WH Group Limited — Share Issue/Capital Change 2002

Jan 9, 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.

PREMIUM LAND LIMITED

策略置地有限公司*

(Incorporated in Bermuda with limited liability)

Financial Adviser

KINGSTON CORPORATE FINANCE LIMITED

SUBSCRIPTIONS OF NEW SHARES

AND

CONNECTED AND DISCLOSEABLE TRANSACTION -

PROPOSED ACQUISITION OF PROPERTY INTEREST

On 4 January 2002, the Company entered into the Subscription Agreement under which the Subscriber will subscribe for a total of 74,980,000 new Shares at the Subscription Price of HK$0.60 per Share. On the same date, Super Target entered into the S&P Agreement under which Super Target conditionally agreed to acquire from the Vendors 51% interest in SHWL.

The Subscription Shares represent about 20% of the Company's existing issued share capital and about 16.67% of the Company's issued share capital as enlarged by the Subscription.

The Subscription is conditional and is subject to conditions set out under "Conditions of the Subscription'' below.

Mr. Chen is independent of and not connected with the chief executive, directors or substantial shareholders of the Company or its subsidiaries or any of their respective associates. As at the date of this announcement, Mr. Chen has no shareholding in the Company.

The Subscription Price was agreed after arm's length negotiations after taking into account the current market price of the Shares and the net asset value per Share. The Subscription Price represents (i) a discount of 52% to closing price of the Shares quoted on the Stock Exchange on 4 January 2002, being the date of the Subscription Agreement; and (ii) a discount of about 48.72% to the average closing price of the Shares as quoted on the Stock Exchange for the ten trading days ended 4 January 2002.

The Company intends to use the net proceeds from the Subscription of about HK$44 million to finance the Acquisition and the remaining balance as additional general working capital of the Group.

The Company is currently owned as to 32.06% by United Jumbo Limited. Subject to completion of the Subscription Agreement, the Company will be owned as to about 26.72% by United Jumbo Limited and as to about 16.67% by the Subscriber.

Super Target entered into the S&P Agreement with the Vendors in which the Vendors conditionally agreed to sell to Super Target and Super Target conditionally agreed to acquire from the Vendors 51% interest in SHWL for a consideration of HK$43.85 million. Upon completion of the Acquisition, the Company will indirectly hold 51% interests in the share capital of SHWL. Completion of the S&P Agreement is conditional and is subject to conditions set out under "Conditions of the Acquisition'' below.

The terms of the S&P Agreement and the Subscription Agreement have been negotiated on an arm's length basis. The Directors consider that the terms of the S&P Agreement and the Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and that such transactions are in the interest of the Company.

Mr. Chen, being one of the Vendors, will beneficially own about 16.67% of the Company's issued share capital after the completion of the Subscription and become a substantial shareholder of the Company. Mr. Chen is therefore a connected person of the Company under the Listing Rules. The proposed Acquisition pursuant to the S&P Agreement constitutes a connected and discloseable transaction for the Company under the Listing Rules and requires approval of the Independent Shareholder at the SGM.

At the request of the Company, dealings in the Shares on the Stock Exchange were suspended with effect from 10:00 a.m. on 7 January 2002 pending the release of this announcement. Application has been made for the resumption of trading in the Shares on the Stock Exchange with effect from 10:00 a.m. on 9 January 2002.

THE SUBSCRIPTION

Date of the Subscription Agreement:

4 January 2002

Subscriber:

Great Huge Investments Corp., a company incorporated in the British Virgin Islands with limited liability, the entire issued share capital of which is beneficially owned by Mr. Chen.

Mr. Chen, being one of the Vendors, is independent of and not connected with the chief executive, directors or substantial shareholders of the Company or its subsidiaries or any of their respective associates. Up to the date of this announcement, Mr. Chen (i) did not have any shareholding in the Company or its subsidiaries; (ii) did not have any business relationships with the Company and/or its substantial Shareholders, the Directors and/or their respective associates; and (iii) did not deal in the Shares.

Mr. Chen is a private investor with business interests in various industries, including property development and investment in the PRC. The Directors confirm that the Subscriber has not requested for the appointment of director to the Board.

Number of Subscription Shares:

74,980,000 new Shares representing about 20% of the Company's existing share capital of 374,947,194 Shares and about 16.67% of its issued share capital as enlarged by the Subscription of 449,927,194 Shares.

Application will be made to the Stock Exchange for the listing of and dealings in the Shares arising from the completion of the Subscription on the Stock Exchange.

Subscription Price:

HK$0.60 per Share. The Subscription Price was agreed after arm's length negotiations after taking into account the current market price of the Shares and the net asset value per Share. The Subscription Price represents (i) a discount of 52.0% to closing price of the Shares of HK$1.25 as quoted on the Stock Exchange on 4 January 2002, being the date of the Subscription Agreement; (ii) a discount of about 48.72% to the average closing price of the Shares of HK$1.17 for the ten trading days ended 4 January 2002 as quoted on the Stock Exchange; and (iii) a premium of about 7.14% to the unaudited net asset value per Share of about HK$0.56 based on the Group's unaudited consolidated net assets of about HK$211.79 million as at 30 September 2001 and 374,947,194 outstanding Shares as at the date of this announcement. After taking into account the benefits that Mr. Chen is expected to bring to the Group (see "Reasons for the Subscription and the Acquisition" below) and the premium of the Subscription Price to the aforesaid unaudited net asset value per Share, the Directors consider that the Subscription Price is fair and reasonable so far as the Independent Shareholders are concerned.

General Mandate:

The Subscription Shares will be allotted and issued pursuant to the general mandate granted to the Directors at its annual general meeting held on 29 August 2001. The Company has not used any of this mandate since 29 August 2001.

Ranking of Subscription Shares:

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

Conditions of the Subscription:

The Subscription is conditional upon, among other things:

(a) the Listing Committee of the Stock Exchange granting approval for the listings of, and permission to deal in, the Subscription Shares; and

(b) if required, the Bermuda Monetary Authority granting its consent to the issue of the Subscription Shares.

Completion of the Subscription:

The Subscription shall complete on the business day following the fulfillment of the conditions of the Subscription (or such other date as agreed by the parties). The Directors confirm that the Subscription is not conditional on the completion of the Acquisition.

SHAREHOLDING STRUCTURE

The shareholding structure of the Company, Directors and the Subscribers in the existing issued share capital of the Company and upon issue of the Subscription Shares are as follows:

Upon issue of the

Existing issued share capital Subscription Shares

% of issued shares held % of issued shares held

United Jumbo Limited (Note) 32.06% 26.72%

Subscriber - 16.67%

Public 67.94% 56.61%

Total 100.00% 100.00%

Note:

The entire issued share capital of United Jumbo Limited is wholly and beneficially owned by Mr. Dong Bo, chairman of the Group.

USE OF PROCEEDS

The net proceeds from the Subscription, after deducting the relevant expenses, is estimated to be about HK$44 million. The Directors presently intend to apply the net proceeds to finance the entire consideration for the Acquisition. The remaining balance of such net proceeds will be applied for the Group's general working capital.

THE ACQUISITION

Date of the S&P Agreement:

4 January 2002

Parties involved:

(1) Purchaser: Super Target

(2) Vendors: The Vendors

Transaction:

Pursuant to the S&P Agreement, the Vendors conditionally agreed to sell to Super Target and Super Target conditionally agreed to acquire from the Vendors 51% interest in SHWL, representing the Vendors' entire interest in SHWL, for a consideration of HK$43.85 million. After the Acquisition, the Company will indirectly hold about 51% interests in the share capital of SHWL. The Vendors are independent of and not connected with the chief executive, directors or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

Consideration:

The consideration of HK$43.85 million, which is payable in cash upon completion of the Acquisition, was determined after arm's length negotiation by reference to the fair market value of SHWL as at 30 November 2001, which has been appraised by B.I. Appraisals, an independent valuer, to be about HK$93 million. The consideration represents a discount of about 7.5% to the fair market value of 51% interest of SHWL as abovementioned.

Source of funding of the Company:

The Acquisition will be financed by the net proceeds of about HK$44 million from the Subscription.

Conditions of the Acquisition:

Completion of the S&P Agreement is conditional upon, among others,

1. the grant of unanimous approvals by the board of directors of上海浦東龍宇房地產開發有限公司(Shanghai Pudong Longyu Real Estate Development Co., Ltd.), 上海金鵬房地產開發有限公司(Shanghai Jinpeng Real Estate Development Co., Ltd.), 上海華展建築裝潢有限公司(Shanghai Huazhan Architectural Decoration Co., Ltd.), 上海秦龍岩土工程有限公司(Shanghai Qinlong Rock Engineering Co., Ltd.), 上海安民物業有限公司(Shanghai Anmin Real Estate Management Co., Ltd.), 上海華龍建設股份有限公司職工持股會(Employee Stock Holding Committee for Shanghai Hualong Construction Stock Co., Ltd.) (an organisation established by employees of SHWL for the sole purpose of holding their interests in SHWL) respectively and approvals by relevant government authorities in the PRC on the S&P Agreement (if necessary);

2. the Independent Shareholders approving the S&P Agreement and the Acquisition in the SGM;

3. the Joint Venture Agreements duly signed by the PRC Party and Super Target;

4. Super Target has conducted due diligence (including but not limited to relevant laws, finance and businesses) on SHWL and its group (including its subsidiaries and associated companies) pursuant to the terms of the S&P Agreement and has accepted to its satisfaction the results of such due diligence in all respect;

5. the grant of approvals and consents by relevant government authorities in the PRC with regard to the S&P Agreement, the Acquisition and the Joint Venture Agreements, including but not limited to the issue to the SHWL new approval certificate and business licence all of which do not subject to conditions or restrictions not acceptable to the Super Target;

6. the grant of approvals and consents by relevant government authorities in the PRC and other jurisdictions with regard to all the transactions contemplated in the S&P Agreement and the completion of such transactions and related matters;

7. Super Target has been provided with a legal opinion (to the satisfaction of Super Target) issued by licenced PRC legal advisers on PRC securities laws, confirming:

i. the legality and effect of the S&P Agreement and the Joint Venture Agreements upon signing;

ii. all process for the reorganization of SHWL from a PRC company with limited liability into a sino-foreign joint venture enterprise has been completed and relevant approvals and consents in respect of such reorganization has been granted;

iii. no change in the authorized scope of businesses to be carried on by the SHWL before and after the reorganization of the SHWL into a sino-foreign joint venture enterprise;

iv. the appointment of authorized representative and directors on the board of directors of SHWL nominated by Super Target have taken effect (the total number of directors to be appointed by Super Target has not been determined but, in any event, will dominate the board of directors of SHWL);

v. the legality of the businesses in respect of the real estate property and other transactions carried on by the SHWL; and

vi. all other matters reasonably requested by Super Target.

Completion of the Acquisition:

Completion of the Acquisition is expected to take place within seven business days (or such other date as agreed by the parties involved) after the above conditions are fulfilled which is expected on or before 31 March 2002.

Further information about SHWL and the Company:

SHWL is principally engaged in property development in Shanghai, the PRC. As at the date of this announcement, SHWL had four property development projects on hand in Shanghai, the PRC with an aggregate gross floor area of about 175,000 square metre. It also engages in the business relating to building constructions and building materials and the provision of building advisory services in Shanghai, the PRC.

For the year ended 31 December 2000, the audited net profit after tax and net asset value of SHWL amounted to about RMB8.14 million (equivalent to about HK$7.68 million) and RMB58.60 million (equivalent to about HK$55.28 million) respectively. Based on SHWL's management account, unaudited net profit after tax and net asset value of SHWL for the 11 months ended 30 November 2001 amounted to about RMB15.64 million (equivalent to about HK$14.75 million) and RMB72.96 million (equivalent to about HK$68.83 million) respectively.

Under the S&P Agreement, a reorganisation for SHWL shall take place in which SHWL shall be changed from a PRC company with limited liability into a sino-foreign joint venture enterprise. Upon completion of the Acquisition and this reorganisation, SHWL shall be owned as to 51% by Super Target and the remaining 49% by the PRC Party.

The Group is principally engaged in the business of property development, property rental, and securities trading and investment business in Hong Kong.

To facilitate the proposed acquisition of 51% of SHWL by Super Target, Mr. Chen has agreed to procure the PRC Party to enter into the Joint Venture Agreements in a form to the satisfaction of Super Target in respect of SHWL be converted into a sino-foreign equity joint venture. The entering into of the Joint Venture Agreements is one of the conditions for the conversion of SHWL from a PRC limited company into a sino-foreign equity joint venture company.

REASONS FOR THE SUBSCRIPTION AND THE ACQUISITION

The Directors confirm that the Group currently does not undertake any property related projects in the PRC but intends to extend its property business into the PRC property market. Accordingly, the Directors consider that the Acquisition provides the Group with a channel to develop its property related business in the PRC. Further, the Directors believe that the introduction of Mr. Chen as a substantial shareholder will be beneficial to the business development of the Group as a result of Mr. Chen's business connection and experience in the PRC property market.

GENERAL

The Directors consider that the Subscription and the Acquisition are in the interests of the Company and its Shareholders as a whole.

Mr. Chen, being the beneficial owner of the Subscriber and one of the Vendors, will become a substantial Shareholder, who beneficially owns about 16.67% of the Company's entire issued share capital after the completion of the Subscription and, therefore, is a connected person of the Company under the Listing Rules. The proposed Acquisition constitutes a connected and discloseable transaction for the Company under the Listing Rules and requires approval of the Independent Shareholder at the SGM.

An independent board committee will be appointed to advise the Independent Shareholders on the terms and conditions of the Acquisition. In this regard, an independent financial adviser will be appointed to advise the independent board committee accordingly.

A circular containing details of the Acquisition, the recommendation of the independent board committee and the advice of the independent financial adviser, together with the notice convening the SGM will be dispatched to the Shareholders as soon as practicable.

RESUMPTION OF DEALINGS

At the request of the Company, dealings in the Shares on the Stock Exchange were suspended with effect from 10:00 a.m. on 7 January 2002 pending the release of this announcement. Application has been made for the resumption of trading in the Shares on the Stock Exchange with effect from 10:00 a.m. on 9 January 2002.

EXCHANGE RATE TRANSLATION

In this announcement, unless otherwise specifically provided, translation of Renminbi into Hong Kong dollars is based on the approximate exchange rate of RMB1.06 to HK$1.00.

DEFINITIONS

In the announcement, the following expressions have the meanings set out below unless the context otherwise requires.

"Acquisition" The acquisition of 51% interest in SHWL by Super Target from the Vendors contemplated under the S&P Agreement

"Board" The board of directors of the Company

"Company" Premium Land Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange

"Directors" The directors of the Company including independent non-executive directors of the Company

"Group" The Company and its subsidiaries

"Hong Kong" The Hong Kong Special Administrative Region of the PRC

"Independent Shareholders" Shareholders excluding the Subscriber

"Joint Venture Agreements" New agreements including but not limited to joint venture agreement and Articles of Association of SHWL to be entered into between Super Target and the PRC Party

"Listing Rules" The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

"Mr. Chen" 陳龍 (Chen Long), a PRC citizen and also an independent third party not connected with the chief executive, directors or substantial shareholders of the Company or its subsidiaries or any of their respective associates as at the date of this announcement

"PRC" The People's Republic of China, which for the purpose of this announcement excluding Hong Kong, Macau and Taiwan

"PRC Party" 上海華龍企業集團有限公司 (Shanghai Hualong Enterprise (Group) Co. Ltd.), a company incorporated in the PRC with limited liability and holds 49% interest of SHWL. The entire interest of which is owned as to about 46% by Mr. Chen and as to the remaining by various PRC companies and individuals

"S&P Agreement" the agreement dated 4 January 2002 entered into by Super Target and the Vendors in which the Vendors conditionally agreed to sell and Super Target agreed to acquire 51% interests of SHWL

"SGM" a special general meeting of the Company to be convened to consider and if thought fit, approve among others, the Acquisition contemplated under the S&P Agreement

"Shares" The share capital of the Company of HK$0.05 each

"Shareholders" Holders of the Shares

"SHWL" 上海華龍建設股份有限公司 (Shanghai Hualong Construction Stock Co., Ltd.), a company incorporated in the PRC with limited liability

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Subscriber" Great Huge Investments Corp., a company incorporated in the British Virgin Islands with limited liability and the issued shares of which are wholly and beneficially owned by Mr. Chen

"Subscription" The subscription of 74,980,000 new Shares by the Subscriber pursuant to the Subscription Agreement.

"Subscription Agreement" The agreement dated 4 January 2002 entered into between the Subscriber and the Company

"Subscription Price" HK$0.60, being the price of each Subscription Share

"Subscription Shares" Shares to be subscribed under the Subscription Agreement

"Super Target" Super Target Limited, a company incorporated in the British Virgin Islands with limited liability, a wholly owned subsidiary of the Company

"Vendors" 上海浦東龍宇房地產開發有限公司 (Shanghai Pudong Longyu Real Estate Development Co., Ltd.), 上海金鵬房地產開發有限公司 (Shanghai Jinpeng Real Estate Development Co., Ltd.), 上海華展建築裝潢有限公司 (Shanghai Huazhan Architectural Decoration Co., Ltd.), 上海秦龍岩土工程有限公司 (Shanghai Qinlong Rock Engineering Co., Ltd.), 上海安民物業有限公司 (Shanghai Anmin Real Estate Management Co., Ltd.), 上海華龍建設股份有限公司職工持股會 (Employee Stock Holding Committee for Shanghai Hualong Construction Stock Co., Ltd.), 丁連德 (Ding Liade), 錢思解 (Qian Sijie), 金維幸 (Jin Weixing), 王國利 (Wang Guo Li), and Mr. Chen

By Order of the Board

Premium Land Limited

Dong Bo

Chairman

Hong Kong, 8 January 2002

* for identification only

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