10:23     SMI CORP<00198> - Announcement & Resumption of Trading (6)          

    Subject to the financial conditions of the Group, the                     
    Company may consider to exercise the option (which will                   
    be expired by 20 August 2005) to acquire the remaining 15%                
    equity interest in Stellar Cinema from Stellar. However,                  
    as at the date of this announcement, the Board has no such                
    intention.                                                                
                                                                              
    3.3   Funding arrangement                                                 
    The aggregate consideration of the Leadership S&P Agreement               
    of approximately HK$16.2 million has been satisfied by SMI                
    in cash. The net proceeds are estimated to be approximately               
    HK$16.2 million and together with the net proceeds of                     
    approximately HK$48 million received and to be received                   
    from the recent disposal of Alfaway International Limited                 
    (as announced by the Company on 8 February 2005 and                       
    disclosed in a circular of the Company dated 28 February                  
    2005) will be applied for the settlement of the Stellar                   
    Cinema S&P Agreement. Any excess funding from the aforesaid               
    disposals (after deducting the consideration for the                      
    subject acquisition) will be applied by the Group as general              
    working capital.                                                          
                                                                              
    4.   COMPLETION OF THE LEADERSHIP S&P AGREEMENT                           
    Reference is made to the announcements made by the Company                
    dated 1 April 2004 and 11 May 2004 and the circular issued                
    by the Company on 23 April 2004 in relation to the disposal               
    by the Company's subsidiaries to SMI, the controlling                     
    Shareholder currently having 153,244,526 Shares,                          
    representing approximately 48.79% of the existing issued                  
    share capital of the Company, of (i) 101,186,630 Leadership               
    Shares, representing approximately 18.36% of the then                     
    existing issued share capital of Leadership PGL; (ii)                     
    285,500,562 M Channel Shares, representing approximately                  
    26.91% of the then existing issued share capital of M                     
    Channel; and (iii) shareholder's loans advanced to a                      
    wholly-owned subsidiary of M Channel in the total sum of                  
    approximately HK$10.8 million, at a total consideration                   
    of approximately HK$27.3 million.                                         
                                                                              
    The Disposal constituted a discloseable and connected                     
    transaction of the Company and was duly approved by                       
    Independent Shareholders at a special general meeting of                  
    the Company held on 11 May 2004.                                          
                                                                              
    All the conditions to the above agreements have been                      
    fulfilled following approval by independent shareholders                  
    of the Company at a special general meeting held on 11 May                
    2004.                                                                     
                                                                              
    As stated in the announcement of 28 December 2004 issued                  
    by the Company, from middle of May 2004 to middle of December             
    2004, the Company, through its Directors, had been urging                 
    SMI to complete the transactions as soon as possible.                     
                                                                              
    Solicitors were eventually instructed by the Group and a                  
    letter was sent by them to SMI on 15 December 2004 demanding              
    completion of the Disposal within the next 7 days from the                
    date of the letter from the solicitors.                                   
                                                                              
    By a reply in writing dated 21 December 2004, SMI undertook               
    to complete the purchase of the Leadership Shares on or                   
    before 31 December 2004. With respect to the M Channel                    
    Shares and Loan, SMI requested that completion be deferred                
    to on or before 20 March 2005. No reason for the delay has                
    been given by SMI.                                                        
                                                                              
    The Leadership S&P Agreement was completed on 14 March 2005.              
    Given that completion of the Leadership S&P Agreement                     
    eventually took place (though after 31 December 2004), and                
    the Directors have considered the importance of the                       
    eventual completion of the Leadership S&P Agreement which                 
    outweighed the potential cost and efforts (if required)                   
    to claim SMI for any damages of not completing the                        
    Leadership S&P Agreement as previously agreed, the Board                  
    decided not to take any further action against SMI.                       
                                                                              
    5.   FURTHER EXTENSION OF THE COMPLETION DATE OF THE M                    
    CHANNEL S&P AGREEMENT                                                     
    Reference is made to the Disposal.