Silkwave Inc — Share Issue/Capital Change 2000

Oct 9, 2000

Listed Company Information

SOUTH CHINA H<0265> - Announcement 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. SOUTH CHINA HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability) BONUS ISSUE OF WARRANTS The Board of the Company proposes a bonus issue of warrants of the Company to be granted to shareholders whose names appear on the register of members of the Company on 17th November, 2000 on the basis of one Warrant for every five ordinary shares in the Company then held by them. On 5th October, 2000, the Directors (`Directors') of South China Holdings Limited (the `Company') declared a bonus issue of warrants of the Company (`Warrants') to be granted to shareholders whose names appear on the register of members of the Company on 17th November, 2000 (`Record Date') (other than those shareholders with registered addresses outside Hong Kong) on the basis of one Warrant (`Bonus Warrants') for every five ordinary shares of HK$0.1 each (`Share') in the share capital of the Company. AMOUNT OF WARRANTS Approximately 91,132,538 Warrants will be issued under the Bonus Warrants Issue. Upon full exercise of the subscription rights attached to the Warrants, approximately 91,132,538 new Shares will fall to be issued (the `New Shares'), representing approximately 20% of the Company's existing issued share capital of 455,662,688 Shares and approximately 17% of the Company's issued share capital of approximately 546,795,226 Shares as enlarged by the issue of the New Shares. WARRANT SUBSCRIPTION PRICE The Warrants will entitle the holders to subscribe for new shares of the Company at a price of HK$2.2 per share in cash, subject to adjustments. The warrant exercise price represents a discount of approximately 12% to the closing price of HK$2.5 per share of the Company on The Stock Exchange of Hong Kong Limited (the `Stock Exchange') on 5th October, 2000 and a discount of approximately 10% based on the average closing price per Share of HK$2.46 as quoted on the Stock Exchange for the past five trading days up to, and including, 5th October, 2000. EXERCISE PERIOD The exercise period of the Warrants is one year from the date of issue of the Warrants. RIGHTS The New Shares to be issued upon exercise of the subscription rights attached to Warrants, when fully paid, will rank pari passu in all respects with the existing issued Shares save for any rights or entitlements to dividends or other rights or distributions the record date for which precedes the date on which the subscription rights attached to the Warrants are exercised in accordance with the terms of the Warrants. BOARD LOTS The Warrants will be traded in board lots of 10,000 units carrying rights to subscribe for 10,000 Shares. THE CONDITIONS The Bonus Warrants Issue will be conditional upon, inter alia: 1. the passing of relevant ordinary resolutions approving the Bonus Warrants Issue by the shareholders at an extraordinary general meeting of the Company to be convened shortly. 2. the Listing Committee of the Stock Exchange granting or agreeing to grant listings of, and permission to deal in, the Bonus Warrants and New Shares falling to be issued upon exercise of rights attaching to Warrants. Application will be made to the Listing Committee of the Stock Exchange for the listings of, and the permission to deal in the Bonus Warrants and the New Shares. REASON FOR BONUS WARRANTS ISSUE In view of the good prospects of the activities of the Company, the Directors consider that the Bonus Warrants Issue is in the interests of the shareholders of the Company as it provides an excellent opportunity for shareholders to participate in the Company's development. The Bonus Warrant Issue will also provide the Group with additional working capital for future expansion. CLOSURE OF REGISTER FOR ENTITLEMENTS TO BONUS WARRANTS The register of Members will be closed from 16th November, 2000 to 17th November, 2000, both days inclusive, during which period no share transfers will be registered. To qualify for the Bonus Warrants, all transfers, accompanied by the relevant share certificates, must be lodged for registration with the Company's Share Registrars, Standard Registrars Limited of 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong not later than 4:00 p.m. on 15th November, 2000. Certificates for the Warrants are expected to be despatched to the holders entitled thereto on 20th November, 2000. A circular containing further details of the Bonus Warrants Issue will be sent to the shareholders of the Company. By order of the Board Yuen Kam Tim, Francis Company Secretary 5th October, 2000 Hong Kong Special Administrative Region of the People's Republic of China