Carlyle Capital declared a huge debt of about US$16.6 billion recently, saying that because of its failure to stabilize its financial situation and reach a mutually beneficial agreement, creditors may take over the remaining assets of the company. The impact is now spreading to China and many parties concerned are wondering if the Carlyle Group's pending acquisition of Xugong Science & Technology Co. will be negatively affected.

An insider at Xugong Science & Technology told reporters Carlyle Capital is not the one that will be responsible for the acquisition of Xugong. Carlyle Capital is just one of many fund companies affiliated to the Carlyle Group. At present, a special utility named "Carlyle-Xugong Company" is in charge of the matter.

At the same time, the Carlyle Group also issued a statement on March 13 that the Carlyle Capital case will not affect the group's affiliated funds and other investment entities.

An industry analyst said that the current Carlyle Capital crisis will inevitably have a negative impact on the attitudes of decision-makers. As the acquisition has been widely criticized, the outbreak of the Carlyle crisis will hamper efforts for the potential acquisition.

For more details, please read the full story in Chinese (http://finance.sina.com.cn/j/20080317/08214628575.shtml).

(China.org.cn March 17, 2008)