not to redeem the public shares held by them in connection with the vote at the general meeting.
Lastly, Roberta Lipson and Fosun Seller have agreed to reinvest in NFH, and the certain members of UFH Management are currently expected to reinvest in NFH and roll over their equity interests in UFH into NFH, in an aggregate of  $159,000,000, including (i) the reinvestment by Roberta Lipson, pursuant to the Lipson Reinvestment Agreement, of  $53,128,311 of proceeds received by her in connection with the business combination in newly issued NFH ordinary shares at a price of  $10.00 per share, (ii) the reinvestment by Fosun Seller, pursuant to the Fosun Rollover Agreement, of $94,000,000 of proceeds received by it in connection with the business combination in newly issued NFH ordinary shares at a price of  $10.00 per share, and (iii) the expected re-investments and equity rollover by certain members of UFH Management in an aggregate amount of  $11,871,689, consisting of approximately $8,153,315 in re-investments for newly issued NFH ordinary shares at a price of $10.00 per share and $3,718,374 in equity rollovers at the same valuation.
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Q:
Who are some of the institutional investors that have invested in or agreed to invest in NFC?
A:
NFC’s investors, which comprise investors in its initial public offering, parties to Forward Purchase Agreements, and Subscription Agreements, include entities affiliated with Mr. Antony Leung, Mr. Carl Wu, Nan Fung Group, Vivo, certain funds and accounts advised by Capital Research and Management Company, Shimao Group (SSE: 600823; HKSE: 00813), Agricultural Bank of China International which is a wholly subsidiary of Agricultural Bank of China (SSE: 601288; SEHK: 01288), Aspex Management, BosValen Asset Management, China Cinda (HK) Asset Management Co., Ltd. (SEHK: 01359; 00111), China Shandong Hi-Speed Financial Group (stock code: 00412.HK), CityChamp Group (SEHK: 00256), Exome Asset Management LLC, HS Group, Hysan Group (SEHK: 00014), Ishana Capital, Juno Capital Management Limited, Junson Capital, Maso Capital, Mason Group (SEHK: 00273), certain funds and accounts advised by Morgan Stanley Investment Management Inc. or Morgan Stanley Asia Limited, Mr. Adrian Cheng, Mr. Jason Jiang Nanchun of Focus Media (SZSE: 002027), Mr. Thomas Lau Luen Hung of Lifestyle International Holdings Ltd. (SEHK: 01212), Ovata Capital, Peterson Group, Shui On Group (SEHK: 00272), Tingyi Group (SEHK: 00322), The Segantii Asia-Pacific Equity Multi-Strategy Fund, Thing On Group (SEHK: 02292), York Capital Management, Yunqi Capital, Yuntai Fund and other institutional and private investors.
Q:
What conditions must be satisfied to complete the business combination?
A:
The Transaction Agreement provides that the consummation of the business combination is conditioned upon, among other things, (i) approval by NFC’s shareholders of the Transaction Agreement, the business combination and certain other actions related thereto, (ii) the Company maintaining at least $5,000,001 of net tangible assets, and (iii) NFC having sufficient cash available to pay the Necessary Cash, subject to adjustment as provided in the Transaction Agreement. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. See “The Business Combination Proposal — The Transaction Agreement — Conditions to Closing.
Q:
What happens if the business combination is not consummated?
A:
If NFC is not able to complete the business combination or another initial business combination by July 3, 2020, it will cease all operations except for the purpose of winding up and redeem its public shares and liquidate the trust account, in which case our public shareholders may only receive approximately $10.00 per share, and its warrants will expire worthless.
Q:
When do you expect the business combination to be completed?
A:
It is currently anticipated that the business combination will be consummated as soon as practicable following the general meeting, which is set for [         ], 2019; however, such meeting could be adjourned if the Adjournment Proposal is adopted by our shareholders at the general meeting and we elect to adjourn the general meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the general meeting, any of the condition precedent proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Transaction Agreement is not satisfied or waived. For a description of the conditions for the completion of the business combination, see “The Business Combination Proposal — Transaction Agreement — Conditions to Closing.”
Q:
Did the board of directors of NFC obtain a third-party valuation or fairness opinion for purposes of determining whether or not to proceed with the business combination?
A:
No. NFC’s board of directors did not obtain a third-party valuation or fairness opinion in connection with or for purposes of determining whether or not to proceed with the business combination. NFC’s officers and directors have substantial experience in evaluating the operating and financial merits of companies in the healthcare industry in China and concluded that their experience and backgrounds, together with the experience of their outside advisors, including McKinsey & Company, Pricewaterhouse Coopers, Simpson Thacher & Bartlett LLP and Global Law Office, enabled them to
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make the necessary analyses and determinations regarding the business combination. Accordingly, investors will be relying solely on the judgment of NFC’s board of directors in valuing UFH and assuming the risk that NFC’s board of directors may not have properly valued such businesses.
Q:
What proposals are NFC’s shareholders being asked to vote upon?
A:
NFC’s shareholders are being asked to vote upon the Business Combination Proposal, the Share Issuance Proposal, the Director Election Proposal and the Incentive Plan Proposal. These proposals, which we sometimes refer to as the “condition precedent proposals,” are conditions to the consummation of the business combination. If our public shareholders do not approve each of the condition precedent proposals, then the business combination may not be consummated.
In addition to the foregoing proposals, shareholders are also being asked to consider and vote upon (i) a proposal to approve the Proposed Charter and (ii) a proposal to adjourn the general meeting to a later date or dates to permit further solicitation and vote of proxies if  (a) based upon the tabulated vote at the time of the general meeting, each of the condition precedent proposals has not been approved and/or (b) NFC determines that one or more of the closing conditions under the Transaction Agreement has not been satisfied. See “The Charter Approval Proposal” and “The Adjournment Proposal.”
In addition, as required by applicable SEC guidance, NFC is requesting that its shareholders vote upon, on a non-binding advisory basis, three separate proposals to approve the material differences between the Current Charter of NFC and the Proposed Charter of NFH, which will be in place upon the Closing. These proposals relate to certain amendments contained in the Proposed Charter that materially affect shareholder rights, which are those amendments that will be made to the Current Charter as reflected in the Proposed Charter if the Charter Approval Proposal is approved. This separate vote is not otherwise required by Cayman Islands Law separate and apart from the Charter Approval Proposal, but pursuant to SEC guidance, NFC is required to submit these provisions to its shareholders separately for approval. However, the shareholder vote regarding these proposals are advisory votes, and are not binding on NFC or its board of directors (separate and apart from the approval of the Charter Approval Proposal). Furthermore, the business combination is not conditioned on either the approval of any of the Charter Provisions Proposals or the Charter Approval Proposal. See “The Charter Provisions Proposals.
Pursuant to the Current Charter, until the Closing, only holders of NFC Class B ordinary shares can elect or remove directors. Therefore, only holders of NFC Class B ordinary shares will vote on the election of directors at the general meeting.
NFC will hold the general meeting to consider and vote upon these proposals. This proxy statement contains important information about the business combination and the other matters to be acted upon at the general meeting. Shareholders should read it carefully.
After careful consideration, NFC’s board of directors has determined that the condition precedent proposals, the Charter Approval Proposal, the Charter Provisions Proposals and the Adjournment Proposal are in the best interests of NFC and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of NFC’s directors and officers may result in a conflict of interest on the part of one or more of the directors and officers between what he or they may believe is in the best interests of NFC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for a further discussion.
THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT.
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Q:
What amendments will be made to the Current Charter?
A:
NFC’s shareholders are being asked to consider and vote upon a proposal to:

 approve on a non-binding advisory basis, the provision in the Proposed Charter increasing the authorized share capital from $20,100 divided into 180,000,000 NFC Class A ordinary shares, 20,000,000 NFC Class B ordinary shares and 1,000,000 preference shares to authorized share capital of  $50,000 divided into 490,000,000 NFH ordinary shares and 10,000,000 preference shares by: (i) the redesignation of all issued and unissued NFC Class A ordinary shares and NFC Class B ordinary shares as NFH ordinary shares; (ii) the creation of an additional 290,000,000 NFH ordinary shares, each with the rights set out in the Proposed Charter; (iii) the redesignation of all unissued NFC preference shares as NFH preference shares; and (iv) the creation of an additional 9,000,000 preference shares;

approve, on a non-binding advisory basis, the provision in the Proposed Charter providing that each member of NFH’s board of directors will be elected annually at each annual general meeting (or extraordinary general meeting in lieu thereof) following the Closing;

approve, on a non-binding advisory basis, all other material differences between the Current Charter and the Proposed Charter in connection with the Closing including, among other things, (i) changing the post-business combination corporate name from “New Frontier Corporation” to “New Frontier Health Corporation” and making NFH’s corporate existence perpetual, (ii) granting a waiver regarding corporate opportunities to certain persons, including NFG, Fosun Seller and Vivo and their respective affiliates and representatives, and (iii) removing certain provisions related to NFC’s status as a blank check company that will no longer apply upon consummation of the business combination, all of which NFC’s board of directors believe are necessary to adequately address the needs of the post-business combination company.
For more information on the Charter Provisions Proposals, see “The Charter Provisions Proposals.”
Q:
What material negative factors did NFC’s board of directors consider in connection with the business combination?
A:
Although NFC’s board of directors believes that the acquisition of UFH will provide NFC’s shareholders with an opportunity to participate in a combined company with significant growth potential, leading market position, market share and a well-known brand, the board of directors did consider certain potentially material negative factors in arriving at that conclusion, such as the risk that shareholders would not approve the business combination and the risk that a significant number of shareholders would exercise their redemption rights. These factors are discussed in greater detail in the section entitled “The Business Combination Proposal — NFC’s Board of Directors’ Reasons for Approval of the Business Combination,” as well as in the section entitled “Risk Factors — Risks Relating to UFH’s Business.”
Q:
Do I have redemption rights?
A:
If you are a holder of public shares, you have the right to request that NFC redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal and may redeem their shares even if they were not holders of record on the record date. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the trust account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its
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public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.
Our initial shareholders and the anchor investors have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination.
In no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “The Business Combination Proposal — The Transaction Agreement.”
Q:
How do I exercise my redemption rights?
A:
If you are a holder of public shares and wish to exercise your right to redeem your public shares, you must:
(i)
(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and
(ii)
prior to [         ] p.m., Eastern Time, on [         ], 2019, (a) submit a written request to the transfer agent that NFC redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.
The address of the transfer agent is listed under the question “Who can help answer my questions?” below.
Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If holders hold their units in an account at a brokerage firm or bank, holders must instruct their broker or bank to separate their units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent, directly and instruct them to do so.
Any holder of public shares will be entitled to request that their public shares be redeemed for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable), divided by the number of then issued and outstanding public shares. For illustrative purposes, as of June 30, 2019, this would have amounted to approximately $10.22 per public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders, regardless of whether such public shareholders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal will have no impact on the amount you will receive upon exercise of your redemption rights. It is anticipated that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the business combination.
Any demand for redemption, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with our consent, until the Closing. If you deliver your shares for redemption to the transfer agent and later decide prior to the deadline for submitting redemption requests not to elect redemption, you may request that NFC instruct the transfer agent to return the shares (physically or electronically). You may make such request by contacting the transfer agent at the phone number or address listed at the end of this section.
If a holder of public shares properly makes a request for redemption and the public shares are delivered as described above, then, if the business combination is consummated, NFC will redeem public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the business combination.
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If you are a holder of public shares and you exercise your redemption rights, this will not result in the loss of any NFC warrants that you may hold.
Q:
If I am a holder of units, can I exercise redemption rights with respect to my units?
A:
No. Holders of outstanding units must elect to separate their units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate your units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact NFC’s transfer agent directly and instruct them to do so. If you fail to cause your public shares to be separated and delivered to the transfer agent by [         ] p.m., Eastern Time, on [         ], 2019 you will not be able to exercise your redemption rights with respect to your public shares.
Q:
What are the U.S. federal income tax consequences of exercising my redemption rights?
A:
We expect that a U.S. holder that exercises its redemption rights to receive cash from the trust account in exchange for its public shares will generally be treated as selling such public shares, resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption may be treated as a distribution taxable as a dividend for U.S. federal income tax purposes depending on the amount of public shares that a U.S. holder owns or is deemed to own (including through the ownership of warrants) and redeems. For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “U.S. Federal Income Tax Considerations — U.S. Federal Income Tax Consequences of the Redemption of Public Shares.
Q:
Do I have appraisal rights in connection with the business combination?
A:
No. Neither NFC shareholders nor NFC warrantholders have appraisal rights in connection with the business combination under the Cayman Islands Law.
Q:
What do I need to do now?
A:
NFC urges you to read carefully and consider the information contained in this proxy statement, including the annexes hereto, and to consider how the business combination will affect you as a shareholder of NFC. Shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.
Q:
How do I vote?
A:
If you are a holder of record of ordinary shares on the record date, you may vote in person at the general meeting or by submitting a proxy for the general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the general meeting and vote in person, obtain a proxy from your broker, bank or nominee.
Q:
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A:
No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. We believe the proposals presented to the shareholders at this general meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the general meeting. If you do not provide voting instructions to your broker on a particular proposal on which
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your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Broker non-votes, while considered present for the purposes of establishing a quorum, will have no effect on a particular proposal.8 If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.
Q:
When and where will the general meeting be held?
A:
The general meeting will be held at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166 on [         ], 2019, at [         ] a.m., Eastern Time, unless the general meeting is adjourned.
Q:
Who is entitled to vote at the general meeting?
A:
NFC has fixed [         ], 2019 as the record date. If you were a shareholder of NFC at the close of business on the record date, you are entitled to vote on matters that come before the general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the general meeting.
Q:
How many votes do I have?
A:
NFC shareholders are entitled to one vote at the general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date, there were outstanding 40,462,500 issued and outstanding ordinary shares, of which 28,750,000 were issued and outstanding public shares and 11,712,500 were issued and outstanding NFC Class B ordinary shares.
Q:
What constitutes a quorum?
A:
A quorum of NFC shareholders is necessary to hold a valid meeting. A quorum will be present at the NFC general meeting if the holders of a majority of the issued ordinary shares are represented at the general meeting in person or by proxy. As of the record date for the general meeting, 20,231,251 NFC ordinary shares would be required to achieve a quorum.
Q:
What vote is required to approve each proposal at the general meeting?
A:
The following votes are required for each proposal at the general meeting:

Business Combination Proposal:   The approval of the Business Combination Proposal requires an Ordinary Resolution.

Charter Approval Proposal:   The approval of the Charter Approval Proposal requires a Special Resolution.

Charter Provisions Proposals:   The separate approval of each of the Charter Provisions Proposals (with the exception of Charter Proposal A, which requires an Ordinary Resolution) requires a Special Resolution.

Share Issuance Proposal:   The approval of the Share Issuance Proposal requires an Ordinary Resolution.

Incentive Plan Proposal:   The approval of the Incentive Plan Proposal requires an Ordinary Resolution.

Director Election Proposal:   The election of directors pursuant to the Director Election Proposal requires an Ordinary Resolution. Pursuant to the Current Charter, until the Closing, only holders of NFC Class B ordinary shares can elect or remove directors. Therefore, only holders of NFC Class B ordinary shares will vote on the election of directors at the general meeting.

Adjournment Proposal:   The approval of the Adjournment Proposal requires an Ordinary Resolution.
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Q:
What are the recommendations of NFC’s board of directors?
A:
NFC’s board of directors believes that the Business Combination Proposal and each of the other proposals to be presented at the general meeting are in the best interest of NFC’s shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Approval Proposal, “FOR” each of the separate Charter Provisions Proposals, “FOR” the Share Issuance Proposal, “FOR” the Incentive Plan Proposal, “FOR” each of the director nominees and “FOR” the Adjournment Proposal, in each case, if presented to the general meeting.
The existence of financial and personal interests of NFC’s directors and officers may result in a conflict of interest on the part of one or more of the directors and officers between what he or they may believe is in the best interests of NFC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. These conflicts of interest include, among others, that if we do not consummate a business combination by July 3, 2020, we may be forced to liquidate and the 11,712,500 founder shares and 7,750,000 private placement warrants owned by certain initial shareholders would be worthless. See the section entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for a further discussion.
Q:
How do the Sponsor, NFC’s directors and officers and the anchor investors intend to vote their shares?
A:
NFC’s directors and executive officers at the time of its initial public offering and the Sponsor, who collectively own 26.2% of the outstanding NFC ordinary shares as of the date hereof, entered into a letter agreement at the time of NFC’s initial public offering pursuant to which they agreed to vote any NFC ordinary shares held by them in favor of the business combination. In addition, the anchor investors, who collectively own 2.7% of NFC’s outstanding ordinary shares as of the date hereof (excluding shares owned by Messrs. Leung and Wu and those anchor investors who executed Support Agreements), entered into Forward Purchase Agreements pursuant to which they agreed to vote any NFC Class B ordinary shares held by them in favor of the business combination.
Q:
May the initial shareholders or anchor investors purchase public shares or warrants or enter into other arrangements with holders of public shares or warrants prior to the general meeting?
A:
At any time prior to the general meeting, during a period when they are not then aware of any material nonpublic information regarding NFC or its securities, the initial shareholders, the anchor investors, UFH and/or their respective affiliates may purchase public shares and/or warrants, or they may enter into arrangements with holders of public shares or other investors to provide them with incentives to acquire and/or not redeem their public shares or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of that (i) the proposals presented to shareholders for approval at the general meeting are approved and/or (ii) that NFC has the Necessary Cash at Closing. This may result in the completion of our business combination when it may not otherwise have been possible. Other than as described elsewhere in this proxy statement, the exact nature of any such incentives has not been determined as of the date hereof and they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the initial shareholders for nominal value.
Entering into any such arrangements may have a depressive effect on NFC’s ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the general meeting.
If such transactions are effected, the consequence could be to cause the business combination to be approved and completed in circumstances where such approval or completion could not otherwise be obtained or achieved. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the general meeting and would likely increase the chances that such proposals would be approved. However, as a result of the
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(i) Equity Financing; (ii) Debt Financing; (iii) Forward Purchase Agreements; and (iv) shareholders holding approximately $90 million of our public shares agreeing not to redeem such shares pursuant to the Support Agreements, even if all of our other public shareholders elect to redeem their shares in connection with the general meeting, we will still have sufficient funds available to consummate the business combination.
Other than as described herein, as of the filing date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. NFC will file a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would materially affect the vote on the proposals to be put to the general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
Q:
What happens if I sell my ordinary shares before the general meeting?
A:
The record date for the general meeting is earlier than the date of the general meeting and earlier than the date that the business combination is expected to be completed. If you transfer your ordinary shares after the applicable record date, but before the general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting.
Q:
May I change my vote after I have mailed my signed proxy card?
A:
Yes. Shareholders may send a later-dated, signed proxy card to NFC’s secretary at the address set forth below so that it is received by NFC’s secretary prior to the vote at the general meeting (which is scheduled to take place on [         ], 2019) or attend the general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to NFC’s secretary, which must be received by NFC’s secretary prior to the vote at the general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.
Q:
What happens if I fail to take any action with respect to the general meeting?
A:
If you fail to take any action with respect to the general meeting, whether or not the business combination is approved by shareholders and consummated, you will remain a shareholder and/or warrantholder of NFC (or NFH, if the business combination is consummated). However, if you fail to take any action with respect to the general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the business combination, provided you follow the instructions in this proxy statement for redeeming your shares.
Q:
What should I do if I receive more than one set of voting materials?
A:
Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.
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Q:
Who can help answer my questions?
A:
If you have questions about the business combination or if you need additional copies of the proxy statement, or the enclosed proxy card you should contact:
Morrow Sodali LLC
470 West Avenue, Suite 3000
Stamford CT 06902
Tel: (800) 662-5200
Banks and brokers call collect: (203) 658-9400
E-mail: [         ].info@morrowsodali.com
You also may obtain additional information about NFC from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to need to send a letter demanding redemption and deliver your ordinary shares (either physically or electronically) to NFC’s transfer agent at the address below prior to [         ] p.m., Eastern Time, on [         ], 2019. If you have questions regarding the certification of your position or delivery of your shares, please contact:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
E-mail: mzimkind@continentalstock.com
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SUMMARY OF THE PROXY STATEMENT
This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the general meeting, including the business combination, you should read this entire document carefully, including the Transaction Agreement, which is attached as Annex A. The Transaction Agreement is the legal document that governs the business combination and the other transactions that will be undertaken in connection therewith. The Transaction Agreement is also described in detail in this proxy statement in the section entitled “The Business Combination Proposal — The Transaction Agreement.”
The Parties to the Business Combination
New Frontier Corporation
NFC is a blank check company incorporated on March 28, 2018 as a Cayman Islands exempted company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. NFC’s units, ordinary shares and warrants are listed on the NYSE under the symbols “NFC.U,” “NFC,” and “NFC WS,” respectively.
The mailing address of NFC’s principal executive office is 23rd Floor, 299 QRC, 287-299 Queen’s Road Central, Hong Kong. Its telephone number is 852-3703-3251.
NF Unicorn Acquisition L.P.
NFC Buyer Sub is a wholly owned indirect subsidiary of NFC formed under the laws of the Cayman Islands on June 17, 2019 solely for the purpose of effecting the business combination.
Healthy Harmony Holdings, L.P.
Healthy Harmony was formed on July 29, 2013 under the laws of the Cayman Islands with HH GP as its sole general partner and the Sellers and certain other individuals as its limited partners.
Healthy Harmony, through its offshore subsidiaries, is the indirect holding entity of all of the hospitals and clinics of UFH and operates under the name United Family Healthcare.
Healthy Harmony GP, Inc.
HH GP was incorporated on August 16, 2013 under the laws of the Cayman Islands. HH GP is the sole general partner of Healthy Harmony. The Sellers collectively hold 100% of the GP Shares.
Structure Following the Business Combination
Immediately or shortly following the business combination, Healthy Harmony will distribute all of its assets, including all outstanding shares of its subsidiaries, Healthy Harmony Healthcare, Inc. (“HHH Inc.”) and Chindex Inc. (“Chindex”), to NFC Buyer Sub. Immediately thereafter, NFC Buyer Sub will distribute all of the outstanding shares of HHH Inc. to NF Unicorn HHH Holding Limited, and all of the outstanding shares of Chindex to NF Unicorn Chindex Holding Limited. Each of NF Unicorn HHH Holding Limited and NF Unicorn Chindex Holding Limited is a limited partner of NFC Buyer Sub and a wholly owned indirect subsidiary of NFC. Following the foregoing distributions, each of Healthy Harmony, HH GP, NFC Buyer Sub and NF Unicorn will be dissolved.
Upon the consummation of the business combination, two of NFH’s subsidiaries in China will be organized as partial variable interest entities to comply with Chinese laws and regulations generally limiting foreign ownership of companies in the healthcare industry to no more than 70%. As shown in the second diagram below, United Family Healthcare Management Consulting (Beijing) Co., Ltd. (“UFH (WFOE)”), which is an indirect, wholly-owned subsidiary of Healthy Harmony, owns 70% of the equity interests in Beijing Access Health Hospital Management Co., Ltd (“Access”), and the remaining 30% of the equity interests are held by certain senior executives of UFH, who are serving as nominee shareholders in accordance with and subject to various variable interest entity arrangements in favor of UFH (WFOE).
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Similarly, Access holds 70% of the equity interests in Beijing United Family Hospital Management Co., Ltd. (“SHY”, and together with Access, each a “Relevant Entity”), and the remaining 30% of the equity interests are held by a senior executive of UFH who is serving as a nominee shareholder in accordance with and subject to various variable interest entity arrangements in favor of UFH (WFOE). These variable interest entity arrangements consist of a series of contractual arrangements among UFH (WFOE), the Relevant Entities, their respective nominee shareholders and the respective nominee shareholders’ spouses, and include exclusive operation services agreements, spousal consent letters, entrustment agreements of shareholder’s rights and equity interest pledge agreements, and exclusive call option agreements, in each case, in favor of UFH (WFOE). As a result of these contractual arrangements, NFH will be able to control 100% of the Relevant Entities (including the 30% held by the nominee shareholder(s)) and receive all of the economic benefits of the operations of the Relevant Entities.
The following diagram illustrates the ownership structure of NFH immediately following the business combination, the distributions and the dissolutions contemplated above.
[MISSING IMAGE: tv529264-prer14a_1.jpg]
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[MISSING IMAGE: tv529264-prer14a_2.jpg]
(1)
New Frontier Health Corporation will be a holding company with no direct operations.
(2)
United Family Healthcare Management Consulting (Beijing) Co., Ltd is a wholly foreign-owned enterprise.
(3)
The shareholders of Beijing Access Health Hospital Management Co., Ltd. are United Family Healthcare Management Consulting (Beijing) Co., Ltd., Mr. Ming Xie and Ms. Xiaoyan Shen, owning 70%, 15% and 15% of the equity interests of Beijing Access Health Hospital Management Co., Ltd., respectively. Mr. Ming Xie is a senior executive and director of both Access and SHY, and Ms. Xiaoyan Shen is the supervisor of both Access and SHY; both are acting as nominee shareholders on behalf of United Family Healthcare Management Consulting (Beijing) Co., Ltd.
(4)
The shareholders of Beijing United Family Hospital Management Co., Ltd. are Beijing Access Health Hospital Management Co., Ltd. and Mr. Ming Xie, owning 70% and 30% of the equity interests of Beijing United Family Hospital Management Co., Ltd., respectively. Mr. Ming Xie is a senior executive and director of both Access and SHY and is acting as a nominee shareholder on behalf of United Family Healthcare Management Consulting (Beijing) Co., Ltd.
(5)
Qingdao United Family Hospital Co., Ltd. is a wholly foreign-owned enterprise.
(6)
Shanghai Xincheng United Family Hospital Co., Ltd. is a China-Foreign Equity Joint Venture.
(7)
Guangzhou United Family Hospital Co., Ltd. is a China-Foreign Contractual Joint Venture.
(8)
Beijing Jingbei Women & Children United Family Hospital Co., Ltd. is a China-Foreign Contractual Joint Venture.
(9)
Beijing United Family Hospital Co., Ltd. is a China-Foreign Contractual Joint Venture.
(10)
Beijing United Family Rehabilitation Hospital Co., Ltd. is a China-Foreign Contractual Joint Venture.
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(11)
Tianjin United Family Hospital Co., Ltd. is a China-Foreign Contractual Joint Venture.
(12)
Beijing United Family Health Center Co., Ltd. is a China-Foreign Contractual Joint Venture.
(13)
Shanghai United Family Hospital Co., Ltd. is a China-Foreign Contractual Joint Venture.
Summary of the Transaction Agreement
On July 30, 2019, NFC and NFC Buyer Sub entered into the Transaction Agreement with HH GP, Healthy Harmony and the Sellers, pursuant to which, and subject to the satisfaction or waiver of certain conditions set forth therein, a wholly owned indirect subsidiary of NFC, NFC Buyer Sub, will acquire all of the issued and outstanding GP Shares for $50.4928 per GP Share and approximately 99.37% of the issued and outstanding LP Interests for $50.4928 per LP Interest from the Sellers. The remaining 0.63% of the LP Interests are held by certain members of UFH Management and are expected to be acquired by NFC simultaneously with the Closing on terms and conditions to be agreed between NFC and these holders.
The consummation of the business combination is conditioned upon, among other things, (i) approval by NFC’s shareholders of the Transaction Agreement, the business combination and certain other actions related thereto, (ii) NFC maintaining at least $5,000,001 of net tangible assets, and (iii) NFC having ability to pay the Necessary Cash. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated.
The Transaction Agreement may be terminated under certain circumstances, including, among others, (i) by mutual written consent of the NFC Buyer Sub and HH GP, (ii) by either NFC Buyer Sub, Fosun Seller or TPG Seller if the Closing has not occurred within nine months of the execution of the Transaction Agreement and (iii) by HH GP if NFC’s board of directors modifies its recommendation that its shareholders vote in favor of the proposals contained in this proxy statement such that the recommendation results in a position that is adverse to HH GP. For additional information about the Transaction Agreement and the business combination and other transactions contemplated thereby, see “The Business Combination Proposal — The Transaction Agreement.”
Business Combination Consideration
Under the Transaction Agreement, the valuation ascribed to UFH is approximately $1.3 billion in the aggregate. The Transaction Agreement provides for the acquisition of all of the issued and outstanding GP Shares for $50.4928 per GP Share and approximately 99.37% of the issued and outstanding LP Interests for $50.4928 per LP Interest. The remaining 0.63% of the LP Interests are held by certain members of UFH Management and are expected to be acquired by NFC simultaneously with the Closing on terms and conditions to be agreed between NFC and these holders.
The total consideration for the business combination is expected to be funded from the following sources: (1) proceeds available from the trust account after giving effect to any redemptions; (2) $190,000,000 of proceeds from the private placement of NFC Class A ordinary shares pursuant to the Forward Purchase Agreements; (3) the RMB equivalent of  $300,000,000 of proceeds from the Debt Financing; (4) up to $711,481,860 of proceeds from private placements of NFC Class A ordinary shares to certain accredited investors pursuant to the Subscription Agreements; and (5) $159,000,000 in the form of re-investments by sellers and management and equity rollovers by management. Any excess cash available to NFC after payment of the Purchase Price, any amounts owed in respect of redemptions of public shares, and the payment of transaction expenses will be used for general corporate purposes following the Closing, including for working capital, repayment of debt and growth initiatives.
Related Agreements
We have entered or will enter into certain other agreements related to the business combination, including the Subscription Agreements, the Fosun Director Nomination Agreement, the Fosun Rollover Agreement and the Fosun High Tech Voting Undertaking with Fosun Seller or its affiliate, the Lipson Reinvestment Agreement, Lipson Employment Agreement, Lipson Registration Rights Agreement and Lipson Letter Agreement with certain Lipson Parties, the Vivo Director Nomination Agreement and Vivo
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Letter Agreement with Vivo and the Sponsor Director Nomination Agreement with the Sponsor. In addition, certain shareholders also entered into Support Agreements with HH GP. In addition, the Sponsor will enter into irrevocable proxies or director support agreements with certain shareholders.
See “The Business Combination Proposal — Related Agreements” for additional information about the agreements related to the Transaction Agreement.
Debt Financing
In order to finance a portion of the Purchase Price and transaction expenses, NF Unicorn entered into a senior loan commitment letter (the “Senior Loan Commitment Letter”) with SPDB, pursuant to which SPDB has agreed, upon the terms and subject to the conditions thereof, to grant a seven-year senior secured credit facility to NF Unicorn in an aggregate principal amount equal to the RMB equivalent of $300,000,000. The Senior Secured Term Loan is denominated and funded in offshore RMB and is expected to be funded into a free trade non-resident account of the borrower to be opened with SPDB (the transfer of funds in and out of which is not subject to Chinese regulatory approval) or an account in Hong Kong or any other jurisdiction outside of China that can receive funds in RMB. Given that substantially all of UFH’s revenue and expenses are denominated in RMB, the Senior Secured Term Loan is not expected to create currency exposure for the post-business combination company. The Senior Secured Term Loan will be subject to amortization commencing from 12 months after the utilization date of the Senior Secured Term Loan, with an average life of up to 5.78 years. The interest rate for the Senior Secured Term Loan is set at 126.53% of the applicable People’s Bank of China (the “PBOC”) benchmark annual interest rate for loans denominated in RMB and with tenors of over five years, subject to annual adjustments to reflect the PBOC benchmark annual interest rate applicable on 1 January each year. As of the date of the Senior Loan Commitment Letter, the interest rate was 6.20%.
SPDB’s commitment under the Senior Loan Commitment Letter will, among other things, automatically expire if  (a) NF Unicorn (or the Sponsor on its behalf) notifies the Credit Parties (as defined in the Senior Loan Commitment Letter) that it has (i) conclusively and definitively withdrawn and terminated its (or any of its affiliates’) bid for the entire equity interests of UFH; (ii) the Sellers have notified the Sponsor that NF Unicorn’s (or any of its affiliates) offer for UFH is conclusively and definitively rejected; (iii) the Sellers conclusively and definitively terminate such sale process; or (iv) the Transaction Agreement is terminated in full by the parties thereto or (b) completion of the business combination does not occur by 11:59 p.m. Hong Kong time on the Outside Date (as defined in the Transaction Agreement), which shall be no later than August 12, 2020, unless otherwise extended from time to time with the consent of SPDB.
The final terms of the Senior Secured Term Loan will be set out in a credit agreement to be entered into by, among others, NFC and/or its wholly owned subsidiaries (including NF Unicorn Chindex Holding Limited), as borrower, and SPDB, and are subject to adjustment in accordance with the terms of the Senior Loan Commitment Letter.
The credit agreement and other documentation governing the Senior Secured Term Loan have not been finalized and, accordingly, the actual terms of the Senior Secured Term Loan may differ from those described herein or in the Senior Loan Commitment Letter as a result of the negotiation and syndication process. Although the Senior Secured Term Loan described in this document is not subject to “market out,” such financing may not be considered assured. The obligations of SPDB to provide the financing contemplated under the Senior Loan Commitment Letter is subject to a number of conditions. There is a risk that these conditions will not be satisfied and the Senior Secured Term Loan may not be funded when required. As of the filing date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event the Senior Secured Term Loan is not available.
For more information regarding the Senior Loan Commitment Letter, see “The Business Combination Proposal — Related Agreements — Senior Loan Commitment Letter.
In addition to the Senior Loan Commitment Letter, CMB had previously issued a senior loan commitment letter to NFC, which also contemplated a senior secured credit facility in an aggregate amount of up to $300,000,000 upon the terms and subject to the conditions thereof.
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NFC and its wholly owned subsidiaries expect to borrow only up to an aggregate of the RMB equivalent of  $300,000,000 of senior secured term loans to finance the business combination. As such, NFC and/or its wholly owned subsidiaries (including NF Unicorn Chindex Holding Limited) expect to enter into a separate senior loan commitment letter or other definitive agreements after the date hereof with SPDB and/or CMB reflecting this arrangement.
Forward Purchase Agreements
In connection with its initial public offering, NFC entered into Forward Purchase Agreements, pursuant to which the anchor investors agreed to purchase an aggregate of 19,000,000 NFC Class A ordinary shares, plus 4,750,000 redeemable warrants, for a purchase price of  $10.00 per NFC Class A ordinary share, or $190,000,000 in the aggregate. This aggregate purchase price includes purchases by entities controlled by NFC’s Chairman, Antony Leung, and NFC’s Chief Executive Officer, Carl Wu, for an aggregate of up to $21,000,000. As an inducement to entering into the Forward Purchase Agreements, the Sponsor transferred an aggregate of 2,262,500 founder shares for no cash consideration to the anchor investors, including 175,000 and 87,500 to entities controlled by Antony Leung and Carl Wu, respectively. In addition, in connection with the execution of an additional forward purchase agreement with an accredited investor providing for the purchase of 900,000 forward purchase shares, plus 225,000 forward purchase warrants, NFC agreed to issue 112,500 founder shares to each of such accredited investor and the Sponsor for nominal cash consideration at the Closing.
Equity Financing
In order to finance a portion of the Purchase Price, the Company entered into Subscription Agreements with the PIPE Investors, pursuant to which, among other things, the Company agreed to issue and sell in private placements an aggregate of up to 71,148,186 NFC Class A ordinary shares to the PIPE Investors for $10.00 per share, subject to NFC’s right to reduce the number of NFC Class A ordinary shares to be issued to the PIPE Investors by up to 25%. The PIPE Investors include institutional investors such as Nan Fung Group, Vivo, certain funds and accounts advised by Capital Research and Management Company, Aspex Management, BosValen Asset Management, CityChamp Group (SEHK: 00256), Exome Asset Management LLC, HS Group, Hysan Group (SEHK: 00014), Ishana Capital, Maso Capital, Mason Group (SEHK: 00273), certain funds and accounts advised by Morgan Stanley Investment Management Inc. or Morgan Stanley Asia Limited, Mr. Adrian Cheng, Mr. Jason Jiang Nanchun of Focus Media (SZSE: 002027), Mr. Thomas Lau Luen Hung of Lifestyle International Holdings Ltd. (SEHK: 01212), Ovata Capital, Peterson Group, Shui On Group (SEHK: 00272), Tingyi Group (SEHK: 00322), The Segantii Asia-Pacific Equity Multi-Strategy Fund, Thing On Group (SEHK: 02292), York Capital Management, Yunqi Capital, Yuntai Fund and other institutional and private investors. The Equity Financing is expected to close immediately prior to the Closing. For more information regarding the Equity Financing, see “The Business Combination Proposal — Related Agreements — Subscription Agreements.
Equity Ownership Upon Closing
As of the filing date of this proxy statement, there are 40,462,500 NFC ordinary shares outstanding, comprised of 28,750,000 NFC Class A ordinary shares and 11,712,500 NFC Class B ordinary shares, of which the initial shareholders own 9,450,000 NFC Class B ordinary shares and the anchor investors own 2,262,500 NFC Class B ordinary shares. In connection with the Closing, each currently issued and outstanding NFC Class B ordinary share will automatically convert on a one-for-one basis into NFC Class A ordinary shares and, thereafter, each NFC Class A ordinary share will be redesignated as NFH ordinary shares.
It is anticipated that, upon completion of the business combination, the ownership interests in NFH will be as set forth in the table below.
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Assuming
No Redemptions
of Public Shares
Assuming
Maximum
Redemptions
of Public Shares
NFC’s public shareholders(1)
22% 7%
Initial Shareholders(2)
7% 8%
Anchor Investors(2)(3)
16% 17%
PIPE Investors
43% 56%
Fosun Seller and Roberta Lipson
11% 11%
Management Sellers
1% 1%
(1)
Includes 900,000 NFC Class A ordinary shares underlying the public units held by Antony Leung and Carl Wu.
(2)
Assumes that the Sponsor waives its right to have its NFC Class B ordinary shares converted into a greater number of NFC Class A ordinary shares in respect of the issuance of shares in the Equity Offering (which waiver automatically applies to all of the NFC Class B ordinary shares held by the Anchor Investors), which the Sponsor has indicated its intention to do.
(3)
Includes the NFC ordinary shares to be issued to Antony Leung and Carl Wu at Closing in accordance with the Forward Purchase Agreements entered into by each of them.
There are currently outstanding an aggregate of 22,125,000 warrants to acquire NFC Class A ordinary shares, which includes 7,750,000 private placement warrants issued to the Sponsor at the time of the initial public offering and 14,375,000 public warrants. In addition, we expect to issue at the Closing an aggregate of 4,750,000 forward purchase warrants to the anchor investors pursuant to the Forward Purchase Agreements. Therefore, As of the filing date of this proxy statement, if we assume that each outstanding whole warrant is exercised and one NFC Class A ordinary share is issued as a result of such exercise, with payment to NFC of the exercise price of  $11.50 per share for applicable warrants, NFC’s fully-diluted share capital would increase by a total of 26,875,000 shares, with $309,062,500 paid to NFC to exercise the warrants.
Proposals to be put to the General Meeting
The Business Combination Proposal
NFC’s shareholders are asked to consider and vote upon a proposal to approve by Ordinary Resolution and adopt the Transaction Agreement, pursuant to which NFC will indirectly acquire all of the issued and outstanding GP Shares for $50.4928 per GP Share and approximately 99.37% of the issued and outstanding LP Interests for $50.4928 per LP Interest from the Sellers.
After consideration of the factors identified and discussed in the section entitled “The Business Combination Proposal — NFC’s Board of Directors’ Reasons for Approval of the Business Combination,” NFC’s board of directors concluded that the business combination met all of the requirements disclosed in the prospectus for its initial public offering, including that the business of UFH had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Transaction Agreement.
For additional information, see “The Business Combination Proposal” section of this proxy statement.
The Charter Approval Proposal
NFC’s shareholders are asked to consider and vote upon a proposal to approve and adopt, by special resolution, the Proposed Charter, which will replace the Current Charter upon the Closing.
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The following is a summary of the key changes effected by the Proposed Charter as compared to the Current Charter, but this summary is qualified in its entirety by reference to the full text of the Proposed Charter, a copy of which is attached as Annex C:

increase the authorized share capital from $20,100 divided into 180,000,000 NFC Class A ordinary shares, 20,000,000 NFC Class B ordinary shares and 1,000,000 preference shares to authorized share capital of  $50,000 divided into 490,000,000 NFH ordinary shares and 10,000,000 preference shares by: (i) the redesignation of all issued and unissued NFC Class A ordinary shares and NFC Class B ordinary shares as NFH ordinary shares; (ii) the creation of an additional 290,000,000 NFH ordinary shares, each with the rights set out in the Proposed Charter; (iii) the redesignation of all unissued NFC preference shares as NFH preference shares; and (iv) the creation of an additional 9,000,000 preference shares;

declassify our board of directors and provide that each member of NFH’s board of directors will be elected annually at each annual general meeting;

change the post-business combination corporate name from “New Frontier Corporation” to “New Frontier Health Corporation”;

grant a waiver regarding corporate opportunities to certain persons, including NFG, Fosun Seller and Vivo and their respective affiliates and representatives;

make NFH’s existence perpetual; and

remove certain provisions related to NFC’s status as a blank check company that will no longer apply upon consummation of the business combination.
Under the Transaction Agreement, the Closing is not conditioned upon the approval of the Charter Approval Proposal. Therefore, the business combination could still be consummated even if the Charter Approval Proposal is not approved.
For additional information, see “The Charter Approval Proposal” section of this proxy statement.
The Charter Provisions Proposals
NFC’s shareholders are asked to consider and vote upon and to approve, on a non-binding advisory basis three separate organizational documents in connection with the replacement of the Current Charter with the Proposed Charter. A brief summary of each of the Charter Provisions Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Charter, a form of which is attached hereto as Annex C.
Furthermore, each of the Charter Provisions Proposals (with the exception of Charter Proposal A, which requires an Ordinary Resolution) requires a Special Resolution. Charter Provisions Proposals A, B and C, are, in the judgment of NFC’s board of directors, necessary to adequately address the needs of the post-business combination company. Under the Transaction Agreement, the Closing is not conditioned upon the approval of any of the Charter Provisions Proposals. Therefore, the business combination could still be consummated even if neither of the Charter Provisions Proposals are not approved.
Charter Proposal A — Authorized Share Capital
Charter Proposal A is a proposal to approve, on a non-binding advisory basis, the provision in the Proposed Charter increasing the authorized share capital from $20,100 divided into 180,000,000 NFC Class A ordinary shares, 20,000,000 NFC Class B ordinary shares, and 1,000,000 preference shares, to authorized share capital of  $50,000 divided into 490,000,000 NFH ordinary shares and 10,000,000 preference shares by: (i) the redesignation of all issued and unissued NFC Class A ordinary shares and NFC Class B ordinary shares as NFH ordinary shares; (ii) the creation of an additional 290,000,000 NFH ordinary shares, each with the rights set out in the Proposed Charter; (iii) the redesignation of all unissued NFC preference shares as NFH preference shares; and (iv) the creation of an additional 9,000,000 preference shares.
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Charter Proposal B — Approval of Proposal to Declassify NFH’s Board of Directors.
Charter proposal B is a proposal to approve by special resolution, on a non-binding advisory basis, the provision in the Proposed Charter providing that each member of NFH’s board of directors will be elected annually at each annual general meeting (or extraordinary general meeting in lieu thereof) following the Closing.
Charter Proposal C — Approval of Other Changes in Connection with Adoption of the Proposed Charter
Charter proposal C is a proposal to approve by special resolution, on a non-binding advisory basis, all other material differences between the Current Charter and the Proposed Charter in connection with the Closing including, among other things, (i) changing the post-business combination corporate name from “New Frontier Corporation” to “New Frontier Health Corporation” and making NFH’s corporate existence perpetual, (ii) granting a waiver regarding corporate opportunities to certain persons, including NFG, Fosun Seller and Vivo and their respective affiliates and representatives, and (iii) removing certain provisions related to NFC’s status as a blank check company that will no longer apply upon consummation of the business combination.
For additional information on the charter proposals, see “The Charter proposal” section of this proxy statement.
The Share Issuance Proposal
Assuming the Business Combination Proposal is approved, our shareholders are also being asked to approve, by Ordinary Resolution, the Share Issuance Proposal.
NFC’s units, ordinary shares and public warrants are listed on the NYSE and, as such, our shareholders are being asked to approve by Ordinary Resolution, for purposes of complying with the applicable listing rules of the NYSE, the issuance by NFC of  (i) 19,000,000 NFC Class A ordinary shares to the anchor investors pursuant to the Forward Purchase Agreements, (ii) up to 71,148,186 NFC Class A ordinary shares, subject to adjustment by NFC as discussed herein, to the PIPE Investors pursuant to the Subscription Agreements, (iii) an aggregate of up to approximately 15,528,163 NFH ordinary shares to certain Sellers and members of UFH Management in connection with the business combination (excluding an aggregate of approximately 371,837 of NFH options and NFH RSUs that are expected to be issued to certain members of UFH Management in respect of their outstanding options and RSUs of Healthy Harmony), (iv) an aggregate of 225,000 NFC Class B ordinary shares to an anchor investor and the Sponsor in connection with the increase in NFC’s commitments under the Forward Purchase Agreements from $181,000,000 to $190,000,000 on June 29, 2018 in connection with NFC's initial public offering, and (v) 4,750,000 forward purchase warrants to the anchor investors pursuant to the Forward Purchase Agreements.
The aggregate number of ordinary shares that may be issued in connection with the Share Issuance Proposal is expected to be approximately 110,661,750 (including 4,750,000 ordinary shares underlying the forward purchase warrants).
For additional information, see “The Share Issuance Proposal” section of this proxy statement.
The Director Election Proposal
Our board of directors is currently divided into two classes: Class I and Class II. In accordance with the terms of our Current Charter, our Class I directors will stand elected for a term expiring at NFC’s first annual general meeting and the Class II directors will stand elected for a term expiring at NFC’s second annual general meeting. Commencing at NFC’s first annual general meeting,and at each annual general meeting thereafter, (a) Class I directors elected to succeed those Class I directors whose terms expire shall be elected for a term of office to expire at the next annual general meeting after their election; and (b) Class II directors elected to succeed those Class II directors whose terms expire shall be elected for a term of office to expire at the second succeeding annual general meeting after their election.
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Our Proposed Charter will provide for the declassification of NFH’s board of directors and NFH’s board of directors will consist of one class of directors only, whose term will continue to the first annual general meeting following the Closing, and, thereafter, all directors will be elected annually and will be elected for one year terms expiring at the next annual general meeting of NFH’s shareholders.
Our shareholders are being asked to elect, assuming the Business Combination Proposal is approved, four directors to serve on NFH’s board of directors for a term of one year expiring at the annual general meeting to be held in 2020 or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal.
Pursuant to our Current Charter, until the Closing, only holders of NFC Class B ordinary shares can elect or remove directors. Therefore, only holders of NFC Class B ordinary shares will vote on the election of directors at the general meeting.
For additional information, see “The Director Election Proposal” section of this proxy statement.
The Incentive Plan Proposal
Assuming the Business Combination Proposal is approved, our shareholders are also being asked to approve, by Ordinary Resolution, the Incentive Plan Proposal.
We expect that, prior to the consummation of the business combination, our board of directors will approve and adopt the Incentive Plan, and assuming the Business Combination Proposal is approved, we expect that our shareholders will be asked to approve the Incentive Plan. Our shareholders should carefully read the entire Incentive Plan, a copy of which is attached as Annex E, before voting on this proposal.
For additional information, see “The Incentive Plan Proposal” section of this proxy statement.
The Adjournment Proposal
If based on the tabulated vote, there are not sufficient votes at the time of the general meeting to authorize NFC to consummate the business combination (because any of the condition precedent proposals have not been approved (including as a result of the failure of any other cross-conditioned condition precedent proposals to be approved)) or NFC determines that one or more of the closing conditions under the Transaction Agreement has not been satisfied, NFC ‘s board of directors may submit a proposal to adjourn the general meeting to a later date or dates, if necessary, to permit further solicitation of proxies.
For additional information, see “The Adjournment Proposal” section of this proxy statement.
Date, Time and Place of General Meeting of NFC’s Shareholders
The general meeting will be held at [         ] a.m., Eastern Time, on [         ], 2019, at the offices of Winston & Strawn LLP at 200 Park Avenue, New York, New York 10166, to consider and vote upon the proposals to be put to the general meeting, including if necessary, the Adjournment Proposal.
Voting Power; Record Date
Shareholders will be entitled to vote or direct votes to be cast at the general meeting if they own ordinary shares at the close of business on [         ], 2019, which is the record date for the general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Our warrants do not have voting rights. On the record date, there were 40,462,500 NFC ordinary shares outstanding, of which 28,750,000 were public shares and 11,712,500 are Class B ordinary shares.
Quorum and Vote of Our Shareholders
A quorum of our shareholders is necessary to hold a valid meeting. A quorum will be present at the general meeting if the holders of a majority of the issued and outstanding shares are represented in person or by proxy. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the general meeting.
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As of the record date for the general meeting, 20,231,251 NFC ordinary shares would be required to achieve a quorum.
As of the date hereof, certain NFC shareholders, collectively owning approximately 44.5% of NFC’s outstanding ordinary shares, have agreed to vote any NFC ordinary shares held by them in favor of the business combination at the general meeting. These agreements are as follows: (i) NFC’s directors and executive officers at the time of its initial public offering and the Sponsor, who collectively own 26.2% of the outstanding NFC ordinary shares as of the date hereof, entered into a letter agreement at the time of NFC’s initial public offering pursuant to which they agreed to vote any NFC ordinary shares held by them in favor of the business combination; (ii) the anchor investors, who collectively own 3.4% of NFC’s outstanding ordinary shares as of the date hereof  (excluding shares owned by Messrs. Leung and Wu and those anchor investors who executed Support Agreements), entered into Forward Purchase Agreements pursuant to which they agreed to vote any NFC Class B ordinary shares held by them in favor of the business combination; and (iii) certain NFC shareholders, who collectively own approximately 15.0% of NFC’s outstanding ordinary shares as of the date hereof  (excluding the shares owned by the Sponsor and Messrs. Leung and Wu), entered into Support Agreements with HH GP pursuant to which they have agreed to vote any NFC ordinary shares in favor of the business combination at the general meeting.
The proposals presented at the general meeting require the following votes:

The Business Combination Proposal:   The approval of the Business Combination Proposal requires an Ordinary Resolution.

The Charter Approval Proposal:   The approval of the Charter Approval Proposal requires a Special Resolution.

The Charter Provisions Proposals:   The separate approval of each of the Charter Provisions Proposals (with the exception of Charter Proposal A, which requires an Ordinary Resolution) requires a Special Resolution.

The Share Issuance Proposal:   The approval of the Share Issuance Proposal requires an Ordinary Resolution.

The Incentive Plan Proposal:   The approval of the Incentive Plan Proposal requires an Ordinary Resolution.

The Director Election Proposal:   The election of directors pursuant to the Director Election Proposal requires an Ordinary Resolution. Pursuant to the Current Charter, until the Closing, only holders of NFC Class B ordinary shares can elect or remove directors. Therefore, only holders of NFC Class B ordinary shares will vote on the election of directors at the general meeting.

The Adjournment Proposal:   The approval of the Adjournment Proposal requires an Ordinary Resolution.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the general meeting and therefore will have no effect on the proposals.
Redemption Rights
Pursuant to the Current Charter, a public shareholder may request that NFC redeem all or a portion of their public shares for cash if the business combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:
(i)
(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and
(ii)
prior to [         ] p.m., Eastern Time, on [         ], 2019, (a) submit a written request to the transfer agent that NFC redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.
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As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. Holders may instruct their broker to do so, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal and may redeem their shares even if they were not holders of record on the record date. If the business combination is not consummated, the public shares will not be redeemed for cash. If a public shareholder properly exercises its right to redeem its public shares and timely delivers its public shares to the transfer agent, we will redeem each such public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable), divided by the number of then issued and outstanding public shares. If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with our consent, until the Closing. If a holder of a public share delivers its shares in connection with an election to redeem and subsequently decides prior to the deadline for submitting redemption requests not to elect to exercise such rights, it may simply request that NFC instruct its transfer agent to return the shares (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement. See “Extraordinary General Meeting — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.
For the purposes of Article 49.4 of the Current Charter and Cayman Islands Law, the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and references in this proxy statement shall be interpreted accordingly.
Holders of our warrants will not have redemption rights with respect to the warrants held by them.
Appraisal Rights
Neither NFC shareholders nor NFC warrantholders have appraisal rights in connection with the business combination under the Cayman Islands Law.
Proxy Solicitation
Proxies may be solicited by mail, telephone or in person. NFC has engaged Morrow Sodali LLC to assist in the solicitation of proxies.
If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting — Revoking Your Proxy.”
Interests of Certain Persons in the Business Combination
When you consider the recommendation of NFC’s board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that NFC’s initial shareholders have interests in such proposal that are different from, or in addition to, those of NFC shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

If we do not consummate a business combination transaction by July 3, 2020, we will cease all operations except for the purpose of winding up, redeem all of the issued and outstanding public
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shares for cash and, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under the Cayman Islands Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 11,712,500 founder shares owned by our initial shareholders and the anchor investors would be worthless because following the redemption of the public shares, we would likely have few, if any, net assets and because our initial shareholders and the anchor investors have agreed to waive their rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete a business combination within the required period. The Sponsor purchased its founder shares prior to NFC’s initial public offering for an aggregate purchase price of  $25,000. In addition, the Sponsor has indicated its intention to waive its right to have its founder shares converted into a greater number of NFC Class A ordinary shares in respect of the issuance of shares in the Equity Offering (which waiver automatically applies to all of the NFC Class B ordinary shares held by the Anchor Investors). As such, upon the Closing, the founder shares will automatically convert, on a one-for one basis, into NFC Class A ordinary shares, and such securities, if unrestricted and freely tradable would be valued at approximately $119,350,375, based on the closing price of  $10.19 share of NFC Class A ordinary shares on the NYSE on October 23, 2019.

Simultaneously with the closing of NFC’s initial public offering, the Sponsor purchased 7,750,000 private placement warrants for $1.00 per warrant. The warrants are each exercisable commencing 30 days following the Closing for one NFC Class A ordinary share at $11.50 per share. If we do not consummate a business combination transaction by July 3, 2020, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public shareholders and the warrants held by the Sponsor will be worthless. The warrants held by the Sponsor had an aggregate market value of approximately $9,300,000 based upon the closing price of  $1.20 per warrant on the NYSE on October 23, 2019.

In order to protect the amounts held in the trust account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the trust account below the lesser of  (i) $10.00 per public share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes payable. This liability will not apply with respect to any claims by a third-party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of NFC’s initial public offering against certain liabilities, including liabilities under the Securities Act.

In order to finance transaction costs in connection with the business combination, the Sponsor may, but is not obligated to, loan us funds as may be required. If we complete the business combination, then we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that the business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the trust account would be used to repay such loaned amounts. Up to $2,000,000 of such loans may be convertible into warrants of the post-business combination company at a price of  $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.

Following the consummation of the business combination, we will continue to indemnify our existing directors and officers and will maintain our directors’ and officers’ liability insurance.

Following consummation of the business combination, the initial shareholders and their respective affiliates would be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by NFC from time to time, made
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by the Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. However, if we fail to consummate a business combination within the required period, the Sponsor and our officers and directors and their respective affiliates will not have any claim against the trust account for reimbursement. As of the date of this proxy statement, the initial shareholders have not incurred any reimbursable expenses.

The anticipated continuation of five of our existing directors, Antony Leung, Carl Wu, David Johnson, Edward Leong Che-hung and Frederick Ma Si-hang, as directors of NFH after the consummation of the business combination and, if the Director Election Proposal is passed, David Zeng, the Sponsor’s nominee, will also serve on NFH’s board of directors. As such, in the future they will receive any cash fees, stock options or stock awards that the NFH board of directors determines to pay to its directors.
At any time prior to the general meeting, during a period when they are not then aware of any material nonpublic information regarding NFC or its securities, the initial shareholders, the anchor investors, UFH and/or their respective affiliates may purchase public shares and/or warrants, or they may enter into arrangements with holders of public shares or other investors to provide them with incentives to acquire and/or not redeem their public shares or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of that (i) the proposals presented to shareholders for approval at the general meeting are approved and/or (ii) that NFC has the Necessary Cash at Closing. This may result in the completion of our business combination when it may not otherwise have been possible. Other than as described elsewhere in this proxy statement, the exact nature of any such incentives has not been determined as of the date hereof and they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the initial shareholders for nominal value.
Entering into any such arrangements may have a depressive effect on NFC’s ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the general meeting.
If such transactions are effected, the consequence could be to cause the business combination to be approved and completed in circumstances where such approval or completion could not otherwise be obtained or achieved. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the general meeting and would likely increase the chances that such proposals would be approved. However, as a result of the (i) Equity Financing; (ii) Debt Financing; (iii) Forward Purchase Agreements; and (iv) shareholders holding approximately $90 million of our public shares agreeing not to redeem such shares pursuant to the Support Agreements, even if all of our other public shareholders elect to redeem their shares in connection with the general meeting, we will still have sufficient funds available to consummate the business combination.
Other than as described herein, as of the filing date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. NFC will file a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would materially affect the vote on the proposals to be put to the general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
The existence of financial and personal interests of NFC’s directors and officers may result in a conflict of interest on the part of one or more of them between what he may believe is best for NFC and what he may believe is best for him in determining whether or not to grant a waiver in a specific situation. See the sections entitled “Risk Factors” and “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for a further discussion of this and other risks.
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Recommendation to Shareholders
NFC’s board of directors believes that the Business Combination Proposal and each of the other proposals to be presented at the general meeting are in the best interest of NFC’s shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Approval Proposal, “FOR” each of the separate Charter Provisions Proposals, “FOR” the Share Issuance Proposal, “FOR” the Incentive Plan Proposal, “FOR” each of the director nominees and “FOR” the Adjournment Proposal, in each case, if presented to the general meeting.
The existence of financial and personal interests of NFC’s directors and officers may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of NFC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for a further discussion.
Sources and Uses of Funds for the Business Combination
The following table summarizes the sources and uses for funding the business combination. Where actual amounts are not known or knowable, the figures below represent NFC’s good faith estimate of such amounts assuming a closing as of the indicated date.
(in thousands)
Sources
No Redemptions
Maximum Redemptions
RMB
USD
RMB
USD
Debt Financing
2,059,500 300,000 2,059,500 300,000
Cash from Trust Account(1)
2,017,644 293,903 629,164 91,648
Forward Purchase Agreements
1,304,350 190,000 1,304,350 190,000
Equity Financing
3,875,293(2) 564,500(2) 4,884,324 711,482
Seller Reinvestment(3)
1,091,535 159,000 1,091,535 159,000
Total Sources
10,348,322 1,507,403 9,968,872 1,452,130
Uses
RMB
USD
RMB
USD
Cash to Sellers(4)
7,994,128 1,164,476 7,994,128 1,164,476
Cash to balance sheet
1,056,709 153,927 677,260 98,654
Seller Reinvestment(3)
1,091,535 159,000 1,091,535 159,000
Transaction costs(5)
205,950 30,000 205,950 30,000
Total Uses
10,348,322 1,507,403 9,968,872 1,452,130
(1)
Amounts based on cash held in NFC’s trust account as of June 30, 2019.
(2)
In accordance with the terms of the Subscription Agreements, NFC may, in its discretion, increase this amount at Closing.
(3)
Includes (i) an aggregate of  $147,128,311 (RMB 1,010,035,855) of NFH ordinary shares to be issued to Roberta Lipson and the Fosun Seller pursuant to the Lipson Reinvestment Agreement and the Fosun Rollover Agreement, respectively, (ii) an aggregate of up to $8,153,315 (RMB 55,972,508) of NFH ordinary shares that are expected to be issued to the Management Sellers in accordance with the terms of the Management Reinvestment Agreements and (iii) an aggregate of approximately $3,718,374 (RMB 25,526,638) of NFH Options and NFH RSUs that are expected to be issued to certain members of UFH Management in respect of their outstanding options and RSUs of Healthy Harmony.
(4)
Includes an aggregate of  $21,000,000 (RMB 144,165,000) in expense reimbursements to be paid to Fosun Seller and Healthy Harmony or an affiliate of Roberta Lipson in accordance with the terms of the Transaction Agreement.
(5)
This amount includes $6,912,500 (RMB 47,454,313) of deferred underwriting commission.
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U.S. Federal Income Tax Considerations
For a discussion summarizing the U.S. federal income tax considerations of the business combination, the ownership and disposition of NFC ordinary shares and public warrants and NFH ordinary shares and public warrants and the exercise of redemption rights by U.S. and non-U.S. holders of public shares, please see “U.S. Federal Income Tax Considerations.”
Anticipated Accounting Treatment
The business combination will be accounted for under the scope of IFRS. NFC has been determined to be the accounting acquirer based on an evaluation of the following facts and circumstances:

NFC is transferring cash and equity consideration through the use of funds in their trust account and proceeds from equity issuances, and will be incurring liabilities to execute the business combination;

NFC’s shareholders as a group will have the largest voting interest in the combined entity under the no redemption and maximum redemption scenarios;

The combined company’s board of directors will initially consist of nine directors, seven of whom will be selected by or associated with NFC. Furthermore, NFC’s existing chairman of board of directors will remain in place as the chairman of the board of directors of the combined company;

Healthy Harmony’s senior management will comprise the senior management of the combined company, however, NFC will establish an executive committee to provide oversight to the combined company’s management team as they continue in their current roles; and

NFC was the entity that initiated the business combination.
These factors support the conclusion that NFC is the accounting acquirer in the business combination. Healthy Harmony constitutes a business in accordance with IFRS 3 and the business combination constitutes a change in control. Accordingly, the business combination will be accounted for using the acquisition method.
Regulatory Matters
The business combination is not subject to any additional federal or state regulatory requirements or approvals, except for filings with the Cayman Islands necessary to effectuate the transactions contemplated by the Transaction Agreement.
Risk Factors
In evaluating the proposals to be presented at the general meeting, a shareholder should carefully read this proxy statement and especially consider the factors discussed in the section entitled “Risk Factors.”
Emerging Growth Company
Upon consummation of the business combination, NFH is expected to be an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
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standards. NFH intends to take advantage of the benefits of this extended transition period. This may make comparison of NFH’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
NFH could remain an emerging growth company until the earlier of  (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of its initial public offering, (b) in which it has total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time), or (c) in which it is deemed to be a large accelerated filer, which means the market value of its NFH ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which it has issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Foreign Private Issuer
Upon consummation of the business combination, NFH is expected to be a foreign private issuer under applicable U.S. federal securities laws, and therefore, it will not be required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act. See “Risk Factors — Risks Relating to Status as a Foreign Private Issuer.”
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SELECTED HISTORICAL FINANCIAL INFORMATION OF NFC
The following table shows selected historical financial information of NFC for the periods and as of the dates indicated. The selected historical financial information of NFC as of December 31, 2018 and for the period ended December 31, 2018 was derived from the audited historical financial statements of NFC included elsewhere in this proxy statement. The selected historical financial information of NFC as of June 30, 2019 and for the six months then ended was derived from the unaudited historical financial statements of NFC included elsewhere in this proxy statement. The unaudited financial statements have been prepared in conformity with GAAP and are prepared on the same basis as the annual audited financial statements included elsewhere in this proxy statement. Results from interim periods are not necessarily indicative of results that may be expected for the entire year. The following table should be read in conjunction with “NFC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and the notes and schedules related thereto, included elsewhere in this proxy statement.
Statement of Operations Data
For the Six Months
Ended
June 30, 2019
For the Period from
March 28, 2018
(Date of Inception)
through
December 31, 2018
Revenue
$ $
General and administrative expenses
393,907 778,402
Loss from operations
(393,907) (778,402)
Other income:
Interest income
3,441,325 2,961,316
Net income
$ 3,047,418 $ 2,182,914
Weighted average shares outstanding of Class A ordinary
shares
28,750,000 28,750,000
Basic and diluted net income per share, Class A
$ 0.12 $ 0.10
Weighted average shares outstanding of NFC Class B ordinary shares
11,712,500 11,712,500
Basic and diluted net loss per share, Class B
$ (0.03) $ (0.07)
Balance Sheet Data
June 30, 2019
December 31, 2018
Total assets
$ 295,647,177 $ 292,874,431
Total liabilities
7,109,946 7,384,619
Total shareholders’ equity
5,000,001 5,000,002
Cash Flow Data
For the Six Months
Ended
June 30, 2019
For the Period from
March 28, 2018
(Date of Inception)
through
December 31, 2018
Net cash used in operating activities
$ (612,295) $ (440,857)
Net cash used in investing activities
(287,500,000)
Net cash provided by financing activities
290,294,398
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SELECTED HISTORICAL FINANCIAL INFORMATION OF HEALTHY HARMONY
The following table shows selected historical financial information of Healthy Harmony for the periods and as of the dates indicated. The selected historical consolidated financial information of Healthy Harmony as of December 31, 2017 and 2018, and for the years ended December 31, 2016, 2017 and 2018 was derived from the audited historical consolidated financial statements of Healthy Harmony, which are included elsewhere in this proxy statement. The selected historical financial information of Healthy Harmony as of June 30, 2019 and for the six months ended June 30, 2019 and 2018 was derived from the unaudited historical financial statements of Healthy Harmony included elsewhere in this proxy statement.
The consolidated financial statements of Healthy Harmony are stated in thousands of Renminbi (RMB). However, solely for the convenience of the readers, the consolidated statement of financial position as of June 30, 2019, the consolidated statement of profit or loss and other comprehensive income, and consolidated statement of cash flows for the six months ended June 30, 2019 were translated into U.S. dollars at the exchange rate of the buying rate on June 28, 2019 of RMB6.8650 to US$1.00 in New York City for cable transfers in RMB for U.S. dollars, set forth in the H.10 weekly statistical release of the Federal Reserve Board of the United States as certified for customs purposes by the Federal Reserve Board of New York. These convenience translations should be treated as supplementary information and has not been prepared in compliance with IFRS.
The following table should be read in conjunction with “Healthy Harmony’s Operating and Financial Review and Prospects” and Healthy Harmony’s historical financial statements and the notes and schedules related thereto, included elsewhere in this proxy statement. The historical results presented below are not necessarily indicative of financial results to be achieved by the business following the business combination.
For the Six Months Ended June 30,
For the Year Ended December 31,
(in thousands)
2019
2018
2018
2017
2016
RMB
US$
RMB
RMB
RMB
RMB
Statement of Operations Data:
Revenues
1,205,533 175,606 990,096 2,058,779 1,827,880 1,675,360
Net (loss)/profit
(120,868) (17,606) (30,313) (154,046) 1,591 (2,227)
Statement of Cash Flows Data:
Net cash provided by operating activities
178,085 25,941 67,243 130,980 191,220 211,106
Net cash used in investing activities
(179,916) (26,208) (313,914) (534,948) (129,850) (112,343)
Net cash (used in) / provided by financing activities
(102,609) (14,947) 113,196 103,635 233,681 (27,961)
As of June 30, 2019
As of December 31
2018
2017
RMB
US$
RMB
RMB
Balance Sheet Data:
Total assets
6,757,283 984,310 5,172,462 4,578,401
Total liabilities
3,516,974 512,306 1,832,814 1,111,340
Total equity
3,240,309 472,004 3,339,648 3,467,061
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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following selected unaudited pro forma condensed combined financial data (the “selected pro forma data”) gives effect to the business combination and related transactions as described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” included in this proxy statement. The acquisition of UFH will be accounted for as a business combination using the acquisition method of accounting under the provisions of IFRS 3; Business Combinations. The selected unaudited pro forma condensed combined balance sheet data as of June 30, 2019 gives effect to the business combination and related transactions as if they had occurred on June 30, 2019. The selected unaudited pro forma condensed combined statement of operations data for the six months ended June 30, 2019 and year ended December 31, 2018 gives effect to the business combination and related transactions as if they had occurred on January 1, 2018.
The selected pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information (the “pro forma financial statements”) of NFC appearing elsewhere in this proxy statement and the accompanying notes to the pro forma financial statements. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical consolidated financial statements and related notes of NFC and Healthy Harmony for the applicable periods included in this proxy statement. The historical financial statements of NFC have been prepared in accordance with GAAP. The historical financial statements of Healthy Harmony have been prepared in accordance with IFRS. The historical financial information of NFC has been adjusted to give effect to the differences between GAAP and IFRS as issued by the IASB for the purposes of the selected unaudited pro forma condensed combined financial information. No adjustments were required to convert NFC’s financial statements from GAAP to IFRS for purposes of the selected unaudited pro forma condensed combined financial information, except to classify NFC’s ordinary shares subject to redemption as non-current liabilities under IFRS. The historical financial information of Healthy Harmony has been translated into U.S. dollars for the purposes of convenience translation included elsewhere in this proxy statement.
The selected pro forma data have been presented for informational purposes only and are not necessarily indicative of what NFC’s financial position or results of operations actually would have been had the business combination been completed as of the dates indicated. In addition, the selected pro forma data do not purport to project the future financial position or operating results of NFC. Also, as explained in more detail in the accompanying notes to the pro forma financial statements, the preliminary fair values of assets acquired and liabilities assumed reflected in the selected pro forma data are subject to adjustment and may vary significantly from the fair values that will be recorded upon completion of the business combination.
The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption into cash of NFC’s ordinary shares:

Assuming No Redemptions:   This presentation assumes that no NFC shareholders exercise redemption rights with respect to their public shares.

Assuming Maximum Redemptions:   This presentation assumes that all of NFC’s public shareholders will redeem except for shareholders holding 8,960,000 shares who agreed not to exercise their redemption rights with respect to their public shares pursuant to the terms of the Support Agreements. Furthermore, the Company will only proceed with the business combination if it will have net tangible assets of at least $5,000,001 upon consummation of the business combination, and if there is sufficient cash (defined as Necessary Cash), after giving effect to any redemptions, to pay the Purchase Price and make other required cash payments at the Closing. This scenario assumes that Necessary Cash is met and that 19,790,000 shares are redeemed for a
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redemption payment of RMB 1,388,838,000 (US$202,307,000), based on RMB 2,017,641,000 (US$293,902,478) of cash in trust and 28,750,000 public shares outstanding which results in a redemption per share price of RMB 70.18 (US$10.22) as of June 30, 2019.
Combined Pro Forma
Combined Pro Forma
Assuming No Redemptions
Assuming Maximum Redemptions
(in thousands, except share and per share data)
RMB
US$
RMB
US$
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data
For the Year Ended December 31, 2018
Revenues
2,058,779 299,437 2,058,779 299,437
Net loss
(343,851) (50,012) (343,851) (50,012)
Loss attributable to ordinary shareholders
(319,803) (46,514) (319,803) (46,514)
Non-controlling interests
(24,048) (3,498) (24,048) (3,498)
Net loss per ordinary share – basic and diluted
(2.43) (0.35) (2.53) (0.37)
Weighted average ordinary shares outstanding
131,665,663 131,665,663 126,573,849 126,573,849
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data
For the Six Months Ended June 30, 2019
Revenues
1,205,533 $ 175,606 1,205,533 $ 175,606
Net loss
(192,478) (28,036) (192,478) (28,036)
Loss attributable to ordinary shareholders
(177,479) (25,854) (177,479) (25,854)
Non-controlling interests
(14,999) (2,185) (14,999) (2,185)
Net loss per ordinary share – basic and diluted
(1.35) (0.20) (1.40) (0.20)
Weighted average ordinary shares outstanding
131,665,663 131,665,663 126,573,849 126,573,849
Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data
As of June 30, 2019
Total assets
13,964,256 $ 2,034,124 13,584,449 $ 1,978,799
Total liabilities
5,994,921 873,259 5,994,921 873,259
Total non-controlling interest
16,617 2,421 16,617 2,421
Total stockholder’ equity
7,952,718 1,158,444 7,572,911 1,103,119
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this proxy statement and in any document incorporated by reference herein that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. The information included in this proxy statement in relation to UFH has been provided by UFH and its management team. Forward-looking statements include statements relating to UFH’s management teams’ expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement and in any document incorporated by reference herein may include, for example, statements about:

our ability to complete the business combination, or, if we do not consummate the business combination, any other initial business combination;

the occurrence of any event, change or other circumstances that could give rise to the termination of the Transaction Agreement;

satisfaction of conditions to the business combination, including that we have the Necessary Cash at the Closing;

the outcome of any legal proceedings that may be instituted against NFC or UFH following announcement of the business combination and transactions contemplated thereby;

the ability to obtain and/or maintain the listing of our ordinary shares on the NYSE following the business combination;

our ability to obtain financing to complete the business combination or to raise financing in the future;

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

our public securities’ potential liquidity and trading;

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

costs related to the business combination;

factors relating to the business, operations and financial performance of UFH, including:

the economic, social and political climate in China;

the capital-intensive nature of UFH’s business;

its ability to meet its debt service requirements and obligations;

the impact of regulations on the business of UFH; and

intense competition faced by UFH; and

other factors detailed under the section entitled “Risk Factors.”
The forward-looking statements contained in this proxy statement and in any document incorporated by reference herein are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in
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this proxy statement and in NFC’s Annual Report on Form 10-K for the year ended December 31, 2018. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary materially from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before you grant your proxy or instruct how your vote should be cast or vote on the proposals to be put to the general meeting, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement may adversely affect NFC, UFH, or NFH.
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RISK FACTORS
Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement. These risks could have a material adverse effect on the business, results of operations or financial condition of the Company and could adversely affect the trading price of its ordinary shares following the business combination.
Risks Relating to UFH’s Business and Financial Condition
If UFH’s existing facilities fail to perform as expected, or if existing facilities’ leases are not renewed or leases are canceled, UFH’s overall business could be negatively impacted.
UFH’s existing facilities are all strategic investments which have expected growth rates. These growth rates are based on many factors, including, but not limited to, a baseline expected ramp-up based on previously opened and ramped-up businesses, UFH’s management’s opinion and publically available data on market capacity, planned capital investment in the company, and UFH management’s best estimates and projections of macroeconomic, cultural, and regulatory factors based on publically available data and information. Several of these factors make necessary assumptions and judgments based on management’s experience and expertise, and as such may be imperfect or subject to error. If these factors, assumptions, or judgments prove to be inaccurate or incomplete, the ramp-up of existing facilities could be negatively impacted and adversely affect UFH’s business. Furthermore, UFH’s management uses the cash flow expectations of its existing facilities, which take into account projected ramp-ups and growth trends, as inputs for certain of UFH’s financing and timing decisions relating to potential expansion projects and capital investments. Therefore, if existing facilities do not ramp up as expected, UFH’s future expansions and capital investments may have to be reassessed, or even delayed or canceled, which could adversely impact the overall business.
UFH may experience difficulties executing its expansion plans.
UFH’s long-term expansion plans include targeted expansion into highly populated markets through the development of new facilities in cities such as Shenzhen, among others, as well as expanding current facilities and opening additional facilities in its existing markets, namely Beijing, Shanghai, Tianjin, Qingdao and Guangzhou. In addition, UFH plans to continue expanding the number and variety of services it offers at its facilities. As a result, UFH expects to continue to make capital expenditures over the coming years.
The profitability or success of UFH’s current and future projects and investments are subject to numerous factors, conditions and assumptions, many of which are beyond UFH’s control. Unfavorable outcomes could reduce NFH’s available cash and limit its ability to make cash investments following the business combination. This could result in lower investment interest or earnings that could be offset to the extent resulting in net losses, and reduce UFH’s ability to service current or future indebtedness, which might require NFH to take on additional borrowings at higher costs leading to higher than anticipated depreciation expense, among other negative consequences. Any of these could have a material adverse effect on NFH’s future financial condition or results of operations. Further, any additional financing necessary to complete UFH’s expansion plans may not be available on favorable terms, or at all.
Commencement of facility construction is subject to governmental approval and permitting processes, which could materially affect the ultimate cost and timing of construction. Numerous factors, many of which are beyond UFH’s control, may influence the ultimate costs and timing of various projects or capital improvements at its facilities, including:

delays in mandatory governmental approvals;

additional land or facilities acquisition costs;

increases in the budgeted costs, including increases in the costs of construction materials and labor;

unforeseen changes in design or delays in construction permits;
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litigation, accidents or natural disasters affecting the construction site; and

national or regional economic, regulatory or geopolitical changes.
In addition, actual costs could vary materially from UFH’s estimates if those factors or its assumptions about the quality of materials or labor required, or the cost of financing were to change. Should healthcare facility projects be abandoned or substantially decreased in scope due to the inability to obtain necessary permits or other governmental approvals or other unforeseen negative factors, NFH could be required to expense some or all previously capitalized costs, which could have a material adverse effect on its future financial condition or results of operations.
UFH may not be able to manage its expected growth and enlarged business.
UFH’s plans to make capital expenditures over the coming years to implement its expansion strategy. This growth strategy may not be successful for the following reasons:

UFH’s ability to obtain additional capital for growth is subject to a variety of uncertainties, including its operating results, its financial condition, capital market perception, general market conditions for capital raising activities by healthcare companies, and economic conditions in China.

UFH’s profitability may be adversely affected by the additional costs and expenses associated with the operation of new facilities, increased marketing and sales support activities, technological improvement projects, the recruitment of new employees, the upgrading of its managerial, operational and financial systems, procedures and controls, and the training and management of its growing employee base.

The increased scale of operation will present its management with challenges associated with operating an enlarged business, including dedication of substantially more time and resources in operating and managing facilities in new geographic locations in China, ensuring regulatory compliance and continuing to manage and grow its business.
UFH cannot be certain that its cash flows will grow at all or grow rapidly enough to satisfy the capital and expenses necessary for its growth. It is difficult to assess the extent of capital and expenditure necessary for its growth and their impact on UFH’s operating results. Failure to manage growth and enlarged business effectively could have a material adverse effect on UFH’s business, financial condition and results of operations.
UFH’s business is capital intensive and NFH may not be able to secure additional capital financing for new projects or execute new business strategies.
UFH currently has adequate capital to fund its current expansion projects. However, NFH may not be able to raise sufficient capital to complete some or all of its business strategies in the future, including new projects or acquisitions, or to react rapidly enough to changes in technology, products, services or the competitive landscape. Healthcare service providers often face high capital requirements in order to take advantage of new market opportunities, respond to rigorous competitive pressure and react quickly to changes in technology and as such, there can be no assurance that NFH will be able to satisfy its capital requirements in the future. In particular, UFH’s expansion strategy requires the construction and maintenance of new and existing healthcare facilities, which requires and depends upon the availability of significant capital, not all of which may be available at the time such project is considered or commenced. In the absence of sufficient available or obtainable capital, UFH would likely be unable to establish or maintain its facilities as planned. In addition, UFH may incur costs for projects that may not be completed as projected, if at all, and UFH may be required to seek capital in financings under circumstances and at times that limit the optimization of the terms of such financings.
UFH’s premises are all leased from third parties, and in general have fixed terms. Approximately 9% of UFH’s leases in terms of the lease contract value are up for renewal in the next five years. If UFH is unable to renew its leases, or leases are terminated before the lease ends, operations may need to be relocated, with the associated expense of relocation. Operation relocation may have negative impacts including but not limited to: reduced patient volumes if a new location is inconvenient for existing patients; pressure on
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physician or administration teams if a new location is inconvenient for existing staff; reductions in available space for operations at a new location; less attractive lease terms at a new location; unanticipated capital expenditures to renovate a new location; and possible extra rent expense as UFH pays rent for a new location during construction and fit-out while a previous locations continues operations. Any of these factors may have an adverse effect on UFH’s business and results of operations.
Expansion of private healthcare services to reach the Chinese population depends to some extent on the development of insurance products that are not widely available or used.
Currently, commercial medical insurance is not generally purchased by the majority of the Chinese population; however, according to the China Insurance Yearbook, gross written health insurance premiums sold in China has increased from approximately $12 billion to approximately $76 billion from 2012 to 2018 and, according to the EY White Paper on China Commercial Health Insurance, is expected to reach $181 billion by 2020. This rapid growth is anticipated to continue in the future. Furthermore, reimbursement under Chinese government public healthcare insurance is either not enough to cover the entire cost or partial cost of services at private healthcare facilities like UFH, consequently UFH’s patients often have to pay for their procedures out of their own pocket. This limitation may impede the attractiveness of UFH’s services as compared to services at public hospitals for which government benefits provide coverage, especially during economic downturns. As part of UFH’s expansion plans, UFH intends to implement initiatives to increase the number of its local Chinese patients, including increasing marketing outreach and piloting new commercial insurance products primarily targeted at local Chinese patients. If UFH is not able to achieve success with these initiatives or the commercial insurance industry does not grow as expected, UFH’s ability to continue to grow its business may be materially adversely affected.
Financial projections with respect to UFH may not prove to be reflective of actual future results.
In connection with the business combination, NFC’s board of directors considered, among other things, financial forecasts for UFH prepared by NFC’s management. These financial projections are included in this proxy statement in the section entitled “The Business Combination Proposal — Certain Projected Financial Information” and speak only as of the date they were made and are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, at all or within projected timeframes. In addition, the failure of UFH to achieve projected results could have a material adverse effect on NFH’s share price and financial position following the closing of the business combination.
UFH’s financial performance may be affected by seasonal and annual fluctuations.
UFH’s revenues are impacted by seasonal and annual fluctuations related to epidemiological, cultural, and lifestyle factors. For example, many expatriate and affluent Chinese families traditionally travel outside of China for summer vacations, so UFH’s revenue typically decreases during that time of year. There are also seasonal epidemiological factors where certain medical conditions and patient volume fluctuate over the course of the year, such as the annual flu season which typically boosts primary care volume during the winter months. In addition, there are often variations in demand year to year for obstetrics services depending on the relative attractiveness of any particular Chinese zodiac calendar year, with certain years being considered particularly attractive, boosting volume, and some considered particularly negative, with ensuing volume, revenue, and referral impacts. As a result of these and other unpredictable seasonal factors, UFH’s operating results may fluctuate and adversely impact UFH’s business.
If UFH fails to manage its growth or maintain adequate internal accounting, disclosure, data security, and other controls, its business could be adversely affected.
UFH has expanded its operations rapidly in recent years and continues to explore ways to extend its service and product offerings. UFH’s growth may place a strain on its management systems, information technology systems, resources, internal control over financial reporting and disclosure controls. UFH’s ability to operate its business requires adequate information systems and resources as well as sufficient oversight from senior management. As such, UFH’s ability to manage its operations and future growth will require it to continue to improve its operational, financial, data, and management controls, including its
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internal control over financial reporting and disclosure controls, reporting systems and procedures. As a result of its expansion, UFH may not be able to maintain adequate controls and procedures or implement improvements to its management, information technology, and control systems in an efficient or timely manner and may discover deficiencies in its existing systems and controls. UFH’s inability to successfully manage its growth and expand its operations could have a material and adverse effect on its business, financial condition, results of operations and prospects.
UFH faces competition that could adversely affect its results of operations.
UFH’s Beijing, Shanghai, Tianjin, Qingdao, Guangzhou, and Hangzhou healthcare facilities compete with a large number and variety of healthcare facilities in their respective markets. There are many public Chinese hospitals and many of these offer so called “VIP” services, which cater mostly to the affluent Chinese market as well as some foreign residents, and also international clinics serving the expatriate and diplomatic communities and affluent Chinese population. There can be no assurance that these or other hospitals, clinics or facilities will not commence or expand their operations, which could increase competition and potentially affect UFH’s market position. Further, there can be no assurance that a qualified Western-style or other healthcare organization, having greater resources in the provision or management of healthcare services, will not enter the market and provide similar services to those being provided by UFH in any of the cities in which it currently operates or plans to expand. Any shift in the competitive landscape could adversely affect UFH’s business, such as driving down market perception on prices for private healthcare services.
Competition in payor systems may also emerge in the Chinese private healthcare industry. Managed care or HMO models, innovative payor contract models, or new or reformed government payor systems could change UFH’s payor mix, putting pressure on prices as UFH seeks to attract patients from managed care networks, sign payor contracts, or be eligible for new or reformed government reimbursement systems.
If UFH management decides or is compelled to lower prices as a competitive strategy or reaction for these or other reasons, revenues may be negatively impacted and overall profitability and growth may be adversely affected.
UFH’s business may be adversely affected by inflation or foreign currency fluctuation.
UFH generates 100% of its revenue and incurs approximately 99% of its expenses in RMB within China. The RMB is not freely traded and is closely controlled by the Chinese government and so the value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, the political situation as well as economic policies and conditions. In addition, it is difficult to predict how market forces or Chinese or U.S. government policy may impact the exchange rate between RMB and the U.S. dollar in the future.
Changes in inflation rates and the exchange rate between RMB and the U.S. dollar could significantly impact UFH’s operations by, among other things, decreasing the volume of expatriate patients in China as a result of the increased cost of living abroad, and making it harder for UFH to recruit and hire foreign physicians. Changes in inflation and exchange rates may also negatively impact UFH’s local Chinese patient volumes by lowering disposable income available for premium healthcare services. Furthermore, changes in inflation rates in China and in other countries, could adversely impact UFH’s business by increasing costs and creating pressure to increase prices. As such, any significant fluctuations in the inflation rate or the exchange rate between the RMB and the U.S. dollar may materially adversely affect UFH’s cash flows, revenues, earnings and financial position. Fluctuations in the exchange rate between the RMB and the U.S. dollar could also result in foreign currency translation losses for financial reporting purposes. These and other unpredictable negative consequences of unexpected movements in inflation and foreign exchange rates may adversely impact UFH’s business and prospects.
UFH’s business is heavily regulated and failure to comply with those regulations could result in penalties, loss of licensure, additional compliance costs or other adverse consequences.
Healthcare providers in China, as in most other countries, are required to comply with many laws and regulations at the national and local government levels. These laws and regulations relate to, among other things: operating licenses; the conduct of operations; the relationships among hospitals and their affiliated
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providers; the ownership of facilities; the addition of new facilities and services; confidentiality, maintenance and security issues associated with medical records; billing of services; and pricing of services. If UFH fails to comply with applicable laws and regulations, it could suffer penalties, including the loss of its licenses to operate. In addition, UFH leases its healthcare facilities, including buildings that may be owned by state-owned enterprises, and in those circumstances, UFH may be subject to unfavorable terms, such as early termination clauses.
In addition, further healthcare legislative reform is likely, and although recent policy announcements and healthcare reform legislation has all pointed to more market opening and other issues which are beneficial to UFH’s development, there is no assurance that future legislation will always be reflective of the current policy environment. Unexpected new policies adverse to UFH’s development could materially adversely affect UFH’s business and results of operations in the event it does not comply or if compliance is costly. It is not possible to anticipate the exact nature of future healthcare legislative reform in China, which depends largely on factors such as the Chinese Ministry of Health’s priorities, the political climate, and political priorities that can vary significantly from year to year. As such, legislative reform in China is often unpredictable. Consequently, if UFH’s business fails to comply with any of these reforms for any reason, it could result in penalties, loss of licensure, additional compliance costs or other adverse consequences.
If UFH fails to properly manage the registration of the medical professionals at the medical facilities in its network, it may be subject to penalties against such medical facilities, including fines, loss of licenses, or an order to cease practice, which could materially and adversely affect UFH’s business and results of operations.
The practicing activities of medical professionals are strictly regulated under laws, rules and regulations in China. For instance, in China, medical professionals who practice at medical facilities must hold practicing licenses and may only practice within the scope of their licenses and at the specific medical facilities at which their licenses are registered. Furthermore, in China, if a medical professional is found to be practicing at a medical facility where he or she is not properly registered, both the individual and the medical facility will be subject to administrative penalties. UFH’s failure to properly manage the registration of medical professionals in its medical facilities may subject the physicians, UFH or the individual medical facilities in its network to administrative penalties including fines, loss of licenses, or even an order to cease practice, any of which could materially and adversely affect its business and results of operations.
If UFH does not attract and retain qualified physicians, administrators or other hospital personnel, its hospital operations would be adversely affected.
UFH’s success in operating its hospitals and clinics is, in part, dependent upon the number and quality of the physicians, administrators and other medical personnel working at these facilities and UFH’s ability to retain them. As UFH offers premium, internationally accredited healthcare services at its hospitals and clinics, UFH is dependent on attracting a certain number (depending on market profiles) of qualified healthcare professionals, who may experience cultural challenges working in China and may not be willing or able to remain in China for the extended periods of time which are preferable for physician employment. In addition, physicians may terminate their affiliation with UFH’s hospitals at any time. The failure to recruit and retain qualified physicians, management, nurses and other medical support personnel, or to control labor costs, could have an adverse effect on UFH’s business and results of operations.
UFH depends on key personnel for the success of its business.
UFH’s success depends, to a significant extent, on the continued active participation of executive officers and other key personnel, including its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Vice President of Medical Affairs, Chief Nursing Officer and the General Managers of its hospitals. In addition, there is significant competition for employees with expertise in the healthcare industry in China. In order to succeed, UFH needs to be able to retain its executive officers and key personnel and attract highly skilled personnel in various functions of its business. UFH cannot make assurances that it will be successful in attracting, integrating, motivating and retaining key personnel. If UFH is unable to retain its key personnel and attract additional qualified personnel, as and when needed, its business, and the business of NFH following the business combination, may be adversely affected.
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UFH’s business is highly dependent on its reputation. Failure to further develop, maintain or enhance its reputation may materially and adversely affect its business, financial condition and results of its operations
UFH’s reputation is critical to its success in the healthcare services market in China. UFH’s management believes that its brand is well regarded by its patients. However, UFH’s failure to develop, maintain or enhance its reputation may materially and adversely affect its business, financial condition and results of its operations.
Many factors are important for maintaining and enhancing UFH’s reputation and may negatively affect its reputation if they are not properly managed, such as:

UFH’s ability to effectively manage the quality of its services and facilities in its hospitals and clinics, including monitoring the performance of its physicians and other medical professionals;

UFH’s ability to provide convenient and reliable medical treatments;

UFH’s ability to increase its brand awareness among existing and potential patients;

UFH’s ability to meet and exceed its patients’ expectations;

UFH’s ability to protect the confidentiality of patient data; and

UFH’s ability to adopt new technologies or adapt its systems according to its patients’ needs and/or new industry standards.
Any problems with UFH’s services, if publicized in the media or otherwise, could negatively impact its reputation. Similarly, inappropriate or inadequate communication following a major crisis, such as a major operational incident, cybersecurity breach, breach of law or ethics or leak of market-sensitive confidential information, could quickly and seriously impair its reputation. Depending on the nature of such crisis, effective communication may not mitigate serious damage to its reputation and may render UFH subject to criminal and civil prosecution or class action suits by shareholders and other interested parties. Any of these risks can have a material adverse impact on our business.
If UFH fails to maintain important business relationships with certain key third parties, its business, reputation, financial condition and results of operations may suffer.
The medical facilities in our network have established certain cooperation relationships with various third parties, such as suppliers of medical devices (ranging from medical beds to Da Vinci surgical systems), pharmaceutical drug manufacturers and distributors, marketing agencies and other hospitals and clinics outside of UFH’s network who refer patients to UFH’s facilities. Each of these relationships is important to UFH as it enables UFH to provide quality service and enhance its reputation and brand name in China. For example, UFH works with certain e-commerce sites to market and sell care packages to expectant patients and their families, which is a key patient base for UFH. If this relationship were to be damaged, obstetrics volume could be negatively impacted.
There is no assurance that UFH can maintain its cooperation arrangements with such third parties. Should such arrangements become unsuccessful, the number of patients and in turn UFH’s revenue may be adversely affected. In addition, as certain arrangements may not be exclusive, there is no assurance that such third parties would not enter into similar arrangements with UFH’s competitors or otherwise act in a manner adverse to its interest. If UFH fails to maintain the cooperation arrangements with these third parties or if these third parties fail to fulfill their obligations under the cooperation arrangements, or if they form relationships with its competitors, UFH’s business, reputation, financial condition and results of operations may be adversely affected.
Unauthorized use of UFH’s brand name by third parties may adversely affect its business.
UFH considers its brand name to be critical to its success. In addition, UFH’s continued ability to differentiate itself from the other premium private healthcare providers and other potential new entrants would depend substantially on its ability to preserve the value of its brand name. UFH relies on trademark law, company brand name protection policies, and agreements with its employees, patients and business partners to protect the value of its brand name. In particular, the UFH brand name has been registered as a
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“well-known trademark” by the Trademark Office of the State Administration for Market Regulation of the People’s Republic of China (which had been reorganized as the Trademark Office of National Intellectual Property Administration since March 2018). UFH has also completed the trademark registration process and have been licensed to use several other related trademarks and as of the date of filing of this proxy statement, 32 trademarks are registered under United Family Healthcare Management Consulting (Beijing) Co., Ltd., a wholly foreign-owned enterprise of UFH (the “UFH (WFOE)”), and 108 trademarks are registered under Chindex. However, there can be no assurance that the measures taken by UFH in this regard are adequate to prevent or deter infringement or other misappropriation of its brand name. Among others, UFH may not be able to detect unauthorized use of its brand name or copycat in a timely manner because its ability to determine whether other parties have infringed its brand name is generally limited to information from publicly available sources. In order to preserve the value of the UFH brand name, UFH may have to take legal action against third parties. Nonetheless, because the validity, enforceability and scope of trademark protection in China is uncertain and still evolving, UFH may not be successful in litigation. Further, future litigation may also result in substantial costs and diversion of its resources and disrupt its business.
As a provider of medical services, UFH is exposed to inherent risks relating to malpractice and other claims and it may not be adequately insured against such liabilities.
In recent years, physicians, hospitals and other healthcare providers in China have become subject to an increasing number of legal actions alleging malpractice or related legal issues. In addition, as a provider of medical services, any misdiagnosis or improper treatment may result in negative publicity regarding UFH or its services, which would harm its reputation. If UFH is found liable for malpractice, it may be required to pay substantial monetary damages and legal costs.
To protect UFH from the cost of any such claims, UFH maintains professional malpractice liability insurance and general liability insurance coverage in amounts and with deductibles that UFH believes to be appropriate for its operations. However, UFH’s insurance coverage may not cover all claims against them or continue to be available at a reasonable cost for them to maintain adequate levels of insurance. In addition, even if UFH is able to successfully defend itself against a certain claim, UFH could be required to spend significant management, financial and other resources in the process, which could disrupt its business, and its reputation and brand name may also suffer.
UFH’s insurance coverage may not be sufficient to cover the risks related to its business, and its insurance costs may increase significantly.
UFH’s management believes it has obtained an adequate amount of insurance for the insurable risks relating to its business, including medical malpractice insurance. However, there is no assurance that the insurance policies it maintains are sufficient to cover its business operations. If UFH was to incur substantial liabilities that were not covered by its insurance, UFH could incur costs and losses that could materially and adversely affect its results of operations. Furthermore, UFH cannot assure you that it will be able to continue to maintain insurance with adequate coverage for liability or risks arising from any of its services on acceptable terms. Even if the insurance is considered adequate by management, insurance premiums could increase significantly which could result in higher costs to the company, or insurance terms could change which result in higher effective costs to the company.
UFH depends on its information systems, which if not implemented, maintained, and secured, could adversely affect its operations.
UFH’s business is dependent on effective information systems that assist them in, among other things, monitoring, assessing utilization and other cost factors, supporting its healthcare management techniques, processing billing and providing data to regulators, and maintaining patient, employee, and corporate privacy and security. If UFH experiences a reduction in the performance, reliability or availability of its information systems, its operations and ability to produce timely and accurate reports could be adversely impacted.
UFH’s information systems and applications require regular maintenance, upgrading and enhancement to meet operational needs. Moreover, the proposed expansion of UFH’s facilities and similar activities requires transitions to or from, and the integration of, various information systems. UFH
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regularly upgrades and expands its information systems capabilities throughout its healthcare services operations. Upgrades, expansions of technological capabilities, and other potential system-wide improvements in information systems may require significant capital expenditures. If UFH experiences difficulties with the transition to or from information systems or is unable to properly implement, finance, maintain or expand its systems, UFH’s business could suffer, among other things, from operational disruptions, which could adversely affect its prospects or results of operations.
UFH is subject to cyber security risks and other cyber incidents, including the misappropriation of information and other breaches of information security which could adversely affect our business and disrupt its operations.
In the normal course of conducting business, UFH collects and stores sensitive data on its systems, including personal information of patients and employees, including patient medical records, financial information and documentation, and various internal operational documentation. Despite the security measures UFH has in place and any additional measures it may implement in the future to safeguard its systems and to mitigate potential security risks, UFH’s facilities and systems could be vulnerable to cyber security breaches, such as unauthorized access, accidents, employee errors or malfeasance, computer viruses, hackings or other disruptions. Such breach could compromise the security of UFH’s data and information technology infrastructure, thereby exposing such information to unauthorized third parties. Techniques used to obtain unauthorized access to information systems, or to sabotage those systems, change frequently and generally are not recognized until launched against a target. UFH may be required to expend significant capital and other resources to remedy, protect against or alleviate these and related problems, and it may not be able to remedy these problems in a timely manner, or at all. Any disruption of its systems or security breach or event resulting in the misappropriation, loss or other unauthorized disclosure of confidential information, whether by UFH directly or by an unauthorized third-party, could damage UFH’s reputation, result in the incurrence of costs, expose UFH to the risks of litigation and liability, result in regulatory penalties under laws that protect privacy of personal information, disrupt UFH’s business or otherwise affect its results of operations.
NFH’s debt could impair its financial condition and prevent it from fulfilling its business obligations.
UFH has entered into financing agreements with certain institutions pursuant to which it incurred indebtedness, which will require principal and interest payments. As of June 30, 2019, Healthy Harmony’s total indebtedness was approximately $58.4 million and its total cash balance was $71.2 million. Following the Closing, NFH expects to repay Healthy Harmony’s outstanding indebtedness with its cash balance. Once Healthy Harmony’s debt is repaid, NFH’s total indebtedness is expected to be $300,000,000 and NFH expects to have $172.4 million and $117.0 million of cash after payment of transaction fees assuming no redemptions and maximum redemptions, respectively. Such indebtedness could affect its future operations, for example by:

requiring a substantial portion of its cash flow from operations to be dedicated to the payment of principal and interest on indebtedness instead of funding working capital, capital expenditures, acquisitions and other business purposes;

making it more difficult for NFH to satisfy all of its debt obligations, thereby increasing the risk of triggering a cross-default provision;

increasing NFH’s vulnerability to economic downturns or other adverse developments relative to less leveraged competitors;

limiting NFH’s ability to obtain additional financing for working capital, capital expenditures, acquisitions or other corporate purposes in the future; and

increasing the cost of borrowing to satisfy business needs.
In addition, the terms of UFH’s indebtedness impose significant restrictions on its operating and financial flexibility through various covenants that limit its ability to, among other things:

incur or guarantee additional indebtedness;

make restricted payments, including dividends and management fees;
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create or permit certain liens; and

enter into business combinations and asset sale transactions.
If the terms of UFH’s debt financing arrangements preclude it from pursuing certain business opportunities, its business and prospects could be adversely affected.
NFH may be unable to service or refinance its debt following the Closing.
NFH’s ability to make scheduled payments on, or to reduce or refinance, its indebtedness will depend on its future financial and operating performance. To a certain extent, NFH’s future performance will be affected by the impact of general economic, financial, competitive and other factors beyond NFH’s control, including the availability of financing in the banking and capital markets. NFH cannot be certain that its business will generate sufficient cash flow from operations to service its debt. If NFH is unable to meet its debt obligations or to fund its other liquidity needs, it will need to restructure or refinance all or a portion of its debt to avoid defaulting on its debt obligations or to meet other business needs. A refinancing of any of NFH’s indebtedness could be at higher interest rates, could require compliance with more onerous covenants that further restrict NFH’s business operations, could be restricted by another of NFH’s debt instruments outstanding, or refinancing opportunities may not be available at all.
Risks Relating to Doing Business in China
A severe or prolonged downturn in the global or Chinese economy could adversely affect UFH’s business, results of operations and financial condition.
The potential trade war between the U.S. and China may cause global economic turmoil. A prolonged slowdown in the global or Chinese economies, including sustained periods of decreased consumer spending, higher unemployment levels, declining consumer or business confidence and continued volatility and disruption in the credit and capital markets, may have an adverse effect on UFH’s business. Unfavorable economic conditions could lead to a decrease in consumer spending on discretionary items, such as UFH’s premium services, and could cause UFH’s potential patients to delay their treatments or seek treatments at public hospitals where the cost of such services are covered by public insurance. In addition, if global economic uncertainty continues, international companies with offices in China may decide to close or otherwise significantly reduce their headcount in China. This could lead to a significant reduction in UFH’s patient base, which is largely dependent on expatriates and affluent Chinese patients. Any of these situations could have a material adverse effect on UFH’s business, results of operations and financial condition.
The economic policies of the Chinese government and economic growth of China could adversely affect UFH.
Substantially all of UFH’s assets are located in China, and all of its revenue is derived from operations in China. Accordingly, UFH’s business, financial condition and results of operations are subject to a significant degree, to economic, political and legal developments in China.
The Chinese economy differs from the economies of most developed countries in many respects, including:

the degree of government involvement;

the level of development;

the growth rate;

the control of foreign exchange;

the allocation of resources;

an evolving and rapidly changing regulatory system; and

a lack of sufficient transparency in the regulatory process.
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While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven, both geographically and across various sectors of the economy. The Chinese economy has also experienced certain adverse effects due to the global financial crisis. The growth rate of China’s gross domestic product has slowed in recent years to 6.6% in 2018 from 9.4% in 2009, according to the National Bureau of Statistics of China. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on UFH. For example, UFH’s financial condition and results of operations may be adversely (or positively) affected by government control over capital investments, foreign currency exchange restrictions or changes in tax regulations that are applicable to UFH.
The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in China are still owned by the Chinese government. The continued control of these assets, including formal ownership by the Chinese government of the land used for UFH facilities, and other aspects of the national economy by the Chinese government could materially and adversely affect UFH’s business. The Chinese government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies, including state owned public hospitals.
Any adverse change in the economic conditions or government policies in China could have a material adverse effect on overall economic growth, which in turn could lead to a reduction in demand for UFH’s services and consequently have a material adverse effect on UFH’s business.
Labor policy changes or reforms by the Chinese government could adversely affect UFH.
The Chinese government has strong control and oversight of labor law and labor contract law and enforces compliance with these laws. The government has taken actions to improve protection of employees’ rights, often serving to increase the responsibilities and labor costs of employers. Some significant changes include a requirement to offer permanent employment at the conclusion of two successive fixed term employment contracts; a requirement to pay severance in all cases of termination except for extreme breach of contract by the employee or the employee’s voluntary resignation; and a requirement for the employer to pay financial compensation in return for the employee’s non-compete agreement. UFH’s business is highly dependent on labor for clinical, facility and administrative teams, its business is particularly sensitive to labor reforms that could increase labor costs, such as increasing minimum wages, pension or healthcare contributions, and preferential tax deduction policies. Any changes to such reforms could significantly increase UFH’s labor costs, with associated negative impacts of lowering profitability, available cash for expansions, and other negative impacts.
The Chinese legal system may not provide adequate protections to UFH.
The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, the Chinese legal system is a system in which decided legal cases have little precedential value. As such, there are substantial uncertainties regarding the interpretation and application of China’s laws and regulations. The Chinese government has been developing a comprehensive system of commercial law, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. In addition, new laws and regulations that affect existing and proposed future businesses may also be applied retroactively, which can create significant uncertainty. UFH cannot predict what effect the interpretation of existing or new laws or regulations may have on its business in China. If the relevant authorities determine that UFH is in violation of any laws or regulations, they would have broad discretion in dealing with such violations, including, among other things: (i) levying fines and (ii) requiring that UFH discontinue any portion or all of its business in China.
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Changes in the Foreign Investment Law and regulatory regime could have an impact on the transactions and the operation of UFH’s business.
On March 15, 2019, the National People’s Congress of China promulgated the Foreign Investment Law which will come into effect on January 1, 2020 and replace the trio of existing laws regulating foreign investment in China, namely, the Law of the People’s Republic of China on China-Foreign Equity Joint Venture (the “EJV Law”), the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises and the Law of the People’s Republic of China on China-Foreign Contractual Joint Ventures (together with the EJV Law, the “JV Laws”), each of which currently apply to some entities incorporated in China and controlled (directly or indirectly) by UFH. The Foreign Investment Law embodies an expected Chinese regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. Since the Foreign Investment Law is newly enacted, uncertainties exist in relation to its interpretation and implementation. For instance, though the Foreign Investment Law does not explicitly classify contractual arrangements as a form of foreign investment, it contains a catch-all provision under the definition of  “foreign investment,” which includes investments made by foreign investors in China through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual arrangements as a form of foreign investment. Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, such as unwinding our existing contractual arrangements and/or disposal of our related business operations, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all.
In addition, the Foreign Investment Law requires that all foreign invested enterprises in China must comply with either the Company Law of the People’s Republic China or the Partnership Enterprise Law of the People’s Republic China for purposes of their corporate governance structure, organizational form and operational rules, except that foreign invested enterprises established prior to the effective date of the Foreign Investment Law may keep their current corporate governance structure, organizational form and operational rules for a five year transition period ending on December 31, 2024. As a result of the implementation of the Foreign Investment Law, UFH’s Chinese subsidiaries that were initially established as China-Foreign Equity Joint Ventures (“EJV”), such as PDU and China-Foreign Contractual Joint Ventures (“CJV”), may have to amend their formation documents to take into account some of the material corporate governance and structural differences between the JV Laws and the Company Law. For example, whereas the board of directors governs an EJV and the board of directors or joint management committee governs a CJV under the JV Laws, under the Company Law, the shareholders govern a company. In addition, there are uncertainties as to how and whether UFH’s Chinese joint venture partners will agree to work together to implement the necessary changes during the five-year transition period given that these changes may affect the decision making process and other corporate governance matters of the relevant subsidiaries, which might have an impact on its operations.
Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect NFH’s current corporate structure, corporate governance and business operations.
The conversion of RMB into foreign currency is regulated, and these regulations could adversely affect UFH’s business and investments.
UFH generates 100% of its revenue and incurs approximately 99% of its expenses in RMB within China, however, a portion of its earnings is typically transferred from China and converted into USD or other currencies to pay certain of these expenses, including, following the business combination, to service its offshore debt financing (which will be denominated in RMB). The Chinese government imposes strict controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Specifically, under Chinese foreign exchange regulations, payments for “current account” transactions, including remittance of foreign currencies for payment of dividends, profit distributions, interest and operation-related expenditures, may be made without prior approval but are subject to procedural requirements. Strict foreign exchange control continues to apply to “capital account”
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transactions, such as direct foreign investment and foreign currency loans. These capital account transactions must be approved by or registered with China’s State Administration of Foreign Exchange, or “SAFE” or its authorized local branches. As such, we cannot assure you that we will able to meet all of our foreign currency obligations to remit profits out of China or to fund operations in China. In addition, it is possible that SAFE could impose new or increase existing restrictions on currency transfers or otherwise impose exchange controls that adversely affect UFH’s practices. Adverse actions by SAFE could also affect UFH’s ability to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions, which could adversely affect its business.
Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by Chinese regulations may subject UFH to penalties.
Companies operating in China are required to participate in various government-mandated employee benefit contribution plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and are also required to contribute an amount for each eligible employee equal to certain percentages of their salary, including bonuses and allowances, up to a maximum amount specified by the local government from time to time at locations where UFH operates its businesses. The requirement to contribute to employee benefit contribution plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. In addition, companies operating in China are also required to withhold individual income tax on employees’ salaries based on the actual salary of each employee upon payment. It is the policy of UFH for each of its subsidiaries to follow the government regulations and instructions on tax withholding and social benefit contributions. If UFH does not contribute enough money to the employee benefit contribution plans and/or fails to withhold the appropriate amount of individual income tax, it may be subject to late fees and fines and its financial condition and results of operations may be adversely affected.
China’s M&A Rules and certain other Chinese regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six Chinese regulatory agencies in 2006 and amended in 2009, along with other rules and regulations concerning mergers and acquisitions, established procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the Ministry of Commerce of the People’s Republic of China, or MOFCOM, be notified in advance of any change-of-control transaction in which a foreign investor takes control of a Chinese domestic enterprise. Moreover, the Anti-Monopoly Law of the People’s Republic of China requires that the MOFCOM be notified in advance of any concentration of undertaking if certain thresholds are triggered. In addition, MOFCOM issued a regulation that specifies that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns will be subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, UFH may grow its business by acquiring complementary businesses. Complying with the above-mentioned regulations and other relevant rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM or its local counterparts may delay or inhibit UFH’s ability to complete such transactions, which could affect UFH’s ability to expand its business or maintain its market share.
A new health epidemic could further adversely affect UFH’s operations.
An epidemic outbreak could significantly disrupt UFH’s ability to adequately staff its facilities and may generally disrupt operations. For example, in March 2003, several countries, including China, experienced an outbreak of a new and highly contagious form of atypical pneumonia now commonly known as Severe Acute Respiratory Syndrome, or SARS. The severity of the outbreak in certain municipalities, such as Beijing, and provinces, such as the Guangdong Province, materially affected general
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commercial activity. In particular, a large percentage of the expatriate community that uses UFH’s healthcare services left China during the height of the SARS epidemic and could be expected to do so again under similar circumstances. The SARS epidemic in China had a significantly negative impact on UFH’s healthcare business, and the extent of any adverse impact that any future SARS outbreak or similar epidemic, such as Avian flu or Swine flu, could have on the Chinese economy and on UFH cannot be predicted at this time. Any future SARS or similar outbreak could severely restrict the level of economic activity in affected areas, which could have a material adverse effect on UFH’s business and results of operations.
Natural disasters, terrorist attacks and other extraordinary events could adversely affect UFH’s business.
UFH’s business could be materially and adversely affected by natural disasters, terrorist attacks or other events in China where all of its operations are located. For example, in May 2008, the Sichuan Province suffered a strong earthquake measuring approximately 8.0 on the Richter scale that caused widespread damage and casualties and had a material adverse effect on the general economic conditions in the affected areas. The occurrence of any future disasters such as earthquakes, fires, floods, wars, terrorist attacks, or other events, or if UFH’s information systems or communications network breaks down or operates improperly as a result of such events, its facilities may be seriously damaged, and it may have to stop or delay operations. UFH may incur expenses relating to such damages, which could have a material adverse effect on its business and results of operations.
The Chinese government could change its policies toward, or even nationalize, private enterprise, which could harm UFH’s operations.
Over the past several years, the Chinese government has pursued economic reform policies, including the encouragement of private economic activities, decentralization of economic regulation and substantial reform of the healthcare system in China. The Chinese government may not continue to pursue these policies or may significantly alter them to UFH’s detriment from time to time without notice. Changes in policies by the Chinese government resulting in changes in laws and regulations or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion or imports and sources of supply could materially and adversely affect UFH’s business and operating results. In addition, the nationalization or other expropriation of private enterprises by the Chinese government could result in the total loss of UFH’s investment in China.
Also, the Chinese tax system is subject to substantial uncertainties in both interpretation and enforcement of the laws. In the past, following the Chinese government’s program of privatizing many state-owned enterprises, the Chinese government attempted to augment its revenues through heightened tax collection efforts. Continued efforts by the Chinese government to increase tax revenues could result in other decisions or interpretations of the tax laws by the Chinese taxing authorities that increase UFH’s future tax liabilities or deny it expected refunds, which could adversely impact UFH’s business.
If UFH fails to comply with environmental, health and safety laws and regulations in China, it could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of its business.
UFH is subject to numerous environmental, health and safety laws and regulations. Any violation of these regulations may result in substantial fines, criminal sanctions, revocations of operating permits, shutdown of its facilities and obligations to take corrective measures. UFH cannot completely eliminate the risk of injury as a result of any of these violations, and in such event, UFH could be held liable for any resulting damages, and any liability could exceed UFH’s resources. UFH also could incur significant costs associated with civil, administrative or criminal fines and penalties. Liability for any such costs may materially adversely affect UFH’s business, financial condition, results of operations and prospects.
As the operations of our business generate waste water, hazardous substances and other industrial wastes, we must comply with all applicable national and local environmental laws and regulations in China. In accordance with China’s Environmental Protection Law, as amended in 2014, China’s Law on the Prevention and Control of Occupational Diseases, as amended in 2018, and the Administrative Measures for Pollutant Discharge Licensing, as amended in 2019, we are required to undertake an environmental
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impact assessment, implement occupational disease hazard assessment procedures and pass certain environmental protection acceptance procedures at each of our facilities, the latter of which must be completed within twelve months of the completion of construction at the relevant facility. In addition, we are also required to register with, and/​or obtain approvals from, relevant environmental protection authorities for various environmental matters such as discharging waste generated by our operations.
In addition, each of our medical institutions is required to comply with the safety and health laws and regulations in China. For example, in accordance with China’s Law on the Prevention and Control of Radioactive Pollution (2003), each of our medical institutions that operate equipment that contain radioactive materials or emit radiation must obtain a radiation safety permit from the relevant local counterpart of the Ministry of Environmental Protection.
Two of UFH’s new facilities are in the process of completing their environmental acceptance procedures and are expected to complete the required procedures within the time frame required by applicable laws. These facilities are expected to obtain the required approvals before the expiration of such statutory time limit. However, we may not be able to obtain such approvals or permits or follow the requisite requirements at this facility or other facilities in a timely manner or at all. If we are unable to comply with these rules, we may be required to pay fines or damages to third parties or we may be ordered to suspend or cease our operations in the relevant premises.
Corrupt practices in the healthcare industry in China may place UFH at a competitive disadvantage if its competitors engage in such practices and may harm UFH’s reputation if its hospitals and the medical personnel who work in them engage in such practices.
There may be corrupt practices in the healthcare industry in China. UFH’s competitors, other service providers or their personnel or equipment manufacturers may engage in corrupt practices to influence hospital personnel or other decision-makers in violation of the anti-corruption laws of China and the U.S. Foreign Corrupt Practices Act, or the FCPA.
UFH has adopted a policy regarding compliance with the anti-corruption laws of China and the FCPA to prevent, detect and correct such corrupt practices. However, as competition persists and intensifies in the industry, UFH may lose opportunities if its competitors engage in such practices or other illegal activities. In addition, UFH’s administrators or the doctors or other medical personnel who work in its hospitals may engage in corrupt practices without UFH management’s knowledge.
Although UFH’s policies prohibit such practices, it has limited control over the actions of individual employees who may act outside of such policies. If any of them engages in such illegal practices, UFH or its hospitals may be subject to sanctions or fines and UFH’s reputation may be adversely affected by negative publicity stemming from such incidents.
Failure to comply with anti-corruption laws, rules and regulations could subject UFH’s facilities and/or the physicians, other medical professionals and staff to investigations and administrative or criminal proceedings, which may harm the reputation of such medical facilities and materially and adversely affect the UFH’s business, financial condition and results of operations.
UFH has adopted policies and procedures designed to ensure that the physicians, other medical professionals and staff at the facilities in its network reasonably comply with anti-corruption laws, rules and regulations. The Chinese government has recently increased its anti-bribery efforts to reduce improper payments and other benefits received by physicians, other medical professionals and staff in connection with the purchase of pharmaceuticals and the provision of healthcare services. There can be no assurance that UFH’s policies and procedures will effectively prevent any non-compliance with relevant anti-corruption laws, rules and regulations arising from actions taken by an individual physician, other medical professionals and staff without the knowledge of each medical facility in UFH’s network. If this occurs, the medical facilities and/or the physicians, other medical professionals and staff may be subject to investigations and administrative or criminal proceedings, and the reputation of the medical facilities in UFH’s network could be significantly harmed by any negative publicity stemming from such incidents, which may materially and adversely affect UFH’s business, financial condition and results of operations.
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Recent trade policy initiatives announced by the United States administration against China may adversely affect our business.
On August 14, 2017, the President of the United States issued a memorandum instructing the United States Trade Representative (“USTR”) to determine whether to investigate under section 301 of the United States Trade Act of 1974 (Trade Act), laws, policies, practices, or actions of the Chinese government that may be unreasonable or discriminatory and that may be harming United States intellectual property rights, innovation, or technology development. Based on information gathered in that investigation, the USTR published a report on March 22, 2018 on the acts, policies and practices of the Chinese government supporting findings that such are unreasonable or discriminatory and burden or restrict United States commerce. On March 8, 2018, the President exercised his authority to issue the imposition of significant tariffs on imports of steel and aluminum from a number of countries, including China. Subsequently, the USTR announced an initial proposed list of 1,300 goods imported from China that could be subject to additional tariffs and initiated a dispute with the World Trade Organization against China for alleged unfair trade practices. The President has indicated that his two primary concerns to be addressed by China are (i)  a mandatory $100 billion reduction in the China/United States trade deficit and (ii) limiting the planned $300 billion Chinese government support for advanced technology industries including artificial intelligence, semiconductors, electric cars and commercial aircraft. On July 6, 2018, the United States initially imposed a 25% tariffs on $34 billion worth of Chinese goods, including agriculture and industrial machinery, which prompted the Chinese government to initially impose tariffs on $34 billion worth of goods from the United States, including beef, poultry, tobacco and cars. Since July 2018, the United States imposed tariffs on $250 billion worth of Chinese products and has threatened tariffs on $325 billion more. In response, China imposed tariffs on $110 billion worth of US goods, and threatened qualitative measures that would affect U.S. businesses operating in China. In May 2019, the United States raised the tariffs on $100 billion of Chinese products to 25% from 10%. The United States and the Chinese government have not yet reached any agreement in the trade talks, which have been ongoing for several months.
In addition to the proposed retaliatory tariffs, the President has also directed the U.S. Secretary of the Treasury to develop new restrictions on Chinese investments in the U.S. aimed at preventing Chinese-controlled companies and funds from acquiring U.S. firms with sensitive technologies. A Foreign Investment Risk Review Modernization Act was introduced to Congress for review to modernize the restrictive powers imposed by the Committee on Foreign Investment in the United States.
This evolving policy dispute between China and the United States is likely to have significant impact on the Chinese economy as well as consumer discretional spending, directly and indirectly, and no assurance can be given that UFH will not be adversely affected by any governmental actions taken by either China or the United States, perhaps materially. In view of the positions of the respective trade representatives, it is not possible to predict with any certainty the outcome of this dispute or whether it will involve other agencies or entities brought in to resolve the policy differences of the two countries. Furthermore, any political or trade controversies, or political events or crises, between the United States and China or proxies thereof, whether or not directly related to UFH’s business, could reduce the price of NFH’s ordinary shares following the business combination as it will be a US-listed company operating in China.
If UFH becomes directly subject to the scrutiny involving U.S. listed Chinese companies, it may have to expend significant resources to investigate and/or defend the matter, which could harm its business operations, stock price and reputation.
U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny by investors, financial commentators and regulatory agencies. Much of the scrutiny has centered around financial and accounting irregularities and mistakes, a lack of effective internal controls over financial reporting and, in many cases, allegations of fraud. As a result of the scrutiny, the publicly traded stock of many U.S. listed China-based companies that have been the subject of such scrutiny has sharply decreased in value. Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions and are conducting internal and/or external investigations into the allegations. If UFH become the subject of any such scrutiny, whether any allegations are true or not, it may have to expend
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significant resources to investigate such allegations and/or defend itself. Such investigations or allegations will be costly and time-consuming and distract UFH’s management from its business plan and could result in its reputation being harmed and its stock price could decline as a result of such allegations, regardless of the truthfulness of the allegations.
Healthy Harmony’s audit report included in this proxy statement was prepared by auditors who are not inspected fully by the Public Company Accounting Oversight Board and, accordingly, our shareholders are deprived of the benefits of this inspection.
As an auditor of companies that are publicly traded in the United States and a firm registered with the Public Company Accounting Oversight Board, or PCAOB, Ernst & Young Hua Ming LLP is required under the laws of the United States to undergo regular inspections by the PCAOB. However, because Healthy Harmony has substantial operations within the People’s Republic of China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese government authorities, Healthy Harmony’s auditor and its audit work are not currently inspected fully by the PCAOB. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a heightened interest in an issue that has concerned U.S. regulators in recent years. However, it remains unclear what further actions the SEC and PCAOB will take to address the problem.
Inspections of other auditors conducted by the PCAOB outside of China have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality.
The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of Healthy Harmony’s auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in Healthy Harmony’s, and following the business combination, NFH’s, reported financial information and procedures and the quality of its financial statements.
Restrictions on the direct production of audit work papers to foreign regulators could result in Healthy Harmony’s financial statements being determined to not be in compliance with the requirements of the Exchange Act.
In late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the mainland Chinese affiliates of the “big four” accounting firms, including the affiliate of Healthy Harmony’s auditor. The Rule 102(e) proceedings initiated by the SEC related to the failure of these firms to produce documents, including audit work papers, in response to the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act of 2002, as the auditors located in China are not in a position lawfully to produce documents directly to the SEC because of restrictions under Chinese law and specific directives issued by the China Securities Regulatory Commission (“CSRC”). The issues raised by the proceedings are not specific to the Chinese affiliate of Healthy Harmony’s auditor or to Healthy Harmony, but potentially affect equally all PCAOB-registered audit firms based in China and all businesses based in China (or with substantial operations in China) with securities listed in the United States. In addition, auditors based outside of China are subject to similar restrictions under Chinese law and CSRC directives in respect of audit work that is carried out in China that supports the audit opinions issued on financial statements of entities with substantial China operations.
In February 2015, each of the “big four” accounting firms in China agreed to a censure and to pay a fine to the SEC to settle the dispute with the SEC. The settlement stayed the current proceeding for four years, during which time the firms were required to follow detailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If a firm did not follow the procedures, the SEC would impose penalties such as suspensions, or commence a new, expedited administrative proceeding against the non-compliant firm or it could restart the administrative proceeding against all four firms. In addition, the limitations imposed by China on the production of work papers reflecting audit work performed in China could likewise result in the imposition of penalties on Healthy Harmony’s
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independent registered public accounting firm by the PCAOB or the SEC, such as suspensions of such audit firm’s ability to practice before the SEC. Under the terms of the settlement, the underlying proceeding against the “big four” accounting firms in China was deemed dismissed with prejudice four years after entry of the settlement. The fourth anniversary of the settlement was on February 6, 2019. UFH cannot predict if the SEC will further challenge the four firms as to their compliance with U.S. law in connection with U.S. regulatory requests for audit work papers, or if the results of the challenge would result in the SEC imposing penalties, such as suspensions. If any additional remedial measures are imposed on the Chinese affiliates of the “big four” accounting firms, including Ernst & Young Hua Ming LLP, UFH could be unable to timely file future financial statements in compliance with the requirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act.
If UFH’s independent registered public accounting firm, or the affiliate of its independent registered public accounting firm, were denied, even temporarily, the ability to practice before the SEC, UFH would need to consider alternate support arrangements for the audit of its operations in China. If UFH’s auditor, or an affiliate of that firm, were unable to address issues related to the production of documents, and UFH was unable to timely find another independent registered public accounting firm to audit and issue an opinion on its financial statements, its financial statements could be determined to not be in compliance with the requirements of the Exchange Act. A determination of this type could ultimately lead to delisting of UFH’s ordinary shares from the NYSE or deregistration from the SEC, or both. This would materially and adversely affect the market price of UFH’s ordinary shares and substantially reduce or effectively terminate the trading of UFH’s ordinary shares in the United States.
UFH’s use of its leased properties could be challenged by third parties or government authorities, which may cause interruptions to UFH’s business operations.
All of UFH’s properties are leased. Certain of these leases do not meet various land and property-related legal requirements. For example, certain of UFH’s lessors have not provided UFH with required documentation including: ownership certificates or other documentation proving their right to lease the property to UFH and evidence that they acquired the appropriate government approval and followed the required registration process needed to lease the property to UFH. If UFH’s lessors do not have the right to lease the properties to UFH or they fail to receive required permits or follow the required registration procedures with the relevant government authorities, UFH’s leases could be invalidated. If this occurs, UFH may be required to renegotiate their leases with the proper parties, the terms of which may be less favorable to UFH, or relocate their facilities entirely. In addition, failure to register may expose UFH to potential fines if it fails to remediate after receiving notice from the relevant Chinese government authorities. Although these authorities have not provided UFH with such notice in the past, we cannot assure you that such notice will not be provided in the future. Also, UFH’s operation of its hospitals and clinics on certain of its leases may be challenged by the relevant Chinese authorities because the location of those leases does not permit such operation due to zoning restrictions.
We cannot assure you that third parties or government agencies may not challenge UFH’s use of its leased properties. The consequences of any of the above may materially adversely affect UFH’s business, results of operations and financial condition. For more information, see the section in this proxy statement entitled “Business of Healthy Harmony — Regulations Relating to Leased Property.”
Risks Relating to Our Corporate Structure
If the Chinese government finds that the agreements we intend to enter into to establish the structure for a portion of our operations in China do not comply with its restrictions on foreign investment in healthcare businesses, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish a portion of our economic benefits in the assets and operations of our affiliated Chinese entities.
We are currently and following the business combination will continue to be, a Cayman Islands company and as such we are classified as a foreign enterprise under Chinese laws. Various laws, regulations and rules in China restrict foreign ownership in, and restrict foreign invested enterprises from holding, certain licenses required to operate healthcare-related businesses. Specifically, under the Special Administrative Measures for Market Access of Foreign Investment (Negative List) (2019 Version), medical
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institutions are currently on the “negative list” for foreign investment. As such, foreign investors are not allowed to own more than a 70% equity interest in such institutions pursuant to the Interim Measures for Administration of China-Foreign Joint Venture and Cooperative Medical Institutions (the “Interim Measures”), which took effect in July 2000. In addition, the Interim Measures also set forth certain qualification requirements for foreign investors, such as requiring that such investors possess investment and operational experience in the medical sector. To comply with such restrictions, we intend to organize the remaining 30% of certain of our subsidiaries through a series of contractual arrangements as variable interest entities (the “Relevant Entities”) upon consummation of the business combination. As a result of these contractual arrangements, we expect to be able to control 100% of such entities (including the 30% held by the nominee shareholder(s)) and receive all of the economic benefits from the operations of these entities.
It is uncertain whether any new Chinese laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide, including whether and how the Foreign Investment Law promulgated in March 2019 might impact the viability of this corporate structure. See “— Risks Related to Doing Business in China — Changes in the Foreign Investment Law and regulatory regime could have an impact on the transactions and the operation of UFH’s business.”
If we or any of our Chinese subsidiaries or affiliated Chinese entities, or their respective subsidiaries, are found to be in violation of any existing or future Chinese laws, rules or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant regulatory authorities would have broad discretion in dealing with such violations, including:

revoking the business licenses or operating licenses of our Chinese subsidiaries or affiliated Chinese entities and their respective subsidiaries;

discontinuing or restricting our operations in China, including shutting down or blocking our website or discontinuing or placing restrictions or onerous conditions on our operations;

restricting our ability to collect revenues or confiscating our income or the income of our Chinese subsidiaries or affiliated Chinese entities;

requiring us to undergo a costly and disruptive restructuring such as forcing us to transfer our equity interests in our Chinese subsidiaries to a domestic entity or invalidating the agreements that our Chinese subsidiaries expect to enter into with our affiliated Chinese entities and their respective shareholders;

requiring us to establish a new enterprise, re-applying for required licenses or relocating our businesses, staff and assets;

imposing additional conditions or requirements with which we may not be able to comply;

restricting our right to collect revenues or limiting our business and operations in China; and

taking other regulatory or enforcement actions, including levying fines, that could be harmful to our business.
The imposition of any of these penalties could have a material adverse effect on our ability to conduct our business and our results of operations.
We expect to rely on certain contractual arrangements for a portion of our operations in China, which may not be as effective in providing operational control as direct ownership.
We expect to rely on contractual arrangements with the Relevant Entities, their respective subsidiaries and their respective shareholders to operate a portion of our business in China. Although these contractual arrangements are expected to provide us with 100% control over the Relevant Entities and their subsidiaries, (including the 30% held by the nominee shareholder(s)) the contractual arrangements may not be as effective as direct ownership in providing us with 100% control over our variable interest entities as direct ownership. For example, the Relevant Entities or their shareholders may breach their contractual arrangements with us by, among other things, taking actions that are detrimental to our interests. From a legal perspective, if our variable interest entities, any of their subsidiaries or their shareholders fail to
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perform its respective obligations under the contractual arrangements, we may have to incur substantial costs and spend other resources to enforce such arrangements, and be forced to rely on legal remedies under Chinese law, including seeking specific performance or injunctive relief and claiming damages. If this were to happen, it could be time consuming and costly.
It is expected that these contractual arrangements will be governed by Chinese law and provide for the resolution of disputes through arbitration in China or through Chinese courts. The legal environment in China is not as developed as in some other jurisdictions, such as the United States. In addition, the Chinese regulatory environment presents inherent uncertainties. See “— Risks Relating to Doing Business in China — The Chinese legal system may not provide adequate protections to UFH.” As a result, our rights under the contractual arrangements could not be honored and our ability to enforce these contracts under the contractual arrangements could be limited. If we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, our business and operations could be severely disrupted, which could damage our reputation and materially and adversely affect our business, financial condition, results of operations and prospects.
Shareholders of the Relevant Entities may have a potential conflict of interest with us, and they may breach their contracts with us in a manner contrary to the interest of our company.
Each of the Relevant Entities is expected to be partially owned by certain of our employees who will be designated by us. Accordingly, conflict may arise between these nominee shareholders’ fiduciary duties as director or supervisor of the Relevant Entities and us.
When conflicts of interest arise, these individuals may not act in the best interests of our company and conflicts of interest may not be resolved in our favor. In addition, these individuals may breach or cause either of the Relevant Entities to breach the contractual arrangements that will allow us to control 100% of such entities and their respective subsidiaries (including the 30% held by the nominee shareholder(s)) and receive economic benefits from them. We do not expect to enter into arrangements to address such potential conflicts of interest between these individuals and us. If we cannot resolve any conflicts of interest or disputes between us and the shareholders of either of the Relevant Entities, we would have to rely on legal proceedings, which could result in disruption of our business, and there would be substantial uncertainty as to the outcome of any such legal proceedings.
The contractual arrangements with either of the Relevant Entities may be reviewed by the Chinese tax authorities for transfer pricing adjustments, which could increase our overall tax liability.
The Chinese Enterprise Income Tax Law, effective on January 1, 2008 and amended on December 24, 2017, or the EIT Law, requires every enterprise in China to submit its annual enterprise income tax return together with a report on transactions with its related parties to the relevant tax authorities. The Chinese tax authorities may impose reasonable adjustments on taxation if they have identified any related-party transactions that are inconsistent with arm’s-length principles. The Relevant Entities could face material adverse tax consequences if the Chinese tax authorities determined that certain related party transactions to be entered into between them and UFH (WFOE) were not entered into based on arm’s-length negotiations and therefore constitute a favorable transfer pricing arrangement. If the Chinese tax authorities were to determine that these contracts were not entered into on an arm’s-length basis, they could request that the Relevant Entities adjust their taxable income upward for Chinese tax purposes. Such a pricing adjustment could adversely affect us by increasing the Relevant Entities’ tax expenses without reducing UFH (WFOE)’s tax expenses, and could subject the Relevant Entities to late payment fees and other penalties for underpayment of taxes. As a result, our consolidated net income may be adversely affected.
We may lose the ability to use and benefit from assets held by our variable interest entities that are material to the operation of our business if either of our variable interest entities goes bankrupt or becomes subject to dissolution or liquidation proceeding.
As part of our contractual arrangements with our variable interest entities, these entities hold certain assets, and may in the future hold additional assets, that are material to the operation of our business. If either of our variable interest entities goes bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which
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could materially and adversely affect our business, financial condition and results of operations. If either of our variable interest entities undergoes voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.
Risks Relating to Status as a Foreign Private Issuer
NFH is expected to be a foreign private issuer and subject to different U.S. securities laws and regulations and corporate governance requirements than a domestic U.S. issuer.
Upon consummation of the transactions, NFH is expected to be a “foreign private issuer” under applicable U.S. federal securities laws. As a foreign private issuer, NFH will be exempt from certain rules under the Exchange Act that would otherwise apply if NFH were a company incorporated in the United States, including:

the requirement to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies with securities registered under the Exchange Act;

the requirement to file financial statements prepared in accordance with GAAP;

the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations; and

the requirement to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information.
In addition, NFH’s officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act. Therefore, NFH shareholders may receive less information about NFH than shareholders currently receive about NFC and be afforded less protection under the U.S. federal securities laws than they currently have.
In addition, as a foreign private issuer, NFH will be permitted to follow certain corporate governance rules that conform to its home country requirements in lieu of many of the NYSE corporate governance rules. Section 303A.00 of the NYSE listing rules (the “Listing Rules”) provides that a foreign private issuer, such as NFH, may follow home country corporate governance practices in lieu of certain of the rules in Section 303A of the Listing Rules, including requirements with respect to board independence and the composition and responsibilities of certain board committees and a code of business conduct and ethics, provided that NFH nevertheless has an audit committee that satisfies the requirements of Sections 303A.06, complies with the disclosure requirements of Section 303A.11 and makes the certifications required by Sections 303A.12(b) and (c) of the Listing Rules. NFH has not yet determined the extent to which it may elect to rely on this exemption. Accordingly, former NFC shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE.
NFH may be subject to additional reporting requirements if it loses its status as a foreign private issuer.
If NFH loses its status as a foreign private issuer at some future time, then it will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if it were a company incorporated in the United States. The costs incurred in fulfilling these additional regulatory requirements could be substantial.
U.S. investors may be unable to enforce certain judgments against NFH because it is incorporated and expects to perform substantially all of its business outside of the U.S.
NFH is incorporated under the laws of the Cayman Islands and expects to do substantially all of its business in China. Some of NFH’s directors and executive officers are expected to be residents of China and a significant portion of its assets are expected to be located outside the United States. As a result, it may be difficult to effect service within the United States upon NFH or upon some of its directors and executive officers. Execution by U.S. courts of any judgment obtained against NFH or any of its directors
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or executive officers in U.S. courts may be limited to assets located in the United States. It may also be difficult for holders of securities who reside in the United States to realize in the United States upon judgments of U.S. courts predicated upon civil liability of NFH and its directors and executive officers under the U.S. federal securities laws. There may be doubt as to the enforceability in the Cayman Islands and/or China against non-U.S. entities or their controlling persons, directors and executive officers who are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities predicated solely upon U.S. federal or state securities laws.
Risks Relating to NFC and the Business Combination
If we are not able to complete an initial business combination, we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate the trust account, in which case our public shareholders may only receive approximately $10.00 per share (or less than $10.00 per share in certain circumstances where a third party brings a claim against NFC that its Sponsor is unable to indemnify), and our warrants will expire worthless.
Our Current Charter provided that we will have only until July 3, 2020 to complete our initial business combination. If we are unable to complete our initial business combination by July 3, 2020, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption pursuant to clause (ii), the founder shares held by our initial shareholders, excluding the Sponsor, shall be automatically surrendered by such initial shareholders, without any further action required on the part of such initial shareholders, for no consideration so that the Sponsor shall be the sole shareholder prior to the Company entering into voluntary liquidation; and (iv) thereafter, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case, to our obligations under Cayman Islands Law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. In such case, our public shareholders may only receive approximately $10.00 per share, and our warrants will expire worthless.
NFC’s initial shareholders, anchor investors and their affiliates may elect to purchase shares or public warrants from public shareholders, which may result in the completion of the business combination when it may not otherwise have been possible and reduce the public “float” of our ordinary shares.
NFC’s initial shareholders, anchor investors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of the business combination, although they are under no obligation to do so. Such purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the initial shareholders, anchor investors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the Business Combination. This may result in the completion of our Business Combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our ordinary shares and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of  $0.01 per warrant, provided that the closing price of our ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day
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period ending on the third trading day prior to proper notice of such redemption. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders to (i) exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the warrants at the then-current market price when the holder might otherwise wish to hold the warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. None of the warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.
Even if we consummate the business combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.
The exercise price for the outstanding warrants is $11.50 per ordinary share. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.
Certain of NFC’s initial directors and officers and certain other shareholders have agreed to vote certain of their shares in favor of the business combination, regardless of how our public shareholders vote.
Unlike many other blank check companies in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, our initial shareholders and certain other shareholders have agreed to vote certain of the ordinary shares owned by them in favor of the Business Combination Proposal and the other proposals described in this proxy statement. As of the date hereof, certain NFC shareholders, collectively owning approximately 44.5% of NFC’s outstanding ordinary shares, have agreed to vote any NFC ordinary shares held by them in favor of the business combination at the general meeting. These agreements are as follows: (i) NFC’s directors and executive officers at the time of its initial public offering and the Sponsor, who collectively own 26.2% of the outstanding NFC ordinary shares as of the date hereof, entered into a letter agreement at the time of NFC’s initial public offering pursuant to which they agreed to vote any NFC ordinary shares held by them in favor of the business combination; (ii) the anchor investors, who collectively own 3.4% of NFC’s outstanding ordinary shares as of the date hereof  (excluding shares owned by Messrs. Leung and Wu and those anchor investors who executed Support Agreements), entered into Forward Purchase Agreements pursuant to which they agreed to vote any NFC Class B ordinary shares held by them in favor of the business combination; and (iii) certain NFC shareholders, who collectively own approximately 15.0% of NFC’s outstanding ordinary shares as of the date hereof  (excluding shares owned by the Sponsor and Messrs. Leung and Wu), entered into Support Agreements with HH GP pursuant to which they have agreed to vote any NFC ordinary shares in favor of the business combination at the general meeting. Accordingly, it is more likely that the necessary shareholder approval will be received for the business combination than would be the case if such shareholders agreed to vote any ordinary shares owned by them in accordance with the majority of the votes cast by our public shareholders.
Directors of NFC have potential conflicts of interest in recommending that shareholders vote in favor of approval of the business combination and approval of the other proposals described in this proxy statement.
When considering NFC’s board of directors’ recommendation that its shareholders vote in favor of the approval of the business combination, NFC’s shareholders should be aware that directors and executive officers of NFC have interests in the business combination that may be different from, or in addition to, the interests of NFC’s shareholders. These interests include:

If we do not consummate a business combination transaction by July 3, 2020, we will cease all operations except for the purpose of winding up, redeem all of the issued and outstanding public shares for cash and, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under the Cayman Islands Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 11,712,500 founder shares owned by our initial shareholders and the anchor investors would be worthless because following the redemption of the public shares, we would likely have few, if
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any, net assets and because our initial shareholders and the anchor investors have agreed to waive their rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete a business combination within the required period. The Sponsor purchased its founder shares prior to NFC’s initial public offering for an aggregate purchase price of  $25,000. In addition, the Sponsor has indicated its intention to waive its right to have its founder shares converted into a greater number of NFC Class A ordinary shares in respect of the issuance of shares in the Equity Offering (which waiver automatically applies to all of the NFC Class B ordinary shares held by the Anchor Investors). As such, upon the Closing, the founder shares will automatically convert, on a one-for one basis, into NFC Class A ordinary shares, and such securities, if unrestricted and freely tradable would be valued at approximately $119,350,375 based on the closing price of  $10.19 share of NFC Class A ordinary shares on the NYSE on October 23, 2019.

Simultaneously with the closing of NFC’s initial public offering, the Sponsor purchased 7,750,000 private placement warrants for $1.00 per warrant. The warrants are each exercisable commencing 30 days following the Closing for one NFC Class A ordinary share at $11.50 per share. If we do not consummate a business combination transaction by July 3, 2020, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public shareholders and the warrants held by the Sponsor will be worthless. The warrants held by the Sponsor had an aggregate market value of approximately $9,300,000 based upon the closing price of  $1.11 per warrant on the NYSE on October 23, 2019.

In order to protect the amounts held in the trust account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the trust account below the lesser of  (i) $10.00 per public share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes payable. This liability will not apply with respect to any claims by a third -party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of NFC’s initial public offering against certain liabilities, including liabilities under the Securities Act.

In order to finance transaction costs in connection with the business combination, the Sponsor may, but is not obligated to, loan us funds as may be required. If we complete the business combination, then we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that the business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the trust account would be used to repay such loaned amounts. Up to $2,000,000 of such loans may be convertible into warrants of the post-business combination company at a price of  $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.

Following the consummation of the business combination, we will continue to indemnify our existing directors and officers and will maintain our directors’ and officers’ liability insurance.

Following consummation of the business combination, the initial shareholders and their respective affiliates would be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by NFC from time to time, made by the Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. However, if we fail to consummate a business combination within the required period, the Sponsor and our officers and directors and their respective affiliates will not have any claim against the trust account for reimbursement. As of the date of this proxy statement, have not incurred any reimbursable expenses.
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The anticipated continuation of five of our existing directors, Antony Leung, Carl Wu, David Johnson, Edward Leong Che-hung and Frederick Ma Si-hang, as directors of NFH after the consummation of the business combination and, if the Director Election Proposal is passed, David Zeng, the Sponsor’s nominee, will also serve on NFH’s board of directors. As such, in the future they will receive any cash fees, stock options or stock awards that the NFH board of directors determines to pay to its directors.
These financial interests of our initial shareholders and entities affiliated with them may have influenced their decision to approve the business combination. You should consider these interests when evaluating the business combination and the recommendation of NFC’s board of directors to vote in favor of the Business Combination Proposal and other proposals to be presented to the shareholders.
Our shareholders will experience immediate dilution as a consequence of the issuance of ordinary shares as consideration in the business combination. Having a minority share position may reduce the influence that our current shareholders have on the management of NFC.
It is anticipated that, upon completion of the business combination, the ownership interests in NFH will be as set forth in the table below.
Assuming No
Redemptions of
Public Shares
Assuming
Maximum
Redemptions of
Public Shares
NFC’s public shareholders(1)
22% 7%
Initial Shareholders(2)
7% 8%
Anchor Investors(2)(3)
16% 17%
PIPE Investors
43% 56%
Fosun Seller and Roberta Lipson
11% 11%
Management Sellers
1% 1%
(1)
Includes 900,000 NFC Class A ordinary shares underlying the public units held by Antony Leung and Carl Wu.
(2)
Assumes that the Sponsor waives its right to have its NFC Class B ordinary shares converted into a greater number of NFC Class A ordinary shares in respect of the issuance of shares in the Equity Offering (which waiver automatically applies to all of the NFC Class B ordinary shares held by the Anchor Investors), which the Sponsor has indicated its intention to do.
(3)
Includes the NFC ordinary shares to be issued to Antony Leung and Carl Wu at Closing in accordance with the Forward Purchase Agreements entered into by each of them.
There are currently outstanding an aggregate of 22,125,000 warrants to acquire NFC Class A ordinary shares, which includes 7,750,000 private placement warrants issued to the Sponsor at the time of the initial public offering and 14,375,000 public warrants. In addition, we expect to issue at the Closing an aggregate of 4,750,000 forward purchase warrants to the anchor investors pursuant to the Forward Purchase Agreements. Therefore, as of the filing date of this proxy statement, if we assume that each outstanding whole warrant is exercised and one NFC Class A ordinary share is issued as a result of such exercise, with payment to NFC of the exercise price of  $11.50 per share for applicable warrants, NFC’s fully-diluted share capital would increase by a total of 26,875,000 shares, with $309,062,500 paid to NFC to exercise the warrants.
The Sponsor will have significant influence over us after completion of the business combination.
Upon completion of the business combination, assuming no NFC shareholders redeem their public shares, the Sponsor will beneficially own approximately 12.4% of NFH ordinary shares (including warrants to purchase ordinary shares). Prior to or concurrently with the Closing, the Sponsor also intends to enter into (i) certain irrevocable proxies with certain shareholders, pursuant to which each such shareholder will agree to grant an irrevocable proxy to the Sponsor to exercise all voting rights attaching to any NFH
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ordinary shares held by such shareholders at all shareholder meetings of NFH, and (ii) certain director support agreements with certain shareholders, pursuant to which each such shareholder will agree to, at any shareholder meeting of NFH, vote all of the NFH ordinary shares directly or indirectly owned or controlled by such shareholder or its affiliates or over which such shareholder or any of its affiliates has voting power to elect each and every person who is nominated by the Sponsor or whom is voted in favor of by the Sponsor to serve as a director of NFH. As a result of the entry into the aforementioned agreements, the Sponsor will have the power to indirectly control approximately 38.0% of the outstanding NFH ordinary shares, assuming no NFC shareholders redeem their public shares. As long as the Sponsor owns or controls a significant percentage of outstanding voting power of NFH, it will have the ability to strongly influence all corporate actions requiring shareholder approval.
In addition, pursuant to the Sponsor Director Nomination Agreement, the Sponsor will have the right to nominate that number of directors for election to NFH’s board of directors equal to the total number of directors to be nominated, less the number of directors nominated by Vivo, Fosun Seller and Roberta Lipson pursuant to the terms of the Vivo Director Nomination Agreement, the Fosun Director Nomination Agreement and the Lipson Employment Agreement, respectively. For additional information, see “The Business Combination Proposal – Related Agreements — SponsorDirector Nomination Agreement.”
As a result, the Sponsor’s interests may not align with the interests of our other shareholders. The Sponsor is affiliated with NFG, which is in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us. The Sponsor may also pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our Proposed Charter provides that we renounce any interest or expectancy in the business opportunities of the Sponsor and its directors, managers, officers, members, partners, managing members, employees and/or agents and each such party shall not have any obligation to offer us those opportunities unless presented to one of our directors or officers in his or her capacity as a director or officer.
Our Proposed Charter provides that we will waive any interest or expectancy in corporate opportunities presented to NFG, Fosun Seller, Vivo and their respective affiliates and representatives, including the Sponsor.
Our Proposed Charter provides that we renounce and waive any interest or expectancy in, or in being offered an opportunity to participate in, corporate opportunities that are from time to time presented to NFG, Fosun Seller, Vivo and their respective affiliates and representatives, including the Sponsor, even if the opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. None of NFG, Fosun Seller, Vivo and their respective affiliates and representatives will generally be liable to us for breach of any fiduciary or other duty, as a director or otherwise, by reason of the fact that such person pursues, acquires or participates in such corporate opportunity, directs such corporate opportunity to another person or fails to present such corporate opportunity, or information regarding such corporate opportunity, to us unless, in the case of any such person who is a director or officer, such corporate opportunity is expressly offered to such director or officer solely in his or her capacity as a director or officer. This will allow NFG, Fosun Seller and Vivo to compete with us. Strong competition for investment opportunities could result in fewer such opportunities for us. We likely will not always be able to compete successfully with our competitors and competitive pressures or other factors may also result in significant price competition, particularly during industry downturns, which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Our directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.
The Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, in each case less income taxes payable, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except
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as to any claims under our indemnity of the underwriters of NFC’s initial public offering against certain liabilities, including liabilities under the Securities Act. While we currently expect that our independent directors would take legal action on our behalf against the Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.00 per share.
If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
Our Board may be limited in its ability to defend against an unsolicited takeover attempt by Fosun Seller or its affiliates.
In accordance with the terms of the Fosun Rollover Agreement, we agreed not to establish a shareholder rights plan, rights agreement, “poison pill,” or similar anti-takeover arrangement that would limit the ability of Fosun Seller or any of its affiliates from acquiring or transferring ordinary shares, in each case, without the prior written consent of Fosun Seller and unanimous approval of our board of directors. This arrangement could limit the ability of our board of directors to take certain types of defensive actions against a potential takeover attempt by the Fosun Seller or its affiliates, even if our board believes that, in the absence of this arrangement, these types of defensive actions would be in the best interests of our company.
The business combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.
The completion of the business combination is subject to a number of conditions. The completion of the business combination is not assured and is subject to risks, including the risk that approval of the business combination by NFC’s shareholders is not obtained or that there are not sufficient funds in the trust account, in each case subject to certain terms specified in the Transaction Agreement (as described under “The Transaction Agreement — Conditions to Closing”), or that other closing conditions are not satisfied. If NFC does not complete the business combination, it could be subject to several risks, including:

the parties may be liable for damages to one another under the terms and conditions of the Transaction Agreement;

negative reactions from the financial markets, including declines in the price of NFC’s shares due to the fact that current prices may reflect a market assumption that the business combination will be completed; and

the attention of our management will have been diverted to the business combination rather than our own operations and pursuit of other potentially beneficial opportunities.
NFC or the Sellers may waive one or more of the conditions to the business combination, which could impact the combined company’s capital structure.
NFC or the Sellers may agree to waive, in whole or in part, one or more of the conditions to its obligations to complete the business combination. For example, NFC or the Sellers may agree to waive the condition relating to the Necessary Cash condition. Alternatively, the parties to the Transaction Agreement may waive one or more covenants to permit UFH or their subsidiaries to incur additional debt or equity
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financing in addition to that contemplated by the Debt Financing. If the parties to the Transaction Agreement waive one or more of the conditions to the business combination, the combined company’s capital structure may differ from the one described in this proxy statement. NFC is not able to waive the condition that its shareholders approve the business combination.
Our actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this proxy statement.
The unaudited pro forma condensed combined financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the business combination been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
Following the consummation of the business combination, our only significant asset will be ownership of 100% of UFH, which may not be able to pay dividends or make distributions to enable us to pay any dividends on our ordinary shares or to satisfy our other financial obligations.
Following the consummation of the business combination, we will have no direct operations and no significant assets other than the ownership of 100% of UFH. We will depend on UFH for distributions and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company, and to pay any dividends with respect to our ordinary shares. The earnings from, or other available assets of, UFH may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our ordinary shares or satisfy our other financial obligations.
The Chinese government imposes strict controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of foreign currencies out of China. The principal regulation governing foreign currency exchange in China is the Regulations of China on Foreign Exchange Administration, as amended in 2008, or the Foreign Exchange Regulations. Under the Foreign Exchange Regulations and other relevant regulations and rules, including Explanations to Regulations on Foreign Exchange Sale, Purchase and Payment (1996), RMB are freely convertible for “current account” transactions, including the distribution of dividends and interest payments, subject to the condition that the remittance of such dividends outside of China complies with certain procedures under Chinese foreign exchange regulation. In order to convert RMB for “capital account” transactions, such as capital injections and loans outside China, the prior approval of, or registration with, the Chinese State Administration of Foreign Exchange, or “SAFE” or its authorized local branches is required.
Under the current regulatory regime in China, both domestically-funded enterprises and foreign-invested enterprises in China may pay dividends only out of their after-tax profit, if any, determined in accordance with Chinese accounting standards and regulations. UFH’s wholly foreign-owned enterprises and domestically-funded enterprises in China are required to set aside as statutory reserve funds at least 10% of its after-tax profit, until the cumulative amount of such reserve funds reaches 50% of its registered capital, whereas UFH’s equity joint venture (EJV) subsidiaries and cooperative joint venture (CJV) subsidiaries have discretion in deciding on the percentage of reserve funds and other funds. Domestically-funded enterprises, wholly foreign-owned enterprises, EJVs and CJVs shall not distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. For a discussion of the impact of these rules on UFH, please see the section entitled “Risk Factors — Changes in the Foreign Investment Law and regulatory regime could have an impact on the transactions and the operation of UFH’s business.
Subsequent to the consummation of the business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
Although NFC has conducted due diligence on UFH, NFC cannot assure you that this diligence revealed all material issues that may be present in UFH’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of NFC’s or UFH’s
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control will not later arise. As a result, NFC may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if the due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that NFC reports charges of this nature could contribute to negative market perceptions about NFC or its securities. In addition, charges of this nature may cause NFC to violate net worth or other covenants to which it may be subject. Accordingly, any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
If the benefits of the business combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline.
If the benefits of the business combination do not meet the expectations of investors or securities analysts, the market price of NFC’s securities prior to the Closing may decline. The market values of NFC’s securities at the time of the business combination may vary significantly from their prices on the date the Transaction Agreement was executed, the date of this proxy statement, or the date on which our shareholders vote on the business combination. Because the number of shares to be issued pursuant to the Transaction Agreement will not be adjusted to reflect any changes in the market price of NFC’s ordinary shares, the market value of the ordinary shares issued in the business combination may be higher or lower than the values of these shares on earlier dates.
In addition, following the business combination, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the business combination, trading in NFC Class A ordinary shares has not been active. Accordingly, the valuation ascribed to UFH in the business combination may not be indicative of the price that will prevail in the trading market following the business combination. If an active market for our securities develops and continues, the trading price of our securities following the business combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
Factors affecting the trading price of NFC’s securities may include:

actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

changes in the market’s expectations about our operating results;

success of competitors;

our operating results failing to meet the expectation of securities analysts or investors in a particular period;

changes in financial estimates and recommendations by securities analysts concerning NFC or the industries in which NFC operates in general;

operating and stock price performance of other companies that investors deem comparable to NFC;

our ability to market new and enhanced products on a timely basis;

changes in laws and regulations affecting our business;

commencement of, or involvement in, litigation involving NFC;
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changes in NFC’s capital structure, such as future issuances of securities or the incurrence of additional debt;

the volume of our ordinary shares available for public sale;

changes in our board or management;

sales of substantial amounts of ordinary shares by our directors, executive officers or significant shareholders or the perception that such sales could occur; and

general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock markets in general, and the NYSE in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to NFC could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.
Following the business combination, the price of our securities may fluctuate significantly due to the market’s reaction to the business combination and general market and economic conditions. An active trading market for our securities following the business combination may never develop or, if developed, it may not be sustained. In addition, the price of our securities after the business combination can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities are not listed on, or become delisted from, the NYSE for any reason, and are quoted in the over-the-counter market, the liquidity and price of our securities may be more limited than if we were quoted or listed on the NYSE or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
There can be no assurance that we will be able to comply with the continued listing standards of the NYSE.
Our ordinary shares and warrants will be listed on the NYSE following the business combination. Our continued eligibility for listing may depend on the number of our shares that are redeemed. If, after the business combination, the NYSE delists our ordinary shares from trading on its exchange for failure to meet the listing standards, we and our shareholders could face significant material adverse consequences including:

a limited availability of market quotations for our securities;

a determination that our ordinary shares are a “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;

a limited amount of analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.
We will incur significant transaction and transition costs in connection with the business combination.
We have and we expect to incur significant costs in connection with consummating the business combination and operating as a public company following the consummation of the business combination. All expenses incurred in connection with the Transaction Agreement and the transactions contemplated
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thereby (including the business combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs, subject to our agreement in the Transaction Agreement.
Our transaction expenses as a result of the business combination are currently estimated at approximately $30.0 million, including approximately $6.91 million in deferred underwriting commissions to the underwriters of NFC’s initial public offering.
Following the consummation of the business combination, the combined company will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
Following the consummation of the business combination, the combined company will face increased legal, accounting, administrative and other costs and expenses as a public company that UFH does not incur as a private company. The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. Although UFH was previously operated as a public company, there may still be some requirements which will require the combined company to carry out activities that UFH management has not done previously. For example, the combined company will create new board committees and adopt new internal controls and disclosure controls and procedures. In addition, additional expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if the auditors identify a material weakness or significant deficiency in the internal control over financial reporting), the combined company could incur additional costs rectifying those issues, and the existence of those issues could adversely affect the combined company’s reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability insurance. Risks associated with the combined company’s status as a public company may make it more difficult to attract and retain qualified persons to serve on the board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require the combined company to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
The combined company’s failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it after the business combination is consummated could have a material adverse effect on its business.
UFH is not currently subject to Section 404 of the Sarbanes-Oxley Act. However, following the consummation of the business combination, the combined company will be required to provide management’s attestation on internal controls. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required of UFH as a privately-held company. Although management has operated under procedures required by the Sarbanes-Oxley Act in the past, they may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable after the business combination. If the combined company is not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, it may not be able to assess whether its internal controls over financial reporting are effective, which may subject it to adverse regulatory consequences and could harm investor confidence and the market price of its securities.
NFH may experience difficulties integrating UFH management and operations with NFC management and operations
The proposed business combination requires the integration of UFH, a healthcare services company, with NFC, a special purpose acquisition company with limited operations. These two companies have significantly different histories, growth, management, scale, and strategic focus. Growth of the post-business
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combination company may be adversely affected by how well and in what way the two separate companies integrate and restructure themselves, and may include human resource issues, reporting structure changes, or other issues. If the two companies experience problems with integration, a decrease in operational efficiency and/or other unknown factors may negatively impact NFH’s business outlook.
Our credit facilities will contain certain financial and other covenants. The failure to comply with such covenants could have an adverse effect on us.
The Senior Loan Commitment Letter sets out restrictions on, among others, transactions between the borrower, Chindex and its subsidiaries (each, a “Chindex Group Member”) and HHH Inc. and its subsidiaries (each, a “HHH Group Member” and together the “HHH Group”), including: (i) restrictions on material transactions of any Chindex Group Member with any HHH Group Member except on arm’s length terms or better (from the perspective of the Chindex Group Member) subject to exceptions to be agreed, (ii) restrictions on loans, credits or guarantees to be made by any Chindex Group Member or any HHH Group Member, subject to exceptions to be agreed (including, amongst others, any intercompany loans made by or guarantees granted by (x) a Chindex Group Member to or in favor of another Chindex Group Member or a HHH Group Member or (y) by a HHH Group Member in respect of the obligations of, to or in favor of, NFC or any of its subsidiaries (together, the “NFC Group”), provided that, amongst others, no Chindex Group Member shall provide any guarantee to or in favor of any HHH Group Member, and (iii) the aggregate amount of intercompany loans or entrustment loans made by a Chindex Group Member using operating cash flow generated after the Closing Date to a HHH Group Member shall be subject to the General Basket (defined below). Separately, there are general restrictions (i) that the aggregate consideration paid by the Chindex Group Members for any permitted acquisitions and permitted joint ventures to or in respect of any HHH Group Member and the aggregate intercompany loans made by the Chindex Group Members to the HHH Group Members shall not at any time exceed RMB800,000,000 or the equivalent during the life of the Senior Secured Term Loan, except for (x) any equity injection or shareholder loan made by NFC (or its affiliate) to any Chindex Group Member, and (y) an aggregate amount up to US$150,000,000 funded by NFC (or its affiliate) to any Chindex Group Member by way of the equity injection, which is further provided by such Chindex Group Member to any HHH Group Member by way of equity injection or intercompany loan for the purpose of financing or refinancing the capital expenditure of HHH Group (the “General Basket”), and (ii) in respect of each Chindex Group Member, the making of any permitted acquisition, joint venture investment or restricted payment, or the provision of intercompany loans, entrustment loans or guarantees permitted under the credit agreement related to the Senior Secured Term Loan, shall not have any material adverse effect on the borrower’s ability to comply with its payment obligations under the finance documents, or in respect of any operating expenses in the ordinary course of business in any material respect, or its ability to comply with financial covenants under the credit agreement related to the Senior Secured Term Loan.
In addition, the credit agreement related to the Senior Secured Term Loan will contain certain financial and other general covenants including a net leverage ratio covenant, and limitations on, among other things, liens or security, financial indebtedness, merger, acquisitions, joint venture, change of business, payment of dividends and other distributions of its share capital, provision of loans, credit or guarantee, and disposal of assets. Any failure to comply with the restrictions of the credit facilities may result in an event of default under the credit agreement, and we may then be required to repay such debt with capital from other sources. The contemplated credit agreement will bear interest at variable rates. If benchmark interest rates designated thereunder increase, variable rate debt will create higher debt service requirements, which could adversely affect our cash flow.
The final terms of the Senior Secured Term Loan will be documented in a credit agreement to be entered into by, among others, NFC and/or its wholly owned subsidiaries (including NF Unicorn Chindex Holding Limited), as borrower, and SPDB, and are subject to adjustment in accordance with the terms of the Senior Loan Commitment Letter.
The credit agreement and other documentation governing the Senior Secured Term Loan has not been finalized and, accordingly, the actual terms of the Senior Secured Term Loan may differ from those described herein or in the Senior Loan Commitment Letter as a result of the negotiation and syndication process.
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We may need additional capital in the future, and it may not be available on acceptable terms.
Following the business combination, we may need to access the debt and equity capital markets. However, these sources of financing may not be available on acceptable terms, or at all. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance, investor sentiment and ability to incur additional debt in compliance with agreements governing our then-outstanding debt. These factors may make the timing, amount, terms or conditions of additional financings unattractive to us. If we are unable to generate sufficient funds from operations or raise additional capital, our growth could be impeded.
Risks Relating to Redemptions
Pursuant to the Transaction Agreement, NFC may not be able to consummate the business combination in the event redemptions exceed the amount of cash necessary to pay the cash portion of the merger consideration and make other required cash payments at closing.
The Current Charter do not provide a specified maximum redemption threshold, other than in no event will NFC redeem public shares in an amount that would cause NFC’s net tangible assets to be less than $5,000,001 (such that NFC is not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to NFC’s initial business combination. The Transaction Agreement includes as a condition to the Closing that NFC be able to satisfy the Necessary Cash condition. As a result, NFC may not be able to complete the business combination if a substantial number of its shareholders elect to redeem their shares. However, as a result of the (i) Equity Financing; (ii) Debt Financing; (iii) Forward Purchase Agreements; and (iv) shareholders holding approximately $90 million of our public shares agreeing not to redeem such shares pursuant to the Support Agreements, even if all of NFC’s public shareholders elect to redeem their shares in connection with the general meeting, NFC will still have sufficient funds available to consummate the business combination.
Warrants will become exercisable for ordinary shares, which would increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders.
There are currently outstanding an aggregate of 22,125,000 warrants to acquire NFC Class A ordinary shares, which includes 7,750,000 private placement warrants issued to the Sponsor at the time of the initial public offering and 14,375,000 public warrants. In addition, we expect to issue at the Closing an aggregate of 4,750,000 forward purchase warrants to the anchor investors pursuant to the Forward Purchase Agreements. Therefore, As of the filing date of this proxy statement, if we assume that each outstanding whole warrant is exercised and one NFC Class A ordinary share is issued as a result of such exercise, with payment to NFC of the exercise price of  $11.50 per share for applicable warrants, NFC’s fully-diluted share capital would increase by a total of 26,875,000 shares, with $309,062,500 paid to NFC to exercise the warrants. To the extent such warrants are exercised, additional ordinary shares will be issued, which will result in dilution to the holders of our ordinary shares and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our ordinary shares.
If you or a “group” of shareholders of which you are a part are deemed to hold an aggregate of more than 20.0% of NFC’s NFC Class A ordinary shares issued in the initial public offering, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 20.0% of NFC Class A ordinary shares issued in its initial public offering.
A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the NFC Class A ordinary shares included in the units sold in the initial public offering. NFC refers to such shares in excess of an aggregation of 20% or more of the shares sold in the initial public offering as “shares exceeding the 20% threshold.” In order to determine whether a shareholder is acting in concert or as a group with another shareholder, NFC will require each public shareholder seeking to exercise redemption rights to certify to NFC whether such shareholder is acting in concert or as a group with any other shareholder. Such certifications, together with other public information relating to stock ownership
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available to NFC at that time, such as Section 13D, Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which NFC makes the above-referenced determination. Your inability to redeem any shares exceeding the 20% threshold will reduce your influence over NFC’s ability to consummate the business combination and you could suffer a material loss on your investment in NFC if you sell shares exceeding the 20% threshold in open market transactions. Additionally, you will not receive redemption distributions with respect to the shares exceeding the 20% threshold if NFC consummates the business combination. As a result, you will continue to hold such shares and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss. Notwithstanding the foregoing, shareholders may challenge NFC’s determination as to whether a shareholder is acting in concert or as a group with another shareholder in a court of competent jurisdiction.
If our shareholders fail to comply with the redemption requirements specified in this proxy statement, they will not be entitled to redeem their ordinary shares for a pro rata portion of the trust account.
In order to exercise their redemption rights, holders of public shares are required to submit a request in writing and deliver their shares (either physically or electronically) to our transfer agent by [         ] p.m. Eastern Time on [         ], 2019 as further described in this proxy statement. If a holder of public shares does not follow the procedures specified in this proxy statement for redemptions, such public shares will not be redeemed in connection with the Closing. There will be no further redemption rights following the Closing.
There is no guarantee that a shareholder’s decision whether to redeem its shares for a pro rata portion of the trust account will put the shareholder in a better future economic position.
NFC can give no assurance as to the price at which a shareholder may be able to sell its public shares in the future following the completion of the business combination or any alternative initial business combination. Certain events following the consummation of any initial business combination, including the business combination, may cause an increase in the share price of NFH relative to NFC’s share price, and may result in a lower value realized now than a shareholder of NFC might realize in the future had the shareholder redeemed its shares. Similarly, if a shareholder does not redeem its shares, the shareholder will bear the risk of ownership of the shares in NFH after the consummation of any initial business combination, and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement. A shareholder should consult the shareholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.
Risks Relating to Tax Matters
The Internal Revenue Service may not agree that NFH should be treated as a non-U.S. corporation for U.S. federal tax purposes and may not agree that any U.S. subsidiaries, including Chindex, should not be subject to certain adverse U.S. federal income tax rules.
Under current U.S. federal tax law, a corporation is generally considered for U.S. federal tax purposes to be a tax resident in the jurisdiction of its organization or incorporation. Because NFH is a Cayman Islands incorporated entity, it would generally be classified as a non-U.S. corporation (and, therefore, a non-U.S. tax resident) under these rules. However, Section 7874 (“Section 7874”) of the Internal Revenue Code of 1986, as amended (the “Code”) provides an exception to this general rule under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal tax purposes.
Under Section 7874, if  (1) the Reinvestment Sellers own (within the meaning of Section 7874) 80% or more (by vote or value) of the ordinary shares of NFH after the business combination by reason of indirectly holding Chindex common stock (the “80% ownership test,” and such ownership percentage the “Section 7874 ownership percentage”) taking into account the Treasury regulations on “disqualified stock” that are expected to exclude the shares of NFC issued to the NFC shareholders from the calculation of the Section 7874 ownership percentage, and (2) NFH’s “expanded affiliated group” does not have “substantial business activities” in the Cayman Islands (the “substantial business activities test”), NFH will be treated as a U.S. corporation for U.S. federal tax purposes. If the Section 7874 ownership percentage
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of the Reinvestment Sellers in NFH after the business combination is less than 80% but at least 60% (the “60% ownership test”), and the substantial business activities test is not met, Chindex and any U.S. affiliates may, in some circumstances, be subject to certain adverse U.S. federal income tax rules (which, among other things, could limit their ability to utilize certain U.S. tax attributes to offset U.S. taxable income or gain resulting from certain transactions and subject Chindex to a recapture tax with respect to the transition tax applicable to certain foreign subsidiaries).
Based on the terms of the business combination, the rules for determining share ownership under Section 7874 and certain factual assumptions, the Reinvestment Sellers are expected to own (within the meaning of Section 7874) less than 60% (by both vote and value) of the ordinary shares of NFH after the business combination by reason of indirectly holding shares of Chindex common stock. Therefore, under current law, it is expected that NFH should not be treated as a U.S. corporation for U.S. federal tax purposes and that Section 7874 should otherwise not apply to NFH or its affiliates as a result of the business combination.
However, the rules under Section 7874 are complex and there is limited guidance including with respect to the application of the ownership tests described above. In particular, ownership for purposes of Section 7874 is subject to various adjustments under the Code and the Treasury regulations promulgated thereunder. As a result, the determination of the Section 7874 ownership percentage is complex and is subject to factual and legal uncertainties. Furthermore, the percentage of ordinary shares held by reason of holding shares of Chindex common stock will depend on the relative valuation of HHH Inc. and Chindex. Valuation matters can be subjective, and the U.S. Internal Revenue Service (the “IRS”) may seek to challenge the valuation of such assets. Thus, there can be no assurance that the IRS will agree with the position that NFH should not be treated as a U.S. corporation for U.S. federal tax purposes or that Section 7874 does not otherwise apply as a result of the business combination.
If the 80% ownership test were met after the business combination and NFH were accordingly treated as a U.S. corporation for U.S. federal tax purposes under Section 7874, NFH would be subject to substantial additional U.S. tax liability. Additionally, in such case, non-U.S. shareholders of NFH would be subject to U.S. withholding tax on the gross amount of any dividends paid by NFH to such shareholders (subject to an exemption or reduced rate available under an applicable tax treaty).
If the 60% ownership test were met, several adverse U.S. federal income tax rules could apply to any U.S. affiliates of NFH. In particular, in such case, Section 7874 could limit the ability of such U.S. affiliates to utilize certain U.S. tax attributes (including net operating losses and certain tax credits) to offset any taxable income or gain resulting from certain transactions, including any transfers or licenses of property to a foreign related person during the 10-year period following the business combination. In such case, the application of such rules could result in significant additional U.S. tax liability. In addition, the Treasury regulations under Section 7874 (and certain related temporary regulations issued under other provisions of the Code) include rules that would apply if the 60% ownership test were met, which, in such situation, may limit NFH’s ability to restructure or access cash earned by certain of its non-U.S. subsidiaries, in each case, without incurring substantial U.S. tax liabilities. Moreover, in such case, Section 4985 of the Code and rules related thereto would impose an excise tax on the value of certain share compensation held directly or indirectly by certain “disqualified individuals” at a rate equal to 20%.
For a more detailed discussion of the application of Section 7874 to the business combination, see “U.S. Federal Income Tax Considerations — U.S. Federal Income Tax Consequences of the Business Combination to NFH.
Future changes to U.S. and non-U.S. tax laws could adversely affect NFH.
The U.S. Congress, the Organization for Economic Co-operation and Development and other government agencies in jurisdictions where NFH and its affiliates will conduct business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, China, the Cayman Islands and other countries in which NFH and its affiliates will do business could change on a prospective or retroactive basis, and any such changes could adversely affect NFH.
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There can be no assurance that NFC or, after the business combination, NFH will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of public shares and public warrants or, after the business combination, NFH ordinary shares and public warrants.
A non-U.S. corporation will be a passive foreign investment company (“PFIC”) for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of  “passive” income; or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”). If the Closing occurs on or before December 31, 2019, then based on the projected composition of NFH’s income and assets, and the projected valuation of NFH’s assets, including goodwill, NFC believes that it may not be a PFIC for 2018 because it may qualify for the startup exception.Pursuant to the startup exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income (the “startup year”), if  (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies to the IRS that it will not be a PFIC for either of the first two taxable years following the startup year; and (3) the corporation is not in fact a PFIC for either of those years. However, there is a significant risk that NFC or, after the business combination, NFH will be treated as a PFIC for 2019, and accordingly, NFC would not qualify for the startup exception and would be treated as a PFIC for 2018. The determination of whether NFC or NFH is or will become a PFIC is a fact-intensive inquiry made on an annual basis (and, in the case of the startup exception, may not be determined until after the two taxable years following NFC’s startup year) that depends, in part, upon the composition of NFC or NFH’s income and assets. Fluctuations in the market price of NFH’s ordinary shares may cause NFH to become a PFIC for the current or subsequent taxable years because the value of its assets for the purpose of the asset test may be determined by reference to the market price of its shares. Furthermore, because NFC was a blank check company with no active business in its first year of operation, it is expected that NFC would be a PFIC for 2018 unless NFC qualifies for the startup or other exception. If the Closing occurs after December 31, 2019, then based on the past and projected composition of NFC’s income and assets, NFC believes that it will be a PFIC for both the 2018 and 2019 taxable years. There can be no assurance with respect to NFC’s status as a PFIC for its startup year, NFC’s or, after the business combination, NFH’s status as a PFIC for the current taxable year or NFH’s status as a PFIC for any future taxable year.
If NFC or NFH were to be or become a PFIC for any taxable year during which a U.S. holder (as defined in “U.S. Federal Income Tax Considerations”) holds public shares, NFH ordinary shares or NFC public warrants, certain adverse U.S. federal income tax consequences could apply to such U.S. holder (although a holder of public shares or NFH ordinary shares may be eligible to make a mark-to-market election that would ameliorate some of those adverse consequences). See “U.S. Federal Income Tax Considerations — Passive Foreign Investment Company Status.”
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined financial statements of NFC present the combination of the financial information of NFC and UFH adjusted to give effect to the business combination. The following unaudited pro forma condensed combined financial information has been prepared in accordance with IFRS.
NFC is a blank check company incorporated on March 28, 2018 as a Cayman Islands exempted company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. NFC completed its IPO on July 3, 2018 generating gross proceeds of US$287,500,000. Simultaneously with the closing of NFC’s initial public offering, we completed the private sale of 7,750,000 private placement warrants to the Sponsor at a purchase price of  $1.00 per warrant, generating gross proceeds to the Company of US$7,750,000. Upon the closing of the IPO and the Private Placement, US$287,500,000 was placed in a U.S.-based trust account, and is invested in a money market fund selected by NFC until the earlier of: (i) the completion of the initial business combination or (ii) the redemption of NFC’s public shares if NFC is unable to complete a business combination by July 3, 2020, subject to applicable law. As of June 30, 2019, there was approximately US$293,902,478 held in the trust account. NFC Buyer Sub is a wholly-owned subsidiary of NFC formed under the laws of the Cayman Islands on June 17, 2019 solely for the purpose of effecting the business combination.
UFH is a leading internationally accredited healthcare provider committed to providing comprehensive and integrated healthcare services in urban centers in China. UFH and Healthy Harmony refers to United Family Healthcare, the business in which both Healthy Harmony Holdings, L.P. and Healthy Harmony GP, Inc. collectively operate as it currently exists. UFH’s patient base includes China’s rapidly growing upper middle class and expatriate communities. UFH operates its private healthcare facilities in mainland China. UFH generally transacts business in RMB, with some insurance reimbursements and financing transactions conducted in USD. UFH’s first healthcare facility, which opened in 1997 in Beijing, was approved by the government as an enterprise to improve the availability of healthcare services, an amenity to make China a more attractive target for foreign investment and foreign expatriate employees, and a testing ground for a new healthcare regulatory regime overseen by the Ministry of Health (MoH). Since the successful opening of this first Beijing hospital, UFH has expanded into several other Chinese markets, including the largest cities of Shanghai and Guangzhou. The following unaudited pro forma condensed combined balance sheet as of June 30, 2019 assumes that the business combination and related transactions occurred on June 30, 2019. The unaudited pro forma condensed combined statement of operations for six months ended June 30, 2019 and the year ended December 31, 2018 presents pro forma effect to the business combination and related transactions as if it had been completed on January 1, 2018.
The historical financial statements of Healthy Harmony have been prepared in accordance with IFRS as issued by the IASB and in its presentation currency of Renminbi (RMB). The historical financial statements of NFC have been prepared in accordance with GAAP in its functional and presentation currency of United States dollars. The financial statements of NFC have been translated into RMB for purposes of convenience translation in the unaudited pro forma combined financial information at a rate of RMB6.8755 to US$1.00 and RMB6.8650 to US$1.00, the respective exchange rates on December 31, 2018 and June 28, 2019 set forth in the H.10 statistical release of the Federal Reserve Board. Furthermore, the historical financial information of NFC has been adjusted to give effect to the differences between GAAP and IFRS as issued by the IASB. No adjustments were required to convert NFC’s financial statements from GAAP to IFRS for purposes of the unaudited pro forma condensed combined financial information, except to classify NFC’s common stock subject to redemption as non-current liabilities under IFRS.
The pro forma combined financial statements do not necessarily reflect what NFC’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. The pro forma combined financial information also may not be useful in predicting the future financial condition and results of operations of NFC. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
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This information should be read together with NFC’s and Healthy Harmony’s audited financial statements and related notes, the sections titled “NFC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Healthy Harmony’s Operating and Financial Review and Prospects” and other financial information included elsewhere in this proxy statement/prospectus.
The business combination will be accounted for under the scope of IFRS. NFC has been determined to be the accounting acquirer based on an evaluation of the following facts and circumstances:

NFC is transferring cash and equity consideration via the use of funds in their trust account and proceeds from equity issuances, and will be incurring liabilities to execute the business combination;

NFC’s shareholders as a group will have the largest voting interest (approximately 88%) in the combined entity under the no redemption and maximum redemption scenarios;

The combined company’s board of directors will initially consist of nine directors, seven of whom will be selected by or associated with NFC. Furthermore, NFC’s existing chairman of board of directors will remain in place as the chairman of the board of directors of the combined company.

Healthy Harmony’s senior management will comprise the senior management of the combined company, however, NFC will establish an executive committee to provide oversight to the combined company’s management team as they continue in their current roles; and

NFC was the entity that initiated the business combination.
These factors support the conclusion that NFC is the accounting acquirer in the business combination. Healthy Harmony constitutes a business in accordance with IFRS 3 and the business combination constitutes a change in control. Accordingly, the business combination will be accounted for using the acquisition method.
Description of the Business Combination
The following represents the aggregate consideration:
No redemptions and maximum redemptions
(in thousands)
RMB
US$
Gross Estimated Consideration
9,158,294 $ 1,334,056
Less: Proceeds from option strike price
(216,797) (31,580)
Net Estimated Consideration (a)
8,941,497 $ 1,302,476
Net Estimated Consideration consists of:
Cash to Seller (b)
7,849,962 $ 1,143,476
Rollover Equity – Fosun (c)
645,310 94,000
Rollover Equity – Lipson (c)
364,724 53,128
Rollover Equity – Others (c)
55,970 8,153
NFC Options (d)
15,343 2,235
NFC RSUs (d)
10,188 1,484
Net Estimated Consideration (a)
8,941,497 $ 1,302,476
(a)
Net purchase price of  $1.3 billion is calculated as the Purchase Price Per LP Interest (defined as $50.4928 in the Transaction Agreement) multiplied by the sum of the outstanding number of GP Interest Held, LP Interest Held, RSUs, and Options less unpaid strike costs of  $31.6 million related to the options.
(b)
Excludes the additional RMB 144.2 million (US $21 million) of cash related to the Fosun Expense Reimbursement Amount and Transaction Expenses Reimbursement Amount per the Transaction Agreement. These are separately accounted for outside of consideration.
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(c)
The final estimated merger consideration could significantly differ from the amounts presented in the unaudited pro forma condensed combined financial information due to movements in the NFC ordinary share price up to the Closing Date. For the purposes of this unaudited pro forma condensed combined financial information a price per share of  $10.00 was used as a proxy of fair value. The unaudited pro forma condensed combined financial information will be updated to reflect the Closing Date publicly traded price per NFC ordinary shares. A hypothetical 10% increase in the price of NFC ordinary shares (from USD$10/RMB 69 to USD$11/RMB 76) on the estimated merger consideration and goodwill assuming the minimum and maximum redemption scenarios would increase consideration and goodwill by RMB 106.6 million. A hypothetical 10% decrease in the price of NFC ordinary shares (from USD$10/RMB 69 to USD$9/RMB 62) on the estimated merger consideration and goodwill assuming the minimum and maximum redemption scenarios would decrease consideration and goodwill by RMB 106.6 million.
(d)
An aggregate number of NFC Options and NFC RSUs to be issued in connection with the conversion of unvested Partnership Options and Partnership RSUs at the Closing. The consideration calculates the fair value of the NFC Options using the difference between the Purchase Price Per LP Interest and the strike cost of the options multiplied by the number of Partnership Options remaining unvested. The calculation uses an exchange ratio for Partnership RSUs to NFC RSUs so that the estimates fair value exchanged remains consistent. The final fair value of this portion of the consideration to be updated on the Closing.
NFH will assume the outstanding International Finance Corporation (“IFC”) debt facilities. Upon TPG Seller, Fosun Seller and Roberta Lipson and their respective affiliates ceasing to collectively own 50% of the economic and voting interest in Healthy Harmony, IFC has the right to accelerate the prepayment according to the IFC Loan agreements. The purchase price paid at Closing will be based on an estimate of the amount of the foregoing adjustments and will be subject to a customary post-Closing true-up.
Financing for the business combination and for related transaction expenses will consist of:
No Redemptions
Maximum Redemptions
(in thousands)
RMB
US$
RMB
US$
Proceeds from debt financing
2,059,500 300,000 2,059,500 300,000
Cash held in trust (a)
2,017,641 293,902 628,802 91,595
Forward purchase agreements
1,304,350 190,000 1,304,350 190,000
Subscriptions 3,875,293 564,500 4,884,324 711,482
Roll-over equity and NFC RSUs and Options
1,091,535 159,000 1,091,535 159,000
Total sources of financing
10,348,319 1,507,402 9,968,511 1,452,077
Adjustments:
Ending cash from historical balance sheets (a)
500,630 72,925 500,630 72,925
Adjusted pro forma sources of financing
10,848,949 1,580,327 10,469,141 1,525,002
(a)
Cash in trust and cash from historical balance sheets of NFC and Healthy Harmony are as of June 30, 2019. The maximum redemption scenario reflects cash in trust after redemptions. Subject to change.
The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption into cash of NFC’s ordinary shares:

Assuming No Redemptions:   This presentation assumes that no NFC shareholders exercise redemption rights with respect to their public shares.

Assuming Maximum Redemptions:   This presentation assumes that all of NFC’s public shareholders will redeem except for shareholders holding 8,960,000 shares who agreed to not exercise their redemption rights with respect to their public shares pursuant to Support Agreements (as defined below). Furthermore, NFC will only proceed with the business combination if it will have net tangible assets of at least $5,000,001 upon consummation of the business combination and if there is sufficient cash (defined as Necessary Cash), after giving effect
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to any redemptions, to pay the cash portion of the merger consideration and make other required cash payments at closing. This scenario assumes that Necessary Cash is met and that 19,790,000 shares are redeemed for a redemption payment of RMB 1,388,838,000 (US$202,307,000), based on RMB 2,017,641,000 (US$293,902,478) of cash in trust and 28,750,000 public shares outstanding which results in a redemption per share price of RMB 70.18 (UD$10.22).
The following summarizes the pro forma ordinary shares outstanding under the two scenarios:
Assuming
No Redemptions
Assuming
Maximum Redemption
Shares
%
Shares
%
Shares held by NFC’s public shareholders
28,750 22% 8,960 7%
Shares held by Sponsor
9,563 7% 9,563 8%
Shares held by Anchor Investors (a)
21,375 16% 21,375 17%
Shares issued for Subscription Agreements
56,450 43% 71,148 56%
NFC Shareholders
116,138 88% 111,046 88%
Shares issued for Fosun and Lipson Rollover
14,713 11% 14,713 11%
Shares issued for Other Rollover
815 1% 815 1%
Healthy Harmony
15,528 12% 15,528 12%
Closing merger shares
131,666 100% 126,574 100%
(a)
Includes shares issued pursuant to Forward Purchase Agreements that close concurrently with the business combination
The following unaudited pro forma condensed combined balance sheet as of June 30, 2019 and the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2019 and year ended December 31, 2018 are based on the historical financial statements of NFC and Healthy Harmony. The historical financial information of NFC has been adjusted to give effect to the differences between GAAP and IFRS and translated into RMB for the purposes of the combined unaudited pro forma financial information. No adjustments were required to convert NFC’s financial statements from GAAP to IFRS for purposes of the combined unaudited pro forma financial information, except to classify NFC Class A ordinary shares subject to redemption as non-current liabilities under IFRS. The adjustments presented in the unaudited pro forma combined financial information have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company after giving effect to the business combination and related transactions. The unaudited pro forma adjustments are based on information currently available, assumptions, and estimates underlying the unaudited pro forma adjustments and are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands, RMB)
As of June 30, 2019
As of June 30, 2019
As of June 30, 2019
NFC
(IFRS)
(1)
Healthy
Harmony
(IFRS)
(Historical)
Combined
Purchase
Accounting
Adjustments
Pro Forma
Adjustments
(Assuming No
Redemptions)
Pro Forma
Combined
(Assuming No
Redemptions)
Additional
Pro Forma
Adjustments
(Assuming
Maximum
Redemptions)
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
RMB
US$
RMB
US$
ASSETS
Cash and cash equivalents
11,954 488,676 500,630 (8,941,497)
(A1)
2,017,641
(B)
1,584,201 $ 230,765 1,009,031
(F)
1,204,394 $ 175,440
1,066,004
(A1)
(47,454)
(C)
25,531
(A1)
(130,132)
(C)
(1,388,838)
(K)
(144,165)
(D)
2,059,500
(E)
3,875,293
(F)
(29,506)
(C), (F)
1,304,350
(G)
(773)
(J)
(206)
(J)
28,985
(J)
Restricted cash
24,315 24,315 24,315 3,542 24,315 3,542
Trade receivables
203,304 203,304 203,304 29,615 203,304 29,615
Inventories 57,703 57,703 57,703 8,405 57,703 8,405
Amounts due from related parties