Persistence Gold Group Ltd — Capital/Financing Update 2002

Jul 30, 2002

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.

This announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares in Shanghai Merchants Holdings Limited.

==> picture [85 x 82] intentionally omitted <==

SHANGHAI MERCHANTS HOLDINGS LIMITED 上海商貿控股有限公司[*]

(formerly known as Ying Wing Holdings Limited 盈榮集團有限公司 *) (Incorporated in Bermuda with limited liability)

CONNECTED TRANSACTION SUBSCRIPTION OF NEW SHARES BY CONTROLLING SHAREHOLDER

On 29th July, 2002, the Company entered into a subscription agreement with Angel Field pursuant to which Angel Field has agreed to subscribe for 48,000,000 new Shares at the subscription price of HK$0.418 per Share. The 48,000,000 new Shares represent 20% of the Company’s existing issued share capital and approximately 16.7% of the Company’s issued share capital as enlarged by the issue of the Subscription Shares.

Angel Field is a connected person of the Company under the Listing Rules and therefore the Subscription constitutes a connected transaction of the Company. Under Rule 14.26(3) of the Listing Rules, the Subscription is subject to approval by the Independent Shareholders at a general meeting of the Company at which Angel Field and its associates shall abstain from voting.

SUBSCRIPTION AGREEMENT DATED 29TH JULY, 2002 Parties:

Issuer: Subscriber:

the Company Angel Field

• 1 -

Angel Field is the controlling shareholder of the Company and is beneficially and solely owned by Mr. Chau Ching Ngai, who is the spouse of Ms. Mo Yuk Ping, the chairman and a director of the Company. As at the date of this announcement, Angel Field is interested in 133,986,000 Shares, representing approximately 55.83% of the Company’s existing issued share capital.

Mr. Chau Ching Ngai is a Hong Kong resident and has since 1997 been principally engaged in property investment in Hong Kong and the PRC. Mr. Chau has also invested in agriculture and high technology projects in the PRC, as well as engaging in trading of various industrial and consumer products including fabrics.

Number of Shares to be subscribed:

48,000,000 new Shares, representing 20% of the Company’s existing issued share capital and approximately 16.7% of the Company’s issued share capital as enlarged by the issue of the Subscription Shares.

Subscription price:

HK$0.418 per Subscription Share

The Subscription Price represents a premium of 10% to the closing price of HK$0.38 per Share as quoted on the Stock Exchange on 29th July, 2002 (being the last day of trading in the Shares on the Stock Exchange prior to the release of this announcement). The Subscription Price also represents a discount of approximately 8.1% to the average closing price of HK$0.455 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including 29th July, 2002.

Ranking of the Subscription Shares:

The Subscription Shares, when issued and fully paid, will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Subscription Shares including the right to any dividends or distributions.

Conditions of the Subscription:

The Subscription is conditional upon the following conditions:

• (1) the passing of an ordinary resolution by the Independent Shareholders at a special general meeting of the Company to be convened to approve the Subscription Agreement and the transactions contemplated thereunder (including the issue of the Subscription Shares);

• (2) the Listing Committee granting the listing of, and permission to deal in, the Subscription Shares; and

• 2 -

• (3) the filing of relevant documents or obtaining the necessary waiver relating to the Subscription as required by law in Bermuda, if necessary.

In the event that the conditions set out above are not fulfilled on or before 15th November, 2002 (or such later date as may be agreed between Angel Field and the Company), the Subscription Agreement shall lapse.

Completion of the Subscription:

Completion shall take place on or before the second business day following the date on which all the abovementioned conditions are fulfilled (or such other date as may be agreed between Angel Field and the Company).

CHANGE OF SHAREHOLDING OF SUBSTANTIAL SHAREHOLDER

As at the date of this announcement, the following interests of 10% or more in the issued share capital of the Company were recorded in the register of interests required to be kept by the Company pursuant to Section 16(1) of the Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong). The change of the shareholding of Angel Field in the Company as a result of the Subscription is also detailed as follows:

	Number of		Immediately	% of the issued
	Shares held as	% of the	after the	share capital as
	at the date of this	existing issued	completion of	enlarged by the
Name	announcement	share capital	the Subscription	Subscription
Angel Field	133,986,000	55.83%	181,986,000	63.18%

So far as the Directors are aware of, as at the date of this announcement, no connected persons of the Company other than Angel Field and its associates were interested in the Shares.

REASONS FOR THE SUBSCRIPTION AND USE OF PROCEEDS

The Group is principally engaged in the processing of raw fabric and trading of fabric. The Directors are of the view that the Subscription will enlarge the capital base of the Company and will strengthen the financial position of the Group by providing a cost-effective means of raising additional capital for the Group.

• 3 -

The Subscription Price was determined after arm’s length negotiations between the Company and Angel Field with reference to the prevailing market prices of the Shares and the offer price per Share pursuant to an unconditional cash offer made on behalf of Angel Field (details of which were set out in the offer document dated 14th March, 2002 issued to the Company’s shareholders) and the Directors consider that the terms of the Subscription Agreement are fair and reasonable and believe that the Subscription is in the best interests of the Company and its shareholders as a whole.

The Directors intend to use the net proceeds from the Subscription of approximately HK$19.8 million as to approximately HK$8.0 million for the Group’s fabric trading business and as to the balance of approximately HK$11.8 million for the Group’s general working capital.

CONNECTED TRANSACTION

Angel Field is the controlling shareholder of the Company interested in 133,986,000 Shares, representing approximately 55.83% of the Company’s existing issued share capital. Angel Field is beneficially and solely owned by Mr. Chau Ching Ngai, who is the spouse of Ms. Mo Yuk Ping, the chairman and a director of the Company. Accordingly, Angel Field is a connected person of the Company under the Listing Rules and the Subscription constitutes a connected transaction of the Company. Under Rule 14.26(3) of the Listing Rules, the Subscription is subject to approval by the Independent Shareholders at a general meeting of the Company at which Angel Field and its associates shall abstain from voting.

An independent committee of the board of Directors will be constituted to advise the Independent Shareholders as to whether the terms of the Subscription Agreement are fair and reasonable. An independent financial adviser will be appointed to advise the independent committee of the board of Directors regarding the fairness and reasonableness of the terms of the Subscription Agreement.

A circular containing, among other things, details of the Subscription Agreement, the recommendation from the independent committee of the board of Directors as to whether the terms of the Subscription Agreement are fair and reasonable and the opinion from the independent financial adviser, will be despatched to the shareholders of the Company within 21 days after the date of publication of this announcement.

APPLICATION FOR LISTING

The Company will apply to the Listing Committee for the listing of, and permission to deal in, the Subscription Shares.

• 4 -

DEFINITIONS

In this announcement, unless the content otherwise requires, the following expressions have the following meanings:

“Angel Field” Angel Field Limited, a company incorporated in the British Virgin Islands with limited liability “Company” Shanghai Merchants Holdings Limited, a company incorporated in Bermuda with limited liability the shares of which are listed on the Stock Exchange “Directors” directors of the Company “Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Shareholders” shareholders of the Company other than Angel Field and its associates (as defined in the Listing Rules) “Listing Committee” the listing committee of the Stock Exchange “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “PRC” the People’s Republic of China “Share(s)” share(s) of a nominal value of HK$0.10 each in the capital of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription” the subscription of the Subscription Shares by Angel Field at the Subscription Price “Subscription Agreement” the subscription agreement dated 29th July, 2002 entered into between the Company and Angel Field in respect of the Subscription “Subscription Price” the subscription price of HK$0.418 per Subscription Share - 5 -

“Subscription Share(s)”

48,000,000 new Shares

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“%”

per cent.

By order of the board of Shanghai Merchants Holdings Limited Mo Yuk Ping Chairman

Hong Kong, 29th July, 2002

• For identification purpose only

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

• 6 -