09:27     BAOYE GROUP<02355> - 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.                                                     
                                                                              
                                                                              
    BAOYE GROUP COMPANY LIMITED*                                              
    (a joint stock limited company incorporated in the                        
    People's Republic of China with limited liability)                        
    (Stock code: 2355)                                                        
                                                                              
    CONNECTED TRANSACTIONS:                                                   
    CONSTRUCTION AGREEMENT                                                    
    AND                                                                       
    ACQUISITION AGREEMENT                                                     
                                                                              
    The Board announces that on 26 February 2005, Baoye                       
    Construction, a non-wholly owned subsidiary of the                        
    Company, entered into the Construction Agreement with                     
    Minghua Textile, pursuant to which Baoye Construction                     
    has conditionally agreed to perform certain design,                       
    construction and installation work of Zhejiang                            
    Textile Raw Material Exhibition City Textile Raw                          
    Material Trade Centre (#). The construction site is located at Minghua    
    Village, Yaqian Town, Xiaoshan District (#). The total consideration for  
    the design,                                                               
    construction and installation work under the                              
    Construction Agreement amounts to RMB116,023,788                          
    (equivalent to approximately HK$109,456,404).                             
                                                                              
    Particulars of the Construction Agreement are set out                     
    in the paragraph headed "Construction Agreement" of                       
    this announcement.                                                        
                                                                              
    By virtue of the relationship between Baoye                               
    Construction and Minghua Textile which is more                            
    particularly described under the paragraph headed                         
    "Relationship between the parties" under the heading                      
    "Construction Agreement" in this announcement, the                        
    transaction contemplated under the Construction                           
    Agreement constitutes a connected transaction for the                     
    Company under the Listing Rules.                                          
                                                                              
    In accordance with the Listing Rules, independent                         
    shareholders' approval for the Construction                               
    Agreement is required. The Directors propose to seek                      
    the independent shareholders' approval of the                             
    Construction Agreement at the EGM by way of a poll.                       
    No Shareholder is required to abstain from voting at                      
    the EGM as none of the Shareholders or their                              
    respective associates have any material interest in                       
    the Construction Agreement.                                               
                                                                              
    The Independent Board Committee will be formed to                         
    consider the Construction Agreement, and an                               
    independent financial adviser will be appointed to                        
    advise the Independent Board Committee and the                            
    independent shareholders on those issues. A circular                      
    containing, among other things, details of the                            
    Construction Agreement, the recommendation of the                         
    Independent Board Committee, the advice of the                            
    independent financial adviser and the notice of EGM                       
    will be despatched to the Shareholders as soon as                         
    practicable.                                                              
                                                                              
    The Board further announces that the Acquisition                          
    Agreement was entered into between the Company and                        
    Mr Pang on 26 February 2005 whereby the Company has                       
    conditionally agreed to acquire and Mr Pang has