PegBio Co., Ltd. — Proxy Solicitation & Information Statement 2007

Dec 11, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, other licensed corporation, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Xin Corporation Limited (the “Company”), you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer, other licensed corporation, or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

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

RELATING TO DISPOSAL OF SUBSIDIARIES

Financial adviser to Xin Corporation Limited

Optima Capital Limited

* For identification only

12 December 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Agreement dated 28 November 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Reasons for the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms have the following meanings:

“Agreement” the sale and purchase agreement dated 28 November 2007 between the Company and the Purchaser in relation to the sale and purchase of the Sale Shares and the Loan “Board” board of Directors “BVI” British Virgin Islands “Company” Xin Corporation Limited, a company incorporated in Bermuda with limited liability whose issued shares are listed on the main board of the Stock Exchange “Completion” completion of the Disposal in accordance with the terms of the Agreement, which took place on 30 November 2007 “Directors” directors of the Company “Disposal” the disposal by the Company of the Sale Shares and the benefit of and interest in the Loan pursuant to the Agreement “Group” the Company and its subsidiaries “HCHL” Hung Cheong Holdings Limited, a company incorporated in the BVI which is wholly owned by the Company before Completion “HCHL Group” HCHL and its subsidiaries “Independent Third Party(ies)” third party(ies) independent of the Company and its connected persons (as defined under the Listing Rules)

• “Land and Buildings” 7 parcels of land having a total site area of approximately 106,495 square meter (equivalent to approximately 1,146,312 square feet) and 12 blocks of various completed buildings and structures, and 2 buildings under construction erected thereon, located at Hua Qiao Industrial District, Chang Ming Road, Huang Jiang Town of Dongguan, the PRC

• “Latest Practicable Date” 7 December 2007, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

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DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Loan”	the outstanding amount of HK$28,477,796.43 owed from HCHL
	to the Company as at the date of the Agreement and assigned by
	the Company to the Purchaser upon Completion
“PRC”	The People’s Republic of China
“Purchaser”	Giant Gain Group Limited, a company incorporated in the BVI
	and an Independent Third Party
“Sale Shares”	2,004 issued ordinary shares of US$1.00 each in the capital of
	HCHL, representing the entire issued share capital of HCHL
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars
“RMB”	Renminbi
“US$”	United States dollars

For illustration only, in this circular, amounts stated in RMB have been translated into HK$ at the exchange rate of RMB1.0 = HK$1.0.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

Executive Directors:

Mr. Suen Cho Hung, Paul (Chairman) Mr. Lo Ming Chi, Charles (Deputy Chairman and Chief Executive Officer) Mr. Yu Wai Man Mr. Zhang Zhidong Mr. Sue Ka Lok

Independent Non-executive Directors:

Mr. Wong Kwok Tai Mr. Weng Yixiang Mr. Lu Xinsheng Mr. Xiong Wei

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business: Room 2107, 21st Floor Nan Fung Tower 173 Des Voeux Road Central Hong Kong

12 December 2007

To Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

RELATING TO DISPOSAL OF SUBSIDIARIES

INTRODUCTION

On 28 November 2007, the Board announced that the Company had, on the same date, entered into the Agreement with the Purchaser to dispose of (i) the Company’s entire interest in HCHL and (ii) its benefit of and the interest in the Loan. The Disposal constitutes a discloseable transaction under the Listing Rules.

The purpose of this circular is to provide you with, among other things, details of the Disposal and information of the Company.

* For identification only

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LETTER FROM THE BOARD

THE AGREEMENT DATED 28 NOVEMBER 2007

Parties :

Vendor : the Company Purchaser : Giant Gain Group Limited

As far as the Directors are aware, the Purchaser is principally engaged in investment holding. To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner are Independent Third Parties.

Assets disposed:

• (i) the Sale Shares, being 2,004 issued ordinary shares of US$1.00 each in the capital of HCHL, representing 100% of the entire issued share capital of HCHL ; and

• (ii) the benefit of and the interest in the Loan of approximately HK$28.5 million owed from HCHL to the Company.

The principal assets of the HCHL Group are the Land and Buildings located in Dongguan, Guangdong Province, the PRC. The Land and Buildings were valued at RMB57.7 million (equivalent to HK$57.7 million) as at 31 October 2007 by an independent professional valuer, Knight Frank Petty Limited. At present, the Land and Buildings are vacant but during each of the years ended 31 March 2006 and 2007, it generated rental income of approximately HK$0.7 million and HK$1.2 million respectively. For each of the years ended 31 March 2006 and 2007, the HCHL Group recorded unaudited consolidated loss of approximately HK$12.0 million and HK$8.3 million respectively. The HCHL Group did not record any taxation expenses for both the years ended 31 March 2006 and 2007. As at the date of completion, the unaudited consolidated net liabilities of the HCHL Group were approximately HK$10.0 million. Since the HCHL Group discontinued its toy manufacturing business during 2005, the HCHL Group has remained inactive. The net losses are mainly resulted from depreciation charges, recognition of prepaid land lease payments and other administrative expenses incurred.

The Disposal was completed on 30 November 2007. Since then, the Company has no longer held any interest in HCHL and HCHL ceased to be a subsidiary of the Company.

Consideration:

The aggregate consideration for the Disposal amounting to HK$25,507,632, which was comprised of (i) consideration for the Sale Shares of HK$7,632; and (ii) consideration for the Loan of HK$25,500,000, was paid by the Purchaser to the Company in cash upon Completion.

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LETTER FROM THE BOARD

The consideration for the Sale Shares and the Loan was determined after arm’s length negotiations between the parties taking into account (i) the latest valuation of the Land and Buildings of RMB57.7 million (equivalent to HK$57.7 million), which is HK$7.7 million in excess of their book value; (ii) the net liabilities of the HCHL Group of HK$10.0 million; and (iii) the Loan of approximately HK$28.5 million as at 28 November 2007. The net liabilities of approximately HK$10.0 million of the HCHL Group represent the book value of the Land and Buildings of approximately HK$50.0 million netting off the Loan of approximately HK$28.5 million as well as a short term bank loan and other payables of approximately HK$31.5 million in aggregate.

REASONS FOR THE DISPOSAL

The Group is principally engaged in the supply and procurement business in the Asia Pacific Region. In September 2007, the Group has entered into an agreement with certain Independent Third Parties in relation to the formation of a joint venture company which will be engaged in the business of setting up and operating budget hotels in the PRC. It is expected that the joint venture company will open about 30 to 40 budget hotels in the PRC in the coming 2 years, with 4,000 guest rooms in aggregate.

The net proceeds from the Disposal after deducting the related expenses were approximately HK$24.0 million and shall be used for working capital and business expansion purpose. Taking into account the aggregate consideration for the Sale Shares and the Loan of approximately HK$25.5 million, the unaudited consolidated net liabilities of the HCHL Group of approximately HK$10.0 million and the Loan of approximately HK$28.5 million as at the date of completion, the gain arisen from the Disposal was approximately HK$7.0 million. The Disposal has no material effect on the assets and liabilities of the Group.

Since the discontinuation of the toy manufacturing business by the Group in 2005, the HCHL Group has remained inactive. With the recent general increase in property values in the PRC, the Group is of the view that it is an opportune time to dispose of its interests in the HCHL Group (including the Land and Buildings). Taking into account the above, the Directors consider that the terms of the Agreement are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole.

GENERAL

Your attention is drawn to the additional information set out in the appendix to this circular.

Yours faithfully, For and on behalf of the Board Lo Ming Chi, Charles

Deputy Chairman and Chief Executive Officer

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVE

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which required notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange were as follows:

				Approximate
		Number of	Shares	percentage of the
	Nature of	Long	Short	existing issued
Name of Directors	interests	position	position	share capital
Mr. Lo Ming Chi,	Personal interest	1,000,000	–	0.10%
Charles
Mr. Suen Cho Hung,	Corporate interest	357,181,000 (Note)	–	37.10%
Paul

Note: Details of these 357,181,000 Shares are set out in point 3 of this appendix under the heading “Substantial Shareholders”.

Save as disclosed above, as at the Latest Practicable Date none of the Directors or chief executive of the Company had any interests or short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations which required notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he was deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange; and none of the Directors was a director or employee of a company which had an interest or short position in the Shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date the following persons, other than the Directors or chief executive of the Company as disclosed above, had interests or short positions in the Shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group and the amount of each such person’s interest in such securities, together with particulars of any options in respect of such capital:

				Approximate
		Number of Shares		percentage of the
	Long		Short	existing issued
Name of substantial Shareholders	position		position	share capital
Global Wealthy Limited	357,181,000	(Note)	–	37.10%
Excelsior Kingdom Limited	357,181,000	(Note)	–	37.10%
Mr. Suen Cho Hung, Paul	357,181,000	(Note)	–	37.10%

Note: These 357,181,000 Shares are held by Global Wealthy Limited, a wholly-owned subsidiary of Excelsior Kingdom Limited which is in turn wholly owned by Mr. Suen Cho Hung, Paul. Among which, 142,895,286 Shares are held by Global Wealthy Limited and 214,285,714 underlying Shares are to be allotted and issued to Global Wealthy Limited upon full conversion of the zero coupon 2-year convertible notes due 2009 issued by the Company on 7 November 2007 at the initial conversion price of HK$0.28 per Share held by Global Wealthy Limited.

Save as disclosed above, so far is known to any Directors or chief executive of the Company, as at the Latest Practicable Date no other person had interests or short positions in the Shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group, or in any options in respect of such capital.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group pursuant to Rule 8.10 of the Listing Rules.

5. LITIGATION

As at the Latest Practicable Date, no litigation or claim of material importance was known to the Directors to be pending or threatened against any members of the Group.

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GENERAL INFORMATION

APPENDIX

6. MISCELLANEOUS

• (a) None of the Directors has any existing or proposed service contract with any member of the Group which does not expire or is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

• (b) The secretary and qualified accountant of the Company is Mr. Yu Wai Man, who is a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.

• (c) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (d) The head office and principal place of business of the Company in Hong Kong is located at Room 2107, 21st Floor, Nan Fung Tower, 173 Des Voeux Road Central, Hong Kong.

• (e) The English texts of this circular shall prevail over its respective Chinese texts.

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