GoFintech Quantum Innovation Limited — M&A Activity 2002

Apr 23, 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.

（太平洋興業集團有限公司）*

(incorporated in Bermuda with limited liability)

ANNOUNCEMENT

Independent Financial Adviser to Pacific Challenge Holdings Limited

Anglo Chinese Corporate Finance, Limited

SUMMARY

Further to the company's announcement dated 12th April 2002, the board of directors (the "board") of Pacific Challenge Holdings Limited ("Pacific Challenge" or the "company") received a revised voluntary conditional offer on 16th April, 2002 from Yu Ming Investment Management Limited ("Yu Ming") on behalf of Ontime Capital Investment Limited ("Ontime Capital" or the "offeror") to acquire all of the issued share capital of the company at an offer price of HK$0.01 for each share. In addition, Ontime Capital has stated that it will undertake to pay to shareholders, who accept the offer, 90% of all legally distributable cash balances of the company as soon as practicable after it has obtained control of the board.

The board has discussed the revised terms of the proposals made by Yu Ming with its independent financial adviser Anglo Chinese Corporate Finance, Limited ("Anglo Chinese") and its legal advisers. The proposals set out in the announcement to maximise the amount of the cash distribution could result in the group being in breach of its legal obligations and could damage the ability of the group to conduct its business. The company is obtaining legal advice on whether certain of the offeror's proposals would be an unlawful interference with the group's legal obligations and will take such action against the offeror, its advisers and their respective directors as is necessary to protect the interests of the group and Pacific Challenge shareholders.

The board confirms that the group will continue to operate and to incur and discharge contractual obligations in the ordinary course of its business, as it is entitled to do during an offer under the Takeover Code. Any statement by the offeror expressing or implying that the company should or could be restricted from doing so is without foundation and should be disregarded.

Furthermore the board wishes to emphasise that the value of the proposed offer is still only HK$0.01 per share. The amount of the distribution, if effected, is currently not quantifiable. In addition to implementation of the proposed offer which give rise to a number of practical, technical and legal difficulties and the board and its advisers consider that the proposals as detailed in the announcement by Ontime Capital are incapable of being completed in the manner described. In view of this shareholders are advised to attach little credence to the proposals.

Accordingly shareholders are strongly advised to take no action in connection with the announcement issued by Yu Ming until they have been advised on the mechanics and contractual arrangements to effect the offer and distribution and have considered the views of the board and Anglo Chinese.

In the meantime, shareholders are urged to exercise extreme caution in dealing in the shares of the company.

Trading in the securities of the company on the Stock Exchange was suspended at the request of the company with effect from 9:30 a.m. on 17th April, 2002 pending release of this announcement. Application has been made by the company for the resumption of trading in the securities of the company with effect from 9:30 a.m. on 23rd April, 2002.

The revised proposals

Further to the announcement dated 12th April, 2002, the board received a revised voluntary conditional offer on 16th April, 2002 from Yu Ming on behalf of Ontime Capital to acquire all of the issued share capital of the company at an offer price of HK$0.01 for each share. The company has been informed that Ontime Capital has stated that it undertakes to the shareholders that after it takes control of the board through the completion of the offer, it will cause the company to pay to shareholders 90% of all legally distributable cash balances ("cash distribution") of the company as soon as practicable. Shareholders who accept the offer will also be entitled to the cash distribution as if they were on the shareholders' register on the record date to be fixed for the cash distribution. Ontime Capital also stated that based on the management records of the company, the cash balance of the company and its subsidiaries (the "group") amounted to HK$203.4 million as at 16th April, 2002 and based on 286,480,000 shares in issue, and on the assumption that the cash balance is fully distributable, the cash distribution was estimated to amount to approximately HK$0.64 per share, subject to actual review of the accounts of the group after the completion of the proposed offer.

On 4th February, 2002, the company issued share options under the share option scheme to subscribe a total of 23,888,000 shares at an exercise price of HK$0.32 per share. The revised proposals do not take into account the outstanding options.

The company issued an announcement dated 27th April, 2001 and a circular dated 17th May, 2001 in respect of its direct investment joint venture, El-Skytech Investment Company Limited owned as to 50% by Key Foundation Limited, a wholly owned subsidiary of the company and as to fifty percent by Sky Tech Investment Limited. In view of the change in the economic environment, no investments were made by the joint venture and both shareholders withdrew substantially all of their initial investment by way of shareholders' loan from the joint venture. The company's shareholders' loan and accrued management fee amounting to over HK$50 million are therefore currently reflected in the cash balances of the group and further announcement will be made on any material development on the company's shareholders' loan from the joint venture.

The company's request for details on the implementation of the proposals

The board has discussed the revised terms of the proposals made by Yu Ming with its independent financial advisers, Anglo Chinese and its legal advisers. As it is unclear how the cash distribution will be effected and the interests of shareholders who accept the offer are to be fully protected, the board made a request to Yu Ming on 17th April, 2002 to provide further information on the mechanics and contractual arrangements to effect the offer and cash distribution and how these arrangements comply with the anti-avoidance provisions of the Stamp Duties Ordinance. This request has been made under rule 1.3 of the Takeover Code in order that the board can be satisfied that offeror is able to implement the proposals in full. The board has not received any answer to its request. In view of the uncertainties on the structure and timing of the proposed offer and cash distribution, shareholders are strongly advised to take no action in connection with the announcement issued by Yu Ming until the board has been informed on the mechanics and contractual arrangements to effect the offer and distribution and the board has reported further to shareholders.

The offeror's proposal for obtaining board control

The offeror has also stated that if the existing directors refuse to resign from the board upon the offer becoming unconditional, the offeror would forthwith proceed to requisition a general meeting to take control of the board by way of appointment of new directors, and, or removal of all present directors of the board to form an absolute majority of the board. The board has received legal advice that the offeror would not be able to obtain board control in the manner set out in its announcement.

The offeror's proposals to maximise the cash distribution

The board considers the offeror's proposals set out in the announcement to maximise the amount of the cash distribution could result in the group being in breach of its legal obligations and could damage the ability of the group to conduct its business. Under the proposals to maximise the cash distribution, after obtaining board control but before making the cash distribution, the offeror has undertaken among other things, to cause the company to suspend all payments committed by the company after 28th March 2002. The company is obtaining legal advice on whether that certain of the offeror's proposals would be an unlawful interference with the group's legal obligations and will take such action against the offeror, its advisers and their respective directors as is necessary to protect the interests of the group and Pacific Challenge shareholders.

The board confirms that the group will continue to operate and to incur and discharge contractual obligations in the ordinary course of its business, as it is entitled to do during an offer under the Takeover Code. Any statement by the offeror expressing or implying that the company should or could be restricted from doing so is without foundation and should be disregarded.

Uncertainty of the offeror's proposals

Furthermore the board wishes to emphasise that the value of the proposed offer is still only HK$0.01 per share. The amount of the distribution if effective is currently not quantifiable. Given the incoherent nature of the proposal and a number of practical, technical and legal difficulties in its implementation, the board and its advisers consider that current proposal as detailed in the announcement by Ontime Capital dated 18th April, 2002 is incapable of being completed in the manner described. In view of this shareholders are advised to attach little credence to the proposal.

Other matters

Anglo Chinese has made a submission to the Takeover and Mergers Panel that the original offer of HK$0.01 per share was not a genuine offer being made with objective of acquiring shares in the company, was not being made on a bona fide offer and constituted an abuse of the takeover process under the Takeover Code. The matter was due to be heard by the Panel on 18th April, 2002 but in view of the material revision of the terms of the proposals, the meeting of the Panel was cancelled.

In the letter dated 20th April, 2002 Yu Ming requested that the company provide it with the latest management accounts of the group and that of the legal entity conducting the corporate finance business. The company declined this request; any information relating to the financial and trading condition of the group to be disclosed by the board, will be made available to Pacific Challenge shareholders as a whole.

Further announcement will be made on any further development of the proposed offer. The company will dispatch to shareholders a circular setting out the advice and recommendation of the board and Anglo Chinese in respect of the revised proposals following dispatch of the offeror's document.

Trading in the securities of the company on the Stock Exchange was suspended at the request of the company with effect from 9:30 a.m. on 17th April, 2002 pending release of this announcement. Application has been made by the company for the resumption of trading in the securities of the company with effect from 9:30 a.m. on 23rd April, 2002.

In the meantime, shareholders are urged to exercise extreme caution in dealing in the shares of the company.

For and on behalf of

Pacific Challenge Holdings Limited

Chan Yim Fong, Teli

Executive Director

22nd April, 2002, Hong Kong

The directors of Pacific Challenge Holdings Limited jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge, 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 Hong Kong i-mail"