IGG Inc — Capital/Financing Update 2007

Jul 22, 2007

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

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ORIENTAL WATCH HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

(Stock Code: 398)

PLACING OF NEW SHARES AND RESUMPTION OF TRADING

Placing agent

DBS Asia Capital Limited

Financial Adviser to the Company

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INCU Corporate Finance Limited

PLACING OF NEW SHARES

The Directors are pleased to announce that on 20 July 2007, the Company entered into a Placing Agreement with the Placing Agent in relation to the placing of up to 39,000,000 Placing Shares at a Placing Price of HK$3.80 per Placing Share on a best effort basis.

Completion of the Placing Agreement is subject to the fulfillment of the conditions in relation thereto as stated in the section headed “Conditions” in this announcement. The Placing Shares will be issued under a special mandate to be obtained at the SGM.

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

A circular, containing details of the Placing as well as the notice of SGM, will be despatched to the Shareholders as soon as practicable.

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SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares was suspended with effect from 2:30 p.m. on 20 July 2007 pending the issue of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 23 July 2007.

THE PLACING AGREEMENT

Date: 20 July 2007

Parties: (i) the Company, as issuer; and

(ii) the Placing Agent, as placing agent.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are Independent Third Parties.

Placees

The Placing Shares will be placed to not less than six Placees, who will be individual(s), institutional or other professional investor(s) who together with their ultimate beneficial owners are also Independent Third Parties.

Placing Shares

Pursuant to the Placing Agreement, the Placing Agent has agreed to place on a best effort basis of up to 39,000,000 Placing Shares.

The Placing Shares, when issued, will rank pari passu in all respects with the then existing Shares in issue.

The Placing Shares represent approximately 13.92% and 12.22% of the issued share capital of the Company as at the date of this announcement and as enlarged by the issue of the Placing Shares respectively. The effect of the issue of the Placing Shares is illustrated in a tabular format as set out under the heading “Changes in Shareholding Structure” below.

Placing Price

The Placing Price for each of the Placing Shares is HK$3.80.

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The Placing Price represents:

• (i) a discount of approximately 18.45% to the closing price of HK$4.66 per Share as quoted on the Stock Exchange on 20 July 2007 before trading of the Shares being suspended;

• (ii) a discount of approximately 5.66% to the average closing price of approximately HK$4.028 per Share for the five consecutive trading days up to and including 20 July 2007 before trading of the Shares being suspended; and

• (iii) a discount of approximately 2.16% to the average closing price of HK$3.884 per Share for the ten consecutive trading days up to and including 20 July 2007 before trading of the Shares being suspended.

The Directors (including independent non-executive Directors) consider that the Placing Price to be fair and reasonable and is in the interest of the Company and the Shareholders as a whole which was determined on an arms-length basis between the Company and the Placing Agent having considered the recent closing prices of the Shares.

Conditions

Completion of the Placing Agreement is subject to and conditional upon the following:

• (1) the passing by the Shareholders at the SGM of a resolution authorising the issue of the Placing Shares in accordance with all legal and regulatory requirements; and

• (2) the Listing Committee of the Stock Exchange (either unconditionally or subject only to conditions to which the Company and the Placing Agent both acting reasonably do not object) granting the listing of, and the permission to deal in, the Placing Shares.

If the above conditions are not fulfilled in full on or prior to the day which falls on the expiry of 45 calendar days immediately following the date of the Placing Agreement (or such other date as may be agreed between the Company and the Placing Agent), the Placing Agreement shall terminate and neither of the parties thereto shall have any claim against the other for any costs or losses (save for any prior breaches of the Placing Agreement).

Completion Date

Completion of the Placing Agreement will take place on the third Business Day following the satisfaction of the conditions referred to above or such other date as the Company and the Placing Agent shall agree.

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Termination

If at any time on or prior to the date of completion of the Placing Agreement:

• (i) there develops, occurs or comes into effect:

• (a) any event, development or change (whether or not local, national or international or forming part of a series of events, developments or changes occurring or continuing before, on and/or after the date of the Placing Agreement), including an event or change in relation to or a development of an existing state of affairs of a political, military, industrial, financial, economic, fiscal, regulatory or other nature, whether or not sui generis with any of the foregoing, resulting in a material and adverse change in, or which would be expected to result in a material and adverse change in, political, economic, fiscal, financial, regulatory or stock market conditions in the PRC (including Hong Kong and the Macau Special Administrative Region of the PRC);

• (b) the imposition of any moratorium, suspension or material restriction on trading in securities generally on the Stock Exchange due to exceptional financial circumstances or otherwise;

• (c) any material and adverse change in conditions of local, national or international securities markets;

• (d) any new law or regulation or change in existing laws or regulations or any change in the interpretation or application thereof by any court or other competent authority in Hong Kong or any other jurisdiction relevant to the Group which shall materially and adversely affect the business or the financial or trading position of the Company;

• (e) any suspension of dealings in the Shares for a period exceeding ten (10) Business Days other than due to the clearance of this announcement;

• (f) a change or development involving a prospective change of taxation or exchange control (or the implementation of exchange control) in Hong Kong or elsewhere which would materially and adversely affect the business, financial or trading position of the Company; or

• (g) the instigation of any litigation or claim of material importance by any third party against any member of the Group which would materially and adversely affect the business, financial or trading position of the Company,

and which can reasonably be expected, in the opinion of the Placing Agent acting reasonably, to have or has had a material adverse effect upon the condition, (financial or otherwise) or earnings, business affairs or business prospects of the Company;

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• (ii) there is any breach of any of the warranties made by the Company as set out in the Placing Agreement which has come to the knowledge of the Placing Agent or any event which has occurred or any matter which has arisen on or after the date of the Placing Agreement and prior to the completion thereof which (a) if it had occurred or arisen before the date of the Placing Agreement would have rendered any of such warranties untrue, inaccurate or misleading, or (b) in the opinion of the Placing Agent acting reasonably, materially and adversely affects the financial position or business of the Company; or

• (iii) there has been a breach of or failure to perform any of the Company’s obligations in any material respect under the Placing Agreement,

then and in any such case, the Placing Agent may after consultation with the Company (to the extent that the same is reasonably practicable) terminate the Placing Agreement without liability to the Company by giving notice in writing to the Company, provided that such notice is received prior to the date of completion of the Placing Agreement.

In the event that the Placing Agent terminates the Placing Agreement pursuant to the above provisions, all obligations of the parties to the Placing Agreement shall cease and determine and no party thereto shall have any claim against any other party in respect of any matter arising out of or in connection with the Placing Agreement except for any antecedent breach of any obligation under the Placing Agreement.

MANDATE TO ISSUE THE PLACING SHARES

It is proposed that the Company will seek a special mandate from the Shareholders at the SGM to issue the Placing Shares. As no Shareholder is materially interested in the Placing, none of them will be required to abstain from voting at the SGM.

APPLICATION FOR LISTING

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

REASONS FOR THE PLACING AGREEMENT

The Group is principally engaged in the trading of watches.

As disclosed in the annual report of the Company for the year ended 31 March 2006, during the year, the Group established 11 new outlets throughout the PRC, increasing its point of sales to 21 shops. All of the shops are 100% managed by the Group. The management is trying to open up retail markets in the PRC with a long-term presence. The management also expects there is a long-term investment in trading of watches in the PRC market. In view of the positive market sentiment, the Directors consider the Placing is in the interest and commercial benefit of the Company such that the Group may have a strong financial position in pursuance of its business objectives.

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USE OF PROCEEDS

Assuming all of the Placing Shares are successfully placed, it is estimated that the net proceeds (after deducting all relevant fees, charges and expenses to be incurred in relation to the Placing) from the Placing will be approximately HK$143,700,000 which is intended to be applied as to approximately HK$100,590,000 for business development of the Group in the PRC, as to approximately HK$21,555,000 for business development of the Group in Hong Kong and the remaining balance of approximately HK$21,555,000 as general working capital of the Group.

FUND RAISING ACTIVITIES IN THE PAST TWELVE-MONTH PERIOD

The following is the only fund raising activity that has been carried out by the Company in the twelve months immediately prior to the date of this announcement.

Date of			Intended use	Actual use
announcement	Event	Net proceeds	of proceeds	of proceeds
11 June 2007	Private placing	(1) HK$0.6 million	(1) Net proceeds	(1) HK$0.6 million
	of an aggregate	from the issue of	from the issue of	from the issue of
	of 55,000,000	warrants; and (2) a	the warrants was	warrants has been
	non-listed	maximum of	intended to be	applied as general
	warrants	HK$99.55 million	applied as general	working capital of the
		from the full	working capital of	Group as originally
		exercise of the	the Group; and	intended; and (2) the
		subscription rights	(2) any proceeds	proceeds of HK$9.05
		attaching to the	from the issue of	million from the
		warrants	new Shares upon	exercise of the
			the exercise of the	subscription rights
			subscription rights	attaching to 5,000,000
			attaching to the	warrants has been
			warrants was	applied as general
			intended to be	working capital of the
			applied as funds	Group as originally
			for business	intended
			development of the
			Group in the PRC
			and towards the
			general working
			capital of the
			Group

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CHANGES IN SHAREHOLDING STRUCTURE

As at the date of this announcement, the Company has 280,253,200 Shares in issue. The shareholding structures of the Company as at the date of this announcement and upon completion of the placing of new Shares are as follows:

Shareholders Datsun Holdings Limited_(Note 1) Yeung Ming Biu(Note 2) Au Po Kee(Note 3) Sun International Limited(Note 4) Y.H. Chan Limited(Note 2) Fung Kwong Yiu(Note 5) Lai Wing Kai(Note 6) IXIS Asset Management Asia Ltd. Public Shareholders: Bright Year Limited(Note 7) Placees(Note 8)_ Other public Shareholders Total	Shareholding structure as at the date of this announcement No. Approximate of Shares % 96,800,000 34.54 10,787,260 3.85 6,000,000 2.14 2,000,000 0.71 294,365 0.11 1,803,152 0.64 167,547 0.06 14,258,000 5.09 5,000,000 1.78 — — 143,142,876 51.08 280,253,200 100.00	Shareholding structure upon completion of placing of new Shares No. Approximate of Shares % 96,800,000 30.32 10,787,260 3.38 6,000,000 1.88 2,000,000 0.63 294,365 0.09 1,803,152 0.56 167,547 0.05 14,258,000 4.47 5,000,000 1.57 39,000,000 12.22 143,142,876 44.83 319,253,200 100.00	Shareholding structure upon completion of placing of new Shares No. Approximate of Shares % 96,800,000 30.32 10,787,260 3.38 6,000,000 1.88 2,000,000 0.63 294,365 0.09 1,803,152 0.56 167,547 0.05 14,258,000 4.47 5,000,000 1.57 39,000,000 12.22 143,142,876 44.83 319,253,200 100.00
			100.00

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Notes:

1. 80% of the issued share capital of Datsun Holdings Limited (“Datsun”) is held by Furama Investments Limited (“Furama”). Realtower Holdings Limited (“Realtower”) holds 55% of the issued share capital of Furama. Mr. Yeung Ming Biu and his spouse have 67.5% interest in Realtower and are deemed by the SFO to be interested in the Shares beneficially owned by Datsun.

2. Mr. Yeung Ming Biu, an executive Director and the chairman of the Company, holds 10,782,260 Shares personally. He also has 47.5% interest in Y.H. Chan Limited.

3. Madam Au Po Kee, the wife of Mr. Yeung Ming Biu, holds 6,000,000 Shares personally.

4. The entire issued share capital of Sun International Limited is wholly and beneficially owned by Dr. Sun Ping Hsu, Samson, an independent non-executive Director.

5. Mr. Fung Kwong Yiu, an executive Director, holds 1,803,152 Shares personally.

6. Mr. Lai Wing Kai, the husband of Madam Yeung Man Yee, Shirley, an executive Director, holds 167,547 Shares personally.

7. Bright Year Limited is beneficially owned by Mr. Chan Francis Ping Kuen, an Independent Third Party.

8. After completion of the Placing Agreement, it is expected that none of the Placees will become a substantial Shareholder under the Listing Rules and thus, be regarded as public Shareholders.

A circular, containing details of the Placing as well as the notice of SGM, will be despatched to the Shareholders as soon as practicable.

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares was suspended with effect from 2:30 p.m on 20 July 2007 pending the issue of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 23 July 2007.

DEFINITIONS

Terms or expressions used in this announcement shall, unless the context otherwise requires, have the meanings ascribed to them below:

• “Board”

the board of Directors

“Business Day” any day (not being a Saturday, Sunday or public or statutory holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

“Company” Oriental Watch Holdings Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange

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“Directors”

the directors, including independent non-executive directors, of the Company

• “Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Third independent third party (parties) who is (are) not connected person(s) (as Party(Parties)” defined in the Listing Rules) of the Company and is (are) independent of and not connected with the Company and its connected persons

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Placee(s)” any individual(s), institutional or other professional investor(s) in respect of the subscription of the Placing Shares pursuant to the Placing Agreement

• “Placing” the placing of the Placing Shares, on a best effort basis, by the Placing Agent under the Placing Agreement

• “Placing Agent” DBS Asia Capital Limited, the placing agent specified in the Placing Agreement, a company incorporated in Hong Kong with limited liability and a licensed corporation to carry on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO

• “Placing Agreement” the conditional placing agreement entered into on 20 July 2007 between the Company and the Placing Agent for the placing of the Placing Shares

• “Placing Price” HK$3.80 per Placing Share “Placing Shares” up to 39,000,000 new Shares to be placed under the Placing Agreement “PRC” the People’s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

• “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” a special general meeting of the Company to be convened and held for passing of the necessary resolutions of the Shareholders authorising the Directors to issue the Placing Shares

• “Share(s)” ordinary share(s) of HK$0.10 each in the capital of the Company “Shareholders” holders of the Shares

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“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“%” per cent.

By order of the Board Oriental Watch Holdings Limited Yeung Ming Biu Chairman

Hong Kong, 20 July 2007

As at the date of this announcement, the executive Directors are Mr. Yeung Ming Biu, Mr. Yeung Him Kit, Dennis, Mr. Fung Kwong Yiu, Ms. Yeung Man Yee, Shirley, Mr. Lam Hing Lun, Alain and Mr. Choi Kwok Yum and the independent non-executive Directors are Dr. Sun Ping Hsu, Samson, Dr. Li Sau Hung, Eddy and Mr. So Kai Lau, Peter.

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