09:46 CHINA RICH HOLD<01191> - Announcement & Resumption (2) consolidation prior to the completion of the Rights Issue. The Directors will take appropriate action to ensure compliance with Rule 13.64 of the Listing Rules. More specifically, after the completion of the Rights Issue, taking into consideration the requirement under Rule 13.64 of the Listing Rules, the then trading price of the Shares and the then market conditions, the Directors will propose to the Shareholders to consolidate five Shares into one share of HK$0.05. Further announcement relating to the details of the share consolidation will be made by the Company shortly after completion of the Rights Issue. SUSPENSION AND RESUMPTION OF TRADING At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on Thursday, 31 March 2005 pending the release of this announcement. The Company has applied to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on Wednesday, 6 April 2005. GENERAL A circular containing, among other things, details of the Capital Reorganisation and the Rights Issue together with a notice convening the SGM will be despatched to the Shareholders on or before Monday, 18 April 2005. PROPOSED CAPITAL REORGANISATION The Company proposes to implement the Capital Reorganisation with the objective to reduce the par value of the shares in the Company from HK$0.1 each to HK$0.01 each and to eliminate accumulated losses of the Company. These steps will include (i) the Capital Reduction; (ii) the subdivision of each authorised but unissued Existing Share of HK$0.1 into 10 shares of HK$0.01 each; (iii) the application of the total credit of HK$203,099,957.6 arising from the Capital Reduction to set off part of the accumulated losses of the Company; and (iv) the cancellation of the entire share premium account and application of the credit arising as to approximately HK$256,281,000 to eliminate the balance of the accumulated losses of the Company and as to approximately HK$143,218,000 to the Company's contributed surplus account. Conditions of the Capital Reorganisation The proposed Capital Reorganisation is conditional upon the following conditions being fulfilled: (i) the passing of a resolution by the Shareholders at the SGM to approve the Capital Reorganisation as contained in the notice of SGM; (ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Reorganised Shares to be created and/or issued as mentioned in this announcement; and (iii) publication of a notice in relation to the Capital Reorganisation in compliance with section 46 of the Companies Act. No approval or waiver in relation to the Capital Reorganisation is required from the Supreme Court of Bermuda. The Capital Reduction is necessary to facilitate issue of Rights Shares at a subscription price below the current par value of HK$0.10 per Existing Share. As at 31 July 2004, the Company had accumulated losses of approximately HK$459.4 million. With such accumulated losses, the Company would not be able to pay dividends to Shareholders until such accumulated losses are eliminated. Although the Board has no intention to declare any dividend distribution at present, the Capital Reorganisation would eliminate the Company's accumulated losses and provide flexibility to the Company to declare dividend in the future. Accordingly, the Directors are of the view that the Capital Reorganisation is in the best interests of the Company. Application will be made to the Stock Exchange for the granting of the listing of, and permission to deal in, the Reorganised Shares and all necessary arrangements will be made for the Reorganised Shares to be admitted into the CCASS. PROPOSED RIGHTS ISSUE Issue statistics Basis of the Rights Issue: One Rights Share for every two existing Shares (in issue immediately after the Capital Reorganisation) held on the Record Date