China Treasure Inc. acquires interest in major steel manufacturing plant in booming Western China.

HONG KONG and ORLANDO, Fla.--(BUSINESS WIRE)--Oct. 30, 1995-- China Treasure Inc. (NASDAQ:CHNA) Monday announced that it has acquired a major position in Team Steel Inc., holder of the controlling interest in Chengdu Chengkang Iron & Steel Corp. (CCIS), a major steel and iron manufacturing Sino-Foreign joint venture with 1996 sales expected to approximate the equivalent of more than (US) $110 million.

China Treasure purchased the entire share capital of Team Steel that had been owned by its major shareholder, China Treasure Holding BVI Ltd., for the equivalent of (US) $14.1 million plus an additional $1 million in fees. Team Steel holds a 60% interest in CCIS, with the remainder held by Chengdu Iron & Steel Plant (CISP), a state-owned enterprise controlled by the Department of Metallurgy, Chengdu Government. A previous agreement under which China Treasure would have purchased a 90% interest in Team Steel from Team International Holdings Inc. for the equivalent of (US) $31.7 million, was canceled.

CCIS, engaged in the manufacture of iron, steel wires, reinforced steel bars and related iron and steel products, is based in the Sichuan Province, the most populous province in the People's Republic of China (PRC). It recently was ranked the 14th largest business in that province, with 1994 proforma profits after tax equal to (US) $9.7 million. The plant covers 2.34 million sq. ft. on about 2,450 acres in Quingbiajiang and has been called a "mini city," containing its own roads and railway lines, a hotel and conference center, hospital, television station, schools, dwellings and a power generation station. Currently, 70% of the plant's output is sold in the city of Chengdu, capital of the Sichuan Province.

Management of CCIS, working in conjunction with Clement Mak, Chairman of China Treasure, initiated a modernization and streamlining of plant operations that is anticipated to result in increased output and profitability. A reduction of employees to about 7,000 from more than 11,500 is contemplated.

"Growing and bustling economic conditions in this area of China necessitate increased use of steel and iron products for a strong and stable infrastructure," explained Mak. "As we provide this region with these valuable tools, we are also taking steps to ensure that the organizational and financial infrastructure of Chengdu Chengkang Iron & Steel is sound. CCIS is enhancing its position as one of the PRC's leading steel bar and wire producers through intelligent planning and elimination of operational redundancies and waste."

For the year ended Dec. 31, 1994, CCIS reported a before and after tax proforma profit equal to $14.6 million and $9.7 million respectively on revenues of $108.8 million. CCIS reported for the eight months ended Aug. 31, 1995, an unaudited before and after tax proforma profit equal to (US) $8.7 million and (US) $6 million respectively on revenues of (US) $63 million.

Its status as a Sino-Foreign joint venture entitles CCIS to waive PRC profit taxes for the first two years of operation and 50% of profit taxes for the subsequent three years. In addition, CISP has guaranteed that CCIS's 1995 and 1996 pro forma profit after tax would be equal to no less than $11.5 million and $17.2 million, respectively.

China Treasure Inc., based in Hong Kong, is a real estate and infrastructure development company involved in, among other things, the construction of Sun City, a $2.5 billion upscale satellite city in the Guandong Province, China.

CONTACT: Market Management International

Thomas L. Tedrow, 801/978-9678 or 407/645-0207