Yardway new shares subscription raises HK$62mln

The move attracts prestigious funds to become shareholders & Beijing Capital (Hong Kong) to increase equity stakes as it strengthens financial position and broadens shareholder base.

Yardway Group Limited (“YARDWAY”) (the company name to be changed to “China Environmental Technology Holdings Limited” after approval of the shareholders) announced on Tuesday that it has entered into an agreement with subscribers for the subscription of 143,021,914 new shares at HK$0.4335 each, raising approximately HK$62,000,000.

The subscription deal will bring prominent investors into the Group, including Ajia Partners Asset Management (HK) Limited, an Asia-focus asset management firm, and Senrigan Capital Group Limited], a hedge fund manager backed by global private equity fund Blackstone Group. Moreover, Beijing Capital (Hong Kong) Limited (“Beijing Capital (HK)”), a wholly-owned subsidiary of Beijing Capital Co., Ltd. will also raise stake in the Group.

The net proceeds from the subscription are estimated at HK$60,000,000. The Company intends to use the proceeds for development of wastewater treatment business and upgrade of related technology, as well as general working capital of the Group.

Pursuant to the agreement, Ajia Partners Asset Management (HK) Limited will subscribe 62,283,737 new shares, representing approximately 2.58% of the issued share capital as enlarged by the subscription of new shares. Senrigan Capital Group Limited will subscribe 34,602,076 new shares, representing approximately 1.43% of the issued share capital as enlarged by the subscription. Beijing Capital (HK) will subscribe 46,136,101 new shares, representing approximately 1.91% of the enlarged issued share capital. The shareholdings of Beijing Capital (HK) will increase to 9.37%, according to a Yardway report.

Mr ZHANG Fang Hong, Chief Executive Officer of YARDWAY, said “We are delighted to have attracted institutional investors to join us as shareholders. In addition to broadening our shareholder base, this also serves as evidence of investors’ confidence in our business strategies and prospects. The stake raise by Beijing Capital
(HK) also represented its affirmation to the Group’s wastewater treatment technology. We are confident that the Group and Beijing Capital (HK) will make new growth driver in China’s wastewater treatment industry through the close cooperation in the aspect of technology and capital.”

Beijing Capital (HK) established in 2004, is a wholly-owned subsidiary of Beijing Capital Co., Ltd., the shares of which are listed on the Shanghai Stock Exchange (stock code: 600008). It is principally engaged in the investment and financing businesses related to water treatment and environmental protection, as well as value-added chain business and international cooperation business. Yardway has entered into a letter of intent with Beijing Capital (HK) last month to establish a joint venture company for wastewater treatment project. Yardway and Beijing Capital (HK) will each contribute 50% in cash respectively, and each would hold 50% interest in the shares of the joint venture. The JV will be engaged in sales and provision of technology promotion and consultation services relating to magnetic isolation water treatment equipment and highly-magnetic soil water treatment equipment.

Beijing Capital Co., Ltd., a leading wastewater treatment enterprise in China, is principally engaged in investment and operational management of water supply and wastewater treatment in China. With 32 water-related projects covering 13 provinces, Beijing Capital Co. is capable to treat about 15 million tons of water, serving a fixed urban population of over 20 million.

Ajia Partners Asset Management (HK) Limited is an asset management firm under Ajia Partners Group. It provides investment fund, structural product and investment portfolio management services. Ajia Partners Group has approximately US$2 billion under management and advice.

Backing by global private equity fund Blackstone Group, Senrigan Capital Group Limited established in 2009. It mainly invests in publicly-traded Asian securities. The Blackstone Group provided Senrigan with US$150 million in seed capital for its first three years.

Upon completion of the subscription, there were 2,413,513,914 shares in issue and the 143,021,914 subscription shares represented approximately 5.9% of the issued share capital of the Company. The subscription price represents a discount of 15.99% to the average closing price per share of approximately HK$0.516 for the last five trading days up to and including 6 December 2010.