Wang On Group Limited — Capital/Financing Update 2001

Jul 26, 2001

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.

WANG ON GROUP LIMITED

(Incorporated in Bermuda with limited liability)

PROPOSED ISSUE OF CONVERTIBLE BOND

Placing Agent

Kingsway SW Securities Limited

The Company and the Placing Agent entered into a conditional placing agreement on 24 July 2001 pursuant to which the Placing Agent will place the Convertible Bond to not less than six Subscribers, on a fully underwritten basis, in the aggregate principal amount of HK$30,080,000.

160,000,000 Shares will fall to be allotted and issued upon full conversion of the Convertible Bond at the Initial Conversion Price, representing approximately 19.46% of the existing issued share capital of the Company and approximately 16.29 % of the enlarged issued share capital of the Company.

The Placing Agent is and the Subscribers will be independent of, and not connected with, the directors, chief executive and substantial shareholders of the Company or its subsidiaries, or an associate of any of them (as defined in the Listing Rules).

Completion of the Agreement is conditional upon fulfillment of all the conditions listed below.

The Conversion Shares will be allotted and issued under the general mandate granted to the Board at the Company's annual general meeting held on 11 September 2000.

THE AGREEMENT

The Directors are pleased to announce that the Company and the Placing Agent entered into a conditional placing agreement on 24 July 2001 pursuant to which the Placing Agent will place the Convertible Bond to not less than six Subscribers, on a fully underwritten basis, in the aggregate principal amount of HK$30,080,000.

The Placing Agent is and the Subscribers will be independent of, and not connected with, the directors, chief executive and substantial shareholders of the Company or its subsidiaries or an associate of any of them (as defined in the Listing Rules).

COMPLETION

Completion of the Agreement is conditional on the following conditions being satisfied:

(a) the granting by the Stock Exchange of the listing of, and permission to deal in, the Conversion Shares; and

(b) the government, monetary or other official or regulatory body in Bermuda granting permission for the issue of the Convertible Bond and the Conversion Shares (if any), or if no such permission is necessary, the obtaining of a legal advice from a Bermuda legal counsel stating the same.

Completion of the Agreement will take place on or before 3 business days after satisfaction of all the conditions listed above, which are expected to be fulfilled on or before 8 August 2001 (or such later date(s) as may be agreed between the parties to the Agreement in writing). If any of the above conditions has not been satisfied or waived on or before such date, the Agreement shall lapse.

PRINCIPAL TERMS OF THE CONVERTIBLE BOND

The principal terms of the Convertible Bond are summarized below:

Amount of issue

HK$30,080,000

Initial Conversion Price

The conversion price per Share under the Convertible Bond is initially HK$0.188, which is subject to adjustments.

The Initial Conversion Price represents a premium of approximately 0.53% to the closing price of HK$0.187 per Share as quoted on the Stock Exchange on 24 July 2001, being the last trading day prior to the signing of the Agreement. The Initial Conversion Price also represents a discount of 6.00% to the average closing price of HK$0.200 per Share for the last 10 trading days ended on 24 July 2001.

Interest

The Convertible Bond is a zero-coupon bond.

Maturity Date

The maturity date will be the second anniversary of the date of issue of the Convertible Bond.

Conversion provisions

The Bondholders will be entitled to exercise the right to convert the Convertible Bond into Shares at the Initial Conversion Price (subject to adjustments), at any time after the date of issue of the Convertible Bond up to the date of maturity of the Bond in amounts of not less than HK$500,000 on each conversion, save that if at any time the outstanding principal amounts of the Convertible Bond is less than HK$500,000, the whole (but not in part only) of the outstanding principal amount of the Convertible Bond may be converted at the Initial Conversion Price (subject to adjustments).

Conversion Shares

160,000,000 Shares will fall to be allotted and issued upon full conversion of all of the Convertible Bond at the Initial Conversion Price, representing approximately 19.46% of the existing issued share capital of the Company and approximately 16.29% of the enlarged issued share capital of the Company.

The Conversion Shares will rank pari passu in all respects with the Shares in issue as at the date of their allotment.

Voting

The Bondholders will not be entitled to attend or vote at any meetings of the Company by reason only of them being Bondholders.

Transferability

The Convertible Bond is freely transferable after the first six months from its date of issue to any party other than one which is connected with the directors, chief executive and substantial shareholders of the Company or any of its subsidiaries or an associate of any of them (as defined in the Listing Rules).

The Company undertakes to the Stock Exchange that it will immediately inform the Stock Exchange of any dealings in the Convertible Bond by its connected persons or their associates (as defined in the Listing Rules) for the purpose of the Listing Rules.

DIRECTORS' GENERAL MANDATE

The Conversion Shares will be allotted and issued under the general mandate granted to the Board at the Company's annual general meeting held on 11 September 2000.

REASONS FOR THE ISSUE OF THE CONVERTIBLE BOND

The Directors consider that the issue of the Convertible Bond is an appropriate means of raising additional capital for the Company since it will provide the Company with immediate funding; and if the conversion rights attached to the Convertible Bond are exercised, the shareholder base of the Company will be enlarged.

The Directors consider that the terms of the Agreement, which were arrived at after arm's length negotiations between the Company and the Placing Agent, are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

USE OF PROCEEDS

The net proceeds of this transaction are estimated to be approximately HK$29.5million, which are intended to be used by the Group as follows:

(a) approximately HK$10 million for possible acquisition of, or investment into, new business if and when the Group identifies any suitable new business for acquisition and investment;

(b) approximately HK$10 million for expansion of the commercial management business of the Group in Chinese wet markets, car parks and shopping centres; and

(c) the balance of approximately HK$9.5 million as general working capital for the businesses of the Group.

SHARE CAPITAL

As at the date of this announcement, the issued share capital of the Company was HK$8,220,609 comprising 822,060,933 Shares.

SUBSTANTIAL SHAREHOLDERS

As at the date of this announcement, the following interests of 10% or more in the issued share capital of the Company were recorded in the register of interests required to be kept by the Company pursuant to Section 16(1) of the Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong):

Percentage of

the issued share

capital as enlarged

by full conversion of

Percentage of the Convertible Bond

Number of the existing (based on the Initial

Name of shareholder Shares held issued share capital Conversion Price)

Caister Limited (Note 1) 36,314,000 4.42% 3.70%

Tang Ching Ho 9,927,645 1.21% 1.01%

Yau Yuk Yin (Note 2) 9,927,645 1.21% 1.01%

Tang Mui Fong (Note 3) 48,604,095 5.91% 4.95%

Yau Yuk Tong (Note 4) 30,506,825 3.71% 3.11%

Tang Mui Fun (Note 5) 27,236,907 3.31% 2.77%

162,517,117 19.77% 16.55%

Note 1: Mr. Tang is deemed to be interested in these Shares due to Caister Limited being wholly and beneficially owned by Mr. Tang.

Note 2: Ms. Yau is the wife of Mr. Tang.

Note 3: Ms. Tang Mui Fong is a sister of Mr. Tang.

Note 4: Mr. Yau Yuk Tong is a brother of Ms. Yau.

Note 5: Ms. Tang Mui Fun is a sister of Mr. Tang.

APPLICATION FOR LISTING

No application was or will be made for listing of, or permission to deal in, the Convertible Bond on the Stock Exchange or any other stock exchange. An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

DEFINITIONS

In this announcement, unless the content otherwise requires, the following expressions have the following meanings:

"Agreement" the conditional agreement entered into between the Company and the Placing Agent dated 24 July 2001 in respect of the placing of the Convertible Bond to independent subscribers

"business day" a day (excluding Saturday) on which banks are open for business in Hong Kong

"Board" the board of Directors

"Bondholder(s)" the holder(s) of the Convertible Bond from time to time

"Company" Wang On Group Limited, a company incorporated in Bermuda with limited liability and its Shares are listed on the Stock Exchange

"Conversion Shares" 160,000,000 Shares which will fall to be allotted and issued upon full conversion of the Convertible Bond at the Initial Conversion Price

"Convertible Bond" the convertible bond in the aggregate principal amount of HK$30,080,000 to be issued by the Company

"Directors" the directors of the Company

"Group" the Company and its subsidiaries

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

"Initial Conversion Price" HK$0.188 per Share (subject to adjustments)

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

"Mr. Tang" Mr. Tang Ching Ho, the Chairman and Managing Director of the Company

"Ms. Yau" Ms. Yau Yuk Yin, the Deputy Chairman and Deputy Managing Director of the Company

"Placing Agent" Kingsway SW Securities Limited, a securities dealer registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong)

"Share(s)" share(s) of a nominal value of HK$0.01 each in the capital of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Subscribers" the subscribers of the Convertible Bond to be procured by the Placing Agent, who will be independent of and not connected with the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or an associate of any of them (as defined in the Listing Rules)

"HK$" Hong Kong dollars

"%" per cent.

By Order of the Board

Tang Ching Ho

Chairman and Managing Director

Hong Kong, 24 July 2001

Please also refer to the published version of this announcement in the i-Mail.