Referring to the termination notice served by the Government of Shuyang, Jiangsu Province, Xinhua News Media (HKG:0309) says that, following the receipt of the notice, it has consulted with legal advisers as to the Chinese laws and has been advised that given the inability of the municipal waste treatment plant to fulfill the requirement under the investment agreement, Shuyang ITAD Environmental Technology Limited (a subsidiary of Xinhua News Media) may be in breach of the agreement and may potentially bear the liability of over HK$100 million and that the land may be re-possessed and the buildings thereon may be taken over by the Shuyang Municipal Government for such potential breach of the agreement.

Having assessed the potential adverse impact as a result of the potential breach of the agreement, Xinhua News Media agreed to enter into a termination agreement dated 9 January 2012 with the Shuyang Municipal Government and mutually agreed to terminate the investment agreement and discharge its liabilities and obligations under the investment agreement.

At the same time, Xinhua News Media says that it is in the course of negotiating with an independent state-owned enterprise to utilise the facilities of the municipal waste treatment plant for the operations of its garbage power plant to be constructed in Shuyang county.