Persistence Gold Group Ltd — Capital/Financing Update 2006

Jul 11, 2006

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.

SHANGHAI MERCHANTS HOLDINGS LIMITED

*

(incorporated in Bermuda with limited liability)

(Stock Code: 1104)

RESULTS OF THE RIGHTS ISSUE ADJUSTMENT FOR THE CONVERTIBLE BOND AND CHANGE IN BOARD LOT SIZE

Financial Adviser to the Company

Asian Capital

( C o r p o r a t e F i n a n c e ) L i m i t e d

RESULTS OF THE RIGHTS ISSUE

The Board is pleased to announce that as at 4:00 p.m. on 5 July 2006, being the latest time for acceptance of, and payment for, the Rights Issue, a total of 42 valid acceptances and applications had been received for a total of 610,106,199 Rights Shares, which comprise 38 valid acceptances of provisional allotments in respect of a total of 548,736,200 Rights Shares and 4 valid applications for excess Rights Shares in respect of a total of 61,369,999 Rights Shares, representing in aggregate approximately 73.86% of the total number of 826,000,000 Rights Shares available. Of the total 610,106,199 Rights Shares validly accepted and applied for, 525,204,000 Rights Shares were accepted by Profit Harbour in satisfaction of the irrevocable undertaking given by Profit Harbour. Based on the above results, the Rights Issue was under-subscribed.

Given the Rights Issue was under-subscribed, the Directors consider that it is fair and equitable to accept all excess applications and fully allot all excess Rights Shares applied for thereunder.

Pursuant to the sub-underwriting arrangement between Profit Harbour and the Underwriter, Profit Harbour has taken up 140,893,801 Rights Shares and 75,000,000 Rights Shares have been taken up by six independent subscribers procured by the sub-underwriter through its agents. The independent subscribers are independent of and not connected with any of the directors, chief executives or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

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All the conditions of the Underwriting Agreement have been fulfilled and the Underwriting Agreement became unconditional after 5:00 p.m. on 7 July 2006.

Share certificates for all fully-paid Rights Shares are expected to be posted on or before Friday, 14 July 2006 to those who have accepted and (where applicable) applied for, and paid for the Rights Shares, by ordinary post at their own risks, and refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares are also expected to be posted on or before Friday, 14 July 2006 by ordinary post at the subscribers’ own risks.

Dealings in the fully-paid Rights Shares are expected to commence on Monday, 17 July 2006.

ADJUSTMENT FOR THE CONVERTIBLE BOND

Reference is made to the announcement and circular of the Company dated 15 June 2006 and 30 June 2006 respectively regarding the Acquisition. As the issued share capital of the Company will be enlarged by the issue of the Rights Shares, the conversion price for the convertible bond in the principal amount of HK$2 million to be issued as consideration for the Acquisition will be adjusted from HK$0.15 per Share to HK$0.10 per Share, being the par value of the Share with effect from the date of issue of the convertible bond.

CHANGE IN BOARD LOT SIZE

The board lot size in the ordinary shares in the capital of the Company will change from 2,000 Shares to 20,000 Shares with effect from Friday, 14 July 2006.

GENERAL

On 24 March 2006, the Stock Exchange resolved to allow the Company to proceed with the resumption proposal, which required, amongst others, evidence of the following transactions having been completed: (i) Profit Harbour having acquired the full debt due to the Company from Great Center for approximately US$4.5 million for cash at par value; and (ii) the Rights Issue to yield a net proceed of not less than HK$80 million.

The Company proposes to apply to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on Friday, 14 July 2006. The resumpton of trading in the Shares is subject to all conditions set out above having been fulfilled and the resumption proposal duly implemented by the Company.

Reference is made to the prospectus of the Company dated 20 June 2006 (the “Prospectus”) in relation to the Rights Issue. Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as those defined in the Prospectus.

RESULTS OF THE RIGHTS ISSUE

The Board is pleased to announce that as at 4:00 p.m. on 5 July 2006, being the latest time for acceptance of, and payment for, the Rights Issue, a total of 42 valid acceptances and

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applications had been received for a total of 610,106,199 Rights Shares, which comprise 38 valid acceptances of provisional allotments in respect of a total of 548,736,200 Rights Shares and 4 valid applications for excess Rights Shares in respect of a total of 61,369,999 Rights Shares, representing in aggregate approximately 73.86% of the total number of 826,000,000 Rights Shares available. Of the total 610,106,199 Rights Shares validly accepted and applied for, 525,204,000 Rights Shares were accepted by Profit Harbour in satisfaction of the irrevocable undertaking given by Profit Harbour. Based on the above results, the Rights Issue was under-subscribed.

Given the Rights Issue was under-subscribed, the Directors consider that it is fair and equitable to accept all excess applications and fully allot all excess Rights Shares applied for thereunder.

Pursuant to the sub-underwriting arrangement between Profit Harbour and the Underwriter, Profit Harbour has taken up 140,893,801 Rights Shares and 75,000,000 Rights Shares have been taken up by six independent subscribers procured by the sub-underwriter through its agents. The independent subscribers are independent of and not connected with any of the directors, chief executives or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

All the conditions of the Underwriting Agreement have been fulfilled and the Underwriting Agreement became unconditional after 5:00 p.m. on 7 July 2006.

The net proceed from the Rights Issue will be approximately HK$81.0 million and is free of any lien.

SHAREHOLDING STRUCTURE OF THE COMPANY

The following is a summary of the shareholding structure of the Company immediately before and after completion of the Rights Issue:

	Immediately before completion	Immediately before completion	Immediately after completion	Immediately after completion
Shareholder	of the Rights Issue		of the Rights Issue
		Percentage		Percentage
	No. of Shares	(approximately)	No. of Shares	(approximately)
Profit Harbour (Note)	262,602,000	63.58%	928,699,801	74.96%
Public:
Six independent
subscribers	—	—	75,000,000	6.05%
Other public
Shareholders	150,398,000	36.42%	235,300,199	18.99%
Total	413,000,000	100%	1,239,000,000	100%

Note: The entire issued share capital of Profit Harbour is owned by Mr. Yue. Accordingly, Mr. Yue is deemed to be interested in all the Shares in which Profit Harbour has interest pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Following the completion of the Rights Issue, public Shareholders (including the independent subscribers) will be interested in approximately 25.04% of the total issued share capital of the Company, and thereby maintaining public float for Shares above 25% as required under Rule 8.08 of the Listing Rules.

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DESPATCH OF SHARE CERTIFICATES FOR RIGHTS SHARES AND COMMENCEMENT OF DEALINGS

Share certificates for all fully-paid Rights Shares are expected to be posted on or before Friday, 14 July 2006 to those who have accepted and (where applicable) applied for, and paid for the Rights Shares, by ordinary post at their own risks, and refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares are also expected to be posted on or before Friday, 14 July 2006 by ordinary post at the subscribers’ own risks.

Dealings in the fully-paid Rights Shares are expected to commence on Monday, 17 July 2006.

ADJUSTMENT FOR THE CONVERTIBLE BOND

Reference is made to the announcement and circular of the Company dated 15 June 2006 and 30 June 2006 respectively regarding the Acquisition.

According to the terms of the agreement of the Acquisition, a redeemable convertible bond in the principal amount of HK$2 million exchangeable into new Shares at an initial conversion price of HK$0.15 per Share (subject to adjustments) will be issued by the Company as consideration upon completion of the Acquisition.

As the issued share capital of the Company will be enlarged by the issue of the Rights Shares, and since the convertible bond has not been issued by the Company, the conversion price for the convertible bond will be adjusted from HK$0.15 per Share to HK$0.10 per Share, being the par value of the Share with effect from the date of issue of the convertible bond. Accordingly, the maximum number of new Shares to be issued by the Company upon the full conversion of the convertible bond will be 20,000,000. Save as disclosed above, no other adjustment is expected to be made in relation to the Convertible Bond as a result of the Rights Issue.

As at the date of the announcement, other than the convertible bond mentioned above, the Company had no other derivatives, options, warrants and conversion rights on the similar rights which are convertible or exchangeable into Shares.

CHANGE IN BOARD LOT SIZE

It is expected that the board lot size in the ordinary shares in the capital of the Company will change from 2,000 Shares to 20,000 Shares with effect from Friday, 14 July 2006.

In order to facilitate the trading of odd lots of the Shares after the change in board lot size, the Company has appointed Sun Hung Kai Investment Services Limited (the “Agent”) to stand in the market to provide matching services for the odd lots of Shares on a best effort basis during the period from 14 July 2006 to 14 August 2006 (both days inclusive). Shareholders who wish to take advantage of this matching service either to top up or sell their holdings of Shares may directly or through their brokers, contact Miss Connie Cheung Sau Lin of the Agent at Level 12, One Pacific Place, 88 Queensway, Hong Kong at telephone number 2822-5075.

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Existing share certificates will continue to be valid evidence of entitlement to the Shares and be valid for trading, delivery and settlement. There will be no new share certificate issued as a result of the change in board lot size, and therefore no arrangement for free exchange of existing share certificates in board lots of 2,000 Shares for new share certificates in boards lots of 20,000 Shares will be provided.

Shareholders should note that successful matching of the sale and purchase of odd lots of the Shares is not guaranteed and are advised to consult their professional advisers if they are in doubt about the above procedures.

GENERAL

On 24 March 2006, the Stock Exchange resolved to allow the Company to proceed with the resumption proposal, which required, amongst others, evidence of the following transactions having been completed: (i) Profit Harbour having acquired the full debt due to the Company from Great Center for approximately US$4.5 million for cash at par value; and (ii) the Rights Issue to yield a net proceed of not less than HK$80 million.

The Company proposes to apply to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on Friday, 14 July 2006. The resumpton of trading in the Shares is subject to all conditions set out above having been fulfilled and the resumption proposal duly implemented by the Company.

In the event that the trading of the Shares on the Stock Exchange is unable to be resumed on or before 14 July 2006 (or any subsequent date as may be agreed in writing by the Company and the Underwriter), all subscription of the Rights Shares (including those subscribed or procured by the Underwriter for subscription) will be cancelled in compliance with the Bye-Laws and all applicable laws and regulations and refund cheques in respect of the amount validly tendered and received for subscription (including such amount received by the Company for Rights Shares subscribed or procured by the Underwriter for subscription), in full without interest, will be sent by ordinary post to the subscribers at their own risks, or other person(s) entitled thereto, on or before 21 July 2006 and further announcement will be made by the Company in this regard. In that case, there will be no change in board lot size and the board lot size for trading in Shares will remain at 2,000 Shares. In the event that the trading of Shares on the Stock Exchange is resumed later than 14 July 2006, an announcement will be issued in due course addressing whether there will be refund and change in board lot size. In any event, certificates for Rights Shares will only be despatched upon resumption of trading in Shares on the Stock Exchange.

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By order of the Board Shanghai Merchants Holdings Limited Yue Jialin Chairman

Hong Kong, 11 July 2006

As at the date of this announcement, the Board comprises two executive Directors, namely Mr. Yue Jialin (Chairman) and Mr. Lau Yau Cheung (Chief Executive Officer) and three independent non-executive Directors namely Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong and Mr. Wu Guo Jian.

• For identification purpose only.

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

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