Xinhua China Ltd. Closes Second Part of $4,000,000 Financing

Xinhua China Ltd. Closes Second Part of $4,000,000 Financing

March 28, 2006

    BEIJING, March 28 /Xinhua-PRNewswire/ -- Xinhua China
Ltd. ("Xinhua" or the "Company") (OTC
Bulletin Board: XHUA) is pleased to announce that on March
23, 2006, it agreed to sell the remaining $2,750,000 of the
$4,000,000 secured convertible debenture financing to
Cornell Capital Partners, LP, an affiliate of Highgate
House Funds, Ltd., and an accredited institutional
investor.  On March 24, 2006, the Company closed the second
$2,000,000 portion of the secured convertible debenture
financing pursuant to the Amended and Restated Securities
Purchase Agreement based on exemptions from registration as
set out in Rule 506 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended.  This agreement follows
an initial $1,250,000 in financing closed on December 13,
2005, bringing the total private placement financing under
this arrangement to $3,250,000. 

    On March 23, 2006, the terms of this financing
arrangement were modified, whereby the Company, Highgate
House, Funds, Ltd. and Cornell Capital Partners, LP entered
into an Amended and Restated Securities Purchase Agreement,
an Amended and Restated Investor Registration Rights
Agreement, and an Amended and Restated Security Agreement,
which amended and restated documents completely restate and
replace in their entirety the agreements dated November 23,
2005.  In addition, the parties also executed an Amended
and Restated Irrevocable Transfer Agent Instructions.

    Additionally, on March 23, 2006, the Company, Highgate
House Funds, Ltd. and Cornell Capital Partners, LP
terminated the Escrow Shares Escrow Agreement and the
Escrow Agreement, which resulted in the 20,000,000 shares
issued to Highgate House Funds, Ltd. in escrow to be
returned to the Company for cancellation.

    "Now that we have completed this financing
process, we anticipate that this capital will give us
additional flexibility in our efforts to modernize the book
circulation and distribution business in China," said
Xianping Wang, president and CEO.

    Pursuant to the Amended and Restated Investor
Registration Rights Agreement, the Company has agreed to
file a registration statement registering up to 20,000,000
shares of its common stock, issuable upon conversion of the
convertible debentures, up to 1,035,000 shares of its common
stock issuable upon the exercise of the warrants and up to
20,000,000 shares of the security stock which may be issued
to the selling stockholders if there is an event of default
under the secured convertible debentures.

    A final $750,000 principal amount secured convertible
debenture will be issued to Cornell Capital Partners, LP
upon the Securities and Exchange Commission declaring the
above referenced registration statement effective.

    The aggregate maximum number of shares of common stock
that the convertible debenture may be converted into shall
be 10,000,000 shares of common stock.  If such maximum
conversion limit is reached, then the Company can either
increase the maximum amount or redeem the unconverted
amount of all of the convertible debentures at 135% of the
unconverted amount plus accrued interest.  Interest is
payable on the principal amount of the secured convertible
debentures outstanding at 2% per annum, compounded monthly.
 Xinhua has the right to redeem, with three business days
advance written notice, a portion or all outstanding
secured convertible debentures at a price of 135% of the
face amount redeemed, plus accrued interest. The secured
convertible debentures are secured by all of Xinhua's
assets.

    The investors have received a fee of $240,000, which is
equal to 6% of the aggregate purchase price, of which
$216,000 was paid to Highgate House Funds, Ltd. on December
13, 2005 and $24,000 was paid to Yorkville Advisors, LLC at
the second closing on March 24, 2006.  In addition,
Yorkville Advisors, LLC also received a structuring fee of
$5,000 and a due diligence fee of $5,000 with the first
closing.  Furthermore, Gottbetter and Partners, LLP
received $15,000 in legal fees as counsel to Highgate House
Funds, Ltd. in connection with the first closing.

    The proceeds from the transaction will be used to fund
the business of Xinhua C&D and for general corporate
purposes.

    About Xinhua 

    Xinhua is a US publicly traded holding company that,
through one of its subsidiaries, Xinhua Publications
Circulation & Distribution Co., Ltd., holds a national
license for distribution of books and other publications in
China.  Xinhua is involved in forming strategy, operating
and financing for Xinhua C & D.  Xinhua also interfaces
with the worldwide financial communities to inform them of
the combined companies' goals and developments.  For more
information, please call Mr. Alex Helmel at 1 800 884-3864
ext. 17 or visit its website at
http://www.xinhuachina.com.cn . 

    Safe Harbor Statement

    This news release may include forward-looking
statements within the meaning of section 27a of the UNITED
STATES SECURITIES ACT of 1933, as amended, and section 21e
of the UNITED STATES SECURITIES EXCHANGE ACT of 1934, as
amended, with respect to achieving corporate objectives,
developing additional project interests, Xinhua's analysis
of opportunities in the acquisition and development of
various project interests and certain other matters. These
statements are made under the "safe harbor"
provisions of the United States private securities
litigation reform act of 1995 and involve risks and
uncertainties, which could cause actual results to differ
materially from those in the forward-looking statements
contained herein. 

    For more information, please contact:

    At Xinhua China Ltd.:              
     Alex Helmel                         
     Tel:   [phone] or [phone]          
     Email: [e-mail]               

    At The Investor Relations Company:
     Woody Wallace or Michael Arneth
     Tel:   [phone]
     Email: [e-mail] or [e-mail]

SOURCE  Xinhua China Ltd.