10:28 HON PO GROUP<00228> - Announcement (2) fulfilled from 6th May, 2005 to 30th June, 2005. A notice to reconvene the extraordinary general meeting of the Company adjourned on 8th April, 2005 will be issued after finalisation of the circular. PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The Board intends to put forward a proposal to the Shareholders to increase the authorised share capital of the Company from HK$100,000,000 divided into 2,000,000,000 Shares to HK$500,000,000 divided into 10,000,000,000 Shares each by creation of an additional HK$400,000,000 divided into 8,000,000,000 Shares. SHAREHOLDERS CIRCULAR A shareholders circular containing further details of the Placing and the proposed increase in authorised share capital, together with a letter of advice from an independent financial adviser of the Company and a letter from the independent board committee of the Company in respect of the proposed issue of the Convertible Notes and the First Convertible Notes and a notice of EGM will be despatched to Shareholders as soon as practicable. SHARE CONSOLIDATION The Share Consolidation took effect on 11th April, 2005. Further information regarding trading arrangements for the Shares, the exchange of Pre-Consolidation Share certificates for the Pre-Consolidation Shares for new certificates for the Shares and the facility for the sale and purchase of odd lots of Shares is set out in this announcement. CLARIFICATIONS Reference is made to (1) the suspension in trading of the shares of the Company, at the request of the Company, with effect from 3:26 p.m. on the Last Trading Day, pending an announcement to be made by the Company in connection with new price sensitive information and (2) the Article regarding an alleged disposal of business by the Company and an alleged transfer of controlling interest in the Company to a large Mainland Chinese food and beverages group. The Company clarifies that it was approached by the Placing Agent in connection with the possibility of effecting the Placing at or about 3:15 p.m. on 23rd March, 2005. Before then, the Directors were not aware of reasons for the increases in the price and trading volume of the shares of the Company that morning and had published a statement to that effect pursuant to Rule 13.10 of the Listing Rules at around 2:58 p.m. In view of such movement of share price and trading volume and the Company having decided to pursue discussions with the Placing Agent as initiated by it, trading in the Company's shares was suspended at the Company's request with effect from 3:26 p.m. The Company also clarifies that it does not plan to dispose of its business, nor does it (or its controlling shareholder as defined in the Listing Rules) intend to transfer the controlling interests in the Company to a large Mainland Chinese food and beverages group as alleged by the Article. SUSPENSION AND RESUMPTION OF TRADING At the request of the Company, trading in the shares of the Company on the Stock Exchange was suspended from 3:26 p.m. on 23rd March, 2005 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in Shares on the Stock Exchange with effect from 9:30 a.m. on 12th May, 2005, to accommodate trading arrangements for the Shares given that the Share Consolidation has become effective. (1) POSSIBLE PLACING OF CONVERTIBLE NOTES Placing Agreement Date 29th March, 2005 Parties Involved The Placing Agent and the Company Placing Agent The Placing Agent has conditionally agreed with the Company to place, on a best effort basis, to not less than six independent professional, corporate or individual investors the Convertible Notes which are proposed to be issued in an aggregate principal amount of HK$100,000,000