Pacrim International Capital Inc. Announces Retirement of Loans

Saturday, November 15, 2008; Posted: 09:01 AM

PACRIM INTERNATIONAL CAPITAL INC. (PCN: TSX) ("Pacrim") today announced completion of its previously announced intended retirement of various loans that had been made by Pacrim to a number of companies in which Guy Lam, the Chairman and Chief Executive Officer of Pacrim, has an interest. Pacrim funded the loans in order to allow the borrowing companies to develop investment opportunities in the People's Republic of China to be subsequently offered for sale to Pacrim. These opportunities took longer to develop than originally anticipated.

The loans totalled approximately Cdn$26,619,000 of principal and accrued interest as of November 14, 2008. The loans were secured, part of the security consisting of the pledge of the outstanding common shares of Pacrim International Capital Holdings Inc. ("PICH"), a holding company owned by Mr. Lam with business interests in the People's Republic of China consisting of an indirect 87.81% interest in Wah Sang Paper Products (Shenzhen) Co. Ltd. ("Wah Sang"), a corrugated packaging company. The loans were retired by the transfer of 46% of the shares of PICH to Pacrim pursuant to the realization on this security.

A committee of all of the directors of Pacrim except Mr. Lam (the "Independent Committee") retained American Appraisal China Limited (the "Valuator") to render an independent opinion as to the equity value of PICH based on a valuation of the business enterprise of Wah Sang (the "Valuation") as of June 30, 2008. The Valuation is summarized in Schedule "A" to this press release and is available electronically at www.sedar.com. In dealing with the Valuation for the purposes of the retirement of the loans, the Independent Committee adjusted the value range for PICH as determined by the Valuator to reflect real estate unrelated to Wah Sang that was transferred out of PICH after June 30, 2008 and to reflect the retirement of loans owed by PICH to Pacrim. The resulting range for the equity value of PICH was US$40,667,000 to US$55,566,000 or Cdn$50,081,000 to Cdn$68,430,000. The Independent Committee determined the percentage of shares of PICH to be transferred to Pacrim through retirement of the loans by dividing Cdn$26,619,000 (being the principal and accrued interest of the loans to November 14, 2008) by Cdn$57,867,000, being the value of PICH adopted by the Independent Committee for such calculation on the basis of the adjusted value range for PICH derived from the Valuation. 46% of the shares of PICH were thus transferred to Pacrim with the balance of the shares of PICH being retained by Mr. Lam. Reference is made to the "Valuation" section of Schedule "A" hereto for further details.

The corrugated packaging operations of Wah Sang are located in Shenzhen, in the Pearl River Delta of southern China which houses one of the world's largest concentrations of manufacturing of consumer electronics, office and telecommunication equipment. Wah Sang sells its high-end packaging products almost exclusively to multinational corporations which export from China. Wah Sang has annual production capacity of 63,000 tonnes of containerboard, 50,000 tonnes of flexo containers and 18,000 tonnes of off-set colour containers. The bulk of the containerboard produced is used internally for further processing into flexo containers or off-set colour containers. A detailed description of Wah Sang and a description of PICH are contained in Schedule "A" hereto. Exhibit I to Schedule "A" contains the audited financial statements of PICH for the year ended December 31, 2007 and the unaudited financial statements of PICH for the six month interim period ended June 30, 2008.

There is litigation in Hong Kong with respect to PICH's indirect ownership interest in Wah Sang. Based on the information available to it, including a legal opinion, Pacrim believes that PICH is the rightful owner. Reference is made to the "Litigation" section of Schedule "A" for further details.

Pacrim intends to file a business acquisition report in accordance with National Instrument 51-102 - Continuous Disclosure Obligations with respect to the retirement of the loans.

Under Mr. Lam's direction, Pacrim intends to continue to explore other investment opportunities in China.

Caution concerning forward-looking statements

Statements made in this news release, other than those concerning historical financial information, should be considered forward-looking and subject to various risks and uncertainties. Some forward-looking statements may be identified by words like "may", "will", "anticipate", "estimate", "expect", "intend" or "continue" or the negative thereof or similar variations. Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include, but are not limited to: risks associated with China including state ownership, government sector intervention, foreign investment, repatriation of profit and currency conversion, tax, the developing legal system, protection of intellectual property rights, shareholder rights and enforcement of judgments, permits and business licenses, appropriation, political stability considerations, the central planned economy, fluctuations in foreign exchange rates and Chinese accounting and auditing standards; litigation risk with respect to the ownership of Wah Sang; risks in business and operations including risks associated with expansion, future capital requirements, dependence on key personnel, environmental regulation, competition, risk in purchasing abroad, risk of change in the price of raw materials, product price volatility, insurance and operating plant risk; customer risk including risk of a single market and risk depending on major customers; technical risk including risk in the advance of technology and risk of relying on technology abroad; financial risk including foreign exchange risk, credit risk, liquidity risk, cash flow and fair value interest rate risk; investment strategy risk; and short term management transition risk.

We caution that the foregoing list of factors is not exhaustive and that when reviewing our forward-looking statements, investors and others should refer to the "Risk Factors" section of Pacrim's Annual Information Form, the "Risks and Uncertainties" and other sections of our Management's Discussion and Analysis, the "Risk Factors" section of Schedule "A" to this press release and our other periodic filings with Canadian securities regulatory authorities. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time-to-time by us or on our behalf; such statements speak only as of the date made.

<< For further information, please contact: Cindy Fung Acting Chief Financial Officer Pacrim International Capital Inc. Tel. 852.2526.1554 SCHEDULE "A" DESCRIPTION OF WAH SANG PAPER PRODUCTS (SHENZHEN) CO. LTD. AND PACRIM INTERNATIONAL CAPITAL HOLDINGS INC. TABLE OF CONTENTS CURRENCY ............................................................. 1 WAH SANG PAPER PRODUCTS (SHENZHEN) CO. LTD ........................... 2 PACRIM INTERNATIONAL CAPITAL HOLDINGS INC. ...........................13 PRC REALTY INC. ......................................................13 FINANCIAL STATEMENTS OF PICH .........................................13 VALUATION ............................................................15 LITIGATION ...........................................................16 RISK FACTORS .........................................................17 EXHIBIT I - Financial Statements CURRENCY Unless otherwise indicated, all references herein to "dollar" or the use of the symbol "$" or "Cdn.$" are to Canadian dollars, all references to "US dollars" or "US$" are to United States dollars, and all references to "RMB" are to Renminbi, the legal currency in the People's Republic of China ("China" or the "PRC"). I. Canadian Dollar/RMB Exchange Rates ---------------------------------- The following table sets forth, for the periods indicated, certain information concerning the exchange rate for translating RMB into Canadian dollars using rates quoted by the Bank of Canada website. No representation is made that RMB could be converted into Canadian dollars at that rate or any other rate. One Canadian dollar expressed in RMB ------------------------------------------------------------------------- Year ended December 31 Average During Period ------------------------------------------------------------------------- 2004 6.3573 ------------------------------------------------------------------------- 2005 6.7613 ------------------------------------------------------------------------- 2006 7.0323 ------------------------------------------------------------------------- 2007 7.0822 ------------------------------------------------------------------------- II. US Dollar/RMB Exchange Rates The following table sets forth, for the periods indicated, certain information concerning the exchange rate for translating RMB into US dollars constructed using rates quoted by the Bank of Canada website. No representation is made that RMB could be converted in US dollars at that rate or any other rate. One US dollar expressed in RMB ------------------------------------------------------------------------- Year ended December 31 Average During Period ------------------------------------------------------------------------- 2004 8.2741 ------------------------------------------------------------------------- 2005 8.1922 ------------------------------------------------------------------------- 2006 7.9749 ------------------------------------------------------------------------- 2007 7.6119 ------------------------------------------------------------------------- III. US Dollar/Canadian Dollar Exchange Rates The following table sets forth, for the periods indicated, certain information concerning the exchange rate for translating Canadian dollars into US dollars using rates quoted by the Bank of Canada website. No representation is made that Canadian dollars could be converted in US dollars at that rate or any other rate. One US dollar expressed in Canadian dollars ------------------------------------------------------------------------- Year ended December 31 Average During Period ------------------------------------------------------------------------- 2004 1.3015 ------------------------------------------------------------------------- 2005 1.2116 ------------------------------------------------------------------------- 2006 1.1341 ------------------------------------------------------------------------- 2007 1.0748 ------------------------------------------------------------------------- WAH SANG PAPER PRODUCTS (SHENZHEN) CO. LTD. >>

Wah Sang Paper Products (Shenzhen) Co. Ltd. ("Wah Sang") is strategically located in Shenzhen, in the heart of China's Pearl River Delta, which houses one of the world's largest concentrations of manufacturing of consumer electronics and office and telecommunication equipment. All these products, especially those produced by local operations of multinational corporations for export purposes, require sophisticated high-end packaging such as that produced by Wah Sang, which sells quality corrugated packaging products almost exclusively to multinational corporations.

Please note in the following discussion all information for the year ended December 31, 2006 and for the interim period ended June 30, 2008 is unaudited.

Wah Sang's History

The business of Wah Sang was founded by the father of Guy Lam, the President and Chief Executive Officer of Pacrim International Capital Inc. ("Pacrim"), in 1958 in Hong Kong. It started as a simple converter plant, buying containerboard from local suppliers and converting it into single-colour, single-wall containers. Wah Sang moved its manufacturing operations to Shenzhen, China in 1989. This move was made for two strategic reasons. Firstly, China's labour rates were (and continue to be) a fraction of those in Hong Kong. More important was the belief that China would become the manufacturing base for not just Hong Kong-based companies, but also manufacturers from around the world. By relocating to Shenzhen, Wah Sang, with its roots and track record in Hong Kong, would be better positioned than its competitors in mainland China to supply these multinational enterprises.

In 1993, Wah Sang undertook to expand and to vertically integrate its operations. A 20,000 square metre plant was custom built to house two multi-layered production lines, capable of producing three-colour flexo print containers. In 1995, a product testing centre was set up. In 1997, Wah Sang started an offset printing operation by purchasing a new German made KBA colour printing press. An enterprise wide Quality Control Circle initiative was implemented in 1998. In 1999, Wah Sang introduced innovative Paper Pallet and Slip Sheet to facilitate and streamline the delivery system. In 2000, Wah Sang commenced formal recruiting efforts at local universities and technical colleges in order to strengthen the newly created R&D centre. In 2003, Wah Sang started expansion of its offset printing operation, with a view to the establishment of a stand-alone offset printing centre.

Wah Sang is a joint stock limited company with foreign investment, as approved by the Ministry of Foreign Trade and Economic Cooperation in China, with a registered capital of US$20,700,000.

Intercorporate Relationships

Wah Sang owns 100% of the outstanding shares of Wah Sang Industrial (HK) Co. Ltd., a subsidiary of Wah Sang incorporated in Hong Kong which trades in paper materials for Wah Sang.

China's Corrugated Container Industry

The Pearl River Delta region hosts a concentration of export oriented manufacturing industries which generally require corrugated boxes for packaging. This region, which includes the cities of Guangzhou, Shenzhen, Dongguan and Huizhou, is widely known as the production base for many global manufacturers of consumer electronics and telecommunication products such as Hi-Fi equipment, televisions and monitors, DVD players, computers, printers and cellular phones. These products require high quality and sophisticated corrugated packaging, both in terms of design and protection during transportation. Wah Sang is strategically located in Shenzhen, in the heart of this manufacturing heartland of China. Virtually all of Wah Sang's customers are located within a radius of 200 kilometres of its facilities, allowing Wah Sang to save on transportation costs while offering just-in-time delivery service to customers.

Wah Sang's business strategy is to grow its business through internal means as well as through acquisitions. Initially, Wah Sang plans to concentrate on selective acquisitions within the Pearl River Delta region. In the medium term, Wah Sang would seek acquisition opportunities in the Yangtze River Delta region, including the cities of Shanghai, Suzhou, Nanjing and Hangzhou, which region also hosts a concentration of export-oriented manufacturing industries. The longer-term phase of Wah Sang's acquisition strategy is to target the Beijing-Tianjin region, including the Province of Shandong, which is the third major consumption area of corrugated products in China.

Competitive Advantages of Wah Sang

Management of Wah Sang and management of Pacrim believe that Wah Sang enjoys the following advantages over its competitors:

<< Blue Chip Customer Base ----------------------- >>

Wah Sang's customers are primarily Fortune 500 consumer products, electronics and telecommunications companies, including Wal-Mart, Foxconn Technology Group ("Foxconn"), Brother, Sony, IBM, Canon, Samsung, HP, Xerox, DHL and UPS, and other multinational corporations. These companies all have extremely high standards for the packaging of their products. Wah Sang's ability to acquire these customers and subsequently maintain a strong relationship with them results in a stable revenue base. Furthermore, Wah Sang is in an excellent position to grow with these customers as they expand their operations in China.

<< Quality of Products ------------------- >>

Through a comprehensive quality control system that covers every stage of its production, including assessment of suppliers, sample testing of raw materials, control over usage of raw materials, computerized and monitored production process and quality testing of all finished products, Wah Sang maintains a consistently high level of product quality. Consequently, Wah Sang's products have consistently met its customer acceptance target of 99% while the customer complaint rate has consistently been below the 0.25% target. Wah Sang was ISO 9002 certified in 1996 and obtained its ISO 9000/14000 certification in 2002. Wah Sang has also been awarded Sony's "Green Partner" designation.

<< Superior Equipment and Technologies ----------------------------------- >>

Over the years, Wah Sang has invested heavily in technologies and equipment. For example, Wah Sang's equipment list includes three KBA printing presses imported from Germany, capable of producing four, five and six-colour offsets, respectively. The last one purchased, KBA 162, has a maximum printing size of 47.5 inches x 63.75 inches, the largest available in the world today and only three of such offset printing machines in southern China. Management of Wah Sang believes that the quality of its equipment approaches world standard, allowing it to service even the most demanding clients.

<< Customer Knowledge and Product Development Capabilities ------------------------------------------------------- >>

Management and staff of Wah Sang maintain close relationships with customers and keep up-to-date with market trends and customers' needs. They do so by regularly visiting customers to discuss market trends, pricing and customer requirements, participating in industry conferences and exhibitions and carrying out customer surveys. Consequently, Wah Sang has developed a capability that enables it to conceptualize, design and produce new products based on customers' needs in a timely manner. Examples of such capabilities include shipments of point-of-sale display cases for Wal-Mart and corrugated colouring doll houses for Target Stores.

<< Strong Profit Margins --------------------- >>

Most of Wah Sang's products are considered to be mid or high-end packaging products, which command higher price points than commodity products produced by many of Wah Sang's competitors. Cost control practices are followed at all levels at Wah Sang. These factors combine to give Wah Sang consistent and strong profit margins: Gross margins for 2005, 2006 and 2007 were 23.3%, 17.9% and 22.3% respectively, while net margin (after tax) was 12.5% for 2005, 5.3% for 2006 and 7% for 2007. The margin fluctuation is related to the constant change in commodities prices worldwide, particularly for kraft liner and medium liner paper.

<< Strategic Location ------------------ >>

Wah Sang is strategically located in Shenzhen, in the heart of the Pearl River Delta region of southern China. As above noted, this region is the production base for many global manufacturers, all of which require high quality and sophisticated corrugated packaging. Shenzhen is also adjacent to Hong Kong and serves as the gateway for a significant portion of China's import and export activities. Wah Sang is able to supply customers in Hong Kong, Taiwan and other countries in Southeast Asia.

Products and the Production Process

Corrugated cardboard is made of paper and has an arched layer called "fluting", between smooth sheets called "liner". Wah Sang has three major product lines: containerboards, "flexo containers" and "offset colour containers". Containerboard is the paper used for making corrugated containers. Flexo containers refer to corrugated containers with colour logos, text and graphics printed directly on the surface of the container. Offset colour containers refer to corrugated containers with brilliant and detailed colour graphics printed on laminated offset sheets which are pasted onto the surface of the container. Because of the thickness and rigidity of the containerboard, graphics on the flexo containers are generally inferior in quality to those on offset colour containers.

<< Wah Sang's production capacity and actual production volume by product line are provided below: 2008 (to 2003 2004 2005 2006 2007 June 30) -------- -------- -------- -------- -------- -------- (tonnes) Containerboard Capacity 60,000 60,000 60,000 63,000 63,000 63,000 Actual volume produced 56,647 60,229 58,962 57,455 56,392 24,820 Flexo Containers Capacity 50,000 50,000 50,000 50,000 50,000 50,000 Actual volume produced, tonnes 41,430 44,499 46,988 39,673 39,099 19,260 Offset Colour Containers Capacity 12,000 12,000 18,000 18,000 18,000 18,000 Actual volume produced 13,622 14,027 13,891 16,588 16,086 4,700 >>

The bulk of the containerboard produced is used internally for further processing into flexo containers or offset colour containers. In 2003, Wah Sang embarked on a major expansion program to significantly increase the capacity of the offset operation. The first phase of this program is now complete and the capacity of the new Offset Centre is presently 18,000 tonnes. Current plans call for further phased increase of the capacity, reaching 68,000 tonnes by the end of 2009 and reaping its full financial impact in 2010.

<< Production Process ------------------ >>

Wah Sang has adopted a flexible and efficient production process which vertically integrates the manufacture of corrugated containerboard and the manufacture and printing of corrugated containers. This production process enables Wah Sang to fulfill customer orders within a short lead time. Wah Sang's lead time from the receipt of a customer's order to delivery of finished goods, depending on the customer's specifications and order size, typically ranges from one to seven days.

The principal raw materials used in the manufacture of containerboard and corrugated containers are kraft liner paper and medium paper. The latter, also known as fluting material or corrugated medium, is passed through a corrugator machine at Wah Sang which presses the corrugation (known as flutes) into the medium. These flutes resist pressure and bending from all directions, and their dimensions can be altered to increase or decrease the strength of the containerboard. Adhesives are then applied to the outer tips of the flutes to attach a sheet of liner paper to each side of the corrugated medium to form a rigid containerboard which is then used in the manufacture of corrugated containers.

<< Production of Corrugated Containers ----------------------------------- >>

The containerboards are further processed by Wah Sang into corrugated containers according to customer specifications. Logos of the customer, depictions of the end-products and other graphic designs are printed directly onto the containerboard (a process called flexo printing), which is then moulded or cut into the required design and size, stapled or glued into individual containers and packaged. After inspection, the flexo boxes are then delivered to the customer. Alternatively, should a customer require a printing quality that flexo printing cannot provide, the graphics are printed on separate laminated offset sheets which are then glued onto the containerboards before they are processed into boxes.

A flow chart illustrating the key steps of Wah Sang's production process for containerboard and corrugated containers is provided below:

<< (a) Containerboard ------------ Kraft Liner ---------------------- ------------ Corrugating into the - desired number of ------------ layers Medium ---------------------- Paper ------------ ---------------------- Drying ---------------------- ---------------------- Cutting ------------ ------------ ---------------------- - Container- - Inspection ---------------------- board ------------ ------------ Measuring ------------ ---------------------- Delivery ------------ (b) Corrugated Containers ---------------- Flexo printing - directly on ----------- containerboard Container- ---------------- board ------------ ---------------- ---------------- - Offset colour Adhere offset ------------ printing on - paper on Printing separate paper containerboard Material ---------------- ---------------- ------------ ---------------- ------------ Cut into the Sample required product shape production ---------------- ------------ ---------------- ---------------- ---------------- Stapling or - Offset - Inspection glueing boxes ---------------- ---------------- ---------------- ---------------- Delivery ---------------- >>

Production Facilities and Quality Control

Wah Sang's facilities are located in two adjacent lots in the city of Shenzhen. The original facilities were built in 1993, comprising six buildings with an aggregate building area of 30,415 square metres on a site of 24,518 square metres under long-term land lease from the municipal government of Shenzhen, expiring in 2041. The Offset Centre is a building of 32,747 square metres on a site of 24,125 square metres adjacent to the original facilities. This latter site is under a long-term land lease from the municipal government of Shenzhen, expiring in 2053. A breakdown of the building areas of the two facilities is provided below.

<< Original Offset Building Centre (sq. metres) (sq. metres) ------------ ------------ Production Area A 4,189 13,600 Production Area B 11,102 17,100 Production Area C and warehouse 12,227 2,047 Office 1,025 - Dormitory 1,872 - Total 30,415 32,747 >>

Wah Sang maintains product quality targets that are set to international standards, including a customer acceptance rate of 99% or higher and a customer complaint rate of 0.25% or less.

The quality control team at Wah Sang had a staff of 55 as at December 31, 2007. The first component of the quality control system is a strict supplier evaluation process whereby raw material suppliers are assessed at regular intervals in accordance with a specific set of criteria including pricing, quality of raw material supplied and quality of service. As raw materials arrive at Wah Sang, they are examined on a random sampling basis to ensure the materials meet established quality standards. Work-in-process inventories are inspected to ensure that Wah Sang's products are manufactured in accordance with customer specifications and standards. Finally, finished goods are subject to physical tests and inspection before delivery.

Wah Sang has in place a company-wide Quality Central ("QC") Circle initiative, in which representatives from each department participate in weekly QC Circle meetings to explore different ways to ensure and improve on product quality. As above noted, Wah Sang obtained ISO 9001/14000 certification in 2002.

Raw Material and Suppliers

The principal raw materials used by Wah Sang are kraft liner paper and medium paper. Wah Sang sources these materials from various countries, including China, the United States, Korea, Indonesia, Australia, New Zealand, France, Brazil, South Africa and Canada. Wah Sang normally settles its purchases, which are denominated either in U.S. dollars or Hong Kong dollars, by letter of credit.

Domestically supplied paper material is generally 12% to 18% cheaper than imported material. Furthermore, Wah Sang is exempt from paying VAT for its domestic purchases due to its export company status. The quality of the Chinese domestic paper supply has been steadily improving during the past few years and consequently, Wah Sang has been buying more domestic paper to take advantage of the lower cost. Wah Sang buys its raw material from over 30 suppliers. For the years 2005, 2006 and 2007, the total purchase attributable to the five largest suppliers represented 66%, 46% and 71% of total purchases respectively. The table below sets out the breakdown of Wah Sang's purchases of paper raw material by domestic and foreign sources.

<< 2008 (to 2003 2004 2005 2006 2007 June 30) -------- -------- -------- -------- -------- -------- Paper purchases (US$000s) Domestic 1,221 1,405 3,257 4,683 1,866 492 Foreign 19,468 23,239 20,292 18,072 18,866 10,091 -------- -------- -------- -------- -------- -------- Total 20,689 24,644 23,549 22,755 20,732 10,583 -------- -------- -------- -------- -------- -------- >>

Inventory Control and Delivery System

Wah Sang monitors and controls the inventory levels of its raw material and finished goods in order to ensure an efficient operation and to reduce the risk of over-stocking and obsolescence. For raw material, it is Wah Sang's policy to keep 30 to 45 days of supply in storage. With the gradual shift to buying paper raw material internationally, management expects the paper inventory will be maintained. Wah Sang's policy on finished goods is to keep a minimum level of stock due to its short production lead time and the fact that corrugated products cannot be stored for an extended period of time due to moisture absorption and discolouration.

For local deliveries, Wah Sang has a team of 46 trucks each with delivery routes covering a radius of 200 kilometres from its plant in Shenzhen. These trucks are leased by Wah Sang, which generally signs an agreement with each truck owner annually setting out the unit delivery prices for each destination. The trucks are painted with the name and logo of Wah Sang and are used exclusively by Wah Sang.

The occasional shipment of Wah Sang's products to overseas destinations is made by container. Wah Sang has ongoing arrangements with forwarding companies which transport Wah Sang's product from the plant by truck to the shipping port in Shenzhen where the product is then transferred into containers to be delivered by ship.

Product Development, Sales and Marketing

Wah Sang provides a comprehensive product offering to its customers, including product development, product structure design, a complete graphics design and production facility and product testing service. Most of Wah Sang's customers consider corrugated containers as providing a selling function in addition to protecting the end-product. To this end, Wah Sang offers its customers full graphics capabilities that use state-of-the-art digital photographic and computer technologies. This service is of particular importance to Wah Sang's international customers in that it saves a significant amount of time and expense usually incurred with traditional advertising agencies and design houses, particularly in China where such services at acceptable standards are difficult to find. The in-house design capabilities also allow Wah Sang to achieve better quality control.

Wah Sang's customers may from time to time request Wah Sang to design packaging cartons with specific levels of protection, visual appearance or other particular needs. While some of Wah Sang's customers may have their own in-house packaging design capabilities, Wah Sang often works closely with its customers in designing the packaging. In addition, Wah Sang continuously explores and develops new techniques for producing durable but lightweight cartons to help its customers in reducing costs.

Wah Sang aims to strengthen its ongoing relationship with existing customers, maintain a high level of customer satisfaction and attract new customers by continuously promoting its products and market research. Specific sales and marketing activities include:

<< - Monthly visits with customers to discuss market trends, pricing and the customers' needs; - Regularly provide product samples and specifications to customers and potential customers; - Participation in industry conferences, trade shows and exhibitions in China; - Carrying out customer surveys to gather feedback and suggestions from customers; and - Advertising in, and contributing articles to, industry periodicals. >>

Wah Sang's sales and marketing department employees visit with each customer at least once a month. Customer feedback from these visits is documented in detail and followed closely. The regular customer visits also serve to monitor customer credit issues. Wah Sang has also implemented a roving after-sales program whereby a dedicated team travels to visit customers which have just received a product shipment to ascertain customer satisfaction and deal with any discrepancies and concerns.

Customers

Approximately 95% of Wah Sang's sales are to domestic subsidiaries or affiliates of foreign, international manufacturing companies. The bulk of Wah Sang's customers are Fortune 500 companies or otherwise substantial multinational enterprises, as above noted.

The top five customers of Wah Sang accounted for approximately 48% of Wah Sang's gross revenue in 2005, 52% in 2006 and 57% in 2007. Management of Wah Sang aims to increase sales to other customers and to secure new customers in order to lessen its dependence on its top five customers and the consumer electronics industry. The top five customers (by revenue) in 2007 were Foxconn, Walmart, Brother, TCL King Electrical Appliance (Huizhou) Co., Ltd., and Dynapac Co., Ltd. In May 2007 Wah Sang entered into a strategic partnership arrangement with Foxconn, the largest electronic and cell phone manufacturer in the world. Foxconn has stationed operational staff at the Wah Sang premises to strengthen daily operations. Another strategic partner Dynapac Co. Ltd., a listed company on the Tokyo Stock Exchange, also stationed permanent operational staff at the Wah Sang premises to ensure smooth operations.

<< Organizational Structure, Senior Management and Employees Wah Sang's organizational structure is set out below: Senior Management ------------ Board of Directors ------------ ------------ Chairman ------------ ------------ ------------ Finance General Manager Manager ------------ ------------ ---------- ---------- ---------- ---------- ---------- ---------- Internal Production HR Sales & Corporate Audit Finance Manager Manager Marketing Development Manager Department ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- Internal Production HR Purchasing Engineering Audit Department Department ---------- ----------- Department ---------- ---------- ---------- ---------- ---------- ----------- Operations Import & Information Manager Export Technology ---------- ---------- ----------- ---------- ---------- ----------- Operations Quality Warehouse Department Assurance ---------- ---------- ----------- ---------- ---------- ----------- Design Offset Transpor- Manager Printing tation ---------- ---------- ----------- ------------- Technological Development ------------- Mr. Guy Lam, Chairman --------------------- Mr. Lam has been Chairman since 2006. He obtained a degree in mechanical engineering and a LL.B law degree in Canada, and a LL.M graduate degree in the United States. He is an entrepreneur with experience in both North America and Asia over the past 20 years. Mr. William Lin, General Manager -------------------------------- Mr. Lin joined Wah Sang in April, 2003, as Deputy General Manager, and became General Manager in July, 2006. He has over 20 years of paper industry experience, and held senior management positions with paper products company in Taiwan, Shanghai and Vietnam before joining Wah Sang. Mr. Lin graduated from university in Taiwan. Mr. Huang Wei Rong, Finance Manager ----------------------------------- Mr. Huang joined Wang Sang in September 2006 as Finance Manager, having held management positions in manufacturing companies for the past ten years. He is a university graduate and a qualified accountant in China. Employees --------- As at June 30, 2008, there were 885 employees at Wah Sang. A break down of staff complement by function is provided below: Staff Count ------------- Production 342 Offset printing 206 Sales and marketing 80 Warehouse and inventory control 49 Quality control 52 Finance and administration 78 Transportation 38 Product development 18 Engineering and maintenance 9 Executive office 13 ------------- Total 885 ------------- >>

Wah Sang provides room and board to all employees who elect to take this benefit. Its expense in this regard for 2007 was approximately $52,135. Wah Sang also pays all social insurance premiums on behalf of its employees, including work related injury, health care, and retirement insurance, in compliance with all labour laws and regulations.

Summary Compensation Table

The following table sets forth information concerning the compensation paid by Wah Sang by way of salary and bonus for services rendered during the year ended December 31, 2007, 2006 and 2005 to the equivalent of its Chief Executive Officer and the Chief Financial Officer, and to the three other most highly compensated executive officers during the year ended December 31, 2007 who met the applicable threshold of $150,000, based on total salary and bonuses of which there were none. These individuals are collectively referred to as the "Named Executive Officers".

<< ------------------------------------------------------------------------- Name and Long-Term Principal Position Annual Compensation Compensation ------------------------------------------------------------------------- Securities Other under Annual Options Salary Bonus Compensation Granted Year ($) ($) ($) (No.) ------------------------------------------------------------------------- William Lin 2007 120,000 - - Nil General Manager(2) 2006 108,874 - (1) Nil 2005 87,235 43,618 (1) Nil ------------------------------------------------------------------------- Huang Wei Rong 2007 17,808 - 1,369 Nil Finance Manager(3) 2006 5,688 Nil (1) Nil ------------------------------------------------------------------------- Notes: ------ (1) The aggregate amount of perquisites and other personal benefits, securities or property received in the fiscal year was no greater than the lesser of $50,000 and 10% of the total of annual salary and bonus of such Named Executive Officer for such fiscal year. (2) Mr. Lin became General Manager in July, 2006, having been Deputy General Manager from April, 2003. (3) Mr. Huang commenced as Finance Manager in September, 2006. Material Contracts Wah Sang has not entered into any material contracts within the last two years not in the ordinary course of business. PACRIM INTERNATIONAL CAPITAL HOLDINGS INC. >>

Pacrim International Capital Holdings Inc. ("PICH") is a corporation incorporated under The International Business Companies Ordinance of the British Virgin Islands whose only asset is a 100% equity interest in PRC Realty Inc. ("PRC Realty") which in turn holds an 87.81% equity interest in Wah Sang. PICH has an authorized capitalization of 50,000 ordinary shares of US$1.00 each of which 10,000 ordinary shares are issued and outstanding. Pacrim owns 4,600 of the shares of PICH, being 46%, while Guy Lam owns the balance.

<< PRC REALTY INC. >>

PRC Realty is a corporation incorporated under The International Business Companies Ordinance of the British Virgin Islands whose only asset is an 87.81% equity interest in Wah Sang. PRC Realty has an authorized capitalization of 100,000 ordinary shares of US$1.00 each and 1,000,000 10% preference shares of $13.50 each of which one ordinary share only is issued and outstanding, which share is owned by PICH.

Guy Lam had acquired the 87.81% equity interest in Wah Sang and a smaller packaging company from members of his family between 2001 and 2004 for Hong Kong $186,000,000 (being approximately Cdn. $27,800,000) in cash and common shares of Pacrim.

See "Litigation" below for a description of certain litigation with respect to PRC Realty.

<< FINANCIAL STATEMENTS OF PICH >>

Included in the following Exhibit I are the audited consolidated financial statements of PICH for the year ended December 31, 2007 and the unaudited consolidated financial statements of PICH for the six month interim period ended June 30, 2008.

<< Selected Financial Results -------------------------- The following table contains selected income statement and balance sheet information with respect to PICH and has been derived from, and should be read in conjunction with, the historical financial statements of PICH set out in Exhibit I. For the six For the months ended years ended December 31, June 30, --------------------------- ------------- Consolidated Income Statement 2006 2007 2008 ----------------------------- ------------- ------------- ------------- (US$000s) (unaudited) (unaudited) Turnover 39,663 37,305 19,856 Cost of sales 32,556 28,967 16,020 ------------- ------------- ------------- Gross profit 7,107 8,338 3,836 Gross margin % 17.92% 22.35% 19.32% Other revenue 353 297 847 Other operating cost 1,754 1,645 995 Administrative expenses 2,211 1,879 3,480 ------------- ------------- ------------- Profit from operations 3,495 5,111 208 Finance cost 2,507 5,679 1,451 ------------- ------------- ------------- Profit before taxation 988 (568) (1,243) Taxation (8) 303 205 ------------- ------------- ------------- Profit before minority interests 996 (871) (1,448) Minority interests 254 303 146 ------------- ------------- ------------- Profit attributable to shareholders 742 (1,174) (1,594) Selected Consolidated Balance ----------------------------- Sheet Data (at period-end) -------------------------- (US$000s) Cash and bank balances 574 4,342 1,266 Non-cash working capital 60,220 55,562 67,833 ------------- ------------- ------------- Total assets 60,794 59,904 69,100 Total interest-bearing debt 38,053 36,869 45,952 ------------- ------------- ------------- Total capital & reserves 22,741 23,035 23,148 VALUATION >>

A committee of all of the directors of Pacrim except Guy Lam (the "Independent Committee") retained American Appraisal China Limited (the "Valuator") on 1 September, 2008 to render an independent opinion as to the equity value of PICH based on a valuation of the business enterprise of Wah Sang (the "Valuation").

The Valuator is a subsidiary of American Appraisal Associates, the world's largest independent valuation firm with over 50 offices around the world. American Appraisal Associates has been providing appraisals and business valuations for over 100 years. In China, the Valuator has performed valuations since 1976 for a variety of purposes, including acquisitions, formation of joint ventures, initial public offerings and financings.

The Valuator was selected to carry out the Valuation on the basis of its expertise in such matters. The Valuator advised the Independent Committee that it is independent of the Lam family. The Valuator further advised the Independent Committee that the Valuator and the shareholders thereof have not at any time provided any financial advisory services or participated in any financing involving Pacrim or any of its affiliates and that there are no understandings or agreements between the Valuator and the above parties with respect to any future business dealings. Having reviewed all such circumstances, the Independent Committee was satisfied that the Valuator is independent of Pacrim and is qualified for the purposes of preparing the Valuation.

The fee payable to the Valuator by Pacrim under the terms of its engagement was not contingent in whole or in part on the conclusions of the Valuator or the completion of any transaction and was determined by negotiation between the Independent Committee and the Valuator. No limitations were imposed by the Independent Committee on the Valuator in connection with the provision of the Valuation.

Summary of the Valuation and Methodologies

The Valuator's mandate was to deliver to the Independent Committee the Valuation.

For purposes of the Valuation, the Valuator was guided by the concept of "fair market value", defined as the estimated amount at which a property might be expected to exchange between a willing buyer and a willing seller, neither being under compulsion, each having reasonable knowledge of all relevant facts.

In preparing the Valuation, the Valuator conducted such analyses, investigations, research and testing of assumptions as were considered to be necessary in the circumstances. In the course of preparing the Valuation, the Valuator was granted access to management of Wah Sang and PICH. A detailed description of the scope of the review by the Valuator is set out in the Valuation, a copy of which can be found at www.sedar.com.

In preparing the Valuation, the Valuator relied upon the completeness, accuracy and fair presentation of all of the financial and other information, data, advice, opinions and representations obtained by it from management of PICH and Wah Sang (collectively, the "Information"). Except as expressly described in the Valuation, the Valuator assumed the completeness, accuracy and fair presentation of the Information and has not attempted to independently verify the Information.

The Valuation has been rendered on the basis of the securities markets, economic, financial, and general business conditions prevailing as at the date of the Valuation and the conditions and prospects, financial and otherwise, of PICH and its direct and indirect subsidiaries as they were reflected in the Information and as they have been presented to the Valuator in discussions with management. In the analyses and in preparing the Valuation, the Valuator has also made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of PICH and its subsidiaries.

The Valuator relied on two approaches to determine fair market value: the income approach and the market approach. The income approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principal that an informed buyer would pay no more for the property than an amount equal to the present worth of anticipated future benefits (income) from the same or equivalent property with similar risk. The market approach considers prices recently paid for similar assets, with adjustments made to the indicated market prices to reflect condition and utility of the appraised assets relative to the market comparable. Assets for which there is an established used market may be appraised by this approach.

Based upon the investigation and analysis outlined in the Valuation and the appraisal methods employed, it was the opinion of the Valuator that as at June 30, 2008, the fair market value of the business enterprise of Wah Sang was in the range of US$56,237,000 to US$73,204,000. It was the further opinion of the Valuator that as at June 30, 2008 the equity value of PICH was in the range of US$39,134,000 to US$54,033,000. Excluding common shares of Pacrim held by PICH at June 30, 2008 (subsequently transferred out of PICH), it was the opinion of the Valuator that as at June 30, 2008 the equity value of PICH was in the range of US$34,942,000 to US$49,841,000.

The Valuator did not consider the litigation described below (see "Litigation") in preparing the Valuation.

The foregoing discussion is a summary of the Valuation and is qualified in its entirety by the Valuation available at www.sedar.com.

In dealing with the Valuation for the purposes of the retirement of loans made by Pacrim to companies in which Guy Lam has an interest, the Independent Committee adjusted the value range for PICH to reflect real estate unrelated to Wah Sang transferred out of PICH after June 30, 2008 and to reflect the retirement of loans owed by PICH to Pacrim. The resulting range for the equity value of PICH was US$40,667,000 to US$55,566,000.

<< LITIGATION >>

Guy Lam, PICH, PRC Realty and others are named as defendants in a civil action (the "Action") brought by Lam Pak Cheung (the "Plaintiff"), the father of Guy Lam, in November