Li Lee-cheung and Kwan Man-wai, former directors of Ocean Grand Holdings (HKG:1220), are two of the defendants in an action commenced by two former subsidiaries of Ocean Grand - Hing Yip Holdings (Hong Kong) Limited (in liquidation) and OG Development Company Limited (in liquidation) (OGD), which are excluded companies, Ocean Grand said. Li has filed his defence and the proceedings are on-going.

In High Court Action 1800 of 2007, Hing Yip and OGD claiming, inter alia, damages against (among others) Kwan and Li, for breach of duties arising out of payments of approximately HK$136 million made by Hing Yip and OGD in connection with the purported purchase of machinery by OGD in November 2005.

The abovementioned purchase of machinery was a discloseable transaction of Ocean Grand and the details of the transaction are included in the announcement of the company dated 3 November 2005. At the time OGD entered into the contract for the purchase of machinery, Kwan and Li were executive directors of OGD and Ocean Grand.

Kwan is seeking leave from the court to commence, by way of counterclaim, an action against Ocean Grand for an alleged indemnity. The hearing date for Kwan's application for leave to proceed with the indemnity claim has not been fixed. Having regard to the advice of litigation advisers, Ocean Grand considers that it has grounds to oppose Kwan's leave application and (if necessary) defend the indemnity claim.

Li and Kwan resigned as directors of Ocean Grand with effect from 11 January 2012.

Ocean Grand considers that since the action does not relate to it but relates to the excluded companies and the scheme became effective on 9 January 2012, the excluded companies have ceased to be part of the Ocean Grand group and thus the action commenced against Li and Kwan should not have any business or financial effect on the Ocean Grand group, save for the indemnity claim.