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Amcor sells packaging operations in China

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Amcor has entered into an agreement with the Hong Kong publicly listed company, Vision Grande Group Holdings Limited (Vision Grande), to sell its two China tobacco packaging operations to Vision Grande. These plants are located in Beijing and Qingdao.

The consideration for this sale is 121.1 million Vision Grande shares and represents a valuation of $HK509 million on an assumed share price for the issued shares of $HK4.20 per share.

Vision Grande has also agreed to allot and issue 16.67 million new shares at a subscription price of $HK4.20 per share to Amcor.

In view of these transactions, Amcor does not intend to exercise its existing option to purchase 96 million shares at $HK2.50 per share, which expires on December 31, 2005. Instead, Vision Grande and Amcor have entered into a new agreement under which Vision Grande has agreed to allot and issue a further 96 million shares at a subscription price of $HK2.50 per share, in order to supersede the previous option and bundle it together with the sale of the Chinese tobacco packaging operations and the new subscription. Completion of all three transactions will take place contemporaneously.

All three components of the agreement being the sale of assets, new shares subscription and further share subscription, are subject to regulatory approval in Hong Kong and approval of the independent shareholders of Vision Grande. Amcor will not be eligible to vote on these resolutions.

After completion of these transactions, Amcor will own approximately 44% of the issued capital of Vision Grande.

Amcor will also have the right to appoint the chairman and a majority of directors to the Board of Vision Grande. Amcor intends to consolidate the earnings of Vision Grande from the completion of the transaction.

Amcor managing director Ken MacKenzie said: “Amcor has a strategic objective to increase its exposure to the Chinese tobacco packaging market. Our initial investment in Vision Grande was designed to build our relationship with that company.

“The current plans to increase ownership and inject our Chinese tobacco operations into Vision Grande will cement our relationship and give a solid platform for further growth in this rapidly consolidating industry.”

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