10:18 TRISTATE HOLD<00458> - Announcement (2) REASONS FOR AND BENEFITS OF ENTERING INTO THE TENANCY AGREEMENT Since April 1999, Hwa Fuh has been renting the Premises from TDB for use by the Company and the relevant subsidiaries which have been using the Premises as their principal place of business in Hong Kong. Accordingly, the Company considers it to be commercially necessary and beneficial to renew the tenancy for the Premises so that the Company and the relevant subsidiaries can continue to use the Premises as their principal place of business in Hong Kong. The terms of the Tenancy Agreement were arrived at after arm's length negotiations between Hwa Fuh and TDB and on the basis of the valuation made by DTZ Debenham Tie Leung Limited, a firm of professional property valuer, in its letter dated 26th January, 2005 that the proposed terms (including the rental) of the Tenancy Agreement are fair and reasonable by reference to the prevailing market rentals for comparable properties. The Board (including the independent non-executive Directors) considers the terms of the Tenancy Agreement to be normal commercial terms and are fair and reasonable in the ordinary and usual course of business and in the interests of the shareholders of the Company as a whole. INFORMATION ON THE GROUP AND TDB The Group (including Hwa Fuh) manufactures and sells a wide range of women's and men's apparel, from casual wear to high-end labels, including suits, jackets, coats, outerwear and sportswear, and exports most of its products to the United States, Japan and Europe. TDB is an investment holding company and does not have any subsidiaries. LISTING RULES IMPLICATIONS As the entire issued share capital of TDB is held by a discretionary trust of which Mr. Wang Kin Chung, Peter and Ms. Wang Koo Yik Chun, being the Directors, are eligible beneficiaries, the Tenancy Agreement constitutes a continuing connected transaction for the Company under the Listing Rules. Pursuant to Rule 14A.34 of the Listing Rules, as the applicable percentage ratios for the rent payable by Hwa Fuh to TDB under the Tenancy Agreement on an annual basis represent less than 2.5%, the Company is only subject to the reporting and announcement requirements and no approval from the independent shareholders of the Company is required for the entering into of the Tenancy Agreement. Particulars of the Tenancy Agreement will be disclosed in the annual report and accounts of the Company for each of the two years ending 31st December, 2007 in accordance with Rule 14A.46 of the Listing Rules. DEFINITIONS In this Announcement, the following terms and expressions have the following meanings:- "Board" the board of Directors; "Company" Tristate Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange; "Directors" the directors of the Company; "Group" the Company and its subsidiaries; "HK$" Hong Kong dollars; "Hwa Fuh" Hwa Fuh Manufacturing Company (Hong Kong) Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company; "Listing Rules" the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited; "Premises" Ground and 2nd to 11th Floors, Tak Dah Industrial Building, 66-72 Lei Muk Road, Kwai Chung, New Territories, Hong Kong; "Stock Exchange" The Stock Exchange of Hong Kong Limited; The Board considers that the Open Offer will enable the Group to strengthen its capital base and to enhance its financial position. Since the Open Offer will allow the Qualifying Shareholders to maintain their shareholdings in the Company, the Board considers raising capital through the Open Offer is in the interests of the Company and the Shareholders as a whole. The estimated net proceeds from the Open Offer will be approximately not less than HK$94.0 million and will be used for possible investment, including but not limited to investment in gaming and entertainment business in Macau or elsewhere. However, as at the date of this announcement, the Directors have not yet started seeking for any specific items of the above possible investment. The net proceeds from the Open Offer will be retained as general working capital of the Group before any of the above investment is identified. The estimated expense of the Open Offer is about HK$3.2 million, which will be borne by the Company. There are no other equity fund raising activities of the Company during the 12 months ended immediately before the date of this announcement. EXPECTED TIMETABLE Despatch of the circular to the Shareholders relating to the Open Offer, containing, among things, a notice convening the SGM Friday, 18 February 2005 Last day of dealings in Shares on cum-entitlement basis Tuesday, 1 March 2005 First day of dealings in Shares on ex-entitlement basis Wednesday, 2 March 2005 Latest time for lodging transfers of Shares in order to be entitled to the Open Offer 4:00 p.m. on Thursday, 3 March 2005 Friday, 4 March 2005 Register of members closes (both dates inclusive) to Tuesday, 8 March 2005 Latest time for lodging forms of proxy for the purpose of the SGM (48 hours before the SGM) 10:00 a.m. on Sunday, 6 March 2005 SGM to be held 10:00 a.m. on Tuesday, 8 March 2005 Record Date Tuesday, 8 March 2005 Register of members reopens Wednesday, 9 March 2005 Despatch of the Prospectus Documents Friday, 11 March 2005 Latest time for lodging application for the Offer Shares and payment 4:00 p.m. on Tuesday, 29 March 2005 Latest time for the Open Offer to become unconditional 4:00 p.m. on Friday, 1 April 2005 Announcement of results of the Open Offer Wednesday, 6 April 2005 Despatch of certificates for the Offer Shares Thursday, 7 April 2005 Dealings in Offer Shares commence Monday, 11 April 2005 Dates stated in this announcement for events mentioned in the timetable are indicative only and may be extended or varied. Any change to the expected timetable for the Open Offer will be announced as appropriate. GENERAL The SGM will be held to consider and, if thought fit, passing the resolution (with voting to be taken by a poll) to approve the Open Offer.