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Amax proposes Share Premium Cancellation18 August 2008ONG KONG -- (PRESS RELEASE) -- Amax Entertainment Holdings Limited (HK:0959) ("Amax" or "the Company") announced today that a circular in connection with the Company's proposal to effect a Share Premium Cancellation for the purpose of canceling the entire credit amount of the Company's share premium account will be sent to shareholders in the next few days. If shareholders approve the proposal, Amax plans to apply a portion of the resulting credit towards the elimination of all previously accumulated losses, with the remaining balance credited to the contributed surplus account of the Company. As at 31 March 2008, the share premium account of the Company was approximately HK$3.8 billion and the amount of previously accumulated losses was approximately HK$1.5 billion. Following a Share Premium Cancellation, approximately HK$2.2 billion would ultimately be credited to the surplus account of the Company. The Share Premium Cancellation is subject to shareholder approval and will be voted upon at a specially convened Special General Meeting of Shareholders expected to be held on 19 September 2008. Mr. Ted Chan, Chief Executive Officer of Amax, commented, "The implementation of a Share Premium Cancellation would allow our capital structure to more accurately reflect the substantial leverage we are realizing from the gaming intermediary business model we initiated in mid-December 2007. We remain confident in our ability to deliver promising results and translate our market leading VIP play into shareholder value through the inherent strength in our business model. Creating a surplus account of over HK$2.2 billion would provide Amax with the flexibility to declare a dividend from the Company's future profits, which the Company would consider among other uses of available capital. Our recent name change to Amax Entertainment Holdings Limited reflects our sole focus on the gaming and entertainment business in Macau." As at the date of this announcement, the Company has not yet declared any future dividends. Even in circumstances where the Share Premium Cancellation becomes effective, there can be no assurance that a dividend will be declared or paid. The Share Premium Cancellation does not involve any reduction in the shares authorized or issued for the Company nor does it involve any reduction in the nominal value of the shares or trading arrangements in respect of the shares. Other than nominal expenses incurred related to the implementation of the Share Premium Cancellation, Amax's Board of Directors believes that the implementation would not affect the underlying assets, business operations, management or financial position of the Company. Late in 2007 Amax entered the gaming promotion business in Macau through AMA, whose business model differs from that of other junket operators in Macau. Instead of working directly with junkets and/or gaming customers, AMA aggregates the business of junket operators to whom commissions of 0.9% to 1.21% of rolling chip volume are payable. |