PegBio Co., Ltd. — Share Issue/Capital Change 2000

Feb 9, 2000

Listed Company Information

HUNG FUNG GROUP<1141>-Announcement & Resumption of Trading 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. HUNG FUNG GROUP HOLDINGS LIMITED (the "Company") (Incorporated in Bermuda with limited liability) PLACING OF EXISTING SHARES AND SUBSCRIPTION FOR NEW SHARES Baxter Resources S.A. (the "Vendor") has agreed to place, through its placing agent, Kingston Securities Limited ("Kingston"), 20,000,000 existing ordinary shares ("Placing Shares") of HK$0.10 each in the share capital of the Company ("Shares") to independent investors at a price of HK$1.23 per Share ("Placing") and the Vendor will subscribe for 10,000,000 new Shares ("Subscription Shares") at the price of HK$1.23 per Share ("Subscription"). The Placing is fully underwritten by Kingston. The Placing Shares represent approximately 8.63% of the existing issued share capital of the Company of 231,709,600 Shares and approximately 8.27% of the Company's issued share capital as enlarged by the Subscription of 10,000,000 new Shares. The net proceeds from the Subscription of approximately HK$11.5 million will be used by the Company and its subsidiaries (the "Group") for developing a business-to-business e-commerce platform for their products. The Vendor, the controlling shareholder of the Company, has approximately a 67.47% interest in the Company as at the date of this announcement. The shareholding of the Vendor in the Company will be reduced from approximately 67.47% to approximately 58.84% immediately upon completion of the Placing and will be increased from approximately 58.84% to approximately 60.54% immediately upon completion of the Subscription. Trading in the securities of the Company was suspended from 2:30 p.m. on 8th February, 2000 ("Suspension Date") at the request of the Company pending the issue of this announcement and application has been made to The Stock Exchange of Hong Kong Limited (the "Stock Exchange") for the resumption of trading of the securities of the Company from 10:00 a.m. on 9th February, 2000. A. PLACING OF 20,000,000 EXISTING SHARES A placing agreement dated 8th February, 2000 (the "Placing Agreement") was entered into between the Vendor and Kingston containing the following terms:- Vendor: The Vendor, the controlling shareholder of the Company. Placing agent and Underwriter: Kingston, who is independent of, not connected with the directors, chief executive or substantial shareholders of the Company and any of its subsidiaries or any of their respective associates (as defined under the Rules (the "Listing Rules") Governing the Listing of Securities on the Stock Exchange). Kingston would receive placement commission of 3% on the gross proceeds of the Placing. Placees: The placees (which will be six or more individual, corporate and/or institutional investors) will be independent of, not connected with the directors, chief executive or substantial shareholders of the Company and any of its subsidiaries or any of their respective associates. It is expected that no placee will become a substantial shareholder of the Company as a result of the Placing. Placing price: HK$1.23 per Placing Share. This price was agreed after arm's length negotiations and represents (i) a discount of approximately 0.81% to the closing price of HK$1.24 per Share quoted on the Stock Exchange on 3rd February, 1999, being the last trading day of the Shares immediately before the Suspension Date; and (ii) a premium of approximately 8.95% over the average closing price of approximately HK$1.129 per Share as quoted on the Stock Exchange from 21st January, 2000 to 3rd February, 2000, both dates inclusive, being the last ten trading days of the Shares immediately before the Suspension Date. Rights The Placing Shares will rank equally with the existing Shares. Number of existing Shares to be placed 20,000,000 Shares to be placed, representing approximately 8.63% of the existing issued share capital of the Company of 231,709,600 Shares and approximately 8.27% of the issued capital of the Company as enlarged by the issue of 10,000,000 new Shares under the Subscription. The Placing is fully underwritten by Kingston. Completion of the Placing The Placing is unconditional. Completion will take place on or before 11th February, 2000. B. SUBSCRIPTION OF 10,000,000 NEW SHARES A Subscription Agreement dated 8th February, 2000 between the Vendor and the Company containing the following terms:- Subscriber: The Vendor Number of new Shares to be subscribed for: The Company will issue 10,000,000 new Shares and the Vendor will subscribe for them, representing approximately 4.32% of the existing issued share capital of the Company and approximately 4.14% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares under Subscription. Subscription price: HK$1.23 per Subscription Share. The Company shall reimburse to the Vendor 50% the aggregate amount of the expenses properly incurred by the Vendor in connection with the Placing and the aggregate amount of expenses properly incurred by the Vendor in connection with the Subscription. The estimated expenses for the Placing and the Subscription will be approximately HK$800,000. General mandate to issue Subscription Shares: The Subscription Shares will be issued pursuant to the general mandate to allot, issue and deal with Shares granted to the directors of the Company by resolution of its shareholders passed at the Company's special general meeting held on 28th September, 1999. Ranking of the Subscription Shares The Subscription Shares will rank equally with Shares of the Company in issue at the time of issue and allotment of the Subscription Shares. Use of proceeds The net proceeds from the Subscription of approximately HK$11.5 million will be used by the Group for the purpose of developing a business-to-business e-commerce platform for toys, the Group's products. Condition of the Subscription The Subscription is conditional upon: a) completion of the Placing; and b) the Listing Committee of the Stock Exchange granting listing of, and permission to deal in, the Subscription Shares to be issued under the Subscription. Completion Under the Listing Rules, the Subscription must be completed within 14 days from the date of the Subscription Agreement, that is, on or before 21st February, 2000 (or such later date as the Company, the Vendor and the Placing Agent may agree such agreement not to unreasonably withheld or delayed and subject to compliance with the Listing Rules), failing which the Subscription shall cease and terminate. Application for listing Application will be made by the Company to the Stock Exchange to grant the listing of and permission to deal in the Subscription Shares. C. Effects of the Placing and the Subscription The shareholding of the Vendor in the Company immediately before completion of the Placing, immediately after completion of the Placing but before completion of the Subscription, and immediately after completion of both the Placing and the Subscription are and will be as follows:- Shareholding in the No. of Shares in the Company held by Company held by the Vendor the Vendor (Note) (Note) Immediately before the Placing and the Subscription 67.47% 156,342,000 Immediately after the Placing but before the Subscription 58.84% 136,342,000 Immediately after the Placing and the Subscription 60.54% 146,342,000 Note: Assumes that other than the Subscription Shares, no new Shares are issued or purchased by the Company and other than the Placing Shares no Shares are sold or purchased by the Vendor, in each case after the date of this announcement up to the date of the completion of the Subscription. D. Reason for the Placing and Subscription In view of the current market conditions and the directors of the Company consider that the Placing and Subscription represents a good opportunity to raise capital for the Company while broadening the shareholders base and the capital base of the Company and also enables the Group to have a higher level of working capital to further diversify its business. E. Adjustment of subscription price of Warrants As at the date of this announcement, the Company has outstanding warrants carrying rights to subscribe up to HK$19,989,664 for Shares at a subscription price of HK$0.47 per Share (subject to adjustment) for at any time up to 28th September, 2001. The issue of the Subscription Shares will result in an adjustment to the subscription price of the warrants, further announcement in respect of which will be made by the Company upon such adjustment taking effect. F. General Trading in the securities of the Company was suspended from 2:30 p.m. on 8th February, 2000 at the request of the Company pending the issue of this announcement and application has been made to Stock Exchange for the resumption of trading of the securities of the Company from 10:00 a.m. on 9th February, 2000. By order of the board of directors of Hung Fung Group Holdings Limited Chan Chun Hung Chairman Hong Kong, 8th February, 2000