09:15     HON PO GROUP<00228> - Announcement & Resumption (3)                 

     agree).                                                                  
                                                                              
    The Convertibles Notes                                                    
                                                                              
    The terms of the Convertible Notes have been negotiated on arm's length   
    basis and the principal terms of which are summarized below:              
                                                                              
    Principal amount                                                          
                                                                              
    HK$20,000,000 for the First Notes and HK$20,000,000 for the Second        
    Notes.                                                                    
                                                                              
    Interest                                                                  
                                                                              
    Non-interest bearing                                                      
                                                                              
    Maturity                                                                  
                                                                              
    Second anniversary from the date of the issue of the relevant             
    Convertible Notes.                                                        
                                                                              
    Denomination                                                              
                                                                              
    In multiple of HK$50,000.                                                 
                                                                              
    Conversion Price                                                          
                                                                              
    HK$0.02 per Share which is subject to adjustment for the Share            
    Consolidation and any dilutive events , amongst other matters,            
    sub-division or consolidation of Shares, bonus issues and rights issues.  
                                                                              
                                                                              
    The Conversion Price of HK$0.02 before Share Consolidation represents     
    (i) a discount of about 69.70% to the closing price of HK$0.066 per       
    Share as quoted on the Stock Exchange on the Last Trading Date; (ii) a    
    discount of about 70.06% to the average closing price per Share of about  
     HK$0.0668 as quoted on the Stock Exchange for the last five trading      
    days up to and including the Last Trading Date; and (iii) a discount of   
    about 70.37% to the average closing price per Share of HK$0.0675 as       
    quoted on the Stock Exchange for the last ten trading days up to and      
    including the Last Trading Date.                                          
                                                                              
    Conversion                                                                
                                                                              
    Each holder may convert the whole or part of the principal amount of the  
     relevant Convertible Note (in multiple of HK$50,000) into new Shares as  
     determined by dividing the principal amount of the relevant Convertible  
     Note outstanding at the time of conversion by the Conversion Price.      
                                                                              
    Assuming there is an immediate exercise in full of the conversion rights  
     attaching to the Convertible Notes at the Conversion Price by all        
    holders of the Convertible Notes and Share Consolidation being            
    effective, the Company will issue an aggregate of 400,000,000 new         
    Consolidated Shares, representing approximately 264.55% of the existing   
    issued share capital of the Company before or after Share Consolidation   
    being effective, and approximately 72.57% of the enlarged issued share    
    capital of the Company before or after the Share Consolidation being      
    effective by the Conversion Shares. The Conversion Shares will be issued  
     pursuant to the passing of the relevant resolution at the EGM by the     
    Shareholders.                                                             
                                                                              
    The market value of the total Conversion Shares will be in aggregate of   
    HK$132 million based on the closing price of HK$0.066 per Share on 7      
    February 2005 being the Last Trading Day.                                 
                                                                              
    Conversion period                                                         
                                                                              
    Each of the holders of the Convertible Notes shall have the right at any  
     time after the date of issue of the relevant Convertible Note to         
    convert all or part of the principal amount of the relevant Convertible   
    Note outstanding at any time into new Shares at the Conversion Price      
    provided that an integral multiple of HK$50,000 be converted at any time  
     and save that if the outstanding principal amount of the relevant        
    Convertible Notes is less than HK$50,000 the whole (but not part only)    
    of the outstanding principal amount of the relevant Convertible Note      
    must be converted.                                                        
                                                                              
    Ranking                                                                   
                                                                              
    The Conversion Shares will rank pari passu in all respects among          
    themselves and with all other Shares in issue on the date of such         
    allotment and issue.                                                      
                                                                              
    Placing Limit