China Water Industry Group (HKG:1129) said that due to the downturn and uncertainty of the global financial market, the placing agent has indicated that investors are unwilling to commit to any investment in debt instruments and in any event, not on the current terms suggested by the company. After discussions with the placing agent, the company has confirmed that the placing agreement will not proceed and will lapse.

The directors of China Water Industry are of the view that the lapse of the placing agreement will not cause any negative impact to the operation and financial position of the company.

On 18 August 2011, China Water Industry agreed to place 3 tranches of convertible notes (CNs) in the aggregate principal amount of HK$480 million, of which CNs in the principal amount of HK$280 million will be issued to Honghu Capital Company Limited and CNs in the principal amount of HK$200 million will be placed to not less than 6 placees. The CNs' initital conversion price was HK$0.1.