Asia Aluminum Group Announces Proposed Debt Tender Offer As Part Of Capital Restructuring Plan

Hong Kong (ots/PRNewswire) -

Asia Aluminum Holdings Limited ("AAH") and AA Investments Company
Limited ("AAI," and together with AAH and their respective
subsidiaries, "we") announce today that we intend to commence a
tender offer and consent solicitation (the "Tender Offer and Consent
Solicitation") for:

-- any and all of AAH's outstanding US$450,000,000 8.00% Senior Notes due
2011 (the "AAH Notes");
-- any and all of AAI's outstanding US$355,000,000 12.00% Senior PIK
Notes due 2012 and AAI's outstanding US$180,000,000 14.00% Senior PIK
Notes due 2012 (together, the "PIK Notes") as well as 1,706,987
Warrants originally issued with the PIK Notes ("Warrants"); and
-- solicitation of consents to a one-time waiver of, and amendments to,
certain of the provisions of, the indentures, as amended and
supplemented, under which the AAH Notes and the PIK Notes were issued.

We expect to offer up to US$275 per US$1,000 principal amount for
AAH Notes and up to US$135 per US$1,000 principal amount of PIK Notes
including Warrants.

The AAH Notes and the PIK Notes are listed on the Singapore
Exchange Securities Trading Limited.

Currently, there are US$450,000,000 principal amount of AAH Notes
outstanding and US$727,529,000 principal amount of PIK Notes
outstanding (which amount includes PIK Notes issued as
payment-in-kind for interest).

We expect to commence the Tender Offer and Consent Solicitation
next week.

Background

Due largely to adverse global macroeconomic conditions, we have
experienced declining revenues and cash flow as well as increasing
pressure on available working capital facilities at a time when we
need increased financing to enable our aluminum rolled products
manufacturing facility to begin commercial production. The
deteriorating conditions have adversely affected our business in
various ways, including:

-- a decline of approximately 20% in sales volume for the six months
ended December 31, 2008 as compared to the same period in 2007;
-- higher cost of sales per tonne;
-- increased overall expenses as a result of preparing our aluminum
rolled products manufacturing facility for commercial production;
-- significantly longer accounts receivable days as many of our customers
have also experienced constraints on working capital; and
-- increasing difficulties maintaining sufficient sources of working
capital financing.

AAI's consolidated EBITDA for the year ended June 30, 2008 was
HK$1,121.0 million. For the six months ended December 31, 2008,
principally as a result of market conditions, our sales volumes
declined by approximately 20%, while our cost of sales per tonne
increased by approximately 29% and our cost structure overall
increased significantly as we continued to prepare our aluminum
rolled products manufacturing facility for commercial production.
These figures are compared to the six months ended December 31, 2007.
As a result of these and other factors, our EBITDA declined
significantly for the six months ended December 31, 2008. We expect
our EBITDA will continue to decline unless market conditions improve
significantly, we are able to access sufficient working capital and
we are able to commence commercial production at our aluminum rolled
products manufacturing facility. Maintaining sufficient EBITDA is
crucial to ensure we are able to finance our day-to-day operations,
service our aluminum rolled products expansion project and service
our debt.

Although cash generated from our operations and other sources has
decreased, we continue to require substantial capital. As financial
institutions tighten their lending policies, we have not been able to
increase our credit facilities consistent with the expansion of our
operations as we have done in past years, and expect such situation
to continue to worsen if we cannot successfully restructure or
refinance our existing indebtedness. Moreover, the commissioning of
our aluminum rolled products manufacturing facility has been delayed
for several months, which in turn has further contracted our working
capital due to our inability to commence production to generate cash
from operations.

The Group incurred significant additional indebtedness through
the issuance of the PIK Notes in May 2006 to fund the privatization
of Asia Aluminum Holdings Limited. As of December 31, 2008, AAH's
consolidated total liabilities were HK$12,390.5 million and total
borrowings (including bank and other loans, trust receipt loans and
import loans and the AAH Notes) were HK$8,287.4 million. As of the
same date, AAI's consolidated total liabilities were HK$17,737.3
million and total borrowings (including bank and other loans, trust
receipt loans and import loans, the AAH Notes and the PIK Notes) were
HK$14,094.5 million.

Proposed Restructuring

To address this situation, we have been exploring, for several
months, various options to restructure our balance sheet in an
attempt to strengthen our overall capital and working capital
position. Unfortunately, other options have not progressed on the
timetable necessary to meet our working capital needs and strengthen
our financial position. As such, our management has prepared the
Tender Offer and Consent Solicitation to restructure our existing
indebtedness. We have also pursued or are pursuing, the following
related initiatives:

-- we have received an indication of general support from a local PRC
Municipal Government to assist us with obtaining adequate financing for
the Tender Offer and Consent Solicitation and for our operations;
-- we have received letters of intent from two of our major existing PRC
bank creditors regarding a preliminary agreement to make loans to
refinance our existing indebtedness and to provide us with additional
financing which may increase our total indebtedness up to RMB6.0
billion, provided that we successfully complete the Tender Offer and
Consent Solicitation and satisfy other conditions; and
-- we have been maintaining regular discussions with our non-PRC bank and
trade creditors regarding the renewal and extension of existing credit
facilities.

Completion of the Tender Offer and Consent Solicitation is
crucial to our restructuring efforts and accordingly, our ability to
continue as an operating company. If we fail to consummate the Tender
Offer and Consent Solicitation, our bank creditors may demand
immediate repayment of all outstanding amounts and refuse to approve
further drawdowns under our existing working capital facilities.
Without access to sufficient working capital financing, we project
that our revenue and cash generated from operations would be
insufficient to fund expected operating expenses and required capital
expenditures, including commencing commercial production at our
aluminum rolled products manufacturing facility, as well as to
service our existing indebtedness.

Our Chairman, Mr. Kwong Wui Chun, has been making plans to use
his equity interest in AAI to support our restructuring efforts. In
consideration for a local Municipal Government's support for our
restructuring, Mr. Kwong has been in discussions with the government
with respect to the transfer of 25.0% of AAI's equity owned by him to
an entity controlled by the government upon the completion of our
restructuring. In addition, we expect Mr. Kwong to transfer an
additional 28.4% of AAI's equity to an escrow account following the
completion of the Tender Offer and Consent Solicitation: (i) up to
10.0% of AAI's equity for the benefit of management and employees
(excluding Mr. Kwong) to encourage their continuing services to us,
subject to certain performance thresholds; and (ii) the remainder to
be reserved for subsequent private or public sale to one or more
equity investors, which proceeds are expected to be used to reduce
our indebtedness other than any debt owed to Mr. Kwong. We also
expect Mr. Kwong to transfer an additional 14.0% of AAI's equity to
OK Spring Roll Limited Partnership, an entity owned by a three-member
consortium led by ORIX Corporation ("OK Spring Roll"), in exchange
for OK Spring Roll's existing 25.01% equity interest in one of our
subsidiaries following the completion of the Tender Offer and Consent
Solicitation. Upon completion of the Tender Offer and Consent
Solicitation, and simultaneous closing of the transactions described
above, we anticipate Mr. Kwong's equity ownership in AAI will be
30.0%, representing the minimum level required under the Indentures
and certain loan facilities to avoid triggering a "Change of Control"
and representing a significant decrease from his current equity
ownership position. Further, the shareholder loan of approximately
US$61.2 million granted by Mr. Kwong to AAI in connection with AAH's
privatization in May 2006 will be cancelled upon the completion of
the Tender Offer and Consent Solicitation and the transactions
described above.

Forward-looking Statements

This press release includes "forward-looking statements" within
the meaning of securities laws of applicable jurisdictions.
Forward-looking statements can generally be identified by the use of
forward-looking words such as "may," "will," "expect," "intend,"
"plan," "estimate," "anticipate," "believe," or other similar words,
and include statements regarding certain plans, strategies and
objectives of management and expected financial performance. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors, many of which are outside the
control of us and our officers, employees, agents or associates,
including, but not limited to, the competitive markets for the
provision of aluminum products; general political and economic
conditions, including those related to the PRC; cost and availability
of financing; our ability to meet debt and other obligations when
due; trends in the aluminum industry; our ability to commence
commercial production of our aluminum rolled products manufacturing
facility; regulations and restrictions; and governmental approval
processes. Actual results, performance or achievements may vary
materially from any projections and forward-looking statements and
the assumptions on which those statements are based. In addition,
forward-looking statements in this press release, including those
statements relating to the Tender Offer and Consent Solicitation, are
based on current expectations. Actual events and results could vary
materially from the description contained herein due to many factors
including changes in the market and prices for the AAH Notes, the PIK
Notes and the Warrants; changes in our business and financial
condition; changes in the debt markets in general; and the occurrence
of other events that may trigger a condition permitting termination
or amendment of the Tender Offer and Consent Solicitation. You are
cautioned not to place undue reliance on forward-looking statements.
We assume no obligation to update such information.

Contact:
Jenny Lee or Teresa Cheng
t6.communications limited
Tel: +852-2511-8388
Fax: +852-2511-8238
Email: aahenquiry@t6pr.com

ots Originaltext: Asia Aluminum Holdings Limited
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Jenny Lee or Teresa Cheng, +852-2511-8388, +852-2511-8238,
aahenquiry@t6pr.com , both are t6.communications limited for Asia
Aluminum Holdings Limited