JONES DAY PRESS RELEASE

Jones Day acted as key counsel for Morgan Stanley, which led a consortium that cooperated with China Huarong Asset Management Company (Huarong) in what is the largest portfolio sale of non-performing assets in China's history.

The consortium recently received final regulatory approval for the purchase of a US$1.3bn (10.8bn RMB) portfolio of non-performing loans (NPLs) from Huarong. The landmark transaction sets a number of additional precedents. It is the first time an international consortium and a domestic asset management company have cooperated to create an onshore joint venture to purchase Chinese NPLs.

The close of this deal is also expected to pave the way for the establishment of one of the first, if not the first, Sino-foreign NPL joint venture asset servicing companies in China. The transaction is also one of the first to obtain third party financing for the acquisition of a China NPL portfolio, which was provided by the International Finance Corporation (IFC).

Jones Day acted as key counsel to Morgan Stanley and took the lead in various negotiations among the consortium and with Huarong. Jones Day also played a key role in advising on and negotiating the asset servicing arrangements with Huarong, and assisted in the complex structuring of the various offshore investment vehicles.

Jones Day Partner David Lowery, who advised Morgan Stanley on the deal, said: "Morgan Stanley's expert lead in this precedent-setting deal establishes a new framework for resolving non-performing loans in China. The variety of partners in the financial services sector that make up this consortium and the Sino-foreign joint-venture that will manage this portfolio opens up a new field of international financial options for investors."

"Huarong and China's other asset management institutions will also have more options available to finance debt and help address their NPL problems. We are proud to have assisted Morgan Stanley on this transaction by combining our international expertise in non-performing loans with our structured finance capabilities in our China offices."

Senior Associate Beth Bunnell, who led the Jones Day team in China, said: "The close of this deal has been a long time in coming and the final approval issued last week effectively opens the gates for foreign investors who have been waiting to enter the market. It is also a win for China, as this deal marks an important step toward easing the pressure of the banking sector's staggering bad debt problems and enhances the prospects for greater debt acquisition and financing options.

" She added: "Jones Day tapped its broad legal resources to advise on this deal and thus help China's financial sector develop in an important direction. The extensive experience of our US partners with Morgan Stanley's distressed debt activities in other parts of the world allowed us to provide key advice in this ground-breaking deal from both sides of the Pacific."