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Richina Shareholders Approve Us$3 Million Loan

Richina Shareholders Approve Us$3 Million Loan

Trading on budget for first quarter

Statement made by Alastair MacCormick, Chairman, Richina Pacific Limited

Shareholders approved Richina Pacific entering into a US$3 million loan with its 25.5% majority shareholders, Richina Enterprise Holdings Limited, at today’s special meeting of the company.

The related party loan will tide the company over until it completes its US$10.4 million rights issue, now due for completion in May this year.

The rights issue will now proceed following the resignation of Mr Ming Lu as a director prior to the start of the meeting.

The related party loan will provide the short term funds we require as working capital to buy hides and skins for our leather operations in China. This funding is only required because of unforeseen delays to the rights issue.

Proceeds from the rights issue will be used to repay the US$3 million loan, and other related party loans approved by shareholders in December.

Funds from the rights issue will be used to improve capacity and efficiencies at our leather manufacturing operation in China, and working capital to increase the tannery’s supply line of raw and finished material.

Our leather operation is one of the world’s largest tanneries with a reputation for consistently producing leather of a high quality. Potential demand for its leather outstrips its ability to supply.

At the meeting shareholders were told Richina anticipated its trading performance to be “on budget” at the end of the first quarter of the 2003 financial year.

Being on budget means being ahead of where we were at the same time last year.

The decision of Mr Ming Lu to resign as a director and the passing of the resolution approving the related party loan, means Richina can once again focus its energies on growing the business and increasing shareholder wealth.

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