Extrawell Pharmaceutical Holdings Limited — Proxy Solicitation & Information Statement 2002

Jun 20, 2002

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.

	Extrawell Pharmaceutical Holdings Limited 精優藥業控股有股有限公司* (incorporated in Bermuda with limited liability)

DESPATCH OF CIRCULAR, PROFORMA UNAUDITED
ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF
THE ENLARGED GROUP AND CONTINUING CONNECTED TRANSACTION

Further to the announcements dated 16th May, 2002, 6th June, 2002, and 13th June, 2002 (“Previous Announcements”), the Directors wish to announce that copies of the circular will be despatched to the Shareholders on 21st June, 2002 (“Circular”).

In addition, the Directors note that upon Completion, a sum of RMB20 million (equivalent to approximately HK$18.9 million) will remain owing from Bioraise High-Tech Investment Ltd., Shanghai (“Bioraise High Tech”) to Shanghai Biostar. Bioraise High Tech is an enterprise established under the law of PRC which is beneficially owned as to approximately 40% by Dr. Mao Yu Min, approximately 30% by Dr. Xie Yi and the remaining 30% by Mr. Li Jian He. Dr. Mao Yu Min and Dr. Xie Yi are Directors and also the ultimate beneficial owners of an existing substantial Shareholder, JNJ Investments while Mr. Li Jian He is an independent third party not connected with any of the Directors, chief executive or substantial Shareholders of the Company or any of it subsidiaries or their respective associates (save for his shareholdings in United Gene and Shanghai Biowindow). The amount represented advances to Bioraise High Tech made between 1st July, 2001 and 31st December, 2001 to finance its business activities. Pursuant to the Loan Agreement entered into on 13th June, 2002 between Bioraise High Tech as borrower, Shanghai Biostar as creditor and HK Biowindow as guarantor, such amount due will bear interest at 2% per annum with effect from the Completion Date and the maturity date falls on 30th June, 2003.

Since Gene Generation will after Completion become a 55% owned subsidiary of the Company and the ultimate beneficial owners of Bioraise High Tech are Dr. Mao Yu Min and Dr. Xie Yi, both being Directors and also the ultimate beneficial owners of an existing substantial Shareholder, JNJ Investments, the loan will constitute a continuing connected transaction (“Continuing Connected Transaction”) for the Company upon Completion pursuant to the Listing Rules.

Terms defined in this announcement shall have the same meaning as those defined in the Previous Announcements and the Circular unless the context otherwise requires. The Directors wish to announce that copies of the Circular will be despatched to the Shareholders on 21st June, 2002.

I. STATEMENT OF PROFORMA UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE ENLARGED GROUP

Information in respect of the proforma unaudited adjusted consolidated net tangible assets of the Company and its subsidiaries after the Completion (“Enlarged Group”) is contained in the Circular and have not been made available to the public previously.

The following statement of the proforma unaudited adjusted consolidated net tangible assets of the Enlarged Group is prepared based on the audited consolidated net assets of the Group as at 31st March 2001, taking into account the effects of certain other subsequent events of the Group since 31st March 2001 and the Completion, as described below:

	HK$’000
Audited consolidated net assets of the Group as at 31st March, 2001	119,130
Less: Intangible assets of the Group as at 31st March, 2001	(10,727)
Audited consolidated net tangible assets of the Group as at 31st March, 2001	108,403
Add: Unaudited net profit attributable to Shareholders for the six months ended 30th September, 2001	16,272
Net proceeds from placing 120,000,000 new Shares in December 2001	29,800
Acquisition of Right & Rise Limited pursuant to the sale and purchase agreement dated 9th December, 2001 (as amended by a supplemental agreement dated 13th December, 2001) (Note)	37,500
Less: Intangible assets of Right & Rise Limited (Note)	(95,000)
Add: Net proceeds from subscription of 120,000,000 new Shares announced on 24th May 2002	52,000
Unaudited adjusted consolidated net tangible assets of the Group before the Acquisition	148,975
Attributable tangible assets to the Enlarged Group	36,796
Less: Consideration of the Acquisition	(55,000)
Proforma unaudited adjusted consolidated net tangible assets of the Enlarged Group upon completion of the Acquisition	130,771
Proforma unaudited adjusted consolidated net tangible assets per Share before the Acquisition based on 2,290,000,000 Shares in issue	HK6.5 cents
Proforma unaudited adjusted consolidated net tangible assets per Share after the Acquisition based on 2,290,000,000 Shares in issue	HK5.7 cents

Note: Details of the acquisition are set out in the circular to the Shareholders dated 11th January, 2002.

II. CONTINUING CONNECTED TRANSACTION

The Directors note that upon Completion, a sum of RMB20 million (equivalent to approximately HK$18.9 million) will remain owing from Bioraise High Tech to Shanghai Biostar. The amount represented advances to Bioraise High Tech made between 1st July, 2001 and 31st December, 2001 to finance its business activities. Bioraise High Tech is beneficially owned as to approximately 40% by Dr. Mao Yu Min, approximately 30% by Dr. Xie Yi and the remaining 30% by Mr. Li Jian He. Dr. Mao Yu Min and Dr. Xie Yi are Directors and also the ultimate beneficial owners of an existing substantial Shareholder, JNJ Investments while Mr. Li Jian He is an independent third party not connected with any of the Directors, chief executive or substantial shareholders of the Company or any of it subsidiaries or their respective associates (save for his shareholdings in United Gene and Shanghai Biowindow). Pursuant to the Loan Agreement dated 13th June, 2002 entered into between Bioraise High Tech as borrower, Shanghai Biostar as creditor and HK Biowindow as guarantor, such amount due will bear interest at 2% per annum with effect from the Completion Date and the maturity date falls on 30th June, 2003. Bioraise High Tech has the right to repay the Loan before the expiry date. If the principal amount of the loan is not repaid by the expiry date, interest will be charged at the rate of 5% per annum with effect from 1st July, 2003 up to the date of repayment of the entire principal amount of the loan. HK Biowindow has undertaken to carry out, in the event of default by Bioraise High Tech, the obligations of Bioraise High Tech under the Loan Agreement on its behalf as if HK Biowindow is the borrower of the Loan. In the event that any sum is owing to Gene Generation or any of its subsidiaries from HK Biowindow or any of its associates (excluding (i) Gene Generation and its subsidiaries; and (ii) the Company and its subsidiaries) at Completion, such amount (deducting therefrom any sum repaid during the period up to the first anniversary of the Completion Date) shall be set off against the Promissory Note to be matured on the first anniversary of the Completion Date or Promissory Note(s) to be matured thereafter.

In view of the above, the Directors consider that the terms of the Loan Agreement was made on normal commercial terms and that such terms are fair and reasonable so far as the Independent Shareholders are concerned. In addition, NSC Securities, independent financial adviser to the Independent Board Committee, consider that the terms of the Continuing Connected Transaction are fair and reasonable so far as the Independent Shareholders are concerned. Please refer to the letter of advice from NSC Securities as set out in the Circular.

Since Gene Generation will after Completion become a 55% owned subsidiary of the Company and the ultimate beneficial owners of Bioraise High Tech are Dr. Mao Yu Min and Dr. Xie Yi, both being Directors and each being an ultimate beneficial owner of an existing substantial Shareholder, JNJ Investments, the loan will constitute a connected transaction upon Completion pursuant to the Listing Rules.

The Acquisition (inclusive of the subsisting Continuing Connected Transaction) is subject to the approval of the Independent Shareholders. JNJ Investments, Fudan Biotech, HK Biowindow, Dr. Mao Yu Min, Dr Xie Yi and their respective associates shall abstain from voting in respect of the Acquisition (inclusive of the subsisting Continuing Connected Transaction) at the SGM.

Your attention is drawn to that only one resolution is proposed to consider and, if thought fit, approve the Acquisition (inclusive of the subsisting Continuing Connected Transaction). Accordingly, if the resolution is passed, the Acquisition inclusive of the Continuing Connected Transaction (which subsisted prior to the entering into of the Agreement and will become a connected transaction upon Completion) will be approved and will be implemented upon the Conditions being fulfilled. Otherwise, the proposed Acquisition (inclusive of the subsisting Continuing Connected Transaction) will not proceed at all.

By Order of the Board
Extrawell Pharmaceutical Holdings Limited
Mao Yu MinChairman
Hong Kong, 20th June, 2002

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable inquires, that to the best of their knowledge, the opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

* For identification purpose only

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