Appendix 2(b)
LION INDUSTRIES CORPORATION BERHAD

ISSUES AFFECTING THE JOINT VENTURE COMPANIES OF AMSTEEL CORPORATION BERHAD (“AMSTEEL”) IN THE PRC

No.	Issues	Joint-Venture Company (“JV Co.”)	Steps taken or to be taken to resolve the Issues	Status as at 
5 May 2004	
1.
	Retail enterprises to restructure the share holding ratio between the joint venture parties and/or the term of operation and/or business scope as required by the State Council in the PRC

Sichuan Hezheng Parkson Plaza Co Ltd
(Amsteel Group’s equity holding : 90%)

Chongqing Wangyu Parkson Plaza Co Ltd
(Amsteel Group’s equity holding : 70%)

	Submitted the application to maintain or restructure the share holding ratio and/or the term of operation and/or business scope for approval as required on the following dates:

7 December 2001

3 December 2001	

Awaiting approval from the relevant authorities in the PRC for restructuring. The  JV Co. will endeavour to obtain the approval by 30 June 2004.

Awaiting approval from the relevant authorities in the PRC for restructuring. The  JV Co. will endeavour to obtain the approval by 30 June 2004.	

No.	Issues	Joint-Venture Company (“JV Co.”)	Steps taken or to be taken to resolve the Issues	Status as at 
5  May 2004	
	
	Xian Lucky King Parkson Plaza Co Ltd
(Amsteel Group’s equity holding : 51%)
	20 February 2002	Approval from the State Economic and Trade Commission was obtained on 14 February, 2003 and submission has been made to the Ministry of Foreign Trade and Economic Corporation on 8 May, 2003 for approval to  amend the Joint Venture Agreement and the JV Co’s Articles of Association.
	
2.	Land Use Right(s) for land (“LUR”) to be transferred by the PRC Party to the JV Co. as PRC Party’s contribution to the capital of the JV Co. in accordance with the terms of the joint venture agreement

	Xian Lucky King Parkson Co Ltd
(Amsteel Group’s equity holding : 51%)	The Management of Amsteel Group had liaised with the PRC Party, Li Feng (Xian) Real Estate Development Co Ltd (“LFXR”), to transfer the LUR of the land located at No. 119, Dong Da Jie, Bei Lin District, Xian, Shanxi Province, PRC to the JV Co.	The JV Co. is in the process of procuring the registration of the LUR certificate in the JV Co’s name.

No.	Issues	Joint-Venture Company (“JV Co.”)	Steps taken or to be taken to resolve the Issues	Status as at 
5 May  2004	
3.	Shortfall in capital to be contributed by the Amsteel Group	Mianyang Fulin Parkson Plaza Co Ltd
(Amsteel Group’s interest holding : 60%)
	The Management of Amsteel Group is required to inject such amount to make up for the shortfall of Rmb2.19 million (equivalent to approximately RM1.00 million) (“Shortfall”).	The Amsteel Group has injected the payment for the Shortfall on 21 October 2002. The JV Co. has obtained the capital verification from the certified auditor on 21 April 2004.
	
4.	The PRC party has not obtained the LUR or Property Ownership Right(s) for building (“POR”) certificate in its favour for property leased by the PRC Party to the JV Co. or the lease of the LUR or POR to the JV Co. has not been registered with the relevant authorities in the PRC	Mianyang Fulin Parkson Co Ltd
(Amsteel Group’s interest  holding : 60%)

	The Management of Amsteel Group had liaised with the PRC Party, Sichuan Mianyang Fulin Real Estate Development Co Ltd (“SMF”), to register the lease of building located at No. 17, An Chang Lu, Mianyang City, Sichuan Province, PRC.

	The lease is expected to be registered by 30 June 2004.
In the meantime, SMF has given its undertaking that it shall be responsible to register the lease and will indemnify the JV Co. against any losses due to non-registration of the lease.

No.	Issues	Joint-Venture Company (“JV Co.”)	Steps taken or to be taken to resolve the Issues	Status as at 
5  May 2004	

	

	
Sichuan Hezheng Parkson Plaza Co Ltd
(Amsteel Group’s equity holding : 90%)

Chongqing Wangyu Parkson Plaza Co Ltd
(Amsteel Group’s equity holding : 70%)

	
The Management of Amsteel Group had liaised with the PRC Party, Sichuan Hezheng Company Limited by Shares (“SHC”), to obtain the POR certificate for the building located at No. 31, Zong Fu Lu, Jinjiang District, Chengdu City, Sichuan Province, PRC, leased by the PRC Party to the JV Co.

The Management of Amsteel Group had liaised with the PRC Party, Chongqing Wangyu Economic Industry Development Corporation (“CWE”), to obtain the POR certificate in its favour for the building located at No. 77, Da Ping Changjiang Er Lu,       Yuzhong District, Chongqing, PRC and leased by the PRC Party to the JV Co.
	
SHC will endeavour to transfer the POR certificate in its favour by 30 June 2004.
In the meantime, SHC has issued a letter dated 20 February 2004 to confirm that the JV Co. may use the POR pending the said transfer.

By a letter dated 8 March 2001,  CWE agreed to compensate the 
Amsteel Group if there is any damage arising from the non-transfer of the POR in its name. In addition, the parent company of CWE and owner of the building authorised CWE to lease the building to the JV Co.

No.	Issues	Joint-Venture Company (“JV Co.”)	Steps taken or to be taken to resolve the Issues	Status as at 
5 May 2004	
5.	The PRC Party borrowed Rmb17,803,000 from the JV Co. and as security, the PRC Party pledged its 40% equity interest in the JV Co. to the Amsteel Group. The pledge has not been registered with the relevant authorities.	Dalian Tianhe Parkson Shopping Centre Co Ltd
(Amsteel Group’s equity holding : 60%)
	The Management of Amsteel Group had liaised with the management of JV Co. to take steps to register the pledge of the equity interest by the PRC Party, Dalian Tianhe Plaza Company Limited (“DTP”).	The repayment of the loan to the JV Co. by DTP has been further extended to 30 June 2004. The Management of the Amsteel Group is currently negotiating with DTP for the transfer of DTP’s 40% interest (or part thereof) in the JV Co to the Amsteel Group in lieu of the repayment of the loan.