10:36 TONIC IND HOLD<00978> - Announcement (2) Shareholders (if any), for its information only, on or before Friday, 25 February 2005. RIGHTS ISSUE Issue statistics Basis of the Rights Issue: One Rights Share for every two existing Shares held on the Record Date Number of existing Shares in issue: 635,259,975 Shares as at the date of this announcement Number of existing authorised Shares: 1,200,000,000 Shares as at the date of this announcement Number of Rights Shares: Not less than 317,629,987 Rights Shares and not more than 341,754,987 Rights Shares Underwriter: Success Forever The Rights Shares will be fully underwritten by Success Forever on the terms and subject to the conditions set out in the Underwriting Agreement. Under the Rights Issue, not less than 317,629,987 nil-paid Rights Shares (assuming no Share Options are exercised before the Record Date) would be provisionally allotted, representing 50% of the existing issued share capital of the Company and approximately 33% of the issued share capital of the Company as enlarged by the issue of 317,629,987 Rights Shares. The number of Rights Shares which may be issued pursuant to the Rights Issue will be increased in proportion to any additional Shares which may be allotted and issued upon the exercise of the Share Options on or before 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 at HK$0.70 per Share (of which (i) Mr. Ling is entitled to subscribe for 10,000,000 Shares; (ii) other six executive Directors are entitled to subscribe for 10,150,000 Shares; and (iii) other holders of the Share Options, being employees of the Group, are entitled to subscribe for 28,100,000 Shares). If all of the subscription rights attaching to the outstanding Share Options are exercised in full on or before the Record Date, the number of issued Shares will be increased to 683,509,975 Shares and the number of Rights Shares which may be issued pursuant to the Rights Issue will be increased to 341,754,987 Rights Shares. Qualifying Shareholders To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company on the Record Date. In order to be registered as members of the Company on the Record Date, all transfers of the Shares must be lodged (together with the relevant share certificate(s)) with the Company's branch share registrars in Hong Kong by 4:00 p.m. (Hong Kong time) on Thursday, 17 February 2005. The branch share registrar of the Company in Hong Kong is: Tengis Limited Ground Floor Bank of East Asia Harbour View Centre 56 Gloucester Road Wanchai Hong Kong The Company will send the Rights Issue Documents, including the Prospectus, the provisional allotment letters and the forms of application for excess Rights Shares to the Qualifying Shareholders. The Company will send the Prospectus only to the Excluded Shareholders (if any) for information purposes. The Excluded Shareholders are the Shareholders whose names appear on the register of members of the Company as at the close of business on the Record Date and whose addresses as shown on such register are outside Hong Kong where the Directors consider it necessary or expedient not to offer the Rights Issue to such Shareholders on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place. As at the date of this announcement, the Company does not have any Shareholders whose addresses as shown on the register of members are outside Hong Kong. In the event that the Company has Shareholder(s) whose addresses as shown on the register of members is/are outside Hong Kong on the Record Date, the Company will make enquiry regarding the legal restrictions (if any) under the laws of the relevant places and the requirements of the relevant regulatory bodies or stock exchanges for the Company's offering the Rights Shares to such Shareholders to determine who will be the Excluded Shareholders. The Company will make further announcement regarding the Excluded Shareholders (if any) on or before the date of despatch of the Right Issue Documents, which is expected to be on Friday, 25 February 2005.