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Publish Date : 02-Nov-2012

Zongshen PEM Power Systems Inc. (\"ZPP\" or the \"Company\") announces today that it has entered into a definitive agreement with Zongshen Industrial Group Co. Ltd. (\"ZIG\") and Hong Kong VAS International Development Limited (\"HKVAS\"), an investment entity controlled indirectly by ZIG, pursuant to which HKVAS has agreed to acquire all of the issued and outstanding common shares of ZPP (the \"Shares\") not owned by HKVAS or ZIG for C$0.60 per Share in cash.

The purchase price to be paid to ZPP\'s shareholders represents a 13.2% premium over the closing price of the Shares on the TSX on October 30, 2012, and an 37.5% premium over the 30 trading-day volume-weighted average share price. The transaction will be structured as a plan of arrangement under the Business Corporations Act (British Columbia) (the \"Arrangement\"). Pursuant to the terms of the Arrangement, all outstanding Shares not owned by HKVAS or ZIG will be transferred to HKVAS in exchange for a cash payment of C$0.60 per Share. The estimated transaction value for the Shares is approximately C$22 million, funded by HKVAS.

Holders of options to acquire the Shares (\"Options\") have agreed to surrender their Options for cancellation upon completion of the Arrangement.

Completion of the Arrangement is subject to, among other things, customary conditions, including approval of at least two-thirds of the votes cast by ZPP\'s shareholders in person or by proxy at the special shareholders\' meeting to be held on or about December 17, 2012 (the \"Meeting\"), and the receipt of court and necessary regulatory approvals. The Arrangement is also subject to approval by a simple majority of votes cast in person or by proxy by the disinterested shareholders of ZPP, excluding certain votes outlined in Multilateral Instrument 61-101 - Protection of Minority Securityholders In Special Transactions. HKVAS and ZIG collectively hold approximately 63.5% of the outstanding Shares.

Recommendation of the Independent Directors of the Board of Directors of ZPP (the \"Board\")

An independent committee of the Board, after consulting with its financial and legal advisors, has unanimously determined that the Arrangement is fair to ZPP\'s shareholders and has unanimously resolved to recommend that ZPP\'s shareholders vote in favour of the Arrangement at the Meeting. Details of the terms and conditions of the Arrangement will be included in an information circular for the Meeting that is expected to be mailed to ZPP\'s shareholders on or about November 20, 2012. The Arrangement is expected to close shortly after the Meeting.

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