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GERG News

2006.09.28

Golden Eagle Issues HK$1,000 Million

Finance possible acquisition of suitable properties
for development of new department stores

(28 September 2006-Hong Kong) - Golden Eagle Retail Group Limited ("Golden Eagle" or the "Company", and together with its subsidiaries, the "Group"; HKEX stock code: 3308), a premium department store chain in the PRC, announced today that the Company proposed to issue an aggregate principle amount of HK$1,000 million Zero Coupon Convertible Bonds ("Bond Issue") to finance possible acquisition for the development of new department stores.

The Lead Manager of the Bond Issue is ABN AMRO Rothschild ("ABN AMRO"). Under the Subscription Agreement between ABN AMRO and the Group, the issue price is 100% of the principal amount of the Bonds. The Initial Conversion Price is HK$6.42 per Share, representing a premium of approximately 30% over the closing price of HK$4.94 per Share as quoted on the Stock Exchange of Hong Kong on 27 September 2006. Assuming full conversion of the Bonds at the initial price of the HK$6.42 per Share, the Bonds will be convertible into approximately 155,763,239 Shares, or approximately 8.57% of the issued share capital of the Company as at 28 September 2006 and approximately 7.90% of the enlarged issued share capital of the Company. Maturity date of the Bond Issue will be on 23 October 2011.

The estimated net proceeds of the Bonds Issue, after deduction of commission and administrative expenses will amount to approximately HK$977.5 million. The proceeds are currently intended to be used as to approximately 45% for the financing of possible acquisitions by the Group of suitable properties for the development of new department stores, as to approximately 45% for potential acquisitions of other department store operators and as to approximately 10% for general working capital requirements.

Mr. Roger Wang, Chairman of the Group, concluded, "The Bond Issue received positive response from institutional investors. Following our IPO in March this year, the proceeds have been applied for the establishment of new department stores in Xi'an, Taizhou, and Huaian, upgrading internal systems and repaying bank loans. With the additional proceeds raised by the Bond Issue, our liquidity position as well as equity base will be further enhanced," Mr Wang added, "The retail sector in the PRC is growing rapidly and the Bond Issue provides a good opportunity for us to seize the development potential and market opportunity of the retail industry in the coming years."

 
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