China Water Industry Announces HK$385,000,000 Convertible Bond Financing

Funds to Accelerate and Expand Waterworks Business in the PRC

    HONG KONG, Aug. 1 /Xinhua-PRNewswire/ -- China Water Industry Group
 Limited ("China Water Industry" or the "Company") (HKEX: 1129) today
 announced that it has entered into a bond purchase agreement with a group
 of investors for the issuance of HK$385,000,000 Convertible Bonds ("CBs")
 which will be due in 2012. Hong-Kong based Abax Global Capital has agreed
 to be the cornerstone investor for the issue.
     The bonds are convertible into Company shares at an initial conversion
 price of HK$1.42 per share, representing a premium of approximately 17.36%
 to the Company shares' closing price of HK$1.21 per share traded on The
 Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 25 July 2007,
 or a premium of approximately 19.53% to the average closing price of
 HK$1.188 per share of the Company as quoted on the Stock Exchange for the
 last ten trading days up to and including 25 July 2007.
     A maximum 271,126,760 Conversion Shares will be issued by the Company
 upon full conversion of the CBs, which represents approximately 14.42% of
 the issued share capital of the Company and approximately 12.60% of the
 issued share capital of the Company as enlarged by such conversion
 (assuming no other issue of Shares is made before full conversion of the
 CBs).
     Proceeds of the issue of the CBs will be used for investments, by way
 of capital expenditure and working capital in Hong Kong, and investment in
 water supply and water related projects in the PRC. Closing of the
 financing transaction is subject to customary closing conditions.
     Mr. Zhong Wen Sheng, Managing Director of China Water Industry, said,
 "We are glad to be announcing this landmark financing agreement. The fast
 growing China economy has generated substantial market opportunities for
 us. Since transforming into a waterworks enterprise last year, the Company
 has capitalized on the growth momentum of the water supply sector in China.
 We have been actively acquiring waterworks projects to expand our business
 in the PRC. Funds from this financing will be applied to enhance our core
 waterworks businesses so as to bring maximum returns to our shareholders."
     Mr. Andy Shpiz, a Managing Director of Abax Global Capital, commented,
 "This investment is a significant milestone for China Water Industry. Abax
 looks forward to the investment contributing significantly to China Water
 Industry's expansion plans."
     About China Water Industry Group Limited (stock code: 1129)
     China Water Industry Group Limited is set to become a leader in China's
 water investment and operation and management industry. The Group has been
 actively tapping the water industry in China since last year and has
 progressively acquired all or part of the interests in the water supply
 and/or sewage treatment projects in Yichun City of Jiangxi Province,
 Dangshan County of Anhui Province, Jinxiang County in Jining City of
 Shandong Province, Linyi City of Shandong Province, Shangqiu City of Henan
 Province, etc. With a wealth of professional management team comprising
 experts of city construction and water infrastructure investment, operation
 and management, the Group has also forged close cooperative relationship
 with many leading water facilities construction and design enterprises in
 China.
     About Abax Global Capital
     Abax Global Capital ("Abax") is a leading Hong-Kong-based investment
 fund manager focused on Pan-Asian private and public investments with an
 emphasis on Greater China and South East Asia. Founded in 2007, Abax's
 objective is to invest in and create value for small-to-mid-sized Asian
 enterprises, thereby generating returns for all stakeholders. Morgan
 Stanley Investment Management is a minority shareholder of Abax, an
 independently managed investment company.
     For press enquiries
 
     Strategic Financial Relations (China) Limited
     Ms. Anita Cheung
     Tel:  +852-2864-4827
     Email: anita.cheung@sprg.com.hk
 
     Mr. Marcus Keung
     Tel:   +852-2114-4967
     Email: marcus.keung@sprg.com.hk
 
     Ms. Florence Chu
     Tel:   +852-2864-4893
     Email: florence.chu@sprg.com.hk
 
     Ms. Arlene Wong
     Tel:   +852-2864-4899
     Email: arlene.wong@sprg.com.hk
 
 

SOURCE China Water Industry Group Limited