PegBio Co., Ltd. — Capital/Financing Update 2010

Nov 10, 2010

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 is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*] (Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

PROPOSED PLACING OF NEW SHARES UNDER SPECIFIC MANDATE

Placing Agent

RADLAND INTERNATIONAL LIMITED

On 10 November 2010 (after trading hours), the Company entered into the Placing Agreement with the Placing Agent whereby the Company conditionally agreed to place, through the Placing Agent, on a best effort basis, 1,000,000,000 Placing Shares at a price of HK$0.32 per Placing Share. A maximum of 1,000,000,000 Placing Shares represent approximately 32.13% of the Company’s existing issued share capital of the Company of 3,112,479,760 Shares as at the date of this announcement and approximately 24.32% of its issued share capital as enlarged by the Placing. The aggregate nominal value of the Placing Shares under the Placing will be HK$10,000,000.

The Placing Price of HK$0.32 per Placing Share represents (i) a discount of approximately 5.88% to the closing price of HK$0.34 per Share as quoted on the Stock Exchange on 10 November 2010, being the date of the Placing Agreement; (ii) a premium of approximately 7.74% to the average closing price of HK$0.297 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including 9 November 2010; and (iii) a premium of approximately 14.70% to the average closing price of approximately HK$0.279 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including 9 November 2010.

• For identification purpose only

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The maximum gross proceeds from the Placing will be HK$320 million. The Company plans to use the maximum net proceeds of approximately HK$311.2 million from the Placing for (i) general working capital of the Group and/or (ii) repayment of debts of the Group and/or (iii) funding of appropriate investment opportunities if arise.

A SGM will be convened and held for the Shareholders to consider and, if thought fit, pass the relevant resolution(s) to approve (i) the Placing Agreement and the transactions contemplated thereunder; and (ii) the Specific Mandate.

The Placing is conditional upon (i) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Placing Shares; and (ii) passing of the resolution(s) in relation to the Placing and the transactions contemplated thereunder and the Specific Mandate by the Shareholders at the SGM.

A circular containing, among other things, (i) further details of the Placing Agreement and the transactions contemplated thereunder and the Specific Mandate; and (ii) a notice convening the SGM will be despatched to the Shareholders as soon as practicable in accordance with the requirements of the Listing Rules.

Completion of the Placing is subject to the satisfaction of the conditions precedent in the Placing Agreement.

As the Placing may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

THE PLACING AGREEMENT

Date

10 November 2010 (after trading hours)

Issuer

The Company

Placing Agent and the Placees

Radland International Limited is the Placing Agent, has conditionally agreed to place 1,000,000,000 Placing Shares on a best effort basis and in consideration thereof, it will receive a placing commission of 2.5% on the gross proceeds of the Placing upon completion of the Placing. The Directors are of the view that the placing commission accords with the market rate and is fair and reasonable. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are third parties independent of and not connected with the Company and its Connected Persons.

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The Placing Agent agreed to procure, on a best effort basis, not fewer than six Placees, being independent individuals, institutional or other professional investors, to subscribe for the Placing Shares at the Placing Price within the Placing Period. The Placing Agent agreed to use all reasonable endeavours to ensure that the Placees and their ultimate beneficial owners are third parties independent from the Company and the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

Number of Placing Shares

A maximum of 1,000,000,000 Placing Shares represent approximately 32.13% of the Company’s existing issued share capital of the Company of 3,112,479,760 Shares as at the date of this announcement and approximately 24.32% of its issued share capital as enlarged by the Placing. The aggregate nominal value of the Placing Shares under the Placing will be HK$10,000,000.

Placing Price

The Placing Price of HK$0.32 per Placing Share represents (i) a discount of approximately 5.88% to the closing price of HK$0.34 per Share as quoted on the Stock Exchange on 10 November 2010, being the date of the Placing Agreement; (ii) a premium of approximately 7.74% to the average closing price of HK$0.297 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including 9 November 2010; and (iii) a premium of approximately 14.70% to the average closing price of approximately HK$0.279 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including 9 November 2010.

The net placing price under the Placing is approximately HK$0.311 per Placing Share.

The Directors consider that the Placing Price, which was agreed after arm’s length negotiations between the Company and the Placing Agent with reference to current market price of the Shares, is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Ranking of Placing Shares

The Placing Shares, when issued and fully paid, will rank pari passu in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Placing Shares.

Specific Mandate

The Placing Shares will be allotted and issued under the Specific Mandate to be granted to the Directors by a resolution of the Shareholders passed at the SGM.

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As at the date of this announcement, 517,000,000 Shares had been issued and allotted pursuant to the placing agreement dated 28 September 2010, of which had utilized over 99.98% of the general mandate granted to the Directors by a resolution of the Shareholders passed at the annual general meeting of the Company held on 8 September 2010. As a result, the remaining general mandate only allows the Directors to allot and issue up to 95,952 Shares which is not sufficient for the issue and allotment of the Placing Shares under the Placing.

Conditions of the Placing

The Placing is conditional upon:–

• (a) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Placing Shares; and

• (b) the passing of the resolution(s) by the Shareholders at the SGM to approve the Placing Agreement and the transactions contemplated thereunder and the Specific Mandate.

The conditions must be fulfilled on or prior to 28 February 2011 (or such later date as agreed by the Company and the Placing Agent), failing which the Placing Agreement shall terminate and none of the parties to the Placing Agreement shall have any claim against the other for any costs or losses (save for any prior breaches of the Placing Agreement).

Termination and force majeure events

The Placing Agreement may be terminated by the Placing Agent if at any time prior to 10:00 a.m. on the date of completion for the Placing Agreement, in the reasonable opinion of the Placing Agent the success of the Placing or the business or financial prospects of the Group would or might be adversely affected by any force majeure events (as defined below):

• (a) the introduction of any new law or regulation or any change in existing laws or regulations or change in the interpretation or application thereof; or

• (b) the occurrence of any event, development or change (whether or not local, national or international or forming part of a series of events or changes occurring or continuing before, on and/or after the date hereof and including an event or change in relation to or a development of an existing state of affairs) of a political, military, industrial, financial, economic or other nature, whether or not sui generis with any of the foregoing, resulting in a material adverse change in, or which might be expected to result in a material adverse change in, political, economic or stock market conditions; or

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

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• (d) a change or development involving a prospective change in taxation in Hong Kong, Bermuda or the People’s Republic of China or the implementation of exchange controls which shall or might materially and adversely affect the Group (as a whole) or its present or prospective shareholders in their capacity as such; or

• (e) any change or deterioration in the conditions of local, national or international securities markets occurs.

Completion of the Placing

Completion of the Placing shall take place not later than the second Business Day after the Placing Agreement has become unconditional (or such later date as may be agreed between the Company and the Placing Agent).

REASONS FOR THE PLACING AND USE OF PROCEEDS

The Group is principally engaged in the business of supply and procurement of metal minerals and recyclable metal materials, pharmaceutical, provision of finance and securities investment.

The maximum gross proceeds from the Placing will be HK$320 million. The Company plans to use the maximum net proceeds of approximately HK$311.2 million from the Placing for (i) general working capital of the Group and/or (ii) repayment of debts of the Group and/or (iii) funding of appropriate investment opportunities if arise.

The Directors are of the view that the Placing will enlarge the shareholder base and the capital base of the Company. In addition, the net proceeds of the Placing will strengthen the Group’s financial position for future development of the Group. Accordingly, they consider that the Placing is in the interests of the Company and the Shareholders as a whole.

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FUND RAISING EXERCISES DURING THE PAST 12 MONTHS

Date of	Fund raising	Net proceeds raised	Proposed use of the	Actual use of the
announcement	activity	(approximately)	net proceeds	net proceeds
28 Sep 2010	Placing of	HK$142.9 million	General working capital of the	Used as intended
	517,000,000 new		Group
	shares under
	general mandate
11 Mar 2010	Placing of existing	HK$476 million	Approximately HK$300 million	Used as intended
	shares and		for general working capital and
	subscription of		the development of the Group’s
	425,912,000 new		Chinese medicine business,
	shares at HK$1.14		and as to the remaining
	per share		approximately HK$176 million
			as the Group’s general working
			capital as well as future
			opportunistic investments (if
			suitable opportunities do so
			arise in the future)
8 January 2010	Placing of	HK$241 million	General working capital	Used as intended
	convertible notes		and potential investments	(approximately
	in an aggregate		opportunities	HK$200
	principal			million has
	amount of			been designated
	HK$244,900,000,			to fund the
	which was			acquisitions of
	completed on 28			the Yu Sheng
	January 2010			Tang Group
				and Beijing
				Unioncom, and
				their respective
				intended
				financial
				obligations and
				general working
				capital, and
				the remaining
				HK$41 million
				has been used as
				general working
				capital of the
				Group)

Save as disclosed above, the Company has not conducted any other fund raising exercises in the past twelve months before the date of this announcement.

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SHAREHOLDING STRUCTURE

The shareholding structure of the Company (i) as at the date of this announcement, and (ii) immediately after completion of the Placing is as follows:

	As at the	date of this	Immediately after	Immediately after
Shareholders	announcement		completion of the Placing
	Number of Shares	Approximate %	Number of Shares	Approximate %
Substantial Shareholder:
Global Wealthy Limited	437,433,866	14.05	437,433,866	10.64
Directors:
Suen Cho Hung, Paul_(Note 1)_	10,000,000	0.32	10,000,000	0.24
Sue Ka Lok_(Note 2)_	10,000,000	0.32	10,000,000	0.24
Other Shareholders:
– Placees	0	0	1,000,000,000	24.32
– Others	2,655,045,894	85.31	2,655,045,894	64.56
Total	3,112,479,760	100.00	4,112,479,760	100.00

Notes:

1. Global Wealthy Limited, a company incorporated in the British Virgin Islands with limited liability, is a wholly owned subsidiary of Excelsior Kingdom Limited, which in turn is wholly owned by Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company.

2. Mr. Sue Ka Lok is an Executive Director and the Chief Executive Officer of the Company.

GENERAL

Pursuant to the termination provision in the Placing Agreement, the Placing Agent has the right in certain circumstances, in the discretion of the Placing Agent, to terminate the Placing Agreement prior to the date of completion of the Placing Agreement. Completion of the Placing is subject to the satisfaction of the conditions precedent in the Placing Agreement.

As the Placing may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

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

A SGM will be convened and held for the Shareholders to consider and, if thought fit, pass the relevant resolution(s) to approve (i) the Placing Agreement and the transactions contemplated thereunder; and (ii) the Specific Mandate.

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To the best knowledge of the Directors, none of the Shareholders has a material interest in the transaction contemplated under the Placing Agreement as at the date of this announcement, accordingly, none of the Shareholders will be required to abstain from voting at the SGM in respect of the resolution relating to the Placing.

A circular containing, among other things, (i) further details of the Placing Agreement and the transactions contemplated thereunder and the Specific Mandate; and (ii) a notice convening the SGM will be despatched to the Shareholders as soon as practicable in accordance with the requirements of the Listing Rules.

DEFINITIONS

The following terms have the following meanings in this announcement unless the context otherwise requires:

“Beijing Unioncom” Beijing Unioncom Pharmaceutical Company Limited (now known as Jinhua Qinggan (Beijing) Pharmaceutical Company Limited*(金花清感（北京） 藥業有限公司))

“Board”

the board of Directors

• “Business Day” any day (other than a Saturday, Sunday or public holiday) on which banks are generally open for business in Hong Kong

“Company” Beijing Yu Sheng Tang Pharmaceutical Group Limited (Stock Code: 1141), a company incorporated in Bermuda with limited liability and the shares of which are listed on main board of the Stock Exchange

• “Connected Person(s)” has the meaning ascribed thereto in the Listing Rules “Director(s)” the director(s) of the Company

• “Group” the Company and its subsidiaries

“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

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

“Placees” any individual(s), institutional or other professional investor(s) procured by the Placing Agent to subscribe for any of the Placing Shares pursuant to the Placing Agreement

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“Placing” placing of up to 1,000,000,000 new Shares by the Placing Agent on a best effort basis pursuant to the terms of the Placing Agreement

• “Placing Agent” Radland International Limited, a licensed corporation within the meaning of the SFO

• “Placing Agreement” a conditional placing agreement dated 10 November 2010 entered into between the Company and the Placing Agent in relation to the Placing

• “Placing Period” 30 Business Days commencing upon the date of passing the resolution(s) approving the Placing Agreement and the transactions contemplated thereunder and the grant of the Specific Mandate, at the SGM and terminating at 5:00 p.m. on the first Business Day following the expiry of a period of 30 Business Days from the date of the SGM, unless terminated earlier pursuant to the terms of the Placing Agreement

• “Placing Price” HK$0.32 per Placing Share

• “Placing Shares” up to 1,000,000,000 Shares to be placed under the Placing

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “SGM” the special general meeting of the Company to be convened to consider and, if appropriate, to approve, inter alia, the Placing Agreement and the transactions contemplated thereunder and the grant of the Specific Mandate

• “Shareholder(s)” holder(s) of Share(s)

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

• “Specific Mandate” a specific mandate to be sought from the Shareholders at the SGM to allot and issue the Placing Shares pursuant to the Placing Agreement

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

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“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“Yu Sheng Tang Group”

Beijing Yu Sheng Tang Holdings Limited and its subsidiaries

“%”

per cent

By Order of the Board Suen Cho Hung, Paul Chairman

Hong Kong, 10 November 2010

As at the date of this announcement, the Board comprises Mr. Suen Cho Hung, Paul (Chairman), Mr. Sue Ka Lok (Chief Executive Officer), Mr. Bai Jianjiang and Ms. Lee Chun Yeung, Catherine as Executive Directors and Mr. Wong Kwok Tai, Mr. Weng Yixiang and Mr. Lu Xinsheng as Independent Non-executive Directors.

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