10:28 CHINA SCI-TECH<00985> - Announcement & Resumption (8) of the principal amount of the Convertible Notes so redeemed from the date immediately following the last interest payment date up to and including the date of redemption. Status of the Convertible Notes The Convertible Notes constitute a direct, general, unconditional and unsecured obligation of the Company and rank pari passu and rateably without preference (with the exception of obligations in respect of taxes and certain other mandatory provisions of applicable law exceptions) equally with all other present and/or future unsecured and unsubordinated obligations of the Company. Transferability The Convertible Notes may not be assigned or transferred to a connected person of the Company. Voting Rights The Convertible Notes do not confer any voting rights at any meetings of the Company. Listing No application will be made for the listing of the Convertible Notes. Application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Conversion Shares. REASONS FOR AND BENEFIT OF THE NEW SHARES PLACING AND THE CN PLACING AND USE OF PROCEEDS The Directors consider the timing of the fund raising by the New Shares Placing and CN Placing is appropriate in view of the favourable economic condition and stock market sentiment. Therefore, notwithstanding that the Company has conducted a placing in January 2005 (For details, please refer to the announcement of the Company dated 7 January 2005.) the Directors consider that it is an appropriate time to conduct the New Shares Placing and the CN Placing. The gross proceeds from the New Shares Placing and the CN Placing will be about HK$120 million. The net proceeds from the New Shares Placing and CN Placing will be about HK$115 million, of which not less than HK$58 million will be used for possible further investment in Shijiazhuang Shuanghuan Automobile Co. Ltd. (`Shuanghuan') and the remaining balance of net proceeds will be used for other investments when opportunities are identified and as the Directors consider appropriate. For details of the Company's acquisition of Tian Yang (H.K.) Company Limited which in turn holds 25% of the registered capital in Shuanghuan (the `Acquisition'), please refer to the announcement of the Company dated 18 November 2004 and the circular of the Company dated 31 December 2004. The Acquisition was completed on 28 January 2005. In the event that no appropriate investment opportunities is identified, the net proceeds will be used as general working capital of the Company. EFFECT ON SHAREHOLDING STRUCTURE The existing shareholding structure of the Company and the shareholding structure of the Company upon the completion of New Shares Placing and CN Placing are set out as below (assuming the Consolidation becomes effective and no change in share capital until the completion of New Shares Placing and CN Placing) Existing Immediatel Immediatel Immediatel Immediatel Shares y after y after y after y after (approxima the New the the New the New tely) Shares exercise Shares Shares Placing of the Placing Placing, but conversion and the the before rights exercise exercise the in full of the of the exercise attaching conversion conversion of the to the rights rights conversion Convertibl in full in full rights e Notes attaching attaching in full at the to the to the attaching conversion Convertibl Convertibl to the price of e Notes e Notes Convertibl HK$0.3but at the at the e Notes before conversion conversion at the the New price of price of conversion Shares HK$0.3 HK$0.3 price of Placing (approxima and the HK$0.3 (approxima tely) exercise (approxima tely) of the tely) conversion rights in full attaching to the outstandin g convertibl e notes in an aggregate