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

Mar 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 purposes only and does not constitute an invitation or offer to acquire purchase or subscribe for any securities.

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POLY DEVELOPMENT HOLDINGS LIMITED 保興發展控股有限公司[*]

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

PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES UNDER THE GENERAL MANDATE AND RESUMPTION OF TRADING

Placing Agent

PLACING AND SUBSCRIPTION AGREEMENT

On 9 March 2010, the Vendor, the Company and the Placing Agent entered into the Placing and Subscription Agreement pursuant to which (i) the Vendor agreed to place, through the Placing Agent, an aggregate of up to 425,912,000 Placing Shares, on a best effort basis, at a price of HK$1.14 per Share; and (ii) the Vendor has conditionally agreed to subscribe for an aggregate of up to 425,912,000 new Shares at a price of HK$1.14 per Share.

The Placing Shares (or the Subscription Shares) of 425,912,000 Shares at maximum represent (i) approximately 20.00% of the Company’s existing issued share capital, (ii) approximately 16.67% of its issued share capital as enlarged by the Subscription (assuming that the outstanding Convertible Notes are not converted) and (iii) approximately 14.89% of its issued share capital as enlarged by the Subscription (assuming that the outstanding Convertible Notes are converted in full).

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The Placing is unconditional except that it is subject to termination provisions upon occurrence of certain events. The Subscription is conditional upon (1) the Listing Committee of the Stock Exchange agreeing to grant a listing of and permission to deal in the Subscription Shares (either conditionally or subject to conditions which are acceptable to the Company); and (2) completion of the Placing, being fulfilled on or before the Subscription Long Stop Date.

Assuming placement of the maximum of 425,912,000 Placing Shares, the gross proceeds from the Subscription will be approximately HK$485.5 million and the net proceeds from the Subscription (after deducting the placing commission for the Placing and other expenses) of approximately HK$476.0 million will be used as to approximately HK$300 million for general working capital and the development of the Group’s Chinese medicine business, and as to the remaining approximately HK$176 million as the Group’s general working capital as well as for future opportunistic investments (if suitable opportunities do so arise in the future).

GENERAL MANDATE

The Subscription Shares will be issued under the general mandate granted to the Directors at the Company’s special general meeting held on 23 February 2010 and the issue of the Subscription Shares will not be subject to the approval of the Shareholders.

Application will be made to the Stock Exchange for the listing of, and permission to deal, in the Subscription Shares.

RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:30 a.m. on 9 March 2010 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on 11 March 2010.

The Board is pleased to announce that on 9 March 2010, the Vendor, the Company and the Placing Agent entered into the Placing and Subscription Agreement in respect of the Top-up Placement of an aggregate of up to 425,912,000 Shares, on a best effort basis, at a price of HK$1.14 per Share.

PLACING AND SUBSCRIPTION AGREEMENT

Date

9 March 2010

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Parties

1. the Company (as the issuer of the Subscription Shares)

2. the Vendor (as the vendor of the Placing Shares and subscriber of the Subscription Shares)

3. the Placing Agent (as the Placing Agent of the Vendor)

As at the date of this announcement, the Vendor is a substantial shareholder (as defined in the Listing Rules) of the Company, holding 437,433,866 Shares which represents approximately 20.54% of the issued share capital of the Company.

CCB International Capital Limited is the Placing Agent. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Placing Agent and its ultimate beneficially owner(s) is/are third party(ies) independent of the Company and is/are not connected person(s) (as defined in the Listing Rules) of the Company.

The Placing

Placees

The Placees are expected to be independent individuals, corporations and/or institutional investors, who and whose ultimate beneficial owners will be third parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company.

It is expected that the Placing Shares will be placed to not less than six Placees and none of the Placees will become substantial shareholder of the Company immediately after the Placing. A further announcement will be made in accordance with the disclosure requirements of the Listing Rules should the number of Placees is less than six.

Placing Shares

The Placing Shares (or the Subscription Shares) of 425,912,000 Shares at maximum represent (i) approximately 20.00% of the Company’s existing issued share capital, (ii) approximately 16.67% of its issued share capital as enlarged by the Subscription (assuming that the outstanding Convertible Notes are not converted) and (iii) approximately 14.89% of its issued share capital as enlarged by the Subscription (assuming that the outstanding Convertible Notes are converted in full).

Rights of the Placing Shares

The Placing Shares will be sold free from all encumbrances together with all rights attaching to them as at the date of the Placing and Subscription Agreement.

Placing Price

The Placing Price (or the Subscription Price) of HK$1.14 per Share represents:

• (i) the closing price of the Shares of HK$1.14 quoted on the Stock Exchange on 8 March 2010;

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• (ii) a premium of approximately 2.70% to the average closing price of the Shares of approximately HK$1.11 quoted on the Stock Exchange for the last five consecutive trading days up to and including 8 March 2010; and

• (iii) a premium of approximately 9.62% to the average closing price of the Shares of approximately HK$1.04 quoted on the Stock Exchange for the last ten consecutive trading days up to and including 8 March 2010.

The net placing price for the Placing is approximately HK$1.12 per Share.

The Placing Price was negotiated on arm’s length basis between the Company and the Placing Agent. The Directors consider that the Placing Price is fair and reasonable based on current market conditions and in the interest of the Company and the Shareholders as a whole.

Completion of the Placing

The Placing is unconditional and is expected to be completed on the Placing Completion Date.

The Subscription

The Vendor has conditionally agreed to subscribe for an aggregate of up to 425,912,000 new Shares at a price of HK$1.14 per Share under the Placing and Subscription Agreement.

The Subscription Price

The Subscription Price is HK$1.14 per Share, which is the same as the Placing Price.

Number of Subscription Share

The number of Subscription Shares to be subscribed by the Vendor shall be the same as the number of Placing Shares being placed, which is up to 425,912,000 Shares.

Ranking of Subscription Shares

The Subscription Shares shall rank pari passu among themselves and with all the Shares in issue as at the Subscription Completion Date.

Conditions of the Subscription

The Subscription is conditional upon the following conditions being fulfilled on or before the Subscription Long Stop Date:

1. the Listing Committee of the Stock Exchange agreeing to grant a listing of and permission to deal in the Subscription Shares (either conditionally or subject to conditions which are acceptable to the Company); and

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2. completion of the Placing.

The Placing and Subscription Agreement does not provide the Company or the Vendor to have the right to waive the above conditions. Under the Placing and Subscription Agreement, each of the Company and the Vendor shall exercise its best endeavours to procure the satisfaction of the above conditions on or before the Subscription Long Stop Date. Further, the Company and the Vendor have undertaken that in the event the above conditions are not fulfilled by the Subscription Long Stop Date, they shall use their respective endeavours to comply with the applicable requirements under Chapter 14A of the Listing Rules to procure the Subscription taking place.

Completion

The completion of the Subscription shall take place at 10:00 a.m. on the Subscription Completion Date or such later time as the Vendor and the Company may agree.

If the Subscription is not completed within 14 days from the date of the Placing and Subscription Agreement and unless it is waived by the Stock Exchange, it will constitute a connected transaction and is subject to compliance of relevant requirements under Chapter 14A of the Listing Rules, including the issue of separate announcement and circular and approval of independent Shareholders.

RIGHT TO TERMINATE THE PLACING AND SUBSCRIPTION AGREEMENT BY THE PLACING AGENT

The Placing Agent is entitled to terminate the Placing and Subscription Agreement by notice in writing given to the Vendor and the Company at any time prior to 10 a.m. on the Placing Completion Date if any of the following occurs:

• (a) there shall have come to the notice of the Placing Agent any material breach of, or any event rendering untrue or incorrect in any material respect, any of the representations and warranties of the Vendors contained herein or any failure by any of the Vendors to perform its undertakings in the Placing and Subscription Agreement;

• (b) in the sole judgment of the Placing Agent, there shall have been such a change in the national or international financial, political or economic conditions or currency exchange rates or exchange controls as would in its judgment be likely to prejudice the success of the Placing or trading in the of the Shares in the secondary market;

• (c) any new law, rule or regulation or any change in existing laws (including common law), rules or regulations (or the juridical interpretation thereof) or other occurrence of any nature whatsoever which, in the reasonable opinion of the Placing Agent, are or may be materially adverse to the business or financial position or prospects of the Company or any other member of the Group taken as a whole or otherwise makes it inexpedient or inadvisable to proceed with the Placing; or

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• (d) any event or circumstance (whether or not forming part of a series of events or circumstances occurring or continuing before, on and/or after the date of the Placing and Subscription Agreement) or material change or deterioration in local, national, international, political, military, financial, economic, market or trading conditions or any other conditions (whether or not ejusdem generis with any of the foregoing) in any part of the world in which the Company or any other member of the Group carries on business which, in the reasonable opinion of the Placing Agent, is or may be materially adverse to the business or financial position or prospects of the Company or any other member of the Group taken as a whole or otherwise makes it inexpedient or inadvisable to proceed with the Placing.

GENERAL MANDATE TO ISSUE THE SUBSCRIPTION SHARES

The Subscription Shares will be allotted and issued pursuant to the general mandate granted to the Directors at the Company’s special general meeting held on 23 February 2010. Under this general mandate, the Directors are allowed to allot and issue up to 425,913,552 Shares. Since the date of the special general meeting and up to the date of this announcement, no new Shares have been issued and allotted under such general mandate and therefore, the Company is allowed to issue a maximum of 425,913,552 Shares under such general mandate.

The issue of the Subscription Shares will not be subject to the approval of the Shareholders.

APPLICATION FOR LISTING

Application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Subscription Shares.

REASON FOR THE PLACING AND SUBSCRIPTION AND USE OF PROCEEDS

The Group is principally engaged in supply and procurement business, provision of finance and securities investment. With a view to diversifying into the Chinese medicine business and to enhance its revenue base and profitability, the Group acquired Beijing Yu Sheng Tang Holdings Limited and its subsidiaries (“Yu Sheng Tang Group”) in January 2010 (as announced by the Company on 29 January 2010), which hold the right to commence production and sale of Jinhua Qinggan (金花清感), a Chinese medicine aimed at treating patients who have been infected with Influenza A (H1N1) and other types of influenza, as prescription drug for clinical use. The Group also acquired Beijing Unioncom Pharmaceutical Company Limited (“Beijing Unioncom”) in February 2010 (as announced by the Company on 10 February 2010), which owns and occupies a GMP compliant medicine production plant and engages in the manufacture of Chinese medicines and health care product.

Assuming placement of the maximum of 425,912,000 Placing Shares, the gross proceeds from the Subscription will be approximately HK$485.5 million and the net proceeds from the Subscription (after deducting the placing commission for the Placing and other expenses) of approximately HK$476.0 million will be used as to approximately

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HK$300 million for general working capital and the development of the Group’s Chinese medicine business, and as to the remaining approximately HK$176 million as the Group’s general working capital as well as for future opportunistic investments (if suitable opportunities do so arise in the future).

Under the prevailing market conditions, the Directors are of view that the Top-up Placement represents a good opportunity to raise capital for the Company, to enlarge the shareholder base and capital base of the Company, as well as to strengthen the Group’s financial position. Accordingly, the Directors consider that the Top-up Placement is in the interests of the Company and the Shareholders as a whole.

FUND RAISING ACTIVITIES DURING THE PAST 12 MONTHS

Apart from the fund raising activities mentioned below, the Company has not carried out other fund raising activities during the 12 months immediately preceding the date of this announcement.

		Net proceeds
Date of	Fund raising	raised	Intended use	Actual use of
announcement	activity	(approximately)	of proceeds	proceeds
14 May 2009	Top up placing of	HK$9.63 million	General	Used as intended
	99,120,000 Shares at		working capital
	HK$0.102 per Share
26 August 2009	Placing of	HK$83.8 million	General	Used as intended
	313,640,000 new		working capital
	Shares at HK$0.275
	per Share
8 January 2010	Placing of Convertible	HK$241 million	General	Used as intended
	Notes in an aggregate		working capital	(approximately
	principal amount of		and potential	HK$200 million has
	HK$244,900,000,		investments	been designated to
	which was completed		opportunities	fund the acquisitions
	on 28 January 2010			of the Yu Sheng 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)

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SHAREHOLDING STRUCTURE

The existing shareholding structure of the Company and the effect on the shareholding structure of the Company upon completion of the Placing is illustrated as follows:

As at the date of this announcement Approximate Shares % SUBSTANTIAL SHAREHOLDER Global Wealthy Limited_(Note)_ 437,433,866 20.54 DIRECTOR Suen Cho Hung, Paul 10,000,000 0.47 OTHER SHAREHOLDERS Placees – – Public 1,682,133,894 78.99 TOTAL 2,129,567,760 100.00	Immediately after completion of the Top-up Placement (assuming the outstanding Convertible Notes are not converted) Approximate Shares % 437,433,866 17.12 10,000,000 0.39 425,912,000 16.67 1,682,133,894 65.82 2,555,479,760 100.00	Immediately after completion of the Top-up Placement (assuming the outstanding Convertible Notes are converted in full) Approximate Shares % 437,433,866 15.29 10,000,000 0.35 425,912,000 14.89 1,987,133,894 69.47 2,860,479,760 100.00	Immediately after completion of the Top-up Placement (assuming the outstanding Convertible Notes are converted in full) Approximate Shares % 437,433,866 15.29 10,000,000 0.35 425,912,000 14.89 1,987,133,894 69.47 2,860,479,760 100.00
			100.00

Note: 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.

RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:30 a.m. on 9 March 2010 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on 11 March 2010.

DEFINITIONS

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

“associate(s)” has the meaning ascribed in the Listing Rules “Board” the board of Directors

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• “Business Day”

• any day (excluding a Saturday, Sunday and any other public holidays and any day on which a tropical cyclone warning no.8 or above or a “black” rainstorm warning signal is hoisted or remains hoisted in Hong Kong at any time between 9:00 a.m. and 12:00 noon and is not lowered or discontinued at or before 12:00 noon) on which banks generally are open for business in Hong Kong

• “Company”

• Poly Development Holdings Limited, a company incorporated in Bermuda whose Shares are listed on the Stock Exchange

• “Convertible Notes”

• a series of 1% coupon convertible notes of up to an aggregate principal amount of HK$244,900,000 issued by the Company as announced on 8 January 2010

• “Directors” director(s) of the Company

• “Group”

• the Company and its subsidiaries

• “HK$”

• Hong Kong dollars

• “Listing Rules”

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

• “Placees”

• any individual(s), corporation(s) and/or institutional investor(s) procured by or on behalf of the Placing Agent to purchase any of the Placing Shares pursuant to the Placing Agent’s obligations under the Placing and Subscription Agreement

• “Placing”

• the placing of the Placing Shares at the Placing Price pursuant to the terms of the Placing and Subscription Agreement

• “Placing Agent”

• CCB International Capital Limited, a licensed person registered under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) to engage in Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities

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• “Placing and Subscription Agreement”

the placing and subscription agreement entered into among the Company, the Vendor and the Placing Agent dated 9 March 2010 in respect of the Top-up Placement

• “Placing Completion Date”

• on or before 10:00 a.m. on 16 March 2010 or such other time or date as the Placing Agent may agree

• “Placing Price”

the placing price of HK$1.14 per Placing Share

• “Placing Shares”

• an aggregate of up to 425,912,000 existing Shares beneficially owned by the Vendor under the Placing

• “Shareholder(s)”

holder(s) of the Shares

• “Share(s)”

• the ordinary share of HK$0.01 each in the share capital of the Company

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Subscription”

• the subscription of Subscription Shares by the Vendor pursuant to the terms of the Placing and Subscription Agreement

• “Subscription Completion Date”

• the second Business Day immediately after the date of fulfilment of all the conditions referred to in the Subscription

• “Subscription Long Stop Date”

• 23 March 2010, being the date falling 14 days after the date of the Placing and Subscription Agreement, or such later time or date as the parties may agree in writing

• “Subscription Price” the subscription price of HK$1.14 per Subscription Share (which is the same as the Placing Price)

• “Subscription Shares”

• an aggregate of up to 425,912,000 new Shares, which shall be the same number of Placing Shares being placed under the Placing, to be subscribed by the Vendor pursuant to the terms of the Placing and Subscription Agreement

• “Top-up Placement”

• the Placing and the Subscription

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“Vendor”

Global Wealthy Limited, a company incorporated in the British Virgin Islands with limited liability and is beneficially owned by Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company

“%”

per cent

By Order of the Board Suen Cho Hung, Paul Chairman

Hong Kong, 10 March 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 Mr. Chau Chung Tak as Executive Directors and Mr. Wong Kwok Tai, Mr. Weng Yixiang, Mr. Lu Xinsheng and Mr. Xiong Wei as Independent Non-executive Directors.

• For identification only

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