09:26 CHINA STAR ENT<00326> - 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. CHINA STAR ENTERTAINMENT LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 326) DISCLOSURE PURSUANT TO RULES 13.13 AND 13.16 OF THE LISTING RULES AND DISCLOSEABLE TRANSACTION This announcement is made pursuant to Rules 13.13, 13.16 and Chapter 14 of the Listing Rules to disclose details of the relevant advance to an entity by the Group which exceeded 8% of the Company's Total Market Capitalisation as at 19th April, 2005 and which also constitutes a discloseable transaction for the Company. This announcement is made by China Star Entertainment Limited (the "Company") in compliance with the disclosure requirements under Rules 13.13, 13.16 and Chapter 14 of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). As at 19th April, 2005, there were 520,541,608 shares of the Company in issue. Based on the average closing price of the Company's shares of HK$0.448 as stated in the Stock Exchange's daily quotation sheets for the trading days from 12th April, 2005 to 18th April, 2005 (both days inclusive), being the five business days immediately preceding 19th April, 2005, the total market capitalisation of the Company was approximately HK$233.2 million (the "Total Market Capitalisation"). On 19th April, 2005, the Company granted a loan ("Loan") to Riche Multi-Media Holdings Limited, an affiliated company of the Company which is not a connected person (as defined in the Listing Rules). The terms of the Loan are as follows: Amount : HK$33,800,000 Term : 1 year Interest : 1% per annum Repayment : on demand Security : none Source of fund : internal resources The Loan exceeds 8% of the Total Market Capitalisation and therefore gives rise to a disclosure obligation of the Company under Rules 13.13 and 13.16 of the Listing Rules. Furthermore, the Loan constitutes a discloseable transaction for the Company as it exceeds 5% but not more than 25% of the applicable five tests under Chapter 14 of the Listing Rules. The Company and its subsidiaries (the "Group") are engaged in film production, distribution of film and television drama series, and the provision of post-production services. The principal activity of Riche Multi-Media Holdings Limited is investment holding and its subsidiaries are principally engaged in the distribution of films, sub-licensing of film rights and sale of advertising rights or otherwise related to the entertainment industry. The directors of the Company (including the independent non- executive directors) consider that the Loan can create a stable return for the Group and believe that the terms of the transaction are fair and reasonable and are normal commercial terms and in the interests of the shareholders of the Company as a whole. The Company will fulfil the continuing disclosure obligation under Rules 13.20 and 13.22 of the Listing Rules so long as circumstances giving rise to such disclosure obligation continue to exist. A circular containing details of the Loan will be despatched to shareholders of the Company as soon as practicable after the publication of this announcement. By Order of the Board China Star Entertainment Limited Li Yuk Sheung Executive Director