10:36 TONIC IND HOLD<00978> - Announcement (1) 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. TONIC INDUSTRIES HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock code: 978) RIGHTS ISSUE OF NOT LESS THAN 317,629,987 RIGHTS SHARES AND NOT MORE THAN 341,754,987 RIGHTS SHARES AT HK$0.20 EACH ON THE BASIS OF ONE RIGHTS SHARE FOR EVERY TWO EXISTING SHARES HELD ON THE RECORD DATE Financial adviser to the Company TAI FOOK CAPITAL LIMITED Underwriter Success Forever Limited The Rights Issue The Company proposes to raise approximately HK$64 million to HK$68 million, before expenses, by way of a rights issue of not less than 317,629,987 Rights Shares and not more than 341,754,987 Rights Shares at a price of HK$0.20 per Rights Share on the basis of one Rights Share for every two existing Shares held on the Record Date. Pursuant to the Rights Issue, the Qualifying Shareholders will be provisionally allotted one Rights Share in nil-paid form for every two existing Shares held on the Record Date. As at the date of this announcement, there are outstanding Share Options entitling holders thereof to subscribe for 48,250,000 Shares. The estimated net proceeds of the Rights Issue is approximately HK$62 million (assuming no outstanding Share Options are exercised on or before the Record Date) or approximately HK$67 million (assuming all outstanding Share Options are exercised in full on or before the Record Date), which is intended to be used as to approximately HK$30 million for the purchase of plant and machinery and as to approximately HK$32 million to HK$37 million for the general working capital of the Group. Success Forever has indicated to the Company that the Shares beneficially owned by it as at the date of this announcement will remain registered in the same name on the Record Date and that it will accept or procure the acceptance of all the 158,943,391 Rights Shares to be provisionally allotted to it or its nominee as the holder of such Rights Shares pursuant to the Rights Issue. The Rights Shares will be fully underwritten by Success Forever on the terms and subject to the conditions set out in the Underwriting Agreement. If Success Forever terminates the Underwriting Agreement (see sub-section headed "Termination of the Underwriting Agreement" below) or the conditions of the Rights Issue (see sub-section headed "Conditions of the Rights Issue" below) are not fulfilled or waived, the Rights Issue will not proceed. Accordingly, the Rights Issue may or may not proceed. Investors' attention is drawn to the section headed "Warning of the risks of dealings in the Shares and the nil-paid Rights Shares" below. The last day of dealing in the Shares on a cum-rights basis is Tuesday, 15 February 2005. The Shares will be dealt with on an ex-rights basis from Wednesday, 16 February 2005. The Rights Shares are expected to be dealt with in their nil-paid form from Tuesday, 1 March 2005 to Wednesday, 9 March 2005 (both dates inclusive). To qualify for the Rights Issue, any transfer of the Shares (together with the relevant share certificate(s)) must be lodged for registration with the Company's branch share registrars in Hong Kong, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, by 4:00 p.m. on Thursday, 17 February 2005. The last day for acceptance and payment of the Rights Shares are expected to be on Monday, 14 March 2005. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares in both the nil-paid and fully-paid forms. The Company will despatch the Rights Issue Documents to each of the Qualifying Shareholders and the Prospectus to each of the Excluded