China Search Inc. Announces up to US$13.5 Million Financing Transaction with Fidelity, Legend Capital and IDG
Latitude Capital Group Acted as the Financial Advisor to China Search Inc. on the Transaction
2005-08-19

On 19 August 2005, Hong Kong Huicong International Group Limited ("HKHC"), China Search Inc. ("CSI"), Global Cyberlink Holdings Inc. ("GC"), and the Investors (Fidelity, Legend Capital and IDG), among others, entered into a Share Purchase Agreement, under which the following key transactions are contemplated:

1. Share Transfer: HKHC agreed to sell and each of the Investors and GC agreed, severally and not jointly, to acquire existing shares at a total consideration of US$3.6 million (approximately HK$28.1 million) in cash;

2. Share Issuance: CSI agreed to issue and each of the Investors and GC agreed, severally and not jointly, to subscribe for new shares in two tranches, at a total consideration of US$0.9 million (approximately HK$7.0 million) in cash; and

3. Series A Shares Issuance: CSI agreed to issue and each of the Investors agreed, severally and not jointly, to subscribe for the new Series A Shares at a total consideration of US$6.5 million (approximately HK$50.7 million) on the First Closing Date; and subject to fulfillment of the Performance Targets by the CSI Group, the Investors have the right to subscribe for additional Series A Shares at a total consideration of US$2.5 million (approximately HK$19.5 million) on the Second Closing Date.

On the same date, HKHC and IDG entered into the HKHC Share Transfer Agreement, pursuant to which, HKHC will transfer, on a net basis, 4,000,000 CSI Shares (representing 5.0% equity interest in CSI) to IDG for a net consideration of US$1.14 million (approximately HK$8.89 million) in cash on the First Closing Date. Completion of the HKHC Share Transfers are conditional upon completion of the Share Transfer, and tranche one of the Share Issuance and the Series A Shares Issuance.

A circular containing, among other things, details of the Transactions, a letter of advice from an independent financial adviser and a recommendation from the independent board committee of the Company, together with a notice convening the EGM will be dispatched to the Shareholders in accordance with the requirements of the GEM Listing Rules.