YGM Trading Limited — M&A Activity 2002

May 14, 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.

AKAI HOLDINGS LIMITED YGM TRADING LIMITED

(In Compulsory Liquidation) YGM貿易有限公司

雅佳控股有限公司 (Incorporated in Hong Kong with limited liability)

(Incorporated in Bermuda with limited liability) DISCLOSEABLE TRANSACTION

RESTRUCTURING PROPOSAL FOR AKAI HOLDINGS LIMITED

(IN COMPULSORY LIQUIDATION)

BY WAY OF A SCHEME OF ARRANGEMENT PURSUANT TO SECTION 99 OF THE COMPANIES ACT,

PROPOSED SPIN-OFF OF HANG TEN INTERNATIONAL HOLDINGS LIMITED

BY YGM TRADING LIMITED

AND

LISTING OF NEWCO ON THE STOCK EXCHANGE

BY WAY OF INTRODUCTION

The Liquidators and the Investors are pleased to announce that the Restructuring Agreement regarding the Restructuring Proposal for the Company was signed on 16 April 2002 and a supplemental agreement was entered into on 10 May 2002. Key terms of the Restructuring Proposal are set out in this announcement.

The Restructuring Proposal, if successfully implemented, will, amongst other things, result in:

(a) NewCo, or a subsidiary of NewCo, acquiring the entire issued share capital of Hang Ten and the Investors holding a controlling interest in the issued share capital of NewCo;

(b) Shareholders receiving a pro rata entitlement to 300,000,000 NewCo Shares credited as fully paid so that the Shareholders become minority shareholders of NewCo;

(c) the Liquidators (for the benefit of the Creditors) receiving HK$12 million cash and 2,100,000,000 NewCo Shares credited as fully paid for the benefit of the Creditors;

(d) the listing of the Shares on the Stock Exchange being withdrawn and NewCo Shares listed on the Stock Exchange by way of introduction; and

(e) all the delisted Shares being transferred to the Liquidators (or their nominee) to be held on trust for the Creditors for a total consideration of HK$1.00.

ILC was a subsidiary of YGM and became a subsidiary of Hang Ten in December 2001 after YGM disposed its 63.77% shareholding in ILC to Hang Ten, further details of which were announced by YGM on 13 November 2001. At the date of this announcement, YGM is interested in 25% of the issued share capital of Hang Ten. Under the Restructuring Proposal, YGM will dispose its interest in Hang Ten to NewCo and in return acquire NewCo Shares which will be listed on the Stock Exchange by way of introduction. Accordingly, the Restructuring Proposal will involve the Proposed Spin-off and YGM is expected to submit to the Stock Exchange for its review a proposal in this regard in accordance with practice note 15 of the Listing Rules as soon as practicable. The Proposed Spin-off constitutes a discloseable transaction for YGM under Chapter 14 of the Listing Rules and separate announcement on the Proposed Spin-Off will be published by YGM as soon as practicable. The approval from the Stock Exchange for the Proposed Spin-off, being one of the conditions precedent, may or may not be granted. Under paragraph 19 of Part A of Appendix 7 to the Listing Rules, Hang Ten is an associate of YGM.

The release of this announcement does not necessarily indicate that the Restructuring Proposal will be successfully implemented and completed as the conditions precedent to the Restructuring Proposal may not be fulfilled or otherwise waived. The approval from the Stock Exchange for the Proposed Spin-off and new listing application under the Restructuring Proposal, being one of the conditions precedent, may or may not be granted. If the Restructuring Proposal is not so completed, the Shares of the Company will be de-listed in accordance with practice note 17 of the Listing Rules.

Trading in the securities of the Company has been suspended since 23 August 2000 and will remain suspended pending the implementation of the Restructuring Proposal.

Shareholders and investors of YGM should exercise extreme caution in dealing in the shares of YGM.

LIQUIDATORS APPOINTED

The Company was incorporated in Bermuda and has been principally engaged in manufacturing, distributing and retailing of computer, consumer electronics products and developing property.

Trading in the Shares on the Stock Exchange has been suspended since 23 August 2000. The High Court of Hong Kong SAR ordered the Company be wound up pursuant to its Court Order dated 23 August 2000. The Stock Exchange announced on 10 September 2001 that the Company was being placed into the third stage of the delisting procedures under practice note 17 of the Listing Rules.

On 28 February 2002, the Company submitted the Restructuring Proposal to the Stock Exchange and applied for an extension of the deadline for the cancellation of the listing of the Shares of the Company. After considering the Restructuring Proposal, the Listing Committee of the Stock Exchange agreed to extend the deadline for the cancellation of the listing of the Shares of the Company to 17 July 2002. The extension was granted solely for the purpose of enabling the Company to implement the Restructuring Proposal and the new listing application under the Restructuring Proposal but not for any other proposals. Such extension is conditional on, inter alia, the submission of an advance booking form with draft listing document for the listing of NewCo to the Stock Exchange on or before 2 July 2002.

THE RESTRUCTURING PROPOSAL

The Restructuring Proposal involves, amongst other things, the Scheme, the Debt Restructuring and the acquisition of Hang Ten.

I. THE RESTRUCTURING AGREEMENT

The Liquidators, the Company and the Investors entered into the Restructuring Agreement dated 16 April 2002 as supplemented by an agreement dated 10 May 2002 regarding the Restructuring Proposal for the Company. The principal terms of the Restructuring Agreement have the support of the committee of inspection which was appointed at a meeting of the Creditors held on 26 October 2000 to represent the Creditors of the Company.

(A) SCHEME OF ARRANGEMENT

NewCo will issue and allot 300,000,000 NewCo Shares, credited as fully paid, to the Shareholders in proportion to their respective shareholdings in the Company in return for the Shareholders transferring all their Shares to NewCo. Upon completion of the Restructuring Proposal, the listing status of the Shares on the Stock Exchange will be withdrawn and NewCo Shares will be listed on the Stock Exchange by way of introduction.

Under Rule 2.10 of the Code except with the consent of the Executive, the Scheme may only be implemented if:-

(a) the Scheme is approved by at least 75% of the votes attaching to the disinterested Shares that are cast either in person or by proxy at a duly convened SGM; and

(b) the number of votes cast against the resolution to approve the Scheme at such meeting is not more than 10% of the votes attaching to all the disinterested Shares.

The Investors, its chief executives, directors and shareholders, and their respective associates, are independent of the Company and its shareholders. Neither the Investors nor any person acting in concert with it holds any of the Shares of the Company. Accordingly, all of the votes attaching to the entire shareholding of the Company are to be considered as attaching to "disinterested shares" for the purposes of Rule 2.10 of the Code.

Accordingly, the Restructuring Proposal will be subject to such conditions being satisfied. Further, the Scheme must be conducted in accordance with laws and regulatory requirements applicable to the Scheme, including, but not limited to, passing a resolution at the Court Meeting by a majority of those Shareholders who are present and who vote in person or by proxy, and who represent not less than 75 per cent. of the value of the Shares voted.

(B) DEBT RESTRUCTURING

As part of the Restructuring Proposal, NewCo will issue and allot 2,100,000,000 NewCo Shares, credited as fully paid, and make a cash payment of HK$12 million to the Liquidators for the sole benefit of the Creditors. The cash payment will be financed by Hang Ten's internal resources. On completion of the Restructuring Proposal, the indebtedness due to the Creditors will remain with the Company and the Company will remain under the control of the Liquidators. As such, the liabilities of the Company will not have any impact on the affairs of the NewCo.

II. ACQUISITION OF HANG TEN

NewCo will enter into the Sale and Purchase Agreement to acquire the entire issued share capital of Hang Ten from the Investors and the Other Investors. On the transfer of the Investors' entire equity interests in Hang Ten to NewCo for the total consideration of HK$915.8 million, NewCo will issue and allot 21,200,000,000 NewCo Shares at par (with one Warrant for every five NewCo Shares) for HK$212 million and 7,038 CPS for HK$703.8 million to the Investors. The Warrants will be issued upon completion of the Restructuring Proposal. A total of 4,240 million NewCo Shares will be issued on exercise of the Warrants representing approximately 17.97% of the issued ordinary share capital of NewCo at the time such Warrants are issued. Out of the 21,200,000,000 NewCo Shares, the Investors will direct NewCo to issue and allot 1,200,000,000 NewCo Shares (with one Warrant for every five NewCo Shares) to the Designated Person in consideration of consultancy services provided by the Designated Person to the Investors in relation to the restructuring of the Company.

The total consideration of HK$915.8 million was determined on an arm's length basis between the Company and the Investors.

As at the date of this announcement, YGM is interested in 25% of the issued share capital of Hang Ten. Upon the transfer of this interest to NewCo under the Sale and Purchase Agreement, the portion of the consideration payable to YGM will amount to approximately HK$226 million which will be satisfied by the issue of 5,000 million NewCo Shares at par for an aggregate value of HK$50 million and 1,759 CPS for an aggregate value of HK$175.9 million.

The Kung Family is interested as to 73% of the issued share capital of Hang Ten. Upon the transfer of its interest to the NewCo under the Sale and Purchase Agreement, the portion of the consideration payable to the Kung Family will amount to approximately HK$659.8 million which will be satisified by the issue of 14,600,000,000 NewCo Shares at par and 5,138 CPS for an aggregate value of HK$513.8 million.

Ms. Wang Li Wen, and Ms. Kao Yu Chu have 2% interest in Hang Ten as at the date of this announcment. Upon the transfer of their interest to NewCo under the Sale and Purchase agreement, the portion of the consideration payable to Ms. Wang Li Wen, and Ms. Kao Yu Chu will amount to approximately HK$18 million, which will be satisfied by the issue of 400 million NewCo Shares at par and 141 CPS for an aggregate value of HK$14.1 million.

In consideration of consultancy services provided by the Designated Person to the Investors in relating to the restructuring of the Company, the Investors will direct NewCo to issue and allot 1,200 million NewCo Shares at par (with associated Warrants) for an aggregate value of HK$12 million to the Designated Person.

In order to maintain a sufficient public float, NewCo intends to issue and allot to Other Investors the NewCo Shares at par (with one Warrant for every five NewCo Shares) for an aggregate value equivalent to the amount invested in Hang Ten by the Other Investors. Completion of the Sale and Purchase Agreement will take place on or before the Restructuring Proposal becoming unconditional.

III. CONDITIONS PRECEDENT TO THE RESTRUCTURING PROPOSAL

Completion of the Restructuring Proposal will be subject to, amongst others, the following:

(i) the Sale and Purchase Agreement being completed;

(ii) the Bermuda Court sanctioning the Scheme and the Scheme becoming effective;

(iii) the Hong Kong Court sanctioning the transfer of the Shares from the Shareholders to NewCo pursuant to section 182 of the Hong Kong Company Ordinance;

(iv) all necessary resolutions being passed by the Shareholders (other than those who are not permitted to vote pursuant to the Listing Rule or the Code) approving the implementation of the Restructuring Proposal at the SGM

(v) the Stock Exchange approving the withdrawal of the listing of the Shares on the Stock Exchange and granting the listing of, and permission to deal in, NewCo Shares in issue and to be issued pursuant to the Restructuring Agreement, the Scheme and the Sale and Purchase Agreement;

(vi) necessary approvals by all relevant authorities for the issue of the NewCo Shares pursuant to the Restructuring Agreement, the Scheme and the Sale and Purchase Agreement being obtained; and

(vii) all consents and approvals from all other governmental and regulatory authorities, including the Stock Exchange's approval of the Proposed Spin-off, necessary for the implementation of the Restructuring Proposal being obtained.

If any of the above conditions have not been fulfilled or waived in writing before 31 December 2002, being the long-stop date, or such later date as the parties may agree, the Restructuring Agreement will be terminated. The obligations of the parties under the Restructuring Agreement shall cease upon the termination of the Restructuring Agreement.

Should the Restructuring Proposal fail, the Shares of the Company on the Stock Exchange will be delisted in accordance with practice note 17 of the Listing Rules. Should this occur, the Liquidators believe that there will be no return to the Shareholders.

IV. CHANGES IN SHAREHOLDING AND MAINTENANCE OF THE LISTING OF NEWCO

Upon NewCo, or a subsidiary of NewCo, acquiring the Investors' entire equity interests in Hang Ten for a total consideration of HK$915.8 million, NewCo will issue and allot NewCo Shares with an aggregate value of HK$212 million (with one Warrant for every five NewCo Shares), and 7,038 CPS for HK$703.8 million to the Investors. The Warrants will be issued upon completion of the Restructuring Proposal. A total of 4,240 million NewCo Shares will be issued on exercise of the Warrants representing approximately 17.97% of the issued ordinary share capital of NewCo at the time such Warrants are issued. Out of the 21,200,000,000 NewCo Shares to be issued to the Investors, the Investors will direct NewCo to issue and allot 1,200,000,000 NewCo Shares (with associated Warrants) with an aggregate value of HK$12 million to the Designated Person in return for the Designated Person provides consulting services to the Investors in connection with the Restructuring Proposal. Based on these assumptions, the estimated changes in the shareholding of NewCo upon completion of the Restructuring Proposal will be as follows:

Upon completion

Restructuring Upon completion of the Restructuring

Before Proposal with no of the Proposal with all

completion of the CPS converted Restructuring CPS converted

Restructuring and Warrants Proposal with all and Warrants

Proposal exercised CPS converted exercised

Number of Number of Number of Number of

Shares NewCo Shares NewCo Shares NewCo Shares

(million shares) % (million shares) % (million shares) % (million shares) %

Shareholders 2,191.0 100 300.0 1.27 300.0 0.32 300.0 0.30

Creditors - - 2,100.0 8.90 2,100.0 2.23 2,100.0 2.14

Investors: - -

YGM - - 5,000.0 21.19 22,590.0 24.04 23,590.0 24.02

The Kung Family - - 14,600.0 61.87 65,980.0 70.21 68,900.0 70.15

Ms. Wang Li Wen

and Ms. Kao Yu Chu - - 400.0 1.69 1,810.0 1.92 1,890.0 1.92

Designated Person - - 1,200.0 5.08 1,200.0 1.28 1,440.0 1.47

Subtotal of

concert parties - - 21,200.0 89.83 91,580.0 97.45 95,820.0 97.56

Total 2,191.0 100 23,600.0 100 93,980.0 100 98,220.0 100

Note: The number of NewCo Shares to be held by the Other Investors have not been confirmed and thus are not included in this shareholding table.

It will be a term of the issued Warrants and CPS that no subscribers shall be entitled to exercise the conversion right if such conversion would result in the public float falling below minimum prescribed percentage as required under the Listing Rules.

As shown from the above shareholding table, the Investors and the Designated Person will be interested in approximately 89.83% of the entire issued share capital of NewCo upon completion of the Restructuring Proposal. The NewCo Shares to be issued and allotted to the Investors are not considered to be "in public hands". In order to ensure that immediately upon completion of the Restructuring Proposal, NewCo Shares held "in public hands" (as such term is understood in accordance with Rule 8.24 of the Listing Rules) will not be less than 25% of the NewCo's entire issued ordinary share capital, the Investors will endeavor to secure Other Investors, who are independent investors not connected with the directors, the chief executives and the substantial shareholders of YGM and Hang Ten and their subsidiaries and their respective associates (as defined in the Listing Rules) and concert parties, to subscribe shares of Hang Ten. If Other Investors are secured, they will be joined as parties to the Sale and Purchase Agreement under which they will acquire NewCo Shares (with one Warrant for every five NewCo Shares) as consideration for the transfer of their shares in Hang Ten to NewCo.

It is the intention of the Investors to maintain the listing of the NewCo Shares on the Stock Exchange upon completion of the Restructuring Proposal. Accordingly, the Investors will undertake to the Stock Exchange that they will use their best endeavors and to take appropriate steps to ensure that immediately upon the completion of the Restructuring Proposal, the public will together hold not less than 25% of the NewCo's entire issued share captial. The Stock Exchange has stated that in the event that less than 25% of the issued shares are in public hands after the completion of the Restructuring Proposal or if the Stock Exchange believes that:

• a false market exists or may exist in the trading of the NewCo Shares; or
• there are insufficient NewCo Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend dealings in the NewCo Shares.

The Stock Exchange has further stated that, if NewCo remains listed on the Stock Exchange, any asset dispositions or asset acquisitions by the NewCo and its subsidiaries will be subject to the relevant provisions of the Listing Rules. The Stock Exchange has the discretion to require Newco to issue a circular to the shareholders of Newco irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of the New Group. The Stock Exchange also has the power to aggregate a series of transactions and any such transaction may result in Newco being treated as if it were a new listing applicant.

V. INFORMATION ON HANG TEN

Hang Ten was incorporated in the British Virgin Islands and is an investment holding company whose principal asset is its 97.01% equity interest in ILC.

As at the date of this announcement, YGM and the Kung Family are beneficially interested in 25% and about 73% of Hang Ten's issued share capital respectively. The remaining 2% of its issued share capital is held by Ms. Wang Li Wen, and Ms. Kao Yu Chu who are directors of ILC's subsidiaries.

VI. INFORMATION ON ILC

(A) Principal Business

ILC was incorporated in the British Virgin Islands and became the subsidiary of Hang Ten in December 2001 after YGM disposed its 63.77% shareholding in ILC to Hang Ten.

ILC and its subsidiaries are principally engaged in the business of designing, marketing and retailing casual wears, apparels and accessories. The brand name "Hang Ten" originated in Southern California. ILC and its subsidiaries are the registered owner of the trade marks "Hang Ten" which are licensed to independent third parties for distribution and production of similar products in over 50 countries, including the United States, Europe, Japan and Australia. ILC manages its retailing network of over 300 retail outlets in Taiwan, Singapore, the Philippines and South Korea.

(B) Ownership and Management

ILC was owned as to about 63.77% by YGM and as to about 30% by the Kung Family prior to December 2001. The balance of approximately 6.23% was owned as to approximately 2.99% by Citicorp Asia Limited, 2.99% by China Investment Development Company Limited, 0.08% by Ms. Wang Li Wen, 0.08% by Ms. Kao Yu Chu, 0.04% by Chen Tzu Kang, 0.03% by Chen Kin No and 0.01% by Chen Lan Ying. Ms. Wang Li Wen and Ms. Kao Yu Chu are currently directors of ILC's subsidiaries.

In December 2001, there was a capital rearrangement such that YGM, the Kung Family and certain other shareholders of ILC disposed of their shareholding interests in ILC to Hang Ten. These parties at the same time subscribed for new shares in Hang Ten and as a result of these transactions, Hang Ten became interested in about 97.01% of the issued share capital of ILC and YGM and the Kung Family became interested in about 25% and 73% of the issued share capital of Hang Ten respectively.

The following is the shareholding structure of Hang Ten as at the date of this announcement:

Prior to the completion of these transactions, Mr. Chan Wing Sun, Samuel was the chairman of ILC, Mr. Kenneth Hung was an executive director of ILC and Mr. Dennis Kung was the general manager of ILC. Mr. Dennis Kung and Mr. Kenneth Hung have been, since 1993 and 1995 respectively, the principal officers responsible for the management of the business operations of ILC and its subsidiaires.

After completion of the transactions described, Mr. Chan Wing Sun, Samuel was appointed chairman of Hang Ten and the respective roles that Mr. Dennis Kung and Mr. Kenneth Hung played in the business operations of ILC and its subsidiaries have remained unchanged. Mr. Chan Wing Sun, Samuel and Mr. Kenneth Hung will become directors of the NewCo upon completion of the Restructuring Proposal and other directors of NewCo are expected to be appointed prior to the listing application being made.

Mr. Chan Wing Sun, Samuel, aged 54, received a Bachelor's degree from the University of Manchester, United Kingdom in 1970 and qualified as a Chartered Accountant in 1973. Mr. Chan has been the Managing Director of YGM Trading Ltd since 1987.

Mr. Kenneth Hung, aged 35, graduated from the University of Minnesota in the USA in 1992. Mr. Hung is a director of all ILC's subsidiaries except ILC (Hungary) Ltd..

Mr. Chan Wing Sun, Samuel and Mr. Kenneth Hung will become directors of the NewCo upon completion of the Restructuring Proposal and other directors of NewCo are expected to be appointed prior to the listing application being made. Further announcement will be made once the other directors of NewCo are appointed.

(C) Financial Information

Hang Ten was incorporated on 10 September 2001 and had not carried out any activities since its incorporation except for the acquisiton of 97.01% equity interests in ILC in December 2001. Based on the audited consolidated financial statements of ILC, ILC and its subsidiaries have recorded profits before taxation and extraordinary items of about HK$65.9 million, HK$108.8 million and HK$111.3 million for the years ended 31 March 1999, 2000 and 2001 respectively. Based on the audited consolidated financial statements of ILC, ILC and its subsidiaries have recorded profits attributable to shareholders of about HK$66.7 million, HK$94.8 million and HK$102.6 million for the years ended 31 March 1999, 2000 and 2001 respectively.

ILC has audited consolidated net asset value of approximately HK$341.9 million as at 31 March 2001.

VII. BENEFITS OF THE RESTRUCTURING PROPOSAL TO YGM

The unaudited consolidated net tangible assets value of YGM's 25% shareholding in Hang Ten is approximately HK$33.2 million following the completion of the capital rearrangement as described above under paragraph B headed "Ownership and Management" of section VI. As YGM owned approximately 63.77% shareholding in ILC prior to December 2001, the ILC's audited net profit attributable to the shareholders of YGM for each of the two years ended 31 March 2000 and 31 March 2001 were approximately HK$60.45 million and HK$65.43 million respectively.

Upon completion of the Proposed Spin-off and the Restructuring Proposal, the management team of YGM will become more focused on its principal business operations. The Restructuring Proposal will enhance the respective operations of YGM and Hang Ten in the decision making processes, improve response times to market charges, gain operational efficiency and expedite business development. YGM will retain a significant equity interest in Hang Ten and its subsidiaries through NewCo following the Restructuring Proposal to enable the YGM to benefit in any future growth of Hang Ten and its subsidiaries.

The Proposed Spin-off will enhance the transparency of the performance of the separate business operations of YGM and the Hang Ten and its subsidiaries. Shareholders of YGM will have much more information and avenues of communication to interact with and evaluate the two business operations.

VIII. OTHER INFORMATION

YGM and its subsidiaries are principally engaged in manufacturing, the retail and wholesale of apparel and accessories, property investment and printing in Asia including Taiwan. ILC was a subsidiary of YGM and became a subsidiary of Hang Ten in December 2001 after YGM disposed its 63.77% shareholding in ILC to Hang Ten, further details of which were announced by YGM on 13 November 2001. At the date of this announcement, YGM is interested in 25% of the issued share capital of Hang Ten. Under the Restructuring Proposal, YGM will dispose of its interest in Hang Ten to NewCo and in return acquire NewCo Shares which will be listed on the Stock Exchange by way of introduction. Accordingly, the Restructuring Proposal will involve the Proposed Spin-off and YGM is expected to submit its spin-off proposal in accordance with practice note 15 of the Listing Rules to the Stock Exchange for its review as soon as practicable. The approval from the Stock Exchange for the Proposed Spin-off, being one of the conditions precedent, may or may not be granted. Shareholders and investors of YGM should exercise extreme caution in dealing in the shares of YGM. Under paragraph 19 of Part A of Appendix 7 to the Listing Rules, Hang Ten is an associate of YGM. The Proposed Spin-off constitutes a discloseable transaction for YGM under Chapter 14 of the Listing Rules. Separate announcement on the Proposed Spin-off will be made by YGM as soon as practicable and the respective circular will be dispatched to the shareholders of YGM as soon as practicable.

NewCo will submit an application for new listing to the Stock Exchange on or before 2 July 2002.

The Company has applied to the Executive for a waiver from strict compliance with Rule 8.2 of the Code which requires the composite document be despatched within 35 days following the announcement of the Restructuring Proposal. The composite document containing, inter alia, the prospectus, further details of the Restructuring Proposal, the Scheme, letter from the Liquidators, and letter from the independent financial adviser will be despatched to the Shareholders no later than 2 September 2002.

Indicative timetable for the listing of the NewCo Shares

Events Expected Date(on or before)

Application to the Bermuda Court for convening a 30 August 2002

shareholders' meeting to approve the Scheme

Despatch of the Composite Document 2 September 2002

Dealing of NewCo Shares 22 October 2002

Long Stop Date 31 December 2002

The release of this announcement does not necessarily indicate that the Restructuring Proposal will be successfully implemented and completed as the conditions precedent to the Restructuring Proposal may not be fulfilled or otherwise waived. The approval from the Stock Exchange for the Proposed Spin-off and new listing application under the Restructuring Proposal, being one of the conditions precedent, may or may not be granted. If the Restructuring Proposal is not completed, the Shares of the Company will be de-listed on the Stock Exchange in accordance with practice note 17 of the Listing Rules.

Trading in the securities of the Company has been suspended since 23 August 2000 and will remain suspended pending the implementation of the Restructuring Proposal. Separate announcement will be made once the independent finanical adviser is appointed.

Shareholders and investors of YGM should exercise extreme caution in dealing in the shares of YGM.

DEFINITIONS:

"Bermuda Court" the Supreme Court of Bermuda

"Code" The Hong Kong Code on Takeovers and Mergers

"Companies Act" The Companies Act 1981 of Bermuda (as amended)

"Company" Akai Holdings Limited (in compulsory liquidation), a company incorporated in Bermuda with limited liability and whose shares are listed on the Stock Exchange

"Creditors" the creditors of the Company

"CPS" the 7,038 unlisted convertible preference shares of HK$100,000 each with an annual dividend of 1% to be issued by NewCo to the Investors under the Sale and Purchase Agreement and are convertible into NewCo Shares at a conversion price of HK$0.01 each (subject to adjustments) from time to time within 5 years and to be mandatorily converted at the end of such 5 years period following the allotment provided that such conversion would not result in members of the public together hold less than 25% of the issued shares capital of NewCo as required under the Listing Rules, in which case, such mandatory conversion date will be extended automatically for further period of 2 years

"Debt Restructuring" the proposed restructuring of the indebtedness and liabilities of the Company pursuant to the Restructuring Agreement

"Designated Person" Metro Capital Holdings Limited is designated by the Investors to receive NewCo Shares upon the completion of the Sale and Purchase Agreement in consideration of its provision of consulting services to the Investors in connection with the Restructuring Proposal.

"Directors" directors of the Company

"Executive" the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

"Hang Ten" Hang Ten International Holdings Limited, a company incorporated in the British Virgins Islands with limited liability and is wholly owned by the Investors

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

"ILC" ILC International Corporation, a company incorporated in the British Virgin Islands with limited liability and a subsidiary 97.01% owned by Hang Ten

"Investors" YGM, the Kung Family, Ms. Wang Li Wen and Ms. Kao Yu Chu who are all shareholders of Hang Ten

"Kung Family" Mr. Dennis Kung, his family members and their respective associates as defined under the Listing Rules and concert parties

"Liquidators" collectively Messrs. Nicholas Timothy Cornforth Hill and Fan Wai Kuen, Joseph of RSM Nelson Wheeler Corporate Advisory Services Limited and Mr. R. Craig Christensen of Arthur Morris and Co. of Hamilton Bermuda, being the joint and several liquidators of the Company

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

"NewCo" a company incorporated in Bermuda with limited liability and will become the holding compnay of Hang Ten upon completion of the Sale and Purchase Agreement

"NewCo Share(s)" ordinary shares of HK$0.01 each in the existing share capital of NewCo

"Other Investors" expected to be shareholders of Hang Ten, other than the Investors, who are not connected with and may or may not be acting in concert with the directors, the chief executives and the substantial shareholders of YGM and Hang Ten and their subsidiaries and their respective associates (as defined in the Listing Rules) and concert parties

"Proposed Spin-off" the proposed separate listing of YGM's interest in Hang Ten on the Stock Exchange pursuant to the implementation of the Restructuring Proposal

"Restructuring Agreement" the agreement dated 16 April 2002 as supplemented by an agreement dated 10 May 2002 between the Liquidators, the Company and the Investors

"Restructuring Proposal" the proposal involving the Scheme, Debt Restructuring and the acquisition of Hang Ten

"Sale and Purchase Agreement" the agreement to be entered between the Investors and NewCo in connection with NewCo's acquisition of Hang Ten from the Investors and the Other Investors

"Scheme" the proposed schemes of arrangement under section 99 of the Companies Act between the Company and the Shareholders

"SFC" Securities and Futures Commission of Hong Kong

"SGM" the special general meeting of the Company to be held for the purpose of passing the relevant resolutions pursuant to the Restructuring Proposal

"Share(s)" ordinary share(s) of HK$0.10 each in the existing capital of the Company

"Shareholders" the shareholders of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Warrant(s)" the 3-year unlisted and transferrable warrant(s) to be issued by NewCo, upon completion of the Restructuring Proposal, to the Investors and Other Investors pursuant to the Sale and Purchase Agreement which will entitle the holders thereof to subscribe for NewCo Shares at HK$0.01 each (subject to adjustments)

"YGM" YGM Trading Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Stock Exchange

"HK$" and "cents" Hong Kong dollars and cents, the lawful currency of Hong Kong

For and on behalf of By order of the board of directors of

AKAI HOLDINGS LIMITED YGM TRADING LIMITED

(In Compulsory Liquidation) Chan Wing Sun, Samuel

Nicholas Timothy Cornforth Hill Director

W.K. Fan, Joseph

R. Craig Christensen

Joint and Several Liquidators

13 May 2002

The Liquidators jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to the Investors, Hang Ten and YGM and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief, the opinions expressed in this announcement 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.

Ms. Wang Li Wen, Mr. Kao Yu Chu and the Kung Family accept full responsibility for the accuracy of the information contained in this announcement other than that relating to the Company and YGM and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief, the opinions expressed in this announcement 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 YGM and Hang Ten accepts full responsibility for the accuracy of the information relating to YGM and Hang Ten contained in this announcement and confirms, having made all reasonable inquiries, that to the best of its knowledge and belief, the opinions expressed in this announcement 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.

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