Sunbase Asia, Inc. Reports Convertible Debentures Have Been Called

Business Wire, June 2, 1998

LOS ANGELES--(BUSINESS WIRE)--June 2, 1998--On May 25, 1998 the holders of certain convertible debentures ("Debentures") issued by China Bearing Holdings Limited ("China Bearing"), notified China Bearing that they were demanding payment in full on the $11.5 million principal amount of the Debentures plus accrued interest by May 31, 1998. The Debentures are guaranteed by Sunbase Asia (Nasdaq NM Symbol: SNBS) (the "Company") and certain related companies. The holders of the Debentures have notified Sunbase Asia that they are reserving their rights and remedies under the guarantee.

Under the Subscription Agreement governing the Debentures, an event of default occurs when the earnings per share (EPS) of Sunbase Asia for any of the financial years falling between the financial year ended December 31, 1995 and the maturity date, August 1999, is less than US$0.55. Sunbase Asia had a loss for the year ended December 31, 1997.

Demand has been made by the holders of the Debentures for full payment on the Debentures by May 31, 1998. As of today, the holders of the Debentures have not withdrawn their demand for May 31, 1998 payment, however the Debenture holders have agreed to meet with the Chairman of the Company on June 5, 1998 to consider and discuss a proposal for the repayment of the loan to the satisfaction of the Debenture holders so as to avoid legal proceedings against the Company and certain related companies. No assurance can be given that an acceptable resolution will be reached with the holders of the Debentures. If Sunbase Asia is required to satisfy the demand of the holders for accelerated payment on the Debentures, such event would have a severe adverse effect on the liquidity and financial condition of Sunbase Asia.

Sunbase Asia also announced the resignation of George Raffini and his alternate Brian Law from its Board of Directors effective May 21, 1998 and May 29, 1998 respectively.

Sunbase Asia is a leading manufacturer and distributor of a wide range of bearing products. Most of the Company's manufacturing facilities are located in China. The Company's bearing operations include more than 2 million square feet of manufacturing space and over 12,000 employees. Southwest Products Company, the Company's U.S. manufacturing facility, is a 53-year old designer and producer of highly-engineered bearings used by many Fortune 500 companies.

    CONTACT:  Investor Contact:    John Nesbett, ext. 303
                                    Scott Henry, ext. 129
                                    Tel: 212/838-3777
               Company Contact:     Bill McKay
                                    Sunbase Asia / Southwest Products
                                    Tel: 800/826-0729