RemeGen Co., Ltd. — Capital/Financing Update 2007

Aug 26, 2007

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.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of Huali Holdings (Group) Limited.

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HUALI HOLDINGS (GROUP) LIMITED 華力控股（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3366)

(I) DISCLOSEABLE AND CONNECTED TRANSACTION: ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED

(II) PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES

(III) PROPOSED CHANGE OF NAME OF THE COMPANY AND

(IV) RESUMPTION OF TRADING

Financial Adviser & Placing Agent

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SUMMARY

(I) THE SHARE TRANSFER AGREEMENT

On 21 August 2007, the Company entered into the Share Transfer Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares and the Shareholders Loan at an aggregate consideration of HK$140,000,000, to be satisfied as below:

• (i) HK$51,600,000 shall be payable by the Company to the Vendor in cash; and

• (ii) HK$88,400,000 shall be satisfied by the Company to issue and allot the Consideration Shares to the Vendor (or its nominee(s)).

Upon Completion, the Company will be interested in 49% equity interest in OCT Investments, which in turn holds 25% equity interest of Chengdu OCT.

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As the applicable percentage ratios as defined in the Listing Rules exceeds 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Vendor is an indirect controlling Shareholder, holding approximately 67.19% of the issued share capital of the Company through Pacific Climax. Under Chapter 14A of the Listing Rules, the Vendor is a connected person of the Company and therefore the Acquisition constitutes a connected transaction of the Company. The Acquisition, including the issue of the Consideration Shares by way of a specific mandate to be sought from the Independent Shareholders, are subject to the reporting and announcement requirements, and the approval of the Independent Shareholders at an extraordinary general meeting by way of poll under the Listing Rules. Pacific Climax and its associates are required to abstain from voting on the resolution(s) in respect of the Acquisition at the extraordinary general meeting.

A circular containing, among other things, details of the Acquisition together with the advice from the independent board committee of the Company and the independent financial adviser as well as a notice of the extraordinary general meeting will be despatched to the Shareholders as soon as practicable under the requirement of the Listing Rules.

(II) THE PLACING AND SUBSCRIPTION AGREEMENT

On 21 August 2007, Pacific Climax, which held approximately 67.19% of the existing issued share capital of the Company as at the date of this announcement, entered into the Placing and Subscription Agreement with the Company and the Placing Agent, pursuant to which (i) Pacific Climax has agreed to place and the Placing Agent has agreed to procure, on a fully underwritten basis, the placing of the Placing Shares, being 20,000,000 Shares, to the Placees at the Placing Price of HK$3.40 per Placing Share; and (ii) subject to fulfillment of the conditions set out in the paragraph headed “Conditions of the Subscription” below, Pacific Climax has agreed to subscribe for and the Company has agreed to allot and issue the Subscription Shares, which are equal to the number of the Placing Shares, at the Subscription Price of HK$3.40 per Subscription Share, which is equivalent to the Placing Price.

Both the Placing Shares and the Subscription Shares represent (i) 10% of the issued share capital of the Company as at the date of the Placing and Subscription Agreement; (ii) 10% of the total issued share capital of the Company immediately after the completion of the Placing but before the completion of the Subscription; (iii) approximately 9.09% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares; and (iv) approximately 8.13% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Share and the Consideration Shares.

The Subscription Shares will be allotted and issued under the general mandate to allot, issue and deal with Shares granted to the Directors by the Shareholders by a resolution passed at the annual general meeting of the Company held on 26 April 2007.

The net proceeds of the Subscription is expected to be approximately HK$65.83 million. The Company intends to use all the net proceeds as general working capital of the Group. If the Acquisition proceeds, part or all of the net proceeds may be applied for the Acquisition.

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

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(III) PROPOSED CHANGE OF COMPANY NAME OF THE COMPANY

The Board proposes to change the existing name of the Company to “Overseas Chinese Town (Asia) Holdings Limited 華僑城 (亞洲 )控股有限公司 ”, subject to the conditions set out in this announcement below.

Particulars of the Proposed Name Change together with the notice of extraordinary general meeting will be set out in the circular to be despatched to the Shareholders as soon as practicable.

(IV) RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange was suspended with effect from 9:30 a.m. on 22 August 2007 pending for the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 27 August 2007.

(I) THE SHARE TRANSFER AGREEMENT

On 21 August 2007, the Company entered into the Share Transfer Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares, representing 49% of the total issued share capital of OCT Investments, and the Shareholder Loan of HK$46,995,346, at an aggregate consideration of HK$140,000,000.

1. Principal terms of the Share Transfer Agreement

The principal terms of the Share Transfer Agreement are set out below:

Date

21 August 2007

Parties

Vendor:

Overseas Chinese Town (HK) Company Limited, a company incorporated in Hong Kong and is beneficially wholly owned by OCT Group. The principal business activity of the Vendor is investment holding and its investments cover different areas of businesses such as paper-based packaging containers, hotels, tourism and property.

Purchaser:

The Company.

Subject matter of the Share Transfer Agreement

Pursuant to the Share Transfer Agreement, the Company has conditionally agreed to purchase and the Vendor has conditionally agreed to sell (i) the Sale Shares, representing 49% of the total issued share capital of OCT Investments, free from encumbrance and together with all rights now or hereinafter attached thereto including but not limited to all dividends and distributions declared, paid or made in respect thereof on or after the date of the Share

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Transfer Agreement; and (ii) the Shareholder’s Loan. Upon Completion, the Company will be interested in 49% equity interest in OCT Investments, which in turn holds 25% equity interest in Chengdu OCT. Accordingly, the Company will be indirectly interested in 12.25% equity interest of Chengdu OCT. OCT Investments will become an associated company of the Company.

The consideration of the Acquisition

The aggregate consideration of the Acquisition payable by the Company to the Vendor on the Completion Date for the Acquisition shall be HK$140,000,000, of which:

• (i) HK$51,600,000 is payable by the Company to the Vendor in cash; and

• (ii) HK$88,400,000 shall be satisfied by the Company to issue and allot the Consideration Shares to the Vendor (or its nominee(s)).

The aggregate consideration of the Acquisition has been determined after arm’s length negotiations between the Company and the Vendor with reference to, among other things, (i) the net asset value of Chengdu OCT of RMB400 million (equivalent to approximately HK$412.37 million); and (ii) the prospect of the Project which is further elaborated in the section headed “Information on OCT Investments and Chengdu OCT” below. The Directors intends to finance the cash payment of HK$51,600,000 by internal resources of the Group. The Directors will seek a specific mandate from its Shareholders for the issue and allotment of the Consideration Shares to the Vendor or its nominee.

The Directors considered that the aggregate consideration of the Acquisition is fair and reasonable and on normal commercial terms and that the entering into the Share Transfer Agreement is in the interests of the Company and the Shareholders as a whole.

Conditions precedent of the Share Transfer Agreement

Completion of the Acquisition is conditional upon fulfillment of the conditions including but not limited to the following:

• (i) there being no material adverse impact on the legal, financial, commercial or trading position of the Target Group from the date of the Share Transfer Agreement up to the Completion Date;

• (ii) the Company being satisfactory with the due diligence results in relation to, inter alia, the finance, taxation, business, rights to its assets and other aspects of the Target Group;

• (iii) the Company having obtained the approval by the Independent Shareholders at the extraordinary general meeting in respect of the Share Transfer Agreement and the transactions contemplated under the Share Transfer Agreement including the issue of the Consideration Shares;

• (iv) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in the Consideration Shares; and

• (v) the issue of a legal opinion by the PRC legal advisers in relation to, inter alia, Chengdu OCT.

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If the conditions precedent as set out in the Share Transfer Agreement have not been fulfilled or waived by the Company (other than conditions (iii) and (iv) which may not be waived) within 6 months from the date of the Share Transfer Agreement (or such other date as the parties to the Share Transfer Agreement may agree), the provisions of the Share Transfer Agreement (other than, among others, the confidentiality clause) shall from such date become null and void.

Completion

Completion shall take place on the fifteen Business Day after the fulfillment of all the conditions of the Share Transfer Agreement (or such other date as may be agreed between the Vendor and the Company before the Completion Date).

2. Consideration Shares

The issue price of the Consideration Shares of HK$3.40 per Share represents:

• (i) a discount of approximately 10.05% to the closing price of HK$3.78 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 7.15% to the average of the closing prices of HK$3.662 per Share for the last five consecutive trading days up to and including the Last Trading Day;

• (iii) a discount of approximately 8.08% to the average of the closing prices of HK$3.699 per Share for the last ten trading days up to and including the Last Trading Day; and

• (iv) a premium of approximately 101.30% to the audited consolidated net asset value per Share of approximately HK$1.689 as at 31 December 2006 based on the latest published audited consolidated financial statements of the Group for the year ended 31 December 2006.

The issue price of HK$3.40 per Consideration Share was arrived at by the Company and the Vendor after taking into account of the closing prices of the Shares as shown above.

The Consideration Shares comprising 26,000,000 Shares represent (i) 13.0% of the existing issued share capital of the Company as at the date of this announcement; (ii) approximately 11.8% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares; and (iii) approximately 10.6% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and the Consideration Shares.

Based on the closing price of HK$3.78 per Share on the Last Trading Day, the market value of the Consideration Shares was HK$98.28 million.

3. Listing application

An application will be made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares which will rank pari passu with the existing Shares.

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4. Information on OCT Investments and Chengdu OCT

OCT Investments is a company incorporated in the British Virgin Islands with limited liability on 6 September 2005. As at the date of this announcement, OCT Investments has paid-up capital of US$100 (equivalent to approximately HK$780). OCT Investments has been whollyowned by the Vendor since its incorporation. The principal business activity of OCT Investments is investment holding. Up to the date of the Share Transfer Agreement, the Vendor has provided a non-interest bearing shareholder’s loan of HK$95,908,870 to OCT Investments. Save as holding the 25% equity interest in Chengdu OCT and the shareholder loan of HK$95,908,870, OCT Investments does not have any other investment or operations, and does not have any other loan or liabilities to the Vendor or other creditors. According to the management account of OCT Investments, as at 30 June 2007, the unaudited total assets of OCT Investments was approximately HK$95,903,518 and the unaudited net liabilities of OCT Investments was approximately HK$5,352. As Chengdu OCT has not commenced its business operation up to the date of the Share Transfer Agreement, no turnover was recorded by OCT Investments since its incorporation on 6 September 2005 up to 31 December 2006. OCT Investments had recorded loss of HK$5,360 for the period from its incorporation on 6 September 2005 to 31 December 2005, and had recorded no profits or losses (both before and after taxation and extraordinary items) for the year ended 31 December 2006.

Chengdu OCT is a company incorporated in the PRC on 31 October 2005 with a registered capital of RMB400 million (equivalent to approximately HK$412.37 million) which has been fully paid-up. As at the date of this announcement, Chengdu OCT was owned as to 38%, 35%, 25% and 2% by 深圳華僑城房地產有限公司 (Shenzhen OCT Properties Co., Ltd.), 深圳華 僑城控股股份有限公司 (Shenzhen OCT Holdings Co., Ltd.), OCT Investments, and 成都 錦鵬投資管理有限公司 (Chengdu Jinpeng Investment Management Co., Ltd.), respectively. OCT Investments has contributed RMB100 million (equivalent to approximately HK$103.09 million) as registered capital to Chengdu OCT at the date of its incorporation. Shenzhen OCT Properties Co., Ltd. and Shenzhen OCT Holdings Co., Ltd. are non-wholly owned subsidiaries of OCT Group. In March 2007, OCT Group entered into a share transfer agreement with Chengdu Jinpeng Investment Management Co., Ltd to acquire the 2% equity interest of Chengdu OCT from Chengdu Jinpeng Investment Management Co., Ltd, the acquisition of which was not completed as at the date of this Share Transfer Agreement. Based on the articles of association of Chengdu OCT, the total investment amount of Chengdu OCT is RMB780 million (equivalent to approximately HK$804.12 million). Save for the registered capital of RMB400 million (equivalent to approximately 412.37 million) which has been fully paid-up, the shareholders of Chengdu OCT are not obliged to make further capital investment in Chengdu OCT of the difference between the total investment amount of RMB780 million (equivalent to approximately 804.12 million) and the registered capital of RMB400 million (equivalent to approximately 412.37 million). The difference of RMB380 million (equivalent to approximately 391.75 million) has been financed by way of bank loans up to the date of this announcement.

The principal business activities of Chengdu OCT are the provision of the development and operation of travel facilities, management of restaurant and entertainment, organization of culture activities, stage design, manufacturing and sale of travel souvenir products, travel information services, arts training, and garden design.

Chengdu OCT entered into a land use-rights transfer agreement with 中華人民共和國四川 省成都市國土資源局 (Land Resource Bureau of Chengdu City, Sichuan Province, the PRC) on 29 September 2006, pursuant to which Chengdu OCT has agreed to purchase a plot of land

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for a consideration of approximately RMB1,833,10 million (equivalent to approximately HK$1,889.79 million). The plot of land, amounting to approximately 2,036,779 square meters, is located at both sides of Shaxi line, outer Sanhuan Road, Jinniu Disctrict, Chengdu, the PRC. The acquisition costs for the land of approximately RMB1.8 billion is payable by Chengdu OCT in cash. As at the date of this announcement, Chengdu OCT has paid approximately RMB733.24 million (equivalent to approximately HK$755.92 million) and the remaining sum of approximately RMB1,099.86 million (equivalent to approximately HK$1,133.88 million) shall be paid on or before 28 March 2008. Chengdu OCT intends to finance the remaining acquisition costs for the plot of land with bank facilities. Chengdu OCT intends to develop the Project given the tourism industry and the real estate industry are two of the core industries of Chengdu, which are highly emphasized by the local authorities. The increase in domestic purchasing power in Chengdu will also stimulate the market growth of the two industries. Hence, it will bring business opportunities to the Project. Therefore, the Directors believe that the Project has good prospects in the future.

As at the date of this announcement, save as entering into the above land use-rights transfer agreement, Chengdu OCT has not commenced any business since its incorporation. Therefore, no turnover and net profits or losses (both before and after taxation and extraordinary items) were recorded by Chengdu OCT since its incorporation on 31 October 2005 up to 31 December 2006. Chengdu OCT has not generated any revenue up to the date of this announcement. According to the management accounts of Chengdu OCT, as at 30 June 2007, the unaudited total assets of Chengdu OCT was approximately RMB865.81 million (equivalent to approximately HK$892.59 million) and the unaudited net asset value of Chengdu OCT was RMB400 million (equivalent to approximately HK$412.37 million). Pursuant to the Share Transfer Agreement, the Company has not committed to make other financial commitment other than the payment of the consideration as mentioned in the section headed “The consideration of the Acquisition” above.

5. Reasons for and the benefits of the Acquisition

The Group is principally engaged in the manufacture of quality paper-based packaging containers and materials, including corrugated paperboard and printed cartons for customer.

As stated in the annual report of the Company for the year ended 31 December 2006, since raw material prices, energy prices, labour costs and interest rates have been rising continuously on different extents, the competition in the paper packaging industry became increasingly intensive. Under such circumstances, the Group still managed to achieve a business growth and the Group will continue its existing business after completion of the Acquisition. However, the Directors consider that it would be beneficial to the Company to broaden the Group’s business horizon and new income stream by acquiring the Sale Shares. Moreover, as the jointventure partners of Chengdu OCT, Shenzhen Overseas Chinese Town Holdings Co., Ltd. and Shenzhen Overseas Chinese Town Properties Co., Ltd., have successful experience on developing and operating the metropolitan entertainment parks and high-class residential buildings, the Directors consider that the Acquisition will leverage the successful experience of the joint venture to the Group. Having considered the above, the Directors (including the non-executive Directors) consider that the terms of the Share Transfer Agreement are fair and reasonable and the Acquisition is in the interest of the Company and the Shareholders as a whole.

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6. Implications under the Listing Rules

As the applicable percentage ratios as defined in the Listing Rules exceeds 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Vendor is an indirect controlling Shareholder, holding approximately 67.19% of the issued share capital of the Company through Pacific Climax. Under Chapter 14A of the Listing Rules, the Vendor is a connected person of the Company and therefore the Acquisition constitutes a connected transaction of the Company. The Acquisition, including the issue of the Consideration Shares by way of a specific mandate to be sought from the Independent Shareholders, are subject to the reporting and announcement requirements, and the approval of the Independent Shareholders at an extraordinary general meeting by way of a poll under the Listing Rules. Pacific Climax and its associates are required to abstain from voting on the resolution(s) in respect of the Acquisition at the extraordinary general meeting.

A circular containing, among other things, details of the Acquisition together with the advice from the independent board committee of the Company and the independent financial adviser as well as a notice of the extraordinary general meeting will be despatched to the Shareholders as soon as practicable under the requirements of the Listing Rules.

(II) THE PLACING AND SUBSCRIPTION AGREEMENT

1. The Placing and Subscription Agreement

On 21 August 2007, Pacific Climax, the Company and the Placing Agent has entered into the Placing and Subscription Agreement, pursuant to which, the Placing Agent has agreed with Pacific Climax to place 20,000,000 existing Shares at the Placing Price on a fully underwritten basis. On the next Business Day after the conditions of the Subscription have been fulfilled, the Company will allot and issue to Pacific Climax the Subscription Shares, which is equal to the number of the Placing Shares that Pacific Climax placed under the Placing, at the Subscription Price. Details of the Placing and Subscription Agreement are set out below.

The Placing

Vendor

Pacific Climax, a company incorporated in the British Virgin Islands with limited liability, is a substantial Shareholder. As at the date of the Placing and Subscription Agreement, it held 134,370,000 Shares, representing approximately 67.19% of the existing issued share capital of the Company.

Placing Agent

Each of China Merchants Securities (HK) Co., Ltd. and its ultimate beneficial owner(s) is not a connected person (as defined in the Listing Rules) of and is independent of, and not connected with, the Company, any director(s), chief executive(s) or substantial shareholder(s) (as defined in the Listing Rules) of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules). The Placing Agent will receive a placing commission of 2.5% on the gross proceeds of the Placing, which was arrived at after arm’s length negotiations between the Company and the Placing Agent.

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Placees

The Placing Shares will be placed to not less than six Placees, which will be institutional, corporate and/or individual investors. The Placing Agent will use its best endeavor to ensure that the Placees and their respective ultimate beneficial owners will be third parties independent of the Company or any of its subsidiaries or any director(s), substantial shareholder(s) or chief executive (as defined in the Listing Rules) of the Company or any of its subsidiaries or any of their associates (as defined in the Listing Rules).

Number of the Placing Shares

Pursuant to the Placing and Subscription Agreement, the number of the Placing Shares shall be 20,000,000 existing Shares currently held by Pacific Climax. The Placing Shares represent (i) 10% of the total issued share capital of the Company as at the date of the Placing and Subscription Agreement; (ii) 10% of the total issued share capital of the Company immediately after completion of the Placing but before completion of the Subscription; (iii) approximately 9.09% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares pursuant to the Subscription; and (iv) approximately 8.13% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and the Consideration Shares.

Placing Price

The Placing Price of HK$3.40 per Placing Share represents

• (i) a discount of approximately 10.05% to the closing price of HK$3.78 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 7.15% to the average of the closing prices of HK$3.662 per Share for the last five trading days up to and including the Last Trading Day; and

• (iii) a discount of approximately 8.08% to the average of the closing prices of HK$3.699 per Share for the last ten trading days up to and including the Last Trading Day.

The Placing Price is determined after arm’s length negotiation between the Company, Pacific Climax and the Placing Agent with reference to the closing prices as shown above and the Board considers it fair and reasonable.

After taking into consideration of the costs and expenses of approximately HK$2.17 million in relation to the Placing and the Subscription, the net price per Placing Share is approximately HK$3.29 per Share.

The Company will bear all the costs and expenses and will reimburse Pacific Climax for all costs and expenses incurred by it in relation to the Placing and the Subscription. Any interest received by Pacific Climax in relation to the proceeds of the Placing will be kept for the benefit of the Company.

Basis of the Placing

Pursuant to the Placing and Subscription Agreement, the Placing Agent will place the Placing Shares on a fully underwritten basis.

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Rights of the Placing Shares

The Placing Shares will be sold by Pacific Climax free and clear from all liens, charges, encumbrances, claims, options and all third party rights and together with all rights attaching thereto as at the date of the Placing and Subscription Agreement, including the right to receive all dividends or other distributions hereafter declared, made or paid on the Placing Shares at any time on or after the Placing and Subscription Agreement.

Completion of the Placing

The Placing is unconditional. Completion of the Placing will take place before 4:00 p.m. on the second Business Day immediately after the date of the Placing and Subscription Agreement, or if later, the date of resumption of trading of the Company after publication of this announcement or such other time as Pacific Climax and the Placing Agent shall agree.

The Subscription

Issuer

The Company.

Subscriber

Pacific Climax.

Number of the Subscription Shares

The number of Subscription Shares shall be equivalent to the number of Placing Shares under the Placing, which is 20,000,000 new Shares, representing (i) 10% of the total issued share capital of the Company as at the date of the Placing and Subscription Agreement; (ii) 10% of the total issued share capital of the Company immediately after completion of the Placing but before completion of the Subscription; (iii) approximately 9.09% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares; and (iv) approximately 8.13% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and the Consideration Shares.

Subscription Price

HK$3.40 per Subscription Share, which is equivalent to the Placing Price.

Mandate to issue the Subscription Shares

The Subscription Shares will be allotted and issued under the general mandate to allot, issue and deal with Shares granted to the Directors by the Shareholders by a resolution passed at the annual general meeting of the Company held on 26 April 2007. Under the said general mandate, the Company is authorized to allot, issue or otherwise deal with up to 40,000,000 new Shares (representing 20% of the issued share capital of the Company as at the date of the annual general meeting). As at the date of this announcement, no Shares have been issued by the Company under the said general mandate since 26 April 2007.

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Ranking of the Subscription Shares

The Subscription Shares, when fully paid and issued, will rank pari passu in all respects among themselves and with all other Shares in issue as at the date of completion of the Subscription.

Conditions of the Subscription

The Subscription is conditional upon the occurrence of the following by not later than 3 September 2007 (or such later date as may be agreed between Pacific Climax and the Company):

• (a) completion of the Placing; and

• (b) the Listing Committee of the Stock Exchange granting or agreeing to grant listing of, and permission to deal in all of the Subscription Shares.

In the event of the conditions above not being fulfilled by 3 September 2007 (or such later date as may be agreed between Pacific Climax and the Company), the obligations and liabilities of Pacific Climax and the Company under the Subscription shall be null and void and Pacific Climax and the Company shall be released from all rights and obligations pursuant to the Subscription.

Completion of the Subscription

Completion of the Subscription will take place on the second Business Day following the fulfillment of all the conditions of the Subscription. The Subscription constitutes a connected transaction under the Listing Rules but it falls within the exemption under Rule 14A.31(3)(d) of the Listing Rules if the Subscription is completed within 14 days from the date of the Placing and Subscription Agreement (i.e. 4 September 2007).In the event that the Subscription is not completed within 14 days from the date of the Placing and Subscription Agreement, and Pacific Climax and the Company agree to extend the long stop date, the Subscription will not fall within the exemption under Rule 14A.31(3)(d) of the Listing Rules and shall be subject to the approval of independent shareholders of the Company and the Company will comply with the relevant connected transaction requirements of Chapter 14A of the Listing Rules.

Application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

3. Reasons for the Placing and the Subscription and use of the net proceeds of the Subscription

In view of the current market, the Directors (including the independent non-executive Directors) considered that the Placing and the Subscription represents an ideal opportunity for the Company to raise additional capital for its future business development, to enhance its capital base and broaden its shareholders’ base. The gross proceeds of the Subscription is expected to be HK$68 million, and the net proceeds of the Subscription is expected to be approximately HK$65.83 million. The Company intends to use such net proceeds as general working capital of the Group. If the Acquisition proceeds, part or all of the net proceeds may be applied for the Acquisition.

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The Directors (including the independent non-executive Directors) considered that the Placing and Subscription Agreement are entered into on normal commercial terms following arm’s length negotiations between the Company, Pacific Climax and the Placing Agent, and that the terms of the Placing and Subscription Agreement are fair and reasonable and are in the interest of the Company and its shareholders as a whole.

4. Fund raising activity during the preceding 12 months from the date of this announcement

The Company had not conducted any fund raising exercise during the past twelve months before the date of this announcement.

Changes in the shareholding interests of the Company

The shareholding interests of the Company as at (i) the date of the Placing and Subscription Agreement; (ii) immediately after the Placing but before completion of the Subscription; (iii) immediately after completion of the Placing and the Subscription; and (iv) immediately after completion of the Placing, the Subscription and the Acquisition are as follows:

Shareholders Pacific Climax and parties acting in conert with it Polyfairz Group Limited Public shareholders: The Placees_(Note)_ Other public Shareholders Total:	Immediately after the Immediately after Placing but before completion of the completion of the Placing and the Existing shareholding Subscription Subscription approximately approximately approximately Shares % Shares % Shares % 134,370,000 67.19 114,370,000 57.19 134,370,000 61.08 15,630,000 7.81 15,630,000 7.81 15,630,000 7.10 – – 20,000,000 10.00 20,000,000 9.09 50,000,000 25.00 50,000,000 25.00 50,000,000 22.73 200,000,000 100.00 200,000,000 100.00 220,000,000 100.00	Immediately after completion of the Placing, the Subscription and the Acquisition approximately Shares % 160,370,000 65.19 15,630,000 6.35 20,000,000 8.13 50,000,000 20.33 246,000,000 100.00	Immediately after completion of the Placing, the Subscription and the Acquisition approximately Shares % 160,370,000 65.19 15,630,000 6.35 20,000,000 8.13 50,000,000 20.33 246,000,000 100.00
			100.00

Note: No placee will become a substantial shareholder of the Company as a result of the Placing.

(III) PROPOSED CHANGE OF COMPANY NAME OF THE COMPANY

Proposed change of company name

For the purpose of reflecting the adjustment of the business development of the Company, the Directors will propose a special resolution to the Shareholders to change the existing name of the Company to “Overseas Chinese Town (Asia) Holdings Limited 華僑城 (亞洲 )控股有限 公司 ” (the “Proposed Name Change”) at the forthcoming extraordinary general meeting of the Company to be held at a date to be fixed.

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Conditions

The Proposed Name Change is subject to the satisfaction of the following conditions:

1. the passing of a special resolution by the Shareholders at an extraordinary general meeting of the Company to be convened and held, inter alia, to approve the Proposed Name Change;

2. the approval of the Proposed Name Change by the Registrar of Companies in the Cayman Islands to effect the Proposed Name Change.

Subject to the approval of the Registrar of Companies in the Cayman Islands, the Proposed Name Change shall take effect upon the passing of the special resolution by the Shareholders at the extraordinary general meeting of the Company approving the Proposed Name Change, or at such effective date as specified in the special resolution. Upon the Proposed Name Change taking effect and the receipt of the certificate of incorporation on change of name, the Company will carry out the necessary filing procedures with the Registrar of Companies in Hong Kong under Part XI of the Companies Ordinance (Chapter 32, Laws of Hong Kong). Subject to the Proposed Name Change becoming effective, the English and Chinese stock short names of the Company will also be changed. Further announcement on the change of the Company’s name and change in stock short names will be made once the Proposed Name Change has become effective.

Effects of change of name

The Proposed Name Change, once approved and after becoming effective, will not in any way affect any of the rights of any Shareholders and all existing share certificates of the Company in issue bearing the present name of the Company will, after the Proposed Name Change has become effective, continue to be effective as documents of title to the shares of the Company and will be valid for trading, settlement and registration purposes.

Accordingly, there will not be any arrangement for free exchange of existing share certificates for new share certificates under the new name. Should the Proposed Name Change become effective, all new share certificates of the Company will be issued in the new name of the Company thereafter.

(IV) RESUMPTION OF TRADING

Trading of the Shares was suspended at the request of the Company with effect from 9:30 a.m. on 22 August 2007 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 27 August 2007.

WARNING

Shareholders and potential investors should note that the Acquisition, the Placing and the Subscription which are subject to a number of conditions precedent, may or may not be completed. Shareholders and potential investors are reminded to exercise caution when dealing in the securities of the Company.

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DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise.

• “Acquisition” the acquisition of the Sale Shares and the Shareholder’s Loan by the Company from the Vendor pursuant to the terms and subject to the conditions set out in the Share Transfer Agreement

• “associate(s)” has the meaning ascribed thereto under the Listing Rules “Board” the board of Directors “Business Day” a day (other than a Saturday) on which banks in Hong Kong are open for business

• “Chengdu OCT” 成都天府華僑城實業發展有限公司 (Chengdu Tianfu OCT Industry Development Co., Ltd.), a company incorporated in the PRC on 31 October 2005, with a registered capital of RMB400 million (equivalent to approximately HK$412.37 million)

• “Company” Huali Holdings (Group) Limited, an exempted company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the main board of the Stock Exchange

• “Completion” the completion of the Share Transfer Agreement “Completion Date” the fifteen Business Day after the fulfillment or waiver of the conditions precedent of the Share Transfer Agreement (or such other date as may be agreed between the Vendor and the Company before the Completion Date)

• “connected person(s)” has the meaning ascribed thereto under the Listing Rules “Consideration Shares” 26,000,000 Shares to be allotted and issued by the Company to the Vendor (or its nominee) credited as fully paid pursuant to the Share Transfer Agreement

• “Director(s)” director(s) of the Company “Group” the Company and its subsidiaries

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Shareholders other than Pacific Climax and its associates Shareholders”

• “Last Trading Day” 21 August 2007, being the last day on which the Shares were traded on the Stock Exchange prior to suspension of trading in the Shares pending release of this announcement

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

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“OCT Group”	華僑城集團公司(Overseas Chinese Town Enterprises Co.), a company
	incorporated in the PRC and is the holding company of the Vendor
“OCT Investments”	OCT Investments Limited, a company incorporated in the British Virgin
	Islands with limited liability
“Pacific Climax”	Pacific Climax Limited, a company incorporated in the British Virgin
	Islands with limited liability, is the controlling Shareholder which held
	134,370,000 Shares, representing approximately 67.19% of the existing
	issued share capital of the Company as at the date of the Placing and
	Subscription Agreement. The entire issued share capital of the Pacific
	Climax is wholly owned by the Vendor
“Placees”	placees procured by the Placing Agent or its sub-placing agent(s), all of
	which are not connected persons (as defined in the Listing Rules) of and
	are independent of, and not connected with, the Company, any director(s),
	chief executive(s) or substantial shareholder(s) (as defined in the Listing
	Rules) of the Company or any of its subsidiaries or their respective
	associates (as defined in the Listing Rules)
“Placing”	the placing of the Placing Shares pursuant to the Placing and Subscription
	Agreement
“Placing Agent”	China Merchants Securities (HK) Co., Ltd., a licensed corporation to
	carry on business in type 1 (dealing in securities), type 2 (dealing in
	futures contracts), type 4 (advising on securities), type 6 (advising on
	corporate finance) and type 9 (asset management) of the regulated
	activities under the Securities and Futures Ordinance (Chapter 571 of
	the laws of Hong Kong)
“Placing and Subscription	the placing and subscription agreement entered into on 21 August 2007
Agreement”	by the Company, Pacific Climax and the Placing Agent in relation to
	the Placing and the Subscription
“Placing Price”	HK$3.40 per Placing Share
“Placing Shares”	20,000,000 existing Shares owned by Pacific Climax as at the date of
	the Placing and Subscription Agreement
“PRC”	the People’s Republic of China
“Project”	a metropolitan composite area which will be developed and managed by
	Chengdu OCT and contain modern theme parks, metropolitan
	entertainments, and high-class residential buildings on a plot of land
	located at both sides of Shaxi line, outer Sanhuan Road, Jinniu Disctrict,
	Chengdu City, the PRC
“Sale Shares”	49 shares of OCT Investments, representing 49% equity interest of OCT
	Investments as at the date of the Share Transfer Agreement

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“Share Transfer	the agreement for the transfer of the 49% equity interest and the
Agreement”	Shareholder’s Loan in OCT Investments from the Vendor to the Company
	dated 21 August 2007 entered into between the Vendor and the Company
“Share(s)”	share(s) of HK$0.10 each in the share capital of the Company
“Shareholder(s)”	holder(s) of the Shares
“Shareholder’s Loan”	49% of the shareholder’s loan owed by OCT Investments to the Vendor.
	As at the date of this announcement, OCT Investments has borrowed
	from the Vendor a shareholder’s loan of HK$95,908,870
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription”	the subscription for the Subscription Shares by Pacific Climax pursuant
	to the Placing and Subscription Agreement
“Subscription Price”	HK$3.40 per Subscription Share
“Subscription Shares”	20,000,000 new Shares to be subscribed by Pacific Climax under the
	Placing and Subscription Agreement, such number of the Subscription
	Shares which is equivalent to the Placing Shares
“Target Group”	OCT Investments and Chengdu OCT
“Vendor”	Overseas Chinese Town (HK) Company Limited, a company incorporated
	in Hong Kong on 31 October 1997 and the holding company of Pacific
	Climax, which is the controlling Shareholder
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“%”	per cent.
	By order of the Board
	Huali Holdings (Group) Limited
	Zheng Fan
	Chairman

Hong Kong, 24 August 2007

As at the date of this announcement, the Board comprises seven directors, namely: Mr. Zheng Fan, Mr. Ni Zheng, Ms. Xie Mei and Mr. Zhou Guangneng as executive directors; Ms. Wong Wai Ling, Mr. Chen Xiangdong and Mr. Xiao Yongping as independent non-executive directors.

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

Unless the context requires otherwise, the conversion of RMB and US$ into HK$ is based on the exchange rate of RMB1.00=HK$0.97 and US$1=HK$7.8 respectively. Such conversion should not be construed as a representation that the amount in question has been, could have been or could be converted on any particular rate at all.

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