Walnut Capital Limited — Share Issue/Capital Change 2002

Mar 18, 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.

HAYWOOD INVESTMENTS LIMITED

(Incorporated in the Cayman Islands with limited liability)

Placing of up to 20 million existing shares

and

Subscription of up to 20 million new shares

Placing Agents

Ever-Long Securities Company Limited

Fortuna Alliance, a substantial shareholder of the Company has entered into the Placing and Subscription Agreement for (i) the placing of up to 20 million existing Shares in the capital of the Company at the Placing Price to independent investors, and (ii) the conditional subscription of new Shares up to the same number of Placing Shares successfully placed by the Placing Agents at the Subscription Price. The Placing Price (which is the same as the Subscription Price) represents a discount of 15.66% to the closing price of HK$0.415 of the Shares as quoted on the Stock Exchange on 15 March 2002 and a discount of approximately 17.45% to the average closing price of approximately HK$0.424 of the Shares as quoted on the Stock Exchange for the ten consecutive trading days ended on 15 March 2002. The Subscription Shares represent up to 20% of the existing issued share
capital of the Company and up to approximately 16.67% of the issued share capital of the Company as enlarged by the Subscription.

Placing and Subscription Agreement dated 15 March 2002

(A) Placing

Vendor:

Fortuna Alliance Limited, a substantial shareholder of the Company. The sole owner of Fortuna Alliance is Mr. Lam Andy Siu Wing. As mentioned in the Company's announcement dated 11 December 2001, pursuant to an agreement dated 11 December 2001, Mr. Lam Andy Siu Wing agreed to sell the entire share capital of Fortuna Alliance to Mr. Tai Ah Lam, Michael, and the completion of such sale is expected to take place on or before 30 June 2002. Mr. Tai Ah Lam, Michael has consented to the Placing and Subscription.

Fortuna Alliance is independent of and not connected with Ever Harvest Investment Limited, another substantial shareholder of the Company.

Number of Placing Shares and Placing Price:

Up to 20 million existing Shares beneficially owned by Fortuna Alliance, representing up to 20% of the issued share capital of the Company, to be placed at the Placing Price of HK$0.35 per Share.

Placing agents:

The Placing Agents have agreed to use their respective best efforts to place up to 20 million Shares (8.5 million Shares by ASG and 11.5 million Shares by Ever-Long, subject to any adjustment as may be agreed between the Placing Agents). Both Placing Agents and their ultimate beneficial owners are independent third parties not connected with any of the directors, substantial shareholders and chief executive of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules).

Placement to:

More than six independent investors. None of the placees will become the substantial shareholder of the Company upon the completion of the Placing.

Independence of placees:

The placees are to be independent third parties not acting in concert or connected with Fortuna Alliance, the Company, any of the directors, chief executive, substantial shareholders of the Company or Fortuna Alliance or any of their subsidiaries or their respective associates (as defined in the Listing Rules).

Completion of the Placing:

Completion of the Placing will take place on 18 March 2002 or such other date as Fortuna Alliance and the Placing Agents may agree.

(B) Subscription

Subscriber:

Fortuna Alliance

Number of Subscription Shares and Subscription Price:

Equal to the aggregate number of Placing Shares successfully placed by the Placing Agents up to a maximum of 20 million Shares, representing up to 20% of the existing issued share capital of the Company and up to approximately 16.67% of the enlarged issued share capital of the Company as a result of the Placing and the Subscription. The Subscription Price of HK$0.35 per Share is equal to the Placing Price.

Conditions of the Subscription:

The Subscription is conditional upon :

(i) the Listing Committee of the Stock Exchange granting listing of and permission to deal in the Subscription Shares; and

(ii) completion of the Placing.

Completion of Subscription:

Completion of the Subscription will take place on the business day after the conditions of the Subscription are satisfied and not more than 14 days after the date of the Placing and Subscription Agreement. In the event that completion of the Subscription takes place after 14 days from the date of the Placing and Subscription Agreement, the Company shall comply with the connected transaction requirements under Chapter 14 of the Listing Rules.

Mandate to issue new Shares:

The Subscription Shares will be issued under the general mandate granted to the Directors under the resolutions of the shareholders of the Company dated 29 May 2001 which is sufficient for the issue of the Subscription Shares.

Ranking:

The Subscription Shares, when fully paid, will rank pari passu in all respects with the existing issued Shares.

(C) General

Placing Price:

The Placing Price of HK$0.35 per Share, representing a discount of 15.66% to the closing price of HK$0.415 of the Shares as quoted on the Stock Exchange on 15 March 2002 and a discount of approximately 17.45% to the average closing price of approximately HK$0.424 of the Shares as quoted on the Stock Exchange for the ten consecutive trading days ended on 15 March 2002. The Placing Price was arrived at after arm's length negotiation between the Company, Fortuna Alliance and the Placing Agents.

Costs and Expenses:

All reasonable legal costs and expenses incurred by Fortuna Alliance in respect of the Placing and Subscription are to be borne by the Company. Any interest earned by Fortuna Alliance on the moneys raised by the Placing, between the date of completion of the Placing and the date of completion of the Subscription, will be for the benefit of the Company.

Substantial Shareholder:

At the date hereof, Fortuna Alliance holds 25,000,000 Shares, representing 25.00% of the existing issued share capital of the Company. Immediately after completion of the Placing of 20 million Shares in full, the shareholding of Fortuna Alliance will be reduced to 5,000,000 Shares, representing 5.00% of the issued share capital of the Company. Immediately after completion of the Subscription, the shareholding of Fortuna Alliance will return to 25,000,000 Shares, representing approximately 20.83% of the enlarged issued share capital of the Company.

Effects on Shareholding Structure:

Immediately Immediately Immediately

before after Placing after

Placing and but before Placing and

Subscription Subscription Subscription

Fortuna Alliance 25.00% 5.00% 20.83%

Ever Harvest Investment Limited 25.00% 25.00% 20.83%

Public 50.00% 70.00% 58.34%

Total: 100.00% 100.00% 100.00%

Use of proceeds:

The net proceeds of the Subscription, estimated to be approximately HK$6.6 million assuming that all the Placing Shares have been placed, will be used for making investments and working capital purposes. Currently, the Company does not have any specific plan for the investments.

General:

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

Terms and Definition:

"Company" Haywood Investments Limited

"Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange

"Placing Agents" ASG Brokerage Limited ("ASG") and Ever-Long Securities Company Limited ("Ever-Long")

"Placing and a placing and subscription agreement between the

Subscription Company, the Placing Agents and Fortuna Alliance

Agreement" dated 15 March 2002 for the Placing and the Subscription

"Placing Price" the placing price of HK$0.35 per Placing Shares

"Placing Shares" up to 20 million existing Shares beneficially owned by Fortuna Alliance and to be placed pursuant to the Placing and Subscription Agreement

"Placing" the placing of the Placing Shares beneficially owned by Fortuna Alliance pursuant to the Placing and Subscription Agreement

"Shares" ordinary shares of HK$0.01 each in the share capital of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Subscription Price" the subscription price of HK$0.35 per Share, being the same as the Placing Price

"Subscription Shares" up to 20 million new Shares to be subscribed by Fortuna Alliance pursuant to the Placing and the Subscription Agreement

"Subscription" the subscription for the Subscription Shares at the Subscription Price

"Fortuna Alliance" Fortuna Alliance Limited

By Order of the Board

Haywood Investments Limited

Tai Ah Lam, Michael

Director

Hong Kong, 15 March 2002

"Please also refer to the published version of this announcement in the Hong Kong i-mail"