The board of directors (the "Board") of Silver Grant International Industries Limited (the "Company") announced that pursuant to a subscription agreement dated 4th January, 2000, ("Subscription Agreement") the Company has conditionally agreed to issue and Catic Limited (the "Subscriber") has agreed to subscribe for 178,468,000 new shares of HK$0.20 each (the "Subscription Shares") in the share capital of the Company (the "Subscription") at a price of HK$0.85 per Subscription Share (the "Subscription Price"). The Subscription is conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") granting or agreeing to grant the listing of, and permission to deal in, the Subscription Shares. The Subscriber is independent of and not connected with the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in The Rules Governing the Listing of Securities (the "Listing Rules") on the Stock Exchange). The Subscription Shares represent approximately 20 per cent. and approximately 16.67 per cent. of the existing and enlarged issued share capital of the Company respectively. The net proceeds of approximately HK$151 million will be used for general working capital of the Company and are not intended to be applied for funding of the acquisition of new shares in Righteous (Holdings) Limited ("Righteous") as disclosed in another announcement of even date issued jointly by the Company and Righteous.

SUBSCRIPTION AGREEMENT DATED 4TH JANUARY, 2000

Parties

Company : Silver Grant International Industries Limited

Subscriber : Catic Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of (China Cinda Asset Management Corporation)

Subsciption Shares

The Subscription Shares are 178,468,000 new shares of HK$0.20 each in the capital of the Company, representing approximately 20 per cent. and approximately 16.67 per cent. of the existing and enlarged issued share capital of the Company respectively.

The Subscription Shares will rank pari passu in all respects with the then issued shares of the Company (the "Shares") as at the date of completion of the Subscription. The Subscription Shares are to be issued pursuant to the general mandate granted to the directors of the Company at the annual general meeting of the Company held on 28th June, 1999. After the completion of the Subscription, such general mandate granted to the directors of the Company will have been substantially exercised in full.

Subscription Price

The Subscription Price of HK$0.85 per Subscription share represents a premium of approximately 9.0 per cent. to the closing price of HK$0.78 per Share as quoted on the Stock Exchange on 3rd January, 2000 (prior to the suspension of trading of the Company's shares with effect from 2:30 p.m. on 3rd January, 2000), and a premium of approximately 11.5 per cent. to the average closing price of HK$0.762 per Share as quoted on the Stock Exchange for the last ten trading days ended 3rd January, 2000 (prior to the suspension of trading of the Company's shares as mentioned above). The Subscription Price in the aggregate sum of HK$151,697,800 will be paid by the Subscriber upon completion of the Subscription pursuant to the terms of the Subscription Agreement. The Subscription Price was arrived at following arm's length negotiations between the Subscriber and the Company.

The Subscriber

The Subscriber is a limited company incorporated in the British Virgin Islands, the ultimate shareholder of which is China Cinda Asset Management Corporation ("Cinda").

Cinda is a state-owned financial institution with independent legal entity status and is under the supervision of China People's Bank . Its major businesses include acquiring, managing, and dealing with certain assets of China Construction Bank , which is a substantial shareholder of the Company indirectly holding approximately 12.10 per cent. of the entire issued share capital of the Company as at the date hereof (and approximately 10.08 per cent. of the then enlarged issued share capital of the Company immediately after completion of the Subscription) through its wholly-owned subsidiary, Maxtrack Limited. Cinda does not have intention to nominate directors to the Board immediately after completion of the Subscription. Save as disclosed herein, Cinda is independent of and not connected with the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules).

Upon completion of the transactions contemplated under the Subscription Agreement, Cinda will hold approximately 16.67 per cent. of the then enlarged issued share capital of the Company indirectly through the Subscriber. Cinda intends to hold the interest in the Subscription Shares as a long-term investment. The existing shareholding structure of the Company and the shareholding structure of the Company immediately after completion of the Subscription Agreement are set out below:--

1. Existing Shareholding Structure

2. Shareholding Structure upon Completion of the Subscription Agreement

* The shareholders of SGIH are Messrs. Gao Jian Min, Hui Xiao Bing, Xu Shi Quan and Sheng Yong, each of whom holds 30%, 30%, 30% and 10% in the share capital of SGIH respectively.

Condition of the Subscription

The Subscription is conditional upon the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Subscription Shares.

Completion

Subject to the satisfaction of the condition stated above, completion of the Subscription is expected to take place within two weeks after the date on which the condition is fulfilled, which shall be no later than 31st March, 2000 (or such later date as the Company and the Subscriber may agree prior to completion of the Subscription).

Lock-up

Pursuant to the Subscription Agreement, the Subscriber has undertaken to the Company that it will not, at any time within the period of six months from the date of completion of the Subscription, dispose or offer to dispose whether directly or indirectly and whether conditionally or unconditionally, of any Subscription Shares or any shares in the Company derived therefrom or any interest therein or any securities convertible into, exercisable for or exchangeable for any of the foregoing.

Application for Listing

Application has been made to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

Reasons for the Subscription and Use of Proceeds

The Company is principally engaged in property, PRC retailing and other investments.The Board considers the terms of the Subscription to be fair and reasonable and are in the interests of the Company and its shareholders. The Board further believes that the Subscription will enlarge the capital base of the Company and further strengthen the financial position of the Company.

The Company intends to use the net proceeds of approximately HK$151 million from the Subscription for general working capital of the Company in its ordinary course of business. Such net proceeds are not intended to be used for funding of the subscription of new shares in Righteous as disclosed in another announcement of even date issued jointly by the Company and Righteous.

General

At the request of the Company, trading in the shares of the Company on the Stock Exchange were suspended with effect from 2:30 p.m. on 3rd January, 2000. Application has been made for the resumption of trading in the shares of the Company with effect from 10:00 a.m. on 10th January, 2000.

By Order of the Board
Gao Jian Min
Managing Director

Hong Kong, 8th January, 2000

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