NewState Capital Issued Its Fourth Mortgage-Backed Securities in Korea; 10.1 Billion Won MBS Underwritten by LG Investments

Business Wire, May 17, 2001

Business Editors

NEW YORK--(BUSINESS WIRE)--May 17, 2001

NewState Holdings, Inc. (OTCBB:NSTH) announced today that NewState Capital Co., Ltd., its Korean operating subsidiary ("NewState Capital"), issued mortgage-backed securities ("MBS") in the principal amount of 10.1 billion Won (US$7.8 million). This is NewState Capital's fourth MBS issuance since March 20, 2000 and this issue incorporates special call provisions used for the first time in a Korean MBS issuance. This effort by NewState Capital to lead Korea's mortgage industry and to secure funds for its origination activities will benefit NewState Capital's financial ability as well as the Korean financial market.

This MBS issuance is structured with 3 tranches: (i) a 5-year senior tranch (6 billion Won) with AAA rating at 8.5% fixed rate with a call option exercisable in blocks of 1 billion Won quarterly, (ii) a 10-year senior tranch (1.3 billion Won) with BBB- rating at 12% fixed rate with a call option exercisable in blocks of 1 billion quarterly, and (iii) a 15-year unrated Class M tranch (2.8 billion Won) with a clean-up call option. The high quality of the underlying mortgage pool and expected cash flow made it possible to eliminate a liquidity facility.

NewState Capital issued the MBS with LG Investment & Securities Co., Ltd. as the lead manager/underwriter and H&CB (formerly Housing & Commercial Bank) acting as the trustee. Legal counsel for NewState Capital was Shin & Kim in Korea, due diligence was conducted by Samil Accounting Corporation (an international member firm of Price-WaterhouseCoopers), and ratings was provided by Korea Investors Service Inc. and Korean Management Consulting Credit Rating Corp.

NewState Capital was founded in 1994 as a specialty finance company. Presently, the company originates, sells and services home mortgage loans to middle-income individuals and families in Korea. The company maintains its headquarters with three branch offices in Seoul, Korea, and has additional branch offices in Taegu, Pusan, Ulsan and Kwang-ju, employing over 120 sales agents. The company plans to open additional offices in other principal cities in Korea in the next 6 to 12 months. Korean customers may apply for mortgages on-line via the company web site located at www.newstate.co.kr.

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