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2011 SINOBEST TECHNO : Acquisitions And Disposals :: Very Substantial Acq..
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Sinobest Technology : Acquisitions And Disposals :: Very Substantial Acquisition Or Reverse Takeover :: Proposed Acquisition Of The Entire Issued Share Capital Of Okh Holdings Pte. Ltd.

07/05/2011 | 09:50am US/Eastern
SINOBEST TECHNOLOGY HOLDINGS LTD.

Incorporated in Bermuda

(Company Registration Number: 35479)PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF OKH HOLDINGS PTE. LTD.1. INTRODUCTION

The Board of Directors (the “Board”) of Sinobest Technology Holdings Ltd. (the "Company" or “Purchaser”) is pleased to announce that the Company has, on 4 July 2011, entered into a sale and purchase agreement (the "SPA") with Mr Bon Ween Foong (the “Vendor”) in respect of the proposed acquisition by the Company of 6,500,000 ordinary shares (the “Sale Shares”) representing the entire issued share capital of OKH Holdings Pte. Ltd. (“OKH”) from the Vendor for the purchase consideration estimated to be S$108 million, which shall be satisfied in full by the allotment and issue of 900,000,000 new ordinary shares in the capital of the Company (the “Consideration Shares”) to the Vendor or its nominees at an issue price of S$0.12 for each Consideration Share (the "Proposed Acquisition") based on the principles set out in paragraph 4.1 of this Announcement. The exact Purchase Consideration (defined below) and the number of Consideration Shares will be finalised after the issue of OKH’s audited financial statements for its financial year ended 30 June 2011.

The Proposed Acquisition will be classified as a “very substantial acquisition or reverse takeover” according to the size of the relative figures computed on the bases as set out in Chapter 10 of the Listing Manual (the “Listing Manual”) of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), and this announcement sets out the information required for a “very substantial acquisition or reverse takeover” under Chapter 10 of the Listing Manual. As per Rule 1015 of the Listing Manual, the Proposed Acquisition, being a “very substantial acquisition or reverse takeover”, will also be subject to the approval of the SGX-ST and the shareholders of the Company (the “Shareholders”) at a special general meeting to be convened (the “SGM”).

Shareholders are advised to read this announcement in its entirety, in particular the

Cautionary Statement as set out in paragraph 13 of this announcement.2. INFORMATION RELATING TO OKH AND THE VENDOR

2.1 Information on OKH

OKH is a limited exempt private company incorporated in Singapore. OKH and its subsidiaries (“OKH Group”) are primarily involved in the business of property development, construction and provision of services as a specialist contractor (including mechanical and electrical services and other work relating to LED (light emitting diode) panel projects, energy projects and all other work or projects commenced or undertaken by the OKH Group). The recipient of the SME 50 Fastest Growing Companies Award in Singapore (2008) and the SME

1000 Top Companies in Singapore Award (2010 and 2011), OKH has been involved in various projects including the expansion of the existing Budget Terminal at Changi Airport.

3.1 Further details relating to the history, business and operations of OKH will be included in the circular to be despatched by the Company to the Shareholders in connection with the Proposed Acquisition.

2.2 Information on the Vendor

The Vendor is the legal and beneficial owner of the entire issued share capital of OKH. The

Vendor is the founder and currently a director of the OKH Group.

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2.3 Financial information of OKH

A summary of the audited consolidated financial statements of OKH for the financial years ended 30 June 2008 (“FY2008”), 30 June 2009 (“FY2009”) and 30 June 2010 (“FY2010”) are set out below:-

Income Statement

FY2008

FY2009

FY2010

S$’000

Revenue

36,322

36,371

38,112

Profit before tax

819

1,234

7,887

Profit after tax

675

1,029

7,002

border=1>

Balance Sheet

As at 30 June 2010

S$’000

Current assets

15,085

Current liabilities

19,061

Net current assets

(3,976)

Net tangible assets

16,216

border=1>3. RULE 1006 OF THE SGX-ST’S LISTING MANUAL

The relative figures for the Proposed Acquisition computed on the relevant bases set out in

Rule 1006 of the Listing Manual of the SGX-ST are as follows:

(a)

Net asset value of the assets to be disposed of, compared with the Company and its subsidiaries (the "Group")

Not applicable to an acquisition of assets

(b)

Net profits attributable to the Sale Shares compared with the

Group's net profits for the financial year ended 31 December

2010

1,415.2% (1)

(c)

Aggregate value of the purchase consideration given, compared with the Company's market capitalisation on 1 July

2011, being the market day preceding the date of the SPA during which the Company’s ordinary shares of par value US$0.09 each (“Shares”) were traded

1,516.2% (2)

(d)

The number of new Shares to be issued by the Company as consideration for the Proposed Acquisition, compared with the number of Shares of the Company previously in issue

812.4% (3)

border=1>Notes:

(1) Based upon OKH’s audited consolidated profit before tax of S$7,887,102 for FY2010, the

Company’s audited consolidated profit before tax of RMB2,708,000 for the financial year ended 31

December 2010 and the exchange rate of S$1 = RMB4.859 for FY2010.

(2) Based upon the Consideration Shares and the adjusted net tangible assets of S$0.224 for each Share (as adjusted for the proposed distribution further detailed in paragraph 7 of this announcement) and the Company’s market capitalisation of S$13,293,128 as at 1 July 2011, being the market day preceding the date of the SPA. The market capitalisation is calculated based on S$0.12, being the volume weighted average price of the Shares traded on 1 July 2011.

(3) Based upon the 900,000,000 Consideration Shares to be issued and the 110,776,067 Shares in issue as at the date of this announcement. The 472,000 treasury Shares were excluded from the above calculations.

As the relative figures computed on the bases set out in paragraphs (b), (c) and (d) above exceed 100 per cent., the Proposed Acquisition constitutes a very substantial acquisition or

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reverse takeover for the purposes of the Listing Manual. In addition, as the Vendor will hold approximately 96.2 per cent. of the enlarged issued share capital of the Company pursuant to the Proposed Acquisition, a change of control of the Company will arise immediately upon Completion (defined below). Accordingly, the Proposed Acquisition is subject to the approval of the SGX-ST and the Shareholders under Chapter 10 of the Listing Manual.4. PRINCIPAL TERMS OF THE SPA

4.1 Purchase Consideration

The purchase consideration for the Proposed Acquisition is estimated to be S$108 million ("Purchase Consideration") and was arrived at on a willing-buyer and willing-seller basis after taking into account, inter alia:

(1) The consolidated profit after tax of OKH that is estimated to be around S$13.5 million for the financial year ended 30 June 2011; and

(2) A price-earnings ratio of eight (8) times based on the above mentioned consolidated profit after tax of OKH.

The Purchase Consideration will be satisfied entirely by the issue and allotment to the Vendor of such number of Consideration Shares at an issue price of S$0.12 each ("Issue Price") based on eight (8) times of the price-earnings ratio of OKH’s audited consolidated profit after tax for the financial year ended 30 June 2011, fractional Shares to be disregarded. The exact Purchase Consideration and the number of Consideration Shares will be finalised after the issue of OKH’s audited financial statements for its financial year ended 30 June 2011.

The Consideration Shares, when issued and allotted, shall rank pari passu in all respects with the then existing Shares. The Issue Price:

(1) represents a discount of approximately 7.7 per cent. to the volume weighted average market price of S$0.13 for each Share based on trades done on the SGX-ST on 4 July

2011, being the market day of which the SPA was signed; and

(2) is equal to the volume weighted average market price of S$0.12 for each Share based on trades done on the SGX-ST on 1 July 2011, being the market day preceding the date of the SPA.

4.2 Conditions precedent

Completion of the SPA is conditional upon, inter alia:

(a) The Purchaser being satisfied with the results of the due diligence (whether legal, financial, contractual, tax or otherwise) (the “Due Diligence Investigations”) to be carried out by the Purchaser and/or its advisers on the OKH Group, including without limitation the title to and the status and condition of any properties (whether movable or immovable), assets (whether tangible or intangible), liabilities, businesses, operations, records, financial position, accounts, results, legal and corporate structure, its subsidiaries and associated companies, and any other information disclosed to the Purchaser;

(b) The rectification, or the procurement of such rectification, to the satisfaction of the Purchaser by the Vendor, of all issues or irregularities uncovered by the Purchaser during the Due Diligence Investigations on OKH Group;

(c) The Vendor being satisfied with the results of the due diligence (whether legal, financial, contractual, tax or otherwise) to be carried out by the Vendor and/or his advisers on the Purchaser, including without limitation the title to and the status and condition of any properties (whether movable or immovable), assets (whether tangible or intangible), liabilities, businesses, operations, records, financial position,

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accounts, results, legal and corporate structure, its subsidiaries and associated companies;

(d) The Securities Industry Council of Singapore (“SIC”) having granted the Vendor and his concert parties (and not having revoked or repealed such grant) a waiver of their obligation to make a mandatory general offer under Rule 14 of the Takeover Code ("Code") for the shares in the Purchaser not held by them and their concert parties and from having to comply with the requirements of Rule 14 of the Code subject to (i) any conditions that the SIC may impose, provided that such conditions are reasonably acceptable to the Vendor; and (ii) the shareholders of the Purchaser other than (a) the Vendor; (b) persons acting in concert with the Vendor; and (c) persons not considered independent of the persons mentioned in (a) and (b) above

(“Independent STH Shareholders”) approving at a general meeting of the Purchaser

the Whitewash Resolution (defined below);

(e) The Purchaser receiving the following approvals from its shareholders at an extraordinary general meeting to be convened, for:-

(i) The Proposed Acquisition;

(ii) The proposed disposal by the Purchaser of all the Purchaser’s and its subsidiaries’ existing business (“Proposed Disposal”); and

(iii) such other corporate action(s) in connection with the Proposed Acquisition and the Proposed Disposal, as may be necessary.

(f) There being no delisting of the existing Shares of the Purchaser from the SGX-ST Mainboard prior to the completion date;

(g) The appointment of such directors nominated by the Vendor to form the Purchaser's

Board of Directors on the completion date;

(h) The Vendor and Purchaser not having received notice of any injunction or other order, directive or notice restraining or prohibiting the consummation of the transactions contemplated by the SPA, and there being no action seeking to restrain or prohibit the consummation thereof, or seeking damages in connection therewith, which is pending or any such injunction, other order or action which is threatened;

(i) All consents, approvals and authorisation of bankers, financial institutions, landlord of leases, relevant third parties, government, statutory or regulatory authorities in Singapore and Bermuda (if any) which are necessary or desirable in connection with the transfer of the Sale Shares from the Vendor to the Purchaser, the Proposed Disposal and such other corporate action(s) as may be necessary having been obtained, and such consents, approvals and waivers not having been amended or revoked before completion date, and if subject to conditions, on such conditions acceptable to the Purchaser, prior to the completion date;

(j) There is no material breach by either the Vendor or the Purchaser of the representations, warranties, covenants and indemnities contained in the SPA;

(k) The Purchaser being satisfied in its sole and absolute discretion that there has been no material adverse change, or events, acts or omissions likely to lead to such a change, in the business, assets, prospects, performance, financial position or results of operations of OKH from the date of the SPA;

(l) Listing and quotation notice being received from the SGX-ST for the dealing in and quotation for the Consideration Shares, such approval not being revoked, rescinded or cancelled prior to Completion (defined below) and, where such listing and quotation notice is obtained subject to any conditions, such conditions being reasonably acceptable to the Vendor and the Purchaser;

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(m) The delivery of a disclosure letter by the Vendor to the Purchaser and the Purchaser being satisfied with the contents thereof of the disclosure letter as on the completion date (which shall include any disclosures pertaining to OKH Group and the business of OKH Group as will be found in the shareholders’ circular to be issued by the Purchaser in connection with the acquisition of the Sale Shares);

(n) The Purchaser’s distribution of the amount up to S$5 million in cash to its shareholders either through:

(i) the issue of special dividends to its shareholders; or

(ii) the distribution in cash via share capital reduction; (o) The Proposed Disposal, such that:

(i) the existing Shares held directly or indirectly by the Undertaking Shareholders (defined below) (amounting to approximately 68.02% of the total issued share capital of the Purchaser as at the date of the SPA) will be wholly cancelled via a selective share cancellation exercise as part satisfaction for the purchase consideration payable by the Undertaking Shareholders under the Disposal Agreement (defined below) ;

(ii) in consideration thereto, the Purchaser shall transfer its entire ownership and interest in the Purchaser’s existing business (including the relevant subsidiaries involved in such business) to the Undertaking Shareholders (in such proportion to be agreed between them and notified to the Purchaser) at a purchase consideration, mutually agreed by the Purchaser, the Vendor and the Undertaking Shareholders; and

(iii) the Undertaking Shareholders will pay cash to the Purchaser to settle the difference (if any) between the value of their shares cancelled and the purchase consideration for the Purchaser’s and its subsidiaries’ existing business to be sold by the Purchaser;

(p) The Purchaser shall have available cash or cash equivalent for the sum of no less than S$1.3 million as at the completion date;

(q) The OKH Group meets and complies with all the requirements for listing on the

Mainboard of the SGX-ST;

(r) The receipt of a notification by SGX-ST confirming that it has no further comments to the Purchaser’s draft shareholders’ circular prepared in relation to the Purchaser’s acquisition of the Sale Shares and the compliance by the Purchaser of all the conditions which may be imposed by the SGX-ST in connection thereto; and

(s) The allotment, issue and subscription of the Consideration Shares, the Proposed Disposal and other corporate action(s) not being prohibited by any statute, order, rule, regulation, directive or request promulgated or issued by any legislative, executive or regulatory body or authority of Singapore or elsewhere, which is applicable to OKH and/or the Purchaser.

4.3 Long-Stop Date

If any of the conditions precedent above are not satisfied or waived by the Company and the Vendor (as the case may be) on or before 12 months from the date of the SPA (or such further date as may be agreed between the Company and the Vendor), the obligations of the parties under the SPA shall cease and determine.

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4.4 Completion

The Proposed Acquisition will be completed within seven (7) days from the fulfilment or waiver of all the conditions precedent set out in paragraph 4.2 above (“Completion”).

4.5 Moratorium

The Proposed Acquisition, being a substantial acquisition or a reverse takeover pursuant to the Listing Manual, is subject to the moratorium requirements of the Listing Rules.

In this regard, the Vendor has under the SPA undertaken to comply with any applicable moratorium requirements imposed by the SGX-ST.5. RATIONALE FOR THE PROPOSED ACQUISITION

The Company had been loss making for the financial years ended 31 December 2007, 2008 and 2009. Consequently, the Company was placed on the SGX Watchlist on 3 March 2010. Under Rule 1315 of the Listing Manual, the Company is required to take active steps to meet the requirements of Rule 1314 of the Listing Manual for removal from the SGX Watchlist. Rule

1314 requires the Company to satisfy one of the two following criteria:

(a) consolidated pre-tax profit for one year and an average daily market capitalisation of at least S$40 million over the last 120 market days; or

(b) operations of the Group meet SGX-ST Main Board admission criteria.

Should the Company be unable to meet the requirements of Rule 1314 of the Listing Manual by 3 March 2012, the SGX-ST may either remove the Company from its Official List, or suspend trading of the Shares with a view to removing the Company from its Official List.

The Company reported a consolidated profit after tax of RMB1.89 million for the financial year ended 31 December 2010. Nonetheless, the Company is of the view that the profitability for traditional IT businesses will continue to be under pressure in view of the increased competition in the China market.

The Proposed Acquisition provides the Company with an opportunity to acquire a profitable business in the property development and construction industry. The Proposed Acquisition is expected to increase its market capitalisation and hence enhance its profile with the investment community, henceforth leading to improved investors’ interest and trading liquidity for its Shares. The increased market capitalisation, investor interest and trading liquidity arising from the Proposed Acquisition are expected to assist in the Company’s future application for removal from the SGX Watchlist.

In connection with the Proposed Acquisition, the existing business of the Group is proposed to be divested so that it will not affect the financial results of the Group after the Proposed Acquisition.

The Proposed Acquisition, if successful, will transform the principal business of the Company into a property development and construction business. Upon Completion, the Company will have a new board of directors and a new management team, who are experienced in the property development and construction business.

The Directors of the Company believe the Proposed Acquisition will benefit the Company and that it is in the interests of all Shareholders.6. WAIVER OF OBLIGATION TO MAKE A MANDATORY GENERAL OFFER FROM THE SIC

As the Vendor and his concert parties will own more than 30% of the enlarged share capital of the Company upon Completion, the Vendor and his concert parties will be required to make a mandatory general offer for all the remaining issued shares in the Company not already

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owned, controlled or agreed to be acquired by them pursuant to Rule 14 of the Code. As such, the Vendor and his concert parties will be seeking a waiver of their obligation to make a mandatory general offer under Rule 14 of the Code from the SIC.

An ordinary resolution will be tabled at a special general meeting to be convened which if passed, will result in a waiver by the independent shareholders of the Company of their right to receive a mandatory general offer from the Vendor and his concert parties in connection with the issue of the Consideration Shares under the Proposed Acquisition (the “Whitewash Resolution”).

It is a condition precedent to the Proposed Acquisition that the SIC grants the Vendor and his concert parties, and does not revoke or repeal such grant, a waiver of their obligation to make a mandatory offer under Rule 14 of the Code and that the Shareholders approve at a general meeting of the Company the Whitewash Resolution for the waiver of the rights of the Shareholders of the Company to receive a mandatory offer from the Vendor and his concert parties, for all the Shares of the Company not already owned, controlled or agreed to be acquired by the Vendor and his concert parties.

The Company will be appointing an independent financial adviser to the independent directors of the Company in connection with the Whitewash Resolution and the advice of the independent financial adviser will be set out in the circular to be despatched to the Shareholders in due course.7. PROPOSED DISTRIBUTION

One of the conditions precedent in the SPA is for the Company’s distribution of the amount of up to S$5 million in cash to its Shareholders either through:

(i) the issue of special dividends to its Shareholders; or

(ii) the distribution in cash via share capital reduction.

This proposed cash distribution (the “Proposed Distribution”) will be subject to Shareholders approval at the SGM.8. PROPOSED DISPOSAL

Another condition precedent in the SPA is for the proposed disposal of all the Company’s existing business on the terms and subject to the conditions set out in the disposal agreement between (a) the Company; and (b) Zou Gefei, Jin Changren and Profit Saver International Limited (the “Undertaking Shareholders”) for the sale of the existing business of the Company, to the Undertaking Shareholders (the “Disposal Agreement”), such that:

(i) the Shares held by the Undertaking Shareholders (amounting to approximately

68.02% of the total issued share capital of the Company as at the date of this announcement) will be wholly cancelled via a selective share cancellation exercise as part satisfaction for the purchase consideration payable by the Undertaking Shareholders under the Disposal Agreement;

(ii) in consideration thereto, the Company shall transfer its entire ownership and interest in the Company’s existing business (including the relevant subsidiaries involved in such business) to the Undertaking Shareholders (in such proportion to be agreed between them and notified to the Company) at a purchase consideration, mutually agreed by the Company, the Vendor and the Undertaking Shareholders; and

(iii) the Undertaking Shareholders will pay cash to the Company to settle the difference (if any) between the value of their shares cancelled and the purchase consideration for the Company’s existing business to be sold by the Company;

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As the Proposed Disposal involves the Undertaking Shareholders, who are deemed to be interested parties according to Chapter 9 of the Listing Manual, the Proposed Disposal will be an interested person transaction subject to Shareholders approval at the SGM.

The Company will be appointing an independent financial adviser to the independent directors of the Company in connection with the interested party transaction and the advice of the independent financial adviser will be set out in the circular to be despatched to the Shareholders in due course.

The Company will make a further announcement on the Proposed Disposal when the disposal agreement is finalised and entered into.9. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION, PROPOSED DISTRIBUTION AND PROPOSED DISPOSAL (COLLECTIVELY KNOWN AS THE “PROPOSED TRANSACTIONS”)

9.1 Bases and Assumptions

The financial effects of the Proposed Transactions on the share capital, earnings, net tangible assets ("NTA") and gearing of Sinobest Technology Holdings Ltd. and its subsidiaries (the “Group”) have been prepared based on the audited consolidated financial statements of the Group for the financial year ended 31 December 2010 (being the latest available information prior to the date of this announcement) and the audited consolidated financial statements of OKH for FY2010. The proforma financial effects of the Proposed Transactions are for illustrative purposes only and do not necessarily reflect the actual results and financial position of the Group following Completion.

For the purposes of illustrating the financial effects of the Proposed Transactions, the financial effects have been prepared based on, inter alia, the following assumptions:

(a) the financial effects of the Proposed Transactions on the earnings and earnings per Share of the Group are computed assuming that the Proposed Transactions were completed on 1 January 2010;

(b) the financial effects of the Proposed Transactions on the NTA and gearing of the

Group are computed assuming that the Proposed Transactions were completed on

31 December 2010; and

(c) the fair market value of each Sale Share is assumed to be the same as the net asset value (“NAV”) per Sale Share and accordingly, no goodwill arises as a result of the Proposed Acquisition. On Completion, the deemed consideration for the Proposed Acquisition for accounting purposes will be based on the fair market value of each Sale Share at the date of completion. As the final goodwill will have to be determined at Completion, the actual goodwill could be materially different from the assumptions used above. Any goodwill arising thereon from the Proposed Acquisition will be accounted for in accordance with the accounting policies of the Company or international accounting standards.

In addition, the financial effects were prepared based on the audited consolidated information of OKH for its financial year ended 30 June 2010, being its latest available audited consolidated financial statements.

The financial effects stated below are neither indicative of the actual financial effects of the Proposed Transactions on the share capital, earnings per Share, NTA per Share and gearing of the Company, nor are they indicative of the consolidated financial performance of the Company for the financial year ended 31 December 2010.

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9.2 Share CapitalBefore the ProposedTransactionsAfter the ProposedTransactions

Issued and paid up share capital (RMB) 82,802,000 554,777,466 (1)

Number of issued shares of the

Company

110,776,067 935,428,634 (2)Notes:

(1) Par value of each ordinary share in Company is US$0.09. Exchange rate used was

US$1=RMB6.5897 as at 31 December 2010.

(2) Based upon the 900,000,000 Consideration Shares to be issued, the 110,776,067 Shares in issue as at the date of this announcement and the 75,347,433 Shares held by the Undertaking

Shareholders that are to be cancelled as a result of the Proposed Disposal. The 472,000 treasury

Shares were excluded from the above calculations.

9.3 Earnings

Before the ProposedTransactionsAfter the ProposedTransactions

Profit after tax (RMB) 1,893,000 34,021,027 (1)

Number of issued Shares of the

Company

110,776,067 935,428,634 (2)

Earnings per Share (RMB) 0.02 0.04Notes:

(1) Based upon OKH’s audited consolidated profit after tax of S$7,001,652 for FY2010 and the exchange rate of S$1 = RMB4.859 for FY2010.

(2) Based upon the 900,000,000 Consideration Shares to be issued, the 110,776,067 Shares in issue as at the date of this announcement and the 75,347,433 Shares held by the Undertaking Shareholders that are to be cancelled as a result of the Proposed Disposal. The 472,000 treasury Shares were excluded from the above calculations.

9.4 Net Tangible Assets (“NTA”)

Before the ProposedTransactionsAfter the ProposedTransactions

NTA (RMB) 153,063,000 78,695,860 (1)

Number of issued Shares of the

Company

110,776,067 935,428,634 (2)

NTA per Share (RMB) 1.38 0.08Notes:

(1) This is purely based upon OKH’s audited NTA of S$16,215,920 as at 30 June 2010 and the exchange rate of S$1 = RMB4.853 as at 30 June 2010. It excludes (i) the remaining cash in the Company after the Proposed Distribution and the Proposed Disposal; and (ii) the cash compensation, if any, from the Undertaking Shareholders for the Proposed Disposal.

(2) Based upon the 900,000,000 Consideration Shares to be issued, the 110,776,067 Shares in issue as at the date of this announcement and the 75,347,433 Shares held by the Undertaking

Shareholders that are to be cancelled as a result of the Proposed Disposal. The 472,000

treasury Shares were excluded from the above calculations.

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9.5 GearingBefore the ProposedTransactionsAfter the ProposedTransactions

Total borrowings (RMB) - 30,203,941

Total equity (RMB) 157,659,000 78,695,860 (1)

Gearing (times) - 0.38 (2)Notes:

(1) This is purely based upon OKH’s audited total equity of S$16,215,920 as at 30 June 2010 and the exchange rate of S$1 = RMB4.853 as at 30 June 2010. It excludes (i) the remaining cash in the Company after the Proposed Distribution and the Proposed Disposal; and (ii) the cash compensation, if any, from the Undertaking Shareholders for the Proposed Disposal.

(2) Gearing is calculated as total borrowings divided by total equity.

10. COMPLIANCE PLACEMENT

After completing the Proposed Transactions, the Vendor will own approximately 96.2 per cent. of the enlarged issued share capital of the Company while approximately 3.8 per cent. of the enlarged issued share capital of the Company will be held by public shareholders.

Under Rule 723 of the Listing Manual, at least 10 per cent. of the issued share capital of the Company must be held in the hands of public shareholders in order for the Company to maintain its listing status. Further, in compliance with Rule 1015 and Rule 210 of the Listing Manual, 25% of the issued share capital of the Company must be held in the hands of public shareholders upon Completion. In order to comply with the free float requirement, the Vendor has agreed and undertaken to place or procure the placement of such number of Shares and/or procure the Company after Completion, to issue such number of new Shares to investors in order to fulfill the free float requirement.11. FURTHER INFORMATION

11.1 Interest of Directors and Controlling Shareholders

Save as disclosed above and in respect of the Undertaking Shareholders’ interest relating to the Proposed Disposal, none of the Directors or controlling Shareholders of the Company has any interest, direct or indirect in the Proposed Acquisition and the Proposed Disposal.

11.2 Directors’ Service Contracts

It is envisaged that the Company will, upon Completion, enter into service contracts with nominees of the Vendor to be appointed to the Board. As such arrangements have not been firmed up as at the date of this announcement, the details of such arrangements will be disclosed in the circular to be despatched to Shareholders in due course.

11.3 Financial Adviser

The Company has appointed Asiasons WFG Capital Pte Ltd as its financial adviser in respect of the Proposed Acquisition and the Proposed Disposal.

11.4 Special General Meeting

A circular ("Circular") setting out information on, inter alia, the Proposed Transactions, together with a notice of the SGM, will be despatched by the Company to the Shareholders in due course. In the meantime, the Shareholders are advised to refrain from taking any action in relation to their Shares in the Company, which may be prejudicial to their interests until they or their advisers have considered the information and the recommendations to be set out in the Circular.

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11.5 Documents Available for Inspection

A copy of the SPA will be made available for inspection during normal business hours at the office of the Company Secretary at RHT Corporate Advisory Pte. Ltd., 6 Battery Road #10-01, Singapore 049909, for a period of three (3) months from the date of this announcement.12. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors of the Company (including any who may have delegated supervision of this announcement) collectively and individually accept full responsibility for the accuracy of the information given in this announcement and confirm, after making all reasonable enquiries that to the best of their knowledge and belief, the facts stated and opinions expressed in this announcement are accurate and fair in all material respects as at the date hereof, and that there are no material facts the omission of which would make this announcement misleading.

The directors of OKH (including any who may have delegated supervision of this announcement) collectively and individually accept full responsibility for the accuracy of the information given in this announcement in respect of OKH and confirm, after making all reasonable enquiries that to the best of their knowledge and belief, the facts stated and opinions expressed in this announcement in respect of OKH are accurate and fair in all material respects as at the date hereof, and that there are no material facts the omission of which would make this announcement misleading.13. CAUTIONARY STATEMENT

The Directors of the Company would like to advise the Shareholders that, although the SPA has been entered into, Completion is subject to conditions precedent being fulfilled and there is no assurance that Completion will take place. Accordingly, Shareholders are advised to exercise caution before making any decision in respect of their dealings in the Company’s shares. Shareholders who are in any doubt about this announcement should consult their legal, financial, tax or other professional adviser.

BY ORDER OF THE BOARD

Mr Zou Gefei

Executive Chairman and Chief Executive Officer

5 July 2011

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