Mountain China Resorts (Holding) Limited
TSX VENTURE : MCG

Mountain China Resorts (Holding) Limited

January 27, 2011 20:59 ET

Mountain China Announces Convertible Bond Financing and Provides Operational Update

BEIJING, CHINA--(Marketwire - Jan. 27, 2011) - Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) ("MCR" or the "Company") is pleased to announce that it intends to issue a convertible bond in the amount of $7,600,000 to Century Zone Limited ("Century Zone"), the majority shareholder of Wisecord Holdings Limited (who currently holds approximately 49.4% of the issued outstanding common shares of MCR).

Offering

The convertible bond is expected to be for a term of 2 years with an interest rate of LIBOR + 3% and conversion price of $0.15. The proposed transaction with Century Zone is subject to certain conditions, including finalization of definitive documentation and approval of the TSX Venture Exchange.

In addition to the proposed transaction with Century Zone, MCR intends to offer convertible bonds on substantially the same terms as the proposed convertible bond to be issued to Century Zone to "accredited investors", including existing shareholders of the Company, and certain other persons pursuant to available exemptions under applicable securities laws for an aggregate amount of up to $2,000,000 (the "Offering"). The Offering will be subject to a minimum subscription amount of $100,000 and is also subject to certain conditions, including finalization of definitive documentation and approval of the TSX Venture Exchange. Neither the proposed transaction with Century Zone nor the Offering is conditional on the completion of the other.

The Company intends to use the net proceeds from the transaction with Century Zone for settlement of its immediate payment obligations of approximately RMB58,000,000 (approximately $8,800,000) at the end of March 2011. These obligations include payments to the previous hotel construction contractors which have been overdue, certain construction expenses relating to villas at the Company's Sun Mountain Yabuli Resort as well as ongoing construction progress payments to contractors. The proceeds will also be used to settle certain interest expenses in respect of its outstanding debt obligations, and the principal of the bank loan of RMB20,000,000 which will mature on March 2, 2011.

The Company determined that the transaction with Century Zone represented its best financing option at the present time. The new funds from the transaction with Century Zone and the Offering will permit the Company to meet its immediate financial needs, notwithstanding that the said funds will not be sufficient to satisfy the entire outstanding financial obligations of the Company. The Company is continuing to pursue other financing alternatives in order to satisfy its outstanding obligations and to provide sufficient capital for the Company's future development.

Operational Update

The Company's Club Med Yabuli Resort has commenced the winter season beginning on November 27, 2010. As a result of marketing promotions by Club Med, the number of guests and revenue has significantly improved compared to the 2009 winter season. Due to the Christmas seasonal sales, the number of guests reached 11,833 during December 2010 whereas the number of guests only reached 5,802 during December 2009, which represents an increase of 104%. The income from hotels and the ski resort has reached RMB14,990,000 (approximately $2,250,000) during December 2010, which represents an increase of approximately 400% compared to the same period last year.

The sale of villas has also come to the implementation stage. The Company has formally sent booking information to the famous entrepreneurs who are the members of China Entrepreneurs' Forum (CEF). The CEF will hold its Annual Forum at the Club Med Yabuli Resort between 15th and 17th of February 2011. The Company will take the opportunity to promote the villas. It is anticipated that some of the famous entrepreneurs from CEF will be interested in purchasing villas. At present, there are no villa sales that have been realized.

About MCR

MCR is the premier developer of four season destination ski resorts in China. MCR is transforming existing China ski properties into world-class, four seasons luxury mountain resorts with excellent real estate investment opportunities for discerning buyers. In February 2009, the Company's Sun Mountain Yabuli Resort was awarded Best Resort Makeover in Asia by TIME Magazine. Yabuli is also the permanent home of the China Entrepreneur's Forum the leading and most influential community of China's most distinguished and successful entrepreneurs and business leaders with over 5,000 members from across a variety of key industries.

FORWARD LOOKING INFORMATION

Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, and actual results may vary from the forward-looking information. Implicit in this information are assumptions regarding completion of the convertible bond financing, use of proceeds, future operations, plans, expectations, anticipations, estimates and intentions, such as the plans to develop the ski resorts in China and the sale of villas. These assumptions, although considered reasonable by MCR at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of MCR are subject to a number of risks and uncertainties, including general economic, market and business conditions, uncertainty relating to land use rights, adverse industry events for the ski and real estate industries, MCR's ability to make and integrate acquisitions, the requirements of recent Chinese regulations relating to cross-border mergers and acquisitions, the inability to obtain required approvals or approvals may be subject to conditions that are unacceptable to the parties, changing industry and government regulation, as well as MCR's ability to implement its business strategies, dispose of assets or raise sufficient capital, seasonality, weather conditions, competition, currency fluctuations and other risks, and could differ materially from what is currently expected as set out above.

Forward-looking information contained in this press release is based on current estimates, expectations and projections, which MCR believes are reasonable as of the date of this press release. MCR uses forward-looking statements because it believes such statements provide useful information with respect to the operation and financial performance of MCR, and cautions readers that the information may not be appropriate for other purposes. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While MCR may elect to, it does not undertake to update this information at any particular time.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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