Walnut Capital Limited — Capital/Financing Update 2003

Feb 28, 2003

Haywood Investments Limited

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.

HAYWOOD INVESTMENTS LIMITED

(Incorporated in the Cayman Islands with limited liability)

PLACING OF NEW SHARES UNDER GENERAL MANDATE

On 27 February 2003, the Company has conditionally agreed to place, through its placing agent, Upbest, 24,000,000 Placing Shares to more than six professional investors who are not connected persons of the Company (as defined under the Listing Rules), at a price of HK$0.04 per Placing Share.

The Placement is fully underwritten by Upbest and will be subject to certain termination events as set out below.

The Placing Shares represent 20.00% of the existing issued share capital of the Company of 120,000,000 Shares and approximately 16.67% of the Company’s issued share capital as enlarged by the issue of the Placing Shares. The net proceeds from the Placement of approximately HK$850,000 will be used for additional working capital of the Company. The proceeds will not be utilized for investment.

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

PLACING

The Company has conditionally agreed to place, through its placing agent, Upbest, 24,000,000 Placing Shares to more than six professional investors who are not connected persons of the Company (as defined in the Listing Rules), at a price of HK$0.04 per Placing Share.

PLACING AGREEMENT DATED 27 FEBRUARY 2003 Placing agent and underwriter

Upbest is the placing agent and underwriter and will receive a placing and underwriting commission of 2.5% on the gross proceeds of the Placement. Upbest and its ultimate beneficial owner are not connected persons of the

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Company (as defined in the Listing Rules).

Placees

Upbest has agreed to procure more than six placees (independent individuals and institutional investors) who are not connected persons of the Company (as defined in the Listing Rules) to subscribe for the Placing Shares at HK$0.04 per Placing Share, failing which Upbest has agreed to subscribe for the unplaced portion of the Placing Shares. None of the Placees will become substantial shareholders of the Company after completion of the Placement.

Placing price

The placing price is HK$0.04 per Placing Share. This price was agreed after arm’s length negotiations and represents (i) a discount of approximately 23.07% to the closing price of HK$0.052 per Share quoted on the Stock Exchange on the last dealing day, before the signing of the Placing Agreement, 27 February 2003; and (ii) a discount of approximately 7.83% to the average closing price of approximately HK$0.0434 per Share as quoted on the Stock Exchange from 14 February 2003 to 27 February 2003, both dates inclusive, being the last ten full trading days immediately before the signing of the Placement Agreement.

Ranking of Placing Shares

The Placing Shares, when fully paid, will rank pari passu in all respects with the existing issued share capital of the Company. Holders of the Placing Shares will be entitled to receive all dividends and distributions which are declared, made or paid after the completion of the Placement which is expected to be on or before 20 March 2003.

Independence of the Placees

The Placees and its ultimate beneficial owners are not connected persons of the Company (as defined in the “Listing Rules”) and has no prior shareholding in the Company.

Number of Shares to be placed

24,000,000 new Shares are to be placed, representing 20.00% of the existing issued share capital of the Company of 120,000,000 Shares and approximately 16.67% of the issued share capital of the Company as enlarged by the issue of 24,000,000 Placing Shares. The Placing Shares are fully underwritten by Upbest.

General Mandate

The Placing Shares will be issued pursuant to the general mandate to allot, issue and deal with Shares granted to the directors of the Company by resolution of its shareholders passed at the Company’s annual general meeting held on 23 May 2002 and then the issued share capital of the Company was 120,000,000 Shares.

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Haywood Investments Limited

Use of Proceeds

The Company is an investment holding company. The company and its principal subsidiaries invest in listed and unlisted companies in Hong Kong and in other parts of the PRC.

The net proceeds from the Placement, after deduction of the expenses of the Placement to be borne by the Company, is approximately HK$850,000. The net proceeds will be used as additional working capital of the Company. The proceeds will not be utilized for investment.

The directors consider that the Placement is beneficial to the Company as it will increase the capital base of the Company for future business expansion and enlarge the shareholders base of the Company. The directors consider that the terms of the Placement and the Placing Price, are fair and reasonable in the interest of the Company’s shareholders and arrived at after arm’s length negotiation.

Condition of the Placement (the “Condition”)

The Placement is conditional upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Placing Shares. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares. In the event that such conditions are not fulfilled by 20 March 2003, the Placement shall cease unless another date is agreed between the placing agent, the placees and the Company.

Completion

The Placement is to be completed on the second business day after satisfaction of the Condition or such other date as the Company and Upbest may agree. The Placing Agreement will lapse if the Condition is not satisfied by 20 March 2003 unless the parties agree otherwise.

Termination Events

Notwithstanding anything contained in the Placing Agreement, if at any time on or prior to 4 p.m. on the following date of fulfillment of the Condition (“Expiry Date”):–

• (A) in the reasonable opinion of Upbest there shall have been since the date of the Placing Agreement, such a change in national or international financial, political or economic conditions or taxation or exchange controls as would be likely to prejudice materially the consummation of the Placement; or

• (B) any material breach of any of the representations and warranties by the Company as set out in the Placing Agreement comes to the knowledge of Upbest or any event occurs or any matter arises on or after the date of the Placing Agreement and prior to the date of completion which if it had occurred or arisen before the date of the Placing Agreement would have rendered any of such representations and warranties untrue or incorrect in

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any material respect or there has been a material breach by the Company of any other provision of the Placing Agreement; or

• (C) the suspension of trading of the Shares on the Stock Exchange for 7 consecutive days or more,

then and in any such case, Upbest may after consultation with the Company (to the extent that the same is reasonably practicable) terminate the Placing Agreement without liability to the Company by giving notice in writing to the Company, provided that such notice is received prior to the Expiry Date.

Application for listing

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

Reason for the Placement

In view of the current market conditions, the Directors consider that the Placement represents an opportunity to raise capital for the Company while broadening the shareholder base and the capital base of the Company.

Dilution of shareholdings of the existing substantial shareholder

The shareholding immediately before completion of the Placement and immediately after completion of the Placement are and will be as follows:

	Immediately before	Immediately before	Immediately	after the
	completion of the Placement		completion of the	Placement
	Number of		Number of
Name of Shareholders	issued Shares	%	issued Shares	%
Fortuna Alliance Limited_(note 1)_	25,000,000	20.83	25,000,000	17.36
Ever Harvest Investment Limited_(note 2)_	25,000,000	20.83	25,000,000	17.36
The Placees	–	–	24,000,000	16.67
Public	70,000,000	58.34	70,000,000	48.61
Total	120,000,000	100.00	144,000,000	100.00

Notes:

1. Fortuna Alliance Limited is a company wholly owned by Mr. Lam Andy Siu Wing.

2. Ever Harvest Investment Limited is a company wholly owned by Mr. Wong Fong Kim, who is the Chairman of the Company.

DEFINITIONS

“Board” the board of Directors; “Company”

Haywood Investments Limited, a company incorporated in Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange;

“Directors”

the directors including the independent non-executive directors of the Company;

• the Hong Kong Special Administrative Region of the PRC;

“Hong Kong”

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Haywood Investments Limited	Haywood Investments Limited
“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange;
“Placement”	the placing of 24,000,000 Placing Shares at a price of
	HK$0.04 per Placing Share pursuant to the Placing
	Agreement;
“Placing Agreement”	the placing and underwriting agreement dated 27
	February 2003 entered into between the Company and
	Upbest relating to the Placement;
“Placing Price”	HK$0.04 per Placing Share;
“Placing Shares”	24,000,000 new Shares to be placed to independent
	investors of the Company;
“PRC”	The People’s Republic of China;
“Share(s)”	Share(s) of HK$0.01 each in the share capital of the
	Company;
“Shareholder(s)”	holder(s) of Share(s);
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Upbest”	Upbest Securities Company Limited, the placing agent
	and underwriter in relation to the Placement;
“%”	per cent;
“HK$”	Hong Kong dollars;
	By order of the Board of
	Haywood Investments Limited
	Wong Fong Kim
	Chairman
Hong Kong, 27 February 2003

Please also refer to the published version of this announcement in The Standard dated on 28-2-2003.

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