Cathay Pacific Airways Limited — Proxy Solicitation & Information Statement 2002

Jul 31, 2002

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 all your shares in IDT International Limited, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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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IDT INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors: Registered Office: Raymond Chan, Chairman & Chief Executive Officer Clarendon House Alain Jacques Gilbert Li, Chief Financial Officer Church Street Chan Pau Shiu Yeng, Shirley Hamilton HM 11 Shigenobu Morita Bermuda Non-Executive Directors: Principal Place of Business: Jack William Edouard Heuer Block C, 9th Floor Lo Kai Yiu, Anthony * Kaiser Estate Kao Ying Lun * 41 Man Yue Street Jack Schmuckli * Hunghom, Kowloon Kenichi Ohmae * Hong Kong Woo Chia Wei

• Independent Non-Executive Directors

July 31, 2002

To the Shareholders,

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES

INTRODUCTION

At the last annual general meeting of IDT International Limited (“Company”) held on August 28, 2001, general mandates were granted to the directors (“Directors”) of the Company (i) to allot, issue and deal with additional shares of HK$0.10 each (“Shares”) in the capital of the Company; (ii) to repurchase issued Shares; and (iii) to add such Shares repurchased pursuant to the aforesaid mandate to the general mandate granted to the Directors on August 28, 2001 to allot, issue and deal with additional Shares.

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Since the above general mandates will expire at the conclusion of the forthcoming annual general meeting (“Annual General Meeting”) of the Company to be held on August 28, 2002, the Directors consider that it is in the interests of the Company and its shareholders (“Shareholders”) that the Directors should continue to be granted these general mandates to issue, allot and deal with additional Shares and to repurchase Shares.

GENERAL MANDATE TO ISSUE SHARES

At the Annual General Meeting, an ordinary resolution, as set out in agenda item 5(1) of the notice of Annual General Meeting, will be proposed that a general mandate be granted to the Directors to allot, issue and deal with additional Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company at the date of passing the resolution. This is to ensure flexibility and discretion to the Directors to allot, issue and deal with additional Shares. In addition, another ordinary resolution, as set out in agenda item 5(3) of the notice of Annual General Meeting, will be proposed to extend such general mandate to issue Shares by adding to it any Shares representing the aggregate nominal amount of Shares repurchased by the Company after the granting of the general mandate to repurchase up to 10% of the aggregate nominal amount of the issued share capital of the Company at the date of passing the relevant resolution for repurchase of Shares is approved.

GENERAL MANDATE TO REPURCHASE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed that a general mandate be granted to the Directors to exercise all the powers of the Company to repurchase issued Shares (“Repurchase Mandate”) and the terms of the proposed ordinary resolution are set out in agenda item 5(2) of the notice of Annual General Meeting.

The following serves as an explanatory statement in compliance with the Rules Governing the Listing of Securities (“Listing Rules”) on The Stock Exchange of Hong Kong Limited (“Stock Exchange”) to give all the information reasonably necessary to enable Shareholders to make an informed decision on whether to vote for or against the resolution to approve the Repurchase Mandate.

1. Share Capital

At July 25, 2002, the latest practicable date prior to the printing of this circular (“Latest Practicable Date”), the issued share capital of the Company was HK$207,157,590.70 comprising 2,071,575,907 Shares. In addition, as at such date, there were also outstanding options (“Options”) granted under an employees’ share option scheme of the Company carrying the rights to subscribe for 13,101,000 Shares.

Subject to the passing of the relevant ordinary resolution to approve the Repurchase Mandate (as set out in agenda 5(2) of the notice of Annual General Meeting) and on the basis that no further Shares are issued or repurchased and no subscription rights of the Options are exercised prior to the Annual General Meeting, exercise in full of the Repurchase Mandate would result in the repurchase by the Company of a maximum of 207,157,590 Shares during the period ending the earliest of the date of the next annual general meeting of the Company, the date by which the next annual general meeting of the Company is required by the Bye-laws of the Company or by any applicable laws of Bermuda to be held or the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in general meeting.

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2. Reasons for Repurchases

The Directors have no present intention to repurchase any Shares but consider that the Repurchase Mandate is in the best interests of the Company and the Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per share of the Company and will only be made when the Directors believe that such repurchases will benefit the Company and the Shareholders.

As compared with the financial position of the Company at March 31, 2001 (being the date to which the latest audited financial statements of the Company were published), there will not be a material adverse impact on the working capital or gearing position of the Company in the event that the Repurchase Mandate is carried out in full during the proposed repurchase period. The Directors do not propose to exercise the Repurchase Mandate to such an 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.

3. Funding of Repurchases

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum of Association and Bye-laws and all applicable laws of Bermuda.

4. Market Prices

The highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the twelve months from July 1, 2001 to June 30, 2002 were as follows:

	Highest Per Share	Lowest Per Share
	HK$	HK$
2001
July	0.650	0.570
August	0.600	0.490
September	0.490	0.390
October	0.500	0.430
November	0.630	0.495
December	0.560	0.510
2002
January	0.590	0.500
February	0.610	0.520
March	0.810	0.580
April	0.790	0.720
May	0.810	0.710
June	0.780	0.710

5. Directors, their Associates and Connected Person

None of the Directors nor, to the best of their knowledge and having made all reasonable enquiries, any of their respective associates, have any present intention to sell any Shares to the Company or its subsidiaries under the Repurchase Mandate in the event that such mandate is approved by Shareholders.

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No connected person, as defined in the Listing Rules, has notified the Company that he/she has a present intention to sell any Shares to the Company, nor has he/she undertaken not to do so in the event that the Repurchase Mandate is approved by Shareholders.

6. Undertaking of the Directors

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules, all applicable laws of Bermuda and the Memorandum of Association and Bye-laws of the Company.

7. Effect of Takeovers Code

If on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Hong Kong Code on Takeovers and Mergers (“Takeovers Code”). As a result, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code for all the Shares not already owned by such Shareholder or group of Shareholders.

At the Latest Practicable Date, Mr. Raymond Chan and Mrs. Chan Pau Shiu Yeng, Shirley (the wife of Mr. Raymond Chan) together with their associates were interested in Shares representing approximately 55.17% of the issued share capital of the Company. To the best of the knowledge and belief of the Company, Mr. Raymond Chan and Mrs. Chan Pau Shiu Yeng, Shirley together with their associates are the only substantial shareholders of the Company. On the basis that no further Shares are issued or repurchased and in the event that the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate, the shareholding of Mr. Raymond Chan and Mrs. Chan Pau Shiu Yeng, Shirley together with their associates in the Company would increase to approximately 61.30% of the issued share capital of the Company. The Directors believe that such increase would not give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code.

9. Share Repurchases made by the Company

The Company had not repurchased any Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

10. Recommendation

The Directors consider that the granting of the general mandates to issue Shares and to repurchase Shares are in the interests of the Company and recommend Shareholders to vote in favour of the resolutions to approve the same at the Annual General Meeting.

Yours faithfully, Raymond Chan

Chairman & Chief Executive Officer

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