WH Group Limited — M&A Activity 2001

May 24, 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.

CAPITAL STRATEGIC INVESTMENT LIMITED	SING PAO MEDIA GROUP LIMITED
(incorporated in Bermuda with limited liability)	(incorporated in Bermuda with limited liability)
CHINA STRATEGIC HOLDINGS LIMITED	STAR EAST HOLDINGS LIMITED
(incorporated in Hong Kong with limited liability)	(incorporated in Bermuda with limited liability)
Major transaction for Capital Strategic Investment	Major and connected transaction for Sing Pao Media and connected transaction for China Strategic Holdings
Acquisition of approximately 60% interest in Sing Pao Media by the acquisition of Gold Brilliant Limited, a company beneficially owned by China Strategic Holdings and Star East Holdings, and a possible unconditional offer by Kingsway SW Securities Limited, on behalf of Upland Profits Limited, for the balance of the shares in Sing Pao Media, other than the shares in Sing Pao Media already held or agreed to be acquired by Upland Profits or parties acting in concert with it	The sale by Sing Pao Media of its media interests to a company beneficially owned by China Strategic Holdings and Star East Holdings
Financial adviser to Capital Strategic Investment:	Financial adviser to Sing Pao Media:
Kingsway Capital Limited	Anglo Chinese Corporate Finance, Limited

Acquisition and possible unconditional offer

It is announced that a conditional agreement was entered into on 18th May, 2001 between, amongst others, Capital Strategic Investment, China Strategic Holdings and Star East Holdings, under which Upland Profits Limited, a wholly owned subsidiary of Capital Strategic Investment will purchase the entire issued share capital and approximately HK$209.7 million of the shareholder loans of Gold Brilliant, a company beneficially held as to 65% by China Strategic Holdings and as to 35% by Star East Holdings. Presently, Gold Brilliant's sole asset is an approximately 74.99% shareholding in Sing Pao Media. On completion of the acquisition agreement, Gold Brilliant will hold 187,768,316 shares in Sing Pao Media representing approximately 60% of the issued share capital of Sing Pao Media and the balance of its shareholding in Sing Pao Media representing approximately 14.99% of the issued share capital of Sing Pao Media will be held as to approximately 9.74% by China Strategic Holdings and approximately 5.25% by Star East Holdings. Both China Strategic Holdings and Star East Holdings have undertaken to Upland Profits to procure the holders of the retained shares not to accept the offer in respect of these shares. The aggregate consideration payable for the entire issued share capital and the shareholder loans of Gold Brilliant is HK$206 million, equivalent to HK$1.10 per Sing Pao Media share. On completion, as required by the Takeovers Code, Kingsway SW Securities Limited will make an offer, on behalf of Upland Profits, of HK$1.10 per Sing Pao Media share in cash for all the outstanding shares in Sing Pao Media other than those Sing Pao Media shares already held or agreed to be acquired by Upland Profits or parties acting in concert with it.

The acquisition of the Sing Pao Media shares through the purchase of Gold Brilliant by Upland Profits and the offer that will be made on its behalf following the completion of the acquisition of Gold Brilliant constitutes a major transaction for Capital Strategic Investment under the Listing Rules of the Stock Exchange and, accordingly, it is subject to the approval of its shareholders. The offer for shares in Sing Pao Media will not proceed unless such approval is obtained.

Disposal

One of the conditions precedent for completion of the acquisition agreement is disposal to Expert Solution, a company beneficially owned as to 65% and 35% by China Strategic Holdings and Star East Holdings respectively, of the media interests of Sing Pao Media, being interests in Sing Pao Daily News, books and magazine publishing and an Internet portal specialising mainly in news and information in China, for a cash consideration of HK$110 million.

The disposal of its media interests by Sing Pao Media to Expert Solution constitutes a major and connected transaction for Sing Pao Media and a connected transaction for China Strategic Holdings under the Listing Rules. The disposal is, therefore, conditional upon the approval of the independent shareholders of Sing Pao Media, being those shareholders other than China Strategic Holdings, Star East Holdings, Capital Strategic Investment and their respective associates as defined in the Listing Rules and parties acting in concert with any of them. The disposal, therefore, also requires an approval by the shareholders of China Strategic Holdings. In addition, the disposal constitutes a special deal under Rule 25 of the Takeovers Code. An application will be made to the Takeovers Executive of the Securities and Futures Commission for the special deal consent. Under the Takeovers Code, the special deal has to be voted by the independent shareholders of Sing Pao Media by way of a poll. The offer for the Sing Pao Media shares will not proceed unless these approvals and consent are obtained.

Following the completion of the disposal agreement, the principal assets of Sing Pao Media will continue to be properties and securities and it is intended that Sing Pao Media will continue to be engaged in properties investment and development, and securities trading and investment.

General

Trading in the securities of Capital Strategic Investment and Sing Pao Media were suspended temporarily at the request of Capital Strategic Investment and Sing Pao Media respectively at 10:00 a.m. on Friday, 18th May, 2001 pending the publication of this announcement. Application will be made to the Stock Exchange for the resumption of the trading in such securities with effect from 10:00 a.m. on Thursday, 24th May, 2001.

Save for the above, the board of directors of Star East Holdings wishes to state that it is not aware of any other reasons for the recent increase in the price and trading volume of the shares of Star East Holdings. The main purpose for Star East Holdings to make this announcement is to enable the shareholders of Star East Holdings to appraise the above mentioned transactions and provide further details.

Warning : The acquisition, the disposal and a possible unconditional offer are conditional upon various conditions and may or may not proceed. The shareholders of Sing Pao Media and other potential investors should therefore exercise extreme caution in buying and selling Sing Pao Media shares.

Acquisition of a controlling interest in Sing Pao Media by a subsidiary of Capital Strategic Investment

Acquisition agreement

Date:	18th May, 2001
Vendors:	Good Trend Enterprises Limited, a wholly and beneficially owned subsidiary of China Strategic Holdings and Capital Deal Investments Limited, a wholly and beneficially owned subsidiary of Star East Holdings
Purchaser:	Upland Profits Limited, a wholly and beneficially owned subsidiary of Capital Strategic Investment
Vendors' guarantors:	China Strategic Holdings as guarantor of Good Trend Enterprises and Star East Holdings as guarantor of Capital Deal Investments
Purchaser's guarantor:	Capital Strategic Investment, an independent third party not connected with each of China Strategic Holdings and Star East Holdings or their respective subsidiaries, directors, chief executive, substantial shareholders and/or any of their associates

Assets to be acquired and consideration

Upland Profits will acquire from the vendors the entire issued share capital of Gold Brilliant, a company beneficially held as to 65% by Good Trend Enterprises and as to 35% by Capital Deal Investments and the shareholder loans in the aggregate sum of approximately HK$209.7 million to Gold Brilliant. Gold Brilliant will hold on completion as its sole asset 187,768,316 Sing Pao Media shares representing approximately 60% of the issued share capital of Sing Pao Media.

Presently, Gold Brilliant's sole asset is 234,675,783 shares in Sing Pao Media representing approximately 74.99% of the issued share capital of Sing Pao Media. Prior to completion, Gold Brilliant has shareholder loans due to Good Trend Enterprises and Capital Deal Investments in the aggregate sum of HK$261.8 million and Gold Brilliant will transfer a portion of its shareholding in Sing Pao Media being 46,907,467 shares representing approximately 14.99% of the issued share capital of Sing Pao Media to its present shareholders pro rata to their respective shareholdings in Gold Brilliant as repayment of the shareholder loans of HK$52.1 million so that on completion Gold Brilliant will hold approximately 187,768,316 Sing Pao Media shares representing approximately 60% of the issued share capital of Sing Pao Media and China Strategic Holdings and Star East Holdings will then hold approximately 30,489,854 and 16,417,613 Sing Pao Media shares representing approximately 9.74% and 5.25% of the issued share capital of Sing Pao Media respectively.

Under the acquisition agreement, the price payable for each Sing Pao Media share is equivalent to HK$1.10 which represents:

-- a premium of approximately 19.6% to the closing price of Sing Pao Media shares of HK$0.92 each as quoted on the Stock Exchange on 17th May, 2001, being the last trading day immediately preceding the suspension of trading in Sing Pao Media shares; and

-- a premium of approximately 50.7% to the average closing price of approximately HK$0.73 per Sing Pao Media share for the 10 consecutive trading days up to and including 17th May, 2001.

The consideration for the acquisition of the entire issued share capital of and the shareholder loans of Gold Brilliant is HK$206 million, equivalent to HK$1.10 per Sing Pao Media share. The consideration will be paid as to HK$150 million in cash on the date of completion of the acquisition agreement and the balance of HK$56 million will be satisfied by Upland Profits issuing interest free promissory notes for an amount of HK$36.4 million and HK$19.6 million to Good Trend Enterprises and Capital Deal Investments respectively. The promissory notes are repayable at the end of a six month period from the date of completion of the acquisition agreement and will be guaranteed by Capital Strategic Investment. Upland Profits will fund this acquisition from its internal resources. The terms of the acquisition were reached after arm's length negotiations and were determined primarily with reference to the underlying net asset value of Sing Pao Media with consideration being also given to its listed status.

Conditions of the acquisition agreement

Completion of the acquisition agreement is conditional upon, amongst other things:

-- the approval of the acquisition agreement and the transactions contemplated thereunder by the shareholders of Capital Strategic Investment;

-- the approval of the sale of the media interests of Sing Pao Media by its independent shareholders by way of a poll;

-- the consent from the Takeovers Executive of the Securities and Futures Commission to the sale of the media interests of Sing Pao Media which transaction constitutes a special deal under Rule 25 of the Takeovers Code; and

-- the disposal agreement becoming unconditional and being completed simultaneously with the acquisition agreement.

Option agreements

Upland Profits also entered into the two option agreements on 18th May, 2001:

Option Agreement 1

Date	:	18th May, 2001
Parties	:	(1)	Mr. Lim Eng Hock, Peter, an independent third party investor not connected with Capital Strategic Investment, the directors, chief executive, substantial shareholders of Capital Strategic Investment or any of its subsidiaries (including Sing Pao Media) and/or any of their respective associates
		(2)	Upland Profits
Option Period	:	The 36-month period after the expiry of the 6-month period after completion of the Acquisition Agreement or such shorter period as agreed by Upland Profits in writing. The option will lapse after such 36-month period if not exercised and the relevant consideration paid will be forfeited.
Call Option	:	Subject to, amongst other things, completion of the acquisition agreement, Upland Profits has agreed to grant to Mr. Lim Eng Hock, Peter, an option pursuant to which Mr. Lim Eng Hock, Peter, may require Upland Profits to procure the transfer to Mr. Lim Eng Hock, Peter, all or part of 28,165,247 shares in Sing Pao Media representing approximately 9% in the issued share capital of Sing Pao Media at an aggregate consideration of approximately HK$31,582,000. These option shares will be transferred at a price not less than HK$1.10 per Sing Pao Media share. Mr. Lim Eng Hock, Peter may exercise the option on one or more than one occasion. Approximately HK$23 million will be paid upon completion of the acquisition agreement. The remaining balance of approximately HK$8.5 million will be paid 6 months after completion of the acquisition agreement.
Termination	:	Under no circumstances can Mr. Lim Eng Hock, Peter terminate the option under the option agreement 1.

Option Agreement 2

Date	:	18th May, 2001
Parties	:	(1)	Goodstar International Limited, a company wholly and beneficially owned by Mr. Chan Kai Kong, an independent third party investor not connected with Capital Strategic Investment, the directors, chief executive, substantial shareholders of Capital Strategic Investment or any of its subsidiaries (including Sing Pao Media), and/or any of their respective associates
		(2)	Upland Profits
Option Period	:	The 36-month period after the expiry of the 6-month period after completion of the acquisition agreement or such shorter period as agreed by Upland Profits in writing. The option will lapse after such 36-month period if not exercised and the relevant consideration paid will be forfeited.
Call Option	:	Subject to, amongst other things, completion of the Acquisition Agreement, Upland Profits has agreed to grant to Goodstar International an option pursuant to which Goodstar International may require Upland Profits to procure the transfer to Goodstar International all or part of 9,388,415 shares in Sing Pao Media representing approximately 3% in the issued share capital of Sing Pao Media at an aggregate consideration of approximately of HK$10,528,000. These option shares will be transferred at a price not less than HK$1.10 per Sing Pao Media share. Goodstar International may exercise the option on one or more than one occasion. Approximately HK$7.7 million will be paid upon completion of the acquisition agreement. The remaining balance of approximately HK$2.8 million will be paid 6 months after completion of the acquisition agreement.
Termination	:	Under no circumstances can Goodstar International terminate the option under the option agreement 2.

The directors of Capital Strategic Investment consider that the option agreements can provide an opportunity for Capital Strategic Investment to broaden the shareholders’ base in Sing Pao Media. The terms of the option agreements were arrived at after arm’s length negotiations. Mr. Lim Eng Hock, Peter and Mr. Chan Kai Kong are not connected with each other.

The disposal of the media interests of Sing Pao Media

Disposal agreement

Date	:	18th May, 2001
Vendor	:	Sing Pao Media
Purchaser	:	Expert Solution Limited, a company beneficially owned as to 65% and 35% by China Strategic Holdings and Star East Holdings respectively.

Assets to be disposed

The media interests of Sing Pao Media comprise principally:

-- the printing and publishing business of Sing Pao Daily News, a general interest daily newspaper published in Hong Kong;

-- Komatic International Limited, a wholly owned subsidiary of Sing Pao Media, which owns Wide Angle Press Limited which publishes Wide Angle magazine, a current affairs magazine sold in Hong Kong and China and Wah Fung Book Store Limited which publishes books; and

-- China Youth Net.Com Limited, a wholly owned subsidiary of Sing Pao Media, which owns a 60% equity interest in a joint venture company which operates an Internet portal catering for users interested in news and information mainly about China.

Shortly before its acquisition by Sing Pao Media, the undertaking of Sing Pao Daily News had been acquired jointly by China Strategic Holdings and Star East Holdings. Before that date no audited accounts of the assets which now comprise the undertaking of Sing Pao Daily News have been prepared.

The audited net tangible asset value of Sing Pao Media was approximately HK$2,447 million as at 31st March, 2000. The net loss before and after taxation and minority interests for Sing Pao Media are approximately HK$870 million and HK$677 million respectively for the year ended 31st March, 1999 and its net profit before and after taxation and minority interests are approximately HK$71 million and HK$19 million respectively for the year ended 31st March, 2000.

Based on their audited accounts, Wide Angle Press and Wah Fung Book Store made an aggregate loss attributable to its shareholders of HK$427,017 and HK$86,783 and HK$466,378 and HK$26,657 for the financial years ended 31st December, 1998 and 31st December, 1999 respectively. As at 31st December, 1998, the audited net assets of Wide Angle Press and Wah Fung Book Store was HK$5,597,583 and HK$634,956 respectively. As at 31st December, 1999 the audited net assets of Wide Angle Press and Wah Fung Book Store was HK$5,131,205 and HK$608,299 respectively.

Based on the audited accounts, China Youth Net.Com made a loss attributable to its shareholders of HK$5,250 and HK$5,490 for the financial years ended 31st December, 1998 and 31st December, 1999 respectively. As at 31st December, 1998 and 31st December, 1999 the audited net liabilities of China Youth Net.Com was HK$95,136 and HK$100,626 respectively.

It should be noted that the above financial information of Sing Pao Media does not represent the changes in corporate development of Sing Pao Media since the last financial year ended 31st March, 2000. The shareholders of Sing Pao Media and other potential investors should therefore exercise extreme caution in interpreting these figures, buying and selling Sing Pao Media shares based on the above financial information.

Consideration and conditions of the disposal agreement

The consideration for the disposal of the media interests of Sing Pao Media is HK$110 million payable in cash on completion, which will take place simultaneously with the completion of the acquisition agreement. The terms of the disposal were reached after arm's length negotiations and were determined primarily with reference to the original acquisition price paid by Sing Pao Media on 19th January, 2001. China Strategic Holdings and Star East Holdings will fund their purchase in full by using the proceeds of the sale of their interests in Gold Brilliant.

The disposal agreement is conditional upon all the conditions to which the acquisition agreement is subject being fulfilled.

It would be noted that China Strategic Holdings and Star East Holdings were not prepared to sell their controlling interest in Sing Pao Media, unless they were to retain their ownership of Sing Pao Media’s media interests. Capital Strategic Investment, on the other hand, was not prepared to acquire a controlling interest in Sing Pao Media if it retains its media interests which Capital Strategic Investment is not interested in. As a result, Capital Strategic Investment acquired the entire issued share capital and the shareholder loans of Gold Brilliant but not the media interests of Sing Pao Media. The disposal of media interests of Sing Pao Media to Expert Solution constitutes a connected transaction for China Strategic Holdings and its shareholders’ approval is required to approve such disposal.

Special deal consent

The disposal of the media interests in Sing Pao Media constitutes a special deal under Rule 25 of the Takeovers Code and hence requires consent from the Takeovers Executive. An application will be made to the Takeovers Executive for the special deal consent which, if given, will be subject to the independent financial adviser to Sing Pao Media stating that in its opinion the terms of the disposal agreement are fair and reasonable and the disposal agreement being approved by the independent shareholders at a special general meeting of Sing Pao Media on vote taken by way of a poll.

Possible unconditional offer for the Sing Pao Media shares

When the acquisition agreement is completed, Upland Profits and parties acting in concert with it will be interested in approximately 60% of the issued share capital of Sing Pao Media and Upland Profits will be obliged under Rule 26 of the Takeovers Code to extend a mandatory unconditional general offer to the other shareholders of Sing Pao Media. In this event, in compliance with its obligations under the Takeovers Code, Kingsway Securities, on behalf of Upland Profits, will make an offer to acquire all the outstanding shares in Sing Pao Media other than those already held or agreed to be acquired by Upland Profits or parties acting in concert with it at a price of HK$1.10 per Sing Pao Media share payable in cash which is the same as the effective price as was paid for each share in Sing Pao Media held by Gold Brilliant under the acquisition agreement. In this regard, it should be noted that the offer price of HK$1.10 per Sing Pao Media share is equivalent to the offer price of HK$0.22 per Sing Pao Media share under the offer made by Anglo Chinese Corporate Finance, Limited and CEF Capital Limited on behalf of Gold Brilliant in January 2001 prior to the subsequent consolidation of Sing Pao Media shares on the basis of 5 then existing ordinary shares into 1 new ordinary share on 3rd April, 2001. Upland Profits has confirmed that neither it nor parties acting in concert with it has dealt in any shares in Sing Pao Media and owned any Sing Pao Media shares during the six months preceding the date of this announcement.

By accepting the offer, the shareholders of Sing Pao Media will sell their shares and all rights attached to them to Upland Profits, including their rights to receive all dividends and distributions declared, made or paid on or after the date of the acquisition agreement.

Sing Pao Media has no outstanding convertible securities or options in issue as at the date of this announcement.

Based on the 125,178,878 Sing Pao Media shares representing approximately 40.0% of the entire issued share capital of Sing Pao Media which are subject to the possible offer, the offer is valued at approximately HK$137.7 million. However, both China Strategic Holdings and Star East Holdings have irrevocably undertaken to Capital Strategic Investment to procure the holders of the retained shares not to accept the offer in respect of those shares. Kingsway Capital is satisfied that there are sufficient financial resources available to Upland Profits to satisfy full acceptance of the possible offer.

Condition of the offer

The offer, if and when made, will be unconditional in all respects.

Stamp duty

Sellers' ad valorem stamp duty at the rate of HK$1.125 per every HK$1,000 or part thereof of the consideration arising on acceptance of the offer and the transfer of the Sing Pao Media shares will be payable by accepting shareholders and such amounts will be deducted from the consideration paid to accepting shareholders.

Shareholding structure of Sing Pao Media

The following charts summarise the shareholding structure of Sing Pao Media immediately before and after the completion of the acquisition agreement and the disposal agreement but before the making of the offer:

Immediately before the completion of the acquisition agreement and the disposal agreement

Immediately after the completion of the acquisition agreement and the disposal agreement

Nature of business of Capital Strategic Investment

Capital Strategic Investment is engaged in three principal areas of activity, being:

-- the manufacture of computers and related products;

-- the provision of online advertising networks, media buying and technology related businesses; and

-- investments in local and mainland property market and strategic investments.

Nature of business of China Strategic Holdings

China Strategic Holdings is an investment holding company which, apart from its investment in Sing Pao Media, is engaged principally in various investments including tyres manufacturing through its New York listed subsidiary, China Tire e-commerce.com Limited, property development and investment, and infrastructure investment principally through its Hong Kong listed subsidiary, China Land Group Limited.

Sing Pao Media after the completion of the disposal agreement and the intention of the offeror regarding its future

Sing Pao Media's principal business has for many years been properties investment and development and securities trading and investment. Following the completion of the disposal agreement, the principal assets of Sing Pao Media will continue to be properties and securities and it is intended that Sing Pao Media will continue to be engaged in properties investment and development, and securities trading and investment. The Sing Pao Media group currently has an interest in a property in Sai Kung, New Territories, Hong Kong for future development and it also holds a number of properties including residential premises, shop, office premises and carparks for investment or sale in Hong Kong.

Capital Strategic Investment believes in the positive long-term prospects of the real estate property market throughout Asia, and intends to exploit opportunities in strategic land and property investments and developments within this region. The regional economies are stabilizing and improving following the Asian economic slowdown in 1998. As the regional economies continue their recovery and market confidence continues to improve, property and land assets are expected to appreciate in both capital and rental values. Capital Strategic Investment believes that, in view of the recovery of economy in the Asian region, this acquisition will enable Capital Strategic Investment to focus more on strategic potential real estate projects. The directors of Capital Strategic Investment intend to use the proceeds from the disposal of the media interest as the general working capital for the Sing Pao Media group.

There is no existing plan for Capital Strategic Investment to inject any of its existing assets or businesses into Sing Pao Media or its subsidiaries.

In order to reflect the disposal of its media interests, Capital Strategic Investment proposed that the company's name will be changed so that it does not include the words “Sing Pao Media”.

Directors of Sing Pao Media

It has been agreed that following the closing of the offer, all the current directors on the board of Sing Pao Media, being Messrs. Cheung Kwok Wah, Tong Chin Shing, Wong Lai Shun, Benny, Tsang Chi Wai, Eric, Lee Peng Fei, Allen, Tse Wan Chung, Philip and Ms. Alice Choi will resign. Once the offer document is posted, it is expected that, Mr. Choo Yeow Ming and Ms. Ma Wai Man, Catherine, being nominees of Capital Strategic Investment, will be appointed as executive directors to the board. The other additional directors whom Capital Strategic Investment intends to nominate to the board of Sing Pao Media have not yet been determined but at least two independent non-executive directors will be appointed as soon as practicable. However, it is the intention of Capital Strategic Investment that the daily operations and management of the remaining business of Sing Pao Media will continue to be carried out by the existing management of Sing Pao Media together with the two new executive directors and any subsequent appointees following their appointment.

Particulars of Mr. Choo Yeow Ming and Ms. Ma Wai Man, Catherine are as follows:

Mr. Choo Yeow Ming, the executive chairman of Capital Strategic Investment, and is a senior consultant of the U.S. law firm, Pillsbury Winthrop. A graduate of Harvard University Law School and University of Malaya Faculty of Law, Mr. Choo specializes in Capital Markets, Securities as well as Merger and Acquisitions. Mr. Choo has also been involved in China related transactions since 1980 and advises many Chinese governmental entities on legal aspects on merger and acquisition and fund raising transactions.

Ms. Ma Wai Man, Catherine, an executive director and the company secretary of Capital Strategic Investment, is a graduate of the City University of Hong Kong. She is a chartered secretary and a member of the Association of Chartered Certified Accountants. Ms. Ma has extensive management experience in companies with diversified interests ranging from manufacturing, telecommunications, to infrastructure and property investments. She had also held executive directorship in a number of companies listed in local and overseas exchanges before joining Capital Strategic Investment.

The directors of Capital Strategic Investment intend that there will be no material changes to the existing management and employees of Sing Pao Media group as a result of the acquisition and the offer.

Maintenance of the listing status of Sing Pao Media

It is the intention of Capital Strategic Investment to maintain the listing of Sing Pao Media on the Stock Exchange after closing of the offer. Capital Strategic Investment has undertaken and the new directors to be appointed to the board of Sing Pao Media will undertake to the Stock Exchange that appropriate steps following the close of the offer will be taken to ensure that not less than 25% of the shares in Sing Pao Media will be held by the public. When the offer closes, should there be less than 25% of the Sing Pao Media shares in public hands, the directors of Capital Strategic Investment presently intend to take appropriate steps which may include, placing down its shareholding interest in Sing Pao Media to independent third parties within one month after closing of the offer. The Stock Exchange has stated that it will monitor closely trading in the Sing Pao Media shares if, at the close of the offer, less than 25% of the Sing Pao Media shares are held by the general public. If the Stock Exchange believes that:

-- a false market exists or may exist in the Sing Pao Media shares; or

-- there are too few Sing Pao Media shares in public hands to maintain an orderly market,

then it will consider exercising its discretion to suspend trading in the Sing Pao Media shares. In this connection, it should be noted that upon completion of the offer, there may be insufficient public float for the Sing Pao Media shares and, therefore, trading in the Sing Pao Media shares may be suspended until a sufficient level of public float is attained.

The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by Sing Pao Media. The Stock Exchange has indicated that it has the discretion to require Sing Pao Media to issue a circular to its shareholders irrespective of the size of any proposed transactions, particularly when such proposed transactions represent a departure from the principal activities of Sing Pao Media. The Stock Exchange also has the power to aggregate a series of transactions of Sing Pao Media and any such transactions may result in Sing Pao Media being treated as if it were a new listing applicant.

Reasons for the acquisitions of the media interests of Sing Pao Media

The media interests of Sing Pao Media were sold to it by China Strategic Holdings and Star East Holdings under an agreement entered into on 17th November, 2000 and completed in January 2001. Since that time, it has become apparent to China Strategic Holdings and Star East Holdings that the development of these assets are likely to be best achieved through the effective combination of traditional print media publication and online publication. This is likely to be achieved through the development by it of a greater online publishing capability or by the acquisition of, or amalgamation with, online publishing businesses. As an initial step in this development, the directors of China Strategic Holdings consider that the media interests should not be indirectly held through another listed company, which the directors of Star East Holdings agree upon it. The completion of the acquisition agreement and disposal agreement will achieve this objective.

Since the effective consideration to be received for the shares in Sing Pao Media through the sale of its interest in Gold Brilliant is the same as the consideration effectively paid for them by China Strategic Holdings and Star East Holdings, the sale of its interest in Gold Brilliant is not expected to give rise to a significant profit or loss.

General

As the disposal agreement constitutes a major and connected transaction for Sing Pao Media under the Listing Rules and a special deal under the Takeovers Code respectively which both of them require shareholders to be independently advised, a committee of the board of Sing Pao Media will be formed for this purpose. An independent financial adviser will be appointed to advise this independent board committee. A circular will be despatched to the shareholders of Sing Pao Media as soon as practicable.

As the acquisition constitutes a major transaction for Capital Strategic Investment under the Listing Rules, it is subject to the approval of the shareholders of Capital Strategic Investment and the offer will not proceed unless such approval is obtained. A circular, among other things, containing details of the acquisition and a notice of special general meeting will be despatched to the shareholders of Capital Strategic Investment as soon as practicable.

As the disposal constitutes a connected transaction for China Strategic Holdings under the Listing Rules, it is subject to the approval of the shareholders of China Strategic Holdings. A circular containing, among other things, details of the disposal of media interest by Sing Pao Media, advice of an independent financial adviser on the terms of the disposal and a notice of extraordinary general meeting will be despatched to the shareholders of China Strategic Holdings as soon as practicable.

Immediately following completion of the acquisition agreement, offer documents containing, among other things, detailed terms of the offer and procedures for acceptance of the offer, will be sent to the shareholders of Sing Pao Media.

Save for the above, the board of directors of Star East Holdings wishes to state that it is not aware of any other reasons for the recent increase in the price and trading volume of the shares of Star East Holdings. The main purpose for Star East Holdings to make this announcement is to enable the shareholders of Star East Holdings to appraise the above mentioned transactions and provide further details.

Kingsway Capital is advising Capital Strategic Investment and, Kingsway SW Securities, will make the offer on behalf of Upland Profits, if required.

Anglo Chinese is advising Sing Pao Media.

At the request of their respective boards, trading in the listed securities of Capital Strategic Investment and Sing Pao Media were suspended at 10:00 a.m. on Friday, 18th May, 2001. Application will be made to the Stock Exchange for the resumption of trading on the Stock Exchange in these securities with effect from 10:00 a.m. on Thursday, 24th May, 2001.

By order of the board
Capital Strategic Investment Limited
Ma Wai Man, CatherineExecutive Director

By order of the board
Sing Pao Media Group Limited
Tong Chin ShingExecutive Director

By order of the board
China Strategic Holdings Limited
Lien Kait LongExecutive Director

By order of the board
Star East Holdings Limited
Chau Mei Wah, RosannaManaging Director

Hong Kong, 23rd May, 2001

The directors of Capital Strategic Investment jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Sing Pao Media, China Strategic Holdings and Star East Holdings and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement other than those relating to Sing Pao Media, China Strategic Holdings and Star East Holdings have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

The directors of Sing Pao Media jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Capital Strategic Investment, China Strategic Holdings and Star East Holdings and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement other than those relating to Capital Strategic Investment, China Strategic Holdings and Star East Holdings have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

The directors of China Strategic Holdings jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Capital Strategic Investment, Sing Pao Media and Star East Holdings and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement other than those relating to Capital Strategic Investment, Sing Pao Media and Star East Holdings have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

The directors of Star East Holdings jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to Capital Strategic Investment, Sing Pao Media and China Strategic Holdings and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement other than those relating to Capital Strategic Investment, Sing Pao Media and China Strategic Holdings have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.