10:45 CHEUNG TAI HONG<00199> - Announcement & Resumption (17) "Group" the Company and its subsidiaries "Hanny" Hanny Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange "HK$" Hong Kong dollars, the lawful currency of Hong Kong "Hong Kong" the Hong Kong Special Administrative Region of the People's Republic of China "Independent Board Committee" an independent committee of the Board established by the Board to advise the independent Shareholders in respect of the Subscription and the Placing "Initial Conversion Price" the initial conversion price of HK$0.44 per Share (subject to adjustment) "Kopola" Kopola Investment Company Limited, a company incorporated in British Virgin Islands with limited liability "Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange "Loyal Concept" Loyal Concept Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of Hanny "Mr. Ho" Mr. Ho Hau Chong, Norman, the deputy chairman and independent non-executive Director "Pacific Wins Convertible Notes" the HK$15 million 2% convertible notes due 2006 issued by the Company on 6 May 2004, which have been fully converted into Shares as at the date of this announcement "Placee(s)" any individual, institutional or other professional investor(s) procured by the Placing Agent to subscribe for the Placing Convertible Notes pursuant to the Placing Agent's obligations under the Placing Agreement "Placing" the placing of the Placing Convertible Notes by the Placing Agent pursuant to the Placing Agreement "Placing Agent" Tai Fook Securities Company Limited, a licensed corporation to carry on regulated activities 1, 3 and 4 for the purpose of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) "Placing Agreement" the conditional convertible note placing agreement dated 20 April 2005 entered into between the Company and the Placing Agent in relation to the Placing, subject to the terms and conditions contained therein "Placing Convertible Notes" the HK$44 million zero coupon convertible notes due 2010 proposed to be issued by the Company pursuant to the Placing Agreement "SFC" Securities and Futures Commission of Hong Kong "SGM" a special general meeting of the Company to be convened for the purpose of considering and, if (a) the Company will make a monthly announcement (the "Monthly Announcement") on the website of the Stock Exchange. Such announcement will be made on or before the fifth business day following the end of each calendar month and will include the following details in a table form: (i) whether there is any conversion of the Convertible Notes during the relevant month. If yes, details of the conversion(s), including the conversion date, number of new Shares issued, conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect; (ii) the number of outstanding Convertible Notes after the conversion, if any; (iii) the total number of Shares issued pursuant to other transactions, including Shares issued pursuant to exercise of options under any share option scheme(s) of the Company; and (iv) the total issued share capital of the Company as at the commencement and the last day of the relevant month; and (b) in addition to the Monthly Announcement, if the cumulative amount of new Shares issued pursuant to the conversion of the Convertible Notes reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the website of the Stock Exchange including details as stated in (a) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be) up to the date on which the total amount of Shares issued pursuant to the conversion amounted to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be). REASONS FOR THE SUBSCRIPTION AND THE PLACING AND USE OF PROCEEDS The Company is an investment holding company and the subsidiaries of which are principally engaged in (i) property development and investment; (ii) trading of motor cycles and spare parts; and (iii) the sale and manufacture of "Tung Fong Hung" branded Chinese pharmaceutical and health products, as well as the production and distribution of western pharmaceutical products. As stated in the circular of the Company dated 6 January 2005, by leveraging on its extensive experience in the property business, the Group is open for property investment opportunities and has decided to further expand its investment properties portfolio in high quality residential and commercial buildings in Hong Kong and other areas that the Board may think fit. The Group is still focusing on this business development approach and the Board has kept on exploring suitable investment opportunities. The Board has considered various ways of raising funds other than the Subscription and the Placing, such as bank borrowings, rights issue and open offer. However, the Board considers