09:35 PEARL ORIENTAL<00600> - Announcement & Resumption (3) The Placing Price represents: (i) a discount of approximately 21.26% to the closing price per Share of HK$1.27 on 7 January 2005 (the last trading day prior to suspension of trading in the Shares pending the release of this announcement); and (ii) a premium of approximately 21.95% to the average closing price per Share of approximately HK$0.82 as quoted on the Stock Exchange for the last 5 trading days up to and including 7 January 2005. Although the Placing Price represented a discount to the closing price of HK$1.27 per Share on a single day, the Board noted that (i) the price per Share fluctuated between HK$1.17 per Share (lowest) to HK$1.69 per Share (highest) on that single trading day (i.e. the date when the Shares resumed trading following the issue of an announcement regarding the Acquisition) whilst (ii) the historical Share price (i.e. prior to 7 January 2005) were traded substantially below the Placing Price in the past, and believed that the Placing Price is reasonable (irrespective of the percentage of discount to the closing price per Share on a single trading day immediately prior to suspension of trading in the Shares pending the release of this announcement). The Placing Agent will charge a placing commission of HK$0.02 per Share successfully placed. The total cost of the Placing (approximately HK$4 million) shall be borne by the Company. 1.4 Rights of the Placing Shares The Placing Shares are sold free from all liens, charges and encumbrances, claims, options and third party rights and together with all rights attaching thereto as at the Placing Completion Date, including the right to receive all dividends or other distributions declared, made or paid on the Placing Shares at any time on or after the Placing Completion Date. 1.5 Independence of placees The Placees (and their respective ultimate beneficial owners) will not be connected persons (as defined in the Listing Rules) of the Company and will be independent from and not connected with the Company and its connected persons and will not be acting in concert with Mr. Law and the directors, the chief executive or the substantial shareholders of the Company or its subsidiaries and/or their respective associates and its connected persons. All the Placing Shares are to be placed on a best effort basis and the Placing is expected to be completed on or about 14 January 2005. The Placing Agent informed the Company that there will be not less than six placees who are (i) professional and institutional investors which term generally includes brokers, dealers and companies (including fund managers), whose ordinary business involves dealing in shares and other securities; (ii) corporate entities which regularly invest in shares and other securities; and (iii) individuals. The Directors expect that no new substantial shareholder will be introduced to the Company as a result of the Placing. 1.6 Termination events The Placing Agreement contains provisions granting the Placing Agent the right to terminate the Placing Agreement on the occurrence of certain events including force majeure occurring prior to completion of the Placing. For this purpose, force majeure includes any event, development or change resulting in a material adverse change in political, economic, fiscal, financial, regulatory or stock market conditions and which in the Placing Agent's reasonable opinion would materially and adversely affect the success of the Placing. If the Placing Agent exercises such right (i.e. at any time prior to the Placing Completion Date which is expected to be on or about 14 January 2005 as set out in paragraph 1.7 below), the Placing will not proceed. 1.7 Completion of the Placing The Placing is not subject to any condition. The parties expect that the Placing will be completed on or before the Placing Completion Date (which is expected to be on or about 14 January 2005). 2. SUBSCRIPTION AGREEMENT DATED 7 JANUARY 2005 2.1 Parties (a) Mr. Law; and (b) the Company.