PegBio Co., Ltd. — Capital/Financing Update 2006

Feb 20, 2006

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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(Incorporated in Bermuda with limited liability) (Stock Code: 1141)

CONNECTED TRANSACTION – PROPOSED ISSUE OF CONVERTIBLE NOTE

On 15th February, 2006, the Company entered into the Subscription Agreement with the Subscriber pursuant to which the Company agreed to issue the Convertible Note in the principal amount of HK$37,000,000 to the Subscriber. Upon Completion, the Company will issue the Convertible Note to the Subscriber and the Subscriber will release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 representing the principal amount of the outstanding Loan and part of its accrued interest owed by the Company to the Subscriber. The Company is expected to benefit from (i) the interest savings for the Group from the issue of the Convertible Note at an interest rate of 1% per annum; and (ii) the long term feature of the Convertible Note as compared to that of the Facility for the Loan expiring in October 2006.

The Subscriber, Vision Century Group Limited, is the controlling Shareholder as at the date of this announcement. Accordingly, the transactions contemplated under the Subscription Agreement, including the issue of the Convertible Note, will constitute connected transactions of the Company under the Listing Rules. The entering into of the Subscription Agreement and the transactions contemplated thereunder, including the issue of the Convertible Note, are subject to, among others, the approval of the Independent Shareholders by way of a poll at a special general meeting of the Company where Vision Century and its associates will be required to abstain from voting.

A circular containing, among others, (i) details of the Subscription Agreement and the Convertible Note; (ii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Subscription Agreement and the Convertible Note; (iii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; and (iv) the notice of the special general meeting of the Company will be sent to the Shareholders as soon as practicable.

Trading in the Shares was suspended from 9:30 a.m. on 16th February, 2006 pending the release of this announcement. An application has been made by the Company for the resumption of trading of the Shares on the Stock Exchange with effect from 9:30 a.m. on 20th February, 2006.

On 15th February, 2006, the Company entered into the Subscription Agreement with the Subscriber pursuant to which the Company agreed to issue the Convertible Note in the principal amount of HK$37,000,000 to the Subscriber. As at the date of this announcement, HK$37,485,640 (being the principal amount of the Loan in the sum of HK$31,377,540 and accrued interest in the sum of HK$6,108,100 calculated up to the date of this announcement) was owed by the Company to the Subscriber. The Subscriber has agreed to release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note. The Company will, upon Completion, settle the remaining accrued interest in the sum of HK$485,640 calculated up to the date of this announcement and any further interest to be accrued up to the date of Completion by cash from internal resources of the Group. Set out below is the principal terms of the Subscription Agreement.

THE SUBSCRIPTION AGREEMENT

Date : 15th February, 2006 Issuer : the Company Subscriber : Vision Century Group Limited, the controlling Shareholder interested in approximately 61.9% of the issued share capital of the Company as at the date of this announcement

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The Subscriber is an investment holding company, the principal asset of which is the investment in the Company.

Conditions:

Completion of the Subscription Agreement is conditional upon:

• (i) the Listing Committee of the Stock Exchange having granted (either unconditionally or subject only to conditions to which neither the Company nor the Subscriber shall reasonably object) listing of and permission to deal in the Conversion Shares;

• (ii) if required, the Stock Exchange or any relevant regulatory authorities shall have approved and not withdrawn approval for the issue of the Convertible Note and the transactions contemplated under the Subscription Agreement (either unconditionally or subject only to conditions to which neither the Company nor the Subscriber shall reasonably object and the fulfilment of such conditions);

• (iii) if required, all consents or approvals of, and all filings with any relevant governmental or regulatory authorities and other third parties in Bermuda; and

• (iv) the approval of the Independent Shareholders, having been obtained at a duly convened shareholders’ meeting of the Company, passing a resolution to approve the Subscription Agreement and the transactions contemplated thereunder, including the issue of the Convertible Note.

None of the above conditions is capable of being waived. If any of the above conditions are not fulfilled on or before 30th April, 2006 (or such later date as may be agreed between the Subscriber and the Company), the Subscription Agreement shall lapse and become null and void and the parties to the Subscription Agreement shall be released from all obligations thereunder. None of the parties shall have any claims against the others for costs, damages, compensation or otherwise, save for any liability arising out of any antecedent breaches thereof.

Completion:

Subject to fulfilment of the aforesaid conditions precedent to the Subscription Agreement, Completion shall take place before 5:00 p.m. on the first business day following the date on which all the conditions precedent to the Subscription Agreement have been fulfilled, or such other time and date as the Company and the Subscriber may agree in writing.

On Completion, the Subscriber shall deliver a waiver to the Company under which the Subscriber shall release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber.

PRINCIPAL TERMS OF THE CONVERTIBLE NOTE

• Issuer : The Company Principal : HK$37,000,000 amount

• Maturity : Unless previously converted or repaid, the Convertible Note will mature on the date preceding the third anniversary of the date of its issue.

• Interest : 1% per annum on the principal amount of the Convertible Note outstanding from time to time, payable semi-annually in arrears on 31st March and 30th September each year.

• Conversion : Subject to the terms of the Convertible Note, holder(s) of the Convertible Note will have the right to convert on any business day (prior to the earlier of (1) the date on which a notice is given by the Company exercising its rights attached to the Convertible Note to redeem the whole or a part of the principal amount of the Convertible Note, or (2) five business days prior to the Maturity Date) the whole or part of the outstanding principal amount of the Convertible Note (in an amount or integral multiple of HK$500,000) into Shares at any time and from time to time at the initial conversion price of HK$0.205 per Conversion Share, subject to adjustment as detailed below.

The Conversion Price is subject to adjustment from time to time for (1) any consolidation or subdivision of Shares; (2) issue of new Shares by way of capitalization of profits or reserves; (3) capital distribution; (4) rights issue or

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grant of option or warrants to subscribe for new Shares; (5) issue of other securities which are convertible or exchangeable into Shares for cash at an effective price which is less than 90% of the then prevailing market price; or the effective price of Shares receivable from the rights of conversion or exchange of such securities are modified to be less than 90% of the then prevailing market price; and (6) issue of Shares at a price which is less than 90% of the then prevailing market price for cash.

The holder(s) of the Convertible Note including the subsequent transferee(s) shall be entitled to exercise the conversion right to convert the whole or part of the outstanding principal amount of the Convertible Note into new Shares to the extent that such conversion will not cause the public float of the Company to fall below the minimum public float requirement under Rule 8.08 and Rule 13.32 of the Listing Rules.

The Conversion Price represents:

• (i) the closing price of HK$0.205 per Share as quoted on the Stock Exchange on 15th February, 2006, being the last trading day on which the Shares were traded on the Stock Exchange prior to the release of this announcement; and

• (ii) a premium of approximately 1.0% over the weighted average closing price of approximately HK$0.203 per Share for the five trading days (excluding those trading days without trading volume) ended on 15th February, 2006, being the last trading day on which the Shares were traded on the Stock Exchange prior to the release of this announcement.

The Conversion Price is determined after arm’s length negotiations between the Company and the Subscriber with reference to the weighted average closing price of the Shares for the five trading days (excluding those trading days without trading volume) ended on 15th February, 2006, being the date of the subscription agreement entered into between the Company and the Subscriber.

No fraction of a Share will be issued on conversion of the Convertible Note. Fractional entitlements shall be ignored and any sum paid by the Subscriber in respect thereof shall be retained by the Company for its own benefit.

• Conversion : The Conversion Shares shall, when issued, rank pari passu in all respects with Shares all the Shares then in issue and be entitled to all dividends and other distributions, the record date of which falls on a date on or after the date of the conversion notice.

There were 82,704,014 Shares in issue as at the date of this announcement. Upon full conversion of the entire principal amount of the Convertible Note into Conversion Shares at the initial conversion price of HK$0.205, a total of 180,487,804 Conversion Shares will be issued, which represents approximately 218.2% of the issued share capital of the Company as at the date of this announcement and approximately 68.6% of the issued share capital of the Company as enlarged by such conversion, assuming no other Shares are issued before full conversion of the Convertible Note.

• Early : The Company may at any time prior to the Maturity Date, by giving not less redemption than 5 business days’ prior notice to the holder(s) of the Convertible Note, repay the whole or part only (in an amount or integral multiple of HK$500,000) of the principal outstanding amount of the Convertible Note together with the outstanding interest accrued thereon in accordance with the terms of the Convertible Note.

• Transferability : The Convertible Note may be assigned or transferred subject to compliance of the conditions of the Convertible Note and further subject to the conditions, approvals, requirements and any other provisions of or under (i) the Stock Exchange (and any other stock exchange on which the Shares may be listed at the relevant time) or their rules and regulations; (ii) the approval for listing in respect of the Conversion Shares; and (iii) all applicable laws and regulations.

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Save with the prior written approval of the Company, none of the Convertible Note or any part thereof may be transferred to a connected person of the Company.

• Voting : Holder(s) of the Convertible Note will not be entitled to receive notices of, attend or vote at any general meetings of the Company by reason only of it being a holder of the Convertible Note.

• Listing : The Convertible Note will not be listed on the Stock Exchange or any other stock exchange. An application will be made to the Stock Exchange for the listing of and permission to deal in the Conversion Shares to be issued upon the exercise of the conversion rights attached to the Convertible Note.

SHAREHOLDING STRUCTURE OF THE COMPANY

The effect of the full conversion of the Convertible Note on the shareholding structure of the Company is as follows:

is as follows:
Shareholders Vision Century_(Note)_ Independent Shareholders	As at the date of this announcement and immediately upon completion of the Subscription Agreement Number of Shares % 51,157,196 61.9 31,546,818 38.1 82,704,014 100.0	Assuming full conversion of the Convertible Note Number of Shares % 231,645,000 88.0 31,546,818 12.0 263,191,818 100.0
			100.0

Note: Vision Century is a wholly-owned subsidiary of Huang Worldwide Holding Limited, which is in turn wholly owned by Huang Group (BVI) Limited. Huang Group (BVI) Limited is wholly owned by a discretionary trust, of which Mr. Ng (Huang) Cheow Leng is the settlor and Mr. Kan Ka Chong, Frederick is the trustee. Mr. Ng (Huang) Cheow Leng, Mr. Wilson Ng and Mr. Ng Wee Keat are discretionary beneficiaries of the trust.

The Stock Exchange has stated that if, upon the issue of the Conversion Shares, less than 25% of the Shares are held by the public or if the Stock Exchange believes that:

• a false market exists or may exist in the trading of the Shares; or

• there are too few Shares in public hands to maintain an orderly market,

then it will consider exercising its discretion to suspend trading in the Shares until a sufficient level of public float is attained.

Vision Century has undertaken to the Company that, so long as the conversion rights attached to the Convertible Note remains valid and subsisting, it will not cause the public float of the Company to fall below the minimum public float requirement under Rule 8.08 and Rule 13.32 of the Listing Rules as a result of it allowing, causing, or procuring any part of the Convertible Note to be converted into new Shares.

REASONS FOR THE ISSUE OF THE CONVERTIBLE NOTE AND USE OF PROCEEDS

The principal activities of the Group are the provision of supply and procurement business. The Group recorded net losses of approximately HK$30.9 million and HK$11.1 million for each of the two years ended 31st March, 2004 and 2005 respectively. In order to provide continuing financial support to the Group, the Subscriber has granted the Facility of HK$50 million to the Group pursuant to a loan facility agreement dated 2nd July, 2003 (as supplemented on 29th October, 2004) which will be expired by October 2006. The Group has since then utilised the Facility. As at the date of this announcement, HK$37,485,640 (being the principal amount of the Loan in the sum of HK$31,377,540 and accrued interest in the sum of HK$6,108,100 calculated up to the date of this announcement) was owed by the Company to the Subscriber. The Subscriber has agreed to release and discharge the Company from its obligations and liabilities of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note. The Company will, upon Completion, settle the remaining accrued interest in the sum of HK$485,640 calculated up to the date of this announcement and any further interest to be accrued up to the date of Completion by cash from internal resources of the Group.

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The Loan is unsecured and bears interest at prime rate quoted from time to time by The Hongkong and Shanghai Banking Corporation Limited plus 3% per annum. The interest expenses incurred in respect of the Loan for the years ended 31st March, 2004 and 31st March, 2005 were approximately HK$1.9 million and HK$2.1 million respectively. The other secured bank borrowings and unsecured borrowings obtained by the Group before Vision Century becoming the controlling Shareholder in 2002 bear interests ranging from 4.0% to 6.4% per annum at present. The Facility and the other borrowings were negotiated and agreed by the Group at different financial years. Having regard to the then financial position of the Group, the then economic environment in general and the unsecured nature of the Facility, the Board considers that the interest rate of the Facility to be on normal commercial terms. Based on the interest rate of 1% per annum of the Convertible Note, the annual interest expense of the Convertible Note is expected to be HK$370,000 which is significantly less than the interest expenses which would otherwise be borne by the Company under the Facility.

The Subscription Agreement and the terms of the Convertible Note have been arrived at after arm’s length negotiations between the Company and the Subscriber and are on normal commercial terms. Given that (i) there will be interest savings for the Group from the issue of the Convertible Note; (ii) the issue of the Convertible Note would not have immediate dilution effect to the Shareholders; and (iii) the long term feature of the Convertible Note as compared to that of the Facility expiring in October 2006, the Directors (including the independent non-executive Directors) consider the issue of the Convertible Note and the terms therein to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

DILUTION EFFECT ON SHAREHOLDERS

In view of the future dilution to existing Shareholders on the exercise of the conversion rights attached to the Convertible Note, the Company will keep the Shareholders informed of the level of dilution and details of conversion as follows :

• (a) the Company will make a monthly announcement (the “Monthly Announcement”) on the website of the Stock Exchange after Completion. Such announcement will be made on or before the fifth business day following the end of each calendar month and will include the following details in a table form:

• (i) whether there is any conversion of the Convertible Note during the relevant month. If there is a conversion, details thereof including the conversion date, number of new Shares issued, conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;

• (ii) the number of outstanding Convertible Note after conversion, if any;

• (iii) the total number of new Shares issued pursuant to other transactions during the relevant month, including new Shares issued pursuant to exercise of options under any share option scheme(s) of the Company; and

• (iv) the total issued share capital of the Company as at the commencement and the last day of the relevant month; and

• (b) in addition to the Monthly Announcement, if the cumulative amount of new Shares issued pursuant to the conversion of the Convertible Note reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Note (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the website of the Stock Exchange including details as stated in (a) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement in respect of the Convertible Note (as the case may be) up to the date on which the total amount of Shares issued pursuant to the conversion amounted to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Note (as the case may be).

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

In February 2005, the Company completed an open offer from which approximately HK$20.9 million (net of expenses) was raised. Details of the open offer were set out in the announcement of the Company dated 14th January, 2005 and the prospectus of the Company dated 4th February, 2005. The net proceeds of approximately HK$20.9 million were used as to approximately HK$16 million to repay the Group’s liabilities including bank loans, other loans, account payables and accruals due to independent third parties and as to the remaining balance of approximately HK$4.9 million as general

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working capital of the Group, which comply with the intended use of proceeds as set out in the announcement of the Company dated 14th January, 2005 and the prospectus of the Company dated 4th February, 2005.

Other than the open offer completed as mentioned above, the Company has not conducted any other fund raising activities in the past twelve months before the date of this announcement.

LISTING RULES IMPLICATIONS

Vision Century, the controlling Shareholder, is interested in approximately 61.9% of the issued share capital of the Company as at the date of this announcement and is therefore a connected person of the Company. Accordingly, the transactions contemplated under the Subscription Agreement, including the issue of the Convertible Note, will constitute connected transactions of the Company under the Listing Rules.

The Subscription Agreement and the transactions contemplated thereunder, including the issue of the Convertible Note, are subject to, among others, (i) the approval of the Independent Shareholders by way of a poll at a special general meeting of the Company where Vision Century and its associates will be required to abstain from voting; and (ii) the approval by the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the new Shares falling to be issued upon conversion of the Convertible Note. The Independent Board Committee will be constituted by the Company to advise the Independent Shareholders and an independent financial adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders as regards the terms of the Subscription Agreement and the Convertible Note.

GENERAL

A circular containing, among others, (i) details of the Subscription Agreement and the Convertible Note; (ii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Subscription Agreement and the Convertible Note; (iii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; and (iv) the notice of the special general meeting of the Company will be sent to the Shareholders as soon as practicable.

Trading in the Shares was suspended from 9:30 a.m. on 16th February, 2006 pending the release of this announcement. An application has been made by the Company for the resumption of trading of the Shares on the Stock Exchange with effect from 9:30 a.m. on 20th February, 2006.

DEFINITIONS

In this announcement, the following terms have the meanings set out below unless the context requires otherwise:

requires otherwise:
“Board”	the board of Directors
“Company”	Xin Corporation Limited, a company incorporated in Bermuda with
	limited liability and the issued Shares of which are listed on the
	Main Board of the Stock Exchange
“Completion”	completion of the Subscription Agreement in accordance with its
	terms and conditions
“Completion Date”	the first business day following the date on which all the conditions
	precedent to the Subscription Agreement are fulfilled
“Conversion Price”	the initial conversion price of HK$0.205, subject to adjustment
	pursuant to the terms of the Convertible Note
“Conversion Shares”	Shares to be allotted and issued by the Company upon exercise of
	the conversion rights attached to the Convertible Note
“Convertible Note”	a convertible note with an aggregate principal amount of
	HK$37,000,000, bearing interest at 1% per annum on the principal
	amount outstanding from time to time, to be issued by the Company
	in accordance with the provisions of the Subscription Agreement
“Director(s)”	the director(s) of the Company
“Facility”	a credit facility in the amount of HK$50 million granted to the Group
	by Vision Century pursuant to a loan facility agreement dated 2nd
	July, 2003 (as supplemented on 29th October, 2004)

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“Group”

the Company and its subsidiaries

“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Independent Board an independent board committee to be constituted to advise the Committee” Independent Shareholders regarding the Subscription Agreement and the Convertible Note

• “Independent Shareholders” Shareholders other than the Subscriber and its associates “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Loan” the loan drawn down by the Company under the Facility in the principal amount of HK$31,377,540 as at the date of this announcement

• “Maturity Date” the date preceding the third anniversary of the date of issue of the Convertible Note

• “Shareholder(s)” holder(s) of the Shares “Share(s)” ordinary share(s) of HK$0.01 each in the issued share capital of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Subscriber” or Vision Century Group Limited, a company incorporated in the “Vision Century” British Virgin Islands, being the controlling Shareholder interested in approximately 61.9% of the issued share capital of the Company as at the date of this announcement

• “Subscription Agreement” the subscription agreement dated 15th February, 2006 entered into between the Company and the Subscriber in relation to the subscription of the Convertible Note and as supplemented by an agreement dated 17th February, 2006

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “%” per cent.

By Order of the Board XIN CORPORATION LIMITED Lo Ming Chi, Charles Chairman

Hong Kong, 17th February, 2006

As at the date of this announcement, the Board comprises Mr. Lo Ming Chi, Charles (Chairman), Mr. Yu Wai Man, Mr. Wilson Ng, Mr. Ng Wee Keat and Mr. Ng Eng Leng as executive Directors and Mr. Wong Kwok Tai, Mr. Lau Pok Lam and Mr. Ko Kwong Woon, Ivan as independent non-executive Directors.

• For identification only

Please also refer to the published version of this announcement in The Standard.

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