Alco Holdings Limited — Proxy Solicitation & Information Statement 2002

Apr 30, 2002

IMPORTANT

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Keck Seng Investments (Hong Kong) Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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KECK SENG INVESTMENTS (HONG KONG) LIMITED

(Incorporated in Hong Kong under the Companies Ordinance)

Directors:

Executive:

Ho Kian Guan (Chairman) Ho Kian Hock Ho Kian Cheong Paul Tse See Fan

Registered office: Room 1211, Wing On Centre 111 Connaught Road Central Hong Kong

Independent Non-Executive: Robin Chan Yau Hing Arthur Kwok Chi Shun

30 April 2002

To Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO PURCHASE ITS OWN SHARES AND TO ISSUE SHARES

INTRODUCTION

The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“the Stock Exchange”) (“the Listing Rules”) contain provisions to regulate the repurchase by companies with primary listings on the Stock Exchange of their own securities on the Stock Exchange (“the Share Buyback Rules”). The Companies Ordinance (Chapter 32 of the Laws of Hong Kong) (“the Companies Ordinance”) allows companies incorporated in Hong Kong, if so permitted by their articles of association, to purchase their own shares.

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On 30 June 2001, a general mandate was given to the Directors to exercise the powers of the Company to repurchase, inter alia, shares of the Company. The general mandate will lapse at the conclusion of the forthcoming 2002 Annual General Meeting of the Company unless the authority is renewed by ordinary resolution at that meeting.

The purpose of this circular is to provide you with information relating to the Ordinary Resolutions to be proposed at the forthcoming Annual General Meeting to be held on 29 June 2002 to grant a general mandate to the Directors to exercise the powers of the Company to repurchase the Company’s fully paid up shares representing up to a maximum of 10% of the existing issued share capital of the Company at the date of the Ordinary Resolution, to grant a general mandate to the Directors to issue new shares up to a maximum of 20% of the issued share capital of the Company at the date of the Ordinary Resolution and to increase the number of shares which the Directors may issue by the number of shares repurchased.

This circular also serves as the explanatory statement to provide you with requisite information reasonably necessary to enable you to make an informed decision on whether to vote for or against Resolutions 4 to 6 to be proposed at the Annual General Meeting of the Company.

RESOLUTIONS TO BE PROPOSED AT THE ANNUAL GENERAL MEETING

The Ordinary Resolution 4 to be proposed at the Annual General Meeting relates to the granting of a general mandate to the Directors of the Company to repurchase, on the Stock Exchange, shares of the Company up to a maximum of 10% of the issued share capital of the Company at the date of the resolution (“the Repurchase Proposal”).

The Ordinary Resolution 5 to be proposed at the Annual General Meeting relates to the granting of a general mandate to the Directors to issue new shares up to a maximum of 20% of the issued share capital of the Company at the date of the resolution; in addition, subject to a separate approval of shareholders of the Ordinary Resolution 6, the number of shares purchased by the Company under the Repurchase Proposal will also be added to the 20% general mandate as mentioned above.

The Ordinary Resolution 6 relates to the extension of the general mandate to be granted to the Directors to issue new shares during the relevant period by adding to it the number of shares purchased under the Repurchase Proposal, if any.

SECURITIES REPURCHASE MANDATE

Reasons for Share Buyback

Although the Directors have no present intention of repurchasing any shares, they believe that the flexibility afforded by the Repurchase Proposal would be beneficial to the Company and its shareholders. Trading conditions on the Stock Exchange have sometimes been volatile in recent years. At any time in the future when shares are trading at a discount to their underlying value, the ability of the Company to repurchase shares will be beneficial to those shareholders who retain their investment in the Company since their percentage interest in the assets of the Company would increase in proportion to the number of shares repurchased by the Company and thereby resulting in an increase in net assets and/or earnings per share of the Company. Furthermore, the Directors’ exercise of the mandate granted under the Repurchase Proposal may lead to an increased volume of trading in shares on the Stock Exchange. Such repurchases will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders.

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Funding of Repurchases

The Directors propose that repurchases of shares under the Repurchase Proposal in these circumstances would be financed from the Company’s distributable profits or proceeds of a fresh issue of shares in accordance with the Memorandum and Articles of Association of the Company and laws of Hong Kong.

There might be material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the Annual Report for the year ended 31 December 2001) in the event that the repurchase mandate was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the repurchase mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company. The number of shares to be repurchased on any occasion and the price and other terms upon which the same are purchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining.

Market Prices

The highest and lowest market prices at which the shares of the Company have been traded on the Stock Exchange during each of the previous twelve months were as follows:

	Highest	Lowest
	HK$	HK$
April 2001	0.650	0.580
May 2001	0.670	0.590
June 2001	0.700	0.700
July 2001	0.740	0.700
August 2001	0.510	0.470
September 2001	—	—
October 2001	—	—
November 2001	0.630	0.550
December 2001	0.700	0.560
January 2002	0.600	0.520
February 2002	0.930	0.650
March 2002	0.780	0.720

SHARE CAPITAL

As at 26 April 2002 (the latest practicable date prior to the printing of this circular), the issued share capital of the Company comprises 340,200,000 fully paid shares of HK$1.00 each (“Shares”).

Subject to the passing of the Ordinary Resolution 4, the Company would be allowed under the buyback mandate to repurchase a maximum of 34,020,000 shares on the basis that no further shares will be issued prior to the date of the forthcoming Annual General Meeting.

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DISCLOSURE OF INTEREST

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make purchases under the Repurchase Proposal in accordance with the Listing Rules and laws of Hong Kong. The Directors are not aware of any consequences which will arise under the Code on Takeovers and Mergers as a result of any purchases to be made under the Repurchase Proposal.

As at 26 April 2002 (the latest practicable date prior to the printing of this circular), the Directors of the Company and their associates beneficially held in aggregate 255,066,480 shares in the issued share capital of the Company, representing approximately 74.98% of the Company’s issued share capital. If the powers of the Company to make purchases under the Repurchase Proposal is exercised in full, the Directors’ interest in the issued capital of the Company will be increased to 83.31%. However, the Directors shall not exercise the repurchase mandate to such extent that less than 25% of the issued share capital of the Company would be in public hands.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates presently intend to sell shares to the Company under the Repurchase Proposal in the event that the Repurchase Proposal is approved by shareholders.

The Company has not been notified by any connected persons of the Company that they have a present intention to sell any shares or that they have undertaken not to sell any shares held by them to the Company in the event that the Repurchase Proposal is approved by its shareholders.

SHARE PURCHASES MADE BY THE COMPANY

No purchase of Shares have been made by the Company during the last six months (whether on the Stock Exchange or otherwise).

PROXY ARRANGEMENT

A form of proxy for use at the Annual General Meeting is enclosed with the Annual Report for the year ended 31 December 2001. To be valid, the form of proxy must be completed in accordance with the instructions printed thereon and deposited, together with power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority at the Company’s Registrars, Tengis Limited at 4/F, Hutchison House, Hong Kong not less than 48 hours before the time appointed for holding the meeting. Completion and delivery of the form of proxy will not prevent you from attending and voting at the Annual General Meeting.

RECOMMENDATION

Your Directors consider that the Repurchase Proposal and the granting of general mandate to issue new shares are in the best interests of the Company and its shareholders and accordingly recommend that all shareholders should vote in favour of the Resolutions 4 to 6 to be proposed at the Annual General Meeting as they intend to do themselves in respect of their own holdings.

Yours faithfully, Ho Kian Guan

Chairman

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