Possible Discloseable and Connected Transactions

Possible very substantial Acquisition and connected Transactions

INTRODUCTION

           The directors of Guoco Group Limited ("Guoco"), Dao Heng Bank Group Limited ("Dao Heng") and Guoco Land Limited ("Guoco Land") announce that Guoco has today entered into an agreement (the "Guoco Agreement") with Land Development Corporation ("LDC") (as vendor) and Agrila Limited, a company within the Cheung Kong (Holdings) Limited group of companies (as developer) ("Agrila"), for the purchase of units in the retail and office development being constructed at the corner of Jubilee Street and Queen's Road Central in Hong Kong on the parcel of land registered in the Land Registry as Inland Lot No. 8827 (the "Development"). Neither LDC nor Agrila is connected with Guoco, Dao Heng or Guoco Land.

           As the certificate of compliance in respect of the Development has not yet been issued, the consent of the Director of Lands is required for any sale of units within the Development. The Director of Lands has consented to the Guoco Agreement.

           It is intended that, once approval of the Director of Lands has been obtained, Guoco will enter into an agreement with each of Dao Heng Bank Limited ("DHBL"), a wholly-owned subsidiary of Dao Heng, and Supreme Goal Investments Limited, a wholly-owned subsidiary of Guoco Land, (as purchaser) ("SGIL") and Guoco Land (as guarantor) for the purchase by DHBL and SGIL of certain of these units. Application will be made immediately to the Director of Lands for approval of these agreements.

THE PARTIES

           Guoco beneficially owns approximately 70% of the issued shares in Dao Heng. Dao Heng owns 100% of DHBL. Guoco owns approximately 70% of the issued shares in Guoco Land.

DETAILS OF THE PURCHASES

           Under the terms of the Guoco Agreement, Guoco has agreed to purchase the ninth, tenth, eleventh, twelfth, fifteenth, sixteenth, seventeenth, eighteenth and seventy-third floors of the Development as well as premises for use as a banking hall on the ground floor and the upper ground floor (the "Property") for a purchase price of approximately HK$2.567 billion (the "Price"). The Price was negotiated at arm's length with LDC and Agrila. Guoco will fund the payment of the Price by external borrowings.

           It is intended that DHBL will purchase the banking hall on the ground floor and the upper ground floor as well as the ninth, tenth and seventy-third floors in the Development (the "DHBL Property") for a consideration of approximately HK$1.353 billion (the "DHBL Price") and that SGIL will purchase the other six floors of office accommodation in the Development (the "Guoco Land Property") for a consideration of approximately HK$1.214 billion (the "Guoco Land Price"). Guoco Land will guarantee SGIL's obligations to Guoco under the agreement for the purchase of the Guoco Land Property. Any agreement with SGIL will be conditional on the approval of the shareholders of Guoco Land (see "Possible very substantial acquisition" below). The aggregate of the DHBL Price and the Guoco Land Price is the same as the Price and DHBL and Guoco Land have received advice from independent valuers that each of the DHBL Price and the Guoco Land Price is fair and reasonable.

OTHER TERMS OF THE GUOCO AGREEMENT

           The Price is payable in four instalments. The first instalment (being 10% of the Price) was paid on signing today. The balance of the Price is payable as to 10% within one month, 10% within three months and the remaining 70% on completion of the sale and purchase. Completion is scheduled to occur within six weeks following the earlier of the issue of the certificate of compliance in respect of the Development or the consent of the Director of Lands to assign which is expected by the end of 1998.

           Guoco will pay the deposit and subsequent instalments of the Price until agreements can be entered into with DHBL and SGIL and the conditions of those agreements (if any) have been satisfied, at which time DHBL and SGIL will pay all such sums to Guoco and will pay Guoco's costs of funds and other related expenses in connection with the purchase of the Property. All subsequent instalments of the Price will be payable by DHBL and SGIL to LDC.

REASONS FOR PURCHASE

           During the negotiations for the purchase of the Property, LDC required a single unconditional agreement with one purchaser. As the holding company of the Guoco group, Guoco agreed to enter into the Guoco Agreement with a view to facilitating the purchase of the DHBL Property and the Guoco Land Property by DHBL and Guoco Land respectively. Under the Guoco Agreement, LDC and Agrila have agreed that Guoco can sell the DHBL Property and the Guoco Land Property to DHBL and Guoco Land respectively subject to, inter alia, the consent of the Director of Lands for which application will be made. There will be no direct benefit to Guoco arising out of the Guoco Agreement, the DHBL Agreement or the Guoco Land Agreement. The purchase of the Property demonstrates the commitment of the management of the Guoco group to the future prosperity of Hong Kong's economy.

           The proposed purchase of the DHBL Property would enable DHBL to establish a new headquarters and principal banking hall in a modern office building in the Central district of Hong Kong. An added benefit of the purchase of the DHBL Property would be the opportunity for Dao Heng and DHBL further to rationalise management functions and centralise selected business divisions in order to improve their operational effectiveness and efficiency.

           The proposed purchase by SGIL of the Guoco Land Property as an investment property is in line with Guoco Land's stated objective of purchasing and holding investment and development properties in Hong Kong and the People's Republic of China ("PRC") and of becoming the flagship of the Guoco group's property investment and development activities in Hong Kong and the PRC.

DISCLOSEABLE TRANSACTION

           The Guoco Agreement constitutes a discloseable transaction for Guoco. A circular will be sent to the shareholders of Guoco containing details of the purchases as soon as practicable following receipt of approval of the Director of Lands or, if the application is unsuccessful, as soon as practicable after notification thereof.

POSSIBLE DISCLOSE TRANSACTION

           An agreement for the purchase of the DHBL Property would currently constitute a discloseable transaction for Dao Heng. If an agreement is entered into between Guoco and DHBL for the sale and purchase of the DHBL Property, a further announcement will be made and a circular sent to the shareholders of Dao Heng as soon as practicable afterwards containing details of the purchase of the DHBL Property.

POSSIBLE VERY SUBSTANTIAL ACQUISITION

           The purchase of the Guoco Land Property would constitute a very substantial acquisition for Guoco Land and would accordingly require shareholders' approval. As Guoco would be deriving no benefit from the transaction (for the reasons described above in "Reasons for the purchase"), The Stock Exchange of Hong Kong Limited ("SEHK") has confirmed that shareholders' approval of any agreement entered into for the purchase of the Guoco Land Property may be satisfied by the approval in writing of Guoco as the holder of a majority in nominal value of the issued shares in Guoco Land. If an agreement is entered into between Guoco and Guoco Land for the sale and purchase of the Guoco Land Property, a further announcement will be made and a circular sent to the shareholders of Guoco Land as soon as practicable containing details of the purchase of the Guoco Land Property.

POSSIBLE CONNECTED TRANSACTIONS

            The DHBL Agreement and the Guoco Land Agreement will constitute connected transactions for each of Guoco, Dao Heng and Guoco Land. As Guoco would be selling the Property to DHBL and SGIL for the Price (and payment of its costs of funds and related expenses (if any))and would be deriving no benefit from the transaction, SEHK has confirmed that waivers from the requirements to hold shareholders' meetings will be granted on condition that Dao Heng and Guoco Land will issue to their respective shareholders a circular containing a letter from an independent financial adviser relating to the DHBL Agreement and the Guoco Land Agreement.

Hong Kong, 25th April, 1997