Hony Media Group — M&A Activity 1999

Nov 11, 1999

Listed Company Information

CHINA STRATEGIC<0235> - Announcement The Stock Exchange of Hong Kong Limited (the `Stock Exchange') 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. CHINA STRATEGIC HOLDINGS LIMITED (incorporated in Hong Kong with limited liability) DISCLOSEABLE TRANSACTION AND DELAY OF DESPATCH OF CIRCULAR - China Strategic Holdings Limited (the `Company') acquired 1,000,000,000 shares of HK$0.10 each in Pearl Oriental Holdings Limited (`Pearl Oriental') on 11 October, 1999 for a total consideration of HK$182 million (`Transaction I'). In addition, the Company entered into a placing agreement with Pearl Oriental to subscribe for a further 1,000,000,000 shares of HK$0.10 each in Pearl Oriental for a total consideration of HK$210 million (`Transaction II') Pursuant to the Listing Rules, Transaction I and Transaction II collectively constitute a discloseable transaction. A circular containing further information on these transactions will be sent to the Company's shareholders in due course. - The despatch of the circular (the `Circular') in connection with the major transaction announced on 25 October, 1999 is expected to be delayed from 16 November, 1999 to on or before 24 November, 1999. Transaction I The Company entered into an agreement on 29 September, 1999 with Charcon Assets Limited, the controlling shareholder of Pearl Oriental, to acquire 1,000,000,000 Pearl Oriental shares for a total consideration of HK$182 million. The transaction was completed on 11 October, 1999, the Pearl Oriental shares acquired under Transaction I represents 8.48% of Pearl Oriental's existing issued share capital. The consideration of HK$0.182 per Pearl Oriental share for Transaction I was negotiated on arm's length basis and represented a discount of about 4.51% to the average closing price of HK$0.1906 per Pearl Oriental share for the 10 trading days up to and including 28 September, 1999. Transaction II The Company entered into a placing agreement with Pearl Oriental on 8 November, 1999, pursuant to which the Company conditionally agreed to subscribe for 1,000,000,000 new Pearl Oriental shares (the `Placing Shares') for a total consideration of HK$210 million. The transaction is conditional upon (i) the passing of an ordinary resolution at shareholders' meeting of Pearl Oriental to be held on 20 November, 1999 approving the granting of an unconditional general mandate to the directors of Pearl Oriental to issue up to a further 20% of the issued share capital of Pearl Oriental on the date of such resolution and (ii) the Listing Committee of the Stock Exchange granting listing of permission to deal in the Placing Shares. Such conditions shall be fulfilled on or before 30 November, 1999 or such later date as the parties shall agree. Completion of Transaction II will take place, subject to the fulfilment of the above conditions, on or before 30 November, 1999, or such later date as the parties shall agree. The shares to be acquired under Transaction II represents 8.48% of Pearl Oriental's existing issued share capital which together with shares acquired under Transaction I represents 15.63% of Pearl Oriental's share capital as enlarged by the issue of shares under Transaction II. The consideration of HK$0.21 per Pearl Oriental share for Transaction II was negotiated on arm's length basis and represented a discount of about 4.33% to the average closing price of HK$0.2195 per Pearl Oriental share for the 10 trading days up to and including 5 November, 1999. Information on the Company and Pearl Oriental The Company is an investment holding company and its subsidiaries have substantial investments in telecommunications and Internet related businesses and also a vast range of business in mainland China including manufacturing industries relating to food and rubber tires, property investment as well as infrastructure and energy related business. Pearl Oriental is a company listed on the Stock Exchange and is an investment holding company which through its subsidiaries are engaged in telecommunications, Internet and information technology businesses as well as property investment, development and trading, hotel investment and management and financial services. Given Pearl Oriental's investment in the telecommunications, Internet and information technology area, the directors of the Company believes that the transactions described above provides the Company an opportunity to diversify its investments into this potentially high growth area. General As Transaction I and Transaction II collectively constitute a discloseable transaction under the Listing Rules, a circular will be sent to the Company's shareholders in due course. Delay in Despatch of Circular The directors of the Company refers to the major transaction announced on 25 October, 1999 in respect of the disposal of equity interests in China Online (Bermuda) Limited, and wish to advise that the despatch of the Circular is expected to be delayed from 16 November, 1999 to on or before 24 November, 1999 as additional time is needed to prepare the financial information required for inclusion in the Circular. An applicaion has been made by the Company to the Stock Exchange for a waiver, under Rule 14.13(2) of the Listing Rules, in connection with such delay. By order of the board of China Strategic Holdings Limited Ma Wai Man, Catherine Executive Director Hong Kong, 10 November, 1999