Rego Interactive Co., Ltd — Capital/Financing Update 2005

Oct 24, 2005

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.

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1065)

DISCLOSEABLE TRANSACTION FORMATION OF A JOINT VENTURE ENTERPRISE

The Board is pleased to announce that on 21 October 2005, the Board approved that, upon receiving the Notice Form issued by the Committee to the Company, the Company and HCPO will enter into (i) the Joint Venture Agreement; and (ii) the Joint Venture Articles in relation to the establishment of the Project Company in the PRC. The Board also approved the terms of the Joint Venture Agreement and the Joint Venture Articles. The registered capital of the Project Company shall be RMB257,445,000, of which RMB77,233,500, representing 30% of the registered capital, shall be contributed by HCPO, and RMB180,211,500, representing 70% of the registered capital, shall be contributed by the Company through its internal resources. The registered capital of the Project Company will be injected by way of cash.

Besides, pursuant to the tender documents of the Hangzhou Project, the Project Company shall enter into (i) the Licensed Operation Agreement with the City Management Office; (ii) the Assets Transfer Agreement with HCPO; and (iii) the Sewage Water Processing Agreement with Hangzhou Sewage Water Company. If required by the bank, the Company would consider to execute the Guarantee for securing the bank borrowings of the Project Company to finance the difference between the total investment and the registered capital of the Project Company. Further announcements will be made by the Company if and when the Company executes the Guarantee and/or the Company finalises the terms of the above agreements (i) to (iii) in compliance with the Listing Rules and the relevant laws and regulations in the PRC.

The Directors are of the view that the terms of the Joint Venture Agreement and the Joint Venture Articles are on normal commercial terms which are fair and reasonable and are in the best interests of the Shareholders and the Company as a whole.

The establishment of the Project Company by the Company and HCPO constitutes a discloseable transaction of the Company under Rule 14.06(2) of the Listing Rules. Further announcement will be made by the Company when the Company and HCPO enter into the Joint Venture Agreement and the Joint Venture Articles. A circular containing, among other things, the details of the Joint Venture Agreement and the Joint Venture Articles will be despatched to the Shareholders as soon as possible and in compliance with the Listing Rules.

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INTRODUCTION

Reference is made to the announcement of the Company in relation to the result in respect of the tender of the Hangzhou Project dated 19 July 2005.

The Board is pleased to announce that on 21 October 2005, the Board approved that, upon receiving the form of notice (the “ Notice Form ”) issued by the Guidance Committee of Tender Invitation for the Hangzhou Project (the “ Committee ”) to the Company stating that the Company has won the tender of the Hangzhou Project and was granted the rights to set up the Project Company with HCPO, the Company and HCPO will enter into (i) the Joint Venture Agreement and (ii) the Joint Venture Articles in relation to the establishment of the Project Company in the PRC pursuant to the tender documents of the Hangzhou Project. The Board also approved the terms of the Joint Venture Agreement and the Joint Venture Articles. Further announcement will be made by the Company when the Company and HCPO enter into the Joint Venture Agreement and the Joint Venture Articles. The major terms of the Joint Venture Agreement and the Joint Venture Articles approved by the Board are set out below:

JOINT VENTURE AGREEMENT AND JOINT VENTURE ARTICLES

Date : To be entered into between the Company and HCPO upon receiving the Notice Form issued by the Committee to the Company Parties: (i) The Company; and (ii) HCPO, an independent third party not connected with the Directors, supervisors, chief executives, substantial shareholders of the Company and its subsidiaries or any of their respective associates. Term : 26 years, commencing from the date of issue of the business licence of the Project Company and ending on the date one year after the expiry of the Licensed Period. Registered capital: RMB257,445,000 Total investment : RMB858,150,000

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Financing :

Shareholding structure :

The difference between the total investment and the registered capital shall be financed by the Project Company itself through bank borrowings in which the Company would consider to execute a guarantee (the “ Guarantee ”) in favour of the bank in respect of such bank borrowings if required by the bank. Supplemental agreement(s) will be agreed and signed by the Company and HCPO in the event if there is any changes in the total investment. Any amount exceeds RMB600,705,000 shall be funded by the methods to be agreed between the Company and HCPO. Further announcement will be made when supplemental agreement(s) is/are entered into by the Company. The Company will monitor the total amount of commitment made to the Project Company from time to time and will comply with the relevant provisions of the Listing Rules and the laws and regulations in the PRC as and when necessary.

• (i) The Company shall contribute RMB180,211,500, representing 70% of the registered capital thereof, to the Project Company by way of cash through its internal resources; and

• (ii) HCPO shall contribute RMB77,233,500, representing 30% of the registered capital thereof, to the Project Company by way of cash.

Transfer of interest:

• (i) Within the first three years after the signing of the Licensed Operation Agreement, the Assets Transfer Agreement and the Sewage Water Processing Agreement by the Project Company (the “ Restriction Period ”), the Company and HCPO are not allowed to transfer or in any other method to dispose their equity interests in the Project Company, all or in partial, to the other joint venture party or the other independent third party; and

• (ii) after the Restriction Period, the Company and HCPO are allowed to transfer their equity interests in the Project Company, all or in partial, to the other joint venture party or the other independent third party given that prior written consents/approvals are obtained from the other joint venture party, the general meeting of the Project Company and the other relevant governmental authorities.

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Conditions to be fulfilled before contribution made by the joint venture partners:

• (i) The Joint Venture Agreement and the Joint Venture Articles were signed by the Company and HCPO and became effective;

• (ii) the Licensed Operation Agreement in draft form was signed by the Company, HCPO and the City Management Office;

• (iii) the Assets Transfer Agreement in draft form was signed by the Company and HCPO; and

• (iv) the Sewage Water Processing Agreement in draft form was signed by the Company, HCPO and Hangzhou Sewage Water Company.

The above agreements mentioned in conditions (i) to (iv) will be signed by the Company and HCPO upon receiving the Notice Form issued by the Committee to the Company. The terms of the above draft agreements mentioned in conditions (ii) to (iv) have not yet been finalised and are subject to amendments upon further negotiations between the relevant parties. The above draft agreements mentioned in condtions (ii) to (iv) will be formally entered into by the Project Company to replace the ones to be signed by the Company and HCPO upon the establishment of the Project Company pursuant to the tender documents of the Hangzhou Project. The date of establishment of the Project Company shall be the date of the issue of the business licence of the Project Company.

• Date of contribution: Subject to the above conditions (i) to (iv), the Company and HCPO shall contribute their respective capital contributions to the Project Company within five days from the date of signing of the Joint Venture Agreement. In the event if either joint venture party fails to contribute its capital contribution to the Project Company under the Joint Venture Agreement, the defaulting party shall, within 30 days after the issue of a written notice by the non-defaulting party, contribute its capital contribution to the Project Company, failing which shall be regarded as a breach of the Joint Venture Agreement. The Joint Venture Agreement shall then lapse and the winding up procedures for the Project Company shall be commenced unless other legal remedial procedures could be agreed by the Company and HCPO. In any event, the defaulting party shall indemnify the non-defaulting party and the Project Company for all losses and damages incurred as a result of such breach.

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Besides, the Company shall assist the Project Company to complete the necessary procedures for obtaining the bank borrowings in the sum of RMB600,705,000 (i.e. the difference between the total investment and the registered capital of the Project Company) within 22 days from the date of signing the Joint Venture Agreement. As at the date of this announcement, no arrangements for the bank borrowings have been done by the Company and no bank borrowings have been obtained by the Project Company.

Board of directors:

Profit distribution :

Major roles and responsibilities of the joint venture partners:

The board of directors of the Project Company shall consist of seven directors in total, among which, four directors shall be nominated by the Company, two directors shall be nominated by HCPO and one independent director shall be appointed by the Company and HCPO jointly.

The profit distribution and liabilities of the Project Company shall be distributed in proportion to the shareholding in the Project Company held by the respective parties.

• (i) HCPO and the Company shall assist the Project Company to obtain the necessary approval and registration for the establishment of the Project Company, and the necessary approval and licence for the operation of the Project Company;

• (ii) the Company shall assist and warrant that the Project Company is able to obtain the necessary bank borrowings in the sum of RMB600,705,000 (i.e. the difference between the total investment and the registered capital of the Project Company) within 22 days from the date of signing the Joint Venture Agreement, while HCPO shall also give necessary assistance to the Project Company in that regard; and

• (iii) the Company shall be responsible for the implementation of (a) proposed advance enterprise management strategy; and (b) renovation plan and improved sewage water treatment method as recognised by the Committee to the Hangzhou Qige Sewage Water Treatment Plant. The Company shall appoint a qualified person as the senior management officer of the Project Company. In addition, the Company shall, according to the needs of the Project Company, provide necessary training for the management and technicians of the Project Company in various levels.

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Business scope :

The Project Company shall be principally engaged in the management and operation of the Hangzhou Qige Sewage Water Treatment Plant. It shall also be engaged in the management, operation and technological consultation of sewage water treatment plants and their auxiliary services.

Termination:

• Upon expiry of the Licensed Period, the Project Company shall hand over the Hangzhou Qige Sewage Water Treatment Plant and its relevant rights and interests, including but not limited to, the premises, facilities, machinery, accessories, chemicals and the relevant properties of the Hangzhou Qige Sewage Water Treatment Plant, to the City Management Office or its specified authority at nil consideration. The remaining assets of the Project Company shall be treated in proportion to the shareholding in the Project Company held by the respective parties upon expiry of the term of the Project Company. The treatment of the remaining assets of the Project Company shall be agreed by the respective parties at such time.

REASONS FOR THE ESTABLISHMENT OF THE PROJECT COMPANY

In order to increase the commercialisation on the municipal public utilities and to enhance operational efficiency of the municipal public utilities, the People’s Government of Hangzhou City decided to grant an operation licence to a joint venture enterprise (which shall be formed between HCPO and the winner of the public tender) to operate the Hangzhou Qige Sewage Water Treatment Plant during the Licensed Period. The People’s Government of Hangzhou City selected the suitable joint venture partner for the joint venture enterprise by way of public tender. The winner of the public tender shall be granted the rights to set up the joint venture enterprise with HCPO so as to operate the Hangzhou Qige Sewage Water Treatment Plant. On 18 July 2005, the Company received the Notice of Tender Invitation Assessment Results for Investors of Hangzhou Qige Sewage Water Treatment Plant issued by the Committee for which the Committee has listed the Company as the first candidate for winning the tender of the Hangzhou Project. Therefore, on 21 October 2005, the Board approved that, upon receiving the Notice Form issued by the Committee to the Company, the Company will enter into the Joint Venture Agreement and the Joint Venture Articles with HCPO. Further announcement will be made by the Company when the Company and HCPO enter into the Joint Venture Agreement and the Joint Venture Articles.

Under the tender documents of the Hangzhou Project, the Company shall establish a joint venture enterprise, the Project Company, with HCPO to operate and manage the Hangzhou Qige Sewage Water Treatment Plant so as to provide sewage water treatment services to Hangzhou Sewage Water Company in accordance with the Sewage Water Processing Agreement. The Project Company can charge the sewage water treatment fee and the other related fees in relation to the provision of sewage water treatment services to Hangzhou Sewage Water Company.

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As advised by the Company, it usually takes approximately two months to obtain the business licence of the Project Company under normal circumstances. The Company and HCPO will make the application for the business licence of the Project Company upon the signing of the Joint Venture Agreement. The Project Company will become a non wholly-owned subsidiary of the Company and its account will be consolidated in the consolidated financial statements of the Group.

Besides, pursuant to the tender documents of the Hangzhou Project, the Project Company shall formally enter into (i) the Licensed Operation Agreement with the City Management Office; (ii) the Assets Transfer Agreement with HCPO; and (iii) the Sewage Water Processing Agreement with Hangzhou Sewage Water Company. If required by the bank, the Company would consider to execute the Guarantee in favour of the bank in respect of the bank borrowings provided to the Project Company. Further announcements will be made by the Company if and when the Company executed the Guarantee and/or the Company finalises the terms of the above agreements (i) to (iii) in compliance with the Listing Rules and the relevant laws and regulations in the PRC.

The Directors, including the independent non-executive Directors, are of the view that the terms of the Joint Venture Agreement and the Joint Venture Articles are on normal commercial terms which are fair and reasonable and are in the best interests of the Shareholders and the Company as a whole.

INFORMATION OF HCPO

HCPO is a state-owned enterprise established in accordance with the laws of the PRC in June 2003 with the approvals from the Hangzhou City Committee and the People’s Government of Hangzhou City. The registered capital of HCPO is RMB6,500 million. HCPO is principally engaged in the businesses of public transportation, supply of water and gas, public utilities facilities, wastes processing services, real estate development, construction project and research and development of techonolgies.

INFORMATION OF THE GROUP

The Group is principally engaged in (i) the design, management, operation, technological consultation of sewage water treatment plants and their related infrastructure facilities and auxiliary services; (ii) the design, toll collection, repair and maintenance, management, operation, technological consultation of toll roads and auxiliary services in relation to the operation of the South-eastern Half Ring Road of the Middle Ring of Tianjin, Tianjin City Indebted Road Construction for Vehicle-passage Toll Collection Office and their related auxiliary facilities; and (iii) the development and operation of environmental protection technology and products.

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DISCLOSEABLE TRANSACTION

As each of the percentage ratios of the capital contribution to the Project Company by the Company is more than 5% but less than 25%, the establishment of the Project Company constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. It is subject to the reporting and announcement requirements, but is exempt from the Shareholders’ approval requirement. Further announcement will be made by the Company when the Company and HCPO enter into the Joint Venture Agreement and the Joint Venture Articles. A circular containing, among other matters, the details of the Joint Venture Agreement and the Joint Venture Articles will be despatched to the Shareholders as soon as possible and in compliance with the Listing Rules.

DEFINITIONS

• “A Shares” Renminbi-denominated domestic shares of nominal value of RMB1.00 each in the ordinary share capital of the Company

• “Assets Transfer an assets transfer agreement to be entered into between the Project Agreement” Company and HCPO in relation to the acquisition of the Hangzhou Qige Sewage Water Treatment Plant, upon the establishment of the Project Company

• “associates” has the meaning ascribed thereto in the Listing Rules “Board” the board of Directors “City Management (City Management Office of the People’s Office” Government of Hangzhou City), a governmental department of the city management of the government of Hangzhou City established in June 2003

• “Company” Tianjin Capital Environmental Protection Company Limited, a joint stock limited company established in the PRC whose A Shares and H Shares are listed on the Shanghai Stock Exchange and the Stock Exchange respectively

• “Directors” the directors of the Company “Group” the Company and its subsidiaries “H Shares” overseas listed foreign shares in the ordinary share capital of the Company, with a nominal value of RMB1.00 each, which are listed on the Stock Exchange

• “Hangzhou Project” a project in relation to the grant of licence to the Project Company for the exclusive rights to operate and manage the Hangzhou Qige Sewage Water Treatment Plant and the provisions of sewage water treatment services to Hangzhou Sewage Water Company

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• “Hangzhou Qige the sewage water treatment plant situated at a zone in between Sewage Water Hangzhou City and Xia Sha Economic Technological Development Treatment Plant” District, together with all buildings, constructions, equipments, facilities and other assets constructed thereon

• “Hangzhou Sewage Hangzhou Sewage Water Company Limited, a state-owned Water Company” enterprise established in accordance with the laws of the PRC in October 1993

• “HCPO”

• (Hangzhou City Construction Property

• Operation Company Limited), a state-owned enterprise established in accordance with the laws of the PRC

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Joint Venture a joint venture agreement to be entered into between the Company Agreement” and HCPO upon receiving the Notice Form issued by the Committee to the Company

• “Joint Venture the articles of association of the Project Company to be entered Articles” into between the Company and HCPO upon receiving the Notice Form issued by the Committee to the Company

• “Licensed Operation a licensed operation agreement to be entered into between the City Agreement” Management Office and the Project Company in relation to the Hangzhou Project, upon the establishment of the Project Company

• “Licensed Period” a period of 25 years, commencing from the date of signing of the Licensed Operation Agreement, or extend for such a period as agreed between the parties

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

• “PRC” the People’s Republic of China

• “Project Company” the joint venture enterprise to be established in the PRC by the Company and HCPO, with the registered capital of RMB257,445,000, of which RMB180,211,500, representing 70% of the registered capital, will be contributed by the Company through its internal resources, and RMB77,233,500, representing 30% of the registered capital will be contributed by HCPO

• “RMB” Renminbi, the lawful currency of the PRC

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“Sewage Water	a sewage water processing agreement to be entered into between
Processing	the Project Company and Hangzhou Sewage Water Company in
Agreement”	relation to the provisions of sewage water treatment services to
	Hangzhou Sewage Water Company, upon the establishment of the
	Project Company
“Shareholders”	holders of Shares
“Shares”	A Shares and H Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	per cent

As at the date of this announcement, the Board comprises executive Directors: Ms. Ma Baiyu, Mr. An Pindong, Mr. Gu Qifeng, Mr. Wang Zhanying, Mr. Tan Zhaofu and Ms. Fu Yana and independent non-executive Directors: Mr. Wang Xiangfei, Mr. Gao Zongze and Mr. Ko Poming.

By order of the Board Ma Baiya Chairman

Tianjin, the PRC, 21 October 2005

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

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