WH Group Limited — Share Issue/Capital Change 2001

Mar 1, 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.

HUEY TAI INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

(i) CAPITAL REORGANIZATION PROPOSAL

(ii) CHANGE IN THE COMPANY NAME

(iii) CANCELLATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF A NEW SHARE OPTION SCHEME

(iv) GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES

The board of directors of Huey Tai International Limited intends to put forward a capital reorganization proposal to shareholders of the company to reduce the nominal value of all the ordinary shares of HK$0.40 each in the capital of the company to HK$0.05 each.

The capital reorganization proposal will be carried out by (i) reducing the nominal value of the issued shares of the company from HK$0.40 each to HK$0.01 each by cancelling HK$0.39 paid up capital on each issued share; (ii) subdividing every unissued share of HK$0.40 into 40 unissued shares of HK$0.01 each; (iii) consolidating every five issued and unissued shares of HK$0.01 each into one share of HK$0.05; (iv) cancelling the amount of HK$48,000,000 being part of the amount standing to the credit of the share premium account of the company; (v) changing the board lot size of shares from 5,000 shares to 2,000 shares following the capital reduction, share subdivision and consolidation described above; (vi) cancelling the authorized but unissued share capital of the company of an amount equivalent to HK$1,050,000,000 after the capital reduction, share subdivision and consolidation described above. All amounts cancelled arising from the capital reduction and cancellation of part of the amount standing to the credit of the share premium account described above will be credited to the contributed surplus account of the company to set off against the deficit of the company.

The company proposes to change its name to "Sing Pao Media Group Limited" and to adopt "成報傳媒集團有限公司" for identification purpose only in order to reflect the change in ownership, management and business activities of the company.

The company also proposes to cancel the existing share option scheme of the company granted to employees and directors of the company and its subsidiaries on 8th September 1998 and to adopt a new share option scheme to authorize the board of directors to grant options and to allot and issue shares pursuant to the exercise of any options granted under the new share option scheme by the employees and directors of the company.

The board of directors would also like to propose a resolution to grant general mandates to the board of directors to exercise the powers of the company to allot and issue shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the company, and to repurchase shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the company.

THE PROPOSAL

The board of directors (the "Board") of Huey Tai International Limited (the "Company") intends to put forward a capital reorganization proposal (the "Proposal") for approval by the shareholders of the Company (the "Shareholders") at the Special General Meeting (the "SGM") to reduce the nominal value of all the issued and unissued shares from HK$0.40 each to HK$0.05 each by (i) reducing the nominal value of the issued shares of the Company (the "Shares") from HK$0.40 each to HK$0.01 each by cancelling HK$0.39 paid up capital on each issued Share (the "Capital Reduction"); (ii) subdividing every unissued Share of HK$0.40 into 40 unissued Shares of HK$0.01 each (the "Share Subdivision"); (iii) consolidating every five issued and unissued Shares of HK$0.01 each into one share of HK$0.05 (the "Consolidated Share") (the "Share Consolidation"); (iv) cancelling the amount of HK$48,000,000 from the total of about HK$50,395,000 standing to the credit of the share premium account of the Company as at 31st March 2000 (the "Share Premium Cancellation"); (v) changing the board lot size of Consolidated Shares from 5,000 Consolidated Shares to 2,000 Consolidated Shares; (vi) cancelling the authorized but unissued share capital of the Company of an amount equivalent to HK$1,050,000,000 after the Capital Reduction, Share Subdivision and Share Consolidation (the "Capital Cancellation"). All amounts cancelled arising from the Capital Reduction and Share Premium Cancellation (the "Cancelled Amounts") will be credited to the contributed surplus account of the Company to set off against the deficit of the Company for the year ending 31st March 2001.

An amount of approximately HK$610,247,028, based on 1,564,735,970 existing Shares of HK$0.40 each in issue as at the date of this announcement, will arise as a result of the proposed Capital Reduction and will be cancelled. Such cancelled amount will be credited to the contributed surplus account of the Company. After the Capital Reduction, the issued share capital will be reduced from HK$625,894,388 to about HK$15,647,360. Every unissued Share of HK$0.40 will be subdivided into 40 Shares of HK$0.01 each under the Share Subdivision. The Board also proposes to consolidate, after the Capital Reduction and Share Subdivision, every five issued and unissued Shares of HK$0.01 each to one Consolidated Share of HK$0.05.

The two convertible notes of principal amount HK$150,000,000 each have been redeemed by the Company on 19th January 2001, and the holders of the Company's share options have all surrendered their options, a total of 133,005,000 options, for cancellation for a consideration of HK$0.01 each in cash under the Company's share option offer as disclosed in the Company's announcement dated 22nd February 2001.

The existing authorized share capital of the Company is HK$1,200,000,000 divided into 3,000,000,000 Shares of which 1,564,735,970 Shares of HK$0.40 each have been issued and are credited as fully paid as at the date of this announcement. Immediately after the Proposal: (i) the authorized share capital of the Company will be reduced from HK$1,200,000,000 to HK$150,000,000 by cancelling the authorized but unissued share capital of the Company of an amount equivalent to HK$1,050,000,000; (ii) the authorized shares of the Company thereafter will then comprise of 3,000,000,000 Consolidated Shares of which 312,947,194 Consolidated Shares will be in issue and credited as fully paid based on 1,564,735,970 Shares in issue as at the date of this announcement.

In order to alleviate the difficulties arising from the existence of odd lots of the Consolidated Shares, the Company has agreed to procure an agent to match the sales and purchases of odd lots of the Consolidated Shares, details of which will be explained in the circular of the Company to be dispatched to the Shareholders in due course. The fractional entitlements, if any, of the Consolidated Shares that arise from the Share Consolidation will be aggregated and sold, and the proceeds of the sale will be retained for the benefit of the Company. For the timing of parallel trading and odd lots arrangement, please refer to the "Expected Timetable" below.

REASONS FOR THE PROPOSAL

The Shares have been recently trading below their nominal value of HK$0.40 each. It will be difficult for the Company, if suitable opportunities arise, to raise capital by issuing new Shares as long as the price of each Share continues trading below the nominal value. With a view to facilitate any capital raising when circumstances permit in the future, the Board believes that the Proposal will provide the Company with greater flexibility for the issue of new Shares in the future and is thus in the best interests of the Company and its Shareholders as a whole. However, the Board currently has no intention to raise capital by issuing new Shares while the possibility of capital raising in the future will depend on the market conditions and capital requirements of the Company. Upon implementation of the Proposal, the nominal value of the Shares will be HK$0.05 each and it is expected that the market price will be higher than the nominal value based on the closing price of HK$0.22 per Share as at 28th February 2001. The Share Consolidation will also reduce transaction costs in dealing in the Shares, as the board lot size for the Shares after the Proposal will be 2,000 Consolidated Shares. The cancellation of part of the authorized share capital of the Company from HK$1,200,000,000 to HK$150,000,000 will also reduce the amount of annual fee payable to the relevant government authorities of Bermuda.

Upon completion of the disposal of Asean Resources Holdings Limited (the "Disposal") and acquisition of media interests including Sing Pao, Komatic International Limited and China Youth Net.Com Limited (the "Acquisition") during the year, the Company and its subsidiaries (the "Group") had a diminution in the unaudited consolidated net tangible asset value of about HK$2,167,905,000 resulting from the Disposal and the Acquisition as disclosed in the Company's announcement dated 22nd January 2001 and it is expected that a deficit will be recorded for the year ending 31st March 2001. Although the Company is not able to ascertain the exact amount of deficit for the current year until the financial result for the year ending 31st March 2001 has been audited, the Company believes that there will not be any other material deficits for the current year apart from those arising from the Disposal and the Acquisition or its operations. The Board believes that it is unlikely that the Company will generate sufficient profits in the immediate future to eliminate this deficit and that it would be inappropriate for the Company to pay any dividends while this deficit remains. Accordingly, the Board proposes to credit the Cancelled Amounts to the contributed surplus account of the Company to set off against this deficit. The Cancelled Amounts may be applied by the Company in any manner permitted by the laws of Bermuda and the bye-laws of the Company including for distribution to Shareholders or writing off against any further deficit of the Company.

EFFECTS OF THE PROPOSAL

Other than the expenses incurred relating to the Proposal, implementation of the Proposal will not, of itself, alter the underlying assets, business operations, management or financial position of the Company or the interests of its Shareholders. The Board believes that the Proposal will not have a material adverse effect on the consolidated balance sheet or the net asset value of the Group as a whole.

The effects of the Proposal are summarized below:

After the Capital

Prior to the Reduction and After the Share After the Capital

Proposal Share Subdivision *** Consolidation *** Cancellation ***

Nominal value of each Share HK$0.40 HK$0.01 HK$0.05 HK$0.05

Number of authorized Shares 3,000,000,000 120,000,000,000 24,000,000,000 3,000,000,000

Authorized share capital HK$1,200,000,000 HK$1,200,000,000 HK$1,200,000,000 HK$150,000,000

Number of Shares in issue 1,564,735,970 1,564,735,970 312,947,194 312,947,194

Issued and fully paid up

share capital HK$625,894,388 HK$15,647,360 HK$15,647,360 HK$15,647,360

Number of unissued Shares 1,435,264,030 118,435,264,030 23,687,052,806 2,687,052,806

Unissued share capital HK$574,105,612 HK$1,184,352,640 HK$1,184,352,640 HK$134,352,640

Unaudited pro forma

consolidated net tangible

asset value per Share

before the Acquisition** HK$0.21 HK$0.21 HK$1.04 HK$1.04

Unaudited pro forma

consolidated net tangible

asset value per Share

after the Acquisition* HK$0.13 HK$0.13 HK$0.67 HK$0.67

* The unaudited pro forma consolidated net tangible asset value per share is calculated based on the audited consolidated net tangible asset value of the Group as at 31st March 2000, adjusted for the unaudited interim profit, the completion of the Disposal and the Acquisition which was stated in the Company's composite document dated 22nd January 2001.

** The unaudited pro forma consolidated net tangible asset value per share is calculated based on the audited consolidated net tangible asset value of the Group as at 31st March 2000, adjusted for the unaudited interim profit and the completion of the Disposal which was stated in the Company's composite document dated 22nd January 2001.

*** The Capital Reduction, the Share Subdivision, the Share Consolidation and the Capital Cancellation are conditional upon each other and figures given are for information only.

CONDITIONS OF THE PROPOSAL

The Capital Reduction, Share Subdivision, Share Consolidation and Capital Cancellation are conditional, among other things, upon:

– the passing by the Shareholders of a special resolution approving the Capital Reduction and Share Subdivision;

– the passing by the Shareholders of ordinary resolutions approving the Share Consolidation and Capital Cancellation; and

– the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares.

Assuming all the conditions of the Proposal are fulfilled and the Share Premium Cancellation is approved by a special resolution at the SGM , it is expected that the Proposal will become effective on the business day immediately following the date of the SGM, which is expected to be 3rd April 2001.

CHANGE IN THE COMPANY NAME

The Board proposes to change the Company name to "Sing Pao Media Group Limited" and to adopt "成報傳媒集團有限公司" for identification purpose only in order to reflect the change in the ownership and management of the Company and that the publication, sales and distribution of Sing Pao 成報, one of the leading Chinese newspapers widely circulated in Hong Kong, has become an important part of the Group's business. Subject to the change of name proposal becoming effective, the Company will make arrangements for free exchange of the existing share certificates for the Shareholders during the share certificate exchange period stated in the "Expected Timetable" below, and which is expected to be from 3rd April 2001 to 21st May 2001. During this period, the Shareholders are free to exchange their existing share certificates for new share certificates in the Company's new name for Consolidated Shares. Thereafter, the exchange of existing share certificates will be accepted only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each new certificate issued. However, the certificates of the existing Shares will continue to be effective as documents of title valid for trading, settlement and registration purposes.

The change in the Company name is conditional, among other things, upon the passing by the Shareholders of a special resolution at the SGM.

CANCELLATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF A NEW SHARE OPTION SCHEME

The Board considers that it is in the best interests of the Group that employees and directors of the Group should be given the opportunity to obtain equity holdings in the Company, thus enabling them to participate in the Group's prosperity and consequently providing them with an incentive to contribute further to the success of the Group. As the existing share option scheme (the "Old Scheme") which was adopted by resolution of the Shareholders on 8th September 1998 will lapse on 8th September 2001 and in view of the recent change in the management of the Company, the Board proposes to cancel the Old Scheme and to adopt a new share option scheme (the "New Scheme") at the SGM, so that the Board can utilize the New Scheme to reward the contribution from the new management of the Company. As at the date of this announcement, all the outstanding 133,005,000 options under the Old Scheme were surrendered for cancellation for a consideration of HK$0.01 each in cash under the Company's share option offer as disclosed in the Company's announcement dated 22nd February 2001. The cancellation of the Old Scheme and the adoption of the New Scheme will comply with the Chapter 17 of the Listing Rules.

The cancellation of the Old Scheme and the adoption of the New Scheme are conditional, among other things, upon:

– the passing of an ordinary resolution to cancel the Old Scheme and adopt the New Scheme at the SGM;

– the Listing Committee of the Stock Exchange granting approval of the New Scheme, the subsequent granting of options thereunder and for listing of and permission to deal in the Shares or any part thereof to be issued and allotted pursuant to the exercise of the options granted under the New Scheme; and

– if required, the consent of the Bermuda Monetary Authority to the issue of Shares on the exercise of the option granted under the New Scheme.

GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES

The Board would also like to propose resolutions at the SGM to grant general mandates to the Board to exercise the powers of the Company to allot and issue Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company and to repurchase Shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company. The Board believes that it is in the best interests of the Company and its Shareholders as a whole if the general mandates are approved by the Shareholders and granted to the Board at the SGM.

GENERAL

The Company will apply to the Listing Committee of the Stock Exchange for:

(i) the listing of, and permission to deal in, the Consolidated Shares;

(ii) approval of the New Scheme and the subsequent granting of options thereunder; and

(iii) the listing of and permission to deal in the Shares to be issued pursuant to the exercise of the options granted under the New Scheme.

Further details of the above proposals will be set out in a circular of the Company which will be posted to the Company's Shareholders as soon as practicable.

EXPECTED TIMETABLE

The expected timetable is as follows:

2001

Circular/proxy forms dispatched…………………………………………………... 10th March

Latest time for the Shareholders to

lodge forms of proxy for the SGM………………………………………. 2:30 p.m. 31st March

SGM for Shareholders to approve

the Proposal and other proposals

set out in this announcement…………………………………………. 2:30 p.m. 2nd April

Effective date of the Proposal………………………………………………………. 3rd April

First day of free exchange of certificate(s)

for existing Shares for new certificate(s)

in the Company's new name for Consolidated Shares…………………………… 3rd April

Dealings in Consolidated Shares commence…………………………………………. 3rd April

Closure of original counter for trading

in Shares in board lots of 5,000……………………………………………………. 3rd April

Temporary counter for trading in

Consolidated Shares in board lots of 1,000

Consolidated Shares in the form of

existing share certificate(s) for the Shares opens…………………………………... 3rd April

Holders of odd lots of Consolidated Shares to contact

Ms. Clara Ho of CU Securities Limited at 2801 0787

to arrange to match the sales and purchases of

odd lots of the Consolidated Shares………………………………….. 3rd April to 15th May

Original counter for trading in Consolidated Shares

in board lots of 2,000 Consolidated Shares

in the form of new share certificate(s),

for the Consolidated Shares re-opens……………………………………………. 20th April

Parallel trading commences………………………………………………………… 20th April

Last day for trading in temporary counter for

the Consolidated Shares, in board lots of

1,000 Consolidated Shares in the form of

existing share certificate(s)………………………………………………………... 15th May

Parallel trading ends…………………………………………………………………. 15th May

Last day for free exchange of certificate(s) for

existing Shares for new certificate(s) in

the Company's new name for Consolidated Shares……………………………….. 21st May

By Order of the Board

Huey Tai International Limited

Leung Man Fai

Company Secretary

Hong Kong, 28th February 2001

Please also refer to the published version of this announcement in the Hong Kong iMail.