Mountain China Resorts (Holding) Limited
TSX VENTURE : MCG

Mountain China Resorts (Holding) Limited

February 18, 2011 04:18 ET

Mountain China Resorts (Holding) Limited Completes Convertible Bond Financing

BEIJING, CHINA--(Marketwire - Feb. 18, 2011) -

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Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) ("MCR" or the "Company") is pleased to announce that it has completed its previously announced convertible bond financing (the "Offering") with Century Zone Limited for aggregate gross proceeds of $7,600,000. The convertible bond is due on February 17, 2013, has an interest rate of LIBOR + 3% and a conversion price of $0.15. The convertible bond as well as the common shares of MCR that may be issuable upon conversion thereof will be subject to a four month hold period under applicable Canadian securities laws and the policies of the TSXV until June 18, 2011.

The Offering constitutes a related party transaction pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") and is exempt from the formal valuation and minority approval requirement pursuant to Sections 5.5(g) and 5.7(1)(e) - Financial Hardship of MI 61-101. The board of directors of the Company (including all independent directors), acting in good faith, determined that the Company was in serious financial difficulty and that the Offering was designed to improve the financial position of the Company and is reasonable given the circumstances.

The Company will also be extending an offer to existing shareholders who are "accredited investors", to participate in the Offering on the same terms as those entered into with Century Zone Limited up to an aggregate amount of $2,000,000. To the extent that such existing shareholders do not subscribe for the full $2,000,000, the offer will be made to other "accredited investors". The Company anticipates mailing an offer letter shortly to its existing shareholders providing details on how to subscribe for convertible bonds pursuant to the Offering. Closing of such subscription is subject to certain conditions, including conditional listing approval of the TSXV. The Company expects to complete any such additional subscriptions on or prior to April 30, 2011.

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.

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.

www.mountainchinaresorts.com

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 future operations, plans, expectations, anticipations, estimates and intentions, such as the plans to develop the ski resorts in China, the use of proceeds from the Offering and the timing of completion of additional subscriptions pursuant to the Offering. 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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