13:03     LENOVO GROUP<00992> - Ann. & Resumption of Trading (10)             

    As at 29 March 2005                                                       
                                                                              
    Immediately upon the issue of the Convertible                             
    Preferred Shares and the initial closing of the IBM Acquisition           
                                                                              
    *  Represents percentage of the total issued capital of the Company       
    (comprising Shares, Non-voting Shares and Shares converted from the       
    Convertible Preferred Shares) and assuming: (a) up to 1,307,153,271       
    Shares will be issued to IBM upon the initial closing of the IBM          
    Acquisition; and (b) no Warrants have been exercised.                     
                                                                              
    A Convertible Preferred Shareholder (individually or in aggregate with    
    its associates) having the rights to exercise 10% or more of the voting   
    rights of the Company will be regarded as a substantial shareholder of    
    the Company (as defined in the Listing Rules) and thus a connected        
    person of the Company (as defined in the Listing Rules).                  
                                                                              
                                                                              
    USE OF PROCEEDS                                                           
                                                                              
    The net proceeds from the issue of the Convertible Preferred Shares and   
    the Warrants after deducting the relevant expenses are expected to be     
    approximately US$347 million. The Directors intend to apply the           
    proceeds from the issue of the Convertible Preferred Shares and the       
    Warrants as to approximately US$150 million to satisfy part of the        
    consideration payable to IBM for the IBM Acquisition, and as to the       
    balance for general corporate purposes. The payment of US$150 million     
    in cash to IBM would reduce 435,717,757 shares in the capital of the      
    Company which would otherwise be issuable to IBM as consideration for     
    the IBM Acquisition. Pursuant to the Investment Agreement, the initial    
    closing of the IBM Acquisition is one of the condition precedents to      
    the closing of the Investment Agreement. It is expected that the          
    closing IBM Acquisition shall either occur contemporaneously or before    
    the closing of Investment Agreement.                                      
                                                                              
    As mentioned in the paragraph entitled "The Issue Price and Exercise      
    Price" above, the aggregate amount of cash which the Company will         
    receive upon full exercise of the Warrants cannot be ascertained as at    
    the date of this announcement. The Company intends to use the proceeds    
    arising from the exercise of Warrants for general corporate purposes.     
                                                                              
                                                                              
    GENERAL                                                                   
                                                                              
    The principal activity of the Company is investment holding. The          
    principal activities of the Group are the provision of advanced           
    information technology products and services in the PRC. In December      
    2004, the Company announced a definitive agreement for the acquisition    
    of IBM's global desktop computer and notebook computer business.          
                                                                              
    The terms of the Convertible Preferred Shares and the Warrants were       
    negotiated at arm's length between the Company and the Investors. The     
    Directors consider that the issue of the Convertible Preferred Shares     
    and Warrants provides an alternative funding means to the Company and     
    part of the proceeds from the issue of the Convertible Preferred Shares   
    and Warrants will be used to satisfy part of the consideration payable    
    to IBM for the IBM Acquisition. In addition, the Directors consider       
    that the Investors offer expertise and experience that are expected to    
    be valuable to the Company. The Directors consider that the terms of      
    the Convertible Preferred Shares and the Warrants are fair and            
    reasonable and in the interests of the Company and the Shareholders as    
    a whole.                                                                  
                                                                              
                                                                              
    Subject to any applicable laws or regulations, the Listing Rules and      
    decisions of any applicable authority, the Major Shareholder has, under   
    the Voting Undertaking, undertaken and agreed with the Investors to       
    vote (or procure to be voted) in favour of the Investment Agreement and   
    any other agreements relating to the transactions mentioned therein,      
    and any action and transaction contemplated under such agreements at      
    any shareholder meeting and Board meeting, including the resolutions to   
    be proposed at the Extraordinary General Meeting and the appointment of   
    the Directors to be designated by the Investors as described in this      
    announcement.                                                             
                                                                              
    Save as the Warrants to be issued and the 516,100,000 outstanding share   
    options granted under the Company's share option schemes, there are no    
    other warrants, options, or similar securities conferring rights to       
    subscribe for Shares outstanding as at the date of this announcement.