ICO Group Limited - Capital/Financing Update 2011

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

(1) CAPITAL REORGANISATION;

(2) REDEMPTION OF THE UGENT BONDS;

(3) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE; (4) SUPPLEMENTAL AGREEMENTS ON MAJOR AND CONNECTED TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS; AND (5) RESUMPTION OF TRADING

Financial Adviser to Guojin Resources Holdings Limited

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CAPITAL REORGANISATION

The Company intends to put forward for approval by the Shareholders the proposal of the Capital Reorganisation as follows:

(i) Capital Reduction: the nominal value of each issued Share will be reduced from HK$0.10 to HK$0.01 and the paid-up capital of each issued Share of HK$0.09 will be cancelled;

For identification purposes only

(ii) Share subdivision: each existing unissued Share of HK$0.10 will be subdivided into 10 New Shares of HK$0.01 each;
(iii) Share premium cancellation: the entire amount standing to the credit of the share premium account of the Company as at the effective date of the Capital Reorganisation will be reduced and cancelled;
(iv) The credit arising from the Capital Reduction and the share premium cancellation will be transferred to the contributed surplus account of the Company; and
(v) The contributed surplus account of the Company will be applied to set off against the Accumulated Losses of the Company as permitted by the laws of Bermuda and the Bye-Laws.

The Capital Reorganisation is subject to, among others, the approval of the Shareholders who are permitted to vote on the proposal under the Listing Rules at the SGM.

REDEMPTION OF UGENT BONDS

On 20 June 2011, the Company, Ugent and each of the Ugent Bondholders entered into the Redemption Agreements, pursuant to which the Company shall redeem the Ugent Bonds for an aggregate outstanding principal amount of HK$177.0 million and all accrued interest up to the date of the Redemption. An aggregate amount of approximately HK$207,561,999, representing the aggregate of the entire outstanding principal amount of the Ugent Bonds plus the interest accrued and to be accrued up to and including 31 August 2011 shall be settled by the allotment and issue of 4,151,240,001 Redemption Shares at the issue price of HK$0.05 per Redemption Share, and the interest to be accrued from 1 September 2011 up to and including the date of Redemption shall be settled in cash on the date of Redemption. The Redemption is subject to, among other things, the Capital Reorganisation becoming effective.

RIGHTS ISSUE

Subject to the Capital Reorganisation becoming effective, the Board proposes to raise approximately HK$82.7 million, before expenses, by issuing not less than 1,654,125,556 Rights Shares, or approximately HK$87.0 million before expenses by issuing not more than 1,739,889,220 Rights Shares at the Rights Issue Price of HK$0.05 per Rights Share.

The Rights Issue is available only to the Qualifying Shareholders on the basis of the provisional allotment of 11 Rights Shares for every 10 Shares in issue and held on the Record Date.

Pursuant to the Underwriting Agreement, the Rights Shares will be fully underwritten by the Underwriters. If the number of untaken Rights Shares is less than or equal to 896,589,220, Mr. Yip shall first subscribe for or procure the subscription for all those untaken Rights Shares. Kingsway shall subscribe for or procure subscription for the remaining untaken Rights Shares.

Mr. Yip is the Chairman and Managing Director of the Company and is therefore a connected person of the Company. Accordingly, the transactions contemplated under the Underwriting Agreement (including the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million) constitute a connected transaction under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.31(3)(c) (in respect of the allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip) of the Listing Rules, the allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip under the Underwriting Agreement is exempt from the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.32 (in respect of the payment of the underwriting commission to Mr. Yip) of the Listing Rules, the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million under the Underwriting Agreement is exempt from the Independent Shareholders’ approval.

The Rights Issue is subject to the satisfaction of certain conditions as described under the section headed “Conditions of the Rights Issue”. In particular, it is subject to the Underwriters not terminating the Underwriting Agreement (see the section headed “Termination of the Underwriting Agreement”) on or before the second Business Day following the Last Acceptance Date. Accordingly, the Rights Issue may or may not become unconditional and may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealings in the Shares and the nil-paid Rights Shares up to the date when the conditions of the Rights Issue are fulfilled.

GENERAL

The Capital Reorganisation, the Rights Issue and the Redemption are inter-conditional with one another. The Capital Reorganisation is subject to, among others, the approval of the Shareholders who are permitted to vote on the proposal under the Listing Rules at the SGM. The Rights Issue and the Redemption are subject to the approval by the Independent Shareholders at the SGM. In accordance with the Listing Rules, the Vendors, the Ugent Bondholders and their respective associates will abstain from voting on the relevant resolution(s) to approve the Rights Issue and the Redemption at the SGM.

The Independent Board Committee comprising all independent non-executive Directors has been established to advise the Independent Shareholders in respect of the terms of the Redemption Agreements and the Rights Issue. An independent financial adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in these regards.

SUPPLEMENTAL AGREEMENTS ON THE ACQUISITION AGREEMENT AND THE PERFORMANCE INCENTIVE AGREEMENT

On 20 June 2011, taking into account (i) the current liquidity constraints encountered by the Group as mentioned in the paragraph headed “Reasons for the Redemption and Rights Issue” below; (ii) the consequent postponement of the completion date of the Acquisition; (iii) the fact that the pro forma combined profit and loss accounts of the Target Companies for the year ended 31 December 2010 are now available and show an unaudited net profit after taxation of the Target Companies for the year ended 31 December 2010 of approximately HK$9.9 million; and (iv) recent market conditions and performance of the Shares, after arm’s length negotiations, the Purchaser and the Vendors have agreed to amend certain terms of the Acquisition Agreement and the Performance Incentive Agreement,

including, among others, (a) reducing the cash portion of the consideration by HK$7.5 million and increasing the principal amount of Convertible Notes by an equivalent amount; (b) changing the Convertible Notes so that they are now unsecured; (c) releasing the profit guarantee to be given by the Vendors of the New Group for the year ending 31 December 2011; (d) extending the term of the Performance Incentive Agreement by one year to 31 December 2016; and (e) reducing both the initial conversion price of the Convertible Notes and the initial issue price of the Performance Incentive Shares from HK$0.2 to HK$0.105 per Share (subject to adjustment).

ADJUSTMENT TO CONVERSION PRICE OF CONVERTIBLE NOTES AND ISSUE PRICE OF THE PERFORMANCE INCENTIVE SHARES

In accordance with the terms and conditions of the Convertible Notes to be issued upon the Acquisition Completion, the Rights Issue and the Redemption will result in an adjustment to the conversion price of the Convertible Notes and the issue price of the Performance Incentive Shares. A further announcement will be made by the Company as and when appropriate.

RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:00 a.m. on 20 June 2011 pending the release of this announcement. The Company has applied to the Stock Exchange for the resumption of trading in the Shares with effect from 9:00 a.m. on 22 June 2011.

CAPITAL REORGANISATION

The Company intends to put forward for approval by the Shareholders the proposal of the Capital Reorganisation as follows:

(i) Capital Reduction: the nominal value of each issued Share will be reduced from HK$0.10 to HK$0.01 and the paid-up capital of each issued Share of HK$0.09 will be cancelled;
(ii) Share subdivision: each existing unissued Share of HK$0.10 will be subdivided into 10 New Shares of HK$0.01 each;

(iii) Share premium cancellation: the entire amount standing to the credit of the share premium account of the Company as at the effective date of the Capital Reorganisation will be reduced and cancelled;
(iv) The credit arising from the Capital Reduction and the share premium cancellation will be transferred to the contributed surplus account of the Company; and
(v) The contributed surplus account of the Company will be applied to set off against the Accumulated Losses of the Company as permitted by the laws of Bermuda and the ByeLaws.

Based on the existing number of issued Shares of 1,503,750,505, the credit arising from the Capital Reduction is expected to be approximately HK$135.3 million. As at 31 December 2010, the amounts standing to the credit of the share premium account and the contributed surplus of the Company were approximately HK$379.5 million and HK$15.0 million respectively.

The entire balance of the accumulated losses of the Company amounted to approximately HK$600.6 million as at 31 December 2010.

Upon the Capital Reorganisation becoming effective, the authorised share capital of the Company shall remain HK$400,000,000, which will be divided into 40,000,000,000 New Shares of HK$0.01 each and, of which 1,503,750,505 New Shares will be in issue and fully paid or credited as fully paid. The New Shares will rank pari passu in all respects with each other.

Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional upon:

(i) the passing of the necessary resolutions by the Shareholders who are permitted to vote on the proposal under the Listing Rules approving the Capital Reorganisation at the SGM;
(ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the New Shares in issue arising from the Capital Reorganisation;

(iii) the compliance with the relevant procedures and requirements under the Listing Rules, the Companies Act 1981 of Bermuda (as amended) and the Bye-laws to effect the Capital Reorganisation; and
(iv) the Rights Issue and the Redemption having become unconditional (other than the condition for the Capital Reorganisation to become unconditional).

Subject to the above conditions, it is expected that the Capital Reorganisation will become effective on the Latest Time for Termination.

Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the New Shares.

Reasons for the Capital Reorganisation

As set out in the audited financial statements of the Company as at 31 December 2010, the Company had net deficit of approximately HK$184.7 million, showing that the capital of the Company is no longer represented by its assets. The Directors believe that it is unlikely that the Company will generate sufficient profits in the immediate future to eliminate this deficit and that it would be inappropriate for the Company to pay dividends while the deficit remains. As at 31 December 2010, the Company had accumulated losses of approximately HK$600.6 million. The Company can apply the credit arising from the Capital Reduction and the share premium cancellation to partially offset the Accumulated Losses. When the Company is restored to a positive financial position in future, it will consider to pay dividend if the Board sees appropriate.

The Directors, therefore, consider that the proposed Capital Reorganisation is in the interests of the Company and the Shareholders as a whole.

Certificates for the New Shares

Subject to the proposed Capital Reorganisation becoming effective, the Shareholders may submit their existing certificates for the Shares to the Registrar in exchange for certificates for the New Shares free of charge during a certain period after the Capital Reorganisation has become effective. After the expiry of such period, certificates for the Shares will be accepted for exchange only on payment of a fee of HK$2.50 per share certificate (or such higher amount as allowed by the Stock Exchange from time to time). Existing certificates for the Shares will cease to be good for delivery but will continue to be good evidence of legal title to the New Shares. Details of such exchange arrangements will be set out in a circular to be despatched to the Shareholders.

THE REDEMPTION

Background

On 6 March 2009, Ugent and the Initial Subscriber entered into the subscription agreement in relation to the subscription of the Ugent Bonds. Completion of the subscription took place on 6 April 2009 and the Ugent Bonds were issued to the Initial Subscriber on the same date. The maturity date of the Ugent Bonds is 6 April 2012. The interest rate is 12% per annum on the outstanding principal amount of the Ugent Bonds, which shall be payable semi-annually on 30 September and 31 March each year. Pursuant to the terms of the Ugent Subscription Agreement, the Company has given an undertaking to the bondholder that the Company will procure due performance of Ugent of its obligations including, but not limited to, the repayment of the Ugent Bonds. Details of the subscription of Ugent Bonds were set out in the announcements of the Company dated 21 January 2009, 10 March 2009 and 6 April 2009, and the circular of the Company dated 21 March 2009.

As at the date of the Redemption Agreements, the principal amounts of Ugent Bonds held by Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6 were HK$93 million, HK$35 million, HK$14 million, HK$14 million, HK$14 million and HK$7 million respectively.

As at the date of the Redemption Agreements, the Ugent Bonds in the total outstanding principal amount of HK$177.0 million were owned by the Ugent Bondholders. The total interest accrued and to be accrued up to 31 August 2011 is expected to be approximately HK$30,561,999.

The Company proposes to redeem the Ugent Bonds in accordance with the terms of Ugent Subscription Agreement. On 20 June 2011, the Company, Ugent and each of the Ugent Bondholders entered into the Redemption Agreements respectively to set out the terms for the Redemption. Principal terms of the Redemption Agreements are as follows.

Date: 20 June 2011

Parties:

(i) Ugent Bondholders (comprising Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6)
(ii) Ugent; and

(iii) The Company

Ugent Bondholder 1 is wholly owned by Ms. Leung, who is the controlling shareholder of Optima Capital being the financial adviser to the Company in respect of the Capital Reorganisation, the Redemption and the Rights Issue. Save for aforesaid, neither Ms. Leung nor Optima Capital or any of its beneficial owners are connected, financially or otherwise, with the Company or any of its subsidiaries.

Save as disclosed above, to the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Ugent Bondholders and their ultimate beneficial owners are Independent Third Parties. Each of the Ugent Bondholders has confirmed that it and its beneficial owners are independent of and not acting in concert with each other or the Vendors or Kingsway.

Subject Matter

Pursuant to the Redemption Agreements, the Company shall redeem the Ugent Bonds for an aggregate outstanding principal amount of HK$177.0 million and all accrued interest up to the date of the Redemption. An aggregate amount of approximately HK$207,561,999, representing the aggregate of the entire outstanding principal amount of the Ugent Bonds of HK$177.0 million plus the interest accrued and to be accrued up to and including 31 August 2011 of approximately HK$30,561,999 shall be settled by the allotment and issue of an aggregate of 4,151,240,001 Redemption Shares (based on the Redemption Price of HK$0.05 per Redemption Share), and the interest to be accrued from 1 September 2011 up to and including the date of Redemption shall be settled in cash on the date of Redemption.

The Redemption Shares to be issued on the date of Redemption represent approximately 2.8 times of the existing share capital of the Company, and approximately 73.4% of the total issued share capital of the Company as enlarged by the issue of the Redemption Shares, and approximately 56.8% of the total issued share capital as enlarged by the issue of the Redemption Shares and the Rights Shares (assuming no exercise of share options).

Set out below is the allocation of the Redemption Shares to the Ugent Bondholders according to their respective interests in the Ugent Bonds (including the principal amount and the accrued interest up to and including 31 August 2011):

Ugent Bondholder 1 Ugent Bondholder 2 Ugent Bondholder 3 Ugent Bondholder 4 Ugent Bondholder 5 Ugent Bondholder 6 Ugent Bondholders	Principal amounts of the Ugent Bonds HK$ 93,000,000 35,000,000 14,000,000 14,000,000 14,000,000 7,000,000 177,000,000	Accrued interest of the Ugent Bonds as at 31 August 2011 HK$ (approx.) 16,058,000 6,043,333 2,417,333 2,417,333 2,417,333 1,208,667 30,561,999	Expected total outstanding amount of the Ugent Bonds for redemption as at 31 August 2011 HK$ (approx.) 109,058,000 41,043,333 16,417,333 16,417,333 16,417,333 8,208,667 207,561,999	Issue and allocation of Redemption Shares upon completion of the Redemption Number of Redemption Shares 2,181,160,000 820,866,667 328,346,667 328,346,667 328,346,667 164,173,333 4,151,240,001

The Redemption Shares, when issued and fully paid, shall rank pari passu in all respects among themselves and with all the New Shares in issue on the date of allotment and issue of the Redemption Shares and are free from all liens, charges, security interests, encumbrances and adverse claims.

The Redemption Shares will be issued under a specific mandate which is subject to the approval of the Independent Shareholders at the SGM. An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in, the Redemption Shares.

Conditions

The Redemption is conditional upon:

(i) the Listing Committee of the Stock Exchange granting listing of and permission to deal in, the Redemption Shares;
(ii) the Independent Shareholders having passed the necessary resolution(s) to approve the Redemption Agreements and the transactions contemplated thereby (including but not limited to the allotment and issue of the Redemption Shares) at the SGM;
(iii) the warranties given by the Company in Redemption Agreements remaining true and correct in all material respects;
(iv) all necessary consents and approvals as may be required to be obtained on the part of the Company and Ugent in respect of the Redemption Agreements and the transactions contemplated thereunder having been obtained;
(v) all necessary consents and approvals as may be required to be obtained on the part of the Ugent Bondholders in respect of the Redemption Agreements and the transactions contemplated thereunder having been obtained;
(vi) the Underwriting Agreement having become unconditional (other than the condition for the relevant Redemption Agreement and Capital Reorganisation to become unconditional);

(vii) the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulation at the general meeting of the Company; and
(viii) the Capital Reorganisation having become unconditional (other than the condition for the relevant Redemption Agreement and the Underwriting Agreement to become unconditional).

Save for condition (iii) which can be waived by the Ugent Bondholders, all other conditions are incapable of being waived. Completion of the Redemption shall take place on the third business day after the date on which the above conditions are fulfilled or waived by the Ugent Bondholders. Each of the Redemption Agreements is not inter-conditional to each other. In the event that any of the conditions set out above is not being fulfilled or waived in full by 5:00 p.m. on the date falling 110 days from the date of the Redemption Agreements (or such other time and date as may be agreed between the Company and the Ugent Bondholders in writing), the Redemption Agreements shall cease and determine and neither party shall have any obligations and liabilities thereunder save for any antecedent breaches of the provisions thereof.

Information on Ugent

Ugent is a company incorporated under the laws of the BVI with limited liability on 18 May 1993. The current issued and paid-up share capital of Ugent is US$10,000, which is wholly owned by Oakview International Limited, which in turn is a wholly-owned subsidiary of the Company. Ugent is an investment holding company and its principal asset is its investment in Jackin Enterprises Limited, which in turn holds the entire issued share capital of AFEX. AFEX is a limited liability company incorporated under the laws of Hong Kong on 4 January 2002 and its current issued and paid-up share capital is HK$50,000. AFEX is principally engaged in trading of computer printing and imaging products and holds 100% of the registered capital in 深圳利滿豐源打印耗材有限公司 (Shenzhen Afex Print Image Ltd.[#] ) and 珠海利滿豐源打印耗材有限公司 (Zhuhai Afex Print Image Ltd.[#] ), each a wholly foreign owned enterprise established under the laws of the PRC. AFEX and its subsidiaries are principally engaged in the operations of remanufacturing and sale of computer printing and imaging products.

For the financial year ended 31 December 2010, the Group’s revenue generated from remanufacturing and sale of computer printing and imaging products recorded a sharp decline of 50% as compared with the previous year. The profit for this segment was hit severely by a few factors including (i) the rise in its key feedstock, empty cartridges; (ii) rise in labour costs for the factories located in Shenzhen and Zhuhai; and (iii) high fixed costs due to low utilization of production capacity of the factories. All these factors, in addition to the impairment losses and write-off of inventories, have led to a division loss of HK$197 million for the financial year ended 31 December 2010, despite the implementation of some cost cutting measures such as production base contraction and headcount reduction. The management of the Company believes that the ultimate solution is to dispose of this loss making division. The intention to dispose of Ugent was first disclosed in the announcement of the Company dated 29 July 2010, followed by another announcement on 4 October 2010 which disclosed the entering into of a non-legally binding term sheet in relation to the debt restructuring and disposal of Ugent. However, as disclosed in the announcement dated 10 March 2011, such debt restructuring and disposal of Ugent will not be proceeding.

Given the unsatisfactory performance of AFEX’s business relating to remanufacturing and sale of computer printing and imaging products and the cash flow required to sustain the operation, the Directors consider that it may not be feasible to look for interested buyers within a short period of time. Accordingly, the Group is currently in the process of discontinuing the relevant business.

PROPOSED RIGHTS ISSUE

Issue statistics

Basis of the Rights Issue:

11 Rights Shares for every 10 Shares held on the Record Date

Number of Shares in issue as at the date of this announcement:

1,503,750,505 Shares

Number of outstanding share options: 77,966,968 Number of Shares to be issued upon full exercise 77,966,968 Shares of the share options: Number of Shares (assuming full exercise of 1,581,717,473 Shares the share options on or before the Record Date): Number of Rights Shares (assuming no share options 1,654,125,556 Rights Shares have been exercised on or before the Record Date): Number of Rights Shares 1,739,889,220 Rights Shares (assuming share options are exercised in full on or before the Record Date): Rights Issue Price: HK$0.05 per Rights Share with nominal value of HK$0.01 each

Assuming no share options are exercised before the Record Date, the nil-paid Rights Shares proposed to be provisionally allotted to Shareholders pursuant to the terms of the Rights Issue is 1.1 times of the total New Shares in issue after the Capital Reorganisation has become effective and 110% of the total issued share capital of the Company as at the date of this announcement and approximately 52.4% the total issued share capital of the Company as enlarged by the issue of the Rights Shares, and approximately 22.6% of the total issued share capital as enlarged by the issue of the Redemption Shares and the Rights Shares.

Save as disclosed above, there are no outstanding securities that are convertible or exchangeable into Shares or confer any right on any person to subscribe for Shares as at the date of this announcement.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. The Company will send (i) the Prospectus Documents to Qualifying Shareholders; and (ii) the Prospectus, for information only, to the Excluded Shareholders.

To qualify for the Rights Issue, the Shareholder must be registered as a member of the Company on the Record Date and not be an Excluded Shareholder.

In order to be registered as a member of the Company on the Record Date, Shareholders must lodge any transfers of the Shares (with the relevant share certificate(s)) with the Registrar on the Latest Lodging Date.

Rights Issue Price

The Rights Issue Price for the Rights Shares is HK$0.05 per Rights Share, payable in full when a Qualifying Shareholder accepts his/her/its provisional allotment under the Rights Issue or applies for excess Rights Shares or when a transferee of nil-paid Rights Shares subscribes for the Rights Shares.

The Rights Issue Price represents:

(i) a discount of approximately 66.4% to the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 67.3% to the average of the closing prices of HK$0.153 per Share for the 10 consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 68.8% to the average of the closing prices of HK$0.160 per Share for the 20 consecutive trading days up to and including the Last Trading Day; and
(iv) a discount of approximately 48.5% to the theoretical ex-rights price of HK$0.097 per Share based on the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day.

Status of the Rights Issue

The Rights Shares, when fully-paid, shall rank pari passu in all respects with the New Shares then in issue, including as to the right to receive all dividends and distributions which may be declared, made or paid on or after the date of allotment of the Rights Shares.

Conditions of the Rights Issue

The Rights Issue is conditional upon:

(i) the filing and registration on or prior to the Prospectus Posting Date of the Prospectus Documents (and all other documents required to be attached thereto) with the Registrar of Companies in Hong Kong, complying with the requirements of the Companies Ordinance (Cap.32 of the laws of Hong Kong);
(ii) the filing on or as soon as practicable after the Prospectus Posting Date of the Prospectus Documents (and all other documents required to be attached thereto) with the Registrar of Companies in Bermuda, complying with the requirements of the Companies Act 1981 of Bermuda (as amended);
(iii) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) the listing of, and permission to deal in, all the Rights Shares, in their nilpaid and fully paid forms, by not later than, in respect of the Rights Shares in their nilpaid form, the first Business Day after the Prospectus Posting Date and, in respect of the Rights Shares in their fully paid form, the day on which certificates for the Rights Shares are despatched to those entitled thereto under the Rights Issue, and such listing not being revoked prior to 5:00 p.m. on the day which is the second Business Day following the latest time for acceptance of Rights Shares;
(iv) compliance by Mr. Yip with all of his obligations under the Underwriting Agreement (except for his obligation to subscribe for the Underwritten Shares) and the Undertaking on or before the latest time for acceptance of Rights Shares;
(v) compliance by the Company with all of its obligations under the Underwriting Agreement;
(vi) the passing by no later than the Prospectus Posting Date by the Independent Shareholders at the SGM of all necessary resolution(s) to approve the Rights Issue;
(vii) the obtaining of the permission of the Bermuda Monetary Authority for the issue of the Rights Shares, if necessary;

(viii) the obligations of the Underwriters becoming unconditional and that Underwriting Agreement is not terminated in accordance with its terms;
(ix) the Redemption Agreements having become unconditional (other than the condition for Underwriting Agreement and the Capital Reorganisation to become unconditional);
(x) the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulations approving at the special general meeting of the Company; and
(xi) the Capital Reorganisation having become unconditional (other than the condition for Underwriting Agreement and the Redemption Agreements to become unconditional).

The above conditions of the Rights Issue are incapable of being waived. If any of the above conditions is not fulfilled by the Latest Time for Termination, or where appropriate, the respective dates aforesaid (or such later time as the Underwriters may agree with the Company in writing), or the Underwriting Agreement shall terminate pursuant to the Underwriting Agreement and the obligations of the parties shall forthwith cease and be null and void and none of the parties shall have any right against or liability towards any of the other parties arising out of or in connection with the Underwriting Agreement and the Company shall reimburse to the Underwriters all reasonable costs and expenses as have been properly incurred by it in connection with the Rights Issue.

Rights of Overseas Shareholders

If at the close of business on the Record Date, a Shareholder’s address on the Company’s register of members is in a place outside of Hong Kong, that Shareholder may not be eligible to take part in the Rights Issue. The Prospectus Documents will not be registered or filed under the applicable securities or equivalent legislation of any jurisdiction other than that in Hong Kong and Bermuda.

In compliance with Rule 13.36(2) of the Listing Rules, the Directors will make enquiries as to whether the issue of Rights Shares to the Overseas Shareholder may contravene the applicable securities legislation of the relevant overseas places or the requirements of the relevant regulatory body or stock exchange. If, after making such enquiry, the Directors are of the opinion that it would be necessary or expedient, on account either of the legal restrictions under the laws of the relevant place or any requirement of the relevant regulatory body or stock exchange in that place, not to offer the Rights Shares to such Overseas Shareholders, no provisional allotment of nil-paid Rights Shares or allotment of fully-paid Rights Shares will be made to such Overseas Shareholders. Accordingly, the Rights Issue will not be extended to the Excluded Shareholders.

Arrangements will be made for the Rights Shares, which would be provisionally allotted in nil-paid form to Excluded Shareholders to a nominee of the Company which will arrange for the sale of such nil-paid rights as soon as practicable after the commencement of dealings on the Stock Exchange in Rights Shares in nil-paid form if a net premium can be obtained, and, if and to the extent that such rights can be so sold, the nominee will thereafter account to the Company for the net proceeds of sale (after deducting the expenses of sale if any), which will be distributed by the Company in Hong Kong dollars to the Excluded Shareholders prorata (but rounded down to the nearest cent) to their shareholdings on the Record Date, except that individual amounts of less than HK$100 shall not be so distributed but shall be retained for the benefit of the Company. Any unsold Rights Shares will be available for excess application.

Basis of provisional allotment

The basis of the provisional allotment will be 11 Rights Shares for every 10 Shares in issue and held on the Record Date at the Rights Issue Price payable in full on acceptance and otherwise on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents.

Fractional entitlement to the Rights Shares

The Company will not provisionally allot fractions of Rights Shares in nil-paid form to the Qualifying Shareholders otherwise entitled thereto. All fractions of nil-paid Rights Shares will be aggregated and all nil-paid Rights Shares arising from such aggregation will be sold in the market, if a premium (net of expenses) can be achieved, and the Company will retain the proceeds from such sale(s) for its benefit. Any unsold aggregate of fractions of nil-paid Rights Shares will be made available for excess application under the excess application forms.

Application for excess Rights Shares

Qualifying Shareholders are entitled to apply for any unsold entitlements of the Excluded Shareholders and any nil-paid Rights Shares provisionally allotted but not accepted, by completing the form of application for excess Rights Shares and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis, and on the following principles:

(i) preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to round up odd-lot holdings to whole-lot holdings and that such applications are not made with intention to abuse this mechanism (the “ Top-up Arrangement ”); and
(ii) subject to the availability of excess Rights Shares after allocation under principle (i) above, the excess Rights Shares will be allocated to the Qualifying Shareholders based on a sliding scale with reference to the number of excess Rights Shares applied by them (i.e. Qualifying Shareholders applying for smaller number of Rights Shares are allocated with a higher percentage of successful application but will receive less number of Rights Shares; whereas Qualifying Shareholders applying for larger number of Rights Shares are allocated with a smaller percentage of successful application but will receive greater number of Rights Shares) and with board lot allocations to be made on best effort basis.

Shareholders with their Shares held by a nominee company should note that the Board will regard the nominee company as a single Shareholder according to the register of members of the Company under the Top-up Arrangement. Accordingly, the aforesaid Top-up Arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually. Beneficial owners who hold their Shares through a nominee company are advised to consider whether they would like to arrange for the registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date.

Share certificates for the fully-paid Rights Shares

Subject to the fulfillment of the conditions of the Rights Issue, share certificates for all fullypaid Rights Shares are expected to be sent by ordinary post to the Qualifying Shareholders who have accepted and applied for (where appropriate), and paid for the Rights Shares in accordance with the timetable at their own risk.

Application for listing of the Rights Shares on the Stock Exchange

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares in both nil-paid and fully-paid forms.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in their nil-paid and fully-paid forms on the Stock Exchange or such other dates as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Dealings in the Rights Shares in both their nil-paid and fully-paid forms (both in board lots of 2,000), which are registered in the register of members of the Company in Hong Kong will be subject to the payment of stamp duty, Stock Exchange trading fee, transaction levy, investor compensation levy and any other applicable fees and charges in Hong Kong.

UNDERTAKING AND UNDERWRITING ARRANGEMENT

Undertaking

At the date of this announcement, Mr. Yip is holding 3,000,000 Shares (through his 42.5% interest in Vendor 3). Mr. Yip has given an irrevocable undertaking to the Company and Kingsway that he will accept or procure the subscription of his full entitlement of Rights Shares pursuant to the Rights Issue; and that he shall not, without the prior written consent of the Company, dispose of, transfer or deal in any Shares from the date of the undertaking up to and including the Last Acceptance Date.

Underwriting Agreement

Date: 20 June 2011 Underwriters: (1) Mr. Yip (2) Kingsway Number of Rights Shares Not less than 1,650,825,556 Rights Shares and not more than underwritten: 1,736,589,220 Rights Shares Commission: 2.5% of the total aggregate Rights Issue Price for the Underwritten Shares

The commission rate was determined after arm’s length negotiation between the Company and the Underwriters by reference to the existing financial position of the Group, the size of the Rights Issue, and the current and expected market condition. The Directors (excluding the independent non-executive Directors who will give their view on the Rights Issue after taking into account the advice of the independent financial adviser) consider the terms of the Underwriting Agreement including the commission rate are fair and reasonable so far as the Company and the Shareholders are concerned.

allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip under the Underwriting Agreement is exempt from the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.32 (in respect of the payment of the underwriting commission to Mr. Yip) of the Listing Rules, the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million under the Underwriting Agreement is exempt from the Independent Shareholders’ approval.

Termination of the Underwriting Agreement

The Underwriters reserve the right to terminate the Underwriting Agreement by giving notice to the Company at any time prior to the Latest Time for Termination:

(i) in the reasonable and good faith opinion of the Underwriters, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the reasonable opinion of any of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(b) the occurrence of any national or international event or change, whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date thereof, of a political, military, diplomatic, financial, economic or other nature (whether or not sui generis with any of the foregoing), or in the nature of any national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of any of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or

(d) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities) occurs which in the reasonable opinion of the Underwriters make them inexpedient or inadvisable to proceed with the Rights Issue; or
(e) the imposition of economic sanction or withdrawal of trading privileges, in whatever form, by the United States of America or by the European Union (or any member thereof) on Hong Kong or any jurisdiction relevant to the Group; or
(f) a general moratorium on commercial banking activities in Hong Kong declared by the relevant authorities; or
(g) any change or development involving a prospective change in taxation or exchange control (or the implementation of any exchange control) in Hong Kong or other jurisdictions relevant to the Group; or
(h) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(i) any matter or event showing any of the warranties, undertakings or provisions contained in the Underwriting Agreement to be untrue, inaccurate or misleading in any material respect when given or repeated or there has been a breach of any of the warranties, undertakings or any other provisions of the Underwriting Agreement; or
(j) any breach by Mr. Yip of any provision in the Undertaking; or
(k) the circular and the Prospectus Documents when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date thereof been publicly announced or published by the Company and which may in the reasonable opinion of any of the Underwriters is material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to accept the Rights Shares provisionally allotted to it; or

(l) any event, act or omission which gives rise to any material liability of the Company arising out of or in connection with any warranties or undertakings in the Underwriting Agreement.

Upon the giving of notice under the Underwriting Agreement, the Underwriting Agreement shall terminate and the obligations of the parties shall forthwith cease and be null and void and none of the parties shall have any right against or liability towards any of the other parties arising out of or in connection with the Underwriting Agreement.

If the Underwriting Agreement is terminated by the Underwriters on or before the Latest Time for Termination or does not become unconditional, the Rights Issue will not proceed.

EXPECTED TIMETABLE

The expected timetable will be announced in a separate announcement by the Company as and when appropriate.

FUND RAISING EXERCISE OF THE COMPANY

On 15 December 2010, the Company announced that it proposed to raise funds by way of placing. However, the placing has lapsed without completion as announced by the Company on 14 January 2011.

Save as disclosed above, there has not been any fund raising exercise conducted by the Company in the past 12 months immediately preceding the date of the announcement.

SHAREHOLDING STRUCTURE AS A RESULT OF RIGHTS ISSUE AND REDEMPTION

Set out below is a summary of the shareholding structure of the Company (i) as at the date of this announcement and immediately upon Acquisition Completion; (ii) immediately after the issue of Redemption Shares and the Rights Shares (assuming full exercise of share options); and (iii) immediately after the issue of Redemption Shares and the Rights Shares (assuming no exercise of share options), without taking into account any conversion of Convertible Notes upon Acquisition Completion and the issue of Performance Incentive Shares:

Mr. Leung Ka Kui, Johnny (Note 1) Mr. Yip Wai Lun, Alvin (Note 2) Ugent Bondholder 1 Ugent Bondholder 2 Ugent Bondholder 3 Ugent Bondholder 4 Ugent Bondholder 5 Ugent Bondholder 6 Other share option holders Kingsway and/or the subscribers procured by it Other public shareholders Total Total public shareholders (Note 4)	As at the date of this announcement and immediately upon Acquisition Completion Number of shares % (approx.) 290,000 0.02% 3,000,000 0.20% – – – – – – – – – – – – – – – – 1,500,460,505 99.78% 1,503,750,505 100.00% 1,500,460,505 99.78%	Assuming full exercise of share options Immediately after the issue of Redemption Shares and the Right Shares (Assuming 0% acceptance of Rights Issue) Immediately after the issue of Redemption Shares and the Right Shares (Assuming 100% acceptance of Rights Issue) Number of shares % (approx.) Number of shares % (approx.) 291,542 0.01% 612,238 0.01% 902,889,220 12.08% 6,300,000 0.08% 2,181,160,000 29.19% 2,181,160,000 29.19% 820,866,667 10.99% 820,866,667 10.99% 328,346,667 4.39% 328,346,667 4.39% 328,346,667 4.39% 328,346,667 4.39% 328,346,667 4.39% 328,346,667 4.39% 164,173,333 2.20% 164,173,333 2.20% 77,965,426 1.04% 163,727,394 2.19% 840,000,000 11.24% – – 1,500,460,505 20.08% 3,150,967,061 42.17% 7,472,846,694 100.00% 7,472,846,694 100.00% 3,567,639,265 47.73% 4,463,907,789 59.73%	Assuming no exercise of share options Immediately after the issue of Redemption Shares and the Right Shares (Assuming 0% acceptance of Rights Issue) Immediately after the issue of Redemption Shares and the Right Shares (Assuming 100% acceptance of Rights Issue) Number of shares % (approx.) Number of shares % (approx.) 290,000 0.01% 609,000 0.01% 902,889,220 12.35% 6,300,000 0.09% 2,181,160,000 29.84% 2,181,160,000 29.84% 820,866,667 11.23% 820,866,667 11.23% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 164,173,333 2.25% 164,173,333 2.25% – – – – 754,236,336 10.32% – – 1,500,460,505 20.53% 3,150,967,061 43.11% 7,309,116,062 100.00% 7,309,116,062 100.00% 3,403,910,175 46.57% 4,300,180,395 58.83%	Assuming no exercise of share options Immediately after the issue of Redemption Shares and the Right Shares (Assuming 0% acceptance of Rights Issue) Immediately after the issue of Redemption Shares and the Right Shares (Assuming 100% acceptance of Rights Issue) Number of shares % (approx.) Number of shares % (approx.) 290,000 0.01% 609,000 0.01% 902,889,220 12.35% 6,300,000 0.09% 2,181,160,000 29.84% 2,181,160,000 29.84% 820,866,667 11.23% 820,866,667 11.23% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 328,346,667 4.49% 164,173,333 2.25% 164,173,333 2.25% – – – – 754,236,336 10.32% – – 1,500,460,505 20.53% 3,150,967,061 43.11% 7,309,116,062 100.00% 7,309,116,062 100.00% 3,403,910,175 46.57% 4,300,180,395 58.83%
				100.00%

				58.83%

Notes:

Mr. Leung Ka Kui, Johnny is an independent non-executive Director who holds share options to subscribe for 1,542 Shares.
Mr. Yip is the Chairman and Managing Director of the Company. These 3,000,000 Shares are held by Vendor 3 which is owned as to 42.5% by Vendor 1, 42.5% by Mr. Yip and 15% by Mr. Lee.
The above shareholding table does not take into account any conversion of Convertible Notes and issue of Performance Incentive Shares, details of which are set out in the paragraph headed “Shareholding structure as a result of the Acquisition and Performance Incentive Agreement” below.
It is assumed that none of Kingsway or the subscribers procured by it will become substantial shareholders of the Company upon completion of the Rights Issue.

REASONS FOR THE REDEMPTION AND RIGHTS ISSUE

The Company is an investment holding company and its subsidiaries are engaged in the (i) remanufacturing and sale of computer printing and imaging products; (ii) manufacture and sale of data media products; and (iii) distribution and sale of data media products.

As disclosed in the Annual Report, the Group recorded a turnover of approximately HK$169.9 million for the year ended 31 December 2010, representing a decrease of approximately 23% compared with approximately HK$221.4 million in 2009. The Group’s loss attributable to the owners of the Company amounted to approximately HK$383.4 million in 2010, which was mainly attributable to the raw material price hike and the substantial wage hike in the PRC. As at 31 December 2010, the Group had cash and cash equivalent of approximately HK$37.9 million, net current assets of approximately HK$18.4 million and net liabilities of approximately HK$132.2 million. As stated in the Annual Report, in view of the liquidity constraints encountered by the Group and the need to improve the Group’s overall financial and cash flow positions so as to maintain the Group’s existence as a going concern, the Directors have implemented measures to tighten cost controls over various distribution costs and administrative expenses and are considering various alternatives to enlarge the capital base of the Company in order to provide additional funding to the Group.

Given the unsatisfactory performance of AFEX’s business relating to remanufacturing and sale of computer printing and imaging products as mentioned in above section, the Group is currently in the process of discontinuing the relevant business in order to minimize its adverse impact on the Group’s financial position. Nevertheless, the Group will continue to engage in the manufacture and sale of data media products and distribution and sale of data media products. For the year ended 31 December 2010, this segment recorded a turnover of approximately HK$68.3 million and a segment profit of approximately HK$1.9 million. The Group will continue to improve its operational efficiency to improve the profitability of this division.

Having taken into account the current financial position of the Group, particularly the debt obligation of the Ugent Bonds which is due April 2012 and the working capital needs of the Company for the near future, the Board is of the view that the Company has immediate funding need for its existing operation. In addition, with a view to improving its financial performance, the Group has been actively looking for attractive merger and acquisition opportunities in order to extend its business reach. As disclosed in the First Announcement, the Company entered into the Acquisition Agreement relating to the acquisition of the entire issued share capital of a group of companies engaged in manufacturing business. To this end, the Board has worked out the proposal involving the Rights Issue and the Redemption to ensure that the Group will be in a much healthier financial position to engage in the business of the Target Companies.

The estimated net proceeds from the Rights Issue will be approximately HK$77.4 million (assuming no exercise of share options) or HK$81.7 million (assuming full exercise of share options). The Company intends to apply the net proceeds for working capital of the Group and the Target Companies upon the Acquisition Completion.

The terms of the Rights Issue (including the Rights Issue Price) were arrived at after arm’s length negotiation between the Company and the Underwriters with reference to the prevailing market prices of the Shares, the financial conditions of the Company, existing number of issued Shares and the fund expected to be raised by the Rights Issue. The Directors consider that under the Rights Issue, each Shareholder is entitled to subscribe for the Rights Shares at the same price in proportion to his/her/its existing shareholding in the Company and the discount of the Rights Issue Price will encourage the Shareholders to participate in the Rights Issue.

Taking into account the outstanding principal amount of the Ugent Bonds and the current financial position of the Company, there will be material adverse impact on the Group’s cash flow if the Company were to repay all the outstanding debts of the Ugent Bonds at maturity. The Board also considers that the Redemption will enlarge the capital base of the Company and will reduce the gearing level of the Group thereby strengthening the financial position of the Group.

Despite the fact that a significant amount of odd lot shares may be resulted from the Rights Issue, having considered the above factors and the agreements are negotiated on arm’s length basis, the Directors consider the terms of the Redemption Agreements and the Rights Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

GENERAL

The Capital Reorganisation is subject to, among other things, the approval by the Shareholders who are permitted to vote on the proposal under the Listing Rules at the SGM.

The Rights Issue is conditional on, among other things, approval from the Independent Shareholders. In compliance with Rule 7.19(6) of the Listing Rules, the Rights Issue is conditional on the approval of the Shareholders at the SGM where any controlling Shareholders and their associates or where there are no controlling Shareholders, directors (excluding independent non-executive directors) and the chief executive of the Company and his/her associates shall abstain from voting in favor. The Company does not have any controlling Shareholder. As at the date of this announcement, save for 3,000,000 Shares and 290,000 Shares held by Mr. Yip (through his 42.5% interest in Vendor 3) and Mr. Leung Ka Kui, Johnny respectively, no other Directors hold any Shares. Mr. Yip and his associates will abstain from voting in favour of the Rights Issue at the SGM.

As the Rights Issue and the Redemption are inter-conditional with one another and therefore they are subject to the approval by the Independent Shareholders at the SGM. In accordance with the Listing Rules, the Vendors, the Ugent Bondholders and their respective associates will abstain from voting on the relevant resolution(s) to approve the Rights Issue and the Redemption at the SGM.

A circular containing, among other things, (i) further details on the Capital Reorganisation, the Redemption Agreements and the Rights Issue; (ii) the advice of the independent financial adviser in relation to the Redemption Agreements and the Rights Issue; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Redemption and the Rights Issue; (iv) the notice of the SGM; and (v) other information as required under the Listing Rules will be sent to the Shareholders on or about 11 July 2011.

SGM

The Capital Reorganisation is subject to, among others, the approval of the Shareholders who are permitted to vote on the proposal under the Listing Rules by way of poll at the SGM. The Redemption and the Rights Issue are subject to the approval of the Independent Shareholders by way of poll at the SGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors, the Ugent Bondholders and their respective associates shall abstain from voting in respect of the proposed resolutions at the SGM.

SUPPLEMENTAL AGREEMENTS ON THE ACQUISITION AGREEMENT AND THE PERFORMANCE INCENTIVE AGREEMENT

Reference is made to the First Announcement in relation to, among other things, the Acquisition and the Continuing Connected Transactions.

Background

As set out in the First Announcement, pursuant to the Acquisition Agreement, the Purchaser conditionally agreed to acquire and the Vendors conditionally agreed to sell, the Sale Shares for a total consideration of HK$120 million (subject to adjustment), which was to be satisfied by the Purchaser as to (i) HK$15 million in cash; and (ii) HK$105 million by way of allotment and issue of the Convertible Notes by the Company. In addition, pursuant to the Performance Incentive Agreement which is conditional on the Acquisition Completion, the Service Provider was to, upon completion, provide the Services to the Purchaser for a term of 5 years which is up until 31 December 2015 in consideration of a monthly fee and, subject to the relevant terms, the Performance Bonus. The Service Provider is entitled to receive a Performance Bonus equal to 30% of the excess of the pro forma combined profit before tax of the Titron Group over HK$10 million for each of the five financial years ending 31 December 2015. The Performance Bonus in each year shall be satisfied 50% in cash and subject to the relevant cap amounts (the “ Share Caps ”) for each of the financial year ended 31 December 2011 to 31 December 2015, 50% in Performance Incentive Shares. If in any financial year, the Service Provider would be entitled to the Performance Incentive Shares in excess of the Share Caps, Performance Incentive Shares equivalent to the Share Caps shall be issued and allotted and the balance of Performance Bonus in excess of the Share Caps shall be payable in cash.

Details of the amendments

On 20 June 2011, taking into account (i) the current liquidity constraints encountered by the Group as mentioned in the paragraph headed “Reasons for the Redemption and Rights Issue” above; (ii) the consequent postponement of the completion date of the Acquisition; (iii) the fact that the pro forma combined profit and loss accounts of the Target Companies for the year ended 31 December 2010 are now available and show an unaudited net profit after taxation of the Target Companies for the year ended 31 December 2010 of approximately HK$9.9 million; and (iv) recent market conditions and performance of the Shares, after arm’s length negotiations, the Purchaser and the Vendors have agreed to amend certain terms of the Acquisition Agreement and the Performance Incentive Agreement.

The principal amendments to the Acquisition Agreement are set out below:

(i) the total consideration of HK$120 million shall be satisfied by the Purchaser as to HK$7.5 million (instead of HK$15 million) in cash and as to HK$112.5 million (instead of HK$105 million) by way of allotment and issue of the Convertible Notes to the Vendors (or their nominees). The Convertible Notes will be unsecured. After signing the supplemental agreement to the Acquisition Agreement, the parties thereto further agreed that the cash consideration of HK$7.5 million shall be payable on a date six months from the date of Acquisition Completion;
(ii) the initial conversion price of the Convertible Notes has been changed from HK$0.2 to HK$0.105 per Conversion Share (subject to adjustment). The conversion price of HK$0.105 represents: (i) a discount of approximately 29.5% to the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day); (ii) a discount of approximately 31.4% to the average of the closing prices of HK$0.153 per Share for the 10 consecutive trading days up to and including the Last Trading Day; and (iii) a discount of approximately 34.4% to the average of the closing prices of HK$0.160 per Share for the 20 consecutive trading days up to and including the Last Trading Day. It is agreed among the Company, the Purchaser and the Vendors that in the event the adjusted conversion price, arising as a result of the Redemption and the Rights Issue pursuant to the terms of the Convertible Notes, is less than HK$0.05 per Conversion Share, the adjusted conversion price shall be fixed at HK$0.05 per Conversion Share;
(iii) save for the Convertible Notes in the principal amount of HK$40 million to be retained by the Vendors for the purpose of satisfying any claims under the warranties pursuant to the Acquisition Agreement, the Vendors undertake to use all reasonable endeavours to exercise the conversion rights attaching to the balance of the Convertible Notes as soon as practicable after the Acquisition Completion provided that any such conversion of the Convertible Notes will not (i) trigger a mandatory offer obligation under Rule 26 of the Takeovers Code by all or any of the Vendors (whether or not such mandatory offer obligation is triggered by the fact that the number of the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Notes, including any Shares acquired or owned by any parties acting in concert with the Vendors or any of them, represents 30% (or such other percentage as may be stated in Rule 26 of the Takeovers Code in effect from time to time) or more of the voting rights at the general meetings of the Company) or otherwise pursuant to other provisions of the Takeovers Code; or (ii) result in the Company being not able to maintain the minimum public float of 25% (or any other percentage as required by the Listing Rules from time to time) of the issued shares of the Company after such conversion;

(iv) no profit guarantee shall be given by the Vendors of the New Group for the 12 months ending 31 December 2011;
(v) the release of the directors of the Target Companies from personal guarantee(s) given in respect of banking facilities of the Target Companies shall become a term to be fulfilled as soon as possible after Acquisition Completion; and
(vi) the long stop date for fulfillment or waiver of the conditions precedent in respect of the Acquisition has been extended to 31 October 2011 from 31 August 2011.

The 1,071,428,571 Conversion Shares (based on the principal amount of the Convertible Notes of HK$112.5 million and the initial conversion price of HK$0.105 per Conversion Share) to be issued upon full conversion of the Convertible Notes represent approximately 71.3% of the existing share capital of the Company, and approximately 41.6% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Notes. The number of Conversion Shares to be converted has not taken into account the adjustment to be made to the conversion price of the Convertible Notes as a result of the Rights Issue and the Redemption.

The principal amendments to the Performance Incentive Agreement are set out below:

(i) the term of Performance Incentive Agreement has been extended by one year to 31 December 2016 such that the Service Provider is entitled to receive Performance Bonus equal to 30% of excess of the pro forma combined profit before tax of the Titron Group over HK$10 million for each of the six financial years ending 31 December 2016 (the “ Revised Entitlement Period ”);
(ii) the initial issue price of the Performance Incentive Shares has been changed from HK$0.2 to HK$0.105 per Share (subject to adjustment). The issue price of HK$0.105 represents: (i) a discount of approximately 29.5% to the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day); (ii) a discount of approximately 31.4% to the average of the closing prices of HK$0.153 per Share for the 10 consecutive trading days up to and including the Last Trading Day; and (iii) a discount of approximately 34.4% to the average of the closing prices of HK$0.160 per Share for the 20 consecutive trading days up to and including the Last Trading Day. It is agreed among the Company, the Purchaser and the Service Provider that in the event the adjusted issue price, arising as a result of Redemption and Rights Issue pursuant to the terms of the Performance Incentive Agreement, is less than HK$0.05 per Performance Incentive Share, the adjusted issue price shall be fixed at HK$0.05 per Performance Incentive Share;

(iii) the Share Cap for the financial year ending 31 December 2016 would be HK$130 million;
(iv) in satisfying the Performance Bonus, if (1) in any financial year the Service Provider would be entitled to Performance Incentive Shares in excess of the respective Capped Amount, or (2) the issue of the Performance Incentive Shares would result in the Vendors being required to make a mandatory general offer under Rule 26 of the Takeovers Code (the “ Offer Obligation ”), or (3) the issue of the Performance Incentive Shares would result in the minimum public float of the Company as required by the Listing Rules not being maintained, such number of the Performance Incentive Shares equivalent to the Capped Amount or to the extent that no Offer Obligation would be triggered or to the extent that the minimum public float of the Company is maintained (as the case may be) shall be issued and allotted, and the balance of the Performance Bonus in excess of the Capped Amount or the amount which would trigger the Offer Obligation or would result in an insufficient public float of the Company (as the case may be) shall be payable in cash.

Given the Revised Entitlement Period and the revised issue price of the Performance Incentive Shares, the Share Caps and the Capped Amounts will be as follows:

For the year ended
31 December	2011	2012	2013	2014	2015	2016
	HK$	HK$	HK$	HK$	HK$	HK$
	million	million	million	million	million	million
Share Caps	1	5	30	70	100	130
	Number	Number	Number	Number	Number	Number
	of Shares	of Shares	of Shares	of Shares	of Shares	of Shares
	(million)	(million)	(million)	(million)	(million)	(million)
Equivalent maximum
number of
Performance
Incentive Shares (the
“Capped Amounts”
for each year)	9.5	47.6	285.7	666.7	952.4	1,238.1

A maximum of 3,200,000,000 Performance Incentive Shares will be issued, representing approximately (i) 2.1 times of the existing issued share capital of the Company; (ii) 68.0% of the issued share capital of the Company as enlarged by the allotment and issue of the Performance Incentive Shares; and (iii) 55.4 % of the issued share capital of the Company as enlarged by the allotment and issue of the Performance Incentive Shares and the issue of the Conversion Shares upon full conversion of the Convertible Notes at the initial conversion price. The number of Performance Incentive Shares to be issued has not taken into account the adjustment to be made to the issue price of the Performance Incentive Shares as a result of the Rights Issue and the Redemption; and

(v) the long stop date for the fulfillment or waiver of conditions precedent in respect of the Performance Incentive Agreement has been extended to 31 October 2011 from 31 August 2011.

Save as disclosed above, there are no other material changes in the terms of the Acquisition Agreement and the Performance Incentive Agreement.

Caps on the Continuing Connected Transactions

As set out in the First Announcement, in compliance with Rule 14A.35(2) of the Listing Rules, an annual cap in respect of the Service Fee and the Performance Bonus payable by the Group to the Service Provider has been specified for each of the financial year ending 31 December 2011 to 31 December 2015.

In line with the Revised Entitlement Period for the provision of the Services under the Performance Incentive Agreement, the proposed caps for the Service Fee and the Performance Bonus will be as follows:

For the year ended

For the year ended
31 December	2011	2012	2013	2014	2015	2016
	HK$	HK$	HK$	HK$	HK$	HK$
	million	million	million	million	million	million
Cap amounts on the
Service Fee	1.6	2.4	2.4	2.4	2.4	2.4
Cap amounts on the
Performance Bonus	2	53	130	300	350	400

The proposed cap amounts for the Service Fee are determined based on the fixed monthly service as stipulated in the Performance Incentive Agreement. The proposed cap amounts for the Performance Bonus are determined with reference to the anticipated expected sales of New Group’s products and cost structure of the New Group, the expansion of the scale of production and future growth of the New Group’s business in particular, the manufacturing business of medical devices for the six years ending 31 December 2016. The Directors consider the basis fair and reasonable.

SHAREHOLDING STRUCTURE AS A RESULT OF ACQUISITION AND PERFORMANCE INCENTIVE AGREEMENT

Set out below is a summary of the shareholding structure of the Company (i) as at the date of this announcement and upon Acquisition Completion; (ii) immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes; and (iii) immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes and the issue of a maximum of 3,200 million Performance Incentive Shares, based on the initial conversion/ issue price of HK$0.105 per Share and without taking into account of the effect of the Rights Issue and the Redemption:

Mr. Leung Ka Kui, Johnny (Note 1) Vendors (or their respective nominees) (Note 2) Other public shareholders Total Total public shareholders (Note 5)	As at the date of this announcement and upon Acquisition Completion Number of shares % (approx.) 290,000 0.02% 4,790,000 0.32% 1,498,670,505 99.66% 1,503,750,505 100.00% 1,500,460,505 99.78%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes(Note 3) Number of shares % (approx.) 290,000 0.01% 1,076,218,571 41.79% 1,498,670,505 58.20% 2,575,179,076 100.00% 1,498,670,505 58.20%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes and the issue of a maximum of 3,200 million Performance Incentive Shares(Note 4) Number of shares % (approx.) 290,000 0.01% 4,276,218,571 74.04% 1,498,670,505 25.95% 5,775,179,076 100.00% 1,498,670,505 25.95%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes and the issue of a maximum of 3,200 million Performance Incentive Shares(Note 4) Number of shares % (approx.) 290,000 0.01% 4,276,218,571 74.04% 1,498,670,505 25.95% 5,775,179,076 100.00% 1,498,670,505 25.95%
				100.00%

				25.95%

Notes:

Mr. Leung Ka Kui, Johnny is an independent non-executive Director.
Set out below is the allocation of the Convertible Notes agreed by the Vendors:

Vendor 1 Vendor 2 Vendor 3 Mr. Lee Vendor 4 Vendors (or their respective nominees)	Allocation of principal amount of the Convertible Notes HK$ % (approx.) 29,762,460 26.45% 42,418,905 37.71% – – 8,156,190 7.25% 32,162,445 28.59% 112,500,000 100.00%	Shareholding as at the date of this announcement Number of shares % (approx.) 1,790,000 0.12% – – 3,000,000 0.20% – – – – 4,790,000 0.32%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes at initial conversion price(Note 3) Number of shares % (approx.) 285,242,000 11.07% 403,989,571 15.69% 3,000,000 0.12% 77,678,000 3.02% 306,309,000 11.89% 1,076,218,571 41.79%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes at initial conversion price(Note 3) Number of shares % (approx.) 285,242,000 11.07% 403,989,571 15.69% 3,000,000 0.12% 77,678,000 3.02% 306,309,000 11.89% 1,076,218,571 41.79%
				41.79%

The Vendors informed the Company that in the event that upon conversion of the Convertible Notes, the Vendors, together with the parties acting in concert with them, will be interested in an aggregate of 30% or more of the voting rights of the Company immediately following the issue of the relevant Conversion Shares, the Vendors will comply with the relevant rules under the Takeovers Code.
Pursuant to the terms of the Performance Incentive Agreement, the Performance Incentive Shares will not be issued to the extent that, (i) the Vendors, together with parties acting in concert with them, directly or indirectly control or would be interested in an aggregate of 30% or more of the issued Shares immediately following the issue of the relevant Shares, or if the Vendors would otherwise be obliged to make a mandatory offer obligation under Rule 26 of the Takeovers Code or otherwise pursuant to other provisions of the Takeovers Code; or (ii) the minimum public float requirement of the Company under the Listing Rules will be breached as a result of such issue. Accordingly, the column under which the issue of a maximum of 3,200 million Performance Incentive Shares is for illustration purpose only.
Shareholders not being a director, chief executive or substantial shareholder of the Company or a director of the Company within the preceding 12 months or an associate of a person referred to above are regarded as public Shareholders.
The above shareholding table has not taken into account the adjustment to be made to the initial conversion price of the Convertible Notes and the initial issue price of the Performance Incentive Shares as a result of the Rights Issue and the Redemption.

ADJUSTMENT TO CONVERSION PRICE OF CONVERTIBLE NOTES AND ISSUE PRICE OF THE PERFORMANCE INCENTIVE SHARES

In accordance with the terms and conditions of the Convertible Notes to be issued upon the Acquisition Completion, the Rights Issue and the Redemption will result in an adjustment to the initial conversion price of the Convertible Notes and the issue price of the Performance Incentive Shares. Further announcement will be made by the Company as and when appropriate.

SUSPENSION AND RESUMPTION OF TRADING

DEFINITIONS

In this announcement, unless the context otherwise requires, the following words and expressions shall have the following meanings when used herein:

“Accumulated Losses”

the accumulated losses of the Company immediately before the Capital Reorganisation becomes effective

“Acquisition”

the proposed acquisition of the entire issued share capital/ registered capital of the Target Companies by the Purchaser pursuant to the Acquisition Agreement, details of which are set out in the First Announcement

“Acquisition Agreement”

the sale and purchase agreement dated 23 January 2011 (as amended) and entered into among the Company, the Purchaser and the Vendors in relation to the Acquisition

“Acquisition Completion” the completion of Acquisition Agreement in accordance with its terms and conditions “AFEX” AFEX International (HK) Limited, a company incorporated under the laws of Hong Kong and an indirect wholly-owned subsidiary of Ugent “Annual Report” annual report of the Group for the year ended 31 December 2010 “associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “Business Day” a day (other than a Saturday or a Sunday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours “BVI” the British Virgin Islands “Bye-Laws” the bye-laws of the Company in effect from time to time “Capital Reduction” the proposed reduction of the share capital of the Company through a cancellation of the paid-up capital of the Company to the extent of HK$0.09 on each of the issued Shares such that the nominal value of each issued Share will be reduced from HK$0.1 to HK$0.01 “Capital Reorganisation” the proposed share capital reorganisation as more fully set out under the section headed “Capital Reorganisation” in this announcement “CCASS” the Central Clearing and Settlement System established and operated by HKSCC

“Company”

“Completion”
“Completion Date”
“connected person”
“Continuing Connected Transactions”
“Conversion Shares”
“Convertible Notes”
“Excluded Shareholder(s)”
“First Announcement”
“Group”
“HKSCC”

Guojin Resources Holdings Limited (stock code: 630), a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange

completion of the Redemption Agreements and Rights Issue

the date of Completion

has the meaning ascribed to it under the Listing Rules

the provision of the Services contemplated under the Performance Incentive Agreement
up to 1,071,428,571 new Shares which may fall to be allotted and issued upon full conversion of the Convertible Notes at the initial conversion price of HK$0.105 (subject to adjustments)
the convertible notes in the principal amount of HK$112.5 million (as revised from HK$105 million) to be issued by the Company to the Vendors to satisfy part of the consideration of the Acquisition
Overseas Shareholder(s), to whom the Directors, based on legal opinions provided by legal advisers in the relevant jurisdictions and on account either of legal restrictions under the laws of relevant place or the requirements of the relevant regulatory body or stock exchange in that place, consider it necessary or expedient not to offer the Rights Shares
the announcement of the Company dated 25 January 2011 in relation to, among other things, the Acquisition and the Continuing Connected Transactions
the Company and its subsidiaries
Hong Kong Securities Clearing Company Limited

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”
the independent board committee of the Board, comprising of Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and Mr. Lau Man Tak, being all the independent nonexecutive Directors, established for the purpose of, among other things, advising the Independent Shareholders in respect of the Rights Issue and the Redemption Agreements
“Independent the Shareholders other than the Vendors, Ugent Bondholders Shareholders” and their respective associates who are required to abstain from voting at the SGM under the Listing Rules
“Independent Third the independent third party(ies) who is/are independent of Party(ies)” the Company and its connected persons
“Initial Subscriber”
The China Fund Inc., being the initial subscriber to the Ugent Bonds
“Kingsway”
Kingsway Financial Services Group Limited, a company incorporated in Hong Kong with limited liability and a corporation licensed to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management)
“Last Acceptance Date”
the date as the Underwriters and the Company may agree as the latest date for acceptance of and payment for Rights Shares and application for and payment for excess Rights Shares
“Last Trading Day”
17 June 2011, being the last trading day for the Shares before the date of this announcement
“Latest Lodging Date”
the date as the Underwriters and the Company may agree as the latest date for lodging transfer of Shares in order to be qualified for the Rights Issue

“Latest Time for being 5:00 p.m. on the second Business Day immediately Termination” following the latest day upon which provisional allotments of Rights Shares in nil-paid form may be validly accepted under the Rights Issue
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Mr. Lee” Mr. Lee Siew Yuen, one of the shareholders of Vendor 3 and an Independent Third Party
“Mr. Yip” or “Vendor 2” Mr. Yip Wai Lun, Alvin, the Chairman and Managing Director of the Company
“Ms. Leung” Ms. Leung Mei Han, who is the beneficial owner of Ugent Bondholder 1
“New Group” the Target Companies, the Purchaser and any of their subsidiaries from time to time upon and after the Acquisition Completion
“New Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company immediately upon the Capital Reorganisation becoming effective
“Optima Capital”
Optima Capital Limited, a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities as defined under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Performance Bonus” the performance bonus to which the Service Provider will be entitled in relation to the Services pursuant to the Performance Incentive Agreement

“Performance Incentive the conditional agreement dated 4 March 2011 (including Agreement” the supplements) entered into among the Company, the Purchaser and the Service Provider in relation to the provision of the Services “Performance Incentive up to 3,200 million new Shares (subject to adjustments) Shares” which may fall to be allotted and issued to the Vendors to satisfy part of the Performance Bonus

“PRC” The People’s Republic of China, for the purpose of this announcement, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

“Prospectus”

the prospectus to be issued by the Company in relation to the Rights Issue

“Prospectus Documents” the Prospectus, the provisional allotment letter and the form of application for excess Rights Shares

“Prospectus Posting Date”

the date as the Underwriters may agree in writing with the Company as the date of despatch of the Prospectus Documents to the Qualifying Shareholders or the Prospectus for information only (as the case may be) to the Excluded Shareholders

“Purchaser”

Energy Best Investments Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of the Company, being the purchaser under the Acquisition Agreement to be used as the immediate holding company of the Target Companies upon the Acquisition Completion
“Qualifying Shareholder(s), other than the Excluded Shareholder(s), Shareholder(s)” whose name(s) appear(s) on the register of members of the Company on the Record Date

“Record Date”

being the date by reference to which entitlements to the Rights Issue will be determined

“Redemption” redemption of the Ugent Bonds in accordance with the terms of the Ugent Subscription Agreement, details of which are set out in the Redemption Agreements “Redemption Agreements” six agreements each dated 20 June 2011 signed among the Company, Ugent and each of the Ugent Bondholders respectively in relation to the Redemption “Redemption Price” the issue price of HK$0.05 per Redemption Share “Redemption Shares” 4,151,240,001 New Shares to be issued at the Redemption Price under the Redemption “Registrar” Tricor Standard Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, being the Company’s Hong Kong branch share registrar “Rights Issue” the proposed issue of Rights Shares on the basis of eleven (11) Rights Shares for every ten (10) Shares held on the Record Date “Rights Issue Price” the subscription price of HK$0.05 per Rights Share “Rights Share(s)” not less than 1,654,125,556 New Shares and not more than 1,739,889,220 New Shares to be issued and allotted under the Rights Issue “Sale Shares” the entire issued share capital/registered capital of the Target Companies “Services” services to be provided by the Service Provider to the Purchaser, details of which are set out in the First Announcement “Service Fee” the service fee of HK$200,000 per month to which the Service Provider will be paid in relation to the Services pursuant to the Performance Incentive Agreement

“Service Provider”

Atlas Medical Limited, a company incorporated in Hong Kong

“SGM” a special general meeting of the Company to be convened and held to consider and, if thought fit, approve, among other matters, (i) the Capital Reorganisation; (ii) the Redemption; and (iii) the Rights Issue

“Share(s)” existing ordinary share(s) of HK$0.10 each in the share capital of the Company

“Shareholder(s)”

holder(s) of the issued Shares

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“subsidiaries” has the meaning ascribed to it under the Listing Rules

“Takeovers Code”

Hong Kong Code on Takeovers and Mergers

“Target Companies” collectively, Titron Industries Limited and its subsidiary, Titron International Limited, Titron Manufacturing Limited, Titron Precision Limited and its subsidiary, and 東莞德越電子塑膠製品有限公司 (Dongguan De Yue Electronic and Plastic Products Company Limited[#] )

“Titron Group” the subsidiaries of the Purchaser from time to time including the Target Companies after the Acquisition Completion

“Ugent” Ugent Holdings Limited, a company incorporated under the laws of the BVI with limited liability and an indirect whollyowned subsidiary of the Company

“Ugent Bonds” the 12% convertible bonds of Ugent in the principal amount of HK$177,000,000 issued by Ugent to the Initial Subscriber pursuant to the Ugent Subscription Agreement

“Ugent Bondholder 1” Qshare Holding Limited, a company incorporated in Hong Kong, the entire issued capital of which is held by Ms. Leung “Ugent Bondholder 2” Integrated Asset Management (Asia) Limited, a company incorporated in the BVI with limited liability, the entire issued capital of which is held by Mr. Yam Tak Cheung “Ugent Bondholder 3” Value Creation Partners Company Limited, a company incorporated in Hong Kong, the entire issued capital of which is held by Ms. Loh Jiah Yee, Katherine “Ugent Bondholder 4” Mr. Lo Ming Chi, Charles “Ugent Bondholder 5” Mr. Ou Tian Xiong “Ugent Bondholder 6” Ms. Fu Wai Ling “Ugent Bondholders” collectively, Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6 “Ugent Share(s)” ordinary share(s) of par value US$1.00 each in the share capital of Ugent

“Ugent Subscription the subscription agreement dated 6 March 2009 entered into Agreement” between Ugent and the Initial Subscriber in relation to the subscription of the Ugent Bonds “Undertaking” the irrevocable undertaking dated 20 June 2011 given by Mr. Yip in favour of the Company and Kingsway in relation to his undertaking to accept or procure the subscription of his full entitlement of Rights Shares pursuant to the Rights Issue; and that he shall not, without the prior written consent of the Company, dispose of, transfer or deal in any Shares from the date of the undertaking up to and including the Last Acceptance Date

“Underwritten Shares”	all the Rights Shares (other than the 3,300,000 Rights Shares
	to be provisionally allotted to Mr. Yip (through his interest
	in Vendor 3), being up to and not more than 1,736,589,220
	Rights Shares
“Underwriters”	together, Kingsway and Mr. Yip
“Underwriting Agreement”	the underwriting agreement dated 20 June 2011 entered into
	between the Company and the Underwriters in relation to the
	Rights Issue
“United States”	the United States of America
“Vendor 1”	Mr. Lye Khay Fong
“Vendor 3”	Titron Group Holdings Limited, a company incorporated
	in the BVI with limited liability and owned as to 42.5% by
	Vendor 1, as to 42.5% by Mr. Yip and as to 15% by Mr. Lee
“Vendor 4”	Chelin International Limited, a company incorporated in
	Hong Kong with limited liability and owned by a cousin of
	Vendor 2
“Vendors”	collectively, Vendor 1, Vendor 2, Vendor 3 and Vendor 4
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.
	By order of the Board
	Guojin Resources Holdings Limited
	Yip Wai Lun, Alvin
	Chairman and Managing Director

Hong Kong, 21 June 2011

For reference purpose only, the Chinese names of the PRC entities have been translated into English in this announcement. In the event of any discrepancies between the Chinese names and the English translation, the Chinese names prevail.

As at the date of this announcement, Mr. Yip Wai Lun, Alvin, Ms. Lam Suk Ling, Shirley and Mr. Lee Cheuk Yin, Dannis are the Executive Directors and Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and Mr. Lau Man Tak are the Independent Non-executive Directors.

AI assistant

ICO Group Limited — Capital/Financing Update 2011

49938_rns_2011-06-21_b0f3c28c-1e3e-4a0c-9870-5b07fe5d3c11.pdf

(1) CAPITAL REORGANISATION;

(2) REDEMPTION OF THE UGENT BONDS;

(3) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE; (4) SUPPLEMENTAL AGREEMENTS ON MAJOR AND CONNECTED TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS; AND (5) RESUMPTION OF TRADING

Financial Adviser to Guojin Resources Holdings Limited

CAPITAL REORGANISATION

REDEMPTION OF UGENT BONDS

RIGHTS ISSUE

GENERAL

SUPPLEMENTAL AGREEMENTS ON THE ACQUISITION AGREEMENT AND THE PERFORMANCE INCENTIVE AGREEMENT

ADJUSTMENT TO CONVERSION PRICE OF CONVERTIBLE NOTES AND ISSUE PRICE OF THE PERFORMANCE INCENTIVE SHARES

RESUMPTION OF TRADING

CAPITAL REORGANISATION

Conditions of the Capital Reorganisation

Reasons for the Capital Reorganisation

Certificates for the New Shares

THE REDEMPTION

Background

Date: 20 June 2011

Parties:

(iii) The Company

Subject Matter

Conditions

Information on Ugent

PROPOSED RIGHTS ISSUE

Issue statistics

Qualifying Shareholders

Rights Issue Price

Status of the Rights Issue

Conditions of the Rights Issue

Rights of Overseas Shareholders

Basis of provisional allotment

Fractional entitlement to the Rights Shares

Application for excess Rights Shares

Share certificates for the fully-paid Rights Shares

Application for listing of the Rights Shares on the Stock Exchange

UNDERTAKING AND UNDERWRITING ARRANGEMENT

Undertaking

Underwriting Agreement

Termination of the Underwriting Agreement

EXPECTED TIMETABLE

FUND RAISING EXERCISE OF THE COMPANY

SHAREHOLDING STRUCTURE AS A RESULT OF RIGHTS ISSUE AND REDEMPTION

REASONS FOR THE REDEMPTION AND RIGHTS ISSUE

GENERAL

SGM

SUPPLEMENTAL AGREEMENTS ON THE ACQUISITION AGREEMENT AND THE PERFORMANCE INCENTIVE AGREEMENT

Background

Details of the amendments

Caps on the Continuing Connected Transactions

For the year ended

SHAREHOLDING STRUCTURE AS A RESULT OF ACQUISITION AND PERFORMANCE INCENTIVE AGREEMENT

ADJUSTMENT TO CONVERSION PRICE OF CONVERTIBLE NOTES AND ISSUE PRICE OF THE PERFORMANCE INCENTIVE SHARES

SUSPENSION AND RESUMPTION OF TRADING

DEFINITIONS

“Company”

“Service Provider”

For reference purpose only, the Chinese names of the PRC entities have been translated into English in this announcement. In the event of any discrepancies between the Chinese names and the English translation, the Chinese names prevail.

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ICO Group Limited Capital/Financing Update 2011