Beauty China : Loan lenders request for repayment by 27 March 2009

Statutory demand by the lenders. Beauty China (BCH)announced that the company had received a statutory demand from the lenders for the repayment of the entire principal and interest outstanding on the loan, amounting to approximately HK$134m, by 27 March 2009. By the end of FY08, BCH had cash of HK$64.6m, bank loan due within one year of HK$80.8m and long-term bank loan of HK$74.1m.

Potential investment in the company. BCH has entered into negotiations with a potential financial investor, who will bring in a cosmetics industry player as strategic investor. BCH's management expects that the proposed capital injection by the potential investors will be adequate to help BCH meet its immediate financial obligations and provide additional working capital.

Update on potential sales of shares by the major shareholder. BCH's chairman, Mr. Wang had entered into a conditional sale and purchase agreement with a potential buyer to sell 50m shares (14% of the share capital of the company) and to grant a call option to purchase another 41m (11.5% of the share capital of the company). The call option may be exercised by the potential buyer on or after 31 Dec 2010 but not later than the 5th anniversary of the completion date of the sales and purchase of the 50m shares. BCH also disclosed that the potential buyer is a subsidiary of a company listed on the HKEX, whose principal business is in financial services. The agreed purchase price is S$0.12825/share, which represented a 5% discount to the closing price on 6 March 2009.

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