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<SEC-DOCUMENT>0001145549-05-000520.txt : 20050407
<SEC-HEADER>0001145549-05-000520.hdr.sgml : 20050407
<ACCEPTANCE-DATETIME>20050407071939
ACCESSION NUMBER:		0001145549-05-000520
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050407
FILED AS OF DATE:		20050407
DATE AS OF CHANGE:		20050407

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHINA YUCHAI INTERNATIONAL LTD
		CENTRAL INDEX KEY:			0000932695
		STANDARD INDUSTRIAL CLASSIFICATION:	ENGINES & TURBINES [3510]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13522
		FILM NUMBER:		05738099

	BUSINESS ADDRESS:	
		STREET 1:		16 RAFFLES QUAY #26-00
		STREET 2:		HONG LEONG BLDG
		CITY:			SINGAPORE 0104 SINGA
		STATE:			U0
		BUSINESS PHONE:		0116563226220

	MAIL ADDRESS:	
		STREET 1:		16 RAFFLES QUARY #26-00
		CITY:			SINGAPORE
		STATE:			U0
		ZIP:			00000
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>u92512e6vk.txt
<DESCRIPTION>CHINA YUCHAI INTERNATIONAL LIMITED
<TEXT>
<PAGE>
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ----------------------

                                    FORM 6-K

                             ----------------------


                        REPORT OF FOREIGN PRIVATE ISSUER
    PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

                           FOR THE MONTH OF APRIL 2005

                         COMMISSION FILE NUMBER 1-13522

                             ----------------------

                       CHINA YUCHAI INTERNATIONAL LIMITED
                 (Translation of Registrant's name into English)

                             ----------------------

                             16 RAFFLES QUAY #26-00
                               HONG LEONG BUILDING
                                SINGAPORE 048581
                    (Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.

                    Form 20-F [X]              Form 40-F [ ]

Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

                          Yes [ ]              No [X]

If "Yes" is marked, indicate below the file number assigned to registrant in
connection with Rule 12g3-2(b): NOT APPLICABLE.

================================================================================

<PAGE>

This Report on Form 6-K shall be incorporated by reference in the prospectus,
dated March 24, 2004, of China Yuchai International Limited (the "Company" or
"CYI") included in the Company's Registration Statement (Registration No.
333-111106) on Form F-3 and to be part thereof from the date on which this
report is filed, to the extent not superseded by documents or reports
subsequently filed or furnished by the Company with the U.S. Securities and
Exchange Commission (the "SEC").

1.   OTHER EVENTS

On April 7, 2005, CYI entered into a Reorganization Agreement with Guangxi
Yuchai Machinery Company Limited ("Yuchai"), a subsidiary of CYI, and Coomber
Investments Limited ("Coomber"), a shareholder of CYI. The terms of this
Reorganization Agreement were also acknowledged and agreed to by Guangxi Yuchai
Machinery Group Company, a shareholder of Yuchai. The Reorganization Agreement
is intended to be in furtherance of the terms of the July 2003 Agreement. The
Reorganization Agreement outlines steps regarding the adoption of corporate
governance practices at Yuchai and outlines the broad framework for a
restructuring of CYI's ownership of Yuchai. Although the parties to the
Restructuring Agreement expect to work towards its implementation as
expeditiously as possible, no assurance can be given as to when the transactions
contemplated therein will be consummated.

A copy of the above-mentioned Reorganization Agreement is attached hereto as
Exhibit 1.1 and is incorporated herein by reference.

2.   EXHIBITS

     1.1  Reorganization Agreement, dated April 7, 2005 between CYI, Yuchai and
          Coomber.

<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly organized.


                                     CHINA YUCHAI INTERNATIONAL LIMITED



                                     By: /s/ Philip Ting Sii Tien
                                     -------------------------------------------
                                     Name:  Philip Ting Sii Tien
                                     Title: Chief Financial Officer and Director
Dated: April 7, 2005

                                       2
<PAGE>

                                  EXHIBIT INDEX

1.1  Reorganization Agreement, dated April 7, 2005 between CYI, Yuchai and
     Coomber.

                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1.1
<SEQUENCE>2
<FILENAME>u92512exv1w1.txt
<DESCRIPTION>EX-1.1 REORGANIZATION AGREEMENT, DATED APRIL 7, 2005 BETWEEN CYI, YUCHAI AND COOMBER.
<TEXT>
<PAGE>
                                                                     Exhibit 1.1



                            REORGANIZATION AGREEMENT

     This constitutes a binding agreement (the "Agreement") dated April 7, 2005
between Guangxi Yuchai Machinery Company Limited ("Yuchai"), China Yuchai
International Limited ("CYI") and Coomber Investments Limited ("Coomber") in
furtherance of the terms of the July 2003 agreement (the "July Agreement").

     WHEREAS the parties are committed to implementing the terms of the July
Agreement (including without limitation, the adoption by Yuchai of a corporate
governance structure that conforms to the requirements of China's Company Law
and international practice ("Governance Requirements") and a restructuring of
CYI's ownership of Yuchai on mutually acceptable terms ("Restructuring
Exercise")) and this Agreement is demonstrative of the parties' mutual desire
and commitment to observe the terms of the July Agreement.

     WHEREAS the parties acknowledge that CYI's continued ability to assert its
ownership and management control over Yuchai is a necessary pre-requisite to the
implementation of two key features of the Restructuring Exercise, namely, (a)
the listing and quotation of the shares in a new Yuchai holding company (without
any golden or special share) on an international capital market, and (b) the
restructuring and/or recapitalisation of CYI to enable it to implement the
Yuchai spin-off plans and at the same time maintain its listing on the New York
Stock Exchange. The parties are aware that any failure or delay in the
implementation of the Governance Requirements in Yuchai and/or impediment to
CYI's ability to assert its ownership and management control over Yuchai for any
reason, will negatively affect the implementation of the Restructuring Exercise.

     WHEREAS the parties are desirous of implementing the Restructuring Exercise
as soon as reasonably practicable with an anticipated date of completion of 30
September 2005 and Yuchai agrees that it will take all necessary steps as may be
required from time to time to implement the Governance Requirements in Yuchai
and to enable CYI to continue to assert its ownership and management rights of
control over Yuchai on and subject to the terms of this Agreement until such
time as the Restructuring Exercise shall have been completed.

     In consideration of the mutual agreements contained herein, and intending
to be legally bound hereby, and subject to all applicable laws and regulations,
the parties hereto agree as follows:

1.   GOVERNANCE REQUIREMENTS IN YUCHAI

1.1  Yuchai affirms the shareholder rights of Hong Leong Technology Systems
     (BVI) Ltd, Earnest Assets Limited, Cathay Diesel Holdings Ltd, Tsang & Ong
     Nominees (BVI) Ltd, Goldman Sachs Guangxi Holdings (BVI) Ltd and Youngstar
     Holdings Ltd (companies owned and controlled by CYI) (collectively referred
     to as "CYI Group"). Without limitation to the foregoing, Yuchai further
     acknowledges and affirms CYI Group's continued rights as majority
     shareholder to direct the management and policies of Yuchai through
     Yuchai's Board of Directors.
<PAGE>
1.2  Yuchai further acknowledges and confirms that its Board of Directors is
     comprised of the nine (9) directors nominated by the holders of the Foreign
     Shares of Yuchai (namely, Mr. Gao Jia Lin, Mr. Wrixon Frank Gasteen, Mr.
     Wong Hong Ren, Mr. Qin Xiaocong, Mr. Yuan Xucheng, Mr. Raymond Chi-Keung
     Ho, Mr. Teo Tong Kooi, Mr. Philip Ting Sii Tien and Mr. Gan Khai Choon),
     and four (4) directors nominated by the holders of the State Shares of
     Yuchai (namely, Mr. Wang Jianming, Mr. Li Tiansheng, Mr. Zeng Shiqiang and
     Mr. Shao Qihui).

1.3  Yuchai undertakes to immediately set up the financial sub-committee and
     other relevant committees contemplated by the Articles of Association of
     Yuchai. The financial sub-committee and the Board of Directors of Yuchai
     shall unless there is a conflict with the Articles of Association of Yuchai
     be guided by the financial advisor to the Restructuring Exercise jointly
     engaged by CYI and Yuchai as described in clause 2.8 below as to the
     reasonableness of the amount of the working capital proposed by Yuchai to
     meet its on-going requirements for its businesses at the date of this
     Agreement.

1.4  Yuchai agrees that it will seek the requisite approval of its shareholders
     at a properly convened shareholders meeting prior to entering into any
     material transactions (including without limitation entering into
     agreements or arrangements with parties related to Yuchai or any of its
     shareholders) and Yuchai shall comply with all provisions of Yuchai's
     Governance Requirements, the revised and/or restated Articles of
     Association of Yuchai as approved by its directors and shareholders in 1996
     and other constitutive documents, as shall be given formal effect to in
     accordance with clause 1.7 below.

1.5  Within thirty (30) calendar days from the date of this Agreement, Yuchai
     will:-

          a. provided that there shall be no adverse consequence to the
     Restructuring Exercise as confirmed by the financial adviser appointed
     pursuant to the provisions of clause 2.8 for the Restructuring Exercise,
     convene a meeting of its Board of Directors and a meeting of its
     shareholders to approve all necessary steps to be taken by Yuchai and
     Yuchai Marketing Company Limited ("YMC") for the capitalisation of the RMB
     205 million loan as equity capital of YMC which shall represent a 67.2 per
     cent. interest in the enlarged issued share capital of YMC. In the event
     that the financial adviser to the Restructuring Exercise shall be of the
     view that the proposed capitalisation of the RMB205 million loan has
     adverse consequences to the Restructuring Exercise, the RMB205 million loan
     shall not be capitalised as equity capital of YMC and the parties to this
     Agreement shall promptly meet and resolve on the repayment of the RMB 205
     million loan in a manner satisfactory to them, taking into account any
     existing shareholders' interests in YMC;

          b. convene a meeting of its Board of Directors to terminate the
     proposed sale of the spare parts business of one of Yuchai's subsidiaries;
     and

          c. convene a meeting of its Board of Directors and shareholders to
     approve the declaration and payment of an appropriate dividend for profits
     earned in the financial year ended 31 December 2003 and 2004 of RMB 300
     million.

                                       2
<PAGE>
     Within seven (7) calendar days of the passing of the resolutions of the
     Board of Directors or shareholders (as the case may be) in the meeting(s)
     convened for the aforesaid purposes, Yuchai will effect and/or implement
     all these resolutions. Without limiting the generality of the foregoing,
     promptly after approval of the shareholders to the declaration and payment
     of the dividend is obtained in paragraph (c) above, the Board of Directors
     of Yuchai shall cause CYI Group's share of the dividend amount to be paid
     and transferred to such bank account as CYI shall notify Yuchai in writing.
     The board of directors of CYI presently contemplates that, subject to
     obtaining shareholders' approval (if required), approximately 50 per cent.
     of CYI Group's share of the Yuchai dividend paid out shall be declared for
     payment to CYI's shareholders.

1.6  Promptly upon the execution of this Agreement, Yuchai will implement the
     corporate governance guidelines approved by the directors and shareholders
     of Yuchai on 1 November 2002 and take all other steps to put in place an
     appropriate corporate governance structure conforming to international
     custom and practice, and promptly take such steps and provide all customary
     certifications and confirmations as may be required by CYI or its external
     auditors for the continued consolidation of the financial statements of
     Yuchai with those of CYI under United States generally accepted accounting
     principles ("US GAAP") and for CYI's audited consolidated financial
     statements to be approved and signed off by CYI's external auditors on that
     basis with an unqualified opinion.

1.7  Within thirty (30) days from the date of this Agreement, Yuchai shall take
     all necessary steps and cause all relevant documents to be approved,
     formalized, endorsed, registered and filed with all the relevant
     governmental authorities (including without limitation, the Bureau of
     Administration for Industry and Commerce in the Guangxi Zhuang Autonomous
     Region and the Ministry of Commerce of the People's Republic of China in
     Beijing, as necessary or appropriate) to give formal effect to:-

     (a) the revised and/or restated Articles of Association of Yuchai as
     approved by its shareholders/directors in 1996 incorporating the corporate
     governance guidelines approved by the directors and shareholders of Yuchai
     on 1 November 2002;

     (b) the constitution of the board of directors of Yuchai comprising Mr. Gao
     Jia Lin, Mr. Wrixon Frank Gasteen, Mr. Wong Hong Ren, Mr. Qin Xiaocong, Mr.
     Yuan Xucheng, Mr. Raymond Chi-Keung Ho, Mr. Teo Tong Kooi, Mr. Philip Ting
     Sii Tien, Mr. Gan Khai Choon, Mr. Wang Jianming, Mr. Li Tiansheng, Mr. Zeng
     Shiqiang and Mr. Shao Qihui; and

     (c) the compliance programme for the internal controls over financial
     reporting to be implemented by PricewaterhouseCoopers at Yuchai with
     respect to section 404 of the Sarbanes-Oxley Act.

     Yuchai shall promptly, but in any event no later than forty (40) days from
     the date of this Agreement, provide to CYI all documents, certificates,
     confirmations, notices and receipts evidencing the formalisation,
     registrations and filings required by this clause 1.7.

                                       3
<PAGE>
1.8  In consideration of CYI's agreement to ensure that Coomber will under the
     terms of the share exchange described in clause 2.4 receive no less than
     6,354,911 Newco shares, Yuchai shall, within 5 business days from the date
     that an unqualified audit report is issued on CYI's financial statements in
     the form substantially similar to that of the unaudited financial
     statements filed by CYI in its Form 6K dated 28 February 2005, pay CYI an
     amount of US$20,000,000 in cash into such bank account as CYI shall notify
     Yuchai in writing.

2.   RESTRUCTURING EXERCISE

2.1  Subject to any required shareholders' approval and subject also to all the
     required approvals under all applicable laws and regulations in Bermuda,
     China and the US (including, but not limited to, the requirements of the
     New York Stock Exchange, Inc. ("NYSE")):-

     (a)  CYI will cause a new company, Newco, to be formed as a Bermuda
          corporation with a board of directors comprising nominees of CYI and
          Yuchai in the same respective proportions to the nominees of the
          foreign and Chinese shareholders on the Yuchai board of directors, and
          charter documents and officers mutually agreeable to CYI and Yuchai
          and on the completion date of the Restructuring Exercise, CYI shall
          have no appointees to the board of Newco; and

     (b)  CYI will contribute its 76.4% indirect interest in Yuchai, ie
          361,420,150 shares of Yuchai, to Newco in exchange for a number of
          Newco shares equal to the number of outstanding CYI common shares as
          of the date hereof.

2.2  Newco will apply to list its shares on the NYSE. Newco will seek all
     required approvals in order to give effect to such listing in accordance
     with Bermuda, Chinese, U.S. and other applicable laws and the requirements
     of the NYSE. CYI and Yuchai will use reasonable efforts to assist Newco to
     make the relevant applications to the NYSE and to obtain all such
     approvals.

2.3  CYI shall use reasonable efforts to acquire assets and/or businesses of
     such size and which shall have achieved historical operating results of a
     magnitude sufficient to permit the continued listing of CYI on the NYSE
     under the listing standards of that exchange after the Spin-off described
     in clause 2.6 below. If appropriate, such acquisitions may involve
     affiliates of CYI. If necessary, CYI shall temporarily retain shares of
     Newco in order to meet such listing standards. Yuchai shall procure that
     such acquisitions by CYI shall have the support of Coomber Investments
     Limited ("Coomber") and such other shareholders of CYI that are related
     parties of Yuchai and Coomber hereby agrees and undertakes that it will
     vote in favour of any and all such acquisitions by CYI.

2.4  Subject to appropriate regulatory approvals, if any, Coomber will transfer
     to CYI 6,701,550 unencumbered CYI shares in exchange for a number of
     unencumbered Newco shares held by CYI in the same proportion that the
     6,701,550 CYI shares bears to the total number of issued CYI shares
     outstanding at the time of completion of the share exchange described in
     this clause (taking into account any new CYI shares that may arise from the

                                       4
<PAGE>
     conversion of any of the convertible bonds outstanding at the date of this
     Agreement but disregarding any new CYI shares that may be issued after the
     date of this Agreement). Accordingly, the parties agree that Coomber will
     under the terms of this clause 2.4 receive no less than 6,354,911 Newco
     shares.

     For illustrative purposes, upon completion of the share exchange described
     in this clause 2.4 and before completion of the transaction described in
     clause 2.5 below, Coomber will have a 18.96% interest, ie 6,701,550 shares,
     in Newco which owns 76.4% of Yuchai (if the convertible bonds of CYI
     outstanding at the date of this Agreement are not converted prior to the
     completion of the share exchange described in this clause 2.4) or a 17.98%
     interest, ie 6,354,911 shares, in Newco which owns 76.4% of Yuchai (if the
     convertible bonds of CYI outstanding at the date of this Agreement are
     converted prior to the completion of the share exchange described in this
     clause 2.4).

2.5  Subject to appropriate regulatory approvals, and following the completion
     of the share exchange described in clause 2.4 above, Guangxi Yuchai
     Machinery Group Company ("GYM Group") will contribute directly (or
     indirectly through Coomber or Goldman Industrial Ltd) to Newco all of the
     shares of Yuchai owned by GYM Group, ie 104,483,646 shares in Yuchai, in
     exchange for 10,216,508 new shares of Newco to be issued by Newco. For
     illustrative purposes, upon completion of the transactions described in
     clauses 2.4 and 2.5, GYM Group, together with Coomber, will together have
     an approximately 37.14% interest in Newco which owns approximately 98.5% of
     Yuchai (if the convertible bonds of CYI outstanding at the date of this
     Agreement are not converted prior to the completion of the share exchange
     described in clause 2.4) or an approximately 36.38% interest in Newco which
     owns approximately 98.5% of Yuchai (if the convertible bonds of CYI
     outstanding at the date of this Agreement are converted prior to the
     completion of the share exchange described in clause 2.4).

2.6  Subject to the acquisition by CYI of new assets and/or businesses as
     contemplated in clause 2.3 above as well as mutual agreement with respect
     to applicable tax treatment of the transactions contemplated in this clause
     2.6 and the execution of mutually acceptable documents to implement the
     transactions contemplated by this clause 2.6 (including without limitation
     (a) a distribution agreement and (b) a tax sharing agreement), CYI will
     then distribute all of its Newco shares to its shareholders, pro rata in
     accordance with their ownership of CYI shares (the "Spin-off"), provided,
     however, that CYI may, if necessary, temporarily retain up to 10,000,000
     shares of Newco. If any such shares are retained, and subject to CYI
     obtaining any necessary approval of its shareholders, CYI will grant to
     Coomber an irrevocable proxy to vote such shares for the election of
     directors to the board of Newco for such time as these shares are owned by
     CYI, and Newco will enter into an appropriate registration rights agreement
     to permit CYI to sell those shares to the public at such time as CYI
     determines that the sale of those shares will not affect its listing status
     on the NYSE. CYI will not knowingly sell more than 2,000,000 of such shares
     to any entity or related group of entities unless CYI has the prior written
     approval of Coomber. Contemporaneous with completion of the Spin-off and
     without demand, Yuchai shall pay CYI US$30,000,000 in cash as compensation
     for CYI's loss of its controlling interest in Yuchai. Such payment shall be
     made by Yuchai by SWIFT transfer to such bank account as CYI shall notify
     Yuchai in writing. No portion of the Newco

                                       5
<PAGE>
     shares to be distributed to CYI shareholders will be distributed in respect
     of the special share held by Hong Leong Asia Ltd. ("HLA"). The Spin-off
     will be submitted for approval to the shareholders of CYI at a meeting (the
     "EGM") to be called and held for such purpose in accordance with Bermuda
     law, if necessary. CYI and Yuchai will respectively use reasonable efforts
     to have HLA and Coomber vote in favour of the Spin-off at the EGM.

2.7  The parties hereby agree that the transactions contemplated under clauses
     2.4, 2.5 and 2.6 shall be completed in sequence but practically
     contemporaneously with each other.

2.8  Within 30 calendars days from the date of this Agreement, CYI and Yuchai
     will jointly engage an internationally reputable financial adviser to (a)
     assist Newco to apply for the listing of its shares on the NYSE and (b)
     assist CYI with the implementation of the Spin-off described in clause 2.6
     above. Any direct and incidental costs and expenses (other than taxes)
     incurred in connection with such listing and the Spin-off (including any
     fees payable to the financial adviser, audit, legal and tax advisers) shall
     be borne or reimbursed by Yuchai monthly. Without limitation to the
     foregoing, Yuchai will, within 10 calendar days from the date of this
     Agreement, pay an advisory fee of US$1,500,000 to each of Strategic Capital
     Group and CYI for their advisory assistance rendered in connection with the
     listing of Newco and the Spin-off and be further responsible to reimburse
     each of them for all out-of-pocket expenses incurred in connection with
     such listing and Spin-off. Any necessary authorization and approval from
     shareholders and other parties for the payment of the advisory fees and
     reimbursement of out-of-pocket expenses described in this clause 2.8 shall
     be Yuchai's responsibility to obtain.

2.9  CYI and Yuchai shall jointly instruct the financial advisers referred to in
     clause 2.8 above to promptly prepare and present to the parties a timetable
     setting out in reasonable detail the expected dates by which the events
     described in each of clauses 2.1, 2.2, 2.4, 2.5 and 2.6 may reasonably be
     anticipated to be completed. The parties acknowledge that the timetable
     presented by the financial adviser will not be in any way binding upon the
     parties and serves as a reasonable estimate only. Notwithstanding, and
     subject to the terms of this Agreement, the parties agree to use reasonable
     endeavours to undertake and complete the events described in each of
     clauses 2.1, 2.2, 2.4, 2.5 and 2.6 by the dates indicated in the timetable
     where feasible.

2.10 The parties acknowledge and accept that the CYI Group, as majority
     shareholders of Yuchai and with majority control of the Board of Directors
     of Yuchai, may cause the employment of Yuchai's current Chief Executive
     Officer to be terminated in accordance with the terms of his employment
     agreement. CYI acknowledges and accepts, however, that the successful
     implementation of the Restructuring Exercise will require the continued
     uninterrupted involvement and participation of Yuchai's current Chief
     Executive Officer on and subject to the terms (including remuneration) of
     his employment agreement. Accordingly, CYI agrees that it will not, and
     will procure that its appointees to the Board of Directors of Yuchai do
     not, take any action prior to the completion of the Restructuring Exercise
     that will interfere with, or cause the termination of, the employment of
     Yuchai's current Chief Executive Officer except if he were to be prosecuted
     or convicted for any activities of a criminal nature.

                                       6
<PAGE>
2.11 Notwithstanding anything to the contrary in this Agreement, the July
     Agreement or any other agreement, document, letter or supplement relating
     to this Agreement or the July Agreement, CYI shall only be bound to comply
     with the requirements in clauses 2.1 to 2.2 and 2.4 to 2.9 for so long as
     (a) the requirements in clause 1 are complied with in full, (b) the
     financial statements of Yuchai continue to be consolidated by CYI in
     accordance with the requirements under US GAAP and (c) CYI's shares are
     listed and freely traded on the NYSE. In the event that any of these
     requirements listed in (a), (b) or (c) are not met, CYI shall not have to
     comply with the requirements in clauses 2.1 to 2.2 and 2.4 to 2.9 and
     Yuchai shall have no claim whatsoever against CYI for any costs, damages,
     losses or other liabilities that Yuchai shall incur in consequence of CYI
     not complying with the relevant provisions in this clause 2.

3.   FURTHER UNDERTAKINGS

3.1  Each party shall, at any time and from time to time after the date hereof,
     execute, acknowledge, deliver and file, or cause to be done, executed,
     acknowledged, delivered and filed, all such further acts, transfers,
     conveyances, assignments or assurances as may be necessary, proper or
     advisable in order to consummate the transactions contemplated hereby as
     promptly as practicable, and shall not prior to the completion of the
     Restructuring Exercise take any action (including a sale of shares in
     Yuchai or the shares in Newco) that would prevent the consummation of such
     transactions.

3.2  Each party agrees to consult the other parties before issuing any press
     release, making any public statements or otherwise making any public
     disclosure with respect to this Agreement or the transactions contemplated
     hereby, and shall not issue any such press release, make any such public
     statement or otherwise make any public disclosure without the written
     consent of each of the other parties, except as may be required by any
     applicable law, rule or regulation (including without limitation any
     requirements of any applicable stock exchange or market).

4.   TERMINATION

     In the event that the parties are unable to complete the events described
     in each of clauses 2.1, 2.2, 2.4, 2.5 and 2.6 above (not due to the default
     of either party) by 5.00 p.m. on 31 December 2005 (or if such day is not a
     business day in Hong Kong, the immediately succeeding business day) (or
     such other date to be mutually agreed between the parties), the provisions
     of this Agreement shall terminate and in such event no party shall have any
     claim against any other party for any claims, damages, losses or other
     costs and expenses arising from such termination.

5.   INDEMNITY

5.1  Yuchai hereby irrevocably and unconditionally agrees to indemnify and save
     CYI harmless from and against and in respect of all loss and damage
     suffered or incurred by CYI directly and/or indirectly as a result of or in
     connections with any breach of any undertaking or agreement given by Yuchai
     in this Agreement or any breach or non-

                                       7
<PAGE>
     performance by each of Yuchai or GYM Group or Coomber of their respective
     obligations (whether expressed or implied) under this Agreement.

5.2  CYI hereby irrevocably and unconditionally agrees to indemnify and save
     Yuchai harmless from and against and in respect of all loss and damage
     suffered or incurred by Yuchai directly and/or indirectly as a result of or
     in connections with any breach of any undertaking or agreement given by CYI
     in this Agreement.

6.   COSTS AND EXPENSES

     Except as otherwise agreed elsewhere in this Agreement, each party shall
     bear its own expenses in connection with the consummation of the
     transactions contemplated hereby.

7.   GOVERNING LAW AND JURISDICTION

7.1  This Agreement shall be governed by and construed in accordance with the
     laws of Hong Kong. Any dispute, controversy or claim arising out of, or
     relating to this Agreement, or the breach, termination or invalidity
     thereof, shall be settled by arbitration in Hong Kong by a single
     arbitrator at the Hong Kong International Arbitration Centre in accordance
     with the UNCITRAL Arbitration Rules.

7.2  Each of the parties to this Agreement and each of the parties that
     acknowledge and accept this Agreement irrevocably waives any immunity to
     which it or any of its property may at any time be or become entitled,
     whether characterized as sovereign immunity or otherwise, from any set-off
     or legal action in the People's Republic of China (including the Hong Kong
     Special Administrative Region) or elsewhere, including immunity from
     service of any legal process or any reference for arbitration, immunity
     from jurisdiction of any court or tribunal, and immunity of any of its
     property from attachment prior to an arbitration award or judgment or from
     execution of an arbitration award or judgment.

8.   ENTIRE AGREEMENT

8.1  Each of the parties to this Agreement confirms that this Agreement,
     together with the July Agreement, constitutes the entire agreement among
     the parties hereto relating to the subject matter hereof and thereof. The
     terms of this Agreement shall govern to the extent they are inconsistent
     with the terms of the July Agreement.

                                       8
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Reorganization
Agreement to be executed on its behalf as of the day and year first above
written.



GUANGXI YUCHAI MACHINERY COMPANY LIMITED      CHINA YUCHAI INTERNATIONAL LIMITED


Signed:       /s/ Wang Jianming               Signed:     /s/ Wong Hong Ren
       ---------------------------------             ---------------------------
Name:  Wang Jianming                          Name:  Wong Hong Ren
Title: Director                               Title: Director



COOMBER INVESTMENTS LIMITED


Signed:       /s/ Wang Jianming
       ---------------------------------
Name:  Wang Jianming
Title: Authorised Signatory

The party named below acknowledges and accepts as of the day and year first
above written the contents of this Agreement and irrevocably undertakes to use
reasonable efforts to cause Yuchai to fulfill its obligations under this
Agreement.

GUANGXI YUCHAI MACHINERY GROUP COMPANY


Signed:       /s/ Wang Jianming
       ---------------------------------
Name:  Wang Jianming
Title: Authorised Signatory

                                       9


</TEXT>
</DOCUMENT>
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