On 25 Mar 2008, the company singed a framework agreement regarding transfer of assets and debts with He Xuejian, Shenzhen Kejian Group Co. Ltd, Shenzhen Zhixiong Electronics Co. Ltd, Shenzhen Tongli Investment Co. Ltd and the Creditor Committee, a cooperative of 20 banks. The agreement was approved by the 10th Special Meeting of the 4th Board of Directors held on 24 Mar 2008.

The conditions, according to the contract, are as follows:
1. As of 30 June 2007, the company had assets of RMB 357.95 mln and debts of RMB 1445.24 mln. Except for assets and debts that are separately arranged, all remaining assets and debts of the company are to be transferred to Kejian Group, Zhixiong Electronics and Tongli Investemnt.
2. The company is to repay debts using its 75 residential properties, untransferable assets including but not limited to Kejian Tower, and its holding of 35% equity in Shenzhen Samsung Kejian Mobile Telecommunication Co. Ltd. Except for the abovementioned assets, all other assets together with debts owed are to be transferred to Kejian Group without condition as total debts are more than the value of assets.
3. The company has direct liabilities of RMB 690.5 mln and corresponding interest, and contingent liabilities of RMB 1.24 bln and corresponding interest owed to members of the creditor committee, which are to be transferred to Kejian, Zhixiong and Tongli.
4. The company plans to purchase the quality assets of Tongfang Co. Ltd through a private placement of up to 530 million new shares to shareholders of Tongfang, prior to which shareholders of Tongfang will transfer assets equivalent to the value of 20.75% of the 530 million new shares of the company (110 millions shares) to Tongli in advance. If the private placement fails to obtain approval from the China Securities Regulatory Commission, Tongli has pledged to unconditionally return the transferred equity in Tongfang to shareholders of Tongfang.

Board of Directors
26 Mar 2008


Source: Securities Times

Date: 26 Mar 2008

CN01/MZ/BT/GB