Cathay International Water Limited Increases the Price and Extends Its Tender Offer for up to $40 Million of Its Senior Notes.

Business Editors

HONG KONG--(BUSINESS WIRE)--Jan. 22, 2003

Cathay International Water Limited ("CIWL") (formerly Cathay International Limited) announced today that it is increasing the price to be paid for its outstanding 13% Senior Notes Due 2008 (the "Notes") to a cash price of $1,000 per $1,000 principal amount from its prior price of $850 per $1,000 principal amount pursuant to its previously announced cash tender offer (as amended by this announcement, the "Offer") for up to $40 million in aggregate principal amount of its Notes and is extending the Offer until 5:00 p.m., New York City time, on Wednesday, February 5, 2003 (the "New Expiration Date").

Pursuant to CIWL's Offer to Purchase, dated December 4, 2002, as amended by CIWL's announcement on January 6, 2003 and as further amended by this announcement, CIWL is offering to purchase up to $40 million in aggregate principal amount of the Notes for a cash price of $1,000 per $1,000 principal amount, plus accrued but unpaid interest, including Special Interest (as defined below). The initial purchase price for the Notes in the Offer was $825 per $1,000 principal amount, plus accrued but unpaid interest, including Special Interest. This amount was increased to $850 per $1,000 principal amount, plus accrued but unpaid interest, including Special Interest, on January 6, 2003. Since January 10, 1999, the Notes have borne interest at the rate of 13.5% per annum due to an 0.5% per annum increase in the interest rate pursuant to the terms of the Notes (such 0.5% per annum increase in the interest rate, the "Special Interest").

Notes that have already been validly tendered and are not withdrawn prior to the New Expiration Date and that are accepted for purchase by CIWL pursuant to the Offer will be purchased at the increased price plus accrued but unpaid interest, including Special Interest, subject to satisfaction of the conditions set forth in the Offer to Purchase.

As a consequence of the extension of the expiration date, holders of Notes may tender or withdraw Notes until 5:00 p.m., New York City time, on Wednesday, February 5, 2003 unless the Offer is further extended. The Offer was previously scheduled to expire at 5:00 p.m., New York City time, on Tuesday, January 21, 2003.

CIWL has been informed by Deutsche Bank Trust Company Americas, the depositary for the Offer (the "Depositary") that, as of 5:00 p.m., New York City time, on January 21, 2003, $5,840,000 in aggregate outstanding principal amount of Notes have been validly tendered and not withdrawn pursuant to the Offer.

Additional information concerning the terms of the Offer, including all questions relating to the mechanics of the Offer, as well as copies of the Offer to Purchase, the Letter of Transmittal and related documents may be obtained by contacting the Depositary at [phone] (toll free). Questions about CIWL may be directed to CIWL through CIWL's affiliate, Cathay International Holdings Limited of UK, at [phone].

About Cathay International Water Limited

Founded in 1991, CIWL is developing a portfolio of infrastructure projects in some of the fastest-growing regions in the People's Republic of China (the "PRC") and is seeking to become a leading water company in the PRC. CIWL intends to focus on water treatment facilities which it believes will be key areas of development in the PRC.

CIWL is incorporated as an exempted company with limited liability under the laws of Bermuda. Since CIWL's founding, the Singapore Technologies Group, the Santander Group, Nomura/Jafco (since April 1996), Union Bank of Switzerland and certain funds managed by Union Bank of Switzerland (since May 1997) and J.P. Morgan Securities Asia (since May 1998) have become strategic investors in CIWL.

CIWL's principal executive offices are located in Hong Kong.