C&D Property Management Group Co., Ltd — M&A Activity 2005

Oct 12, 2005

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

GOOD FELLOW GROUP LIMITED 金威集團控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock code: 910)

LETTER OF INTENT

On 10 October, 2005, Good Fellow Group Limited (the “Company”) has entered into a legally binding Letter of Intent with the Vendors, pursuant to which the Company may acquire from the Vendors the entire issued share capital in the Target Company which holds 70% equity interest in a Sino-Foreign joint venture company, principally engaged in the business of tree planting and management, manufacture and distribution of forest products such as timber and wood pulp.

Pursuant to the terms of the Letter of Intent, the Proposed Acquisition is subject to, among other things, the completion of a due diligence review of the financial condition, legal and other affairs of the Target Company to the satisfaction of the Company and the negotiation and finalization of the terms and conditions in relation thereof. Accordingly, the Proposed Acquisition may or may not be consummated.

The parties to the Letter of Intent agreed to enter into a formal legally binding but conditional sales and purchase agreement (the “Formal Agreement”) upon completion of the Due Diligence Review. Further announcement will be made by the Company when Formal Agreement is being entered into by the parties to the Letter of Intent.

This announcement is made pursuant to Rule 13.09 of the Listing Rules. Further announcement will be made by the Company in respect of any further material development on the Proposed Acquisition and action will be taken to comply with the disclosure/approval requirements under the Listing Rules in respect of the Proposed Acquisition.

As the Proposed Acquisition may and may not proceed, shareholders and investors should exercise caution when dealing in the shares of the Company.

Suspension and Resumption of Trading in the Shares

At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on Monday, 10 October, 2005 pending the release of this announcement. Application have been made to the Stock exchange for resumption of trading in the Shares with effect from 9:30 a.m. on Wednesday, 12 October, 2005.

THE LETTER OF INTENT

The Board announces that on 10 October, 2005, the Company has entered into a legally binding Letter of Intent with the Vendors, pursuant to which the Company may acquire from the Vendors the entire issued share capital in the Target Company (the “Proposed Acquisition”) which holds 70% equity interest in a Sino-Foreign joint venture company, principally engaged in the business of tree planting and management, manufacture and distribution of forest products such as timber and wood pulp. The following is a summary of the terms of the Letter of Intent:

Date

10 October, 2005

Parties

1. the Vendors; and

2. the Company

TERMS OF THE LETTER OF INTENT

Subject matter Vendor A and Vendor B currently own 60% and 40% shareholding interest in the Target Company, respectively. Pursuant to the Letter of Intent, the Company may acquire from the Vendors the entire issued share capital in the Target Company which is incorporated in the British Virgin Islands and its sole asset is a 70% equity interest in a Sino-Foreign JV, principally engaged in the business of tree planting and management, manufacture and distribution of forest products such as timber and wood pulp;

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Consideration The basis of consideration and purchase price are subject to, among other things, further negotiation and finalization and will be fixed upon completion of the Due Diligence Review or such other date to be agreed between the Company and the Vendors.

Payment terms The total consideration shall be satisfied by a mixture of (i) cash; (ii) issue of new Shares at an issue price of HK$0.12 per Share; and (iii) issue of convertible notes which are exercisable by the convertible note holders at a conversion price of HK$0.12 per new Share. The basis in respect of the issue price of the new Shares and the conversion price of the convertible notes were determined between the Company and the Vendors, among other things, after arm’s length negotiations with reference to the Company’s recent share price performance. The mixture of payment by which the consideration to be satisfied is subject to further negotiation and finalization and will be fixed upon completion of the Due Diligence Review.

Earnest money Pursuant to the terms of the Letter of Intent, subject to the parties agreeing on the consideration and the definitive terms of the Formal Agreement, a refundable earnest monies of HK$20 million (the “Deposit”) will be deposited with a mutually agreed escrow agent who shall act as a stakeholder and hold the Deposit until the satisfactory completion of the Formal Agreement whereupon the Deposit will be released to the Vendors as partial payment of the total consideration as stipulated in the Formal Agreement. Escrow agent and its ultimate beneficial owner are not connected with the Company, the directors, chief executive, substantial shareholders of the Company, its subsidiaries and their respective associates (as defined in the Listing Rules);

Due diligence The Company was granted one month from the date of the Letter of Intent (the “Due Diligence Review Period”) to conduct the Due Diligence Review and to determine whether or not to proceed with the Proposed Acquisition; Lapse of the Letter In the event that the Company is not satisfied with the result of the of Intent due diligence review, among other things, of the affairs of the Target Company on or before the expiry of the Due Diligence Review Period, the Letter of Intent will lapse and neither party shall have any obligations towards the other party nor has any claims against the other party. Exclusivity During the Due Diligence Review Period and any extended period which may be specified in the Formal Agreement (the “Exclusivity Period”), the Company will have the sole and exclusive right to negotiate with the Vendors with a view to agreeing and executing the Formal Agreement in respect of the Proposed Acquisition. The Vendors also undertake to the Company that they will not procure the Target Company to, among other things, issue any new shares or warrants during the Exclusivity Period without the prior written consent of the Company; Non-legal binding The Vendors undertake (but not on an legally binding basis) to the Undertakings Company that: (i) the aggregate profits after tax shown in the audited consolidated accounts of the Sino-Foreign JV for the financial year ending 31 December, 2006 and the financial year ending 31 December, 2007 shall not be less than HK$200 million (the “Profit Guarantee”). Compensation for not fulfilling the Profit Guarantee requirement is subject to, among other things, further negotiation and finalization upon completion of the Due Diligence Review; and (ii) the fair market value of the assets of Sino-Foreign JV, as assessed by an independent appraiser in Hong Kong and confirmed in a valuation report, shall be not less than HK$ 1 billion. Date of valuation will be fixed following the completion of the Due Diligence Review

Pursuant to the terms of the Letter of Intent, the Proposed Acquisition is subject to the completion of the Due Diligence Review and the negotiation and finalization of the terms and conditions in relation thereof. Accordingly, the Proposed Acquisition may or may not be consummated.

The parties to the Letter of Intent agreed to enter into a formal legally binding but conditional sales and purchase agreement (the “Formal Agreement”) upon completion of the Due Diligence Review. Further announcement will be made by the Company when Formal Agreement is being entered into by the parties to the Letter of Intent.

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Based on the information available to the Company following preliminary enquiry of the Company with the Vendor in respect of Sino-Foreign JV, Sino-Foreign JV is principally engaged in the business of tree planting and management, manufacture and distribution of forest products such as timber and wood pulp. Sino-Foreign JV operates by making use of the modified tree species Broussonetia Papyriferalvent in its plantation process that can be applied to ecological and forestry purposes. The chemical characteristic of the modified tree species may serve to improve the quality of infertile and polluted land on which the plantation is carried out, as well as lowering the carbon dioxide level in the surrounding atmosphere. Sino-Foreign JV also plans to broaden the forest area and extensively plant the tree species, principally catering for the high domestic demand in wood pulp from the paper making industry in the People’s Republic of China.

The core business of the Company and its subsidiaries consist of the design, manufacture and sale of a range of high-end apparel and uniforms. To complement the highly competitive apparel market, the Directors consider the diversification of business into new arenas of high-growth potential will be in the best interest of its shareholders. The Company takes initiative in identifying business opportunities in new emerging industries that will broaden its revenue sources. With availability of adequate cash resources, the Company is well poised to seize new business opportunities in the Proposed Acquisition for the prospect of which the Board has assessed as promising.

This announcement is made pursuant to Rule 13.09 of the Listing Rules. Further announcement will be made by the Company in respect of any further material development on the Proposed Acquisition and action will be taken to comply with the disclosure/approval requirements under the Listing Rules in respect of the Proposed Acquisition.

As the Proposed Acquisition may or may not proceed, shareholders and investors should exercise caution in dealing in the shares of the Company.

Suspension and Resumption of Trading in the Shares

At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on Monday, 10 October, 2005 pending the release of this announcement. Application have been made to the Stock exchange for resumption of trading in the Shares with effect from 9:30 a.m. on Wednesday, 12 October, 2005.

DEFINITION

DEFINITION
In this announcement, unless	the context otherwise requires, terms used herein shall have the following
meaning:
“Board”	the board of directors of the Company;
“Company”	Good Fellow Group Limited, a company incorporated in Bermuda whose
	securities are listed on The Stock Exchange of Hong Kong Limited;
“Due Diligence Review”	a due diligence review of the financial condition, legal and other affairs
	of the Target Company to the satisfaction of the Company;
“Formal Agreement”	a formal legally binding but conditional sales and purchase agreement
“Letter of Intent”	the letter of intent dated 10 October, 2005 and entered into between the
	Company and the Vendors in relation to the Proposed Acquisition;
“Listing Rules”	The Rules Governing the Listing of Securities on The Stock Exchange of
	Hong Kong Limited;
“Proposed Acquisition”	the proposed acquisition of the entire issued share capital of the Target
	Company from the Vendors by the Company;
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the Company
“Sino-Foreign JV”	a Sino-Foreign joint venture company which is incorporated in the People’s
	Republic of China is principally engaged in the business of tree planting
	and management, manufacture and distribution of forest products such as
	timber and wood pulp;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Target Company”	a company incorporated in British Virgin Islands whose sole asset is 70%
	equity interest in Sino-Foreign JV;
“Vendors”	Vendor A and Vendor B;
“Vendor A”	a company (and its ultimate beneficial owner) incorporated in the British
	Virgin Islands with limited liability which holds 60% shareholding interest
	in the Target Company and is not connected with the Company, the
	directors, chief executive, substantial shareholders of the Company, its
	subsidiaries and their respective associates (as defined in the Listing
	Rules); and

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“Vendor B”

a company (and its ultimate beneficial owner) incorporated in the British Virgin Islands with limited liability which holds 40% shareholding interest in the Target Company and is not connected with the Company, the directors, chief executive, substantial shareholders of the Company, its subsidiaries and their respective associates (as defined in the Listing Rules).

As at the date of this announcement, the Board of Directors of the Company comprises of Mr. Ng Leung Ho, Ms. Lee Ming Hin, Mr. Wang Weining and Mr. Hu Xiaoming being the Executive Directors, Mr. Ng Leung Tung being the Non-Executive Director and Mr. Lo Chung Kin, Mr. Zhou Zi Ping and Mr. Zhu Jian Hong being the Independent Non-Executive Directors.

By Order of the Board Good Fellow Group Limited Ng Leung Ho Chairman

Hong Kong, 10 October, 2005

* For identification purposes only

Please also refer to the published version of this announcement in The Standard.

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