09:23 GUANGZHOU SHIP<00317> - Announcement 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. GUANGZHOU SHIPYARD INTERNATIONAL COMPANY LIMITED (a joint stock company with limited liability incorporated in the People's Republic of China) Stock Code: 0317 DISCLOSEABLE TRANSACTION GZITIC DEBT RESTRUCTURING A debt restructuring agreement was entered into between the Company and GZITIC on January 31, 2005, pursuant to which GZITIC will procure transfer of certain real estate to the Company in settlement of debts owing to the Company in the principal amount of RMB220 million and interest otherwise accrued thereon. A debt restructuring agreement ("Agreement") was entered into between Guangzhou Shipyard International Company Limited ("Company") and Guangzhou International Trust and Investment Company ("GZITIC") on January 31, 2005. Pursuant to the terms of the Agreement, GZITIC will procure transfer of certain unencumbered shops with an approximate area of 19,250 sq. meters located in Urumuqi ("Real Estate") to the Company, in settlement of debts owing to the Company in the principal amount of RMB220 million and interest otherwise accrued thereon. The Real Estate has been preliminarily valued by a PRC independent valuer on October 26, 2004 at not less than RMB110 million and has not been occupied currently. The Company will employ a Hong Kong valuer named Sallmanns to further appraise for determining the final value, but the final value will not have any effect to any terms of the Agreement, and will be included in the circular. The amount of debt to be settled in exchange for the Real Estate was agreed upon arm's-length terms on the basis that the value of the Real Estate will not be less than RMB110 million and a debt repayment ratio refers to the ratio of 50%. In accordance with the Agreement, debts owing by GZITIC to the Company in the principal amount of RMB220 million together with interest otherwise accrued thereon will be treated as fully and finally settled upon the Company obtaining the building ownership certificate to the Real Estate. The principal businesses of the Company and its subsidiaries ("Group") are ship building, ship repairing, steel structure and other manufacturing. GZITIC is a non-bank financial institution and since ceasing its trust business in 1998 following the Asian Financial Crisis, has been conducting debt restructuring. To the best of the knowledge, information and belief of the directors of the Company ("Directors") having made all reasonable enquiry, GZITIC and its ultimate beneficial owner are third parties independent of the Directors, chief executives, & substantial shareholders of the Company or its subsidiaries or any of their respective associates. As at December 31, 2004, the balance of the Company's trust deposits at GZITIC amounted to RMB397,072,000, of which 10% and 70% in the total amount of RMB325,374,800 had been provided for as bad debts in 1999 and 2000 respectively. Such deposits has been disclosed in the annual reports since 1998, and the interests accrued has not been calculated into the accounts due to their impossible recovery. The Directors consider the transaction to be a reasonable proposal to settle a significant amount of the outstanding debts from GZITIC to the Company on terms which are satisfactory to the Group taking into account the difficult financial circumstances of GZITIC and the adverse consequences to the Group of the prolonged recovery period overdue since 1998 if the transaction was not entered into. The Directors including independent non-executive Directors therefore consider the terms of the Agreement to be fair and reasonable and in the interests of the shareholders of the Company as a whole. The outstanding debt balance with an amount of RMB177,072,000 from GZITIC to the Group has not been waived, and the Group will continue to take active measures to settle such balance. Because the total assets test and consideration test of the size tests of the transaction are higher than the ratio of 5% and lower than the ratio of 25%, the transaction constitutes a discloseable transaction. The circular will be dispatched to shareholder for information purpose as soon as practible. By Order of the Board Guangzhou Shipyard International Co., Ltd. Li Zhidong Company Secretary Guangzhou, January 31, 2005 As at the date of this announcement, the Board of Directors of the Company is composed of eleven directors, namely executive directors Messrs. Hu Guoliang, Yu Baoshan, Han Guangde, Wang Yi, non-executive directors Messrs. Zhong Jian, Li Junfeng, Miao Jian, and independent non-executive directors Messrs. Wu Fabo, Bu Miaojin, David Hon To, Yu and Philip Pak Yiu, Yuen.