BENEFUN INT'L<01130> - Announcement

Benefun International Holdings Limited
(Incorporated in Cayman Islands with limited liability)

PROPOSAL FOR ADJUSTMENT OF NOMINAL VALUE OF SHARES
BY WAY OF REDUCTION OF CAPITAL

Summary

The Board announces its intention to put forward an Adjustment
Proposal for the adjustment of the nominal value of the Shares from
HK$0.10 to HK$0.01 by way of a reduction of capital. The credit
arising from the reduction will be transferred to a special capital
reserve account of the Company subject to such conditions as the Court
may impose. The Adjustment Proposal is conditional upon, amongst other
things, the approval by the Shareholders and confirmation of the
reduction of capital by the Court.

It is further proposed that conditional upon such reduction of capital
becoming effective, the authorised capital of the Company will
immediately be restored to the original amount of HK$100,000,000 by
the creation of 9,000,000,000 New Shares with nominal value of HK$0.01.

A circular containing details of the Adjustment Proposal and a notice
convening an EGM to approve the Adjustment Proposal will be despatched
to the Shareholders on or about 24 October 2001.

Adjustment Proposal

The Board is putting forward the Adjustment Proposal to the
Shareholders for the adjustment of the nominal value of the Shares by
way of a reduction of capital. Upon the Adjustment Proposal becoming
effective, the nominal value of all the issued and unissued Shares
will be reduced by HK$0.09 from HK$0.10 to HK$0.01, being the nominal
value of the New Shares, and the authorised share capital of the
Company will be restored to its original amount of HK$100,000,000.

As at the date of this announcement, the authorised share capital of
the Company is HK$100,000,000 divided into 1,000,000,000 Shares, of
which an aggregate of 801,929,000 Shares have been issued and are
fully paid. The proposed reduction of capital, which will result in
the reduction of the authorised share capital of the Company from
HK$100,000,000 to HK$10,000,000, will be effected by cancelling paid
up capital to the extent of HK$0.09 upon each of the 801,929,000
Shares in issue as at the date of this announcement and any further
Shares which may be issued prior to the date on which the petition for
the confirmation of the reduction is heard by the Court and by
reducing the nominal amount of all the unissued Shares from HK$0.10 to
HK$0.01. On the assumption that no further Shares will be issued after
this announcement, a credit of HK$72,173,610 will arise as a result of
the reduction of capital involved in the Adjustment Proposal. The
credit will be transferred to a special capital reserve account to be
created by the Company the application of which will be subject to the
conditions imposed by the Court.

As part of the Adjustment Proposal, conditional upon the reduction of
capital becoming effective, the authorised share capital of the
Company will immediately be restored from HK$10,000,000 divided into
1,000,000,000 New Shares to the original amount of HK$100,000,000 by
the creation of an additional 9,000,000,000 New Shares.

Upon the increase in the authorised share capital of the Company
becoming effective and on the basis of 801,929,000 Shares in issue at
the date of this announcement, the authorised share capital of the
Company will be HK$100,000,000 divided into 10,000,000,000 New Shares,
of which 801,929,000 New Shares will be in issue and credited as fully
paid.

The implementation of the Adjustment Proposal will not, of itself,
alter the underlying assets, business operations, management or
financial position of the Company or the proportionate interests of
the Shareholders and the Group, except for the expenses incurred in
relation to the Adjustment Proposal. Such expenses are expected to be
under HK$600,000.00. The Adjustment Proposal does not involve any
diminution or increase of any underlying assets or liabilities of the
Company and does not result in any return of capital to the
Shareholders. The Board believes that the Adjustment Proposal will not
have any material adverse effect on the financial position of the
Group.

Reasons for the Adjustment Proposal

On each of 19, 20 and 21 September 2001, the Shares were traded at the
Stock Exchange at prices below their nominal value of HK$0.10. The
closing price of the Shares traded at the Stock Exchange on the date
immediately preceding the date of this announcement was HK$0.10 per
Share. Under section 35 of the Companies Law (2001 Second Revision) of
the Cayman Islands, the Company may only issue shares at a discount to
the nominal value of its Shares unless, amongst other things, the
issue is authorised by a resolution of the Shareholders and is
sanctioned by the Court and the shares to be issued at a discount
within one month after the date on which the issue is sanctioned by
the Court or within such extended time as the Court may allow and on
such terms and conditions as the Court thinks fit.

With a view to facilitating any issue of New Shares in future when
suitable circumstances arise, whether as consideration for
acquisitions or for capital raising or otherwise, and to avoid the
cumbersome statutory procedure for issuing shares at a discount and
the time involved, the Board proposes the Adjustment Proposal which it
considers to be in the best interests of the Company and the
Shareholders as a whole.

The directors of the Company have no present plan to issue any New
Shares.

Conditions of the Adjustment Proposal

The Adjustment Proposal is subject to the following conditions being
fulfilled :

1.        the passing of a special resolution to approve the reduction
of capital involved in the Adjustment Proposal and the consequent
increase of the authorised share capital of the Company to its
original amount of HK$100,000,000 at the EGM of the Company;

2.        the confirmation of such reduction of capital by the Court
and the registration by the Registrar of Companies in the Cayman
Islands of a copy of the Court order and the minute containing the
particulars required under section 17 of the Companies Law (2001
Second Revision) of the Cayman Islands;

3.        the Stock Exchange granting the approval of the listing of,
and permission to deal in, the New Shares in issue immediately
following the Adjustment Proposal becoming effective;

4.        the Singapore Exchange granting the approval of the listing
of, and permission to deal in, the New Shares in issue immediately
following the Adjustment Proposal becoming effective; and

5.        the obtaining of all other requisite consents, whether
statutory or otherwise for implementation of the Adjustment Proposal.

The Adjustment Proposal will become effective upon the fulfilment of
the above conditions. The effective date of the Adjustment Proposal
cannot be ascertained at present, as it depends on the availability of
the date for the hearing of the petition for the confirmation of the
reduction of capital by the Court. Further announcement(s) will be
made by the Company informing the Shareholders of the effective date
of the Adjustment Proposal, the timetable for the arrangement for free
exchange of certificates for New Shares, further details of the
designated broker and the matching services to be provided in respect
of odd lot holdings and, if applicable, the progress and results of
the Adjustment Proposal.

Arrangement for free exchange of certificates for New Shares

On the Adjustment Proposal becoming effective, the Shareholders may
submit existing certificates (which are currently yellow in colour)
for the Shares to the share registrar of the Company, Central
Registration Hong Kong Limited, at 17th Floor, Hopewell Centre, 183
Queen's Road East, Hong Kong for exchange, at the expense of the
Company, up to four weeks from the effective date of the Adjustment
Proposal, for certificates for the New Shares (which are expected to
be light green in colour). Certificates for the existing Shares which
are submitted at anytime after 4:00 p.m. on the last day of the
aforesaid four week period will only be accepted for exchange upon
payment of a fee of HK$2.50 per certificate (subject to adjustment) to
the share registrar of the Company. All existing certificates for the
Shares and the new certificates for the New Shares will be effective
as documents of title for the New Shares and valid for trading,
settlement and registration purposes. There will not be any
arrangement for parallel trading.

The size of each board lot of the New Shares will be 20,000 per board
lot.

Odd Lot Arrangements

The Company intends to appoint a broker to match sales and purchases
of odd lots holdings of Shares. Further details of the designated
broker and the matching services to be provided will be contained in
the further announcement to be made by the Company as stated under the
heading "Conditions of the Adjustment Proposal" above and in the
circular to be despatched to the Shareholders on or about 24 October
2001 as stated under the paragraph headed "General" below.

EGM

The EGM will be convened as soon as practicable at which all necessary
resolutions will be proposed to approve the reduction of capital and
the consequent increase of the authorised share capital of the Company
to its original amount.

General

The shares of the Company are also listed on the Singapore Exchange.

A circular containing further details of the Adjustment Proposal and a
notice convening the EGM will be despatched to the Shareholders on or
about 24 October 2001.

Definitions

"Adjustment Proposal"        a proposal by the Board for the
adjustment of the nominal value of the Shares from HK$0.10 to HK$0.01
each by way of a reduction of capital and the restoration of the
authorised share capital of the Company to HK$100,000,000

"Board"        the board of directors of the Company

"Company"        Benefun International Holdings Limited, a company
incorporated in the Cayman Islands with limited liability and whose
shares are listed on the Stock Exchange and the Singapore Exchange

"Court"        Grand Court of the Cayman Islands

"EGM"        an extraordinary general meeting of the Company to be
convened to approve the Adjustment Proposal and any ancillary matters

"Group"        the Company and its subsidiaries

"HK$"        Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong"        the Hong Kong Special Administrative Region of the
People's Republic of China

"New Share(s)"        ordinary share(s) of HK$0.01 each in the capital
of the Company upon the Adjustment Proposal becoming effective

"Share(s)"        ordinary share(s) of HK$0.10 each in the existing
capital of the Company

"Shareholders"        holders of the Shares

"Stock Exchange"        The Stock Exchange of Hong Kong Limited

        By order of the Board
        Tan Sim Chew
        Chairman

Hong Kong, 9 October 2001