CHINA STATE CONSTRUCTION DEVELOPMENT HOLDINGS LIMITED - Capital/Financing Update 2012

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

This announcement appears for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

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MEDIA CHINA CORPORATION LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 419)

(1) VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

IN RELATION TO THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF YUAN SHUN INVESTMENTS LIMITED

INVOLVING ISSUE OF PROMISSORY NOTE AND CONVERTIBLE NOTE AND

(2) PROPOSED GRANT OF SPECIFIC MANDATE

TO ISSUE NEW SHARES

AND

(3) PROPOSED SHARE CONSOLIDATION

THE PROPOSED ACQUISITION

The Board is pleased to announce that on 25 May 2012, the Purchaser entered into the Acquisition Agreement with the Vendor for the Proposed Acquisition. Pursuant to the Acquisition Agreement, the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to dispose of the Sale Share for the consideration of HK$900 million. The Sale Share represents the entire issued share capital of the Target Company. Upon Completion, the Target Company will become a wholly-owned subsidiary of the Purchaser.

Pursuant to the Acquisition Agreement, the consideration of HK$900 million shall be settled in the following manner:

(i) HK$50 million shall be paid in cash by the Purchaser to the Vendor on Completion;

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(ii) HK$150 million shall be settled by way of Promissory Note to be issued by the Purchaser on Completion; and
(iii) the remaining HK$700 million shall be settled by the Purchaser procuring the Company to issue the Convertible Note to the Vendor on Completion.

The cash portion of the Consideration to be paid by the Purchaser to the Vendor will be financed by internal resources of the Group.

PROPOSED GRANT OF SPECIFIC MANDATE TO ISSUE NEW SHARES

Under the Acquisition Agreement, the Purchaser will procure the Company to issue the Convertible Note to the Vendor as a part of the Consideration on Completion. The Conversion Shares to be issued following the exercise of the Conversion Rights shall rank pari passu in all respects with the Shares then in issue on the date of allotment and issue thereof. The Company will seek the grant of Specific Mandate from the Independent Shareholders at the EGM to satisfy the allotment and issue of the Conversion Shares upon the exercise of the Conversion Rights pursuant to the Convertible Note.

PROPOSED SHARE CONSOLIDATION

The Board proposes that every five issued and unissued Shares in the share capital of the Company will be consolidated into two Consolidated Shares. Upon the Share Consolidation becoming effective, the authorized share capital of the Company will become HK$3,002,407,600 divided into 12,000,000,000 Consolidated Shares and 240,760,000 Preference Shares.

Further details of the Share Consolidation will be disclosed in a separate announcement to be released on or before 31 May 2012 and a circular to be despatched to the Shareholders in due course.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios under the Listing Rules exceed 100%, the Proposed Acquisition constitutes a very substantial acquisition of the Company under Rule 14.06(5) of the Listing Rules and is therefore subject to the reporting, announcement and Independent Shareholders’ approval requirements of the Listing Rules.

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transactions contemplated under the Acquisition Agreement are therefore subject to approval by the Independent Shareholders at the EGM by way of poll. Other than Mr. Yuen and his associates, who are required to abstain from voting on the relevant resolutions to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder, no other Shareholders are required to abstain from voting in respect of the resolutions relating to the Acquisition Agreement, and the transactions contemplated thereunder at the EGM.

An Independent Board Committee has been formed to advise the Independent Shareholders with respect to the relevant resolutions on the transactions contemplated under the Acquisition Agreement proposed to be passed at the EGM, and an independent financial adviser has been appointed to make recommendations to the Independent Board Committee and the Independent Shareholders regarding the same.

GENERAL

The EGM will be held to consider, and if thought fit, pass the requisite resolution(s) to approve the Acquisition Agreement, the issue of the Convertible Note, the proposal for the grant of Specific Mandate to satisfy the allotment and issue of the Conversion Shares following the exercise of the Conversion Rights pursuant to the Convertible Note and other transactions contemplated under the Acquisition Agreement.

A circular containing, among other things, further details of the Proposed Acquisition, the letter from the Independent Board Committee to the Independent Shareholders, the letter from the independent financial adviser to the Independent Board Committee and the Independent Shareholders, and the notice convening the EGM, will be despatched to the Shareholders on or before 31 July 2012 in order to have more time to prepare the accounting information and finalise the contents of the circular.

As completion of the Proposed Acquisition is subject to the fulfillment of a number of conditions precedent and may or may not proceed, Shareholders and potential investors should exercise caution when dealing with the Shares.

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THE ACQUISITION AGREEMENT

Date: 25 May 2012

Vendor:

Smart Concept Enterprise Limited, an investment holding company incorporated in BVI and a wholly-owned company of Mr. Yuen, a Director, the Chairman and a substantial shareholder of the Company, indirectly holding approximately 17.66% interests of the Company pursuant to Part XV of the SFO as at the date of this announcement. Since the Vendor is an associate of Mr. Yuen, the Vendor is a connected person pursuant to Rule 14A.11(4) of the Listing Rules.

Purchaser: Unique Talent Group Limited

The Purchaser is an investment holding company incorporated in BVI and is a whollyowned subsidiary of the Company.

The Company is incorporated in the Cayman Islands with limited liability and, through its subsidiaries, is principally engaged in media business, properties investment through jointly controlled entities, and the provision of high-end recreational and tourism services.

As at the date of this announcement, the Target Company is legally and beneficially owned as to 100% by the Vendor.

Asset to be acquired

The asset to be acquired is the Sale Share, representing the entire issued share capital of the Target Company, which is an investment holding company, holding interest in the entire issued share capital of the Hong Kong Company. The sole asset of the Hong Kong Company is the interest in the entire issued share capital of the PRC Company which was established on 11 January 2012. Save the Second Cooperation Agreement dated 30 January 2012 entered into between the PRC Company and 北京朝來 (Beijing Chao Lai*) relating to the development and operation rights of the 580 acres (equivalent to approximately 387,000 square metres) of the Subject Land up to 31 May 2048, the PRC Company has not engaged in any other business activities.

The Sale Share has been pledged to a financial institution in Hong Kong by the Vendor for a loan of HK$195 million secured by, inter alia, the personal guarantee from Mr. Yuen, the sole shareholder of the Vendor, and a debenture incorporating floating charge on the assets of the Target Company and the Hong Kong Company. It is a

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condition precedent for Completion that the Sale Share, the entire issued share capital of the Hong Kong Company and the entire issued share capital of the PRC Company shall be free from encumbrances at the own cost of the Vendor on Completion.

Shareholding structure of the Target Group before and after the reorganization and upon Completion

The following diagrams set out the shareholding structure of the Target Group before and after the reorganization of the Target Group on 30 January 2012, and upon Completion:

Before the reorganization

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After the reorganization (Note)

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The reorganization, which reflects the corporate structure of the Target Group as described in the Acquisition Agreement, has been completed on 30 January 2012.

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Shareholding structure of the Target Group upon Completion

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In order to reduce any potential risks, the Company did not purchase Zhou Hai Tong Da which entered into the First Cooperation Agreement with Beijing Chai Lai after taken into consideration of the following factors:

Zhou Hai Tong Da was established in 2007 with a 5-year history. It has been engaged in trading businesses other than the development of the Subject Land. The Company would only like to acquire Zhou Hai Tong Da’s business in relation to the development of the Subject Land but is not willing to acquire its other trading businesses and its history.
Zhou Hai Tong Da has not signed any proper employment agreements with its employees since its incorporation and has not properly made provident fund payments for its employees. There may be potential legal risks in particular to those former employees of Zhou Hai Tong Da.
As Zhou Hai Tong Da only has 5 years history, the Company may not be able to identify whether there are any contingent liabilities of Zhou Hai Tong Da even after conducting thorough due diligence exercise.

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Consideration

Pursuant to the Acquisition Agreement, the Consideration was agreed at HK$900 million. The Consideration shall be satisfied by the Purchaser in the following manner:

(i) HK$50 million shall be paid in cash by the Purchaser to the Vendor on Completion;
(ii) HK$150 million shall be settled by way of Promissory Note to be issued by the Purchaser on Completion; and
(iii) the remaining HK$700 million shall be settled by the Purchaser procuring the Company to issue the Convertible Note to the Vendor on Completion.

The cash portion of the Consideration to be paid by the Purchaser to the Vendor will be financed by internal resources of the Group.

Basis of the Consideration

The Consideration was arrived at after arm’s length negotiations between the Purchaser and the Vendor on normal commercial terms by reference to, among other things, the letter dated 22 May 2012 issued by American Appraisals China Limited, an independent valuer, in which it stated the fair value of 100% equity interest of the Target Company as at 31 December 2011 is approximately HK$1 billion. The income approach has been applied for the valuation, which constitutes a profit forecast under Rule 14.61 of the Listing Rules. The requirements under Rule 14.62 of the Listing Rules will be complied by the Company. The valuation was performed according to the business plan of the Company, in which the Group intended to develop the Subject Land as the extension of ‘‘Bayhood No. 9 Club’’ and low-density, double-storey deluxe hotel villas and conferencing facilities with a total floor area of 80,404 square meters would be constructed. Those villas would be operated in the form of serviced apartments and leased out on short to medium terms.

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The major assumptions of the valuation include the following:

Revenue

By referencing the average room rate and occupancy rate for high-end hotels in Beijing, it was assumed the proposed project could charge at RMB55 per square meter per day with an annual occupancy rate of 60% during the forecasting period. As inflation was expected in the PRC, an annual growth rate of 5% was assumed on the rental charges.

Business, Property and Income tax

Industry standard business tax (5.5%), property tax (1.2% of original value with certain deduction which is assumed to be 30%) and corporate income tax policy (25%) were applied in the discounted cash flow analysis.

Operating expenses and EBITDA

Operating expenses include land use right payment, general administrative expenses, salaries, depreciation, and overhead, etc. For the land use right payment, the amount was estimated according to the Second Cooperation Agreement, which is RMB6 million per annum with an increment of 10% increase in every 5 years. Without any historical track record as reference, it was assumed the Target Group could achieve the operating results similar to its peers, which is around 33% of revenue in terms of EBITDA margin.

Capital expenditure

Based on the business plan, it was assumed the initial investment cost would be approximately RMB838 million. After year 2015, the capital expenditure would approximate to annual depreciation charges on the initial investment cost. Given the long operational period up to year 2048, 5% annual growth was assumed on the capital expenditure.

Working capital

Due to the nature of hotel or serviced apartment business, no substantial amounts of account receivable or inventory are required. Net working liabilities were observed in accordance with historical track record of comparable companies or the industry statistics. Thus, no working capital was projected.

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The full valuation report will be included in the circular to be despatched to the Shareholders in accordance with the Listing Rules. In view of the Consideration for the Proposed Acquisition as compared with the valuation of the development and operation rights of the Subject Land, the Company is of the view that the Proposed Acquisition is beneficial to the Group.

The Acquisition Agreement will be terminated if the Purchaser shall not be satisfied with, among other things, the results of the due diligence exercise and the valuation in its absolute discretion.

The Directors consider that the Proposed Acquisition has great potential for the expansion of the high-end recreational and tourism business of the Group as the Subject Land is adjacent to ‘‘Bayhood No. 9 Club’’ owned by the Group, which is principally engaged in the provision of high-end recreational and tourism services. Taking this into account and having considered the reasons and benefits as stated in the paragraph headed ‘‘Reasons for and Benefits of the Proposed Acquisition’’ below, the Directors (excluding the independent non-executive Directors who will express their views after having considered the advice of the independent financial adviser) are of the opinion that the terms of the Acquisition Agreement and the Consideration are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

The Proposed Acquisition is a conditional acquisition which will be subject to, among other things, the satisfactory completion of the due diligence review by the Purchaser on the Subject Land and the affairs of the Target Group.

Conditions Precedent

Completion shall be subject to the satisfaction of the following conditions precedent (or waived by the Purchaser regarding condition precedent set out in (iv) below) on or before the Long Stop Date:

(i) the development and operation rights of the Subject Land being legally owned by Beijing Chao Lai;
(ii) the Purchaser being completed and satisfied in all respects, at its absolute discretion, with the results of the due diligence review (including but not limited to the financial, legal and business reviews) to be conducted by the Purchaser in accordance with the Acquisition Agreement;
(iii) a legal opinion having been issued by qualified lawyers in PRC appointed by the Purchaser in form and substance to the satisfaction of the Purchaser in its absolute discretion in relation to all matters concerning the Acquisition Agreement;

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(iv) the warranties given by the Vendor in the Acquisition Agreement remaining true and accurate in all respects;
(v) the Sale Share, the entire issued share capital of the Hong Kong Company and the entire issued share capital of the PRC Company being free from encumbrances at the own cost of the Vendor on Completion;
(vi) the corporate structure of the Target Group as described in the Acquisition Agreement remaining accurate, and each of the companies of the Target Group having no indebtedness;
(vii) the Shares remaining listed and traded on the Stock Exchange save any temporary suspensions provided that such suspension of trading in the Shares not exceeding 9 months;
(viii) the transactions contemplated under the Acquisition Agreement not having breached any provisions of the Listing Rules and the Stock Exchange not having opposed any transaction contemplated under the Acquisition Agreement;
(ix) the passing by the Independent Shareholders at the EGM by way of poll, the necessary resolutions to approve the Acquisition Agreement and the transactions contemplated thereunder, including but not limited to the issue and allotment of the Convertible Note and the issue of the Conversion Shares to be issued following the exercise of the Conversion Rights;
(x) the Listing Committee of the Stock Exchange having granted the listing of, and the permission to deal in the Conversion Shares; and
(xi) the Purchaser and the Company having sufficient funding to satisfy the cash portion of the Consideration.

The Purchaser may waive the condition precedent set out in (iv) above at its absolute discretion and require the Vendor to complete the Proposed Acquisition. The waiver is to provide flexibility in situations where only a small part of that condition may not have been fulfilled or the benefit which the Purchaser may derive from the Proposed Acquisition greatly outweighs the loss which the Purchaser may suffer as a result of the waiver of that condition. Without the right on the part of the Purchaser to waive the condition, the Vendor may terminate the Acquisition Agreement on the ground that the condition has not been fulfilled in situations which the Vendor sees benefit in termination (e.g. sudden rise in price or in face of a higher offer). Such right to waive fulfillment of the condition is common in agreements of similar natures. The Directors will exercise due care in discharge of their fiduciary duties in deciding whether to waive the condition and the Purchaser has no present intention to waive the condition.

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In the event that any of the above conditions precedent has not been satisfied on or before the Long Stop Date or such later date as the Purchaser and the Vendor may agree, and in case the condition precedent set out in (iv) above has not been satisfied and the Purchaser has not waived the condition), the Acquisition Agreement shall cease without prejudice to the rights and the obligations of the parties before the termination.

As at the date of this announcement, the conditions precedent set out in (i) and (iii) above have been fulfilled.

Completion

Upon fulfillment of the conditions precedent (or in case the condition precedent set out in (iv) above has not been satisfied and the same having been waived by the Purchaser) set out in the Acquisition Agreement, Completion shall take place on the Completion Date or such other date as agreed by parties to the Acquisition Agreement in writing. Upon Completion, the Target Company and its subsidiaries will become wholly-owned subsidiaries of the Company and their financial results will be consolidated into the accounts of the Group.

PROMISSORY NOTE

Upon Completion, HK$150 million of the Consideration will be settled by way of Promissory Note to be issued by the Purchaser to the Vendor. The terms of the Promissory Note have been negotiated on an arm’s length basis and the principal terms of which are as follows:

Issuer The Purchaser

Principal amount HK$150 million Interest The Promissory Note shall bear interest from the date of the issue at the best lending rate of The Hongkong and Shanghai Banking Corporation Limited on the full amount of the Promissory Note, which subject to provided herein, shall be payable by the Purchaser in arrears on the Repayment Date

Date of issue The Completion Date Repayment Date The date falling on the last day of the 24th month from the date of issue of the Promissory Note

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Early repayment

The Purchaser could, at its discretion, repay the Promissory Note in whole or in part prior to the Repayment Date. There will not be any premium over or discount to the payment obligations under the Promissory Note for any early repayment.

CONVERTIBLE NOTE

Upon Completion, HK$700 million of the Consideration will be settled by the Purchaser procuring the Company to issue the Convertible Note to the Vendor. The terms of the Convertible Note have been negotiated on an arm’s length basis and the principal terms of which are as follows:

Issuer The Company Noteholder The Vendor Principal Amount RMB569 million, (equivalent to the agreed converted amount of HK$700 million) which amount will not be subject to any change notwithstanding variation in the conversion rate between HK$ and RMB. Interest Zero coupon convertible note Date of Issue Completion Date Maturity Date Subject to the terms and conditions of the Convertible Note, the Maturity Date shall fall on the third anniversary from the date of issue of the Convertible Note.

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Conversion Rights Provided that any conversion of the Convertible Note does not trigger a mandatory offer obligation under Rule 26 of the Takeovers Code on the part of the Noteholder who exercises the Conversion Rights, whether or not such mandatory offer obligation is triggered by the fact that the number of Conversion Shares to be allotted and issued following the exercise of the Conversion Rights attaching to Convertible Note and, if applicable, together with any Shares already owned or agreed to be acquired by the Noteholder or parties acting in concert with it, represents 30% or more (or such other percentage as stated in Rule 26 of the Takeovers Code in effect from time to time) of the then issued ordinary share capital of the Company or otherwise pursuant to other provisions of the Takeovers Code; and any conversion of the Convertible Note will not result in an insufficient public float for the Company under the Listing Rules, the Noteholder shall have the right on any Business Day during the Conversion Period to convert the whole or part of such principal amount of the Convertible Note set out therein into Conversion Shares at the Conversion Price, other than the part of the Convertible Note which has been called for redemption before the Maturity Date of the Convertible Note.

Conversion Price The initial Conversion Price will be HK$0.10 per Conversion Share (equivalent to approximately RMB0.0813 per Conversion Share at the fixed conversion rate of RMB1.00 equal to HK$1.2302) subject to adjustment provisions customary for convertible securities of a similar type. The adjustment events will arise as a result of certain changes in the share capital of the Company including consolidation or sub-division of shares, capitalisation of profits or reserves, capital distributions in cash or specie or subsequent issue of securities in the Company at substantial discount to market value. The Company shall issue an announcement in the event that there are any changes in the initial Conversion Price (and any subsequent changes in the conversion price of the Convertible Note) in the future to comply with the relevant requirements under the Listing Rules.

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The initial Conversion Price represents (i) a premium of approximately 8.70% to the closing price of HK$0.092 per Share as quoted on the Stock Exchange on the Last Trading Day; (ii) a premium of approximately 11.86% to the average of the closing prices of HK$0.0894 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day; and (iii) a premium of approximately 12.36% to the average of the closing prices of approximately HK$0.089 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day.

The Board considered that the initial Conversion Price was arrived at after arm’s length negotiations between the Company and the Vendor, after taking into account stock market conditions and the prevailing market price of the Shares.

Conversion Shares

7,000 million new Shares to be issued upon full conversion of the Convertible Note on the basis of the Principal Amount (in terms of HK$) and initial Conversion Price subject to adjustment.

The Conversion Shares following the exercise of the Conversion Rights pursuant to the Convertible Note represent approximately 154.9% of the existing issued share capital of the Company and approximately 60.8% of the then issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Note.

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Redemption

The Noteholder is not permitted to require redemption of the Convertible Note before the Maturity Date unless an event of default shall have occurred and the Noteholder shall have given a duly completed and signed notice of redemption, together with the Convertible Note Certificate to the Company not later than 60 calendar days following the occurrence of an event of default specifying the date of redemption and the amount proposed to be redeemed.

Events of default for early redemption include the following:

(a) the Company defaults in making payment of any principal, redemption or other amount due in respect of the Convertible Note and such default continues for more than fourteen (14) Business Days;
(b) the Company fails to deliver any Shares as and when such Shares are required to be delivered following conversion of the Convertible Note and such failure continues for more than fourteen (14) Business Days;
(c) the Company defaults in performance or observance or compliance with any material obligations set out in the Convertible Note Conditions or any of its material representations, warranties or covenants is breached which default or breach is incapable of remedy or, if capable of remedy, is not remedied within fourteen (14) Business Days after notice of the occurrence of such default or breach from the Convertible Noteholder to the Company; or
(d) an encumbrancer takes possession or a receiver, manager or other similar officer is appointed of the whole or any material part of the undertaking, property, assets or revenues of the Company which is not dismissed or discharged or settled within sixty (60) Business Days; or

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(e) the Company becomes insolvent or is unable to pay its debts as they fall due or applies for or consents to or suffers the appointment of any administrator, liquidator or receiver of the Company the whole or any material part of the undertaking, property, assets or revenues of the Company which is not dismissed or discharged or settled within sixty (60) Business Days or takes any proceeding under any law for a readjustment or deferment of its obligations or any part of them or makes or enters into a general assignment or compromise with or for the benefit of its creditors or initiates or consents to proceedings relating to itself under any applicable bankruptcy or insolvency law relating to the insolvency or inability to repay debts of the Company; or
(f) a moratorium is agreed or declared in respect of any indebtedness of the Company of material effect or any governmental authority or agency seizes all or a material part of the assets of the Company; or
(g) the listing of the Shares (as a class) on the Stock Exchange ceases.

Transferability The Convertible Note may be assignable or transferable provided that the Convertible Note may not be transferred to any connected person of the Company.

Ranking The Conversion Shares, when allotted and issued, will rank pari passu in all respects with all existing Shares in issue on the date of allotment and issue of such Conversion Shares. There shall be no restriction for subsequent sale of the Conversion Shares.
Voting rights The Noteholder will not be entitled to attend or vote at any general meetings of the Company by reason only of it being the Noteholder.
Application for listing No application will be made by the Company to the Listing Committee for the listing of the Convertible Note. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

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PROPOSED GRANT OF SPECIFIC MANDATE TO ISSUE NEW SHARES

Specific mandate

Under the Acquisition Agreement, the Purchaser will procure the Company to issue the Convertible Note to the Vendor as part payment of the Consideration on Completion. The Conversion Shares to be issued following the exercise of the Conversion Rights pursuant to the Convertible Note shall rank pari passu in all respects with the Shares then in issue on the date of allotment and issue thereof. The Company will seek the grant of Specific Mandate from the Independent Shareholders at the EGM for the allotment and issue of the Conversion Shares upon the exercise of the Conversion Rights pursuant to the Convertible Note.

Application for listing

Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

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SHAREHOLDING STRUCTURE OF THE COMPANY BEFORE AND UPON COMPLETION

For illustration purpose only and without taking into account any other possible changes in the shareholding structure of the Company, the following table sets out the shareholding structure of the Company (i) as at the date of this announcement; (ii) immediately upon the issue of the maximum consideration Shares of 100,000,000 for the acquisition announced by the Company on 22 February 2011; (iii) immediately upon the exercise of the subscription rights attaching to the Warrants; (iv) immediately upon Completion and assuming conversion of the Convertible Note to the extent that the Noteholder holds or controls 29.9% of the issued share capital of the Company; and (v) immediately upon Completion and assuming full conversion of the Convertible Note.

Sun Hung Kai Investment Services Limited (Note 1) Mr. Yuen (Note 2) & the Vendor (Note 3) He Peng Placees for the subscription of the Warrants Public Shareholders Total	As at the of this announce No. of Shares 827,435,214 798,150,000 200,000,000 — 2,693,594,239	date ment Approximate % 18.31 17.66 4.43 — 59.60	Immediately after the issue of the maximum consideration Shares of 100,000,000 for the acquisition announced by the Company on 22 February 2011 No. of Shares Approximate % 827,435,214 17.91 798,150,000 17.28 300,000,000 6.50 — — 2,693,594,239 58.31 4,619,179,453 100.00	Immediately after the issue of the maximum consideration Shares of 100,000,000 for the acquisition announced by the Company on 22 February 2011 No. of Shares Approximate % 827,435,214 17.91 798,150,000 17.28 300,000,000 6.50 — — 2,693,594,239 58.31 4,619,179,453 100.00	Immediately upon the exercise of the subscription rights attaching to the Warrants No. of Shares Approximate % 827,435,214 16.01 798,150,000 15.44 300,000,000 5.80 550,000,000 10.64 2,693,594,239 52.11 5,169,179,453 100.00	Immediately upon the exercise of the subscription rights attaching to the Warrants No. of Shares Approximate % 827,435,214 16.01 798,150,000 15.44 300,000,000 5.80 550,000,000 10.64 2,693,594,239 52.11 5,169,179,453 100.00	Immediately upon and assuming conv Convertible Note t that the Notehold controls 29.9% o share capital of t and public f not less tha No. of Shares 827,435,214 1,864,017,642 300,000,000 550,000,000 2,693,594,239	Completion ersion of the o the extent er holds or f the issued he Company loat of n 25% Approximate % 13.27 29.90 4.81 8.82 43.20	Immediately upon Completion and assuming full conversion of the Convertible Note (Note 4) No. of Shares Approximate % 827,435,214 6.80 7,798,150,000 64.08 300,000,000 2.47 550,000,000 4.52 2,693,594,239 22.13 12,169,179,453 100.00	Immediately upon Completion and assuming full conversion of the Convertible Note (Note 4) No. of Shares Approximate % 827,435,214 6.80 7,798,150,000 64.08 300,000,000 2.47 550,000,000 4.52 2,693,594,239 22.13 12,169,179,453 100.00
	4,519,179,453	100.00	4,619,179,453	100.00	5,169,179,453	100.00	6,235,047,095	100.00	12,169,179,453	100.00

Notes:

Sun Hung Kai Investment Services Limited is a wholly-owned subsidiary of Sun Hung Kai Securities Limited, a wholly-owned subsidiary of Sun Hung Kai & Co. Limited, which in turn is a non wholly-owned subsidiary of Allied Properties (H.K.) Limited. Allied Properties (H.K.) Limited is a non wholly-owned subsidiary of Allied Group Limited in which Mr. LEE Seng Hui, Ms. LEE Su Hwei and Mr. LEE Seng Huang are the trustees of the Lee and Lee Trust, having 63.70% interest in Allied Group Limited as at 22 May 2012. Accordingly, Mr. LEE Seng Hui, Ms. LEE Su Hwei and Mr. LEE Seng Huang are deemed to have the same long position as Sun Hung Kai Investment Services Limited.
Rich Public Limited is an investment holding company incorporated in the BVI and its entire issued share capital is beneficially owned by Ming Bang Limited. Ming Bang Limited is an investment holding company incorporated in the BVI and its entire issued share capital is beneficially owned by Mr. Yuen. Mr. Yuen is therefore deemed to be interested in 798,150,000 Shares held by Ming Bang Limited and Rich Public Limited pursuant to Part XV at the SFO. Mr. Yuen is also a director of Ming Bang Limited.

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The Vendor’s entire issued share capital is owned by Mr. Yuen and by virtue of Part XV of the SFO, Mr. Yuen is deemed to be interested in the Shares held by the Vendor.
It is provided in the conditions of the Convertible Note that the relevant holder of the Convertible Note is only allowed to exercise the Conversion Rights only to the extent that (i) any conversion of the Convertible Note does not render the relevant holder of the Convertible Note who exercises the Conversion Rights and parties acting in concert with such holder to hold (whether directly or indirectly), together with any Shares already owned or agreed to be acquired by such holder of Convertible Note and parties acting in concert Shares representing 30% or more of the consequential enlarged issued ordinary share capital of the Company and (ii) any conversion of the Convertible Note will not lead to the public float being less than 25% of the consequential enlarged issued ordinary share capital of the Company at the date of the relevant exercise. Accordingly, the figures shown in this column are for illustration purposes only.

INFORMATION OF THE TARGET GROUP

Introduction of the Subject Land

As at the date of this announcement, the Subject Land is a piece of collectively-owned land, owned by the Villagers’ Committee, which is made up of representatives of local villagers, in accordance with the record of the competent local land management department of the PRC government. No Collective Land Ownership Certificate has been granted by the PRC government to the villagers. According to PRC laws, the Villagers’ Committee has the right to operate the Subject Land on behalf of the villagers. On 8 May 2008, Beijing Chao Lai, a collective enterprise, (i) has been granted the development and operation rights of the Subject Land by the Villagers’ Committee; (ii) has been granted the rights to pay for the compensation amount to change the nature of the Subject Land and obtain its land use right; and (iii) has the right to further grant the development and operation rights of the Subject Land to other parties. The development rights of the Subject Land are the construction rights of the Subject Land and the operation rights of the Subject Land are the rights to manage the properties to be developed on the Subject Land. On 31 March 2012, Beijing Chao Lai has obtained the relevant Rural Construction Planning Permit (鄉村建設規劃許可證) issued by the Beijing Municipal Commission of Urban Planning (北京市規劃委員會) for the development of a total gross area of approximately 80,404 square meters on the Subject Land. Beijing Municipal Commission of Urban Planning (北京市規劃委員會) also imposed that the establishments on the Subject Land cannot be higher than nine meters and the development at the Subject Land shall also fulfill other local requirements for urban planning, transportation, virescence and civil defence.

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Relationship between Beijing Chao Lai and Zhou Hai Tong Da

On 16 May 2008, Beijing Chao Lai has entered into the First Cooperation Agreement with Zhou Hai Tong Da which is beneficially wholly-owned by Mr. Yuen. Zhou Hai Tong Da was founded in year 2007 and was acquired by Mr. Yuen in year 2008. Zhou Hai Tong Da is principally engaged in the trading of hotel and catering utensils in the PRC, and has entered into the First Cooperation Agreement with Beijing Chao Lai. Pursuant to the First Cooperation Agreement, Beijing Chao Lai has granted the development and operation rights of the Subject Land to Zhou Hai Tong Da up to 31 May 2048 and Zhou Hai Tong Da guaranteed to pay Beijing Chao Lai an amount of RMB6 million annually from 1 June 2008 to 31 May 2048 with an increment of 10% every 5 years.

In the event that the PRC government allowed Beijing Chao Lai to change the nature of the Subject Land from collectively-owned land to state-owned land, Zhou Hai Tong Da agreed to pay for the compensation amount on behalf of Beijing Chao Lai to the relevant PRC government departments. Upon the payment of the compensation amount, Beijing Chao Lai would obtain the land use right of the Subject Land. Beijing Chao Lai agreed to become a wholly-owned subsidiary of Zhou Hai Tong Da in the event that (i) Zhou Hai Tong Da would pay for the compensation amount on behalf of Beijing Chao Lai to change the nature of the Subject Land; and (ii) Beijing Chao Lai should have successfully changed the nature of the Subject Land and obtained the land use right of the Subject Land.

Based on the latest circular regarding the pricing standard on state-owned land use right disposal issued by the Beijing Municipal Government in year 2002, the estimated compensation amount for the Subject Land (assuming no change in the construction density) is approximately RMB320 million. However, the amount shall still be subject to case by case negotiation with the local government and shall also reflect the changes in the overall economic environment compared to that of year 2002. There is no expected date of payment for the compensation amount as the application process for changing the nature of the Subject Land has not been commenced. As at the date of this announcement, the PRC government has not agreed to change the nature of the Subject Land.

Save of the above, Beijing Chao Lai agreed that it would not be involved in the daily operation and management of the Subject Land.

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Relationship between the Target Group and Beijing Chao Lai

On 30 January 2012, the PRC Company, being an indirect wholly-owned subsidiary of the Target Company, has entered into the Second Cooperation Agreement with Beijing Chao Lai with the consents from Zhou Hai Tong Da and Beijing Chao Lai itself. Pursuant to the Second Cooperation Agreement, the development and operation rights of the Subject Land up to 31 May 2048 has been effectively transferred to the PRC Company. As Mr. Yuen is the ultimate sole shareholder of both Zhou Hai Tong Da and the PRC Company, terms of the Second Cooperation Agreement are in line with that of the First Cooperation Agreement, save for the terms relating to the payment of the compensation amount for the Subject Land to the relevant PRC government departments which remains to be the obligations of Zhou Hai Tong Da. Beijing Chao Lai and Zhou Hai Tong Da have also issued the Beijing Chao Lai Consent Letter and Zhou Hai Tong Da Consent Letter, respectively, consenting to the execution of the Second Cooperation Agreement.

In view of the above, the development and operation rights of the Subject Land up to 31 May 2048 will be held by the Group (indirectly through the PRC Company) upon Completion. Beijing Chao Lai could not purchase the land use right or ownership of the Subject Land from the Villagers’ Committee directly according to existing PRC laws, but only could apply and pay for the compensation amount in order to acquire the land use right through the land acquisition system of the PRC government. However, such administrative procedure would take a prolonged period to obtain the approval from the relevant government departments in the PRC. Should Beijing Chao Lai obtains the land use right of the Subject Land after the payment of the compensation amount by Zhou Hai Tong Da and Beijing Chao Lai becoming a whollyowned subsidiary of Zhou Hai Tong Da, the Group’s development and operation rights of the Subject Land will not be affected in any circumstances as the land use right of the Subject Land would still be owned by Beijing Chao Lai.

PRC legal opinion on the Subject Land

In accordance with the PRC legal opinion dated 24 May 2012, Guantao Law Firm, the PRC legal adviser of the Company, confirmed the followings:

(i) the villagers are the owner of the Subject Land;
(ii) the Villagers’ Committee possesses the proper ownership title of the Subject Land;
(iii) the Villagers’ Committee has the right to grant the development and operation rights of the Subject Land to Beijing Chao Lai on behalf of the Villagers’ Committee;
(iv) Beijing Chao Lai has the right to further grant the development and operation rights of the Subject Land to the PRC Company; and

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(v) pursuant to the Second Cooperation Agreement entered into between Beijing Chao Lai and the PRC Company, the development and operation rights of the Subject Land granted to the PRC Company would expire by 31 May 2048.

The Board is of the view that the change of the nature of the Subject Land by the PRC government is not crucial to the Group due to the following reasons:

(i) the Group has already obtained the development and operation rights of the Subject Land from Beijing Chao Lai for a period of 36 years. The business plan of the Group relating to the development of the Subject Land will not be affected irrespective of whether the land use right of the Subject Land is owned by Beijing Chao Lai or the development and operation rights of the Subject Land are owned directly by the Group through the PRC Company;
(ii) the Group intends to develop the Subject Land into low density, double storey deluxe hotel villas and conferencing facilities, which will be leased out on short and medium terms and not to be sold;
(iii) should Beijing Chao Lai obtain the land use right of the Subject Land after the payment of the compensation amount by Zhou Hai Tong Da and Beijing Chao Lai becoming a wholly-owned subsidiary of Zhou Hai Tong Da, the Group’s development and operation rights of the Subject Land would not be affected in any circumstances as the land use right of the Subject Land would still be owned by Beijing Chao Lai; and
(iv) the Group does not have to bear the estimated compensation amount of RMB320 million of the Subject Land which would be the responsibility of Zhou Hai Tong Da when Beijing Chao Lai is required to pay for such compensation amount. As such, the cashflow of the Group will not be reduced by the payment of the compensation amount and the Group could concentrate on the development of the Subject Land.

In view of the above reasons, the Board is of the opinion that it is fair and reasonable that the Acquisition Agreement does not include the change of the nature of the Subject Land as a condition precedent and this is in the interests of the Company and the Independent Shareholders as a whole.

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Principal business of the Target Group

The Target Group comprises the Target Company, the Hong Kong Company and the PRC Company. The Target Company is an investment holding company and was established on 9 June 2011 in BVI with Mr. Yuen being its ultimate beneficial owner. The Target Group has obtained all relevant licenses or certificates in relation to the development and operation of the Subject Land through the cooperation with Beijing Chao Lai.

Business Plan of the Target Group

The Company intends to develop the Subject Land into low density, double storey deluxe hotel villas supplemented by conferencing facilities equipped with basement, luxurious amenities and gardening. The total number of hotel villas to be constructed will be around 80 to 100. They will be operated in the form of serviced apartments and leased out on short to medium terms. Tenants of the serviced apartments could also enjoy the golf and spa facilities of the ‘‘Bayhood No. 9 Club’’.

The development of the Subject Land will be subject to two phases. The first phase, representing around 40% of the whole construction project, will commence in the third quarter of 2012 and is expected to be completed in the third quarter of 2013.

The second phase, representing the remaining 60% of the construction project, will commence in the third quarter of 2013 and is expected to be completed in the third quarter of 2014.

Estimated Capital Commitment of the Group:

	RMB
First Phase	335 million
— Civil Engineering Construction	88 million
— Interior decoration and furniture	152 million
— Other (ventilation, air-conditioning, water and
sewage, electricity, fire prevention)	80 million
— Gardening	15 million
Second Phase	503 million
— Civil Engineering Construction	132 million
— Interior decoration and furniture	228 million
— Other (ventilation, air-conditioning, water and
sewage, electricity, fire prevention)	120 million
— Gardening	23 million

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On 11 April 2012, the Target Group has entered into a subcontracting agreement with a PRC contractor, an independent third party to the Vendor, the Company and their respective connected persons. Pursuant to such subcontracting agreement, (i) the construction cost of the first phase will only be paid within 18 months upon completion of the verification of the quality of the construction of the first phase; and (ii) the construction cost of the second phase will only be paid within 18 months upon completion of the verification of the quality of the construction of the second phase.

Material terms of the Second Cooperation Agreement entered into between the PRC Company and 北京朝來 (Beijing Chao Lai*)

Parties: The PRC Company 北京朝來 (Beijing Chao Lai*)

Period: 30 January 2012 to 31 May 2048

Material Terms:

. The PRC Company has been granted the development and operation rights of the Subject Land and will be in charge of the daily operation and management of the Subject Land up to 31 May 2048.
. The PRC Company plans to build premier low-density double storied deluxe hotel villas and conferencing facilities equipped with basement on the Subject Land with a total gross area of approximately 80,404 square meters. The developments on the Subject Land could not be sold to external parties.
. The PRC Company guarantees to contribute an annual guaranteed profit of RMB6 million from 30 January 2012 to 31 May 2048 as fees for the development and operation rights of the Subject Land to 北京朝來 (Beijing Chao Lai*). Such annual fee is subject to an increase of 10% every 5 years starting from 1 June 2013.
. 北京朝來 (Beijing Chao Lai*) will not be entitled to any profit arising from the development and operation rights of the Subject Land save for the above annual distributions from the PRC Company.
. The PRC Company guarantees the fair value of all the developments on the Subject Land at the expiry of the Second Cooperation Agreement will not be lower than RMB65 million.
. The Second Cooperation Agreement can only be terminated if both parties agree to the termination; and

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. The PRC Company will have first right of renewal to renew the Second Cooperation Agreement upon its expiry.

POTENTIAL CONTINUING CONNECTED TRANSACTION

As Beijing Chao Lai will become a subsidiary of Zhou Hai Tong Da upon the payment of the compensation amount for the land use right of the Subject Land by Zhou Hai Tong Da on behalf of Beijing Chao Lai, the Company will comply with the relevant Chapter 14A requirements about the annual payment of RMB6 million (subject to an increase of 10% every 5 years starting from 1 June 2013) to Beijing Chao Lai when it becomes a subsidiary of Zhou Hai Tong Da.

FINANCIAL INFORMATION OF THE TARGET GROUP

No audited financial statements of the Target Company, the Hong Kong Company and the PRC Company have been prepared since their incorporation on 9 June 2011, 11 July 2011 and 11 January 2012 in the BVI, Hong Kong and the PRC respectively.

The following is the financial information of the Target Group as extracted from its unaudited management accounts as provided by the Vendor from the date of incorporation of the Target Company on 9 June 2011 up to 31 March 2012, which was prepared in accordance with Hong Kong Financial Reporting Standards:

From 9 June 2011 up to 31 March 2012

(unaudited) HK$’000

Turnover	Nil
Loss before taxation	8
Taxation	Nil
Loss after taxation	8
Net liability	8

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REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITION

The Group is engaged in (i) media business; (ii) properties investment through jointly controlled entities; and (iii) the provision of high-end recreational and tourism services through the management of ‘‘Bayhood No. 9 Club’’. ‘‘Bayhood No. 9 Club’’ is a membership-based luxury golf club near the city centre of Beijing and comprises an 18-hole championship golf course, an unique double-storey practice bays, the first PGA branded and managed golf academy in Asia, theme dining rooms serving Chinese and Western cuisine, spa facilities and retail shops. The Group acquired ‘‘Bayhood No. 9 Club’’ in 2011 from Mr. He Peng who has been acquainted with Mr. Yuen, the Chairman, an executive Director and a substantial shareholder of the Company, for more than 10 years. Mr. He and Mr. Yuen met each other through a co-investment in a media project in year 2000. Although the Subject Land is adjacent to ‘‘Bayhood No. 9 Club’’, the Company did not contemplate the Proposed Acquisition by January 2011 or any other date before the Shareholders’ meeting for the acquisition of ‘‘Bayhood No. 9 Club’’. The Company commenced negotiations with the Vendor in early March 2012 when the Vendor noticed that Beijing Chao Lai will soon be able to obtain the Rural Construction Planning Permit (鄉村建設規劃許可證) of the Subject Land.

The Group intends to develop the Subject Land as the extension of ‘‘Bayhood No. 9 Club’’. Low density, double-storey deluxe hotel villas and conferencing facilities equipped with basement, luxurious amenities and gardening will be built on it. They will be operated in the form of serviced apartments and leased out on short to medium terms. As ‘‘Bayhood No. 9 Club’’ is currently only equipped with golf, spa, dining and retail facilities, the development and operation of serviced apartments in the vicinity enables the Group to provide more comprehensive services to customers. Current and potential members of ‘‘Bayhood No. 9 Club’’ are considered to be the target customers for the project, which will also be branded as ‘‘Bayhood No. 9’’. The Group believes that the Proposed Acquisition will create considerable synergies to it and help it to tap further into the high-end recreational and tourism services sector.

Driven by the robust growth of the Chinese economy, the consuming power of local residents, especially the top niche group, has substantially increased. There is growing number of people who have developed a strong interest in and can afford luxurious residences or vacations with golf course and comprehensive club facilities. According to the recent Global Wealth Report issued by Credit Suisse in October 2011, the PRC was one of the six countries with the highest wealth increase and had about 10.17 million millionaires. This figure is expected to double in the coming five years. The Board believes that the increasing number of wealthy people in the nation will create a favourable environment for the luxury residences and vacations market which has plenty of room for growth in the PRC.

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The development and operation of the project near ‘‘Bayhood No. 9 Club’’ puts the Group in a better position to capture business opportunities that may arise in the market. Moreover, the expansion of high-end recreational and tourism services business will boost the Group’s revenue base and profitability, laying a solid foundation for its sustainable development.

In view of the above factors, the Directors (excluding the independent non-executive Directors who will express their views after having considered the advice of the independent financial adviser) are of the view that the Proposed Acquisition is in the interest of the Company and the Independent Shareholders as a whole.

Up to the date of this announcement, the Company does not contemplate any intention, negotiation, agreement, arrangement and understanding (concluded or otherwise) about any disposal, scaling down and/or termination of its existing businesses, particularly the media business, and/or major operating assets. The Vendor and/or Mr. Yuen do not intend to nominate any director/senior management to the Company in view of the Proposed Acquisition.

MANAGEMENT EXPERIENCE OF THE GROUP

Mr. Yuen, aged 48, has been appointed as the Chairman and Executive Director of the Company in August 2010. Mr. Yuen is also a shareholder and a director of Ming Bang Limited which is a substantial shareholder of the Company pursuant to Part XV of SFO. Mr. Yuen currently serves as a member of the standing committee of Beijing Youth Federation. Mr. Yuen has acquired extensive experiences in the commercial sector including trading, real estates, tourism and services since 1990.

In 2005, Mr. Yuen was appointed as senior vice president of Beida Jade Bird Group, mainly responsible for the sectors of cultural media and real estate, including the following real estate projects:

(i) Forest Hill, being located at Chaoyang Park, Beijing, and established in 2005, consisting of 155 luxurious detached villas, each of which has a basement, a private garden and a garage.
(ii) Beijing Richmond Park, being located at the Chaoyang District, Beijing, and completed in 2006, containing 306 apartments with club house facilities.

Mr. Yuen was the project in-charge for the above and was responsible for, including but not limited to, the concept formulation and customer targeting, the selection of design plan and construction material, the co-ordination of the construction team, and the quality control.

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CONTRIBUTION OF MR. YUEN TO THE TARGET GROUP

Mr. Yuen has invested approximately RMB95 million into the Target Group. In addition to the monetary investment from Mr. Yuen, Mr. Yuen and his team have assisted Beijing Chao Lai to successfully obtain the relevant Rural Construction Planning Permit (鄉村建設規劃許可證) issued by Beijing Municipal Commission of Urban Planning (北京市規劃委員會), which is a crucial permit for the proposed development of a total gross area of approximately 80,404 square meters on the Subject Land. Mr. Yuen and his team have also assisted Beijing Chao Lai to successfully obtain the following approvals and permits which are relevant to the proposed development on the Subject Land:

. Project approval by Beijing Municipal Commission of Development and Reform (北京市發展和改革委員會) and Beijing Municipal Commission of Urban Planning (北京市規劃委員會)
. Land use approval by Beijing Municipal Bureau of Land and Resources, Chaoyang Branch (北京市國土資源局朝陽分局)
. Environmental impact approval by Environmental Protection Bureau of Chaoyang District Beijing Municipality (北京市朝陽區環境保護局)
. Energy saving planning approval by Beijing Municipal Commission of Development and Reform (北京市發展和改革委員會)
. Transportation planning approval by Beijing Municipal Commission of Transport (北京市交通委)
. Civil defence planning approval by Beijing Municipal Bureau of Civil Defence (北京市民防局)
. Virescence planning approval by The Virescence Bureau of Chaoyang District Beijing Municipality (北京市朝陽區園林綠化局)

The Target Group could not proceed with the planning, construction and operation on the Subject Land without the above permits and approvals. These permits and approvals are unique to the project and are not transferrable. All these intangible assets being contributed by Mr. Yuen justifies the substantial increment in the Consideration. Therefore, the Board is of the view that the Consideration is fair and reasonable and in the interests of the Company and its Independent Shareholders as a whole.

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FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

Set out below is the fund raising activities conducted by the Company in the past twelve months prior to the date of this announcement:

Date of			Intended use of	Actual use of
Announcement	Event	Net Proceeds	Proceeds	Proceeds
6 May 2011	Rights issue of	HK$251 million by	To finance the	To finance the
	1,439,726,484	way of the rights	very substantial	very substantial
	Shares at the	issue of the	acquisition as	acquisition as
	subscription price	Company	announced by the	announced by the
	of HK$0.18 per		Company on 22	Company on 22
	Share on 13 June		February 2011	February 2011
	2011
19 December 2011	Placing of	Not less than	To be applied	Not yet utilized
	550,000,000	HK$2.25 million.	for the working
	Warrants	Additional	capital and future
		proceeds of HK$55	development
		million upon the	funds of the
		full exercise of the	Company
		subscription rights
		attaching to the
		Warrants

Save as disclosed above, the Company has not conducted any other fund raising activities in the past 12 months prior to the date of this announcement.

The Company does not contemplate any intention, negotiation, agreement, arrangement and understanding (concluded or otherwise) about equity fund raising to finance the business development of the Target Group. The Group is of the view that it that it is not necessary to consider equity fund raising to finance the development of the first phase of the Subject Land due to the following factors:

(i) The Group has approximately HK$201 million cash on hand as at 31st December 2011;
(ii) It is expected that approximately HK$100 million is to be realized in year 2012 through return of investments in movies and TV dramas in the past. Approximately HK$73 million of which would be generated from guaranteedreturn contracts pursuant to which the timing and amount of returns have been pre-fixed; and

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(iii) Other than internal working capital, the above construction has been partly financed by the subcontractor, which entered into a construction agreement with the PRC Company on 11 April 2012. Pursuant to such agreement, it is agreed that the construction cost of the first phase will only be paid within 18 months upon completion of the verification of the quality of the construction of the first phase.

The Group is also of the view that it is not necessary to consider equity fund raising to finance the development of the second phase of the Subject Land due to the following factors:

(i) Upon completion of the first phase, approximately 32,000 square meters will be available for leasing. By referencing to the average room rate and occupancy rate for high-end hotels in Beijing, it was assumed that the proposed project could charge at RMB55 per square meter per day with an annual occupancy rate of 60%, which will generate approximately RMB385 million rental income per annum to the Group; and
(ii) In accordance with the above subcontracting agreement dated 11 April 2011, it is agreed that the construction cost of the second phase will only be paid within 18 months upon completion of the verification of the quality of the construction of the second phase.

PROPOSED SHARE CONSOLIDATION

Further details of the Share Consolidation will be disclosed in a separate announcement to be released on or before 31 May 2012 and a circular to be despatched to the Shareholders in due course.

LISTING RULES IMPLICATIONS

– 31 –

In addition, the Vendor is a wholly-owned company of Mr. Yuen, who is an executive Director and a substantial shareholder of the Company, indirectly holding approximately 17.66% interests of the Company pursuant to Part XV of the SFO. Accordingly, the Vendor is a connected person of the Company by way of being an associate of Mr. Yuen and the Proposed Acquisition also constitutes a connected transaction pursuant to Rule 14A.13(1)(a) of the Listing Rules. The Proposed Acquisition and the transactions contemplated under the Acquisition Agreement are therefore subject to approval by the Independent Shareholders at the EGM by way of poll. Other than Mr. Yuen and his associates, who are required to abstain from voting on the relevant resolutions to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder, no other Shareholders are required to abstain from voting in respect of the resolutions relating to the Acquisition Agreement, and the transactions contemplated thereunder at the EGM.

GENERAL

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DEFINITIONS

In this announcement, unless the context does not permit or otherwise requires, the following terms shall have the following meanings:

‘‘Acquisition Agreement’’
the conditional sale and purchase agreement dated 25 May 2012 made between the Purchaser and the Vendor in relation to the Proposed Acquisition
‘‘acting in concert’’ has the meaning ascribed to this term under the Takeovers Code
‘‘associates’’ has the meaning ascribed to it in the Listing Rules
‘‘Bayhood No. 9’’
Beijing Bayhood No. 9 Business Hotel Limited* (北京北湖九號商務酒店有限公司), a company incorporated in PRC with limited liability, and is an indirect wholly-owned subsidiary of the Purchaser
‘‘Bayhood No. 9 Club’’
a membership-based luxury club managed by Bayhood No. 9 which comprises of business hotel facilities, an 18-hole golf course, driving range facilities, theme restaurants and cafes, spa facilities, retail shops, and the first PGA branded and managed golf academy in Asia
‘‘北京朝來北京朝來足球活動中心 (Beijing Chao Lai Football (Beijing Chao Lai)’’ Activities Centre), a collective enterprise incorporated in PRC which has been granted the development and operations rights of the Subject Land and the right to apply for the land use right of the Subject Land by the Villagers’ Committee
‘‘Beijing Chao Lai Consent the consent letter issued by Beijing Chao Lai Letter’’ consenting to the execution of the Second Cooperation Agreement
‘‘Board’’
the board of Directors

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‘‘Business Day(s)’’
‘‘BVI’’
‘‘Company’’
‘‘Completion’’
‘‘Completion Date’’
‘‘connected person(s)’’
‘‘Consideration’’
‘‘Consolidated Share(s)’’
‘‘Conversion Period’’
a day (other than a Saturday, Sunday or a public holiday and a day on which a tropical cyclone warning signal number 8 or above or a black rainstorm warning is hoisted in Hong Kong between 9:00 a.m. to 5:00 p.m.) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours
the British Virgin Islands
Media China Corporation Limited, a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the main board of the Stock Exchange
completion of the Proposed Acquisition in accordance with the terms and conditions of the Acquisition Agreement
within 5 Business Days following the date on which all the conditions precedent to the Acquisition Agreement have been fulfilled (or waived by the Purchaser) or such other date as the Purchaser and the Vendor may agree
has the meaning ascribed to this term under the Listing Rules
a consideration of HK$900 million which was determined in the manner as described in the subparagraph headed ‘‘Consideration’’ of this announcement and shall be payable by the Purchaser to the Vendor for the Proposed Acquisition pursuant to the payment terms as set out in the Acquisition Agreement
ordinary share(s) of HK$0.25 each in the share capital of the Company proposed to be created immediately after the Share Consolidation becoming effective
the period commencing from the issue date of the Convertible Note and ending at 4:00 p.m. on the Maturity Date (both dates inclusive)

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‘‘Conversion Price’’
‘‘Conversion Rights’’
‘‘Conversion Shares’’
‘‘Convertible Note’’
‘‘Convertible Note Certificate’’
‘‘Convertible Note Conditions’’
‘‘Director(s)’’
HK$0.10 per Conversion Share (equivalent to approximately RMB0.0813 per Conversion Share at the fixed conversion rate of RMB1.00 equal to HK$1.2302) subject to adjustments in accordance with the terms and conditions of the Convertible Note
the rights attached to the Convertible Note to convert the same or a part thereof into Conversion Shares pursuant to the terms and conditions of the Convertible Note
new Shares which fall to be allotted and issued by the Company following the exercise of the Conversion Rights attached to the Convertible Note at the Conversion Price and ‘‘Conversion Share’’ shall be construed accordingly
the zero coupon convertible note in the amount of RMB569 million (equivalent to the agreed converted amount of HK$700 million which amount will not be subject to any change notwithstanding variation in the conversion rate between HK$ and RMB) to be issued by the Company in favour of the Vendor with the Conversion Rights attached to satisfy part of the Consideration pursuant to the Acquisition Agreement with the benefit of and subject to the conditions of the Convertible Note or, as the context may require, any part of the principal amount thereof
the certificate to be issued in respect of the Convertible Note together with the Convertible Note Conditions
the terms and conditions of the Convertible Note to be attached to the Convertible Note Certificate with such attachments thereto
directors of the Company

– 35 –

‘‘EGM’’
an extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving the Proposed Acquisition and the transactions contemplated thereunder, the issue of the Convertible Note, the issue of the Conversion Shares following the exercise of the Conversion Rights and the granting of the Specific Mandate
‘‘First Cooperation Agreement’’
the cooperation agreement dated 16 May 2008 entered into by Beijing Chao Lai and Zhou Hai Tong Da, whereby Zhou Hai Tong Da has been granted the right to develop and operate the Subject Land up to 31 May 2048
‘‘Group’’
the Company and its subsidiaries
‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the PRC
‘‘Hong Kong Company’’
Estate Giant Limited, a company incorporated in Hong Kong with limited liability on 11 July 2011, which is owned as to 100% by the Target Company and is the owner of 100% equity interest in the PRC Company
‘‘HK$’’
Hong Kong dollars, the lawful currency of Hong Kong
‘‘Independent Board Committee’’
the independent board committee of the Company comprising Professor WEI Xin, Dr. WONG Yau Kar David JP, Mr. YUEN Kin and Mr. CHU Yuguo, independent non-executive Directors, established to advise the Independent Shareholders in respect of the Proposed Acquisition
‘‘Independent Shareholder(s)’’ Shareholder(s) other than the Vendor’s associates, Mr. Yuen and his associates, and any Shareholders who have a material interest in the Proposed Acquisition
‘‘Last Trading Day’’
25 May 2012, being the last trading day of the Shares on the Stock Exchange before the issue of this announcement
‘‘Listing Committee’’ has the meaning ascribed to this term under the Listing Rules

– 36 –

‘‘Listing Rules’’
‘‘Long Stop Date’’
‘‘Maturity Date’’
‘‘Mr. Yuen’’
‘‘Noteholder’’
‘‘PRC’’
‘‘PRC Company’’
‘‘Preference Share(s)’’
‘‘Promissory Note’’
‘‘Proposed Acquisition’’
‘‘Purchaser’’
‘‘RMB’’
the Rules Governing the Listing of Securities on the Stock Exchange
31 December 2012 or such other date as may be agreed by the Purchaser and the Vendor in writing
the day falling on the third anniversary from the date of issue of the Convertible Note
Mr. YUEN Hoi Po, being a Director, the Chairman and a substantial shareholder of the Company, and is interested in the entire issued share capital of the Vendor
holder of the Convertible Note
the People’s Republic of China, which for the purpose of this announcement only (unless otherwise indicated) excludes Hong Kong, Macau and Taiwan
北京北湖商務咨詢有限公司 (Beijing Beihu Business Consulting Company Limited*), a wholly-foreign owned enterprise established by the Hong Kong Company on 11 January 2012 in PRC with limited liability and being the wholly-owned subsidiary of the Hong Kong Company
preference share(s) of HK$0.01 each in the share capital of the Company. As at the date of this announcement, no preference share is in issue
the promissory note in the sum of HK$150 million to be executed by the Purchaser in favour of the Vendor on Completion for the purpose of settling part of the Consideration under the Acquisition Agreement
the proposed acquisition of the Sale Share by the Purchaser from the Vendor pursuant to the terms and subject to the conditions of the Acquisition Agreement
Unique Talent Group Limited, a company incorporated in BVI and a wholly-owned subsidiary of the Company
Renminbi, the lawful currency of PRC

– 37 –

‘‘Sale Share’’
1 ordinary share of USD1.00 in the issued share capital of the Target Company, representing the entire issued share capital of the Target Company
‘‘Second Cooperation the cooperation agreement dated 30 January 2012 Agreement’’ entered into by Beijing Chao Lai and the PRC Company, whereby the PRC Company has been granted the right to develop and operate the Subject Land up to 31 May 2048
‘‘SFO’’
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Share(s)’’
ordinary share(s) of HK$0.10 each in the share capital of the Company and shall include shares arising from any subdivisions or consolidations thereof
‘‘Shareholder(s)’’ holder(s) of the Shares
‘‘Share Consolidation’’
the proposed share consolidation of every five issued and unissued Shares in the share capital of the Company into two Consolidated Shares
‘‘Specific Mandate’’
a specific mandate for the Directors to issue the Conversion Shares
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Subject Land’’
580 acres (equivalent to approximately 387,000 square meters) of land located at 北京朝來足球活動中心 (Beijing Chao Lai Football Activities Centre*), which is adjacent to ‘‘Bayhood No. 9 Club’’
‘‘substantial shareholder’’ has the meaning ascribed to this term under the Listing Rules
‘‘Takeovers Code’’ Hong Kong Code on Takeovers and Mergers
‘‘Target Company’’ Yuan Shun Investments Limited, a company incorporated in BVI with limited liability on 9 June 2011
‘‘Target Group’’ the Target Company, the Hong Kong Company and the PRC Company

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‘‘trading day’’
a day on which the Stock Exchange is open throughout its usual trading hours for the business of dealing in securities that are listed thereon and ‘‘trading days’’ shall be construed accordingly
‘‘Vendor’’ Smart Concept Enterprise Limited, a company incorporated in the BVI and a wholly-owned company of Mr. Yuen, the chairman and a substantial shareholder of the Company
‘‘Villagers’ Committee’’
the villagers’ committee of Beihuqu Village, Lai Guang Ying Xiang, Chaoyang District, Beijing (北京市朝陽區來廣營鄉北湖渠村), being the owner of the Subject Land as at the date of this announcement
‘‘Warrants’’
the subscription rights as mentioned in the placing of unlisted warrants under general mandate announcement of the Company dated 19 December 2011. A total of up to 550,000,000 new shares will be issued upon full exercise of the subscription rights attaching to the Warrants
‘‘洲海通達北京洲海通達國際貿易有限公司 (Beijing Zhou Hai (Zhou Hai Tong Da)’’ Tong Da International Trading Company Limited*), a company incorporated in PRC which is beneficially wholly-owned by Mr. Yuen
‘‘Zhou Hai Tong Da Consent the consent letter issued by Zhou Hai Tong Da Letter’’ consenting to the execution of the Second Cooperation Agreement
‘‘%’’ per cent.
The English translation of the names of companies established in PRC referred to in this announcement is for reference only. The official names of those companies are in Chinese.

By the order of the Board

Media China Corporation Limited YUEN Hoi Po Chairman

Hong Kong, 25 May 2012

As at the date of this announcement, the Board comprises Mr. YUEN Hoi Po (Chairman and Executive Director), Mr. Hugo SHONG (Vice Chairman and Non-Executive Director), Mr. ZHANG Changsheng (Executive Director), Mr. Edward TIAN Suning (Non-executive Director), Professor WEI Xin, Dr. WONG Yau Kar David JP, Mr. YUEN Kin and Mr. CHU Yuguo (each an Independent Non-executive Director)

– 39 –

AI assistant

CHINA STATE CONSTRUCTION DEVELOPMENT HOLDINGS LIMITED — Capital/Financing Update 2012

49495_rns_2012-05-25_177f1aa1-deb1-4d87-86bc-9e20ff972303.pdf

MEDIA CHINA CORPORATION LIMITED

(1) VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

(2) PROPOSED GRANT OF SPECIFIC MANDATE

TO ISSUE NEW SHARES

AND

(3) PROPOSED SHARE CONSOLIDATION

THE PROPOSED ACQUISITION

PROPOSED GRANT OF SPECIFIC MANDATE TO ISSUE NEW SHARES

PROPOSED SHARE CONSOLIDATION

LISTING RULES IMPLICATIONS

GENERAL

THE ACQUISITION AGREEMENT

Asset to be acquired

Shareholding structure of the Target Group before and after the reorganization and upon Completion

Before the reorganization

Shareholding structure of the Target Group upon Completion

Consideration

Basis of the Consideration

Revenue

Business, Property and Income tax

Operating expenses and EBITDA

Capital expenditure

Working capital

Conditions Precedent

Completion

PROMISSORY NOTE

CONVERTIBLE NOTE

PROPOSED GRANT OF SPECIFIC MANDATE TO ISSUE NEW SHARES

Specific mandate

Application for listing

SHAREHOLDING STRUCTURE OF THE COMPANY BEFORE AND UPON COMPLETION

INFORMATION OF THE TARGET GROUP

Introduction of the Subject Land

Relationship between Beijing Chao Lai and Zhou Hai Tong Da

Relationship between the Target Group and Beijing Chao Lai

PRC legal opinion on the Subject Land

Principal business of the Target Group

Business Plan of the Target Group

Material terms of the Second Cooperation Agreement entered into between the PRC Company and 北京朝來 (Beijing Chao Lai*)

POTENTIAL CONTINUING CONNECTED TRANSACTION

FINANCIAL INFORMATION OF THE TARGET GROUP

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITION

MANAGEMENT EXPERIENCE OF THE GROUP

CONTRIBUTION OF MR. YUEN TO THE TARGET GROUP

FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

PROPOSED SHARE CONSOLIDATION

LISTING RULES IMPLICATIONS

GENERAL

DEFINITIONS

Media China Corporation Limited YUEN Hoi Po Chairman

Hong Kong, 25 May 2012

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CHINA STATE CONSTRUCTION DEVELOPMENT HOLDINGS LIMITED Capital/Financing Update 2012