Mingfa proposes issuance of HK$1.94bln convertible bonds and warrants to Warburg Pincus

Mingfa believes that collaboration with Warburg Pincus is a huge endorsement of its business vision to increase its for land acquisition and strengthens shareholder base.

Mingfa Group (International) Company Limited (“Mingfa”) (SEHK Stock Code: 0846), a leading property developer in China, announced that it has proposed an issue of convertible bonds and warrants to two private equity funds managed by the leading global private equity firm, Warburg Pincus. The two transactions would have a total capital value of HK$1.94 Billion. The Company intends to apply such net proceeds from the exercises as payment for land acquisitions, acquisitions of companies directly or indirectly holding land or real estate as well as for general working capital.

The Company intends to issue an aggregate principal amount of convertible bonds of HK$1,551,580,000 due 2015 (the “Convertible Bonds”). The Convertible Bonds will bear interest of 5% per annum, payable semi-annually. The bonds are convertible into shares at an initial conversion price of HK$2.9 per share. At the same time, Mingfa Group is to issue HK$387,895,000 in Warrants (the “Warrants”). The Warrants’ subscription price is HK$4.36. If the subscribers exercise the subscription rights attached to the Warrants in full, a total of 623,994,329 new shares will be allotted and issued by the Company. The New Shares represent approximately 9.42% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares and Warrant Exercise Shares upon full exercise of the subscription rights attaching to the Convertible Bonds and the conversion rights attaching to the Warrants. The subscription of the Convertible Bonds and the Warrants, and the issue of the New Shares by the Company are not subject to Shareholders approval.

The conversion price (HK$2.90 per conversion share) and the warrant exercise price (HK$4.36 per warrant share) represent premiums of approximately 16.94% and 75.81% respectively over the last closing price of Mingfa shares of HK$2.48 per Share on 24 November 2010 (the last trading day before the date of the announcement). The Directors consider that the foregoing prices are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

Assuming the convertible bonds are issued in full as planned, the net proceeds will be approximately HK$1.547 billion after deducting all related costs and expenses (including professional advisors’ fees and printing costs). No amount is payable by the subscriber to the Company for the issue of the warrants. Assuming the exercise in full of the subscription rights attaching to the warrants, the proceeds will be around HK$388 million.The Company intends to apply such net proceeds to be used in connection with the payment for land acquisitions and acquisitions of companies holding land or real estate and towards general working capital.

Founded in 1966 and headquartered in New York, Warburg Pincus is a leading global private equity firm which has more than US$30 billion in assets under management. The firm has started and managed 13 private equity funds which have invested more than US$35 billion in more than 600 companies in more than 30 countries which are highly diversified by stage of development, sector and geography. Warburg Pincus is an experienced partner to superior management teams seeking to build durable companies with sustainable value. Enterprises in which funds managed by the firm currently or recently had invested within China include top real estate companies such as R&F Properties (2777.HK), Greentown China (3900.HK), Sunshine 100 and Beijing Rongke as well as outstanding enterprises in other sectors such as GOME (493.HK), Datang Telecom and Harbin Pharmaceutical Group.

Mr. Wong Wun Ming, Chairman of Mingfa, said, “Warburg Pincus, one of the world’s leading private equity firms, arranging this size of investment and serving as an independent and significant shareholder is a huge endorsement of Mingfa’s business vision. The Board believes an important objective of the collaboration is to add considerable value by bringing international best practices in business strategy and corporate governance. Warburg Pincus is renowned as a long term strategic partner to high-growth companies, and the subscription agreement provides a solid foundation for the strategic relationship between Warburg Pincus and Mingfa. The issue of the convertible bonds and the warrants also represent an opportunity to enlarge and diversify the shareholder base of the Group and to raise further capital for the Group for financing new projects. We strongly believe that this initiative can facilitate the overall course of development and expansion of Mingfa.”