G-Resources Group Limited — Capital/Financing Update 2001

Mar 30, 2001

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.

STAR BIO-TECH (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

PROPOSED ISSUE OF CONVERTIBLE BOND

The Company has entered into the Agreement with the Subscriber on 29th March 2001 under which the Company agreed to issue the Bond in the aggregate principal amount of HK$28,800,000 to the Subscriber.

The Conversion Shares to be issued upon conversion of the Bond at the Initial Conversion Price will represent approximately 11.14 per cent. of the existing issued share capital of the Company and approximately 10.02 per cent. of the enlarged issued share capital of the Company.

The Subscriber is independent of, and not connected with, the directors, chief executive and substantial shareholders of the Company or its subsidiaries, or any of their respective associates (as defined in the Listing Rules of the Stock Exchange).

Completion of the Agreement is conditional upon the Conditions as listed below being satisfied.

The issue of the Bond and of the Conversion Shares are within the general mandate given to the Directors at the special general meeting of the Company held on 15th December 2000.

‍THE AGREEMENT

The Directors of the Company announces that the Agreement has been entered into between the Company and the Subscriber on 29th March 2001 pursuant to which the Subscriber will subscribe for the Bond in the aggregate principal amount of HK$28,800,000 upon completion. Completion of the Agreement will take place on the second Banking Day after satisfaction of all conditions listed below.

The Subscriber is independent of, and not connected with, the directors, chief executive and substantial shareholders of the Company or its subsidiaries or their respective associates (as defined in the Listing Rules).

‍COMPLETION

Completion of the Agreement is conditional on the following conditions (amongst others) being satisfied or waived:

(a) (if required) the obtaining of the approval of the Bermuda Monetary Authority for the issue and any subsequent transfer of the Bond; and

(b) the granting by the Stock Exchange of listing of and permission to deal with the Conversion Shares;

If any of the conditions have not been satisfied or waived on or before 2nd May 2001 (or such later date as the Company and the Subscriber may agree in writing), this Agreement shall terminate.

‍PRINCIPAL TERMS OF THE CONVERTIBLE BOND

The principal terms of the Convertible Bond are summarized below:

Amount of issue

HK$28,800,000.

‍Initial Conversion Price

The conversion price of the Bond is initially HK$0.018, subject to adjustments as set out in the terms and conditions set out in the form as attached to the Agreement.

The Initial Conversion Price represents a premium of 50 per cent. to the average closing price per Share for the last 10 trading days ended on 28th March 2001 of HK$0.012. The Conversion Price also represents a premium of 50 per cent. to the closing price per Share as quoted on the Stock Exchange of HK$0.012 on 28th March 2001, being the last trading day prior to the signing of the Agreement.

‍Interest

The Bond will bear interest from the date of issue at the rate of 4 per cent. per annum, which will be payable half yearly in arrears on dates following six months, one year, one year and six months and two years after the date of issue of the Bond.

‍Maturity Date

The second anniversary of the date of issue of the Bond. Unless fully converted as provided in the Agreement, the Company shall redeem the Bond on the Maturity Date.

‍Conversion provisions

The Bondholder will have the right, at any time after the date of issue of the Bond to convert the Bond into Shares at the Conversion Price on any Banking Day prior to the Maturity Day (excluding the Maturity Day).

Conversion Shares

1,600,000,000 Shares will fall to be issued upon full conversion of all the Bond at the Initial Conversion Price representing approximately 11.14 per cent. of the existing issued share capital of the Company and approximately 10.02 per cent of the enlarged issued share capital of the Company.

The Conversion Shares will rank pari passu in all respects with the Shares in issue as at the date of the registration of Shares issued upon conversion of the Bond.

‍Voting

The Bondholder will not be entitled to attend or vote at any meetings of the Company by reason only of it being a Bondholder.

‍Transferability

The Bond may be transferred or assigned to any third party approved in advance by the Company. A Bondholder shall not, without the prior approval of the Company and the Stock Exchange, transferred or assigned the Bond (or any part thereof) to any person which is a connected person (as defined in the Listing Rules) of the Company.

The Company undertakes to the Stock Exchange that it will disclose to the Stock Exchange any dealings in the Bond by the connected persons or their associates.

‍DIRECTORS' GENERAL MANDATE

The issue of the Bond and of the Conversion Shares are within the general mandate given to the Directors at the special general meeting of the Company held on 15th December 2000.

‍REASONS FOR THE ISSUE OF THE BOND

The Directors consider that the issue of the Bond is an appropriate means of raising additional capital for the Company since it will not have an immediate dilution effect on the shareholding of the existing shareholders of the Company; and if the conversion rights attached to the Bond are exercised, the loan capital represented by the Bond that are exercised will become share capital of the Company and the holders of such Bond will become shareholders of the Company.

The Directors consider that the terms of the Agreement, which were arrived at after arm's length negotiations between the Company and the Subscriber, are fair and reasonable and are in the interests of the Company.

‍USE OF PROCEEDS

The net proceeds of this transaction will amount to approximately HK$28,800,000 in cash which will be paid by the Subscriber at Completion and will be used as general working capital for the businesses of the Group. At present, the Company has no specific plan to utilize the capital.

‍APPLICATION FOR LISTING

No application will be made for listing of, or permission to deal in, the Bond on the Stock Exchange or any other stock exchange. An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Conversion Shares.

‍DEFINITIONS

In this announcement, unless the content otherwise requires, the following expressions have the following meanings:

“Agreement”	The conditional agreement entered into between the Company and the Subscriber dated 29th March 2001 in respect of the subscription of the Bond
“Banking Day”	A day (excluding Saturday) on which banks are open for business in Hong Kong
“Board”	The board of Directors
“Bond”	The convertible bond in the aggregate principal amount of HK$28,800,000 to be issued to the Subscriber
“Bondholder(s)”	The holder(s) of the Bond from time to time
“Company”	Star Bio-Tech (Holdings) Limited, a company incorporated in Bermuda with limited liability and its shares are listed on the Stock Exchange
“Conversion Shares”	1,600,000,000 Shares to be issued upon full conversion of the Bond
“Directors”	The directors of the Company
“Group”	The Company and its subsidiaries
“Initial Conversion Price”	HK$0.018 per Share subject to adjustments
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock Exchange
“Share(s)”	Share(s) of a nominal value of HK$0.01 each in the capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscriber”	Gain Master Assets Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly owned subsidiary of Capital Strategic Investment Limited (whose shares are listed on the Stock Exchange)
“HK$”	Hong Kong dollars

By Order of the Board
Wong Kam Fu, NelsonChairmanHong Kong, 29th March 2001