On 14 Oct, the company announced that due to financial insolvency, it has signed agreements with Industrial and Commercial Bank of China, Suzhou Yongqiao sub-branch, China Construction Bank, Suzhou branch, and Agricultural Bank of China, Suzhou Huaihai sub-branch, to repay debts related to land use rights.

Jin Jie, Secretary of the Board of Directors, said that these agreements will accelerate asset restructuring and subsequently lead to a private placement which has already been submitted to the China Securities Regulatory Commission for approval.

According to the agreements, the company will transfer its rights to 115,727 sq. meters of property located in the Suzhou Economic Development Zone for RMB 843.9 per sq. meter to Industrial and Commercial Bank of China, Suzhou Yongqiao sub-branch, as payment for its RMB 96.5 mln in debt.

Meanwhile, the company's rights to 214,600 sq. meters of property in the Suzhou Economic Development Zone will be used to repay RMB 229,041,931 in debt to China Construction Bank, Suzhou branch.

In addition, the company will repay RMB 83,858,678 in principal to Agricultural Bank of China, Suzhou Huaihai sub-branch, using its rights to 255,667 sq. meters of property in the Suzhou Economic Development Zone for an audited price of RMB 328 per sq. meter.

Property value appreciation, coupled with an interest payment exemption, will add a total of RMB 340.54 mln to the company's revenue for the current period. Of this figure, property appropriated to Industrial and Commercial Bank of China, Suzhou Yongqiao sub-branch will account for RMB 107.5 mln. China Construction Bank, Suzhou branch, will add RMB 192.6 mln and Agricultural Bank of China, Suzhou Huaihai sub-branch, will realize approximately RMB 40.45 mln.

A Shanghai-based accounting firm believes that the deal will contribute around RMB 200 mln to the balance sheet after deducting value-added taxes on land. The company posted revenue of RMB 56.7 mln and a net loss of RMB -38.8 mln in its semiannual report. A company source remarked that the debt restructuring will help alleviate the serious financial stresses and cut capital costs substantially.

On 14 Oct, stimulated by the news, the company's stock price reached its intraday maximum limit, closing at RMB 3.19 per share, with a turnover rate of 0.16%.

Source: 21st Century Business Herald

Date: 15 Oct 2008

CN01/DC/LZ/NK/MM