Rego Interactive Co., Ltd — Capital/Financing Update 2008

Mar 18, 2008

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 IN RESPECT OF THE ACQUISITION AND LICENSED OPERATION OF XIAN SEWAGE WATER TREATMENT PLANTS

Reference is made to the announcement of the Company dated 20 December 2007 (the “ Announcement ”).

In order to explore the market, the Company has participated in the tender of the Xian Sewage Water Treatment Plants asset transfer-operation-hand over project in Xian organized by Xian Assets Trading Center (西安產權交易中心). On 17 December 2007, the Company received a notice from Xian Assets Trading Center advising that the Company won the tender. Upon winning the tender, the Company established the Project Company on 21 January 2008 for the purpose of acquiring and operating the Xian Sewage Water Treatment Plants under license for a term of 25 years from the Effective Date.

On 18 March 2008, the Project Company entered into the Asset Transfer Agreement and the Sewage Water Treatment Service Agreements with Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司), the Licensed Operation Agreement with Xian Municipal Administration Committee (西安市市政管理委員會), and the Staff Reallocation Agreement with Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司).

As the relevant percentage ratios of the Acquisition is more than 5% but less than 25%, the Acquisition by the Project Company constitutes a discloseable transaction under Chapter 14 of the Listing Rules. It is subject to the reporting and announcement requirements, but is exempt from the Shareholders’ approval requirement. A circular containing, among other things, further information on the Acquisition will be dispatched to the Shareholders as soon as practicable.

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INTRODUCTION

Reference is made to the Announcement, in which the Company announced that the fourteenth meeting of the Fourth Board was convened on 20 December 2007 by way of facsimile, during which the “Resolution regarding the acquisition and licensed operation of Xian Sewage Water Treatment Plants” was considered and passed by all Directors.

THE ACQUISITION

In order to explore the market, the Company has participated in the tender of the Xian Sewage Water Treatment Plants asset transfer-operation-hand over project in Xian organized by Xian Assets Trading Center (西安產權交易中心). On 17 December 2007, the Company received a notice from Xian Assets Trading Center advising that the Company won the tender. Upon winning the tender, the Company established the Project Company on 21 January 2008 for the purpose of acquiring and operating the Xian Sewage Water Treatment Plants under license for a term of 25 years from the Effective Date.

The Board is pleased to announce that on 18 March 2008, the Project Company entered into the Asset Transfer Agreement and the Sewage Water Treatment Service Agreements with Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司), the Licensed Operation Agreement with Xian Municipal Administration Committee (西安市市政管理委員會), and the Staff Reallocation Agreement with Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司).

Set out below is a summary of the principal terms of the above agreements.

ASSET TRANSFER AGREEMENT

Date:

18 March 2008

Parties:

• (i) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司); and

• (ii) the Project Company

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Subject matters:

Pursuant to the Asset Transfer Agreement and subject to the fulfillment of the conditions precedent described below, on the Completion Date, the Project Company has agreed to acquire the Xian Sewage Water Treatment Plants and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司) has agreed to transfer Xian Sewage Water Treatment Plants at a Consideration of RMB643,000,000. During the Licensed Period, the Project Company was granted the right to operate and manage the Xian Sewage Water Treatment Plants. On the Hand Over Date, the Project Company is required to hand over the Xian Sewage Water Treatment Plants to the People’s Government of Xian, the PRC or other designated institutions. Details of the licensed operation and hand over of the Xian Sewage Water Treatment Plants will be discussed below under the heading of “Licensed Operation Agreement”.

Consideration

The Consideration for the acquisition of the Xian Sewage Water Treatment Plants from Xian Infrastructure Investment and Construction Company (西安市基礎設施建 設投資總公司) was fixed when the Company submitted its tender, which was fixed at the total sum of RMB643,000,000 and not subject to change. At the time when the Company submitted its tender, the Consideration was considered by the Company with reference to the amount of the capital expenditure for the Acquisition, the length of the licensed period, possible operation costs for operating and managing the Xian Sewage Water Treatment Plants and the provision of the sewage water treatment service, and the expected return on the investment.

The Consideration shall be funded by internal resources and bank loan (if required) and shall be settled in cash as follows:

• (a) 50% of the Consideration in the sum of RMB321,500,000 will be paid within 7 days after the Effective Date; and

• (b) 50% of the Consideration in the sum of RMB321,500,000 will be paid on or before the Completion Date.

Conditions precedent

The Completion Date shall be the first business day after fulfillment of all the following conditions of the Assets Transfer Agreement, but not later than 2 months after the Effective Date:

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• (a) Xian Infrastructure Investment and Construction Company (西安市基礎設施建 設投資總公司) has provided all information and documents in respect of the Xian Sewage Water Treatment Plants;

• (b) The checking of the Xian Sewage Water Treatment Plants is completed;

• (c) The transfer of the Original Contracts to the Project Company is completed;

• (d) The preparation work for the hand over of the Xian Sewage Water Treatment Plants to the Project Company is completed;

• (e) The Project Company has signed group employment contract and individual employment contracts with all the employees according to the Staff Reallocation Agreement;

• (f) Xian Infrastructure Investment and Construction Company (西安市基礎設施建 設投資總公司) has obtained the required approval in respect of the execution of the Assets Transfer Agreement from the relevant authorities in Xian; and

• (g) The Project Company has paid all the Consideration.

Completion

On the Completion Date, Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) shall transfer all the rights and interests in the Xian Sewage Water Treatment Plants, together with all menus, summaries, memorandums, plans and documents and technical information required for the operation and management of Xian Sewage Water Treatment Plants, to the Project Company.

Other terms

Other terms of the Asset Transfer Agreement:

• (a) The Original Contracts shall be reviewed and assigned to the Project Company if no objection.

• (b) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) ensures that on the Completion Date, the Original Contracts (which are assignable) shall be assigned to the Project Company and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) shall also be responsible for the completion of the relevant assignment procedures.

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• (c) During the Licensed Period, the Project Company will be given, by way of transfer, the land use rights of the land where the Xian Sewage Water Treatment Plants located. However, the Project Company has no right to change the purpose of the land use to one which is not related to the operation of the Xian Sewage Water Treatment Plants. Upon the expiry of the Licensed Period, the Project Company shall return the land use rights to the People’s Government of Xian or other designated institutions at nil consideration and without imposing any conditions.

• (d) Xian Assets Trading Center (西安產權交易中心) shall issue the proof of trading of assets on the second day after the Completion Date.

LICENSED OPERATION AGREEMENT

Date:

18 March 2008

Parties:

• (i) Xian Municipal Administration Committee (西安市市政管理委員會); and

• (ii) the Project Company

Licensed Period:

25 years commencing from the Effective Date or the extension period pursuant to the Licensed Operation Agreement or the date of termination of the Licensed Operation Agreement.

Principal Terms:

• (1) With the authorization from the People’s Government of Xian, Xian Municipal Administration Committee (西安市市政管理委員會) grants to the Project Company an exclusive right to be transferred, to operate and to manage the Xian Sewage Water Treatment Plants and charge the sewage water treatment services fees during the Licensed Period while the Project Company shall bear the costs, responsibility and risks.

• (2) The Project Company shall on the Hand Over Date hand over the Xian Sewage Water Treatment Plants, which can normally operate, and the land use rights to the People’s Government of Xian or other designated institutions at nil consideration.

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• (3) Xian Municipal Administration Committee (西安市市政管理委員會) shall assist the Project Company to obtain the land use rights by way of transfer and procure Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) to implement the Asset Transfer Agreement and the Sewage Water Treatment Service Agreements and procure Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) to implement the Staff Reallocation Agreement.

• (4) During the Operation Period, the Project Company shall be responsible for the collection of sewage water through the sewage water collection system inside the service area and for the discharge of the processed sewage water to the releasing point.

• (5) Xian Municipal Administration Committee (西安市市政管理委員會) shall provide the Project Company with the sewage water.

• (6) The Project Company shall be responsible for the improvement of the technology of Xian Sewage Water Treatment Plants.

SEWAGE WATER TREATMENT SERVICE AGREEMENTS

Date:

18 March 2008

Parties:

• (i) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司); and

• (ii) the Project Company

Subject matters:

The Project Company entered into two Sewage Water Treatment Service Agreements with Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司). One relates to the provision of sewage water treatment services by Sewage Water Treatment Plant and the other one relates to the provision of sewage water treatment services by Purification Center. The terms of the two Sewage Water Treatment Service Agreements are principally the same.

Principal Terms:

• (1) The Sewage Water Treatment Service Agreements shall take effect on the same effective date of the Licensed Operation Agreement and shall be effective during the Licensed Period.

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• (2) The Project Company shall, from the Business Operation Date, receive from the receiving point and process the sewage water and discharge the processed sewage water attaining the quality standard to the releasing point every hour for each day and every day for each year.

• (3) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) shall assist Xian Municipal Administration Committee (西安市市政管理委員會) to provide sewage water to and collect the processed sewage water from the Project Company.

• (4) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) shall be responsible for the payment of the sewage water service fees to the Project Company every month from the Business Operation Date.

• (5) The sewage water service fees shall be the unit price of RMB0.8 per cubic meter, which shall be adjusted for the first time on 1 January 2011 and for every two years thereafter, with reference to the costs of electricity, chemical materials, wages, enterprise income tax, land use tax, disposal costs for sewage wastage soil and other relevant costs.

• (6) For each year during the Operation Period, the daily average basic volumes of sewage water to be processed by Sewage Water Treatment Plant are as follows:-

• a. 102,000 cubic meter for the first year; and

• b. 114,000 cubic meter for the second year to the end of the Operation Period.

• (7) For each year during the Operation Period, the daily average basic volumes of sewage water to be processed by the Purification Center are as follows:-

• a. 127,500 cubic meter for the first year; and

• b. 142,500 cubic meter for the second year to the end of the Operation Period.

• (8) If the actual volume of processed sewage water is higher than the daily average basic volume of sewage water, the sewage water service fees shall be calculated by the formula of “[the unit price x 80% x (actual volume of processed sewage water — basic volumes of sewage water) x number of days] + [the unit price x basic volumes of sewage water x number of days]”. However, if the actual volume of processed sewage water is lower than the daily average basic volume of sewage water, the Project Company shall charge the fee with reference to the daily average basis volume of sewage water.

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• (9) The Project Company shall issue invoices to Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) on monthly basis and Xian Infrastructure Investment and Construction Company shall settle the invoices within 7 business days upon receipt of the invoices.

STAFF REALLOCATION AGREEMENT

Date:

18 March 2008

Parties:

• (i) Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公 司); and

• (ii) the Project Company

Principal Terms:

• (1) The parties shall implement the Staff Reallocation Proposal.

• (2) The Project Company shall sign group employment contract and individual employment contracts with all the employees.

• (3) The Project Company shall pay to Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) the retirement and medical insurances and housing allowance of the reallocated staffs on time.

• (4) The Project Company shall transfer to Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) relevant fees such as transportation fees of the retired staffs on time.

REASONS FOR THE ACQUISITION

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 Xian decided to grant an operation licence to a company to operate the Xian Sewage Water Treatment Plants for a licensed period of 25 years by way of public tender. The winner of the public tender shall be granted the rights to acquire the Xian Sewage Water Treatment Plants, operate the Xian Sewage Water Treatment Plants and provide sewage water treatment services. With a view to exploring the market, the Company has participated in the said tender, and on 17 December 2007, the Company received a notice from Xian Assets Trading Center advising that the Company won the tender.

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To allow the Project Company to acquire the Xian Sewage Water Treatment Plants, operate the Xian Sewage Water Treatment Plants and provide sewage water treatment services, the Project Company, pursuant to the tender documents, entered into the Asset Transfer Agreement, the Licensed Operation Agreement, the Sewage Water Treatment Service Agreement and the Staff Reallocation Agreement.

By entering into the above agreements, the Project Company can operate and manage the Xian Sewage Water Treatment Plants and can provide sewage water treatment services and in return, charge the sewage water treatment service fee in relation to the provision of sewage water treatment services. The Directors, including the independent non-executive Directors, are of the opinion that the Acquisition is fair and reasonable and are in the interest of the Shareholders and the Company as a whole.

INFORMATION OF THE XIAN SEWAGE WATER TREATMENT PLANTS

Xian Sewage Water Treatment Plants include the Sewage Water Treatment Plant and the Purification Center, both located in Xian. The Sewage Water Treatment Plant was built in 1956 and commenced operation in 1958. The plant was expanded in 1963, 1976 and 1999 and now has a sewage water processing capacity of 160,000 m[3] per day. Regarding the Purification Center, it was built in 1992 and commenced operation in 1998. The Purification Center has a sewage water processing capacity of 150,000 m[3] per day. The total sewage water processing capacity of the Xian Sewage Water Treatment Plants is 310,000 m[3] per day. The total net asset value of Xian Sewage Water Treatment Plants is approximately RMB234,000,000 as at 30 June 2007. As Xian Sewage Water Treatment Plants were state-owned enterprise’s assets before the Acquisition, there is no profit figure for the two financial years immediately preceding the Acquisition.

INFORMATION OF THE GROUP, THE PROJECT COMPANY, XIAN ASSETS TRADING CENTER (西安產權交易中心), XIAN INFRASTRUCTURE INVESTMENT AND CONSTRUCTION COMPANY (西安市基礎設施建設投資總 公司), XIAN MUNICIPAL ADMINISTRATION COMMITTEE (西安市市政管理 委員會) AND XIAN SEWAGE WATER TREATMENT COMPANY LIMITED (西安市污水處理有限責任公司)

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

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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.

The Project Company is principally engaged in the development, construction, management and operation of sewage water treatment plants, their auxiliary facilities and equipment for unused solid materials, research and development and promotion of environmental protection technology, application of renewable energy and the related equipment, installation services of equipment of sewage water treatment plants, and consultation services of water treatment facilities, environmental engineering, municipal engineering, road engineering and transportation engineering.

Xian Assets Trading Center (西安產權交易中心) is established upon approval by the People’s Government of Xian and is assigned by the State-owned Assets Supervision and Administration Commission of the People’s Government of Xian to deal with trading of property assets, debts, share interests and intellectual property.

Xian Municipal Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) is managed by the People’s Government of Xian and is a platform for the financing and investment of city infrastructures.

Xian Municipal Administration Committee (西安市市政管理委員會) is established by the People’s Government of Xian for administrating the municipal public utilities.

Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) was established in 2006 and was responsible for the management of the Xian Sewage Water Treatment Plants.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Xian Assets Trading Center, Xian Municipal Administration Committee, Xian Municipal Infrastructure Investment and Construction Company and Xian Sewage Water Treatment Company Limited and their ultimate beneficial owner are third parties independent of the Company and the connected persons of the Company.

DISCLOSEABLE TRANSACTION

As the relevant percentage ratios of the Acquisition is more than 5% but less than 25%, the Acquisition by the Project Company constitutes a discloseable transaction under Chapter 14 of the Listing Rules. It is subject to the reporting and announcement requirements, but is exempt from the Shareholders’ approval requirement. A circular containing, among other things, further information on the Acquisition will be dispatched to the Shareholders as soon as practicable.

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DEFINITIONS

• “Acquisition”

• “Asset Transfer Agreement”

• “Board”

• “Company”

• “Completion Date” or “Business Operation Date”

• “connected person”

• “Consideration”

• “Directors”

• “Effective Date”

• “Group”

• the acquisition of all rights and interests in the Xian Sewage Water Treatment Plants, together with all menus, summaries, memorandums, plans and documents and technical information required for the operation and management of Xian Sewage Water Treatment Plants, by the Project Company from Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) at the Consideration

• an assets transfer agreement entered into between the Project Company and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資 總公司) on 18 March 2008, in relation to the Acquisition

• the board of Directors

• 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

• the first business day after fulfillment of all the conditions of the Assets Transfer Agreement, but not later than 2 months after the Effective Date

• has the same meaning ascribed to it in the Listing Rules

• consideration of acquisition of the Xian Sewage Water Treatment Plants in the total sum of RMB643,000,000

• the directors of the Company

• 18 March 2008, the date of execution of the Asset Transfer Agreement, the Licensed Operation Agreement, the Sewage Water Treatment Service Agreements and the Staff Reallocation Agreement

• the Company and its subsidiaries

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• “Hand Over Date”

• the next date after the expiry of the License Period or the other date as agreed by the parties of the Licensed Operation Agreement, for the hand over of the Xian Sewage Water Treatment Plants

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Licensed Operation a licensed operation agreement entered into between the Agreement” Project Company and Xian Municipal Administration Committee (西安市市政管理委員會) on 18 March 2008 in relation to the Xian Project

• “Licensed Period”

• 25 years commencing from the Effective Date or the extension period pursuant to the Licensed Operation Agreement or the date of termination of the Licensed Operation Agreement

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

• “Operation Period” the period commencing from the Business Operation Date of Xian Sewage Water Treatment Plants to the expiry of the Licensed Period

• “Original Contracts”

• the contracts, agreements or orders still effective on or after the Effective Date entered into by Sewage Water Treatment Plant or Purification Center or Xian Sewage Water Treatment Company Limited (西安市污水處理有 限責任公司) or Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司), for and on behalf of the Sewage Water Treatment Plant and Purification Center, with the relevant contractors, manufacturers or suppliers

• “percentage ratios” has the meaning ascribed to it under the Listing Rules, as application to a transaction

• “PRC”

• the People’s Republic of China

• “Project Company”

• 西安創業水務有限公司 (Xian Capital Water Company Limited), a limited liability company incorporated in the PRC and wholly-owned by the Company

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• “Purification Center”

• “RMB”

• “Sewage Water Treatment Plant”

• “Sewage Water Treatment Service Agreements”

• “Shareholders”

• “Staff Reallocation Agreement”

• “Staff Reallocation Proposal”

• “Stock Exchange”

• “Xian Project”

Xian Beishiqiao Purification Center, located in Xian, the PRC, with a sewage water processing capacity of 150,000 m[3] per day

Renminbi, the lawful currency of the PRC

• a sewage water treatment plant located in Xian, the PRC, with a sewage water processing capacity of 160,000 m[3] per day

• two sewage water treatment service agreements entered into between the Project Company and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) on 18 March 2008 in relation to the provisions of sewage water treatment services by the Sewage Water Treatment Plant and the Purification Center

• the shareholders of the Company

• a staff reallocation agreement entered into between the Project Company and Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) on 18 March 2008 in relation to the reallocation of the staff in Xian Sewage Water Treatment Plants

• a staff reallocation proposal in relation to the Xian Sewage Water Treatment Plants asset transfer-operation-hand over project issued by the Xian Labour and Social Protection Bureau (西安市勞動和社 會保障局)

• The Stock Exchange of Hong Kong Limited

a project in relation to the grant of an operation licence to the Project Company for the exclusive rights to acquire, operate and manage the Xian Sewage Water Treatment Plants and the provision of sewage water treatment services

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• “Xian Sewage Water Treatment Plants”

The facilities, buildings, constructions and other production related fix assets (not including water recycling system) in the Sewage Water Treatment Plant and Purification Center, both situated at Xian, the PRC

“%”

per cent

By order of the Board Ma Baiyu Chairman

• Tianjin, the PRC 18 March 2008

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.

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