09:25 ASIA ALLIANCE<00616>-Announcement & Resumption of Trading(3) hold assets (including the Property and the Plant) relating to the development of manufacturing operations in Huzhou, PRC. (2) The Vendor has agreed to provide the Group with infrastructure support to ensure the Plant can be functional, including the construction of drainage linking the Plant to the canal nearby. Information about the Project The Company intends to divide the Project into 2 phases. Phase 1 of the Project consists of the acquisition of the Property, the construction of the Plant, and the development of the garment manufacturing and bleaching and dyeing operations which will involve erecting factories for housing equipment and machinery for manufacturing process, storage and maintenance facilities, packaging facilities and employee quarters. The Plant is an integral part of the Project to develop the manufacturing facilities, and a clear plan as to how to deal with waste water treatment to the standard required under PRC laws is an important factor taken into account by the Group in choosing the Property to be the site of developing such facilities. The Agreement and the Supplemental Agreement provide for what the Vendor has agreed to provide the Group to ensure the Plant can be functional, including the construction of drainage linking the Plant to the canal nearby. The intended investment of phase 1 is up to HK$200,000,000, among which HK$40,000,000 has been committed for the acquisition of the Property and construction of the Plant under the Agreement and the Supplemental Agreement and will be financed through bank borrowings. No other commitment as to capital has been made by the Group. The Group will proceed with its investment in phase 1 of the Project as and when it has obtained further funding either through bank borrowings, or to the extent possible through internal resources depending on when such funding is needed. Phase 2 of the Project will consist of the development of the knitting operation. The Company has no present intention to move forward to phase 2 unless and until phase 1 of the Project has been completed and has demonstrated its value to the business of the Group. The Group will make further announcement as and when necessary if it decides to pursue phase 2 of the Project. Reasons for and benefits of the Transaction The Company is engaged in the business of bleaching, dyeing and knitting. The Company wishes to strengthen its manufacturing operations and capability of its existing main business by developing a multi function base in Huzhou, PRC and as part of that development, to acquire the Property and to construct the Plant for the purpose of establishing a manufacturing base for its business. The Company chose the Property in the PRC so as to benefit from its inexpensive land and low cost base including labour. The Company further believes that the development of the Project will consolidate and significantly increase its manufacturing capabilities and to enjoy further economy of scale. It also enhances relationship with the Vendor which will assist in ensuring the smooth running of the operations, including providing infrastructure support as contemplated in the Agreement and the Supplemental Agreement. Special General Meeting The Transaction constitutes a very substantial acquisition of the Company under the Listing Rules. The Agreement and the Supplemental Agreement are subject to, among other things, the approval by the shareholders of the Company at the special general meeting of the Company. A circular in compliance with Rule 14.63 of the Listing Rules and containing further information as required under Rule 14.69 of the Listing Rules, together with the notice of the special general meeting of the Company and the form of proxy for use at the special general meeting will be dispatched to shareholders of the Company as soon as practicable. To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, as at the date of this announcement, no shareholder of the Company is required to abstain from voting at the special general meeting for the shareholders to consider and, if thought fit, approve the Transaction. General At the request of the Company, trading of the shares of the Company has been suspended with effect from 9:30 a.m. on 28 December 2004 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading of the shares of the Company with effect from 9:30 a.m. on 4 January 2005. As of the date of this announcement, the executive directors of the Company are Mr. Koon Wing Yee, Mr. Tsang Yiu Kai and Ms. Lui Yuk Chu and the independent non-executive directors are Mr. Kan Ka Hon, Mr. Kwong Jimmy Cheung Tim and Mr. Lau Sin Ming. Definitions:- In this announcement, the following terms have the following meanings:- `Acquisition' the proposed acquisition of