Cocoon Holdings Limited — Share Issue/Capital Change 2000

Sep 5, 2000

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.

21CN CyberNet Corporation Limited

(Incorporated in Bermuda with limited liability)

Website: http://www.irasia.com/listco/hk/21cncybernet

ISSUE OF 58,910,000 NEW SHARES,

DISPOSAL OF 176,722,000 EXISTING SHARES BY

UNI-TECH INTERNATIONAL GROUP LIMITED AND

APPOINTMENT AND RESIGNATION OF DIRECTORS

The Directors are pleased to announce that on 4th September, 2000, the Company entered into the Subscription Agreement with the Subscribers for the subscription of 58,910,000 new Shares at HK$1.20 per Share, representing about 2.00% of the existing issued share capital of the Company and approximately 1.93% as enlarged by the AIMCF Subscription and the Subscription.

The proceeds from the Subscription of HK$70,692,000 is intended to be used as additional general working capital and future investments of the Company.

The Directors have been informed by Uni-Tech of the Disposal Agreement entered into between Uni-Tech and Goldreward.com on 4th September, 2000 in relation to the disposal of 176,722,000 existing Shares owned by Uni-Tech at HK$1.20 per Share. As such, upon completion of the AIMCF Subscription, the Disposal and the Subscription, the public shareholders of the Company will hold 768,273,100 Shares, representing 25.11% of the then issued share capital of the Company.

The Board would like to announce that Mr. TSUI Yiu Wa, Alec has been appointed as an independent non-executive Director with effect from 1st September, 2000 and Mr. KOON Wing Yee resigned as the Director with effect from 24th August, 2000.

THE SUBSCRIPTION AGREEMENT

Date :	4th September, 2000
Issuer :	the Company
Subscribers :	Perfect Deed and Yi Hua

The Subscribers and their respective beneficial owners are independent of and not connected with any of the Directors, chief executives or substantial shareholders of the Company, any of its subsidiaries or their respective associates (as defined under the Listing Rules).

Number of Subscription Shares

58,910,000 new Shares, representing approximately 2.00% of the existing issued share capital of the Company or approximately 1.93% of the issued share capital of the Company as enlarged by the AIMCF Subscription and the Subscription. Pursuant to the Subscription Agreement, 44,180,000 new Shares will be subscribed by Perfect Deed and the balance by Yi Hua. The 58,910,000 new Shares will be issued under the general mandate granted to the Directors at the special general meeting held on 3rd April, 2000.

The Subscription Shares will rank pari passu in all respects with the existing Shares in issue as at the issue date of the Subscription Shares including the right to receive all future dividends and distributions which may be declared, made or paid.

Subscription Price

HK$1.20 per Subscription Share, which represents a discount of approximately 19.46% to the closing price of the Shares of HK$1.49 as quoted on the Stock Exchange as at 4th September, 2000, the date of this announcement or a discount of about 12.73% to the average closing prices of the Shares of approximately HK$1.375 for the 10 trading days up to and including 4th September, 2000.

In the event the Company issue or agree to issue any Shares, warrants or other securities or grant or agree to grant any option over or right to acquire or convert into any share to any existing holders of Shares (otherwise than pro rata to the holdings of all existing holders of Shares) or other third parties resulting in such existing holder of Shares or third parties acquiring Shares at a price of less than HK$1.20 per Share between the date of the Subscription Agreement and the date of completion of the Subscription Agreement, the number of the Subscription Shares shall be adjusted so that the Subscription Price will be equal to the price at which such existing holder of Shares or third parties are paying for the Shares.

Conditions of the Subscription Agreement

The Subscription Agreement is conditional upon, among others, the followings:

(a) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Subscription Shares;

(b) the completion of the Disposal; and

(c) the due completion of the AIMCF Subscription.

If the conditions of the Subscription Agreement are not fulfilled or waived by 21st September, 2000, the Subscription Agreement will terminate unless the parties to the Subscription Agreement agree in writing. Completion of the Subscription is on the third business day following the fulfillment of the conditions or the waiver of such conditions.

Use of proceeds

The proceeds from the Subscription of HK$70,692,000 is intended to be used as additional general working capital and future investments of the Company.

THE DISPOSAL

The Directors have been informed by Uni-Tech that on 4th September, 20000, Uni-Tech and Goldreward.com entered into the Disposal Agreement for the disposal of 176,722,000 existing Shares, representing approximately 6.00% of the existing issued share capital of the Company or approximately 5.78% of the issued share capital of the Company as enlarged by the AIMCF Subscription and the Subscription, held by Uni-Tech to Goldreward.com at HK$1.20 per Share. The Directors were also informed that the Disposal is anticipated to be completed by 15th September, 2000.

Upon completion of the AIMCF Subscription, the Subscription and the Disposal, CITIC through Perfect Deed and Goldreward.com will be interested in 220,902,000 Shares, representing approximately 7.50% of the existing issued share capital of the Company and approximately 7.22% as enlarged by the AIMCF Subscription and the Subscription. The Directors believe that the Company will benefit from having CITIC as the strategic investor. It is the intention of the Company to explore telecommunication-related and/or technology-related investment opportunities with CITIC.

SHAREHOLDING STRUCTURE

Set out below is the shareholding structure of the Company as at the date of this announcement and upon completion of the AIMCF Subscription, the Disposal and Subscription:

	As at the date of this announcement		Upon completion of the Disposal and Subscription
	Number of Shares	Approximate percentage	Number of Shares	Approximate percentage
Easyknit International Holdings Limited	405,965,700	13.53	405,965,700	13.27
Uni-Tech International Group Limited	2,061,749,200	68.72	1,885,027,200	61.62
Public shareholders	532,641,100*	17.75	768,273,100	25.11
	3,000,356,000	100.00	3,059,266,000	100.00

• Of which 55 million Shares will be held by Asian Infrastructure Mezzanine Capital Fund upon completion of the AIMCF Subscription which is expected to be on or before 21st September, 2000.
• APPOINTMENT AND RESIGNATION OF DIRECTORS

The Board would like to announce that Mr. TSUI Yiu Wa, Alec has been appointed as an independent non-executive Director with effect from 1st September, 2000 and Mr. KOON Wing Yee resigned as the Director with effect from 24th August, 2000.

GENERAL

The Group is principally engaged in investment in companies conducting information technology including telecommunications, media and internet-related activities in China and property investment activities.

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

“AIMCF Subscription”	the subscription of 55 million new Shares by Asian Infrastructure Mezzanine Capital Fund pursuant to the subscription agreement dated 24th July, 2000, details of which were disclosed in the announcement of the Company dated 24th July, 2000
“CITIC”	China International Trust and Investment Corporation, a company incorporated in the People's Republic of China
“Company”	21CN CyberNet Corporation Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Stock Exchange
“Directors”	the directors of the Company
“Disposal”	the disposal of 176,722,000 existing Shares at HK$1.20 per Share pursuant to the Disposal Agreement
“Disposal Agreement”	the agreement dated 4th September, 2000 entered into between Uni-Tech and Goldreward.com for the disposal of 176,722,000 existing Shares held by Uni-Tech to Goldreward.com at HK$1.20 per Share
“Goldreward.com”	Goldreward.com Ltd., a company incorporated in the British Virgin Island with limited liability and a wholly owned subsidiary of CITIC, who is independent of and not connected with any of the Directors, chief executives or substantial shareholders of the Company, any of its subsidiaries or their respective associates (as defined under the Listing Rules)
“Group”	the Company together with its subsidiaries
“Perfect Deed”	Perfect Deed Company Limited, a company incorporated in the British Virgin islands with limited liability and a wholly owned subsidiary of CITIC
“Share(s)”	shares of HK$0.01 each in the share capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription”	the subscription of 58,910,000 new Shares at the Subscription Price pursuant to the Subscription Agreement
“Subscription Agreement”	the agreement dated 4th September, 2000 entered into between the Company and Subscribers in relation to the Subscription
“Subscription Price”	HK$1.20 per Subscription Share
“Subscription Shares”	58,910,000 new Shares to be issued by the Company at HK$1.20 per Share pursuant to the Subscription Agreement
“Uni-Tech”	Uni-Tech International Group Limited, a company incorporated in the British Virgin Islands with limited liability, and the controlling shareholder of the Company
“Yi Hua”	Yi Hua Assets Limited, a company incorporated in the British Virgin Islands with limited liability, which is owned as to 50% by BNP Paribas Peregrine Limited and 50% by Mr. Leung Pak To, Francis

By Order of the Board
Chen Xiao Ying
Executive Chairman
Hong Kong, 4th September, 2000