RMB 30 Mln Overdue Guarantee Pending Solution

On 8 Jul 2003, Guangzhou Baoshui Hejia International Trade Co., Ltd. applied for a one-year RMB 30 mln loan from 8 Jul 2003 to 7 Jul 2004 with Guangdong Development Bank, Guangzhou Tianhe sub-branch. To date, this loan remains overdue with Hejia Trade having only repaid RMB 5 mln. RMB 25 mln has yet to be paid.

The company provided a three-year joint liability guarantee from 8 Jul 2003 to 7 Jul 2006 on the aforementioned bank loan for Hejia Trade. But neither a meeting of the board of directors nor a general meeting of shareholders was convened to examine this guarantee and it was approved by only two thirds of the board directors.

The company discovered the overdue guarantee during consultations with its controlling shareholder to address the company's bank debt issues, as part of an ongoing governance rectification. Further information will be disclosed within two working days.

Board of Directors
5 Nov 2008


Source: Shanghai Stock Exchange

Date: 6 Nov 2008

CN01/BJ/JL/JE/KM