Chu Kong Shipping to acquire 75% equity interest in Civet Logistics

Optimises the Pearl River transport system to become a diverse transport service provider.

Chu Kong Shipping Development Co, Ltd (“CKSD” or the “Company”), a comprehensive logistics services supplier in Guangdong-Hong Kong-Macau Region, announced on Monday the Company will purchase 75% equity interest in Civet (Zhuhai) Logistics Company Limited (“Civet Logistics”) for a consideration of approximately RMB77.69 million (HKD89.30 million). CKSD has entered into an equity transfer agreement with Civet Zhuhai Investment Company Limited (“Civet Investment”). After the completion of the acquisition, the port operation business of CKSD would become more diverse thus enhancing the Company’s revenue stream, according to a CKSD report.

The consideration of RMB77.69 million (HKD89.30 million) will be satisfied in cash and settled in a foreign currency (other than Renminbi) by CKSD to Civet Investment. CKSD will pay 30% of the total consideration within five business days upon signing of the equity transfer agreement. The remaining 70% will be paid in two installments within five business days upon the completion of the relevant procedures. The Company plans to fund the initial consideration with internal resources.

The acquisition consideration has been determined after arm’s length negotiations between CKSD and Civet Investment and with reference to the valuation report prepared by an independent professional valuer in the PRC appointed by both parties. According to the report, the valuation of Civet Logistics as at 31 March 2010 was RMB132.28 million (HK$151.59 million) which includes the value of the land, approximately 100,000 m2, according to land use rights already obtained by Civet Logistics. The net assets value of Civet Logistics as at 31 December 2009 was RMB30.51 million (HK$34.96 million). CKSD believes that the acquisition consideration is fair and reasonable and in the interests of the Company and its shareholders as a whole.

Civet Logistics is located in Zhuhai City, Guangdong Province and is principally engaged in the operation and management of Civet Port for port storage and transportation businesses. Civet Port is located in the southwestern part of Zhuhai City and is equipped with one 1,000 deadweight tonnage (DWT) multifunctional berth, two 500 DWT multifunctional berths and one container yard with a site area of approximately 80,000 m2. The total site area is around 100,000m2 with annual throughput capacity of 150,000 twenty-foot equivalent units (TEU).

Dr Hua Honglin, Chairman of CKS, said, “On the heels of our recent acquisition of Chu Kong Passenger Transport, this acquisition demonstrates our determination to become a diverse transportation service provider. The consolidation of port business enables us to further expand our transportation network in the Pearl River Delta region and consolidate our market presence in port operation business. Through our strengthened network in the Pearl River Delta region and our professional management team, we have full confidence in promoting our services and creating satisfactory returns for shareholders.”