Silkwave Inc — Share Issue/Capital Change 2002

Jun 13, 2002

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.

	南華集團有限公司* 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 approximately 364,680,275 Warrants of the Company at the initial subscription price of HK$0.42 per share to be granted to shareholders whose names appear on the register of members of the Company on 22 July, 2002 (other than those shareholders with registered addresses outside Hong Kong) on the basis of one Warrant for every five Shares held on the Record Date. The register of members will be closed on 22 July, 2002. A circular containing further details of the Bonus Warrants Issue will be sent to the shareholders of the Company.

On 13 June, 2002 the Directors (“Directors”) of South China Holdings Limited (the “Company”) have 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 22 July, 2002 (“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$0.025 each (“Share”) in the share capital of the Company. The Bonus Warrant will be issued in registered form in units of HK$0.42 of subscription rights entitling the holders to subscribe for one Share of the Company at a price of HK$0.42 per New Share (subject to adjustment) at any time from the date of issue (expected to be 23 July, 2002) up to and including the first anniversary date of that date (which is expected to be 23 July, 2003).

‍AMOUNT OF WARRANTS

Based on a total of 1,823,401,376 outstanding shares as at the date of this announcement, approximately 364,680,275 Warrants will be issued under the Bonus Warrants Issue. Upon full exercise of the subscription rights attached to the Warrants, approximately 364,680,275 new Shares will fall to be issued (the “New Shares”), representing approximately 20% of the Company's existing issued share capital of 1,823,401,376 Shares and approximately 17% of the Company's issued share capital of approximately 2,188,081,651 Shares as enlarged by the issue of the New Shares. The Directors will seek the approval of shareholders at the Extraordinary General Meeting of the Company (the “EGM”) for the issue of any new shares upon the exercise of the Bonus issue of Warrants.

‍WARRANT SUBSCRIPTION PRICE

The Warrants will entitle the holders to subscribe for New Shares of the Company at an initial subscription price of HK$0.42 per share in cash, subject to adjustments. The initial subscription price represents no discount to the closing price of HK$0.42 per share of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 13 June, 2002 and no discount on the average closing price per Share of HK$0.42 as quoted on the Stock Exchange for the past five trading days up to, and including, 13 June, 2002.

‍FRACTIONAL ENTITLEMENTS

Fractional entitlements to the Warrants will not be issued but will be aggregated and sold if a premium over expenses could be achieved upon such sale. The net proceeds of sale will be retained for the benefit of the Company.

‍OVERSEAS SHAREHOLDERS

The Bonus Warrant Issue will not be registered under any securities legislation outside Hong Kong. As the directors of the Company are of the view that the granting of the Warrants to members whose registered addresses on the Record Date are outside Hong Kong (“Overseas Shareholders”) would or might, in the absence of compliance with registration or other special formalities be unlawful or impractical, the Warrants will not be given to Overseas Shareholders. Warrants which would otherwise have been issued to such persons will be sold in the market as soon as practicable. Any proceeds of sale, net of expenses, will be distributed in Hong Kong dollars pro rata to such persons and posted to them, at their own risk, but any entitlement of less than HK$100 will be retained for the benefit of the Company.

‍SHARE CERTIFICATES

Certificates for the Warrants are expected to be despatched to the holders entitled thereto on or before 25 July, 2002.

‍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 50,000 units carrying rights to subscribe for 50,000 Shares and the existing board lots of the Shares is 5,000 units.

‍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 EGM 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 which may fall to be issued upon the exercise of the subscription rights attaching to the Warrants.

‍REASON FOR BONUS WARRANTS ISSUE

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 increase an equity participation in the Company. The Bonus Warrant Issue will also provide the Group with additional working capital for future expansion.

‍NET PROCEEDS

The gross proceeds of the Bonus Warrant issue, if fully subscribed, will be approximately HK$ 153 million and there is no other purpose of the use of net proceeds other than the purposes as stated in the previous paragraph.

‍DILUTION OF SHAREHOLDINGS OF THE COMPANY SHAREHOLDERS

The Directors believe there will be no material dilution on the Shareholding of the Company's Shareholders upon the Bonus Issue of Warrants.

‍CLOSURE OF REGISTER FOR ENTITLEMENTS TO BONUS WARRANTS

The register of Members will be closed on 22 July, 2002, 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 19 July, 2002.

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, FrancisCompany Secretary13 June, 2002

Hong Kong Special Administrative Region
of the People's Republic of China

* for identification only

Copy of this announcement can be obtained from our website www.sctrade.com

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