CHINA GAOXIAN SIGNS IMPLEMENTATION AGREEMENT WITH FLEUR CAPITAL FOR S$27 MILLION INVESTMENT

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1 China Gaoxian Fibre Fabric Holdings Ltd. Singapore Address: 9 Battery Road, #15-01 Straits Trading Building Singapore Company Registration No K Media Release CHINA GAOXIAN SIGNS IMPLEMENTATION AGREEMENT WITH FLEUR CAPITAL FOR S$27 MILLION INVESTMENT Fleur Capital replaces Dymon Asia Special Opportunities Fund as White Knight Singapore, 23 July 2012 Singapore Exchange and Korea Exchange Mainboard listed, China Gaoxian Fibre Fabric Holdings Ltd. ( China Gaoxian, the Company or collectively with its subsidiaries, the Group ), would like to announce that it has, together with China Success Group (International Holdings) Limited 1 ( Controlling Shareholder ), entered into an Implementation Agreement with Fleur Capital (S) Pte. Ltd. ( Fleur Capital or Investor ), for a proposed S$27 million investment into the Company ( Proposed Investment ). Fleur Capital had previously indicated an interest to invest in the Company on terms that were substantially similar to those set out in the earlier non-binding term sheet that the Company signed with Dymon Asia Special Opportunities Fund ( Dymon ) as announced on 4 May When the exclusivity period with Dymon lapsed, Dymon informed the Company that they did not wish to proceed with the proposed investment on the terms set out in the aforesaid term sheet. Thereafter, China Gaoxian started discussions with Fleur Capital. Following the signing of the Implementation Agreement, China Gaoxian intends to submit a resumption of trading proposal to the Singapore Exchange Securities Trading Limited ( SGX- ST ). Commenting on the signing of the Implementation Agreement, the Executive Director and Interim CEO of the Company, Mr Jerome Tham Wan Loong, said: The signing of the Implementation Agreement marks an important milestone in the Company s efforts towards resuming trading on the SGX-ST. The Board will now work closely with Fleur Capital on the 1 China Success Group (International Holdings) Limited is a private company limited by shares incorporated in Hong Kong under the Companies Ordinance of Hong Kong. As at the date of this Announcement, the Controlling Shareholder is the registered holder of 850,900,000 Shares, representing 41.7% of the issued and paid-up capital of the Company. Mr Cao Xiangbin, the Non-Executive Chairman and Director of the Company, is the legal and beneficial shareholder of the Controlling Shareholder and holds 99.8% of the issued and paid up capital of the Controlling Shareholder. 1

2 implementation of the proposed Scheme and the submission of a resumption of trading proposal to SGX-ST. Under the conditions precedent in the Implementation Agreement, the Proposed Investment is, amongst others, subject to the Investor s completion of due diligence on all operational, financial and legal matters and considerations in relation to the Group to their satisfaction; the approval of the Investment Committee of Fleur Capital; and the requisite approvals from SGX-ST, the Court, and other authorities, as well as the shareholders. Salient Points of Proposed Investment The Scheme In summary, the proposed Investment will be implemented by way of a scheme ( Scheme ) to be proposed in accordance with Section 210 of the Companies Act involve, inter alia, the following: The Investor subscribing for 270 million New Shares in the Company ( Subscription ) at S$0.10 per share, for a total subscription price of S$27 million ( Subscription Shares ); China Gaoxian issuing 1,155,000,000 warrants representing one free warrant to all shareholders and the Investor, for every two existing Shares in the Company at an exercise price of $0.10 per share with an exercise period of five years from date of issue ( Warrant Issue ); and the Scheme Creditors 2 agreeing to waive and/or compromise all claims against the Interested Parties in accordance with the terms of the Scheme. Once the Scheme is approved, the Controlling Shareholder will transfer 510 million shares to the Investor for a nominal consideration of S$1 ( Transfer Shares ) in total ( Acquisition ). After the Subscription and the Acquisition are completed, the Investor will hold 780,000,000 shares (excluding any shares to be issued upon conversion of the Warrants), representing approximately 33.8% of the total number of issues shares in the enlarged capital of the Company after the Subscription and the Acquisition. 2 The Scheme is to be proposed to any person or entity (including, without limitation, the lawyers, auditors, professional advisers and/or underwriters of the Company s KDR listing in Korea) which has, alleges to have, may have or could have a Claim against all or any of the Interested Parties ("Scheme Creditors"). Please refer to the SGXnet announcement on the same date for further definitions of the Claim and Interested Parties. 2

3 Full details of the Scheme including details of the Subscription and Warrant Issue will be contained in the Scheme Document to be dispatched to shareholders in due course. The Rationale The Board of China Gaoxian is of view that the Investor will be a valuable partner in the development of the Company s upstream expansion project ( Huaxiang Project ) and assist the Company in its resumption of trading of its shares on SGX-ST. The additional capital raised through the Subscription will also be used to finance the expansion of the Group s businesses, including the Huaxiang Project. In addition, the proposed Warrant Issue will enable shareholders (including KDR Holders) to participate in the potential success of the Huaxiang Project. It will also provide shareholders the opportunity to increase their equity participation in the Company and potentially increase the Company s capital base and strengthen its balance sheet. Assuming that all the proposed warrants are exercised and new shares issued, the Company would receive additional gross proceeds of approximately S$115.5 million, which can be used for expansion of the Company s business and/or general working capital. The Scheme, if successful, would allow the company to operate under a new Board and Management, with a new controlling shareholder in Fleur Capital. Commitment by Mr Cao Xiangbin To demonstrate his commitment to the Company, the Non-Executive Chairman of the Company, Mr Cao Xiangbin will execute a personal guarantee to secure project financing by the Group s PRC banks to finance the Huaxiang Project. Mr Cao will also make himself available to the Company, as and when needed, to provide such services to ensure the smooth implementation and completion of the Huaxiang Project and other operations of the Group. Mr Cao has also agreed to place his remaining million shares and any shares arising from the Warrants Issue under moratorium ( CS Moratorium Shares ) till the completion of the Huaxiang Project, and 80% of the CS Moratorium Shares will remain under moratorium until the project financing to be advanced by the PRC banks for the Huaxiang Project is fully repaid. Commitment by Investor At the same time, the Investor will also place all the Subscription Shares and Transfer Shares under moratorium for a period of 12 months from the completion date. 3

4 We will bring our turnaround experience to China Gaoxian with a view to strengthening its position in the industry. We intend to work closely with the Board towards the resumption of trading of the Company s shares, which will ultimately enhance shareholder value, said Mr Yap Chee Wee, Director of Fleur Capital. For avoidance of any doubt, shareholders are advised to refer to the Company s SGXnet announcement on 23 July 2012 for more details. The Scheme is subject to numerous Conditions Precedent set out in Schedule of the aforementioned announcement, of which, if not satisfied (or where applicable, waived), within a period of six months from the date of the Implementation Agreement (or any other such date agreed by the parties to the Implementation Agreement), may cause the Implementation Agreement to be terminated (if necessary, with prior consultation of the Securities Industry Council). End. Note: This media release is to be read in conjunction with the SGX announcement dated 23 July 2012, copies of which are currently available on Issued on behalf of China Gaoxian Fibre Fabric Holdings Ltd. by Cogent Communications Pte Ltd Tel: (65) , Fax: (65) Ms Celine Ooi, celine@cogentcomms.com DID: MOB: Mr Gerald Woon, woon@cogentcomms.com DID: MOB: About China Gaoxian Fibre Fabric Holdings Ltd. Listed on the Main Board of Singapore Exchange in September 2009 and dual listed on the Main Board of Korea Exchange in January 2011, China Gaoxian Fibre Fabric Holdings Ltd. ( China Gaoxian ) is a leading supplier of premium differentiated fine polyester yarn and warp knit fabric in the PRC. It is principally engaged in the manufacture of premium differentiated fine polyester yarn and fabric under its own HuaGang ( 华港 ) and DaHuaWei ( 大华威 ) brands. Its two production facilities are strategically located in Zhejiang and Fujian provinces, otherwise known as two textile hubs of the PRC, which gives China Gaoxian easy access to the entire production chain. It therefore enables the Group to respond quickly to customers demands and develop long lasting relationships with many of its local customers. With an annual production capacity of 210,000 metric tonnes of differential polyester yarn and 81,000 metric tonnes of warp knitted fabric, China Gaoxian is one of the largest differential polyester yarn and fabric producers in the PRC. In 2010, the Group announced its upstream expansion project ( Huaxiang Project ), which refers to the construction of a new integrated facility with Polyester Direct Spinning production lines which 4

5 are capable of producing PET chips and differentiated polyester yarn ( DPY ) products ( Huaxiang Project ). The estimated production capacity of the Huaxiang Project is approximately 400,000 tonnes of PET chips and/or DPY per annum upon completion and the total estimated cost is approximately RMB2,160 million. The Company is incorporated in Singapore and its shares are listed on the Official List of the Singapore Exchange Securities Trading Limited ("SGX-ST"), and the Korea Depository Receipts ("KDRs") of the Company are listed on the Main Board of the Korea Exchange ("KRX"). The Company has an issued and paid-up share capital consisting of 2,040,000,000 Shares, of which 600,000,000 Shares are represented by 30,000,000 KDRs issued by the Company. The trading of the Shares and KDRs are currently suspended. About Fleur Capital (S) Pte Ltd Fleur Capital (S) Pte. Ltd. ( Fleur Capital ) is a boutique fund management firm serving high net worth individuals in Asia. Fleur Capital forms strategy specific funds that are tailored to the needs of high net worth investors and institutions. Fleur Capital s investment focus is to invest in private equity, pre-ipo, listed equities in special situations, and turn around companies which have financial or operational difficulties. Fleur Capital was incorporated in Singapore in 2007 and operates as an exempt fund manager. It is headed by Mr Yap Chee Wee and Mr Michael Khoon, both of whom have had many years of experience in venture capital, private equity, IPO and corporate advisory. 5