09:26     FOUR SEAS MER<00374> - 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.                                
                                                                              
    FOUR SEAS MERCANTILE HOLDINGS LIMITED                                     
    (Incorporated in the Cayman Islands with limited liability)               
    (Stock code: 374)                                                         
                                                                              
    DISCLOSEABLE TRANSACTION                                                  
    ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET              
    COMPANY                                                                   
                                                                              
    SUMMARY                                                                   
    The Board is pleased to announce that the Company has                     
    entered into the Stock Purchase Agreement with the Seller                 
    on 4 April 2005 pursuant to which the Seller has agreed to                
    sell and the Company has agreed to acquire the entire issued              
    share capital of the Target Company at an aggregate                       
    consideration of JPY541,600,000 (equivalent to                            
    approximately HK$39,522,177) (subject to adjustment). Upon                
    Completion, the Target Group will be wholly owned by the                  
    Company.                                                                  
                                                                              
    The Acquisition constitutes a discloseable transaction for                
    the Company under the Listing Rules. Accordingly, the                     
    Acquisition is subject to disclosure requirement as set out               
    in Chapter 14 of the Listing Rules.                                       
                                                                              
    A circular containing, amongst other things, further                      
    details of the Acquisition will be despatched to the                      
    Shareholders as soon as practicable.                                      
                                                                              
    THE STOCK PURCHASE AGREEMENT                                              
    Date                                                                      
    4 April 2005                                                              
                                                                              
    Parties                                                                   
    Purchaser:   The Company.                                                 
                                                                              
    Seller:   Ai Food (in liquidation), as represented by the                 
    trustee Toshiaki Higashibata. To the best of the Directors'               
    knowledge, information and belief having made all                         
    reasonable enquiry, the Seller and its ultimate beneficial                
    owners are independent of the Company and its connected                   
    persons (as defined in the Listing Rules).                                
                                                                              
    The Acquisition                                                           
    Pursuant to the Stock Purchase Agreement, the Seller agreed               
    to sell and the Company agreed to acquire the Sale Shares,                
    representing the entire issued share capital of the Target                
    Company.                                                                  
                                                                              
    Consideration                                                             
    The Consideration, determined based on the unaudited book                 
    value of the net assets of each of the Target Company,                    
    Restaurant Shiki and New Kondo, after eliminating the                     
    inter-company balances and the share capital of Restaurant                
    Shiki and New Kondo, in the aggregate amount of                           
    approximately HK$42 million as at 15 December 2004, after                 
    deducting the value of the net balance of goodwill of New                 
    Kondo in the amount of approximately HK$9.2 million as shown              
    in its management accounts as at 15 December 2004, plus the               
    book value of the net assets of the Target Company that has               
    increased between the period from 16 December 2004 to 15                  
    January 2005 based on the unaudited accounts of the Target                
    Company as agreed by both the Company and the Seller, will                
    be settled as follows:                                                    
                                                                              
    (a)   JPY30,000,000 (equivalent to approximately                          
    HK$2,189,190) of which has been paid by the Company upon                  
    signing of the Stock Purchase Agreement as a security                     
    deposit; and                                                              
                                                                              
    (b)   JP511,600,000 (equivalent to approximately                          
    HK$37,332,987) of which will be paid by the Company on 15                 
    May 2005.                                                                 
                                                                              
    The Consideration will be adjusted upward or downward                     
    taking into account the following:                                        
                                                                              
    (a)   the differences between the book value of the net                   
    assets of the Target Company as at 15 January 2005 and 15                 
    May 2005; and