Television Broadcasts Limited — Capital/Financing Update 2003

Sep 23, 2003

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.

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HONG TONG HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

PLACING OF NEW SHARES, LETTER OF INTENT AND RESUMPTION OF TRADING

THE PLACING

The Company and the Placing Agent entered into a placing and underwriting agreement on 19 September 2003 for the placing of 44,760,000 Placing Shares at a placing price of HK$1.18 per Placing Share to not less than six independent individual or institutional investors.

The Placing Price was arrived at after arm’s length negotiations between the Company and the Placing Agent and represents a discount of approximately 28.9 per cent. to the closing price of HK$1.66 per Share as quoted on the Stock Exchange on 19 September 2003, being the date of the Placing and Underwriting Agreement and a discount of approximately 35.7 per cent. to the average closing price of approximately HK$1.836 per Share as quoted on the Stock Exchange for the last ten trading days prior to and including 19 September 2003. The Placing Shares represent 20.00 per cent. of the existing issued share capital of the Company and approximately 16.67 per cent. of the issued share capital of the Company as enlarged by the issue of the Placing Shares.

The net proceeds to be raised from the Placing in the amount of approximately HK$51.1 million will be used for the making of future investments, inter alia, the Proposed Investment, if appropriate opportunity arises or the Proposed Investment materialises. In the event that the Proposed Investment does not materialise or no appropriate investment opportunity is identified by the Group, the net proceeds will be retained by the Group for general working capital purpose.

THE LETTER OF INTENT

The Board also announced that on 19 September 2003, HTH, an indirectly wholly- owned subsidiary of the Company, has entered into the legally-binding Letter of Intent with Angola Group relating to the acquisition of the entire interest of King Glory. Angola Group and its beneficial owners are not connected persons (as defined in the Listing Rules) to the Company.

Further announcement will be made by the Company as and when appropriate.

The Proposed Investment may or may not proceed. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

At the request of the Company, trading in the Shares was suspended with effect from 9:30 a.m. on 22 September 2003 pending the publication of this announcement. Application has been made to the Stock Exchange for resumption of trading in the Shares with effect from 9:30 a.m. on 24 September 2003.

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THE PLACING

The Placing and Underwriting Agreement dated 19 September 2003

Issuer

Hong Tong Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange

Placing Agent

The Placing is fully underwritten by Sanfull Securities Limited. The Placing Agent will charge 2.5 per cent. of the total Placing Price of the Placing Shares as the placing commission.

Placees

Not less than six independent individual or institutional investors

Independence of the Placing Agent and placees

The Placing Agent is, and the placees and their respective beneficial owners are, not connected persons (as defined in the Listing Rules) to the Company. The Directors expect that the Placing will not result in an introduction of any substantial shareholder to the Company. Further announcement will be made by the Company if there is an introduction of any substantial shareholder to the Company as a result of the Placing.

Number of Placing Shares

44,760,000 new Shares, representing 20.00 per cent. of the existing issued share capital of the Company and approximately 16.67 per cent. of the issued share capital of the Company as enlarged by the issue of the Placing Shares

Placing Price

HK$1.18 per Placing Share

The Placing Price was arrived at after arm’s length negotiations between the Company and the Placing Agent and represents:

• (i) a discount of approximately 28.9 per cent. to the closing price of HK$1.66 per Share as quoted on the Stock Exchange on 19 September 2003, being the date of the Placing and Underwriting Agreement; and

• (ii) a discount of approximately 35.7 per cent. to the average closing price of approximately HK$1.836 per Share as quoted on the Stock Exchange for the last ten trading days prior to and including 19 September 2003.

In view of the thin trading volume of Shares (with average monthly trading volume of approximately 3.7 million Shares for the past 12 months) and the reported net loss of the Group of approximately HK$40.6 million for the year ended 31 March 2003, the Directors consider that the Placing Price are fair and reasonable to the shareholders of the Company.

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Mandate to issue the Placing Shares

The Placing Shares will be issued under the general mandate granted to the Directors at the annual general meeting of the Company held on 29 August 2003. The Company confirmed that such general mandate has not been utilized prior to the date of the Placing and Underwriting Agreement.

Ranking of the Placing Shares

The Placing Shares, when fully paid, will rank pari passu in all respects with the Shares in issue at the date of allotment of the Placing Shares.

Condition of the Placing

The Placing is conditional upon the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Placing Shares.

In the event that the above condition is not fulfilled on or before 17 October 2003 or such other date as may be agreed between the Company and the Placing Agent in writing, the Placing and Underwriting Agreement will lapse and be of no further effect.

Application for listing

Application will be made by the Company to the Listing Committee of the Stock Exchange for the granting of the listing of and permission to deal in the Placing Shares.

Completion

Completion of the Placing will take place before the sixth business day after fulfillment of the condition referred to in the paragraph headed “Condition of the Placing” (or such later date as the Company and the Placing Agent may agree in writing).

Reason for the Placing and use of proceeds

The Company has not carried out any fund raising exercise within the past 12 months. The Directors consider that the Placing represents a good opportunity to raise capital for the Company while broadening the shareholders base and the capital base of the Company. The Directors consider that the Placing Price are fair and reasonable and the Placing is in the best interest of the Company and the shareholders of the Company.

As the Directors consider that sufficient funding should be raised before proceeding with the Proposed Investment, the net proceeds to be raised from the Placing in the amount of approximately HK$51.1 million will be used for the making of future investments including, inter alia, the Proposed Investment, if appropriate opportunity arises or the Proposed Investment materialises. In the event that the Proposed Investment does not materialise and no appropriate investment opportunity is identified by the Group, the net proceeds will be retained by the Group for general working capital purpose. The Company will bear the costs and expenses in connection with the Placing.

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Substantial shareholders’ interest in the Company

Shareholders YSH Investments Limited_(Note 1) Highworth Venture Limited(Note 2)_ AWH Fund Ltd. Public Total	Existing shareholding Number of Shares held Per cent. 58,916,000 26.33 54,900,000 24.53 27,366,000 12.23 82,618,000 36.92 223,800,000 100.00	Shareholding after completion of the Placing Number of Shares held Per cent. 58,916,000 21.94 54,900,000 20.44 27,366,000 10.19 127,378,000 47.43 268,560,000 100.00	Shareholding after completion of the Placing Number of Shares held Per cent. 58,916,000 21.94 54,900,000 20.44 27,366,000 10.19 127,378,000 47.43 268,560,000 100.00
			100.00

Notes:

1. Mr. Lai Sai Sang, former Chairman of the Company and existing director of subsidiaries of the Company, has a 90.4 per cent. beneficial interest in YSH Investments Limited.

2. Highworth Venture Limited is a company wholly owned by Mr. Hon Ming Kong, Chairman and executive Director.

THE LETTER OF INTENT

On 19 September 2003, HTH has entered into the Letter of Intent with Angola Group relating to the acquisition of the entire interest of King Glory. Angola Group and its beneficial owners are not connected persons (as defined in the Listing Rules) to the Company.

Pursuant to the Letter of Intent, HTH has the right to appoint accountants, valuer or other relevant parties to carrying out a due diligence review and valuation on the potential waste disposal business of King Glory. The due diligence report shall be completed within three months from the date of Letter of Intent. Angola Group agreed to grant an exclusive right to HTH for a period of three months from the date of the Letter of Intent for the purpose of negotiating of the terms of the Proposed Investment and conducting the due diligence review and valuation on the potential business of King Glory, after which the exclusive right will lapse. HTH shall determine whether to proceed with the Proposed Investment within three months from the date of the Letter of Intent. Further announcement will be made by the Company as and when appropriate.

In the event that HTH confirming not to proceed with the Proposed Investment, the Letter of Intent shall lapse and each party to the Letter of Intent shall have no liabilities thereunder.

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Subject to HTH confirming to proceed with the Proposed Investment, the parties shall enter into a formal agreement within three months from the date of the Letter of Intent. The final terms of the formal agreement, including the consideration of the Proposed Investment, have yet to be negotiated and finalised. The parties to the Letter of Intent have also agreed that the consideration of the Proposed Investment shall be satisfied in one of the following manners:

• a) by cash in full;

• b) partially by cash and partially by the allotment and issue of new Shares at an issue price of HK$1.18 per new Share; or

• c) by the allotment and issue of new Shares at an issue price of HK$1.18 per new Share in full.

The issue price of the new Shares was arrived at after arm’s length negotiations with reference to the Placing Price. As the Placing Shares will be issued under the general mandate granted to the Directors at the annual general meeting of the Company held on 29 August 2003, the issue of the new Shares in relation to the Proposed Investment, is expected to require shareholders’ approval at a special general meeting of the Company.

INFORMATION ON ANGOLA GROUP AND KING GLORY

Angola Group, a company incorporated on 18 April 2000 in British Virgin Islands with limited liability, is beneficially owned as to 25 per cent. by each of Yan Youlan, Xing Xiaolin, Chen Lei and Jin Lijing respectively. All the beneficial shareholders of Angola are not connected persons (as defined in the Listing Rules) to the Company. Angola Group and its beneficial shareholders have no shareholding in the Company.

Since the incorporation of Angloa Group in 2000, it has been mainly participated in bond and stock trading in Hong Kong. It only started to explore the waste disposal market in the PRC in 2002 and established King Glory to pursue business opportunities in that area. Angola Group has also engaged a professional consultant to conduct a professional study in the similar business in waste disposal business.

King Glory, a company incorporated on 20 August 2002 in British Virgin Islands with limited liability and wholly owned by Angola Group, has no assets and business operations and is a special purpose vehicle for entering into the Co-operation Agreement with BCS General Energy & Environment. BCS General Energy & Environment is owned as to 54.9 per cent. by China Sciences Group and as to 45.1 per cent. by 20 individuals and is a specialist in waste processing and disposal in the PRC. BCS General Energy & Environment and all its beneficial shareholders are not connected persons (as defined in the Listing Rules) to the Company.

Pursuant to the Co-operation Agreement, BCS General Energy & Environment and King Glory agreed to form joint ventures in exploring the waste disposal market in the PRC. BCS General Energy & Environment will own not more than 49 per cent. and King Glory will own not less than 51 per cent. of the registered capital of each of these joint ventures. BCS General Energy & Environment will be responsible for providing technical support and operation management for the waste incineration projects of the joint ventures. The joint ventures aim to set up a series of highly effective municipal solid waste incineration facilities by using the proprietary technology and equipment of BCS General Energy & Environment. King Glory will be responsible for making financing arrangement for the joint ventures.

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China Sciences Group, supported by the technology and expertise of BCS General Energy & Environment, has been participating in tendering projects in waste processing and disposal in various municipalities of the PRC. Currently, neither China Sciences Group nor BCS General Energy & Environment has been awarded with the relevant projects. The investment amount and other principal terms of the project will have to be reviewed and accepted by King Glory before any joint venture is established as and when China Science Group is awarded with the relevant project. So far, no joint venture has been established between King Glory and BCS General Energy & Environment and the investment amount for each joint venture has yet to be determined. However, the joint ventures, if any, will be established in the form of equity joint venture.

China Sciences Group is a large scale enterprise group established by Chinese Academy of Science. China Sciences Group was formed in January 1998 with a registered capital of RMB200 million. BCS General Energy & Environment became a member of China Sciences Group in July 2001 as a result of corporate reorganization of the enterprises of Chinese Academy of Science. The predecessor of BCS General Energy & Environment is Beijing General Energy and Power Company, which in turn was established by the Institute of Engineering Thermophysics of Chinese Academy of Science in 1980s. China Sciences Group comprises over 40 enterprises focusing on science and technology activities and engaging in a wide range of business activities including, inter alia, research and development, production and sale of products in the fields of information technology, environmental protection, energy, computer systems, medical equipment and biotechnology.

REASONS FOR THE PROPOSED INVESTMENT

The Group is principally engaged in electrical engineering contracting business, trading in electrical equipment and materials mainly in private sector in Hong Kong and the PRC and provision of corporate and business consultancy services, direct investments and securities brokerage services in Hong Kong.

Pursuant to a study from Columbia University of the United State of America, municipal solid waste is one of the major problems that affects the environmental quality and the sustainable development of the cities of the PRC and rural areas. Accordingly to a report on handling the municipal solid waste in the PRC issued Lund University in Sweden, the PRC, ranked after the USA, generated the second largest amount of municipal waste when compared with the OECD countries. In terms of municipals waste per capita per day, the PRC, ranked after the USA and Canada, generated the third largest amount of municipal waste when compared with the OECD countries. According to figures by National Bureau of Statistics of China, the amount of municipal solid waste increased from 108 million tonnes in 1996 to 135 million tones in 2001, representing an increase of 25 per cent. The shortage of municipal solid waste disposal and treatment facilities and the backward technologies causes a large amount of solid waste disposal to be untreated and dumped in the open. As a result, not only have land resources been wasted, but also there is large scale pollution of the atmosphere, water and soil.

As mentioned in the 2003 annual report of the Company, the Group has been evaluating investment opportunities in the PRC for environmental protection by using sophisticated technology to transform domestic waste into electricity fuel. The Directors believe that the Proposed Investment represents an excellent opportunity for the Company to diversify into a unique business with vast market potential. It was also mentioned in the 2003 annual report of the Company that the Group is striving to minimize the adverse impact arising from the contraction of the electrical engineering market by implementing strategies including vertical integration into construction related businesses and horizontal diversification. The Proposed Investment is in line with the corporate strategy of the Group. In addition to the shareholders’ returns expected to be generated from the waste management projects, the Directors also aim to participate in the construction of the waste incineration plants and in the electrical engineering contracting services. Accordingly, if the Proposed Investment materialises, the Directors expect that the construction of the waste incineration plants and the electrical engineering projects in relation to the Proposed Investment will be able to bring about synergy to the existing electrical engineering businesses of the Group.

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GENERAL

The Proposed Investment may or may not proceed. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the Shares.

At the request of the Company, trading in the Shares was suspended with effect from 9:30 a.m. on 22 September 2003 pending the publication of this announcement. Application has been made to the Stock Exchange for resumption of trading in the Shares with effect from 9:30 a.m. on 24 September 2003.

DEFINITIONS

“Angola Group” Angola Group Holdings Limited, a company incorporated in British Virgin Islands with limited liability

• “BCS General Energy ���������������� (Beijing China Sciences General Energy and Environment” & Environment Co., Ltd.), a company incorporated in the PRC and owned as to 54.9 per cent. by China Sciences Group and as to 45.1 per cent. by 20 individuals

• “China Science Group” ���� (China Sciences Group (Holding) Corporation, a large scale enterprise group established by ����� (Chinese Academy of Science)

• “Company” Hong Tong Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange

• “Co-operation Agreement” a co-operation entered into between King Glory and BCS General Energy and Environment dated 28 August 2003 in relation to the formation of joint venture in exploring the waste disposal market in the PRC

• “Director(s)” director(s) of the Company

• “Group” the Company and its subsidiaries

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

• “HTH” Hong Tong Hai Investments Limited, a company incorporated in Hong Kong with limited liability and is indirectly wholly owned by the Company

• “King Glory” King Glory Development Limited, a company incorporated in British Virgin Islands with limited liability and wholly owned by Angola Group

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

• “Placing” a private placing by the Placing Agent of Placing Shares at the Placing Price with independent investors

• “Placing Agent” Sanfull Securities Limited

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“Placing and Underwriting a placing and underwriting agreement dated 19 September 2003 entered into Agreement” between the Company and the Placing Agent

“Placing Price” the placing price of HK$1.18 per Placing Share “Placing Share(s)” 44,760,000 new Shares to be issued under the Placing “PRC” the People’s Republic of China

“Proposed Investment” the proposed acquisition of the entire interest of King Glory from Angola Group “Share(s)” share(s) of HK$0.10 each in the share capital of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

By Order of the Board Hong Tong Holdings Limited Hon Ming Kong Chairman

Hong Kong, 23 September 2003

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

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