Pursuant to the repayment agreement signed between the company, Xiantao Caiyuan Guaranty Co., Ltd. and Bank of China, Xiantao sub-branch, Xiaotao Caiyuan has provided a joint liability guarantee on a RMB 158 mln loan with the bank for the company.

In addition a counter-guarantee agreement was reached between the company and Xiantao Caiyuan. Under the terms of the agreement, the company will provide a counter-guarantee on the loan by pledging its accounts payable at book value of RMB 158,323,436, as of 30 Jun 2008.

However, the company failed to repay the loan by the stipulated deadline of 20 Oct 2008. Xiantao Caiyuan Guaranty therefore honored its joint liability obligations in accordance with the terms of its agreement, repaying the loan in full to the bank on 21 Oct 2008. Concurrently, Xiantao Caiyuan required the company to honor obligations prescribed in the counter-guarantee agreement.

The company is currently negotiating with Xiantao Caiyuan on the treatment of the pledged accounts payable and the impact of these negotiations is not yet known. Information pertaining to the matter will be disclosed in a timely manner as it becomes available.

Board of Directors
22 Oct 2008


Source: Securities Times

Date: 23 Oct 2008

CN01/FL/JL/JE/MM