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Tristate Holdings Limited

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					The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement,
makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever
for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this
announcement.


                             Tristate Holdings Limited
                             (Incorporated in Bermuda with limited liability)



                                    MAJOR TRANSACTION
                                           AND
                                  RESUMPTION OF TRADING

                            Financial Adviser to Tristate Holdings Limited



 THE ACQUISITION

 On 25 January 2008 after the trading hours of the Stock Exchange, Sharp Hero, a wholly-owned
 subsidiary of the Company, and the Vendors entered into the Sale and Purchase Agreement, pursuant
 to which Sharp Hero has conditionally agreed to purchase and the Vendors have conditionally agreed
 to sell the entire issued share capital of Velmore for, subject to adjustments, a total Consideration of
 GBP11,614,000 (equivalent to approximately HK$179,436,300).

 Velmore is an investment company incorporated in England with limited liability. The Velmore Group
 is a full service vendor for a renowned retail chain in the UK. Services provided by the Velmore
 Group include garment design, fabric development and testing, sample making, raw materials
 procurement, manufacture subcontracting, quality inspection and warehouse storage. Velmore holds
 equity interests in two garment manufacturers in Morocco.

 GENERAL

 The Acquisition constitutes a “major transaction” of the Company under Chapter 14 of the Listing
 Rules and is subject to the approval by the Shareholders. Written approval of the Acquisition has been
 obtained from Silver Tree which beneficially owns 178,442,000 Shares, representing approximately
 66.4% of the issued share capital of the Company as at the date of this announcement. To the best of
 the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder
 has any material interest in the Acquisition and therefore no Shareholder is required to abstain from
 voting if the Company was to convene a general meeting for the approval of the Acquisition. As such,
 pursuant to Rule 14.44 of the Listing Rules, the written approval provided by Silver Tree in relation to
 the Acquisition is accepted in lieu of holding a general meeting.




                                                  –1–
 A circular containing, among other things, details of the Acquisition and the accountants’ report on
 the Velmore Group will be despatched to the Shareholders as soon as practicable.

 SUSPENSION AND RESUMPTION OF TRADING IN THE SHARES

 Trading in the Shares on the Stock Exchange was suspended at the request of the Company with effect
 from 10:22 a.m. on 28 January 2008 pending the release of this announcement. Application has been
 made to the Stock Exchange for resumption of trading in the Shares with effect from 9:30 a.m. on
 30 January 2008.

THE SALE AND PURCHASE AGREEMENT

Date

25 January 2008 (after the trading hours of the Stock Exchange)

Parties

Purchaser:                 Sharp Hero, a wholly-owned subsidiary of the Company

Vendors:                   Mr. D. Morton, who owns 5,583,346 shares of Velmore (inclusive of 583,336
                           shares of Velmore to be issued upon full exercise of 583,336 share options
                           prior to the Completion Date); and

                           Mrs. S. Morton, who owns 10 shares of Velmore.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the
Vendors are third parties independent of and not connected with the Company or its connected persons.

There were no prior transactions between the Company and the Vendors which would require aggregation
with the Acquisition under Rule 14.22 of the Listing Rules.

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, Sharp Hero has conditionally agreed to purchase and the
Vendors have conditionally agreed to sell 5,583,356 ordinary shares of Velmore, representing the entire
issued share capital of Velmore (inclusive of 583,336 shares of Velmore to be issued upon full exercise of
583,336 share options prior to the Completion Date).

Consideration

The Consideration, subject to adjustments, is GBP11,614,000 (equivalent to approximately
HK$179,436,300) which shall be settled in cash in the following manner:

(a)    GBP1,000,000 (equivalent to approximately HK$15.5 million) as a refundable deposit paid upon
       signing of the Sale and Purchase Agreement;




                                                  –2–
(b)   GBP5,806,100 (equivalent to approximately HK$89.7 million) payable at Completion;

(c)   GBP2,032,450 (equivalent to approximately HK$31.4 million) to be adjusted pursuant to the
      adjustment mechanism set out below to be paid into an escrow account (in the joint names of the
      parties’ solicitors) upon Completion as the Deferred Consideration; and

(d)   GBP2,775,450 (equivalent to approximately HK$42.9 million) to be paid into an escrow account (in
      the joint names of the parties’ solicitors) upon Completion as the Retention.

The abovementioned Consideration has been determined after arm’s length negotiations between the
Purchaser and the Vendors with reference to the unaudited net assets value of the Velmore Group as at
30 September 2007 of approximately GBP12.2 million (equivalent to approximately HK$188.5 million)
as provided by the Vendors and after taking into consideration (i) the strong design and sales team of
Velmore; and (ii) the strategic value of the Velmore Group on the future development of the Group,
details of which are set out in the section headed “Reasons for and benefits of the Acquisition” below.

The Consideration will be satisfied by internal resources of the Group.

The adjustment mechanism for the Consideration

The Final Consideration will be adjusted with reference to the audited net assets value of the Velmore
Group as at the Completion Date, based on the UK accounting standards in accordance with, among other
things, the bases for determining the estimated realisable value of each category of assets of the Velmore
Group as agreed between the parties and provided for in the Sale and Purchase Agreement. Should the
Final Consideration differ from the Consideration of GBP11,614,000 (equivalent to approximately
HK$179,436,300) referred to above, the Deferred Consideration will be adjusted accordingly on a dollar
for dollar basis. The adjustment mechanism also requires the estimated realisable value of certain assets
of the Velmore Group, including finished goods and receivables, to be subject to realisation in cash
within twelve months from the Completion Date failing which the amounts unrealised will be recoverable
from the Vendors.

The Deferred Consideration

Subject to payment of any tax on interest earned on the Deferred Consideration and to payment of any
bank or other charges relating to the escrow account, the solicitors of the parties to the Sale and Purchase
Agreement will apply the Deferred Consideration as follows:

(a)   as the Purchaser and the Vendors may from time to time jointly instruct; and

(b)   upon the agreement of the Final Consideration (i) pay the Deferred Consideration subject to
      adjustments made in accordance with the adjustment mechanism referred to above to the Vendors;
      and (ii) pay the balance to the Purchaser.




                                                   –3–
The Retention

Subject to payment of any tax on interest earned on the Retention and to payment of any bank or other
charges relating to the escrow account, the solicitors of the parties to the Sale and Purchase Agreement
will apply the Retention as follows:

(a)   as the Purchaser and the Vendors may from time to time jointly instruct (including payments in
      relation to certain asset excluded from the Acquisition which may be sold by the Velmore Group
      after the date of the Sale and Purchase Agreement); and

(b)   in paying to the Purchaser any amount at any time due to it from the Vendors under the Sale and
      Purchase Agreement with respect to warranties or other claims which have been settled.

On the expiry of 18 calendar months after the Completion Date, any part of the Retention which then
remains after any applications set out above and amounts set aside for unsettled claims shall be released
to the Vendors.

As at the date of this announcement, the Directors expect that the Final Consideration adjusted based on
the aforesaid adjustment mechanism will not be higher than GBP11,614,000 (equivalent to approximately
HK$179,436,300). In the event that the Final Consideration exceeds GBP11,614,000 (equivalent to
approximately HK$179,436,300), the Company will comply with the relevant Listing Rules when
appropriate.

The Directors (including the independent non-executive Directors) consider that the terms of the Sale and
Purchase Agreement are on normal commercial terms, fair and reasonable and in the interests of the
Company and the Shareholders as a whole.

Conditions precedent

Completion is conditional upon the following:

(a)   the completion of due diligence conducted on the Velmore Group to the reasonable satisfaction of
      the Purchaser;

(b)   the exercise of the share option agreements between Velmore and certain of its directors and the
      transfer of the resulting issued shares of Velmore to Mr. D. Morton; and

(c)   the passing of the necessary resolution by the Shareholders at a general meeting approving the
      Acquisition or the Company obtaining the written Shareholders’ approval stipulated in Rule 14.44
      of the Listing Rules in respect of the Acquisition and such approval being accepted by the Stock
      Exchange.

If all the above conditions precedent shall not have been fulfilled or waived by the Purchaser on or before
the Long Stop Date (or such later date as the Purchaser may decide, being no later than the Long Stop
Date), the Sale and Purchase Agreement shall lapse and the deposit of GBP1,000,000 (equivalent to
approximately HK$15.5 million) shall be refunded to the Purchaser.




                                                  –4–
Completion

Completion is due to take place on 28 March 2008 or, if later, on the first Business Day after the day on
which all the above conditions precedent have been satisfied or waived, or at such other date, as the
parties may agree, provided that Completion shall not take place after 1 April 2008.

Upon Completion, Velmore will become an indirect wholly-owned subsidiary of the Company and its
results will be consolidated into the financial statements of the Group.

INFORMATION ON THE VELMORE GROUP

Overview

Velmore is an investment company incorporated in England with limited liability. The Velmore Group is
a full service vendor for a renowned retail chain in the UK. Services provided by the Velmore Group
include garment design, fabric development and testing, sample making, raw materials procurement,
manufacture subcontracting, quality inspection and warehouse storage. Velmore holds equity interests in
two garment manufacturers in Morocco.

Financial information

The following table sets out the audited financial information of the Velmore Group for the two years
ended 30 April 2006 and 2007 prepared in accordance with the UK accounting standards:

                                                                      For the year ended 30 April
                                                                   2006                          2007
                                                                 (’000)                        (’000)

Turnover                                                   GBP64,636.3                      GBP57,471.6
                                           (equivalent to approximately     (equivalent to approximately
                                                          HK$998,630.8)                    HK$887,936.2)

Profit before taxation                                      GBP2,017.6                        GBP140.9
                                           (equivalent to approximately     (equivalent to approximately
                                                           HK$31,171.9)                      HK$2,176.9)

Profit/(loss) after taxation                                GBP1,446.2                        GBP(200.5)
                                           (equivalent to approximately     (equivalent to approximately
                                                           HK$22,343.8)                    HK$(3,097.7))

The audited net assets value of the Velmore Group was approximately GBP12.3 million (equivalent to
approximately HK$190.0 million) as at 30 April 2007.




                                                 –5–
REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in (i) garment manufacturing and trading; and (ii) branded product
distribution and trading. As stated in the Company’s interim report for the six months ended 30 June
2007, the Group will explore business opportunities to expand its existing business segments.

The Velmore Group has been a full service vendor to a renowned retail chain in the UK, which is also a
customer of the Group, for over 20 years. It has a strong design and sales team based in the UK.

Currently, the majority of the Group’s customers are based in the US. The Acquisition is expected to
enable the Group to gain further access to the UK market and to reduce its reliance on the US market.
The Acquisition will also allow the Group to extend its scope of services offered to include garment
design, fabric development and testing, and in particular, to provide complete apparel solutions to the
existing mutual customer of the Group and the Velmore Group as discussed above. This is expected to
expand the source of revenue of the Group. Furthermore, the Group will benefit from Velmore’s strong
sales team based in the UK. For the reasons set out above, the Directors consider that the Acquisition is
in line with the Group’s business strategy.

In view of the above, the Directors (including the independent non-executive Directors) consider that the
Acquisition is in the interests of the Company and the Shareholders as a whole and the terms thereof are
fair and reasonable so far as the Shareholders are concerned.

GENERAL

The Acquisition constitutes a “major transaction” of the Company under Chapter 14 of the Listing Rules
and is subject to the approval by the Shareholders. Written approval of the Acquisition has been obtained
from Silver Tree which beneficially owns 178,442,000 Shares, representing approximately 66.4% of the
issued share capital of the Company as at the date of this announcement. To the best of the Directors’
knowledge, information and belief, having made all reasonable enquiries, no Shareholder has any material
interest in the Acquisition and therefore no Shareholder is required to abstain from voting if the Company
was to convene a general meeting for the approval of the Acquisition. As such, pursuant to Rule 14.44 of
the Listing Rules, the written approval provided by Silver Tree in relation to the Acquisition is accepted
in lieu of holding a general meeting.

Based on the results of preliminary due diligence on the Velmore Group, the Directors do not expect that
the audited financial statements of the Velmore Group for the three years ended 30 April 2007 and the six
months ended 31 October 2007 for inclusion in the circular regarding the Acquisition will be qualified. In
the unlikely event that the reporting accountants can only give a qualified opinion in the accountants’
report as required by the Listing Rules, a general meeting will be held accordingly.

A circular containing, among other things, details of the Acquisition and the accountants’ report on the
Velmore Group will be despatched to the Shareholders as soon as practicable.




                                                  –6–
SUSPENSION AND RESUMPTION OF TRADING IN THE SHARES

Trading in the Shares on the Stock Exchange was suspended at the request of the Company with effect
from 10:22 a.m. on 28 January 2008 pending the release of this announcement. Application has been
made to the Stock Exchange for resumption of trading in the Shares with effect from 9:30 a.m. on
30 January 2008.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following
meanings:

“Acquisition”                      acquisition of the entire issued share capital of Velmore by the
                                   Purchaser pursuant to the Sale and Purchase Agreement

“Board”                            the board of Directors

“Business Day”                     a day, except a Saturday or a Sunday, on which banks in the City of
                                   London, the UK are open for business generally

“Company”                          Tristate Holdings Limited, a company incorporated in Bermuda with
                                   limited liability and the shares of which are listed on the Stock
                                   Exchange

“Completion”                       completion of the Sale and Purchase Agreement

“Completion Date”                  the date on which Completion takes place

“connected person”                 has the meaning ascribed thereto in the Listing Rules and the word
                                   “connected” shall be construed accordingly

“Consideration”                    the consideration payable by the Purchaser for the Acquisition

“Deferred Consideration”           part payment of the Consideration, being GBP2,032,450 (equivalent
                                   to approximately HK$31.4 million), which is subject to adjustments
                                   pursuant to the adjustment mechanism as contained in the Sale and
                                   Purchase Agreement and shall be paid into an escrow account upon
                                   Completion, details of which are set out under the section headed
                                   “Sale and Purchase Agreement” in this announcement

“Director(s)”                      the director(s) of the Company

“Final Consideration”              the final Consideration payable by the Purchaser after being adjusted
                                   pursuant to the adjustment mechanism as contained in the Sale and
                                   Purchase Agreement, details of which are set out under the section
                                   headed “Sale and Purchase Agreement” in this announcement




                                                 –7–
“GBP”                           Pound Sterling, the lawful currency of the UK; and the exchange rate
                                between GBP and HK$ for the purpose of this announcement is GBP1
                                = HK$15.45

“Group”                         the Company and its subsidiaries

“HK$”                           Hong Kong dollar(s), the lawful currency of Hong Kong

“Hong Kong”                     the Hong Kong Special Administrative Region of the People’s Republic
                                of China

“Listing Rules”                 Rules Governing the Listing of Securities on the Stock Exchange

“Long Stop Date”                1 April 2008

“Mr. D. Morton”                 Mr. Derek Anthony Morton, a shareholder of Velmore and one of the
                                Vendors

“Mrs. S. Morton”                Mrs. Stephanie Vera Morton, a shareholder of Velmore and one of the
                                Vendors

“Retention”                     part payment of the Consideration, being GBP2,775,450 (equivalent
                                to approximately HK$42.9 million), which shall be paid into an escrow
                                account upon Completion, details of which are set out under the
                                section headed “Sale and Purchase Agreement” in this announcement

“Sale and Purchase Agreement”   the conditional agreement dated 25 January 2008 entered into among
                                Sharp Hero and the Vendors in respect of the Acquisition

“Share(s)”                      share(s) of HK$0.1 each in the issued share capital of the Company

“Shareholder(s)”                holder(s) of the Shares

“Sharp Hero” or “Purchaser”     Sharp Hero International Limited, a company incorporated in the
                                British Virgin Islands with limited liability and a wholly-owned
                                subsidiary of the Company

“Silver Tree”                   Silver Tree Holdings Inc., a controlling Shareholder and a company
                                wholly-owned by Mr. Wang Kin Chung, Peter, an executive Director

“Stock Exchange”                The Stock Exchange of Hong Kong Limited

“UK”                            the United Kingdom

“US”                            the United States of America




                                               –8–
“Velmore”                         Velmore Holdings Limited, a company incorporated in England with
                                  limited liability

“Velmore Group”                   Velmore and its subsidiaries

“Vendors”                         Mr. D. Morton and Mrs. S. Morton

“%”                               per cent

As at the date of this announcement, the Board comprises one executive Director, Mr. Wang Kin Chung,
Peter; four non-executive Directors, namely Ms. Wang Koo Yik Chun, Ms. Leslie Tang Schilling, Ms. Mak
Wang Wing Yee, Winnie and Dr. Wang Shui Chung, Patrick; and three independent non-executive Directors,
namely Mr. Lo Kai Yiu, Anthony, Mr. James Christopher Kralik and Professor John Zhuang Yang.


                                                                   On Behalf of the Board
                                                                  Tristate Holdings Limited
                                                                   Wang Kin Chung, Peter
                                                             Chairman and Chief Executive Officer

Hong Kong, 29 January 2008




                                                –9–

				
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