Rego Interactive Co., Ltd — M&A Activity 2000

Sep 29, 2000

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.

TIANJIN BOHAI CHEMICAL INDUSTRY (GROUP) COMPANY LIMITED
(天津渤海化工(集團)股份有限公司)

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

CLARIFICATION ANNOUNCEMENT

The Directors have been informed by Bohai Corporation that it is the intention of the Tianjin Municipal Government to transfer the Controlling Interest from Bohai Corporation to TMICL, subject to the approvals of the relevant PRC and Hong Kong authorities.

The Company would also like to announce that the Company is negotiating with its controlling shareholder and TMICL in relation to the Asset Exchange Transaction. The Directors stress that the Asset Exchange Transaction may or may not materialise. Shareholders of the Company and potential investors are reminded to exercise caution when dealing in the shares of the Company. It is confirmed that the Share Transfer is neither subject to nor conditional upon the completion of the Asset Exchange Transaction.

The Directors have noted that there have been various newspaper articles reporting a possible asset restructuring of the Company and TMICL by way of an exchange of the existing assets of the Company for certain assets of urban construction and environmental protection related businesses of TMICL and the possible change of the controlling shareholder of the Company.

1. The Share Transfer

The Company had been notified by its controlling shareholder, Bohai Corporation, in August 2000 that it is the intention of the Tianjin Municipal Government to transfer the Controlling Interest from Bohai Corporation to TMICL. Upon completion of the Share Transfer, TMICL will hold the Controlling Interest in the Company.

Set out below is the shareholding structure of the Company prior to and immediately after the completion of the Share Transfer:

Prior to the completion of the Share Transfer

Notes:

1. Bohai Corporation and TMICL are under the supervisory control of Tianjin Economic Commission and Urban Construction Bureau respectively

2. the Company's H Shares are listed on the Stock Exchange

3. the Company's A Shares are listed on the Shanghai Stock Exchange

4. the legal person shares are owned by the PRC enterprises independent of any of the Directors, chief executive and substantial shareholders of the Company or its subsidiaries or any of their respective associates

Immediately upon the completion of the Share Transfer

Notes:

1. Bohai Corporation and TMICL are under the supervisory control of Tianjin Economic Commission and Urban Construction Bureau respectively

2. the Company's H Shares are listed on the Stock Exchange

3. the Company's A Shares are listed on the Shanghai Stock Exchange

4. the legal person shares are owned by the PRC enterprises independent of any of the Directors, chief executive and substantial shareholders of the Company or its subsidiaries or any of their respective associates

As indicated in the above chart, both Bohai Corporation and TMICL are wholly owned by the Tianjin Municipal Government, the Share Transfer does not result in a change of ultimate control of the Company. The Company had been notified by Bohai Corporation and TMICL that based on the information provided and representation made to the SFC by Bohai Corporation and TMICL, the SFC expressed its intention to grant TMICL a waiver from the obligation to make a general offer for all the H shares of the Company that may arise from the Share Transfer pursuant to Rule 26 of the Takeovers Code.

The Share Transfer is subject to the fulfillment of requirements of and obtaining the approvals from the relevant PRC and Hong Kong authorities. Bohai Corporation and TMICL are in the process of applying to the relevant PRC and Hong Kong authorities (including, inter alia, the Ministry of Finance, the CSRC and the SFC) with respect to the Share Transfer. Accordingly, the Share Transfer may or may not materialise. Shareholders of the Company and potential investors are reminded to exercise caution when dealing in the shares of the Company.

The Share Transfer is aimed at facilitating the Asset Exchange Transaction with a view to improving the financial position and the business prospects of the Group. It should be noted that the Share Transfer is neither subject to nor conditional upon the completion of the Asset Exchange Transaction. Bohai Corporation and TMICL estimated that approvals from the relevant PRC and Hong Kong authorities may be obtained in October 2000. As the business operations of the Group have been managed by the board of Directors of the Company, which is independent from Bohai Corporation, and the Directors consider that the business operations of the Group will not be affected as a result of the Share Transfer.

2. Asset Exchange Transaction

The Directors would like to announce that the Company is currently negotiating with TMICL and Bohai Corporation, the controlling shareholder of the Company, at an advanced stage in relation to an exchange of the existing assets and liabilities of the Company for certain assets of urban construction and environmental protection related businesses of TMICL (including water sewage treatment plants and toll roads with booths) and transactions contemplated and/or ancillary thereto. Should the Asset Exchange Transaction materialise, it will constitute a very substantial acquisition and connected transaction for the Company pursuant to the Listing Rules and is subject to the approval of the Company's independent shareholders. Although discussions regarding the Asset Exchange Transaction are currently taking place with Bohai Corporation and TMICL at an advanced stage, no binding agreement in relation to the terms and timing of the Asset Exchange Transaction has been reached up to date.

The Directors stress that the Asset Exchange Transaction may or may not materialise. Shareholders of the Company and potential investors are reminded to exercise caution when dealing in the shares of the Company.

3. General

Further announcement regarding the Share Transfer and Asset Exchange Transaction will be made by the Company in compliance with the Listing Rules as and when appropriate.

This statement is made by order of the board of Directors which individually and jointly accept responsibility for the accuracy of this statement.

1. Definitions

"Asset Exchange Transaction"		the proposed exchange of the Group's assets and liabilities with certain assets of urban construction and environmental protection related business of TMICL
"Bohai Corporation"		Bohai Chemical Industry (Group) Corporation, a State-owned enterprise owned by the Tianjin Municipal Government and the controlling shareholder of the Company
"Controlling Interest"		the 63.09% interest in the total share capital of the Company
"Company"		Tianjin Bohai Chemical Industry (Group) Company Limited
"CSRC"		中國証券監督管理委員會 (China Securities Regulatory Commission)
"Director(s)"		the director(s) of the Company
"Hong Kong"		Hong Kong Special Administrative Region of the PRC
"Listing Rules"		the Rules governing the Listing of Securities on the Stock Exchange
"PRC"		the People's Republic of China
"SFC"		the Securities & Futures Commission of Hong Kong
"Share Transfer"		the proposed transfer of the Controlling Interest from Bohai Corporation to TMICL
"Stock Exchange"		The Stock Exchange of Hong Kong Limited
"Takeovers Code"		The Hong Kong Code on Takeovers and Mergers
"Tianjin Economic Commission"		天津市經濟委員會 (Economic Commission of Tianjin Municipal)
"Tianjin Municipal Government"		the People's Government of Tianjin Municipality
"TMICL"		天津市政投資有限公司 (Tianjin Municipal Investment Company Limited), a State-owned enterprise owned by the Tianjin Municipal Government
"Urban Construction Bureau"		天津市市政工程局 (Urban Construction Bureau of the Tianjin Municipal)

By Order of the Board
Tianjin Bohai Chemical Industry (Group) Company Limited
Chen Yuanzhen Ip Pui SumCompany SecretariesTianjin, the People's Republic of China, and Hong Kong, 28th September, 2000