RemeGen Co., Ltd. — Capital/Financing Update 2006

Feb 1, 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.

Huali Holdings (Group) Limited

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3366)

CONNECTED TRANSACTIONS

The Directors are pleased to announce that on 20 January 2006, Max Surplus, a wholly-owned subsidiary of the Company, and OCT (HK) entered into the Anhui Agreement pursuant to which Max Surplus has agreed to acquire the entire issued share capital of Grand Signal which in turn owns all the equity interest of Anhui Huali. The Directors further announce that Shanghai Huali, an indirect wholly-owned subsidiary of the Company, and Panyu Huali entered into the Huayou Agreement pursuant to which Shanghai Huali has agreed to acquire 10% equity interest in Shenzhen Huayou.

The consideration for the Anhui Acquisition and the Huayou Acquisition are HK$8,457,236.30 and RMB300,000.00 respectively and to be paid by cash. The consideration together with other terms of the Anhui Acquisition and the Huayou Acquisition have been determined through arm’s length negotiations between the parties taking into account the reasons for the Anhui Acquisition and the Huayou Acquisition as set out in the paragraphs headed “Reasons for the Anhui Acquisition” and “Reasons for the Huayou Acquisition” in this announcement respectively.

OCT (HK) owns 100% equity interest in Pacific Climax Limited, which is the controlling shareholder of the Company. Panyu Huali is an indirect non-wholly owned subsidiary of OCT (Group) which is the ultimate holding company of OCT(HK). Pursuant to Chapter 14A of the Listing Rules, OCT (HK) and Panyu Huali are connected persons to the Company. The Anhui Acquisition and the Huayou Acquisition in aggregate constitute connected transactions for the Company under Rule 14A.32 of the Listing Rules, which are subject to the reporting and announcement requirements but are exempt from independent shareholders’ approval requirements under the Listing Rules.

The Directors are pleased to announce that on 20 January 2006, Max Surplus, a wholly owned subsidiary of the Company, and OCT (HK) entered into the Anhui Agreement pursuant to which Max Surplus has agreed to acquire all the equity interest in Grand Signal which in turn owns all the equity interest of Anhui Huali.

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THE ANHUI AGREEMENT

Date: 20 January 2006

Parties:

• (1) Vendor: OCT (HK); and

• (2) Purchaser: Max Surplus.

The Transaction

Max Surplus will acquire from OCT (HK) the entire issued share capital of Grand Signal at a consideration of HK$8,457,236.30. Grand Signal owns all the equity interest of Anhui Huali. The consideration will be satisfied through internally generated funds of the Group.

The consideration to be paid by Max Surplus is HK$8,457,236.30 and is payable in one lump sum in cash within 15 working days after fulfillment of the conditions precedent as set out in the Anhui Agreement. The consideration is equivalent to the consolidated net asset value of Grand Signal as at 30 November 2005 as per its unaudited management accounts as at 30 November 2005 which were prepared in accordance with the International Financial Reporting Standards.

The Anhui Agreement is conditional upon fulfillment of the conditions including but not limited to the following:

1. Grand Signal and Anhui Huali do not have any material adverse change in terms of its legal, financial, commercial or trading circumstances from the date of Anhui Agreement to the Completion Date;

2. The tendering by OCT (HK) to Max Surplus of information in relation to the finance, corporate, taxation and business aspects of Grand Signal and Anhui Huali, title of assets owned by Grand Signal and Anhui Huali, and all legal aspects of Grand Signal and Anhui Huali, and Max Surplus in its absolute discretion is satisfied with its due diligence investigations;

3. Completion of all requisite procedures for the transfer of share of Grand Signal;

4. Provision of all other documents as requested by Max Surplus.

Should the conditions not fulfill in accordance with the terms of the Anhui Agreement within 12 months from the date of execution of the Anhui Agreement (or such later date as OCT (HK) and Max Surplus hereunder mutually agreed), unless Max Surplus in its absolute discretion waive any of the conditions precedent, the Anhui Agreement shall become void.

There is no restriction in the Anhui Agreement restricting Max Surplus from subsequent sale of its interest in Grand Signal after completion of the Anhui Agreement. No statutory approval is required in the PRC for the Anhui Acquisition.

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OCT (HK) provides warranties to Max Surplus, including but not limited to, that it has title to the equity interest of Grand Signal and such equity interest are free from any encumbrances whatsoever.

Information on Grand Signal and Anhui Huali

Anhui Huali is wholly owned by Grand Signal, which is an investment holding company and in turn is wholly owned by OCT (HK). Grand Signal is incorporated in the British Virgin Islands with paid-up share capital of US$1.00. Save as holding the interest in Anhui Huali, Grand Signal does not have any other investment or operations.

Anhui Huali is a wholly foreign-owned enterprise which was established on 9 June 2004 for a term of 30 years commencing from 9 June 2004. Its principal assets consists of a plot of land located at the Industry & Technology Development District of Chuzhou, Anhui, the PRC amounting to 66,667 square meters and a factory erected on that piece of land which is still under construction. The land is restricted for industrial purpose. The factory is designed to manufacture fittings for electrical appliances. Anhui Huali has obtained the land use right certificate of the land. As at the date of this announcement, Anhui Huali has not commenced any business since its incorporation. Anhui Huali has not generated any revenue and only incurred immaterial preliminary expenses up to the date of this announcement.

As at the date of this announcement, Anhui Huali has a paid-up capital of HK$9,000,000. The acquisition cost of the land owned by Anhui Huali was HK$2,740,384.62 and was fully paid up by Anhui Huali. Other assets of Anhui Huali is mainly a factory under construction. As at 30 November 2005, the unaudited consolidated net asset value of Grand Signal was HK$8,457,236.30.

Reasons for the Anhui Acquisition

In the prospectus of the Company dated 24 October 2005, it is stated that the Group intends to expand its production capacity through the construction of new manufacturing facilities and, or acquisition of packaging businesses in Mainland China. As Anhui Huali holds a piece of land of 66,667 square meters and a factory under construction erected on that piece of land which can be renovated with minor decoration work for manufacturing packaging containers and materials, the Directors expect that the preliminary production line setting up in the factory may commence production in May 2006 and thus will increase the Group’s production capacity. The Directors also consider that as the land and labour cost in Anhui is lower than that in Shenzhen and Shanghai, having a production base in Anhui can reduce production cost of the Group. With an increase in its production capacity, the Group will be able to broaden its sales network geographically to better cover the Yangtze River Delta, and will help the Group to further extend its market share in Mainland China.

The consideration of the Anhui Acquisition was arrived at after arm’s length negotiations between the Group and OCT (HK). Each of the Directors (including the independent non-executive Directors) believes that the terms of the Anhui Agreement are fair and reasonable and the Anhui Agreement is in the interests of the Group and the Shareholders as a whole.

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THE HUAYOU AGREEMENT

Date: 20 January 2006

Parties:

• (1) Vendor: Panyu Huali; and

• (2) Purchaser: Shanghai Huali.

The Transaction

Shanghai Huali has agreed to acquire 10% equity interest of Shenzhen Huayou from Panyu Huali.

The consideration to be paid by Shanghai Huali is RMB300,000 in one lump sum by cash within 10 days from the date of execution of the Huayou Agreement. The consideration is equivalent to 10% net asset value of Shenzhen Huayou as at 30 November 2005 as per its unaudited management accounts as at 30 November 2005,which were prepared in accordance with the PRC accounting standards. The consideration will be satisfied by internal generated funds of the Group.

Panyu Huali provides warranties to Shanghai Huali, including but not limited to, it has title of the 10% equity interest of Shenzhen Huayou and such equity interest are free from any encumbrances whatsoever. There is no restriction in the Huayou Agreement restricting Shanghai Huali from subsequent sale of its interest in Shenzhen Huayou after completion of the Huayou Agreement. No statutory approval is required in the PRC for the Huayou Acquisition.

Information on Shenzhen Huayou

Shenzhen Huayou was established as a domestic company in the PRC on 19 April 2004. Shenzhen Huali, a wholly-owned subsidiary of the Company, and Panyu Huali, hold 90% and 10% of the equity interest of Shenzhen Huayou respectively. According to the business licence of Shenzhen Huayou, it engages in the manufacturing and sale of corrugated paperboard and cartons. It has not yet commenced any business since its incorporation. Shenzhen Huayou has not generated any revenue and only incurred immaterial preliminary expenses up to the date of this announcement.

Reasons for the Huayou Acquisition

As the Group indirectly holds 90% interest in Shenzhen Huayou, the Group would like to have all the equity interest in Shenzhen Huayou. Upon completion of the Huayou Acquisition, Shenzhen Huayou will become a wholly-owned subsidiary of the Company. The Directors expect that the Huayou Acquisition will facilitate the future business development and planning as management decision and operations can be taken consistently and effectively according to the Group’s business mission.

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The consideration of the Huayou Acquisition was arrived at after arm’s length negotiation between the Group and Panyu Huali. Each of the Directors (including the independent non-executive Directors) believes that the terms of the Huayou Agreement are fair and reasonable and the Huayou Agreement is in the interests of the Group and the Shareholders as a whole.

Information on the Group and Max Surplus

The Company is a holding company. The Group engages in the design and manufacture of quality paper-based packaging containers and materials, including corrugated paperboard and printed cartons for customers in the PRC. Max Surplus, a wholly-owned subsidiary of the Company, is an investment holding company.

Information on OCT (HK) and Panyu Huali

OCT (HK) is an investment company incorporated in Hong Kong.

Panyu Huali, a company incorporated in the PRC, is engaged in the printing of instruction manuals and booklets.

General

OCT (HK) owns 100% equity interest in Pacific Climax Limited, which is the controlling shareholder of the Company. Panyu Huali is an indirect non-wholly owned subsidiary of OCT (Group) which is the ultimate holding company of OCT(HK). Pursuant to Chapter 14A of the Listing Rules, OCT (HK) and Panyu Huali are connected persons to the Company. The Anhui Acquisition and the Huayou Acquisition in aggregate constitute connected transactions for the Company under Rule 14A.32 of the Listing Rules, which are subject to the reporting and announcement requirements but are exempt from independent shareholders’ approval requirements under the Listing Rules.

After the completion of the two acquisitions, both Anhui Huali and Shenzhen Huayou will become wholly-owned subsidiaries of the Company. Financial statements of Anhui Huali and Shenzhen Huayou will be consolidated into the Group’s consolidated financial statements. Since Shenzhen Huayou is already a 90% owned subsidiary of the Company, there is no change in the accounting treatment with respect to Shenzhen Huayou before and after the completion of the Huayou Acquisition.

Definitions

“Anhui Acquisition” The acquisition of the 100% equity interest of Grand Signal which wholly owns the equity interest of Anhui Huali, by Max Surplus from OCT (HK);

“Anhui Agreement”

The agreement entered into by Max Surplus and OCT (HK) on 20 January 2006 for the Anhui Acquisition;

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• “Anhui Huali”

• Anhui Huali Industrial Products Manufacturing Company Limited ( ), a wholly-foreign owned enterprise established in the PRC with limited liability;

• “Company” Huali Holdings (Group) Limited, a company incorporated in the Cayman Islands with limited liability and its shares are listed on the Stock Exchange;

• “Completion Date” the 15th working day after completion of all the conditions precedent as set out in the Anhui Agreement (or such other date as agreed between OCT (HK) and Max Surplus);

• “Directors” directors of the Company;

• “Grand Signal” Grand Signal Limited, a company incorporated in the British Virgin Islands with limited liability;

• “the Group” the Company and its subsidiaries;

• “Huayou Acquisition” the acquisition of the 10% equity interest of Shenzhen Huayou by Shanghai Huali from Panyu Huali;

• “Huayou Agreement” the agreement entered into by Shanghai Huali and Panyu Huali on 20 January 2006 for the Huayou Acquisition;

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

• “Max Surplus” Max Surplus Limited, a company incorporated in the British Virgin Islands with limited liability and is a wholly owned subsidiary of the Company;

• “OCT (HK)” Overseas Chinese Town (HK) Company Limited is a company incorporated in Hong Kong and is the sole legal and beneficial owner of the entire issued share capital of Pacific Climax Limited which in turn owns 67.185% equity interest of the Company;

• “OCT (Group)” Overseas Chinese Town Group Company ( ), a PRC state-owned company incorporated in the PRC;

• “Panyu Huali” Panyu Huali Youde Offset Printing & Packaging Company Limited ( ), a company incorporated in the PRC;

• “PRC” or “Mainland the People’s Republic of China, and for the purpose of this China” announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

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“Shanghai Huali”	Shanghai Huali Packaging Co., Ltd. (		), a
	wholly foreign-owned enterprise and indirectly		wholly-
	owned by the Company;
“Shenzhen Huali”	Shenzhen Huali Packing & Trading Co., Ltd. ( ), a wholly foreign-owned enterprise
	and indirectly wholly owned by the Company
“Shenzhen Huayou”	Shenzhen Huayou Packaging Company Limited ( ), a company incorporated in the PRC;
“Share(s)”	Shares of the Company;
“Shareholder(s)”	shareholders of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong; and
“RMB”	Renminbi, the lawful currency of the PRC.

If there is any inconsistency between the Chinese names of PRC entities, departments, facilities or titles mentioned in this announcement and their English translations, the Chinese version shall prevail.

As at the date of this announcement, the directors of the Company are: Executive Directors : Mr. Zheng Fan, Mr. Ni Zheng, Mr. Zhou Guangneng; Non-executive Director : Ms. Xie Mei; Independent non-executive Directors : Mr. Lee Kit Wah, Mr. Chen Xiangdong, Mr. Xiao Yongping.

By order of the board of Huali Holdings (Group) Limited Zheng Fan Chairman

Hong Kong, 27 January 2006

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

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