APT Satellite Holdings Limited — Proxy Solicitation & Information Statement 2004

Nov 25, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in APT Satellite Holdings Limited (the “Company”), you should at once hand this circular, together with the enclosed 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.

APT SATELLITE HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1045)

DISCLOSEABLE TRANSACTION

Rights To Design, Construction, Delivery and Launch of APSTAR VIB

The letter from the board of Directors of the Company is set out in pages 3 to 7 of this circular.

25 November 2004

DEFINITIONS

Terms used in this circular shall have the following meanings:

• “Agreement”

the agreement dated 10 November 2004 between APT Satellite and CGWIC in respect of the granting of a rights to APT Satellite to require CGWIC to provide for the design, construction, delivery and launch of APSTAR VIB to a designated orbit;

• “APT Satellite”

• APT Satellite Company Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company;

• “APSTAR IA” a satellite based on Boeing BSS-376 with 24 C-band transponders;

• “APSTAR VI” a satellite based on Alcatel SB-4100 C1 with 38 C-band transponders and 12 Ku-band transponders;

• “APSTAR VIB” a satellite based on DFH-4 with 28 C-band transponders and 16 Kuband transponders;

• “Company” APT Satellite Holdings Limited;

• “CGWIC” China Great Wall Industry Corporation (中國長城工業總公司 ), a company established in the People’s Republic of China;

• “Director(s)” Director(s) of the Company; “EDA” the effective commencement date of the provision of services by CGWIC in respect of the design, construction, delivery and launch of APSTAR VIB to a designated orbit;

• “Group” the Company and its subsidiaries;

• “HK$” Hong Kong dollars;

• “Latest Practicable Date” 23 November 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information of this circular;

“Listing Rules” The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

• “SFO” Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong);

• “Share(s)” share(s) of HK$0.10 in the capital of the Company;

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DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited; and “US$” United States dollars

In this circular, figures originally expressed in US$ have been converted into HK$ equivalents at the rate of US$1.00 to HK$7.80.

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LETTER FROM THE BOARD

APT SATELLITE HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1045)

Executive Directors: Chen Zhaobin (President) Tong Xudong (Vice President)

Non-Executive Directors: Liu Ji Yuan (Chairman) Zhang Hainan (Deputy Chairman) Lim Toon Wu Zhen Mu Tay Chek Khoon Yin Yen-liang Tseng Ta-mon (Alternate Director to Yin Yen-liang) Lim Wee Seng (Alternate Director to Lim Toon and Tay Chek Khoon)

Registered Office: Clarendon House 2 Church Street Hamilton, HM 11 Bermuda

Head Office and principal place of business: 22 Dai Kwai Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong

Independent Non-Executive Directors: Yuen Pak Yiu, Philip Huan Guocang Lui King Man

25 November 2004

To: All Shareholders

Dear Sirs,

DISCLOSEABLE TRANSACTION Rights To Design, Construction, Delivery and Launch of APSTAR VIB

INTRODUCTION

As set out in the announcement of the Company dated 12 November 2004, APT Satellite, a wholly-owned subsidiary of the Company, entered into the Agreement with CGWIC pursuant to which APT Satellite was granted a right to require CGWIC to provide for the design, construction, delivery and launch of APSTAR VIB to a designated orbit. The purpose of this circular is to provide further information on the transaction for your information.

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LETTER FROM THE BOARD

AGREEMENT DATED 10 NOVEMBER 2004

The major terms of the Agreement entered into between APT Satellite, a wholly-owned subsidiary of the Company, and CGWIC are as follows:

Parties:

Grantor and contractor: CGWIC; so far as the directors are aware, CGWIC and its ultimate beneficial owner are independent third parties and not connected persons of the Company (as defined under rule 14A.11 of the Listing Rules)

Grantee and purchaser: APT Satellite

Option granted:

Rights granted to APT Satellite to require CGWIC to provide for the design, construction, delivery and launch of APSTAR VIB to a designated orbit.

Option exercise period:

Commencing from the date of the Agreement and ending on 30 September 2005.

Exercise of option:

APT Satellite may at any time during the option exercise period notify CGWIC in writing of its exercise of the option and reconfirm, inter alia, the technical specifications and EDA.

Option price and payment:

US$7,680,000 (approximately HK$59,904,000) payable in four instalments:

• a. US$3,180,000, upon signing of the Agreement;

• b. US$1,750,000, not later than 20 November 2004; c. US$1,750,000, not later than 15 January 2005; and d. US$1,000,000, not later than 5 April 2005.

The option price is to be funded by internal resources of the Company.

In the event the option is exercised by APT Satellite, the option price will be applied towards the total consideration for the design, construction, delivery and launch of APSTAR VIB.

In the event, the option is not exercised by APT Satellite, CGWIC shall stop all preparation work for the design, construction, delivery and launch of APSTAR VIB and will have to transfer the option price to such other satellite project as may be designated by APT Satellite (whether with CGWIC or not) and refund the balance of the option price (net of all reasonable fee incurred).

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LETTER FROM THE BOARD

Termination of option:

The Agreement will be deemed terminated if the option is not exercised and the option price has not been fully paid by APT Satellite.

Set out below the major terms of the in-orbit delivery satellite arrangement upon exercise of the option:

Subject:

The design, construction, delivery and launch of APSTAR VIB by CGWIC (and approved subcontractors) to a designated orbit.

Consideration:

US$120,100,000 (approximately HK$936,780,000), by instalments according to the progress of the design, construction, delivery of APSTAR VIB and in respect of services provided by CGWIC for the design, construction and delivery of the relevant launching vehicle, the launch and the relevant in-orbit testing of APSTAR VIB with the first payment payable upon EDA and the last payment payable upon completion of the in-orbit testing.

The consideration shall be subject to adjustment in case after inorbit testing, APSTAR VIB carries functional transponders of less than 28 C-band transponders and 16 Ku-band transponders with an expected operational life of 13 years.

• Major milestones:

• It is expected that the delivery, launch and in-orbit testing of APSTAR VIB will take place within 27, 29 and 30.5 months after EDA (as indicated in the confirmation of technical specifications upon exercise of the option).

• Risk allocation:

The ownership of APSTAR VIB shall be transferred to APT Satellite upon the lift-off of APSTAR VIB.

• Termination of the design, construction, delivery and launch of APSTAR VIB arrangement:

• In case the launch of APSTAR VIB is delayed for more than 5 months from the scheduled milestones, the acquisition of the APSTAR VIB shall be cancelled at the discretion of APT Satellite and CGWIC shall refund all payments made by APT Satellite.

In case (a) APT Satellite determines to terminate the acquisition and the launch of APSTAR VIB or (b) if APT Satellite fails to comply with the relevant obligations (payment and instructions) and CGWIC terminates the services, APT Satellite shall be responsible to indemnify CGWIC for all costs and expenses incurred up to the date of termination in respect of the design, construction and delivery of APSTAR VIB and the launch services with a 5% profit compensation together with all costs and expenses reasonably incurred to terminate all subcontracting arrangements, if any. Progress payments made by APT Satellite in excess of the

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LETTER FROM THE BOARD

costs, expenses and compensation shall be refunded by CGWIC to APT Satellite and the work in progress to the date of termination shall be transferred to APT Satellite upon due settlement.

Basis of consideration

The option price is determined after arm’s length negotiation between the parties (taking into account the preparation works which CGWIC has to carry out for the design and construction of APSTAR VIB prior to the exercise of the option).

The consideration for the design, construction, delivery and launch of APSTAR VIB arrangement is determined after arm’s length negotiation between the parties (taking into account the backup schedule for APSTAR VI as set out below, the satellite model and the launch services).

Reasons and benefit of the transaction

The estimated operational life of APSTAR IA will not expire before the end of 2007. The transponder services offered by APSTAR IA are intended to be replaced by APSTAR VI (which will be launched by CGWIC) upon its successful launch in the first quarter of 2005. However, in view of the risk of satellite launch, it is necessary for the Company to have a contingency plan safeguarding the replacement arrangement of APSTAR IA and to lock in a launching slot in case of the failure of the launching of APSTAR VI for the smooth operations of satellite transponder services provided by the Company.

The directors (including independent non-executive directors) of the Company are of the view that the transaction has been conducted in the ordinary and usual course of business of APT Satellite, on normal commercial terms and the terms of the transaction are fair and reasonable and in the interests of the shareholders of the Company as a whole.

Effect on the earnings, assets and liabilities of the Company

Based on the 2004 interim report of the Company, the condensed consolidated balance sheet of the Group recorded a total consolidated assets of HK$3,243,601,000 and cash and cash equivalents of HK$240,614,000 as at 30 June 2004. As at 30 June 2004, the total consolidated liabilities of the Group amounted to HK$1,036,119,000. Given that the option price is US$7,680,000 (approximately HK$59,904,000) and is payable by four instalments, the Directors are of the view that the effect of the transaction on the earnings, assets and liabilities of the Company is unlikely to have any material impact. Nevertheless, the entering into of the transaction can safeguard the replacement arrangement of APSTAR IA and to lock in a launching slot in case of the failure of the launching of APSTAR VI for the smooth operations of satellite transponder services provided by the Company. When the option is exercised, the option price will be applied towards the consideration of the design, construction, delivery and launch of APSTAR VIB. In the event, the option is not exercised, the option price will be applied towards other satellite projects as the Group may designate.

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LETTER FROM THE BOARD

General

Principal business activities carried out by the Company:

The Company and its subsidiaries are engaged in the provision of satellite transponder services for the international and Asia-Pacific broadcasting and telecommunications sectors.

Principal business activities of CGWIC:

CGWIC is engaged in the provision of launch services in respect of, inter alia, satellites. It also engages as contractor for the design and construction of satellites.

The transaction contemplated under the agreement constitutes a discloseable transaction of the Company pursuant to rule 14.08 of the Listing Rules. In the event the option is to be exercised, the relevant disclosure and shareholders approval requirement of Chapter 14 of the Listing Rules will be complied with.

Your attention is also drawn to the additional information set out in the Appendix.

Yours faithfully,

By order of the Board APT Satellite Holdings Limited Liu Ji Yuan Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular have been arrived at after due and careful consideration and that there are no other facts the omission of which would make any statement contained herein misleading.

2. DISCLOSURE OF INTERESTS

A. Directors’ interests in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests or short positions of the Directors, and chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required pursuant to Section 352 of the SFO to be entered in the register referred to therein; or (c) were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”) to be notified to the Company and the Stock Exchange, were as follows:

Name of Directors and	Nature	Number of	Number of
chief executives	of interests	shares held	share options(1)
Chen Zhaobin	Personal	–	2,200,000
(Executive Director &
President)
Cui Xinzheng_(Vice President)_	Personal	–	1,200,000
Lo Kin Hang, Brian	Personal	5,000	800,000
(Vice President & Company
Secretary)

(1) The share options were granted on 19 June 2001 under the share option scheme adopted at the annual general meeting of the Company held on 22 May 2001 and all the above share options have an exercise price of HK$2.765 per share and are exercisable within the period from 22 May 2003 to 21 May 2011.

All the interests disclosed above represent long positions in the shares of the Company or its associated corporations.

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GENERAL INFORMATION

APPENDIX

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors or chief executive of the Company were, or were taken or deemed to have any interest or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

B. Persons who have interests or short positions in Shares and underlying Shares which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following parties, had, or were deemed or taken to have any interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of the Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

		Number of	% of issued
Name	Note	shares interested	share capital
APT Satellite International Company		214,200,000	51.83
Limited
China Aerospace Science & Technology	1	37,200,000	9.00
Corporation
China Aerospace International	1	31,200,000	7.55
Holdings Limited
Sinolike Investments Limited	1	31,200,000	7.55
Temasek Holdings (Private) Limited	2	22,800,000	5.52
Singapore Telecommunications Limited	2	22,800,000	5.52
Singasat Private Limited	2	22,800,000	5.52

Note:

1. China Aerospace Science & Technology Corporation was deemed to be interested in the shares of the Company by virtue of its 41.86% shareholding in China Aerospace International Holdings Limited, which was deemed to be interested in the shares of the Company by virtue of its 100% shareholding in Sinolike Investments Limited, which was deemed to be interested in the shares of the Company by virtue of its 100% shareholding in CASIL Satellite Holdings Limited which holds 14,400,000 shares of the Company.

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GENERAL INFORMATION

APPENDIX

1. Temasek Holdings (Private) Limited was deemed to be interested in the shares of the Company by virtue of its 67.16% shareholding in Singapore Telecommunications Limited, which was deemed to be interested in the shares of the Company by virtue of its 100% shareholding in Singasat Private Limited.

Save as disclosed in this circular, as at the Latest Practicable Date, so far is known to any Director or chief executive of the Company, no other person has an interest or short position in the shares, underlying shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group.

As at the Latest Practicable Date, save for the aforementioned, there were no outstanding securities, options or warrants which were convertible into new Shares.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, a service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation, other than statutory compensation.

4. COMPETING INTERESTS

As at the Latest Practicable Date, the following non-executive directors of the Company are also directors in other businesses, which compete or are likely to compete, either directly or indirectly, with the Group’s business:

Name of Director Name of the Companies Principal Activities Lim Toon SingTelSat Pte Ltd Provision of satellite capacity for telecommunication and video broadcasting services Singapore Telecom Hong Kong Investment holding and provision Limited of telecommunications services INS Holdings Pte Ltd SingTel Services Australia Pty Provision of customer services for Limited telecommunications related SingTel (Philippines), Inc. activities Singapore Telecom Taiwan Limited

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GENERAL INFORMATION

APPENDIX

Name of Director	Name of the Companies	Principal Activities
	Singapore Telecom Japan Co Ltd	Provision of telecommunications
	Singapore Telecom Korea Limited	services and all related activities
	Bharti Tele-Ventures Limited	Provision of cellular, fixed line,
		national long distance and
		international telecommunication
		services
	Singapore Telecom USA, Inc.	Provision of telecommunication
		services and engineering and
		marketing services for
		telecommunications networks
		in USA
	New Century Infocomm	Provision of fixed line
	Tech Co. Ltd.	telecommunication services
Lim Wee Seng	C2C Pte Ltd	Operation and provision of
		telecommunications facilities and
		services utilising a network of
		submarine cable systems and
		associated terrestrial capacity

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors and the chief executive officer of the Company were considered to have interests in businesses which competed or were likely to compete, either directly or indirectly, with the businesses of the Group, other than those businesses in which (a) the Group was interested and (b) the Directors’ only interests were as directors appointed to represent the interests of the Group.

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware, no litigation or arbitration or claim of material importance was pending or threatened by or against any member of the Group.

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GENERAL INFORMATION

APPENDIX

6. MISCELLANEOUS

• (a) The Qualified Accountant of the Company is Miss Lau Mei Bik who is a fellow member of the Hong Kong Institute of Certified Public Accountants.

• (b) The Secretary of the Company is Dr. Lo Kin Hang, Brian, DBA, MScIT, MBA, FCIS, CEng, MIEE.

• (c) The Company’s Hong Kong share registrar and transfer office is Tengis Limited, G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) This circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

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